Document:

exv4w7

 

Exhibit 4.7

FORM 51-102F3

Material Change Report

	 	 	 

	Item 1

	 	Name and Address of Company
	 
	 	 
	 

	 	Fairfax Financial Holdings Limited (“Fairfax”)
	 

	 	95 Wellington Street West
	 

	 	Suite 800
	 

	 	Toronto, Ontario
	 

	 	M5J 2N7
	 
	 	 
	Item 2

	 	Date of Material Change
	 
	 	 
	 

	 	February 18, 2010
	 
	 	 
	Item 3

	 	News Release
	 
	 	 
	 

	 	News releases were issued through Marketwire on February 18, 2010 and are
attached to this report.
	 
	 	 
	Item 4

	 	Summary of Material Change
	 
	 	 
	 

	 	Fairfax and Zenith National Insurance Corp. (“Zenith”) have entered into a
merger
agreement pursuant to which Fairfax will acquire all of the outstanding
shares of
Zenith common stock, which it does not currently own. Zenith stockholders will
receive $38.00 per share in cash. The transaction values Zenith at
approximately $1.4
billion. The transaction is expected to close in the second quarter of 2010.
Following
the closing, Zenith will become a wholly owned subsidiary of Fairfax. The
transaction is subject to customary conditions, including approval by Zenith’s
stockholders and regulatory approval. Fairfax intends to finance the
acquisition with a
combination of holding company cash and subsidiary dividends, but is also
raising
$200 million through offering of subordinate voting shares.
	 
	 	 
	Item 5

	 	Full Description of Material Change
	 
	 	 
	 

	 	Fairfax and Zenith have entered into a merger agreement (the “Merger
Agreement”)
pursuant to which Fairfax will acquire all of the outstanding shares of
Zenith common
stock, which it does not currently own. Zenith stockholders will receive
$38.00 per
share in cash, representing a premium of 31.4% to the closing price of Zenith
common stock on February 17, 2010, the last trading day prior to the
announcement
of the transaction, and a 34.0% premium to the 30-day average closing price
for the
period ending on February 17, 2010. The merger consideration of $38.00 per
share
also represents a premium of 34.5% to Zenith’s book value as of December 31,
2009.
The transaction values Zenith at approximately $1.4 billion.
	 
	 	 
	 

	 	The transaction is expected to close in the second quarter of 2010. Following
the
closing, Zenith will continue to operate from its Woodland Hills, CA
headquarters

 

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	 	and will become a wholly owned subsidiary of Fairfax. The board of directors of
Zenith, after unanimously determining that the merger is in the best interest
of Zenith
and its stockholders, unanimously approved the Merger Agreement and resolved to
recommend that Zenith’s stockholders vote to approve the merger. All of the
directors
and executive officers of Zenith, who in the aggregate beneficially own
approximately 3.4% of the outstanding shares of Zenith common stock, have
agreed
to vote their shares in favor of the merger. The transaction is subject to
customary
conditions, including approval by Zenith’s stockholders and regulatory
approval.
	 
	 	 
	 

	 	There is no financing condition to consummate the transaction. Fairfax intends
to
finance the acquisition with a combination of holding company cash and
subsidiary
dividends, but also announced on February 18, 2010 that it would issue 563,381
subordinate voting shares to a number of institutional investors at a price of
US$355.00 per share for aggregate proceeds of approximately US$200 million.
Closing of the share issuance is subject to approval of the Toronto Stock
Exchange
and is expected to occur on or about February 26, 2010. Following the
completion of
the acquisition and the share issuance, Fairfax expects to continue to maintain
approximately $1.0 billion in cash and marketable securities at the holding
company
level.
	 
	 	 
	 

	 	A copy of the Merger Agreement has been filed at www.sedar.com.
	 
	 	 
	Item 6

	 	Reliance on subsection 7.1(2) or (3) of National Instrument 51-102
	 
	 	 
	 

	 	Not applicable.
	 
	 	 
	Item 7

	 	Omitted Information
	 
	 	 
	 

	 	No significant facts in this report remain confidential, and no information
has been
omitted from this report.
	 
	 	 
	Item 8

	 	Executive Officer
	 
	 	 
	 

	 	For further information please contact Greg Taylor, Chief Financial Officer,
at (416)
367-4941.
	 
	 	 
	Item 9

	 	Date of Report
	 
	 	 
	 

	 	February 22, 2010

 

 

News Release

FAIRFAX FINANCIAL TO ACQUIRE ZENITH NATIONAL INSURANCE

FOR $38.00 PER SHARE IN CASH

Zenith will continue to operate from its Woodland Hills, CA headquarters and will become a

wholly owned subsidiary of Fairfax

(Note: All dollar amounts in this press release are expressed in U.S. dollars.)

TORONTO, ON and WOODLAND HILLS, CA — February 18, 2010 — Fairfax Financial Holdings Limited
(TSX: FFH and FFH.U) and Zenith National Insurance Corp. (NYSE: ZNT) today announced that Fairfax
and Zenith have entered into a merger agreement pursuant to which Fairfax will acquire all of the
outstanding shares of Zenith common stock, which it does not currently own. Zenith stockholders
will receive $38.00 per share in cash, representing a premium of 31.4% to the closing price of
Zenith common stock on February 17, 2010, the last trading day prior to this announcement, and a
34.0% premium to the
30-day average closing price for the period ending on February 17, 2010. The merger consideration
of
$38.00 per share also represents a premium of 34.5% to Zenith’s book value as of December 31, 2009.
The transaction values Zenith at approximately $1.4 billion.

The transaction is expected to close in the second quarter of 2010. Following the closing, Zenith
will continue to operate from its Woodland Hills, CA headquarters and will become a wholly owned
subsidiary of Fairfax.

The board of directors of Zenith, after unanimously determining that the merger is in the best
interest of Zenith and its stockholders, unanimously approved the merger agreement and resolved to
recommend that Zenith’s stockholders vote to approve the merger. All of the directors and executive
officers of Zenith, who in the aggregate beneficially own approximately 3.4% of the outstanding
shares of Zenith common stock, have agreed to vote their shares in favor of the merger.

The transaction is subject to customary conditions, including approval by Zenith’s stockholders and
regulatory approval. There is no financing condition to consummate the transaction. Fairfax intends
to
finance the acquisition with a combination of holding company cash and subsidiary dividends, but
will also raise $200 million through an equity issue prior to the closing. Following the completion
of the acquisition, Fairfax expects to continue to maintain approximately $1.0 billion in cash and
marketable securities at the holding company level.

Prem Watsa, Chairman and Chief Executive Officer of Fairfax, said: “We are very pleased to announce
this transaction and look forward to working together with Zenith and its Chairman and Chief
Executive Officer, Stanley Zax, to complete the merger as soon as possible. Our agreement to
acquire Zenith reflects our strategy of investing in well-managed and well-positioned insurance
companies.” Mr. Watsa added, “Zenith has an outstanding long-term underwriting track record
spanning over thirty years under Stanley’s leadership. Following the successful completion of the
transaction, there will be no changes in Zenith’s strategic or operating philosophy. Zenith will
continue to operate its business as it has always been run under Stanley’s excellent leadership,
with investment management centralized at Fairfax. All other Fairfax group companies will continue
to operate independently on a decentralized basis.”

Stanley Zax, Zenith’s Chairman and Chief Executive Officer, stated: “We believe the transaction
will benefit our key constituents and enable our shareholders to realize compelling value for their
investment

 

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in Zenith. I am very proud of the employees, agents, management and directors at Zenith in creating
one of the most successful specialty workers’ compensation companies. We admire Fairfax’s
accomplishments in creating an extremely successful insurance and reinsurance business and are
delighted to become part of the Fairfax family.”

Shearman & Sterling LLP is acting as legal counsel to Fairfax. Torys LLP is acting as Canadian
legal counsel to Fairfax.

BofA Merrill Lynch is acting as exclusive financial advisor to Zenith and Dewey & LeBoeuf LLP is
acting as legal counsel to Zenith.

Background

Fairfax is a financial services holding company which, through its subsidiaries, is engaged in
property and casualty insurance and reinsurance and investment management.

Zenith National Insurance Corp., a Delaware corporation incorporated in 1971, is a holding company
engaged, through its wholly owned subsidiaries, Zenith Insurance Company and ZNAT Insurance
Company, in the workers’ compensation insurance business, nationally.

Forward-looking Statements

This press release includes certain forward-looking statements. Such forward-looking statements are
subject to known and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Fairfax or Zenith to be materially different from any
future results, performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the timing and completion of the merger, the
outcome of any legal proceedings relating to the merger, the effect of the announcement on Zenith’s
customer relationships, operating results and business generally. Such factors also include, but
are not limited to, the risks and uncertainties described in Fairfax’s reports filed with the SEC
and securities regulatory authorities in Canada, which are available at www.sec.gov and
www.sedar.com, and in Zenith’s reports, including its Annual Report on Form 10-K for the year ended
December 31, 2009, filed with the SEC, which are available at www.sec.gov. Fairfax and Zenith
disclaim any intention or obligation to update or revise any forward-looking statements, except as
required by law.

Additional Information

In connection with the proposed transaction, Zenith will file a proxy statement with the Securities
and Exchange Commission (“SEC”). INVESTORS AND STOCKHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AND THE PARTIES THERETO.

Investors and stockholders may obtain free copies of the proxy statement and other documents filed
by Zenith (when available), at the SEC’s Web site at www.sec.gov or at Zenith’s Web site at
www.thezenith.com. The proxy statement and such other documents may also be obtained, when
available, for free from Zenith by directing such request to Investor Relations, Zenith National
Insurance Corp., 21255 Califa Street, Woodland Hills, California 91367-5021, telephone:
1-818-713-1000.

Zenith and its directors, executive officers and other members of its management and employees may
be deemed to be participants in the solicitation of proxies from Zenith’s stockholders in
connection with the

 

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proposed transaction. Information concerning the interests of those persons is set forth in
Zenith’s proxy statement relating to the 2009 annual stockholder meeting and annual report on Form
10-K for the fiscal 3 year ended December 31, 2009, both filed with the SEC, and will
also be set forth in the proxy statement relating to the transaction when it becomes available.

This press release does not constitute an offer of securities for sale in the United States. The
Fairfax securities referred to in this press release have not been, nor will be, registered under
the United States Securities Act of 1933, as amended, and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an
applicable exemption from U.S. registration requirements.

Contacts

Fairfax Financial Holdings Limited:

Greg Taylor

Chief Financial Officer

416-367-4941

Media Contact

Paul Rivett

Chief Legal Officer

416-367-4941

Zenith National Insurance Corp.:

William J. Owen

Senior Vice President, Investor Relations

818-676-3936

 

 

FAIRFAX News Release

TSX Stock Symbol: FFH and FFH.U

TORONTO, February 18, 2010

US$200 MILLION EQUITY ISSUE

(Note: All dollar amounts in this press release are expressed in U.S. dollars.)

Fairfax Financial Holdings Limited (TSX: FFH and FFH.U) has agreed to issue 563,381
subordinate voting shares to a number of institutional investors at a price of $355 per share for
aggregate proceeds of approximately $200 million. Fairfax previously announced its intention to
complete the equity offering in connection with its proposed acquisition of Zenith National
Insurance Corp. Fairfax intends to finance the acquisition with a combination of holding company
cash and subsidiary dividends, and will use the proceeds of this offering to increase its cash
position at the holding company. The acquisition is subject to a number of customary conditions,
including regulatory approval and approval by Zenith National’s stockholders, and is
expected to close in the second quarter of 2010. Closing of this share issuance is subject to
approval of the Toronto Stock Exchange and is expected to occur on or about February 26, 2010.

Fairfax intends to file a prospectus supplement to its short form base shelf prospectus dated
September 25, 2009, in respect of this offering with the applicable Canadian securities regulatory
authorities. Details of this offering will be set out in the prospectus supplement, which will be
available on the SEDAR website for the Company at www.sedar.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the securities laws of any
such jurisdiction. The securities will not be registered under the Securities Act of 1933 and may
not be offered or sold in the United States absent registration or an applicable exemption from
registration requirements.
Fairfax is a financial services holding company which, through its subsidiaries, is engaged in
property and casualty insurance and reinsurance and investment management.

-30-

For further information contact: Greg Taylor, Chief Financial Officer, at (416) 367-4941

Media Contact

Paul Rivett, Chief Legal Officer, at (416) 367-4941exv10w1

Exhibit 10.1

	 	 	 	 	 

		 	CONTRACT A	 	Page 1 of 1
	 	SUPPLEMENTARY OVERDRAFT FACILITY
	Branch

	 	For purposes other than
	 	  Facility no.
	Frölunda

	 	personal consumption	 	 

	 	 	 	 	 

	 

	 	Name
	 	Civic reg. no./Business org. no.
	Borrower

	 	MOBITEC AKTIEBOLAG
	 	556546-6793 
	 
	 	 	 	 
	Normal overdraft 
facility

	 	Amount granted 

7,000,000.00
	 	Contract date

2001-08-28 
	 
	 	 	 	 
	Amount of
supplementary
facility

	 	SEK (in words)

TWELVE MILLION KRONOR

SEK (in figures)

12,000,000.00
	 	 

	 	 	 	 	 

	Overdraft 

period

	 	As from — to, inclusive (year, month, day)

2010-12-06—2010-12-31
	 	In accordance with section 8 of the “General Terms” for the facility,
the Bank can suspend utilisation of the facility during the overdraft
period and/or terminate the facility.

	 	 	 	 	 	 	 

	Interest

	 	Utilisation interest rate, currently %

The interest rate is subject to special terms relating
to money market accounts
STIBOR T/N + 4.20
	 	Contract interest rate
currently %

0.50
	 	The interest is payable as contract interest
on the full overdraft amount and as
utilisation interest on the borrower’s debt.
	 	 	
Due dates for utilisation interest every (month, day)

1231, 0331, 0630, 0930	 	Contract interest is payable in advance at
the commencement of the facility period.

	 	 	 

	The Bank’s
undertaking

	 	In addition to the above-mentioned normal overdraft facility, Svenska
Handelsbanken AB (publ) allows the borrower to utilise a supplementary overdraft facility
up to the above-mentioned facility amount on the terms and conditions set out in this
contract.
	 
	 	 
	The borrower’s
undertaking

	 	The Borrower shall comply with the terms and conditions of this contract, some of which are set out in the
“General terms” for the facility. On expiry of the agreed overdraft period, the borrower shall immediately
repay his/her debt pursuant to the contract. When the borrower’s right to utilise the normal overdraft facility
and/or supplementary facility has expired, the borrower must immediately return unused cheques and any
other instruments used for operation of the account.
	 
	 	 
	Signature

	 	I/We confirm that I/we have read all pages of the contract including the “General terms” for the facility.

	 	 	 	 	 

	 

	 	Date 

2010-12-01
	 	Date 

2010-12-06
	 
	 	 	 	 
	 

	 	Borrower
	 	Svenska Handelsbanken AB (publ)
	 
	 

	 	Mobitec AB	 	 
	 
	 

	 	/s/ Agne Axelsson
	 	/s/ Catarina Berntsson
	 

	 	 
	 	 
	 

	 	Agne Axelsson
	 	Catarina Berntsson
	 
	 	 	 	 
	 

	 	 	 	/s/ Patrik Niklasson
	 

	 	 	 	 
	 

	 	 	 	Patrik Niklasson

 

	 	 	 	 	 

		 	 	 	Page 1 of 3

GENERAL TERMS CONTRACT A — Supplementary credit for purposes other than personal consumption,
applying from 

21 December 2009

	1.	 	General terms for accounts held with Handelsbanken
	 
	 	 	The borrower disposes of the account in accordance with the terms applying to the account to
which the overdraft facility is linked. The Bank may withdraw funds from the account if the
borrower has ordered this or has approved that the account may be debited.
	 
	 	 	The Bank may also debit the account with amounts corresponding to interest, charges and costs
which are associated with the account. In addition, the Bank may debit the account with amounts
corresponding to charges, costs and outlays for orders effected on behalf of the borrower and
for payment of other due claims which the Bank has on the borrower.
	 
	 	 	When the Bank is entitled to debit the account as stated in the previous paragraph, this may
also be done as at a day which is a public holiday or equivalent day. It is the duty of the
borrower to ensure that a sufficiently large amount is available on the account when the debit
occurs. If the borrower dies during the contract period, the estate of the deceased may not
increase the debt on the account without the consent of the Bank.
	 
	2.	 	Interest
	 
	 	 	The borrower shall pay utilisation interest to the Bank at an annual rate computed on the
overdraft amount outstanding at any time, plus contract interest on the granted overdraft
amount. The utilisation interest is calculated at the interest rate and on the grounds which
the Bank applies to this type of facility from time to time. The interest rates applying when
the facility was provided are set out in the contract. If different interest rates are applied
for utilisation interest in different ranges of the overdraft amount, this is indicated on page
one with the interest rates applying when the contract was entered into.
	 
	 	 	In the event of an
extension of the facility, additional contract interest is payable for each period of
extension, this being payable in advance for the period concerned.
	 
	 	 	The borrower is liable for
contract interest for the period until the end of the overdraft period set out in the contract,
without any obligation for the Bank to make a refund if the contract should be terminated
before then.
	 
	3.	 	Overdrafts
	 
	 	 	If the borrower’s debt to the Bank under this contract exceeds the amount granted, the borrower
shall upon demand pay the difference. In this case, the borrower shall also pay interest on the
overdrawn amount at the rate and on the grounds applied by the Bank at any time, 

as well as an
unauthorised overdraft fee as set out in section 5 below.
	 
	 	 	Unauthorised overdrafts also entitle the Bank to terminate the facility for repayment and/or
suspend utilisation of the facility in advance. In this case the provisions in section 8 will
apply.
	 
	4.	 	Penalty interest
	 
	 	 	If payment of principal, interest and/or charges is not effected when due, the borrower shall
pay special annual penalty interest on the overdue amount until payment is made. On amounts not
overdue, the usual interest rate continues to apply.
	 
	 	 	Penalty interest is calculated at the
utilisation interest rate applying to the facility, plus five percentage points or, when the
entire facility is overdue, one percentage point.
	 
	5.	 	Charges and costs
	 
	 	 	The account is subject to charges according to the terms generally applied from time to time by
the Bank. Particulars of current charges are available at any of the Bank’s branches.
	 
	 	 	The borrower shall reimburse the Bank for the costs and work associated with obtaining, maintaining
and utilising the security agreed upon, as well as with the lodging of proof and collection of
the Bank’s claim on the borrower or on any other party liable for payment thereof. The Bank’s
written payment reminders shall thus also be reimbursed.
	 
	6.	 	Order of debt settlement
	 
	 	 	When payment is made, the Bank is entitled to deduct the charges, costs and interest due on the
facility before settling the principal amount.
	 
	7.	 	Facility period
	 
	 	 	The facility period for the supplementary overdraft facility is set out in the contract and
will not be extended. If the Bank does not grant an extension of the normal overdraft facility
or if the normal overdraft facility is terminated for payment in advance, the supplementary
overdraft facility shall be due for payment at the same time as the normal overdraft facility
irrespective of whether the agreed facility period for the supplementary overdraft facility is
longer or the supplementary overdraft facility has not been subject to separate notice of
termination.
	 
	8.	 	The Bank’s right to terminate the facility and/or suspend utilisation of the facility
	 
	 	 	The Bank may terminate the facility for payment immediately or at any time determined by the
Bank and suspend utilisation of the overdraft facility, if any of the following circumstances
should apply:

	 	•	 	the borrower has failed to meet his obligations under this
contract or otherwise to the Bank,
	 
	 	•	 	the borrower has used the account improperly in a manner
set out under Section 3,
	 
	 	•	 	the collateral for the loan or for other obligations of the borrower towards the Bank is no longer satisfactory,
	 
	 	•	 	there is reasonable cause to assume that the borrower will
not meet his payment obligations to the Bank.

	 	 	If any of the circumstances set out above are present, the Bank is entitled, regardless of
whether termination has been made, to immediately suspend the right to utilise the facility
further.

	 
	 	 	
If the Bank has terminated the facility in accordance with this section, the borrower
shall immediately return unused cheques and other instruments for operating the account.
	 
	9.	 	Closing bill and refund
	 
	 	 	When the agreed overdraft period has expired or when the facility is payable in advance
pursuant to section 3, 7 or 8, the Bank shall prepare a closing bill.
	 
	 	 	The borrower must immediately pay the debt according to the closing bill.
	 
	10.	 	Definition of a pledge, etc.
	 
	 	 	‘Pledge’ also refers to property that is included in a floating charge on assets. The term
‘pledger’ also refers to an assignor of floating charge, ‘pledging’ also refers to assignment
of the floating charge and ‘pledge deed’ also refers to deeds associated with a floating charge
and pledge claims.
	 
	11.	 	The Bank’s right to sell pledged financial instruments
	 
	 	 	If the security for the loan consists in full or in part of financial instruments and if the
value for borrowing purposes assigned by
the Bank declines, implying that the security is no longer satisfactory, the borrower must at
the request of the Bank immediately provide additional security. If such security is not
provided, or if the Bank is unable to contact the borrower within a reasonable period of time,
the Bank has the right, but not the obligation, to sell the required portion of the financial
instruments. The proceeds shall be deposited to an interest-bearing account and continue to
constitute a pledge for the loan. That which is stated above does not restrict the Bank’s right
to terminate the facility for immediate payment in accordance with section 8 and/or the right
to immediately suspend utilisation of the facility in accordance with section 8.
	 
	12.	 	Right of guarantor and pledger to prevent extension of overdraft period
	 
	 	 	A guarantor is not entitled to terminate his guarantee and a pledger may not revoke his
mortgage.

 

	 	 	 	 	 

		 	 	 	Page 2 of 3

	 	 	However, any guarantor or pledger may separately, not later than six weeks before the due
date of the facility, request in writing that the Bank shall not extend the facility. Such request
may imply that the guarantor becomes forced to pay by virtue of his guarantee, or that the Bank
utilises a pledge.
	 
	 	 	If the Bank within the period set out in the preceding paragraph has received a
request that the facility shall not be extended but nevertheless extends the facility, the
guarantee or pledge provided by the party making such request ceases to be valid. This does not
apply, however, if the Bank, due to the borrower’s negligence, before expiry of the aforementioned
time period, has commenced legal proceedings against the party who has opposed an extension or has
commenced negotiation with this party concerning the guarantee commitment or pledge.
	 
	13.	 	Sequence of utilisation of security
	 
	 	 	If the borrower fails to meet his obligations under the contract, the Bank may determine the
sequence in which the securities (pledges, guarantees, etc.) shall be utilised.
	 
	14.	 	General right of pledge
	 
	 	 	Property pledged by the borrower in this contract shall also constitute security for any other
obligations towards the Bank for which the borrower is or may in the future be liable, in his
capacity as borrower, principal, account holder, guarantor or otherwise as customer of the
Bank. Such other obligation must have arisen before the borrower’s obligations under this
contract have been met. The Bank shall determine in which order the obligations are to be
settled out of the proceeds of the pledge. However, account must be taken of the right of
guarantors according to section 22.
	 
	 	 	Property thus pledged shall not, however, by reason of the pledge, constitute security for the
borrower’s obligations on account of bills of exchange which have been discounted, or which may
be discounted at the Bank by a third party, unless they concern the renewal of bills, or have
otherwise replaced bills originally discounted by the borrower. Neither shall the property thus
pledged secure any other claims on the borrower which the Bank has acquired or may acquire from
a third party.
	 
	15.	 	Yield on property pledged
	 
	 	 	Yield and all other rights based on the pledge are also covered by the pledging and constitute
a pledge. Thus, the pledging of shares, for example, includes the right of the Bank to
participate in bonus issues, new issues and other issues for which the shares qualify. As
stated in section 16, the Bank is, however, not liable for ensuring that such rights are
safeguarded. Where this nevertheless occurs, the Bank is accountable to the pledger.
	 
	16.	 	Safeguard by the Bank of the pledge
	 
	 	 	The Bank has a duty to take good care of the pledge.
	 
	 	 	Where appropriate, the Bank shall renew
limitation periods and lodge proof of claim in case of summons of unknown creditors and also in
bankruptcies, where the pledger so requests after commencement of the bankruptcy. Where
announcement has been made regarding the cancellation of a pledged document, the Bank shall give
notice that it holds the document. However, the Bank is not obliged to take any of these
measures regarding certificates of claim consisting of coupons or which are intended for the
open market, such as bonds, or to which Swedish law does not apply.
	 
	 	 	The Bank is not obliged to maintain personal liability for payment in respect of mortgaged
instruments of debt.

 The Bank’s safeguard of the pledge does not extend beyond what has been
stated above. Thus the Bank is not, for example, as far as securities are concerned, obliged to
collect dividends and interest or observe the pledger’s rights in connection with issues,
exchanges of shares, conversions, distributions of net assets, etc.
	 
	17.	 	How a pledge may be utilised by the Bank
	 
	 	 	The Bank may utilise a pledge as the Bank deems fit. In this respect, the Bank shall proceed
with care and, where possible and if in the opinion of the Bank it can be accomplished without
prejudice to the Bank, notify the pledger to this effect in advance.
	 
	 	 	When applying the above, a financial instrument can be sold in a different way than on a market
where the instrument is registered or is normally traded.
	 
	 	 	If the pledge consists of funds deposited in an account with the Bank, the Bank may immediately
debit the account in reimbursement of the amount due, without informing the pledger in advance.
	 
	 	 	Should the pledge consist of an instrument of debt for which the pledger is liable personally
or with certain property, the instrument is, with respect to the pledger, due for payment on
demand, regardless of the due date stipulated in the instrument.
	 
	18.	 	The Bank’s right to sign on behalf of the pledger
	 
	 	 	Through his pledging, the pledger authorises the Bank, or anyone appointed by the Bank, to sign
on behalf of the pledger, where this is necessary in order to safeguard the Bank’s right of
pledge. This authorisation may not be revoked as long as the pledging is in force.
	 
	19.	 	Release of pledge
	 
	 	 	The Bank may release pledges without being bound to observe any right to the pledge which may
accrue to a guarantor who has made payment to a party other than the Bank by virtue of his
guarantee.
	 
	20.	 	Transfer of unpledged deeds of mortgage
	 
	 	 	When the Bank no longer holds the pledge and has not been informed of a new pledge-holder or
received a request that a written deed of mortgage shall be issued, the Bank is entitled to
transfer an electronic deed of mortgage to the National Land Survey’s register of mortgages for
which no other mortgage-holder is registered, known as the Public Archive.
	 
	21.	 	Payment by the guarantor
	 
	 	 	If a guarantor makes payment to the Bank on account of his guarantee, he shall specifically
notify the Bank that he is paying in his capacity as guarantor and request that this fact be
noted by the Bank.
	 
	22.	 	Guarantor’s right to pledges
	 
	 	 	If a guarantee has been signed on this contract, the following shall apply with regard to the
guarantor’s right to pledges in this contract by the borrower alone or jointly with another:

The pledge shall constitute security for the guarantor’s claim for recourse against the
borrower to the extent that it is not utilised by the Bank for the borrower’s obligations under
this contract. When the pledge constitutes security for the right of recourse of several
guarantors, they shall have rights to the pledge in proportion to the right of recourse of each
of them, unless they agree otherwise.
	 
	 	 	In relation to the Bank, a guarantor is not entitled to any other property which has been
pledged to the Bank by the borrower or another party.
	 
	 	 	The Bank may release yield from the pledge which is not required for payment of amounts due
under this contract, without thereby reducing the liability of any guarantor.
	 
	23.	 	How the pledge may be utilised for a guarantor’s right of recourse
	 
	 	 	Where a guarantor has made payment to the Bank by virtue of his guarantee, he may exercise his
right to a pledge under section 22 only when the Bank has received payment in full for its
claim under this contract. If the guarantor wishes to exercise this right, the Bank is entitled
to choose between releasing the pledge to the guarantor or utilising the pledge on behalf of
the guarantor, Section 17 shall apply in this connection.
	 
	24.	 	Property pledged by a party other than the borrower
	 
	 	 	Property pledged on this contract by a party other than the borrower shall constitute security
only for the borrower’s obligations under this contract, unless otherwise agreed.
	 
	 	 	Without any
reduction of the Bank’s right to property which a party other than the borrower has pledged on
this contract, the Bank is entitled to release property pledged by the borrower or any other
party, which has not been pledged on this contract, as well as the yield on such property. The
Bank is also entitled to release the yield on property pledged on this contract by the

 

	 	 	 	 	 

		 	 	 	Page 3 of 3

	 	 	borrower or any other party, if the yield is due for payment but is not required to cover
interest or costs due under the contract.
	 
	25.	 	Cancellation of the contract
	 
	 	 	The contract will be cancelled one month after the overdraft has been repaid in full, unless
the borrower has asked in advance for it to be returned.
	 
	26.	 	Insurance
	 
	 	 	Property which constitutes security for the Bank’s claim shall be satisfactorily insured.
	 
	 	 	If the borrower fails to show proof that insurance as prescribed above is in force, the Bank
shall be entitled to arrange for such insurance at the borrower’s expense.
	 
	27.	 	Processing of personal data
	 
	 	 	Personal data submitted in connection with a credit application or otherwise registered in
connection with processing or administration of this credit will be subject to such processing
in computer systems at the Bank as required by the credit agreement. This includes information
about contacts between the borrower and the Bank.
	 
	 	 	This promissory note contains special information on the processing of data for credit
references.
	 
	 	 	The personal data is also used for marketing and customer research, business and methods
development and risk management in the Handelsbanken Group. Risk management also involves
processing information on the borrower and loans to assess the quality of loans for purposes of
capital adequacy.

 The personal data is also used for marketing purposes, unless the borrower has
requested a block on direct advertising from the Bank. The processing of personal data can —
within the framework of current bank confidentiality regulations — take place with other Group
companies and other companies with whom the Bank collaborates in its operations. 

If the borrower
requires information about the personal data about him/her which is being processed by the Bank,
the borrower can request this in writing from his/her branch of the Bank. Requests to correct
incomplete or incorrect personal data can be made at the Bank branch or sent to Handelsbanken,
Central auditing department, SE-106 70 Stockholm, Sweden.

The above statements regarding
borrowers also apply to guarantors, if any, or pledgers other than the borrower.
	 
	28.	 	Notices, etc.
	 
	 	 	The borrower, guarantors and pledgers shall notify the Bank of any changes of address,
telephone number or fax number. 

Registered letters regarding the overdraft facility which the
Bank has forwarded to any of the parties mentioned above shall be deemed to have reached the
addressee not later than on the seventh day after despatch if the letter has been sent to the
address which is known to the Bank.
	 
	 	 	Notices sent by fax shall be deemed to have reached the addressee no later than the next
business day if the fax message was sent to a number which the addressee has submitted to the
Bank. A business day is a day other than a Sunday, public holiday, Saturday, Midsummer’s Eve,
Christmas Eve or New Year’s Eve.
	 
	 	 	These provisions do not apply to notices renewing periods of limitation.
	 
	29.	 	Limitation of the Bank’s liability
	 
	 	 	The Bank shall not be held responsible for any loss or damage resulting from a legal enactment
(Swedish or foreign), the intervention of a public authority (Swedish or foreign), an act of
war, a strike, a blockade, a boycott, a lockout or any other similar circumstance. The
reservation in respect of strikes, blockades, boycotts and lockouts applies even if the Bank
itself is subjected to such measures or takes such measures.
	 
	 	 	Any damage which occurs in other
circumstances shall not be compensated by the Bank, provided the Bank has exercised normal
standards of care. The Bank shall in no case be liable for indirect damage.
	 
	 	 	Where a circumstance as referred to in the first paragraph should prevent the Bank from making a
payment or taking other measures, such payment or measures may be postponed until the obstacle
no longer exists. In the event of a postponement of payment the Bank shall, if it is committed
to pay interest, pay such interest at the interest rate prevailing on the due date for the
postponed payment. Where the Bank is not committed to pay interest, the Bank shall not be
obliged to pay interest at a higher rate than the prevailing reference rate of Sveriges
Riks-bank pursuant to the Section 9 of the Interest Act (1975:635), plus two percentage points.
Where a circumstance as referred to in the first paragraph should prevent the Bank from
receiving payments, the Bank shall, as long as the obstacle exists, be entitled to interest only
on the terms prevailing on the due date of the payment.

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