EX-10.58 3 c35889_ex10-58.txt Exhibit 10.58 AMENDED AND RESTATED STANDBY LETTER OF CREDIT AGREEMENT This AMENDED AND RESTATED STANDBY LETTER OF CREDIT AGREEMENT is dated as of June 30, 2004 (the "Agreement") and is by and among National Australia Bank Limited, New York Branch (the "Bank"), XL Capital Ltd, a company incorporated under the laws of the Cayman Islands, XL America, Inc., a Delaware corporation, XL Insurance (Bermuda) Ltd, a Bermuda limited liability company, and XL Re Ltd, a Bermuda limited liability company (collectively, the "Account Parties" and each an "Account Party"). WHEREAS, the Account Parties, the Bank and XL Europe Ltd ("XL Europe") have entered into two Standby Letter of Credit Agreements, one dated as of January 31, 2003 and the other dated as of July 25, 2003 (the "Existing Agreements") pursuant to which the Bank issued to the benefit of XL Capital Assurance Inc. as Beneficiary, respectively, that certain US $100 Million Standby Letter of Credit No. SB-0406 and that certain US $100 Million Standby Letter of Credit No. SB-0429 (collectively, the "Credits" and each a "Credit"); WHEREAS, the parties hereto desire to amend the Existing Agreements by combining them into one agreement to govern the rights and obligations of the parties with respect to the Credits and to make such other amendments as the parties shall agree; WHEREAS, the parties hereto and XL Europe have agreed that XL Europe will not be a party to this Agreement and that upon execution of this Agreement XL Europe will not have any rights or obligations hereunder or under the Existing Agreements; NOW, THEREFORE, the parties hereto agree that, as of the date hereof, the Existing Agreements are hereby amended and restated in their entirety to constitute this one Amended and Restated Standby Letter of Credit Agreement which shall read as follows: 1. The Account Parties unconditionally agree, jointly and severally and regardless of the identity of the Account Party of the Credit, to pay to the Bank, on demand in immediately available funds (in United States Dollars), on each date on which a disbursement is made by the Bank pursuant to a Credit, an amount equal to such disbursement. If payment is not made on the date of disbursement, such amount shall bear interest (based on a 360-day year and actual days EXECUTION COPY elapsed) from the date of disbursement until paid in full, but excluding the date paid, at a rate per annum equal to the rate of interest from time to time announced by the Bank as its prime rate plus 2%. 2. The Account Parties agree to pay to the Bank, quarterly in arrears and on the date on which a Credit expires, letter of credit fees (based on a 360-day year and actual days elapsed) in an amount equal to 0.40% per annum of the amount available to be drawn under such Credit from time to time. 3. The Account Parties' joint and several obligations to reimburse Credit disbursements as provided in Paragraph 1 above shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with terms of this Agreement, irrespective of any of the following circumstances: (a) any lack of validity or enforceability of a Credit or any document or instrument relating thereto; (b) the existence of any claim, setoff, defense or other rights which any of the Account Parties may have at any time against the Bank, the Beneficiary or any other person or entity, whether in connection with this Agreement or any unrelated transaction; (c) any document presented under a Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever; (d) payment by the Bank under a Credit against presentation of a draft or certificate which does not strictly comply with the terms of a Credit, provided such payment shall have been made by the Bank in good faith and without gross negligence and payment is made against presentation of a draft or other document that at least substantially complies with the terms of the relevant Credit; (e) any agreement by the Bank and the Beneficiary extending or shortening the Bank's time after presentation to examine documents or to honor or give notice of discrepancies; (f) 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 being waived, extended or renewed; (g) 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 being released, substituted or exchanged in whole or in part or otherwise dealt with; (h) the occurrence of any Event of Default; (i) the existence of any proceedings of the type described in clause (g) or (h) of Article VIII of that certain 364-Day Credit Agreement dated as of June 23, 2004 among the Account Parties hereunder, as account EXECUTION COPY -2- parties and guarantors thereunder, various lenders parties thereto and JPMorgan Chase Bank, as administrative agent (the "Syndicated Credit Agreement") with respect to any other Account Party or any guarantor of any of such reimbursement obligations; (j) any lack of validity or enforceability of any of such reimbursement obligations against any other Account Party or any guarantor of any of such reimbursement obligations; or (k) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Paragraph 3, constitute a legal or equitable discharge of the obligations of any Account Party hereunder, other than performance by an Account Party hereunder. Without limiting any other provision of this Agreement, the Bank: (i) may rely upon any oral, telephonic, facsimile, electronic, written or other communication believed by it in good faith to have been authorized by any Account Party, the Beneficiary or anyone acting for any of them; (ii) shall not be responsible for errors, omissions, interruptions or delays in transmission or delivery of any message, advice or document in connection with a Credit, whether transmitted by courier, mail, telecommunication or otherwise, or for errors in interpretation of technical terms or in translation; (iii) shall not be responsible for the identity or authority of any signer or the form, accuracy, genuineness or legal effect of any draft, certificate or other document presented under a Credit; and (iv) may accept as a draft any written or electronic demand or other request for payment under a Credit, even if such demand or other request is not in the form of a negotiable draft. 4. If after the date hereof, the adoption of or any change in any law or regulation or in the interpretation thereof by, or compliance by the Bank with any guideline or request from any central bank or other authority charged with the administration thereof (whether or not having the force of law) shall impose, modify or deem applicable any (a) reserve, special deposit or similar requirement against letters of credit issued by the Bank or (b) capital adequacy or similar requirement (including without limitation a requirement which affects the manner in which the Bank allocates capital to letters of credit), and the result thereof shall be to increase the cost to the Bank of issuing or maintaining a Credit (which increase in cost shall be calculated in accordance with the Bank's reasonable averaging and attribution methods) or to reduce the rate of return on the Bank's capital as a consequence of its obligations under a Credit to a level below that which the Bank could have achieved but for such circumstances, then the Account Parties shall pay to the Bank within 10 days of demand such additional amount or amounts as shall compen- EXECUTION COPY -3- sate the Bank for such increase in cost or reduction in rate of return; provided that this Paragraph 4 shall not apply to Taxes, which shall be governed exclusively by Paragraph 5. A certificate of the Bank as to such additional amount or amounts shall be conclusive, absent manifest error. 5. (a) Any and all payments made to the Bank by any Account Party hereunder shall be made free and clear of and without deduction for any Covered Taxes unless an Account Party is required to withhold Covered Taxes. If an Account Party shall be required by law to deduct any Covered Taxes from or in respect of any sum payable hereunder to the Bank, (i) the sum payable shall be increased as may be necessary so that after making all required deductions of Covered Taxes (including deductions applicable to additional sums payable under this Paragraph 5) the Bank receives an amount equal to the sum it would have received had no such deductions been required and (ii) such Account Party shall pay the full amount deducted to the relevant taxing authority in accordance with applicable law and shall provide the Bank with the original or a certified copy of the receipt evidencing such payment. If the Bank determines in good faith that it has received a refund in respect of any Covered Taxes with respect to which any Account Party has paid additional amounts pursuant to this Paragraph 5, the Bank shall promptly after the date of such receipt pay over the amount of such refund to such Account Party (but only to the extent of additional amounts paid by the Account Party under this Paragraph 5 with respect to the Covered Taxes giving rise to such refund), net of all reasonable expenses of the Bank (including additional Taxes attributable to such refund, as determined in good faith by the Bank) and without interest (other than interest, if any, paid by the relevant taxing authority with respect to such refund). Any Account Party shall, upon demand, repay to the Bank any amount paid over to such Account Party by the Bank in the event the Bank is required to repay any portion of such refund to such taxing authority. If any Account Party reasonably believes that any Covered Taxes were not correctly or legally asserted, the Bank will use reasonable efforts to cooperate with such Account Party (at Account Party's expense) to obtain a refund of such Covered Taxes, which refund shall be returned to the Account Party to the extent provided in this Paragraph 5(a). Nothing in this Paragraph 5 shall entitle any Account Party to have access to the records of the Bank, including, without limitation, tax returns. (b) To the extent it is legally entitled to do so, the Bank shall from time to time, at the written request of any Account Party, provide to such Account Party such form, certification or EXECUTION COPY -4- similar documentation, if any (each duly completed, accurate and signed) as is required by any jurisdiction, in order to obtain an exemption from, or reduced rate of, deduction, payment or withholding of Covered Taxes to which the Bank is entitled pursuant to an applicable tax treaty or other applicable law. (c) An assignee of the Bank or subsequent assignee shall not be entitled to any greater gross-up payments under this Paragraph 5 than such assignee's assignor was entitled to immediately prior to such assignment (determined taking into account the provisions of this Paragraph 5) except to the extent that the entitlement to greater payments resulted solely from a change in law formally announced after the date on which such assignee became an assignee hereunder. (d) For purposes of this Agreement the following terms shall have the following meanings, respectively: "Excluded Taxes" means, with respect to the Bank or any other recipient of a payment from any Account Party hereunder, (a) any Taxes that are imposed as a result of a connection the recipient of the payment has with the relevant jurisdiction (other than a connection that is deemed to arise solely by reason of both (i) the transactions contemplated by this Agreement and (ii) an Account Party being organized or resident, maintaining an office or conducting business in such jurisdiction), including without limitation any such Taxes imposed on (or measured by) net income, net profits, branch profits or overall gross receipts, (b) any Tax that is not imposed solely as a result of a change in law formally announced after the date hereof and (c) any Tax that is attributable to the recipient's failure to comply with Paragraph 5(b) above. "Covered Taxes" means all Taxes, other than Excluded Taxes, that are imposed on the Bank with respect to any payment made by any Account Party hereunder. "Tax" or "Taxes" means any present or future income, stamp or other tax, levy, impost, duty, charge or withholding imposed, levied, collected, withheld or assessed by any taxing authority (including any interest or penalties attributable thereto). 6. Should any of the following events (each an "Event of Default") occur and be continuing: (a) the Account Parties fail to make payment when due of any amount payable under EXECUTION COPY -5- this Agreement and such failure continues unremedied for at least 3 days; (b) any representation made in any financial statement or in any certificate or other writing delivered to the Bank by or on behalf of any Account Party in connection with this Agreement or a Credit is in any material respect false or misleading when made; (c) an Account Party shall default in the due performance or observance by it of any term, covenant or agreement contained herein and such default shall continue unremedied for a period of more than 20 days; or (d) an event of default under and as defined in the Syndicated Credit Agreement; then in each such event, the Bank may declare the obligations of the Account Parties hereunder to be due and payable immediately and thereupon such obligations shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Account Parties; and in case of any event with respect to any Account Party described in clause (g) or (h) of Article VIII of the Syndicated Credit Agreement, the obligations of the Account Parties 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 Account Party. The Account Parties shall pay to the Bank, on demand, for application to drawings under each Credit the entire amount thereof which has not been drawn. Any amount so paid which has not been drawn at the expiration of a Credit shall be repaid to the Account Parties, without interest, upon the payment in full of all other amounts owing hereunder. 7. Promptly after the occurrence of an Event of Default or an event which with the giving of notice or the passage of time, or both, would constitute an Event of Default, the Account Parties shall notify the Bank of such event, together with a statement setting forth the actions being taken by the Account Parties to remedy the same. 8. Each Account Party hereby represents and warrants as to itself that (a) it is duly organized, validly existing and 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 (as such term is defined in the Syndicated Credit Agreement), is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required; (b) this Agreement has been duly executed and delivered by such Account Party and constitutes a legal, valid and binding obligation of such Account Party, enforceable against EXECUTION COPY -6- such Account Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, examination or similar laws of general applicability affecting the enforcement of creditors' rights and the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); and (c) the execution, delivery, and performance of this Agreement will not violate any provision of any existing law or regulation binding on such Account Party, the violation of which would have a Material Adverse Effect (as such term is defined in the Syndicated Credit Agreement) on the business, operations, assets, or financial condition of such Account Party. 9. The Account Parties jointly and severally agree to pay all reasonable out-of-pocket expenses incurred by the Bank, including the fees, charges and disbursements of legal counsel, in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Paragraph 9, or in connection with the Credits issued hereunder, including in connection with any workout, restructuring or negotiations in respect thereof. 10. The Account Parties jointly and severally agree to indemnify the Bank, its affiliates and each of their respective directors, officers, employees, agents and advisors (each an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee (but not including Excluded Taxes), incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (a) 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 any transactions contemplated hereby, (b) any Credit or the use thereof (including any refusal by the Bank to honor a demand for payment under a Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Credit), (c) any actual or alleged presence or release of Hazardous Materials (as such term is defined in the Syndicated Credit Agreement) on or from any property owned or operated by any Account Party or any of its Subsidiaries (as such term is defined in the Syndicated Credit Agreement), or any Environmental Liability (as such term is defined in the Syndicated Credit Agreement) related in any way to any Account Party or any of its Subsidiaries (as such term is defined in the Syndicated Credit Agreement), or EXECUTION COPY -7- (d) 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 expenses result from or arise out of the gross negligence or willful misconduct of such Indemnitee. To the extent permitted by applicable law, no Account Party shall assert, and each Account 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, any transaction effected in connection herewith and any Credit or the use of the proceeds thereof. 11. Each Account Party hereby consents to the non-exclusive jurisdiction of any court of record in the City of New York or of the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement or a Credit, and service of process by the Bank in any such suit, action, proceeding or judgment may be made by mailing a copy thereof to such Account Party at its address set forth in Paragraph 17 below. The Account Party also waives any claim that New York County or the Southern District of New York is an inconvenient forum. 12. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH NEW YORK LAW. 13. If an Event of Default shall have occurred and be continuing, the Bank 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 the Bank to or for the credit or the account of any Account Party against any of and all the obligations of such Account Party now or hereafter existing under this Agreement held by the Bank, irrespective of whether or not the Bank shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of the Bank under this Paragraph 13 are in addition to other rights and remedies (including other rights of setoff) which the Bank may have. EXECUTION COPY -8- 14. Any articles, sections, clauses, provisions, terms and conditions of the Syndicated Credit Agreement that are referenced herein (including any related definitions, schedules and ancillary provisions) and any capitalized terms used herein with reference to the Syndicated Credit Agreement (the "Incorporated Terms"), shall be incorporated herein with the same meaning, force and effect as if such Incorporated Terms were set forth in full as of the date hereof without amendment (except for those changes or modifications to such Incorporated Terms as may be necessary or appropriate in the Bank's reasonable discretion to conform the Incorporated Terms to this Agreement). Each Account Party agrees to notify the Bank promptly of any amendment or modification of or change or waiver granted with respect to any Incorporated Term and, if the Bank so requests by a written instrument, to execute and deliver an amendment to this Agreement which incorporates such amendment, modification, change or waiver. 15. No failure on the part of the Bank to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Bank of any right, remedy or power hereunder preclude any other or future exercise of any other right, remedy or power. Each and every right, remedy and power hereby granted to the Bank or allowed it by law or other agreement shall be cumulative and not exclusive the one of any other and may be exercised by the Bank from time to time. 16. The Bank shall provide the Account Parties with not less than 60 days prior written notice of its intent not to renew the term of a Credit. 17. All demands for payment, notices or other communications hereunder shall be in writing (including communications by facsimile transmission) and shall be addressed, if to the Bank, at 245 Park Avenue, New York, New York 10167, Attention: Letter of Credit Department, Fax No. (212) 490-8087, and if to the Account Parties, c/o XL Capital, Ltd., at XL House, One Bermudiana Road, Hamilton, HM 11 Bermuda, Attention: Mr. Roderick Gray, Fax No. (441) 296-6399, or to such other address as such party may designate by notice to the other parties. 18. This Agreement shall be binding upon the Account Parties and their successors, assigns, and legal representatives, and shall inure to the benefit of, and be enforceable by, the Bank, its successors and assigns. Neither the Bank nor the Account Parties may assign any of its EXECUTION COPY -9- rights or obligations under this Agreement without the prior written consent of the other, such consent not to be unreasonably withheld. 19. EACH ACCOUNT PARTY AND THE BANK IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL IN ANY ACTION OR PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, A CREDIT OR ANY DEALINGS WITH ONE ANOTHER RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT. 20. This Agreement may be executed in any number of counterparts and by the several parties hereto on separate counterparts, each of which when so executed shall be an original, but all such separate counterparts shall together constitute but one and the same agreement. The parties agree that all telecopied or telefaxed execution copies and signatures thereto shall be duplicate originals. 21. The Account Parties and the Bank agree that upon the execution and delivery of this Agreement by each of the parties hereto, the terms and conditions of the Existing Agreements shall be and hereby are amended, superseded and restated in their entirety by the terms and provisions of this Agreement. This Agreement is not intended to and shall not constitute a novation of the Existing Agreements or the obligations or indebtedness created thereunder. 22. The Bank hereby notifies each Account Party that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Bank is required to obtain, verify and record information that identifies each Account Party, which information includes the name and address of such Account Party and other information that will allow the Bank to identify each Account Party in accordance with said Act. EXECUTION COPY -10- IN WITNESS WHEREOF, the Bank and the Account Parties have entered into this Amended and Restated Standby Letter of Credit Agreement as of the date first written above. NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937), New York Branch By: /s/ Lawrence Karp --------------------- Name: Lawrence Karp Title: Director & Head, Insurance Americas XL CAPITAL LTD XL INSURANCE (BERMUDA) LTD By: /s/ Michael Siese By: /s/ Christopher Coelho --------------------- -------------------------- Name: Michael Siese Name: Christopher Coelho Title: SVP, Controller Title: SVP, CFO, COO XL AMERICA, INC. XL RE LTD By: /s/ Richard H. Miller By: /s/ James O'Shaughnessy --------------------- -------------------------- Name: Richard H. Miller Name: James O'Shaughnessy Title: EVP & CFO & Treasurer Title: SVP & CFO Acknowledged as of the date first written above: XL EUROPE LTD By: /s/ Michael Brady --------------------- Name: Michael Brady Title: CFO EXECUTION COPY -11-