Document:

exv4w38

 

Exhibit 4.38

			
	                
	 	December 2003

ROYAL & SUN ALLIANCE INSURANCE PLC

AND

CONVERIUM AG

AGREEMENT FOR THE SALE AND

PURCHASE OF PART OF ROYAL & SUN

ALLIANCE INSURANCE PLC’S

SHAREHOLDING IN GLOBAL AEROSPACE

UNDERWRITING MANAGERS LIMITED

 

 

CONTENTS

	 	 	 	 	 	 	 
	CLAUSE	 	PAGE
	1.	 	
INTERPRETATION
	 	 	1	 
	2.	 	
SALE AND PURCHASE
	 	 	7	 
	3.	 	
THE RSA LOAN
	 	 	8	 
	4.	 	
CONDITIONS
	 	 	8	 
	5.	 	
FRONTING ARRANGEMENTS
	 	 	9	 
	6.	 	
COMPLETION
	 	 	10	 
	7.	 	
THE SELLER’S WARRANTIES AND OTHER MATTERS
	 	 	10	 
	8.	 	
THE BUYER’S REMEDIES
	 	 	11	 
	9.	 	
THE BUYER’S WARRANTIES
	 	 	12	 
	10.	 	
FITZWILLIAM LEASE
	 	 	13	 
	11.	 	
DEFERRED CONSIDERATION
	 	 	13	 
	12.	 	
CONDUCT OF BUSINESS BETWEEN COMPLETION AND THE FOURTH PAYMENT DATE
	 	 	13	 
	13.	 	
CONFIDENTIAL INFORMATION
	 	 	14	 
	14.	 	
ANNOUNCEMENTS
	 	 	15	 
	15.	 	
ASSIGNMENT
	 	 	16	 
	16.	 	
COSTS
	 	 	16	 
	17.	 	
WITHHOLDING TAX AND GROSSING UP
	 	 	16	 
	18.	 	
ENTIRE AGREEMENT
	 	 	17	 
	19.	 	
THIRD PARTY RIGHTS
	 	 	17	 
	20.	 	
GENERAL
	 	 	18	 
	21.	 	
NOTICES
	 	 	19	 
	22.	 	
GOVERNING LAW AND JURISDICTION
	 	 	20	 
	SCHEDULE 1 COMPLETION REQUIREMENTS	 	 	22	 
	 	 	
1.        Seller’s obligations
	 	 	22	 
	 	 	
2.        Buyer’s obligations
	 	 	22	 
	SCHEDULE 2 SELLER’S WARRANTIES	 	 	24	 
	 	 	
1.        Capacity and authority
	 	 	24	 
	 	 	
2.        RSA shares
	 	 	25	 
	SCHEDULE 3 LIMITATIONS ON THE SELLER’S LIABILITY	 	 	26	 
	 	 	
1.        Limitation on quantum
	 	 	26	 
	 	 	
2.        Mitigation
	 	 	26	 
	 	 	
3.        General
	 	 	26	 

Page I

 

	 	 	 	 	 	 	 
	CLAUSE	 	PAGE
	SCHEDULE 4 DETERMINATION OF 2003 RELEVANT PROFIT	 	 	27	 
	SCHEDULE 5 DETERMINATION OF AMOUNT IN RESPECT OF PROFIT COMMISSION DUE TO SELLER	 	 	29	 

Page II

 

THIS AGREEMENT is made on 30 December 2003

BETWEEN:

	(1)	 	ROYAL & SUN ALLIANCE INSURANCE PLC, a company incorporated in England and
Wales (registered no. 93792), whose registered office is at St Mark’s
Court, Chart Way, Horsham, West Sussex RH12 1XL (RSA or the Seller); and
	 
	(2)	 	CONVERIUM AG, a company incorporated in Switzerland whose registered
office is at General Guisan-Quai 26, 8022 Zürich, Switzerland (Converium
or the Buyer).

WHEREAS:

(A)  The Company (as defined below) is a private company limited by shares
incorporated in England. The Seller is the sole legal and beneficial owner of
10.1 per cent of the share capital of the Company.

(B)  RSA has agreed to sell the RSA Shares (as defined below) to the Buyer and
the Buyer has agreed to purchase the RSA Shares for the consideration and upon
the terms set out in this Agreement.

(C)  The parties have agreed that Converium will take the economic benefits of
the RSA Shares with effect from 1 January 2004.

THE PARTIES AGREE as follows:

	1.	 	Interpretation
	 
	1.1	 	In this Agreement:

AAU means Associated Aviation Underwriters, Inc. a Delaware corporation
and an indirect wholly-owned subsidiary of the Company;

Act means the Companies Act 1985;

Accounts means the Group Accounts for the financial year ended 31 December
2002;

Agents means, together, the Company and AAU and Agent means either one of
them;

Agreed Rate means:

	(a)	 	where the sum owed is denominated in United States dollars, the rate per
annum at which HSBC Bank plc is offering US dollar deposits of US$1
million to prime banks in the London Interbank Market for a period of one
year at or about 11.00 a.m. (London time) on the first day of the period
for which interest is to accrue (or if that day is not a Business Day on
the next Business Day); and
	 
	(b)	 	where the sum owed is denominated in pounds sterling, the rate per annum
at which HSBC Bank plc is offering pound sterling deposits of £1 million
to

 

 

	 	 	prime banks in the London Interbank Market for a period of one year at or
about 11.00 a.m. (London time) on the first day of the period for which
interest is to accrue (or if that day is not a Business Day on the next
Business Day);

Business Day means a day (other than a Saturday or Sunday) on which banks
generally are open in London for the transaction of normal banking business;

Buyer’s Completion Documents means the documents which the Buyer will
execute at Completion as specified in Schedule 1 of this Agreement;

Buyer’s Group means the Buyer its ultimate parent undertaking and its
ultimate parent undertaking’s subsidiary undertakings for the time being and
from time to time;

Buyer’s Group Undertaking means the Buyer, a subsidiary undertaking or
parent undertaking for the time being of the Buyer or a subsidiary undertaking
for the time being and from time to time of a parent undertaking of the Buyer;

Company means Global Aerospace Underwriting Managers Limited, a company
incorporated in England and Wales (registered no. 02512067), whose registered
office is at Fitzwilliam House, 10 St Mary Axe, London, EC3A 8EQ;

Completion means the completion of the sale and purchase of the RSA Shares
under this Agreement;

Completion Date means the date which is five Business Days after the date
on which the last of the Conditions is satisfied (not being later than the
Longstop Date);

Condition means a condition set out in clause 4.1 and Conditions means all
those conditions;

Deed of Waiver of Pre-emption Rights and Certain Other Rights means the
deed of waiver in the agreed form to be entered into, amongst others, between
the Buyer and the Seller prior to Completion;

Deferred Consideration means the amounts payable to the Seller as
additional consideration for the RSA Shares in accordance with clause 11;

Draft Certificate has the meaning set out in paragraph 1.2 of Schedule 4;

Encumbrance means any security interest of any nature whatsoever including
without limitation, any mortgage, lien, equity, claim, restriction, charge or
other encumbrance or right exercisable by a third party having similar effect;

First Payment Date means the tenth Business Day following the earlier of
the acceptance by the parties of the Draft Certificate or the final
determination in accordance with paragraphs 1.4 and 1.5 of Schedule 4 of the
2003 Relevant Profit;

First Period means the underwriting year in respect of the GAUM Pool
commencing on 1 January 2001 and expiring on 31 December 2001, inclusive of
both these dates;

Page 2

 

First Pool Members Agreement means the members agreement dated 27
September 2000 relating to the GAUM Pool (as subsequently amended) in respect
of the underwriting years commencing 1 January 2001 and 1 January 2002;

Fitzwilliam Lease means the lease in respect of the second and third
floors of Fitzwilliam House, 10 St. Mary Axe, London EC3 dated 16 March 1992
between (1) the Universities Superannuation Scheme (2) British Aviation
Insurance Group Limited (3) Aviation & General Insurance Company Limited and
Others;

Fourth Payment Date means the twenty-first Business Day following the
determination of the Total Trading Return in respect of the Third Period as
provided in paragraph 3.3 of schedule 3 to the Second Pool Members Agreement;

GAUM Pool means the pool arrangement known as the Global Aerospace
Underwriting Pool which was managed by the Company and AAU on the terms set out
in the First Pool Members Agreement;

Group means the Company and each Subsidiary Undertaking;

Group Accounts means, in respect of any financial year, the audited group
accounts (as that term is used in section 227 Companies Act 1985) for the
Group;

Group Company means the Company or a Subsidiary Undertaking;

Indemnities means the indemnities and undertakings contained in clauses
20, 21 and 23.5 of the Original SPA and Indemnity means any one of them;

Initial Consideration means that part of the consideration payable by the
Buyer at Completion, as specified in clause 2.2(a);

Longstop Date has the meaning given in clause 4.1;

New Warranties means the warranties to be given by the Seller and set out
in Schedule 2;

Original SPA means the agreement for the sale and purchase of CGU
International PLC’s and part of Royal & Sun Alliance Insurance PLC’s
shareholding in Global Aerospace Underwriting Managers Limited dated 27
November 2002 to which amongst others the Buyer and the Seller are parties;

Profit Commission has the meaning set out in paragraph 1.5 of schedule 3
to the First Pool Members Agreement as regards the First and Second Periods and
has the meaning set out in paragraph 3.2 of schedule 3 to the Second Pool
Members Agreement as regards the Third Period;

Proceedings means any civil, criminal, arbitration, administrative or
other proceeding;

Related Persons means in relation to any party, its ultimate parent
undertaking and its ultimate parent undertaking’s subsidiary undertakings at
the date of this Agreement;

Relevant Claim means a claim by the Buyer under the New Warranties;

Page 3

 

Relief means any loss, relief, allowance, exemption, set-off, deduction,
right to repayment or credit or other relief of a similar nature granted by or
available in relation to Tax pursuant to any legislation or otherwise;

RSA Loan means 50.49 per cent. (or such lesser amount pursuant to clause
3.5) of the amount outstanding at Completion, together with accrued interest
attributable to such amount from and including 1 January 2004, under the loan
agreement dated 12 March 2003 between (1) RSA and (2) the Company (the RSA Loan
Agreement);

RSA Shares means 1,275,000, of the fully-paid ordinary shares of £1.00
each in the capital of the Company;

Second Global Aerospace Pool means the aerospace pool arrangement in
respect of Specified Risks (as such term is defined in the Second Pool Members
Agreement) written after 27 November 2002 and attaching on or after 1 January
2003 and before 1 January 2004 managed by the Company and AAU on the terms set
out in the Second Pool Members Agreement;

Second Payment Date means the twenty-first Business Day following the
agreement of the Total Trading Return in respect of the First Period with the
external actuaries (as referred to in paragraph 1.6 of schedule 3 to the First
Pool Members Agreement) or such later date as may be agreed pursuant to the
Original SPA;

Second Period means the underwriting year in respect of the GAUM Pool
commencing on 1 January 2002 and expiring on 31 December 2002, inclusive of
both these dates;

Second Pool Members Agreement means the members agreement dated 27
November 2002 between, amongst others, the Seller, the Buyer and the Company
constituting the Second Global Aerospace Pool;

Seller’s Group means for the time being and from time to time the Seller,
its ultimate parent undertaking and its ultimate parent undertaking’s
subsidiary undertakings;

Seller’s Group Undertaking means for the time being and from time to time
the Seller, a subsidiary undertaking or parent undertaking of the Seller or a
subsidiary undertaking for the time being of a parent undertaking of the
Seller;

Subsidiary Undertaking means a subsidiary undertaking of the Company or an
undertaking in which the Company owns shares and Subsidiary Undertakings means
all those undertakings;

Tax means (a) all forms of taxation including and without limitation any
charge, tax, duty, levy, impost, withholding or liability wherever chargeable,
imposed by any Tax Authority or any national, state, federal, municipal or
local government or governmental authority or any other person and whether of
UK or any other jurisdiction; and (b) any penalty, fine, surcharge, interest
and costs payable in connection with any taxation within (a) above;

Tax Authority and Taxation Authority mean any fiscal, revenue, customs or
excise authority anywhere in the world including, without limitation, the
Inland Revenue and H.M. Customs & Excise;

Page 4

 

Tax Deed means the tax deed dated 12 March 2003 to which, amongst others,
the Buyer and Seller are parties;

Third Period means the underwriting year in respect of the Second Global
Aerospace Pool commencing on 1 January 2003 and expiring on 31 December 2003,
inclusive of both these dates;

Third Payment Date means the twenty-first Business Day following the
agreement of the Total Trading Return in respect of the Second Period with the
external actuaries (as referred to in paragraph 1.6 of schedule 3 to the First
Pool Members Agreement) or such later date as may be agreed pursuant to the
Original SPA;

Total Trading Return shall mean, in respect of either of the First or
Second Period, the total trading return as such term is defined in paragraph
1.5 of schedule 3 to the First Pool Members Agreement and in respect of the
Third Period, the total trading return as such term is defined in paragraph 3.2
of schedule 3 to the Second Pool Members Agreement;

2003 Accounts means the Group Accounts prepared for the financial year to
31 December, 2003;

2003 Financial Year means the financial year to 31 December 2003;

2003 Relevant Profit means in respect of the 2003 Financial Year, an amount
calculated using the following formula:

A = P – (C+T+D) + G

where

	A	 	is the Relevant Profit;
	 
	P	 	is the pre tax profit of the Group in respect of the 2003
Financial Year as shown in the 2003 Accounts;
	 
	C	 	is any amount taken into account in the calculation of P as
shown in the 2003 Accounts by way of accrual for any Profit
Commission which will or may become payable to the Agents under
the provisions of the First and Second Pool Members Agreement;
	 
	T	 	is the amount of tax payable by the Company relating to the
2003 Financial Year excluding taxes in respect of accruals for
any Profit Commission;
	 
	D	 	is the amount which as at Completion has already been paid to
the Seller in respect of profits for the 2003 Financial Year;
and
	 
	G	 	is an amount equal to goodwill amortisation for the 2003
Financial Year as shown in the 2003 Accounts;

Warranty means a statement contained in Schedule 3 of the Original SPA and
Warranties means all those statements; and

Working Hours means 9.30 a.m. to 5.30 p.m. on a Business Day.

Page 5

 

	1.2	 	In this Agreement, a reference to:
	 
	(a)	 	a subsidiary undertaking or parent undertaking is to be construed in
accordance with section 258 of the Act, to an undertaking or group
undertaking is to be construed in accordance with section 259 of the Act
and to a subsidiary or holding company is to be construed in accordance
with section 736 of the Act;
	 
	(b)	 	a document in the agreed form is a reference to a document in a form
approved on or before the date of this Agreement and for the purposes of
identification initialled by or on behalf of each party hereto or in such
other form as may be agreed in writing by each party hereto;
	 
	(c)	 	a statutory provision includes a reference to the statutory provision as
modified or re-enacted or both from time to time before the date of this
Agreement and any subordinate legislation made under the statutory
provision (as so modified or re-enacted) before the date of this
Agreement;
	 
	(d)	 	a person includes a reference to any individual, firm, company,
corporation or other body corporate, government, state or agency of a
state or any joint venture, association or partnership, works council or
employee representative body (whether or not having separate legal
personality);
	 
	(e)	 	a person includes a reference to that person’s legal personal
representatives, successors and permitted assigns;
	 
	(f)	 	a party includes a reference to that party’s successors and permitted
assigns;
	 
	(g)	 	a clause, paragraph or Schedule, unless the context otherwise requires,
is a reference to a clause or paragraph of, or Schedule to, this
Agreement;
	 
	(h)	 	any English legal term for any action, remedy, method of judicial
proceeding, legal document, legal status, court, official or any legal
concept or thing shall in respect of any jurisdiction other than England
be deemed to include what most nearly approximates in that jurisdiction to
the English legal term and to any English statute shall be construed so as
to include equivalent or analogous laws of any other jurisdiction;
	 
	(i)	 	times of the day is to London time and reference to a day is to a period
of 24 hours running from midnight on the previous day;
	 
	(j)	 	the words other, include and including do not connote limitation in any
way; and
	 
	(k)	 	to £ are to pounds sterling and reference to any amount in such currency
shall be deemed to include reference to an equivalent amount in any other
currency.
	 
	1.3	 	The headings in this Agreement do not affect its interpretation.

1.4     Where it is necessary to determine whether a pounds sterling monetary
threshold referred to in this Agreement has been reached or exceeded and the
value of the relevant claim is expressed in a currency other than pounds
sterling, the value of

Page 6

 

that claim shall be translated into pounds sterling at the closing mid-point
pound spot rate applicable to that amount of that non-pound currency at close
of business in London on the date of receipt by the Seller of written
notification from the Buyer of the existence of such claim (or, if such day is
not a Business Day, on the Business Day immediately preceding such day) as
shown in the Financial Times (London First Edition) published on the next
following day or if the Financial Times (London First Edition) is not published
on that day the closing middle point spot rate quoted by HSBC Bank plc for
pounds sterling applicable to amounts of £1 million or more.

1.5 Where it is necessary to determine whether a US dollar monetary limit
referred to in this Agreement has been reached or exceeded and the value of the
claim is expressed in a currency other than United States dollars, the value of
that claim shall be translated into United States dollars at the closing
mid-point dollar spot rate applicable to that amount of that non-dollar
currency at close of business in London on the date of receipt by the Seller of
written notification from the Buyer of the existence of such claim (or, if such
day is not a Business Day, on the Business Day immediately preceding such day)
as shown in the Financial Times (London First Edition) published on the next
following day or if the Financial Times (London First Edition) is not published
on that day the closing middle point spot rate quoted by HSBC Bank plc for
United States dollars applicable to amounts of $1 million or more.

	2.	 	Sale and purchase

2.1 On and subject to the terms of this Agreement RSA, as legal and beneficial
owner, agrees to sell or procure the sale with full title guarantee and the
Buyer agrees to buy the RSA Shares together with all rights and benefits
attaching to the RSA Shares on or after 1 January 2004, free of any Encumbrance
including, without limitation, claims or other third party rights (including
rights of pre-emption) of any nature whatsoever.

2.2 The total Consideration for the sale of the RSA Shares shall be the payment
by the Buyer of:

	(a)	 	the Initial Consideration, being
the sum of US$2,945,980.841 payable in
accordance with clause 6; and
	 
	(b)	 	the Deferred Consideration, to be determined and paid in accordance with
clause 11.

2.3 The Seller shall, if requested by the Buyer from time to time, provide to
the Buyer a copy of a properly completed US Internal Revenue Service Form
W-8BEN or other applicable form, certificate or document specified by the Buyer
and prescribed by the US Internal Revenue Service in respect of any payments to
be made to the Seller under this Agreement in respect of which the Buyer would
be liable to withhold tax.

	1	 	2,571,439.39 x 1.7710 = $4,554,019.16

$7,500,000 – $4,554,019.16 = $2,945,980.84

Page 7

 

	3.	 	The RSA Loan

3.1 At Completion RSA will assign to Converium (or subject to not less than
three Business Days notice by Converium, a member of the Buyer’s Group
incorporated in England or Wales) its rights under the RSA Loan for a
consideration of $4,554,019.16 pursuant to an assignment in the agreed form.

3.2 RSA confirms that the amount of principal outstanding under the RSA Loan as
at the date of this Agreement is £2,571,439.39.

3.3 The Buyer agrees and undertakes that it shall promptly pay to the Seller
any interest in respect of the RSA Loan the Buyer receives in respect of
periods up to 31 December 2003. Any such receipt shall, pending such payment,
be held by the Buyer as agent for the Seller.

3.4 The Seller agrees and undertakes that it shall promptly pay to the Buyer
any interest in respect of the RSA Loan the Seller receives in respect of
periods after 31 December 2003. Any such receipt shall, pending such payment,
be held by the Seller as agent for the Buyer.

3.5 RSA agrees that if the principal amount of the RSA Loan is reduced prior to
Completion, the consideration under clause 3.1 will be correspondingly reduced
(using the exchange rate of $1.7710 to £1).

	4.	 	Conditions

4.1 Completion is conditional on the following Conditions being satisfied, on
or before 31 March 2004 (or if any clearance or approval is required in order
to satisfy the Condition in clause 4.1(b), on or before 30 June 2004) (the
Longstop Date):

	(a)	 	each of the parties to the Deed of Waiver of Pre-emption Rights and
Certain Other Rights having validly executed it or the consents, waivers
and authorisations required thereunder having been obtained by other means
acceptable to the Buyer and the Seller, acting reasonably;
	 
	(b)	 	Converium being satisfied, acting reasonably, that no clearances or
approvals are required in relation to the transfer of the RSA Shares or
any other provision of this Agreement or the Buyer’s Completion Documents
which:

	 	(i)	 	have not been obtained on terms reasonably
satisfactory to the Buyer; or
	 
	 	(ii)	 	if not obtained would:

	 	(A)	 	render such transfer or the effecting of such
provision illegal, void or invalid in any applicable
jurisdiction; or
	 
	 	(B)	 	render the Buyer liable to any penalty; or

	 	(iii)	 	would not be likely to be granted on terms
reasonably satisfactory to the Buyer; and

Page 8

 

	(c)	 	RSA validly withdrawing from the Second Global Aerospace Pool for periods
commencing on or after 1 January 2004.

4.2 Each of the Buyer and the Seller shall use their respective reasonable
efforts to achieve satisfaction of the Conditions in clauses 4.1(a) and 4.1(c)
as soon as reasonably practicable and in any event before the Longstop Date.

4.3 The following provisions apply in relation to the Condition set out in
clause 4.1(b):

	(a)	 	the Buyer shall use its reasonable efforts to achieve satisfaction of
such Condition as soon as practicable and the Seller shall provide such
information and assistance as may be reasonably required by the Buyer in
this connection;
	 
	(b)	 	the Buyer shall as soon as practicable after the date hereof identify
jurisdictions in respect of which clauses 4.1(b)(ii) and (iii) are not
satisfied and provide the Seller with a list of jurisdictions so
identified. The Buyer agrees to provide the Seller by 30 January 2004
with a preliminary list based on information solely within its own
control;
	 
	(c)	 	the Buyer agrees to use reasonable efforts to make applications for
clearance in such jurisdictions by 27 February 2004 or as soon as
practicable thereafter.

4.4 If, at any time, any party becomes aware of a fact or circumstance that is
likely to prevent a Condition being satisfied, it shall as soon as reasonably
practicable and in any event within two Business Days, inform the other party
of the matter.

4.5 If one or more of the Conditions set out in clause 4.1 has not been
satisfied on or before the Longstop Date, this Agreement (other than clauses 1,
7.9, 13, 14, 15, 16, 17, 18, 19, 20, 21 and 22) shall automatically terminate
with immediate effect and each party’s further rights and obligations cease
immediately on termination, but termination does not affect a party’s accrued
rights and obligations at the date of termination.

	5.	 	Fronting arrangements

5.1 For a period of one year from the date of this Agreement, the Seller agrees
to act, and to procure that members of the Seller’s Group shall act, as
fronting insurers for the Buyer and members of the Buyer’s Group in such
jurisdictions as the Buyer may direct from time to time where the Buyer or such
member of the Buyer’s Group is not duly authorised in respect of the type of
insurance business to which the direction relates provided that the Seller or a
member of the Seller’s Group has any necessary authorisation in the relevant
jurisdiction (Fronting Arrangements), and the Buyer agrees to pay to the Seller
at Completion US$1,500,000 in consideration of the Seller affording the Buyer
such right.

5.2 The Seller and the Buyer shall review the Fronting Arrangements as at 1
December 2004.

5.3 Any Fronting Arrangement shall be on the terms of the Fronting and
Administration Agreement between Global Aerospace Underwriters Managers
Limited, Global Aerospace, Inc., Converium and RSA dated 1 January 2003 with
the

Page 9

 

jurisdictions in Schedule 1 and the “Specified Risks” changed to reflect the
business to which the direction relates (subject to the proviso in clause 5.1)
and any other consequential or clerical amendments which may be necessary.

	6.	 	Completion

6.1 Completion shall take place at the offices of Freshfields Bruckhaus
Deringer in London or such other place as shall be agreed in writing between
the parties on the Completion Date.

6.2 At Completion the Seller and the Buyer shall do all those things
respectively required of them in Schedule 1.

6.3 No party is obliged to complete this Agreement unless the other party
complies with all its obligations under this clause 6 and Schedule 1.

6.4 The Buyer shall not be obliged to complete the purchase of any of the RSA
Shares unless the sale and purchase of all the RSA Shares is completed
simultaneously.

6.5 If Completion does not take place on the Completion Date because the Buyer
or the Seller fails to comply with any of its obligations under this clause 6
and/or under Schedule 1 (whether any such failure amounts to a repudiatory
breach or not), the Seller (in the case of a failure by the Buyer) may by
notice to the Buyer, or the Buyer (in the case of a failure by the Seller), may
by notice to the Seller:

	(a)	 	proceed to Completion to the extent reasonably practicable (without
limiting its rights under this Agreement);
	 
	(b)	 	postpone Completion to a date not more than ten Business Days after the
Completion Date and not later than the Longstop Date; or
	 
	(c)	 	terminate this Agreement.

6.6 If the Buyer or the Seller postpones Completion to another date in
accordance with clause 6.5(b), the provisions of this Agreement apply as if
that other date is the Completion Date.

6.7 If the Buyer or the Seller terminates this Agreement pursuant to clause
6.5(c), each party’s further rights and obligations (other than clauses 1, 7.9,
13, 14, 15, 16, 17, 18, 19, 20, 21 and 22) cease immediately on termination,
but termination shall not affect a party’s accrued rights and obligations at
the date of termination (including, if applicable, the rights to remedies).

	7.	 	The seller’s warranties and other matters

7.1 The Seller warrants to the Buyer in the terms of the New Warranties. The
New Warranties shall be deemed to have been repeated at Completion by the
Seller to the Buyer by reference to the facts and circumstances then
subsisting.

7.2 The Seller’s liability shall be limited or excluded, as the case may be,
if, but only to the extent that, the limitations or exclusions set out in
Schedule 3 apply.

Page 10

 

7.3 Each warranty in Schedule 2 is to be construed independently and separately
and is not limited by a provision of this Agreement or another Warranty.

7.4 If the Buyer has a valid claim under the Warranties, the Tax Deed or the
Indemnities, the parties agree that the aggregate liability of RSA set out in
paragraph 1.2 of Schedule 4 of the Original SPA (the Original Cap) shall be
increased as set out in clause 7.5, but subject to the limitations under the
Original SPA.

7.5 If the Buyer has a right to claim amounts from the Seller in respect of
valid claims under the Warranties, the Tax Deed or the Indemnities and the
amount of the Buyer’s loss or claim (calculated subject to the same principles
and limitations mutatis mutandis as under the Original SPA or Tax Deed, as
appropriate) in respect of all claims exceeds 25% of the Original Cap, the
Buyer will be entitled to recover the amount of its loss or claim from the
Seller, (subject to the same principles and limitations as aforesaid), up to a
maximum aggregate amount of US$7,500,000 in respect of all such claims.

7.6 The limitation in clause 20.1, 20.8 and 21.1 of the Original SPA whereby
the “Sellers” covenant or indemnify the “Buyers” up to 89.9% of the relevant
amounts shall be increased as between the Buyer and the Seller only, but not
against any other person, so that the Buyer shall be entitled to claim from the
Seller such additional amounts under clauses 20 and 21 of the Original SPA as
could have been claimed by the Buyers from the “Sellers” had the figure “89.9%”
been replaced by “95%”.

7.7 The limitation in clause 2 of the Tax Deed whereby the “Sellers” agree to
pay the “Buyers” 89.9% of the relevant amounts, liabilities or losses shall be
increased as between the Buyer and the Seller only, but not against any other
person, so that the Buyer shall be entitled to claim from the Seller such
additional amounts under the Tax Deed as could have been claimed by the
“Buyers” from the “Sellers” had the figure of 89.9% in clause 2 of the Tax Deed
been replaced in each case where it appears in that clause by “95%”.

7.8 This clause 7 is not a variation of the Original SPA or the Tax Deed.

7.9 The Seller undertakes to each Group Company that it:

	(a)	 	does not have any rights against; and
	 
	(b)	 	may not make any claim against,

any employee, director, agent or officer of any Group Company on whom it may
have relied before agreeing to any term of, or entering into, this Agreement or
any other agreement or document referred to herein (save in relation to any
right or claim arising from wilful default or a fraudulent act or omission).

	8.	 	The buyer’s remedies

8.1 Notwithstanding that the Buyer becomes aware at any time after execution of
this Agreement, whether before or after Completion:

	(a)	 	of a fact or circumstance which gives rise to or which would or might
give rise to a claim under the New Warranties;

Page 11

 

	(b)	 	that there has been a breach of any New Warranty or any other provision
of this Agreement; or
	 
	(c)	 	that there may be a claim against the Seller under any representation,
statement, assurance, covenant, undertaking, indemnity, guarantee or
commitment given by or on behalf of the Seller in connection with this
Agreement,

the Buyer shall not, save as provided in clause 6, be entitled to rescind this
Agreement or treat this Agreement as terminated and, accordingly, the Buyer
waives all and any rights of rescission and/or termination they may have in
respect of any such matter (howsoever arising or deemed to arise), other than
those provided in clause 6 and any such rights in respect of fraud or wilful
non-disclosure.

	9.	 	The buyer’s warranties
	 
	9.1	 	The Buyer warrants to the Seller that:
	 
	(a)	 	it has the requisite capacity, power and authority, and has taken all
action necessary, to execute, deliver and perform its obligations under
this Agreement;
	 
	(b)	 	its obligations under this Agreement and the Buyer’s Completion Documents
are, or when the relevant Buyer’s Completion Document is executed will be,
enforceable in accordance with their respective terms;
	 
	(c)	 	the execution and delivery of, and the performance by it of its
obligations under, this Agreement and the Buyer’s Completion Documents
will not:

	 	(i)	 	result in a breach of any provision of its by-laws;
	 
	 	(ii)	 	result in a breach by it of, or constitute a
default by it under, any instrument to which it is a party or
by which it is bound and which is material in the context of
the transactions contemplated by this Agreement;
	 
	 	(iii)	 	result in a breach by it of any order, judgment or
decree of any court or governmental agency to which it is a
party or by which the Buyer is bound or submits and which is
material in the context of the transactions contemplated by
this Agreement; or
	 
	 	(iv)	 	save for any consent, approval, notice or
registration which would be required in order to satisfy the
Condition in clause 4.1(b), require it to obtain any consent or
approval of, or give any notice to or make any registration
with, any governmental or other regulatory authority which has
not been obtained or made at the date hereof both on an
unconditional basis and on a basis which cannot be revoked
(save pursuant to any legal or regulatory entitlement to revoke
the same other than by reason of any misrepresentation or
misstatement) to the extent such consent, approval, notice or
regulation is material in the context of the transaction
contemplated by this Agreement.

Page 12

 

	9.2	 	The Buyer’s warranties in clause 9.1 shall be deemed to have been
repeated at Completion by the Buyer to the Seller by reference to the
facts and circumstances then subsisting.
	 
	10.	 	Fitzwilliam lease

The limitation in clause 23.3 of the Original SPA whereby Converium’s “Relevant
Percentage” is stated to be “25%” shall be increased as between the Buyer and
the Seller only, but not against any other person, so that the Seller shall be
entitled to claim from the Buyer such additional amounts under clause 23 of the
Original SPA as could have been claimed by it from the Converium had the figure
“25%” been replaced by “30.1%”.

	11.	 	Deferred consideration

The Buyer shall pay to the Seller:

	(a)	 	an amount equal to 5.1 per cent of the 2003 Relevant Profit determined as
set out in Schedule 4, such amount to be paid in cash on the First Payment
Date;
	 
	(b)	 	an amount in respect of the Profit Commission received by the Agents
under the First Pool Members Agreement in respect of the First Period,
such amount to be determined as set out in Schedule 5 and paid in cash on
the Second Payment Date or, if the circumstances in paragraph 1.4 of
Schedule 5 apply, in whole or in part at a time or times thereafter, as
provided for in such paragraph;
	 
	(c)	 	an amount in respect of the Profit Commission received by the Agents
under the First Pool Members Agreement in respect of the Second Period,
such amount to be determined as set out in Schedule 5 and paid in cash on
the Third Payment Date or, if the circumstances in paragraph 1.4 of
Schedule 5 apply, in whole or in part at a time or times thereafter, as
provided for in such paragraph; and
	 
	(d)	 	an amount in respect of the Profit Commission received by the Agents
under the Second Pool Members Agreement in respect of the Third Period,
such amount to be determined as set out in Schedule 5 and paid in cash on
the Fourth Payment Date or, if the circumstances in paragraph 1.4 of
Schedule 5 apply, in whole or in part at a time or times thereafter, as
provided for in such paragraph.
	 
	12.	 	Conduct of business between completion and the fourth payment date

12.1   The Buyer undertakes to the Seller that, during the period between
Completion and the Fourth Payment Date:

	(a)	 	it shall not, and shall use its reasonable endeavours to procure that no
member of the Buyer’s Group shall and that no member of the Group shall,
take steps, or cause steps to be taken, where the main intention of taking
such steps or causing such steps to be taken is to materially adversely
affect the amount of Deferred Consideration; and

Page 13

 

	(b)	 	it shall not, and shall use its reasonable endeavours to procure that no
member of the Group or of the Buyer’s Group shall, take steps, or cause
steps to be taken, where the Buyer is aware that the effect of taking such
steps or causing such steps to be taken is to materially adversely affect
the amount of Deferred Consideration provided always that at any time
during such period, the Buyer shall not be required to use reasonable
endeavours to procure that any member of the Group shall allocate costs,
expenses or liabilities other than in accordance with its normal practice
at such time or otherwise act in a way which is inconsistent with its
normal business practice or its obligations under any applicable laws and
existing contractual agreements at such time.

12.2 Prior to the Fourth Payment Date, save with the prior written consent of
the Seller (such consent not to be unreasonably withheld or delayed), the Buyer
will not take steps, nor will it procure that steps are taken, to wind up the
Agents (or either of them) or cause the Agents (or either of them) to cease
carrying on any material part of its business, save where an Agent is unable to
pay its debts (for the purposes of section 123 of the Insolvency Act 1986) or
the directors of an Agent, acting in good faith, reasonably consider it their
duty to cause such winding-up or cessation.

	13.	 	Confidential information

13.1 Subject to clause 13.2 and clause 14, the Seller undertakes to the Buyer
(for the Buyer’s own benefit and as agent and trustee for each Buyer’s Group
Undertaking) and the Buyer undertakes to the Seller (for the Seller’s own
benefit and as agent and trustee for each Seller’s Group Undertaking), that it
shall (and, in the case of the Seller, that it shall procure that each Seller’s
Group Undertaking shall, and, in the case of the Buyer, that it shall procure
that each Buyer’s Group Undertaking shall) treat as confidential and shall not
use or disclose to any other person all information received or obtained as a
result of entering into or performing this Agreement which relates to:

	(a)	 	the other party including, where that other party is the Seller, the
Seller’s Group and where that other party is the Buyer, the Buyer’s Group;
	 
	(b)	 	the provisions or the subject matter of this Agreement or any document
referred to herein and any claim or potential claim thereunder; or
	 
	(c)	 	the negotiations relating to this Agreement or any documents referred to
herein.

13.2 Clause 13.1 does not apply to disclosure of any such information as is
referred to in this clause 13.2:

	(a)	 	which is required to be disclosed by law or for the purpose of any
judicial proceedings, by a rule of a listing authority or stock exchange
to which any party is subject or submits or by a governmental authority or
other authority with relevant powers to which any party is subject or
submits, whether or not the requirement has the force of law provided that
the disclosure shall, so far as is practicable, be made after consultation
with the other party and after taking into account the other party’s
reasonable requirements as to its timing, content and manner of making or
despatch;

Page 14

 

	(b)	 	to the extent required by, or necessary in the opinion of that party for,
any securities exchange or regulatory or governmental body or Tax
Authority to which any Seller’s Group Undertaking or Buyer’s Group
Undertaking is subject, wherever situated;
	 
	(c)	 	to an adviser for the purposes of advising in connection with the
transactions contemplated by this Agreement provided that such disclosure
is necessary or desirable for these purposes and is on the basis that
clause 13.1 applies to the disclosure by the adviser;
	 
	(d)	 	to any director, officer or employee of the Buyer or the Buyer’s Group or
of a Seller’s Group Undertaking whose function requires him to have the
relevant confidential information;
	 
	(e)	 	to the extent that the information has been made public other than
through breach of this Agreement;
	 
	(f)	 	to any connected company (as defined in clause 15.1) of any party in
connection with any assignment permitted under clause 15.1;
	 
	(g)	 	to the extent confidential information (as such term is defined in clause
8.7 of the First Pool Members Agreement) is required or permitted to be
disclosed under the provisions of clause 8 (Confidentiality) of the First
Pool Members Agreement;
	 
	(h)	 	to the extent confidential information (as such term is defined in clause
16.8 of the Second Pool Members Agreement) is required or permitted to be
disclosed under the provisions of clause 16 (Confidentiality) of the
Second Pool Members Agreement.

13.3 The restrictions contained in this clause shall continue to apply without
limit in time and whether or not this Agreement is terminated.

	14.	 	Announcements

14.1 Subject to clause 14.2, no party may, before or after Completion, make or
send a public announcement, communication or circular concerning the
transactions referred to in this Agreement unless it has first obtained the
other party’s written consent, which may not be unreasonably withheld or
delayed.

14.2 Clause 14.1 does not apply to a public announcement, communication or
circular:

	(a)	 	required by law, by a rule of a listing authority or stock exchange to
which either party is subject or submits or by a governmental authority or
other authority with relevant powers to which any party is subject or
submits, whether or not the requirement has the force of law provided that
the public announcement, communication or circular shall, so far as is
practicable, be made after consultation with the other parties and after
taking into account the other party’s reasonable requirements as to its
timing, content and manner of making or despatch; or

Page 15

 

	(b)	 	which the other party has given its prior written approval to, such
approval not to be unreasonably withheld or delayed.

14.3 The provisions of this clause shall remain in full force and effect
notwithstanding the termination of this Agreement and each party to this
Agreement shall remain bound by the provisions of this clause for a period of
five years from Completion.

	15.	 	Assignment

15.1 A party may, without the consent of the other party, assign to a connected
company the benefit of all or any or any part of any other party’s obligations
to it under this Agreement and/or any benefit arising under or out of this
Agreement provided however that such assignment shall not be absolute but shall
be expressed to have effect only for so long as the assignee remains a
connected company. For the purposes of this clause 15.1, connected company
means, for the Seller, any Seller’s Group Undertaking and, for the Buyer, any
Buyer’s Group Undertaking.

15.2 No party shall assign, transfer, declare a trust of the benefit of or in
any other way alienate any of its rights under this Agreement whether in whole
or in part to a company which is not a connected company without the consent in
writing of the other party.

15.3 A party shall, following an assignment under clauses 15.1 and 15.2, notify
the other party within 14 days of such an assignment.

	16.	 	Costs

Each party shall pay its own legal, accountancy and other costs and expenses
relating to the negotiation, preparation, execution and performance by it of
this Agreement and of each document referred to in it.

	17.	 	Withholding tax and grossing up

17.1 Each party shall pay all sums payable by it under this Agreement free and
clear of all deductions or withholdings unless the law requires a deduction or
withholding. If a deduction or withholding is so required and except in the
case of interest payments the relevant party shall pay such additional amount
as will ensure that the net amount the payee receives equals the full amount
which it would have received had the deduction or withholding not been
required.

17.2 If any Tax authority brings any sum paid by the Seller pursuant to this
Agreement into charge to Tax (other than interest but including any
circumstances where any Relief is available in respect of such charge to Tax)
then the Seller shall pay such additional amount as will ensure that the total
amount paid, less the Tax chargeable on such amount (or that would be so
chargeable but for such Relief) is equal to the amount that would otherwise be
payable under this Agreement.

Page 16

 

	18.	 	Entire agreement

18.1 Each party on behalf of itself and as agent for each of its Related
Persons acknowledges and agrees with the other party (acting on behalf of
itself and as agent for each of its Related Persons) that:

	(a)	 	this Agreement and each document referred to in the Agreement constitutes
the entire agreement between the parties relating to the sale of the RSA
Shares;
	 
	(b)	 	neither it nor any of its Related Persons has relied on or been induced
to enter into this Agreement or any document referred to in it in reliance
upon nor has any such party been given any warranty, representation,
statement, assurance, covenant, undertaking, indemnity, guarantee or
commitment (whether contractual or otherwise) other than as expressly set
out in this Agreement or any document referred to herein.

18.2 In relation to the sale of the RSA Shares, no party is liable to any other
party (in equity, contract or tort (including negligence), under the
Misrepresentation Act 1967 or in any other way) for a representation,
statement, assurance, covenant, undertaking, indemnity, guarantee or commitment
(whether contractual or otherwise) that is not set out in this Agreement or any
document referred to in it including the Original SPA.

18.3 Nothing in this clause 18 shall have the effect of limiting or restricting
any liability arising as a result of any fraud including, without limitation,
fraudulent concealment.

	19.	 	Third party rights

19.1 Subject to this clause and to clause 7.9, a person who is not a party to
this Agreement has no right under the Contracts (Rights of Third Parties) Act
1999 (the Third Parties Act) to enforce any term of this Agreement but this
does not affect any right or remedy of a third party which exists or is
available apart from the Third Parties Act.

19.2 Any employee, director, agent or officer of any Group Company referred to
in clause 7.9 (each a Third Party) may enforce the terms of clause 7.9, subject
to and in accordance with this clause and clause 23 and the provisions of the
Third Parties Act.

19.3 The parties to this Agreement do not require the consent of any Third
Party to vary or, to the extent they may do so, rescind or terminate this
Agreement.

19.4 If a Third Party brings proceedings to enforce the terms of clause 7.9,
then, in addition to the defences, set-offs and counterclaims available to it
by virtue of sections 3(2) and 3(4) of the Third Parties Act, the Seller shall
have available to them by way of defence or set-off any matter that would have
been available by way of defence or set-off if the proceedings had been brought
by the Buyer.

19.5 If the Seller is in breach of clause 7.9 the Buyer may not recover from
the Seller any sum in respect of a Third Party’s loss arising from that breach
or the expense to the Buyer of making good to a Third Party the default of the
Seller.

Page 17

 

19.6 No Third Party may assign or transfer or purport to assign or transfer a
right to enforce clause 7.9 under the Third Parties Act without having first
obtained the parties’ written consent.

19.7 No Third Party may take proceedings to enforce clause 7.9 of this
Agreement unless and until it gives notice in writing to the Seller agreeing
irrevocably to the provisions of clause 22.

	20.	 	General

20.1 A variation of this Agreement is valid only if it is in writing and signed
by or on behalf of each party to it. The expression variation shall include any
variation, supplement, deletion or replacement however effected.

20.2 The failure to exercise or delay in exercising a right or remedy provided
by this Agreement or by law does not impair or constitute a waiver of the right
or remedy or an impairment of or a waiver of other rights or remedies. No
single or partial exercise of a right or remedy provided by this Agreement or
by law prevents further exercise of the right or remedy or, the exercise of
another right or remedy.

20.3 Each of the Seller’s rights and remedies contained in this Agreement are
cumulative, may be exercised as often as the Seller considers appropriate and
are not exclusive of rights or remedies provided by law.

20.4 Each of the Buyer’s rights and remedies contained in this Agreement are
cumulative, may be exercised as often as the Buyer considers appropriate and
are not exclusive of rights or remedies provided by law.

20.5 Except to the extent that they have been performed and except where this
Agreement provides otherwise, the obligations contained in this Agreement
remain in force after Completion.

20.6 If a party fails to pay a sum due from it under this Agreement on the due
date of payment in accordance with the provisions of this Agreement, that party
shall pay interest on the overdue sum from the due date of payment until the
date on which its obligation to pay the sum is discharged at a rate of 2% above
the Agreed Rate for the currency in which the debt is denominated (accrued
daily and compounded monthly).

20.7 Any payment made by the Seller to the Buyer in respect of a claim pursuant
to the New Warranties or clauses 7.4 to 7.7 shall be treated by the Buyer and
the Seller as a reduction in the consideration paid for the RSA Shares pursuant
to this Agreement .

20.8 Save as otherwise provided herein, any payment to be made by any party
under this Agreement shall be made in full without any set-off, restriction,
condition or deduction for or on account of any counterclaim (including any
set-off under any contract with a member of the Seller’s Group).

20.9 If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable under the laws of any jurisdiction, that shall not
affect:

Page 18

 

	(a)	 	the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
	 
	(b)	 	the legality, validity or enforceability under the law of any other
jurisdiction of that or another provision of this Agreement.

20.10 This Agreement may be executed in any number of counterparts, each of
which when executed and delivered is an original and all of which together
evidence the same agreement.

20.11 Following Completion the Seller shall from time to time forthwith upon
request from the Buyer at the Seller’s expense do or procure the doing of all
acts and/or execute or procure the execution of all such documents in a form
reasonably satisfactory to that Buyer for the purpose of vesting in the Buyer
the full legal and beneficial title to the RSA Shares and otherwise giving the
Buyer the full benefit of this Agreement.

	21.	 	Notices

21.1 A notice or other communication under or in connection with this Agreement
(a Notice) shall be:

	(a)	 	in writing;
	 
	(b)	 	in the English language; and
	 
	(c)	 	delivered personally or sent by first class post pre-paid recorded
delivery (and air mail if overseas) to the party due to receive the Notice
to the address set out in clause 21.3 or to another address, person or fax
number specified by that party by not less than seven days’ written notice
to the other parties received before the Notice was despatched.

21.2 Unless there is evidence that it was received earlier, a Notice is deemed
given if:

	(a)	 	delivered personally, when left at the address referred to in clause
21.1(c);
	 
	(b)	 	sent by mail, except air mail, two Business Days after posting it;
	 
	(c)	 	sent by air mail, six Business Days after posting it; and
	 
	(d)	 	sent by fax, when confirmation of its transmission has been recorded by
the sender’s fax machine.

21.3 The address referred to in clause 21.1(c) is:

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Marked for the
	Name of party	 	Address	 	Fax No.	 	attention of
	
	 	
	 	
	 	

	RSA	 	
St. Mark’s Court
	 	00 44 207 569 6607
	 	Company Secretary
	 	 	
Chart Way	 	 	 	 
	 	 	
Horsham	 	 	 	 
	 	 	
West Sussex	 	 	 	 

Page 19

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Marked for the
	Name of party	 	Address	 	Fax No.	 	attention of
	
	 	
	 	
	 	

	 	 	
RH12 1XL	 	 	 	 
	 	 	 	 	 	 	 
	Converium	 	
General Guisan-Quai
	 	00 41 1 639 9066
	 	Chris Bell/
	 	 	
26
	 	 	 	Christian Felderer
	 	 	
8022 Zürich	 	 	 	 
	 	 	
Switzerland	 	 	 	 

21.4 Any notice given under this Agreement outside Working Hours in the place
to which it is addressed shall be deemed not to have been given until the start
of the next period of Working Hours in such place.

	22.	 	Governing law and jurisdiction

22.1 This Agreement is governed by English law.

22.2 The courts of England have exclusive jurisdiction to settle any dispute
arising from or connected with this Agreement (a Dispute) save that this clause
22.2 shall not apply in relation to proceedings commenced to enforce a
judgment.

22.3 The parties agree that the courts of England are the most appropriate and
convenient courts to settle any Dispute and, accordingly, that they will not
argue to the contrary.

22.4 The parties agree that the documents which start any Proceedings and any
other documents required to be served in relation to those Proceedings may be
served on any party in accordance with clause 21. These documents may, however,
be served in any other manner allowed by law. This clause applies to all
Proceedings wherever started.

Page 20

 

IN WITNESS of which this agreement has been executed and delivered as a deed on
the date which first appears on page 1 of this agreement:

	 	 	 	 	 	 	 
	Executed as a deed by	 	 	 	)	 	 
	ROYAL & SUN ALLIANCE	 	 	 	)	 	 
	INSURANCE PLC	 	 	 	)	 	 
	acting by its duly appointed attorney	 	 	 	)	 	 
	in the presence of:	 	 	 	)	 	(Signature of attorney)
	 	 	 	 	 	 	 
	Witness’s signature:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Name (print):	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Occupation:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Address:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Executed as a deed by	 	 	 	)	 	 
	CONVERIUM AG	 	 	 	)	 	 
	acting by Chris Bell and Benjamin Gentsch	 	 	 	)	 	 
	who in accordance	 	 	 	)	 	 
	with the laws of Switzerland are	 	 	 	)	 	 
	acting under the authority of	 	 	 	)	 	 
	Converium AG	 	 	 	)	 	(Authorised signatories)

Page 21

 

SCHEDULE 1

COMPLETION REQUIREMENTS

	1.	 	Seller’s obligations
	 
	1.1	 	At Completion the Seller shall deliver to the Buyer:
	 
	(a)	 	a duly executed transfer in respect of the RSA Shares in favour of the
Buyer or its nominee(s) (subject to written notification to the Seller not
less than two days before Completion) along with the share certificate(s)
for the RSA Shares (or an indemnity in lieu thereof in a form reasonably
acceptable to the Buyer);
	 
	(b)	 	as evidence of the authority of each person executing a document referred
to in this Schedule on the Seller’s behalf:

	 	(i)	 	a copy of the minutes of a duly held meeting of the
directors of the Seller (or a duly constituted committee
thereof) authorising the execution by the Seller of the
document and, where such execution is authorised by a committee
of the board of directors of the Seller, a copy of the minutes
of a duly held meeting of the directors constituting such
committee or a relevant extract thereof; or
	 
	 	(ii)	 	a copy of a power of attorney conferring the
authority,

	 	 	in each case certified to be true and complete and that it has not been
revoked or superseded by a director or the secretary of the Seller;
	 
	(c)	 	an irrevocable power of attorney in the agreed form duly executed by RSA
in favour of the Buyer or its nominee(s) in respect of the RSA Shares;
	 
	(d)	 	the Seller shall deliver to the Buyer a resignation from the board of
each Group Company of which such person is a director in the agreed form
from David Reeves; and
	 
	(e)	 	an assignment in the agreed form of the RSA Loan duly executed by the
Seller (if the Company does not execute the assignment in the agreed form
at or prior to Completion, the agreed form shall be amended to remove the
Company as a party).
	 
	2.	 	Buyer’s obligations
	 
	2.1	 	At Completion the Buyer shall:
	 
	(a)	 	deliver to the Seller as evidence of the authority of each person
executing a document referred to in this Schedule on the Buyer’s behalf:

	 	(i)	 	a copy of the minutes of Converium Holding Limited
in the agreed form); or
	 
	 	(ii)	 	a copy of a power of attorney conferring the
authority,

Page 22

 

	 	 	in each case certified to be true and complete (or a true and complete
extract) and that it has not been revoked or superseded by a director or
secretary of the Buyer;
	 
	(b)	 	pay to the Seller by way of CHAPS or SWIFT the Initial Consideration and
the amount due under clause 5.1(a); and
	 
	(c)	 	countersign the assignment referred to in paragraph 1.1(e) of this
schedule (if the Company does not execute the assignment in the agreed
form at or prior to Completion, the agreed form shall be amended to remove
the Company as a party) and pay to the Seller by way of CHAPS or SWIFT the
consideration for such assignment.

2.2 Unless otherwise specified by the Seller not less than 2 Business days
prior to Completion, payments due to RSA at Completion shall be made to RSA’s
“RSAIPLC - Global Risks Reinsurance USD” account at HSBC Bank plc, of 27-32
Poultry, London, PO Box 181, EC2P 2BX, Sort Code: 40-05-15, Account No:
35729639.

Page 23

 

SCHEDULE 2

SELLER’S WARRANTIES

	1.	 	Capacity and authority
	 
	1.1	 	Capacity, power, authority and action
	 
	(a)	 	The Seller has the requisite capacity, power and authority and has taken
all action necessary, to execute, deliver and exercise its rights, and
perform its obligations under this Agreement and each document to be
executed by the Seller at or before Completion.
	 
	(b)	 	Save for any consent, approval, notice or registration which would be
required in order to satisfy the Condition in clause 4.1(b), the Seller
has obtained all applicable governmental, statutory, regulatory or other
consents, licences, waivers or exemptions to empower it to enter into and
perform its obligations under this Agreement.
	 
	1.2	 	Binding agreements

The Seller’s obligations under this Agreement and each document to be executed
by the Seller at or before Completion are, or when the relevant document is
executed will be, enforceable in accordance with their respective terms.

	1.3	 	No Breach

The execution and delivery of, and the performance by the Seller of its
obligations under this Agreement and any other documents to be executed by the
Seller pursuant to or in connection with this Agreement will not:

	(a)	 	result in a breach of any provision of the memorandum or articles of the
Seller; or
	 
	(b)	 	result in a breach by it of any order, judgement or decree of any court
or governmental agency to which the Seller is a party or by which the
Seller is bound which is material in the context of the transactions
contemplated by this Agreement; or
	 
	(c)	 	save for any consent, approval, notice or registration which would be
required in order to satisfy the Condition in clause 4.1(b), require the
Seller to obtain any consent or approval of, or give any notice or make
any registration with, any governmental or other regulatory authority or
person which has not been obtained or made at the date hereof both on an
unconditional basis and on a basis which cannot be revoked (save pursuant
to any legal or regulatory entitlement to revoke the same other than by
reason of any misrepresentation or misstatement) to the extent such
consent, approval, notice or regulation is material in the context of the
transaction contemplated by this Agreement.

Page 24

 

	2.	 	RSA shares

2.1 The Seller is the sole legal and beneficial owner of the RSA Shares.

2.2 There is no Encumbrance, and, subject to the satisfaction of the Condition
set out in clause 4.1(a), there is no agreement, arrangement or obligation to
create or give an Encumbrance, in relation to any of the RSA Shares including,
without limitation, an option or right of pre-emption or conversion and the RSA
Shares are free from other third party rights of any nature whatsoever.

Page 25

 

SCHEDULE 3

LIMITATIONS ON THE SELLER’S LIABILITY

	1.	 	Limitation on quantum

RSA’s total aggregate liability in respect of all claims pursuant to the New
Warranties is limited to US$7,500,000.

	2.	 	Mitigation

Nothing in this Schedule 3 restricts or limits any Buyer’s general obligation
at law to mitigate any loss or damage which it may incur in consequence of a
matter giving rise to a Relevant Claim.

	3.	 	General

Nothing in this Schedule 3 shall have the effect of limiting or restricting any
liability of the Seller in respect of a claim based upon or arising as a result
of any fraud including, without limitation, fraudulent concealment.

Page 26

 

SCHEDULE 4

DETERMINATION OF 2003 RELEVANT PROFIT

1.1 The Buyer shall use reasonable endeavours to procure that the 2003 Accounts
are prepared by the Company and audited by 31 March 2004 (or in any event as
soon as reasonably practicable thereafter) in accordance with generally
accepted accounting principles and practices in the United Kingdom and on bases
and policies consistent in all material respects with those adopted in the
Accounts subject to any modification necessary to comply with legal, regulatory
or taxation requirements or new accounting standards.

1.2 The Buyer shall use reasonable endeavours to procure that as soon as
reasonably practicable after Completion and in any event by the date 15
Business Days after the 2003 Accounts are prepared and audited in accordance
with paragraph 1.1 of this Schedule (the Calculation Date) the Company shall
calculate the amount of the 2003 Relevant Profit based on the 2003 Accounts and
shall set out the amount payable in accordance with clause 11.2(a) on the First
Payment Date due to the Seller (along with full details of the calculation
thereof) in a certificate (the Draft Certificate) and send a copy of the Draft
Certificate to the Seller and the Buyer by no later than 5 Business Days after
the Calculation Date.

1.3 After Completion the Buyer shall use reasonable endeavours to procure that
the Company shall, in a timely manner, subject to the giving of confidentiality
undertakings reasonably acceptable to the Buyer:

	(a)	 	provide the Seller with copies of any relevant papers and/or relevant
materials which the Seller may reasonably request at the Seller’s cost;
and
	 
	(b)	 	give to the Seller and its accountants, as soon as reasonably practicable
following any request, such access during normal working hours to the
relevant records, directors, and employees of any Group Company as may
reasonably be required,

in order to verify the calculation of the amounts set out in the Draft
Certificate and any figures contained in the 2003 Accounts upon which the 2003
Relevant Profit figure is based PROVIDED THAT the obligations in this paragraph
1.3 shall not extend to any information or materials or any other matter that
is in the reasonable opinion of the Company confidential or subject to legal
privilege which would be likely to be jeopardised by disclosure.

1.4 If the Seller accepts the matters contained in the Draft Certificate and
the figures in the 2003 Accounts on which the calculation of the 2003 Relevant
Profit is based or the Seller does not elect by notice in writing to the Buyer,
within 20 Business Days of receipt of the Draft Certificate to refer the
matters for determination pursuant to paragraph 1.5, then the Draft Certificate
and the amount payable to the Seller under clause 11.2(a) as set out in such
certificate shall be final and binding upon the Buyer and the Seller.

Page 27

 

1.5 If the Seller does not agree the Draft Certificate or any of the figures in
the 2003 Accounts upon which the calculations in the Draft Certificate are
based, then the following provisions shall apply:

	(a)	 	the Seller shall within the period of 20 Business Days referred to in
paragraph 1.4 of this Schedule serve written notice on the Buyer to that
effect along with an explanation in reasonable detail of the reasons
behind such disagreement (Disagreement Notice);
	 
	(b)	 	the Buyer and the Seller shall, acting in good faith, try to settle the
matters set out in the Disagreement Notice and agree the relevant matters
within the period of 20 Business Days after the date of service of the
Disagreement Notice (the Resolution Period);
	 
	(c)	 	if the Buyer and the Seller do not reach agreement within the Resolution
Period then the Buyer or the Seller may elect, by notice in writing to the
other party, at any time after the end of the Resolution Period, to refer
the disagreement for determination by an independent firm of chartered
accounts (Independent Accountants), acting as experts and not arbitrators
and appointed by agreement between the Buyer and the Seller or, in default
of agreement within 7 days of receipt of notification of such election,
appointed by the President for the time being of the Institute of
Chartered Accountants in England and Wales (or in his absence, any
appropriate deputy) and, in that regard:

	 	(i)	 	the Seller and the Buyer shall be bound by the
terms of reference and timetable agreed with or, in default of
such agreement, imposed by the Independent Accountants; and
	 
	 	(ii)	 	the determination of the Independent Accountants
shall be final and binding upon the Buyer and the Seller in the
absence of manifest error (and if there is manifest error the
relevant matter shall be referred back to the Independent
Accountants to be re-determined);

	(d)	 	in making their determination, the Independent Accountants shall state
which of, and to what extent (if at all), those adjustments requested by
the Seller are necessary to the Draft Certificate and/or any figures from
the 2003 Accounts upon which any calculation therein is based in order
that it complies with this agreement and the Independent Accountants shall
not consider or propose any adjustments which have not been requested by
the Seller or which do not affect the Draft Certificate or any such
figures; and
	 
	(e)	 	the costs of the Independent Accountants shall be borne by the Buyer and
the Seller in such proportions as the Independent Accountants shall
determine, failing which they shall be borne in equal shares by the
parties.

Page 28

 

Draft: [1] 5 March 2004

SCHEDULE 5

DETERMINATION OF AMOUNT IN RESPECT OF

PROFIT COMMISSION DUE TO SELLER

1.1 The Buyer shall use its reasonable endeavours to procure that the Company
shall comply with the relevant provisions of the First Pool Members Agreement
relating to the calculation of the Profit Commission in respect of the First
Period or the Second Period (as the case may be) and with the relevant
provisions of the Second Pool Members Agreement relating to the calculation of
the Profit Commission in respect of the Third Period and, in respect of each
such period, the Buyer shall use reasonable endeavours to procure that the
Company shall:

	(a)	 	consult with the Seller in a reasonable timely manner in respect of the
proposed calculation of the Total Trading Return and Profit Commission in
respect of the relevant Period and, subject to the giving of
confidentiality undertakings reasonably acceptable to the Buyer, provide
copies of any relevant papers and/or relevant materials which the Seller
may reasonably request at the Seller’s cost in respect of such
calculations;
	 
	(b)	 	give the Seller reasonable notice in advance of any material discussions
with the external actuaries referred to in paragraph 1.5 of schedule 3 to
the First Pool Members Agreement relating to the calculation of the Total
Trading Return in respect of the First or Second Period or of any
discussions regarding the Audited Return to Members relating to the
calculation of the Total Trading Return in respect of the Third Period
which are material in the context of calculating the Deferred
Consideration and allow such representatives of the Seller as the Seller
may reasonably request to take part in such discussions;
	 
	(c)	 	to the extent permitted by the First Pool Members Agreement or, as
applicable, the Second Pool Members Agreement, take due and reasonable
account of the Seller’s views (including, without limitation, complying
with any reasonable requests which the Seller may make) in respect of the
calculation of the Total Trading Return and/or Profit Commission for the
relevant Period (and/or the process for agreeing the same with such
external actuaries or agreeing the same for the purposes of the Audited
Return to Members to the extent permitted by the First or Second (as
applicable) Pool Members Agreement); and
	 
	(d)	 	not agree the calculation of the Total Trading Return for the First or
Second Period with such external actuaries or determine the calculation
thereof for the Third Period without the prior written consent of the
Seller (such consent not to be unreasonably withheld or delayed).

1.2 On agreement being reached in accordance with paragraph 1.1 of this
Schedule between the Company and such external actuaries in respect of the
Total Trading Return for the First or Second Period, the Buyer shall procure
that the Company complies with the provisions of paragraph 1.6 of schedule 3 to
the First Pool Members Agreement. On determination of the Total Trading Return
for the

 

 

Third Period, the Buyer shall use its reasonable endeavours to procure that the
Company complies with the provisions of paragraph 3.3 of schedule 3 to the
Second Pool Members Agreement.

	1.3	 	The Buyer shall pay to the Seller:
	 
	(a)	 	on the Second Payment Date, an amount equal to 5.1 per cent of net Profit
Commission which has been received by the Agents by such date from or on
behalf of members of the GAUM Pool in respect of the First Period under
the First Pool Members Agreement;
	 
	(b)	 	on the Third Payment Date, an amount equal to 5.1 per cent of net Profit
Commission which has been received by the Agents by such date from or on
behalf of members of the GAUM Pool in respect of the Second Period under
the First Pool Members Agreement; and
	 
	(c)	 	on the Fourth Payment Date, an amount equal to 5.1 per cent of the net
Profit Commission which has been received by the Agents by such date from
or on behalf of members of the Second Global Aerospace Pool in respect of
the Third Period under the Second Pool Members Agreement,

where, in any case, net Profit Commission shall mean the Profit Commission so
received by the Company after deduction of any amounts in respect of taxes
payable by any member of the Group in respect of such receipt.

1.4 If, on or after the Second Payment Date, the Third Payment Date or the
Fourth Payment Date (as the case may be), there remain outstanding any amounts
in respect of Profit Commission in respect of the First Period, the Second
Period or the Third Period (as the case may be) which are payable to the Agents
under the First Pool Members Agreement by any member(s) of the GAUM Pool or
under the Second Pool Members Agreement by any member(s) of the Second Global
Aerospace Pool, and the Agents (or either of them) receives any payment in
respect of such outstanding amounts, the Buyer shall, within 10 Business Days
of such receipt, pay in cash to the Seller, an amount equal to 5.1 per cent of
such receipt after deduction of any amounts in respect of Taxes payable by any
member of the Group in respect of such receipt.

1.5 For the purposes of this Schedule 5:

	(a)	 	a reference to any Agent shall be taken to include any Subsidiary (as
such term is used in clause 2.25 of the First Pool Members Agreement or
(as the case may be clause 10 of the Second Pool Members Agreement) of
such Agent;
	 
	(b)	 	a reference to a member of the GAUM Pool shall be taken to include any
nominated company (as such term is used in clause 2.22 of the First Pool
Members Agreement) of such member and a reference to a member of the
Second Global Aerospace Pool shall be taken to include any nominated
company (as such term is used in clause 9 of the Second Pool Members
Agreement) of such member; and
	 
	(c)	 	any receipt of any amount in respect of Profit Commission from or on
behalf of any member of the GAUM Pool in respect of the First Period or
the Second

Page 30

 

	 	 	Period or any member of the Second Global Aerospace Pool in respect of
the Third Period by the Buyer or any subsidiary undertaking of the Buyer
or any Group Company other than an Agent shall be taken to be a receipt
by the Agents.

Page 31exv4w39

 

Exhibit 4.39

AGREEMENT

DATED 24th July, 2003

US$900,000,000

CREDIT FACILITY

FOR

CONVERIUM AG, ZURICH

ARRANGED BY

ABN AMRO BANK N.V.

BARCLAYS CAPITAL

COMMERZBANK AKTIENGESELLSCHAFT

London

 

 

CONTENTS

	 	 	 	 	 	 	 	 	 
	Clause	 	 	 	Page
	 	1.	 	 	Interpretation
	 	 	1	 
	 	2.	 	 	Facility
	 	 	13	 
	 	3.	 	 	Purpose
	 	 	14	 
	 	4.	 	 	Conditions Precedent
	 	 	15	 
	 	5.	 	 	Utilisation
- Letters of Credit
	 	 	15	 
	 	6.	 	 	Utilisation
- Loans
	 	 	19	 
	 	7.	 	 	Letters of Credit
	 	 	20	 
	 	8.	 	 	Optional Currencies
	 	 	23	 
	 	9.	 	 	Repayment
	 	 	26	 
	 	10.	 	 	Prepayment and Cancellation
	 	 	26	 
	 	11.	 	 	Interest
	 	 	29	 
	 	12.	 	 	Terms
	 	 	30	 
	 	13.	 	 	Market Disruption
	 	 	31	 
	 	14.	 	 	Taxes
	 	 	31	 
	 	15.	 	 	Increased Costs
	 	 	34	 
	 	16.	 	 	Mitigation
	 	 	35	 
	 	17.	 	 	Payments
	 	 	35	 
	 	18.	 	 	Guarantee and Indemnity
	 	 	37	 
	 	19.	 	 	Representations
	 	 	40	 
	 	20.	 	 	Information Covenants
	 	 	44	 
	 	21.	 	 	Financial Covenant
	 	 	47	 
	 	22.	 	 	General Covenants
	 	 	48	 
	 	23.	 	 	Default
	 	 	54	 
	 	24.	 	 	Security
	 	 	58	 
	 	25.	 	 	The Administrative Parties
	 	 	59	 
	 	26.	 	 	Evidence and Calculations
	 	 	64	 
	 	27.	 	 	Fees
	 	 	64	 
	 	28.	 	 	Indemnities and Break Costs
	 	 	65	 
	 	29.	 	 	Expenses
	 	 	66	 
	 	30.	 	 	Amendments and Waivers
	 	 	67	 
	 	31.	 	 	Changes to the Parties
	 	 	68	 
	 	32.	 	 	Disclosure of Information
	 	 	72	 
	 	33.	 	 	Set-off
	 	 	72	 
	 	34.	 	 	Pro Rata Sharing
	 	 	73	 
	 	35.	 	 	Severability
	 	 	74	 
	 	36.	 	 	Counterparts
	 	 	75	 
	 	37.	 	 	Notices
	 	 	75	 
	 	38.	 	 	Language
	 	 	76	 
	 	39.	 	 	Governing law
	 	 	77	 
	 	40.	 	 	Enforcement
	 	 	77	 

 

 

Schedules

	 	 	 	 	 	 	 	 
	1.	 	 	Original Parties
	 	 	79	 
	2.	 	 	Conditions Precedent Documents
	 	 	81	 
	3.	 	 	Form of Request
	 	 	84	 
	4.	 	 	Calculation of the Mandatory Cost
	 	 	85	 
	5.	 	 	Form of Transfer Certificate
	 	 	87	 
	6.	 	 	Form of Compliance Certificate
	 	 	88	 
	7.	 	 	Form of Accession Agreement
	 	 	89	 
	8.	 	 	Form of Resignation Request
	 	 	90	 
	9.	 	 	Forms of Letter of Credit
	 	 	91	 
	10.	 	 	Minimum Criteria for Confirming Bank Agreement
	 	 	96	 
	11.	 	 	Existing Letters of Credit
	 	 	97	 
	Signatories	 	 
	 	 	100	 

 

 

THIS AGREEMENT is dated 24th July, 2003

BETWEEN:

	(1)	 	CONVERIUM AG, ZURICH (registered number CH-170.3.024.826-2) (the
Company);
	 
	(2)	 	THE SUBSIDIARIES OF THE COMPANY listed in Schedule 1 (Original Parties)
as original borrowers (in this capacity the Original Borrowers);
	 
	(3)	 	ABN AMRO BANK N.V., BARCLAYS CAPITAL AND COMMERZBANK AKTIENGESELLSCHAFT
as arrangers (in this capacity the Mandated Lead Arrangers);
	 
	(4)	 	THE FINANCIAL INSTITUTIONS listed in Schedule 1 (Original Parties) as
original lenders (the Original Lenders); and
	 
	(5)	 	ABN AMRO BANK N.V., as facility agent (in this capacity the Facility
Agent).

IT IS AGREED as follows:

	1.	 	INTERPRETATION
	 
	1.1	 	Definitions
	 
	 	 	In this Agreement:
	 
	 	 	Accession Agreement means a letter, substantially in the form of
Schedule 7 (Form of Accession Agreement), with such amendments as the
Facility Agent and the Company may agree.
	 
	 	 	Additional Borrower means a wholly owned Subsidiary of the Company
which becomes a Borrower after the date of this Agreement.
	 
	 	 	Administrative Party means a Mandated Lead Arranger or the Facility
Agent.
	 
	 	 	Affiliate means a Subsidiary or a Holding Company of a person or any
other Subsidiary of that Holding Company.
	 
	 	 	Agent’s Spot Rate of Exchange means the Facility Agent’s spot rate
of exchange for the purchase of the relevant currency in the London
foreign exchange market with US Dollars (or, where used in the definition
of Required Security or Clause 10.3(c) (Mandatory cancellation - Rating
Event), euro or sterling, as the context so requires) at or about 11.00
a.m. on a particular day.
	 
	 	 	Approved Jurisdiction means:

	 	(a)	 	any jurisdiction within Canada, Australia or the U.S.A.;
	 
	 	(b)	 	any jurisdiction which at the date of this Agreement is
within the European Economic Area;
	 
	 	(c)	 	Labuan;
	 
	 	(d)	 	Bermuda;

1

 

	 	(e)	 	Singapore;
	 
	 	(f)	 	Poland; and
	 
	 	(g)	 	Switzerland,

	 	 	or any other jurisdiction approved by all the Lenders.
	 
	 	 	Availability Period means the period from and including the date of
this Agreement to and including the date falling one month prior to the
Final Maturity Date.
	 
	 	 	Bank means any legal entity which is recognised as such by the
banking laws in force in its country of incorporation and which exercises
as its main purpose a true banking activity, having personnel, premises
and communication devices of its own.
	 
	 	 	Borrower means the Company, an Original Borrower or an Additional
Borrower.
	 
	 	 	Break Costs means the amount (if any) which a Lender is entitled to
receive under Subclause 28.3 (Break Costs) as compensation if any part of
a Loan or overdue amount is repaid or prepaid.
	 
	 	 	Bridge Loan means a Loan made pursuant to Clause 7.3 (Claims under a
Letter of Credit).
	 
	 	 	Business Day means a day (other than a Saturday or a Sunday) on
which banks are open for general business in London and:

	 	(a)	 	if on that day a payment in or a purchase of a currency
(other than euro) is to be made, the principal financial centre of
the country of that currency; or
	 
	 	(b)	 	if on that day a payment in or a purchase of euro is to be
made, which is also a TARGET Day; and
	 
	 	(c)	 	in relation to the date for the issue of a Letter of Credit
the place of the office of the Facility Agent through which the
Letter of Credit is to be issued.

	 	 	Commitment means:

	 	(a)	 	for an Original Lender, the amount set opposite its name in
Schedule 1 (Original Parties) under the heading Commitments and the
amount of any other Commitment it acquires; and
	 
	 	(b)	 	for any other Lender, the amount of any Commitment it
acquires,

	 	 	to the extent not cancelled, transferred or reduced under this
Agreement.
	 
	 	 	Compliance Certificate means a certificate substantially in the form
of Schedule 6 (Form of Compliance Certificate) setting out, among other
things, calculations of the financial covenant.
	 
	 	 	Confirming Bank means an NAIC Approved Bank which confirms Letters
of Credit on behalf of a Lender under a Confirming Bank Agreement entered
into by it with that Lender.
	 
	 	 	

Confirming Bank Agreement means an agreement, the terms of which
comply with the criteria specified in Schedule 10 (Minimum criteria for
Confirming Bank Agreement) and are

2

 

	 	 	approved by the Company (acting reasonably), and which is entered into by
the Facility Agent, the relevant Lender and a Confirming Bank.
	 
	 	 	Converium Group means Holding and its Subsidiaries.
	 
	 	 	Credit means a Loan or a Letter of Credit.
	 
	 	 	Default means:

	 	(a)	 	an Event of Default; or
	 
	 	(b)	 	an event which would be (with the expiry of a grace period,
the giving of notice or the making of any determination under the
Finance Documents or any combination of them) an Event of Default.

	 	 	Eligible Investments means any investment in marketable obligations
denominated in either US Dollars, euro or sterling and issued or
guaranteed by a sovereign government and which have a credit rating of
AAA by S&P or Aaa by Moody’s (or, where there is a credit rating in
respect of those obligations from each such rating agency, a credit
rating of AAA and Aaa respectively).
	 
	 	 	EURIBOR means for a Term of any Loan or overdue amount in euro:

	 	(a)	 	the applicable Screen Rate; or
	 
	 	(b)	 	if no Screen Rate is available for that Term of that Loan or
overdue amount, the arithmetic mean (rounded upward to four decimal
places) of the rates as supplied to the Facility Agent at its
request quoted by the Reference Banks to leading banks in the
European interbank market,

	 	 	as of 11.00 a.m. (Central European time) on the Rate Fixing Day for
the offering of deposits in euro for a period comparable to that Term.

	 	 	euro means the single currency of the Participating Member States.

	 	 	Event of Default means an event specified as such in Clause 23
(Default).
	 
	 	 	Existing Letters of Credit means the letters of credit referred to
in Schedule 11 (Existing Letters of Credit).
	 
	 	 	Facility means the credit facility made available under this
Agreement.
	 
	 	 	Facility Office means the office(s) notified by a Lender to the
Facility Agent:

	 	(a)	 	on or before the date it becomes a Lender; or
	 
	 	(b)	 	by not less than five Business Days’ notice,

	 	 	as the office(s) through which it will perform its obligations under
this Agreement (or, as the case may be, that Lender’s relevant Affiliate
acting in accordance with Clause 2.4 (Affiliate Facility Offices)).

3

 

	 	 	Fee Letter means any letter entered into by reference to this
Agreement between one or more Administrative Parties and the Company
setting out the amount of certain fees referred to in this Agreement.
	 
	 	 	Final Maturity Date means 3rd July, 2006.
	 
	 	 	Finance Document means:

	 	(a)	 	this Agreement;
	 
	 	(b)	 	a Security Document;
	 
	 	(c)	 	a Fee Letter;
	 
	 	(d)	 	a Transfer Certificate;
	 
	 	(e)	 	an Accession Agreement; or
	 
	 	(f)	 	any other document designated as such by the Facility Agent and the
Company.

	 	 	Finance Party means a Lender or an Administrative Party.
	 
	 	 	Financial Indebtedness means any indebtedness for or in respect of:

	 	(a)	 	moneys borrowed;
	 
	 	(b)	 	any acceptance credit;
	 
	 	(c)	 	any bond, note, debenture, loan stock or other similar
instrument;
	 
	 	(d)	 	any redeemable preference share;
	 
	 	(e)	 	any agreement treated as a finance or capital lease in
accordance with GAAP;
	 
	 	(f)	 	receivables sold or discounted (unless on a non-recourse
basis);
	 
	 	(g)	 	the acquisition cost of any asset to the extent payable after
its acquisition or possession by the party liable where the deferred
payment is arranged primarily as a method of raising finance or
financing the acquisition of that asset;
	 
	 	(h)	 	any derivative transaction protecting against or benefiting
from fluctuations in any rate or price (and, except for non-payment
of an amount, the then mark to market value of the derivative
transaction will be used to calculate its amount);
	 
	 	(i)	 	any other transaction (including any forward sale or purchase
agreement) which has the commercial effect of a borrowing;
	 
	 	(j)	 	any counter-indemnity obligation in respect of any guarantee,
indemnity, bond, letter of credit or any other instrument issued by
a bank or financial institution; or
	 
	 	(k)	 	any guarantee, indemnity or similar assurance against
financial loss of any person in respect of any item referred to in
the above paragraphs.

	 	 	GAAP means generally accepted accounting principles in the U.S.A.

4

 

	 	 	Group means the Company and its Subsidiaries.
	 
	 	 	Holding means Converium Holding AG.
	 
	 	 	Holding Company of any other person, means a company in respect of
which that other person is a Subsidiary.
	 
	 	 	IBOR means LIBOR or EURIBOR.
	 
	 	 	Increased Cost means:

	 	(a)	 	an additional or increased cost;
	 
	 	(b)	 	a reduction in the rate of return from a Facility or on its
overall capital; or
	 
	 	(c)	 	a reduction of an amount due and payable under any Finance
Document,

	 	 	which is incurred or suffered by a Finance Party or any of its
Affiliates but only to the extent attributable to that Finance Party
having entered into any Finance Document or funding or performing its
obligations under any Finance Document.
	 
	 	 	Insurance Arrangement means any contract or agreement of insurance or
reinsurance, including any surety bond, contingent capital arrangement,
insurance or reinsurance securitization transaction and any other
arrangement having a similar economic effect that is entered into in the
course of the underwriting business of a member of the Converium Group
whether as cedant, reinsurer or otherwise and which constitutes, for the
purpose of the laws or regulations to which the Converium Group is
subject in any Approved Jurisdiction, insurance or reinsurance business.
	 
	 	 	LC Commission means the rate determined in accordance with Clause
7.2 (Commission in respect of Letters of Credit).
	 
	 	 	LC Series has the meaning given to it in Clause 5.4(c) (Issue of
Letter of Credit).
	 
	 	 	Lender means:

	 	(a)	 	an Original Lender; or
	 
	 	(b)	 	any person which becomes a Lender after the date of this
Agreement.

	 	 	Letter of Credit means a Multiple Lender Letter of Credit or a
Single Lender Letter of Credit or both, as the context so requires.   
	 
	 	 	LIBOR means for a Term of any Loan or overdue amount in a currency
other than euro:

	 	(a)	 	the applicable Screen Rate; or
	 
	 	(b)	 	if no Screen Rate is available for the relevant currency or
Term of that Loan or overdue amount, the arithmetic mean (rounded
upward to four decimal places) of the rates, as supplied to the
Facility Agent at its request, quoted by the Reference Banks to
leading banks in the London interbank market,

	 	 	as of 11.00 a.m. on the Rate Fixing Day for the offering of deposits
in the currency of that Loan or overdue amount for a period comparable to
that Term.

5

 

	 	 	Loan means, unless otherwise stated in this Agreement, the principal
amount of each borrowing under this Agreement or the principal amount
outstanding of that borrowing.
	 
	 	 	Majority Lenders means, at any time, Lenders:

	 	(a)	 	whose share in the outstanding Credits and whose undrawn
Commitments then aggregate 66 2/3 per cent. or more of the aggregate
of all the outstanding Credits and the undrawn Commitments of all
the Lenders;
	 
	 	(b)	 	if there is no Credit then outstanding, whose undrawn
Commitments then aggregate 66 2/3 per cent. or more of the Total
Commitments; or
	 
	 	(c)	 	if there is no Credit then outstanding and the Total
Commitments have been reduced to zero, whose Commitments aggregated
66 2/3 per cent. or more of the Total Commitments immediately before
the reduction.

	 	 	For the purposes of this definition, the share in outstanding Credits or,
as the case may be, Commitment of each Lender shall be deemed to comprise
a number of distinct shares in outstanding Credits or, as the case may
be, Commitments (corresponding to the number of Sub-participations
entered into by that Lender and in amounts corresponding to the amounts
of such participations). The Parties agree that each Lender shall be
entitled to notify the Facility Agent of each of its Sub-participant’s
directions and that Majority Lenders shall be determined accordingly.
	 
	 	 	Mandatory Cost means the cost of complying with certain regulatory
requirements, expressed as a percentage rate per annum and calculated by
the Facility Agent under Schedule 4 (Calculation of the Mandatory Cost).
	 
	 	 	Margin means at any time twice the LC Commission applicable at that
time.
	 
	 	 	Material Adverse Effect means a material adverse effect on:

	 	(a)	 	the business, condition, (financial or otherwise),
performance, assets or operations of the Group as a whole resulting
in any of the foregoing being worse than they are on the date of
this Agreement;
	 
	 	(b)	 	the ability of any Obligor to perform its payment obligations
or other material obligations under any Finance Document (including,
without limitation, the ability of the Company to comply with Clause
21 (Financial Covenant));
	 
	 	(c)	 	the validity or enforceability of any Finance Document; or
	 
	 	(d)	 	any right or remedy of a Finance Party in respect of a
Finance Document.

	 	 	Material Group means each Obligor and each Material Subsidiary.
	 
	 	 	Material Subsidiary means, at any time, a Subsidiary of the Company
whose gross assets or pre-tax profits (consolidated in the case of a
Subsidiary which itself has Subsidiaries) then equal or exceed 10 per
cent. of the gross assets or pre-tax profits of the Group.
	 
	 	 	For this purpose:

6

 

	 	(a)	 	the gross assets or pre-tax profits of a Subsidiary of the
Company will be determined from its financial statements
(consolidated if it has Subsidiaries) upon which the latest audited
financial statements of the Group have been based;
	 
	 	(b)	 	if a Subsidiary of the Company becomes a member of the Group
after the date on which the latest audited financial statements of
the Group have been prepared, the gross assets or pre-tax profits of
that Subsidiary will be determined from its latest financial
statements;
	 
	 	(c)	 	the gross assets or pre-tax profits of the Group will be
determined from its latest audited financial statements, adjusted
(where appropriate) to reflect the gross assets or pre-tax profits
of any company or business subsequently acquired or disposed of; and
	 
	 	(d)	 	if a Material Subsidiary disposes of all or substantially all
of its assets to another Subsidiary of the Company, it will
immediately cease to be a Material Subsidiary and the other
Subsidiary (if it is not already) will immediately become a Material
Subsidiary; the subsequent financial statements of those
Subsidiaries and the Group will be used to determine whether those
Subsidiaries are Material Subsidiaries or not.

	 	 	If there is a dispute as to whether or not a company is a Material
Subsidiary, a certificate of the auditors of the Company will be, in the
absence of manifest error, conclusive.
	 
	 	 	Maturity Date means the last day of the Term of a Letter of Credit
or a Loan.
	 
	 	 	Moody’s means Moody’s Investors Service Ltd.
	 
	 	 	Multiple Lender Letter of Credit means a standby letter of credit,
substantially in the form set out in Schedule 9 Part 1 (Form of Multiple
Lender Letter of Credit) together with such amendments requested by a
Borrower and agreed by the Facility Agent which would not, in the opinion
of the Facility Agent, substantively alter the nature or amount of any
Lender’s liability thereunder as the Facility Agent may agree.
	 
	 	 	NAIC means The National Association of Insurance Commissioners.
	 
	 	 	NAIC Approved Bank means, at any time, a bank named on the then
current list approved by NAIC.
	 
	 	 	Obligor means a Borrower or the Company.
	 
	 	 	Original Financial Statements means the audited consolidated
financial statements of Holding for the year ended 31st December, 2002.
	 
	 	 	Original Obligor means the Company or an Original Borrower.
	 
	 	 	Participating Member State means a member state of the European
Communities that adopts or has adopted the euro as its lawful currency
under the legislation of the European Community for Economic Monetary
Union.
	 
	 	 	Party means a party to this Agreement.
	 
	 	 	Permitted Reorganisation means an amalgamation, demerger, merger or
reorganisation (a Reorganisation) between members of the Group which
would not reasonably be expected to

7

 

	 	 	result in a Rating Event or an Event of Default and, where the
Reorganisation involves an Obligor:

	 	(a)	 	either:

	 	(i)	 	that Obligor is the surviving entity and remains
responsible for all of its obligations under the Finance
Documents; or
	 
	 	(ii)	 	if the surviving entity is not that Obligor, the
Facility Agent has first received legal opinions from external
counsel addressed to the Finance Parties, in form and
substance satisfactory to the Facility Agent (acting
reasonably), confirming that the surviving entity will accede
to the obligations of the Obligor under the Finance Documents
in full upon the Reorganisation taking effect; and

	 	(b)	 	the Reorganisation taking effect would not reasonably be
expected to have a Material Adverse Effect.

	 	 	Pro Rata Share means:

	 	(a)	 	for the purpose of determining a Lender’s share in a
utilisation of the Facility, the proportion which its Commitment
bears to the Total Commitments; and
	 
	 	(b)	 	for any other purpose on a particular date:

	 	(i)	 	the proportion which a Lender’s share of the
Credits (if any) bears to all the Credits;
	 
	 	(ii)	 	if there is no Credit outstanding on that date,
the proportion which its Commitment bears to the Total
Commitments on that date; or
	 
	 	(iii)	 	if the Total Commitments have been cancelled,
the proportion which its Commitment bore to the Total
Commitments immediately before being cancelled.

	 	 	Rate Fixing Daymeans:

	 	(a)	 	the first day of a Term for a Loan denominated in sterling;
	 
	 	(b)	 	the second Business Day before the first day of a Term for a
Loan denominated in any other currency (other than euro); or
	 
	 	(c)	 	the second TARGET Day before the first day of a Term for a
Loan denominated in euro,

	 	 	or such other day as the Facility Agent determines is generally
treated as the rate fixing day by market practice in the relevant
interbank market.

	 	 	Rating means the rating (without regard to outlook, whether positive
or negative) attributed to the Company’s issuer credit rating and insurer
financial strength rating by S&P or, if S&P does not attribute such a
rating, by A.M. Best Company or, if neither S&P nor A.M. Best Company
attribute such a rating, by Moody’s or, if none of S&P, A.M. Best or
Moody’s attribute such a rating, by such other recognised rating agency
as the Company and the Facility Agent (acting on the instructions of the
Majority Lenders) may agree.

8

 

	 	 	 	Rating Event means either:

	 
	 	(a)	 	the Rating being reduced to below A- or, where the rating of a
rating agency other than S&P is applicable, its equivalent (as
determined by the Facility Agent (acting on the instructions of the
Majority Lenders)); or
	 
	 	(b)	 	the Company ceasing to have a Rating.

	 	 	Reference Banks means the Facility Agent, Barclays Bank PLC and
Commerzbank Aktiengesellschaft and any other bank or financial
institution appointed as such by the Facility Agent under this Agreement.
	 
	 	 	Repeating Representations means the representations which are deemed
to be repeated under Clause 19.19 (Times for making representations).
	 
	 	 	Request means a request for a Credit, substantially in the form of
Schedule 3 (Form of Request) or such other form (including an electronic
form) as the Facility Agent may agree.
	 
	 	 	Required Security in respect of a Credit means:

	 	(a)	 	in the case of a Credit denominated in euro, sterling or US
Dollars:

	 	(i)	 	cash in the currency of that Credit in an amount
equal to the outstanding amount of that Credit; or
	 
	 	(ii)	 	Eligible Investments denominated in the same
currency as that Credit with a market value (as determined by
the Facility Agent (acting reasonably)) in excess of 115 per
cent. of the outstanding amount of that Credit),

	 	 	 	or a combination of the foregoing; and

	 	(b)	 	in the case of a Credit denominated in a currency other than
euro, sterling or US Dollars:

	 	(i)	 	cash in US Dollars, euro or sterling in an amount
equal to the amount of that Credit converted into US Dollars,
euro or sterling (as applicable) at the relevant Agent’s Spot
Rate of Exchange on the day the Required Security is required
to be delivered; or
	 
	 	(ii)	 	Eligible Investments denominated in US Dollars,
euro or sterling with a market value (as determined by the
Facility Agent (acting reasonably)) in excess of 115 per cent.
of the outstanding amount of that Credit converted into US
Dollars, euro or sterling (as applicable) at the relevant
Agent’s Spot Rate of Exchange on the day the Required Security
is required to be delivered,

	 	 	 	or a combination of the foregoing,
	 

	 	 	which in each case are held in a blocked account (which shall be
interest bearing in the case of paragraphs (a)(i) and (b)(i) above) with
the Facility Agent (or, in the case of Eligible Investments, with an
entity acceptable to the Facility Agent (acting reasonably)) in the name
of the Company and in relation to which the Company has executed a
security document over that account, in form and substance satisfactory
to the Facility Agent (acting reasonably) creating a first ranking
security interest over that account (and provided that any interest

9

 

	 	 	earned on such cash or Eligible Investments shall, unless a Default is
outstanding, be for the account of the Company). For these purposes the
outstanding amount of a Letter of Credit at any time is the maximum
amount that is or may be payable by the relevant Borrower in respect of
that Letter of Credit at that time.
	 
	 	 	Screen Rate means:

	 	(a)	 	for LIBOR, the British Bankers Association Interest
Settlement Rate; and
	 
	 	(b)	 	for EURIBOR, the percentage rate per annum determined by the
Banking Federation of the European Union,

	 	 	for the relevant currency and Term displayed on the appropriate page
of the Reuters screen selected by the Facility Agent. If the relevant
page is replaced or the service ceases to be available, the Facility
Agent (acting reasonably) may specify another page or service displaying
the appropriate rate.
	 
	 	 	SEC means the United States Securities and Exchange Commission.
	 
	 	 	Security means, at any time the cash and Eligible Investments held
at that time by the Facility Agent pursuant to the obligations of the
Company to provide Required Security.
	 
	 	 	Security Document means any security agreement entered into by an
Obligor and the Facility Agent or a Lender in connection with Required
Security or cash cover (as defined in Clause 7.1).
	 
	 	 	Security Interest means any mortgage, pledge, lien, charge,
assignment, hypothecation or security interest or any other agreement or
arrangement having a similar effect.
	 
	 	 	Single Lender Letter of Credit means a standby letter of credit,
substantially in the form set out in Schedule 9 Part 2 (Form of Single
Lender Letter of Credit) together with such amendments requested by a
Borrower and agreed by the Facility Agent as would not, in the opinion of
the Facility Agent, substantively alter the nature or amount of a
Lender’s liability thereunder as the Facility Agent may agree.
	 
	 	 	S&P means Standard & Poor’s, a division of the McGraw-Hill
Companies, Inc.
	 
	 	 	sterling means the lawful currency for the time being of the United
Kingdom.
	 
	 	 	Subsidiary means an entity of which a person has direct or indirect
control or owns directly or indirectly more than 50 per cent. of the
voting capital or similar right of ownership and control for this purpose
means the power to direct the management and policies of the entity
whether through the ownership of voting capital or similar rights of
ownership, by contract or otherwise.
	 
	 	 	Sub-participant means any person with whom a Lender enters into a
Sub-participation.
	 
	 	 	Sub-participation means any form of participation agreement entered
into by a Lender with respect to this Agreement where such agreement
relates to US$10,000,000 (or its equivalent) or more of that Lender’s
Commitment and/or share in the outstanding Credits.
	 
	 	 	TARGET Day means a day on which the Trans-European Automated
Real-time Gross Settlement Express Transfer payment system is open for
the settlement of payments in euro.

10

 

	 	 	Tax means any tax, levy, impost, duty or other charge or withholding
of a similar nature (including any related penalty or interest).
	 
	 	 	Tax Deduction means a deduction or withholding for or on account of
Tax from a payment under a Finance Document.
	 
	 	 	Tax Payment means a payment made by an Obligor to a Finance Party in
any way relating to a Tax Deduction or under any indemnity given by that
Obligor in respect of Tax under any Finance Document.
	 
	 	 	Term means each period determined under this Agreement:

	 	(a)	 	on a Loan or an overdue amount
is calculated; or
	 
	 	(b)	 	for which the Lenders may be under a liability under a Letter
of Credit.

	 	 	Total Commitments means the aggregate of the Commitments of all the
Lenders.
	 
	 	 	Transfer Certificate means a certificate, substantially in the form
of Schedule 5 (Form of Transfer Certificate), with such amendments as the
Facility Agent may approve or reasonably require or any other form agreed
between the Facility Agent and the Company.
	 
	 	 	U.K. means the United Kingdom.
	 
	 	 	U.S.A. means the United States of America.
	 
	 	 	Utilisation Date means each date on which the Facility is utilised.
	 
	1.2	 	Construction
	 
	(a)	 	In this Agreement, unless the contrary intention appears, a reference to:

	 	(i)	 	an amendment includes a supplement, novation, restatement or
re-enactment and amended will be construed accordingly;
	 
	 	(ii)	 	assets includes present and future properties, revenues and
rights of every description;
	 
	 	(iii)	 	an authorisation includes an authorisation, consent,
approval, resolution, licence, exemption, filing, registration or
notarisation;
	 
	 	(iv)	 	disposal means a sale, transfer, grant or other disposal,
whether voluntary or involuntary, and dispose will be construed
accordingly;
	 
	 	(v)	 	indebtedness includes any obligation (whether incurred as
principal or as surety) for the payment or repayment of money;
	 
	 	(vi)	 	a person includes any individual, company, corporation,
unincorporated association or body (including a partnership, trust,
joint venture or consortium), government, state, agency,
organisation or other entity whether or not having separate legal
personality;
	 
	 	(vii)	 	a regulation includes any regulation, rule, official
directive, request or guideline (when used in relation to a Finance
Party, whether or not having the force of law but,

11

 

	 	 	 	if not having the force of law, being of a type with which any
person to which it applies is accustomed to comply) of any
governmental, inter-governmental or supranational body, agency,
department or regulatory, self-regulatory or other authority or
organisation;
	 
	 	(viii)	 	a currency is a reference to the lawful currency for the time
being of the relevant country;
	 
	 	(ix)	 	a Default being outstanding means that it has not been
remedied or waived;
	 
	 	(x)	 	a wholly-owned subsidiary of a person shall be construed as a
reference to any company or corporation which has no shareholders
except that person and that person’s wholly-owned subsidiaries (save
by reason of directors holding qualifying shares or another person
or persons holding an immaterial amount of shares, in each case as
required by law);
	 
	 	(xi)	 	a provision of law is a reference to that provision as
extended, applied, amended or re-enacted and includes any
subordinate legislation;
	 
	 	(xii)	 	a Clause, a Subclause or a Schedule is a reference to a
clause or subclause of, or a schedule to, this Agreement;
	 
	 	(xiii)	 	a Party or any other person includes its successors in title,
permitted assigns and permitted transferees;
	 
	 	(xiv)	 	a Finance Document or another document is a reference to
that Finance Document or other document as amended;
	 
	 	(xv)	 	a time of day is a reference to London time (unless otherwise
stated); and
	 
	 	(xvi)	 	Barclays Capital is a reference to the investment banking
division of Barclays Bank PLC and shall be construed as a reference
to Barclays Bank PLC.

	 	(b)	 	Unless the contrary intention appears, a reference to a month or months
is a reference to a period starting on one day in a calendar month and
ending on the numerically corresponding day in the next calendar month or
the calendar month in which it is to end, except that:

	 	(i)	 	if the numerically corresponding day is not a Business Day,
the period will end on the next Business Day in that month (if there
is one) or the preceding Business Day (if there is not);
	 
	 	(ii)	 	if there is no numerically corresponding day in that month,
that period will end on the last Business Day in that month; and
	 
	 	(iii)	 	notwithstanding sub-paragraph (i) above, a period which
commences on the last Business Day of a month will end on the last
Business Day in the next month or the calendar month in which it is
to end, as appropriate.

	 	(c)	 	Unless expressly provided to the contrary in a Finance Document, a person
who is not a party to a Finance Document may not enforce any of its terms
under the Contracts (Rights of Third Parties) Act 1999 and,
notwithstanding any term of any Finance Document, no consent of any third
party is required for any variation (including any release or compromise
of any liability) or termination of that Finance Document.

12

 

	 	(d)	 	Unless the contrary intention appears:

	 	(i)	 	a reference to a Party will not include that Party if it has
ceased to be a Party under this Agreement;
	 
	 	(ii)	 	an amount in euro is payable only in the euro unit;
	 
	 	(iii)	 	a word or expression used in any other Finance Document or
in any notice given in connection with any Finance Document has the
same meaning in that Finance Document or notice as in this Agreement
unless otherwise specifically provided therein; and
	 
	 	(iv)	 	any obligation of an Obligor under the Finance Documents
which is not a payment obligation remains in force for so long as
any payment obligation of an Obligor is or may be outstanding under
the Finance Documents.

	 	(e)	 	References to Lenders, the share or participation of a Lender in a Credit
or the utilisation of the Facility, a Lender paying a claim under a Letter
of Credit or a Lender authorising the Facility Agent to issue a Letter of
Credit and other relevant expressions in the Finance Documents shall be
read in the light of Clause 2.4 (Affiliate Facility Offices).
	 
	 	(f)	 	The headings in this Agreement do not affect its interpretation.

	 	2.	 	FACILITY
	 
	 	2.1	 	Facility
	 
	 	 	 	Subject to the terms of this Agreement, the Lenders make available
to the Borrowers a letter of credit facility in an aggregate amount equal
to the Total Commitments. Subject to the terms of this Agreement, claims
paid under Letters of Credit may be financed by short-term cash advances
by the Lenders under the Facility.
	 
	 	2.2	 	Nature of a Finance Party’s rights and obligations
	 
	 	 	 	Unless otherwise agreed by all the Finance Parties:

	 	(a)	 	the obligations of a Finance Party under the Finance
Documents are several;
	 
	 	(b)	 	failure by a Finance Party to perform its obligations does
not affect the obligations of any other Party under the Finance
Documents;
	 
	 	(c)	 	no Finance Party is responsible for the obligations of any
other Finance Party under the Finance Documents;
	 
	 	(d)	 	the rights of a Finance Party under the Finance Documents are
separate and independent rights;
	 
	 	(e)	 	a Finance Party may, except as otherwise stated in the
Finance Documents, separately enforce those rights; and
	 
	 	(f)	 	a debt arising under the Finance Documents to a Finance Party
is a separate and independent debt.

13

 

	 	 	This Subclause shall not operate so as to limit the liability of any
Lender to the Obligors as a result of a failure by that Lender to perform
its obligations under the Finance Documents or any Letter of Credit.

	2.3	 	Nature of an Obligor’s rights and obligations
	 
	 	 	Unless otherwise agreed by all the Obligors:

	 	(a)	 	the obligations of each Obligor (other than the Company) are
several; and
	 
	 	(b)	 	no Obligor (other than the Company) is responsible for the
obligations of any other Obligor under the Finance Documents.

	 	 	This Subclause shall not prejudice or limit the rights of any
Finance Party to exercise or enforce its rights under the Finance
Documents with respect to a Default against any Obligor , irrespective of
whether that Default has arisen in relation to the Obligor against which
the Finance Party is seeking to enforce or exercise those rights.
	 
	2.4	 	Affiliate Facility Offices
	 
	(a)	 	The Affiliate (if any) of a Lender appearing under the name of that
Lender in Schedule 1 (Original Parties) or, as the case may be, referred
to in a Transfer Certificate, shall act as that Lender’s Facility Office
for the purpose of participating in Letters of Credit.
	 
	(b)	 	The Affiliate of a Lender referred to in paragraph (a) shall not have any
Commitment, but shall be entitled to all rights and benefits under the
Finance Documents relating to its participation in Letters of Credit, and
shall have the corresponding duties of a Lender in relation thereto, and
is a Party to this Agreement for those purposes.
	 
	(c)	 	A Lender which has an Affiliate appearing under its name in Schedule 1
(Original Parties), or, as the case may be, in a Transfer Certificate,
will:

	 	(i)	 	so long as the relevant Affiliate is able to do so, procure,
subject to the terms of this Agreement, that the Affiliate
participates in Letters of Credit and the payment of any claim under
any Letter of Credit in place of that Lender; and
	 
	 	(ii)	 	remain liable for the relevant obligations under the Finance
Documents in the event that the Affiliate fails to perform them.

	3.	 	PURPOSE
	 
	3.1	 	Letters of Credit
	 
	 	 	Each Letter of Credit may be issued for the collateralisation of claims
(other than claims of a member of the Converium Group) arising under
transactions which constitute, for the purpose of the laws or regulations
to which the Group is subject in any Approved Jurisdiction, insurance or
reinsurance business (provided that the aggregate amount of Credits made
in connection with the insurance business of the Group shall not at any
time exceed US$50,000,000 (or its equivalent)).
	 
	3.2	 	Loans
	 
	(a)	 	Each Bridge Loan may only be used to meet claims (as defined in Clause
7.3 (Claims under a Letter of Credit)) under Letters of Credit.

14

 

	(b)	 	Each Loan other than a Bridge Loan may only be used to repay a Bridge
Loan (and for the avoidance of doubt may not be used to repay any other
Loan other than a Bridge Loan).
	 
	3.3	 	No obligation to monitor
	 
	 	 	No Finance Party is bound to monitor or verify the purposes for
which any Letter of Credit or Loan is applied.
	 
	4.	 	CONDITIONS PRECEDENT
	 
	4.1	 	Conditions precedent documents
	 
	 	 	A Request may not be acted upon by the Facility Agent until the
Facility Agent has notified the Company and the Lenders that it has
received all of the documents and evidence set out in Part 1 of Schedule
2 (Conditions precedent documents) in form and substance satisfactory to
the Facility Agent. The Facility Agent must give this notification to
the Company and the Lenders promptly upon being so satisfied.
	 
	4.2	 	Further conditions precedent
	 
	 	 	The obligations of each Lender to participate in any Credit are
subject to the further conditions precedent that on both the date of the
Request and the Utilisation Date for that Credit:

	 	(a)	 	the Repeating Representations are correct in all material
respects; and
	 
	 	(b)	 	no Default is outstanding or would result from the Credit.

	4.3	 	Further conditions precedent - Loans
	 
	 	 	The obligations of each Lender to participate in any Loan (other
than a Bridge Loan) are subject to the further condition precedent that
on both the date of the Request and the Utilisation Date, the Required
Security for that Loan is in place.
	 
	5.	 	UTILISATION – LETTERS OF CREDIT
	 
	5.1	 	Giving of Requests
	 
	(a)	 	A Borrower may request a Letter of Credit to be issued by giving to the
Facility Agent a duly completed Request.
	 
	(b)	 	Unless the Facility Agent otherwise agrees, the latest time for receipt
by the Facility Agent of a duly completed Request is 10.00 a.m. (Central
European time) five Business Days before the proposed Utilisation Date.
	 
	(c)	 	Each Request is irrevocable.
	 
	5.2	 	Completion of Requests
	 
	 	 	A Request for a Letter of Credit will not be regarded as being duly
completed unless:

	 	(a)	 	it identifies the Borrower that is the applicant in respect
of the Letter of Credit;
	 
	 	(b)	 	it specifies that it is for Letters of Credit;

15

 

	 	(c)	 	the Utilisation Date is a Business Day falling within the
Availability Period;

	 	(d)	 	the amount of the Letter of Credit requested is:

	 	(i)	 	(other than in the case of a Letter of Credit
issued in replacement of an Existing Letter of Credit and any
subsequent replacements thereof) a minimum of US$25,000 or
such other amount as the Facility Agent and the Company may
agree; or
	 
	 	(ii)	 	the maximum undrawn amount available under the
Facility on the proposed Utilisation Date;

	 	(e)	 	the proposed currency complies with this Agreement;
	 
	 	(f)	 	it specifies the proposed beneficiary, which is operating in
an Approved Jurisdiction and it identifies whether it is for a
Multiple Lender Letter of Credit or for Single Lender Letters of
Credit;
	 
	 	(g)	 	the form of Letter of Credit is attached;
	 
	 	(h)	 	the expiry date of the Letter of Credit (or each Letter of
Credit in the LC Series) falls on or before the earlier of:

	 	(i)	 	29th December, 2006 (without prejudice to Clause
9.1 (Repayment of Letters of Credit)); and
	 
	 	(ii)	 	the date falling 364 days after the proposed
Utilisation Date; and

	 	(i)	 	the delivery instructions for the Letter of Credit are
specified.

	 	 	Only one Letter of Credit (or one LC Series) may be requested in a Request.

	5.3	 	  Renewals

	 	 	Where a Letter of Credit is, by its terms, automatically renewed or
extended on its expiry date unless cancelled, the Facility Agent will not
cancel, or give a notice of non renewal in relation to, the Letter of
Credit unless:

	 	(a)	 	the Borrower in respect of that Letter of Credit has
requested the Facility Agent to do so by no later than the third
Business Day before the last day on which the Facility Agent can,
under the terms of that Letter of Credit, give a notice of
cancellation or non-renewal;
	 
	 	(b)	 	a Default is outstanding or would result from the renewal or
extension of that Letter of Credit or a notice has been given by the
Facility Agent under Clause 10.2(c) (Mandatory prepayment - change
of control) or Clause 23.14 (Acceleration);
	 
	 	(c)	 	it would be unlawful for the Lenders in any jurisdiction to
continue to make that Letter of Credit available;
	 
	 	(d)	 	it is required to do so pursuant to Clause 34.4 (Loss
sharing); or
	 
	 	(e)	 	the expiry date of that Letter of Credit would, if renewed or
extended, fall after 29th December, 2006.

16

 

	5.4	 	 Issue of Letter of Credit
	 
	(a)	 	Subject to paragraph (b), each Letter of Credit issued will be a Multiple
Lender Letter of Credit.
	 
	(b)	 	If a Borrower notifies the Facility Agent in a Request that a beneficiary
will not accept a Multiple Lender Letter of Credit, the Facility Agent
shall instead issue to that beneficiary in accordance with this Clause 5,
Single Lender Letters of Credit with an aggregate amount equal to the
Multiple Lender Letter of Credit which would otherwise have been issued
(provided that that beneficiary has first returned to the Facility Agent
and cancelled any Multiple Lender Letter of Credit issued to it in
substitution for which the Single Lender Letters of Credit are to be
issued).
	 
	(c)	 	Each set of Single Lender Letters of Credit issued instead of a Multiple
Lender Letter of Credit to a beneficiary pursuant to paragraph (b) is an
LC Series. References in Clause 5.2 (d) to a minimum amount for a Letter
of Credit shall refer to the aggregate amount of the Single Lender Letters
of Credit in the same LC Series. The aggregate amount of Single Lender
Letters of Credit and Loans made in connection therewith shall not at any
time exceed US$75,000,000 (or its equivalent).
	 
	(d)	 	The Facility Agent must promptly notify each Lender of:

	 	(i)	 	the details of the requested Letter of Credit;
	 
	 	(ii)	 	whether the Letter of Credit is a Multiple Lender of Credit
or a Single Lender Letter of Credit;
	 
	 	(iii)	 	in the case of a Multiple Lender Letter of Credit, the
amount of its share of that Letter of Credit; and
	 
	 	(iv)	 	in the case of a Single Lender Letter of Credit, the amount
of that Letter of Credit and the aggregate amount of the Letters of
Credit in the same LC Series.

	(e)	 	The amount of each Lender’s share in a Multiple Lender Letter of Credit
will be its Pro Rata Share on the proposed Utilisation Date. The amount of
each Lender’s Single Lender Letter of Credit will be its Pro Rata Share of
the aggregate amount of all the Single Lender Letters of Credit in the
same LC Series on the proposed Utilisation Date. Where a Lender is not
able to participate in a Multiple Lender Letter of Credit or have issued
on its behalf a Single Lender Letter of Credit by reason of it not being
an NAIC Approved Bank and not having entered into a Confirming Bank
Agreement, the Commitment of that Lender shall be ignored for the purposes
of the definition of Total Commitments and the calculation of each other
Lender’s Pro Rata Share in connection with that Letter of Credit or that
LC Series.
	 
	(f)	 	No Lender is obliged to participate in any Letter of Credit (and the
Facility Agent shall not issue any Letter of Credit on its behalf) if as a
result:

	 	(i)	 	a Lender’s share in the Credits (including, for the avoidance
of doubt and without limitation, any Credits in respect of which
cash cover or Required Security has been provided) would exceed its
Commitment; or
	 
	 	(ii)	 	the Credits (including, for the avoidance of doubt and
without limitation, any Credits in respect of which cash cover or
Required Security has been provided) would exceed the Total
Commitments.

17

 

	(g)	 	If the conditions set out in this Agreement have been met, the Facility
Agent must:

	 	(i)	 	(in the case of a Multiple Lender Letter of Credit) issue the
Letter of Credit on behalf of the Lenders severally in their Pro
Rata Shares on the Utilisation Date; or
	 
	 	(ii)	 	(in the case of Single Lender Letters of Credit) issue a
Letter of Credit on behalf of each Lender in the amount determined
in accordance with paragraph (e).

	(h)	 	Each Lender irrevocably authorises the Facility Agent to issue and sign
Letters of Credit in its name and on its behalf in accordance with this
Subclause. Promptly upon the Facility Agent’s request, each Lender will
deliver to the Facility Agent such powers of attorney or other evidence of
authority as the Facility Agent or any beneficiary of a Letter of Credit
may request in connection with the Facility Agent’s authority to issue any
Letter of Credit.
	 
	5.5	 	 Loss of NAIC approval
	 
	(a)	 	If a Lender ceases after the date of this Agreement to be an NAIC
Approved Bank (in this Clause 5.5, an Affected Lender), it must promptly
inform the Company and the Facility Agent of this fact.
	 
	(b)	 	If there is an Affected Lender, it must (acting in good faith) consult
with the Company for a period not exceeding five Business Days as to the
course of action to be taken, which will be one of those set out in
paragraphs (c) and (d) below.
	 
	(c)	 	If the course of action is for the Affected Lender’s obligations under
Letters of Credit to be confirmed by a Confirming Bank:

	 	(i)	 	the Affected Lender must, in consultation with the Company
for a period not exceeding 20 Business Days, seek (acting in good
faith) to invite other financial institutions that are NAIC Approved
Banks to become a Confirming Bank in respect of the obligations of
the Affected Lender under any outstanding Letters of Credit in which
the Affected Lender has participated and any Letters of Credit that
are subsequently to be issued;
	 
	 	(ii)	 	the Facility Agent must promptly notify the Company of any
Confirming Bank Agreement;
	 
	 	(iii)	 	the Affected Lender must notify the Facility Agent (for the
Company) of any relevant matter relating to the Confirming Bank
Agreement of which it is notified; and
	 
	 	(iv)	 	unless the Affected Lender has ceased to be an NAIC Approved
Bank by reason of its own default or negligence the Company must
reimburse the Affected Lender for:

	 	(A)	 	any reasonably incurred cost (including legal
fees) of preparation and execution of the Confirming Bank
Agreement; and
	 
	 	(B)	 	any fees payable by it to the Confirming Bank
under the Confirming Bank Agreement.

	(d)	 	If the course of action is for a new Lender to be sought, the Affected
Lender must, in consultation with the Company for a period not exceeding
20 Business Days, seek (acting in good faith) to invite other financial
institutions that are NAIC Approved Banks to become a Lender in place of
the Affected Lender in accordance with Clause 31 (Changes to the Parties)
(provided that nothing in this paragraph (d) shall have the effect of
requiring an Affected Lender to effect any below par transfer of its
participation in this Agreement).

18

 

	(e)	 	An Affected Lender’s obligation under paragraph (c) or (d) to co-operate
with the Company in seeking to invite institutions consists only of
assisting the Company in identifying banks to invite, and preparing and
despatching the invitations.
	 
	(f)	 	If a Lender is not an NAIC Approved Bank at the date of this Agreement
and that Lender has entered into arrangements for its obligations under
Letters of Credit to be confirmed by a Confirming Bank which is an NAIC
Approved Bank, that Lender must notify the Facility Agent of:

	 	(i)	 	any Confirming Bank Agreement; and
	 
	 	(ii)	 	any relevant matter relating to the Confirming Bank Agreement
of which it is notified,

	 	 	and the Facility Agent shall notify the Company accordingly.
	 
	6.	 	UTILISATION - LOANS
	 
	6.1	 	Giving of Requests
	 
	(a)	 	This Subclause shall not apply to Bridge Loans.
	 
	(b)	 	A Borrower may borrow a Loan by giving to the Facility Agent a duly
completed Request.
	 
	(c)	 	Unless the Facility Agent otherwise agrees, the latest time for receipt
by the Facility Agent of a duly completed Request is 10.00 a.m. (Central
European time) one Business Day before the Rate Fixing Day for the
proposed borrowing.
	 
	(d)	 	Each Request is irrevocable.
	 
	6.2	 	Completion of Requests
	 
	 	 	A Request for a Loan will not be regarded as having been duly completed unless:

	 	(a)	 	it identifies the Bridge Loan which is to be repaid by that
Loan;
	 
	 	(b)	 	the Borrower is either (i) the Company or (ii) an Obligor of
which the Borrower of the Bridge Loan which is to be repaid by that
Loan is a Subsidiary or (iii) that Borrower;
	 
	 	(c)	 	the Utilisation Date is a Business Day falling within the
Availability Period and is the Maturity Date for the Bridge Loan
which is to be repaid by that Loan;
	 
	 	(d)	 	the amount of the Loan requested is an amount equal to the
amount of the Bridge Loan which is to be repaid by that Loan or, if
less, the maximum undrawn amount available under the Facility on the
proposed Utilisation Date.
	 
	 	(e)	 	the currency of the Loan is the same as the currency of the
Bridge Loan which is to be repaid by that Loan; and
	 
	 	(f)	 	the proposed Term complies with this Agreement.

	 	 	Only one Loan may be requested in a Request.

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	6.3	 	 Advance of Loan
	 
	(a)	 	The Facility Agent must promptly notify each Lender that participated in
the relevant Bridge Loan (or the Lender that made the relevant Bridge Loan
in the case of a Loan made in connection with a Single Lender Letter of
Credit) of the details of each Loan and (in the case of a Loan made in
connection with a Multiple Lender Letter of Credit) the amount of its
share in that Loan.
	 
	(b)	 	The amount of each such Lender’s share of a Loan made in connection with
a Multiple Lender Letter of Credit will be its Pro Rata Share on the
proposed Utilisation Date.
	 
	(c)	 	No Lender is obliged to participate in a Loan if, as a result:

	 	(i)	 	its share in the Credits (including, for the avoidance of
doubt and without limitation, any Credits in respect of which cash
cover or Required Security has been provided) would exceed its
Commitment; or
	 
	 	(ii)	 	the Credits (including, for the avoidance of doubt and
without limitation, any Credits in respect of which cash cover or
Required Security has been provided) would exceed the Total
Commitments.

	(d)	 	If the conditions set out in this Agreement have been met:

	 	(i)	 	(in the case of a Loan made in connection with a Multiple
Lender Letter of Credit) each such Lender must make its share in the
Loan; or
	 
	 	(ii)	 	(in the case of a Loan made in connection with a Single
Lender Letter of Credit) the Lender on whose behalf that Single
Letter of Credit was issued must make the amount of that Loan,

	 	 	available to the Facility Agent for the relevant Borrower through its
Facility Office on the Utilisation Date.
	 
	(e)	 	On the Utilisation Date, the Facility Agent shall apply the proceeds of
the Loan directly in repayment of the relevant Bridge Loan.
	 
	7.	 	LETTERS OF CREDIT
	 
	7.1	 	General
	 
	(a)	 	A Letter of Credit is repaid or prepaid if:

	 	(i)	 	a Borrower provides cash cover for that Letter of Credit;
	 
	 	(ii)	 	the maximum amount payable under the Letter of Credit is
reduced in accordance with its terms; or
	 
	 	(iii)	 	the Facility Agent is satisfied that no Lender has any
further liability under that Letter of Credit.

	 	 	The amount by which a Letter of Credit is repaid or prepaid under
sub-paragraphs (i) and (ii) above is the amount of the relevant cash
cover or reduction.

20

 

	(b)	 	If a Letter of Credit or any amount outstanding under a Letter of Credit
is expressed to be immediately payable, the Borrower that requested the
issue of that Letter of Credit must repay or prepay that amount
immediately.
	 
	(c)	 	Cash cover is provided for a Letter of Credit if a Borrower or the
Company on its behalf pays an amount in the currency of the Letter of
Credit to an account with a Finance Party specified by that Finance Party
in the name of the Borrower and the following conditions are met:

	 	(i)	 	the account is with the Facility Agent (if, subject as
provided below, the cash cover is to be provided for all the
Lenders) or with a Lender (if the cash cover is to be provided for
that Lender);
	 
	 	(ii)	 	until no amount is or may be outstanding under that Letter of
Credit, withdrawals from the account may only be made to pay a
Finance Party amounts due and payable to it under that Letter of
Credit or this Clause; and
	 
	 	(iii)	 	the Borrower has executed a security document over that
account, in form and substance satisfactory to the Facility Agent or
the relevant Lender (in each case acting reasonably), creating a
first ranking security interest over that account.

	 	 	Where cash cover is to be provided to all the Lenders, a Lender may
require its portion of the cash cover to be paid into its account (which
account shall be in the name of the Borrower) instead of an account with
the Facility Agent. The account will in all cases be an interest bearing
account (and the interest will be for the account of the relevant
Borrower) except in the case of cash cover provided or held after the
Facility Agent has given a notice under Clause 23.14 (Acceleration). In
determining whether a Letter of Credit has been repaid or prepaid by the
provision of cash cover, any Security comprised by Eligible Investments
shall be ignored.
	 
	(d)	 	The outstanding or principal amount of a Letter of Credit at any time is
the maximum amount that is or may be payable by the relevant Borrower in
respect of that Letter of Credit at that time.
	 
	7.2	 	 Commission in respect of Letters of Credit
	 
	(a)	 	Each Borrower must pay to the Facility Agent for each Lender a letter of
credit commission computed at the rate determined in accordance with
paragraph (b) below on the US Dollar Amount (as defined in Clause 8
(Optional Currencies)) of each outstanding Letter of Credit requested by
it (irrespective of whether or not cash cover or Required Security has
been provided for a Letter of Credit) for the period from the issue of
that Letter of Credit until its Maturity Date (the LC Commission). The LC
Commission will be distributed by the Facility Agent according to each
Lender’s Pro Rata Share, adjusted to reflect any assignment or transfer to
or by that Lender.
	 
	(b)	 	The LC Commission is determined by reference to the Rating, such that
when the Rating is that set out in Column 1 of the table below (or, where
the rating of a rating agency other than S&P is applicable, its equivalent
(as determined by the Facility Agent (acting on the instructions of the
Majority Lenders))), the LC Commission shall be the rate set out next to
that Rating in Column 2.

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	Column 1	 	Column 2
	 	 	 	LC Commission (per cent.
	Rating	 	per annum)
	A+ or above
	 	 	0.50	 
	 	A
	 	 	0.60	 
	A- or below
	 	 	0.70	 

	 	 	Any change in the LC Commission pursuant to this paragraph (b) shall
take effect from (and including) the date which is five days after the
relevant change in the Rating.
	 
	(c)	 	The Company must immediately upon becoming aware of the same notify the
Facility Agent of any change in the Rating together with details of the
new Rating. The Facility Agent will notify the Lenders of any change in
the rate of LC Commission resulting from a change in the Rating so
notified by the Company.
	 
	(d)	 	Accrued LC Commission is payable quarterly in arrear with respect to each
period ending on 31st March, 30th June, 30th September and 31st December
and shall be paid by the Borrowers within 5 Business Days of the Facility
Agent notifying the Company of the amount due.
	 
	(e)	 	Accrued LC Commission is also payable to the Facility Agent on the
Maturity Date for that Letter of Credit and on the cancelled amount of any
Lender’s Commitment at the time the cancellation is effective if that
Commitment is cancelled in full and the participation of that Lender in
the Letters of Credit is prepaid or repaid in full.
	 
	7.3	 	 Claims under a Letter of Credit
	 
	(a)	 	Each Borrower irrevocably and unconditionally authorises each Lender and
the Facility Agent to pay any claim made or purported to be made under a
Letter of Credit requested by it and which appears on its face to be in
order (a claim). Each Lender irrevocably and unconditionally authorises
the Facility Agent to pay any claim.
	 
	(b)	 	The Facility Agent shall promptly notify each Lender participating in the
relevant Letter of Credit (or the relevant Lender in the case of a Single
Lender Letter of Credit) and the relevant Borrower of the details of any
claim, the date the claim is due to be paid (the claim payment date) and
(in the case of each Lender and a Multiple Lender Letter of Credit) the
amount of its share in that claim. The amount of each such Lender’s share
of a claim under a Multiple Lender Letter of Credit will be its Pro Rata
Share on the claim payment date. Each such Lender must make its share in
the claim (or the amount of the claim in the case of a Single Lender
Letter of Credit) available to the Facility Agent through its Facility
Office on the claim payment date.
	 
	(c)	 	Unless a Borrower notifies the Facility Agent before the Lenders make a
payment consequent upon a claim stating that that Borrower wishes to
reimburse the Lenders in respect of the amount of the claim, the amount
paid by Lenders consequent on and in accordance with a claim under a
Letter of Credit shall, provided:

	 	(i)	 	the requirements of Clause 4.2 (Further conditions precedent)
are met on the claim payment date; and
	 
	 	(ii)	 	the claim payment date falls within the Availability Period,

	 	 	be deemed to be a Loan to that Borrower made on the claim payment date
(in the case of a payment under a Single Lender Letter of Credit, by the
Lender on whose behalf that Single

22

 

	 	 	Lender Letter of Credit was issued). A Loan made pursuant to paragraph
(c) above is a Bridge Loan.
	 
	(d)	 	Each Borrower must immediately on demand pay to the Facility Agent for
the relevant Lenders an amount equal to the amount of any claim unless a
Bridge Loan is borrowed.
	 
	(e)	 	Each Borrower acknowledges that each Lender and the Facility Agent:

	 	(i)	 	is not obliged to carry out any investigation or seek any
confirmation from any other person before paying a claim; and
	 
	 	(ii)	 	deals in documents only and will not be concerned with the
legality of a claim or any underlying transaction or any available
set-off, counterclaim or other defence of any person.

	(f)	 	The obligations of a Borrower under this Clause will not be affected by:

	 	(i)	 	the sufficiency, accuracy or genuiness of any claim or any
other document; or
	 
	 	(ii)	 	any incapacity of, or limitation on the powers of, any person
signing a claim or other document.

	(g)	 	References in this Subclause to a Lender paying an amount consequent on
and in accordance with a claim under a Letter of Credit shall be construed
so as to include a Lender making a payment under a Confirming Bank
Agreement to which it is party to reimburse another bank or financial
institution which has itself made a payment in respect of the relevant
claim.
	 
	7.4	 	Indemnities
	 
	 	 	Without prejudice to Clause 7.3(c) a Borrower must immediately on demand
indemnify each Lender against any loss or liability which the Lender
incurs under or in connection with:

	 	(a)	 	any Letter of Credit requested by it; and
	 
	 	(b)	 	any claim or any Bridge Loan,

	 	 	except to the extent that the loss or liability is directly caused by the
gross negligence or wilful misconduct of the Lender.
	 
	7.5	 	Rights of contribution
	 
	 	 	No Borrower will be entitled to any right of contribution or
indemnity from any Finance Party in respect of any payment it may make
under this Clause.
	 
	8.	 	OPTIONAL CURRENCIES
	 
	8.1	 	General
	 
	 	 	In this Clause:
	 
	 	 	US Dollar Amount of a Credit or part of a Credit means:

	 	(a)	 	if the Credit is denominated in US Dollars, its amount;

23

 

	 	(b)	 	if the Credit is a Loan denominated in an Optional Currency,
its equivalent in US Dollars (determined in accordance with Clause
8.3(c)) if it had first been drawn down and had remained denominated
in US Dollars, adjusted to reflect any repayment, prepayment,
consolidation or splitting of that Loan; or
	 
	 	(c)	 	if the Credit is a Letter of Credit denominated in an
Optional Currency, its equivalent in US Dollars calculated on the
basis of the Agent’s Spot Rate of Exchange three Business Days
before the Utilisation Date for that Letter of Credit, as adjusted
in accordance with clause 8.7 (Letters of Credit in Optional
Currency) at three monthly intervals.

	 	 	Optional Currency means any currency (other than US Dollars) in
which a Credit may be denominated under this Agreement.
	 
	8.2	 	Selection
	 
	(a)	 	A Borrower must select the currency of a Credit in its Request.
	 
	(b)	 	The amount of a Letter of Credit requested in an Optional Currency must
be:

	 	(i)	 	(other than in the case of a Letter of Credit issued in
replacement of an Existing Letter of Credit and any subsequent
replacements thereof) a minimum amount of the equivalent of
US$25,000 or such other amount as the Facility Agent and the Company
may agree (and in the case of Single Lender Letters of Credit,
references in this paragraph (i) to a minimum amount for a Letter of
Credit shall refer to the aggregate amount of the Single Lender
Letters of Credit in the same LC Series); or
	 
	 	(ii)	 	in relation to a Letter of Credit issued to replace an
Existing Letter of Credit and any other replacements of Letters of
Credit, the amount of the Letter of Credit replaced.

	(c)	 	Unless the Facility Agent otherwise agrees, the Credits may not be
denominated at any one time in more than six currencies.
	 
	8.3	 	 Conditions relating to Optional Currencies
	 
	(a)	 	A Credit may be denominated in an Optional Currency for a Term if:

	 	(i)	 	that Optional Currency is readily available in the amount
required and freely convertible into US Dollars in the relevant
interbank market on the Rate Fixing Day and the first day of that
Term; and
	 
	 	(ii)	 	that Optional Currency is Australian Dollars, Canadian
Dollars, euro, Singapore Dollars, sterling or Swiss Francs or has
been previously approved by the Facility Agent (acting on the
instructions of all the Lenders).

	(b)	 	If the Facility Agent has received a request from the Company for a
currency to be approved as an Optional Currency, the Facility Agent must,
within five Business Days, confirm to the Company:

	 	(i)	 	whether or not the Lenders have given their approval; and
	 
	 	(ii)	 	if approval has been given, the minimum amount (and, if
required, integral multiples) for any Credit in that currency.

24

 

	(c)	 	When a Loan is drawn down in an Optional Currency, the amount of the Loan
in that Optional Currency will be its US Dollar Amount notionally
converted into that Optional Currency at the Agent’s Spot Rate of Exchange
one Business Day before the Rate Fixing Day for the Term of that Loan.
	 
	8.4	 	Revocation of currency
	 
	(a)	 	Notwithstanding any other term of this Agreement, if before 9.30 a.m. on
any Rate Fixing Day the Facility Agent receives notice from a Lender that:

	 	(i)	 	the Optional Currency requested is not readily available to
it in the relevant interbank market in the amount and for the period
required; or
	 
	 	(ii)	 	participating in a Loan in the proposed Optional Currency
might contravene any law or regulation applicable to it,

	 	 	the Facility Agent must give notice to the Company to that effect
promptly and in any event before 11.00 a.m. on that day.
	 
	(b)	 	In this event:

	 	(i)	 	that Lender must participate in the Loan in US Dollars; and
	 
	 	(ii)	 	the share of that Lender in the Loan and any other similarly
affected Lender(s) will be treated as a separate Loan denominated in
US Dollars during that Term.

	(c)	 	Any part of a Loan treated as a separate Loan under this Subclause will
not be taken into account for the purposes of any limit on the number of
Loans or Bridge Loans or currencies outstanding at any one time.
	 
	8.5	 	 Optional Currency equivalents
	 
	(a)	 	The equivalent in US Dollars of a Credit or part of a Credit in an
Optional Currency for the purposes of calculating:

	 	(i)	 	whether any limit under this Agreement has been exceeded;
	 
	 	(ii)	 	the amount of a Credit;
	 
	 	(iii)	 	the share of a Lender in a Credit;
	 
	 	(iv)	 	the amount of any repayment of a Credit; or
	 
	 	(v)	 	the undrawn amount of a Lender’s Commitment,

	 	 	is its US Dollar Amount.
	 
	(b)	 	The rate of exchange to be used for calculating the amount in US Dollars
of any repayment or prepayment of a Loan in an Optional Currency is that
last used for determining the amount of that Loan in that Optional
Currency.

25

 

	8.6	 	 Notification
	 
	 	 	The Facility Agent must notify the Lenders and the Company of the
relevant US Dollar Amount (and the applicable Agent’s Spot Rate of
Exchange) promptly after they are ascertained.
	 
	8.7	 	Letters of Credit in Optional Currency
	 
	(a)	 	If a Letter of Credit is denominated in an Optional Currency, the
Facility Agent must at three monthly intervals after the date of this
Agreement, recalculate the US Dollar Amount of that Letter of Credit by
notionally converting the outstanding amount of that Letter of Credit into
US Dollars on the basis of the Agent’s Spot Rate of Exchange on the date
of calculation.
	 
	(b)	 	Each Borrower must, if requested by the Facility Agent within 5 days of
any calculation under paragraph (a) above, ensure that sufficient Credits
are prepaid to prevent the US Dollar Amount of the Credits under the
Facility exceeding an amount equal to 105 per cent. of the Total
Commitments following any adjustment to a US Dollar Amount under paragraph
(a) above.
	 
	9.	 	REPAYMENT
	 
	9.1	 	 Repayment of Letters of Credit
	 
	 	 	Without prejudice to Clause 7.3 and 7.4, each Borrower must repay
each Letter of Credit issued on its behalf in full on the Final Maturity
Date.
	 
	9.2	 	 Repayment of Loans

	 
	 	 	
Each Borrower must repay each Loan made to it in full on its Maturity Date.
	 
	10.	 	PREPAYMENT AND CANCELLATION
	 
	10.1	 	 Mandatory prepayment - illegality
	 
	(a)	 	A Lender must notify the Company promptly if it becomes aware that it is
unlawful in any jurisdiction for that Lender to perform any of its
obligations under a Finance Document or to fund or maintain its share in
any Credit.
	 
	(b)	 	After notification under paragraph (a) above:

	 	(i)	 	each Borrower must repay or prepay the share of that Lender
in each Credit utilised by it on the date specified in paragraph (c)
below; and
	 
	 	(ii)	 	the Commitment of that Lender will be immediately cancelled.

	(c)	 	The date for repayment or prepayment of a Lender’s share in a Credit will
be:

	 	(i)	 	the last day of the current Term of that Credit; or
	 
	 	(ii)	 	if earlier, the date specified by the Lender in the
notification under paragraph (a) above and which must not be earlier
than the last day of any applicable grace period allowed by law.

26

 

	10.2	 	Mandatory prepayment - change of control
	 
	(a)	 	For the purposes of this Clause:
	 
	 	 	a change of control occurs if:

	 	(i)	 	any person (other than Holding) or group of persons acting in
concert acquires control (directly or indirectly) of the Company or
Holding ceases to own directly or indirectly more than 50 per cent.
of the voting shares of the Company; or
	 
	 	(ii)	 	any Obligor (other than the Company) ceases to be a
wholly-owned Subsidiary (directly or indirectly) of the Company;

	 	 	acting in concert means acting together pursuant to an agreement or
understanding (whether formal or informal); and
	 
	 	 	control means the power to direct the management and policies of an
entity, whether through the ownership of voting capital, by contract or
otherwise.
	 
	(b)	 	The Company must promptly notify the Facility Agent (which shall promptly
notify the Lenders) if it becomes aware of any change of control.
	 
	(c)	 	After a change of control, if the Majority Lenders so require the
Facility Agent must, by notice to the Company:

	 	(i)	 	cancel the Total Commitments;
	 
	 	(ii)	 	declare all outstanding Credits, together with accrued
interest and all other amounts accrued under the Finance Documents,
to be immediately due and payable; and
	 
	 	(iii)	 	declare that full cash cover in respect of each Letter of
Credit is immediately due and payable.

	 	 	Any such notice will take effect in accordance with its terms.
	 
	10.3	 	Mandatory cancellation - Rating Event
	 
	(a)	 	By no later than five Business Days after the occurrence of a Rating
Event, the Company must provide Required Security in respect of all the
Credits then outstanding.
	 
	(b)	 	On the date falling five Business Days after a Rating Event:

	 	(i)	 	the undrawn Total Commitments shall be cancelled in the
amount by which the Total Commitments then exceed the amount of
Required Security actually delivered under paragraph (a) above; and
	 
	 	(ii)	 	the Borrowers must prepay the Credits in full in the amount
by which the then outstanding Credits exceed the amount of the
Required Security actually delivered under paragraph (a) above.

	(c)	 	At monthly intervals from the date on which the Company provides Required
Security under paragraph (a) above the Facility Agent shall calculate the
then value of the Security. For these purposes the Facility Agent shall
notionally convert (in whole or in part) Credits denominated in currencies
other than US Dollars, sterling or euro into the currencies in which

27

 

	 	 	the Security is then denominated at the appropriate Agent’s Spot Rate of
Exchange on the day the valuation is made.
	 
	(d)	 	If the Facility Agent determines that the value of the Security does not
then constitute Required Security in respect of all the Credits then
outstanding, the Company must within five Business Days of demand by the
Facility Agent provide such cash or Eligible Investments as the Facility
Agent shall direct to ensure that there is Required Security in respect of
all the Credits then outstanding.
	 
	10.4	 	 Voluntary prepayment
	 
	(a)	 	The Company may, by giving not less than three Business Days’ prior
notice to the Facility Agent, prepay (or ensure that a Borrower prepays)
any Loan at any time in whole or in part. Any prepayment in part shall be
applied against the participation in that Loan of the relevant Lenders pro
rata.
	 
	(b)	 	A prepayment of part of a Loan must be in a minimum amount of US$100,000,
and an integral multiple, of US$25,000.
	 
	10.5	 	 Automatic cancellation
	 
	 	 	The Commitment of each Lender will be automatically cancelled at the
close of business on the last day of the Availability Period.
	 
	10.6	 	Voluntary cancellation
	 
	(a)	 	The Company may, by giving not less than 15 Business Days’ prior notice
to the Facility Agent, cancel the unutilised amount of the Total
Commitments in whole or in part.
	 
	(b)	 	Partial cancellation of the Total Commitments must be in a minimum amount
of US$10,000,000 and an integral multiple of US$5,000,000.
	 
	(c)	 	Any cancellation in part will be applied against the Commitment of each
Lender pro rata.
	 
	10.7	 	 Involuntary prepayment and cancellation
	 
	(a)	 	If an Obligor is, or will be, required to pay to a Lender a Tax Payment
or an Increased Cost or if a Lender ceases to be an NAIC Approved Bank,
the Company may, while the requirement continues or following the relevant
loss of approval, give notice to the Facility Agent requesting prepayment
and cancellation in respect of that Lender.
	 
	(b)	 	After notification under paragraph (a) above:

	 	(i)	 	each Borrower must repay or prepay that Lender’s share in
each Credit utilised by it on the date specified in paragraph (c)
below; and
	 
	 	(ii)	 	the Commitment of that Lender will be immediately cancelled.

	(c)	 	The date for repayment or prepayment of a Lender’s share in a Credit will
be the last day of the current Term for that Credit or, if earlier, the
date specified by the Company in its notification.

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	10.8	 	 Re-borrowing
	 
	 	 	No amount of a Loan prepaid under this Agreement may subsequently be
re-borrowed.
	 
	10.9	 	Miscellaneous provisions
	 
	(a)	 	Any notice of prepayment and/or cancellation under this Agreement is
irrevocable and must specify the relevant date(s) and the affected Credits
and Commitments. The Facility Agent must notify the Lenders promptly of
receipt of any such notice.
	 
	(b)	 	All prepayments under this Agreement must be made with accrued interest
on the amount prepaid. No premium or penalty is payable in respect of any
prepayment except for Break Costs.
	 
	(c)	 	The Majority Lenders may agree a shorter notice period for a voluntary
prepayment or a voluntary cancellation.
	 
	(d)	 	No prepayment or cancellation is allowed except in accordance with the
express terms of this Agreement.
	 
	(e)	 	No amount of the Total Commitments cancelled under this Agreement may
subsequently be reinstated.
	 
	11.	 	INTEREST
	 
	11.1	 	 Calculation of interest
	 
	 	 	The rate of interest on each Loan for its Term is the percentage
rate per annum equal to the aggregate of the applicable:

	 	(a)	 	Margin;
	 
	 	(b)	 	IBOR; and
	 
	 	(c)	 	Mandatory Cost.

	11.2	 	 Payment of interest
	 
	 	 	Except where it is provided to the contrary in this Agreement, each
Borrower must pay accrued interest on each Loan made to it on its
Maturity Date.
	 
	11.3	 	Interest on overdue amounts
	 
	(a)	 	If an Obligor fails to pay any amount payable by it under the Finance
Documents, it must (unless prohibited from doing so by applicable law)
immediately on demand by the Facility Agent pay interest on the overdue
amount from its due date up to the date of actual payment, before, on and
after judgment.
	 
	(b)	 	Interest on an overdue amount is payable at a rate determined by the
Facility Agent to be one per cent. per annum above the rate which would
have been payable if the overdue amount had, during the period of
non-payment, constituted a Loan in the currency of the overdue amount.
For this purpose, the Facility Agent may (acting reasonably):

	 	(i)	 	select successive Terms of any duration of up to one month;
and

29

 

	 	(ii)	 	determine the appropriate Rate Fixing Day for that Term.

	(c)	 	Notwithstanding paragraph (b) above, if the overdue amount is a principal
amount of a Loan and becomes due and payable prior to the last day of its
current Term, then:

	 	(i)	 	the first Term for that overdue amount will be the unexpired
portion of that Term; and
	 
	 	(ii)	 	the rate of interest on the overdue amount for that first
Term will be one per cent. per annum above the rate then payable on
that Loan.

	 	 	After the expiry of the first Term for that overdue amount, the rate
on the overdue amount will be calculated in accordance with paragraph (b)
above.
	 
	(d)	 	Interest (if unpaid) on an overdue amount will, to the fullest extent
permitted by applicable law, be compounded with that overdue amount at the
end of each of its Terms but will remain immediately due and payable.
	 
	11.4	 	 Notification of rates of interest
	 
	 	 	The Facility Agent must promptly notify each relevant Party of the
determination of a rate of interest under this Agreement.
	 
	12.	 	TERMS
	 
	12.1	 	 Selection
	 
	(a)	 	Each Loan has one Term. Each Term for a Loan will start on its
Utilisation Date.
	 
	(b)	 	The Term for each Bridge Loan shall be five Business Days.
	 
	(c)	 	A Borrower must select the Term for a Loan (other than a Bridge Loan) in
the relevant Request.
	 
	(d)	 	Subject to the following provisions of this Clause, each Term for a Loan
(other than a Bridge Loan) will be one or two weeks or one month or any
other period agreed by the Company and all the Lenders.
	 
	12.2	 	 No overrunning the Final Maturity Date
	 
	 	 	If a Term for a Loan would otherwise overrun the Final Maturity
Date, it will be shortened so that it ends on the Final Maturity Date.
	 
	12.3	 	Other adjustments
	 
	 	 	The Facility Agent and the Company may enter into such other
arrangements as they may agree for the adjustment of Terms and the
consolidation and/or splitting of Loans.
	 
	12.4	 	 Notification
	 
	 	 	The Facility Agent must notify the relevant Borrower and the
relevant Lenders of the duration of each Term promptly after ascertaining
its duration.

30

 

	13.	 	MARKET DISRUPTION
	 
	13.1	 	 Failure of a Reference Bank to supply a rate
	 
	 	 	If IBOR is to be calculated by reference to the Reference Banks but
a Reference Bank does not supply a rate by 12.00 noon (local time) on a
Rate Fixing Day, the applicable IBOR will, subject as provided below, be
calculated on the basis of the rates of the remaining Reference Banks.
	 
	13.2	 	 Market disruption
	 
	(a)	 	In this Clause, each of the following events is a market disruption
event:

	 	(i)	 	IBOR is to be calculated by reference to the Reference Banks
but no, or only one, Reference Bank supplies a rate by 12.00 noon
(local time) on the Rate Fixing Day; or
	 
	 	(ii)	 	the Facility Agent receives by close of business on the Rate
Fixing Day notification from Lenders whose shares in the relevant
Loan exceed 35 per cent. of that Loan that the cost to them of
obtaining matching deposits in the relevant interbank market is in
excess of IBOR for the relevant Term.

	(b)	 	The Facility Agent must promptly notify the Company and the Lenders of a
market disruption event.
	 
	(c)	 	After notification under paragraph (b) above, the rate of interest on
each Lender’s share in the affected Loan for the relevant Term will be the
aggregate of the applicable:

	 	(i)	 	Margin;
	 
	 	(ii)	 	rate notified to the Facility Agent by that Lender as soon as
practicable, and in any event before interest is due to be paid in
respect of that Term, to be that which expresses as a percentage
rate per annum the cost to that Lender of funding its share in that
Loan from whatever source it may reasonably select; and
	 
	 	(iii)	 	Mandatory Cost.

	13.3	 	Alternative basis of interest or funding
	 
	(a)	 	If a market disruption event occurs and the Facility Agent or the Company
so requires, the Company and the Facility Agent must enter into
negotiations for a period of not more than 30 days with a view to agreeing
an alternative basis for determining the rate of interest and/or funding
for the affected Loan and any future Loan.
	 
	(b)	 	Any alternative basis agreed will be, with the prior consent of all the
Lenders, binding on all the Parties.

	14.	 	TAXES
	 
	14.1	 	 General
	 
	 	 	In this Clause:
	 
	 	 	Tax Credit means a credit against any Tax or any relief or remission
for Tax (or its repayment).

31

 

	14.2	 	Tax gross-up
	 
	(a)	 	Each Obligor must make all payments to be made by it under the Finance
Documents without any Tax Deduction, unless a Tax Deduction is required by
law.
	 
	(b)	 	If an Obligor or a Lender is aware that an Obligor must make a Tax
Deduction (or that there is a change in the rate or the basis of a Tax
Deduction), it must promptly notify the Facility Agent. The Facility
Agent must then promptly notify the affected Parties.
	 
	(c)	 	If a Tax Deduction is required by law to be made by an Obligor or the
Facility Agent, the amount of the payment due from the Obligor will be
increased to an amount which (after making the Tax Deduction) leaves an
amount equal to the payment which would have been due if no Tax Deduction
had been required.
	 
	(d)	 	If an Obligor is required to make a Tax Deduction, that Obligor must make
the minimum Tax Deduction allowed by law and must make any payment
required in connection with that Tax Deduction within the time allowed by
law.
	 
	(e)	 	Within 30 days of making either a Tax Deduction or a payment required in
connection with a Tax Deduction, the Obligor making that Tax Deduction or
payment must deliver to the Facility Agent for the relevant Finance Party
evidence satisfactory to that Finance Party (acting reasonably) that the
Tax Deduction has been made or (as applicable) the appropriate payment has
been paid to the relevant taxing authority.
	 
	(f)	 	An Obligor is not obliged to pay any additional amount under paragraph
(c) above for the account of a Finance Party in respect of any Tax
Deduction to the extent that the Tax Deduction would not have arisen but
for the failure by that Finance Party to provide (within a reasonable
period after being requested to do so by an Obligor or the Facility Agent)
any form, certificate or other documentation (i) the provision of which
would have relieved the Obligor from the relevant withholding obligation
and (ii) which is within the power of such Finance Party to provide.
	 
	14.3	 	 Tax indemnity
	 
	(a)	 	Except as provided below, each Obligor must indemnify a Finance Party
against any loss or liability which that Finance Party (in its absolute
discretion and acting in good faith) determines will be or has been
suffered (directly or indirectly) by that Finance Party for or on account
of Tax in relation to a payment received or receivable (or any payment
deemed to be received or receivable) under a Finance Document from that
Obligor.
	 
	(b)	 	Paragraph (a) above does not apply to any Tax assessed on a Finance Party
under the laws of the jurisdiction in which:

	 	(i)	 	that Finance Party is incorporated or, if different, the
jurisdiction (or jurisdictions) in which that Finance Party has a
Facility Office and is treated as resident for tax purposes; or
	 
	 	(ii)	 	that Finance Party’s Facility Office is located in respect of
amounts received or receivable in that jurisdiction,

	 	 	if that Tax is imposed on or calculated by reference to the net
income received or receivable by that Finance Party. However, any
payment deemed to be received or receivable, including any amount treated
as income but not actually received by the Finance Party, such as a Tax
Deduction, will not be treated as net income received or receivable for
this purpose.

32

 

	(c)	 	A Finance Party making, or intending to make, a claim under paragraph (a)
above must promptly notify the Company of the event which will give, or
has given, rise to the claim.
	 
	14.4	 	 Tax Credit
	 
	(a)	 	If an Obligor makes a Tax Payment and the relevant Finance Party (in its
absolute discretion but acting in good faith) determines that:
	 

	 	(i)	 	a Tax Credit is attributable to that Tax Payment; and
	 
	 	(ii)	 	it has used and retained that Tax Credit,

	 
	 	 	the Finance Party must pay an amount to the Obligor which that
Finance Party determines (in its absolute discretion but acting in good
faith) will leave it (after that payment) in the same after-tax position
as it would have been if the Tax Payment had not been required to be made
by the Obligor.
	 
	(b)	 	Each Lender shall use its reasonable endeavours to determine whether it
is entitled to receive a Tax Credit and, if it determines that it is, to
obtain the same, unless to do so or attempt to do so might, in the
reasonable opinion of the Lender, be in any way prejudicial to the Lender
(provided that where a Lender claims a Tax Credit under this paragraph
(b), the extent, order and manner in which it does so shall be in the
absolute discretion of that Lender (acting in good faith)). No Lender
shall be obliged to disclose any information regarding its tax affairs or
computations to any other Party.
	 
	14.5	 	 Stamp taxes
	 
	 	 	The Obligors must pay and indemnify each Finance Party against any
stamp duty, registration or other similar Tax payable in connection with
the entry into, performance or enforcement of any Finance Document,
except for any such Tax payable in connection with the entry into a
Transfer Certificate. Each Obligor’s liability for any amount due under
this Clause shall be limited to the proportion of that amount which is
equal to the proportion which the outstanding amount of all Letters of
Credit in respect of which it is Borrower bears to the outstanding amount
of all Letters of Credit. Where there are no Letters of Credit
outstanding, the Company alone shall be liable for any amount due under
this Clause.
	 
	14.6	 	 Value added taxes
	 
	(a)	 	Any amount (including costs and expenses) payable under a Finance
Document by an Obligor is exclusive of any value added tax or any other
Tax of a similar nature which might be chargeable in connection with that
amount. If any such Tax is chargeable, the Obligor must pay to the
Finance Party (in addition to and at the same time as paying that amount)
an amount equal to the amount of that Tax.
	 
	(b)	 	The obligation of any Obligor under paragraph (a) above will be reduced
to the extent that the Finance Party determines (acting reasonably) that
it is entitled to repayment or a credit in respect of the relevant Tax.
	 
	14.7	 	 Banks
	 
	(a)	 	Each Lender confirms, on the date it becomes a Lender, that it is a Bank.
	 
	(b)	 	If a Lender ceases to be a Bank it shall promptly notify the Facility
Agent, which shall notify the Company. Thereafter that Lender shall use

its reasonable endeavours to transfer its rights

33

 

	 	 	and obligations under this Agreement at par to a Bank in accordance with
Clause 31 (Changes to the Parties).
	 
	15.	 	INCREASED COSTS
	 
	15.1	 	 Increased Costs
	 
	(a)	 	Except as provided below in this Clause, each Obligor must pay to a
Finance Party the amount of any Increased Cost incurred by that Finance
Party or any of its Affiliates as a result of:

	 	(i)	 	the introduction of, or any change in, or any change in the
interpretation, administration or application of, any law or
regulation; or
	 
	 	(ii)	 	compliance with any law or regulation,

	 	 	
made after the date of this Agreement.
	 
	(b)	 	Each Obligor’s liability for any amount due under this Clause shall be
limited to the proportion of that amount which is equal to the proportion
which the outstanding amount of all Letters of Credit in respect of which
it is Borrower bears to the outstanding amount of all Letters of Credit.
Where there are no Letters of Credit outstanding, the Company alone shall
be liable for any amount due under this Clause.
	 
	15.2	 	 Exceptions
	 
	 	 	An Obligor need not make any payment for an Increased Cost to the
extent that the Increased Cost is:

	 	(a)	 	compensated for under another Clause or would have been but
for an exception to that Clause;
	 
	 	(b)	 	a tax on the overall net income of a Finance Party or any of
its Affiliates; or
	 
	 	(c)	 	attributable to a Finance Party or its Affiliate wilfully
failing to comply with any law or regulation.

	15.3	 	Claims
	 
	(a)	 	A Finance Party intending to make a claim for an Increased Cost must
notify the Obligors concerned promptly of the circumstances giving rise
to, and the amount of, the claim. Unless to do so would involve the
disclosure of any information considered by the Finance Party to be
commercially sensitive or confidential, a Finance Party’s notification
under this paragraph (a) shall include calculations in reasonable detail
evidencing the Increased Cost.
	 
	(b)	 	A Finance Party will not be able to make a claim for an Increased Cost
under paragraph (a) above if it fails to notify the Company within six
months of the date on which the individuals responsible for the
administration of this Agreement within that Finance Party became aware of
the circumstances giving rise to that Increased Cost.

34

 

	16.	 	MITIGATION
	 
	16.1	 	Mitigation
	 
	(a)	 	Each Finance Party must, in consultation with the Company, take all
reasonable steps to mitigate any circumstances which arise and which
result or would result in:

	 	(i)	 	any Tax Payment or Increased Cost being payable to that
Finance Party;
	 
	 	(ii)	 	that Finance Party being able to exercise any right of
prepayment and/or cancellation under this Agreement by reason of any
illegality; or
	 
	 	(iii)	 	that Finance Party incurring any cost of complying with the
minimum reserve requirements of the European Central Bank,

	 	 	including changing its Facility Office or transferring its rights
and obligations under the Finance Documents to an Affiliate or to another
Bank (the new Bank) introduced by the Company provided such transfer is
at par and the new Bank sub-participates in full in any outstanding
Letters of Credit in which the Finance Party is participating.
	 
	(b)	 	Paragraph (a) above does not in any way limit the obligations of any
Obligor under the Finance Documents.
	 
	(c)	 	The Company must indemnify each Finance Party for all duly documented
costs and expenses reasonably incurred by that Finance Party as a result
of any step taken by it under this Subclause.
	 
	(d)	 	A Finance Party is not obliged to take any step under this Subclause if,
in the opinion of that Finance Party (acting reasonably), to do so might
be prejudicial to it (provided that the fact that a Finance Party will not
receive any further remuneration under this Agreement after it ceases to
be a Party shall not be considered prejudicial to it).
	 
	16.2	 	 Conduct of business by a Finance Party
	 
	 	 	No term of this Agreement will:

	 	(a)	 	interfere with the right of any Finance Party to arrange its
affairs (Tax or otherwise) in whatever manner it thinks fit;
	 
	 	(b)	 	oblige any Finance Party to investigate or claim any credit,
relief, remission or repayment available to it in respect of Tax or
the extent, order and manner of any claim; or
	 
	 	(c)	 	oblige any Finance Party to disclose any information relating
to its affairs (Tax or otherwise) or any computation in respect of
Tax.

	17.	 	PAYMENTS
	 
	17.1	 	 Place
	 
	 	 	Unless a Finance Document specifies that payments under it are to be
made in another manner, all payments by a Party (other than the Facility
Agent) under the Finance Documents must be made to the Facility Agent to
its account at such office or bank:

35

 

	 	(a)	 	in the principal financial centre of the country of the
relevant currency; or
	 
	 	(b)	 	in the case of euro, in the principal financial centre of a
Participating Member State or London,

	 	 	as it may notify to that Party for this purpose by not less than
five Business Days’ prior notice.
	 
	17.2	 	 Funds
	 
	 	 	Payments under the Finance Documents to the Facility Agent must be
made for value on the due date at such times and in such funds as the
Facility Agent may specify to the Party concerned as being customary at
the time for the settlement of transactions in the relevant currency in
the place for payment.
	 
	17.3	 	 Distribution
	 
	(a)	 	Each payment received by the Facility Agent under the Finance Documents
for another Party must, except as provided below, be made available by the
Facility Agent to that Party by payment (as soon as practicable after
receipt) to its account with such office or bank:

	 	(i)	 	in the principal financial centre of the country of the
relevant currency; or
	 
	 	(ii)	 	in the case of euro, in the principal financial centre of a
Participating Member State or London,

	 	 	as it may notify to the Facility Agent for this purpose by not less
than five Business Days’ prior notice.
	 
	(b)	 	The Facility Agent may apply any amount received by it for an Obligor in
or towards payment (as soon as practicable after receipt) of any amount
due from that Obligor under the Finance Documents or in or towards the
purchase of any amount of any currency to be so applied.
	 
	(c)	 	Where a sum is paid to the Facility Agent under this Agreement for
another Party, the Facility Agent is not obliged to pay that sum to that
Party until it has established that it has actually received it. However,
the Facility Agent may assume that the sum has been paid to it, and, in
reliance on that assumption, make available to that Party a corresponding
amount. If it transpires that the sum has not been received by the
Facility Agent, that Party must immediately on demand by the Facility
Agent refund any corresponding amount made available to it together with
interest on that amount from the date of payment to the date of receipt by
the Facility Agent at a rate calculated by the Facility Agent to reflect
its cost of funds.
	 
	17.4	 	 Currency
	 
	(a)	 	Unless a Finance Document specifies that payments under it are to be made
in a different manner, the currency of each amount payable under the
Finance Documents is determined under this Clause.
	 
	(b)	 	Interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated.
	 
	(c)	 	A repayment or prepayment of any principal amount is payable in the
currency in which that principal amount is denominated on its due date.

36

 

	(d)	 	Amounts payable in respect of costs and expenses are payable in the
currency in which they are incurred.
	 
	(e)	 	Each other amount payable under the Finance Documents is payable in US
Dollars.
	 
	17.5	 	 No set-off or counterclaim
	 
	 	 	All payments made by an Obligor under the Finance Documents must be
made without set-off or counterclaim.
	 
	17.6	 	 Business Days
	 
	(a)	 	If a payment under the Finance Documents is due on a day which is not a
Business Day, the due date for that payment will instead be the next
Business Day in the same calendar month (if there is one) or the preceding
Business Day (if there is not) or whatever day the Facility Agent
determines is market practice.
	 
	(b)	 	During any extension of the due date for payment of any principal under
this Agreement interest is payable on that principal at the rate payable
on the original due date.
	 
	17.7	 	 Partial payments
	 
	(a)	 	If any Administrative Party receives a payment insufficient to discharge
all the amounts then due and payable by the Obligors under the Finance
Documents, the Administrative Party must apply that payment towards the
obligations of the Obligors under the Finance Documents in the following
order:

	 	(i)	 	first, in or towards payment pro rata of any unpaid fees,
costs and expenses of the Administrative Parties under the Finance
Documents;
	 
	 	(ii)	 	secondly, in or towards payment pro rata of any accrued
interest or fee due but unpaid under this Agreement;
	 
	 	(iii)	 	thirdly, in or towards payment pro rata of any principal
amount due but unpaid under this Agreement; and
	 
	 	(iv)	 	fourthly, in or towards payment pro rata of any other sum due
but unpaid under the Finance Documents.

	(b)	 	The Facility Agent must, if so directed by all the Lenders, vary the
order set out in sub-paragraphs (a)(ii) to (iv) above.
	 
	(c)	 	This Subclause will override any appropriation made by an Obligor.
	 
	17.8	 	 Timing of payments
	 
	 	 	If a Finance Document does not provide for when a particular payment
is due, that payment will be due within three Business Days of demand by
the relevant Finance Party.
	 
	18.	 	GUARANTEE AND INDEMNITY
	 
	18.1	 	 Guarantee and indemnity
	 
	 	 	The Company irrevocably and unconditionally:

37

 

	 	(a)	 	guarantees to each Finance Party punctual performance by each
Borrower of all its obligations under the Finance Documents;
	 
	 	(b)	 	undertakes with each Finance Party that, whenever a Borrower
does not pay any amount when due under any Finance Document, it must
immediately on demand by the Facility Agent pay that amount as if it
were the principal obligor; and
	 
	 	(c)	 	indemnifies each Finance Party immediately on demand against
any loss or liability suffered by that Finance Party if any payment
obligation guaranteed by it is or becomes unenforceable, invalid or
illegal; the amount of the loss or liability under this indemnity
will be equal to the amount the Finance Party would otherwise have
been entitled to recover.

	18.2	 	 Continuing guarantee
	 
	 	 	This guarantee is a continuing guarantee and will extend to the
ultimate balance of all sums payable by any Obligor under the Finance
Documents, regardless of any intermediate payment or discharge in whole
or in part.
	 
	18.3	 	Reinstatement
	 
	(a)	 	If any discharge (whether in respect of the obligations of any Obligor or
any security for those obligations or otherwise) or arrangement is made in
whole or in part on the faith of any payment, security or other
disposition which is avoided or must be restored on insolvency,
liquidation or otherwise without limitation, the liability of the Company
under this Clause will, to the fullest extent permitted by applicable
law, continue as if the discharge or arrangement had not occurred.
	 
	(b)	 	Each Finance Party may concede or compromise any claim that any payment,
security or other disposition is liable to avoidance or restoration.
	 
	18.4	 	 Waiver of defences
	 
	 	 	The obligations of the Company under this Clause will not be
affected by any act, omission or thing which, but for this provision,
would reduce, release or prejudice any of its obligations under this
Clause (whether or not known to it or any Finance Party). This includes:

	 	(a)	 	any time or waiver granted to, or composition with, any
person;
	 
	 	(b)	 	any release of any person under the terms of any composition
or arrangement;
	 
	 	(c)	 	the taking, variation, compromise, exchange, renewal or
release of, or refusal or neglect to perfect, take up or enforce,
any rights against, or security over assets of, any person;
	 
	 	(d)	 	any non-presentation or non-observance of any formality or
other requirement in respect of any instrument or any failure to
realise the full value of any security;
	 
	 	(e)	 	any incapacity or lack of power, authority or legal
personality of or dissolution or change in the members or status of
any person;
	 
	 	(f)	 	any amendment (however fundamental) of a Finance Document or
any other document or security; or

38

 

	 	(g)	 	any unenforceability, illegality, invalidity or
non-provability of any obligation of any person under any Finance
Document or any other document or security.

	18.5	 	 Immediate recourse
	 
	 	 	The Company waives any right it may have of first requiring any
Finance Party (or any trustee or agent on its behalf) to proceed against
or enforce any other right or security or claim payment from any person
before claiming from the Company under this Clause.
	 
	18.6	 	Appropriations
	 
	 	 	Until all amounts which may be or become payable by the Obligors
under the Finance Documents have been irrevocably paid in full, each
Finance Party (or any trustee or agent on its behalf) may without
affecting the liability of the Company under this Clause:

	 	(a)	 	refrain from applying or enforcing any other moneys, security
or rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts; or
	 
	 	(b)	 	apply and enforce them in such manner and order as it sees
fit (whether against those amounts or otherwise); and
	 
	 	(c)	 	hold in an interest-bearing suspense account any moneys
received from the Company or on account of the Company’s liability
under this Clause.

	18.7	 	 Non-competition
	 
	 	 	Unless:

	 	(a)	 	all amounts which may be or become payable by the Obligors
under the Finance Documents have been irrevocably paid in full; or
	 
	 	(b)	 	the Facility Agent otherwise directs,

	 	 	the Company will not, after a claim has been made or by virtue of
any payment or performance by it under this Clause:

	 	(i)	 	be subrogated to any rights, security or moneys held,
received or receivable by any Finance Party (or any trustee or agent
on its behalf);
	 
	 	(ii)	 	be entitled to any right of contribution or indemnity in
respect of any payment made or moneys received on account of the
Company’s liability under this Clause;
	 
	 	(iii)	 	claim, rank, prove or vote as a creditor of any Obligor or
its estate in competition with any Finance Party (or any trustee or
agent on its behalf); or
	 
	 	(iv)	 	receive, claim or have the benefit of any payment,
distribution or security from or on account of any Obligor, or
exercise any right of set-off as against any Obligor, in each case
in respect of which any amount is or may be outstanding under the
Finance Documents.

	 	 	The Company must hold in trust for and immediately pay or transfer
to the Facility Agent for the Finance Parties any payment or distribution
or benefit of security received by it contrary

39

 

	 	 	to this Clause or in accordance with any directions given by the Facility
Agent under this Clause.
	 
	18.8	 	 Additional security
	 
	 	 	This guarantee is in addition to and is not in any way prejudiced by
any other security now or subsequently held by any Finance Party.
	 
	19.	 	REPRESENTATIONS
	 
	19.1	 	 Representations
	 
	 	 	The representations set out in this Clause are made by each Obligor
or (if it so states) the Company to each Finance Party.
	 
	19.2	 	 Status
	 
	(a)	 	It is a stock corporation, duly organised and validly existing under the
laws of the jurisdiction of its organisation.
	 
	(b)	 	It and each of its Subsidiaries which is a Material Subsidiary has the
power to own its assets in all material respects and carry on its business
substantially as it is being conducted on any day on which the
representation in this paragraph (b) is made or deemed to be repeated.
	 
	19.3	 	 Powers and authority
	 
	 	 	It has the power to enter into and perform, and has taken all
necessary action to authorise the entry into and performance of, the
Finance Documents to which it is a party and the transactions
contemplated by those Finance Documents.
	 
	19.4	 	 Legal validity
	 
	 	 	Subject to any principles of law referred to in any legal opinion
required under this Agreement, each Finance Document to which it is a
party is its legally binding, valid and enforceable obligation.
	 
	19.5	 	Non-conflict
	 
	 	 	The entry into and performance by it of, and the transactions
contemplated by, the Finance Documents do not conflict with:

	 	(a)	 	any law or regulation applicable to it;
	 
	 	(b)	 	its or any of its Subsidiaries’ which is a Material
Subsidiary constitutional documents; or
	 
	 	(c)	 	any document which is binding upon it or any of its
Subsidiaries or any of its or its Subsidiaries’ assets where such
conflict would reasonably be expected to have a Material Adverse
Effect.

	19.6	 	 No default
	 
	(a)	 	No Default is outstanding or will result from the execution of, or the
performance of any transaction contemplated by, any Finance Document; and

40

 

	(b)	 	no other event is outstanding which constitutes a default under any
document which is binding on it or any of its Subsidiaries or any of its
or its Subsidiaries’ assets to an extent or in a manner which would
reasonably be expected to have a Material Adverse Effect.
	 
	19.7	 	 Authorisations
	 
	 	 	All authorisations required by it in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Finance Documents to which it is party have been
obtained or effected (as appropriate) and are in full force and effect.
	 
	19.8	 	 Financial statements
	 
	 	 	Its audited financial statements most recently delivered to the
Facility Agent (and the Original Financial Statements):

	 	(a)	 	have been prepared in accordance with:

	 	(i)	 	(in the case of Holding) GAAP; or
	 
	 	(ii)	 	(in the case of an Obligor) accounting principles
and practices generally accepted or (as applicable) required
for insurance or reinsurance companies, in the jurisdiction of
its incorporation or organisation,

	 	 	 	in each case consistently applied; and
	 
	 	(b)	 	present fairly in all material respects its or Holding’s
financial condition (consolidated, if applicable) as at the date to
which they were drawn up,

	 	 	except, in each case, as disclosed to the contrary in those financial statements.

	 
	19.9	 	No material adverse change
	 
	 	 	As at the date of this Agreement, since the date to which the
Original Financial Statements were drawn up:

	 	(a)	 	there has been no material adverse change in Holding’s
consolidated financial condition; and
	 
	 	(b)	 	neither any Obligor nor Holding has incurred any actual or
contingent liabilities and no circumstances have occurred that may
give rise to it or Holding incurring actual or contingent
liabilities which in each case would reasonably be expected to have
a Material Adverse Effect.

	19.10	 	Litigation
	 
	(a)	 	Save:

	 	(i)	 	as disclosed in writing to the Facility Agent prior to the
date of this Agreement; and
	 
	 	(ii)	 	for claims in respect of which the Group has (A) full
insurance coverage which has not been denied, withdrawn or rescinded
in writing, or (B) made reserves in accordance with GAAP or other
applicable statutory accounting principles,

41

 

	 	 	 	no litigation, arbitration or administrative proceedings are current or,
to its knowledge, pending or threatened, which are reasonably likely to
be adversely determined and which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect.

	(b)	 	No proceedings of any nature are current or, to its knowledge, pending or
threatened, for its winding-up, administration or dissolution.
	 
	19.11	 	Information
	 
	(a)	 	In this Subclause, Information Memorandum means the information
memorandum prepared on behalf of, and approved by, the Company in
connection with this Agreement and Information means the Information
Memorandum and all other written information delivered by any member of
the Group in connection with the Finance Documents prior to the date of
this Agreement.
	 
	(b)	 	In the case of the Company only:

	 	(i)	 	the factual information contained in the Information was true
and accurate in all material respects as at its date or (if
appropriate) as at the date (if any) at which it is stated to be
given;
	 
	 	(ii)	 	each expression of opinion or intention contained in the
Information was made after careful consideration and enquiry and is
believed by the Company to be reasonable as at the date at which it
is stated to be given;
	 
	 	(iii)	 	the Information Memorandum did not omit as at its date any
information which, if disclosed, would make the Information
Memorandum untrue or misleading in any material respect; and
	 
	 	(iv)	 	as at the date of this Agreement and save as disclosed in
writing to the Facility Agent prior to the date of this Agreement,
nothing has occurred since the date of the Information Memorandum
which, if disclosed, would make the Information Memorandum untrue or
misleading in any material respect.

	19.12	 	 Pari passu ranking
	 
	 	 	Its payment obligations under the Finance Documents rank at least
pari passu with all its other present and future unsecured payment
obligations, except for obligations mandatorily preferred by law applying
to insurance or reinsurance companies generally.
	 
	19.13	 	Taxes on payments
	 
	 	 	As at the date of this Agreement, all amounts payable by it under
the Finance Documents may be made without any Tax Deduction.
	 
	19.14	 	Stamp duties
	 
	 	 	As at the date of this Agreement, no stamp or registration duty or
similar Tax or charge is payable in its jurisdiction of incorporation or
organisation in respect of any Finance Document.

42

 

	19.15	 	 Immunity
	 
	(a)	 	The execution by it of each Finance Document to which it is party
constitutes, and the exercise by it of its rights and performance of its
obligations under each such Finance Document will constitute, private and
commercial acts performed for private and commercial purposes; and
	 
	(b)	 	it will not be entitled to claim immunity from suit, execution,
attachment or other legal process in any proceedings taken in its
jurisdiction of incorporation or organisation in relation to any Finance
Document.
	 
	19.16	 	Jurisdiction/governing law
	 
	(a)	 	Its:

	 	(i)	 	irrevocable submission under this Agreement to the
jurisdiction of the courts of England;
	 
	 	(ii)	 	agreement that this Agreement is governed by English law; and
	 
	 	(iii)	 	agreement not to claim any immunity to which it or its
assets may be entitled,

	 	 	are legal, valid and binding under the laws of its jurisdiction of
incorporation (subject, in the case of paragraph (iii) to insolvency laws
affecting the rights of creditors of insurance and reinsurance
companies); and
	 
	(b)	 	Subject to any general principles of law referred to in any legal opinion
required to be delivered under this Agreement, any judgment obtained in
England will be recognised and be enforceable by the courts of its
jurisdiction of incorporation.
	 
	19.17	 	 Ownership
	 
	(a)	 	Each Obligor (other than the Company) is a wholly-owned subsidiary of the
Company.
	 
	(b)	 	The Company is controlled by Holding.
	 
	19.18	 	 United States laws
	 
	(a)	 	In this Subclause:
	 
	 	 	holding company, affiliate and subsidiary company have the meanings
given to them in the United States Public Utility Holding Company Act of
1935.
	 
	 	 	investment company and controlled have the meanings given to them in
the United States Investment Company Act of 1940.
	 
	 	 	public utility has the meaning given to it in the United States
Federal Power Act of 1920.
	 
	(b)	 	It is not:

	 	(i)	 	a holding company, an affiliate of a holding company or a
subsidiary company of a holding company, or subject to regulation,
under the United States Public Utility Holding Company Act of 1935;

43

 

	 	(ii)	 	a public utility, or subject to regulation, under the United
States Federal Power Act of 1920;
	 
	 	(iii)	 	an investment company or a company controlled by an
investment company; or
	 
	 	(iv)	 	subject to regulation under any United States Federal or
State law or regulation that limits its ability to incur or
guarantee indebtedness in such a way as would conflict with its
obligations under this Agreement.

	19.19	 	Times for making representations
	 
	(a)	 	The representations set out in this Clause are made by each Original
Obligor on the date of this Agreement.
	 
	(b)	 	Unless a representation is expressed to be given at a specific date, each
representation is deemed to be repeated by:

	 	(i)	 	each Additional Borrower and the Company on the date that
Additional Borrower becomes an Obligor; and
	 
	 	(ii)	 	each Obligor on the date of each Request, each Utilisation
Date, the date on which any Letter of Credit is automatically
extended in accordance with its terms and at six monthly intervals
from the date of this Agreement.

	(c)	 	When a representation is repeated, it is applied to the circumstances
existing at the time of repetition.
	 
	20.	 	INFORMATION COVENANTS
	 
	20.1	 	 Financial statements
	 
	(a)	 	The Company must supply to the Facility Agent in sufficient copies for
all the Lenders:

	 	(i)	 	the audited consolidated financial statements of Holding for
each of its financial years; and
	 
	 	(ii)	 	the audited financial statements of each Obligor for each of
its financial years; and
	 
	 	(iii)	 	the unaudited consolidated financial statements of Holding
for each of the first three of its financial quarters in each of its
financial years.

	(b)	 	All financial statements must be supplied as soon as they are available
and:

	 	(i)	 	in the case of Holding’s audited consolidated financial
statements, within 180 days;
	 
	 	(ii)	 	in the case of each Obligor’s audited financial statements,
within 180 days or within such longer period as may permitted by
applicable law; and
	 
	 	(iii)	 	in the case of the Holding’s quarterly financial statements, within 45 days,

	 
	 	
of the end of the relevant financial period.

44

 

	20.2	 	 Form of financial statements
	 
	(a)	 	The Company must ensure that each set of financial statements supplied
under this Agreement presents fairly in all material respects the
financial condition (consolidated or otherwise) of the relevant person as
at the date to which those financial statements were drawn up.
	 
	(b)	 	The Company must notify the Facility Agent of any change to the manner in
which Holding’s audited consolidated financial statements are prepared
from that used in relation to the Original Financial Statements.
	 
	(c)	 	If requested by the Facility Agent, the Company must supply to the
Facility Agent:

	 	(i)	 	a full description of any change notified under paragraph (b)
above; and
	 
	 	(ii)	 	sufficient information to enable the Finance Parties to make
a proper comparison between the financial position shown by the set
of financial statements prepared on the changed basis and the
financial position which would have been shown by those financial
statements had they been prepared in the same manner as the Original
Financial Statements.

	(d)	 	If requested by the Facility Agent, the Company must enter into
discussions for a period of not more than 30 days with a view to agreeing
any amendments required to be made to this Agreement to place the Company
and the Lenders in the same position as they would have been in if the
change had not happened. Any agreement between the Company and the
Facility Agent will be, with the prior consent of the Majority Lenders,
binding on all the Parties.
	 
	(e)	 	If no agreement is reached under paragraph (d) above on the required
amendments to this Agreement, the Company must supply with each set of
Holding’s financial statements another set of its financial statements
prepared on the same basis as the Original Financial Statements.
	 
	20.3	 	 Compliance Certificate
	 
	(a)	 	The Company must supply to the Facility Agent a Compliance Certificate
with each set of Holding’s financial statements sent to the Facility Agent
under this Agreement.
	 
	(b)	 	A Compliance Certificate must be signed by two authorised signatories of
the Company (one of which must be the finance director).
	 
	20.4	 	 Information - miscellaneous
	 
	 	 	The Company must supply to the Facility Agent, in sufficient copies
for all the Lenders if the Facility Agent so requests:

	 	(a)	 	copies of all documents despatched by Holding to its
shareholders (or any class of them) or its creditors generally or
any class of them at the same time as they are despatched;
	 
	 	(b)	 	promptly upon becoming aware of them, details of any
litigation, arbitration or administrative proceedings which are
current, threatened or pending which are reasonably likely to be
adversely determined and which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect; and

45

 

	 	(c)	 	promptly on request, such further information regarding the
financial condition and operations of the Group as any Finance Party
through the Facility Agent may reasonably request.

	20.5	 	 SEC information
	 
	 	 	The Company must promptly supply to the Facility Agent such
information as any Obligor is required to provide to the SEC pursuant to
Sections 13 or 15(d) of the Securities Exchange Act, 1934. The Company
may satisfy its obligations under this Subclause 20.5 by referring the
Facility Agent to a location on the Electronic Data Gathering, Analysis,
and Retrieval system (EDGAR) on which the information appears.
	 
	20.6	 	 Notification of Default
	 
	(a)	 	Unless the Facility Agent has already been so notified by another
Obligor, each Obligor must notify the Facility Agent of any Default (and
the steps, if any, being taken to remedy it) promptly upon becoming aware
of its occurrence.
	 
	(b)	 	Promptly on request by the Facility Agent, the Company must supply to the
Facility Agent a certificate, signed by two of its authorised signatories
on its behalf, certifying that no Default is outstanding or, if a Default
is outstanding, specifying the Default and the steps, if any, being taken
to remedy it.
	 
	20.7	 	 Year end
	 
	 	 	The Company must not change its financial year end.
	 
	20.8	 	 Use of websites
	 
	(a)	 	Except as provided below, the Company may deliver any information under
this Agreement to a Lender by posting it on to an electronic website if:

	 	(i)	 	the Facility Agent and the Lender agree;
	 
	 	(ii)	 	the Company and the Facility Agent designate an electronic
website for this purpose;
	 
	 	(iii)	 	the Company notifies the Facility Agent of the address of
and password for the website; and
	 
	 	(iv)	 	the information posted is in a format agreed between the
Company and the Facility Agent.

	 	 	The Facility Agent must supply each relevant Lender with the address
of and password for the website.
	 
	(b)	 	Notwithstanding the above, the Company must supply to the Facility Agent
in paper form a copy of any information posted on the website together
with sufficient copies for:

	 	(i)	 	any Lender not agreeing to receive information via the
website; and
	 
	 	(ii)	 	within ten Business Days of request any other Lender, if that
Lender so requests.

	(c)	 	The Company must promptly upon becoming aware of its occurrence, notify
the Facility Agent if:

46

 

	 	(i)	 	the website cannot be accessed;
	 
	 	(ii)	 	the website or any information on the website is infected by
any electronic virus or similar software;
	 
	 	(iii)	 	the password for the website is changed; or
	 
	 	(iv)	 	any information to be supplied under this Agreement is posted
on the website or amended after being posted.

	 	 	If the circumstances in paragraphs (i) or (ii) above occur, the
Company must supply any information required under this Agreement in
paper form.
	 
	21.	 	FINANCIAL COVENANT
	 
	21.1	 	 Definitions
	 
	 	 	In this Clause:
	 
	 	 	Consolidated Tangible Net Worth means at any time Holding’s Total
equity (as determined from the line item so described under the heading
Liabilities and equity in the consolidated financial statements of
Holding most recently delivered under Clause 20.1 (Financial statements),
adjusted, if necessary, to reflect the principles applied in connection
with the Original Financial Statements) less any amount identified in
those financial statements as goodwill.
	 
	 	 	Consolidated Total Borrowings means, in respect of the Converium
Group, at any time Holding’s Debt (as determined from the line item so
described under the heading Liabilities and equity in the consolidated
financial statements of Holding most recently delivered under Clause 20.1
(Financial statements) adjusted, if necessary, to reflect the principles
applied in connection with the Original Financial Statements).
	 
	21.2	 	 Interpretation
	 
	(a)	 	Except as provided to the contrary in this Agreement, an accounting term
used in this Clause is to be construed in accordance with the principles
applied in connection with the Original Financial Statements.
	 
	(b)	 	Any amount in a currency other than US Dollars is to be taken into
account at its US Dollar equivalent calculated on the basis of:

	 	(i)	 	the Agent’s Spot Rate of Exchange on the day the relevant
amount falls to be calculated; or
	 
	 	(ii)	 	if the amount is to be calculated on the last day of a
financial period of Holding, the relevant rates of exchange used by
Holding in, or in connection with, its financial statements for that
period.

	(c)	 	No item must be credited or deducted more than once in any calculation
under this Clause.
	 
	21.3	 	 Gearing
	 
	 	 	The Company must ensure that Consolidated Total Borrowings do not at
any time exceed 35 per cent. of Consolidated Tangible Net Worth at that
time.

47

 

	22.	 	GENERAL COVENANTS
	 
	22.1	 	 General
	 
	 	 	Each Obligor agrees to be bound by the covenants set out in this
Clause relating to it and, where the covenant is expressed to apply to
each member of the Group or the Material Group, the Company must ensure
that each of its Subsidiaries or Material Subsidiaries (as applicable)
performs that covenant.
	 
	22.2	 	 Authorisations
	 
	 	 	Each Obligor must promptly obtain, maintain and comply with the
terms of any authorisation required under any law or regulation to enable
it to perform its obligations under, or for the validity or
enforceability of, any Finance Document.
	 
	22.3	 	 Compliance with laws
	 
	 	 	Each member of the Group must comply in all respects with all laws
to which it is subject where failure to do so would reasonably be
expected to have a Material Adverse Effect.
	 
	22.4	 	 Pari passu ranking
	 
	 	 	Each Obligor must ensure that its payment obligations under the
Finance Documents rank at least pari passu with all its other present and
future unsecured payment obligations, except for obligations mandatorily
preferred by law applying to insurance and reinsurance companies
generally.
	 
	22.5	 	 Negative pledge
	 
	(a)	 	Except as provided below, no member of the Material Group may create or
allow to exist any Security Interest on any of its assets.
	 
	(b)	 	Paragraph (a) does not apply to:

	 	(i)	 	any Security Interest constituted by the Security Documents;
	 
	 	(ii)	 	Security Interests existing on the date of this Agreement
securing indebtedness of not more than US$700,000,000 (or its
equivalent) in aggregate (approximately US$230,000,000 of which is
indebtedness in respect of Existing Letters of Credit which are to
be cancelled and replaced by Letters of Credit issued under this
Agreement) or any replacement or renewals thereof;
	 
	 	(iii)	 	any Security Interest comprising a netting or set-off
arrangement entered into by a member of the Material Group in the
ordinary course of its banking or brokerage arrangements for the
purpose of netting debit and credit balances;
	 
	 	(iv)	 	any lien arising by operation of law and in the ordinary
course of trading;
	 
	 	(v)	 	any Security Interest on an asset, or an asset of any person,
acquired by a member of the Material Group after the date of this
Agreement but only for the period of 6 months from the date of
acquisition and to the extent that the principal amount secured by
that Security Interest has not been incurred or increased in
contemplation of, or since, the acquisition;

48

 

	 	(vi)	 	any Security Interest or trust arrangement over or in respect
of cash required pursuant to the terms of contracts of reinsurance
entered into between members of the Material Group to cash
collateralise claims under those contracts;
	 
	 	(vii)	 	any Security Interest for taxes or other governmental
charges, but only if the taxes are not more than 60 days overdue or
are being contested in good faith by appropriate measures and
provided that any reserve or provision in relation thereto required
by GAAP has been made;
	 
	 	(viii)	 	any Security Interest over cash deposits or marketable investment
securities in favour of any exchange or financial institution by
way of margin collateral for dealings in securities, foreign
exchange or derivatives in the ordinary course of trading but only
if the total value of such collateral does not exceed, in aggregate,
US$100,000,000 (or its equivalent);
	 
	 	(ix)	 	any Security Interest securing judgments which do not
constitute an Event of Default;
	 
	 	(x)	 	any Security Interest constituted by easements, rights of
way, zoning restrictions or similar charges and encumbrances in
respect of real property owned or occupied by any member of the
Material Group;
	 
	 	(xi)	 	any Security Interests existing on the assets of a company
with which a member of the Material Group is merged but only if (1)
the Security Interest was existing at the time of the merger, (2)
the Security Interest was not created in contemplation of the
merger, (3) the principal amount secured by the Security Interest is
not increased after the merger, and (4) the Security Interest is
discharged within six months of the merger;
	 
	 	(xii)	 	any Security Interest over or affecting any asset acquired
by a member of the Material Group (other than inventory or
receivables) after the date of this Agreement if (1) the Security
Interest is created within 3 months of the date of the acquisition
of the asset to secure indebtedness incurred to finance the
acquisition of the relevant asset (2) the principal amount secured
does not exceed 100 per cent. of the value of that asset, and (3)
the Security Interest does not affect any other asset of any member
of the Material Group;
	 
	 	(xiii)	 	any Security Interest created in connection with, or contemplation
of, a disposal permitted by Clause 22.6 (Disposals) over the asset
the subject of that disposal or over the proceeds of that disposal
under an escrow arrangement;
	 
	 	(xiv)	 	any Security Interest created in favour of another member of
the Group, provided that where that Security Interest is created by
an Obligor, the person in whose favour that Security Interest is
created is also an Obligor and that person remains beneficially
entitled to the Security Interest;
	 
	 	(xv)	 	any Security Interest securing a reimbursement obligation
with respect to a letter of credit which encumbers documents and
other property relating to such letter of credit;
	 
	 	(xvi)	 	any Security Interest constituted by the withholding or
retention of premiums due to a member of the Group from Zurich
Insurance Company or Zurich International (Bermuda) Limited under
quota share retrocession agreements (as amended or supplemented)
dated 1st July, 2001;

49

 

	 	(xvii)	 	any Security Interest over cash or marketable securities created
in favour of a ceding company to secure the obligations to that
ceding company of an Obligor or a Material Subsidiary under a
contract of reinsurance to which it is party where the creation of
that Security Interest satisfies a regulatory requirement;
	 
	 	(xviii)	 	any Security Interest renewing or replacing those referred to in
the preceding paragraphs of this sub-paragraph (b) provided (1) the
Security Interest secures a principal amount not exceeding that
outstanding and secured by the previous Security Interest at the
time of renewal and replacement and (2) the Security Interest is
over the same assets; and
	 
	 	(xix)	 	any Security Interest securing indebtedness the amount of
which (when aggregated with the amount of any other indebtedness
which has the benefit of a Security Interest not allowed under the
preceding sub-paragraphs and the aggregate principal amount of
transactions permitted under paragraph (c) below) does not at any
time exceed ten per cent. of Consolidated Tangible Net Worth (as
defined in Clause 21 (Financial Covenant), determined by reference
to the Original Financial Statements or, as the case may be, the
financial statements most recently delivered under Clause 20.1
(Financial statements).

	(c)	 	No member of the Material Group may:

	 	(i)	 	sell, transfer or otherwise dispose of any of its assets on
terms where it is or may be leased to or re-acquired or acquired by
a member of the Group or any of its related entities; or
	 
	 	(ii)	 	sell, transfer or otherwise dispose of any of its receivables
on recourse terms,

	 	 	in circumstances where the transaction is entered into primarily as
a method of raising Financial Indebtedness or of financing the
acquisition of an asset unless the proceeds of the transaction are
applied in repaying or prepaying the Facility in full. This paragraph
(c) does not apply to any transaction, the principal amount of which
(when aggregated with the amount of an indebtedness which has the benefit
of a Security Interest permitted by paragraph (b)(xix) above) does not
exceed ten per cent. of Consolidated Tangible Net Worth (as defined in
Clause 21 (Financial Covenant)), determined by reference to the Original
Financial Statements or, as the case may be, the financial statements
most recently delivered under Clause 20.1. (Financial statements). For
these purposes, the principal amount of any transaction referred to in
paragraph (c)(ii) above shall be the maximum amount of any recourse to a
member of the Material Group in connection with that transaction.
	 
	22.6	 	Disposals
	 
	(a)	 	Except as provided below, no member of the Material Group may, either in
a single transaction or in a series of transactions and whether related or
not, dispose of all or any part of its assets.
	 
	(b)	 	Paragraph (a) does not apply to any disposal:

	 	(i)	 	made in the ordinary course of business of the disposing
entity and on arm’s length terms;
	 
	 	(ii)	 	of assets in exchange for other assets comparable or superior
as to type, value and quality;

50

 

	 	(iii)	 	of an asset which is redundant or obsolete for the purposes
for which such asset is normally utilised;
	 
	 	(iv)	 	of shares in a member of the Group to another member of the
Group as part of a Permitted Reorganisation;
	 
	 	(v)	 	by a member of the Group which is not an Obligor to another
member of the Group or by an Obligor to another Obligor; and
	 
	 	(vi)	 	not otherwise permitted by the preceding sub-paragraphs
provided that the aggregate of the higher of the market value or
consideration receivable in respect of all disposals permitted by
this sub-paragraph (vi) occurring in any financial year of the
Company does not exceed ten per cent. of Consolidated Tangible Net
Worth (as defined in Clause 21 (Financial Covenant)) determined by
reference to the Original Financial Statements or, as the case may
be, the financial statements most recently delivered under Clause
20.1 (Financial statements).

	22.7	 	 Subsidiary indebtedness
	 
	 	 	The Company must ensure that the aggregate amount of Financial
Indebtedness which would fall within the definition of Consolidated Total
Borrowings in Clause 21 (Financial Covenant) in respect of which the
creditor is not a member of the Group incurred by its Subsidiaries which
are not Obligors does not (other than in the case of such Financial
Indebtedness outstanding on the date of this Agreement (of which the
amount is US$400,000,000) and any subsequent refinancing thereof) at any
time exceed US$150,000,000.
	 
	22.8	 	 Loans out
	 
	(a)	 	Except as provided below, no member of the Material Group may be the
creditor in respect of any Financial Indebtedness.
	 
	(b)	 	Paragraph (a) does not apply to:

	 	(i)	 	any Financial Indebtedness acquired by a member of the
Material Group as creditor prior to the date of this Agreement;
	 
	 	(ii)	 	a loan made by a member of the Material Group to another
member of the Converium Group (provided that in the case of a loan
to Holding, the proceeds of that loan are on-lent, or otherwise made
available, by Holding to a member of the Group);
	 
	 	(iii)	 	any receivable acquired as consideration for a disposal
permitted by Clause 22.6 (Disposals);
	 
	 	(iv)	 	a loan made by a member of the Group under the terms of any
Insurance Arrangement;
	 
	 	(v)	 	any Eligible Investment; and
	 
	 	(vi)	 	any Financial Indebtedness acquired as creditor in the
ordinary course of a member of the Material Group’s investment
activities, portfolio operations and management or liquidity and
cash management operations.

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	22.9	 	 Change of business
	 
	 	 	The Company must ensure that no material change is made to the
business of the Company or the Group which would result in the Company or
Group not being primarily engaged in the business of insurance or
reinsurance.
	 
	22.10	 	 Mergers
	 
	 	 	No Obligor may consummate or implement any amalgamation, demerger,
merger or reconstruction otherwise than pursuant to a Permitted
Reorganisation or other transaction agreed by the Majority Lenders.
	 
	22.11	 	 Acquisitions
	 
	 	 	No member of the Group may acquire any equity interest in any person
other than a member of the Group (the target) if, upon such acquisition
taking effect and, if applicable, the target being consolidated with the
Company in accordance with GAAP, a Rating Event or an Event of Default
would reasonably be expected to occur.
	 
	22.12	 	 Pension schemes
	 
	 	 	Each member of the Group must be:

	 	(a)	 	in substantial compliance with any laws or contract relating
to any of its pension schemes; and
	 
	 	(b)	 	maintain and fund its pension schemes to at least the extent
required by local law and practice.

	22.13	 	Taxes
	 
	 	 	Each member of the Group must pay all Taxes due and payable by it, unless:

	 	(a)	 	(i) payment of those Taxes is being contested in good faith; and
	 
	 	 	 	(ii) adequate reserves are being maintained for those
Taxes; and
	 
	 	(b)	 	failure to pay those Taxes could not reasonably be expected
to have a Material Adverse Effect.

	22.14	 	Share capital
	 
	 	 	No member of the Group may:

	 	(a)	 	redeem, repurchase, defease, retire or repay any of its share
capital or loan stock or resolve to do so; or
	 
	 	(b)	 	issue any shares which by their terms are redeemable,

	 	 	if upon the transaction taking effect an Event of Default would
reasonably be expected to occur.

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	22.15	 	Required Security
	 
	 	 	The Company shall ensure that at all times it has sufficient
unencumbered cash and Eligible Investments available to it to meet its
obligations under this Agreement to deliver (or supplement) Required
Security when required.
	 
	22.16	 	United States laws
	 
	(a)	 	In this Subclause:
	 
	 	 	Code means the United States Internal Revenue Code of 1986.
	 
	 	 	ERISA means the United States Employee Retirement Income Security
Act of 1974.
	 
	 	 	ERISA Affiliate means any person treated as a single employer with
any Obligor for the purpose of section 414 of the Code.
	 
	 	 	Margin Stock has the meaning given to it in Regulations U and X
issued by the Board of Governors of the United States Federal Reserve
System.
	 
	 	 	Plan means an employee benefit plan as defined in section 3(3) of
ERISA:

	 	(a)	 	maintained by any Obligor or any ERISA Affiliate; or
	 
	 	(b)	 	to which any Obligor or any ERISA Affiliate is required to
make any payment or contribution.

	 	 	Reportable Event means:

	 	(a)	 	an event specified as such in section 4043 of ERISA or any
related regulation, other than an event in relation to which the
requirement to give notice of that event is waived by any
regulation; or
	 
	 	(b)	 	a failure to meet the minimum funding standard under section
412 of the Code or section 302 of ERISA, whether or not there has
been any waiver of notice or waiver of the minimum funding standard
under section 412 of the Code.

	(b)	 	No Obligor may:

	 	(i)	 	extend credit for the purpose, directly or indirectly, of
buying or carrying Margin Stock; or
	 
	 	(ii)	 	use any Credit, directly or indirectly, to buy or carry
Margin Stock or to extend credit to others for the purpose of buying
or carrying Margin Stock.

	(c)	 	No Obligor may use any part of any Credit to acquire any security in a
transaction that is subject to section 13 or 14 of the United States
Securities Exchange Act of 1934.
	 
	(d)	 	Each Obligor must promptly upon becoming aware of it notify the Facility
Agent of:

	 	(i)	 	any Reportable Event;

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	 	(ii)	 	the termination of or withdrawal from, or any circumstances
reasonably likely to result in the termination of or withdrawal
from, any Plan subject to Title IV of ERISA; and
	 
	 	(iii)	 	a claim or other communication alleging material
non-compliance with any law or regulation relating to any Plan.

	(e)	 	Each Obligor and its ERISA Affiliates must be, and remain, in compliance
in all material respects with all laws and regulations relating to each of
its Plans.
	 
	(f)	 	Each of the Obligors and its ERISA Affiliates must ensure that no event
or condition exists at any time in relation to a Plan which is reasonably
likely to result in the imposition of a Security Interest on any of its
assets or which is reasonably likely to have a Material Adverse Effect.
	 
	23.	 	DEFAULT
	 
	23.1	 	 Events of Default
	 
	(a)	 	Each of the events set out in this Clause is an Event of Default.
	 
	(b)	 	In this Clause, Material Converium Group Member means Holding, each
Obligor and each Material Subsidiary.
	 
	23.2	 	 Non-payment
	 
	 	 	An Obligor does not pay on the due date any amount payable by it
under the Finance Documents in the manner required under the Finance
Documents, unless the non-payment:

	 	(a)	 	is caused by technical or administrative error; and
	 
	 	(b)	 	is remedied within three Business Days of the due date.

	23.3	 	 Breach of other obligations
	 
	(a)	 	An Obligor does not comply with any term of Clause 22.4 (Pari passu
ranking), 22.5 (Negative pledge), 22.6 (Disposals), 22.9 (Change of
business), 22.10 (Mergers), 22.15 (Required Security) or Clause 21
(Financial Covenant); or
	 
	(b)	 	an Obligor does not comply with any other term of the Finance Documents
not already referred to in this Clause, unless the non-compliance:

	 	(i)	 	is capable of remedy (including, without limitation, by the
relevant Obligor (not being the Company) resigning in accordance
with Clause 31.8 (Resignation of the Borrower (other than the
Company)); and
	 
	 	(ii)	 	is remedied within ten Business Days of the earlier of the
Facility Agent giving notice and the Obligor becoming aware of the
non-compliance.

	23.4	 	Misrepresentation
	 
	 	 	A representation made or repeated by an Obligor in any Finance
Document or in any document delivered by or on behalf of any Obligor
under any Finance Document is incorrect

54

 

	 	 	in any material respect when made or deemed to be repeated, unless the
circumstances giving rise to the misrepresentation:

	 	(a)	 	are capable of remedy (including, without limitation, by the
relevant Obligor (not being the Company) resigning in accordance
with Clause 31.8 (Resignation of the Borrower (other than the
Company)); and
	 
	 	(b)	 	are remedied within ten Business Days of the earlier of the
Facility Agent giving notice and the Obligor becoming aware of the
non-compliance.

	23.5	 	Cross-default
	 
	 	 	Any of the following occurs in respect of a Material Converium Group Member :

	 	(a)	 	any of its Financial Indebtedness is not paid when due (after
the expiry of any originally applicable grace period or any grace
period subsequently agreed provided that such agreement was not made
in contemplation of, or after, the relevant failure to pay)) unless,
where that Financial Indebtedness is an Insurance Arrangement, the
relevant Material Converium Group Member is contesting in good faith
and with due diligence that the relevant amount is due;
	 
	 	(b)	 	any of its Financial Indebtedness:

	 	(i)	 	becomes prematurely due and payable;
	 
	 	(ii)	 	is placed on demand; or
	 
	 	(iii)	 	is capable of being declared by a creditor to be
prematurely due and payable or being placed on demand,

	 
	 	 	 	in each case, as a result of an event of default (howsoever
described); or

	 	(c)	 	any commitment for its Financial Indebtedness is cancelled or
suspended as a result of an event of default (howsoever described),

	 	 	unless the aggregate amount of Financial Indebtedness falling within
all or any of paragraphs (a)-(c) above is less than US$20,000,000 or its
equivalent.
	 
	23.6	 	 Insolvency
	 
	 	 	Any of the following occurs in respect of a Material Converium Group Member:

	 
	 	(a)	 	it is, or is deemed for the purposes of any law to be, unable
to pay its debts as they fall due, over-indebted or insolvent;
	 
	 	(b)	 	it admits its inability to pay its debts as they fall due;
	 
	 	(c)	 	it suspends making payments on any of its debts (other than
under a contractually agreed suspension or break clause relating to
the relevant debts) or announces an intention to do so;
	 
	 	(d)	 	by reason of actual or anticipated financial difficulties, it
begins negotiations with any creditor for the rescheduling of any of
its indebtedness; or

55

 

	 	(e)	 	a moratorium is declared in respect of any of its
indebtedness.

	 
	 	 	If a moratorium occurs in respect of any Material Converium Group
Member, the ending of the moratorium will not remedy any Event of Default
caused by the moratorium if a notice has already been given to the
Company under Clause 23.14(b) (Acceleration).
	 
	23.7	 	 Insolvency proceedings
	 
	(a)	 	Except as provided below, any of the following occurs in respect of a
Material Converium Group Member:

	 	(i)	 	any step is taken with a view to a moratorium or a
composition, assignment or similar arrangement with any of its
creditors;
	 
	 	(ii)	 	a meeting of its shareholders, directors or other officers is
convened for the purpose of considering any resolution for, to
petition for or to file documents with a court or any registrar for,
its winding-up, administration or dissolution or any such resolution
is passed;
	 
	 	(iii)	 	any person presents a petition (other than frivolously or
vexatiously), or files documents with a court or any registrar, for
its winding-up, administration or dissolution;
	 
	 	(iv)	 	an order for its winding-up, administration or dissolution is
made;
	 
	 	(v)	 	any liquidator, trustee in bankruptcy, judicial custodian,
compulsory manager, receiver, administrative receiver, administrator
or similar officer is appointed in respect of it or any of its
assets;
	 
	 	(vi)	 	its shareholders, directors or other officers request the
appointment of, or give notice of their intention to appoint, a
liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or similar
officer; or
	 
	 	(vii)	 	any other analogous step or procedure is taken in any
jurisdiction.

	(b)	 	Paragraph (a) does not apply to a petition for winding-up presented by a
creditor which is being contested in good faith and with due diligence and
is discharged or struck out within 21 days.
	 
	23.8	 	United States Bankruptcy Laws
	 
	(a)	 	In this Subclause:
	 
	 	 	U.S. Bankruptcy Law means the United States Bankruptcy Code of 1978
or any other United States Federal or State bankruptcy, insolvency or
similar law.
	 
	 	 	U. S. Group Member means any Material Converium Group Member
incorporated or organised under the laws of the United States of America
or any state of the United States of America (including the District of
Columbia).
	 
	(b)	 	Any of the following occurs in respect of a U.S. Group Member:

	 	(i)	 	it makes a general assignment for the benefit of creditors;

56

 

	 	(ii)	 	it commences a voluntary case or proceeding under any U.S.
Bankruptcy Law; or
	 
	 	(iii)	 	an involuntary case under any U.S. Bankruptcy Law is
commenced against it and is not controverted within 30 days or is
not dismissed or stayed within 90 days after commencement of the
case.

	(c)	 	In the event of any inconsistency between paragraph (iii) above and
Clause 23.7(a)(iii) (Insolvency proceedings) in relation to events
occurring in connection with a U.S. Group Member, paragraph (iii) above
shall prevail.
	 
	23.9	 	Creditors’ process/final judgment
	 
	(a)	 	Any attachment, sequestration, distress, execution or analogous event
affects, any asset(s) of a Material Converium Group Member, having an
aggregate value of at least US$10,000,000, unless it is (a) stayed within
30 days, (b) contested in good faith and with due diligence and (c)
ultimately discharged.
	 
	(b)	 	A final judgment or court order for the payment of US$20,000,000 (or its
equivalent) or more is made against any Material Converium Group Member
and continues unsatisfied and unstayed for a period of 30 days after the
date of judgment or order or, if later, the date specified for payment.
	 
	23.10	 	 Cessation of business
	 
	 	 	A Material Converium Group Member ceases, or threatens to cease, to
carry on business except:

	 	(a)	 	as part of a Permitted Reorganisation; or
	 
	 	(b)	 	as a result of any disposal allowed under this Agreement.

	23.11	 	Effectiveness of Finance Documents
	 
	(a)	 	It is or becomes unlawful for any Obligor to perform any of its
obligations under the Finance Documents and, in the case of an Obligor
other than the Company, the relevant Obligor does not resign in accordance
with Clause 31.8 (Resignation of a Borrower (other than the Company))
within five Business Days of the unlawfulness arising.
	 
	(b)	 	Any Finance Document is not effective or is alleged by an Obligor to be
ineffective for any reason.
	 
	(c)	 	An Obligor repudiates a Finance Document or evidences an intention to
repudiate a Finance Document.
	 
	23.12	 	Audit qualification
	 
	 	 	The auditors of Holding qualify their report on any of the audited
consolidated financial statements of the Converium Group.
	 
	23.13	 	Material adverse change
	 
	 	 	Any event or series of events occurs which, in the opinion of the
Majority Lenders (acting reasonably), would reasonably be expected to
have a Material Adverse Effect.

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	23.14	 	Acceleration
	 
	(a)	 	If an Event of Default described in Subclause 23.8 (U.S. Bankruptcy Laws)
occurs, the Total Commitments will, if not already cancelled under this
Agreement, be immediately and automatically cancelled.
	 
	(b)	 	If an Event of Default is outstanding, the Facility Agent may, and must
if so instructed by the Majority Lenders, by notice to the Company:

	 	(i)	 	cancel the Total Commitments; and/or
	 
	 	(ii)	 	declare that all or part of any amounts outstanding under the
Finance Documents are:

	 	(A)	 	immediately due and payable; and/or
	 
	 	(B)	 	payable on demand by the Facility Agent acting on
the instructions of the Majority Lenders; and/or

	 	(iii)	 	declare that full cash cover in respect of each Letter of
Credit is immediately due and payable.

	 	 	Any notice given under this Subclause will take effect in accordance
with its terms.
	 
	24.	 	SECURITY
	 
	24.1	 	 Facility Agent as trustee
	 
	 	 	Unless expressly provided to the contrary, the Facility Agent holds
any security created by a Security Document on trust for the Finance
Parties.
	 
	24.2	 	 Responsibility

	 
	 	 	
The Facility Agent is not liable or responsible to any other Finance Party for:
	 

	 	(a)	 	any failure in perfecting or protecting the security created
by any Security Document;
	 
	 	(b)	 	any other action taken or not taken by it in connection with
any Security Document,

	 
	 	 	unless directly caused by its gross negligence or wilful misconduct.

	 
	24.3	 	 Title

	 
	 	 	The Facility Agent may accept, without enquiry, the title (if any)
an Obligor may have to any asset over which security is intended to be
created by any Security Document.
	 
	24.4	 	Possession of documents
	 
	 	 	The Facility Agent is not obliged to hold in its own possession any
Security Document, title deed or other document in connection with any
asset over which security is intended to be created by a Security
Document.
	 
	24.5	 	 Investments
	 
	 	 	Except as otherwise provided in this Agreement or any Security
Document, all moneys received by the Facility Agent under a Security
Document may be invested in the name of, or

58

 

	 	 	under the control of, the Facility Agent in any investments which by
their terms are interest bearing selected by the Facility Agent.
Additionally, those moneys may be placed on deposit in the name of, or
under the control of, the Facility Agent at any bank or institution
(including itself) and upon such terms as it may think fit.
	 
	24.6	 	 Co-security Agent
	 
	(a)	 	The Facility Agent may appoint a separate security agent or a co-security
agent:

	 	(i)	 	if the Facility Agent considers that without the appointment
the interests of the Lenders under the Finance Documents might be
materially and adversely affected;
	 
	 	(ii)	 	for the purpose of complying with any law, regulation or
other condition in any jurisdiction; or
	 
	 	(iii)	 	for the purpose of obtaining or enforcing a judgment or
enforcing any Finance Document in any jurisdiction.

	(b)	 	Any appointment under this Subclause will only be effective if the
security agent or co-security agent confirms to the Facility Agent and the
Company in form and substance satisfactory to the Facility Agent that it
is bound by the terms of this Agreement as if it were the Facility Agent.
	 
	(c)	 	The Facility Agent may remove any security agent or co-security agent
appointed by it and may appoint a new security agent or co-security agent
in its place.
	 
	(d)	 	The Company must pay to the Facility Agent any reasonable remuneration
paid by the Facility Agent to any security agent or co-security agent
appointed by it, together with any related costs and expenses properly
incurred by the security agent or co-security agent.
	 
	25.	 	THE ADMINISTRATIVE PARTIES
	 
	25.1	 	 Appointment and duties of the Facility Agent
	 
	(a)	 	Each Finance Party (other than the Facility Agent) irrevocably appoints
the Facility Agent to act as its agent under the Finance Documents.
	 
	(b)	 	Each Finance Party irrevocably authorises the Facility Agent to:

	 	(i)	 	perform the duties and to exercise the rights, powers and
discretions that are specifically given to it under the Finance
Documents, together with any other incidental rights, powers and
discretions; and
	 
	 	(ii)	 	execute each Finance Document expressed to be executed by the
Facility Agent.

	(c)	 	The Facility Agent has only those duties which are expressly specified in
the Finance Documents. Those duties are solely of a mechanical and
administrative nature.
	 
	25.2	 	Role of the Mandated Lead Arrangers
	 
	 	 	Except as specifically provided in the Finance Documents, no
Mandated Lead Arranger has any obligations of any kind to any other Party
in connection with any Finance Document.

59

 

	25.3	 	No fiduciary duties
	 
	 	 	Except as specifically provided in a Finance Document, nothing in
the Finance Documents makes an Administrative Party a trustee or
fiduciary for any other Party or any other person. No Administrative
Party need hold in trust any moneys paid to it for a Party or be liable
to account for interest on those moneys.
	 
	25.4	 	Individual position of an Administrative Party
	 
	(a)	 	If it is also a Lender, each Administrative Party has the same rights and
powers under the Finance Documents as any other Lender and may exercise
those rights and powers as though it were not an Administrative Party.
	 
	(b)	 	Each Administrative Party may:

	 	(i)	 	carry on any business with any Obligor or its related
entities (including acting as an agent or a trustee for any other
financing); and
	 
	 	(ii)	 	retain any profits or remuneration it receives under the
Finance Documents or in relation to any other business it carries on
with any Obligor or its related entities.

	25.5	 	Reliance
	 
	 	 	The Facility Agent may:

	 	(a)	 	rely on any notice or document believed by it to be genuine
and correct and to have been signed by, or with the authority of,
the proper person;
	 
	 	(b)	 	rely on any statement made by any person regarding any
matters which may reasonably be assumed to be within his knowledge
or within his power to verify;
	 
	 	(c)	 	engage, pay for and rely on professional advisers selected by
it (including those representing a Party other than the Facility
Agent); and
	 
	 	(d)	 	act under the Finance Documents through its personnel and
agents.

	25.6	 	 Majority Lenders’ instructions
	 
	(a)	 	The Facility Agent is fully protected if it acts on the instructions of
the Majority Lenders in the exercise of any right, power or discretion or
any matter not expressly provided for in the Finance Documents. Any such
instructions given by the Majority Lenders will be binding on all the
Lenders. In the absence of instructions, the Facility Agent may act as it
considers to be in the best interests of all the Lenders.
	 
	(b)	 	The Facility Agent may assume that unless it has received notice to the
contrary, any right, power, authority or discretion vested in any Party or
the Majority Lenders has not been exercised.
	 
	(c)	 	The Facility Agent is not authorised to act on behalf of a Lender
(without first obtaining that Lender’s consent) in any legal or
arbitration proceedings in connection with any Finance Document.

60

 

	(d)	 	The Facility Agent may require the receipt of security satisfactory to it
from the Lenders, whether by way of payment in advance or otherwise,
against any liability or loss which it may incur in complying with the
instructions of the Majority Lenders.
	 
	25.7	 	 Responsibility
	 
	(a)	 	No Administrative Party is responsible to any other Finance Party for the
adequacy, accuracy or completeness of:

	 
	 	(i)	 	any Finance Document or any other document; or
	 
	 	(ii)	 	any statement or information (whether written or oral) made
in or supplied in connection with any Finance Document.
	 

	(b)	 	Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance Document,
each Lender confirms that it:

	 	(i)	 	has made, and will continue to make, its own independent
appraisal of all risks arising under or in connection with the
Finance Documents (including the financial condition and affairs of
each Obligor and its related entities and the nature and extent of
any recourse against any Party or its assets); and
	 
	 	(ii)	 	has not relied exclusively on any information provided to it
by any Administrative Party in connection with any Finance Document.

	25.8	 	Exclusion of liability
	 
	(a)	 	The Facility Agent is not liable or responsible to any other Finance
Party for any action taken or not taken by it in connection with any
Finance Document, unless directly caused by its gross negligence or wilful
misconduct.
	 
	(b)	 	No Party (other than the Facility Agent) may take any proceedings against
any officer, employee or agent of the Facility Agent in respect of any
claim it might have against the Facility Agent or in respect of any act or
omission of any kind by that officer, employee or agent in connection with
any Finance Document. Any officer, employee or agent of the Facility
Agent may rely on this Subclause and enforce its terms under the Contracts
(Rights of Third Parties) Act 1999.
	 
	25.9	 	 Default
	 
	(a)	 	The Facility Agent is not obliged to monitor or enquire whether a Default
has occurred. The Facility Agent is not deemed to have knowledge of the
occurrence of a Default.
	 
	(b)	 	If the Facility Agent:

	 	(i)	 	receives notice from a Party referring to this Agreement,
describing a Default and stating that the event is a Default; or
	 
	 	(ii)	 	is aware of the non-payment of any principal or interest or
any fee payable to a Lender under this Agreement,

	 	 	it must promptly notify the Lenders.

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	25.10	 	Information
	 
	(a)	 	The Facility Agent must promptly forward to the person concerned the
original or a copy of any document which is delivered to the Facility
Agent by a Party for that person.
	 
	(b)	 	Except where a Finance Document specifically provides otherwise, the
Facility Agent is not obliged to review or check the adequacy, accuracy or
completeness of any document it forwards to another Party.
	 
	(c)	 	Except as provided above, the Facility Agent has no duty:

	 	(i)	 	either initially or on a continuing basis to provide any
Lender with any credit or other information concerning the risks
arising under or in connection with the Finance Documents (including
any information relating to the financial condition or affairs of
any Obligor or its related entities or the nature or extent of
recourse against any Party or its assets) whether coming into its
possession before, on or after the date of this Agreement; or
	 
	 	(ii)	 	unless specifically requested to do so by a Lender in
accordance with a Finance Document, to request any certificate or
other document from any Obligor.

	(d)	 	In acting as the Facility Agent, the agency division of the Facility
Agent is treated as a separate entity from its other divisions and
departments. Any information acquired by the Facility Agent which, in its
opinion, is acquired by it otherwise than in its capacity as the Facility
Agent may be treated as confidential by the Facility Agent and will not be
treated as information possessed by the Facility Agent in its capacity as
such.
	 
	(e)	 	The Facility Agent is not obliged to disclose to any person any
confidential information supplied to it by or on behalf of a member of the
Group solely for the purpose of evaluating whether any waiver or amendment
is required in respect of any term of the Finance Documents.
	 
	(f)	 	Each Obligor irrevocably authorises the Facility Agent to disclose to the
other Finance Parties any information which, in its opinion, is received
by it in its capacity as the Facility Agent.
	 
	25.11	 	Indemnities
	 
	(a)	 	Without limiting the liability of any Obligor under the Finance
Documents, each Lender must indemnify the Facility Agent for that Lender’s
Pro Rata Share of any loss or liability incurred by the Facility Agent in
acting as the Facility Agent, except to the extent that the loss or
liability is caused by the Facility Agent’s gross negligence or wilful
misconduct.
	 
	(b)	 	The Facility Agent may deduct from any amount received by it for a Lender
any amount due to the Facility Agent from that Lender under a Finance
Document but unpaid.
	 
	25.12	 	Compliance
	 
	 	 	Each Administrative Party may refrain from doing anything (including
disclosing any information) which might, in its opinion (acting in good
faith), constitute a breach of any law or regulation or be otherwise
actionable at the suit of any person, and may do anything which, in its
opinion, is necessary or desirable to comply with any law or regulation.

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	25.13	 	 Resignation of the Facility Agent
	 
	(a)	 	The Facility Agent may resign and appoint any of its Affiliates as
successor Facility Agent by giving notice to the Lenders and the Company.
	 
	(b)	 	Alternatively, the Facility Agent may resign by giving not less than 90
days notice to the Lenders and the Company (or such shorter period as the
Company may agree), in which case the Majority Lenders may appoint a
successor Facility Agent.
	 
	(c)	 	If no successor Facility Agent has been appointed under paragraph (b)
above within 30 days of the expiry of the notice period, the Facility
Agent may appoint a successor Facility Agent.
	 
	(d)	 	The person(s) appointing a successor Facility Agent must, if practicable,
consult with the Company prior to the appointment and any successor
Facility Agent must have an office within the European Union.
	 
	(e)	 	The resignation of the Facility Agent and the appointment of any
successor Facility Agent will both become effective only when the
successor Facility Agent notifies all the Parties that it accepts its
appointment. On giving the notification, the successor Facility Agent
will succeed to the position of the Facility Agent and the term Facility
Agent will mean the successor Facility Agent.
	 
	(f)	 	The retiring Facility Agent must, at its own cost, make available to the
successor Facility Agent such documents and records and provide such
assistance as the successor Facility Agent may reasonably request for the
purposes of performing its functions as the Facility Agent under the
Finance Documents.
	 
	(g)	 	Upon its resignation becoming effective, this Clause will continue to
benefit the retiring Facility Agent in respect of any action taken or not
taken by it in connection with the Finance Documents while it was the
Facility Agent, and, subject to paragraph (f) above, it will have no
further obligations under any Finance Document.
	 
	(h)	 	The Majority Lenders may, by notice to the Facility Agent, require it to
resign under paragraph (b) above.
	 
	25.14	 	Relationship with Lenders
	 
	(a)	 	The Facility Agent may treat each Lender as a Lender, entitled to
payments under this Agreement and as acting through its Facility Office(s)
until it has received not less than five Business Days’ prior notice from
that Lender to the contrary.
	 
	(b)	 	The Facility Agent may at any time, and must if requested to do so by the
Majority Lenders, convene a meeting of the Lenders.
	 
	(c)	 	The Facility Agent must keep a register of all the Parties and supply any
other Party with a copy of the register on request. The register will
include each Lender’s Facility Office(s) and contact details for the
purposes of this Agreement.
	 
	25.15	 	Facility Agent’s management time
	 
	 	 	If the Facility Agent requires, any amount payable to the Facility
Agent by any Party under any indemnity or in respect of any costs or
expenses incurred by the Facility Agent under the Finance Documents after
the date of this Agreement may include the cost of using its management
time or other resources and will be calculated on the basis of such
reasonable

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	 	 	daily or hourly rates as the Facility Agent may notify to the relevant
Party. This is in addition to any amount in respect of fees or expenses
paid or payable to the Facility Agent under any other term of the Finance
Documents.
	 
	25.16	 	Notice period
	 
	 	 	Where this Agreement specifies a minimum period of notice to be
given to the Facility Agent, the Facility Agent may, at its discretion,
accept a shorter notice period.
	 
	26.	 	EVIDENCE AND CALCULATIONS
	 
	26.1	 	 Accounts
	 
	 	 	Accounts maintained by a Finance Party in connection with this
Agreement are prima facie evidence of the matters to which they relate
for the purpose of any litigation or arbitration proceedings.
	 
	26.12	 	Certificates and determinations
	 
	 	 	Any certification or determination by a Finance Party of a rate or
amount under the Finance Documents will be, in the absence of manifest
error, conclusive evidence of the matters to which it relates.
	 
	26.3	 	Calculations
	 
	 	 	Any interest or fee accruing under this Agreement accrues from day
to day and is calculated on the basis of the actual number of days
elapsed and a year of 360 or 365 days or otherwise, depending on what the
Facility Agent determines is market practice.
	 
	27.	 	FEES
	 
	27.1	 	Facility Agent’s fee
	 
	 	 	The Company must pay to the Facility Agent for its own account
agency fees in the manner agreed in the Fee Letter between the Facility
Agent and the Company.
	 
	27.2	 	 Arrangement fee
	 
	 	 	The Company must pay to the Mandated Lead Arrangers for their own
account an arrangement fee in the manner agreed in the Fee Letter between
the Mandated Lead Arrangers and the Company.
	 
	27.	 	Commitment fee
	 
	(a)	 	The Company must pay a commitment fee computed at the rate of 50 per
cent. of the LC Commission per annum on the unutilised or undrawn,
uncancelled amount of each Lender’s Commitment.
	 
	(b)	 	Accrued commitment fee is payable quarterly in arrear with respect to
each period ending on 31st March, 30th June, 30th September and 31st
December. Accrued commitment fee is also payable to the Facility Agent
for a Lender on the date its Commitment is cancelled in full.

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	28.	 	INDEMNITIES AND BREAK COSTS
	 
	28.1	 	Currency indemnity
	 
	(a)	 	Each Obligor must, as an independent obligation, indemnify each Finance
Party against any loss or liability which that Finance Party incurs as a
consequence of:

	 	(i)	 	that Finance Party receiving an amount in respect of that
Obligor’s liability under the Finance Documents; or
	 
	 	(ii)	 	that liability being converted into a claim, proof, judgment
or order,

	 	 	in a currency other than the currency in which the amount is
expressed to be payable under the relevant Finance Document.
	 
	(b)	 	Unless otherwise required by law, each Obligor waives any right it may
have in any jurisdiction to pay any amount under the Finance Documents in
a currency other than that in which it is expressed to be payable.
	 
	28.2	 	 Other indemnities
	 
	(a)	 	Each Obligor must indemnify each Finance Party against any loss or
liability which that Finance Party incurs as a consequence of:

	 	(i)	 	the occurrence of any Event of Default with respect to it;
	 
	 	(ii)	 	any failure by that Obligor to pay any amount due from it
under a Finance Document on its due date, including any resulting
from any distribution or redistribution of any amount among the
Lenders under this Agreement;
	 
	 	(iii)	 	(other than by reason of negligence or default by that
Finance Party) a Credit for that Obligor not being made after a
Request has been delivered for that Credit;
	 
	 	(iv)	 	a Credit (or part of a Credit) in respect of which that
Obligor is Borrower not being prepaid in accordance with a notice of
prepayment; or
	 
	 	(v)	 	an overdue amount from that Obligor being paid other than on
the last day of the Term for that overdue amount.

	 	 	The Obligor’s liability in each case includes any loss or expense on
account of funds borrowed, contracted for or utilised to fund any amount
payable under any Finance Document, any amount repaid or prepaid or any
Credit.
	 
	(b)	 	The Company must indemnify the Facility Agent against any loss or
liability incurred by the Facility Agent as a result of:

	 	(i)	 	investigating any event which the Facility Agent reasonably
believes to be a Default; or
	 
	 	(ii)	 	acting or relying on any notice which the Facility Agent
reasonably believes to be genuine, correct and appropriately
authorised.

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	28.3	 	Break Costs
	 
	(a)	 	Each Borrower must pay to each Lender its Break Costs.
	 
	(b)	 	Break Costs are the amount (if any) determined (in good faith) by the
relevant Lender by which:

	 	(i)	 	the interest which that Lender would have received for the
period from the date of receipt of any part of its share in a Loan
or an overdue amount to the last day of the applicable Term for that
Loan or overdue amount if the principal or overdue amount received
had been paid on the last day of that Term;

	 	 	exceeds

	 	(ii)	 	the amount which that Lender would be able to obtain by
placing an amount equal to the amount received by it on deposit with
a leading bank in the appropriate interbank market for a period
starting on the Business Day following receipt and ending on the
last day of the applicable Term.

	(c)	 	Each Lender must supply to the Facility Agent for the relevant Borrower
details of the amount of any Break Costs claimed by it under this
Subclause.
	 
	29.	 	EXPENSES
	 
	29.1	 	Initial costs
	 
	 	 	The Company must (subject to the provisions of the mandate letter
relating to this Agreement between the Company and the Mandated Lead
Arrangers dated 7th April, 2003) pay to each Administrative Party the
amount of all costs and expenses (including legal fees) reasonably
incurred by it in connection with the negotiation, preparation, printing,
execution and syndication of the Finance Documents.
	 
	29.2	 	Subsequent costs
	 
	 	 	The Company must pay to the Facility Agent the amount of all costs
and expenses (including legal fees) reasonably incurred by it in
connection with:

	 	(a)	 	the negotiation, preparation, printing and execution of any
Finance Document (other than a Transfer Certificate) executed after
the date of this Agreement;
	 
	 	(b)	 	any amendment, waiver or consent requested by or on behalf of
an Obligor; and
	 
	 	(c)	 	the delivery of, and creation of any Security Interest with
respect to, Required Security.

	29.3	 	Enforcement costs
	 
	 	 	The Company must pay to each Finance Party the amount of all duly
documented costs and expenses (including legal fees) incurred by it in
connection with any Event of Default, the enforcement, perfection or
preservation of any rights under, any Finance Document.

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	30.	 	AMENDMENTS AND WAIVERS
	 
	30.1	 	Procedure
	 
	(a)	 	Except as provided in this Clause, any term of the Finance Documents may
be amended or waived with the agreement of the Company and the Majority
Lenders. The Facility Agent may effect, on behalf of any Finance Party,
an amendment or waiver allowed under this Clause.
	 
	(b)	 	The Facility Agent must promptly notify the other Parties of any
amendment or waiver effected by it under paragraph (a) above. Any such
amendment or waiver is binding on all the Parties.
	 
	30.2	 	 Exceptions
	 
	(a)	 	An amendment or waiver which relates to:

	 	(i)	 	the definition of Majority Lenders in Clause 1.1
(Definitions);
	 
	 	(ii)	 	an extension of the date of payment of any amount to a Lender
under the Finance Documents;
	 
	 	(iii)	 	a reduction in the Margin, LC Commission or a reduction in
the amount of any payment of principal, interest, fee or other
amount payable to a Lender under the Finance Documents;
	 
	 	(iv)	 	an increase in, or an extension of, a Commitment or the Total
Commitments;
	 
	 	(v)	 	a release of an Obligor or any security constituted by a
Security Document (other than as contemplated by this Agreement);
	 
	 	(vi)	 	a term of a Finance Document which expressly requires the
consent of each Lender;
	 
	 	(vii)	 	the right of a Lender to assign or transfer its rights or
obligations under the Finance Documents; or
	 
	 	(viii)	 	this Clause or Clause 10.2
(Mandatory prepayment - change of control),

	 	 	may only be made with the consent of all the Lenders.
	 
	(b)	 	An amendment or waiver which relates to the rights or obligations of an
Administrative Party may only be made with the consent of that
Administrative Party.
	 
	30.3	 	Change of currency
	 
	 	 	If a change in any currency of a country occurs (including where
there is more than one currency or currency unit recognised at the same
time as the lawful currency of a country), the Finance Documents will be
amended to the extent the Facility Agent (acting reasonably and after
consultation with the Company) determines is necessary to reflect the
change.
	 
	30.4	 	Waivers and remedies cumulative
	 
	 	 	The rights of each Finance Party under the Finance Documents:

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	 	(a)	 	may be exercised as often as necessary;
	 
	 	(b)	 	are cumulative and not exclusive of its rights under the
general law; and
	 
	 	(c)	 	may be waived only in writing and specifically.

	 	 	Delay in exercising or non-exercise of any right is not a waiver of
that right.
	 
	31.	 	CHANGES TO THE PARTIES
	 
	31.1	 	Assignments and transfers by Obligors
	 
	 	 	No Obligor may assign or transfer any of its rights and obligations
under the Finance Documents without the prior consent of all the Lenders.
	 
	31.2	 	Assignments and transfers by Lenders
	 
	(a)	 	A Lender (the Existing Lender) may, subject to paragraph (b) below, at
any time assign or transfer (including by way of novation) any of its
rights and obligations under this Agreement to a Bank (the New Lender),
provided that a Lender may not transfer its Commitment if to do so would
result in its Commitment being less than the aggregate of the US Dollar
Amount (as defined in Clause 8 (Optional Currencies)) of its
participations in all outstanding Letters of Credit.
	 
	(b)	 	At the date it becomes a Party, either:

	 	(i)	 	the New Lender must be a Bank and an NAIC Approved Bank; or
	 
	 	(ii)	 	the New Lender’s obligations with respect to Letters of
Credit must be confirmed by an NAIC Approved Bank under a Confirming
Bank Agreement entered into by it with that New Lender.

	(c)	 	A transfer of obligations will be effective only if either:

	 	(i)	 	the obligations are novated in accordance with the following
provisions of this Clause; or
	 
	 	(ii)	 	the New Lender confirms to the Facility Agent and the Company
in form and substance satisfactory to the Facility Agent that it is
bound by the terms of this Agreement as a Lender. On the transfer
becoming effective in this manner the Existing Lender will (without
prejudice to its obligations under any outstanding Letter of Credit)
be released from its obligations under this Agreement to the extent
that they are transferred to the New Lender.

	(d)	 	Unless the Facility Agent otherwise agrees, the New Lender must pay to
the Facility Agent for its own account, on or before the date any
assignment or transfer occurs, a fee of US$2,500.
	 
	(e)	 	Any reference in this Agreement to a Lender includes a New Lender but
excludes a Lender if no amount is or may be owed to or by it under this
Agreement.
	 
	(f)	 	A Lender may not enter into a participation or subparticipation in
connection with this Agreement with a person that is not a Bank.

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	31.3	 	Procedure for transfer by way of novations
	 
	(a)	 	In this Subclause:
	 
	 	 	Transfer Date means, for a Transfer Certificate, the later of:

	 	(i)	 	the proposed Transfer Date specified in that Transfer
Certificate; and
	 
	 	(ii)	 	the date on which the Facility Agent executes that Transfer
Certificate.

	(b)	 	A novation is effected if:

	 	(i)	 	the Existing Lender and the New Lender deliver to the
Facility Agent a duly completed Transfer Certificate; and
	 
	 	(ii)	 	the Facility Agent executes it.

	 	 	The Facility Agent must execute as soon as reasonably practicable a
Transfer Certificate delivered to it and which appears on its face to be
in order.
	 
	(c)	 	Each Party (other than the Existing Lender and the New Lender)
irrevocably authorises the Facility Agent to execute any duly completed
Transfer Certificate on its behalf.
	 
	(d)	 	On the Transfer Date:

	 	(i)	 	the New Lender will assume the rights and obligations of the
Existing Lender expressed to be the subject of the novation in the
Transfer Certificate in substitution for the Existing Lender; and
	 
	 	(ii)	 	the Existing Lender will be released from those obligations
and cease to have those rights.

	(e)	 	A Transfer Certificate may, in addition to a bank or financial
institution which is the New Lender thereunder, designate an Affiliate of
the New Lender for the purposes referred to in Clause 2.4 (Affiliate
Facility Offices) and shall be effective to do so if that Affiliate also
executes the Transfer Certificate (and relevant references in the Finance
Documents shall be read accordingly).
	 
	31.4	 	 Limitation of responsibility of Existing Lender
	 
	(a)	 	Unless expressly agreed to the contrary, an Existing Lender is not
responsible to a New Lender for the legality, validity, adequacy,
accuracy, completeness or performance of:

	 	(i)	 	any Finance Document or any other document; or
	 
	 	(ii)	 	any statement or information (whether written or oral) made
in or supplied in connection with any Finance Document,

	 	 	and any representations or warranties implied by law are excluded.
	 
	(b)	 	Each New Lender confirms to the Existing Lender and the other Finance
Parties that it:

	 	(i)	 	has made, and will continue to make, its own independent
appraisal of all risks arising under or in connection with the
Finance Documents (including the financial

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	 	 	 	condition and affairs of each Obligor and its related entities and
the nature and extent of any recourse against any Party or its
assets) in connection with its participation in this Agreement; and
	 
	 	(ii)	 	has not relied exclusively on any information supplied to it
by the Existing Lender in connection with any Finance Document.

	(c)	 	Nothing in any Finance Document requires an Existing Lender to:

	 	(i)	 	accept a re-transfer from a New Lender of any of the rights
and obligations assigned or transferred under this Clause; or
	 
	 	(ii)	 	support any losses incurred by the New Lender by reason of
the non-performance by any Obligor of its obligations under any
Finance Document or otherwise.

	31.5	 	 Outstanding Letters of Credit
	 
	 	 	Other than Clause 31.2(f), nothing in this Agreement shall restrict
the right of any Lender to enter into any form of sub-participation
arrangement or agreement in relation to its participation in this
Agreement and any outstanding Letter of Credit (and any disposal by a
Lender of its obligations under, or interest in, any outstanding Letter
of Credit shall be by way of a participation arrangement or agreement).
	 
	31.6	 	 Costs resulting from change of Lender or Facility Office
	 
	 	 	If:

	 	(a)	 	a Lender assigns or transfers any of its rights and
obligations under the Finance Documents or changes its Facility
Office; and
	 
	 	(b)	 	as a result of circumstances existing at the date the
assignment, transfer or change occurs, an Obligor would be obliged
to pay a Tax Payment or an Increased Cost in an amount greater than
the amount (if any) payable immediately prior to such assignment or
transfer,

	 	 	then, unless the assignment, transfer or change is made by a Lender
to mitigate any circumstances giving rise to the Tax Payment, Increased
Cost or a right to be prepaid and/or cancelled by reason of illegality,
the Obligor need only pay that Tax Payment or Increased Cost to the same
extent that it would have been obliged to if no assignment, transfer or
change had occurred.
	 
	31.7	 	Additional Borrower
	 
	(a)	 	If one of the wholly-owned Subsidiaries of the Company is to become an
Additional Borrower, then the Company must (following consultation with
the Facility Agent) deliver to the Facility Agent the relevant documents
and evidence listed in Part II of Schedule 2 (Conditions precedent
documents).
	 
	(b)	 	Except in the case of Converium Reinsurance (North America) Inc., the
prior consent of all the Lenders is required before any wholly-owned
Subsidiary of the Company may become an Additional Borrower.
	 
	(c)	 	The relevant Subsidiary will become an Additional Borrower when the
Facility Agent notifies the other Finance Parties and the Company that it
has received all of the documents and

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	 	 	evidence referred to in paragraph (a) above in form and substance
satisfactory to it. The Facility Agent must give this notification as
soon as reasonably practicable.
	 
	(d)	 	Delivery of an Accession Agreement, executed by the relevant Subsidiary
and the Company, to the Facility Agent constitutes confirmation by that
Subsidiary and the Company that the Repeating Representations are then
correct in all material respects.
	 
	31.8	 	Resignation of a Borrower (other than the Company)
	 
	(a)	 	In this Subclause, Resignation Request means a letter in the form of
Schedule 8 (Form of Resignation Request), with such amendments as the
Facility Agent may approve or reasonably require.
	 
	(b)	 	The Company may request that a Borrower (other than the Company) ceases
to be a Borrower by giving to the Facility Agent a duly completed
Resignation Request.
	 
	(c)	 	The Facility Agent must accept a Resignation Request and notify the
Company and the Lenders of its acceptance if:

	 	(i)	 	it is not aware that a Default is outstanding or would result
from the acceptance of the Resignation Request or, where a Default
is outstanding, that Default would be cured by accepting that
Resignation Request; and
	 
	 	(ii)	 	no amount owed by that Borrower under this Agreement and no
Letter of Credit requested by that Borrower, is still outstanding.

	(d)	 	The Borrower will cease to be a Borrower when the Facility Agent gives
the notification referred to in paragraph (c) above.
	 
	(e)	 	A Borrower (other than the Company) may also cease to be a Borrower in
any other manner approved by the Majority Lenders.
	 
	31.9	 	Changes to the Reference Banks
	 
	 	 	If a Reference Bank (or, if a Reference Bank is not a Lender, the
Lender of which it is an Affiliate) ceases to be a Lender, the Facility
Agent must (in consultation with the Company) appoint another Lender or
an Affiliate of a Lender to replace that Reference Bank.
	 
	31.10	 	 Affiliates of Lenders
	 
	(a)	 	Each Lender may fulfil its obligations in respect of any Credit through
an Affiliate if:

	 	(i)	 	the relevant Affiliate is specified in this Agreement as a
Lender or becomes a Lender by means of a Transfer Certificate in
accordance with this Agreement; and
	 
	 	(ii)	 	the Credits in which that Affiliate will participate are
specified in this Agreement or in a notice given by that Lender to
the Facility Agent and the Company.

	 	 	In this event, the Lender and the Affiliate will participate in
Credits in the manner provided for in sub-paragraph (ii) above.
	 
	(b)	 	If paragraph (a) above applies, the Lender and its Affiliate will be
treated as having a single Commitment and a single vote, but, for all
other purposes, will be treated as separate Lenders.

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	32.	 	DISCLOSURE OF INFORMATION
	 
	(a)	 	Each Finance Party must keep confidential any information supplied to it
by or on behalf of any member of the Converium Group in connection with
the Finance Documents. However, a Finance Party is entitled to disclose
information:

	 	(i)	 	which is publicly available, other than as a result of a
breach by that Finance Party of this Clause;
	 
	 	(ii)	 	with respect to the U.S. federal income tax treatment and
U.S. federal income tax structure of the transactions contemplated
by this Agreement and all materials of any kind (including opinions
or other tax analyses in the possession of that Finance Party) which
relate to such tax treatment and tax structure;
	 
	 	(iii)	 	in connection with any legal or arbitration proceedings;
	 
	 	(iv)	 	if required to do so under any law or regulation;
	 
	 	(v)	 	to a governmental, banking, taxation or other regulatory
authority;
	 
	 	(vi)	 	to its professional advisers;
	 
	 	(vii)	 	to the extent allowed under paragraph (b) below;
	 
	 	(viii)	 	to another Obligor; or
	 
	 	(ix)	 	with the agreement of the relevant Obligor,

	 	 	provided that in the case of paragraphs (ii) (other than where such
proceedings relate to the enforcement of a Finance Party’s rights under
the Finance Documents), (iii) or (iv) above, the Finance Party concerned
shall notify the Company of the disclosure (if lawfully permissible,
prior to it being made) unless it is prevented from doing so by any
obligation of confidentiality or to do so might be prejudicial to that
Finance Party.
	 
	(b)	 	A Finance Party may disclose to an Affiliate or any person with whom it
may enter, or has entered into, any kind of transfer, participation or
other agreement in relation to this Agreement (a participant):

	 	(i)	 	a copy of any Finance Document; and
	 
	 	(ii)	 	any information which that Finance Party has acquired under
or in connection with any Finance Document.

	 	 	However, before a participant may receive any confidential
information, it must agree with the relevant Finance Party to keep that
information confidential on the terms of paragraph (a) above.
	 
	(c)	 	This Clause supersedes any previous confidentiality undertaking given by
a Finance Party in connection with this Agreement prior to it becoming a
Party.
	 
	33.	 	SET-OFF
	 
	 	 	A Finance Party may set off any matured obligation owed to it by an
Obligor under the Finance Documents (to the extent beneficially owned by
that Finance Party) against any

72

 

	 	 	obligation (whether or not matured) owed by that Finance Party to that
Obligor, regardless of the place of payment, booking branch or currency
of either obligation. If the obligations are in different currencies,
the Finance Party may convert either obligation at a market rate of
exchange in its usual course of business for the purpose of the set-off.
	 
	34.	 	PRO RATA SHARING
	 
	34.1	 	Redistribution
	 
	 	 	If any amount owing by an Obligor under this Agreement to a Lender
(the recovering Lender) is discharged by payment, set-off or any other
manner other than through the Facility Agent under this Agreement (a
recovery), then:

	 	(a)	 	the recovering Lender must, within three Business Days,
supply details of the recovery to the Facility Agent;
	 
	 	(b)	 	the Facility Agent must calculate whether the recovery is in
excess of the amount which the recovering Lender would have received
if the recovery had been received by the Facility Agent under this
Agreement; and
	 
	 	(c)	 	the recovering Lender must pay to the Facility Agent an
amount equal to the excess (the redistribution).

	34.2	 	Effect of redistribution
	 
	(a)	 	The Facility Agent must treat a redistribution as if it were a payment by
the relevant Obligor under this Agreement and distribute it among the
Lenders, other than the recovering Lender, accordingly.
	 
	(b)	 	When the Facility Agent makes a distribution under paragraph (a) above,
the recovering Lender will be subrogated to the rights of the Finance
Parties which have shared in that redistribution.
	 
	(c)	 	If and to the extent that the recovering Lender is not able to rely on
any rights of subrogation under paragraph (b) above, the relevant Obligor
will owe the recovering Lender a debt which is equal to the
redistribution, immediately payable and of the type originally discharged.
	 
	(d)	 	If:

	 	(i)	 	a recovering Lender must subsequently return a recovery, or
an amount measured by reference to a recovery, to an Obligor; and
	 
	 	(ii)	 	the recovering Lender has paid a redistribution in relation
to that recovery,

	 	 	each Finance Party must reimburse the recovering Lender all or the
appropriate portion of the redistribution paid to that Finance Party,
together with interest for the period while it held the re-distribution.
In this event, the subrogation in paragraph (b) above will operate in
reverse to the extent of the reimbursement.
	 
	34.3	 	 Exceptions
	 
	 	 	Notwithstanding any other term of this Clause, a recovering Lender
need not pay a redistribution to the extent that:

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	(a)	 	it would not, after the payment, have a valid claim against
the relevant Obligor in the amount of the redistribution; or
	 
	(b)	 	it would be sharing with another Finance Party any amount
which the recovering Lender has received or recovered as a result of
legal or arbitration proceedings, where:

	 	(i)	 	the recovering Lender notified the Facility Agent
of those proceedings; and
	 
	 	(ii)	 	the other Finance Party had an opportunity to
participate in those proceedings but did not do so or did not
take separate legal or arbitration proceedings as soon as
reasonably practicable after receiving notice of them.

	34.4	 	Loss sharing
	 
	(a)	 	If with respect to:

	 	(i)	 	any Single Lender Letter of Credit which is by its terms
automatically renewed or extended on its expiry date unless
cancelled; or
	 
	 	(ii)	 	any Loan made in connection with such a Single Lender Letter
of Credit,

	 	 	an Event of Default occurs under Clause 23.2 (Non-payment), the Facility
Agent shall as soon as practicable following its becoming aware of that
Event of Default (and whilst the same is still outstanding) give a notice
of cancellation and non renewal to the beneficiary of that Single Lender
Letter of Credit and each other Single Lender Letters of Credit which are
in the same LC Series as that Single Lender Letter of Credit.
	 
	(b)	 	In this Subclause, Discharge Date means, in relation to an LC Series, the
date (as determined by the Facility Agent) on which no Lender has any
further liability (actual or contingent) under any Single Lender Letter of
Credit issued on its behalf which forms part of that LC Series.
	 
	(c)	 	Without prejudice to Clause 34.1 (Redistribution), if following a
Discharge Date, it transpires that any amount outstanding under this

Agreement with respect to the LC Series to which that Discharge Date
relates remains undischarged and for any reason any resulting losses are
not being borne by the Lenders participating in that LC Series pro rata to
the amount their Commitments bears to the Total Commitments on that
Discharge Date (or, if the Total Commitments have been cancelled, bore to
the Total Commitments before such cancellation), those Lenders shall make
such payments between themselves as the Facility Agent shall direct to
ensure that after taking into account such payments such losses are borne
by those Lenders pro rata. Where a Lender makes a payment to another
Lender under this Subclause, it will be subrogated to the rights of the
Lender to which that payment is made with respect to the liability of the
Obligors to which the payment relates. If and to the extent that the
Lender making the payment is not able to rely on such rights of
subrogation, the relevant Obligor will owe that Lender a debt which is
equal to the amount of the payment, immediately payable and of the type in
respect of which the payment was made.
	 
	35.	 	SEVERABILITY
	 
	 	 	If a term of a Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that will not affect:

74

 

	 	(a)	 	the legality, validity or enforceability in that jurisdiction
of any other term of the Finance Documents; or
	 
	 	(b)	 	the legality, validity or enforceability in other
jurisdictions of that or any other term of the Finance Documents.

	36.	 	COUNTERPARTS
	 
	 	 	Each Finance Document may be executed in any number of counterparts.
This has the same effect as if the signatures on the counterparts were
on a single copy of the Finance Document.
	 
	37.	 	NOTICES
	 
	37.1	 	 In writing
	 
	(a)	 	Any communication in connection with a Finance Document must be in
writing and, unless otherwise stated, may be given:

	 	(i)	 	in person, by post, fax, e-mail or any other electronic
communication approved by the Facility Agent; or
	 
	 	(ii)	 	if between the Facility Agent and a Lender and the Facility
Agent and the Lender agree, by e-mail or other electronic
communication.

	(b)	 	For the purpose of the Finance Documents, an electronic communication
will be treated as being in writing.
	 
	(c)	 	Unless it is agreed to the contrary, any consent or agreement required
under a Finance Document must be given in writing.
	 
	37.2	 	 Contact details
	 
	(a)	 	Except as provided below, the contact details of each Party for all
communications in connection with the Finance Documents are those notified
by that Party for this purpose to the Facility Agent on or before the date
it becomes a Party.
	 
	(b)	 	The contact details of the Company for this purpose are:

	 	 	 
	Address:	 	
General Guisan-Quai 26
	 	 	
8002 Zurich
	 	 	
Switzerland
	 	 	
 
	Fax number:	 	
+411 639 90 66
	E-mail:	 	
christian.felderer@converium.com
	Attention:	 	
Christian Felderer

	(c)	 	The contact details of the Facility Agent for this purpose are:

	 	 	 
	Address:	 	
250 Bishopsgate

London
	 	 	
 
	Fax number:	 	
+44 207 678 6021
	E-mail:	 	
lisa.lee@uk.abnamro.com / vikki.mayell@uk.abnamro.com
	Attention:	 	
Lisa Lee / Vikki Mayell.

75

 

	(d)	 	Any Party may change its contact details by giving five Business Days’
notice to the Facility Agent or (in the case of the Facility Agent) to the
other Parties.
	 
	(e)	 	Where a Party nominates a particular department or officer to receive a
communication, a communication will not be effective if it fails to
specify that department or officer.
	 
	37.3	 	 Effectiveness
	 
	(a)	 	Except as provided below, any communication in connection with a Finance
Document will be deemed to be given as follows:

	 	(i)	 	if delivered in person, at the time of delivery;
	 
	 	(ii)	 	if posted, five days after being deposited in the post,
postage prepaid, in a correctly addressed envelope;
	 
	 	(iii)	 	if by fax, when received in legible form; and
	 
	 	(iv)	 	if by e-mail or any other electronic communication, when
received in legible form.

	(b)	 	A communication given under paragraph (a) above but received on a
non-working day or after business hours in the place of receipt will only
be deemed to be given on the next working day in that place.
	 
	(c)	 	A communication to the Facility Agent will only be effective on actual
receipt by it.
	 
	37.4	 	Obligors
	 
	(a)	 	All communications under the Finance Documents to or from an Obligor must
be sent through the Facility Agent.
	 
	(b)	 	All communications under the Finance Documents to or from an Obligor
(other than the Company) must be sent through the Company.
	 
	(c)	 	Each Obligor (other than the Company) irrevocably appoints the Company to
act as its agent:

	 	(i)	 	to give and receive all communications under the Finance
Documents; and
	 
	 	(ii)	 	to supply all information concerning itself to any Finance
Party.

	(d)	 	Any communication given to the Company in connection with a Finance
Document will be deemed to have been given also to the other Obligors.
	 
	(e)	 	The Facility Agent may assume that any communication made by the Company
is made with the consent of each other Obligor.
	 
	38.	 	LANGUAGE
	 
	(a)	 	Any notice given in connection with a Finance Document must be in
English.
	 
	(b)	 	Any other document provided in connection with a Finance Document must
be:

	 	(i)	 	in English; or

76

 

	 	(ii)	 	(unless the Facility Agent otherwise agrees) accompanied by a
certified English translation. In this case, the English
translation prevails unless the document is a statutory or other
official document.

	39.	 	GOVERNING LAW
	 
	 	 	This Agreement is governed by English law.
	 
	40.	 	ENFORCEMENT
	 
	40.1	 	 Jurisdiction
	 
	(a)	 	The English courts have exclusive jurisdiction to settle any dispute in
connection with any Finance Document.
	 
	(b)	 	The English courts are the most appropriate and convenient courts to
settle any such dispute and each Obligor waives objection to those courts
on the grounds of inconvenient forum or otherwise in relation to
proceedings in connection with any Finance Document.
	 
	(c)	 	This Clause is for the benefit of the Finance Parties only. To the
extent allowed by law, a Finance Party may take:

	 	(i)	 	proceedings in any other court; and
	 
	 	(ii)	 	concurrent proceedings in any number of jurisdictions.

	40.2	 	Service of process
	 
	(a)	 	Each Obligor not incorporated in England and Wales irrevocably appoints
Law Debenture Corporate Services Ltd., presently at 100 Wood Street,
London EC2V 7EX as its agent under the Finance Documents for service of
process in any proceedings before the English courts.
	 
	(b)	 	If any person appointed as process agent is unable for any reason to act
as agent for service of process, the Company (on behalf of all the
Obligors) must immediately appoint another agent on terms acceptable to
the Facility Agent (acting reasonably). Failing this, the Facility Agent
may appoint another agent for this purpose.
	 
	(c)	 	Each Obligor agrees that failure by a process agent to notify it of any
process will not invalidate the relevant proceedings.
	 
	(d)	 	This Clause does not affect any other method of service allowed by law.
	 
	40.3	 	 Waiver of immunity
	 
	 	 	Each Obligor irrevocably and unconditionally:

	 	(a)	 	agrees not to claim any immunity from proceedings brought by
a Finance Party against it in relation to a Finance Document and to
ensure that no such claim is made on its behalf;
	 
	 	(b)	 	consents generally to the giving of any relief or the issue
of any process in connection with those proceedings; and
	 
	 	(c)	 	waives all rights of immunity in respect of it or its assets.

77

 

This Agreement has been entered into on the date stated at the beginning of this Agreement.

78

 

SCHEDULE 1

ORIGINAL PARTIES

	 	 	 	 	 
	 	 	Registration number
	Name of Original Borrower	 	(or equivalent, if any)
	Converium Rückversicherung
(Deutschland) AG
	 	 	 	 
	Converium Insurance (UK) Ltd.
	 	 	4580111	 

79

 

	 	 	 	 	 
	 	 	Commitments
	Name of Original Lender	 	US$
	ABN AMRO Bank N.V
	 	 	60,000,000	 
	Barclays Bank PLC
	 	 	60,000,000	 
	Commerzbank Aktiengesellschaft
	 	 	60,000,000	 
	Crédit Lyonnais, Frankfurt am Main
	 	 	55,000,000	 
	Dresdner Bank AG, Niederlassung Luxemburg
	 	 	55,000,000	 
	HSBC Bank USA
	 	 	55,000,000	 
	Bayerische Hypo- und Vereinsbank AG
	 	 	55,000,000	 
	ING Bank N.V., London Branch
	 	 	55,000,000	 
	JPMorgan Chase Bank
	 	 	55,000,000	 
	Landesbank Baden-Württemberg, London Branch
	 	 	55,000,000	 
	Lloyds TSB Bank plc
	 	 	55,000,000	 
	National Australia Bank Limited (A.B.N. 12
004 044 937)
	 	 	55,000,000	 
	HSH Nordbank AG
	 	 	47,500,000	 
	Landesbank Sachsen Girozentrale
	 	 	47,500,000	 
	Credit Suisse
	 	 	40,000,000	 
	The Bank of New York
	 	 	25,000,000	 
	Bank One, NA
	 	 	25,000,000	 
	WestLB AG, New York Branch
	 	 	25,000,000	 
	Caixa Geral de Depositos
	 	 	15,000,000	 
	 
	 	 	
	 
	Total Commitments
	 	US$	900,000,000	 
	 
	 	 	
	 

80

 

SCHEDULE 2

CONDITIONS PRECEDENT DOCUMENTS

PART 1

TO BE DELIVERED BEFORE THE FIRST REQUEST

Original Obligors

	1.	 	A copy of the constitutional documents of each Original Obligor.
	 
	2.	 	A copy of a resolution of the board of directors of each Original Obligor
(or, in the case of the Company, of Holding) approving the terms of, and
the transactions contemplated by, this Agreement.
	 
	3.	 	A specimen of the signature of each person authorised on behalf of an
Original Obligor to execute or witness the execution of any Finance
Document or to sign or send any document or notice in connection with any
Finance Document.
	 
	4.	 	A certificate of an authorised signatory of the Company:

	 	(a)	 	confirming that utilising the Total Commitments in full would
not breach any limit binding on any Original Obligor; and
	 
	 	(b)	 	certifying that each copy document specified in Part I of
this Schedule is correct, complete and in full force and effect as
at a date no earlier than the date of this Agreement.

	5.	 	Evidence that each agent of the Original Obligors under the Finance
Documents for service of process in England and Wales has accepted its
appointment.
	 
	6.	 	A copy of the most recent audited, consolidated financial statements of
Holding.
	 
	7.	 	A copy of the most recent audited, financial statements of each Original
Obligor.

Legal opinions

	1.	 	A legal opinion of Allen & Overy, London, legal advisers to the Mandated
Lead Arrangers and the Facility Agent as to English law, addressed to the
Finance Parties.
	 
	2.	 	If an Original Obligor is incorporated in a jurisdiction other than
England, a legal opinion from legal advisers in that jurisdiction to the
Mandated Lead Arrangers, addressed to the Finance Parties.

Other documents and evidence

	1.	 	Evidence that all fees and expenses then due and payable from the Company
under this Agreement have been or will be paid by the first Utilisation
Date.
	 
	2.	 	Evidence that arrangements satisfactory to each Original Lender that has
issued an Existing Letter of Credit and the Company for the return and
cancellation of the Existing Letters of Credit have been agreed.

81

 

	3.	 	A copy of any regulatory or governmental consent, licence or registration
that is required for any Original Obligor to enter into the transactions
contemplated by this Agreement.
	 
	4.	 	A copy of any other authorisation or other document, opinion or assurance
which the Facility Agent (acting reasonably) has notified the Company is
necessary or desirable in connection with the entry into and performance
of, and the transactions contemplated by, any Finance Document or for the
validity and enforceability of any Finance Document.

82

 

PART 2

FOR AN ADDITIONAL BORROWER

Additional Borrowers

	1.	 	An Accession Agreement, duly executed by the Company and the Additional
Borrower.
	 
	2.	 	A copy of the constitutional documents of the Additional Borrower.
	 
	3.	 	A copy of a resolution of the board of directors of the Additional
Borrower approving the terms of, and the transactions contemplated by, the
Accession Agreement.
	 
	4.	 	A specimen of the signature of each person authorised on behalf of the
Additional Borrower to execute or witness the execution of any Finance
Document or to sign or send any document or notice in connection with any
Finance Document.
	 
	5.	 	If applicable, a copy of a resolution, signed by all (or any lower
percentage agreed by the Facility Agent) of the holders of its issued or
allotted shares, approving the terms of, and the transactions contemplated
by, the Accession Agreement.
	 
	6.	 	If applicable, a copy of a resolution of the board of directors of each
corporate shareholder in the Additional Borrower approving the resolution
referred to in paragraph 5 above.
	 
	7.	 	A certificate of an authorised signatory of the Additional Borrower:

	 	(a)	 	confirming that utilising the Total Commitments in full would
not breach any limit binding on it; and
	 
	 	(b)	 	certifying that each copy document specified in Part 2 of
this Schedule is correct, complete and in full force and effect as
at a date no earlier than the date of the Accession Agreement.

	8.	 	If available, a copy of the latest audited accounts of the Additional
Borrower.
	 
	9.	 	Evidence that each agent of the Additional Borrower under the Finance
Documents for service of process in England and Wales has accepted its
appointment.

Legal opinions

A legal opinion from legal advisers in the jurisdiction of incorporation of the
Additional Borrower , addressed to the Finance Parties.

Other documents and evidence

	1.	 	Evidence that all expenses due and payable from the Company under this
Agreement in respect of the Accession Agreement have been paid.
	 
	2.	 	A copy of any other authorisation or other document, opinion or assurance
which the Facility Agent (acting reasonably) has notified the Company is
necessary or desirable in connection with the entry into and performance
of, and the transactions contemplated by, the Accession Agreement or for
the validity and enforceability of any Finance Document.

83

 

SCHEDULE 3

FORM OF REQUEST

To: ABN AMRO BANK N.V., LONDON BRANCH as Facility Agent

From: [          ]

Date: [          ]

CONVERIUM AG, ZURICH-US$900,000,000 Credit Agreement

dated [          ], 2003 (the Agreement)

	1.	 	We refer to the Agreement. This is a Request.
	 
	2.	 	We wish to [borrow a Loan/arrange for a Letter of Credit to be issued]+
on the following terms:

	 	(a)	 	Utilisation Date: [          ]
	 
	 	(b)	 	Amount/currency: [          ]
	 
	 	(c)	 	Term: [          ]
	 
	 	(d)	 	[Multiple Lender Letter of Credit / Single Lender Letters of
Credit]+
	 
	 	(e)	 	Expiry date: [          ]
	 
	 	(f)	 	[Beneficiary name and
address]+.

	3.	 	Our [payment/delivery]+ instructions are: [          ].
	 
	4.	 	We confirm that each condition precedent under the Agreement which must
be satisfied on the date of this Request is so satisfied.
	 
	5.	 	This Request is irrevocable.
	 
	6.	 	[NAIC approval is relevant to the purposes for which the Letter of Credit
is requested]+.

[We attach a copy of the proposed Letter of Credit.]

By:

[           ]

	 	 	+Delete as applicable

84

 

SCHEDULE 4

CALCULATION OF THE MANDATORY COST

	1.	 	General
	 
	 	 	The Mandatory Cost is the weighted average of the rates for each
Lender calculated below by the Facility Agent on the first day of a Term.
The Facility Agent must distribute each amount of Mandatory Cost among
the Lenders on the basis of the rate for each Lender.
	 
	2.	 	For a Lender lending from a Facility Office in the U.K.
	 
	(a)	 	The relevant rate for a Lender lending from a Facility Office in the U.K.
is calculated in accordance with the following formulae:
	 
	 	 	for a Loan in sterling:

	 	 	 
	AB+C(B–D)+Ex0.01	 	 
	
	 	
per cent per annum
	100–(A+C)	 	 

	 	 	for any other Loan:

	 	 	 
	Ex0.01	 	 
	
	 	
per cent. per annum
	300	 	 

	 	 	where on the day of application of the formula:

	 	A	 	is the percentage of that Lender’s eligible liabilities (in
excess of any stated minimum) which the Bank of England requires it
to hold on a non-interest-bearing deposit account in accordance
with its cash ratio requirements;
	 
	 	B	 	is LIBOR for that Term;
	 
	 	C	 	is the percentage of that Lender’s eligible liabilities which the
Bank of England requires it to place as a special deposit;
	 
	 	D	 	is the interest rate per annum allowed by the Bank of England on
a special deposit; and
	 
	 	E	 	is calculated by the Facility Agent as being the average of the
rates of charge supplied by the Reference Banks to the Facility
Agent under paragraph (d) below and expressed in pounds per £1
million.

	(b)	 	For the purposes of this paragraph 2:

	 	(i)	 	eligible liabilities and special deposit have the meanings
given to them at the time of application of the formula by the Bank
of England;
	 
	 	(ii)	 	fees rules means the then current rules on periodic fees in
the Supervision Manual of the FSA Handbook; and
	 
	 	(iii)	 	tariff base has the meaning given to it in the fees rules.

85

 

	(c)	(i)	In the application of the formulae, A, B, C and D are
included as figures and not as percentages, e.g. if A =
0.5% and B = 15%, AB is calculated as 0.5 x 15. A negative
result obtained by subtracting D from B is taken as zero.
	 
	 	(ii)	Each rate calculated in accordance with a formula is, if
necessary, rounded upward to four decimal places.
	 
	(d)	(i)	Each Reference Bank must supply to the Facility Agent the rate of
charge payable by that Reference Bank to the Financial Services Authority
under the fees rules (calculated by that Reference Bank as being the
average of the rates of charge within fee-block Category A1 (Deposit
acceptors) applicable to that Reference Bank but, for this purpose,
applying any applicable discount and ignoring any minimum fee required
under the fees rules) and expressed in pounds per £1 million of the tariff
base of that Reference Bank.
	 
	 	(ii)	Each Reference Bank must promptly notify the Facility Agent
of any change to the rate of charge.
	 
	(e)	(i)	Each Lender and each Reference Bank must supply to the Facility Agent
the information required by it to make a calculation of the rate for that
Lender or Reference Bank. The Facility Agent may assume that this
information is correct in all respects.
	 
	 	(ii)	If a Lender or a Reference Bank fails to do so, the Facility
Agent may assume that the Lender’s or that Reference Bank’s
obligations in respect of cash ratio deposits, special deposits and
the fees rules are the same as those of a typical bank from its
jurisdiction of incorporation with a Facility Office in the U.K.
	 
	 	(iii)	The Facility Agent has no liability to any Party if its
calculation over or under compensates any Lender.

	 
	3.	For a Lender lending from a Facility Office in a Participating Member
State
	 
	(a)	The relevant rate for a Lender lending from a Facility Office in a
Participating Member State is the percentage rate per annum notified by
that Lender to the Facility Agent as its cost of complying with the
minimum reserve requirements of the European Central Bank.
	 
	(b)	If a Lender fails to specify a rate under paragraph (a) above, the
Facility Agent will assume that the Lender has not incurred any such cost.
	 
	4.	Changes
	 
	 	The Facility Agent may, after consultation with the Company and the
Lenders, notify all the Parties of any amendment to this Schedule which
is required to reflect:

	 	(a)	 	any change in law or regulation; or
	 
	 	(b)	 	any requirement imposed by the Bank of England, the Financial
Services Authority or the European Central Bank (or, in any case,
any successor authority).

	 	 	Any notification will be, in the absence of manifest error,
conclusive and binding on all the Parties.

86

 

SCHEDULE 5

FORM OF TRANSFER CERTIFICATE

To: ABN AMRO BANK N.V., LONDON BRANCH as Facility Agent

From: [THE EXISTING LENDER] (the Existing Lender) and [THE NEW LENDER]
(the New Lender)

Date: [          ]

CONVERIUM AG, ZURICH - US$900,000,000 Credit Agreement

dated [          ], 2003 (the Agreement)

	 	 	We refer to the Agreement. This is a Transfer Certificate.
	 
	1.	 	The Existing Lender transfers by novation to the New Lender the Existing
Lender’s rights and obligations referred to in the Schedule below in
accordance with the terms of the Agreement.
	 
	2.	 	The proposed Transfer Date is [          ].
	 
	3.	 	The administrative details of the New Lender for the purposes of the
Agreement are set out in the Schedule.
	 
	4.	 	This Transfer Certificate is governed by English law.

THE SCHEDULE

Rights and obligations to be transferred by novation

[insert relevant details, including applicable Commitment (or part)]

Administrative details of the New Lender

[insert details of Facility Office, address for notices and payment details etc.]

	 	 	 
	[EXISTING LENDER]	 	
[NEW LENDER]
	By:	 	
By:

The Transfer Date is confirmed by the Facility Agent as [          ].

ABN AMRO BANK N.V., LONDON BRANCH

By:

87

 

SCHEDULE 6

FORM OF COMPLIANCE CERTIFICATE

To: ABN AMRO BANK N.V., LONDON BRANCH as Facility Agent

From: CONVERIUM AG, ZURICH

Date: [          ]

CONVERIUM AG, ZURICH - US$900,000,000 Credit Agreement

dated [          ], 2003 (the Agreement)

	1.	 	We refer to the Agreement. This is a Compliance Certificate.
	 
	2.	 	We confirm that as at [date]:

	 	(a)	 	Consolidated Tangible Net Worth was [          ];
	 
	 	(b)	 	Consolidated Total Borrowings were [     ];
therefore, Consolidated Total Borrowings were [     ] per cent. ([          ]%) of Consolidated Tangible Net Worth

	3.	 	We set out below calculations establishing the figures in paragraph 2
above:
	 
	 	 	[          ].
	 
	4.	 	As at the date of this certificate, the Rating is [          ].
	 
	5.	 	We confirm that we have sufficient unencumbered cash and Eligible
Investments available to us to meet our obligations under the Agreement
with respect to the provision of Required Security.
	 
	6.	 	We confirm that no Default is outstanding.

CONVERIUM AG, ZURICH

By:

88

 

SCHEDULE 7

FORM OF ACCESSION AGREEMENT

To: ABN AMRO BANK N.V., LONDON BRANCH as Facility Agent

From: CONVERIUM AG, ZURICH and [Proposed Borrower]

Date: [          ]

CONVERIUM AG, ZURICH – US$900,000,000 Credit Agreement

dated [          ], 2003 (the Agreement)

We refer to the Agreement. This is an Accession Agreement.

[Name of company] of [address/registered office] agrees to become an
Additional Borrower and to be bound by the terms of the Agreement as an
Additional Borrower.

This Accession Agreement is governed by English law.

CONVERIUM AG, ZURICH

By:

[PROPOSED BORROWER

By:

89

 

SCHEDULE 8

FORM OF RESIGNATION REQUEST

To: ABN AMRO BANK N.V., LONDON BRANCH as Facility Agent

From: CONVERIUM AG, ZURICH and [relevant Borrower]

Date: [          ]

CONVERIUM AG, ZURICH - US$900,000,000 Credit Agreement

dated [          ], 2003 (the Agreement)

	1.	 	We refer to the Agreement. This is a Resignation Request.
	 
	2.	 	We request that [resigning Borrower] be released from its obligations as
a Borrower under the Agreement.
	 
	3.	 	We confirm that no Default is outstanding or would result from the
acceptance of this Resignation Request.
	 
	4.	 	We confirm that as at the date of this Resignation Request no amount owed
by [resigning Borrower] under the Agreement and no Letter of Credit
requested by [resigning Borrower] is outstanding.
	 
	5.	 	This Resignation Request is governed by English law.

	 	 	 
	CONVERIUM AG, ZURICH	 	
[Relevant Borrower]
	 	 	
 
	By:	 	
By:

The Facility Agent confirms that this resignation takes effect on [          ].

ABN AMRO BANK N.V., LONDON BRANCH

By:

90

 

SCHEDULE 9

FORMS OF LETTER OF CREDIT

Part 1 - Form of Multiple Lender Letter of Credit

IN FAVOUR OF:

[               ]

The banks and financial institutions listed in the Part A of the schedule to
this letter of credit (the Issuing Banks) have established this clean,
irrevocable and unconditional letter of credit in your favor as beneficiary for
drawings up to USD [     ] in aggregate.

[[This letter of credit is effective immediately].

[This letter of credit is issued in substitution and replacement for the
following outstanding letter(s) of credit issued in your favour: [insert
details of relevant Existing Letters of Credit] (the Existing Letter(s) of
Credit). This letter of credit shall be effective on the date on which we
receive confirmation from each bank that issued the Existing Letter(s) of
Credit that you have returned to such bank each of the Existing Letter(s) of
Credit issued by it together with your confirmation to it in writing that those
Existing Letter(s) of Credit are cancelled and that the bank has no further
liability thereunder.]]+

This letter of credit is issued, presentable and payable at the offices of the
Issuing Banks’ agent, ABN AMRO Bank N.V., Chicago (the Agent) at 200 West
Monroe St, Suite 1100, Chicago, IL 60606 and expires with the Agent’s close of
business on [          ]. Except when the amount of this letter of
credit is increased, this credit cannot be modified or revoked without your
consent.

The term ‘beneficiary’ includes any successor by operation of law of the named
beneficiary including without limitation any liquidator, rehabilitator,
receiver or conservator. Drawings by any liquidator, rehabilitator, receiver
or conservator shall be for the benefit of all of the beneficiary’s
policyholders. Where a claim is made by a successor, additional documents
evidencing the succession must also be presented.

Subject to the matters set out below, each Issuing Bank hereby severally
undertakes to promptly honor your claim (in the amount for that Issuing Bank
determined in accordance with the succeeding paragraphs) against sight draft(s)
drawn on the Issuing Banks or us as agent for the Issuing Banks, indicating
credit no.        , for all or any part of this credit, presented on or
before the expiration date hereof or any automatically extended expiry date.

The amount of this letter of credit will automatically reduce by the
amount of any drawing under it and the obligations of the Issuing Banks under
this letter of credit shall be reduced pro rata.

The liability of each Issuing Bank under this letter of credit is several and
not joint. No Issuing Bank is responsible for the obligations of any other
Issuing Bank under this letter of credit. Failure by an Issuing Bank to
perform its obligations under this letter of credit does not affect the
obligations of any other Issuing Bank under this letter of credit. The
liability of each Issuing Bank with respect to any amount demanded by you under
this letter of credit (other than a demand that relates to a failure by an

+Delete as applicable

91

 

Issuing Bank to pay an amount due from it under this letter of credit) shall be
the percentage of the amount demanded which is set out next to its name in Part
A of the schedule. Payment of amounts due from an Issuing Bank under this
letter of credit shall be effected through the Agent (provided that an Issuing
Bank’s liability to make a payment under this letter of credit shall be
discharged only upon receipt by you of that amount). The Agent will promptly
remit to you an amount equal to each amount received for you under this letter
of credit from an Issuing Bank.

Except as expressly stated herein, this undertaking is not subject to any
agreement, requirement or qualification. The obligation of each Issuing Bank
under this credit is the individual obligation of that Issuing Bank and is in
no way contingent upon reimbursement with respect thereto, or upon its ability
to perfect any lien, security interest or any other reimbursement.

This letter of credit is deemed to be automatically renewed without
amendment for one year from the expiration date or any future expiration date,
unless at least thirty days prior to such expiration date, the Agent sends you
notification by registered or certified mail that this letter of credit will
not be renewed for any such additional period.

Save as expressly stated in this letter of credit, the Agent has no
obligation of any kind to you under, or in respect of, this letter of credit.
Without prejudice to the generality of the foregoing sentence, the Agent’s role
in connection with this letter of credit is purely administrative and the Agent
shall have no obligation to meet any drawing or demand for payment by you under
this letter of credit and shall have no liability or responsibility to you for
any failure by any Issuing Bank to perform any of its obligations under this
letter of credit.

[Where an Issuing Bank’s name appears in Part B of the Schedule, this
letter of credit, insofar as it is issued on behalf of that Issuing Bank, is
confirmed by the bank or financial institution whose name appears opposite that
Issuing Bank’s name in Part B of the Schedule (each a Confirming Bank). Each
Confirming Bank shall be liable (as if it were itself an Issuing Bank) for the
obligations of the Issuing Bank opposite whose name its own name appears in
Part B of the Schedule. Any payment under this letter of credit by:

	(a)	 	a Confirming Bank shall reduce the liability of the relevant Issuing
Bank pro tanto; or
	 
	(b)	 	an Issuing Bank in respect of which there is a Confirming Bank shall
reduce the liability of the relevant Confirming Bank pro
tanto.]++

The Agent has the authority of each
Issuing Bank [and the Confirming
Bank]++
to deliver this letter of credit to you in its name and on its behalf.

This letter of credit is subject to
and governed by the laws of [      ]
and the provisions of the 1993 Revision of the Uniform Customs and Practice for
Documentary Credits of the International Chamber of Commerce (Publication no.
500) and in the event of any conflict, the laws of [
     ] will control. If
this credit expires during an interruption of business as described in Article
17 of said Publication 500, the bank hereby specifically agrees to effect
payment if this credit is drawn against otherwise in accordance with its term
within 30 days after the resumption of business*.

Schedule

Part A

	++	 	Delete as applicable
	 
	*	 	Letters of Credit may alternatively, at the Borrower’s request, be issued
under the International Standard & Practices ISP98 of the International Chamber
of Commerce (Publication no.590)

92

 

	 	 	 	 	 
	Issuing Bank	 	 	 	Percentage Share
	 
	Total	 	 	 	100%
	 
	 	 	
Part B	 	 
	Issuing Bank	 	 	 	Confirming Bank

93

 

Part 2 - Form of Single Lender Letter of Credit

IN FAVOUR OF:

[               ]

[     ] (the Issuing Bank) has established this clean, irrevocable and
unconditional letter of credit in your favor as beneficiary for drawings up to
USD [          ] in aggregate.

[[This letter of credit is effective immediately].

[This letter of credit is issued in [partial] substitution and replacement for
the following outstanding letter(s) of credit issued in your favour: [insert
details of relevant Existing Letters of Credit] (the Existing Letter(s) of
Credit). This letter of credit shall be effective on the date on which we
receive confirmation from each bank that issued the Existing Letter(s) of
Credit that you have returned to such bank each of the Existing Letter(s) of
Credit issued by it together with your confirmation to it in writing that those
Existing Letter(s) of Credit are cancelled and that the bank has no further
liability thereunder.]]+

This letter of credit is issued, presentable and payable at the offices of the
Issuing Bank’s agent, ABN AMRO Bank N.V., Chicago (the Agent) at 200 West
Monroe St, Suite 1100, Chicago, IL 60606 and expires with the Agent’s close of
business on [          ]. Except when the amount of this letter of
credit is increased, this credit cannot be modified or revoked without your
consent.

The term ‘beneficiary’ includes any successor by operation of law of the named
beneficiary including without limitation any liquidator, rehabilitator,
receiver or conservator. Drawings by any liquidator, rehabilitator, receiver
or conservator shall be for the benefit of all of the beneficiary’s
policyholders. Where a claim is made by a successor, additional documents
evidencing the succession must also be presented.

The Issuing Bank hereby undertakes to promptly honor your claim against sight
draft(s) drawn on the Issuing Bank or us as agent for the Issuing Bank,
indicating credit no.         , for all or any part of this credit,
presented on or before the expiration date hereof or any automatically extended
expiry date.

The amount of this letter of credit will automatically reduce by the

amount of any drawing under it and the obligations of the Issuing Bank under
this letter of credit shall be reduced pro tanto.

Payment of amounts due from the Issuing Bank under this letter of credit shall
be effected through the Agent (provided that the Issuing Bank’s liability to
make a payment under this letter of credit shall be discharged only upon
receipt by you of that amount). The Agent will promptly remit to you an amount
equal to each amount received for you under this letter of credit from the
Issuing Bank.

Except as expressly stated herein, this undertaking is not subject to any
agreement, requirement or qualification. The obligation of the Issuing Bank
under this credit is the individual obligation of the Issuing Bank and is in no
way contingent upon reimbursement with respect thereto, or upon its ability to
perfect any lien, security interest or any other reimbursement.

	+	 	Delete as applicable

94

 

This letter of credit is deemed to be automatically renewed without
amendment for one year from the expiration date or any future expiration date,
unless at least thirty days prior to such expiration date, the Agent sends you
notification by registered or certified mail to the above address that this
letter of credit will not be renewed for any such additional period.

Save as expressly stated in this letter of credit, the Agent has no
obligation of any kind to you under, or in respect of, this letter of credit.
Without prejudice to the generality of the foregoing sentence, the Agent’s role
in connection with this letter of credit is purely administrative and the Agent
shall have no obligation to meet any drawing or demand for payment by you under
this letter of credit and shall have no liability or responsibility to you for
any failure by the Issuing Bank to perform any of its obligations under this
letter of credit.

[This letter of credit is
confirmed by [       ] (the Confirming Bank).
Accordingly, the Confirming Bank shall itself be liable as if it were itself
the Issuing Bank for the obligations of the Issuing Bank under this Letter of
Credit. Any payment under this letter of credit by:

	(a)	 	the Confirming Bank shall reduce the liability of the Issuing Bank
pro tanto; or	 
	 
	(b)	 	the Issuing Bank shall reduce the liability of the Confirming Bank pro
tanto.]++	 

The Agent has the authority of the
Issuing Bank [and the Confirming Bank] ++ to
deliver this letter of credit to you in its name and on its behalf.

This letter of credit is subject to and governed by the laws of [     ]
and the provisions of the 1993 Revision of the Uniform Customs and Practice for
Documentary Credits of the International Chamber of Commerce (Publication no.
500) and in the event of any conflict, the laws of [     ] will control. If
this credit expires during an interruption of business as described in Article
17 of said Publication 500, the bank hereby specifically agrees to effect
payment if this credit is drawn against otherwise in accordance with its term
within 30 days after the resumption of business*.

	++	 	Delete as applicable
	 
	*	 	Letters of Credit may alternatively, at the Borrower’s request, be issued
under the International Standard & Practices ISP98 of the International Chamber
of Commerce (Publication no.590)

95

 

SCHEDULE 10

MINIMUM CRITERIA FOR CONFIRMING BANK AGREEMENT

	1.	 	The Confirming Bank must be an NAIC Approved Bank.
	 
	2.	 	The Confirming Bank must agree to confirm the obligations of the Affected
Lender under any outstanding Letters of Credit and any further Letters of
Credit that are subsequently to be issued.
	 
	3.	 	The Confirming Bank must agree to honour any demand under each Confirmed
Letter of Credit as if it were the Affected Lender.
	 
	4.	 	The Confirming Bank must irrevocably appoint the Facility Agent to act as
its attorney-in-fact, acting through any duly authorised officer, to
execute and deliver under the Facility Agreement, in the Confirming Bank’s
name and on its behalf, each Letter of Credit to be confirmed by it.
	 
	5.	 	The Affected Lender must promptly reimburse the Confirming Bank if it is
required to make a payment consequent on a claim under a Letter of Credit.
	 
	6.	 	The Confirming Bank Agreement shall be terminable by the Affected Lender
in whole or in respect of any particular Letter(s) of Credit in the event
that the Confirming Bank ceases to be an NAIC Approved Bank.
	 
	7.	 	The duration of the Confirming Bank Agreement must be approved by the
Company.

96

 

SCHEDULE 11

EXISTING LETTERS OF CREDIT

	 	 	 	 	 	 	 	 	 
	L/C Number	 	Issuing Bank	 	Amount	 	Issue Date	 	Beneficiary
	
	 	
	 	
	 	
	 	

	99187	 	
Barclays Bank Plc
	 	US$2,326,277.32
	 	27/09/99
	 	ACE American Reinsurance Company
	99188	 	
Barclays Bank Plc
	 	US$136,430.00
	 	27/09/99
	 	RLI Insurance Company
	99192	 	
Barclays Bank Plc
	 	US$427,445.86
	 	05/10/99
	 	Employers Reinsurance Corp
	99195	 	
Barclays Bank Plc
	 	US$95,236.91
	 	13/10/99
	 	Factory Mutual Insurance Company
	99199	 	
Barclays Bank Plc
	 	US$172,771.00
	 	18/10/99
	 	St Paul Fire & Marine Insurance Company
	99202	 	
Barclays Bank Plc
	 	US$141,576.68
	 	26/10/99
	 	Insurance Corporation of Hannover
	99210	 	
Barclays Bank Plc
	 	US$1,234,754.55
	 	26/10/99
	 	Factory Mutual Insurance Company
	99211	 	
Barclays Bank Plc
	 	US$9,356,838.42
	 	26/10/99
	 	Factory Mutual Insurance Company
	99212	 	
Barclays Bank Plc
	 	US$195,946.07
	 	26/10/99
	 	Factory Mutual Insurance Company
	99221	 	
Barclays Bank Plc
	 	US$50,000.00
	 	03/11/99
	 	Fremont Indemnity Company
	99225	 	
Barclays Bank Plc
	 	US$93,624.00
	 	05/11/99
	 	Lexington Insurance Company
	99246	 	
Barclays Bank Plc
	 	US$475,674.06
	 	17/11/99
	 	Westport Insurance Corporation
	99247	 	
Barclays Bank Plc
	 	US$280,280.74
	 	17/11/99
	 	Continental Reinsurance Corporation
	99248	 	
Barclays Bank Plc
	 	US$76,123.33
	 	17/11/99
	 	Westport Insurance Corporation
	99249	 	
Barclays Bank Plc
	 	US$62,984.00
	 	17/11/99
	 	Bayside Reinsurance Company Ltd
	99250	 	
Barclays Bank Plc
	 	US$738,350.04
	 	17/11/99
	 	Westport Insurance Corporation
	99251	 	
Barclays Bank Plc
	 	US$15,028.00
	 	17/11/99
	 	Westchester Fire Insurance Company
	99259	 	
Barclays Bank Plc
	 	US$23,582.53
	 	24/11/99
	 	ML Life Insurance Company of New York
	99260	 	
Barclays Bank Plc
	 	US$165,212.32
	 	24/11/99
	 	Merrill Lynch Life Insurance Company
	99261	 	
Barclays Bank Plc
	 	US$64,450.26
	 	23/11/99
	 	Monarch Life Insurance Company
	99262	 	
Barclays Bank Plc
	 	US$1,011,940.00
	 	23/11/99
	 	Manjlife Insurance Corporation (USA)
	99263	 	
Barclays Bank Plc
	 	US$431,479.90
	 	24/11/99
	 	Reliastar Life Insurance Company
	99264	 	
Barclays Bank Plc
	 	US$1,641,421.11
	 	23/11/99
	 	Continental Assurance Company
	99265	 	
Barclays Bank Plc
	 	US$489,087.00
	 	23/11/99
	 	NAC Reinsurance Corporation
	99277	 	
Barclays Bank Plc
	 	US$23,691,118.00
	 	02/12/99
	 	Connecticut General Life Insurance Co
	99281	 	
Barclays Bank Plc
	 	US$107,476.99
	 	07/12/99
	 	ERC Life Reinsurance Corporation

97

 

	 	 	 	 	 	 	 	 	 
	L/C Number	 	Issuing Bank	 	Amount	 	Issue Date	 	Beneficiary
	
	 	
	 	
	 	
	 	

	99282	 	
Barclays Bank Plc
	 	US$31,457,764.00
	 	07/12/99
	 	ERC Life Reinsurance Corporation
	99283	 	
Barclays Bank Plc
	 	US$957,935.00
	 	07/12/99
	 	Swiss Re Life & Health America Inc.
	99284	 	
Barclays Bank Plc
	 	US$18,737.65
	 	07/12/99
	 	First Allmerica Financial Life Ins Co.
	99285	 	
Barclays Bank Plc
	 	US$40,110.79
	 	07/12/99
	 	Reliance National Indemnity Company
	99286	 	
Barclays Bank Plc
	 	US$5,383,969.00
	 	07/12/99
	 	Security Life of Denver Insurance Co
	99287	 	
Barclays Bank Plc
	 	US$55,012.00
	 	09/12/99
	 	Associated Aviation Underwriters Inc
	99288	 	
Barclays Bank Plc
	 	US$1,864,247.30
	 	07/12/99
	 	Phoenix Home Life Mutual Insurance Co
	99303	 	
Barclays Bank Plc
	 	US$1,554,000.00
	 	14/12/99
	 	Swiss Re Life & Health Co. America Inc.
	99304	 	
Barclays Bank Plc
	 	US$84,806.66
	 	14/12/99
	 	Swiss Re Life & Health America Inc.
	99306	 	
Barclays Bank Plc
	 	US$115,000.00
	 	14/12/99
	 	The AIG Life Companies (U.S.)
	99317	 	
Barclays Bank Plc
	 	US$295,000.00
	 	15/12/99
	 	Lamar Life Insurance Company
	99337	 	
Barclays Bank Plc
	 	US$7,062.48
	 	20/12/99
	 	Scor Reinsurance Company
	99338	 	
Barclays Bank Plc
	 	US$140,047.44
	 	20/12/99

	 	Allstate Insurance Company
	99341	 	
Barclays Bank Plc
	 	US$103,750.00
	 	20/12/99
	 	United States Fire Insurance Co
	99344	 	
Barclays Bank Plc
	 	US$99,929.74
	 	20/12/99
	 	The Manufacturers Life Insurance Co.
	99345	 	
Barclays Bank Plc
	 	US$180,598.00
	 	20/12/99
	 	First Reliance Standard Life Ins. Co.
	99346	 	
Barclays Bank Plc
	 	US$499,658.60
	 	20/12/99
	 	NAC Reinsurance Corporation
	99347	 	
Barclays Bank Plc
	 	US$998,507.00
	 	20/12/99
	 	Pan American Life Insurance Co.
	99348	 	
Barclays Bank Plc
	 	US$2,757,921.00
	 	20/12/99
	 	Reliance Standard Life Insurance Co.
	99349	 	
Barclays Bank Plc
	 	US$4,153,209.00
	 	21/12/99
	 	National Western Life Insurance Co.
	99350	 	
Barclays Bank Plc
	 	US$4,649,735.00
	 	20/12/99
	 	Swiss Re Life & Health America, Inc.
	99351	 	
Barclays Bank Plc
	 	US$99,590.00
	 	20/12/99
	 	Valley Forge Life Insurance Co.
	99354	 	
Barclays Bank Plc
	 	US$30,000.00
	 	20/12/99
	 	General & Cologne Life Re of America
	99380	 	
Barclays Bank Plc
	 	US$258,206.00
	 	30/12/99
	 	Phoenix Home Life Mutual Ins Co.
	99383	 	
Barclays Bank Plc
	 	US$2,305,035.00
	 	30/12/99
	 	Transamerica Occidental Life Ins Co
	00007	 	
Barclays Bank Plc
	 	US$239,248.00
	 	06/01/00
	 	Pan American Life Insurance Co.
	00034	 	
Barclays Bank Plc
	 	US$202,877.00
	 	14/01/00
	 	Lincoln Life and Annuity Co. of New York
	00035	 	
Barclays Bank Plc
	 	US$1,817,787.00
	 	14/01/00
	 	Lincoln National Life Insurance. Co
	00044	 	
Barclays Bank Plc
	 	US$7,400.00
	 	19/01/00
	 	Great Southwest Fire Insurance Company
	00065	 	
Barclays Bank Plc
	 	US$47,489.22
	 	28/01/00
	 	Lincoln National Health & Casualty Company
	00162	 	
Barclays Bank Plc
	 	US$233,759.02
	 	14/03/00
	 	Century Indemnity Company
	01014	 	
Barclays Bank Plc
	 	US$1,835,293.00
	 	10/01/00
	 	The Canada Life Assurance Company

98

 

	 	 	 	 	 	 	 	 	 
	L/C Number	 	Issuing Bank	 	Amount	 	Issue Date	 	Beneficiary
	
	 	
	 	
	 	
	 	

	01021	 	
Barclays Bank Plc
	 	US$1,050,000.00
	 	22/01/01
	 	Transamerica Occidental Life Ins Co
	01022	 	
Barclays Bank Plc
	 	US$156,837.63
	 	22/01/01
	 	London Life Reinsurance Company
	01034	 	
Barclays Bank Plc
	 	US$264,757.36
	 	31/01/01
	 	Sun Life Assurance Company of Canada
	01065	 	
Barclays Bank Plc
	 	US$8,250,000.00
	 	13/02/01
	 	RGA Reinsurance Company
	01112	 	
Barclays Bank Plc
	 	US$2,165,000.00
	 	06/09/01
	 	RGA Reinsurance Company
	02033	 	
Barclays Bank Plc
	 	US$649,338.00
	 	10/01/02
	 	AUSA Life Insurance Company
	03022	 	
Barclays Bank Plc
	 	US$64,153.98
	 	13/01/03
	 	Allianz Insurance Company
	02145	 	
Barclays Bank Plc
	 	€70,314.25
	 	16/07/02
	 	MEIE Associates S.P.A
	03077	 	
Barclays Bank plc
	 	US$147,617.00
	 	09/06/03
	 	Presidential Life Insurance Company
	AV01-5807643	 	
Commerzbank AG
	 	US$7,650,000.00
	 	11/12/01
	 	RGA Reinsurance Company
	AV02-5807705	 	
Commerzbank AG
	 	US$804,970.00
	 	31/12/01
	 	Swiss Re Life + Health America Inc.
	AV02-5807706	 	
Commerzbank AG
	 	US$40,000,000.00
	 	31/12/01
	 	Connecticut General Life Insurance Co.
	AV02-5807707	 	
Commerzbank AG
	 	US$ 3,400,000.00
	 	31/12/01
	 	RGA Reinsurance Company
	AV02-5807708	 	
Commerzbank AG
	 	US$40,000,000.00
	 	31/12/01
	 	Transamerica Occidental Life Insurance
	AV02-5807716	 	
Commerzbank AG
	 	US$51,750.00
	 	31/12/01
	 	Life Insurance Company of North America
	AV02-5807730	 	
Commerzbank AG
	 	US$13,000,000.00
	 	31/12/01
	 	AUSA Life Insurance Company, Inc.
	AV02-5807975	 	
Commerzbank AG
	 	US$5,555,755.52
	 	16/04/02
	 	The Canada Life Assurance Company
	AV02-5808557	 	
Commerzbank AG
	 	US$30,118.00
	 	13/11/02
	 	Guarantee Reserve Life Ins. Co.
	AV02-5808558	 	
Commerzbank AG
	 	US$204,250.00
	 	17/12/02
	 	Bankers Life and Casualty
	AV02-5808712	 	
Commerzbank AG
	 	US$18,800,000.00
	 	27/12/02
	 	RGA Reinsurance Company
	AV02-5808713	 	
Commerzbank AG
	 	US$17,810,681.00
	 	27/12/02
	 	Connecticut General Life Insurance Co.
	AV02-5808714	 	
Commerzbank AG
	 	US$20,169,179.00
	 	27/12/02
	 	Transamerica Occidental Life Insurance
	AV02-5808718	 	
Commerzbank AG
	 	US$68,171.00
	 	30/12/02
	 	American Heritage
	AV02-5808719	 	
Commerzbank AG
	 	US$483,811.00
	 	31/12/02
	 	Optimum Reinsurance Company
	AV02-5808723	 	
Commerzbank AG
	 	US$3,663,000.00
	 	31/12/02
	 	Swiss Re Life + Health America Inc.
	AV02-5808734	 	
Commerzbank AG
	 	US$187,578.00
	 	31/12/02
	 	Zurich American Insurance Company
	BAHA 131-041329	 	

Credit Suisse First Boston
	 	US$24,469,000.00
	 	 	 	Atlantic Mutual Insurance Company
	BAHA 131-041174	 	
Credit Suisse First Boston

	 	US$20,000,000.00
	 	 	 	Eagle Star Insurance Company
	BAHA 131-041660	 	
Credit Suisse First Boston
	 	€1,071,708.51
	 	 	 	Fondiaria - SAI S.p.A.

99

 

SIGNATORIES

Company

CONVERIUM AG, ZURICH

By:

Original Borrowers

CONVERIUM RUCKVERSICHERUNG (DEUTSCHLAND) AG

By:

CONVERIUM INSURANCE (UK) LTD.

By:

Mandated Lead Arrangers

ABN AMRO BANK N.V.

By:

BARCLAYS CAPITAL

By:

COMMERZBANK AKTIENGESELLSCHAFT

By:

Original Lenders

ABN AMRO BANK N.V.

By:

BARCLAYS BANK PLC

100

 

By:

COMMERZBANK AKTIENGESELLSCHAFT

By:

CREDIT LYONNAIS, FRANKFURT AM MAIN

By:

DRESDNER BANK AG, NIEDERLASSUNG LUXEMBURG

By:

HSBC BANK USA

By:

BAYERISCHE HYPO- UND VEREINSBANK AG

By:

ING BANK N.V., LONDON BRANCH

By:

JPMORGAN CHASE BANK

By:

LANDESBANK BADEN-WÜRTTEMBERG, LONDON BRANCH

By:

LLOYDS TSB BANK PLC

By:

101

 

NATIONAL AUSTRALIA BANK LIMITED (A.B.N. 12 004 044 937)

By:

HSH NORDBANK AG

By:

LANDESBANK SACHSEN GIROZENTRALE

By:

CREDIT SUISSE

By:

THE BANK OF NEW YORK

By:

BANK ONE, NA

By:

WESTLB AG, NEW YORK BRANCH

By:

CAIXA GERAL DE DEPOSITOS

By:

Facility Agent

ABN AMRO BANK N.V.

By:

102

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