PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of November 9, 2015, (as amended, supplemented or otherwise modified from time to time, this "Agreement) made among Everest International Reinsurance, Ltd., a company organized and existing under the laws of Bermuda (the "Pledgor"), and Lloyds Bank plc (the "Pledgee").
PRELIMINARY STATEMENTS
(1) The Pledgor and the Pledgee have entered into the Master Agreement and the Facility Letter (each as defined in Annex A) pursuant to which the Pledgee may, from time to time subject to the terms thereof, issue for the account of the Pledgor and each Other Party (as defined in the Master Agreement) letters of credit (each a "Credit" and, collectively, the "Credits").
(2) The Pledgor has agreed to collateralize its obligations to the Pledgee that result from time to time under the Master Agreement and each other Related Document (as defined in the Facility Letter) 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 Pledgor 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 payment and performance by the Pledgor of the Secured Obligations.
(4) The Pledgor has opened account number XXXX (together with any related Deposit Account (within the meaning of the NYUCC (as defined in Annex A)) or successor account opened and maintained for purposes of this Agreement, the "Account") with The Bank of New York Mellon at its office at 101 Barclay Street, New York, New York 10286, U.S.A. ("Custodian").
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 Pledgor pursuant to the Master Agreement and the Facility Letter, 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 Annex A, the Master Agreement or the Facility Letter, as applicable.
Section 2. Grant of Security. As security for the payment and performance of all of the Secured Obligations, the Pledgor hereby collaterally assigns, pledges and grants to the Pledgee a first priority security interest in and a Lien on all of the Pledgor's right, title and interest, whether now owned or hereafter acquired, in all of the following (collectively, the "Collateral'):
(i) the Account;
(ii) the Securities and any Instruments or other Financial Assets at any time credited to or carried in the Account or otherwise acquired by the Pledgee in any manner and under its control as Collateral (including, without limitation Securities of the type specified in Schedule 1 hereto) (collectively, the "Pledged Securities") and any Deposit Account, Securities Account and Security Entitlement in respect of the Account, the Pledged Securities or any of them;
(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) from time to time
(A) 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) or (B) otherwise acquired by the Pledgee in any manner and delivered to the Pledgee or under the control of the Pledgee as Collateral; 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 of Obligations. This Agreement secures the payment and performance of all obligations of the Pledgor now or hereafter existing under the Master Agreement (including all contingent obligations with respect to credit(s) issued by the Pledgee for the Pledgor's account), the Facility Letter, this Agreement and each other Related Document, whether for principal, interest, fees, expenses or otherwise and the payment of any and all expenses (including reasonable counsel fees and expenses) incurred by the Pledgee in enforcing any rights under this Agreement (all such obligations being the "Secured Obligations"). This Agreement is intended to convey to the Pledgee control of all Security Entitlements in, and the right to direct dispositions of all cash deposits from, the Account for the purposes of Sections 8-106 and 9-104 of the NYUCC.
Section 4. Delivery of Security Collateral. On or prior to the date hereof, the Pledgor shall transfer or credit, or cause to be transferred or credited, all of the Pledged Securities to the Pledgee or to an Account or a Securities Account under arrangements acceptable to the Pledgee in its sole discretion. Pledgor shall deliver all other Collateral to the Pledgee or to a Secured Intermediary subject to the control (within the meaning of the NYUCC) of the Pledgee under arrangements acceptable to the Pledgee in its sole discretion. Upon the occurrence and during the continuance of an Event of Default, the Pledgee shall have the right, at any time it reasonably determines is necessary or desirable to enable the Pledgee to better perfect or protect the security interests granted hereunder, upon notice to the Pledgor, to transfer to or to register in the name of the Pledgee or any of its nominees any or all of the Collateral.
Section 5. Use of Proceeds. Proceeds that are received in respect of any Collateral shall be held as cash Collateral as provided in Section 2 of this Agreement and shall be credited to or otherwise maintained in the Account.
Section 6. Representations, Warranties and Covenants. The Pledgor represents, warrants and covenants as follows:
(a) The Pledgor is a corporation duly organized and validly existing under the laws of its incorporation 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 the Pledgor's business), to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted.
(b) The execution, delivery and performance by the Pledgor of this Agreement, and the consummation of the transactions contemplated hereby, are within the Pledgor's corporate powers and have been duly authorized by all necessary corporate action.
(c) The execution, delivery and performance by the Pledgor of this Agreement and the consummation of the transactions contemplated hereby, do not and will not (i) violate any provision of law, rule or regulation applicable to the Pledgor; (ii) conflict with the charter or by-laws or substantively similar constitutive documents of the Pledgor; or (iii) 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 favor of the Pledgee created hereby) upon any of the property or assets of the Pledgor or any of its subsidiaries, under any indenture, loan agreement, mortgage, deed of trust or other instrument or agreement to which the Pledgor or any of its subsidiaries may be or become a party or by which it may be or become bound or to which the property or assets of the Pledgor of any of its subsidiaries may be or become subject.
(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 either (i) for the grant by the Pledgor of the Lien and security interest granted hereby, for the pledge by the Pledgor of the Collateral pursuant hereto or for the execution, delivery or performance of this Agreement by the Pledgor, (ii) for the perfection or maintenance of the pledge, Lien and security interest created hereby (including the first priority nature of such pledge, Lien or security interest) except for the registration of this agreement at the Register of Companies under Bermuda law or (iii) for the exercise by the Pledgee of its rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with the disposition of any portion of the Collateral by laws affecting the offering and sale of securities generally or as may be applicable to the Pledgee.
(e) This Agreement has been duly executed and delivered by the Pledgor. This Agreement constitutes, or when executed and delivered will constitute, the legal, valid and binding obligation of the Pledgor enforceable against the Pledgor in accordance with its terms, subject as to enforceability to applicable bankruptcy, insolvency, and similar laws affecting creditors' rights generally.
(f) The Pledgor is the legal and beneficial owner of the Collateral and the Pledgor has and shall at all times have rights in, and good and valid 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) (other than those in favor of the Pledgee and the set off rights or liens of the Custodian as expressly provided in the Account Control Agreement ("Permitted Liens")).
(g) To the best of the Pledgor's knowledge, no default has occurred under or with respect to any Collateral as of the date hereof.
(h) the Pledgor's chief executive office and principal place of business and the office where the Pledgor keeps its records concerning the Collateral are located at Everest International Reinsurance, Ltd., Seon Place, 4th Floor, 141 Front Street, Hamilton, HM 19, P.O. Box HM 845, Bermuda.
(i) Since October 10, 2001, the Pledgor has not been known by any legal name different from the one set forth on the signature page of this Agreement;
(j) (i) This Agreement creates a valid security interest in favor of the Pledgee in the Collateral, securing the payment of the Secured Obligations, (ii) this Agreement and the related Collateral Account Control Agreement, dated November 9, 2015, by and among the Pledgor, the Pledgee and the Custodian (as amended, supplemented or otherwise modified from time to time, the "Account Control Agreement") are sufficient to perfect such security interest, and (iii) assuming the Pledgee has no notice of any Liens or "adverse claims" (as such terms is defined in Section 8‑102(a)(1) of the NYUCC) with respect to the Collateral, the Pledgee will take the Collateral free and clear of any Liens and adverse claims (other than Permitted Liens).
(k) (i) This Agreement is in proper legal form under all applicable laws of New York and the Pledgor's jurisdiction of organization for the enforcement thereof against the Pledgor in accordance with its terms. To ensure the legality, validity, enforceability or admissibility into evidence of this Agreement it is not necessary that this Agreement or any other document be filed or recorded with any governmental authority of the Pledgor's jurisdiction of organization or that any stamp or similar tax be paid on or in respect of this Agreement or any other document delivered pursuant hereto.
(ii) It is not necessary (A) in order for the Pledgee to enforce any rights or remedies under this Agreement or (B) solely by reason of the execution delivery and performance of this Agreement by the Pledgee, that the Pledgee be licensed or qualified with any governmental authority of the Pledgor's jurisdiction of organization or of the United States of America or be entitled to carry on business in the Pledgor's jurisdiction of organization or the United States of America.
(l) The Pledgor shall cause cash or Securities of the type specified in Schedule 1 to be pledged as Collateral and held at all times in the Account pursuant to the terms of the Account Control
Agreement so that at all times the British Pound Sterling Equivalent of the Collateral Value of the Collateral in the Account is equal to or greater than the Total Outstandings (the "Required Account Value"). As long as no notice has been provided by the Pledgor pursuant to the next sentence at any time an Event of Default exists, and is continuing, the Pledgor shall be the sole party entitled to exercise for any purpose any and all (i) voting rights and (ii) powers, in either case arising from or relating to the Pledgor's interest in respect of any Collateral; provided, however, (x) the Pledgor shall not exercise such rights or powers in a manner, or consent to any action that would in any manner impair the enforceability of the Pledgee's lien on any of the Collateral and (y) the Pledgor shall not have the power to direct the Custodian with respect to the investment of funds, the sale of Investment Property or any withdrawals from the Account unless the Pledgor has first delivered a Collateral Value Report to the Pledgee and the Custodian demonstrating that the British Pound Sterling Equivalent of the Collateral Value is equal to or exceeds the aggregate Total Outstandings immediately prior to and after giving effect to the proposed investment, sale or withdrawal. At any time an Event of Default exists and is continuing and the Pledgee has provided notice of suspension of the Pledgor's voting rights, all rights and powers of the Pledgor provided in this Section 6(l) shall cease, and all voting rights and powers described herein shall thereupon be vested in the Pledgee who shall have the sole and exclusive right and authority to exercise such voting rights and powers. The Pledgee hereby agrees that it shall not issue to the Custodian a Notice of Exclusive Control (as defined in the Account Control Agreement) unless an Event of Default shall have occurred and be existing at the time such Notice of Exclusive Control is issued.
(m) The Pledgor shall deliver or cause to be delivered to the Pledgee a certificate in the form of Exhibit A or otherwise in a form reasonably satisfactory to the Pledgee (which form may vary depending on the frequency of the delivery of such certificate and subject to the review and verification by the Pledgee), setting forth the aggregate Total Outstandings of the Pledgor, the British Pound Sterling Equivalent of the Collateral Value of the Collateral in the Account by category and in the aggregate, and such other information as the Pledgee may reasonably request (such certificate, a "Collateral Value Report"), (A) on the Business Day immediately preceding the proposed date of issuance of a Letter of Credit pursuant to the Facility Letter, (B) within 10 Business Days after the end of each calendar month, (C) at and as of such other times as the Pledgee may reasonably request in its sole discretion and (D) at such other times as the Pledgor may desire.
(n) Concurrently with each delivery of the financial statements described in Section 8(b) of the Master Agreement, the Pledgor shall deliver to the Pledgee a Compliance Certificate in the form of Exhibit B with respect to the period covered by the financial statements then being delivered, executed by the chief executive officer or chief accountant of the Pledgor, together with a Covenant Compliance Worksheet reflecting the computation of the respective financial covenants set forth in such Covenant Compliance Worksheet as of the last day of the period covered by such financial statements.
Section 7. Further Assurances.
The Pledgor agrees that from time to time, at the expense of the Pledgor, the Pledgor will promptly execute and deliver all further Instruments and documents, and take all further action, that may be necessary or desirable, or that the Pledgee may reasonably request, in order to continue, perfect and protect any pledge, assignment 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 Collateral. Without limiting the generality of the foregoing, the Pledgor will execute and file such Uniform Commercial Code financing or continuation statements, or amendments thereto, and such other Instruments or notices, as may be necessary or desirable, or as the Pledgee may request, in order to perfect and preserve the pledge, assignment and security interest granted or purported to be granted hereby. Notwithstanding the foregoing, the Pledgor hereby irrevocably authorizes the Pledgee at any time and from time to time to file, in the name of the Pledgor and without the signature or other separate authorization or authentication of the Pledgor appearing thereon, such Uniform Commercial Code financing statements or continuation statements as the Pledgee may reasonably deem necessary or appropriate to further perfect or maintain the perfection of its security interests in the Collateral.
Section 8. Distributions.
(a) Other than upon and during the continuance of an Event of Default (as hereinafter defined), the Pledgor shall be entitled to receive and retain any and all dividends or distributions paid in respect of the Pledged Securities; provided, however, that any and all:
(i) dividends or distributions paid or payable other than in cash in respect of, and Instruments, Financial Assets and other property received, receivable or otherwise dividended or distributed in respect of, or in exchange for, any Collateral; and
(ii) cash paid, payable or otherwise dividended or distributed in respect of principal of, or in redemption of, or in exchange for, any Collateral, shall be forthwith delivered to the Pledgee to hold as Collateral and shall, if received by the Pledgor, be received in trust for the benefit of the Pledgee, be segregated from the other property or funds of the Pledgor and be forthwith delivered to the Pledgee as Collateral in the same form as so received (with any necessary endorsement) to the extent the Collateral is less than the Required Account Value.
(b) The Pledgee shall execute and deliver (or cause to be executed and delivered) to the Pledgor all such proxies and other instruments as the Pledgor may reasonably request for the purpose of enabling the Pledgor to receive the interest payments that it is authorized to receive and retain pursuant to paragraph (a) above.
Section 10. Pledgee Appointed Attorney-in-Fact. The Pledgor hereby irrevocably appoints the Pledgee as the Pledgor's attorney-in-fact, with full authority upon failure to perform any of the obligations under the Master Agreement, the Facility Letter or this Agreement in the place and stead of the Pledgor and in the name of the Pledgor or otherwise, from time to time to take any action and to execute any instrument that the Pledgee may deem necessary or advisable to accomplish the purposes of this Agreement.
Section 11. Pledgee May Perform. If the Pledgor fails to perform any agreement contained herein, after receipt of a written request from the Pledgee to do so, the Pledgee may (but shall have no obligation to) itself perform, or cause performance of, such agreement, and the reasonable expenses of the Pledgee incurred in connection therewith shall be payable by the Pledgor under Section 15(b) hereof.
Section 12. The Pledgee's Duties. The powers conferred on the Pledgee hereunder are solely to protect its interest in the 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 13. Security Interest Absolute. The obligations of the 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 the Pledgor to enforce this Agreement, irrespective of whether any action is brought against the Pledgor or whether the Pledgor is joined in any such action or actions. All rights of the Pledgee and the pledge, assignment and security interest hereunder, and all obligations of the Pledgor hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of 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 the Collateral, or proceeds thereof, to all or any of the Secured Obligations, or any manner of sale or other disposition of any Collateral for all or any of the Secured Obligations or any other assets of the Pledgor or any of its subsidiaries;
(e) any change, restructuring or termination of the corporate structure or existence of the Pledgor or any of its subsidiaries; or
(f) any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Pledgor or a third party grantor of a security interest.
Section 14. Remedies. If an Event of Default shall occur and be continuing:
(a) The Pledgee may exercise in respect of the 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 the 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. The Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten days' notice to the 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 Collateral regardless of 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) All cash proceeds received by the Pledgee in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Pledgee, be held by the Pledgee as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Pledgee pursuant to Section 15) 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 of all the Secured Obligations shall be paid over to the Pledgor or to whomsoever may be lawfully entitled to receive such surplus.
(c) The Pledgee may, without notice to the 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 the Collateral or any part thereof.
Section 15. Indemnity and Expenses.
(a) The Pledgor agrees to indemnify the Pledgee and its affiliates and its (and its affiliates') officers, directors, employees, agents, attorneys and advisors from and against any and all claims, damages, losses and liabilities growing out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except claims, damages, losses or liabilities resulting from the Pledgee's gross negligence or willful misconduct.
(b) The Pledgor will upon demand 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 the 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 the Pledgor to perform or observe any of the provisions hereof.
Section 16. Amendments; Waivers; Etc. No amendment or waiver of any provision of this Agreement, and no consent to any departure by the Pledgor hereof, shall in any event be effective unless the same shall be in writing and signed by the Pledgee, 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 the Pledgee 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 17. Notices. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be provided in the manner set forth in Section 15 of the Master Agreement.
Section 18. Continuing Security Interest; Assignments.This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the irrevocable payment in full in cash of all Secured Obligations, the expiration or termination of all Credits and the termination of the Master Agreement and the Facility Letter, (b) be binding upon the Pledgor and the Pledgee and their respective successors and permitted assigns and (c) inure, together with the rights and remedies of the Pledgee and its respective successors, 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 to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Pledgee herein or otherwise. The Pledgor will, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Pledgee such confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, reports and other assurances or instruments and take such further steps related to the 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 the Collateral, including any actions which may be required or advisable as a result of any amendment or supplement to applicable laws, including the NYUCC.
Section 19. Release and Termination. Upon the irrevocable payment in full in cash of all Secured Obligations, the expiration or termination of all Credits and the termination of the Master Agreement and the Facility Letter, the pledge, collateral assignment and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Pledgor. Upon any such termination, the Pledgee will, at the Pledgor's expense execute and deliver to the Pledgor such documents as the Pledgor shall reasonably request to evidence such termination. If at any time all or any part of any payment theretofore applied by the Pledgee to any of the Secured Obligations is or must be rescinded or returned by the Pledgee for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of the Pledgor), such Secured Obligations 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 Pledgee, and this Agreement shall continue to be effective or be reinstated, as the case may be, as to such Secured Obligations, all as though such application by the Pledgee had not been made.
Section 20. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER IN RESPECT OF ANY PARTICULAR COLLATERAL IS MANDATORILY GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, IN WHICH CASE THE LAWS OF SUCH OTHER JURISDICTION SHALL GOVERN SUCH MATTERS.
Section 21. Jurisdiction, Venue.THE PLEDGOR HEREBY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, NEW YORK IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING HEREUNDER OR RELATING HERETO. THE PLEDGEE AND THE PLEDGOR HEREBY WAIVE ANY OBJECTION TO VENUE AND THE DEFENSE OF FORUM NON CONVENIENS IN ANY SUCH ACTION OR PROCEEDING. THE PLEDGOR HEREBY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO ITS ADDRESS FOR NOTICES FORTH IN SECTION 15 OF THE MASTER AGREEMENT.
Section 22. WAIVER OF JURY TRIAL. EACH OF THE 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 23. 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 telecopier or other electronic transmission (including "PDF") shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 24. 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.
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.
EVEREST INTERNATIONAL REINSURANCE, LTD. |
|
| |
| |
By: /S/ PATRICIA GORDON-PAMPLIN |
Name: Patrcia Gordon-Pamplin |
Title: Vice President |
LLOYDS BANK PLC |
|
|
| By: /S/ DAVEN POPAT |
| Name: Daven Popat |
| Title: Senior Vice President |
| Transaction Execution |
| Category A |
| P003 |
| |
By: /S/ JULIA R. FRANKLIN |
Name: Julia R. Franklin |
Title: Vice President |
| Business Transformation |
| Category A |
| F002 |
Signature Page to the Pledge and Security Agreement
SCHEDULE 1
COLLATERAL VALUES1
| Category of Collateral | Eligible Percentage |
| Cash (denominated in British pounds sterling) | 100% |
| Cash (denominated in US dollars) | 95% |
| Certificates of deposit and savings, money market and demand deposit accounts issued by federally insured U.S. banks rated Aa3/AA- or better. | 95% |
Securities issued by the U.S. government or its agencies (whose debt obligations are fully and explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the U.S. government), in each case rated AA or AA equivalent or better. - Maturity 2 years or less - Maturity over 2 years | 95% of Market 90% of Market |
Securities issued by the central government of an OECD (Organization for Economic Co-Operation and Development) country (whose debt obligations are fully and explicitly guaranteed as to the timely payment of principal and interest by the full faith and credit of the central government of the OECD country issuing such securities), in each case rated AA or AA equivalent or better. | 90% of Market |
| Securities issued by the U.S. government or U.S. government sponsored enterprises (including the Federal Home Loan Mortgage Corporation or any successor thereto and the Federal National Mortgage Association or any successor thereto), in each case rated AA or AA equivalent or better. | 90% of Market |
| 1 | Other than U.S. Treasury bills, bonds & notes, no single issue or issuer shall comprise greater than 10% of the Collateral Value at any time. Commercial paper shall not comprise greater than 15% of the Collateral Value at any time, regardless of issuer. No Collateral (including, without limitation, Cash) shall be include in the calculation of the Collateral Value unless the Pledgee has a first priority perfected lien on and security interest in such Collateral and the Account. No Collateral which is subject to a securities lending arrangement shall be included in a Collateral Value. All Collateral must be capable of being marked to market on a daily basis and cleared and settled within the United States. Notwithstanding anything set forth herein to the contrary, (i) if at any time the difference between the ratings established by Moody's and Standard & Poor's shall fall within different categories in this Schedule 1, then for purposes of determining the Eligible Percentage, the rating one level above the lower rating will apply, and (ii) if either Moody's or Standard & Poor's shall not have in effect a rating, the Eligible Percentage shall be based upon the rating of Moody's or Standard & Poor's (whichever is then in effect). |
ANNEX A
CERTAIN DEFINED TERMS
Capitalized terms used herein shall have the respective meanings ascribed to them below:
"Account Control Agreement" has the meaning specified therefor in Section 6 hereof.
"British Pound Sterling Equivalent" means, at any time:
(i) with respect to any amount denominated in British pounds sterling, such amount; and
(ii) with respect to any amount denominated in any foreign currency, the equivalent amount thereof in British pounds sterling calculated by the Pledgee at such time at the selling rate ruling for telegraphic transfers on the financial center of such foreign currency (as determined by the Pledgee) as of the close of business day immediately preceding the date of such determination for the purchase of British pounds sterling with such foreign currency.
"Business Day" means a day (other than a Saturday or Sunday) on which the banks are generally open for business in London.
"Collateral" has the meaning specified therefor in Section 2 hereof.
"Collateral Value" means, with respect to the Pledgee as of any Business Day as of which it is being calculated:
(i) for each category of Eligible Collateral set forth on Schedule 1, an amount equal to the "Eligible Percentage" of the fair market value (or, as to cash, the British Pound Sterling Equivalent) thereof set forth opposite such category of Eligible Collateral on Schedule 1; and
(ii) for the Eligible Collateral, in the aggregate, the sum of such amounts, in each case as of the close of business on the immediately preceding Business Day or, if such amount is not determinable as of the close of business on such immediately preceding Business Day, as of the close of business on the most recent Business Day on which such amount is determinable, which Business Day shall be not more than two Business Days prior to the Business Day as of which the Collateral Value is being calculated;
provided that the calculation of the Collateral Value shall be further subject to the terms and conditions set forth on Schedule 1; provided further that (x) no Collateral (including cash) shall be included in the calculation of the Collateral Value unless the Pledgee has a first priority perfected Lien on and security interest in such Collateral pursuant to this Agreement and the Account Control Agreement and (y) no Collateral that is subject to a securities lending arrangement shall be included in the calculation of Collateral Value.
"Collateral Value Report" has the meaning given to such term in Section 6.
"control" means "control" within the meaning of Section 9-104 or Section 9-106 of the NYUCC, as applicable.
"Entitlement Holder" means a Person that (i) is an "entitlement holder" as defined in Section 8‑102(a)(7) of the NYUCC (except in respect of a Book-entry Security); and (ii) 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.
"Eligible Collateral" means the Cash and other obligations and investments fitting within a category specified on Schedule 1, subject to the term to maturity criteria set forth therein.
"Eligible Percentage" means, for any category of Eligible Collateral, the percentage set forth opposite such category of Eligible Collateral in the column "Eligible Percentage" specified on Schedule 1.
"Entitlement Order" shall have 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.
"Facility Letter" means the agreement dated November 9, 2015 (as from time to time amended, varied supplemented, novated or assigned) between the Pledgor and the Pledgee, which, along with the Master Agreement and each Application for Irrevocable Standby Letter of Credit, sets forth the terms and conditions of the standby letter of credit.
"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.
"Master Agreement" means the Master Agreement for Stand-by Letter of Credit and Demand Guarantees dated as of November 9, 2015, (as from time to time amended, varied supplemented, novated or assigned) between the Pledgor (or by any person for or on behalf of the Pledgor) 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.
"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.
"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.
"Permitted Liens" has the meaning specified therefor in Section 6 hereof.
"Required Account Value" has the meaning specified therefor in Section 6 hereof.
"Secured Obligations" has the meaning specified therefor in Section 3 hereof.
"Secured Intermediary" means a Person that (i) is a "securities intermediary" as defined in Section 8-102(a)(14) of the NYUCC and (ii) in respect of any U.S. Government Obligations, is also a "securities intermediary' as defined in 31 C.F.R. 357.2.
"Security Entitlement" means (i) security entitlement as define din Section 8‑102(a)(17) of the NYUCC (except in respect of a U.S. Government Obligation); and (ii) 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" shall have 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.
(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: "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); "Securities Account': Section 8-501(a); "Security': Section 8-102(a)(15).
EXHIBIT A
FORM OF COLLATERAL VALUE REPORT
[DATE]
Lloyds Bank plc
[ADDRESS]
Attention: [_]
Ladies and Gentlemen:
Reference is made to the Pledge and Security Agreement, dated as of [______], 2015, among Everest International Reinsurance, Ltd., a company organized under the laws of Bermuda, as pledgor (the "Pledgor") and Lloyds Bank plc, as pledgee (the "Pledgee") (as amended or otherwise modified from time to time, the "Pledge and Security Agreement"). Terms defined in the Pledge and Security Agreement are, unless otherwise defined herein or the context otherwise requires, used herein as defined therein.
This Collateral Value Report is delivered pursuant to Section 6(m) of the Pledge and Security Agreement. The date of this Collateral Value Report is _____________, 20__ (the "Report Date"). Set forth on Attachment A is the computation of the Collateral Value of the Pledgor and certain other information required by Section 6(m) of the Pledge and Security Agreement as of ______________, 20__ (the "Valuation Date"), calculated in accordance with the definition of "Collateral Value" contained in the Pledge and Security Agreement and the other provisions of the Pledge and Security Agreement (including Schedule 1 thereto).
The undersigned hereby certifies that:
(i) the information on Attachment A correctly sets forth the British Pound Sterling Equivalent of the Collateral Value (in the aggregate and for each category of Collateral) of the Pledgee and the aggregate Total Outstandings as of the Valuation Date;
(ii) the aggregate British Pound Sterling Equivalent of the Total Outstandings do not exceed the British Pound Sterling Equivalent of the aggregate Collateral Value as of the Valuation Date; and
(iii) nothing has come to the attention of the undersigned to cause the undersigned to believe that the Pledgee does not have a first priority perfected Lien (subject to Permitted Liens in favor of the Custodian) on and security interest in the Collateral set forth on Attachment A as of the Report Date.
| EVEREST INTERNATIONAL REINSURANCE, LTD. |
| |
|
By: |
|
| Name: |
|
Title: |
Collateral Value
[TO COME]
Aggregate Total Outstandings
| Number | Issue Date | Undrawn Amount | Unreimbursed Drawings |
| | | £ [_] | £ [_] |
| | | | |
| | | | |
Aggregate Total Outstandings | £ [_] | £ [_] |
Ratio of aggregate Collateral Value to Total Outstandings: _________________
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
THIS CERTIFICATE is given pursuant to Section (n) of the Pledge and Security Agreement, dated as of November 9, 2015 (as amended, restated, modified or supplemented from time to time, the "Pledge and Security Agreement", the terms defined therein being used herein as therein defined), among EVEREST INTERNATIONAL REINSURANCE, LTD., a company organized under the laws of Bermuda, as pledgor (the "Pledgor"), and Lloyds Bank plc, as pledgee (the "Pledgee").
The undersigned hereby certifies that:
1. He is the [Chief Executive Officer]/[Chief Accountant] of the Pledgor.
2. Enclosed with this Certificate are copies of the financial statements of Everest Group and its subsidiaries as of __________, and for the [________-month period]/[year] then ended, required to be delivered under Section [8(a)]/[8(b)] of the Master Agreement (as defined in the Pledge and Security Agreement). Such financial statements have been prepared in accordance with GAAP [(subject to the absence of notes required by GAAP and subject to normal year-end adjustments)]2 and present fairly, in all material respects, the financial condition of Everest Group and its subsidiaries on a consolidated basis as of the date indicated and the results of operations of Everest Group and its subsidiaries on a consolidated basis for the period covered thereby.
3. The undersigned has reviewed the terms of the Master Agreement, the Facility Letter (as defined in the Pledge and Security Agreement) and the Pledge and Security Agreement and has made, or caused to be made under the supervision of the undersigned, a review in reasonable detail of the transactions and condition of Everest Group and its subsidiaries during the accounting period covered by such financial statements.
4. The examination described in paragraph 3 above did not disclose, and the undersigned has no knowledge of the existence of, any Default or Event of Default during or at the end of the accounting period covered by such financial statements or as of the date of this Certificate[, except as set forth below.
Describe here or in a separate attachment any exceptions to paragraph 4 above by listing, in reasonable detail, the nature of the Default or Event of Default, the period during which it existed and the action that the Borrower has taken or proposes to take with respect thereto].
5. Attached to this Certificate as Attachment A is a Covenant Compliance Worksheet reflecting the computation of the financial covenants set forth in Schedule 8(d) of the Master Agreement as of the last day of the period covered by the financial statements enclosed herewith.
2 Insert in the case of quarterly financial statements.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Certificate as of the _____ day of __________, _______.
EVEREST INTERNATIONAL REINSURANCE, LTD. |
|
|
By: |
|
Name: |
|
Title: |
ATTACHMENT A
GAAP COVENANT COMPLIANCE WORKSHEET
A. Consolidated Indebtedness to Total Capitalization
| (1) Consolidated Indebtedness as of the date of determination (excluding, to the extent otherwise included, amounts due to Hybrid Securities) | | £ ________________ |
| | | |
| (2) Total Capitalization of the Pledgor as of such date: | | |
| | | |
| (a) Consolidated Indebtedness as of such date (from Line 1 above) | £ ________________ | |
| | | |
| (b) Consolidated Net Worth as of such date (excluding Disqualified Capital Stock) | £________________ | |
| | | |
| (c) Aggregate principal amount of all Hybrid Securities as of such date | £ ________________ | |
| | | |
| (d) Sum of Line 2(a), Line 2(b) and Line 2(c) | £ ________________ | |
| | | |
| (3) Hybrid Securities exclusion: | | |
| | | |
| Multiply Line 2(d) by 15% | £ ________________ | |
| | | |
| (4) Adjustment for Hybrid Securities: | | |
| | | |
| Subtract line (3) from Line 2(c) (if not a positive number, enter 0) | | £ ________________ |
| | | |
| (5) Consolidated Indebtedness plus Hybrid Securities adjustment: | | |
| | | |
| Add Line 1 and Line 4 | | £ ________________ |
| | | |
| (6) Consolidated Indebtedness (as adjusted) to Total Capitalization as of the date of determination: | | £ ________________ |
| | | |
| Divide Line 5 by Line 2(d) | | |
| | | |
| (7) Maximum Consolidated Indebtedness to Total Capitalization Ratio as of the date of determination | | 0.35 : 1.0 |
Attachment A to Exhibit B - Page 1
B. Minimum Consolidated Net Worth
(1) Consolidated Net Worth as of the date of determination: | £ ____________ | | |
(2) Minimum Amount as of the date of determination: | | | |
(a) Consolidated Net Worth (as of [December 31, 2014]) | £ ____________ | | |
(b) Net Worth Adjustment Multiply line 2(b) by 0.70 | | £ ____________ | |
(c) Consolidated Net Income per fiscal quarter (ending on or after [December 31, 2014]) | £ ____________ | | |
(d) Net Income Adjustment Multiply line (c) by 0.25 | | £ ____________ | |
(e) Increase in Consolidated Net Worth attributable to the issuance of ordinary and preferred shares | £ ____________ | | |
(f) Net Worth Adjustment Multiply line (e) by 0.25 | | £ ____________ | |
(g) Minimum Consolidated Net Worth as of the Date of Determination Add Lines 2(b), 2(d) and 2(f) | | | £ ____________ |
Attachment A to Exhibit B - Page 3
C. Minimum Financial Strength Rating
(1) Has the Pledgor maintained a financial strength rating by A.M. Best at all times from the date of the most recently delivered Compliance Certificate to and including the date hereof? | ____ Yes | ____ No |
(2) Has the financial strength of A.M. Best for the Pledgor been equal to or better than "B++" at all times during the period described in line (1) above? | ____ Yes | ____ No |
