Amended and Restated General Services Agreement between XL Capital Assurance Inc. and XL Financial Administrative Services Inc.

Summary

This agreement, effective as of 2006, is between XL Capital Assurance Inc. (XLCA) and XL Financial Administrative Services Inc. (XLFAS). XLFAS will provide general administrative and support services to XLCA, with costs allocated according to specific methodologies and regulations. XLCA will reimburse XLFAS for all related expenses. The agreement outlines access to records, management authority, dispute resolution by arbitration, and termination rights with 60 days' notice. It is subject to approval by the New York Insurance Department and governed by New York law.

EX-10.42 23 c41990_ex10-42.txt Exhibit 10.42 AMENDED AND RESTATED GENERAL SERVICES AGREEMENT Amended and Restated General Services Agreement dated as of [ ], 2006 by and between XL Capital Assurance Inc., a New York corporation ("XLCA"), and XL Financial Administrative Services Inc., a Delaware corporation, ("XLFAS"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, XLCA and XLFAS are parties to a General Services Agreement dated January 28, 2002,and effective as of January 1, 2002(the "Original Agreement"); WHEREAS, the parties hereto desire to amend and restate the Original Agreement in the manner, and on the terms and conditions herein provided; NOW, THEREFORE, in consideration of the premises and other good and continuing relationships between the parties hereto, it is hereby agreed as follows: FIRST: XLFAS hereby agrees to provide, and XLCA hereby accepts certain general services as described in Exhibit A. SECOND: In consideration of the services provided pursuant to paragraph FIRST above, XLCA hereby agrees to pay XLFAS on a cost basis all in-house and out-of-pocket third party costs and fees incurred by XLFAS, allocable to the general services used by it in accordance with this Agreement. The allocation of charges and credits shall be made pursuant to the allocation methodology and the definitions contained in Exhibit A and New York Insurance Department Regulation No. 30, and a report covering all the items and incurred charges and/or credits will be furnished monthly with the final payment being remitted within fifteen days upon receipt of such monthly report. THIRD: This Agreement and Exhibit A are subject to the non-disapproval of the Insurance Department of the State of New York pursuant to Section 1505(D) of the New York Insurance Law, and such terms and conditions hereof as may be required by the New York Insurance Department to be altered or amended shall be deemed acceptable to the parties hereto, to the extent same shall not change the substance and intent of this Agreement. FOURTH: XLFAS and XLCA and their respective duly authorized representatives shall, at all reasonable times, each be permitted access to all relevant books and records of the other pertaining to charges allocated to or made pursuant to the provisions of this Agreement or this Agreement generally. It is understood that all books, accounting information and other records regarding the business affairs of XLCA which are processed and maintained pursuant to this Agreement or otherwise shall be the sole and exclusive property of XLCA. FIFTH: Notwithstanding any other provision of this Agreement to the contrary, it is understood that the business and affairs of XLCA shall be managed by its Board of Directors, and, to the extent delegated by such board, by its appropriately designated officers. The Board of Directors and officers of XLFAS shall not have any management prerogatives with respect to the business affairs and operations of XLCA. SIXTH: All underwriting and claims services provided to XLCA are to be based upon the written criteria, standards and guidelines of XLCA. XLCA shall have the ultimate and final authority over the underwriting decisions with respect to the acceptance, rejection and cancellation of any risks as well as the ultimate and final authority regarding the payment or non-payment of claims. SEVENTH: Any dispute or other matter in question arising between the parties out of or relating to the interpretation, performance, or breach of this Agreement, whether such dispute arises before or after termination of this Agreement, shall be settled by arbitration under Article 75 of New York Civil Practice Law and Rules. Arbitration shall be initiated by the delivery of a written notice of demand for arbitration by one party to the other within a reasonable time after the dispute has arisen. Each party shall appoint an individual as arbitrator, and the two so appointed shall then appoint a third arbitrator. If either party refuses or neglects to appoint an arbitrator within sixty days, the other party may appoint the second arbitrator. If the two arbitrators do not agree on a third arbitrator within sixty days of their appointment, each of the arbitrators shall nominate three individuals. Each arbitrator shall then decline two of the nominations presented by the other arbitrator. The third arbitrator shall then be chosen from the remaining two nominations by drawing lots. The arbitrators shall be active or retired officers of insurance or reinsurance companies; the arbitrators shall not have personal or financial interest in the result of the arbitration. The arbitration hearings shall be held in the State of New York. Each party shall submit its case to the arbitrators within a reasonable time after the selection of the third arbitrator or as may be agreed by the arbitrators. The arbitrators shall not be obliged to follow judicial formalities or the rules of the evidence except to the extent required by governing law; they shall make their decisions according to the practice of the insurance business. The decision rendered by a majority of the arbitrators shall be final and binding on both parties. Such decision shall be a condition precedent to any right of legal action arising out of the arbitrated dispute which either party may have against the other. Judgment upon the award rendered may be entered in any court having jurisdiction thereof. Each party shall pay the fee and expenses of its own arbitrator and one-half of the fee and expenses of the third arbitrator. All other expenses of the arbitration shall be equally divided between the parties. EIGHTH: This Agreement may be terminated by any party hereto by sixty (60) days prior written notice to the other party. -2- NINTH: This Agreement shall not be amended except with the written consent of the parties hereto. TENTH: This Agreement shall be construed and enforced with the laws of the State of New York. -3- IN WITNESS WHEREOF, this Agreement is hereby executed by duly authorized officers of the Parties hereto as of the date first above written. XL Financial Administrative Services Inc. By:__________________________ XL Capital Assurance Inc. By:___________________________ -4- EXHIBIT A EXPENSE DESCRIPTION ALLOCATION METHOD SURVEYS AND UNDERWRITING EXPENSES: XLCA'S underwriting expense. Direct or Special Studies AUDIT OF INSURED'S RECORDS: XLCA'S audit expense. Direct or Special Studies SALARIES AND BENEFITS: XLCA's proportion of XLFAS's salary, Direct or Special Studies bonus and related recruitment expense. PAYROLL TAXES: XLCA's proportion of XLFAS's payroll expense. Direct or Special Studies. EMPLOYEE WELFARE AND BENEFITS: XLCA's proportion of XLFAS's direct Direct or Special Studies billed benefit expense from participation's in XL America, Inc's programs or any successor programs for SCA Holdings US Inc. PENSIONS: XLCA's proportion of XLFAS's direct Direct or Special Studies billed expense from participating in SCA Holdings US Inc. Employee Savings Plan and the SCA Holdings US Inc. Deferred Compensation Plan. TRAVEL AND EXPENSE: XLCA's proportion of XLFAS's Direct or Special Studies out-of-pocket travel and entertainment expense. -5- OFFICE OVERHEAD AND EXPENSE INSURANCE: XLCA's proportion of XLFAS`s allocation Direct or Special Studies of SCA Holdings US Inc. corporate insurance coverage RENT AND RENT ITEMS: XLCA's proportion of XLFAS's rent and Direct or Overhead on Salaries other occupancy expense. EQUIPMENT: XLCA's proportion of XLFAS's leasehold Direct or Overhead on Salaries improvement, furniture and equipment depreciation, related finance carrying charges, maintenance and software expense. PRINTING AND STATIONERY: XLCA's printing and its proportion of Direct or Special Studies XLFAS's printing and stationary expense (i.e., forms etc). POSTAGE, TELEPHONE AND TELEGRAPH EXCHANGE AND EXPRESS: XLCA's proportion of XLFAS's postage, Direct or Special Studies telephone, express mail and messenger expense LEGAL AND AUDITING: XLCA's legal and accounting professional Direct or Special Studies fees and its proportion of XLFAS's professional fees that benefit both XLCA and XLFAS. MISCELLANEOUS: XLCA's proportion of other XLFAS Direct or Special Studies expenses not specifically enumerated or reflected in the above categories that benefit its operations. -6-