Security Agreement (Portfolio and Cash Deposits - Third Party - Citibank, N.A. as Custodian)
Exhibit 99.3
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Security
Agreement (Portfolio and Cash Deposits - Third Party - Citibank, N.A. as
Custodian)
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Form
21/CEP
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Name of Chargor and address of
its registered or principal office: Flagstone Réassurance Suisse,
SA, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇, ▇▇-▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
CH-621.3.007.041-9
facsimile no:
▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇ Company
Number: (the
"Chargor")
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Name of Custodian and address
of its registered or principal office:
CITIBANK,
N.A., FAO: INSURANCE LETTER OF CREDIT PRODUCT MANAGER, CITIGROUP CENTRE,
CANADA SQUARE, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(the
"Custodian")
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Date: 22
January 2009
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To:
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CITIBANK EUROPE PLC (the
"Bank")
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Insurance Letter of Credit
▇▇▇▇▇▇▇▇▇▇
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▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇
Republic of Ireland
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The terms used
in this Security Agreement are defined in Clause
21.
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RECITALS
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(A)
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The Chargor
has entered into a Pledge Agreement with the Bank (the “Pledge Agreement”)
under which certain of the Chargor’s deposits in and securities at ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Bank, N.A. (or such other person as the Chargor
and the Bank may agree to in writing from time to time) (the “New York
Custodian”) are pledged to and under the control of the Bank with the
intention of providing the Bank with a perfected first priority
security interest in such securities as further security for the
performance of the Obligations.
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(B)
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The Chargor
and the Bank desire that the collateral pledged hereunder and the
collateral pledged pursuant to the pledge Agreement shall both be
considered in determining whether, at all times and pursuant to Clause 4
hereof, the aggregate of the New York Collateral Value (as that term is
defined in the Pledge Agreement) and the London Collateral Value (as
defined below) shall be equal to or exceed the Required Account Value (as
defined below).
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1.
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PAYMENT AND
DISCHARGE
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The Chargor
shall pay and discharge in full all of the Obligations at the times and in
the manner provided for in each
Agreement.
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2.
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CHARGE
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(a)
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The Chargor
hereby charges with full title guarantee and by way of first fixed charge,
in the Bank’s favour all of the Charged Portfolio for the payment to the
Bank and the discharge of all of the
Obligations.
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(b)
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The Chargor
shall deliver, transfer or assign all of the Charged Portfolio to the
Custodian by means acceptable to the
Bank.
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3.
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CUSTODIAN’S
UNDERTAKING
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The
Custodian’s Undertaking to the Bank (Schedule 2 to this Agreement) shall
be executed simultaneously with the execution of this Security
Agreement.
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4.
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COLLATERAL
REQUIREMENTS
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The
Chargor undertakes to:
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(a)
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ensure that at
all times the Letter of Credit Value of the Charged Portfolio (such value,
the “London Collateral Value”) shall, when added to the New York
Collateral Value of property pledged in New York to the Bank pursuant to
the Pledge Agreement equal to or exceed the Required Account
Value;
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(b) from time to
time,
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a.
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pay or
transfer to the Custodian (by way of increment to the Charged Portfolio)
Deposits and Securities; and/or
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b.
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cause
additional Qualifying Collateral (as that term is defined in the Pledge
Agreement) to be transferred to the New York Custodian pursuant to the
Pledge Agreement
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so
that at all times the aggregate of the London Collateral Value and New York
Collateral Value is equal to or exceeds the Required Account Value;
and
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(c)
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ensure that at
all times each component part of the Charged Portfolio shall satisfy the
Bank’s Requirements. Final determination as to whether the
Bank’s Requirements have been satisfied shall be at the sole discretion of
the Bank.
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5.
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FURTHER
ASSURANCE
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(a)
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The Chargor
undertakes forthwith upon notice to that effect by the Bank to execute and
sign in the Bank or its nominees’ or agent's favour and to deliver to the
Bank all such transfers (or, if the Bank shall so require, partially
completed instruments of transfer with the name of the transferee, date
and consideration left blank), assignments and notices (including without
limitation the notice in the form set out in Schedule One), and to make
all such payments, as the Bank may specify in such notice for the purpose
of perfecting the Bank’s title to all or any part of the Charged Portfolio
or for enabling the Bank (as the Bank shall be entitled at any time to do)
to vest the same in the Bank’s name or in the name(s) of the
Bank’s nominees or agents or any
purchaser.
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(b)
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The Chargor
further undertakes forthwith upon notice to that effect by the Bank to
execute in the Bank or its nominees’ or agents’ favour and to deliver to
the Bank such legal or other mortgages of the Charged Portfolio or any
part thereof for the purpose of securing or further securing the
Obligations and being in such form as the Bank shall
require.
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6.
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REPRESENTATIONS AND
WARRANTIES
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(a)
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The Chargor
hereby represents and warrants to the Bank and undertakes
that:-
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(i)
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it is and
will, at all times during the subsistence of the security hereby
constituted, be the sole, lawful and beneficial owner of all the Charged
Portfolio free from mortgages or charges (other than this charge and any
such mortgages as are referred to in Clause 5(b)) or other
encumbrances;
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(ii)
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it has not
sold or agreed to sell or otherwise disposed of or agreed to dispose of
the benefit of the Charged Portfolio or any part
thereof;
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(iii)
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it has and
will at all times have the necessary power to enable the Chargor to enter
into and perform the obligations expressed to be assumed by it under this
Security Agreement;
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(iv)
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this Security
Agreement constitutes its legal, valid, binding and enforceable obligation
and is a security over the Charged Portfolio and every part thereof
effective in accordance with its terms;
and
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(v)
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all necessary
authorisations to enable or entitle it to enter into this Security
Agreement have been obtained and are in full force and effect and will
remain in such force and effect at all times during the subsistence of the
security hereby constituted.
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(b)
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The Chargor
hereby represents and warrants to the Bank
that:-
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(i)
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it is not
unable to pay its debts as they fall
due;
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(ii)
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it has not
been deemed or declared to be unable to pay its debts under applicable
law;
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(iii)
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it has not
suspended making payments or any of its
debts;
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(iv)
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it has not by
reason of actual or anticipated financial difficulties commenced
negotiations with any of its creditors with a view to rescheduling any of
its indebtedness;
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(v)
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the value of
its assets is not less than its liabilities (taking into account
contingent and prospective
liabilities);
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(vi)
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no moratorium
has been declared in respect of any of its indebtedness;
and
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(vii) no
analogous or similar event or concept to those set out in Clauses 6(b)(i) -
6(b)(vi)above has occurred or is the case under the laws of any
jurisdiction.
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7.
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NEGATIVE
PLEDGE
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The Chargor
hereby undertakes with the Bank that at no time during the subsistence of
the security hereby constituted will it, otherwise
than:-
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(a)
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in the Bank’s
favour, or in favour of Citibank, N.A. (if applicable);
or
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(b)
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with the
Bank’s prior written consent and in accordance with and subject to any
conditions which the Bank may attach to such
consent,
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create, grant,
extend or permit to subsist any mortgage or other fixed security or any floating
charge on or over the Charged Portfolio or any part thereof. The foregoing
prohibition shall apply not only to mortgages, other fixed securities and
floating charges which rank or purport to rank in point of security in priority
to the security hereby constituted but also to any mortgages, securities or
floating charges which rank or purport to rank pari passu therewith or
thereafter.
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8.
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ENFORCEMENT AND POWER
OF SALE
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(a)
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If:-
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(i)
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the Chargor
defaults in paying or discharging any of the Obligations on
demand;
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(ii)
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the Chargor
defaults under or fails to comply with any provision of this Security
Agreement, the Pledge Agreement or of any agreement or contract giving
rise to any of the Obligations;
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(iii)
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a petition or
application is presented for the making of an administration order in
relation to the Chargor or if any person who is entitled to do so gives
written notice of its intention to appoint an administrator of the Chargor
or files such a notice with the
court,
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then:
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(A)
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the security
created by or pursuant to this Security Agreement shall become immediately
enforceable and the Bank may, without notice to the Chargor or prior
authorisation from any court, in the Bank’s absolute discretion enforce
all or any part of that security (at the times, in the manner and on the
terms the Bank thinks fit) and take possession of and hold or dispose of
all or any part of the Charged Portfolio;
and
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(B)
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the Bank shall
have and be entitled without prior notice to the Chargor to exercise the
power to sell or otherwise dispose of, for any consideration (whether
payable immediately or by installments) as the Bank shall think fit, the
whole or any part of the Charged Portfolio and may (without prejudice to
any right which the Bank may have under any other provision hereof) treat
such part of the Charged Portfolio as consists of money as if it were the
proceeds of such sale or other disposal. The Bank shall be entitled to
apply the proceeds of such sale or other disposal in paying the costs of
such sale or other disposal and (subject to the rights or claims of any
person entitled in priority to the Bank) in or towards the discharge of
the Obligations, the balance (if any) to be paid to the Chargor or other
persons entitled thereto. Such power of sale or other disposal shall
operate as a variation and extension of the statutory power of sale under
Section 101 of the Law of Property ▇▇▇
▇▇▇▇.
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(b)
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The
restriction contained in Section 103 of the Law of Property ▇▇▇ ▇▇▇▇ on
the exercise of the statutory power of sale shall not apply to any
exercise by the Bank of its power of sale or other disposal which shall
arise, as shall the statutory power under the said Section 101 of
appointing a receiver of the Charged Portfolio or the income thereof,
immediately upon any such default or failure by the Chargor or the
Custodian as is referred to in Clause 8(a). A certificate in
writing by the Bank’s officer or agent in favour of a purchaser of all or
any part of the Charged Portfolio that either or both of such powers has
arisen and is exercisable shall be conclusive evidence of that
fact.
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(c)
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Without
limitation to the generality of the Bank’s rights and remedies as set
forth in Clause 8(a), the Bank may at any time without prior notice to the
Chargor:-
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(i)
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exercise any
or all of the Bank’s rights under or pursuant to the Custodian’s
Undertaking and
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(ii)
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if any or all
of the component parts of the Charged Portfolio delivered, transferred or
assigned to the Bank under or pursuant to the Custodian’s Undertaking do
not satisfy the Bank’s Requirements (the "Ineligible Property"), then the
Bank may (but shall not be obliged
to):
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(1)
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convert for
the Chargor’s account and at the Chargor’s sole risk all or any part of
the Ineligible Property into property which does satisfy all or any of the
Bank’s Requirements in such manner as the Bank in its sole discretion may
determine to be appropriate; and
/or
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(2)
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sell for the
Chargor’s account and at the Chargor’s sole risk all or any part of the
Ineligible Property in return for payment of such currency or currencies
as the Bank in its sole discretion determine to be appropriate and pay the
same to an account or accounts opened or maintained by the Bank for that
purpose pursuant to Clause 13(b).
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(d)
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The Bank shall
not be liable to account as a mortgagee in possession in respect of all or
any part of the Charged Portfolio or be liable for any loss upon
realisation or for any neglect, default or omission in connection with the
Charged Portfolio to which a mortgagee in possession might otherwise be
liable.
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9.
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POWER OF
ATTORNEY
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The Chargor
hereby irrevocably appoints the Bank to be its attorney and in its name
and on its behalf and as its act and deed to sign, seal, execute, deliver,
perfect and do all deeds, instruments, mortgages and things as may be, or
as the Bank may consider to be, requisite for carrying our any obligations
imposed on the Chargor under Clause 5, or for enabling the Bank to
exercise its power(s) of sale or other disposal or conversion referred to
in Clause 8 or for carrying into effect any such sale or other disposal or
conversion made under such power(s) by executing instruments of transfer
(or completing partially completed instruments executed by the Bank),
assignments or notices, or exercising any of the rights and powers from
time to time attaching to any part of the Charged
Portfolio. The Chargor hereby undertakes to ratify and confirm
all things done and documents executed by the Bank in the exercise of the
power of attorney conferred by this
Clause.
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10.
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CONSOLIDATION OF
SECURITIES
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Subsection (1)
of Section 93 of the Law of Property Act 1925 shall not apply to this
Security Agreement.
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11.
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EFFECTIVENESS OF
SECURITY
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(a)
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This Security
Agreement shall be in addition to and shall be independent of every other
security which the Bank may at any time hold for any of the Obligations.
No prior security held by the Bank over the whole or any part of the
Charged Portfolio shall merge in the security hereby
constituted.
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(b)
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This Security
Agreement shall remain in full force and effect as a continuing security
unless and until the Bank discharges
it.
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(c)
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Nothing
contained in this Security Agreement is intended to, or shall operate so
as to, prejudice or affect any ▇▇▇▇, note, guarantee, mortgage, pledge,
charge or other security of any kind whatsoever which the Bank may have
for the Obligations or any of them or any right, remedy or privilege of
the Bank’s thereunder.
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12.
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REMEDIES, TIME OR
INDULGENCE
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(a)
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The rights,
powers and remedies provided by this Security Agreement are cumulative and
are not, nor are they to be construed as, exclusive of any right of
set-off or other rights, powers and remedies provided by
law.
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(b)
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No failure on
the Bank’s part to exercise, or delay on the Bank’s part in exercising,
any of the rights, powers and remedies provided by this Security Agreement
or by law (each a "Bank’s
Right") shall operate as a waiver thereof, nor shall any single or
partial waiver of any Bank’s Right preclude any further or other exercise
of that Bank’s Right or the exercise of any other Bank’s
Right.
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(c)
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The Bank may
in its discretion grant time or other indulgence or make any other
arrangement, variation or release with any person(s) not party hereto
(irrespective of whether such person(s) is/are jointly liable with the
Chargor) in respect of the Obligations or in any way affecting or
concerning them or any of them or in respect of any security for the
Obligations or any of them, without in any such case prejudicing,
affecting or impairing the security hereby constituted, or any Bank’s
Right or the exercise of the same, or any indebtedness or other liability
owed by the Chargor to the Bank.
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13.
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ACCOUNTS
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(a)
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If the Bank
shall at any time receive notice of any subsequent mortgage, assignment,
charge or other interest affecting all or any part of the Charged
Portfolio the Bank may open a new account or accounts for the Chargor in
the Bank’s books. If the Bank does not do so, then (unless the Bank gives
to the Chargor express written notice to the contrary) as from the time of
receipt of such notice by the Bank, all payments made by the Chargor to
the Bank shall in the absence of any express appropriation by the Bank to
the contrary be treated as having been credited to a new account of the
Chargor’s and not as having been applied in reduction of the Obligations
at the time when the Bank received the
notice.
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(b)
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All monies
received, recovered or realised by the Bank under this Security Agreement
(including the proceeds of any conversion of currency) may in the Bank’s
discretion be credited to any suspense or impersonal account and may be
held in such account for so long as the Bank shall think fit (with
interest accruing thereon at such rate, if any, as the Bank may deem fit)
pending their application from time to time (as the Bank shall be entitled
to do in its discretion) in or towards the discharge of any of the
Obligations.
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(c)
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In case the
Bank shall have more than one account for the Chargor in its books, the
Bank may at any time after making any demand for payment or other
discharge of any of the Obligations or after the Bank shall have received
notice of any subsequent charge or other interest affecting all or any
part of the Charged Portfolio, and without prior notice in that behalf,
forthwith transfer all or any part of any balance standing to the credit
of any such account to any other such account which may be in
debit.
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14.
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CURRENCY
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(a)
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For the
purpose of or pending the discharge of any of the Obligations the Bank may
convert any monies received, recovered or realised or subject to
application by the Bank under this Security Agreement (including the
proceeds of any previous conversion under this Clause) from their existing
currency of denomination into such other currency of denomination as the
Bank may think fit, and any such conversion shall be effected at the
Bank’s then prevailing spot rate of exchange for obtaining such other
currency with the existing
currency.
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(b)
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References
herein to any currency extend to any funds of that currency and for the
avoidance of doubt funds of one currency may be converted into different
funds of the same currency.
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15.
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COST, CHARGES AND
EXPENSES
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All
the Bank’s reasonable costs, charges and expenses incurred in the exercise of
any Bank’s Right, or in connection with the execution of or otherwise in
relation to this Security Agreement or in connection with the perfection or
enforcement of the security hereby constituted or any other security held by the
Bank for the Obligations or any guarantee to the Bank in respect thereof, shall
be reimbursed to the Bank by the Chargor on demand on a full indemnity basis
together with interest from the date of the same having been incurred to the
date of payment at such rate or rates as the Bank may determine in relation to
the currency involved.
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16.
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LAW AND
JURISDICTION
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This Security
Agreement shall be governed by English law and both the Bank and the Chargor
hereby irrevocably submit to the jurisdiction of the English courts in respect
of any dispute which may arise from or in connection with this Security
Agreement.
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17.
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PROVISIONS
SEVERABLE
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Each of the
provisions contained in this Security Agreement shall be severable and distinct
from one another and if at any time any one or more of such provisions is or
becomes invalid, illegal or unenforceable, the validity, legality and
enforceability of each of the remaining provisions of this Security Agreement
shall not in any way be affected, prejudiced or impaired thereby.
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18.
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NOTICES
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(a)
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Any notice or
demand to be served on the Chargor by the Bank hereunder may be
served:-
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(i)
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by letter
addressed to the Chargor or to any of the Chargor’s officers and left at
the Chargor’s registered office or at any one of the Chargor’s principal
places of business; or
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(ii)
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by posting the
same by letter addressed in any such manner as aforesaid to such
registered office or any such principal place of business;
or
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(iii)
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by facsimile
addressed in any such manner as aforesaid to any then published facsimile
number of the Chargor.
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(b)
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Any notice or
demand to be served on the Bank by the Chargor hereunder must be served on
the Bank either at the Bank’s address stated at the beginning of this
Security Agreement (or such other address as the Bank may notify the
Chargor of from time to time); or by facsimile to such number as the Bank
may notify the Chargor of from time to
time.
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(c)
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Any notice or
demand:-
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(i)
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sent by post
in accordance with Clause 18(a) to an address in the Republic of Ireland
or in the United Kingdom shall be deemed to have been served on the
Chargor at 10.00 a.m. (London time) on the first Business Day after the
date of posting (in the case of an address in the Republic of Ireland) and
on the second Business Day after posting (in the case of an address in the
United Kingdom) or, in the case of an address outside the Republic of
Ireland or the United Kingdom (or a notice or demand to the Bank), shall
be deemed to have been served on the relevant party at 10.00 a.m. (London
time) on the third Business Day after and exclusive of the date of
posting; or
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(ii)
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sent by
facsimile in accordance with Clause 18(a) shall be deemed to have been
served on the relevant party when
dispatched.
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In
proving such service by post it shall be sufficient to show that the letter
containing the notice or demand was properly addressed and posted and such proof
of service shall be effective notwithstanding that the letter was in fact not
delivered or was returned undelivered.
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19.
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THE BANK’S
DISCRETIONS
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Any
liberty or power which may be exercised or any determination which may be made
hereunder by the Bank may be exercised or made in the Bank’s absolute and
unfettered discretion and the Bank shall not be under any obligation to give
reasons therefor.
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20.
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ASSIGNMENT
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The
Bank shall have a full and unfettered right to assign and transfer the whole or
any part of its rights and obligations under this Security Agreement and the
expression the "Bank"
wherever used herein shall be deemed to include its assignees, novatees and
other successors, whether immediate or derivative, who shall be entitled to
enforce and proceed upon this Security Agreement in the same manner as if named
herein. The Bank shall be entitled to impart any information concerning the
Chargor to any such actual or proposed assignee, novatee or other successor or
any participant. In the event the Bank does impart any such
information concerning the Chargor to any actual or proposed assignee, it shall
notify the Chargor.
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21.
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INTERPRETATION
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(a)
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In this
Security Agreement:-
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"Agreement" means (whether made
on or before the date hereof or at any time hereafter) each agreement between
the Chargor (or by any person for or on behalf of the Chargor) and the Bank,
pursuant to which the Bank has established, maintained, amended, renewed or
substituted or arranged for the establishment, maintenance, amendment, renewal
or substitution of a Credit;
"Bank’s Requirements" means the
Bank's requirements in respect of the component parts of the Charged Portfolio
all as set forth in the column of the table set out in Schedule Three headed
"Bank's Requirements" or as may be notified from time to time by the Bank to the
Chargor;
"Charged Portfolio" means at
any time all the Chargor’s right, title and interest in and to:
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(i)
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all of the
Deposits;
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(ii)
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all Securities
which are held by, to the order, for the account or under the control or
direction of, the Custodian;
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(iii)
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all Securities
which are held by any clearance system on behalf of, for the account of or
to the order of the Custodian;
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(iv)
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all right,
benefits and proceeds attaching to or arising from or in respect of any of
the Securities referred to in (ii) and (iii)
above;
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(v)
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any of the
foregoing at any time delivered, transferred or assigned by the Custodian
to the Bank;
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"Credit" means each letter of
credit or similar or equivalent instrument from time to time established,
maintained, amended, renewed or substituted pursuant to an Agreement and shall
include any portion of any single letter of credit or similar or equivalent
instrument which is attributable by the Bank to the Chargor and which was
established, maintained, amended, renewed or substituted pursuant to an
Agreement and/or any agreement between the Bank and another person incorporating
similar instructions;
"Custodian" means the
above-mentioned Custodian or such other person as the Chargor and the Bank may
agree to in writing from time to time;
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"Custodian’s Undertaking" means
an undertaking in the form set out in Schedule Two duly executed by the
Custodian as the same may be amended or substituted with the prior written
consent of the Bank from time to time;
"Deposits" means:
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(i)
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all sums of
money standing to the credit of any account opened or maintained by the
Custodian for the Chargor;
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(ii)
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all sums of
money standing to the credit of any account opened or maintained by any
clearance system for the Chargor and under the direction or control of the
Custodian; and
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(iii)
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all sums of
money standing to the credit of any account opened or maintained by any
clearance system for the Custodian;
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“Letter of Credit Value”
means:
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(i)
in respect of each component of the Charged Portfolio (x) the market value
of Security, or as the case may be (y) the value of a Deposit, in each
case:
|
|
|
(1)
|
subject to the
provisions of Schedule Four; and
|
|
|
(2)
|
multiplied by
the percentage specified in the table set out in Schedule Three under the
column headed "Letter of Credit Value" for that type of Security or, as
the case may be, a Deposit,
|
and
if at any time there is more than one component part to the Charged Portfolio,
the Letter of Credit Value for the Charged Portfolio shall be the sum of the
Letter of Credit Values for each component part of Charged Portfolio;
or
|
|
(ii)
|
such other
amount calculated in such other manner as may be notified from time to
time by the Bank to the Chargor;
and
|
"Obligations" means any and all
of the present or future, actual or contingent, obligations of the Chargor to
the Bank hereunder, under any Agreement (whether incurred alone or jointly and
whether as principal or severally or in some other capacity).
"Required Account Value" has
the meaning given to that term in the Pledge Agreement.
|
|
(b)
|
Any reference
in this Security Agreement to:-
|
a
"Business Day" shall be
construed as a reference to a day (other than a Saturday or Sunday) on which
banks are generally open for business in London and New York;
a
"clearance system"
means Clearstream Banking, Luxembourg, CREST (being the clearance system
operated by Crestco Limited), The Depository Trust Company and such other
clearance system as may from time to time be used in connection with
transactions relating to any Securities, and any depository for any of the
foregoing;
a
"Clause" is, unless
otherwise stated, a reference to a Clause hereof;
a
"person" shall be
construed as a reference to any person, firm, company, corporation, government,
state or agency of a state or any association or partnership (whether or not
having separate legal personality) of two or more of the foregoing;
a
"Schedule" is, unless
otherwise stated, a reference to a schedule hereto; and
"Securities" shall be
construed as a reference to bonds, debentures, notes, stocks, shares, warrants,
units or other securities and all moneys, rights or property which may at any
time accrue or be offered (whether by way of bonus, redemption, preference,
option or otherwise) in respect of any of the foregoing (and without limitation,
shall include any of the foregoing not constituted, evidenced or represented by
a certificate or other document but by an entry in the books or other permanent
records of the issuer, a trustee or other fiduciary thereof, or a clearance
system).
8
|
|
(c)
|
Any reference
in this Security Agreement to another agreement, arrangement or
undertaking shall be construed as a reference to such other agreement,
arrangement or undertaking as the same may have been, or may from time to
time be, amended, varied, supplemented, novated or
assigned.
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|
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(d)
|
Clause and
Schedule headings are for ease of reference
only.
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(e)
|
Any reference
in this Security Agreement to the singular includes the plural and vice
versa.
|
|
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(f)
|
A person who
is not a party to this Security Agreement has no rights under the
Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇ to enforce any term of this
Security Agreement.
|
IN WITNESS whereof this
Security Agreement has been signed by the Bank, and the Chargor has executed and
unconditionally delivered this Security Agreement as a DEED on the date first above
stated.
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FLAGSTONE
REASSURANCE SUISSE S.A.
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|
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_/s/
▇▇▇▇▇▇▇ Boisvert_
___________
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|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
|
|
Dated January 22,
2009
|
|
|
Accepted and
agreed for and on behalf of
|
CITIGROUP
EUROPE PLC
|
|
________/s/ ▇▇▇▇
O'Neill_________________
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|
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(Signature(s))
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Dated January 22,
2009
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9
SCHEDULE
ONE
NOTICE
OF CHARGE OF CHARGED PORTFOLIO
|
To:
|
CITIBANK,
N.A.
|
CITIGROUP CENTRE,
CANADA SQUARE
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
We
refer to the Security Agreement (the "Security Agreement")
dated__________________20___ entered into by
us in favour of Citibank Europe plc of Insurance Letter of Credit ▇▇▇▇▇▇▇▇▇▇,
▇▇▇
▇▇▇▇▇, ▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇ of Ireland (the "Bank"), a copy of
which is annexed hereto. Terms defined in the Security Agreement shall have the
same meanings herein.
Notice is hereby
given by us to you that, by and pursuant to the Security Agreement, we have
charged in favour of the Bank all of the Charged Portfolio.
Yours
faithfully,
For and on behalf
of
**____________________________
(**Full
name of Chargor)
____________________________
(Signature(s))
Dated______________________
10
SCHEDULE
TWO
Custodian’s
Undertaking
|
Name of Custodian and address
of its registered or principal office:
CITIBANK,
N.A., FAO: INSURANCE LETTER OF CREDIT PRODUCT MANAGER,
CITIGROUP
CENTRE, CANADA SQUARE, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
(the
"Custodian")
|
|
Name of Chargor and address of
its registered or principal office: Flagstone Réassurance Suisse,
SA, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇, ▇▇-▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
CH-621.3.007.041-9
facsimile no:
▇▇▇ ▇▇ ▇▇▇ ▇▇ ▇▇ Company
Number: (the
"Chargor")
|
|
Date of
Security Agreement (Portfolio - Third Party - Citibank, N.A. as
Custodian)
(Form
21/CIFS): December
2008
|
|
|
To:
|
CITIBANK EUROPE PLC (the
"Bank")
|
Insurance Letter of
Credit ▇▇▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇
▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇
▇▇▇▇▇▇▇▇ of
Ireland
We,
the Custodian, refer to the above-mentioned Security Agreement (the "Security
Agreement") between the Chargor and the Bank and acknowledge receipt of the
Notice of Charged Portfolio
dated 20
that we have received in respect
thereof. Save where the context otherwise requires, terms defined in
the Security Agreement shall have the same meanings herein.
In
consideration of the Bank establishing, maintaining, amending, renewing or
substituting or arranging the establishment, maintenance, amendment, renewal or
substitution of a Credit pursuant to any Security Agreement or otherwise
granting financial accommodation to the Chargor and pursuant to instructions
received by the Custodian from the Chargor, the Custodian hereby represents and
irrevocably undertakes and agrees to and with the Bank as follows:
|
1.
|
The Custodian
will hold the Charged Portfolio to the Bank’s order and for such purposes
will act as pledgeholder for and on behalf of the
Bank.
|
|
2.
|
The Custodian
will ensure that the Bank has, at all times, such access (electronic or
otherwise) to the collateral platform computer systems and records
currently named "▇▇▇▇▇▇" and "CPSE/Cosmos" which are maintained by the
Custodian (and any successor or replacement computer systems and/or
records) (collectively the "Computer Systems") as the Bank may require
from time to time).
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3.
|
The Custodian
will ensure that:
|
|
|
(a)
|
the Computer
Systems display, at all times, all the information that the Bank may
require from time to time; and
|
|
|
(b)
|
that such
information is correct, complete and up-to-date at all
times.
|
|
4.
|
The Custodian
shall:
|
|
|
(a)
|
by 9am GMT on
every day that banks are generally open for business in the country where
the Charged Portfolio is deposited (a “Custodian Business Day”) deliver to
the Bank by Swift (or such other method as the Bank may reasonably
specify) via MT535 to ▇▇▇▇▇▇▇▇▇▇▇ (or such other address as the Bank may
notify the Custodian of from time to time) a statement in a form
reasonably acceptable to the Bank of the Charged Portfolio, each component
thereof and the aggregate value thereof as at close of business on the
prior Custodian Business Day (the “Daily Statement”);
and
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|
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(b)
|
within five
Custodian Business Days of the date of this
Undertaking:
|
|
|
(i)
|
inform the
Bank of a further method by which it will deliver the Daily Statement as a
contingency in the case of failure relating to the method by which the
Custodian will usually deliver the Daily Statement, such contingent method
to be agreed by the Bank; and
|
11
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|
(ii)
|
provide the
Bank with a list of persons and their accompanying contact details (which
the Custodian will update from time to time and provide to the Bank
promptly after such update) with whom the Bank may liaise in respect of
the Daily Statement.
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|
5.
|
Save in
respect of a disposal to a third party in the market of a component part
of the Charged Portfolio and the substitution therefor of other securities
or money, the Custodian will not dispose of or part with possession or
control of all or any part of the Charged Portfolio, save (i) to the Bank
or (ii) to any person with the Bank’s prior written consent or (iii) in
respect of any part of the Charged Portfolio which the Bank notifies to
the Custodian represents an excess over the Required Value, to the Chargor
or as it may direct.
|
|
6.
|
The Custodian
shall deliver, transfer or assign to the Bank on the Bank’s first written
demand all the Charged Portfolio (or, if the Bank shall so require, any
component part of the Charged Portfolio) and all certificates and other
instruments evidencing title thereto or necessary or desirable in order
for the Bank to acquire good and marketable title hereto.
|
|
7.
|
All rights and
interests of the Custodian in or towards the Charged Portfolio or any part
thereof are and shall be subordinated and postponed to the Bank’s rights
and interests therein under and pursuant to the Security Agreement, save
that the Custodian shall be entitled to debit any account of the Chargor
with the Custodian (i) with any reasonable fees or commissions due and
owing by the Chargor to the Custodian in respect of the Charged Portfolio
or part thereof, (ii) for the purchase price of any securities to be
included in the Charged Portfolio or (iii) for any indemnity in respect of
third party claims to which the Custodian is
entitled.
|
|
8.
|
|
|
(a)
|
Any notice,
demand or other communication to be served on us by you (or vice versa)
hereunder must be served on the relevant
party:
|
|
|
(i)
|
at such
party's address stated at the beginning of this Undertaking (or such other
address as either party may notify the other of from time to time);
or
|
|
|
(ii)
|
by facsimile
to such number as either party may notify the other of from time to
time;
|
|
|
(b)
|
Any notice,
demand or other communication:-
|
|
|
(i)
|
sent by post
to either party shall be deemed to have been served on the relevant party
at 10.00 a.m. (London time) on the third Business Day after and exclusive
of the date of posting; or
|
|
|
(ii)
|
sent by
facsimile in accordance with this paragraph shall be deemed to have been
served on the relevant party when
dispatched.
|
In
proving such service by post it shall be sufficient to show that the letter
containing the notice, demand or other communications was properly addressed and
posted and such proof of service shall be effective notwithstanding that the
letter was in fact not delivered or was returned undelivered.
|
9.
|
This
Undertaking shall be governed by and construed in accordance with, English
law and, for the benefit of the Bank, the Custodian hereby irrevocably
submits to the jurisdiction of the English courts in respect of any
dispute which may arise from or in connection with this
Undertaking.
|
|
10.
|
A person who
is not a party to this Undertaking has no right under the Contracts
(Rights of Third Parties) ▇▇▇ ▇▇▇▇ to enforce any term of this
Undertaking
|
|
11.
|
Save as
expressly provided herein, the Custodian shall have no further obligations
or liabilities to the Bank in relation to the Charged
Portfolio.
|
_________________________________
(Authorised
Signatory)
for and on behalf of
the Custodian
___________________________20_____
12
SCHEDULE
THREE
Letter
of Credit Value and Bank's Requirements
|
Bank's
Requirements
|
|||
|
Description
of
component part
of Charged Portfolio
|
Issuer
|
Rating
|
Letter of
Credit Value
|
|
Cash
|
|||
|
Deposits
|
N/A
|
N/A
|
100%
|
|
Securities
|
|||
|
Government
Securities
|
US Government
or the central government of an OECD (Organisation for Economic
Co-operation and Development) country
|
AA or AA
equivalent or better
|
90% of the
fair market value of such Securities
|
|
US Government
Agency Securities
|
The Federal
Home Loan Mortgage Corporation or any successor thereto;
The Federal
National Mortgage Association or any successor thereto;
and/or
The Government
National Mortgage Association or any successor thereto.
|
AA or AA
equivalent or better
|
90% of the
fair market value of such Securities
|
|
Corporate
Bonds
|
US/OECD
Domiciled Corporate Entities, PROVIDED HOWEVER, that (i) a maximum of $100,000,000
in issued Credits can be secured with Corporate Bonds; (ii) not more than
10% by value shall be represented by bonds issued by any one issuer; and
(iii) each Bond shall mature not more than 10 years after the date upon
which it comes within the Charged Portfolio.
|
AA or AA
equivalent or better
|
82.5% of the
fair market value of such
Securities
|
CREDITS
WITH A TENOR IN EXCESS OF 15 MONTHS (INCLUSIVE OF ANY NOTICE PERIOD TO THE
BENEFICIARIES) MAY ONLY BE SECURED BY GOVERNMENT SECURITIES OR US GOVERNMENT
AGENCY SECURITIES
13
SCHEDULE
FOUR
Currency
Margins
|
1.
|
Where the
Charged Portfolio or a portion thereof is denominated in the same currency
as a Credit (the "Credit
Currency"), the Charged Portfolio or such portion thereof shall
have a value of 100% of its current value in the relative Credit Currency;
and for this purpose the Bank shall notionally match each Credit with the
Charged Portfolio or a portion thereof denominated in the relative Credit
Currency.
|
|
2.
|
Where the
Charged Portfolio or a portion thereof is denominated in a currency other
than the relative Credit Currency, both the Letter of Credit Value (or,
where only a portion of the Charged Portfolio is in the relative Credit
Currency, the balance of the Letter of Credit Value remaining unmatched)
and the Charged Portfolio or such portion thereof shall be notionally
converted into a common base currency (as the Bank may in its discretion
determine); and following such notional conversion the Charged Portfolio
or such portion thereof shall suffer a deduction of the Relevant
Percentage, to cover exchange movements that may from time to time affect
the value of the underlying unmatched Charged Portfolio or a portion
thereof and the contingent obligations to which it
relates.
|
|
3.
|
The "Relevant Percentage"
means:
|
|
|
(a)
|
where the
Charged Portfolio or a portion is denominated in U.S. dollars, Canadian
dollars or sterling, 10%;
|
|
|
(b)
|
where the
Charged Portfolio or a portion thereof is denominated in Euro, Swiss
Francs or Japanese yen, 15%; and
|
|
|
(c)
|
where the
Charged Portfolio or a portion there is denominated in any other currency,
25%.
|
|
4.
|
For the
purposes of each notional conversion to be effected hereunder the
provisions of Clause 14(a) shall apply mutatis
mutandis.
|
14