MASTER REIMBURSEMENT
AGREEMENT – FORM 3/CEP

 
 
 
 
 
 
 
 
 

 

 
 

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Insurance Letters of Credit – Master Agreement

 
Form 3/CEP

AGREEMENT DATED August 20th 2010

BETWEEN:

Greenlight Reinsurance, Ltd
65 Market Street
Suite 1207, Jasmine Court
Camana Bay, PO Box 31110 Grand Cayman, KY1-1205
CAYMAN ISLANDS
(“the Company”);

AND

             CITIBANK EUROPE PLC (“CEP”) whose offices and registered address
are at 1
North Wall Quay, I.F.S.C., Dublin 1, Ireland.

PREAMBLE

Subject to the Company’s satisfaction of the terms and conditions contained in
this Agreement, CEP agrees to establish letters of credit or similar or
equivalent acceptable instruments (each a "Credit" and collectively the
"Credits") on behalf of the Company in favour of beneficiaries located in the
United States of America or elsewhere (the "Beneficiary" or "Beneficiaries" as
relevant). In furtherance of this Agreement, the parties have separately agreed
the contractual or security arrangements that will apply in respect of the
Company’s obligations under or pursuant to this Agreement. For the avoidance of
doubt, in the event of any inconsistency between the terms of this Agreement and
the terms of the Committed Facility dated on or about the date of this Agreement
(“Committed Facility Letter”), the terms of the Committed Facility Letter shall
prevail.

1.       AGREEMENT

It is agreed between us in relation to each Credit that:-

 
1.1
In order to establish a Credit, the Company is required to submit an application
form to CEP (“the Application Form”).  The Application Form must (a) be
substantially in the form of Schedule 2 hereto; Application Forms may, subject
to CEP’s agreement, be received via any electronic system(s) or transmission
arrangement(s); (b) be completed by or on behalf of the Company in accordance
with the terms of the Company’s banking mandate(s) or other authorities lodged
with CEP or in accordance with arrangement(s) made with CEP from time to time;
and (c) indicate therein the name of the Beneficiary and the amount and term of
the Credit required.  Upon receipt of an Application Form that satisfies the
above criteria, CEP shall establish on behalf of the Company an irrevocable
clean sight Credit (or such other form of Credit as may be required by the
Application Form relating thereto) available, in whole or in part, by the
Beneficiary’s sight draft (the Company hereby agreeing that CEP may accept as a
valid ”sight draft” any written or electronic demand or other request for
payment under the Credit, even if such demand or other request is not in the
form of a negotiable instrument) on CEP or otherwise as may be required by the
terms of the Credit; provided, however, that:

 
(i)
the opening of any Credit hereunder shall, in every instance, be at CEP’s option
and nothing herein shall be construed as obliging CEP to open any Credit;

 
(ii)
prior to the establishment of any Credit or in order to maintain a Credit the
Company undertakes as follows:

 
(a)
forthwith at CEP’s request to deposit, at an Approved Bank, in an account or
accounts in the Company’s name, cash or securities or a combination of cash and
securities as per the Reinsurance Deposit Agreement or as otherwise agreed
between the parties, of such amount and in such combination as CEP may require
(a "Deposit").  “Approved Bank” for the purposes of this Clause 1.1(ii)(a) shall
mean one or more of the following:- (i) Citibank, N.A. at their branch at
Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB; (ii) a bank
approved by CEP; or, (iii) such other Citigroup branch or approved bank as CEP
may designate and notify to the Company; and

 
(b)
should a Deposit have been requested, to execute CEP’s standard form charge
documentation in relation to the accounts opened pursuant to Clause 1.1 (ii) (a)
above.

 
1.2  
Without prejudice to the generality of Clause 1.1 (i), the opening of any Credit
hereunder

shall be dependent upon CEP being satisfied, in its absolute discretion, that a
Deposit has been carried out and that the documentation required to be executed
under Clause 1.1 (ii) (b) has been validly executed by the Company;

 
1.3
The Company undertakes to reimburse CEP, promptly following demand (and in any
event within five (5) Business Days), the amount of any and all drawings
(including, for the avoidance of doubt, drawings presented electronically) under
each Credit;

 
1.4
The Company undertakes to indemnify CEP, promptly following demand, for and
against all actions, proceedings, losses, damages, charges, costs, expenses,
claims and demands which CEP may incur, pay or sustain in connection with each
Credit and/or this Agreement, howsoever arising (unless resulting from CEP’s own
gross negligence or wilful misconduct);

 
1.5
The Company undertakes to pay CEP, on demand, such fees and/or commissions of
such amount(s) and/or at such rate(s) as specified in the fee letter (separately
agreed between the parties) as payable in connection with each Credit;

      1.6  
The Company hereby irrevocably authorises CEP to make any payments and comply
with any demands which may be claimed from or made upon CEP in connection with
any Credit without any reference to, or further authority from, the Company
against presentation of a draft or other document that in CEP’s good faith
judgment appeared to comply with the terms and conditions of the applicable
Credit.  The Company hereby agrees that it shall not be incumbent upon CEP to
enquire or take notice of whether or not any such payments or demands claimed
from or made upon CEP in connection with each Credit are properly made or
whether any dispute exists between the Company and the Beneficiary thereof.  The
Company further agrees that any payment CEP makes in accordance with the terms
and conditions of each Credit shall be binding upon the Company and shall be
accepted by the Company as conclusive evidence that CEP was liable to make such
payment or comply with such demand.

2.       REPRESENTATIONS AND WARRANTIES

              2.1  
The Company represents and warrants to CEP and undertakes that:-

 
(i)
it has and will at all times have the necessary power to enable it to enter into
and perform the obligations expressed to be assumed by it under this Agreement;

 
(ii)
the Agreement constitutes its legal, valid, binding and enforceable obligation
effective in accordance with its terms, subject to (x) the effect of any
applicable bankruptcy, insolvency, reorganisation, moratorium or similar law
affecting creditors' rights generally and (y) the effect of general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or law); and

                     (iii)
all necessary authorisations to enable or entitle it to enter into this
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 this Agreement;

 
     2.2     The Company represents and warrants to CEP that:-

 
(i)
it is not unable to pay its debts as they fall due;

 
(ii)
it has not been deemed or declared to be unable to pay its debts under any
applicable law;

 
(iii)
it has not suspended making payments on any of its debts;

 
(iv)
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;

 
(v)
the value of its assets is not less than its liabilities (taking into account
contingent and prospective liabilities);

 
(vi)
no moratorium has been declared in respect of any of its indebtedness; and

 
(vii)
no analogous or similar event or concept to those set out in this Clause 2.2 has
occurred or is the case under the laws of any jurisdiction.

3.
EXTENSION/TERMINATION

 
3.1
(a)
Any Credit established hereunder may, if requested by the Company on the
relevant  Application Form and subject to CEP’s consent, bear a clause to the
effect that it will automatically be extended for successive periods of one year
(or such other period as may be stated in the relevant Application Form) UNLESS
the Beneficiary has received from the bank or institution issuing the Credit
(the "Issuing Bank") by registered mail (or other appropriate receipted
delivery) notification of intention not to renew such Credit at least 60 days
(or such longer period as may be stated in the relevant Application Form) prior
to the end of the original term or, as the case may be, of a period of extension
(the "Notice Period").

 
(b)
The Issuing Bank shall be under no obligation to the Company to send the
Beneficiary such notification (and without such notification to the Beneficiary
the Credit will be automatically extended as provided above) UNLESS the Company
shall have sent notification to CEP by registered mail (or other means
acceptable to CEP) of its election not to renew such Credit at least 60 days
prior to the commencement of the Notice Period.

 
(c)
CEP reserves the right, at its sole option and discretion, to give or procure
the giving at any time to the Beneficiary of notification of intention not to
renew any Credit.  If CEP exercises such said right, it will give the Company
notice in writing thereof as soon as is reasonably possible.

4.       UCC/ISP

CEP may, at its sole option, arrange for the issuance of any Credit as being
subject to either (i) the Uniform Customs and Practice for Documentary Credits
(1993 Revision) ICC Publication No. 600 (“the UCP”) or (ii) the International
Chamber of Commerce Publication No. 590 - the International Standby Practices
1998 (the “ISP”), (or any subsequent version of either); provided however that
CEP may agree such modifications thereof as may be required by any regulatory or
other authority having jurisdiction as to the acceptability of the Credit in
question.

5.       PREVIOUS AGREEMENTS

 
5.1
Unless otherwise agreed between the parties in writing, the previous
agreement(s) (if any) entered into between them (other than those at any time
governed by a "Master Agreement – London Market Letter of Credit Scheme" or
substantially equivalent agreement) governing Credits established by CEP on the
Company’s behalf in favour of Beneficiaries shall, on due execution by the
parties of this Agreement, cease to apply to all such Credits, which Credits
shall henceforth be governed by this Agreement.

              5.2  
For the avoidance of doubt any letter or letters of credit or similar or
equivalent instrument or instruments (the "Existing Credit(s)") which has or
have been established or opened pursuant to the terms of any previous
agreement(s) entered into between the Company and Citibank, N.A. governing the
Existing Credits (including any security arrangements that apply in respect of
any obligation under or pursuant to such previous agreement(s)) (the "Existing
Agreement(s)") shall continue in force until cancelled.  The Existing
Agreement(s) shall continue to apply to the Existing Credit(s) until all the
Existing Credit(s) have been cancelled.  The Company undertakes, on CEP’s
request, to take all reasonable steps to procure that any cancelled Existing
Credit(s) are destroyed or returned to CEP.

6.       CREDIT CHOICE OF LAW

If, at the Company’s request, a Credit expressly chooses a state or country law
other than New York, U.S.A. or English law, or is silent with respect to the
UCP, the ISP or a governing law, CEP shall not be liable for any payment, cost,
expense or loss resulting from any action or inaction it takes provided such
action or inaction is justified under UCP, ISP, New York law, English law or the
law governing the Credit.

7.       BRANCHES/CORRESPONDENT BANKS

 
7.1
The Company acknowledges that CEP may carry out any of its obligations or
exercise any of its rights under this Agreement through any of its offices or
branches, wheresoever situated.

              7.2  
The Company further understands that CEP reserves the right to issue any Credit
through any third party correspondent bank of its choice (provided that such
correspondent bank is approved by the National Association of Insurance
Commissioners) and/or to have any Credit confirmed by Citibank, N.A.  In such
circumstances, CEP will be required to guarantee reimbursement to such
correspondent and/or Citibank, N.A. of any payments which such correspondent
and/or Citibank, N.A. may make under the Credit in question and such guarantee
(howsoever described) shall be treated mutatis mutandis as a Credit for the
purpose of this Agreement.

8.       INCREASES ETC/REINSTATEMENTS

The provisions of the foregoing Clauses shall be equally applicable to any
increase, extension, renewal, partial renewal, modification or amendment of, or
substitute instrument for, any Credit to which they apply.  If for any reason
any amount paid under any Credit is repaid, in whole or in part, by the
Beneficiary thereof, CEP may, in its sole discretion, treat (or procure the
treatment of) such repayment as a reinstatement of an amount (equal to such
repayment) under such Credit.  The value date CEP applies to any such
reinstatement shall not be earlier than the date of such repayment and CEP shall
not be liable for losses of any nature which the Company may suffer or incur
and/or which may arise from any inadvertent or erroneous drawing.

9.       NOTICES

 
9.1
Any notice or demand to be served on the Company by CEP hereunder may be served:

 
        (a)    on any of the Company’s officers personally;

 
(b)
by letter addressed to the Company or to any of its officers and left at the
Company’s registered office or at any one of its principal places of business;

 
(c)
by posting the same by letter addressed in any such manner as aforesaid to such
registered office or principal place of business; or

 
(d)
by facsimile addressed in any such manner as aforesaid to any then published
facsimile number of the Company.

 
9.2
Unless otherwise stated, any notice or demand to be served on CEP by the Company
hereunder must be served either at CEP’s address as stated above (or such other
address as CEP may notify us of from time to time) or by facsimile to such
number as CEP may notify the Company of from time to time.

 
9.3
Any notice or demand:-

 
(a)
sent by post to any address in the Republic of Ireland or the United Kingdom
shall be deemed to have been served on the Company at 10am. (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 CEP), shall
be deemed to have been served on the relevant party at 10am. (London time) on
the third Business Day after and exclusive of the date of posting; or

 
(b)
sent by facsimile shall be deemed to have been served on the relevant party when
dispatched.

 
9.4
In proving 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.

 
9.5
In this Clause 9, "Business Day" shall be construed as a reference to a day
(other than a Saturday or a Sunday) on which banks are generally open in London.

10.       ASSIGNMENT/NOVATION

 
10.1
CEP has a full and unfettered right (a) to assign or otherwise dispose of the
whole or any part of its rights and/or benefits under this Agreement or (b)
(subject to Clauses 10.2 to 10.5) to novate its rights and obligations under
this Agreement, in each case, to a Permitted Transferee.  The words "CEP" and
"CEP’s" wherever used in Clauses 10.2 to 10.5 shall be deemed to include CEP’s
permitted assignees and novatees and other successors, whether immediate or
derivative, who shall be entitled to enforce and proceed upon this Agreement in
the same manner as if named herein. CEP shall be entitled to impart any
information concerning the Company to any such permitted assignee, novatee or
other successor or any participant or proposed permitted assignee, novatee,
successor or participant; provided, however, that in connection with any such
assignment or novation, CEP may disclose to the assignee or transferee or
proposed assignee or proposed transferee any information relating to the Company
furnished to CEP by or on behalf of the Company, provided that, prior to any
such disclosure, the assignee or transferee or proposed assignee or proposed
transferee shall agree to be subject to the same confidentiality obligations
applicable to CEP with respect to any confidential information related to the
Company and shall enter into a confidentiality agreement to such effect with CEP
under which the Company is designated a third party beneficiary with the right
to enforce the terms of such confidentiality agreement.

 
10.2
The person who is for the time being liable to perform CEP’s obligations under
this Agreement (a "Transferring Bank") shall be entitled to novate at any time,
upon service of a notice on the Company in the form attached as Schedule One to
this Agreement (a "Novation Notice"), any or all of its rights and obligations
under, and the benefit of, this Agreement to any Permitted Transferee.  With
effect from the date on which a Novation Notice is executed by the Transferring
Bank and the Permitted Transferee and served on the Company (the "Novation
Date"), the provisions of Clause 10.3 shall have effect (but not otherwise).

 
10.3
With effect from (and subject to the occurrence of) the Novation Date:

 
10.3.1
the Permitted Transferee shall be bound by the terms of this Agreement (as
novated) in every way as if the Permitted Transferee was and had been a party
hereto in place of the Transferring Bank and the Permitted Transferee shall
undertake and perform and discharge all of CEP’s obligations and liabilities
under this Agreement (as novated) whether the same fell or fall to be performed
or arose or arise on, before or after the Novation Date;

 
10.3.2  
the Company shall release and discharge the Transferring Bank from further
performance of its obligations arising in favour of the Company on and after the
Novation

 
Date under this Agreement and all claims and demands whatsoever in respect
thereof against the Transferring Bank, and the Company shall accept the
liability of the Permitted Transferee in respect of such obligations in place of
the liability of the Transferring Bank;

 
10.3.3
the Transferring Bank shall release and discharge the Company from further
performance of its obligations arising in favour of the Transferring Bank on and
after the Novation Date under this Agreement and all claims and demands
whatsoever in respect thereof by the Transferring Bank; and

 
10.3.4
the Company shall be bound by the terms of this Agreement (as novated) in every
way, and it shall undertake and perform and discharge in favour of the Permitted
Transferee each of its obligations whether the same fell or fall to be performed
or arose or arise on, before or after the Novation Date and expressed to be owed
to CEP.

 
10.4
Without prejudice to the automatic novation of the Transferring Bank’s rights
and obligations pursuant to Clause 10.3, the Company undertakes to sign and
return promptly each acknowledgement of the Novation Notice from time to time
delivered to it promptly following receipt of the same from the Transferring
Bank.

              10.5  
For the purposes of this Clause 10 a "Permitted Transferee" shall mean;

i)  
any holding company, subsidiary or affiliate of Citigroup Inc, or;

ii)  
subject to the Company’s consent (such consent not to be unreasonably
withheld),any other third party.

11.       SET-OFF

 
11.1
The Company hereby irrevocably authorises CEP to debit and credit, on the
Company’s behalf, any account or accounts which are held in the Company’s name
with Citibank, N.A.

 
11.2
The Company hereby agrees that Citibank N.A. shall be entitled to rely on and
action any credit or debit made by CEP in accordance with Clause 11.1.

12.       GOVERNING LAW/JURISDICTION

This Agreement and all non-contractual obligations arising out of or in
connection with it shall be governed by English law and, for CEP’s benefit, the
Company hereby irrevocably submits to the jurisdiction of the English Courts in
respect of any dispute which may arise from or in connection with this
Agreement. The terms of this Agreement may not be waived, modified or amended
unless such waiver, modification or amendment is in writing and signed by CEP
nor may the Company assign any of its rights hereunder without CEP’s prior
written consent.

13.       MISCELLANEOUS PROVISIONS

 
13.1
Subject to this Clause and to Clause 11.2 a person who is not a party to this
Agreement has no rights under the Contracts (Rights of Third Parties) Act 1999
(the "Third Parties Act") to enforce any terms of this Agreement.

 
13.2
Citibank, N.A. may enforce the terms of Clause 11.2 subject to, and in
accordance with, this Clause 13.2 and Clause 12 and the provisions of the Third
Parties Act.

 
13.3
The parties to this Agreement do not require the consent of Citibank, N.A. to
rescind or vary this Agreement at any time.

 
13.4
If Citibank, N.A. brings proceedings to enforce the terms of Clause 11.2, the
Company shall only have available to it by way of defence, set-off or
counterclaim a matter that would have been available by way of defence, set-off
or counterclaim if Citibank, N.A. had been party to this Agreement.

 
13.5
Citibank, N.A. may not take proceedings to enforce Clause 11.2 unless and until
it gives notice in writing to the Company in any manner as is permitted by
Clause 9, agreeing irrevocably to the provisions of Clause 12.

14  
CONFIDENTIALITY OF COMPANY INFORMATION

 
CEP agrees to take and to cause its affiliates to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information provided by the Company or any of its affiliates under this
Agreement or any other agreement or document relating to the Credit
(“Information”), and neither it nor any of its affiliates shall use any
Information other than in connection with or in enforcement of this Agreement
and the other agreements and  documents relating to the Credit except to the
extent the Information was or becomes generally available to the public other
than as a result of a disclosure by CEP or its affiliates, provided that such
source is not bound by a confidentiality agreement with Company known to CEP;
provided, however that CEP may disclose Information (i) at the request or
pursuant to any requirement of any governmental authority to which CEP is
subject, and will use all reasonable endeavours in each case to give prior
notice to the Company unless prohibited by law or the rules governing the
process requiring such disclosure; (ii) pursuant to subpoena or other court
process, and will use all reasonable endeavours to give prior notice to the
Company unless prohibited by law or the rules governing the process requiring
such disclosure; (iii) when required to do so in accordance with the provisions
of any applicable requirement of law, and will use all reasonable endeavours to
give prior notice to the Company unless prohibited by law or the rules governing
the process requiring such disclosure; (iv) to the extent reasonably required in
connection with the exercise of any remedy hereunder or any other agreement or
document relating to the Credit; and (v) to CEP’s independent auditors and other
professional advisors who agree or are directed to maintain the confidentiality
of the Information.  

 
 

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EXECUTED THIS DAY ABOVE WRITTEN BY:

 
 
Tim Courtis
Faramarz Romer

 
Greenlight Reinsurance, Ltd

 
/s/ Tim Courtis
/s/ Faramarz Romer

 
(Signature(s))

 
 
Dated August 20, 2010

AND
 

 
Niall Tuckey___________________________________

CITIGROUP EUROPE PLC

 
/s/ Niall Tuckey________________________________

 
(Signature(s))

 
Dated August 20, 2010

 
 

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SCHEDULE ONE

Form of Novation Notice for Clause 10

To:
[                      ]

 
Date:

Dear Sirs

Insurance Letters of Credit – Master Agreement (Form 3/CEP) dated [        ] and
made between Citibank Europe plc and [                        ] (the
"Agreement")

We refer to Clause 10 of the Agreement.  We hereby notify you that we wish to
exercise our option to novate under Clause 10 thereof so that with effect from
today's date the rights, liabilities and obligations of [name of Transferring
Bank] shall be novated to [name of Permitted Transferee] in the manner set out
in Clause 10 thereof.

The relevant address for the purposes of Clauses 3.1 and 9 is as follows:

[insert new address]

Yours faithfully

                                         
for and on behalf of
[TRANSFERRING BANK]

                                         
for and on behalf of
[PERMITTED TRANSFEREE]

[NAME OF COUNTERPARTY]:

(1)
acknowledges receipt of the Novation Notice; and

(2)
agrees that with effect from the date of the Novation Notice the rights,
liabilities and obligations of [                   ] are novated to
[                    ] in the manner set out in Clause 10 of the Agreement.

                                         
for and on behalf of
 
[NAME OF COUNTERPARTY]

 
 
 

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