Exhibit 10.3

 

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT (as amended or otherwise modified from time to time, this
“Agreement”) dated as of November 22, 2013 is among XL GROUP PLC, an Irish
public limited company (“XL Group”), XLIT LTD., an exempted company incorporated
in the Cayman Islands with limited liability (“XLIT”), X.L. AMERICA, INC., a
Delaware corporation (“XL America”), XL INSURANCE (BERMUDA) LTD, a Bermuda
limited liability company (“XL Insurance (Bermuda)”), XL RE LTD, a Bermuda
limited liability company (“XL Re”), XL RE EUROPE PLC, an Irish public limited
company (“XL Re Europe”), XL INSURANCE COMPANY PLC, a public limited company
domiciled in the United Kingdom (“XL Insurance”), XL INSURANCE SWITZERLAND LTD,
a company limited by shares organized under the laws of Switzerland (“XL
Switzerland”) and XL LIFE LTD, a Bermuda company (“XL Life” and together with XL
Group, XLIT, XL America, XL Insurance (Bermuda), XL Re, XL Re Europe, XL
Insurance and XL Switzerland, each an “Pledgor” and collectively, the
“Pledgors”) and The Bank of New York Mellon, not in its individual capacity but
solely as Collateral Agent (in such capacity, the “Collateral Agent”), for the
benefit of the Secured Parties (as defined below).

 

W I T N E S S E T H:

 

WHEREAS, the Pledgors, various financial institutions, the Collateral Agent and
JPMorgan Chase Bank, N.A., as Administrative Agent, have entered into a Secured
Credit Agreement dated as of November 22, 2013 (as amended or otherwise modified
from time to time, the “Credit Agreement”); and

 

WHEREAS, under the Credit Agreement, each of the Pledgors has agreed to grant to
the Collateral Agent security interests in each of their respective Accounts (as
defined below), and each of the Pledgors has agreed to deliver cash and Eligible
Assets to its Accounts from time to time in order to secure its obligations
under the Credit Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions. In addition to terms defined in the preamble and recitals, (a)
capitalized terms used but not defined herein have the respective meanings set
forth in the Credit Agreement, and (b) the following terms have the following
meanings (such definitions to be applicable to both the singular and plural
forms of such terms):

 

“Account” means, with respect to any Pledgor, the segregated securities account
(and includes any sub-accounts thereof and deposit accounts related thereto)
established and maintained in accordance with the Control Agreement and bearing
the account number specified on Schedule II thereto with respect to such Pledgor
(as the same may be redesignated, renumbered or otherwise modified from time to
time, and including any account opened in replacement of or in substitution for
such account).

 

“Cash Collateral Account” has the meaning given to it in Section 6(f).

 

“Collateral” has the meaning given to it in Section 2.

 

“Control Agreement” means the Collateral Account Control Agreement, dated as of
November 22, 2013, among the Pledgors, the Collateral Agent, as pledgee, the
Custodian, the Administrative Agent and The Bank of New York Mellon, as service
provider.

 

“Custodian” means The Bank of New York Mellon (or any successor thereto
permitted under the Control Agreement).

 

“Enforcement Event” means the occurrence and continuation of any Event of
Default under the Credit Agreement, which has not been waived by the
Administrative Agent; provided that no Enforcement Event shall be deemed to have
occurred with respect to XL Insurance Switzerland Ltd., XL Re Europe plc or XL
Insurance Company plc (collectively, the “European Entities”), unless such
European Entity is the defaulting party.

 

“Enforcement Event Notice” means a notice delivered from the Administrative
Agent to the Collateral Agent (with a copy to XL Group) stating (i) that an
Enforcement Event has occurred and is continuing and (ii) which Pledgors are
subject to such Enforcement Event.

 

“Investment Property” shall have the meaning provided in Article 8 or Article 9,
as applicable, of the UCC.

 

“L/C Report” shall have the meaning provided in the Control Agreement.

 

“Liabilities” means, with respect to any Pledgor and to the extent owing to one
or more Secured Parties, (i) all Obligations of such Pledgor, (ii) all
obligations of such Pledgor under this Agreement and the Control Agreement, and
(iii) all other obligations of such Pledgor directly related to any Letter of
Credit issued for the account of such Pledgor, in each case, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due.

 

“Notice of Exclusive Control” has the meaning given to it in Section 6(d).

 

“Obligations” means, with respect to any Pledgor, the Reimbursement Obligations
(and interest thereon) and the LC Disbursements (and interest thereon) made by
the Lenders on behalf of such Pledgor and all other amounts from time to time
owing to the Lenders, the Collateral Agent or the Administrative Agent by such
Pledgor under any of the Credit Documents.

 

“Proceeds” means all “proceeds” as such term is defined in Section 9-102(a)(64)
of the UCC.

 

“Secured Parties” means the Lenders, the Issuing Lenders, the Administrative
Agent and the Collateral Agent.

 

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

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2. Grant of Security Interest. As security for the payment of all of its
Liabilities (and not the Liabilities of any other Pledgor), each Pledgor hereby
assigns to the Collateral Agent, and grants to the Collateral Agent a continuing
security interest in, as agent for the benefit of the Secured Parties, all
right, title and interest of such Pledgor in the following property of such
Pledgor, whether now or hereafter existing or acquired, regardless of where
located (the “Collateral”):

 

(a) its Account and all cash, Eligible Assets and all other property (including
Investment Property) held therein or credited thereto from time to time;

 

(b) to the extent related to any property described in this Section 2, all
books, correspondence, credit files, records and other papers; and

 

(c) all Proceeds of any of the foregoing.

 

3. Warranties. Each Pledgor warrants that:

 

(a) such Pledgor is the sole entitlement holder of its Account and no other
Person (other than the Collateral Agent pursuant to this Agreement and the
Custodian pursuant to the Control Agreement) has control or possession of, or
any other interest in, such Account or any cash, Eligible Assets or other
property held in or credited to such Account and, without limiting the
foregoing, no control agreements exist with respect to its Collateral other than
the Control Agreement;

 

(b) such Pledgor is and will be the lawful owner of all of its Collateral, free
of all Liens, other than the security interest created hereunder and Liens in
favor of the Custodian, as securities intermediary, with respect to its Account;
and

 

(c) under the laws of the State of New York, (i) this Agreement creates a
security interest that is enforceable against the Collateral in which such
Pledgor has rights as of the date hereof and will create a security interest
that is enforceable against the Collateral in which such Pledgor hereafter
acquires rights at the time such Pledgor acquires any such rights and (ii) the
Collateral Agent has a perfected and first priority security interest in the
Collateral in which such Pledgor has rights as of the date hereof, and will have
a perfected and first priority security interest in the Collateral in which such
Pledgor hereafter acquires rights at the time such Pledgor acquires any such
rights, in each case securing the payment and performance of the Liabilities of
such Pledgor.

 

4. Agreements of the Pledgors; Control; Withdrawals.

 

(a) Each Pledgor will, at the Administrative Agent’s reasonable request, at any
time and from time to time, promptly execute and deliver to the Collateral Agent
such financing statements, amendments and other documents (including recording a
charge or filing (i) in the case of a Pledgor organized under the laws of a
state of the United States, in such state, (ii) in the case of a Pledgor not
incorporated or organized under the laws of a state of the United States, in the
District of Columbia and, if applicable, in the state of the United States in
which such Pledgor maintains its chief executive office as such office is
identified to the Collateral Agent by such Pledgor), and do such other related
acts as the Collateral Agent (acting at the written

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direction of the Administrative Agent) may reasonably request, in order to
establish and maintain valid, attached and perfected first-priority security
interests under the laws of the State of New York in the Collateral in favor of
the Collateral Agent, free and clear of all Liens except Liens in favor of the
Custodian.

 

(b) Each Pledgor irrevocably authorizes the Collateral Agent (at the request of
the Administrative Agent) at any time, and from time to time, to file and/or
record in any United States jurisdiction any initial financing statement and/or
charge and amendments thereto that (i) reasonably describes the Collateral and
(ii) contains any other information required by Section 5 of Article 9 of the
UCC of the jurisdiction wherein such financing statement or amendment is filed
regarding the sufficiency or filing office acceptance of any financing statement
or amendment, the applicable laws of the jurisdiction of organization of such
Pledgor with respect to recording a security interest. Each Pledgor acknowledges
that pursuant to the Control Agreement, the Collateral Agent has “control” (as
that term is used in Section 9-106 of the UCC) of any securities account
comprising such Pledgor’s Account pursuant to Sections 9-106(a), 9-106(c) and
8-106(d)(2) of the UCC and also “control” (as that term is used in Section 9-104
of the UCC) of any deposit account comprising such Pledgor’s Account pursuant to
Section 9-104 of the UCC.

 

(c) Subject to the terms of the Control Agreement, the parties agree that unless
and until such time as the Collateral Agent (acting at the written direction of
the Administrative Agent) shall deliver a Notice of Exclusive Control to the
Custodian in respect of the Account of a Pledgor (and at any time after the
written rescission by the Collateral Agent (acting at the written direction of
the Administrative Agent) of such Notice of Exclusive Control), and upon three
(3) Business Days’ notice to the Administrative Agent and the Collateral Agent,
each Pledgor shall have the right to instruct the Custodian to:

 

(i) substitute any cash or Eligible Assets held in the Account of such Pledgor
with other cash or Eligible Assets, provided that, (i) immediately after giving
effect to such substitution, the Borrowing Base of such Pledgor is at least
equal to the aggregate face value (or its Dollar Equivalent) of all Letters of
Credit issued on behalf of such Pledgor and (ii) such substitution shall precede
the related release; and

 

(ii) to the extent that the Borrowing Base of such Pledgor exceeds the aggregate
face value (or its Dollar Equivalent) of all Letters of Credit issued on behalf
of such Pledgor, transfer cash or Eligible Assets from such Account to any
account specified by such Pledgor in an amount equal to such excess, in each
case, in accordance with the terms of the Credit Agreement.

 

For the avoidance of doubt, any substituted (in the case of the foregoing clause
(i)) or withdrawn (in the case of the foregoing clause (ii)) cash or Eligible
Assets shall cease to secure the Liabilities and shall be released without
further action from the Liens granted to the Secured Parties hereunder.

 

(d) Each Pledgor agrees that, immediately upon the delivery of a Notice of
Exclusive Control with respect to its Account (but only for so long as such
Notice of Exclusive Control has

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not been rescinded), (i) it will not have the right to make or request any
withdrawal from such Account (including any sub-account or related account
thereof) or otherwise to direct the Custodian’s disposition of any Collateral of
such Pledgor, and (ii) the Collateral Agent has the exclusive right (acting at
the written direction of the Administrative Agent) to direct the Custodian’s
disposition of the Collateral of such Pledgor without further consent of or
notice to such Pledgor. No Pledgor shall give any consent or waiver, authorize
any assumption, make any modification or supplement, or take any other action
with respect to any Collateral in any manner inconsistent with the manner in
which such Pledgor acts with respect to investments of the same type held by
such Pledgor for its own account.

 

5. Voting Rights; Rights to Income.

 

(a) Each Pledgor agrees, immediately upon the delivery of a Notice of Exclusive
Control with respect to its Account (but for so long as such Notice of Exclusive
Control has not been rescinded), (a) that the Collateral Agent (acting at the
written direction of the Administrative Agent) may exercise (to the exclusion of
such Pledgor) the voting power and all other incidental rights of ownership with
respect to any Investment Property constituting such Pledgor’s Collateral, and
such Pledgor hereby grants the Collateral Agent an irrevocable proxy,
exercisable under such circumstances, to vote such Investment Property, and (b)
to promptly deliver to the Collateral Agent such additional proxies and other
documents as may be necessary to allow the Collateral Agent (acting at the
written direction of the Administrative Agent) to exercise such voting power.
The Collateral Agent agrees that unless and until a Notice of Exclusive Control
with respect to the Account of a Pledgor shall have been delivered by the
Administrative Agent to the Collateral Agent (and at any time after the
rescission of such Notice of Exclusive Control), such Pledgor will have the
exclusive voting power with respect to any Investment Property constituting
Collateral of such Pledgor and the Collateral Agent will, upon the written
request of such Pledgor and upon the written direction of the Administrative
Agent, promptly deliver such proxies and other documents, if any, as shall be
reasonably requested by such Pledgor and completed and provided for execution to
the Collateral Agent which are necessary to allow such Pledgor to exercise that
voting power.

 

(b) Unless and until such time as the Collateral Agent (acting at the written
direction of the Administrative Agent) shall deliver a Notice of Exclusive
Control to the Custodian in respect of the Account of a Pledgor (and at any time
after the rescission of such Notice of Exclusive Control), such Pledgor shall be
entitled to receive (by delivery of the Custodian to such Pledgor in accordance
with the Control Agreement) all cash dividend payments, interest payments and
other distributions of cash received by the Custodian in respect of any assets
of such Pledgor credited to the Account of such Pledgor free and clear of any
Lien granted under this Agreement; provided, that after receipt of any such
Notice of Exclusive Control (but only for so long as such Notice of Exclusive
Control has not been rescinded), the Collateral Agent (acting at the written
direction of the Administrative Agent) shall instruct the Custodian to deposit
and retain in the Account of such Pledgor all such cash dividend payments,
interest payments and other distributions of cash received by the Custodian in
respect of any assets of such Pledgor credited to such Account. At all times,
any distributions other than cash received by the Custodian in respect of any
Collateral of such Pledgor shall be delivered by the Custodian to the Account
related to such Collateral, and the security interest granted under this
Agreement with

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respect to Collateral credited to such Account shall automatically attach to
such distributions other than cash for the benefit of the Secured Parties.

 

6. Default and Remedies upon an Enforcement Event. (a) If the Collateral Agent
has received an Enforcement Event Notice with respect to one or more Pledgors
(which notice(s) have not been rescinded), then the Collateral Agent may (and
shall if so directed by the Administrative Agent in writing) apply all or any
portion of the credit balance of the Account of each such Pledgors to the
payment of the respective Liabilities of each such Pledgor (and not the
Liabilities of any other Pledgor).

 

(b) Without limiting the foregoing, if the Collateral Agent has received an
Enforcement Event Notice with respect to one or more Pledgors (which notice(s)
have not been rescinded), the Collateral Agent (acting at the written direction
of the Administrative Agent) may exercise all the rights of a secured party
under the UCC (whether or not in effect in the jurisdiction where such rights
are exercised) with respect to the Collateral of such Pledgors.

 

(c) Without limiting clause (a) above, each Pledgor agrees that, if the
Collateral Agent has received an Enforcement Event Notice with respect to it
(which notice has not been rescinded), then any item of its Collateral may be
sold for cash or on credit or for future delivery without assumption of any
credit risk, in any number of lots at the same or different times, at any
exchange, brokers’ board or elsewhere, by public or private sale, and at such
times and on such terms, as the Collateral Agent, acting at the written
direction of the Administrative Agent, shall elect. The Collateral Agent shall
give the applicable Pledgor such notice of any private or public sales as may be
required by the UCC or other applicable law. Each Pledgor recognizes that the
Collateral Agent may be unable to make a public sale of any or all of the
Collateral of such Pledgor, by reason of prohibitions contained in applicable
securities laws or otherwise, and expressly agrees that a private sale to a
restricted group of purchasers for investment and not with a view to any
distribution thereof shall be considered a commercially reasonable sale. The
Collateral Agent shall have the right upon any such public sale, and, to the
extent permitted by law, upon any such private sale, to purchase the whole or
any part of the Collateral of such Pledgor so sold, free of any right or equity
of redemption, which right or equity of redemption the applicable Pledgor hereby
releases to the extent permitted by law.

 

(d) Without limiting clause (a) above, if the Collateral Agent has received an
Enforcement Event Notice with respect to one or more Pledgors (which notice(s)
have not been rescinded), the Collateral Agent (acting at the written direction
of the Administrative Agent) shall have the right to deliver to the Custodian,
in accordance with the Control Agreement, a “Notice of Exclusive Control” in
respect of the respective Account of each such Pledgor (a “Notice of Exclusive
Control”) pursuant to which the Collateral Agent shall have the right (acting at
the written direction of the Administrative Agent), so long as the Enforcement
Event Notice in respect of any particular Pledgor has not been rescinded, to
execute and deliver to the Custodian any entitlement order, to execute and
deliver other instructions directing the disposition of the Collateral of any
such particular Pledgor, to vote and to give consents, ratifications and waivers
with respect to the Collateral of any such particular Pledgor and exercise all
rights, privileges or options pertaining to the Collateral of any such
particular Pledgor, as if the Collateral Agent were the absolute owner thereof;
provided, that the Collateral Agent hereby covenants that it will not deliver to
the Custodian a Notice of Exclusive Control

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with respect to the Account of any Pledgor or otherwise instruct the Custodian
to liquidate, transfer, restrict transfer of or otherwise act on the Collateral
of any Pledgor until it has received an Enforcement Event Notice in respect of
such Pledgor (which notice has not been rescinded).

 

(e) For the purpose of enabling the Collateral Agent to exercise its rights
under this Section 6 or otherwise in connection with this Agreement, each
Pledgor hereby constitutes and appoints the Collateral Agent (and any of the
Collateral Agent’s officers, employees or agents designated by the Collateral
Agent) its true and lawful attorney-in-fact, with full power and authority to
(i) sign and file any financing statements or other documents, papers or
instruments which must be executed or filed to perfect or continue perfection,
maintain the priority of or provide notice of the pledge of and security
interest in the Collateral of such Pledgor under the laws of the state of New
York, in each case at the written direction of the Administrative Agent and (ii)
if the Collateral Agent has received an Enforcement Event Notice in respect of a
Pledgor (which has not been rescinded), do any and all acts that the
Administrative Agent requests in writing (including deliver a Notice of
Exclusive Control pursuant to Section 6(f)) and things for and on behalf of the
Pledgors that are necessary or desirable to protect, collect, realize upon and
preserve the Collateral of such Pledgor, to enforce the Collateral Agent’s
rights with respect to the Collateral of such Pledgor and to accomplish the
purposes hereof. Such appointment by the Pledgors is coupled with an interest
and is irrevocable so long as all Liabilities of the Pledgors have not been paid
and performed in full. Each Pledgor ratifies, to the extent permitted by law,
all that the Collateral Agent shall lawfully and in good faith do or cause to be
done by virtue of and in compliance with this Section 6(e).

 

(f) To the extent that any of the Liabilities of a Pledgor may be contingent,
unmatured or unliquidated (including with respect to undrawn amounts under any
Letter of Credit) after such time as an Enforcement Event Notice with respect to
such Pledgor shall have been delivered to the Collateral Agent (and which has
not been rescinded), the Collateral Agent (acting at the written direction of
the Administrative Agent) (i) shall instruct the Custodian to retain the
proceeds of any sale, collection, disposition or other realization upon the
Collateral of such Pledgors (or any portion thereof) in a separate cash
collateral account related to the Account of such Pledgor (a “Cash Collateral
Account”) until such time as the Administrative Agent directs the Collateral
Agent to apply such proceeds to the Liabilities of such Pledgor (and not to the
Liabilities of any other Pledgor), and such Pledgor agrees that such retention
of such proceeds by the Collateral Agent shall not be deemed strict foreclosure
with respect thereto; (ii) may conclusively rely on any estimate made by the
Administrative Agent of the liquidated amount of any such contingent, unmatured
or unliquidated claims against or in respect of a Pledgor and apply the proceeds
of the Collateral of such Pledgor against such amount as directed by the
Administrative Agent; and (iii) otherwise may proceed in any other manner
permitted by applicable law. Each Pledgor agrees that any Cash Collateral
Account shall be a blocked account and that upon the irrevocable deposit of
funds into such account, such Pledgor shall not have any right of withdrawal
with respect to such funds and any funds deposited into a Cash Collateral
Account shall not be withdrawn. Each Pledgor hereby grants to the Collateral
Agent a continuing security interest in all right, title and interest of such
Pledgor in and to any Cash Collateral Account and the deposits and funds held
therein, and the Collateral Agent shall have all rights of a secured creditor
under the UCC with respect thereto. Each Pledgor irrevocably waives the right to
make any withdrawal from any Cash Collateral Account until payment in full

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in cash of all Liabilities of such Pledgor and the termination or expiration of
each Letter of Credit issued for the account of such Pledgor pursuant to the
Credit Agreement.

 

(g) Except as otherwise provided in this Agreement, EACH PLEDGOR HEREBY WAIVES,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN
CONNECTION WITH THE COLLATERAL AGENT’S TAKING POSSESSION OR THE COLLATERAL
AGENT’S DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY
PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each
Pledgor hereby further waives, to the extent permitted by law: (i) all damages
occasioned by such taking of possession or any such disposition except any
damages which are the direct result of the Collateral Agent’s gross negligence,
bad faith or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision), and (ii) all rights of
redemption, appraisement, valuation, stay, extension or moratorium now or
hereafter in force under any applicable law in order to prevent or delay the
enforcement of this Agreement or the absolute sale of the Collateral of such
Pledgor or any portion thereof, and each Pledgor, for itself and all who may
claim under it, insofar as it or they now or hereafter lawfully may, hereby
waives the benefit of all such laws. To the extent permitted by applicable law,
any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Pledgor therein and thereto,
and shall be a perpetual bar both at law and in equity against such Pledgor and
against any Persons claiming or attempting to claim the Collateral so sold,
optioned or realized upon, or any part thereof, from, through and under such
Pledgor.

 

7. Application of Proceeds; Releases; Etc. (a) The Collateral Agent shall apply
the proceeds of any sale or other disposition or collection of any Collateral of
any Pledgor to the Liabilities of such Pledgor in the order directed by the
Administrative Agent in accordance with the terms of the Credit Agreement.

 

(b) Upon release of the Collateral of each Pledgor pursuant to Section 10.15(b)
of the Credit Agreement, the Collateral Agent (acting at the written direction
of the Administrative Agent) shall (i) deliver or pay, or cause the Custodian to
deliver or pay in accordance with the Control Agreement, to the account
specified by each Pledgor (or its designee) any surplus Collateral held in the
Account of such Pledgor (or any proceeds thereof held by the Collateral Agent
elsewhere), and (ii) execute and deliver any financing statement amendments or
termination statements or such other documents, instruments, notices,
supplements or other agreements as may be provided to it by the Pledgors to
terminate any financing statements or evidence the termination thereof or any
other documents filed with respect to, or otherwise relating to, the Collateral.
The obligations of the Collateral Agent under this Section 7(b) shall survive
the termination of this Agreement.

 

8. General. (a) All notices and other communications provided for hereunder
shall be in accordance with Section 10.01 of the Credit Agreement.

 

(b) Each Pledgor agrees to pay all expenses, including reasonable attorney’s
fees and charges (including time charges of attorneys who are employees of the
Collateral Agent), paid or incurred by the Collateral Agent in endeavoring to
collect the Liabilities of such Pledgor, or any

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part thereof, and in enforcing this Agreement against such Pledgor, and such
obligations will themselves be Liabilities.

 

(c) No delay on the part of the Collateral Agent in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
the Collateral Agent of any right or remedy shall preclude other or further
exercise thereof or the exercise of any other right or remedy.

 

(d) This Agreement shall remain in full force and effect until the Commitments
have terminated, all Liabilities have been paid in full and each Letter of
Credit has terminated or expired pursuant to the Credit Agreement. At such time,
the Administrative Agent in writing will instruct the Collateral Agent to
provide the Custodian with written instructions in the form required to
terminate the Control Agreement. If at any time all or any part of any payment
theretofore applied by the Collateral Agent to any of the Liabilities is or must
be rescinded or returned by the Collateral Agent for any reason whatsoever
(including the insolvency, bankruptcy or reorganization of any Pledgor), such
Liabilities shall, for the purposes of this Agreement, to the extent that such
payment is or must be rescinded or returned, be deemed to have continued in
existence, notwithstanding such application by the Collateral Agent, and this
Agreement shall continue to be effective or be reinstated, as the case may be,
as to such Liabilities, all as though such application by the Collateral Agent
had not been made.

 

(e) Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

 

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

 

(g) The rights and privileges of the Collateral Agent hereunder shall inure to
the benefit of its successors and assigns. No Person other than the parties
hereto is an intended or third-party beneficiary of any of the provisions of
this Agreement.

 

(h) This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same Agreement.

 

(i) Each party hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the exclusive jurisdiction of the Supreme Court of the
State of New York sitting in the Borough of Manhattan in the City of New York
and of the United States District Court of the Southern District of New York,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be

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enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, the Collateral Agent or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement against any Pledgor or
its properties in the courts of any jurisdiction.

 

(j) Neither the Collateral Agent nor the Administrative Agent shall be
responsible or liable for any failure or delay in the performance of its
obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control, including acts of
God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage;
epidemics; riots; interruptions, loss or malfunctions of utilities, computers
(hardware or software) or communications service; accidents; labor disputes;
acts of civil or military authority; governmental actions; or inability to
obtain labor, material, equipment or transportation.

 

(k) XL Group agrees to indemnify the Collateral Agent against and to hold the
Collateral Agent harmless from all costs, expenses, damages, liabilities or
claims, including reasonable fees of counsel, including any claim by any Pledgor
or the Administrative Agent, that are sustained by the Collateral Agent as a
result of the Collateral Agent’s action or inaction in connection with this
Agreement, except to the extent arising out of the Collateral Agent’s gross
negligence, bad faith or willful misconduct. The foregoing indemnity shall be a
continuing obligation of the Pledgors and their respective successors and
assigns, notwithstanding the termination of this Agreement.

 

(l) The Collateral Agent may conclusively rely on an Enforcement Event Notice
received from the Administrative Agent, without any further inquiry or
investigation of any kind, for so long as it has not received written notice of
the rescission of such Enforcement Event Notice by and from the Administrative
Agent. Subject to the terms of the Credit Agreement, at any such time after its
initial delivery of an Enforcement Event Notice in respect of a Pledgor to the
extent no Event of Default remains continuing with respect to such Pledgor, the
Administrative Agent shall deliver a notice of rescission to the Collateral
Agent informing it that the Enforcement Event Notice has been rescinded.

 

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

 

(n) To the extent that any Pledgor has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
or execution, on the ground of sovereignty or otherwise) with respect to itself
or its property, it hereby irrevocably waives, to the fullest extent permitted
by applicable law, such immunity in respect of its obligations under this
Agreement.

 

(o) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR

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RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

(p) The obligations of each Pledgor hereunder shall remain in full force and
effect without regard to, and shall not be impaired by any exercise or
non-exercise, or any waiver of, any right, remedy, power or privilege under or
in respect of this Agreement or any other Credit Document.

 

(q) Any Person that is required to execute a counterpart of this Agreement after
the date hereof pursuant to the requirements of the Credit Agreement or any
other Credit Document shall become a Pledgor hereunder by (x) executing a
counterpart hereof and delivering same to the Collateral Agent, or by executing
an assumption agreement in form and substance reasonably satisfactory to the
Collateral Agent (acting at the written direction of the Administrative Agent),
(y) delivering supplements to Schedule I and II to the Control Agreement as are
necessary to cause such schedules to be complete and accurate with respect to
such additional Pledgor on such date and complying with Section 10.14 of the
Credit Agreement and (z) taking all actions as specified in this Agreement as
would have been taken by such Pledgor had it been an original party to this
Agreement, in each case with all documents required above to be delivered to the
Collateral Agent and with all documents and actions required above to be taken
to the reasonable satisfaction of the Collateral Agent (acting at the written
direction of the Administrative Agent).

 

(r) By the execution and delivery of this Agreement, each Pledgor acknowledges
that it has by a separate written instrument, designated and appointed CT
Corporation System, 111 Eighth Avenue, 13th floor, New York, New York 10011 (or
any successor entity thereto), as its authorized agent upon which process may be
served in any suit or proceeding arising out of or relating to this Agreement
that may be instituted in any federal or state court in the State of New York.
Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 10.01 of the Credit Agreement. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

 

(s) The parties hereto acknowledge and agree that any Guarantor may, but is not
required to, deliver any cash or Eligible Assets to the Account of any Pledgor
for the purpose of securing the Liabilities of such Pledgor and that upon any
such cash or Eligible Assets being credited to the Account of any Pledgor, such
cash and Eligible Assets shall be deemed to be Collateral of such Pledgor.

 

(t) Notwithstanding anything herein to the contrary, each party hereto agrees
that the Administrative Agent may provide multiple directions and/or
instructions to the Collateral Agent

11

in a single writing; provided that no such instructions or directions shall
relate to contingent events in the future.

 

[Signature pages follow]

12

IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.

 

  PLEDGORS:           Signed and Delivered as a Deed     for and on behalf of  
  XL GROUP PLC,     by its duly authorized attorney     in the presence of:    
      XL GROUP PLC             By /s/ Simon Rich       Name: Simon Rich      
Title:   Global Treasurer             /s/ Candida Medeiros     Witness     Name:
Candida Medeiros     Title:   Executive Assistant  

 

[Signature Page to Pledge Agreement]

 

  XLIT LTD.             By /s/ Simon Rich       Name: Simon Rich       Title:
  Director             By /s/ Robert Hawley       Name: Robert Hawley      
Title:   Authorized Officer  

 

[Signature Page to Pledge Agreement]

 

  X.L. AMERICA, INC.             By /s/ Richard G. McCarty       Name: Richard
G. McCarty       Title:   Senior Vice President  

 

[Signature Page to Pledge Agreement]

 

  XL INSURANCE (BERMUDA) LTD             By /s/ Simon Rich       Name: Simon
Rich       Title:   Director  

 

[Signature Page to Pledge Agreement]

 

  XL RE LTD             By /s/ Mark Twite       Name: Mark Twite       Title:
  Senior Vice President and
            Chief Financial Officer  

 

[Signature Page to Pledge Agreement]

 

  Signed and Delivered as a Deed     for and on behalf of     XL RE EUROPE PLC,
    by its duly authorized attorney     in the presence of:             By /s/
David Watson       Name: David Watson       Title:   Attorney             By /s/
Michele Mulready     Witness       Name: Michele Mulready       Title:   Company
Secretary  

 

[Signature Page to Pledge Agreement]

 

  XL INSURANCE COMPANY PLC             By /s/ Paul Bradbrook       Name: Paul
Bradbrook       Title:   Director  

 

[Signature Page to Pledge Agreement]

 

  XL INSURANCE SWITZERLAND LTD             By /s/ Daniel Maurer      
Name: Daniel Maurer       Title:   Chairman             By /s/ Bruno Länzlinger
      Name: Bruno Länzlinger       Title:   Chief Executive Officer  

 

[Signature Page to Pledge Agreement]

 

  XL LIFE LTD             By /s/ Seamus MacLoughlin       Name: Seamus
MacLoughlin       Title:   President  

 

[Signature Page to Pledge Agreement]

 

  COLLATERAL AGENT:           THE BANK OF NEW YORK MELLON             By /s/
Jose Alcantara       Name: Jose Alcantara       Title:   Vice President  

 

  Address:  The Bank of New York Mellon       101 Barclay Street       New York,
New York 10286       Attn: Insurance Trust Group             Facsimile Number:
(732) 667-9536  

 

[Signature Page to Pledge Agreement]

 

Acknowledged and, with respect to Section 8(l), agreed to by:

 

JPMorgan Chase Bank, N.A.,   as Administrative Agent         By: /s/ Kristen M.
Murphy     Name: Kristen M. Murphy     Title:   Vice President  

 

[Signature Page to Pledge Agreement]