Exhibit 10.55


EXECUTION COPY


PLEDGE AGREEMENT


PLEDGE AGREEMENT, dated as of 11 November 2009 (this “Agreement”) made among


	
  

 	
  

 	
  

 
	
 (1)

 	
 XL Insurance
 (Bermuda) Ltd, a company organized and existing under the laws
 of Bermuda (with company registration number 12809) whose address
 of its registered or principal office is at XL House, One Bermudiana Road,
 Hamilton HM08, Bermuda (the “Applicant’);

 
	
  

 	
  

 	
  

 
	
 (2)

 	
 XL Re Ltd a company
 organized and existing under the laws of Bermuda (with company registration number 21291) whose
 address of its registered or principal office is at XL House, One Bermudiana Road, Hamilton HM08, Bermuda (the “Second Pledgor”);

 
	
  

 	
  

 	
  

 
	
  

 	
 (the Applicant and the Second
 Pledgor, together referred to as the “Original Pledgors”, and, together with any Additional Pledgor from time to
 time becoming party hereto, the “Pledgors”); and

 
	
  

 	
  

 	
  

 
	
 (5)

 	
 CITIBANK EUROPE PLC (the “Pledgee”). 

 
	
  

 	
  

 	
  

 
	
 PRELIMINARY STATEMENTS.

 
	
  

 	
  

 	
  

 
	
 (1)

 	
  

 	
 The Applicant and the Pledgee have
 entered into the Master Agreement (as defined in Exhibit A) pursuant to
 which the Pledgee may from time to time in its sole discretion issue or procure the issuance of, for
 the account of the Applicant, letters of credit or similar or equivalent instruments (each a “Credit” and, collectively, the “Credits”).

 
	
  

 	
  

 	
  

 
	
 (2)

 	
  

 	
 Each Pledgor has agreed to
 collateralize the obligations of the Applicant owed to the Pledgee that result from time to
 time under the Master Agreement and in respect of the Credits issued thereunder whether now existing or from time to time
 hereafter incurred or arising, as such obligations are more fully
 defined in Section 3 of this Agreement as the Secured Obligations.

 
	
  

 	
  

 	
  

 
	
 (3)

 	
  

 	
 The Pledgors and the Pledgee desire to
 execute and deliver this Agreement for the purpose of securing the
 Secured Obligations and subjecting the property hereinafter described to the Lien of this
 Agreement as security for the performance of the Secured Obligations.

 
	
  

 	
  

 	
  

 
	
 (4)

 	
  

 	
 The Pledgors have each opened an
 account with Bank of New York Mellon (the  “Securities
 Intermediary”) at its office at One BNY Mellon
 Center, 500 Grant Street, AIM 151-1035,
 Pittsburgh, PA 15235 U.S.A. as set out in Schedule 7 (as may be
 amended from time to time), and
 each Additional Pledgor will open such an account upon entering into this Agreement (in relation to each
 Pledgor, and together with any successor account or additional account
 (including any account established pursuant to Section 4(e) hereof) opened
 and maintained for this purpose, that Pledgor’s “Account”).

 
	
  

 	
  

 	
  

 
	
 (5)

 	
  

 	
 Each of the Pledgors, the Pledgee,
 and the Securities Intermediary have entered into, and each
 Additional Pledgor will enter into, the Control Agreement (as defined in Exhibit
 A) pursuant to which the
 Accounts and the Collateral will be administered and maintained.

 



          NOW,
THEREFORE, in consideration of the premises and in order to induce the Pledgee
to enter into transactions with and to provide services to the Applicant, the
parties hereto hereby agree as follows:





Section 1. Defined Terms Except as otherwise
expressly provided herein, capitalized terms used herein shall have the
meanings assigned to such terms in Exhibit A.


Section 2. Grant of Security. Subject to and in
accordance with the provisions of this Agreement, each Pledgor
hereby pledges and grants to the Pledgee a first priority security interest in
and a Lien on all of that Pledgor’s right, title and interest, whether now
owned or hereafter acquired, in all of the following (collectively,
the “Collateral”):


	
  

 	
  

 
	
 (i)

 	
 that Pledgor’s Account;

 
	
  

 	
  

 
	
 (ii)

 	
 the Securities and any Instruments or
 other Financial Assets from time to time credited to that Pledgor’s
 Account (the “Pledged
 Securities”) including,
 without limitation, any Security Entitlement in respect of that
 Pledgor’s Account, the Pledged Securities or any of them, and any cash from
 time to time credited to that Pledgor’s Account;

 
	
  

 	
  

 
	
 (iii)

 	
 all additional Investment Property
 (including without limitation) Securities, Security Entitlements, Financial
 Assets, or other property and all funds, cash or cash equivalents (together
 with any applicable
 Account or Securities Account of that Pledgor) from time to time received,
 receivable or otherwise distributed in respect of or in exchange or
 substitution for any other Collateral (all such
 funds, cash or cash equivalents to be Financial Assets for the purposes of
 this Agreement; and

 
	
  

 	
  

 
	
 (iv)

 	
 all Proceeds (including, without
 limitation, cash Proceeds) of any or all of the foregoing, including without limitation, Proceeds that
 constitute property of the types described in clauses (i), (ii) and (iii)
 above.

 



Section 3. Security for Obligations. In relation to
each Pledgor, this Agreement (and the Collateral pledged by that Pledgor hereunder)
secures the payment of all obligations of the Applicant now or hereafter
existing under the Master Agreement (including all contingent obligations with
respect to Credit(s) issued or procured for issuance by the Pledgee for the
Applicant’s account or the account of an
affiliate of the Applicant pursuant to the terms of the Master Agreement), and
further secures the payment of all present and future obligations of
each Pledgor under this Agreement, in each case, whether direct or indirect, absolute or contingent, and whether for
principal, interest, fees, expenses or otherwise, including the payment in
accordance with terms hereof and thereof of any and all expenses (including
reasonable counsel fees and expenses) incurred by the Pledgee in enforcing any
rights under this Agreement and the Master Agreement (all such obligations
being the “Secured
Obligations”). In
relation to each Pledgor, this Agreement is intended to convey to the Pledgee,
and each Pledgor hereby grants to the Pledgee, the right and power to exercise
exclusive control over all Security Entitlements in, and the sole right and power to direct
dispositions of all cash deposits in that Pledgor’s Account for the purposes of sections 8-106, 9-106 and 9-104 of the
NYUCC. For the avoidance of doubt, and notwithstanding anything in this
Agreement or the Master Agreement to the contrary, all amounts paid by any Pledgor, realised from a Pledgor’s
Collateral or otherwise applied in respect of a Pledgor to the Secured Obligations shall be applied without
duplication of any such amounts paid or applied with respect to the other Pledgors and shall, to the
extent so paid or applied, satisfy the obligations of all Pledgors hereunder and under the Master Agreement
with respect to such Secured Obligations.


Section 4. Delivery and Maintenance of Security Collateral


	
  

 	
  

 
	
 (a)

 	
 In connection with
 the issuance of Credits from time to time pursuant to the terms of the Master
 Agreement, the Pledgors (in such
 combination as they may determine in their sole discretion) shall cause cash and/or Securities of the type
 specified in Schedule 1 (the “Qualifying Collateral”) to be credited to the Accounts in accordance
 with the Control Agreement as Collateral so that the Letter of Credit Value
 of such Qualifying Collateral as of the date of issuance of such Credit or Credits shall, in
 the aggregate with respect to all Pledgors, equal or exceed an amount equal to the aggregate face
 amount of the then outstanding Credits, all as

 


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 determined in accordance with the provisions of this
 Agreement, including Schedule 1 and Schedule 2 hereto (the “Required Account Value”).

 
	
  

 	
  

 
	
 (b)

 	
 Pledgors may pledge additional
 Qualifying Collateral hereunder at any time. Unless and until an Event of Default
 shall exist and be continuing, each Pledgor may transfer, sell, exchange,
 settle, withdraw, redeem or invest that Pledgor’s Collateral
 from that Pledgor’s Account or substitute other Collateral for any
 Collateral then held in that Pledgor’s Account (and the security interest hereunder in
 favor of the Pledgee in any such Collateral removed from an Account shall automatically,
 without further action on the part of any party, be released), provided that
 upon giving effect to such transaction (and any contemporaneous
 transactions initiated by other Pledgors) the aggregate Letter
 of Credit Value of the Collateral credited to all Accounts shall equal or
 exceed an amount equal to the Required Account Value. Notwithstanding the
 foregoing or anything to the contrary in this Agreement, each
 Pledgor may at any time cause cash to be paid from that Pledgor’s
 Account to the Pledgee for application to the payment of outstanding Secured
 Obligations.

 
	
  

 	
  

 
	
 (c)

 	
 The Pledgee agrees that in the event
 that it delivers a written instruction to the Securities Intermediary
 under Article lll(3)(ii) of the Control Agreement requiring the Pledgee’s
 prior written approval to any transfer, withdrawal, sale, settlement,
 redemption, investment or substitution (each a “trade”) undertaken by
 any Pledgor in accordance with the foregoing clause (b), the Pledgee shall
 not unreasonably withhold or delay such written approval so as to enable the
 trade to settle in the ordinary course of business.

 
	
  

 	
  

 
	
 (d)

 	
 In the event that the aggregate
 Letter of Credit Value of the Collateral credited to all Accounts shall be less
 than the Required Account Value for any reason, the Pledgors shall, within 5 Business Days after receipt of
 written notice from the Pledgee, cause additional Qualifying Collateral to be credited to one or more
 Accounts to the extent necessary to cause the aggregate Letter of
 Credit Value of the Collateral credited to all Accounts to equal or exceed
 the Required Account Value.

 
	
  

 	
  

 
	
 (e)

 	
 In relation to any Pledgor, upon the
 occurrence of a Net Worth Deficiency (whether or not subsequently cured) or upon the
 announcement by any Pledgor of its decision to cease writing insurance or reinsurance business, the Pledgee
 may upon written notice to that Pledgor transfer, or require that
 Pledgor as promptly as reasonably practicable after receipt of such written
 notice to transfer, that Pledgor’s
 Collateral from that Pledgor’s Account to a securities account at Citibank,
 N.A. (London, England branch), and to execute as promptly as reasonably
 practicable after receipt of such written
 notice a charge governed by English law (in substantially the customary
 form used by the Pledgee, a copy of which charge has been provided to the
 relevant Pledgor) in substitution for or
 in addition to this Agreement.

 
	
  

 	
  

 
	
 Section 5. Use of Proceeds
 In relation to each Pledgor, Proceeds that are received in respect of any of the
 Collateral of that Pledgor shall be held as cash Collateral of that Pledgor
 as provided in Section 2 of this Agreement, but
 subject always to the Pledgors’ rights under Section 4(b) of this Agreement and
 the other terms of this Agreement.

 
	
  

 	
  

 
	
 Section 6. Representations. Warranties and Covenants

 
	
  

 	
  

 
	
 Each Pledgor represents, warrants and
 covenants as follows:

 
	
  

 	
  

 
	
 (a)

 	
 It is duly organized and validly existing under the laws
 of the jurisdiction of its organisation and has
 all requisite corporate power and authority (including, without limitation,
 all governmental licenses, permits
 and other approvals except where such failure would not have a material adverse
 effect on its business) to own or lease and operate its properties and to
 carry on its business as now conducted and
 as proposed to be conducted.

 


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 (b)

 	
 The execution, delivery and performance by it of this
 Agreement, and the consummation of the transactions
 contemplated hereby, are within its corporate powers and have been duly
 authorized by all necessary
 corporate action.

 
	
  

 	
  

 
	
 (c)

 	
 All of its Collateral consisting of
 certificated securities and instruments has been delivered to the Pledgee or
 the Securities Intermediary with appropriate instruments of endorsement in
 blank.

 
	
  

 	
  

 
	
 (d)

 	
 No consent of any other Person and
 no authorization, approval or other action by, and no notice to or filing with, any
 governmental authority or regulatory body or other third party is required
 for any of (i) for the grant by it of the security interest granted hereby,
 for the pledge by it of its Collateral
 pursuant hereto or for the execution, delivery or performance of this
 Agreement by it, (ii) for the
 perfection or maintenance of the pledge and security interest created hereby
 (including the first priority nature of such pledge or security
 interest), save that it may be preferable to register this Agreement in the Register of Charges in Bermuda (with
 respect to Pledgors organized in
 Bermuda), and the actions described in Section 4 of this Agreement
 with respect to its Collateral,
 which actions have been or, at the times required pursuant to Section 4,
 will be taken and are, or at such times or times will be, in full
 force and effect or (iii) for the exercise by the Pledgee of its rights provided for in this Agreement or the
 remedies in respect of its Collateral pursuant to this Agreement,
 except as may be required in connection with the disposition of any portion of its Collateral by laws affecting the
 offering and sale of securities generally.

 
	
  

 	
  

 
	
 (e)

 	
 The execution, delivery and
 performance by it of this Agreement and the consummation of the transactions
 contemplated hereby, (i) do not violate any provision of any law, rule or
 regulation applicable
 to it; (ii) do not and will not conflict with its charter or by-laws or
 substantively similar constitutive
 documents; or (iii) do not and will not conflict with or result in a breach
 of, or constitute a default under,
 or result in the creation or imposition of any Lien (other than the Lien in favour of the Pledgee created hereby) upon any
 of its property or assets (excluding Collateral) of itself or any of
 its subsidiaries, under any indenture, loan agreement, mortgage, deed of trust
 or other instrument or agreement to which
 it or any of its subsidiaries may be or become a party or by which it
 may be or become bound or to which its property or assets or any of its
 subsidiaries may be or become subject,
 except as would not have a material adverse effect on such Pledgor or the rights of the Pledgee hereunder.

 
	
  

 	
  

 
	
 (f)

 	
 It is the legal and beneficial owner
 (or, in the case of Financial Assets that underlie Security Entitlements
 from time to time credited to the Accounts, the beneficial owner) of the
 Collateral, and has and shall at all times have rights in, and
 good and marketable title to, the Collateral, free and clear of all Liens and
 “adverse claims” (as such term is defined in Section 8-102(a)(1) of the
 NYUCC), save as exist under the Control Agreement or as may have been
 disclosed by it to the Pledgee in writing prior to the date of this
 Agreement. Liens in favour of Citibank, N.A. securing its reimbursement
 obligations to Citibank, N.A. in connection with the issuance of letters of credit
 shall be deemed to have been disclosed in writing to the Pledgee. No
 effective financing statement or other instrument similar in effect
 covering all or any part of the Collateral or listing it or any trade
 name of it as debtor with respect to the Collateral is on file in any
 recording office, except such as may have been filed in favour of
 the Pledgee.

 
	
  

 	
  

 
	
 (g)

 	
 It undertakes upon a Change of
 Control promptly to inform the Pledgee of such fact and to enter into such additional documentation
 as is reasonably required by the Pledgee in order to ensure that the rights of the Pledgee under this
 Agreement are in no way prejudiced, including but not limited to, in the case of the Applicant, the
 entering into of any new Master Agreement on substantially the same terms as those existing at such time.

 
	
  

 	
  

 
	
 (h)

 	
  (i) This Agreement
 and the pledge of its Collateral pursuant hereto create a valid security
 interest in its Collateral, securing the payment of the Secured Obligations,
 (ii) this Agreement and the Control Agreement
 are sufficient to perfect such security interest in its Account and all
 Financial Assets and cash from time to time credited thereto, and (iii)
 assuming the Pledgee has no notice of any Liens or “adverse claims”
 (as such term is defined in Section 8-102(a)(1) of the NYUCC)

 


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 with respect to its Collateral,
 the Pledgee will take its Collateral free and clear of any Liens and adverse
 claims.

 
	
  

 	
  

 
	
 (i)

 	
 No Pledgor is, or is “controlled
 by”, an “investment company”, within the meaning of such terms in the
 Investment Company Act of 1940, as amended, and no Pledgor is otherwise
 subject to regulation under said Act.

 



Section 7. Further Assurances


	
  

 	
  

 
	
 (a)

 	
 Each Pledgor agrees that from
 time to time and at its own cost, it will promptly execute and deliver, or
 otherwise authenticate, all further instruments and documents, and take all
 further action, that may be necessary, or that the Pledgee may reasonably
 request, in order to continue, perfect and protect any pledge or security
 interest granted or purported to be granted hereby or to enable the Pledgee
 to exercise and enforce its rights and remedies hereunder with respect to any
 of its Collateral. Without limiting the generality of the foregoing, each
 Pledgor will execute and file such other instruments or notices, as may be
 necessary, or as the Pledgee may reasonably request, in order to perfect and
 preserve the pledge and security interest granted or purported to be granted
 hereby, and will furnish to the Pledgee at or prior to the establishment of
 the initial Credit or Credits under the Master Agreement, and thereafter from
 time to time as the Pledgee may reasonably request upon the occurrence of a
 change in law, addition of an Additional Pledgor hereunder or other
 appropriate change in circumstances, an opinion of counsel, from outside
 counsel reasonably acceptable to the Pledgee, to the effect that the Pledgee
 has a perfected security interest in the Collateral granted hereunder.

 
	
  

 	
  

 
	
 (b)

 	
 Each Pledgor will furnish to the
 Pledgee from time to time statements and schedules further identifying and
 describing its Collateral and such other reports in connection with its
 Collateral as the Pledgee may reasonably request, all in reasonable detail.

 



Section 8. Post-Closing Changes Immediately after
any change in its name, type of organization, jurisdiction of organization,
organizational identification number or location of its principal or registered
office from those set forth on the first page of this Agreement, such Pledgor
will inform Pledgee of such fact and take all action reasonably required by the
Pledgee for the purpose of perfecting or protecting the security interest
granted by this Agreement. No Pledgor will become bound by a security agreement
authenticated by another Person (determined as provided in Section 9-203(d) of
the NYUCC) in relation to its Collateral. Each Pledgor will hold and preserve
its records relating to its Collateral and will permit representatives of the
Pledgee at any time during normal business hours on the Pledgor being given 5
Business Days prior notice of such inspection in writing to inspect and make
abstracts from such records and other documents. If any Pledgor does not have
an organizational identification number and later obtains one, it will
forthwith notify the Pledgee of such organizational identification number.


Section 9. Entitlement Order The Pledgee covenants
and agrees, for the benefit of each Pledgor, that it will not (i) originate any
Entitlement Order or (ii) deliver any Notice of Exclusive Control (as defined
in the Control Agreement) to the Securities Intermediary unless and until an
Event of Default has occurred and is continuing.


Section 10.
Distributions Other than
upon and during the continuance of an Event of Default,


	
  

 	
  

 	
  

 
	
  

 	
 (i) 

 	
 each Pledgor shall be entitled to
 exercise any and all voting and other consensual rights pertaining to its
 Collateral or any part thereof for any purpose; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii) 

 	
 any and all distributions paid in
 respect of the Pledged Securities shall be paid into the relevant Pledgor’s
 Account (but subject always to the Pledgors’ rights under Section 4(b) of
 this Agreement and the other terms of this Agreement);

 



In each
case as further provided for in the Control Agreement.


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Section 11.
Transfer and Other Liens Except
in accordance with the provisions of Section 4 hereof, no Pledgor shall
(i) sell, assign or otherwise dispose of, or grant any option with respect to,
any of its Collateral, or (ii) create or suffer to exist any Lien upon or with
respect to any of its Collateral, including any right to give any Entitlement
Order with respect to its Collateral, except for the pledge and security
interest created by this Agreement.


Section 12.
Pledgee Appointed Attorney-in-Fact
Each Pledgor hereby irrevocably appoints the Pledgee as its
attorney-in-fact, with full authority upon the occurrence and during the
continuance of an Event of Default, in the place and stead of that Pledgor and
in the name of that Pledgor or otherwise, from time to time during the
continuance of such Event of Default, in the Pledgee’s discretion, to take any
action and to execute any instrument that the Pledgee may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:


	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 to ask for, demand, collect, sue
 for, recover, compromise, receive and give acquittance and receipts for
 moneys due and to become due under or in respect of any of its Collateral,

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 to receive, indorse and collect
 any drafts or other instruments or documents, in connection with clause (a)
 above, and

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 to file any claims or take any
 action or institute any proceedings that the Pledgee may deem necessary for
 the collection of any of its Collateral or otherwise to enforce the rights of
 the Pledgee with respect to any of its Collateral.

 



Section 13.
Pledgee May Perform If any
Pledgor fails to perform any agreement contained herein within ten Business
Days of a notice from the Pledgee to do so, the Pledgee may, but without any
obligation to do so and without further notice, itself perform, or cause
performance of, such agreement, and the expenses of the Pledgee incurred in
connection therewith shall be payable by that Pledgor under Section 17(b)
hereof. Notwithstanding any of the foregoing, if at any time an Event of
Default has occurred and is continuing, the Pledgee will not be required to
provide the Pledgor with any such notice and the Pledgee may, but without any
obligation to do so itself perform, or cause performance of, such agreement,
and the expenses of the Pledgee incurred in connection therewith shall be payable
by that Pledgor under Section 17(b) hereof.


Section 14.
The Pledgee’s Duties The
powers conferred on the Pledgee hereunder are solely to protect its interest in
any Pledgor’s Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Pledgee
shall have no duty as to any Collateral, as to ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Pledgee has or is deemed
to have knowledge of such matters, or as to the taking of any necessary steps
to preserve rights against any parties or any other rights pertaining to any
Collateral. The Pledgee shall be deemed to have exercised reasonable care in
the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the Pledgee
accords its own property.


Section 15.
Security Interest Absolute The
obligations of each Pledgor under this Agreement are independent of the Secured
Obligations and any agreement with respect to the Secured Obligations, and a
separate action or actions may be brought and prosecuted against any Pledgor to
enforce this Agreement, irrespective of whether any action is brought against
the Applicant under the Master Agreement or whether that Pledgor is joined in
any such action or actions. All rights of the Pledgee and the pledge and
security interest hereunder, and all obligations of each Pledgor hereunder,
shall be irrevocable, absolute and unconditional, irrespective of, and each
Pledgor irrevocably waives (to the maximum extent permitted by applicable law)
any defenses it may now have or may hereafter acquire in any way relating to,
any or all of the following:


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 (a)

 	
 any lack of validity or
 enforceability of this Agreement, the Master Agreement or any other agreement
 or instrument relating thereto;

 
	
  

 	
  

 
	
 (b)

 	
 any change in the time, manner or
 place of payment of, or in any other term of, all or any of the Secured
 Obligations or any other amendment or waiver of or any consent to any
 departure from this Agreement or the Master Agreement, including, without
 limitation, any increase in the Secured Obligations;

 
	
  

 	
  

 
	
 (c)

 	
 any taking, exchange, release or
 non-perfection of any other collateral, or any taking, release or amendment
 or waiver of or consent to departure from any guaranty for all or any of the
 Secured Obligations;

 
	
  

 	
  

 
	
 (d)

 	
 any manner of application of its
 Collateral, or Proceeds thereof, to all or any of the Secured Obligations, or
 any manner of sale or other disposition of any of its Collateral for all or
 any of the Secured Obligations or any other assets of any Pledgor or any of
 its subsidiaries;

 
	
  

 	
  

 
	
 (e)

 	
 any change, restructuring or
 termination of the corporate structure or existence of any Pledgor or any of
 its subsidiaries; or

 
	
  

 	
  

 
	
 (f)

 	
 any other circumstance that might
 otherwise constitute a defense available to, or a discharge of, any Pledgor
 in its capacity as such.

 



Section 16.
Remedies In relation to any
Pledgor, if an Event of Default shall have occurred and be continuing:


	
  

 	
  

 
	
 (a)

 	
 The Pledgee may exercise in
 respect of that Pledgor’s Collateral, in addition to other rights and
 remedies provided for herein or otherwise available to it, all the rights and
 remedies of a secured party upon default under the NYUCC and also may without
 notice except as specified below, sell that Pledgor’s Collateral or any part
 thereof in one or more parcels at public or private sale, at any of the
 Pledgee’s offices or elsewhere, for cash, on credit or for future delivery,
 and upon such other terms as the Pledgee may deem commercially reasonable.
 Each Pledgor agrees that, to the extent notice of sale shall be required by
 law, at least ten days’ written notice to that Pledgor of the time and place
 of any public sale or the time after which any private sale is to be made
 shall constitute reasonable notification. The Pledgee shall not be obligated
 to make any sale of that Pledgor’s Collateral regardless of a notice of sale
 having been given. The Pledgee may adjourn any public or private sale from
 time to time by announcement at the time and place fixed therefor, and such
 sale may, without further notice, be made at the time and place to which it
 was so adjourned.

 
	
  

 	
  

 
	
 (b)

 	
 The Pledgee may, without notice
 to or consent by any Pledgor, give a Notice of Exclusive Control (as defined
 in the Control Agreement) to the Securities Intermediary or other Person
 holding any Account, whereupon such Pledgor shall have no right to give
 further entitlement orders or other instructions to the Securities
 Intermediary or such Person (and for the avoidance of doubt, the Pledgors
 acknowledge that the Pledgee’s exclusive control may include, without
 limitation, the right to instruct the Securities Intermediary to liquidate
 any or all Collateral, convert the same to cash, and convert such cash from
 any currency to any other currency and to reinvest such cash in other
 investments, whether or not Qualifying Collateral).

 
	
  

 	
  

 
	
 (c)

 	
 All rights of each Pledgor to
exercise all voting and other consensual rights and receive and retain
distributions and all other rights and privileges described in Section 10 shall automatically terminate, and all such rights shall automatically become
vested in the Pledgee, which shall immediately be entitled to exercise all
voting and other consensual rights and receive and retain distributions and
exercise all other rights and privileges described in said Section. 

 


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 (d)

 	
 Any cash held by or on behalf of the Pledgee and all cash
 Proceeds received by the Pledgee in respect of any sale of, collection from,
 or other realization upon all or any part of that Pledgor’s Collateral may,
 in the discretion of the Pledgee, be held by the Pledgee as that Pledgor’s
 Collateral for, and/or then or at any time thereafter applied (after payment
 of any amounts payable to the Pledgee pursuant to Section 17) in whole
 or in part by the Pledgee against all or any part of the Secured Obligations
 in such order as the Pledgee shall elect. Any surplus of such cash or cash
 Proceeds held by the Pledgee and remaining after payment in full or other
 discharge of all the Secured Obligations shall be paid over to the relevant
 Pledgor or to whomsoever may be lawfully entitled to receive such surplus.

 
	
  

 	
  

 
	
 (e)

 	
 The Pledgee may, without notice to any Pledgor, except as
 required by law and at any time or from time to time, charge, set-off and
 otherwise apply all or any part of the Secured Obligations against that
 Pledgor’s Collateral or any part thereof.

 
	
  

 	
  

 
	
 (f)

 	
 The Pledgor expressly authorises the Pledgee, and the
 Pledgee shall, at any time it reasonably determines is necessary to enable
 the Pledgee to better perfect or protect the security interests granted
 hereunder, upon written notice to that Pledgor, transfer to or register in
 the name of the Pledgee or any of its nominees any or all of that Pledgor’s
 Collateral in order to preserve the rights and interests of the Pledgee in
 that Pledgor’s Collateral.

 
	
  

 	
  

 
	
 (g)

 	
 All payments received by any Pledgor in respect of its
 Collateral shall be received in trust for the benefit of the Pledgee, shall
 be segregated from other funds of that Pledgor that do not constitute
 Collateral and shall be forthwith paid over to the Pledgee or credited to
 that Pledgor’s Account in the same form as so received (with any necessary
 indorsement).

 
	
  

 	
  

 
	
 (h)

 	
 At any time when an Event of Default has occurred and is
 continuing, if, by reason of a decrease in the maximum aggregate stated amount
 of all Credits then outstanding and scheduled to remain outstanding, the
 aggregate Letter of Credit Value of all Collateral of all Pledgors exceeds
 125% of the Required Account Value, then notwithstanding the continuance of
 such Event of Default, the Pledgee will reasonably consider a request by the
 Pledgors to release Collateral in excess of 125% of the Required Account
 Value. If such request is granted, such release shall occur within 30 days of
 the Pledgor’s request therefor and the security interest hereunder in favor
 of the Pledgee in such Collateral shall automatically, without further action
 on the part of any party, be released.

 
	
  

 	
  

 
	
 Section 17. Indemnity
 and Expenses

 
	
  

 
	
 (a)

 	
 Each Pledgor jointly and severally undertakes to indemnify
 the Pledgee, within 5 Business Days of demand, for and against all actions,
 proceedings, losses, damages, charges and all reasonable costs, expenses,
 claims and demands which the Pledgee may incur, pay or sustain in connection
 with this Agreement, howsoever arising (unless resulting from the Pledgee’s
 own bad faith, gross negligence or wilful misconduct).

 
	
  

 	
  

 
	
 (b)

 	
 Each Pledgor will, within 5 Business Days of demand,
 jointly and severally pay to the Pledgee the amount of any and all reasonable
 expenses, including the reasonable fees and expenses of its counsel, and of
 any experts and agents that the Pledgee may incur in connection with (i) the
 administration of this Agreement, (ii) the custody, preservation, use or
 operation of, or the sale of, collection from or other realization upon, any
 of its Collateral, (iii) the exercise or enforcement (whether through
 negotiations, legal proceedings or otherwise) of any of the rights of the
 Pledgee hereunder or (iv) the failure by any Pledgor to perform or observe
 any of the provisions hereof.

 
	
  

 	
  

 
	
 Section 18. Currency

 
	
  

 
	
 (a)

 	
 For the purpose of or pending the discharge of any of the
 Secured Obligations, the Pledgee may convert any monies received, recovered
 or realised or subject to application by the Pledgee under this Agreement
 (including the proceeds of any previous conversion under this Section 18)

 



8











	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 from their existing currency of denomination into such
 other currency of denomination as the relevant Secured Obligation may be
 denominated (to the extent of any mismatch at such time, in the aggregate,
 between the currencies of such monies and the currencies in which the
 relevant Secured Obligations to be discharged are denominated), and any such
 conversion shall be effected at the Pledgee’s then prevailing spot rate of
 exchange for obtaining such other currency with the existing currency.

 
	
  

 	
  

 
	
 (b)

 	
 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.

 
	
  

 	
  

 
	
 Section 19. Additional
 Pledgors

 
	
  

 
	
  

 	
 (a)

 	
 Subject to compliance with any provisions of Section
 19(e) ( “Know your customer” checks),
 the Applicant may at any time request that any person become an Additional
 Pledgor. That person shall become an Additional Pledgor if:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
   (i)

 	
 the Pledgee has received the following:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (1)

 	
 a resolution of the board of directors (or its equivalent)
 from the Additional Pledgor approving the terms of the Accession Letter and
 resolving that it execute, deliver and perform the Accession Letter and
 authorising a specified person or persons to execute the Accession Letter
 and/or despatch all other documents and notices to be signed and/or
 despatched by it under or in connection with this Agreement;

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (2)

 	
 a Control Agreement Accession Letter duly completed and
 executed by such Additional Pledgor and the Applicant; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
 (3)

 	
 such other certificates, opinions and other documents that
 the Pledgee may reasonably request, each in form and substance reasonably
 satisfactory to the Pledgee; and

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
   (ii)

 	
 the Additional Pledgor delivers to the Pledgee a duly
 completed and executed Accession Letter.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Upon satisfaction of the requirements set out in
 subsection (a) above, the Pledgee shall in its absolute discretion
 countersign and deliver the Accession Letter and the Control Agreement
 Accession Letter, and the Additional Pledgor shall be deemed from and after
 the date on which the Pledgee counter-signs the Accession Letter and Control
 Agreement Accession Letter to have assumed all rights and obligations under
 this Agreement as if it had been an Original Pledgor.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Delivery of an Accession Letter by the Additional Pledgor
 will constitute confirmation by it that the representations set out in 
Section 6  (Representations, Warranties and
 Covenants) are true and correct in relation to it as at the date
 of delivery as if made by reference to the facts and circumstances then
 existing.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 For the avoidance of doubt, each existing Pledgor hereby
 agrees jointly and severally to indemnify the Pledgee for and against costs
 and expenses (including reasonable legal costs and expenses) that may be
 incurred by the Pledgee, in each case arising out of or in connection with
 the accession or potential accession of any Additional Pledgor to this
 Agreement, in accordance with the provisions of Section 17(a).

 


9











	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Each Pledgor shall promptly comply and provide such
 information reasonably requested from time to time by the Pledgee to carry
 out any “know your customer” or other similar checks.

 
	
  

 	
  

 	
  

 
	
 Section 20. Resignation
 of a Pledqor

 
	
  

 
	
  

 	
 (a)

 	
 The Applicant may request that a Pledgor (a  “Resigning Pledgor”) cease
 to be a Pledgor by delivering to the Pledgee a Resignation Letter.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 The Pledgee shall (but may decline to do so if any of the
 conditions in paragraphs (i) - (iii) below are not met at that time)
 countersign and deliver a Resignation Letter and a Control Agreement
 Resignation Letter, and such Resigning Pledgor shall cease to be a Pledgor
 hereunder effective as of the date specified in the Resignation Letter, if:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 the Resigning Pledgor delivers to the Pledgee a duly
 completed and executed Resignation Letter and Control Agreement Resignation
 Letter, in each case countersigned by the Applicant;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 no Event of Default is continuing or would result from the
 effectiveness of such resignation (and the Applicant has confirmed this is
 the case); and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (iii)

 	
 as a result of the resignation, the aggregate Letter of
 Credit Value of the Collateral (which, to avoid doubt, shall not include any
 assets of the Resigning Pledgor) would not be less than the Required Account
 Value.

 
	
  

 	
  

 	
  

 	
  

 
	
 Section 21. Release
 of Resigning Pledgor

 
	
  

 
	
  

 	
 If a Resigning Pledgor ceases to be a Pledgor in
 accordance with the terms of this Agreement then on and as of the date such
 Resigning Pledgor ceases to be a Pledgor:

 
	
  

 	
  

 
	
  

 	
 (a)

 	
 that Resigning Pledgor is released by the Pledgee from any
 liability (whether past, present or future and whether actual or contingent)
 under this Agreement;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 each other Pledgor waives any rights it may have by reason
 of the performance of its Secured Obligations to take the benefit (in whole
 or in part and whether by way of subrogation or otherwise) of any rights of
 the Pledgee under this Agreement or of any other security taken pursuant to,
 or in connection with this Agreement, where such rights or security are
 granted by or in relation to the assets of the Resigning Pledgor;

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 For the avoidance of doubt, each existing Pledgor hereby
 agrees jointly and severally to indemnify the Pledgee for and against costs
 and expenses (including reasonable legal costs and expenses) that may be
 incurred by the Pledgee, in each case arising out of or in connection with
 the actual or proposed resignation of any Pledgor, in accordance with the
 provisions of Section 17(a).

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 the pledge and security interest granted under this
 Agreement by that Resigning Pledgor shall terminate and that Resigning
 Pledgor’s Collateral shall be returned to that Resigning Pledgor;

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 the Pledgee shall instruct the Securities Intermediary to
 transfer the Resigning Pledgor’s Collateral in accordance with the Resigning
 Pledgor’s instructions; and

 



10









	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 upon the request of any Pledgor, the Pledgee will, at the
 joint and several expense of the Pledgors,
 execute and deliver to that Pledgor such documents as that Pledgor shall reasonably request to evidence such termination.

 



Section 22. Amendments; Waivers; Etc. No amendment
or waiver of any provision of this Agreement, and no consent to any departure by any
party hereto, shall in any event be effective unless the same shall be in writing and signed by the Pledgee and the Applicant,
and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No failure on the part of any party hereto to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the exercise of any other right.


Section 23. Addresses for Notices All notices and
other communications provided for hereunder shall be either (i) in writing (including facsimile
communication) and mailed, transmitted or otherwise delivered or (ii) by electronic mail (if electronic mail addresses are
designated as provided below) confirmed
immediately in writing, in the case of the Pledgee, addressed to:


	
  

 	
  

 	
  

 
	
  

 	
 Citibank Europe Plc 

 	
  

 
	
  

 	
 1 North Wall Quay 

 	
  

 
	
  

 	
 Dublin 1 

 	
  

 
	
  

 	
 Ireland

 	
  

 
	
  

 	
  

 	
  

 
	
  

 	
 Attention:

 	
 Insurance Letter of Credit Department

 
	
  

 	
  

 	
  

 
	
  

 	
 Facsimile Number:

 	
 +353 1622 1009

 



and, in the case of any Pledgor, to
the address shown under its name on the signature page to this Agreement; or, as to any party, at such other
address as shall be designated by such party in a written notice to the
other parties. All such notices and other communications shall, when mailed,
transmitted, sent by electronic mail or
otherwise, be effective when deposited in the mails, sent by electronic mail
and confirmed in writing, or otherwise delivered (or confirmed by a signed
receipt), respectively, addressed as aforesaid;
Delivery by facsimile or electronic transmission (i.e. “PDF” or “TIFF” files)
of an executed counterpart of any amendment or waiver of any provision
of this Agreement or of any Schedule hereto shall
be effective as delivery of an original executed counterpart thereof.


Section 24. Continuing Security Interest: Assignment In
relation to any Pledgor, this Agreement shall create a continuing
security interest in that Pledgor’s Collateral and shall (a) remain in full
force and effect with respect to that Pledgor until the earlier of (i) the
resignation of that Pledgor pursuant to the provisions hereof and (ii) the
termination of this Agreement pursuant to Section 25 hereof, (b) be
binding upon each Pledgor and the Pledgee and their respective successors and
permitted assigns and (c) inure, together with the rights and
remedies of the Pledgee, to the benefit of the Pledgee and its respective successors,
permitted transferees and assigns. Without limiting the generality of the
foregoing clause (c), the Pledgee may assign or otherwise transfer to any other Person all or
any portion of its rights and obligations under this Agreement, and such other
Person shall thereupon become vested with all the benefits in respect thereof granted to the Pledgee herein or otherwise;
provided that such assignment or transfer is to a Permitted Transferee as defined under the terms of the
Master Agreement to whom the Pledgee in its capacity as provider of Credits
under the Master Agreement is making a contemporaneous assignment of its rights and obligations under the
Master Agreement in accordance with the terms thereof. Each Pledgor
will, at the expense of the Pledgee, make, execute, endorse, acknowledge, file and/or deliver to the Pledgee such confirmatory
assignments, conveyances, transfer endorsements, powers of attorney, certificates, reports and other assurances or
instruments and take such further steps related to that Pledgor’s Collateral
and other property or rights covered by the security interest hereby granted, which the Pledgee deems reasonably
advisable to perfect, preserve or protect its security interest in that
Pledgor’s Collateral, including any actions which may be required or advisable
as a result of any amendment or supplement
to applicable laws, including the NYUCC.


11





Section 25. Release and Termination Except in
relation to the prior resignation of any Resigning Pledgor in
accordance with the terms of this Agreement, upon the later of (i) the payment
in full in cash of the Secured Obligations and (ii) the termination of the
Master Agreement, the pledge and security interest granted hereby
shall terminate and all rights to any Pledgor’s Collateral shall revert to the
relevant Pledgor and the Pledgee shall instruct the Securities
Intermediary to transfer the Pledgor’s Collateral in accordance with that
Pledgor’s instructions. Upon any such termination, the Pledgee will, at the
joint and several expense of the Pledgors, execute and deliver to that Pledgor
such documents as that Pledgor shall reasonably request to evidence such
termination.


Section 26. Governing Law; Terms This Agreement
shall be governed by and construed in accordance with the laws of the
State of New York (including Section 5-1401 of the General Obligations Law of said
State, which is expressly made applicable hereto).


Section 27. Jurisdiction, Venue


	
  

 	
  

 
	
 (a)

 	
 Each party hereto hereby irrevocably
 and unconditionally submits, for itself and its property, to the non-exclusive
 jurisdiction of any New York State or United States federal court (to the
 extent such court has subject matter jurisdiction) sitting in New
 York City and any appellate court from any such court in any action or
 proceeding arising out of or relating to this Agreement or for the recognition
 and enforcement of any judgment, and each party hereto hereby irrevocably and
 unconditionally
 agrees that all claims in respect of such action or proceeding may be heard
 and determined in any such New York State
 court or in such Federal court. Each party hereto agrees that a final judgment in any such action or
 proceeding shall be conclusive and may be enforced in other jurisdictions
 by suit on the judgment or in any other manner provided by law. Each party hereto irrevocably and unconditionally waives,
 to the fullest extent it may legally and effectively do so, any objection that 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 New York State or federal court. Each party hereby irrevocably waives, to the
 fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of
 such action or proceeding in any such court. Each party irrevocably consents
 to the service of any and all process in any such action or proceeding by the mailing of copies of such process to such
 party at its address specified in Section 23.

 
	
  

 	
  

 
	
 (b)

 	
 Nothing in this Section 27
 shall affect the right of any party to serve legal process in any other manner permitted by applicable law
 or affect any right which any party would otherwise have to bring any action or proceeding against any other
 party or its property in the courts of any other jurisdiction.

 



SECTION 28. WAIVER OF JURY TRIAL. EACH PLEDGOR
AND THE PLEDGEE HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF THE PLEDGEE IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.


Section 29. Execution in Counterparts This
Agreement may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of
a signature page to this Agreement by facsimile or electronic transmission (i.e. “PDF” or “TIFF”
files) shall be effective as delivery of a manually executed counterpart of
this Agreement.


Section 30. Severability If any term or provision
of this Agreement is or shall become illegal, invalid or
unenforceable in any jurisdiction, all other terms and provisions of this
Agreement shall remain legal, valid and enforceable in such
jurisdiction and such illegal, invalid or unenforceable provision shall be legal, valid
and enforceable in any other jurisdiction.


12





Section 31. Termination of Prior Agreement The
parties agree that any prior pledge agreement between any Pledgor and the Pledgee with respect to
its Collateral is terminated as of the effective date of this Agreement. For the avoidance of doubt, any other pledge or
security agreement relating to security other than the Collateral which
has been entered into between any Pledgor or any of their affiliates and the Pledgee or any of its affiliates shall be
unaffected by this Agreement and shall remain in full force and effect in
accordance with the terms contained therein.


13







EXECUTION COPY


          IN WITNESS WHEREOF,
 the parties hereto have caused this Agreement to be duly executed and delivered by its
officer thereunto duly authorized as of the date first above written.


XL Insurance (Bermuda) Ltd



	
  

 	
  

 
	
 BY:

 	
 

 
	

 


 	

 


 
	
 Name: C. Stanley Lee

 
	
 Title: Chief Financial Officer

 






	
  

 	
  

 
	
 Address:

 	
 XL House 

 One Bermudiana Road

 Hamilton HM08

 Bermuda

 
	
  

 	
  

 
	
 Attention:

 	
 Senior Treasury Analyst at the
 Treasury Department. with a copy to the Company Secretary

 
	
  

 	
  

 
	
 Facsimile Number:

 	
 +1 441 296 6399 (Treasury Department) 

 +1 441 294 7307 (Company Secretary)

 



XL Re Ltd


	
  

 	
  

 
	
 BY:

 	
 

 
	

 


 	

 


 
	
 Name: Greg Hendrick

 
	
 Title:   President

 






	
  

 	
  

 
	
 Address:

 	
 XL House 

 One Bermudiana Road

 Hamilton HM08

 Bermuda

 
	
  

 	
  

 
	
 Attention:

 	
 Senior Treasury Analyst at the
 Treasury Department. with a copy to the Company Secretary

 
	
  

 	
  

 
	
 Facsimile Number:

 	
 +1 441 296 6399 (Treasury Department) 

 +1 441 294 7307 (Company Secretary)

 






	
  

 	
  

 
	
 Citibank Europe Plc 

 	
  

 
	
 BY: 

 	
  

 
	
  

 
	

 


 	
  

 
	
 Name: 

 	
  

 
	
 Title: 

 	
  

 



14







EXECUTION
COPY


          IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.


	
  

 	
  

 
	
 XL Insurance
 (Bermuda) Ltd

 	
  

 
	
  

 	
  

 
	
 BY:

 	
  

 
	
  

 
	

 


 
	
 Name:

 	
  

 
	
 Title:

 	
  

 
	
  

 	
  

 
	
 Address:

 	
 XL House

 
	
  

 	
 One Bermudiana Road 

 
	
  

 	
 Hamilton HM08

 
	
  

 	
 Bermuda

 
	
  

 	
  

 
	
 Attention:

 	
 Senior Treasury Analyst at the
 Treasury Department, with a copy to the
 Company Secretary

 
	
  

 	
  

 
	
 Facsimile Number: 

 	
 +1 441 296 6399 (Treasury
 Department)

 
	
  

 	
 +1 441 294 7307 (Company
 Secretary)

 
	
  

 	
  

 
	
 XL Re Ltd

 	
  

 
	
  

 	
  

 
	
 BY:

 	
  

 
	
  

 
	

 


 
	
 Name:

 	
  

 
	
 Title:

 	
  

 
	
  

 	
  

 
	
 Address:

 	
 XL House

 
	
  

 	
 One Bermudiana Road

 
	
  

 	
 Hamilton HM08

 
	
  

 	
 Bermuda

 
	
  

 	
  

 
	
 Attention:

 	
 Senior Treasury Analyst at the
 Treasury Department, with a copy to the
 Company Secretary

 
	
  

 	
  

 
	
 Facsimile Number:

 	
 +1 441 296 6399 (Treasury
 Department)

 
	
  

 	
 +1 441 294 7307 (Company
 Secretary)

 
	
  

 	
  

 
	
  

 	
  

 






	
  

 	
  

 
	
 Citibank
 Europe Plc

 
	
 BY:

 	
  


 
	

 


 
	
 Name:

 	
 PEADAR MAC CANNA

 
	
 Title:

 	
 DIRECTOR

 





15






SCHEDULE 1


Letter of Credit Value and Pledgee’s Requirements


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Letter of Credit Value

 	
  

 	
 Maximum 

 % of 

 Total

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	

 


 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
 Maturity (years)

 	
  

 	
  

 
	
  

 	
 Qualifying
 Collateral

 	
  

 	
 Rating

 	
  

 	
 <5

 	
  

 	
 5-10

 	
  

 	
 11-20

 	
  

 	
  

 
	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 	

 


 	
  

 
	
 1.

 	
 OECD
 Government Bonds including agencies and agency RMBS backed by the full faith
 and credit of their respective OECD governments (eg Ginnie Mae, KFW, AGF etc)

 	
  

 	
 AA- or better

 	
  

 	
  

 	
 95.0

 	
 %

 	
  

 	
 92.5

 	
 %

 	
  

 	
 90

 	
 %

 	
  

 	
 100 

 	
 %

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
 US
 and OECD Government Agencies and agency guaranteed RMBS not covered under 2
 above

 	
  

 	
 AA- or better

 	
  

 	
  

 	
 92.0

 	
 %

 	
  

 	
 92.0

 	
 %

 	
  

 	
 88.0

 	
 %

 	
  

 	
 100 

 	
 %

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 3.

 	
 Supranational
 Bonds

 	
  

 	
 AA- or better

 	
  

 	
  

 	
 90.0

 	
 %

 	
  

 	
 90.0

 	
 %

 	
  

 	
 85.0

 	
 %

 	
  

 	
 100 

 	
 %

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 4.

 	
 Government
 Guaranteed Debt to include debt guaranteed by agencies carrying the full
 faith and credit of their respective OECD governments (eg SFEFR)

 	
  

 	
 AA- or better

 	
  

 	
  

 	
 95.0

 	
 %

 	
  

 	
 92.5

 	
 %

 	
  

 	
 90.0

 	
 %

 	
  

 	
 100 

 	
 %

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 5.

 	
 Corporate
 Bonds

 	
  

 	
 AA- or better

 	
  

 	
  

 	
 90.0

 	
 %

 	
  

 	
 90.0

 	
 %

 	
  

 	
 85.0

 	
 %

 	
  

 	
 25 

 	
 %

 



*Subject to further adjustment pursuant to the provisions set forth in
Schedule 2.


NB. Debt issued by the Pledgor is not eligible and money market cash
sweeps are not eligible. 

No single corporate bond issuer is to be more than 10% of total.





SCHEDULE 2 


Currency Margins


	
  

 	
  

 	
  

 
	
 1.

 	
 Where the Qualifying
 Collateral or a portion thereof is denominated in the same currency as a
 Credit (the “Credit Currency”), the Qualifying Collateral or such
 portion thereof shall have a value of 100% of its value in the relevant
 Credit Currency; and for this purpose the Pledgee shall notionally match each
 Credit with the Collateral or a portion
 thereof denominated in the relevant Credit Currency.

 
	
  

 	
  

 	
  

 
	
 2.

 	
 Where the Qualifying
 Collateral 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 Qualifying Collateral is in the relative Credit Currency, the
 balance of the Letter of Credit Value remaining unmatched) and the Qualifying
 Collateral or such portion thereof shall be notionally converted into a
 common base currency (as the Pledgee may in its discretion determine); and
 following such notional conversion the Qualifying Collateral 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 Qualifying Collateral or a portion thereof and the
 contingent obligations to which it relate.

 
	
  

 	
  

 	
  

 
	
 3.

 	
 The “Relevant Percentage” means:

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 where the Qualifying
 Collateral or a portion is denominated in U.S. dollars, Euro or English
 Pounds Sterling, 10% (For the avoidance of doubt, the margin of no more than
 10% applies where there is a discrepancy between the Credit Currency and the
 currency of the Qualifying Collateral relating such to U.S. dollars, Euro or
 English Pound Sterling);

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 where the Qualifying
 Collateral or a portion thereof is denominated in Swiss Francs, Canadian
 dollars or Japanese yen, 15%; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 where the Qualifying Collateral
 or portion thereof is denominated in any other currency, 25%.

 
	
  

 	
  

 	
  

 
	
 4.

 	
 For the purposes of each
 notional conversion to be effected hereunder the provisions of Section
 18(a) shall apply mutatis mutandis.

 









SCHEDULE 3


 [RESERVED]





SCHEDULE 4


 [RESERVED]







SCHEDULE 5 


Form of Accession Letter 


	
  

 	
  

 	
  

 	
  

 
	
 To:

 	
 Citibank Europe Plc as Pledgee 

 
	
  

 	
  

 	
  

 	
  

 
	
 From:

 	
 {Name
 of Additional Pledgor} 

 
	
  

 	
  

 	
  

 	
  

 
	
 Dated:

 	
 {     } 

 	
  

 	
  

 
	
  

 
	
 Dear Sirs

 
	
  

 
	
  

 	
 Pledge Agreement dated { ● } 2009 (as amended and in effect from time
 to time, the “Pledge Agreement”) made between
 XL Insurance (Bermuda) Ltd and XL Re Ltd as
 pledgors and Citibank Europe Plc as pledgee

 
	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
 We refer to
 the Pledge Agreement. This is an Accession Letter. Terms defined in the Pledge
 Agreement have the same meaning in this Accession Letter unless given a different meaning in this
 Accession Letter.

 
	
  

 	
  

 
	
  

 	
  

 	
 (a) We agree to become an Additional Pledgor and to be bound by the terms of the Pledge Agreement as an Additional
Pledgor pursuant to Section 19 (Additional Pledgors) of the Pledge Agreement
and we assume ail rights and
obligations under the Pledge Agreement (including, without limitation, the
grant of security) as if we had been an Original Pledgor. {Additional Pledgor} is a
[company][corporation][limited liability company] duly incorporated, validly
existing and in good standing under the laws of [name of relevant jurisdiction] with company registration number { }. 

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (b) We confirm
that the representations set out in Section 6 of the Pledge Agreement
(Representations, Warranties and Covenants) are true and correct with respect
to {Additional Pledgor} at the
date of delivery of this Accession Letter. 

 
	
  

 	
  

 	
  

 
	
 4.

 	
 Our “Account”
 (as defined in the Pledge Agreement) is

 
	
  

 	
  

 
	
  

 	
 _________________________
 at _________________________.

 
	
  

 	
  

 	
  

 	
  

 
	
 5.

 	
 {Name of Additional Pledgor’s} administrative details are as follows: 

 
	
  

 	
  

 
	
  

 	
 Address:

 	
 [ ● ]

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Fax No:

 	
 [ ● ]

 
	
  

 	
  

 	
  

 
	
  

 	
 Email:

 	
 [ ● ]

 
	
  

 	
  

 	
  

 
	
  

 	
 Attention:

 	
 [ ● ]

 
	
  

 	
  

 
	
 6.

 	
 This
 Accession Letter shall be governed by and construed in accordance with the
 laws of the
 State of New York, including Section 5-1401 of the General Obligations Law of
 said State, which is expressly made
 applicable hereto.

 













	
  

 	
  

 	
  

 	
  

 
	
 7.

 	
 This Accession Letter will take
 effect from the date falling on and after the date on which (if at all) the Pledgee has counter-signed this
 Accession Letter.

 



executed on behalf of

{insert name of additional pledgor}

as Additional Pledgor


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  (Sign)

 	
  

 	
  

 	
  (Sign)

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Name: 

 	
  

 	
  

 	
 Name: 

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Title:

 	
  

 	
  

 	
 Title:

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 



executed on behalf of

XL Insurance (Bermuda) Ltd

as Applicant


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  (Sign)

 	
  

 	
  

 	
  (Sign)

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Name: 

 	
  

 	
  

 	
 Name: 

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Title:

 	
  

 	
  

 	
 Title:

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 



We hereby
consent to and countersign this Accession Letter as of {insert date}.


Citibank Europe Plc


as Pledgee


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  (Sign)

 	
  

 	
  

 	
  (Sign) 

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Name: 

 	
  

 	
  

 	
 Name: 

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Title:

 	
  

 	
  

 	
 Title: 

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 









SCHEDULE 6 


Form of Resignation Letter 


	
  

 	
  

 	
  

 
	
 To:

 	
 Citibank Europe Plc (as Pledgee) 

 
	
  

 	
  

 
	
 From:

 	
  [resigning
 Pledgor)

 
	
  

 	
  

 
	
  

 	
 XL Insurance (Bermuda) Ltd (as
 Applicant) 

 
	
  

 
	
 Dated:

 	
 {     } 

 	
  

 
	
  

 	
  

 	
  

 
	
 Dear Sirs

 
	
  

 
	
 Pledge Agreement dated { ● } 2009 (as amended and in effect from time
 to time, the  “Pledge Agreement”) made between
 XL Insurance (Bermuda) Ltd and XL Re Ltd, as pledgors, and Citibank Europe Plc as pledgee

 
	
  

 
	
 1.

 	
 We refer to
 the Pledge Agreement. This is a Resignation Letter. Terms defined in the Pledge
 Agreement have the same meaning in this Resignation Letter unless given a different
 meaning in this Resignation Letter.

 
	
  

 	
  

 	
  

 
	
 2.

 	
 Pursuant to
 Section 20 (Resignation of a Pledgor) of
 the Pledge Agreement, we request that [resigning Pledgor] be released from its
 obligations as a Pledgor under the Pledge Agreement.

 
	
  

 	
  

 	
  

 
	
 3.

 	
 We confirm
 that:

 
	
  

 	
  

 
	
  

 	
 (a)

 	
 no Event of
 Default is continuing or would result from the effectiveness of this resignation;
 and

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 as a result of
 the resignation, the aggregate Letter of Credit Value of the Collateral
 (which, to avoid doubt, shall not include any assets of the resigning Pledgor) will
 not be less than the Required Account Value.

 
	
  

 	
  

 	
  

 
	
 4.

 	
 This Resignation Letter shall be
 governed and construed in accordance with the laws of the State of New York,
 including Section 5-1401 of the General Obligations Law of said State, which is expressly made applicable
 hereto.

 
	
  

 	
  

 
	
 5.

 	
 This Resignation Letter will take
 effect from the date falling on and after the date on which (if at all) the
 Pledgee counter-signs this Resignation Letter.

 











executed on behalf
of

{insert name of resigining pledgor}

as Resigning Pledgor


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  (Sign)

 	
  

 	
  

 	
  (Sign)

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Name:

 	
  

 	
  

 	
 Name:

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Title:

 	
  

 	
  

 	
 Title:

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 



executed on behalf
of

XL Insurance (Bormuda) Ltd

as Applicant


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  (Sign)

 	
  

 	
  

 	
  (Sign)

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Name:

 	
  

 	
  

 	
 Name:

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Title:

 	
  

 	
  

 	
 Title:

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 



We hereby consent to
and countersign this Resignation Letter as of {insert date}.


Citibank Europe Plc

as Pledgee 


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  (Sign)

 	
  

 	
  

 	
  (Sign)

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Name:

 	
  

 	
  

 	
 Name:

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 
	
 Title:

 	
  

 	
  

 	
 Title:

 	
  

 
	
  

 	

 


 	
  

 	
  

 	

 


 









SCHEDULE 7 


Account details 


	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name of
 Pledgor

 	
  

 	
 Account
 Name & Number

 	
  

 	
 IBAN
 Number

 
	

 


 	
  

 	

 


 	
  

 	

 


 
	
 XL Insurance
 (Bermuda) Ltd

 	
  

 	
 

 	
  

 	
 N/A

 
	
  

 
	
 XL Re Ltd

 	
  

 	
 

 	
  

 	
 N/A

 
	
  

 
	
 XL Re Ltd

 	
  

 	
  

 	
  

 	
 N/A

 











EXHIBIT A 


CERTAIN DEFINED TERMS


	
  

 	
  

 
	
 (a)

 	
 Capitalized
 terms used herein shall have the respective meanings ascribed to them below:

 



 “Accession Letter” means a
document substantially in the form set out in Schedule 3 (Form of Accession Letter) and (as the context
requires) duly executed by the parties thereto.


 “Additional Pledgor” means any person which the Pledgee may approve from time to time as a
pledgor and/or (as the context requires) who is the subject of a duly executed
Accession Letter.


 “Applicant” means XL Insurance (Bermuda) Ltd, a company organized
and existing under the laws of Bermuda, whose
address of its registered or principal office is at XL House, One Bermudiana Road, Hamilton HM08, Bermuda.


 “Business Day” means
a day (other than a Saturday or Sunday) on which the banks are generally open for business in London and Bermuda.


 “Change of Control” is deemed to have occurred if in relation to any Pledgor:


(a) the Persons owning the Voting
Interests of that Pledgor as of the date hereof shall cease to own 51% or more
of the Voting Interests of that Pledgor; or


(b) Continuing Directors shall cease for any reason to
constitute a majority of the board of directors
of that Pledgor.


 “Collateral” has
the meaning specified therefor in Section 2 hereof.


 “Consolidated Net Worth”, with respect to any Person,
means the consolidated stockholders’ equity
of such Person and its consolidated subsidiaries, determined in accordance with
generally accepted accounting
principles and practices in the United States of America.


 “Continuing Directors” means, in relation to any Pledgor, the directors of that Pledgor on the
date hereof and each other director if, in each case, such other
director’s nomination for election to that
Pledgor’s board of directors is recommended by at least a majority of the then
Continuing Directors.


 “Control Agreement” means the Collateral Account
Control Agreement dated on or around the date
of this Agreement (as from time to time amended, varied, supplemented, novated
or assigned) between the Pledgors,
the Pledgee and the Securities Intermediary, pursuant to which the
Securities Intermediary agrees to act as custodian to hold the Collateral upon
the terms contained therein.


 “Control Agreement Accession Letter” means an accession letter substantially in the form attached to the Control Agreement.


 “Control Agreement Resignation Letter” means a
resignation letter substantially in the form attached
to the Control Agreement.


 “Disruption Event” means either or both of:


	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 a material disruption to those
 payment or communications systems or to those financial markets which are, in each case, required to operate in
 order for

 













	
  

 	
  

 	
  

 
	
  

 	
  

 	
 payments to
 be made in connection with this Agreement or the Master Agreement
 (or otherwise in order for the transactions contemplated by this Agreement or the Master Agreement to be carried
 out) which disruption is not caused by, and is beyond the control of, any of
 the parties; or

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 the
 occurrence of any other event which results in a disruption (of a technical
 or systems-related nature) to the
 treasury or payments operations of a party preventing
 that, or any other party:

 






	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 from
 performing its payment obligations under this Agreement or the Master Agreement; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 from
 communicating with other parties in accordance with the terms of this Agreement or the Master Agreement,

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 and which
 (in either such case) is not caused by, and is beyond the control of, the
 party whose operations are disrupted.

 



 “Entitlement Holder” means a Person that (a) is an “entitlement
holder” as defined in Section 8-102(a)(7) of the NYUCC (except in
respect of a Book-entry Security); and (b) in respect of any book-entry
Security, is an “entitlement holder” as defined in 31 C.F.R. 357.2 (or, as
applicable to such book-entry Security, the
corresponding Federal Book-Entry Regulations governing such book-entry
Security) which, to the extent required or permitted by the Federal Book-Entry Regulations, is also an “entitlement holder” as
defined in Section 8-102(a)(7) of the NYUCC.


 “Entitlement Order” has the meaning set forth in
Section 8-102(a)(8) of the NYUCC and shall include,
without limitation, any notice or related instructions from the Pledgee
directing the transfer or redemption
of the Collateral or any part thereof.


 “Event of Default” means:


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 a failure by any Pledgor to pay on its
 due date any reimbursement amount payable pursuant to the
 Master Agreement, or within three Business Days of its due date
 any other amount payable pursuant to this Agreement or the Master
 Agreement, in each case at the place and in the currency in which it is
 expressed to be payable, unless the failure to pay is caused by:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 administrative
 or technical error; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 a Disruption Event; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 payment is
 made within two Business Days of its due date,

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 any Pledgor
 does not comply with its obligations under sections 4(a) or 4(d) of this
 Agreement, or clause 1.2 of the Master Agreement is not satisfied, unless such failure is caused by:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (i)

 	
 administrative
 or technical error; or

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (ii)

 	
 a Disruption Event; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 such
 obligation is complied with within two Business Days of the date required
 pursuant to such provisions,

 













	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 any Pledgor
 does not comply with its obligations under sections 4(e) or 11 of this Agreement,

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 a failure by
 any Pledgor to comply with any provision of this Agreement or the Master
 Agreement (other than those referred to in paragraphs (a), (b) and (c) above), unless the failure to comply is capable of
 remedy and is remedied within ten
 Business Days of the earlier of (1) the Pledgee giving written notice thereof
 to the Applicant and (2) the relevant
 Pledgor becoming aware of the failure to comply.

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 any
 representation or statement made or deemed to be made by any Pledgor under this Agreement or by the Applicant under the
 Master Agreement or in either case under any other document delivered by or
 on behalf of any Pledgor under or in
 connection with this Agreement or the Master Agreement is or proves to have been incorrect or misleading in any
 material respect when made or deemed to be made, unless such breach is
 capable of remedy and is remedied within
 ten Business Days of the earlier of (1) the Pledgee giving written notice
 thereof to the Applicant and (2) the relevant Pledgor becoming aware of such breach.

 



 “Federal Book-Entry Regulations” means the federal regulations contained in Subpart B (“Treasury/Reserve Automated Debt Entry System
(TRADES)” governing book-entry securities consisting of United States Treasury securities, U.S. Treasury bonds,
notes and bills) and Subpart D (“Additional
Provisions”) of 31 C.F.R. Part 357, 31 C.F.R. 357.10 through 357.14 and 357.41 through 357.44 (including related defined terms in 31 C.F.R.
357.2), as amended by regulations published at 61 Fed. Reg. 43626 (August
23, 1996) and as amended by an subsequent
regulations.


 “Letter of Credit Value” means


          (a) in respect of each component of the Qualifying Collateral, (x) the market value of the Security or (y) the cash value, in each case


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 subject to
 the provisions of Schedules 1 and 2 and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 multiplied by the percentage
 specified in the table set out in Schedule 1 under the column headed “Letter of Credit Value” for that
 type of Security or for cash; and if at any time there is more than
 one component part to the Qualifying Collateral, the Letter of Credit Value
 for the Qualifying Collateral shall be the sum of the Letter of Credit values for each component part of the Qualifying
 Collateral; or

 



          (b) such other
amount calculated in such other manner as may be from time to time be agreed by the Pledgee and the Applicant.


 “Lien” means any mortgage, pledge, attachment, lien, charge,
claim, encumbrance, lease or security
interest, easement, right of first or last refusal, right of first offer or
other option or contingent purchase
right.


 “Master Agreement” means the agreement dated on
or around the date of this Agreement (as from time to time amended, varied,
supplemented, novated or assigned) between the Applicant and the Pledgee, pursuant to which the Pledgee has
established, maintained, amended, renewed or substituted or arranged for the establishment, maintenance, amendment,
renewal or substitution of a Credit.






 “Net Worth Deficiency” means that at any time, the
Consolidated Net Worth of XL Capital Ltd, a company
organised and existing under the laws of the Cayman Islands, and its
subsidiaries on a consolidated basis, is less than US$3,000,000,000 (or its
equivalent in other currencies).


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


 “Person” means
any individual, corporation, partnership, joint venture, foundation,
association, joint-stock company, trust, unincorporated organization,
government or any political subdivision thereof or any agency or
instrumentality of any thereof.


 “Resignation Letter” means a letter substantially
in the form set out in Schedule 4 (Form
of Resignation Letter);


 “Securities Intermediary” means a Person that (a) is a
“securities intermediary” as
defined in Section 8-102(a)(14) of the NYUCC and (b) in respect of any U.S.
Government Obligations, is also a “securities intermediary” as defined in 31
C.F.R. 357.2.


 “Secured Obligations” has the meaning specified therefor in Section 3 hereof.


 “Security Control” means “control” as defined in Section 8-106 of
the NYUCC.


 “Security Entitlement” means (a) security entitlement” as defined in Section 8-102(a)(17) of
the NYUCC (except in respect of a U.S.
Government Obligation); and (b) in respect of any U.S. Government Obligation, a “security
entitlement” as defined in 31 C.F.R. 357.2 which, to the extent required or permitted by the Federal Book-Entry Regulations, is also a “security entitlement” as defined in Section 8-102(a)(17) of the NYUCC.


 “STRIPS” has the
meaning thereof set forth in Section 357.2 of the Federal Book-Entry Regulations.


 “U.S. Government Obligations” means all of the United
States Treasury securities (including STRIPS)
maintained in the commercial book-entry system entitled Treasury/Reserve
Automated Debt Entry System (“TRADES’) pursuant
to the Federal Book-Entry Regulations or pursuant to a successor system.


 “Voting Interests” of any Person means shares
of capital stock issued by a corporation, or equivalent
equity interests in any other Person, the holders of which are ordinarily, in
the absence of contingencies, entitled to vote for the election of
directors (or persons performing similar functions)
of such Person, even if the right so to vote has been suspended by the happening
of such a contingency.


(b) NYUCC Terms. Terms defined or referenced in the NYUCC and
not otherwise defined or referenced herein are used herein as therein defined
or referenced. In particular, the following terms are used herein as defined or
referenced in the respective NYUCC sections indicated below: “Deposit Account’: Section
9-102(a)(29); “Entitlement Order”: Section
8-102(a)(8); “Financial
Asset”: Section 8-102(a)(9); “Instrument”: Section 9-102(a)(47); “Investment Property”: Section 9-102(a)(49);
“Proceeds”: Section 9-102(a)(64); “Securities Account”: Section 8-501(a); “Security”: Section 8-102(a)(15).






(c) Other Interpretive Provisions. As used herein,
(i) references to specific sections, articles, annexes, schedules and exhibits
are to this agreement; (ii) references to any agreement include amendments,
restatements, modifications and supplements thereto in accordance with the
terms hereof and thereof; (iii) references
to any applicable law include amendments, supplements and successors thereto;
(iv) references to any Person include such Person’s successors and assigns
(subject to any applicable restrictions on assignment by such Person hereunder
or under the Master Agreement) and, in the case of any governmental authority,
any Person succeeding to its functions and
capacities; (v) words importing any gender include the other gender; (vi) the singular includes the plural and the plural
includes the singular; and (vii) the words “including”, “include” and
“includes” shall be deemed to be followed by the words “without limitation”.