Document:

Exhibit
10.11

 

EXECUTION COPY

 

 

CREDIT AGREEMENT

 

dated as of

 

March 25, 2004

 

among

 

AXIS CAPITAL
HOLDINGS LIMITED,

 

The SUBSIDIARY
CREDIT PARTIES Party Hereto,

 

The LENDERS Party
Hereto

 

and

 

JPMORGAN CHASE
BANK,

as Administrative
Agent

 

 

$750,000,000

 

 

J.P. MORGAN
SECURITIES INC.,

as Sole Lead
Arranger and Sole Bookrunner

 

BARCLAYS BANK PLC,

as Syndication
Agent

 

CITIBANK, N.A.,

ING BANK N.V.,

WACHOVIA BANK,
N.A., and

HSBC BANK USA,

as
Co-Documentation Agents

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
  SECTION 1.01.  Defined Terms

  	
   

  
	
   

  	
   

  	
  SECTION 1.02.  Terms Generally

  	
   

  
	
   

  	
   

  	
  SECTION 1.03.  Accounting Terms; GAAP and SAP; Fiscal Year

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE CREDITS

  	
   

  
	
   

  	
   

  	
  SECTION 2.01.  Syndicated Letters of Credit.

  	
   

  
	
   

  	
   

  	
  SECTION 2.02.  Issuance and Administration

  	
   

  
	
   

  	
   

  	
  SECTION 2.03.  Reimbursement of LC Disbursements, Etc.

  	
   

  
	
   

  	
   

  	
  SECTION 2.04.  Participated Letters of Credit.

  	
   

  
	
   

  	
   

  	
  SECTION 2.05.  Loans and Borrowings

  	
   

  
	
   

  	
   

  	
  SECTION 2.06.  Requests for Borrowings

  	
   

  
	
   

  	
   

  	
  SECTION 2.07.  Funding of Borrowings.

  	
   

  
	
   

  	
   

  	
  SECTION 2.08.  Interest Elections.

  	
   

  
	
   

  	
   

  	
  SECTION 2.09.  Termination, Reduction and Increase of the Commitments.

  	
   

  
	
   

  	
   

  	
  SECTION 2.10.  Repayment of Loans; Evidence of Debt.

  	
   

  
	
   

  	
   

  	
  SECTION 2.11.  Prepayment of Loans.

  	
   

  
	
   

  	
   

  	
  SECTION 2.12.  Addition and Termination of Subsidiary Credit Parties.

  	
   

  
	
   

  	
   

  	
  SECTION 2.13.  Fees.

  	
   

  
	
   

  	
   

  	
  SECTION 2.14.  Interest.

  	
   

  
	
   

  	
   

  	
  SECTION 2.15.  Alternate Rate of Interest

  	
   

  
	
   

  	
   

  	
  SECTION 2.16.  Increased Costs.

  	
   

  
	
   

  	
   

  	
  SECTION 2.17.  Break Funding Payments

  	
   

  
	
   

  	
   

  	
  SECTION 2.18.  Taxes.

  	
   

  
	
   

  	
   

  	
  SECTION 2.19.  Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

  	
   

  
	
   

  	
   

  	
  SECTION 2.20.  Mitigation Obligations; Replacement of Lenders.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
   

  	
  SECTION 3.01.  Organization; Powers

  	
   

  
	
   

  	
   

  	
  SECTION 3.02.  Authorization; Enforceability

  	
   

  
	
   

  	
   

  	
  SECTION 3.03.  Governmental Approvals; No Conflicts

  	
   

  
	
   

  	
   

  	
  SECTION 3.04.  Financial Condition; No Material Adverse Change.

  	
   

  
	
   

  	
   

  	
  SECTION 3.05.  Properties.

  	
   

  
	
   

  	
   

  	
  SECTION 3.06.  Litigation.

  	
   

  
	
   

  	
   

  	
  SECTION 3.07.  Compliance with Laws and Agreements

  	
   

  
	
   

  	
   

  	
  SECTION 3.08.  Investment and Holding Company Status

  	
   

  
	
   

  	
   

  	
  SECTION 3.09.  Taxes

  	
   

  
	
   

  	
   

  	
  SECTION 3.10.  Pension-Related Matters

  	
   

  

 

i

 

	
   

  	
   

  	
  SECTION 3.11.  Disclosure

  	
   

  
	
   

  	
   

  	
  SECTION 3.12.  Use of Credit

  	
   

  
	
   

  	
   

  	
  SECTION 3.13.  Indebtedness and Liens

  	
   

  
	
   

  	
   

  	
  SECTION 3.14.  Subsidiaries

  	
   

  
	
   

  	
   

  	
  SECTION 3.15.  Withholding Taxes

  	
   

  
	
   

  	
   

  	
  SECTION 3.16.  Stamp Taxes

  	
   

  
	
   

  	
   

  	
  SECTION 3.17.  Legal Form

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CONDITIONS

  	
   

  
	
   

  	
   

  	
  SECTION 4.01.  Effective Date

  	
   

  
	
   

  	
   

  	
  SECTION 4.02.  Each Credit Event

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
  SECTION 5.01.  Financial Statements and Other Information

  	
   

  
	
   

  	
   

  	
  SECTION 5.02.  Notices of Material Events

  	
   

  
	
   

  	
   

  	
  SECTION 5.03.  Existence; Conduct of Business

  	
   

  
	
   

  	
   

  	
  SECTION 5.04.  Insurance

  	
   

  
	
   

  	
   

  	
  SECTION 5.05.  Maintenance of Properties

  	
   

  
	
   

  	
   

  	
  SECTION 5.06.  Payment of Obligations

  	
   

  
	
   

  	
   

  	
  SECTION 5.07.  Financial Accounting Practices

  	
   

  
	
   

  	
   

  	
  SECTION 5.08.  Compliance with Applicable Laws

  	
   

  
	
   

  	
   

  	
  SECTION 5.09.  Use of Letters of Credit and Proceeds of Loans

  	
   

  
	
   

  	
   

  	
  SECTION 5.10.  Inspection Rights

  	
   

  
	
   

  	
   

  	
  SECTION 5.11.  Financial Strength Rating

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
  SECTION 6.01.  Fundamental Changes

  	
   

  
	
   

  	
   

  	
  SECTION 6.02.  Liens

  	
   

  
	
   

  	
   

  	
  SECTION 6.03.  Transactions with Affiliates

  	
   

  
	
   

  	
   

  	
  SECTION 6.04.  Financial Covenants

  	
   

  
	
   

  	
   

  	
  SECTION 6.05.  Indebtedness

  	
   

  
	
   

  	
   

  	
  SECTION 6.06.  Investments

  	
   

  
	
   

  	
   

  	
  SECTION 6.07.  Restricted Payments

  	
   

  
	
   

  	
   

  	
  SECTION 6.08.  Continuation of and Change in Businesses

  	
   

  
	
   

  	
   

  	
  SECTION 6.09.  Private Act

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
  ARTICLE IX 
  GUARANTEE

  	
   

  
	
   

  	
   

  	
  SECTION 9.01.  The Guarantee

  	
   

  

 

ii

 

	
   

  	
   

  	
  SECTION 9.02.  Obligations Unconditional

  	
   

  
	
   

  	
   

  	
  SECTION 9.03.  Reinstatement

  	
   

  
	
   

  	
   

  	
  SECTION 9.04.  Subrogation

  	
   

  
	
   

  	
   

  	
  SECTION 9.05.  Remedies

  	
   

  
	
   

  	
   

  	
  SECTION 9.06.  Instrument for the Payment of Money

  	
   

  
	
   

  	
   

  	
  SECTION
  9.07.  Continuing Guarantee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
  SECTION 10.01.  Notices

  	
   

  
	
   

  	
   

  	
  SECTION 10.02.  Waivers; Amendments.

  	
   

  
	
   

  	
   

  	
  SECTION 10.03.  Expenses; Indemnity; Damage Waiver.

  	
   

  
	
   

  	
   

  	
  SECTION 10.04.  Successors and Assigns.

  	
   

  
	
   

  	
   

  	
  SECTION 10.05.  Survival

  	
   

  
	
   

  	
   

  	
  SECTION 10.06.  Counterparts; Integration; Effectiveness

  	
   

  
	
   

  	
   

  	
  SECTION 10.07.  Severability

  	
   

  
	
   

  	
   

  	
  SECTION 10.08.  Right of Setoff

  	
   

  
	
   

  	
   

  	
  SECTION 10.09.  Governing Law; Jurisdiction; Etc.

  	
   

  
	
   

  	
   

  	
  SECTION 10.10.  WAIVER OF JURY TRIAL

  	
   

  
	
   

  	
   

  	
  SECTION 10.11.  Headings

  	
   

  
	
   

  	
   

  	
  SECTION 10.12.  Treatment of Certain Information; Confidentiality.

  	
   

  
	
   

  	
   

  	
  SECTION 10.13.  Judgment Currency

  	
   

  
	
   

  	
   

  	
  SECTION 10.14.  USA Patriot Act

  	
   

  

 

iii

 

	
  SCHEDULE 1.01

  	
   

  	
  -

  	
   

  	
  Commitments

  
	
  SCHEDULE 2.12

  	
   

  	
  -

  	
   

  	
  Approved Subsidiary Credit Parties

  
	
  SCHEDULE 3.06(a)

  	
   

  	
  -

  	
   

  	
  Litigation

  
	
  SCHEDULE 3.14

  	
   

  	
  -

  	
   

  	
  Subsidiaries

  
	
  SCHEDULE 6.02

  	
   

  	
  -

  	
   

  	
  Liens

  
	
  SCHEDULE 6.05

  	
   

  	
  -

  	
   

  	
  Indebtedness

  

 

	
  Exhibit A

  	
   

  	
  -

  	
   

  	
  Form of Assignment and Assumption

  
	
  Exhibit B

  	
   

  	
  -

  	
   

  	
  Form of Subsidiary Joinder Agreement

  
	
  Exhibit C

  	
   

  	
  -

  	
   

  	
  Form of Process Agent Acceptance Letter

  
	
  Exhibit D

  	
   

  	
  -

  	
   

  	
  Form of Subsidiary Credit Party Termination Notice

  
	
  Exhibit E-1

  	
   

  	
  -

  	
   

  	
  Form of Opinion of Conyers Dill & Pearman,
  Bermuda Counsel to AXIS Capital and AXIS Specialty

  
	
  Exhibit E-2

  	
   

  	
  -

  	
   

  	
  Form of Opinion of New York counsel to the Credit
  Parties

  
	
  Exhibit E-3

  	
   

  	
  -

  	
   

  	
  Form of Opinion of Irish Counsel to AXIS Re and
  AXIS Specialty Europe

  
	
  Exhibit F

  	
   

  	
  -

  	
   

  	
  Form of Opinion of Special New York Counsel to JPMCB

  
	
  Exhibit G

  	
   

  	
  -

  	
   

  	
  Form of Confirming Lender Agreement

  

 

 

 

 

iv

 

CREDIT AGREEMENT dated as
of March 25, 2004, among AXIS CAPITAL HOLDINGS LIMITED, a Bermuda limited
liability corporation, the SUBSIDIARY CREDIT PARTIES party hereto (or that
shall become party hereto from time to time pursuant to Section 2.12), the
LENDERS party hereto and JPMORGAN CHASE BANK, as Administrative Agent.

 

AXIS Capital (as
hereinafter defined) has requested that the Lenders (as so defined) make loans
and extend credit to it and certain of its Subsidiaries in an aggregate
principal or face amount not exceeding $750,000,000 at any one time
outstanding, and the Lenders are prepared to extend such credit upon the terms
and conditions hereof.  Accordingly, the
parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01. 
Defined Terms.  As used in
this Agreement, the following terms have the meanings specified below:

 

“ABR”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans constituting such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.

 

“Account Party”
means any of AXIS Capital and the Subsidiary Account Parties, as the context
may require, and “Account Parties” means all of the foregoing.

 

“Acquisition”
means, as to any Person, any transaction or series of related transactions
pursuant to which such Person acquires (i) a majority of the voting shares of
another Person, (ii) all or any substantial part of the assets or business of
another Person, or (iii) any assets that constitute a division or operating
unit of another Person (whether by way of purchase of assets or stock,
including any tender for outstanding shares of stock, by merger or
consolidation, or otherwise).

 

“Additional Margin”
means, with respect to any Eurodollar Loan, the rate per annum specified under
the caption “Additional Margin” in the table contained in the definition of
“Applicable Rate” in this Section or otherwise determined in accordance with
such definition.

 

“Adjusted
LIBO Rate” means, for the Interest Period for any Eurodollar Borrowing, an
interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to (a) the LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate for such Interest Period.

 

“Administrative Agent”
means JPMCB, in its capacity as administrative agent for the Lenders hereunder.

 

“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the Administrative Agent.

 

 

“Affiliate” means,
with respect to a specified Person, another Person that directly, or
indirectly, Controls or is Controlled by or is under common Control with the Person
specified.

 

“Alternate Base Rate”
means, for any day, a rate per annum equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate for
such day plus 1/2 of 1%.  Any
change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, as the case may be.

 

“Applicable Insurance
Regulatory Authority” means, with respect to any Insurance Company, the
insurance department or similar administrative authority or agency of the
jurisdiction in which such Insurance Company is domiciled.

 

“Applicable Margin”
means, with respect to any Eurodollar Loan, the rate per annum specified under
the caption “Applicable Margin” in the table contained in the definition of
“Applicable Rate” in this Section or otherwise determined in accordance with
such definition.

 

“Applicable Percentage”
means, with respect to any Lender, the percentage of the total Commitments
represented by such Lender’s Commitment. 
If the Commitments have terminated or expired, the Applicable
Percentages shall be determined based upon the total Credit Exposures or, if no
Letters of Credit or Loans are outstanding, the Commitments most recently in
effect, giving effect to any assignments.

 

“Applicable Rate”
means, for any day, with respect to the commitment fees payable hereunder, the
letter of credit fees payable hereunder or the interest margins applicable to
Eurodollar Loans, as the case may be, the applicable rate per annum set forth
below under the caption “Commitment Fee”, “Letter of Credit Fee” or, with
respect to such interest margins, “Applicable Margin” and/or “Additional
Margin”, respectively, based upon the S&P Rating on such date:

 

	
  S&P Rating

  	
   

  	
  Commitment

  Fee

  	
   

  	
  Letter of

  Credit Fee

  	
   

  	
  Applicable

  Margin

  (for

  Eurodollar

  Loans only)

  	
   

  	
  Additional

  Margin

  (for Eurodollar

  Loans only)

  	
   

  
	
  A+ or higher

  	
   

  	
  0.08

  	
  %

  	
  0.40

  	
  %

  	
  0.40

  	
  %

  	
  0.10

  	
  %

  
	
  A

  	
   

  	
  0.10

  	
  %

  	
  0.50

  	
  %

  	
  0.50

  	
  %

  	
  0.125

  	
  %

  
	
  A-

  	
   

  	
  0.125

  	
  %

  	
  0.625

  	
  %

  	
  0.625

  	
  %

  	
  0.125

  	
  %

  
	
  Less than A- or
  unrated

  	
   

  	
  0.175

  	
  %

  	
  0.875

  	
  %

  	
  0.875

  	
  %

  	
  0.125

  	
  %

  

 

For purposes of the
foregoing, if the S&P Rating shall be changed (other than as a result of a
change in the rating system of S&P), such change shall be effective as of
the date on which it is first announced by S&P.  Each change in the Applicable Rate shall apply during the period
commencing on such effective date of such change and ending on the date
immediately

 

2

 

preceding the effective date of the next such change.  If the rating system for the S&P Rating
shall change or if S&P shall cease to be in the business of providing
insurer financial strength ratings, AXIS Capital and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the unavailability of such a rating from S&P and, pending the effectiveness
of any such amendment, the Applicable Rate shall be determined by reference to
the S&P Rating most recently in effect prior to such change or cessation.

 

“Approved Fund”
means any Person (other than a natural person) that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of credit
in the ordinary course of its business and that is administered or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers or manages a Lender.

 

“Assignment and
Assumption” means an assignment and assumption entered into by a Lender and
an assignee (with the consent of any party whose consent is required by
Section 10.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.

 

“Availability Period”
means the period from and including the Effective Date to but excluding the
earlier of the Commitment Termination Date and the date of termination of the
Commitments.

 

“AXIS Capital”
means AXIS Capital Holdings Limited, a Bermuda limited liability corporation.

 

“AXIS Re” means
AXIS Re Limited, an Irish limited liability company.

 

“AXIS Specialty”
means AXIS Specialty Limited, a Bermuda limited liability corporation.

 

“AXIS Specialty Europe”
means AXIS Specialty Europe Limited, an Irish limited liability company.

 

“Benefit Plan”
means (a) any Plan or (b) any plan, fund (including any superannuation fund) or
other similar program established or maintained outside the United States by
AXIS Capital or any of its Subsidiaries, with respect to which AXIS Capital or
such Subsidiary has an obligation to contribute, for the benefit of employees
of AXIS Capital or such Subsidiary, which plan, fund or other similar program
provides, or results in, the type of benefits described in Section 3(2) of
ERISA and is not subject to ERISA or the Code.

 

“Board” means the
Board of Governors of the Federal Reserve System of the United States of
America.

 

“Borrower” means
each of AXIS Capital and the Subsidiary Borrowers, as the context may require,
and “Borrowers” means all of the foregoing.

 

3

 

“Borrowing”
means, with respect to any Borrower, (a) all ABR Loans of such
Borrower made, converted or continued on the same date or (b) all
Eurodollar Loans of such Borrower that have the same Interest Period.

 

“Borrowing
Request” means a request by a Borrower for a Borrowing consisting of Loans
in accordance with Section 2.06.

 

“Business Day”
means any day (a) that is not a Saturday, Sunday or other day on which
commercial banks in New York City or Bermuda are authorized or required by law
to remain closed and (b)
if such day relates to a borrowing of, a payment or prepayment of principal of
or interest on, a continuation or conversion of or into, or the Interest Period
for, a Eurodollar Borrowing, or to a notice by a Borrower with respect to any
such borrowing, payment, prepayment, continuation, conversion, or Interest
Period, that is also a day on which dealings in Dollar deposits are carried out
in the London interbank market.

 

“Capital Lease Obligations”
of any Person means the obligations of such Person to pay rent or other amounts
under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP, and the amount of such obligations shall be the capitalized
amount thereof determined in accordance with GAAP.

 

“Change in Control”
means (a) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Securities Exchange Act of 1934,
as amended, and the rules of the SEC thereunder as in effect on the date
hereof), of shares representing more than 30% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of AXIS Capital;
(b) occupation of a majority of the seats (other than vacant seats) on the
board of directors of AXIS Capital by Persons who were neither (i) nominated
by the board of directors of AXIS Capital nor (ii) appointed by directors
so nominated; or (c) the acquisition of direct or indirect Control of AXIS
Capital by any Person or group.

 

“Change in Law”
means (a) the adoption of any law, rule or regulation after the date
hereof, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date hereof or (c) compliance by any Lender (or, for purposes of
Section 2.16(b), by any lending office of such Lender or by such Lender’s
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date hereof.

 

“Code” means the
Internal Revenue Code of 1986, as amended from time to time.

 

“Commitment”
means, with respect to each Lender, the commitment of such Lender to (a) issue
Syndicated Letters of Credit and/or acquire participations in Participated
Letters of Credit and/or (b) to make Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender’s Credit Exposure
hereunder.  The initial amount of each
Lender’s Commitment is set forth on Schedule 1.01, or in the Assignment
and Assumption pursuant to which such Lender shall have assumed its Commitment,
as applicable, but in each

 

4

 

case as such Commitment may be (a) reduced from time to time
pursuant to Section 2.09, (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 10.04 and
(c) increased from time to time pursuant to Section 2.09(c).  The initial aggregate amount of the Lenders’
Commitments is $750,000,000.

 

“Commitment
Termination Date” means March 26, 2007.

 

“Commitment
Utilization Day” means any day on which the aggregate outstanding principal
amount of Loans shall equal or exceed 50% of the Revolving Credit Sublimit
(whether or not the Commitments shall have terminated on or prior to such day).

 

“Confirming Lender”
means, with respect to any Lender, any other bank listed on the NAIC Lender
List that has agreed, by delivery of an agreement between such Lender and such
other bank in substantially the form of Exhibit G or such other agreement in
form and substance satisfactory to the Administrative Agent, that such other
bank will itself honor the obligations of such Lender in respect of a draft
complying with the terms of a Syndicated Letter of Credit, as if, and to the
extent, such other bank were an “issuing lender” (in place of such Lender)
named in such Syndicated Letter of Credit.

 

“Consolidated Net
Worth” means, at any time, the consolidated stockholders’ equity of AXIS
Capital and its Subsidiaries at such time.

 

“Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

 

“Credit Documents”
means, collectively, (a) this Agreement, (b) the Letter of Credit Documents and
(c) any Subsidiary Joinder Agreements.

 

“Credit
Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Loans and its LC Exposure at
such time.

 

“Credit Party”
means an Account Party or a Borrower.

 

“Credit Party
Jurisdiction” means, with respect to any Credit Party, any of (a) the
jurisdictions of its organization and (b) any other country or countries (i)
where such Credit Party is licensed or qualified to do business or (ii) from or
through which payments hereunder are made by such Credit Party.

 

“Default” means
any event or condition which constitutes an Event of Default or which upon
notice, lapse of time or both would, unless cured or waived, become an Event of
Default.

 

“Designation Date”
has the meaning assigned to such term in Section 2.12(a).

 

“Disposition” has
the meaning assigned to such term in Section 6.01(c).

 

5

 

“Dollars” or “$”
refers to lawful money of the United States of America.

 

“Effective Date”
means the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 10.02).

 

“Equity Rights”
means, with respect to any Person, any subscriptions, options, warrants,
commitments, preemptive rights or agreements of any kind (including any
shareholders’ or voting trust agreements) for the issuance, sale, registration
or voting of, or securities convertible into, any additional shares of capital
stock of any class of, or partnership or other ownership interests of any type
in, such Person.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ERISA Affiliate” means
any trade or business (whether or not incorporated) that, together with AXIS
Capital, is treated as a single employer under Section 414(b) or (c)
of the Code, or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

 

“ERISA Event”
means (a) any “reportable event”, as defined in Section 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by AXIS
Capital or any ERISA Affiliate of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the receipt by AXIS Capital or
any ERISA Affiliate from the PBGC or a plan administrator of any notice
relating to an intention to terminate any Plan or Plans or to appoint a trustee
to administer any Plan; (f) the incurrence by AXIS Capital or any ERISA
Affiliate of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by AXIS Capital or
any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan
from AXIS Capital or any ERISA Affiliate of any notice, concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.

 

“Eurodollar”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans constituting such Borrowing, are bearing interest at a rate
determined by reference to the Adjusted LIBO Rate.

 

“Event of Default”
has the meaning assigned to such term in Article VII.

 

“Excluded Taxes”
means, with respect to the Administrative Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of any
Credit Party hereunder, (a) income or franchise Taxes imposed on (or
measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits Taxes imposed
by the

 

6

 

United States of America or any similar Tax imposed by any other
jurisdiction in which any Credit Party is located or (c) with respect to any
Lender (other than an assignee pursuant to a request by AXIS Capital pursuant
to Section 2.20(b)) any withholding Tax that (i) is in effect and would apply
to amounts payable to such Lender at the time such Lender becomes a party to
this Agreement (or designates a new lending office), other than any withholding
Tax imposed on any payment to any Lender to the extent such Lender (or its
assignee, as the case may be) was entitled, at the time of designation of a new
lending office (or assignment, as the case may be) to receive additional
amounts from any Credit Party with respect to such withholding Tax pursuant to
Section 2.18(a) or (ii) is attributable to such Lender’s failure or inability
to comply with Section 2.18(e).

 

“Existing Credit
Agreement” means the $550,000,000 Credit Agreement dated as of March 27,
2003 among AXIS Capital, certain of its Subsidiaries, the lenders party thereto
and JPMCB, as administrative agent.

 

“Existing Letter of
Credit” means each syndicated letter of credit under (and as defined in)
the Existing Credit Agreement which is outstanding as of the Effective Date.

 

“Federal Funds
Effective Rate” means, for any day, the weighted average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if necessary, to the next
1/100 of 1%) of the quotations for such day for such transactions received by
the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.

 

“Financial Officer”
means the chief financial officer, principal accounting officer, treasurer or
controller of AXIS Capital.

 

“GAAP” means
generally accepted accounting principles in the United States of America.

 

“Governmental
Authority” means the government of the United States of America, Bermuda or
any other nation, or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central
bank or other entity (including any federal or other association of or with
which any such nation may be a member or associated) exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.

 

“Guarantee” of or by any Person (the “guarantor”)
means any obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of the guarantor, direct
or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase
(or to advance or supply funds for the purchase of) any security for the
payment thereof, (b) to purchase or lease property, securities or 

 

7

 

services for the purpose of assuring the owner of such Indebtedness or
other obligation of the payment thereof, (c) to maintain working capital,
equity capital or any other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or
other obligation or (d) as an account party or applicant in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.

 

“Guaranteed
Obligations” has the meaning assigned to such term in Section 9.01.

 

“Indebtedness” of any Person means, without duplication,
(a) all obligations of such Person for borrowed money or with respect to
deposits or advances of any kind, (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (c) all obligations
of such Person upon which interest charges are customarily paid, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed,
(g) all Guarantees by such Person of Indebtedness of others, (h) all
Capital Lease Obligations of such Person, (i) all obligations, contingent
or otherwise, of such Person as an account party or applicant in respect of
letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances.  The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor; provided that Indebtedness shall not
include (x) trade payables (including payables under insurance contracts and
reinsurance payables) and accrued expenses, in each case arising in the
ordinary course of business and (y) obligations with respect to Policies.

 

“Indemnified Taxes”
means Taxes (including Other Taxes) imposed on the Administrative Agent or any
Lender on or with respect to any payment hereunder or the execution, delivery
or enforcement of, or otherwise with respect to this Agreement other than
Excluded Taxes.

 

“Insurance Company”
means any Subsidiary which is subject to the regulation of, and is required to
file statements with, any governmental body, agency or official in any
jurisdiction which regulates insurance and/ or reinsurance companies or the
doing of an insurance and/ or reinsurance business therein.

 

“Interest
Election Request” means a request by a Borrower to convert or continue a
Borrowing in accordance with Section 2.08.

 

“Interest
Payment Date” means (a) with respect to any ABR Loan, each
Quarterly Date and (b) with respect to any Eurodollar Loan, the last day
of each Interest Period therefor

 

8

 

and, in the case of any Interest Period of more than three months’
duration, each day prior to the last day of such Interest Period that occurs at
three-month intervals after the first day of such Interest Period.

 

“Interest
Period” means, for any Eurodollar Loan or Borrowing, the period commencing
on the date of such Loan or Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as specified in the applicable Borrowing Request or Interest
Election Request; provided that (a) if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day, and (b) any Interest Period that
commences on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Business Day of the last calendar month
of such Interest Period.  For purposes
hereof, the date of a Loan initially shall be the date on which such Loan is
made and thereafter shall be the effective date of the most recent conversion
or continuation of such Loan, and the date of a Borrowing comprising Loans that
have been converted or continued shall be the effective date of the most recent
conversion or continuation of such Loans.

 

“Investment”
means, for any Person:  (a) the
acquisition (whether for cash, property, services or securities or otherwise)
of capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities of any other Person or any agreement to make any
such acquisition (including any “short sale” or any sale of any securities at a
time when such securities are not owned by the Person entering into such sale);
(b) the making of any deposit with, or advance, loan or other extension of
credit to, any other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such Person), but excluding any such advance, loan or
extension of credit having a term not exceeding 90 days arising in connection
with the sale of inventory or supplies by such Person in the ordinary course of
business; (c) the entering into of any Guarantee of, or other contingent
obligation with respect to, Indebtedness or other liability of any other Person
(excluding any Guarantee or other contingent obligation arising in the ordinary
course of such Person’s business as a reinsurance company) and (without
duplication) any amount committed to be advanced, lent or extended to such
Person; or (d) the entering into of any Swap Agreement.

 

“Investment Guidelines”
means, with respect to any Credit Party, the “Statement of Investment Policy
and Objectives” of such Credit Party (a) as in effect on, and delivered to the
Adminstrative Agent on or prior to, the Effective Date or (b) delivered to the
Administrative Agent pursuant to clause (ii) of the last sentence of Section
2.12(a), as applicable, in each case as may be changed from time to time by a resolution
duly adopted by the board of directors of such Credit Party (or any committee
thereof).

 

“Issuing Lender”
means (a) with respect to any Syndicated Letter of Credit, each Lender, in its
capacity as an issuer under such Syndicated Letter of Credit, and (b) with
respect to any Participated Letter of Credit, JPMCB, in its capacity as the
issuer of such Participated Letter of Credit hereunder, and its successors in
such capacity as provided in Section 2.04(k).

 

9

 

“JPMCB” means
JPMorgan Chase Bank.

 

“Law” means any
law (including common law), constitution, statute, treaty, regulation, rule,
ordinance, order, injunction, writ, decree or award of any Governmental
Authority.

 

“LC Disbursement”
means (a) with respect to any Participated Letter of Credit, a payment made by
the Issuing Lender pursuant thereto and (b) with respect to any Syndicated
Letter of Credit, a payment made by a Lender pursuant thereto.

 

“LC Exposure”
means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements under Letters of Credit that have not yet been
reimbursed by or on behalf of the Account Parties at such time. 
The LC Exposure of any Lender at any time shall be its Applicable
Percentage of the total LC Exposure at such time.

 

“Lenders” means
the Persons listed on Schedule 1.01 and any other Person that shall have
become a Lender party hereto pursuant to an Assignment and Assumption or an
agreement under Section 2.09(c), other than any such Person that ceases to be a
Lender party hereto pursuant to an Assignment and Assumption.

 

“Letter of Credit
Documents” means, with respect to any Letter of Credit, collectively, any
application therefor and any other agreements, instruments, guarantees or other
documents (whether general in application or applicable only to such Letter of
Credit) governing or providing for (a) the rights and obligations of the
parties concerned or at risk with respect to such Letter of Credit or (b) any
collateral security for any of such obligations, each as the same may be
modified and supplemented and in effect from time to time.

 

“Letter
of Credit” means each of the Syndicated Letters of Credit and the Participated
Letters of Credit.

 

“LIBO
Rate” means, for the Interest Period for any Eurodollar Borrowing, the rate
appearing on Page 3750 of the Telerate Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Person serving as the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to Dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for the offering of Dollar
deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available
at such time for any reason, then the LIBO Rate for such Interest Period shall
be the rate at which Dollar deposits of $5,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London office
of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.

 

“Lien” means, with
respect to any asset, (a) any mortgage, deed of trust, pledge, lien,
hypothecation, security interest, charge or other encumbrance or security
arrangement of

 

10

 

any nature whatsoever in, on or of such asset, and (b) the interest
of a vendor or a lessor under any conditional sale agreement, capital lease or
title retention agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such asset.

 

“Loans” means the
loans made by the Lenders to the Borrowers pursuant to Section 2.05.

 

“Margin Stock”
means “margin stock” within the meaning of Regulations T, U and X of the Board.

 

“Material Adverse
Effect” means a material adverse effect on (a) the business, operations,
property or condition (financial or otherwise) of AXIS Capital and its
Subsidiaries taken as a whole, (b) the ability of any Credit Party to perform
any of its obligations under this Agreement or any of the other Credit
Documents or (c) the validity of this Agreement or any of the other Credit
Documents or the rights
of or benefits available to the Administrative Agent and/or the Lenders
hereunder or thereunder.

 

“Material
Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one
or more of AXIS Capital and
its Subsidiaries in an aggregate principal amount exceeding $50,000,000.  For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of any Person in
respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that such Person would be required to
pay if such Swap Agreement were terminated at such time.

 

“Multiemployer Plan”
means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

 

“NAIC” means the
National Association of Insurance Commissioners.

 

“NAIC Approved Lender”
means (a) any Lender that is a bank listed on the most current Bank List
of banks approved by the NAIC (the “NAIC Lender List”) or (b) any
Lender as to which its Confirming Lender is a bank listed on the NAIC Lender
List.

 

“Other Taxes”
means any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made under, or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement or any other Credit Document.

 

“Participant” has
the meaning assigned to such term in Section 10.04(e).

 

“Participated Letters
of Credit” means letters of credit issued under Section 2.04.

 

“PBGC” means the
Pension Benefit Guaranty Corporation referred to and defined in ERISA and any
successor entity performing similar functions.

 

“Permitted
Investments” means, with respect to any Credit Party, investments
made consistent with, and subject to, the Investment Guidelines of such Credit
Party; provided

 

11

 

that the aggregate amount of Permitted Investments with respect to any
Credit Party in non-fixed income investments shall not exceed 20% of the
aggregate amount of all Permitted Investments with respect to such Credit Party
at any time.

 

“Person” means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other entity.

 

“Plan” means any
employee pension benefit plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302
of ERISA, and in respect of which AXIS Capital or any ERISA Affiliate is (or,
if such plan were terminated, would under Section 4069 of ERISA be deemed
to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Policies” means
all insurance and reinsurance policies, annuity contracts, guaranteed interest
contracts and funding agreements (including riders to any such policies or
contracts, certificates issued with respect to group life insurance or annuity
contracts and any contracts issued in connection with retirement plans or
arrangements) and assumption certificates issued or to be issued (or filed
pending current review by applicable Governmental Authorities) by any Insurance
Company and any coinsurance agreements entered into or to be entered into by an
Insurance Company.

 

“Prime Rate” means
the rate of interest per annum publicly announced from time to time by JPMCB as
its prime rate in effect at its principal office in New York City; each change
in the Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.

 

“Private Act”
means separate legislation enacted in Bermuda with the intention that such
legislation apply specifically to AXIS Capital, in whole or in part.

 

“Quarterly Dates”
means the last Business Day of March, June, September and December in each
year, the first of which shall be the first such day after the date hereof.

 

“Register” has the
meaning assigned to such term in Section 10.04(c).

 

“Related Parties”
means, with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.

 

“Required Lenders”
means, at any time,
Lenders having Credit Exposures and unused Commitments representing more than
50% of the sum of the total Credit Exposures and unused Commitments at such
time.

 

“Restricted
Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any shares of any class of
capital stock of AXIS Capital or any of its Subsidiaries, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
AXIS

 

12

 

Capital or any option, warrant or other right to acquire any such
shares of capital stock of AXIS Capital.

 

“Revolving
Credit Sublimit” has the meaning assigned to such term in Section 2.05(a).

 

“SAP” means, as to
each Insurance Company, the statutory accounting practices prescribed or
permitted by the Applicable Insurance Regulatory Authority for the preparation
of its financial statements and other reports by insurance corporations of the
same type as such Insurance Company in effect on the date such statements or
reports are to be prepared, except if otherwise notified by AXIS Capital
pursuant to Section 1.03.

 

“SEC” means the
United States Securities and Exchange Commission or any successor entity.

 

“S&P” means
Standard & Poor’s Ratings Services.

 

“S&P Rating”
means, at any time, the then current financial strength rating of AXIS
Specialty Limited by S&P.

 

“Statutory
Reserve Rate” means, for the Interest Period for any Eurodollar Borrowing,
a fraction (expressed as a decimal), the numerator of which is the number one
and the denominator of which is the number one minus the arithmetic
mean, taken over each day in such Interest Period, of the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board to which
the Person serving as the Administrative Agent is subject for eurocurrency
funding (currently referred to as “Eurocurrency liabilities” in
Regulation D of the Board).  Such
reserve percentages shall include those imposed pursuant to such
Regulation D.  Eurodollar Loans
shall be deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to any Lender under such
Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and
as of the effective date of any change in any reserve percentage.

 

“Statutory Statement”
means, for any Insurance Company, for any fiscal year of such Insurance
Company, the most recent annual statement filed with the Applicable Insurance
Regulatory Authority, which annual statements shall be prepared in accordance
with SAP.

 

“Subsidiary”
means, with respect to any Person (the “parent”), at any date, any corporation, limited liability company,
partnership, association or other entity the accounts of which would be
consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP
as of such date, as well as any other corporation, limited liability company,
partnership, association or other entity of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held
by the parent or one or more subsidiaries of the parent or by the parent and
one or more subsidiaries of the parent. 
Unless otherwise specified, “Subsidiary” means a Subsidiary of AXIS
Capital.

 

13

 

“Subsidiary
Account Party” means each Subsidiary that is listed under the
caption “Subsidiary Credit Parties” on the signature pages hereof and each
other Subsidiary that shall become a Subsidiary Account Party pursuant to
Section 2.12, in each case so long as such Subsidiary shall remain a Subsidiary
Account Party hereunder.

 

“Subsidiary
Borrower” means each Subsidiary that is listed under the caption
“Subsidiary Credit Parties” on the signature pages hereof and each other
Subsidiary that shall become a Subsidiary Borrower pursuant to Section 2.12, in
each case so long as such Subsidiary shall remain a Subsidiary Borrower
hereunder.

 

“Subsidiary Credit
Party” means a Subsidiary Account Party or a Subsidiary Borrower.

 

“Subsidiary Joinder
Agreement” means a Subsidiary Joinder Agreement entered into by AXIS
Capital and a Subsidiary pursuant to Section 2.12, substantially in the form of
Exhibit B or any other form approved by the Administrative Agent.

 

“Supplemental
Commitment Date” has the
meaning assigned to such term in Section 2.09(c).

 

“Supplemental
Lender” has the meaning
assigned to such term in Section 2.09(c).

 

“Swap Agreement”
means any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference
to, one or more rates, currencies, commodities, equity or debt instruments or
securities, or economic, financial or pricing indices or measures of economic,
financial or pricing risk or value or any similar transaction or any
combination of these transactions; provided that no phantom stock or
similar plan providing for payments only on account of services provided by
current or former directors, officers, employees or consultants of AXIS Capital
or its Subsidiaries shall be a Swap Agreement.

 

“Syndicated Letters of
Credit” means letters of credit issued pursuant to Section 2.01.

 

“Taxes” means any
and all present or future taxes, levies, imposts, duties, deductions, charges
or withholdings imposed by any Governmental Authority.

 

“Total Funded Debt”
means, at any time, all Indebtedness of AXIS Capital and its Subsidiaries which
would at such time be classified in whole or in part as a liability on the
consolidated balance sheet of AXIS Capital in accordance with GAAP.

 

“Transactions”
means the execution, delivery and performance by the Credit Parties of this
Agreement and the other Credit Documents, the borrowing of Loans, the use of
the proceeds thereof and the issuance of Syndicated Letters of Credit
hereunder.

 

“Type”,
when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans constituting such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

 

14

 

“UCC” means the
Uniform Commercial Code as in effect in the State of New York from time to
time.

 

“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.

 

SECTION 1.02.  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter
forms.  The words “include”, “includes”
and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of
or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits
and Schedules to, this Agreement and (e) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

 

SECTION 1.03.  Accounting Terms; GAAP and SAP; Fiscal
Year.  Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP or SAP, as the context requires, each as in
effect from time to time; provided that, if AXIS Capital notifies the
Administrative Agent that AXIS Capital requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or SAP, as the case may be, or in the application thereof on the operation
of such provision (or if the Administrative Agent notifies AXIS Capital that
the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or SAP, as the case may be, or in the application thereof, then
such provision shall be interpreted on the basis of GAAP or SAP, as the case
may be, as in effect and applied immediately before such change shall have
become effective until such notice shall have been withdrawn or such provision
amended in accordance herewith.   To
enable the ready and consistent determination of compliance with the covenants
set forth in Article VI, AXIS Capital will not change the last day of its fiscal year from December 31, or
the last days of the first three fiscal quarters in each of its fiscal years
from March 31, June 30 and September 30, respectively.

 

15

 

ARTICLE II

 

THE CREDITS

 

SECTION 2.01. 
Syndicated Letters of Credit.

 

(a)  General.  Subject to the terms and conditions set forth herein, at the
request of an Account Party each Lender agrees at any time and from time to
time during the Availability Period to issue Syndicated Letters of Credit
denominated in Dollars for account of such Account Party in an aggregate amount
that will not result in (i) such Lender’s Credit Exposure exceeding such
Lender’s Commitment or (ii) the total Credit Exposures exceeding the total
Commitments.  Each Syndicated Letter of
Credit shall be in such form as such Account Party shall request and which (x)
the Administrative Agent shall determine in good faith and on a commercially
reasonable basis does not contain any obligations, or diminish any rights, of
any Lender with respect thereto that are inconsistent with the terms hereof or
(y) the Required Lenders shall approve; provided that, without the prior
consent of each Lender, no Syndicated Letter of Credit may be issued that would
vary the several (and not joint) nature of the obligations of the Lenders
thereunder as provided in Section 2.01(e). 
Each Syndicated Letter of Credit shall be issued by all of the Lenders,
acting through the Administrative Agent, at the time of issuance as a single
multi-bank letter of credit, but the obligation of each Lender thereunder shall
be several and not joint as provided in Section 2.01(e).

 

(b)  Notice of Issuance, Amendment, Renewal or
Extension.  To request the issuance
of a Syndicated Letter of Credit (or the amendment, renewal or extension of an
outstanding Syndicated Letter of Credit), an Account Party shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Administrative Agent) to the Administrative Agent
(if by hand delivery or telecopy, not later than 11:00 a.m., New York City
time, one Business Day prior to the requested date of issuance, amendment,
renewal or extension) a notice requesting the issuance of a Syndicated Letter
of Credit, or identifying the Syndicated Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or
extension, as the case may be (which shall be a Business Day), the date on
which such Syndicated Letter of Credit is to expire (which shall comply with
paragraph (d) of this Section), the amount of such Syndicated Letter of
Credit, the name and address of the beneficiary thereof and the terms and
conditions of (and such other information as shall be necessary to prepare,
amend, renew or extend, as the case may be) such Syndicated Letter of
Credit.  If any Syndicated Letter of
Credit shall provide for the automatic extension of the expiry date thereof
unless the Administrative Agent gives notice in accordance with the terms of
such Syndicated Letter of Credit that such expiry date shall not be extended,
then the Administrative Agent will give such notice if requested to do so by the
Required Lenders in a notice given to the Administrative Agent not more than 60
days, but not less than 45 days, prior to the current expiry date of such
Syndicated Letter of Credit; provided that, unless all of the Lenders
shall otherwise agree, if any Syndicated Letter of Credit is outstanding on the
Commitment Termination Date, the Administrative Agent shall thereafter give
such notice of non-extension in accordance with the terms of such Syndicated
Letter of Credit.  If requested by the
Administrative Agent, an Account Party also shall submit a letter of credit
application on JPMCB’s standard form in connection with any request for a
Syndicated Letter of Credit.  In the
event of any inconsistency between the terms and conditions of this Agreement
and the terms and conditions of any form of letter of credit application or
other agreement submitted by an Account Party to, or entered into by an Account
Party with, the Administrative Agent relating to any Syndicated Letter of
Credit, the terms and conditions of this Agreement shall control.

 

16

 

(c)  Limitations on Amounts.  A Syndicated Letter of Credit shall be
issued, amended, renewed or extended only if (and upon such issuance,
amendment, renewal or extension of each Syndicated Letter of Credit the
applicable Account Party shall be deemed to represent and warrant that), after
giving effect to such issuance, amendment, renewal or extension, (A) the
aggregate Credit Exposure of the Lenders shall not exceed the aggregate amount
of the Commitments and (B) the Credit Exposure of each Lender at the time
outstanding shall not exceed the Commitment of such Lender.

 

(d)  Expiry Date.  Each Syndicated Letter of Credit shall
expire at or prior to the close of business on the date one year after the date
of the issuance of such Syndicated Letter of Credit (or, in the case of any
renewal or extension thereof, one year after each such renewal or extension); provided
that in no event shall any Syndicated Letter of Credit have an expiry date
after December 31, 2007.

 

(e)  Obligation of Lenders.  The obligation of any Lender under any
Syndicated Letter of Credit shall be several and not joint and shall at any
time be in an amount equal to such Lender’s Applicable Percentage of the
aggregate undrawn amount of such Syndicated Letter of Credit, and each
Syndicated Letter of Credit shall expressly so provide.

 

(f)  Adjustment of Applicable Percentages.  Upon (i) the addition of a Person as
Lender hereunder or the increase of the Commitment of a Lender, in each case
pursuant to Section 2.09(c) or (ii) the assignment of all or a portion of
the Commitment and interests in outstanding Loans and Syndicated Letters of
Credit of a Lender pursuant to Section 2.20(b) or 10.04(b), the Administrative
Agent shall promptly notify each beneficiary under an outstanding Syndicated
Letter of Credit of the Lenders that are parties to such Syndicated Letter of
Credit, after giving effect to such assignment, and their respective Applicable
Percentages as of the effective date of such assignment.

 

(g)  Continuation
of Existing Letters of Credit. 
Subject to the terms and conditions hereof, each Existing Letter of
Credit shall be deemed to be continued hereunder by all of the Lenders having
Commitments on the Effective Date, and the obligation of each such Lender under
such Existing Letter of Credit as so continued shall be several and not joint,
based upon its Applicable Percentage and the aggregate undrawn amount of such
Existing Letter of Credit, and each Existing Letter of Credit shall be deemed a
Syndicated Letter of Credit for all purposes of this Agreement and the other
Credit Documents as of the Effective Date. 
The Administrative Agent shall, on the Effective Date or promptly
thereafter, notify each beneficiary of an Existing Letter of Credit that is
continued hereunder as to the names of the Lenders that, as of the Effective
Date, will be the issuing lenders under, and party to, such Existing Letter of
Credit and the Lenders’ respective Applicable Percentages thereunder as of such
date.

 

SECTION 2.02.  Issuance and Administration.  Each Syndicated Letter of Credit shall be
executed and delivered by the Administrative Agent in the name and on behalf
of, and as attorney-in-fact for, each Lender party to such Syndicated Letter of
Credit, and the Administrative Agent shall act under each Syndicated Letter of
Credit, and each Syndicated Letter of Credit shall expressly provide that the
Administrative Agent shall act, as the agent of each Lender to (a) receive
drafts, other demands for payment and other documents presented by

 

17

 

the beneficiary under such Syndicated Letter of Credit, (b) determine
whether such drafts, demands and documents are in compliance with the terms and
conditions of such Syndicated Letter of Credit and (c) notify such Lender and
the applicable Account Party that a valid drawing has been made and the date
that the related LC Disbursement is to be made; provided that the
Administrative Agent shall have no obligation or liability for any LC
Disbursement under such Syndicated Letter of Credit, and each Syndicated Letter
of Credit shall expressly so provide. 
Each Lender hereby irrevocably appoints and designates the
Administrative Agent as its attorney-in-fact, acting through any duly
authorized officer of the Person serving as the Administrative Agent, to
execute and deliver in the name and on behalf of such Lender each Syndicated
Letter of Credit to be issued by such Lender hereunder.  Promptly upon the request of the
Administrative Agent, each Lender will furnish to the Administrative Agent such
powers of attorney or other evidence as any beneficiary of any Syndicated
Letter of Credit may reasonably request in order to demonstrate that the
Administrative Agent has the power to act as attorney-in-fact for such Lender
to execute and deliver such Syndicated Letter of Credit.  Upon the request of any Lender following the
issuance of any Syndicated Letter of Credit, the Administrative Agent will
furnish to such Lender a copy of such Syndicated Letter of Credit.

 

SECTION 2.03. 
Reimbursement of LC Disbursements, Etc.

 

(a)  Reimbursement.  If any Lender shall make any LC Disbursement
in respect of any Syndicated Letter of Credit, the applicable Account Party
agrees that it shall reimburse such Lender in respect of such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than noon, New York City time, on (i) the Business Day that such
Account Party receives notice of such LC Disbursement, if such notice is
received prior to 10:00 a.m., New York City time, or (ii) the
Business Day immediately following the day that such Account Party receives
such notice, if such notice is not received prior to such time.

 

(b)  Reimbursement Obligations Absolute.  The Account Parties’ obligations to
reimburse LC Disbursements as provided in paragraph (a) of this Section
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Syndicated Letter of Credit, or any term or provision
therein, (ii) any draft or other document presented under a Syndicated
Letter of Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate in any respect,
(iii) payment under a Syndicated Letter of Credit against presentation of
a draft or other document not complying strictly with the terms of such
Syndicated Letter of Credit, (iv) at any time or from time to time, without
notice to any Account Party, the time for any performance of or compliance with
any of such reimbursement obligations of any other Account Party shall be
waived, extended or renewed, (v) any of such reimbursement obligations of
any other Account Party being amended or otherwise modified in any respect, or
any guarantee of any of such reimbursement obligations or any security therefor
being released, substituted or exchanged in whole or in part or otherwise dealt
with, (vi) any lien or security interest granted to, or in favor of, the
Administrative Agent or any of the Lenders as security for any of such
reimbursement obligations failing to be perfected, (vii) the occurrence of any
Default, (viii) the existence of any proceeding of the type described in clause
(h) or (i) of Article VII with respect to any other Account Party, AXIS Capital
(if it is not an Account Party) or any other guarantor of any of such
reimbursement obligations, (ix) any lack of validity or enforceability of any
of such

 

18

 

reimbursement obligations against any other Account Party, AXIS Capital
(if it is not an Account Party) or any other guarantor of any of such
reimbursement obligations or (x) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable discharge of the
obligations of an Account Party hereunder.

 

Neither the
Administrative Agent nor any Lender nor any of their Related Parties shall have
any liability or responsibility by reason of or in connection with the issuance
or transfer of any Syndicated Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Syndicated Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond their control; provided
that the foregoing shall not be construed to excuse the Administrative Agent or
a Lender from liability to an Account Party to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by each Account Party to the extent permitted by applicable law)
suffered by such Account Party that are caused by the gross negligence or
wilful misconduct of the Administrative Agent or a Lender when determining
whether drafts and other documents presented under a Syndicated Letter of
Credit comply with the terms thereof. 
The parties hereto expressly agree that:

 

(A)  the Administrative Agent may accept
documents that appear on their face to be in substantial compliance with the
terms of a Syndicated Letter of Credit without responsibility for further
investigation, regardless of any notice or information to the contrary, and may
make payment upon presentation of documents that appear on their face to be in
substantial compliance with the terms of such Syndicated Letter of Credit;

 

(B)  the Administrative Agent shall have the
right, in its sole discretion, to decline to accept such documents and to make
such payment if such documents are not in strict compliance with the terms of
such Syndicated Letter of Credit; and

 

(C)  this sentence shall establish the standard
of care to be exercised by the Administrative Agent when determining whether
drafts and other documents presented under a Syndicated Letter of Credit comply
with the terms thereof (and the parties hereto hereby waive, to the extent
permitted by applicable law, any standard of care inconsistent with the
foregoing).

 

(c)  Disbursement Procedures.  The Administrative Agent shall, within a
reasonable time following its receipt thereof, examine all documents purporting
to represent a demand for payment under any Syndicated Letter of Credit.  The Administrative Agent shall promptly
after such examination (i) notify each of the Lenders and the applicable
Account Party by telephone (confirmed by telecopy) of such demand for payment
and (ii) deliver to each Lender a copy of each document purporting to
represent a demand for payment under such Syndicated Letter of Credit; provided that any failure to give or delay in giving such notice or delivering
such documents shall not relieve any Account Party of its obligation to
reimburse the

 

19

 

Lenders with respect to any such
LC Disbursement.  With
respect to any drawing determined by the Administrative Agent to be properly
made under a Syndicated Letter of Credit, each Lender will make an LC
Disbursement in respect of such Syndicated Letter of Credit in accordance with
its liability under such Syndicated Letter of Credit and this Agreement, such
LC Disbursement to be made to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders.  The Administrative Agent will make any such
LC Disbursement available to the beneficiary of such Syndicated Letter of
Credit by promptly crediting the amounts so received, in like funds, to the
account identified by such beneficiary in connection with such demand for
payment.  Promptly following any LC
Disbursement by any Lender in respect of any Syndicated Letter of Credit, the
Administrative Agent will notify the applicable Account Party of such LC
Disbursement; provided that any failure to give or delay in giving such
notice shall not relieve such Account Party of its obligation to reimburse the
Lenders with respect to any such LC Disbursement or (if such Account Party is a
Subsidiary Account Party) AXIS Capital of its guarantee of such obligation.

 

(d)  Interim Interest.  If any LC Disbursement with respect to a
Syndicated Letter of Credit is made, then, unless the applicable Account Party
shall reimburse such LC Disbursement in full on the date such LC Disbursement
is made, the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
such Account Party reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans; provided that if such Account Party fails to
reimburse such LC Disbursement when due pursuant to paragraph (a) of this
Section, then Section 2.14(c) shall apply.

 

(e)  Cash Collateralization.  If an Event of Default shall occur and be
continuing and AXIS Capital receives notice from the Administrative Agent or
the Required Lenders demanding the deposit of cash collateral for the aggregate
LC Exposure of all the Lenders pursuant to this paragraph, AXIS Capital shall
immediately deposit into an account established and maintained on the books and
records of the Administrative Agent, which account may be a “securities
account” (within the meaning of Section 8-501 of the UCC), in the name of
the Administrative Agent and for the benefit of the Lenders, an amount in cash
in Dollars equal to the total LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to
deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other
notice of any kind, upon the occurrence of any Event of Default described in
clause (h) or (i) of Article VII. 
Such deposit shall be held by the Administrative Agent as collateral for
the LC Exposure under this Agreement, and for this purpose AXIS Capital hereby
grants a security interest to the Administrative Agent for the benefit of the
Lenders in such collateral account and in any financial assets (as defined in
the Uniform Commercial Code) or other property held therein.

 

SECTION 2.04. 
Participated Letters of Credit.

 

(a)  General.  Subject to the terms and conditions set forth herein, any Account
Party may request the Issuing Lender to issue, at any time and from time to
time during the Availability Period, Participated Letters of Credit denominated
in Dollars for its own account.  Each
Participated Letter of Credit shall be in such form as such Account Party shall
request and consistent with the requirements of the applicable regulatory
authorities in the jurisdiction of

 

20

 

issue as reasonably determined by the Administrative Agent or as
otherwise agreed to by the Administrative Agent and AXIS Capital, provided
that no Participated Letter of Credit may be requested hereunder for any
jurisdiction unless AXIS Capital provides evidence reasonably satisfactory to
the Administrative Agent that Syndicated Letters of Credit do not comply with the
insurance laws of such jurisdiction. 
Participated Letters of Credit issued hereunder shall constitute
utilization of the Commitments.

 

(b)  Notice of Issuance, Amendment, Renewal or
Extension.  To request the issuance
of a Participated Letter of Credit (or the amendment, renewal or extension of
an outstanding Participated Letter of Credit), an Account Party shall hand
deliver or telecopy (or transmit by electronic communication, if arrangements
for doing so have been approved by the Issuing Lender) to the Issuing Lender
and the Administrative Agent (reasonably in advance of the requested date of
issuance, amendment, renewal or extension) a notice requesting the issuance of
a Participated Letter of Credit, or identifying the Participated Letter of Credit
to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension, as the case may be (which shall be a Business
Day), the date on which such Participated Letter of Credit is to expire (which
shall comply with paragraph (d) of this Section), the amount of such
Participated Letter of Credit, the name and address of the beneficiary thereof
and such other information as shall be necessary to prepare, amend, renew or
extend such Participated Letter of Credit. 
If requested by the Issuing Lender, such Account Party also shall submit
a letter of credit application on the Issuing Lender’s standard form in
connection with any request for a Participated Letter of Credit.  In the event of any inconsistency between
the terms and conditions of this Agreement and the terms and conditions of any
form of letter of credit application or other agreement submitted by such
Account Party to, or entered into by any Account Party with, the Issuing Lender
relating to any Participated Letter of Credit, the terms and conditions of this
Agreement shall control.

 

(c)  Limitations on Amounts.  A Participated Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Participated Letter of Credit each Account Party
shall be deemed to represent and warrant that), after giving effect to such
issuance, amendment, renewal or extension (i) the LC Exposure of the
Issuing Lender with respect to Participated Letters of Credit (determined for
these purposes without giving effect to the participations therein of the
Lenders pursuant to paragraph (e) of this Section) shall not exceed
$75,000,000 and (ii) the aggregate Credit Exposure of the Lenders shall
not exceed the aggregate amount of the Commitments.

 

(d)  Expiry Date.  Each Participated Letter of Credit shall
expire at or prior to the close of business on the date one year after the date
of the issuance of such Participated Letter of Credit (or, in the case of any
renewal or extension thereof, one year after each such renewal or extension); provided
that in no event shall any Participated Letter of Credit have an expiry date
after December 31, 2007.

 

(e)  Participations.  By the issuance of a Participated Letter of
Credit (or an amendment to a Participated Letter of Credit increasing the
amount thereof) by the Issuing Lender, and without any further action on the
part of the Issuing Lender or the Lenders, the Issuing Lender hereby grants to
each Lender, and each Lender hereby acquires from the Issuing Lender, a
participation in such Participated Letter of Credit equal to such Lender’s
Applicable

 

21

 

Percentage of the aggregate amount available to be drawn under such
Participated Letter of Credit.  Each
Lender acknowledges and agrees that its obligation to acquire participations
pursuant to this paragraph in respect of Participated Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Participated
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments.  In
consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
account of the Issuing Lender, such Lender’s Applicable Percentage of each LC
Disbursement made by the Issuing Lender in respect of any Participated Letter
of Credit promptly upon the request of the Issuing Lender at any time from the
time such LC Disbursement is made until such LC Disbursement is reimbursed by
the Account Parties or at any time after any reimbursement payment is required
to be refunded to the Account Parties for any reason.  Such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. 
Promptly following receipt by the Administrative Agent of any payment
from the Account Parties pursuant to the next following paragraph, the
Administrative Agent shall distribute such payment to the Issuing Lender or, to
the extent that the Lenders have made payments pursuant to this paragraph to
reimburse the Issuing Lender, then to such Lenders and the Issuing Lender as
their interests may appear.  Any payment
made by a Lender pursuant to this paragraph to reimburse the Issuing Lender for
any LC Disbursement shall not relieve the Account Parties of their
obligation to reimburse such LC Disbursement.  Notwithstanding anything herein to the contrary, effective upon
the increase of the Commitments pursuant to Section 2.09(c), each Lender’s
participation in any Participated Letter of Credit outstanding on such date
shall be adjusted to reflect its Applicable Percentage after giving effect to
such increase.

 

(f)  Reimbursement.  If any Lender shall make any LC Disbursement
in respect of any Participated Letter of Credit, the applicable Account Party
agrees that it shall reimburse such Lender in respect of such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than noon, New York City time, on (i) the Business Day that such
Account Party receives notice of such LC Disbursement, if such notice is
received prior to 10:00 a.m., New York City time, or (ii) the
Business Day immediately following the day that such Account Party receives
such notice, if such notice is not received prior to such time.  If such Account Party fails to make such
payment when due, the Administrative Agent shall notify each Lender of the
applicable LC Disbursement, the payment then due from such Account Party in
respect thereof and such Lender’s Applicable Percentage thereof.

 

(g)  Obligations Absolute.  The applicable Account Parties’ obligations
to reimburse LC Disbursements in respect of any Participated Letter of Credit
as provided in paragraph (f) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any
Participated Letter of Credit, or any term or provision therein, (ii) any
draft or other document presented under a Participated Letter of Credit proving
to be forged, fraudulent or invalid in any respect or any statement therein
being untrue or inaccurate in any respect, (iii) payment by the Issuing
Lender under a Participated Letter of Credit against presentation of a draft or
other document that does not comply strictly with the terms of such Participated
Letter of Credit, (iv)

 

22

 

at any time or from time to time, without notice to any Account Party,
the time for any performance of or compliance with any of such reimbursement
obligations of any other Account Party shall be waived, extended or renewed,
(v) any of such reimbursement obligations of any other Account Party being
amended or otherwise modified in any respect, or any guarantee of any of such
reimbursement obligations or any security therefor being released, substituted
or exchanged in whole or in part or otherwise dealt with, (vi) any lien or
security interest granted to, or in favor of, the Administrative Agent or any
of the Lenders as security for any of such reimbursement obligations failing to
be perfected, (vii) the occurrence of any Default, (viii) the existence of any
proceedings of the type described in clause (h) or (i) of Article VII with
respect to any other Account Party, AXIS Capital, (if it is not an Account
Party) or any guarantor of any of such reimbursement obligations, (ix) any lack
of validity or enforceability of any of such reimbursement obligations against
any other Account Party, AXIS Capital (if it is not an Account Party) or any
guarantor of any of such reimbursement obligations, or (x) any other event
or circumstance whatsoever, whether or not similar to any of the foregoing,
that might, but for the provisions of this Section, constitute a legal or
equitable discharge of the obligations of any Account Party hereunder.

 

Neither the
Administrative Agent, the Lenders nor the Issuing Lender, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Participated Letter of Credit
or any payment or failure to make any payment under a Participated Letter of
Credit (irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to
any Participated Letter of Credit (including any document required to make a
drawing thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond the control of the Issuing Lender; provided
that the foregoing shall not be construed to excuse the Issuing Lender from
liability to the Account Parties to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Account Parties to the extent permitted by applicable law) suffered by
the Account Parties that are caused by the Issuing Lender’s gross negligence or
willful misconduct when determining whether drafts and other documents
presented under a Participated Letter of Credit comply with the terms
thereof.  The parties hereto expressly
agree that:

 

(i)  the Issuing Lender may accept documents that
appear on their face to be in substantial compliance with the terms of a
Participated Letter of Credit without responsibility for further investigation,
regardless of any notice or information to the contrary, and may make payment
upon presentation of documents that appear on their face to be in substantial
compliance with the terms of such Participated Letter of Credit;

 

(ii)  the Issuing Lender shall have the right, in
its sole discretion, to decline to accept such documents and to make such
payment if such documents are not in strict compliance with the terms of such
Participated Letter of Credit; and

 

(iii)  this sentence shall establish the standard
of care to be exercised by the Issuing Lender when determining whether drafts
and other documents presented under a Participated Letter of Credit comply with
the terms thereof (and the parties hereto hereby

 

23

 

waive, to the extent permitted by applicable law, any
standard of care inconsistent with the foregoing).

 

(h)  Disbursement Procedures.  The Issuing Lender shall, within a
reasonable time following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Participated Letter of Credit.  The Issuing Lender shall promptly after such
examination notify the Administrative Agent and the applicable Account Party by
telephone (confirmed by telecopy) of such demand for payment and whether the
Issuing Lender has made or will make a LC Disbursement thereunder; provided
that any failure to give or delay in giving such notice shall not relieve such
Account Party of its obligation to reimburse the Issuing Lender and the Lenders
with respect to any such LC Disbursement.

 

(i)  Interim Interest.  If any LC Disbursement is made with respect
to a Participated Letter of Credit, then, unless the applicable Account Party
shall reimburse such LC Disbursement in full on the date such LC Disbursement
is made, the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that
such Account Party reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Loans; provided that if such Account Party fails to
reimburse such LC Disbursement when due pursuant to paragraph (f) of this
Section, then Section 2.14(c) shall apply.

 

(j)  Cash
Collateralization.  If an Event of
Default shall occur and be continuing and AXIS Capital receives notice from the
Administrative Agent or the Required Lenders demanding the deposit of cash
collateral for the aggregate LC Exposure of all the Lenders pursuant to this
paragraph, AXIS Capital shall immediately deposit into an account established
and maintained on the books and records of the Administrative Agent, which
account may be a “securities account” (within the meaning of Section 8-501
of the UCC, in the name of the Administrative Agent and for the benefit of the
Lenders, an amount in cash in Dollars equal to the total LC Exposure as of such
date plus any accrued and unpaid interest thereon; provided that
the obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default described
in clause (h) or (i) of Article VII. 
Such deposit shall be held by the Administrative Agent as collateral for
the LC Exposure under this Agreement, and for this purpose AXIS Capital hereby
grants a security interest to the Administrative Agent for the benefit of the
Lenders in such collateral account and in any financial assets (as defined in
the Uniform Commercial Code) or other property held therein.

 

(k)  Replacement
of the Issuing Lender.  The Issuing
Lender may be replaced at any time by written agreement between AXIS Capital,
the Administrative Agent, the replaced Issuing Lender and the successor Issuing
Lender.  The Administrative Agent shall
notify the Lenders of any such replacement of the Issuing Lender.  At the time any such replacement shall
become effective, the Account Parties shall pay all unpaid fees accrued for
account of the replaced Issuing Lender pursuant to Section 2.13(c).  From and after the effective date of any
such replacement, (i) the successor Issuing Lender shall have all the
rights and obligations of the replaced Issuing Lender under this Agreement with
respect to Participated Letters of Credit to be issued thereafter and
(ii) references herein to the term “Issuing Lender” shall be deemed to
refer

 

24

 

to such successor or to any previous Issuing Lender, or to such
successor and all previous Issuing Lenders, as the context shall require.  After the replacement of an Issuing Lender
hereunder, the replaced Issuing Lender shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Lender under this
Agreement with respect to Participated Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Participated
Letters of Credit.

 

SECTION 2.05. 
Loans and Borrowings.

 

(a)  General.  Subject to the terms and conditions set forth herein, in addition
to the Syndicated Letters of Credit provided for in Section 2.01 and the
Participated Letters of Credit provided for in Section 2.04, any Borrower may
request each Lender, and each Lender hereby agrees, to make Loans in Dollars to
such Borrower from time to time during the Availability Period in an aggregate
principal amount that will not result in (i) such Lender’s Credit Exposure
exceeding such Lender’s Commitment, (ii) the total Credit Exposures
exceeding the total Commitments or (iii) the aggregate principal amount of all
outstanding Loans exceeding $300,000,000 (the “Revolving Credit Sublimit”).  Within the foregoing limits and subject to
the terms and conditions set forth herein, the Borrowers may borrow, prepay and
reborrow Loans.

 

(b)  Obligations of Lenders.  Each Loan shall be made as part of a
Borrowing of a Borrower consisting of Loans of the same Type made by the
Lenders ratably in accordance with their respective Commitments.  The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and
no Lender shall be responsible for any other Lender’s failure to make Loans as
required.

 

(c)  Type of Loans.  Subject to Section 2.15, each Borrowing
shall be constituted entirely of ABR Loans or of Eurodollar Loans as the
applicable Borrower may request in accordance herewith.  Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option
shall not affect the obligation of the applicable Borrower to repay such Loan
in accordance with the terms of this Agreement.

 

(d)  Minimum Amounts; Limitation on Number of
Borrowings.  Each Eurodollar
Borrowing shall be in an aggregate amount of $5,000,000 or a larger multiple of
$1,000,000.  Each ABR Borrowing
shall be in an aggregate amount equal to $5,000,000 or a larger multiple of
$1,000,000; provided that an ABR Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total Commitments or
that is required to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.03(a). 
Borrowings of more than one Type may be outstanding at the same time; provided
that there shall not at any time be more than a total of ten Eurodollar
Borrowings for all Borrowers outstanding.

 

(e)  Limitations on Interest Periods.  Notwithstanding any other provision of this
Agreement, none of the Borrowers shall be entitled to request (or to elect to
convert to or continue as a Eurodollar Borrowing) any Borrowing if the Interest
Period requested therefor would end after the Commitment Termination Date.

 

25

 

SECTION 2.06. 
Requests for Borrowings.

 

(a)  Notice by the Borrowers.  To request a Borrowing, a Borrower shall
notify the Administrative Agent of such request by telephone (i) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of the proposed Borrowing or
(ii) in the case of an ABR Borrowing, not later than 11:00 a.m.,
New York City time, one Business Day before the date of the proposed
Borrowing.  Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
in a form approved by the Administrative Agent and signed by such Borrower.

 

(b)  Content of Borrowing Requests.  Each telephonic and written Borrowing
Request shall specify the following information in compliance with
Section 2.05:

 

(i)  the aggregate amount of the
requested Borrowing;

 

(ii)  the date of such Borrowing,
which shall be a Business Day;

 

(iii)  whether such Borrowing is
to be an ABR Borrowing or a Eurodollar Borrowing;

 

(iv)  in the case of a
Eurodollar Borrowing, the Interest Period therefor, which shall be a period
contemplated by the definition of the term “Interest Period” and permitted
under Section 2.05(e); and

 

(v)  the location and number of
the applicable Borrower’s account to which funds are to be disbursed.

 

(c)  Notice by the Administrative Agent to the
Lenders.  Promptly following receipt
of a Borrowing Request in accordance with this Section, the Administrative
Agent shall advise each Lender of the details thereof and of the amount of such
Lender’s Loan to be made as part of the requested Borrowing.

 

(d)  Failure to Elect.  If no election as to the Type of a Borrowing
is specified in the applicable Borrowing Request, then the requested Borrowing
shall be an ABR Borrowing.  If no
Interest Period is specified in the applicable Borrowing Request with respect
to any requested Eurodollar Borrowing, then the requested Borrowing shall be
made instead as an ABR Borrowing.

 

SECTION 2.07. 
Funding of Borrowings.

 

(a)  Funding by Lenders.  Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds by 12:00 noon, New York City time, to the account of the
Administrative Agent most recently designated by it for such purpose by notice
to the Lenders.  The Administrative
Agent will make such Loans available to the applicable Borrower by promptly
crediting the amounts so received,

 

26

 

in like funds, to an account of such Borrower (if any) maintained with
the Administrative Agent in New York City and designated by such Borrower (or
such other account of such Borrower designated by it) in the applicable
Borrowing Request; provided that ABR Borrowings made to finance the
reimbursement of an LC Disbursement as provided in Section 2.03(a)
shall be remitted by the Administrative Agent to the Lenders in accordance with
Section 2.19.

 

(b)  Presumption by the Administrative Agent.  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing that
such Lender will not make available to the Administrative Agent such Lender’s
share of such Borrowing, the Administrative Agent may assume that such Lender
has made such share available on such date in accordance with
paragraph (a) of this Section and may, in reliance upon such assumption, make
available to the applicable Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then such Lender and such Borrower severally agree to pay, without duplication,
to the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to such Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the Federal Funds
Effective Rate or (ii) in the case of such Borrower, the interest rate
applicable to ABR Loans.  If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Loan included in such Borrowing.

 

SECTION 2.08. 
Interest Elections.

 

(a)  Elections by the Borrowers.  The Loans constituting each Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Borrowing, shall have the Interest Period
specified in such Borrowing Request. 
Thereafter, the applicable Borrower may elect to convert such Borrowing
to a Borrowing of a different Type or to continue such Borrowing as a Borrowing
of the same Type and, in the case of a Eurodollar Borrowing, may elect the
Interest Period therefor, all as provided in this Section.  A Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
constituting such Borrowing, and the Loans constituting each such portion shall
be considered a separate Borrowing.

 

(b)  Notice of Elections.  To make an election pursuant to this
Section, the applicable Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would be required
under Section 2.06 if such Borrower were requesting a Borrowing of the
Type resulting from such election to be made on the effective date of such
election.  Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by such
Borrower.

 

(c)  Content of Interest Election Requests.  Each telephonic and written Interest
Election Request shall specify the following information in compliance with
Section 2.05:

 

27

 

(i)  the Borrowing to which such
Interest Election Request applies and, if different options are being elected
with respect to different portions thereof, the portions thereof to be
allocated to each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) of this paragraph shall
be specified for each resulting Borrowing);

 

(ii)  the effective date of the
election made pursuant to such Interest Election Request, which shall be a
Business Day;

 

(iii)  whether the resulting
Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

 

(iv)  if the resulting Borrowing
is a Eurodollar Borrowing, the Interest Period therefor after giving effect to
such election, which shall be a period contemplated by the definition of the
term “Interest Period” and permitted under Section 2.05(e).

 

(d)  Notice by the Administrative Agent to the
Lenders.  Promptly following receipt
of an Interest Election Request, the Administrative Agent shall advise each Lender
of the details thereof and of such Lender’s portion of each resulting
Borrowing.

 

(e)  Failure to Elect; Events of Default.  If the applicable Borrower fails to deliver
a timely and complete Interest Election Request with respect to a Eurodollar
Borrowing prior to the end of the Interest Period therefor, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies AXIS
Capital, then, so long as an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period therefor.

 

SECTION 2.09. 
Termination, Reduction and Increase of the Commitments.

 

(a)  Scheduled Termination.  Unless previously terminated, the
Commitments shall terminate at the close of business on the Commitment
Termination Date.

 

(b)  Voluntary Termination or Reduction.  AXIS Capital may at any time, without
premium or penalty, terminate, or from time to time reduce, the Commitments; provided
that (i) each reduction of the Commitments shall be in an amount that is
$10,000,000 or a larger multiple of $5,000,000, (ii) AXIS Capital shall
not terminate or reduce the Commitments if, after giving effect to any
concurrent prepayment of the Loans in accordance with Section 2.11, the total
Credit Exposures would exceed the total Commitments and (iii) each reduction of
the Commitments shall result in a proportionate reduction in the Revolving
Credit Sublimit.  AXIS Capital shall
notify the Administrative Agent of any election to terminate or reduce the
Commitments under paragraph (b) of this Section at least three Business
Days prior to the effective date of such termination or reduction, specifying
such election and the effective date thereof. 
Promptly following receipt of any notice, the Administrative Agent shall
advise the

 

28

 

Lenders of the contents thereof. 
Each notice delivered by AXIS Capital pursuant to this paragraph shall
be irrevocable.  Any termination or
reduction of the Commitments shall be permanent.  Each reduction of the Commitments shall be made ratably among the
Lenders in accordance with their respective Commitments.

 

(c)  Increases to Commitments.  AXIS Capital shall have the right at any
time prior to the date that is 30 days prior to the Commitment Termination Date
to increase the aggregate Commitments hereunder up to an aggregate amount not
exceeding $1,000,000,000 by adding to this Agreement one or more other NAIC
Approved Lenders (which may include any existing Lender, with the consent of
such Lender in its sole discretion) (each such bank, a “Supplemental Lender”)) with the approval of the
Administrative Agent (which approval shall not be unreasonably withheld), provided
that (i) each Supplemental Lender shall have entered into an agreement
pursuant to which such Supplemental Lender shall undertake a Commitment (or, if
such Supplemental Lender is an existing Lender, pursuant to which its Commitment
shall be increased), (ii) such Commitment of any Supplemental Lender that is
not an existing Lender shall be in an amount of at least $25,000,000 and
(iii) such Commitment (together with the increased Commitment(s) of all
other Supplemental Lenders being provided at such time) shall be in an
aggregate amount of at least $25,000,000. 
Each such Supplemental Lender shall enter into an agreement in form and
substance satisfactory to AXIS Capital and the Administrative Agent pursuant to
which such Supplemental Lender shall, as of the effective date of such increase
in the Commitments (which shall be a Business Day and, unless the
Administrative Agent otherwise agrees, on which no issuance, amendment, renewal
or extension of any Letter of Credit is scheduled to occur or no Borrowing is
scheduled to be made, each a “Supplemental
Commitment Date”), undertake
a Commitment (or, if any such Supplemental Lender is an existing Lender, its
Commitment shall be in addition to such Lender’s Commitment hereunder on such
date) and such Supplemental Lender shall thereupon become (or continue to be) a
“Lender” for all purposes hereof. 
Notwithstanding the foregoing, no increase in the aggregate Commitments
hereunder pursuant to this Section shall be effective unless:

 

(i)  AXIS Capital shall have given the
Administrative Agent notice of any such increase at least three Business Days
prior to the applicable Supplemental Commitment Date;

 

(ii)  no Default shall have occurred and be
continuing on the applicable Supplemental Commitment Date; and

 

(iii)  each of the representations and warranties
of the Credit Parties contained in this Agreement and the other Credit
Documents shall be true on and as of the applicable Supplemental Commitment
Date with the same force and effect as if made on and as of such date (or, if
any such representation or warranty is expressly stated to have been made as of
a specific date, as of such specific date).

 

Each notice under clause (i) above shall be deemed to
constitute a representation and warranty by AXIS Capital and the other Credit
Parties as to the matters specified in clauses (ii) and (iii) above.

 

29

 

On
each Supplemental Commitment Date, each Borrower shall (A) prepay the then
outstanding Loans (if any) to such Borrower in full held by the Lenders
immediately prior to giving effect to such increase in the Commitments, (B) if
it shall so request, borrow new Loans from all Lenders (including any
Supplemental Lender) in an aggregate amount at least equal to such prepayment,
so that, after giving effect thereto, the Loans are held ratably by the Lenders
in accordance with their respective Commitments (after giving effect to such
increase) and (C) pay to the Lenders the amounts, if any, payable under Section
2.17.

 

SECTION 2.10. 
Repayment of Loans; Evidence of Debt.

 

(a)  Repayment.  Each Borrower hereby unconditionally promises to pay to the
Administrative Agent for account of the Lenders the unpaid principal amount of
the Loans made to such Borrower on the Commitment Termination Date.

 

(b)  Manner of Payment.  Prior to any repayment of any Borrowings
hereunder, the applicable Borrower shall select the Borrowing or Borrowings of
such Borrower to be paid and shall notify the Administrative Agent by telephone
(confirmed by telecopy) of such selection not later than 11:00 a.m., New
York City time, three Business Days before the scheduled date of such
repayment; provided that each repayment of Borrowings shall be applied
to repay any outstanding ABR Borrowings before any other Borrowings.  If the applicable Borrower fails to make a
timely selection of the Borrowing or Borrowings to be repaid (in accordance
with the immediately preceding sentence) or prepaid (in accordance with Section
2.11(b)), such payment shall be applied, first, to pay any outstanding
ABR Borrowings and, second, to other Borrowings in the order of the
remaining duration of their respective Interest Periods (the Borrowing with the
shortest remaining Interest Period to be repaid first).  Each payment of a Borrowing shall be applied
ratably to the Loans included in such Borrowing.

 

(c)  Maintenance of Records by Lenders.  Each Lender shall maintain in accordance
with its usual practice records evidencing the indebtedness of the Borrowers to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.

 

(d)  Maintenance of Records by the
Administrative Agent.  The
Administrative Agent shall maintain records in which it shall record
(i) the amount of each Loan made hereunder, the Borrower to which such
Loan was made, the Type thereof and each Interest Period therefor,
(ii) the amount of any principal or interest due and payable or to become due
and payable from a Borrower to each Lender hereunder and (iii) the amount
of any sum received by the Administrative Agent hereunder for account of the
Lenders and each Lender’s share thereof.

 

(e)  Effect of Entries.  The entries made in the records maintained
pursuant to paragraph (c) or (d) of this Section shall be prima
facie evidence of the existence and amounts of the obligations recorded
therein; provided that the failure of any Lender or the Administrative
Agent to maintain such records or any error therein shall not in any manner
affect the obligation of the Borrowers to repay the Loans in accordance with
the terms of this Agreement.

 

(f)  Promissory Notes.  Any Lender may request that Loans made by it
to any Borrower be evidenced by a promissory note of such Borrower.  In such event, such Borrower

 

30

 

shall prepare, execute and deliver to such Lender a promissory note
payable to such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent and the
applicable Borrower.  Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 10.04) be represented by
one or more promissory notes in such form payable to the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).

 

SECTION 2.11. 
Prepayment of Loans.

 

(a)  Right to Prepay Borrowings.  Each Borrower shall have the right at any
time and from time to time to prepay any Borrowing of such Borrower in whole or
in part, subject to the requirements of this Section.

 

(b)  Notices, Etc.  The applicable Borrower shall notify the
Administrative Agent by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not
later than 11:00 a.m., New York City time, three Business Days before the
date of prepayment or (ii) in the case of prepayment of an
ABR Borrowing, not later than 11:00 a.m., New York City time, one
Business Day before the date of prepayment. 
Each such notice shall be irrevocable and shall specify the prepayment
date and the principal amount of each Borrowing or portion thereof to be
prepaid.  Promptly following receipt of
any such notice relating to a Borrowing, the Administrative Agent shall advise
the Lenders of the contents thereof. 
Each partial prepayment of any Borrowing shall be in an amount that
would be permitted in the case of a Borrowing of the same Type as provided in
Section 2.05(d).  Each prepayment
of a Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing.  Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.14 and
shall be made in the manner specified in Section 2.10(b).

 

SECTION 2.12.  Addition
and Termination of Subsidiary Credit Parties.

 

(a)  Addition of Subsidiary Credit Party.  AXIS Capital may, by notice to the
Administrative Agent, which shall promptly notify the Lenders, request from
time to time that any direct or indirect, wholly-owned Subsidiary become a
party to this Agreement as an Account Party and/or a Borrower (as specified in
such notice); provided that such request shall be made in writing and
specify the proposed date, which shall be at least 15 Business Days (or, in the
case of any Subsidiary listed on Schedule 2.12, 5 Business Days) after the date
of such request (the “Designation Date”), on which the designation of
such Subsidiary as an Account Party and/or a Borrower. as applicable, would be
effective and shall be accompanied by final drafts of the documentation
required by clause (ii) of the last sentence of this paragraph.  Each Lender, acting in its sole discretion,
shall, by notice to AXIS Capital and the Administrative Agent given on or
before the Designation Date, advise AXIS Capital whether or not such Lender
agrees to such designation; provided that (x) each Lender that
determines not to agree to such designation shall notify AXIS Capital and the
Administrative Agent of such fact promptly after such determination (but in any
event no later than the Designation Date) and any Lender that does not advise
AXIS Capital on or before the Designation Date shall be deemed not to have
consented to such designation and (y) each Lender consents to the designation
of any Subsidiary listed on Schedule 2.12 as an Account Party and a Borrower
upon the date any such Subsidiary shall

 

31

 

receive all necessary regulatory approval required to be party to this
Agreement and deliver the documentation required by clause (ii) of the last
sentence of this paragraph.  If (and
only if), on or before the Designation Date, (i) each Lender shall have
consented to the designation of a Subsidiary as an Account Party and/or a
Borrower, as applicable, and (ii) such Subsidiary shall have delivered to the
Administrative Agent a Subsidiary Joinder Agreement executed by such Subsidiary
and AXIS Capital (together with a copy of the Investment Guidelines of such
Subsidiary as in effect on the Designation Date, a process agent acceptance
letter in respect of such Subsidiary substantially in the form of Exhibit C and
such other documents (including legal opinions) as the Administrative Agent
shall reasonably request, which may include other documents that are consistent
with conditions set forth in Section 4.01, each in form and substance
reasonably satisfactory to the Administrative Agent, the Administrative Agent
shall accept such Subsidiary Joinder Agreement on the Designation Date, and
upon such acceptance (x) the Administrative Agent shall promptly notify the
Lenders thereof and (y) such Subsidiary shall become a party to this Agreement
as an Account Party and/or a Borrower, as applicable.

 

(b)  Termination of Subsidiary Credit Party.  AXIS Capital may at any time at which
(i) any Subsidiary party hereto as an Account Party shall not be an
Account Party with respect to any outstanding Letter of Credit and shall not have
any unpaid LC Disbursements terminate such Subsidiary as an Account Party
hereunder or (ii) any Subsidiary party hereto as a Borrower shall not have
any unpaid Loans or unpaid interest thereon terminate such Subsidiary as a
Borrower hereunder, in each case by delivering an executed notice thereof,
substantially in the form of Exhibit D hereto, to the Administrative Agent
(which shall promptly notify the Lenders). 
Immediately upon the receipt by the Administrative Agent of such notice,
(in the case of a termination of a Subsidiary Account Party) all Commitments of
the Lenders to issue Syndicated Letters of Credit, or to participate in
Participated Letters of Credit issued, for account of such Subsidiary Account
Party and (in the case of a termination of a Subsidiary Borrower) to make Loans
to such Subsidiary Borrower, and all related rights of such Subsidiary
hereunder, shall terminate and, as applicable, such Subsidiary Account Party
shall immediately cease to be an Account Party and/or such Subsidiary Borrower
shall immediately cease to be a Borrower hereunder; provided that all
obligations of such Subsidiary as an Account Party and/or a Borrower, as
applicable, hereunder arising in respect of any period in which such Subsidiary
was, or on account of any action or inaction by such Subsidiary as, an Account
Party and/or a Borrower hereunder, as applicable, shall survive such
termination.

 

SECTION 2.13. 
Fees.

 

(a)  Commitment Fee.  AXIS Capital agrees to pay to the
Administrative Agent for account of each Lender a commitment fee, which shall
accrue at the Applicable Rate on the average daily unused amount of the
Commitment of such Lender during the period from and including the Effective
Date to but excluding the earlier of the date such Commitment terminates and
the Commitment Termination Date. 
Accrued commitment fees shall be payable on the third Business Day
following each Quarterly Date and on the earlier of the date the Commitments
terminate and the Commitment Termination Date, commencing on the first such
date to occur after the date hereof. 
All commitment fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day).

 

32

 

(b)  Letter of Credit Fee.  AXIS Capital agrees to pay to the
Administrative Agent for account of each Lender a letter of credit fee, which
shall accrue at the Applicable Rate on such Lender’s Applicable Percentage of
the average daily aggregate undrawn amount of all outstanding Letters of Credit
during the period from and including the Effective Date to but excluding the
later of the date on which such Lender’s Commitment terminates and the date on
which such Lender ceases to have any LC Exposure.  Accrued letter of credit fees shall be payable on the third
Business Day following each Quarterly Date and on the earlier of the date the
Commitments terminate and the Commitment Termination Date, commencing on the
first such date to occur after the date hereof; provided that after the
termination of the Commitments, letter of credit fees shall be payable on
demand.  Letter of credit fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).

 

(c)  Participated Letter of Credit Fees.  AXIS Capital agrees to pay to the Issuing
Lender with respect to Participated Letters of Credit a fronting fee at a rate
per annum agreed between AXIS Capital and the Issuing Lender on the average
daily amount of the LC Exposure in respect of Participated Letters of
Credit (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any such LC Exposure.  Fronting fees accrued through and including
each Quarterly Date shall be payable on the third Business Day following such
Quarterly Date and on the earlier of the date the Commitments terminate and the
Commitment Termination Date, commencing on the first such date to occur after
the Effective Date; provided that after the termination of the
Commitments, fronting fees shall be payable on demand.  Fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).

 

(d)  Letter of Credit Commissions, Etc.  AXIS Capital agrees to pay, on demand, to
the Administrative Agent for its own account or the account of the Issuing
Lender with respect to Participated Letters of Credit, as applicable, all
commissions, charges, costs and expenses with respect to the issuance, amendment,
renewal and extension of each Letter of Credit and drawings and other
transactions relating thereto in amounts customarily charged from time to time
in like circumstances by the Person serving as the Administrative Agent and/or
such Issuing Lender, as applicable, and notified to AXIS Capital in writing by
the Administrative Agent and/or such Issuing Lender.

 

(e)  Agent Fees.  AXIS Capital agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed
upon between AXIS Capital and the Administrative Agent.

 

(f)  Payment of Fees.  All fees payable hereunder shall be paid on
the dates due, in immediately available funds, to the Administrative Agent for
distribution, in the case of the commitment fees, letter of credit fees and
fronting fees referred to in paragraphs (a), (b) and (c), respectively, of this
Section, to the Lenders entitled thereto. 
Fees paid shall not be refundable under any circumstances.

 

33

 

SECTION 2.14. 
Interest.

 

(a)  ABR Loans.  The Loans constituting each
ABR Borrowing shall bear interest at a rate per annum equal to the
Alternate Base Rate.

 

(b)  Eurodollar Loans.  The Loans constituting each Eurodollar
Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBO
Rate for the Interest Period for such Borrowing plus the Applicable
Margin plus, for any Commitment Utilization Day, the Additional
Margin.

 

(c)  Default Interest.  Notwithstanding the foregoing, if any
reimbursement of an LC Disbursement or any principal of or interest on any Loan
or any fee or other amount payable by a Credit Party hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a rate per
annum equal to (i) in the case of any overdue reimbursement of an LC
Disbursement or overdue principal of any Loan, 2% plus the rate
otherwise applicable to such LC Disbursement or such Loan as provided above or
(ii) in the case of any other amount, 2% plus the rate applicable
to ABR Loans as provided in paragraph (a) of this Section.

 

(d)  Payment of Interest.  Accrued interest on each Loan shall be
payable in arrears on each Interest Payment Date for such Loan and upon
termination of the Commitments prior to the Commitment Termination Date; provided
that (i) interest accrued pursuant to paragraph (c) of this Section
shall be payable on demand, (ii) in the event of any repayment or prepayment
of any Loan (other than a prepayment of an ABR Loan prior to the
Commitment Termination Date), accrued interest on the principal amount repaid
or prepaid shall be payable on the date of such repayment or prepayment and
(iii) in the event of any conversion of any Eurodollar Borrowing prior to
the end of the Interest Period therefor, accrued interest on such Borrowing
shall be payable on the effective date of such conversion.

 

(e)  Computation.  All interest hereunder shall be computed on
the basis of a year of 360 days, except that interest computed by reference to
the Alternate Base Rate at times when the Alternate Base Rate is based on the
Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in
a leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.

 

SECTION 2.15.  Alternate
Rate of Interest.  If prior to the commencement of the Interest
Period for any Eurodollar Borrowing:

 

(a)  the Administrative Agent
determines (which determination shall be conclusive absent manifest error) that
adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate for such Interest Period; or

 

(b)  the Administrative Agent is
advised by the Required Lenders that the Adjusted LIBO Rate for such Interest
Period will not adequately and fairly reflect the cost to such Lenders of
making or maintaining their respective Loans included in such Borrowing for
such Interest Period;

 

34

 

then
the Administrative Agent shall give notice thereof to AXIS Capital and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies AXIS Capital and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or the
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and such Borrowing (unless prepaid) shall be continued as, or converted to, an
ABR Borrowing and (ii) if any Borrowing Request requests a Eurodollar
Borrowing, such Borrowing shall be made as an ABR Borrowing.

 

SECTION 2.16. 
Increased Costs.

 

(a)  Increased Costs Generally.  If any Change in Law shall:

 

(i)  impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits
with or for account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate); or

 

(ii)  impose on any Lender or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans made by
such Lender or any Letter of Credit;

 

and the result of any of
the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any
such Loan) or to increase the cost to such Lender of issuing, maintaining or
participating in any Letter of Credit or to reduce the amount of any sum
received or receivable by such Lender hereunder (whether of principal, interest
or otherwise), then AXIS
Capital will pay to such Lender such additional amount or amounts as
will compensate such Lender for such additional costs incurred or reduction
suffered.

 

(b)  Capital Requirements.  If any Lender determines that any Change in
Law regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender’s capital or on the capital of such Lender’s
holding company, if any, as a consequence of this Agreement or the Loans made
by, or Letters of Credit issued, or participated in, by such Lender to a level
below that which such Lender or such Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s
policies and the policies of such Lender’s holding company with respect to
capital adequacy), then from time to time AXIS Capital will pay to such Lender such additional amount or
amounts as will compensate such Lender or such Lender’s holding company for any
such reduction suffered.

 

(c)  Certificates from Lenders.  A certificate of a Lender setting forth the
amount or amounts necessary to compensate such Lender or its holding company,
as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to AXIS Capital and shall be conclusive absent manifest error.  AXIS Capital shall pay such Lender the
amount shown as due on any such certificate within 10 days after receipt
thereof by AXIS Capital.

 

35

 

(d)  Delay in Requests.  Failure or delay on the part of any Lender
to demand compensation pursuant to this Section shall not constitute a waiver
of such Lender’s right to demand such compensation; provided that AXIS Capital shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than six months prior to the date that such Lender
notifies AXIS Capital of the
Change in Law giving rise to such increased costs or reductions and of such
Lender’s intention to claim compensation therefor; provided  further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the six-month period referred to above shall be extended to
include the period of retroactive effect thereof.

 

SECTION 2.17.  Break Funding Payments.  In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period therefor (including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of an Interest
Period therefor, (c) the failure to borrow, convert, continue or prepay
any Loan on the date specified in any notice delivered pursuant hereto or
(d) the assignment as a result of a request by AXIS Capital pursuant to Section 2.20(b) of any Eurodollar
Loan other than on the last day of an Interest Period therefor, then, in any
such event, AXIS Capital shall
compensate each Lender for the loss, cost and expense attributable to such
event.  In the case of a Eurodollar
Loan, the loss to any Lender attributable to any such event shall be deemed to
include an amount determined by such Lender to be equal to the excess, if any,
of (i) the amount of interest that such Lender would pay for a deposit
equal to the principal amount of such Loan for the period from the date of such
payment, conversion, failure or assignment to the last day of the then current
Interest Period for such Loan (or, in the case of a failure to borrow, convert
or continue, the duration of the Interest Period that would have resulted from
such borrowing, conversion or continuation) if the interest rate payable on
such deposit were equal to the Adjusted LIBO Rate for such Interest Period, over
(ii) the amount of interest that such Lender would earn on such principal
amount for such period if such Lender were to invest such principal amount for
such period at the interest rate that would be bid by such Lender (or an
affiliate of such Lender) for Dollar deposits from other banks in the
eurodollar market at the commencement of such period.  A certificate of any Lender setting forth any amount or amounts
that such Lender is entitled to receive pursuant to this Section shall be
delivered to AXIS Capital and
shall be conclusive absent manifest error. 
AXIS Capital shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

SECTION 2.18. 
Taxes.

 

(a)  Payments Free of Taxes.  Any and all payments by or on account of any
obligation of a Credit Party hereunder or under any other Credit Document shall
be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if a Credit Party shall be required to deduct
any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent or Lender (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) such Credit Party shall make such deductions and
(iii) such Credit Party shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

 

36

 

(b)  Payment of Other Taxes by the Credit
Parties.  In addition, each Credit
Party shall pay any Other Taxes in respect of such Credit Party to the relevant
Governmental Authority in accordance with applicable law.

 

(c)  Indemnification by the Credit Parties.  Each Credit Party shall indemnify the
Administrative Agent and each Lender, within 10 days after written demand to
such Credit Party therefor, for the full amount of any Indemnified Taxes or
Other Taxes in respect of such Credit Party (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) paid by the Administrative Agent or such Lender, as the case may
be, and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  A certificate as to the
amount of such payment or liability delivered to a Credit Party by a Lender, or
by the Administrative Agent on its own behalf or on behalf of a Lender, shall
be conclusive absent manifest error.

 

(d)  Evidence of Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by a Credit Party to a Governmental Authority,
such Credit Party shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.

 

(e)  Exemptions.  Each Lender and the Administrative Agent shall, at the written
request of a Credit Party, provide to such Credit Party such form,
certification or similar documentation, if any (each duly completed, accurate
and signed) as is currently required by any Credit Party Jurisdiction or any
other jurisdiction, or comply with such other requirements, if any, as is
currently applicable in any Credit Party Jurisdiction or any other
jurisdiction, in order to obtain an exemption from, or reduced rate of,
deduction, payment or withholding of Indemnified Taxes or Other Taxes to which
such Lender or the Administrative Agent is entitled pursuant to an applicable
tax treaty or the law of any Credit Party Jurisdiction or any other
jurisdiction; provided that such Credit Party shall have furnished to
such Lender or the Administrative Agent in a reasonably timely manner copies of
such documentation and notice of such requirements together with applicable
instructions.  No Credit Party shall be
required to indemnify any Lender or the Administrative Agent under clauses (a)
or (c) of this Section for any Indemnified Taxes or Other Taxes to the extent
such Indemnified Taxes or Other Taxes would not be imposed but for the failure
by such Lender or the Administrative Agent, as the case may be, to comply with
the provisions of the preceding sentence. 
Upon the written request of a Credit Party, each Lender and the
Administrative Agent will provide to such Credit Party such form, certification
or similar documentation (each duly completed, accurate and signed) as may in
the future be required by any Credit Party Jurisdiction or any other
jurisdiction, or comply with such other requirements, if any, as may be
applicable in any Credit Party Jurisdiction or any other jurisdiction in order
to obtain an exemption from, or reduced rate of, deduction, payment or
withholding of Indemnified Taxes or Other Taxes to which such Lender or the
Administrative Agent is entitled pursuant to an applicable tax treaty or the
law of the relevant jurisdiction; provided that neither such Lender nor
the Administrative Agent shall have any obligation to provide such form,
certification or similar document if it would be unduly burdensome, would
require such Lender or the Administrative Agent to disclose any confidential
information or would otherwise be materially disadvantageous to such Lender or
the Administrative Agent; and

 

37

 

provided  further that such
Credit Party shall have furnished to such Lender or the Administrative Agent in
a reasonably timely manner copies of such documentation and notice of such
requirements together with applicable instructions.

 

SECTION 2.19. 
Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

 

(a)  Payments by the Credit Parties.  Each Credit Party shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or under Section 2.16, 2.17 or 2.18, or
otherwise) or under any other Credit Document (except to the extent otherwise
provided therein) prior to 12:00 noon, New York City time, on the date
when due, in immediately available funds, without set-off or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received either on such date or on the next succeeding Business Day for purposes
of calculating interest thereon.  All
such payments shall be made to the Administrative Agent at its offices at 270
Park Avenue, New York, New York, except payments pursuant to
Sections 2.16, 2.17, 2.18 and 10.03, which shall be made directly to the
Persons entitled thereto.  The Administrative
Agent shall distribute any such payments received by it for account of any
other Person to the appropriate recipient promptly following receipt
thereof.  If any payment hereunder shall
be due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such
extension.  All payments hereunder or
under any other Credit Document shall be made in Dollars.

 

(b)  Application of Insufficient Payments.  If at any time insufficient funds are
received by and available to the Administrative Agent to pay fully all amounts
of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, to pay interest and fees
then due hereunder, ratably among the parties entitled thereto in accordance
with the amounts of interest and fees then due to such parties, and
(ii) second, to pay principal and unreimbursed LC Disbursements then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such
parties.

 

(c)  Pro Rata Treatment.  Except to the extent otherwise provided
herein: (i) each reimbursement of LC Disbursements shall be made to the
Lenders, each Borrowing shall be made from the Lenders, each payment of fees
under Section 2.13 shall be made for account of the Lenders, and each
termination or reduction of the amount of the Commitments under
Section 2.09 shall be applied to the respective Commitments of the
Lenders, pro rata according to the amounts of their respective Commitments (or,
in the case of any such reimbursement or payment after the termination of the
Commitments, pro rata according to the respective Credit Exposures of the
Lenders); (ii) each
Borrowing shall be allocated pro rata among the Lenders according to the
amounts of their respective Commitments (in the case of the making of Loans) or
their respective Loans that are to be included in such Borrowing (in the case
of conversions and continuations of Loans); (iii) each payment or prepayment of principal of
Loans by a Borrower shall be made for account of the Lenders pro rata in
accordance with the respective unpaid principal amounts of the Loans held by
them; and (iv) each payment of interest on Loans by a Borrower shall be made for account of
the Lenders pro rata in accordance with the amounts of interest on such Loans
then due and payable to the respective Lenders.

 

38

 

(d)  Sharing of Payments by Lenders.  If any Lender shall, by exercising any right
of set-off or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Loans or any LC Disbursements resulting
in such Lender receiving payment of a greater proportion of the aggregate
amount of its Loans and LC Disbursements and accrued interest thereon then due
than the proportion received by any other Lender, then the Lender receiving
such greater proportion shall purchase (for cash at face value) participations
in the Loans and LC Disbursements of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and LC Disbursements; provided that (i) if
any such participations are purchased and all or any portion of the payment
giving rise thereto is recovered, such participations shall be rescinded and
the purchase price restored to the extent of such recovery, without interest,
and (ii) the provisions of this paragraph shall not be construed to apply
to any payment made by a Credit Party pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or LC Disbursements to any assignee or participant, other than to a
Credit Party or any Subsidiary or Affiliate thereof (as to which the provisions
of this paragraph shall apply).  Each
Credit Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Credit Party rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Credit
Party in the amount of such participation.

 

(e)  Presumptions of Payment.  Unless the Administrative Agent shall have
received notice from a Credit Party prior to the date on which any payment is
due from such Credit Party to the Administrative Agent for account of the
Lenders hereunder that such Credit Party will not make such payment, the
Administrative Agent may assume that such Credit Party has made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders the amount due. 
In such event, if such Credit Party has not in fact made such payment,
then each of the Lenders severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
Federal Funds Effective Rate.

 

(f)  Certain Deductions by the Administrative
Agent.  If any Lender shall fail to
make any payment required to be made by it pursuant to Section 2.07(b) or
2.19(e), then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for account of such Lender to satisfy such Lender’s
obligations under such Sections until all such unsatisfied obligations are
fully paid.

 

SECTION 2.20.  Mitigation Obligations; Replacement of
Lenders.

 

(a)  Designation of a Different Lending Office.  If any Lender requests compensation under
Section 2.16, or if a Credit Party is required to pay any additional
amount to any Lender or any Governmental Authority for account of any Lender
pursuant to Section 2.18, then such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loans and
Letters of Credit hereunder or to assign its rights and obligations

 

39

 

hereunder to another of
its offices, branches or Affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable
pursuant to Section 2.16 or 2.18, as the case may be, in the future
and (ii) would not subject such Lender to any unreimbursed cost or expense
and would not otherwise be disadvantageous to such Lender.  AXIS Capital hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

(b)  Replacement of Lenders.  If any Lender requests compensation under
Section 2.16, or if a Credit Party is required to pay any additional
amount to any Lender or any Governmental Authority for account of any Lender
pursuant to Section 2.18 or if any Lender ceases to be an NAIC Approved
Lender, then AXIS Capital may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 10.04), all its interests, rights and obligations
under this Agreement to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided
that (i) AXIS Capital shall have received the prior written consent of the
Administrative Agent, which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and the amount of its LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the applicable Credit Party (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.16 or payments required to be made
pursuant to Section 2.18, such assignment will result in a reduction in
such compensation or payments.  A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling AXIS Capital to require such assignment and delegation cease to
apply.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Each of AXIS Capital and
(except with respect to Section 3.04, the first sentence of Section 3.11 and
Sections 3.13(a) and 3.14) the other Credit Parties severally represents and
warrants to the Lenders that:

 

SECTION 3.01.  Organization; Powers.  Such Credit Party and each of its
Subsidiaries is duly organized, validly existing and (in the case of any Credit
Party organized under the laws of the United States of America or any State
thereof, or any other jurisdiction where the concept of “good standing” of a corporation or company is applicable) in
good standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required.

 

40

 

SECTION 3.02.  Authorization; Enforceability.  The Transactions are within such Credit
Party’s corporate powers and have been duly authorized by all necessary
corporate and, if required, by all necessary shareholder action.  This Agreement has been duly executed and
delivered by such Credit Party and constitutes, and each of the other Credit
Documents to which any Credit Party is to be a party, when executed and
delivered by such Credit Party will constitute, a legal, valid and binding
obligation of such Credit Party, enforceable against such Credit Party in
accordance with its terms, except as such enforceability may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium, examination or
similar laws of general applicability affecting the enforcement of creditors’
rights and (b) the application of general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).

 

SECTION 3.03.  Governmental Approvals; No Conflicts.  The Transactions (a) do not require any
consent or approval of (including any exchange control approval), registration
or filing with, or any other action by, any Governmental Authority (including
the Bermuda Monetary Authority), except such as have been obtained or made and
are in full force and effect, (b) will not violate any applicable law or
regulation (including regulations of the Bermuda Monetary Authority) or the
charter, by-laws or other organizational documents of such Credit Party or any
of its Subsidiaries or any order of any Governmental Authority, (c) will
not violate or result in a default under any material indenture, agreement or
other instrument binding upon such Credit Party or any of its Subsidiaries or
assets, or give rise to a right thereunder to require any material payment to
be made by any such Person, and (d) will not result in the creation or
imposition of any material Lien on any asset of such Credit Party or any of its
Subsidiaries.

 

SECTION 3.04.  Financial
Condition; No Material Adverse Change.

 

(a)  Financial Condition.  AXIS Capital has heretofore furnished to the
Lenders (i) its consolidated balance sheet and statements of income,
shareholders’ equity and cash flows as of and for the fiscal year ended
December 31, 2003, audited by Deloitte & Touche LLP, independent public
accountants, and (ii) the unaudited balance sheet and statement of income of
each Subsidiary Credit Party as of such date and for such fiscal year.  Such financial statements present fairly, in
all material respects, the financial condition and results of operations and
cash flows of AXIS Capital and its consolidated Subsidiaries (in the case of
the financial statements referred to in clause (i) of the first sentence of
this paragraph) and the financial condition and results of operations of each
Subsidiary Credit Party ((in the case of the financial statements referred to
in clause (ii) of the first sentence of this paragraph) as of such date and for
such fiscal year in accordance with GAAP. 
None of AXIS
Capital and its Subsidiaries has on the date hereof any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except (i)
as referred to or reflected or provided for in such balance sheet as of
December 31, 2003 and (ii) for insurance payment liabilities or liabilities
arising in the ordinary course of AXIS Capital’s or any of its Subsidiary’s
business as an insurance or reinsurance company.

 

(b)  No Material Adverse Change.  Since December 31, 2003, there has been no
event, development or circumstance that has had or could reasonably be expected
to result in a Material Adverse Effect.

 

41

 

SECTION 3.05.  Properties.  Such Credit Party and its Subsidiaries has good title to, or
valid leasehold interests in, all its real and personal property material to
its business, subject only to Liens permitted by Section 6.02 and except
for minor defects in title that do not interfere with its ability to conduct
its business as currently conducted or to utilize such properties for their
intended purposes.

 

SECTION 3.06.  Litigation.

 

(a)  Actions, Suits and Proceedings.  Except as disclosed in Schedule 3.06(a) or
as routinely encountered in claims activity, there are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority now pending
against or, to the knowledge of such Credit Party, threatened against or
affecting such Credit Party or any of its Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (ii) that involve
this Agreement or the Transactions.

 

(b)  Disclosed Matters.  Since the date hereof, there has been no
change in the status of the matters disclosed in Schedule 3.06(a) that,
individually or in the aggregate, has resulted in, or materially increased the
likelihood of, a Material Adverse Effect.

 

SECTION 3.07.  Compliance
with Laws and Agreements.  Such
Credit Party and each of its Subsidiaries is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it
or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.  No Default has occurred and is
continuing.

 

SECTION 3.08.  Investment and Holding Company Status.  Neither such Credit Party nor any of its
Subsidiaries is (a) an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a “holding
company” as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935.

 

SECTION 3.09.  Taxes.  Such Credit Party and each of its Subsidiaries has timely filed
or caused to be filed (taking into account any applicable extension within
which to file) all Tax returns and reports required to have been filed and has
paid or caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate
proceedings and for which such Person has set aside on its books adequate
reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.10.  Pension-Related Matters.  Except as could not reasonably be expected
to result in a Material Adverse Effect, (i) all contributions required to be
made by such Credit Party or any of its Subsidiaries with respect to a Benefit
Plan have been timely made, (ii) each Benefit Plan has been maintained in
compliance with its terms and with the requirements of any and all applicable
laws and has been maintained, where required, in good standing with the
applicable Governmental Authority and (iii) neither such Credit Party nor any
of its Subsidiaries

 

42

 

has incurred any
obligation in connection with the termination or withdrawal from any Benefit
Plan.

 

SECTION 3.11.  Disclosure.  AXIS Capital has disclosed to the Lenders all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.  None of the reports,
financial statements, certificates or other written information furnished by or
on behalf of AXIS Capital or any other Credit Party to the Lenders in
connection with the negotiation of this Agreement and the other Credit
Documents or delivered hereunder or thereunder as modified or supplemented by
other information so furnished (taken as a whole with all such written information
theretofore or contemporaneously furnished) contains any material misstatement
of fact or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that, with respect to projected financial
information, AXIS Capital represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

 

SECTION 3.12.  Use of Credit.  Neither such Credit Party nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether immediate, incidental
or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of
any extension of credit hereunder will be used to buy or carry any Margin
Stock.

 

SECTION 3.13.  Indebtedness and Liens.

 

(a)  Indebtedness.  Schedule 6.05 is a complete and correct list
of each credit agreement, loan agreement, indenture, purchase agreement,
guarantee, letter of credit or other arrangement providing for or otherwise
relating to any Indebtedness or any extension of credit (or commitment for any
extension of credit) to, or guarantee by, AXIS Capital or any of its
Subsidiaries outstanding on the Effective Date, and the aggregate principal or
face amount outstanding or that may become outstanding under each such
arrangement is correctly described in Schedule 6.05.

 

(b)  Liens.  Schedule 6.02 is a complete and correct list
of each Lien securing Indebtedness of any Person outstanding on the Effective
Date covering any property of AXIS Capital or any of its Subsidiaries, and the
aggregate Indebtedness secured (or that may be secured) by each such Lien and
the property covered by each such Lien is correctly described in Schedule 6.02.

 

SECTION 3.14.  Subsidiaries.  Set forth in Schedule 3.14 is a complete and
correct list of all of the Subsidiaries of AXIS Capital as of the date hereof,
together with, for each such Subsidiary, the jurisdiction of organization of
such Subsidiary.  Except as disclosed in
Schedule 3.14, (i) each such Subsidiary is a directly or indirectly
wholly-owned Subsidiary, (ii) each of AXIS Capital and its Subsidiaries owns,
free and clear of Liens, and has the unencumbered right to vote, all
outstanding ownership interests in each Person shown to be held by it in
Schedule 3.14, (iii) all of the issued and outstanding capital stock of
each such Person

 

43

 

organized as a corporation
is validly issued, fully paid and nonassessable and (iv) there are no
outstanding Equity Rights with respect to such Person.

 

SECTION 3.15.  Withholding Taxes.  Based upon information with respect to each
Lender provided by each Lender to the Administrative Agent, as of the Effective
Date, the payment of the Loans and LC Disbursements and interest thereon, the
fees under Section 2.13 and all other amounts payable hereunder will not be
subject, by withholding or deduction, to any Taxes imposed by any Credit Party
Jurisdiction.

 

SECTION 3.16.  Stamp Taxes.  To ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement, it is not
necessary that this Agreement or any other document be filed or recorded with
any Governmental Authority or that any stamp or similar tax be paid on or in
respect of this Agreement, or any other document other than (i) such filings
and recordations that have already been made, (ii) such stamp or similar taxes
that have already been paid and (iii) nominal stamp taxes on any promissory
note of any Subsidiary Borrower organized under the laws of Ireland payable
prior to the execution thereof.

 

SECTION 3.17.  Legal Form.  Each of the Credit Documents is in proper legal form under the
law of the jurisdiction of organization of each Credit Party for the
enforcement thereof against each Credit Party under such law, and if each of
the Credit Documents were stated to be governed by such law, they would
constitute legal, valid and binding obligations of each Credit Party under such
law, enforceable in accordance with their respective terms.  All formalities required in the jurisdiction
of organization of each Credit Party for the validity and enforceability of
each of the Credit Documents (including any necessary registration, recording
or filing with any court or other authority in such jurisdiction) have been
accomplished, and no Indemnified Taxes or Other Taxes are required to be paid
to such jurisdiction, or any political subdivision thereof or therein, and no notarization
is required, for the validity and enforceability thereof (except as provided in
Section 3.16).

 

ARTICLE IV

 

CONDITIONS

 

SECTION 4.01.  Effective Date.  The obligations of the Lenders (or the
Issuing Lender, as the case may be) to issue or continue Letters of Credit and
to make Loans hereunder are subject to the receipt by the Administrative Agent
of each of the following documents, each of which shall be satisfactory to the
Administrative Agent (and to the extent specified below, to each Lender) in
form and substance (or such condition shall have been waived in accordance with
Section 10.02):

 

(a)  Executed Counterparts.  From each party hereto either (i) a
counterpart of this Agreement signed on behalf of such party or
(ii) written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page to this Agreement)
that such party has signed a counterpart of this Agreement.

 

(b)  Opinions of Counsel to Credit Parties.  Opinions, each addressed to the
Administrative Agent and the Lenders and dated the Effective Date, of (i)
Conyers Dill &

 

44

 

Pearman, Bermuda counsel
to AXIS Capital and AXIS Specialty, substantially in the form of
Exhibit E-1, (ii) Skadden, Arps, Slate, Meagher &Flom LLP, New
York counsel to the Credit Parties, substantially in the form of
Exhibit E-2, and (iii) William Fry, Irish counsel to AXIS Re and AXIS
Specialty Europe, substantially in the form of Exhibit E-3.

 

(c)  Opinion of Special New York Counsel to
JPMCB.  An opinion, dated the
Effective Date, of Milbank, Tweed, Hadley & McCloy LLP, special New York
counsel to JPMCB, substantially in the form of Exhibit F (and JPMCB hereby
instructs such counsel to deliver such opinion to the Lenders).

 

(d)  Organizational Documents.  Such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Credit Parties, the
authorization of the Transactions and any other legal matters relating to the
Credit Parties, this Agreement or the Transactions, all in form and substance
reasonably satisfactory to the Administrative Agent and its counsel.

 

(e)  Officer’s Certificate.  A certificate, dated the Effective Date and
signed by the President, a Vice President or a Financial Officer of AXIS
Capital, confirming that (i) the representations and warranties of AXIS Capital
set forth in this Agreement are true and correct on and as of such date (or, if
any such representation or warranty is expressly stated to have been made as of
a specific date, as of such specific date) and (ii) no Default has occurred and
is continuing on such date.

 

(f)  Existing Credit Agreements.  Evidence that (i) AXIS Capital shall have
paid in full (or is paying from the proceeds of Borrowings on the Effective
Date) all principal of and interest accrued on the outstanding loans under the
Existing Credit Agreement and all fees, expenses and other amounts owing by it
thereunder (to the extent that reasonably detailed statements for such fees,
expenses and other amounts have been delivered to it prior to the Effective
Date), (ii) the commitments of the lenders thereunder shall have terminated and
(iii) any letters of credit issued and outstanding thereunder (x) shall
have expired or been terminated or (y) shall be continued hereunder as
Syndicated Letters of Credit as contemplated by Section 2.01(g).

 

(g)  Process Agent Acceptance Letters.  A process agent acceptance letter in respect
of each Credit Party substantially in the form of Exhibit C.

 

(h)  Other Documents.  Such other documents as the Administrative
Agent or any Lender or special New York counsel to JPMCB may reasonably
request.

 

The obligation of any
Lender to make its initial extension of credit hereunder is also subject to the
payment by AXIS Capital of such fees as AXIS Capital shall have agreed to pay
to any Lender or the Administrative Agent in connection herewith, including the
reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy LLP,
special New York counsel to JPMCB, in connection with the negotiation,
preparation, execution and delivery of this Agreement and the other Credit
Documents and the extensions of credit hereunder (to the extent

 

45

 

that reasonably detailed
statements for such fees and expenses have been delivered to AXIS Capital prior
to the Effective Date).

 

The Administrative Agent
shall notify AXIS Capital and the Lenders of the Effective Date, and such
notice shall be conclusive and binding. 
Notwithstanding the foregoing, the obligations of the Lenders (or the
Issuing Lender, as the case may be) to issue or continue Letters of Credit and
make Loans hereunder shall not become effective unless each of the foregoing
conditions is satisfied (or waived pursuant to Section 10.02) on or prior
to 5:00 p.m., New York City time, on March 25, 2004 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate
at such time).

 

SECTION 4.02.  Each Credit Event.  The obligation of each Lender (or Issuing
Lender, as the case may be) to make any Loan or issue, amend, renew or extend
any Letter of Credit is additionally subject to the satisfaction of the
following conditions:

 

(a)  the representations and warranties of the
Credit Parties set forth in this Agreement and in the other Credit Documents
shall be true and correct on and as of the date of issuance, amendment, renewal
or extension of such Letter of Credit or the date of such Loan, as applicable
(or, if any such representation or warranty is expressly stated to have been
made as of a specific date, as of such specific date); and

 

(b)  at the time of and immediately after giving
effect to such Loan or the issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, no Default shall have occurred and be
continuing.

 

Each Borrowing and each
issuance, amendment, renewal or extension of a Letter of Credit shall be deemed
to constitute a representation and warranty by AXIS Capital and (if different)
the applicable Credit Party on the date thereof as to the matters specified in
the preceding sentence.

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

Until the Commitments
have expired or been terminated and the principal of and interest on each Loan
and all fees payable hereunder shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have
been reimbursed, AXIS Capital covenants and agrees with the Lenders that:

 

SECTION 5.01.  Financial Statements and Other
Information.  AXIS Capital will
furnish to the Administrative Agent and each Lender:

 

(a)  within 90 days after the end of each fiscal
year of AXIS Capital, the audited consolidated balance sheet and related consolidated
statements of operations, stockholders’ equity and cash flows of AXIS Capital
and its Subsidiaries as of the end of and for such year, setting forth in each
case in comparative form the figures for (or, in the case of the balance sheet,
as of the end of) the previous fiscal year (if such figures were already
produced for such corresponding period or periods), all reported on by Deloitte
&

 

46

 

Touche LLP or other
independent public accountants of recognized national standing (without a
“going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of AXIS Capital and its
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;

 

(b)  within 45 days after the end of each of the
first three fiscal quarters of each fiscal year of AXIS Capital, the
consolidated balance sheet and related consolidated statements of operations,
stockholders’ equity and cash flows of AXIS Capital and its Subsidiaries as of
the end of and for such fiscal quarter and the then elapsed portion of such
fiscal year, setting forth in each case in comparative form the figures for
(or, in the case of the balance sheet, as of the end of) the corresponding
period or periods of the previous fiscal year (if such figures were already
produced for such corresponding period or periods), all certified by a
Financial Officer as presenting fairly in all material respects the financial
condition and results of operations of AXIS Capital and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;

 

(c)  concurrently with any delivery of financial
statements under clause (a) or (b) of this Section, a certificate
signed by a Financial Officer (i) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof and any
action taken or proposed to be taken with respect thereto, (ii) setting
forth reasonably detailed calculations demonstrating compliance with Sections
6.04, 6.05, 6.06 and 6.07 and (iii) stating whether any material change in
GAAP or in the application thereof has occurred since the date of the financial
statements referred to in Section 3.04 and, if any such material change
has occurred, specifying the effect of such material change on the financial
statements accompanying such certificate;

 

(d)  within 15 days after the filing of Statutory
Statements by any Insurance Company, a copy of such Statutory Statements of
such Insurance Company for the relevant fiscal year, accompanied by a
certificate of a senior financial officer of such Insurance Company (i)
certifying that such Statutory Statements present the financial condition and
results of operations of such Insurance Company in accordance with SAP and (ii)
stating whether any material change in SAP or in the application thereof has
occurred since the date of the Statutory Statements most recently filed with
the Applicable Insurance Regulatory Authority by such Insurance Company prior
to the date hereof and, if any such material change has occurred, specifying
the effect of such material change on the Statutory Statements accompanying
such certificate;

 

(e)  concurrently with any delivery of financial
statements under clause (a) of this Section, a certificate of the
accounting firm that reported on such financial statements stating whether they
obtained knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the extent
required by accounting rules or guidelines);

 

47

 

(f)  promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by AXIS Capital or any of its Subsidiaries with the SEC, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any U.S., Bermuda, Irish or other securities exchange, or
distributed by AXIS Capital to its shareholders generally, as the case may be;

 

(g)  promptly after any amendment or modification
of the Investment Guidelines of any Credit Party by the board of directors of
such Credit Party, but in any case not more than once per calendar quarter, a
copy of such Investment Guidelines as so amended or modified; and

 

(h)  promptly following any request therefor,
such other information regarding the operations, business affairs and financial
condition of AXIS Capital or any of its Subsidiaries, or compliance with the
terms of this Agreement or any other Credit Document, as the Administrative
Agent or any Lender may reasonably request.

 

SECTION 5.02.  Notices of Material Events.  AXIS Capital will furnish to the
Administrative Agent and each Lender prompt written notice of the following:

 

(a)  the occurrence of any Default;

 

(b)  the filing or commencement of any action,
suit or proceeding by or before any arbitrator or Governmental Authority
against or affecting AXIS Capital or any of its Subsidiaries that, if adversely
determined, could reasonably be expected to result in a Material Adverse
Effect; and

 

(c)  any other development that results in, or
could reasonably be expected to result in, a Material Adverse Effect.

 

Each notice delivered
under this Section shall be accompanied by a statement of a Financial Officer
or other executive officer of AXIS Capital setting forth the details of the
event or development requiring such notice and any action taken or proposed to
be taken by AXIS Capital with respect thereto.

 

SECTION 5.03.  Existence; Conduct of Business.  AXIS Capital will, and will cause each of
its Subsidiaries to, do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence and the rights,
licenses, permits, privileges and franchises material to the conduct of its
business; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.01.  AXIS Capital will, and will cause each of
its Subsidiaries to, qualify and remain qualified as a foreign corporation in
each jurisdiction in which failure to receive or retain such qualification
could reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.04.  Insurance.  AXIS Capital will, and will cause each of its Subsidiaries to,
maintain with financially sound and reputable insurers insurance with respect
to its directors, officers and physical plant in such amounts and against such
risks as are

 

48

 

customarily maintained by
companies engaged in the same or similar businesses operating in the same or
similar locations.

 

SECTION 5.05.  Maintenance of Properties.  AXIS Capital will, and will cause each of
its Subsidiaries to, keep and maintain all property material to the conduct of
its business in good working order and condition, ordinary wear and tear
excepted.

 

SECTION 5.06.  Payment of Obligations.  AXIS Capital will, and will cause each of
its Subsidiaries to, pay or discharge:

 

(a)  on or prior to the date on which penalties
attach thereto, all taxes, assessments and other governmental charges or levies
imposed upon it or any of its properties or income;

 

(b)  on or prior to the date when due, all lawful
claims of materialmen, mechanics, carriers, warehousemen, landlords and other
like Persons which, if unpaid, might result in the creation of a Lien upon any
such property;

 

(c)  on or prior to the date when due, all other
lawful claims which, if unpaid, might result in the creation of a Lien upon any
such property (other than Liens not prohibited by Section 6.02) or which, if
unpaid, might give rise to a claim entitled to priority over general creditors
of AXIS Capital or such Subsidiary in any proceeding under the Bermuda
Companies Law or Bermuda Insurance Law or the applicable Laws of such
Subsidiary’s jurisdiction of organization, or any insolvency proceeding,
liquidation, receivership, rehabilitation, dissolution or winding-up involving
AXIS Capital or such Subsidiary; and

 

(d)  on or prior to the date when the same shall
become delinquent or be in default, all other obligations that, if not paid,
could reasonably be expected to result in a Material Adverse Effect;

 

provided that, unless and until
foreclosure, distraint, levy, sale or similar proceedings shall have been
commenced, neither AXIS Capital nor any of its Subsidiaries shall be required
to pay or discharge any such tax, assessment, charge, levy or claim so long as
(i) the validity thereof is contested in good faith and by appropriate
proceedings diligently conducted, (ii) such reserves or other appropriate
provisions as may be required by GAAP or SAP, as the case may be, shall have
been made therefor and (iii) such failure to pay or discharge (individually in
the aggregate) could not reasonably be expected to result in a Material Adverse
Effect.

 

SECTION 5.07.  Financial Accounting Practices.  AXIS Capital will, and will cause each of
its Subsidiaries to, make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect its transactions and
dispositions of its assets and maintain a system of internal accounting
controls sufficient to provide reasonable assurances that transactions are
recorded as necessary to permit preparation of financial statements required
under Section 5.01 in conformity with GAAP and SAP, as applicable, and to
maintain accountability for assets.

 

49

 

SECTION 5.08.  Compliance with Applicable Laws.  AXIS Capital will, and will cause each of
its Subsidiaries to, comply with all applicable Laws (including but not limited
to the Bermuda Companies Law, Bermuda Insurance Laws and environmental laws) in
all respects, except where failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.09.  Use of Letters of Credit and Proceeds of
Loans.  The proceeds of the Loans
will be used only for general corporate purposes of AXIS Capital and its
Subsidiaries and the Letters of Credit will be issued only in the ordinary
course of business of AXIS Capital and its Subsidiaries.  No part of the proceeds of any Loan and no
Letter of Credit will be used, whether directly or indirectly, for any purpose
that entails a violation of any of the Regulations of the Board, including
Regulations T, U and X of the Board.

 

SECTION 5.10.  Inspection Rights.  Subject to Section 10.12, AXIS Capital will,
and will cause each of its Subsidiaries to, permit such Persons as the
Administrative Agent or any Lender may designate, upon reasonable prior notice,
to visit and inspect any of its properties, to examine and make extracts from
its books and records, to discuss its affairs, finances and condition with its
officers and independent accountants, and provide such other information
relating to its business, financial condition and prospects at such times as
the Administrative Agent or such Lender, as the case may be, may reasonably
request.

 

SECTION 5.11.  Financial Strength Rating.  AXIS Capital will cause each of the
Subsidiary Credit Parties to maintain a financial strength rating of at least
“B++” from A.M. Best & Co. (or its successor) at all times.

 

ARTICLE VI

 

NEGATIVE COVENANTS

 

Until the Commitments
have expired or terminated and the principal of and interest on each Loan and
all fees payable hereunder have been paid in full and all Letters of Credit
have expired or terminated and all LC Disbursements have been reimbursed, AXIS
Capital covenants and agrees with the Lenders that:

 

SECTION 6.01.  Fundamental Changes.

 

(a)  Mergers,
Consolidations, Etc.  AXIS Capital
will not, nor will it permit any of its Subsidiaries to, enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution).

 

(b)  Acquisitions.  AXIS Capital will not, nor will it permit
any of its Subsidiaries to, acquire any business or property from, or capital
stock of, or be a party to any acquisition of, any Person except for purchases
of property to be sold or used in the ordinary course of business and
Investments permitted under Section 6.06.

 

50

 

(c)  Dispositions.  AXIS Capital will not, nor will it permit
any of its Subsidiaries to, convey, sell, assign, lease, abandon, transfer or
otherwise dispose of, voluntarily or involuntarily, in one transaction or a
series of transactions, all or substantially all of its assets, or all or
substantially all of the stock of any of its Subsidiaries, whether now owned or
hereafter acquired (any of the foregoing being referred to in this Section as a
“Disposition”).

 

(d)  Permitted
Mergers, Acquisitions, Dispositions, Etc. 
Notwithstanding the foregoing provisions of this Section:

 

(i)  any Subsidiary of AXIS Capital may be merged
or consolidated with or into any other such Subsidiary; provided that if
any such transaction shall be between a Subsidiary and a wholly owned
Subsidiary, the wholly owned Subsidiary shall be the continuing or surviving
corporation;

 

(ii)  any Subsidiary of AXIS Capital may make a
Disposition of any or all of its property to AXIS Capital or any wholly owned
Subsidiary of AXIS Capital;

 

(iii)  a Disposition of the capital stock of any
Subsidiary of AXIS Capital may be made to AXIS Capital or any wholly owned
Subsidiary of AXIS Capital;

 

(iv)  AXIS Capital or any of its Subsidiaries may
make a Disposition in the ordinary course of business and on ordinary business
terms;

 

(v)  Any
non-operating Subsidiary may liquidate, wind up or dissolve itself;

 

(vi)  AXIS Capital and its Subsidiaries may make
any Permitted Investments; and

 

(vii)  AXIS Capital and any of its Subsidiaries may
merge with or into or consolidate with any other Person; provided that
(a) immediately prior and after giving effect to such merger or consolidation,
no Default shall have occurred and be continuing and (b) after giving effect
thereto AXIS Capital or such Subsidiary shall be the continuing or surviving
corporation.

 

SECTION 6.02.  Liens.  AXIS Capital will not, nor will it permit any of its Subsidiaries
to, create, incur, assume or permit to exist any Lien on any property or
assets, tangible or intangible, now owned or hereafter acquired by it, except:

 

(a)  Liens existing on the date hereof (and
extension, renewal and replacement Liens upon the same property) listed on
Schedule 6.02; provided that (i) no such Lien shall extend to any
other property or asset of AXIS Capital or any of its Subsidiaries and
(ii) any such Lien shall secure only those obligations which it secures on
the date hereof and extensions, renewals and replacements thereof that do not
increase the outstanding principal amount thereof;

 

(b)  Liens arising from taxes, assessments,
charges, levies or claims described in Section 5.06 that are not yet due or
that remain payable without penalty or to the extent permitted to remain unpaid
under Section 5.06;

 

51

 

(c)  Liens on fixed or capital assets acquired,
constructed or improved by AXIS Capital or any Subsidiary; provided that
(i) such security interests secure Indebtedness permitted by
Section 6.05(g), (ii) such security interests and the Indebtedness
secured thereby are incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvement, (iii) the
Indebtedness secured thereby does not exceed 100% of the cost of acquiring,
constructing or improving such fixed or capital assets and (iv) such
security interests shall not apply to any other property or assets of AXIS
Capital or any Subsidiary;

 

(d)  zoning restrictions, easements, minor
restrictions on the use of real property, minor irregularities in title thereto
and other minor Liens that do not in the aggregate materially detract from the
value of a property or asset to, or materially impair its use in the business
of, AXIS Capital or any such Subsidiary;

 

(e)  statutory and common law Liens of
materialmen, mechanics, carriers, warehousemen and landlords and other similar
Liens arising in the ordinary course of business;

 

(f)  Liens on cash and securities of AXIS Capital
or its Subsidiaries incurred as part of the management of a Credit Party’s
investment portfolio in accordance with the Investment Guidelines of such
Credit Party;

 

(g)  Liens on (i) assets received, and on actual
or imputed investment income on such assets received, relating and identified
to specific insurance payment liabilities or to liabilities arising in the
ordinary course of AXIS Capital’s or any of its Subsidiary’s business as an
insurance or reinsurance company, or the proceeds thereof, in each case held in
a segregated trust or other account and securing such liabilities or (ii) any
other assets subject to any trust or other account arising out of or as a
result of contractual, regulatory or any other requirements; provided
that in no case shall any such Lien secure Indebtedness and any Lien which
secures Indebtedness shall not be permitted under this clause (g);

 

(h)  Liens arising in the ordinary course of
business on operating accounts (including any related securities accounts)
maintained by AXIS Capital or any of its Subsidiaries in the ordinary course of
business;

 

(i)  Liens in favor of the Administrative Agent
for the benefit of the Lenders arising pursuant to any of the Credit Documents;

 

(j)  Liens securing repurchase agreements
constituting a borrowing of funds by AXIS Capital or any Subsidiary in the
ordinary course of business for liquidity purposes and in no event for a period
exceeding 90 days in each case; provided that such Liens are limited to
the securities that are the subject of such repurchase agreements;

 

(k)  Liens on any assets of any Person existing
at the time such Person is merged or consolidated with or into AXIS Capital or
any of its Subsidiaries and not created in contemplation of such event;

 

52

 

(l)  Liens securing obligations owed by AXIS
Capital to any of its Subsidiaries or owed by any Subsidiary to AXIS Capital or
any Subsidiary, in each case solely to the extent that such Liens are required
by an Applicable Insurance Regulatory Authority for such Person to maintain
such obligations; and

 

(m) Liens arising in
connection with securities lending arrangements with financial institutions in
the ordinary course of business.

 

SECTION 6.03.  Transactions with Affiliates.  AXIS Capital will not, nor will it permit
any of its Subsidiaries to, enter into or carry out any transaction with
(including, without limitation, sell, lease or otherwise transfer any property
or assets or services to, purchase, lease or otherwise acquire any property or
assets or services from, loan or advance to or enter into, suffer to remain in
existence or amend any contract, agreement or arrangement with) any Affiliate
of AXIS Capital, or directly or indirectly agree to do any of the foregoing,
except (i) transactions between or among AXIS Capital and its wholly-owned
Subsidiaries not involving any other Affiliate, (ii) transactions with
Affiliates in good faith in the ordinary course of AXIS Capital’s business and
at prices and on terms and conditions no less favorable to AXIS Capital or such
Subsidiary than those that could have been obtained in a comparable transaction
on an arm’s length basis from an unrelated Person and (iii) any Restricted
Payment permitted by Section 6.07.

 

SECTION 6.04.  Financial Covenants.

 

(a)  Ratio
of Total Funded Debt to Total Capitalization.  AXIS Capital will not permit the ratio of (a) Total Funded Debt
to (b) the sum of Total Funded Debt plus Consolidated Net Worth to be
greater than 0.35:1.00 at any time.

 

(b)  Consolidated
Net Worth.  AXIS Capital will not
permit its Consolidated Net Worth to be less than at any time the sum of (i)
$1,975,000,000 plus (ii) 50% of consolidated net income of AXIS Capital
for each fiscal quarter ending on or after March 31, 2005 plus (iii) an
amount equal to 100% of the net cash proceeds received by AXIS Capital from the
issuance of its capital stock after the Effective Date.

 

SECTION 6.05.  Indebtedness.  AXIS Capital will not, nor will it permit
any of its Subsidiaries to, at any time create, incur, assume or permit to
exist any Indebtedness, or agree, become or remain liable (contingent or
otherwise) to do any of the foregoing, except:

 

(a)  Indebtedness created hereunder;

 

(b)  Indebtedness existing on the date hereof and
described in Schedule 6.05 and extensions, renewals and replacements of any
such Indebtedness that do not increase the outstanding principal amount
thereof;

 

(c)  Indebtedness incurred by the Credit Parties
pursuant to a credit facility or facilities providing for the making of loans
and/or the issuance of letters of credit in an aggregate principal or face
amount not exceeding $125,000,000 at any time outstanding;

 

53

 

(d)  Indebtedness incurred in transactions
described in Section 6.02(f);

 

(e)  Indebtedness of AXIS Capital to any
Subsidiary and of any Subsidiary to AXIS Capital or any other Subsidiary;

 

(f)  Guarantees by AXIS Capital of Indebtedness
of any Subsidiary and by any Subsidiary of Indebtedness of AXIS Capital or any
other Subsidiary;

 

(g)  Indebtedness of AXIS Capital or any
Subsidiary incurred to finance the acquisition, construction or improvement of
any fixed or capital assets, including Capital Lease Obligations, and any
Indebtedness assumed in connection with the acquisition of any such assets or
secured by a Lien on any such assets prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof; provided that
(i) such Indebtedness is incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement and
(ii) the aggregate principal amount of Indebtedness permitted by this
clause (g) shall not exceed $50,000,000 at any time outstanding;

 

(h)  other Indebtedness of AXIS Capital in an
aggregate principal amount not exceeding $500,000,000 at any time outstanding;
and

 

(i)  Indebtedness of AXIS Capital or any
Subsidiary in connection with securities lending arrangements with financial
institutions in the ordinary course of business.

 

SECTION 6.06.  Investments.  AXIS Capital will not, nor will it permit
any of its Subsidiaries to, make or permit to remain outstanding any Investments
except:

 

(a)  Investments outstanding on the date hereof;

 

(b)  operating accounts (including any related
securities accounts) maintained by AXIS Capital or any of its Subsidiaries in
the ordinary course of business;

 

(c)  Permitted Investments of any Credit Party;

 

(d)  Investments by AXIS Capital and its
Subsidiaries in Subsidiaries;

 

(e)  Swap Agreements entered into in the ordinary
course of AXIS Capital’s or any Subsidiary’s financial planning and not for
speculative purposes;

 

(f)  Investments consisting of security deposits
with utilities and other like Persons made in the ordinary course of business;

 

(g)  Guarantees by AXIS Capital of obligations of
any of its Subsidiaries with respect to operating leases of office space not
exceeding $50,000,000 in the aggregate;

 

(h)  AXIS Capital may (directly, or indirectly
through one or more Subsidiaries) make Acquisitions that are not otherwise
already permitted under any other provision of

 

54

 

this Section; provided that (i) immediately
prior and after giving effect to each such Acquisition, no Default shall have
occurred and be continuing and AXIS Capital shall have delivered to the
Administrative Agent a certificate of a Financial Officer to such effect; (ii)
at the time of each such Acquisition and after giving effect thereto, AXIS
Capital may not enter into such Acquisition if the aggregate consideration to
be paid by AXIS Capital and its Subsidiaries in connection therewith, when
added to the aggregate consideration paid by AXIS Capital and its Subsidiaries
in connection with each other Acquisition permitted by this clause (h) and
consummated prior thereto but after the Effective Date, shall exceed
$250,000,000, (iii) in the case of an Acquisition of a Person, such Acquisition
has been approved by the board of directors of such Person prior to the
commencement of any tender offer, proxy contest or the like in respect thereof
and (iv) any Person or assets acquired pursuant hereto shall be in the insurance
or reinsurance business;

 

(i)  Investments received in connection with the
bankruptcy or reorganization of, or settlement of, delinquent accounts and
disputes with any Person in the ordinary course of business by any Credit
Party;

 

(j)  Investments by AXIS Capital consisting of
Guarantees by AXIS Capital of Indebtedness permitted under Section 6.05; and

 

(k)  usual and customary loans and advances to
any employees, officers and directors of the Credit Parties in an aggregate
principal amount not to exceed $10,000,000 at any one time outstanding; provided
that such loans and advances are approved by the board of directors or a
committee thereof of the relevant Credit Party.

 

SECTION 6.07.  Restricted Payments.  AXIS Capital will not, nor will it permit
any of its Subsidiaries to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, except that (a) AXIS Capital may
declare and pay dividends with respect to its capital stock consisting solely
of additional shares of its common stock, (b) AXIS Capital may declare and pay
cash dividends with respect to its capital stock in an aggregate amount not
exceeding $150,000,000 for any fiscal year of AXIS Capital, (c) AXIS Capital
may make Restricted Payments pursuant to and in accordance with stock option
plans or other benefit plans for management or employees of AXIS Capital and
its Subsidiaries and (d) AXIS Capital may repurchase shares of its capital
stock for consideration in an aggregate amount not exceeding $500,000,000; provided
that after giving effect to each such repurchase no Default shall have occurred
and be continuing.  Nothing herein shall
be deemed to prohibit the payment of dividends by any Subsidiary of AXIS
Capital to AXIS Capital or to any other Subsidiary of AXIS Capital.

 

SECTION 6.08.  Continuation of and Change in Businesses.  AXIS Capital will not, nor will it permit
any of its Subsidiaries to, engage to any material extent in any business or
businesses other than the business or businesses engaged in (or which AXIS
Capital or any of its Subsidiaries, as the case may be, proposes to engage in)
on the date hereof and businesses related or incidental thereto.

 

55

 

SECTION 6.09.  Private Act.  AXIS Capital will not become subject to a
Private Act.

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

If any of the following
events (“Events of Default”) shall occur:

 

(a)  any Credit Party shall fail to pay any
principal of any Loan or any reimbursement obligation in respect of any LC
Disbursement when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or otherwise;

 

(b)  any Credit Party shall fail to pay any
interest on any Loan or LC Disbursement or any fee payable under this Agreement
or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or under any other Credit Document,
when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of three or more days;

 

(c)  any representation or warranty made or
deemed made by any Credit Party in or in connection with this Agreement or any
other Credit Document or any amendment or modification hereof or thereof, or in
any report, certificate, financial statement or other document furnished
pursuant to or in connection with the provisions hereof or any other Credit
Document or any amendment or modification hereof or thereof, shall prove to
have been incorrect in any material respect as of the time made (or deemed
made) or furnished;

 

(d)  AXIS Capital shall fail to observe or
perform any covenant, condition or agreement contained in Section 5.02(a), 5.03
(with respect to any Credit Party’s existence), 5.09, 5.11 or in
Article VI;

 

(e)  any Credit Party shall fail to observe or
perform any covenant, condition or agreement contained in this Agreement (other
than those specified in clause (a), (b) or (d) of this Article) or
any other Credit Document and such failure shall continue unremedied for a
period of 30 or more days after notice thereof from the Administrative Agent
(given at the request of any Lender) to AXIS Capital;

 

(f)   AXIS Capital or any of its Subsidiaries
shall fail to make any payment (whether of principal or interest and regardless
of amount) in respect of any Material Indebtedness, when and as the same shall
become due and payable (after taking account of any applicable grace period);

 

(g)   any event or condition occurs that results
in any Material Indebtedness becoming due prior to its scheduled maturity or
that enables or permits (with or without the giving of notice, the lapse of
time or both) the holder or holders of any Material Indebtedness or any trustee
or agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or

 

56

 

defeasance thereof, prior
to its scheduled maturity; provided that this clause (g) shall not
apply to secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness;

 

(h)  an involuntary proceeding shall be commenced
or an involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of any Credit Party or its debts, or
of a substantial part of its assets, under the Bermuda Companies Law or any
other similar applicable Law or (ii) the appointment of a receiver,
examiner, trustee, custodian, sequestrator, conservator or similar official for
any Credit Party or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for a period of 60
or more days or an order or decree approving or ordering any of the foregoing
shall be entered;

 

(i)  any Credit Party shall institute proceedings
to be adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or consent
seeking reorganization under the Bermuda Companies Law or any other similar
applicable Law, or shall consent to the filing of any such petition, or shall
consent to the appointment of an examiner, receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of it or a substantial part of its
property, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due,
or corporate or other action shall be taken by any Credit Party in furtherance
of any of the aforesaid purposes;

 

(j)  one or more judgments for the payment of
money in an aggregate amount in excess of $50,000,000 shall be rendered against
AXIS Capital or any of its Subsidiaries or any combination thereof and the same
shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of AXIS Capital or any
of its Subsidiaries to enforce any such judgment;

 

(k)  an ERISA Event (or any event similar to an
ERISA Event with respect to any non-U.S. Benefit Plan) shall have occurred
that, in the opinion of the Required Lenders, when taken together with all
other such similar events that have occurred, could reasonably be expected to
result in liability of AXIS Capital and its Subsidiaries in an aggregate amount
exceeding $50,000,000;

 

(l)  the Guarantee of AXIS Capital under Article
IX shall for whatever reason be terminated or cease to be in full force and
effect, or the validity or enforceability thereof shall be contested by AXIS
Capital; or

 

(m)  a Change in Control shall occur;

 

then, and in every such
event (other than an event with respect to any Credit Party described in
clause (h) or (i) of this Article), and at any time thereafter during
the continuance of such event, the Administrative Agent may, and at the request
of the Required Lenders shall, by notice to AXIS Capital, take either or both
of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately,

 

57

 

and (ii) declare the
Loans then outstanding and all fees and other obligations of the Credit Parties
accrued hereunder to be due and payable in whole (or in part, in which case any
principal and any fees and other obligations not so declared to be due and
payable may thereafter be declared to be due and payable) and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon, and such fees and other obligations shall become due and
payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by each Credit Party; and in case of
any event with respect to any Credit Party described in clause (h)
or (i) of this Article, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest thereon
and all fees and other obligations of the Credit Parties accrued hereunder,
shall automatically become due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Credit Party.

 

If an Event of Default
shall occur and be continuing, the Administrative Agent or the Required Lenders
may require AXIS Capital (or, in case of any Event of Default described in
clause (h) or (i) of this Article, AXIS Capital shall become immediately
obligated) to deposit cash collateral pursuant to Section 2.03(e).

 

ARTICLE VIII

 

THE ADMINISTRATIVE AGENT

 

Each of the Lenders
hereby irrevocably appoints the Administrative Agent as its agent hereunder and
under the other Credit Documents and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto.

 

The Person serving as the
Administrative Agent hereunder shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such Person and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of
business with AXIS Capital or any Subsidiary or other Affiliate thereof as if
it were not the Administrative Agent hereunder.

 

The Administrative Agent
shall not have any duties or obligations except those expressly set forth
herein and in the other Credit Documents. 
Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing,
(b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Credit
Documents that the Administrative Agent is required to exercise in writing by
the Required Lenders, and (c) except as expressly set forth herein and in
the other Credit Documents, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to AXIS Capital or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates
in any capacity.  The Administrative
Agent shall not be liable for any action taken or

 

58

 

not taken by it with the
consent or at the request of the Required Lenders (or, to the extent required
by this Agreement, all of the Lenders) or in the absence of its own gross
negligence or willful misconduct.  The
Administrative Agent shall be deemed not to have knowledge of any Default
unless and until written notice thereof is given to the Administrative Agent by
AXIS Capital or a Lender, and the Administrative Agent shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement or any
other Credit Document, (ii) the contents of any certificate, report or
other document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein,
(iv) the validity, enforceability, effectiveness or genuineness of this Agreement,
any other Credit Document or any other agreement, instrument or document, or
(v) the satisfaction of any condition set forth in Article IV or
elsewhere herein or therein, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent.

 

The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person.  The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. 
The Administrative Agent may consult with legal counsel (who may be
counsel for AXIS Capital), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.

 

The Administrative Agent
may perform any and all its duties and exercise its rights and powers by or
through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent
may perform any and all its duties and exercise its rights and powers through
their respective Related Parties.  The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with
the syndication of the credit facilities provided for herein as well as
activities as Administrative Agent.

 

The Administrative Agent
may resign at any time by notifying the Lenders and AXIS Capital.  Upon any such resignation, the Required
Lenders shall have the right, with the consent of AXIS Capital (which consent
shall not be unreasonably withheld), to appoint a successor.  If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent’s resignation shall nonetheless become
effective and (1) the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and (2) the Required Lenders
shall perform the duties of the Administrative Agent (and all payments and
communications provided to be made by, to or through the Administrative Agent
shall instead be made by or to each Lender directly) until such time as the
Required Lenders, with the consent of AXIS Capital (which consent shall not be
unreasonably withheld), appoint a successor agent as provided for above in this
paragraph.  Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such

 

59

 

successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder (if not
already discharged therefrom as provided above in this paragraph).  The fees payable by AXIS Capital to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between AXIS Capital and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article and
Section 10.03 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
Administrative Agent.

 

Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.  Each Lender also
acknowledges that it will, independently and without reliance upon the Administrative
Agent or any other Lender and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other
Credit Document or any related agreement or any document furnished hereunder or
thereunder.

 

Except as otherwise
provided in Section 10.02(b) with respect to this Agreement, the
Administrative Agent may, with the prior consent of the Required Lenders (but
not otherwise), consent to any modification, supplement or waiver under any of
the Credit Documents.

 

Notwithstanding anything
herein to the contrary, Sole Lead Arranger and Sole Bookrunner, Syndication
Agent and  Co-Documentation Agents named
on the cover page of this Agreement shall not have any duties or liabilities
under this Agreement, except in their capacity, if any, as Lenders.

 

ARTICLE IX

 

GUARANTEE

 

SECTION 9.01.  The Guarantee.  AXIS Capital hereby guarantees to each
Lender and the Administrative Agent and their respective successors and assigns
the prompt payment in full when due (whether by acceleration or otherwise) of
all principal of and interest on the Loans made by the Lenders to each
Subsidiary Borrower pursuant to this Agreement, all reimbursement obligations
in respect of LC Disbursements and all interest thereon payable by each
Subsidiary Account Party pursuant to this Agreement and all other amounts from
time to time owing to the Lenders or the Administrative Agent by each
Subsidiary Credit Party under this Agreement or under any of the other Credit
Documents, in each case strictly in accordance with the terms thereof (such
obligations being herein collectively called the “Guaranteed Obligations”).  AXIS Capital hereby further agrees that if
any Subsidiary Credit Party shall fail to pay in full when due (whether by
acceleration or otherwise) any of the Guaranteed Obligations, AXIS Capital will
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be

 

60

 

promptly paid in full
when due (whether by acceleration or otherwise) in accordance with the terms of
such extension or renewal.

 

SECTION 9.02.  Obligations Unconditional.  The obligations of AXIS Capital under
Section 9.01 are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of the obligations of the
Subsidiary Credit Parties under this Agreement or any other agreement or
instrument referred to herein, or any substitution, release or exchange of any
other guarantee of or security for any of the Guaranteed Obligations, and, to
the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section that the obligations of AXIS Capital hereunder shall be absolute and unconditional
under any and all circumstances. 
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not alter or impair the
liability of AXIS Capital hereunder, which shall remain absolute and
unconditional as described above:

 

(i)  at any time or from time to time, without
notice to AXIS Capital, the time for any performance of or compliance with any
of the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;

 

(ii)  any of the acts mentioned in any of the
provisions of this Agreement or any other agreement or instrument referred to
herein shall be done or omitted;

 

(iii)  the maturity of any of the Guaranteed
Obligations shall be accelerated, or any of the Guaranteed Obligations shall be
modified, supplemented or amended in any respect, or any right under this
Agreement or any other agreement or instrument referred to herein shall be
waived or any other guarantee of any of the Guaranteed Obligations or any
security therefor shall be released or exchanged in whole or in part or
otherwise dealt with; or

 

(iv)  any lien or security interest granted to, or
in favor of, the Administrative Agent or any Lender or Lenders as security for
any of the Guaranteed Obligations shall fail to be perfected.

 

With respect to its
obligations under this Article, AXIS Capital hereby expressly waives diligence,
presentment, demand of payment, protest and all notices whatsoever, and any
requirement that the Administrative Agent or any Lender exhaust any right,
power or remedy or proceed against any Subsidiary Credit Party under this
Agreement or any other agreement or instrument referred to herein, or against
any other Person under any other guarantee of, or security for, any of the
Guaranteed Obligations.

 

SECTION 9.03.  Reinstatement.  The obligations of AXIS Capital under this
Article shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Subsidiary Credit Party in respect of
the Guaranteed Obligations is rescinded or must be otherwise restored by any
holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and AXIS Capital
agrees that it will indemnify the Administrative Agent and each Lender on
demand for all reasonable

 

61

 

costs and expenses
(including fees of counsel) incurred by the Administrative Agent or such Lender
in connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.

 

SECTION 9.04.  Subrogation.  AXIS Capital hereby agrees that until the
payment and satisfaction in full of all Guaranteed Obligations and the
expiration and termination of the Commitments of the Lenders under this
Agreement it shall not exercise any right or remedy arising by reason of any
performance by it of its guarantee in Section 9.01, whether by subrogation
or otherwise, against any Subsidiary Credit Party or any other guarantor of any
of the Guaranteed Obligations or any security for any of the Guaranteed Obligations.

 

SECTION 9.05.  Remedies.  AXIS Capital agrees that, as between AXIS Capital on the one hand
and the Administrative Agent and the Lenders on the other, the obligations of
each Subsidiary Credit Party under this Agreement may be declared to be forthwith
due and payable as provided in Article VII (and shall be deemed to have
become automatically due and payable in the circumstances provided in
Article VII) for purposes of Section 9.01 notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such
obligations from becoming automatically due and payable) as against such
Subsidiary Credit Party and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such obligations
(whether or not due and payable by such Subsidiary Credit Party) shall
forthwith become due and payable by AXIS Capital for purposes of
Section 9.01.

 

SECTION 9.06.  Instrument for the Payment of Money.  AXIS Capital hereby acknowledges that the
guarantee in this Article constitutes an instrument for the payment of money,
and consents and agrees that any Lender or the Administrative Agent, at its
sole option, in the event of a dispute by AXIS Capital in the payment of any
moneys due hereunder, shall have the right to bring motion-action under New
York CPLR Section 3213.

 

SECTION 9.07.  Continuing Guarantee.  The guarantee in this Article is a
continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.

 

ARTICLE X

 

MISCELLANEOUS

 

SECTION 10.01.  Notices.  (a) Except in the case of notices and other communications
expressly permitted to be given by telephone (and subject to paragraph (b)
below), all notices and other communications provided for herein shall be in writing
and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as follows:

 

(i)  if to AXIS Capital, to it at 106 Pitts Bay
Road, Pembroke HM 08, Bermuda, Attention of Andrew Cook (Telecopy No. (441) 296-3140);

 

62

 

(ii)  if to a Subsidiary Credit Party listed
below, to it at the address (or telecopy number) set forth below for such
Subsidiary Credit Party:

 

AXIS Specialty Limited

106 Pitts Bay Road

Pembroke, Bermuda

HM 08

Attention:  Andrew Cook

Telecopy No.:  (441) 296-3140

Telephone No.:  (441) 296-2600

 

AXIS Re Limited and AXIS
Specialty Europe Limited

Mount Herbert Court

34 Upper Mount Street

Dublin 2

Ireland

Attention: Tim Hennessy

Telecopy No.:  (011) 353 1 664 1862

Telephone No.:  (011) 353 1 664 1611

 

(iii)  if to a Subsidiary Credit Party not listed
in clause (ii) above, to it at the address (or telecopy number) set forth in
the Subsidiary Joinder Agreement to which it is a party or (if such Subsidiary
Credit Party is not a party to any Subsidiary Joinder Agreement or if no such
address is set forth in such Subsidiary Joinder Agreement) to it at the address
set forth in clause (i) above;

 

(iv)  if to the Administrative Agent, to JPMorgan
Chase Bank, 1111 Fannin, 10th Floor, Houston, Texas 77002-8069,
Attention of Loan and Agency Services Group (Telecopy No. (713) 750-2782;
Telephone No. (713) 750-2102), with a copy to JPMorgan Chase Bank,
270 Park Avenue, 4th Floor, New York, New York 10017, Attention
of Heather Lindstrom (Telecopy No. (212) 270-1511; Telephone No.
(212) 270-9839); and

 

(v)  if to a Lender, to it at its address (or
telecopy number) set forth in its Administrative Questionnaire.

 

(b)  Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communications
pursuant to procedures approved by the Administrative Agent; provided
that the foregoing shall not apply to notices to any Lender pursuant to Article
II unless otherwise agreed by the Administrative Agent and such Lender.  The Administrative Agent or any Credit Party
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it; provided
that approval of such procedures may be limited to particular notices or
communications.

 

(c)  Any party hereto may change its address or
telecopy number for notices and other communications hereunder by notice to the
other parties hereto (or, in the case of any such

 

63

 

change by a Lender, by
notice to AXIS Capital and the Administrative Agent, or, in the case of any
such change by the Administrative Agent, by notice to AXIS Capital and the
Lenders).  All notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt.

 

SECTION 10.02.  Waivers; Amendments.

 

(a)  No Deemed Waivers; Remedies Cumulative.  No failure or delay by the Administrative
Agent or any Lender in exercising any right or power hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power.  The rights and
remedies of the Administrative Agent and the Lenders hereunder are cumulative
and are not exclusive of any rights or remedies that they would otherwise
have.  No waiver of any provision of
this Agreement or consent to any departure by a Credit Party therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b)
of this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent or any Lender may have had notice or knowledge of such Default at the
time.

 

(b)  Amendments.  Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Credit Parties and the Required Lenders or by the Credit
Parties and the Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall:

 

(i)  increase the Commitment of any Lender
without the written consent of such Lender or increase the Revolving Credit
Sublimit without the consent of each Lender affected thereby,

 

(ii)  reduce the principal amount of any Loan or
the amount of any reimbursement obligation of an Account Party in respect of
any LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,

 

(iii)  postpone the scheduled date for payment of
the principal amount of any Loan or reimbursement of any LC Disbursement, or
any interest thereon, or any fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment or any Letter of Credit (other than an extension thereof
pursuant to an “evergreen” provision with respect to any Letter of Credit),
without the written consent of each Lender affected thereby,

 

(iv)  change Section 2.19(c) or 2.19(d)
without the consent of each Lender affected thereby,

 

64

 

(v)  change or terminate the obligations of AXIS
Capital pursuant to Article IX without the written consent of each Lender or

 

(vi)  change any of the provisions of this Section
or the percentage in the definition of the term “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to
waive, amend or modify any rights hereunder or make any determination or grant
any consent hereunder, without the written consent of each Lender;

 

and provided  further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent hereunder without the prior written consent
of the Administrative Agent.

 

SECTION 10.03.  Expenses; Indemnity; Damage Waiver.

 

(a)  Costs and Expenses.  AXIS Capital shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement and the other Credit Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all
out-of-pocket expenses incurred by the Administrative Agent or any Lender,
including the fees, charges and disbursements of any counsel for the Administrative
Agent or any Lender, in connection with the enforcement or protection of its
rights in connection with this Agreement and the other Credit Documents,
including its rights under this Section, or in connection with the Loans made
or Letters of Credit issued hereunder, including in connection with any
workout, restructuring or negotiations in respect thereof and (iii) all
transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this Agreement or
any other Credit Document or any other document referred to herein or therein.

 

(b)  Indemnification by AXIS Capital.  AXIS Capital shall indemnify the
Administrative Agent and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”),
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable fees,
charges and disbursements of any counsel for any Indemnitee, incurred by or
asserted against any Indemnitee arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement or any agreement
or instrument contemplated hereby, the performance by the parties hereto of
their respective obligations hereunder or the consummation of the Transactions
or any other transactions contemplated hereby, (ii) any Loan or the use of
the proceeds thereof, or any Letter of Credit or the use thereof (including any
refusal by any Lender to honor a demand for payment under a Letter of Credit if
the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), or (iii) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related

 

65

 

expenses are determined
by a court of competent jurisdiction by final and nonappealable judgment to
have resulted from the gross negligence or willful misconduct of such
Indemnitee.

 

(c)  Reimbursement by Lenders.  To the extent that AXIS Capital fails to pay
any amount required to be paid by it to the Administrative Agent under
paragraph (a) or (b) of this Section, each Lender severally agrees to
pay to the Administrative Agent such Lender’s Applicable Percentage (determined
as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent in its
capacity as such.

 

(d)  Waiver of Consequential Damages, Etc.  To the extent permitted by applicable law,
no Credit Party shall assert, and each Credit Party hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or the
use of the proceeds thereof, or any Letter of Credit or the use thereof.

 

(e)  Payments.  All amounts due under this Section shall be payable promptly
after written demand therefor.

 

SECTION 10.04.  Successors and Assigns.

 

(a)  Assignments Generally.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Credit Party
may assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by such Credit Party without such consent shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

 

(b)  Assignments by Lenders.  Any Lender may assign to one or more NAIC
Approved Lenders all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it) and under any Letter of Credit to which it is a party (if
such Letter of Credit permits such assignment or the beneficiary consents thereto);
provided that

 

(i)  except in the case of an assignment to a
Lender, an Affiliate of a Lender or an Approved Fund, AXIS Capital must give
its prior written consent to such assignment (which consent shall not be
unreasonably withheld),

 

(ii)  each of the Administrative Agent and the
Issuing Lender with respect to Participated Letters of Credit must give its
prior written consent to such assignment (which consent, in each case, shall
not be unreasonably withheld),

 

66

 

(iii)  except in the case of an assignment to a
Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender’s Commitment, the amount of the Commitment of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Assumption with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $5,000,000 unless each of AXIS
Capital and the Administrative Agent otherwise consent,

 

(iv)  each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement,

 

(v)  the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500, and

 

(vi)  the assignee, if it shall not be a Lender,
shall deliver an Administrative Questionnaire to the Administrative Agent;

 

provided
further that any consent of AXIS Capital otherwise required under this
paragraph shall not be required if an Event of Default under clause (a),
(b), (h) or (i) of Article VII has occurred and is continuing.  Upon acceptance and recording pursuant to
paragraph (d) of this Section, from and after the effective date specified
in each Assignment and Assumption, the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to
the benefits of Sections 2.16, 2.17, 2.18 and 10.03).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.

 

Notwithstanding anything
to the contrary contained herein, any Lender (a “Granting Lender”) may
grant to a special purpose vehicle (an “SPV”) of such Granting Lender,
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and AXIS Capital, the option to provide to the Credit
Parties all or any part of any Loan or LC Disbursement that such Granting
Lender would otherwise be obligated to make to the Credit Parties pursuant to
Section 2.05 or Section 2.01, respectively; provided that (i) nothing
herein shall constitute a commitment by any SPV to make any Loan or LC
Disbursement, (ii) if an SPV elects not to exercise such option or
otherwise fails to provide all or any part of such Loan or LC Disbursement, the
Granting Lender shall be obligated to make such Loan or LC Disbursement
pursuant to the terms hereof and (iii) any Credit Party may bring any
proceeding against the Granting Lender or the SPV in order to enforce any
rights of such Credit Party under any of the Credit Documents.  The making of a Loan or LC Disbursement by
an SPV hereunder shall utilize the Commitment of the Granting Lender to the
same extent, and as if, such Loan or LC Disbursement were made by the Granting
Lender.  Each party hereto hereby agrees
that no SPV shall be liable for any payment under this Agreement for which a
Lender would otherwise be

 

67

 

liable, for so long as,
and to the extent, the related Granting Lender makes such payment.  In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior
indebtedness of any SPV, it will not institute against, or join any other
person in instituting against, such SPV any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or similar proceedings under
the laws of the United States or any State thereof arising out of any claim
against such SPV under this Agreement. 
In addition, notwithstanding anything to the contrary contained in this
Section, any SPV may with notice to, but without the prior written consent of,
AXIS Capital or the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loan or Letter of
Credit to its Granting Lender or to any financial institutions (consented to by
AXIS Capital and the Administrative Agent) providing liquidity and/or credit
support (if any) with respect to commercial paper issued by such SPV to fund
such Loans or issue such Letters of Credit and such SPV may disclose, on a
confidential basis, confidential information with respect to AXIS Capital and
its Subsidiaries to any rating agency, commercial paper dealer or provider of a
surety, guarantee or credit liquidity enhancement to such SPV.  This paragraph may not be amended without
the consent of any SPV at the time holding Loans or LC Disbursements under this
Agreement.

 

(c)  Maintenance of Register by the
Administrative Agent.  The
Administrative Agent, acting for this purpose as an agent of each Credit Party,
shall maintain at one of its offices in New York City a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitment of, and principal amount of
the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Credit
Parties, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be
available for inspection by AXIS Capital and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

 

(d)  Effectiveness of Assignments.  Upon its receipt of a duly completed
Assignment and Assumption executed by an assigning Lender and an assignee, the
assignee’s completed Administrative Questionnaire (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative
Agent shall accept such Assignment and Assumption and record the information
contained therein in the Register.  No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.

 

(e)  Participations.  Any Lender may, without the consent of any
Credit Party or the Administrative Agent, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of such
Lender’s rights and obligations under this Agreement and the other Credit
Documents (including all or a portion of its Commitment and the Loans owing to
it); provided that (i) such Lender’s obligations under this Agreement
and the other Credit Documents shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations and (iii) the Credit Parties, the

 

68

 

Administrative Agent and
the other Lenders shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under this Agreement
and the other Credit Documents.  Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and the other Credit Documents and to approve any amendment,
modification or waiver of any provision of this Agreement or the other Credit
Documents; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to
Section 10.02(b) that affects such Participant.  Subject to paragraph (f) of this Section, each Credit Party
agrees that each Participant shall be entitled to the benefits of Sections 2.16,
2.17 and 2.18 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section.

 

(f)  Limitations
on Rights of Participants.  A
Participant shall not be entitled to receive any greater payment under
Section 2.16 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with AXIS Capital’s
prior written consent.

 

(g)  Certain Pledges.  Any Lender may at any time pledge or assign
a security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any such pledge or assignment to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such assignee for such Lender as a
party hereto.

 

(h)  No Assignments to AXIS Capital or
Affiliates.  Anything in this
Section to the contrary notwithstanding, no Lender may assign or participate
any interest in any Loan or LC Exposure held by it hereunder to AXIS Capital or
any of its Affiliates or Subsidiaries without the prior consent of each Lender.

 

SECTION 10.05.  Survival.  All covenants, agreements, representations and warranties made by
the Credit Parties herein and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement shall be considered
to have been relied upon by the other parties hereto and shall survive the
execution and delivery of this Agreement and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that the Administrative
Agent or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not expired or terminated.  The provisions of Sections 2.16, 2.17,
2.18, 10.03 and 10.13 and Article VIII shall survive and remain in full
force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.

 

69

 

SECTION 10.06.  Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. 
This Agreement and any separate letter agreements with respect to fees
payable to the Administrative Agent constitute the entire contract between and
among the parties relating to the subject matter hereof and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof.  Except as
provided in Section 4.01, this Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken
together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. 
Delivery of an executed counterpart of a signature page to this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

SECTION 10.07.  Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 10.08.  Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Lender to or for the
credit or the account of any Credit Party against any of and all the
obligations of such Credit Party now or hereafter existing under this Agreement
held by such Lender, irrespective of whether or not such Lender shall have made
any demand under this Agreement and although such obligations may be unmatured.  The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

 

SECTION 10.09.  Governing Law; Jurisdiction; Etc.

 

(a)  Governing Law.  This Agreement shall be construed in
accordance with and governed by the law of the State of New York.

 

(b)  Submission to Jurisdiction.  Each Credit Party hereby agrees that any
suit, action or proceeding with respect to this Agreement, the other Credit
Documents or any judgment entered by any court in respect thereof may be
brought in the United States District Court for the Southern District of New
York, in the Supreme Court of the State of New York sitting in New York County
(including its Appellate Division), or in any other appellate court in the
State of New York, as the party commencing such suit, action or proceeding may
elect in its sole discretion; and each Credit Party hereby irrevocably submits
to the jurisdiction of such courts for the purpose of any such suit, action,
proceeding or judgment.  Each Credit
Party further submits, for the purpose of any such suit, action, proceeding or
judgment brought or rendered against it, to the appropriate courts of the
jurisdiction of its domicile.

 

70

 

(c)  Waiver of Venue.  Each Credit Party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Credit Document in any court referred to in paragraph (b) of
this Section.  Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

 

(d)                                 Appointment
of Agent for Service of Process. 
Each Credit Party irrevocably designates and appoints CT Corporation
System, at its office in New York City, New York, U.S.A., as its authorized
agent, to accept and acknowledge on its behalf, service of any and all process
which may be served in any suit, action or proceeding of the nature referred to
in Section 10.09(b) in any federal or New York State court sitting in New York
City.  Each Credit Party represents and
warrants that such agent has agreed in writing to accept such appointment and
that a true copy of such designation and acceptance has been delivered to the
Administrative Agent.  Said designation
and appointment shall be irrevocable by each such Credit Party until all
reimbursement obligations, Loans, interest thereon and all other amounts
payable hereunder and under the other Credit Documents shall have been paid in
full in accordance with the provisions hereof and thereof or, if earlier, in
the case of any Subsidiary Credit Party, when such Subsidiary Credit Party is
terminated as an Account Party and a Borrower hereunder pursuant to Section
2.12(b).  If such agent shall cease so
to act, each Credit Party covenants and agrees to designate irrevocably and
appoint without delay another such agent satisfactory to the Administrative
Agent and to deliver promptly to the Administrative Agent evidence in writing
of such other agent’s acceptance of such appointment.

 

(e)  Service of Process.  Each party to this Agreement (other than the
Credit Parties) irrevocably consents to service of process in the manner
provided for notices in Section 10.01.  
Each Credit Party hereby consents to process being served in any suit,
action or proceeding of the nature referred to in Section 10.09(b) in any
federal or New York State court sitting in New York City by service of process
upon its agent appointed as provided in Section 10.09(d); provided that,
to the extent lawful and possible, notice of said service upon such agent shall
be mailed by registered or certified air mail, postage prepaid, return receipt
requested, to such Credit Party at its address for notices set forth or
referred to in clause (i) or (ii), as applicable, of Section 10.01(a) or to any
other address of which such Credit Party shall have given written notice to the
applicable Lender.  Each Credit Party
irrevocably waives, to the fullest extent permitted by law, all claim of error
by reason of any such service in such manner and agrees that such service shall
be deemed in every respect effective service of process upon such Credit Party
in any such suit, action or proceeding and shall, to the fullest extent
permitted by law, be taken and held to be valid and personal service upon and
personal delivery to such Credit Party. 
Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

 

(f)  No
Immunity.   To the extent that a
Credit Party may be or become entitled, in any jurisdiction in which judicial
proceedings may at any time be commenced with respect to this Agreement or any
other Credit Document, to claim for itself or its properties or revenues any
immunity from suit, court jurisdiction, attachment prior to judgment,
attachment in aid of execution of a judgment, execution of a judgment or from
any other legal process or remedy

 

71

 

relating to its
obligations under this Agreement or any other Credit Document, and to the
extent that in any such jurisdiction there may be attributed such an immunity
(whether or not claimed), such Credit Party hereby irrevocably agrees not to
claim and hereby irrevocably waives such immunity to the fullest extent permitted
by the laws of such jurisdiction.

 

SECTION 10.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). 
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 10.11.  Headings.  Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement
and shall not affect the construction of, or be taken into consideration in
interpreting, this Agreement.

 

SECTION 10.12.  Treatment of Certain Information;
Confidentiality.

 

(a)  Treatment of Certain Information.  AXIS Capital acknowledges that from time to
time financial advisory, investment banking and other services may be offered
or provided to AXIS Capital or one or more of its Subsidiaries (in connection
with this Agreement or otherwise) by any Lender or by one or more subsidiaries
or affiliates of such Lender and AXIS Capital hereby authorizes each Lender to
share any information delivered to such Lender by AXIS Capital and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such subsidiary or affiliate,
it being understood that any such subsidiary or affiliate receiving such
information shall be bound by the provisions of paragraph (b) of this
Section as if it were a Lender hereunder. 
Such authorization shall survive the repayment of the Loans, the
expiration or termination of the Letters of Credit and the Commitments or the
termination of this Agreement or any provision hereof.

 

(b)  Confidentiality.  Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed (i) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (ii) to
the extent requested by any regulatory authority or self-regulatory body; provided
that unless specifically prohibited by applicable law or court order, each
Lender shall make reasonable efforts to notify AXIS Capital of any request by
any governmental agency or representative thereof (other than such request in
connection with any examination of the financial condition or other routine examination
of such Lender by such governmental agency) for disclosure of any such
non-public information prior to disclosure of

 

72

 

such information,
(iii) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (iv) to any other party to this
Agreement, (v) in connection with the exercise of any remedies hereunder
or under any other Credit Document or any suit, action or proceeding relating
to this Agreement or any other Credit Document or the enforcement of rights
hereunder or thereunder, (vi) subject to an agreement in writing
containing provisions substantially the same as those of this paragraph and for
the benefit of AXIS Capital, to (a) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (b) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to AXIS Capital and
its obligations, (vii) with the consent of AXIS Capital or (viii) to
the extent such Information (A) becomes publicly available other than as a
result of a breach of this paragraph or (B) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than AXIS Capital.  For the
purposes of this paragraph, “Information” means all information received
from AXIS Capital relating to AXIS Capital or its business, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by AXIS Capital; provided
that, in the case of information received from AXIS Capital after the date
hereof, such information is clearly identified at the time of delivery as
confidential.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

SECTION 10.13.  Judgment Currency.  This is an international loan transaction in
which the specification of Dollars and payment in New York City is of the
essence, and the obligations of the Credit Party under this Agreement to make
payment to (or for account of) a Lender in Dollars shall not be discharged or
satisfied by any tender or recovery pursuant to any judgment expressed in or
converted into any other currency or in another place except to the extent that
such tender or recovery results in the effective receipt by such Lender in New
York City of the full amount of Dollars payable to such Lender under this
Agreement.  If for the purpose of
obtaining judgment in any court it is necessary to convert a sum due hereunder
in Dollars into another currency (in this Section called the “judgment
currency”), the rate of exchange that shall be applied shall be that at
which in accordance with normal banking procedures the Administrative Agent
could purchase such Dollars at the principal office of the Administrative Agent
in New York City with the judgment currency on the Business Day next preceding
the day on which such judgment is rendered. 
The obligation of the Credit Parties in respect of any such sum due from
it to the Administrative Agent or any Lender hereunder or under any other
Credit Document (in this Section called an “Entitled Person”) shall,
notwithstanding the rate of exchange actually applied in rendering such judgment,
be discharged only to the extent that on the Business Day following receipt by
such Entitled Person of any sum adjudged to be due hereunder in the judgment
currency such Entitled Person may in accordance with normal banking procedures
purchase and transfer Dollars to New York City with the amount of the judgment
currency so adjudged to be due; and each Credit Party hereby, as a separate
obligation and notwithstanding any such judgment, agrees to indemnify such
Entitled Person against, and to pay such Entitled Person on demand, in Dollars,
the amount (if any) by which the sum originally due to such Entitled Person in
Dollars hereunder exceeds the amount of the Dollars so purchased and
transferred.

 

73

 

SECTION 10.14.  USA Patriot Act.  Each Lender hereby notifies the Credit
Parties that pursuant to the requirements of the USA Patriot Act (Title III of
Pub. L. 107-56 (signed into law October 26, 2001)), it is required to obtain,
verify and record information that identifies the Credit Parties, which
information includes the name and address of each Credit Party and other
information that will allow such Lender to identify each Credit Party in
accordance with said Act.

 

74

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.

 

 

	
   

  	
  AXIS CAPITAL HOLDINGS
  LIMITED

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Andrew Cook

  	
   

  
	
   

  	
   

  	
  Name: Andrew Cook

  
	
   

  	
   

  	
  Title: CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SUBSIDIARY CREDIT
  PARTIES

  
	
   

  	
   

  	
   

  
	
   

  	
  AXIS SPECIALTY LIMITED

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Andrew Cook

  	
   

  
	
   

  	
   

  	
  Name: Andrew Cook

  	
   

  
	
   

  	
   

  	
  Title: Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AXIS RE LIMITED

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Andrew Cook

  	
   

  
	
   

  	
   

  	
  Name: Andrew Cook

  
	
   

  	
   

  	
  Title: Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AXIS SPECIALTY EUROPE
  LIMITED

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Andrew Cook

  	
   

  
	
   

  	
   

  	
  Name: Andrew Cook

  
	
   

  	
   

  	
  Title: Director

  
						

 

75

 

	
   

  	
  LENDERS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK,

  individually and as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Heather Lindstrom

  	
   

  
	
   

  	
   

  	
  Name: Heather Lindstrom

  
	
   

  	
   

  	
  Title: Vice President

  

 

76

 

	
   

  	
  BARCLAYS BANK PLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Neil Holmes

  	
   

  
	
   

  	
   

  	
  Name: Neil Holmes

  
	
   

  	
   

  	
  Title: Relationship
  Director

  

 

77

 

	
   

  	
  CITIBANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Michael A. Taylor

  	
   

  
	
   

  	
   

  	
  Name: Michael A. Taylor

  
	
   

  	
   

  	
  Title: Managing
  Director

  

 

78

 

	
   

  	
  ING BANK N.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ M. Shaiman

  	
   

  
	
   

  	
   

  	
  Name: M. Shaiman

  
	
   

  	
   

  	
  Title: Managing
  Director

  

 

79

 

	
   

  	
  WACHOVIA BANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Kimberly Shaffer

  	
   

  
	
   

  	
   

  	
  Name: Kimberly Shaffer

  
	
   

  	
   

  	
  Title: Director

  

 

80

 

	
   

  	
  HSBC BANK USA

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Anthony C.
  Valeucourt

  	
   

  
	
   

  	
   

  	
  Name: Anthony C.
  Valeucourt

  
	
   

  	
   

  	
  Title: Managing
  Director

  

 

81

 

	
   

  	
  CREDIT LYONNAIS NEW YORK BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Sebastian Rocco

  	
   

  
	
   

  	
   

  	
  Name: Sebastian Rocco

  
	
   

  	
   

  	
  Title: Senior Vice
  President

  

 

82

 

	
   

  	
  DEUTSCHE BANK AG NEW YORK BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Ruth Leung

  	
   

  	
  /s/ Charles Kohler

  
	
   

  	
   

  	
  Name: Ruth Leung

  	
   

  	
   

  	
  Charles Kohler

  
	
   

  	
   

  	
  Title: Director

  	
   

  	
   

  	
  Managing Director

  

 

83

 

	
   

  	
  LLOYDS TSB BANK PLC

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By

  	
  /s/ Michael J. Gilligan

  	
   

  	
  /s/ James M. Rudd

  
	
   

  	
   

  	
  Name: Michael J.
  Gilligan

  	
   

  	
  James M. Rudd

  	 

	
   

  	
   

  	
  Title: Director,
  Financial

  Institution, USA

  	
   

  	
  Vice-President

  	 

 

84

 

	
   

  	
  MORGAN STANLEY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Daniel Twenge

  	
   

  
	
   

  	
   

  	
  Name: Daniel Twenge

  
	
   

  	
   

  	
  Title: Vice President

  

 

85

 

	
   

  	
  THE BANK OF NEW YORK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Scott Schaeffer

  	
   

  
	
   

  	
   

  	
  Name: Scott Schaeffer

  
	
   

  	
   

  	
  Title: Vice President

  

 

86

 

	
   

  	
  THE ROYAL BANK OF SCOTLAND PLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ John F. M. Holm

  	
   

  
	
   

  	
   

  	
  Name: John F. M. Holm

  
	
   

  	
   

  	
  Title: Business
  Development Director

  

 

87

 

	
   

  	
  COMERICA BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Martin G. Ellis

  	
   

  
	
   

  	
   

  	
  Name: Martin G. Ellis

  
	
   

  	
   

  	
  Title: First Vice
  President

  

 

88

 

	
   

  	
  FLEET NATIONAL BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ George J. Urban

  	
   

  
	
   

  	
   

  	
  Name: George J. Urban

  
	
   

  	
   

  	
  Title: Vice President

  

 

89Exhibit 10.15

 

AXIS SPECIALTY U.S. SERVICES, INC.

 

SUPPLEMENTAL RETIREMENT PLAN

 

 

(Effective January 1, 2004)

 

 

TABLE OF CONTENTS FOR

AXIS SPECIALTY U.S. SERVICES, INC.

SUPPLEMENTAL RETIREMENT PLAN

 

	
  Article I.  The Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Establishment of the Plan

  	
   

  
	
  1.2

  	
  Purpose of the Plan

  	
   

  
	
  1.3

  	
  Applicability of the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  Article II.  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Account

  	
   

  
	
  2.2

  	
  Administrative Committee

  	
   

  
	
  2.3

  	
  Affiliate

  	
   

  
	
  2.4

  	
  Beneficiary

  	
   

  
	
  2.5

  	
  Board

  	
   

  
	
  2.6

  	
  Code

  	
   

  
	
  2.7

  	
  Corporation

  	
   

  
	
  2.8

  	
  Effective Date

  	
   

  
	
  2.9

  	
  Employee

  	
   

  
	
  2.10

  	
  Employer

  	
   

  
	
  2.11

  	
  Employment Commencement Date

  	
   

  
	
  2.12

  	
  ERISA

  	
   

  
	
  2.13

  	
  Participant

  	
   

  
	
  2.14

  	
  Plan

  	
   

  
	
  2.15

  	
  Plan Administrator

  	
   

  
	
  2.16

  	
  Plan
  Year

  	
   

  
	
  2.17

  	
  Severance from Employment

  	
   

  
	
  2.18

  	
  Valuation Date

  	
   

  
	
   

  	
   

  	
   

  
	
  Article III. 
  Participation

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Eligibility

  	
   

  
	
  3.2

  	
  Duration

  	
   

  
	
   

  	
   

  	
   

  
	
  Article IV.  Benefits

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Salary Reduction Contributions

  	
   

  
	
  4.2

  	
  Bonus Deferral Contributions

  	
   

  
	
  4.3

  	
  Discretionary Employer Contributions

  	
   

  
	
  4.4

  	
  Forfeitability of Benefits

  	
   

  

 

i

 

	
  Article V.  Accounts;
  Financing

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Participant Accounts

  	
   

  
	
  5.2

  	
  Valuation of Participant Accounts

  	
   

  
	
  5.3

  	
  Unsecured General Creditor

  	
   

  
	
  5.4

  	
  Statement of Accounts

  	
   

  
	
   

  	
   

  	
   

  
	
  Article VI. 
  Distributions

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Timing and Form of Payout

  	
   

  
	
  6.2

  	
  Payments Upon Disability

  	
   

  
	
  6.3

  	
  Payments Upon Death

  	
   

  
	
  6.4

  	
  Hardship Distributions

  	
   

  
	
  6.5

  	
  Immediate Distributions

  	
   

  
	
  6.6

  	
  Termination of Employment

  	
   

  
	
  6.7

  	
  No Additional Withdrawals

  	
   

  
	
   

  	
   

  	
   

  
	
  Article VII. 
  Administration

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Administration

  	
   

  
	
  7.2

  	
  Appeals from Denied Claims

  	
   

  
	
  7.3

  	
  Tax Withholding

  	
   

  
	
  7.4

  	
  Expenses

  	
   

  
	
  7.5

  	
  Beneficiary Designation

  	
   

  
	
   

  	
   

  	
   

  
	
  Article VIII.  Adoption of the Plan by Affiliates;
  Amendment and Termination of the Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Adoption of the Plan by Affiliates

  	
   

  
	
  8.2

  	
  Amendment and Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  Article IX.  Miscellaneous Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Nonalienation

  	
   

  
	
  9.2

  	
  Distribution to Minors and Incompetents

  	
   

  
	
  9.3

  	
  Not a Contract of Employment

  	
   

  
	
  9.4

  	
  Protective Provisions

  	
   

  
	
  9.5

  	
  Notice

  	
   

  
	
  9.6

  	
  Successors

  	
   

  
	
  9.7

  	
  Severability

  	
   

  
	
  9.8

  	
  Applicable Law

  	
   

  

 

ii

 

AXIS SPECIALTY U.S. SERVICES, INC.

SUPPLEMENTAL RETIREMENT PLAN

 

Article I.  The Plan

 

1.1                               Establishment
of the Plan

 

Axis Specialty U.S. Services, Inc. (the “Corporation”) hereby
establishes the Axis Specialty U.S. Services, Inc. Supplemental Retirement Plan
(the “Plan”) for eligible employees of the Corporation and participating
Affiliates, effective as of January 1, 2004 (“the Effective Date”).

 

1.2                               Purpose
of the Plan

 

The Plan is intended to permit eligible employees of the Corporation
and its Affiliates that have adopted the Plan to accumulate additional
retirement income through a nonqualified deferred compensation plan that
enables them to make salary reduction contributions in excess of those
permitted under the Axis 401(k) Savings Plan (the “401(k) Saving Plan”), to
make bonus reduction contributions, and to receive discretionary employer contributions.

 

The group of eligible employees shall be limited to a “select group of
management or highly compensated employees” within the meaning of ERISA
Section 201(2).

 

Benefits provided under this Plan shall be paid solely from the general
assets of the Corporation and participating Affiliates.  This Plan, therefore, is exempt from the
participation, vesting, funding and fiduciary requirements of Title I of
ERISA.  The Corporation may establish a
trust (the “Trust”), which may be used to pay benefits arising under the Plan
and all costs, charges and expenses relating thereto; except that, to the
extent that the funds held in the Trust are insufficient to pay such benefits,
costs, charges and expenses, the Corporation shall pay such benefits, costs,
charges and expenses.

 

1.3                               Applicability
of the Plan

 

This Plan applies only to eligible Employees as defined in Section 2.9 of the Plan.

 

1

 

Article II.  Definitions

 

Whenever used in the Plan, the following terms
shall have the meanings set forth below unless otherwise expressly
provided.  When the defined meaning is
intended, the term is capitalized. The definition of any term in the singular
shall also include the plural.

 

2.1                               Account

 

Account means the bookkeeping account for
each Participant that represents the Participant’s total interest under the
Plan.  A Participant’s Account consists
of the following subaccounts:

 

(a)                                  Salary Reduction Account means the portion of
the Account attributable to salary reduction contributions made on the
Participant’s behalf under Section 4.1, including any gains and losses
credited on such contributions under Section 5.2.

 

(b)                                 Bonus Reduction Account means the portion of
the Account attributable to bonus reduction contributions made on the
Participant’s behalf under Section 4.2, including any gains and losses
credited on such contributions under Section 5.2.

 

(c)                                  Discretionary Employer Account means the
portion of the Account attributable to contributions made by the Employer on
the Participant’s behalf under Section 4.3 including any gains and losses
credited on such contributions under Section 5.2

 

2.2                               Administrative
Committee

 

Administrative Committee means the committee
appointed in accordance with Section 7.1 to administer the Plan.

 

2.3                               Affiliate

 

Affiliate means any entity which, along with
the Corporation, is a member of a controlled group of employers under Code
Section 414(b), (c), (m), or (o) that has adopted the Plan.

 

2.4                               Beneficiary

 

The person, persons or entity designated by
the Participant to receive any death benefits payable under the Plan on the
beneficiary designation form prepared by the Administrative Committee.

 

2.5                               Board

 

Board means the Corporation’s Board of
Directors.

 

2

 

2.6                               Code

 

Code means the Internal Revenue Code of 1986,
as amended, or as it may be amended from time to time.  A reference to a particular section of
the Code also shall be deemed to refer to the regulations under that Code
section.

 

2.7                               Corporation

 

Corporation means Axis
Specialty U.S. Services, Inc. or any successor thereto.

 

2.8                               Effective Date

 

Effective Date means the date set forth in Section 1.1.

 

2.9                               Employee

 

Employee means any person who is (1) a U.S. citizen, (2) in the active employ of the Corporation or a
participating Affiliate, (3) anticipated to receive annual base
salary  equal to or greater than two
hundred thousand dollars ($200,000) (or such other amount determined by the
Administrative Committee), and (4)
determined by the Administrative Committee as being part of a group of
management or highly compensated employees within the meaning of ERISA
Section 201(2).

 

2.10                        Employer

 

Employer means the Corporation and each Affiliate which has adopted
this Plan for its eligible Employees.

 

2.11                        Employment
Commencement Date

 

Employment Commencement Date means the date an Employee first provides
services to the Corporation or an Affiliate.

 

2.12                        ERISA

 

ERISA means the Employee Retirement Income Security Act of 1974, as
amended, or as it may be amended from time to time.  A reference to a particular section of ERISA shall also be
deemed to refer to the regulations under that section.

 

3

 

2.13                        Participant

 

Participant means an Employee of an Employer who has met, and continues
to meet, the eligibility requirements of Sections 3.1 and 3.2.

 

2.14                        Plan

 

Plan means the Axis Specialty U.S. Services, Inc. Supplemental
Retirement Plan, as amended from time to time.

 

2.15                        Plan
Administrator

 

Plan Administrator means the Administrative Committee of the Plan
appointed pursuant to Section 7.1 of the Plan.

 

2.16                        Plan
Year

 

Plan Year means the calendar year.

 

2.17                        Severance
from Employment

 

Severance from Employment means an Employee’s death or resignation,
discharge, or retirement from the Corporation and its Affiliates.

 

2.18                        Valuation Date

 

Valuation Date means the last day of each calendar quarter and any
other date that the Plan Administrator selects in its sole discretion for the
revaluation and adjustment of Accounts.

 

Article III.  Participation

 

3.1                               Eligibility

 

(a)                                  An Employee shall be
eligible to participate in the Plan as of the first date of the Plan Year.

 

(b)                                 Any Employee hired
during the year shall be eligible to participate on the first day of the month
immediately following the date he or she becomes eligible to participate.

 

(c)                                  The election to
participate shall be effective upon completion of the enrollment forms, which
designate the timing and form of payments to be made.

 

3.2                               Duration

 

An Employee who becomes a Participant under Section 3.1 shall
remain an active Participant until he or she no longer is an Employee as
defined in Section 2.9.  No
contributions shall be

 

4

 

credited to the Account of an individual after his or her active
participation has been terminated. 
However, such individual shall continue to be a Participant for all
other purposes until all benefits to which he or she is entitled to receive
under this Plan have been paid.

 

Article IV.  Benefits

 

4.1                               Salary
Reduction Contributions

 

Each Participant in this Plan may execute a supplemental salary
reduction agreement annually on a form prescribed by the Administrative
Committee.  On this form the Participant
may elect to reduce his or her base salary for the Plan Year by a whole
percentage that does not exceed one hundred percent (100%).  The supplemental salary reduction agreement
shall be executed prior to the first day of the Plan Year for which it is to be
effective or, in the case of a Participant who first becomes eligible to
participate in the Plan during the Plan Year, the supplemental salary reduction
agreement shall be executed within 30 days of initial eligibility under this
Plan, effective for base salary earned subsequent to the election.  The supplemental salary reduction agreement
for any Plan Year shall be irrevocable for such Plan Year.  This election shall remain in effect for the
Plan Year, provided that it shall be revoked automatically once a Participant
ceases to be an active Participant as set forth in Section 3.2 of this
Plan.

 

4.2                               Bonus
Deferral Contributions

 

Each Participant in this Plan may execute a bonus reduction agreement
annually on a form prescribed by the Administrative Committee.  On this form the Participant may elect to
reduce his or her bonus by a whole percentage that does not exceed one hundred
percent (100%).  The bonus reduction
agreement shall be executed prior to the first day of the Plan Year for which
it is to be effective or, in the case of a Participant who first becomes
eligible to participate in the Plan during the Plan Year, the bonus reduction
agreement shall be executed within 30 days of initial eligibility under this
Plan, effective for bonus earned subsequent to the election.  The bonus reduction agreement for any Plan
Year shall be irrevocable for such Plan Year, provided that a bonus reduction
agreement shall be revoked automatically once a Participant ceases to be an
active Participant as set forth in Section 3.2 of this Plan.

 

4.3                               Discretionary
Employer Contributions

 

The amount of the discretionary employer contribution allocated to the
Account for a Plan Year shall be an amount, if any, as determined by the
Corporation from time to time for any particular Participant.  To receive this discretionary employer
contribution, a Participant must be employed on the last day of the Plan Year.

 

4.4                               Forfeitability
of Benefits

 

Participants shall have a 100% vested and nonforfeitable right to the
balance of their Salary Reduction Account and Bonus Reduction Account at all
times, subject, however, to the substantial risk of forfeiture set forth in
Section 5.3.

 

5

 

Subject to the substantial risk of forfeiture set forth in
Section 5.3, Participants shall vest in the Discretionary Employer Account
according to the following schedule:

 

	
  Years of Service

  	
   

  	
  Vesting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  25

  	
  %

  
	
  2

  	
   

  	
  50

  	
  %

  
	
  3

  	
   

  	
  75

  	
  %

  
	
  4

  	
   

  	
  100

  	
  %

  

 

Years of Service shall be computed from the Participant’s Employment
Commencement Date with the Employer to his or her severance from employment.

 

Article V.  Accounts; Financing

 

5.1                               Participant
Accounts

 

Each contribution credited to a Participant under Article IV shall
be allocated to an individual bookkeeping Account maintained on behalf of that
Participant by the Administrative Committee. 
Each Participant’s Account shall be adjusted for earnings in the manner
described in Section 5.2

 

5.2                               Valuation
of Participant Accounts

 

The Corporation may establish a rabbi trust (“Trust”) and may (but is
not required) make contributions to it corresponding to any or all amounts
accrued under Article IV.  These
contributions will be credited with income, expenses, gains and losses in
accordance with the investment experience of the Trust.  The Administrative Committee may direct the
trustee of the Trust to establish investment funds in accordance with rules
prescribed by the Administrative Committee. 
The Administrative Committee may alter the available funds or the
procedures for allocating Account balances among them at any time.

 

5.3                               Unsecured
General Creditor

 

Participants and their Beneficiaries, heirs, successors and assigns
shall have no legal or equitable rights, interest or claims in any property or
assets of Employer superior to that of an unsecured general creditor.  The benefits under this Plan shall be paid
out of the general assets of the Employer (including assets held in the
Trust).  To the extent that any person
acquires a right to receive payments under this Plan, such right shall be no
greater than the right of any unsecured general creditor of the Employer.  Nothing contained in this Plan, and no
action taken pursuant to the provisions of this Plan, shall create a fiduciary
relationship between the Employer and any Participant or Beneficiary or a right
of continued employment for any Participant.

 

6

 

5.4                               Statement
of Accounts

 

The Administrative Committee shall submit to each Participant, after
the close of each Plan Year, a statement in such form as the Administrative
Committee deems desirable setting forth the balance to the credit of such
Participant in his or her Account as of the last day of the Plan Year.

 

Article VI.  Distributions

 

6.1                               Timing
and Form of Payout

 

Participants may select the timing of payouts for their Salary
Reduction Accounts and their Bonus Reduction Accounts to occur during
January of a specific year or upon termination of employment.  Participants may select the form of payouts
as either one lump sum of the above described accounts or annual installments
not to exceed fifteen (15) years.  Only
a single election as to timing and form of payout can be made annually with
respect to all amounts deferred during a single Plan Year and earnings on those
deferred amounts.  Any such single
election shall be irrevocable except as provided for in this section.  This election as to timing and form can only
be changed if submitted in writing to the Plan Administrator at least 24 months
prior to the date of the original election as to timing of the payout.

 

The payments to Participants of their Salary Reduction Accounts and
their Bonus Reduction Accounts shall commence within the first 30 days of the
calendar quarter following the event that gives rise to the distribution.  Except as provided in this section, payouts
shall be made in accordance with the designations made in the deferral election
forms filed by the Participant with the Administrative Committee.

 

6.2                               Payments
Upon Disability

 

A Participant determined by the Administrative Committee to have
suffered a disability will be treated as having incurred a termination of
employment for purposes of payouts under this Plan.  A Participant will receive a single lump sum distribution of his
or her vested Discretionary Employer Account, Salary Reduction Account and
Bonus Reduction Account. A Participant will be considered to have suffered a
disability if he is eligible for a distribution under the Axis 401(k) Savings
Plan.

 

6.3                               Payments
Upon Death

 

Upon the death of a Participant, a Participant’s Beneficiary will
receive a single lump sum payment equal to the Participant’s vested
Discretionary Employer Account, Salary Reduction Account and Bonus Reduction
Account, provided however, that if installment payments had commenced to the
Participant, the Participant’s beneficiary may choose between continuing to
receive installment payments or a lump sum distribution of the Participant’s
remaining Account balance.

 

7

 

6.4                               Hardship
Distributions

 

In the event of financial hardship of the Participant, the Participant
may apply to the Administrative Committee for the distribution of all or any
part of his or her Salary Reduction Account and Bonus Reduction Account.  The Administrative Committee shall have the
right, in its sole discretion, to allow such distribution.  Upon a finding of financial hardship, the
Administrative Committee shall make the appropriate distribution to the
Participant from amounts held by the Administrative Committee in respect of the
Participant’s Salary Reduction Account and Bonus Reduction Account.  In no event shall the aggregate amount of
the distribution exceed the amount determined by the Administrative Committee
to be necessary to alleviate the Participant’s financial hardship (which
financial hardship may be considered to include any taxes due because of the
distribution occurring because of this Section), and which is not reasonably
available from other resources of the Participant.  “Financial hardship” means (a) a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Code section 152(a)) of the
Participant, (b) loss of the Participant’s property due to casualty, or (c)
other similar extraordinary and unforeseeable circumstances arising as a result
of event beyond the control of the Participant, each as determined to exist by
the Administrative Committee.  Hardship
distributions cannot be made from a Participant’s Discretionary Employer
Account.

 

6.5                               Immediate
Distributions

 

A Participant shall have the option to request a full or partial
distribution of his or her Salary Reduction Account and Bonus Reduction Account
subject to the approval of the Administrative Committee.  In no event will the withdrawal be greater
than 100% of the value of the above described accounts. Any amount paid
pursuant to this Section shall be subject to a ten percent (10%) penalty,
with the amount of the penalty permanently forfeited from the Participant’s
Salary Reduction Account and Bonus Reduction Account and returned to the
Employer on or about the date of the distribution.  An immediate distribution cannot be made from a Participant’s
Discretionary Employer Account.

 

6.6                               Termination
of Employment

 

Upon a Participant’s termination of employment, a Participant will
receive a single lump sum payment equal to the Participant’s vested
Discretionary Employer Account, Salary Reduction Account and Bonus Reduction
Account.

 

6.7                               No
Additional Withdrawals

 

A Participant may not receive a distribution from his or her Account,
except as provided for in this Article.

 

8

 

Article VII.  Administration

 

7.1                               Administration

 

The Plan shall be administered by the Administrative Committee
appointed by the Board to serve as the Plan Administrator.  The Administrative Committee shall consist
of one or more persons appointed by the Board. 
The Board may remove any member of the Administrative Committee at any
time, with or without cause, and may fill any vacancy.  If a vacancy occurs, the remaining member or
members of the Administrative Committee shall have full authority to act.  The Board will transmit to the trustee of
any Trust created the names and authorized signatures of the members of the
Administrative Committee and, as changes take place in membership, the names
and signatures of new members.  Any
member of the Administrative Committee may resign by delivering his or her
written resignation to the Board and the Administrative Committee.  Any such resignation becomes effective upon
its receipt by the Board or on such other date as is agreed to by the Board and
the resigning member.  The
Administrative Committee acts by a majority of its members at the time in
office and may take action either by vote at a meeting or by consent in writing
without a meeting.  The Administrative
Committee may adopt such rules and appoint such subcommittees as it deems
desirable for the conduct of its affairs and the administration of the Plan.

 

The Administrative Committee may from time to time employ agents and
delegate to them such administrative duties as it deems desirable.

 

The Administrative Committee as Plan Administrator shall have all
powers necessary or appropriate to carry out the provisions of the Plan.  The Plan Administrator shall have absolute
and complete discretionary authority to interpret and administer the Plan and
shall have the exclusive right to make any finding of fact necessary or
appropriate for any purpose under the Plan including, but not limited to, the
determination of eligibility for and amount of any benefit.  The Plan Administrator shall have the
exclusive right to interpret the terms and provisions of the Plan and to
determine any and all questions arising under the Plan or in connection with
its administration, including, without limitation, the right to remedy or
resolve possible ambiguities, inconsistencies, or omissions by general rule or
particular decision, all in its sole and absolute discretion.  To the extent permitted by law, all findings
of fact, determinations, interpretations, and decisions of the Plan
Administrator shall be conclusive and binding upon all persons having or
claiming to have any interest or right under the Plan.  The Plan Administrator may, in its sole and
absolute discretion, delegate any of its powers and duties under this Plan to
one or more subcommittees or individuals. 
In such a case, every reference in the Plan to the Plan Administrator
shall be deemed to include such matters within their jurisdiction.  The Plan Administrator shall have the right
to consult with attorneys and other advisors regarding its duties under this
Plan, which attorneys and advisors may be employed by an Employer.

 

The Corporation agrees to indemnify and hold harmless each member of
the Administrative Committee against any and all expenses and liabilities
arising out of his or her action or failure to act in such capacity, excepting
only expenses and liabilities arising out of his or her own gross negligence or
willful misconduct.  This right of
indemnification is in addition to any other rights

 

9

 

to which a member of the Administrative Committee may be entitled.  The liabilities and expenses against which a
member of the Administrative Committee is indemnified hereunder include,
without limitation, the amount of any settlement or judgment, costs, counsel
fees and related charges reasonably incurred in connection with a claim
asserted or a proceeding brought against such member or the settlement
thereof.  The Corporation may, at its
own expense, settle any claim asserted or proceeding brought against any member
of the Administrative Committee when such settlement appears to be in the best
interests of the Corporation.

 

The members of the Administrative Committee shall serve without
compensation for services as such.  All
expenses of the Administrative Committee shall be paid by the Corporation.

 

7.2                               Appeals
from Denied Claims

 

Any participant may file a claim for benefits.  If the claim is denied, the claimant shall
be provided written notice within 90 days with:

 

•                  Specific reasons
for the denial;

•                  Specific
references to the Plan provisions on which the denial is based;

•                  A description of
any additional information needed and why it is needed; and

•                  An explanation
of (1) the procedures and time limits for an appeal, (2) the right to obtain
information about the procedures and (3) the right to sue in federal court.

 

If there are special circumstances delaying the determination of the
claim, the claimant may be notified within the 90-day period explaining the
special circumstances and stating that an answer will be provided within 90
more days.  If an answer is not received
within the 90 days (or 180 days if an extension notice has been provided), the
claim shall be deemed denied.

 

Any claimant for a benefit (or, as applicable, his or her estate or
other representative beneficiary) may, within sixty (60) days after receipt of
a letter of denial appeal to the Administrative Committee, by writing to:  Administrative Committee, Axis Specialty
U.S. Services, Inc., and may request a review of the denial of the benefit,
with opportunity to submit his or her position in writing.  Appeals not timely filed shall be
barred.  The claimant is entitled to:

 

•                  receive, upon
request and free of charge, reasonable access to, and copies of, all documents,
records and other information relevant to his or her claim.

•                  submit written
comments, documents, records and other information relating to the claim, which
will be considered without regard to whether such information was submitted or
considered in the initial determination.

 

The Administrative Committee will render a written decision, written in
a manner calculated to be understood by the claimant, and mail the written
decision to the claimant at the claimant’s last address known to the plan
sponsor, specifying by reference to the Plan the reasons for denial of such
part or all of the claimed benefit as it denies upon review.  Such letter shall state the claimant is
entitled to receive, upon request and free of charge, reasonable access to,

 

10

 

and copies of all documents, records and other information relevant to
the claim; and shall describe the Plan’s appeal procedure.

 

7.3                               Tax Withholding

 

The Employer may withhold from any payment under this Plan any federal,
state, or local taxes required by law to be withheld with respect to the
payment and any sum the Employer may reasonably estimate as necessary to cover
any taxes for which it may be liable and that may be assessed with regard to
the payment.

 

7.4                               Expenses

 

All expenses incurred in the administration of the Plan shall be paid
by the Employer.

 

7.5                               Beneficiary
Designation

 

(a)                                  Each Participant
shall have the right, at any time, to designate any person, persons, or entity
as his or her Beneficiary or Beneficiaries to whom payment under the Plan shall
be paid in the event of his or her death. 
Any Beneficiary designation may be changed by a Participant by filing
such change on a form prescribed by the Administrative Committee.  The filing of a new Beneficiary designation
form will supersede and cancel all Beneficiary designations previously filed.

 

(b)                                 If a Participant fails
to designate a Beneficiary as provided above, or if his or her Beneficiary
designation is revoked by operation of law or otherwise without execution of a
new designation, or if all designated Beneficiaries predecease the Participant
or die prior to complete distribution of the Participant’s benefits, then the
Participant’s Beneficiary shall be deemed to be the first surviving of the
following classes of Beneficiaries:  the
Participant’s spouse, the Participant’s children (per stirpes), the Participant’s
parents and then the Participant’s estate.

 

Article VIII.  Adoption of the Plan by Affiliates;
Amendment and Termination of the Plan

 

8.1                               Adoption
of the Plan by Affiliates

 

Affiliates of the Corporation shall adopt the Plan in a writing signed
by an officer of the Affiliate.

 

8.2                               Amendment
and Termination

 

The Corporation hereby reserves 
the right to amend, modify or terminate the Plan at any time and for any
reason by action of the Board of Directors of the Corporation.  However, no amendment or termination shall
adversely affect the amount of benefits accrued by a Participant prior to the
date of the amendment or termination. 
Upon the termination of the Plan, the Employer may discharge in full its
obligations to any Participant upon payment of the Participant’s Account.

 

11

 

Article IX.  Miscellaneous Provisions

 

9.1                               Nonalienation

 

No benefit payable under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge.  Any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge shall be
void.  Benefits shall not be in any
manner subject to the debts, contracts, liabilities, engagements, or torts of,
or claims against, any Participant or Beneficiary, including claims of
creditors, claims for alimony or support, and any other like or unlike claims.

 

9.2                               Distribution
to Minors and Incompetents

 

In making any distribution to or for the benefit of any minor or incompetent
person, the Administrative Committee, in its sole and absolute discretion, may,
but need not, direct such distribution to a legal or natural guardian or other
relative of such minor or court appointed committee of such incompetent, or to
any adult with whom such minor or incompetent temporarily or permanently
resides, and any such guardian, committee, relative or other person shall have
full authority and discretion to expend such distribution for the use and
benefit of such minor or incompetent. 
The receipt of such guardian, committee, relative or other person shall
be a complete discharge to the Employer hereunder without any responsibility on
its part or on the part of the Administrative Committee to see the application
thereof.

 

9.3                               Not
a Contract of Employment

 

The terms and conditions of this Plan shall not be deemed to constitute
a contract of employment between the Participant and Employer and the
Participant (or his or her Beneficiary) shall have no rights against Employer
except as may otherwise be specifically provided herein.  Moreover, nothing in this Plan shall be
deemed to give a Participant the right to be retained in the service of
Employer or to interfere with the right of Employer to discipline or discharge
him at any time for any reason whatsoever.

 

9.4                               Protective
Provisions

 

A Participant will cooperate with Employer by furnishing any and all
information requested by Employer in order to facilitate the payment of
benefits hereunder, and taking such action as may be requested by Employer or
the Administrative Committee.

 

9.5                               Notice

 

Any notice of filing required or permitted to be given to the
Administrative Committee under this Plan shall be sufficient if in writing and
hand delivered, or sent by registered or certified mail, to the Administrative
Committee at 11680 Great Oaks Way, Suite 400, Alpharetta, GA  30022. 
Such notice shall be deemed given as of the date of delivery.

 

12

 

9.6                               Successors

 

The provisions of this Plan shall bind and inure to the benefit of
Employer and its successors and assigns. 
The term “successors” as used herein shall include any entity, which
shall, whether by merger, consolidation, purchase or otherwise acquire all or
substantially all of the business and assets of Employer, and successors of any
such entity.

 

9.7                               Severability

 

If any provision of this Plan shall be held illegal or invalid, the
illegality or invalidity shall not affect its remaining parts.  The Plan shall be construed and enforced as
if it did not contain the illegal or invalid provision.

 

9.8                               Applicable Law

 

Except to the extent preempted by applicable federal law, this Plan
shall be governed by and construed in accordance with the laws of the State of
Georgia.

 

13

 

IN WITNESS WHEREOF,
Axis Specialty U.S. Services, Inc., on behalf of itself, has caused its
authorized officers to execute this document on March 15, 2004, effective
as of January 1, 2004.

 

	
   

  	
  AXIS SPECIALTY U.S. SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Lorraine S. Mariano

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:  Senior Vice President

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
  Patricia Smaldone

  	
   

  

 

IN WITNESS WHEREOF,
Axis Specialty Limited, on behalf of itself, has caused its authorized officers
to execute this document on March 15, 2004, effective as of
January 1, 2004.

 

	
   

  	
  AXIS SPECIALTY LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Andrew Cook

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:  Chief Financial Officer

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
  Carol S. Rivers

  	
   

  

 

14

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