EXHIBIT 10.55
100% QUOTA SHARE RETROCESSION AGREEMENT
(TRADITIONAL)
BY AND BETWEEN
ST. PAUL REINSURANCE COMPANY LIMITED
(RETROCEDANT)
and
PLATINUM RE (UK) LIMITED
(RETROCESSIONA1RE)
DATED AS OF 27 November, 2002
THIS QUOTA SHARE RETROCESSION AGREEMENT (this "Agreement"), effective as of
12:01 a.m. London time on the day following receipt by Retrocessionaire of
permission from the Financial Services Authority under Part IV of the Financial
Services and Markets Act 2000 to conduct reinsurance business in the United
Kingdom (such time the Effective Time" and such date the "Effective Date") is
made by and between ST. PAUL REINSURANCE COMPANY LIMITED, a United Kingdom
domiciled insurance company ("Retrocedant"), and PLATINUM RE (UK) LIMITED, a
United Kingdom domiciled insurance company ("Retrocessionaire").
All capitalised terms used but not defined herein shall have the meanings
ascribed to such terms in the Formation and Separation Agreement dated 28th
October, 2002 between Platinum Underwriters Holdings, Ltd., the ultimate parent
of Retrocessionaire, and The St. Paul Companies, Inc., the ultimate parent of
Retrocedant.
WHEREAS, Retrocedant has agreed to retrocede to Retrocessionaire, and
Retrocessionaire has agreed to assume by indemnity reinsurance, a one hundred
percent (100%) quota share of the liabilities arising pursuant to the
Reinsurance Contracts (as defined hereunder), subject to the terms set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises and upon
the terms and conditions set forth herein, the parties hereto agree as follows.
BUSINESS COVERED; EXCLUSIONS
Retrocedant hereby obligates itself to retrocede to Retrocessionaire and
Retrocessionaire hereby obligates itself to accept, pursuant to the terms
of this Agreement, a one hundred percent (100%) quota share of any and all
liabilities incurred by Retrocedant under all reinsurance and retrocession
contracts (each, a "Reinsurance Contract") that are new or renewal
traditional reinsurance contracts entered into by Retrocedant on or after
the Effective Date pursuant to Clause 4.1 or Clause 4.3 of Part B of the
UK Underwriting Agency and Underwriting Management Agreement (the "Agency
Agreement") between Retrocedant and Retrocessionaire dated 1st November,
2002 and that Retrocedant has consented to being retroceded to
Retrocessionaire. No retrocession shall attach with respect to any
contracts of reinsurance of any kind or type whatsoever issued and/or
assumed by Retrocedant, other than the Reinsurance Contracts.
TERM
This Agreement shall be continuous as to the Reinsurance Contracts. Except
as mutually agreed in writing by Retrocedant and Retrocessionaire, this
Agreement shall remain continuously in force until all Reinsurance
Contracts are terminated, expired, cancelled or commuted.
COVERAGE
The Coverage Period will be the period from and including the Effective
Time through the commutation, expiration or final settlement of all
liabilities under any of the Reinsurance Contracts.
PREMIUMS AND COMMISSION
Retrocedant shall transfer to Retrocessionaire with respect to all
Reinsurance Contracts, one hundred percent (100%) of all gross premiums
written on or after the Effective Time, net of premium returns, allowances
and cancellations and less any applicable Retrocedant Ceding Commission
and Inuring Retrocession premiums.
RETROCEDANT CEDING COMMISSION
With respect to the Reinsurance Contracts, Retrocessionaire shall pay to
Retrocedant a ceding commission (the "RETROCEDANT CEDING COMMISSION"), and
such Retrocedant Ceding Commission shall equal 100 percent (100%) of the
actual expenses incurred in writing each Reinsurance Contract, including
actual ceding commissions and brokerage fees, as determined in accordance
with Retrocedant's customary practices and procedures and as submitted to
The St. Paul Companies, Inc., all as allocable pro rata to periods from
and after the Effective Time. Retrocedant Ceding Commission shall also
include all underwriting fees and other costs and expenses paid by
Retrocedant pursuant to the Agency Agreement between Retrocedant and
Retrocessionaire, and all underwriting and other expenses incurred by
Retrocedant on or after the Effective Time with respect to the liabilities
transferred hereunder, as determined in accordance with Retrocedant's
customary practices and procedures.
ORIGINAL CONDITIONS
All retrocessions assumed under this Agreement shall be subject to the
same rates, terms, conditions, waivers and interpretations, and to the
same modifications and alterations, as the respective Reinsurance
Contracts.
INURING RETROCESSIONS
ALLOCATION TO RETROCESSIONAIRE
Retrocedant agrees that the retrocession contracts purchased by the
reinsurance division of The St. Paul ("ST. PAUL RE") from third party
retrocessionaires ("THIRD PARTY RETROCESSIONAIRES") on behalf of
Retrocedant prior to the Effective Time that are listed on Exhibit A
hereto shall inure to the benefit of Retrocessionaire to the extent of
liabilities covered under this Agreement ("Inuring Retrocessions"),
subject to the agreed allocations in Exhibits B, C and D. It is further
understood and agreed that facultative and other reinsurances not listed
on Exhibit A but relating to the Reinsurance Contracts shall also inure to
the benefit of Retrocessionaire to the extent of liabilities covered under
this Agreement and shall be considered Inuring Retrocessions under this
Agreement.
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INURING RETROCESSIONS CLAIMS
Each of the parties agrees to transfer to the other party all recoveries
or any portion thereof that such party receives on or after the Effective
Time pursuant to the Inuring Retrocessions which are allocated to the
other party in the manner set forth in Exhibit B hereto. Retrocedant shall
use its commercially reasonable efforts to collect any recoveries due to
Retrocessionaire under the Inuring Retrocessions that indemnify the
Retrocedant for losses or expenses payable or return of premium allocable
to the Retrocessionaire and shall hold them on trust for, and pay them to
or to the order of Retrocessionaire. The parties agree that
Retrocessionaire's obligations to make payments pursuant to the Inuring
Retrocessions or to reimburse Retrocedant pursuant to this Agreement shall
not be waived by non-receipt of any such amounts. Retrocessionaire shall
reimburse Retrocedant for one hundred percent (100%) of any expenses
reasonably incurred by Retrocedant in attempting to make such collection,
including all allocated expenses, as determined in accordance with St.
Paul Re's customary practices and procedures. Retrocessionaire shall have
the right to associate with Retrocedant, at Retrocessionaire's own
expense, in any actions brought by Retrocedant to make such collections.
In the event claims of Retrocedant and Retrocessionaire aggregate in
excess of the applicable limit under an Inuring Retrocession, all limits
applicable to either Retrocedant or Retrocessionaire shall be allocated
between Retrocedant and Retrocessionaire in the manner set forth in
Exhibit D hereto.
CONSIDERATION
Retrocessionaire agrees to pay under the Inuring Retrocessions its share
of all future premiums Retrocedant is obligated to pay pursuant to the
terms of the Inuring Retrocessions to the extent that such premiums are
allocable to Retrocessionaire in the manner set forth in Exhibit C hereto,
and not otherwise paid by Retrocessionaire and to indemnify Retrocedant
for all such premiums paid directly by Retrocedant, net of any ceding
commissions and similar amounts paid by Third Party Retrocessionaires to
Retrocedant.
TERMINATION OR COMMUTATION OF INURING RETROCESSIONS
With respect to any Inuring Retrocessions providing coverage solely with
respect to the Reinsurance Contracts, Retrocedant agrees, on behalf of
itself and its affiliates, that Retrocedant shall not take any action or
fail to take any action that would reasonably result in the termination or
commutation of, or any material change in the coverage provided by, any
Inuring Retrocession, without the prior written consent of the
Retrocessionaire, such consent not to be unreasonably withheld.
With respect to any Inuring Retrocessions providing coverage for both
Reinsurance Contracts and to business not being transferred, neither party
shall take any action or fail to take any action that would reasonably
result in the termination or commutation of, or any material change in the
coverage provided by, any Inuring Retrocession, without the prior written
consent of the other party, such consent not to be unreasonably withheld.
LOSS AND LOSS EXPENSE; SALVAGE AND SUBROGATION; FOLLOW THE FORTUNES
Retrocessionaire shall be liable for one hundred percent (100%) of all
future loss, loss adjustment expenses, incurred but not reported losses
and other payment obligations as incurred by Retrocedant under the
Reinsurance Contracts on and after the Effective Date. Retrocessionaire
shall have the right to all salvage and subrogation on the account of
claims and settlements with respect to the Reinsurance Contracts.
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In the event of a claim under a Reinsurance Contract, Retrocedant will
assess the validity of the claim and make a determination as to payment,
consistent with the claims handling guidelines previously provided to
Retrocedant in writing by Retrocessionaire and Retrocessionaire may
exercise its rights under the Administration subsection in respect
thereof. Retrocedant shall provide prompt notice of any claim in excess of
USD500,000 or GBP325,000 to Retrocessionaire. All payments made by
Retrocedant, whether under strict contract terms or by way of compromise,
shall be binding on Retrocessionaire. In addition, if Retrocedant refuses
to pay a claim in full and a legal proceeding results, Retrocessionaire
will be unconditionally bound by any settlement agreed to by Retrocedant
or the adverse judgment of any court or arbitrator (which could include
any judgment for bad faith, punitive damages, excess policy limit losses
or extra contractual obligations) and Retrocedant may recover with respect
to such settlements and judgments under this Agreement. Though Retrocedant
will settle such claims and litigation in good faith, Retrocessionaire is
bound to accept the settlements paid by Retrocedant and such settlements
may be for amounts that could be greater than the amounts that would be
agreed to by Retrocessionaire if Retrocessionaire were to settle such
claims or litigation directly. It is the intent of this Agreement that
Retrocessionaire shall in every case in which this Agreement applies and
in the proportion specified herein "follow the fortunes" of Retrocedant in
respect of risks Retrocessionarire has accepted under this Agreement.
EXTRA CONTRACTUAL OBLIGATIONS
In the event Retrocedant or Retrocessionaire is held liable to pay any
punitive, exemplary, compensatory or consequential damages because of
alleged or actual bad faith or negligence related to the handling of any
claim under any Reinsurance Contract or otherwise in respect of such
Reinsurance Contract, the parties shall be liable for such damages in
proportion to their responsibility for the conduct giving rise to the
damages. Such determination shall be made by Retrocedant and
Retrocessionaire, acting jointly and in good faith, and in the event the
parties are unable to reach agreement as to such determination, recourse
shall be had to the Arbitration Section hereof.
ADMINISTRATION OF REINSURANCE CONTRACTS
ADMINISTRATION
The parties agree that, as of the Effective Time, Retrocedant shall have
the sole authority to administer the Reinsurance Contracts in all
respects, which authority shall include, but not be limited to, authority
to bill for and collect premiums, adjust all claims and handle all
disputes thereunder and to effect any and all amendments, commutations and
cancellations of the Reinsurance Contracts, subject, however, in the case
of administration of claims, to all claims handling guidelines provided in
advance in writing by Retrocessionaire to Retrocedant. Retrocedant shall
not, on its own, settle any claim, waive any right, defence, setoff or
counterclaim relating to the Reinsurance Contracts with respect to amounts
in excess of USD500,000 or GBP325,000 or make any ex gratia payments, and
shall not amend, commute or terminate any of the Reinsurance Contracts, in
each case without the prior written consent of Retrocessionaire.
Notwithstanding the foregoing, to the extent permitted by law,
Retrocessionaire may, at its discretion and at its own expense, assume the
administration, defence and settlement of any claim upon prior written
notice to Retrocedant. Upon receipt of such notice, Retrocedant shall not
compromise, discharge or settle such claim except with the prior written
consent of Retrocessionaire. Retrocessionaire shall not take any action in
the administration of such claim that would reasonably be expected to
adversely affect Retrocedant, its business or its reputation, without the
prior written
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consent of Retrocedant. Subject to the terms of the Extra Contractual
Obligations Section hereof, Retrocessionaire shall indemnify Retrocedant
for all Losses, including punitive, exemplary, compensatory or
consequential damages arising from such assumption of the conduct of such
settlement pursuant to the Indemnification Section herein.
REPORTING AND REGULATORY MATTERS
Each party shall provide the notices and filings required to be made by it
to relevant regulatory authorities as a result of this Agreement.
Notwithstanding the foregoing, each party shall provide to the other party
any information in its possession regarding the Reinsurance Contracts as
reasonably required by the other party to make such filings and in a form
as agreed to by the parties.
DUTY TO COOPERATE
Upon the terms and subject to the conditions and other agreements set
forth herein, each party agrees to use its commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other party in doing, all
things necessary or advisable to perform the transactions contemplated by
this Agreement.
COMMUNICATIONS RELATING TO THE REINSURANCE CONTRACTS
Following the Effective Time, Retrocedant and Retrocessionaire shall each
promptly forward to the other copies of all material notices and other
written communications it receives relating to the Reinsurance Contracts
(including, without limitation, all inquiries and complaints from relevant
insurance regulators, brokers and other service providers and reinsureds
and all notices of claims, suits and actions for which it receives service
of process.)
REPORTS AND REMITTANCES
REPORT FROM RETROCEDANT
Within 30 days after the close of each month, Retrocedant shall provide
Retrocessionaire with a summary statement of account for the previous
month showing all activity relating to each of the Reinsurance Contracts,
including related administration costs and expenses incurred by
Retrocedant, consisting of the categories of information set forth in
Exhibit E hereto. The monthly statement of account shall also provide a
breakdown of any amounts due to Retrocedant or Retrocessionaire, as the
case may be, as reimbursement for paid claims, collected premiums or other
amounts due pursuant to the terms of this Agreement, including amounts
relating to Inuring Retrocessions.
REMITTANCES
Within ten Business Days after delivery of each monthly report pursuant to
the Report subsection of this Section, Retrocedant and Retrocessionaire
shall settle all amounts then due under this Agreement for that month.
LATE PAYMENTS
Should any payment due any party to this Agreement be received by such
party after the due date for such payment under this Agreement, interest
shall accrue from the date on which such payment was due until payment is
received by the party entitled thereto, at an annual rate equal to the
London Interbank Offered Rate quoted for six month periods as reported in
The Wall Street Journal on the first Business Day of the
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month in which such payment first becomes due plus one hundred basis
points (the "Applicable Rate").
COST REIMBURSEMENT
Retrocessionaire shall reimburse for its allocated share of all costs and
expenses incurred by Retrocedant in administering the Reinsurance
Contracts as set forth in Exhibit F hereto.
CURRENCY
For purposes of this Agreement, where Retrocedant receives premiums or
pays losses in currencies other than United States dollars, GBP or Euros,
such premiums or losses shall be converted into GBP at the actual rates of
exchange at which these premiums or losses are entered in the
Retrocedant's books.
MAINTENANCE OF LICENSES
Each of Retrocedant and Retrocessionaire hereby covenants to maintain at
all times all licences and authorisations required to undertake the
actions contemplated hereby.
ACCESS TO RECORDS
From and after the Effective Date, Retrocedant shall afford to
Retrocessionaire and its respective authorized accountants, counsel and
other designated representatives (collectively, "REPRESENTATIVES")
reasonable access (including using commercially reasonable best efforts to
give access to Persons possessing information) during normal business
hours to all data and information that is specifically described in
writing (collectively, "INFORMATION") within the possession of Retrocedant
relating to the liabilities transferred hereunder, insofar as such
information is reasonably required by Retrocessionaire. Similarly, from
and after the Effective Date, Retrocessionaire shall afford to
Retrocedant, any Post-closing Subsidiary of Retrocedant and their
respective Representatives reasonable access (including using commercially
reasonable best efforts to give access to Persons possessing information)
during normal business hours to Information within Retrocessionaire's
possession relating to Retrocedant, insofar as such information is
reasonably required by Retrocedant. Information may be requested under
this Section for, without limitation, audit, accounting, claims,
litigation (other than any claims or litigation between the parties
hereto) and tax purposes, as well as for purposes of fulfilling disclosure
and reporting obligations and for performing this Agreement and the
transactions contemplated hereby.
From and after the Effective Date, Retrocessionaire and Retrocedant or
their designated representatives may inspect, at the place where such
records are located, any and all data and information that is specifically
described in writing within the possession of the other party hereto
reasonably relating to this Agreement, on reasonable prior notice and
during normal business hours. The rights of the parties under this Section
shall survive termination of this Agreement and shall continue for as long
as there may be liabilities under the Reinsurance Contracts or reporting
or retention requirements under applicable law. In addition, each party
shall have the right to take copies (including electronic copies) of any
information held by the other party that reasonably relates to this
Agreement or the Reinsurance Contracts. Each party shall, and shall cause
its designated representatives to, treat and hold as confidential
information any information it receives or obtains pursuant to this
Section.
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INDEMNIFICATION
INDEMNIFICATION BY RETROCEDANT
Retrocedant agrees to indemnify, defend and hold harmless
Retrocessionaire, and its officers, directors and employees with respect
to any and all Losses arising from any breach by Retrocedant of any
representation, warranty or covenant herein. Retrocedant further agrees to
indemnify, defend and hold harmless Retrocessionaire and its officers,
directors and employees against any and all Losses arising out of
Retrocedant's administration of the Reinsurance Contracts, including but
not limited to extracontractual obligations, payments in excess of policy
limits and settlements made in respect of any such claims to the extent
arising from the gross negligence or wilful misconduct of Retrocedant
except to the extent such actions are taken with the prior consent or
direction of Retrocessionaire. Such indemnification obligations shall be
limited to the aggregate of all fees paid to Retrocedant pursuant to the
Cost Reimbursement subsection hereof.
INDEMNIFICATION BY RETROCESSIONAIRE
Retrocessionaire agrees to indemnify, defend and hold harmless
Retrocedant, and its officers, directors and employees with respect to any
and all Losses arising from any breach by Retrocessionaire of any
representation, warranty or covenant herein. Retrocessionaire further
agrees to indemnify, defend and hold harmless Retrocedant and its
officers, directors and employees against any and all Losses arising out
of Retrocessionaire's administration of the Reinsurance Contracts,
including but not limited to extracontractual obligations, payments in
excess of policy limits and settlements made in respect of any such
claims.
INDEMNIFICATION PROCEDURES
(a) If a party seeking indemnification pursuant to this Section (each,
an "INDEMNITEE") receives notice or otherwise learns of the
assertion by a Person (including, without limitation, any
governmental entity) who is not a party to this Agreement or an
Affiliate thereof, of any claim or of the commencement by any such
Person of any Action (a "THIRD PARTY CLAIM") with respect to which
the party from whom indemnification is sought (each, an
"INDEMNIFYING PARTY") may be obligated to provide indemnification
pursuant to the Indemnification by Retrocedant and the
indemnification by Retrocessionaire subsections of this Section,
such Indemnitee shall give such Indemnifying Party written notice
thereof promptly after becoming aware of such Third Party Claim;
provided that the failure of any Indemnitee to give notice as
provided in this Section shall not relieve the Indemnifying Party of
its obligations under this Section, except to the extent that such
Indemnifying Party is prejudiced by such failure to give notice.
Such notice shall describe the Third Party Claim in as much detail
as is reasonably possible and, if ascertainable, shall indicate the
amount (estimated if necessary) of the Loss that has been or may be
sustained by such Indemnitee.
(b) An Indemnifying Party may elect to defend or to seek to settle or
compromise, at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within 30
days of the receipt of notice from an indemnitee in accordance with
subsection (a) of this Section (or sooner, if the nature of such
Third Party Claim so requires), the indemnifying Party shall notify
the Indemnitee of its election whether the Indemnifying Party will
assume responsibility for defending such Third Party Claim, which
election shall specify any reservations or exceptions. After notice
from an Indemnifying Party to an Indemnitee of its election to
assume the defence of a Third Party Claim, such Indemnifying Party
shall not be
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liable to such Indemnitee under this Section for any legal or other
expenses (except expenses approved in writing in advance by the
Indemnifying Party) subsequently incurred by such Indemnitee in
connection with the defence thereof; provided that, if the
defendants in any such claim include both the Indemnifying Party and
one or more Indemnitees and in any Indemnitee's reasonable judgment
a conflict of interest between one or more of such Indemnitees and
such Indemnifying Party exists in respect of such claim or if the
Indemnifying Party shall have assumed responsibility for such claim
with reservations or exceptions that would materially prejudice such
Indemnitees, such Indemnitees shall have the right to employ
separate counsel to represent such Indemnitees and in that event the
reasonable fees and expenses of such separate counsel (but not more
than one separate counsel for all such Indemnitees reasonably
satisfactory to the Indemnifying Party) shall be paid by such
Indemnifying Party. If an Indemnifying Party elects not to assume
responsibility for defending a Third Party Claim, or fails to notify
an Indemnitee of its election as provided in this Section, such
Indemnitee may defend or (subject to the remainder of this Section)
seek to compromise or settle such Third Party Claim at the expense
of the Indemnifying Party.
(c) Neither an Indemnifying Party nor an Indemnitee shall consent to
entry of any judgment or enter into any settlement of any Third
Party Claim which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnitee, in the
case of a consent or settlement by an Indemnifying Party, or the
Indemnifying Party, in the case of a consent or settlement by the
Indemnitee, of a written release from all liability in respect to
such Third Party Claim.
(d) If an Indemnifying Party chooses to defend or to seek to compromise
or settle any Third Party Claim, the Indemnitee shall make available
at reasonable times to such Indemnifying Party any personnel or any
books, records or other documents within its control or which it
otherwise has the ability to make available that are necessary or
appropriate for such defence, settlement or compromise, and shall
otherwise cooperate in a reasonable manner in the defence,
settlement or compromise of such Third Party Claim.
(e) Notwithstanding anything in this Section to the contrary, neither an
Indemnifying Party nor an indemnitee may settle or compromise any
claim over the objection of the other; provided that consent to
settlement or compromise shall not be unreasonably withheld or
delayed. If an Indemnifying Party notifies the Indemnitee in writing
of such Indemnifying Party's desire to settle or compromise a Third
Party Claim on the basis set forth in such notice (provided that
such settlement or compromise includes as an unconditional term
thereof the giving by the claimant or plaintiff of a written release
of the Indemnitee from all liability in respect thereof) and the
Indemnitee shall notify the Indemnifying Party in writing that such
Indemnitee declines to accept any such settlement or compromise,
such Indemnitee may continue to contest such Third Party Claim, free
of any participation by such Indemnifying Party, at such
Indemnitee's sole expense. In such event, the obligation of such
Indemnifying Party to such Indemnitee with respect to such Third
Party Claim shall be equal to (i) the costs and expenses of such
Indemnitee prior to the date such Indemnifying Party notifies such
Indemnitee of the offer to settle or compromise (to the extent such
costs and expenses are otherwise indemnifiable hereunder) plus (ii)
the lesser of (A) the amount of any offer of settlement or
compromise which such Indemnitee declined to accept and (B) the
actual out-of-pocket amount such indemnitee is obligated to pay
subsequent to such date as a result of such Indemnitee's continuing
to pursue such Third Party Claim.
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(f) In the event of payment by an Indemnifying Party to any indemnitee
in connection with any Third Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such
Indemnitee as to any events or circumstances in respect of which
such Indemnitee may have any right or claim relating to such Third
Party Claim against any claimant or plaintiff asserting such Third
Party Claim or against any other Person. Such Indemnitee shall
cooperate with such Indemnifying Party in a reasonable manner, and
at the cost and expense of such Indemnifying Party, in prosecuting
any subrogated right or claim.
(g) Except with respect to claims relating to actual fraud, the
indemnification provisions set forth in this Section are the sole
and exclusive remedy of the parties hereto for any and all claims
for indemnification under this Agreement.
SURVIVAL
This Indemnification Section shall survive termination of this Agreement.
ARBITRATION
All disputes and differences arising under or in connection with this
Agreement shall be referred to arbitration under the Arbitration Rules of
the A.I.D.A. Reinsurance and Insurance Arbitration Society of the UK
("ARIAS (UK)").
The Arbitration Tribunal shall consist of three arbitrators, one to be
appointed by the claimant party, one to be appointed by the respondent
party and the third to be appointed by the two appointed arbitrators.
The third member of the Tribunal shall be appointed as soon as practicable
(and no later than 28 days) after the appointment of the two
party-appointed arbitrators. The Tribunal shall be constituted upon the
appointment of the third arbitrator.
The Arbitrators shall be persons (including those who have retired) with
not less than ten years' experience of insurance or reinsurance within the
industry or as lawyers or other professional advisers serving the
industry.
Where a party fails to appoint an arbitrator within 14 days of being
called upon to do so or where the two party-appointed arbitrators fail to
appoint a third within 28 days of their appointment, then upon application
ARIAS (UK) will appoint an arbitrator to fill the vacancy. At any time
prior to appointment by ARIAS (UK) the party or arbitrators in default may
make such appointment.
The Tribunal may in its sole discretion make such orders and directions as
it considers to be necessary for the final determination of the matters in
dispute. The Tribunal shall have the widest discretion permitted under the
law governing the arbitral procedure when making such orders or
directions.
The seat of arbitration shall be London.
Each party shall bear the expense of its own arbitrator and shall share
equally with the other party the expense of the third arbitrator and of
the arbitration.
This Arbitration Section shall survive termination of this Agreement.
INSOLVENCY
In the event of the insolvency of Retrocedant, this reinsurance shall be
payable directly to Retrocedant, or to its liquidator, receiver,
conservator or statutory
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successor on the basis of the liability of Retrocedant without diminution
because of the insolvency of Retrocedant or because the liquidator,
receiver, conservator or statutory successor of Retrocedant has failed to
pay all or a portion of any claim.
It is agreed, however, that the liquidator, receiver, conservator or
statutory successor of Retrocedant shall give written notice to the
Retrocessionaire of the pendency of a claim against Retrocedant indicating
the Reinsurance Contract, which claim would involve a possible liability
on the part of Retrocessionaire within a reasonable time after such claim
is filed in the conservation or liquidation proceeding or in the
receivership, and that during the pendency of such claim, Retrocessionaire
may investigate such claim and interpose, at its own expense, in the
proceeding where such claim is to be adjudicated any defence or defences
that it may deem available to Retrocedant or its liquidator, receiver,
conservator or statutory successor. The expense thus incurred by
Retrocessionaire shall be chargeable, subject to the approval of the
court, against Retrocedant as part of the expense of conservation or
liquidation to the extent of a pro rata share of the benefit which may
accrue to Retrocedant solely as a result of the defence undertaken by
Retrocessionaire.
As to all reinsurance made, ceded, renewed or otherwise becoming effective
under this Agreement, the reinsurance shall be payable as set forth above
by Retrocessionaire to Retrocedant or to its liquidator, receiver,
conservator or statutory successor, except (i) where the Reinsurance
Contracts specifically provide another payee in the event of the
insolvency of Retrocedant, and (ii) where Retrocessionaire, with the
consent of the reinsured or reinsureds under the Reinsurance Contracts,
has assumed such Reinsurance Contract obligations of Retrocedant as direct
obligations of Retrocessionaire to the payees under such Reinsurance
Contracts and in substitution for the obligations of the Retrocedant to
such payees.
For the purposes of this Section, "insolvency of Retrocedant" shall occur
if:
(i) a winding up petition is presented in respect of Retrocedant or a
provisional liquidator is appointed over it or if Retrocedant goes
into administration, administrative receivership or receivership or
if Retrocedant has a scheme of arrangement or voluntary arrangement
proposed in relation to all or any part of its affairs; or
(ii) Retrocedant goes into compulsory or voluntary liquidation; or
(iii) Retrocedant becomes subject to any other similar insolvency process
(whether under the laws of England and Wales or elsewhere); and
Retrocedant is unable to pay its debts as and when they fall due within
the meaning of Section 123 of the Insolvency Act 1986 (or any statutory
amendment or reenactment of that section).
OFFSET
Retrocedant and Retrocessionaire shall have the right to offset any
balance or amounts due from one party to the other under the terms of this
Agreement. The party asserting the right of offset may exercise such right
at any time whether the balances due are on account of premiums, losses or
otherwise.
ERRORS AND OMISSIONS
Any inadvertent delay, omission, error or failure shall not relieve either
party hereto from any liability which would attach hereunder if such
delay, omission, error or failure had not been made, provided such delay,
omission, error or failure is rectified as soon as reasonably practicable
upon discovery.
10
SECURITY
As a condition precedent to this Agreement becoming effective,
Retrocessionaire shall execute:
(i) the custodian and investment accounting agreement with State Street
Bank and Trust Company ("CUSTODIAN") in the form attached as Exhibit
G hereto (the "CUSTODY AGREEMENT");
(ii) the control agreement between Retrocedant, Retrocessionaire and
Custodian in the form attached as Exhibit H hereto (the "CONTROL
AGREEMENT");
(iii) the discretionary investment advisory agreement with Alliance
Capital Management L.P. ("INVESTMENT MANAGER") in the form attached
as Exhibit I hereto (the "INVESTMENT ADVISORY AGREEMENT"); and
(iv) the security agreement, pursuant to which Retrocessionaire grants a
continuing first priority security interest in collateral accounts
established with Custodian pursuant to the Custody Agreement, in
the form attached as Exhibit J hereto (the "SECURITY AGREEMENT"):
Retrocessionaire undertakes to notify Retrocedant in writing immediately
upon becoming aware of the occurrence of a Relevant Event under the
Security Agreement.
MISCELLANEOUS PROVISIONS
SEVERABILITY
If any term or provision of this Agreement shall be held void, illegal, or
unenforceable, the validity of the remaining portions or provisions shall
not be affected thereby.
SUCCESSORS AND ASSIGNS
This Agreement may not be assigned by either party without the prior
written consent of the other. The provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns as permitted herein.
EQUITABLE RELIEF
Each party hereto acknowledges that if it or its employees or agents
violate the terms of this Agreement, the other party will not have an
adequate remedy at law. In the event of such a violation, the other party
shall have the right, in addition to any other rights that may be
available to it, to obtain in any court of competent jurisdiction
injunctive relief to restrain any such violation and to compel specific
performance of the provisions of this Agreement. The seeking or obtaining
of such injunctive relief shall not foreclose or limit in any way relief
against either party hereto for any monetary damage arising out of such
violation.
EXECUTION IN COUNTERPARTS
This Agreement may be executed by the parties hereto in any number of
counterparts and by each of the parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be
deemed to be an original, but all such counterparts shall together
constitute but one and the same instrument.
11
NOTICES
All notices, requests, claims, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered by hand (with receipt confirmed), or by facsimile (with
transmission confirmed), or by certified mail, postage prepaid and return
receipt requested, addressed as follows (or to such other address as a
party may designate by written notice to the others) and shall be deemed
given on the date on which such notice is received:
If to Retrocedant:
St. Paul Reinsurance Company Limited
27 Camperdown Street
London
El 8DS
Facsimile: + 44 20 7488 6345
Attention: Company Secretary
If to Retrocessionaire:
Platinum Re (UK) Limited
52, Lime Street,
London, EC3M 7NL
Facsimile: 020 7623 6610
Attention: Company Secretary
WIRE TRANSFER
All settlements in accordance with this Agreement shall be made by wire
transfer of immediately available funds on the due date, or if such day is
not a Business Day, on the next day which is a Business Day, pursuant to
the following wire transfer instructions:
For credit to Platinum Re (UK) Limited
USD Account
Citibank, London
Account Number 10445312
SORT CODE 18-50-08
GBP Account
Citibank, London
Account Number 10445320
SORT CODE 18-50-08
EUR Account
Citibank, London
Account Number 10445339
SORT CODE 18-50-08
For credit to St. Paul Reinsurance Company Limited
USD Account
Citibank, London
Account Number 988529
SORT CODE 18-50-08
GBP Account
Citibank, London
Account Number 8560420
SORT CODE 18-50-08
12
EUR Account
Citibank, London
Account Number 8655197
SORT CODE 18-50-08
Payment may be made by cheque payable in immediately available funds in
the event the party entitled to receive payment has failed to provide wire
transfer instructions.
HEADINGS
Headings used herein are not a part of this Agreement and shall not affect
the terms hereof.
FURTHER ASSURANCES
Each of the parties shall from time to time, on being reasonably requested
to do so by the other party to this Agreement, do such acts and/or execute
such documents in a form reasonably satisfactory to the party concerned as
may be necessary to give full effect to this Agreement and securing to
that party the full benefit of the rights, powers and remedies conferred
upon it by this Agreement.
THIRD PARTY RIGHTS
The Indemnification Section of this Agreement confers a benefit on the
officers, directors and employees of Retrocedant and of Retrocessionaire
(the "THIRD PARTIES") and, subject to the remaining provisions of this
Section, is intended to be enforceable by the Third Parties by virtue of
the Contracts (Rights of Third Parties) Act 1999.
The parties to this Agreement do not intend that any term of this
Agreement, apart from the indemnification Section, should be enforceable,
by virtue of the Contracts (Rights of Third Parties) Act 1999, by any
person who is not a party to this Agreement.
Notwithstanding the foregoing provisions of this Third Party Rights
Section, this Agreement may be rescinded or varied in any way and at any
time by the parties to this Agreement without the consent of any or all
of the Third Parties.
AMENDMENTS; ENTIRE AGREEMENT
This Agreement may be amended only by written agreement of the parties.
This Agreement, together with the Custody Agreement, the Control
Agreement, the Investment Advisory Agreement, the Security Agreement and
the Agency Agreement, supersedes all prior discussions and written and
oral agreements and constitutes the sole and entire agreement between the
parties with respect to the subject matter hereof.
GOVERNING LAW
This Agreement shall be governed by English law.
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorised representatives as of the date first above written.
ST. PAUL REINSURANCE COMPANY
LIMITED
By /s/ T. Mahoney
----------------------------------
Name: T. Mahoney
Title: Managing Director
PLATINUM RE (UK) LIMITED
By /s/ G.R. Butler
-----------------------------------
Name: G.R. Butler
Title: Finance Director
EXHIBIT A
Inuring Retrocessions
FER 17/10/02
Platinum Re Inuring Reinsurance 17 10 02.xls
PLATINUM RE UK / US / BERMUDA - SCHEDULE OF INURING REINSURANCE: PROPORTIONAL
AS AT 17/10/02
Reference Name of Inception Expiration
No. Contract Date Date Cover Limit Projected Prem. Participants % Placed
--- -------- ---- ---- ----- ----- --------------- ------------ --------
1) Worldwide 1/1/02 12/31/02 International USD 40,000,000 USD 9m - USD Nisshin - 50% 55%
Property Property Risk Aggregate Cession 12m [100% treaty Nichido - 5%
Excluding Excess of Loss & Limit estimate]
Japan Catastrophe Excess
of Loss Business
(projects Europe)
2) UK/Eire Cat. 1/1/02 12/31/02 U.K./Eire Cat.Excess GBP 100,000,000 GBP 5m [100% Nisshin - 14% 29%
XL Q.S./ of Loss Traty Aggregate Cession treaty estimae] PX Re - 10%
1st &/2nd Business (protects Limit TOA Re - 5%
Surplus Europe)
3) UK/Europe 1/1/02 12/31/02 International GBP 75,000,000 GBP 3m - GBP Montpeller Re- 100%
Cat. XL Property Aggregate Cession 3.5M 100%
Quota Share Catastrophe Excess Limit
Treaty of Loss Business
(protects Europe)
4) Japan Cat. 1/1/02 12/31/02 Japan/Japanese USD 30,000,000 USD 1.2m PX Re - 100% 100%
XL Surplus Islands Property Aggregate Cession
Cat. Excess of Limit:
Loss Business quake USD
(protects New 20,000,000
York & Europe) Aggregate Cession
Limit: windstorm
J-1
5) Casualty 1/1/96 12/31/02 Casualty Clash 20% Quota Share $4,200,000 Auto-Owners 100%
Clash Casualty of USD 7,500,000 Ins. Co.
Quota Contingency, any one
Share Casualty Cat. occurrence
and Workers etc.
Comp. Cat. (NY)
J-2
FER 17/10/02
Platinum Reiuring Reinsurance 17 10 02.xls
PLATINUM RE UK / US / BERMUDA - SCHEDULE OF INURING REINSURANCE :
NON-PROPORTIONAL
AS AT 17/10/02
Reference Name of Inception Expiration Projected
No. Contract Date Date Cover Limit Retention Reinstatement Premium
--- -------- ---- ---- ----- ----- --------- ------------- -------
1a) Marine 5/5/01 4/30/02 Protects XL Europe $1,500,000 $1,000,000 1 @ 100% $360,000
XL(a) Account (pound)750,000 (pound)500,000 (pound)20,000
Reference
No. ROL % Placed Participants
--- --- -------- ------------
1a) 26.67% 100% Px re - 44.20%
Lloyd's Synd. 2121 (HYL) - 10%
Cornhill Ins. - 33.33%
XL Re - 12.47%
1b) Marine 1/1/02 12/31/02 Protects XL Europe $5,000,000 $5,000,000 2 @ 100% $1,125,000
XL (b) Account (pound)2,500,000 (pound)2,500,000 (pound)62,500
1b) 25.00% 100% Lloyd's Synd. 1861 (BRM) - 20%
QBE Intnl. London - 30%
Cornhill - 25%
Odyssey London Branch - 25%
1c) Marine 1/1/02 12/31/02 Protects XL Europe $5,000,000 $10,000,000 2 @ 100% $675,000
XL (c) Account (pound)2,500,000 (pound)5,000,000 (pound)37,500
1c) 15.00% 100% QBE Intnl. London - 50%
Cornhill - 25%
Odyssey London Branch - 25%
3a) Joint 2/13/02 2/12/03 1st layer XS 5M $2,500,000 $2,500,000 1 @ 100% $875,000
Risk aggregate,
XOL
Cover -
First
Layer
3a) 35.00% 100% Lloyd's Synd. 566 (STN) - 25%
Lloyd's Synd. 780 (BFC) - 15%
Gerling Global (UK) - 2.373%
XL Re - 8.898%
Transatlantic Re - 15%
Lloyd's Synd. 626 (IRK) - 5.933%
Lloyd's Synd. 2010 (MMX) - 4.449%
Lloyd's Synd. 282 (LSM) - 4.449%
GE Frankona - 8.898%
J-3
3b) Joint 2/13/02 2/12/03 Property Risk & $5,000,000 $5,000,000 1 @ 100% $2,000,000
Risk Prorata Business
XOL (all offices)
Cover -
Second
Layer
Reference
No. ROL % Placed Participants
- ---------- --- -------- ------------
3b) 40.00% 100% PX Re - 10%
Lloyd's Synd. 566 (STN) - 10%
Lloyd's Synd. 780 (BFC) - 15%
Gerling Global (UK) - 4%
XL Re - 15%
Transatlantic Re - 20%
Lloyd's Synd. 2010 (MMX) - 3.50%
Lloyd's Synd. 282 (LSM) - 7.50%
GE Frankona - 15%
PX Re - 10%
4a) Interna- 3/8/02 3/7/03 International $20,000,000 $50,000,000 1 @ 100% $4,800,000
tional Risk/Prorata/Cat.
Cat. XL (all offices)
XOL-First
Layer
4a) 24.00% 100% Lloyd's Synd. 566 (STN) - 12.5%
Lloyd's Synd. 780 (BFC) - 10%
Lloyd's Synd. 282 (LSM) - 8%
PX Re - 8%
Renaissance Re - 25%
Di Vinci Re - 12.5%
Transatlantic Re - 10%
GE Frankona - 10%
Royan Bank of Canada - 4%
4b) Interna- 3/8/02 3/7/03 International $30,000,000 $70,000,000 1 @ 100% $4,500,000
tional Risk/Prorata/Cat.
Cat. XL (all offices)
XOL-
Second
Layer
4b) 15.00% 100% Lloyd's Synd. 566 (STN) - 5%
Lloyd's Synd. 780 (BFC) - 12.5%
Lloyd's Synd. 626 (IRK) - 4.004%
Lloyd's Synd. 2010 (MMX) - 1.202%
Lloyd's Synd. 282 (LSM) - 10.01%
Lloyd's Synd. 1096 (RAS) - 1.602%
Gerling Global (UK) - 0.801%
PX Re - 8.007%
Folksamerica - 16.014%
Renaissance Re - 8.007%
Di Vinci Re - 4.004%
Transatlantic Re - 7.5%
Auto-Owners - 16.015%
Royan Bank of Canada - 2.667%
Protective - 2.667%
J-4
7) Caribbean 11/1/01 10/31/02 Caribbean $15,000,000 $100,000 Nil $3,450,00 23.00% 100% Continental
ILW XOL Property Casualty - 100%
business
subject to an
Industry Loss
of USD 1.5
Billion
13) Single 1/1/02 12/31/02 Covers $200,000,000 79.4% Traditonal bus. $4,750,000 100% Underwriters
Period Aggregate 93.5% Non-traditional Reinsurance -
Accident net losses business 53.75%
Year incurred on an London Life &
Aggregae ultimate General - 25%
XOL accident year PMA Reins. 10%
(Holborn) basis IRO all Hannover Re - 9%
business written E & S Reins. -
by All offices 2.25%
including
Discovery Re.
14) Workers' 1/1/02 12/31/02 Covers Workers' $50,000,000 $75,000,000 $10,000,000 100% Swiss Re - 81.25%
Compensa- 1/1/03 12/31/05 Compensation $50,000,000 $75,000,000 Annual Agg. Hannover - 15%
tion Cat. treaty business of 50M E & S Reins. -
XOL 3.75%
(Holborn)
15) Puerto 7/26/02 7/25/03 Property $10,000,000 $10,000 Nil $1,250,000 100% ACE Tempest Re -
Rico business 50%
ILW XOL subject to an Renaissance Re -
Industry Loss 50%
of USD 1.5
Billion
J-5
EXHIBIT B
Allocation of Recoveries
1. Recoveries allocable to this contract available under an Inuring
Retrocession shall be allocated between the parties in proportion to the
losses otherwise recoverable.
2. Any and all loss recoveries and premium adjustments allocable to this
contract resulting from triggering the 2002 Holborn cover will be
allocated between The St. Paul Companies and Retrocessionaire and its
affiliates ("Platinum Re") based on variance from plan and in accordance
with the existing methodology shown below.
Variance from plan at an underwriting year level will be the basis for the
allocation. The 2000, 2001 and 2002 underwriting year plan loss ratios
associated with the 2002 calendar year plan loss ratio will be compared to
indicated ultimate loss ratios for the same underwriting years. These
indicated ultimate loss ratios are the same ones used to determine if the
Holborn cover has been triggered. The 2002 underwriting year must be
segmented into three pieces. Namely, that business written on Fire and
Marine paper and subject to transfer, that written on Fire and Marine
paper and not subject to transfer and that written on Platinum Re paper.
The distinction is warranted as the cession to Platinum Re will be net of
the Holborn cover. The variance in loss ratio by underwriting year will be
multiplied by the respective underwriting year's EP component in the 2002
calendar year. This is the same EP by underwriting year that was used to
calculate the total 2002 Holborn Year's EP. This dollar variance will be
the basis for determining the distribution to be applied to the total loss
recovery and AP. It is in this manner that the total loss recovery and AP
attributable to the 2002 Holborn Year will be allocated to underwriting
year. To the extent that the recoveries and AP's have been allocated to
the 2000 and 2001 underwriting years they will be afforded to The St. Paul
Companies. Similarly, the allocation to that part of the 2002 underwriting
year pertaining to non-transferred business will also be realised by The
St. Paul Companies. The allocation pertaining to business written on The
St. Paul paper and transferred will be used in determining the net
transferred business that will be ceded to Platinum Re. The remaining
allocation associated with 2002 underwriting year business written on
Platinum Re paper will inure to the benefit of Platinum Re directly. The
margin for the 2002 Holborn cover will be distributed based on earned
premium and allocated between The St. Paul Companies and Platinum Re by
underwriting year.
J-1
EXHIBIT C
Allocation of Retrocessional Premium
1. Ceded premium allocable to this contract will be allocated between the
parties and to the underwriting year in proportion to the earned subject
premium. Ceding commission will be allocated in the same manner.
2. Reinstatement premium allocable to this contract due in respect of
non-proportional Inuring Retrocessions will be allocated between the
parties in proportion to the related allocated recoverable losses.
3. Any and all loss recoveries and premium adjustments allocable to this
contract resulting from triggering the 2002 Holborn cover will be
allocated between The St. Paul Companies and Platinum Re based on variance
from plan and in accordance with the existing methodology shown below.
Variance from plan at an underwriting year level will be the basis for the
allocation. The 2000, 2001 and 2002 underwriting year plan loss ratios
assciated with the 2002 calendar year plan loss ratio will be compared to
indicated ultimate loss ratios for the same underwriting years. These
indicated ultimate loss ratios are the same ones used to determine if the
Holborn cover has been triggered. The 2002 underwriting year must be
segmented into three pieces. Namely, that business written on Fire and
Marine paper and subject to transfer, that written on Fire and Marine
paper and not subject to transfer and that written on Platinum Re paper.
The distinction is warranted as the cession to Platinum Re will be net of
the Holborn cover. The variance in loss ratio by underwriting year will be
multiplied by the respective underwriting year's EP component in the 2002
calendar year. This is the same EP by underwriting year that was used to
calculate the total 2002 Holborn Year's EP. This dollar variance will be
the basis for determining the distribution to be applied to the total loss
recovery and AP. It is in this manner that the total loss recovery and AP
attributable to the 2002 Holborn Year will be allocated to underwriting
year. To the extent that the recoveries and AP's have been allocated to
the 2000 and 2001 underwriting years they will be afforded to The St. Paul
Companies. Similarly, the allocation to that part of the 2002 underwriting
year pertaining to non-transferred business will also be realised by The
St. Paul Companies. The allocation pertaining to business written on The
St. Paul paper and transferred will be used in determining the net
transferred business that will be ceded to Platinum Re. The remaining
allocation associated with 2002 underwriting year business written on
Platinum Re paper will inure to the benefit of Platinum Re directly. The
margin for the 2002 Holborn cover will be distributed based on earned
premium and allocated between The St. Paul Companies and Platinum Re by
underwriting year.
J-2
EXHIBIT D
Allocation of Limits
Available limits under an Inuring Retrocession shall be allocated between the
parties in proportion to the losses otherwise recoverable.
J-3
EXH1BIT E
Form of Retrocedant's Report
Retrocedant will provide the following information on a monthly basis:
a) Transaction listing at assumed policy level showing all revenue items
including booked premiums, booked acquisition costs and paid losses
entered in Retrocedant's books during the relevant accounting period.
b) Claims listing at assumed policy level showing loss description, date of
loss, paid amount and outstanding case reserve.
c) Listing of inuring retrocession amounts allocated to Retrocessionaire
during the relevant accounting period including details of
non-proportional inuring retrocession premiums and recoverables.
Note 1 relating to a) and b): Revenue and reserve amounts will be shown in the
accounting currency used by Retrocedant for the purposes of its own books,
Note 2 relating to a) and b): Transaction and claims listings will include gross
amounts and proportional inuring retrocession amounts.
Note 3 relating to c): Retrocession amounts will be paid to Retrocessionaire
only following receipt by Retrocedant. These amounts together with any unpaid
amounts that are due to Retrocessionaire but not yet received by Retrocedant
will be included in the listing of inuring retrocession amounts.
J-4
EXHIBIT F
Allocation of Administrative Expenses
Retrocessionaire shall pay to Retrocedant the "actual cost" to Retrocedant
(which shall consist of retrocedant's direct and reasonable indirect costs), as
certified in good faith by retrocedant. For greater certainty, the parties agree
that "actual cost" will include any incremental and out-of-pocket costs incurred
by Retrocedant in connection with the administrative services provided
hereunder, including the conversion, acquisition and disposition cost of
software and equipment acquired for the purposes of providing the services and
the cost of establishing requisite systems and data feeds and hiring necessary
personnel.
No later than 30 days following the last day of each calendar quarter,
Retrocedant shall provide Retrocessionaire with a report setting forth an
itemised list of the services provided to Retrocessionaire during such last
calendar quarter, in a form agreed to by the parties. Retrocessionaire shall
promptly (and in no event later than 30 days after receipt of such report,
unless Retrocessionaire is contesting the amount set forth in the report in good
faith) pay to Retrocedant by wire transfer of immediately available funds all
amounts payable as set forth in such report. Each party will pay all taxes for
which it is the primary obligor as a result of the provision of any service
under this Agreement; provided, that Retrocessionaire shall be solely
responsible for, and shall reimburse Retrocedant in respect of, any sales, gross
receipts, value added or transfer tax payable with respect to the provision of
any service under this Agreement, and any such reimbursement obligation shall be
in addition to Retrocessionaire's obligation to pay for such service.
J-5
EXHIBIT G
Custody Agreement
J-6
CUSTODIAN AND INVESTMENT ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of______________________ , 2002, by and among
STATE STREET BANK AND TRUST COMPANY, A Massachusetts trust company ("STATE
STREET") and each of PLATINUM UNDERWRITERS HOLDINGS, LTD., a Bermuda company;
PLATINUM REGENCY HOLDINGS, an Irish holding company; PLATINUM UNDERWRITERS
FINANCE, INC., a Delaware corporation; PLATINUM UNDERWRITERS BERMUDA, LTD., a
Bermuda company; and PLATINUM RE (UK) LIMITED, a company organized under the
laws of England and Wales (each, a "COMPANY").
WITNESSETH:
WHEREAS, the Company is the owner of certain assets; and
WHEREAS, the Company desires to retain State Street to act as custodian of
such assets, and State Street is willing to provide services to the Company upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF STATE STREET AND PROPERTY TO BE HELD BY IT.
The Company hereby employs State Street as the custodian of certain assets
held in one or more accounts (collectively, the "ACCOUNT"), including securities
which the Company desires to be held in places within the United States
("DOMESTIC SECURITIES") and securities it desires to be held outside the United
States ("FOREIGN SECURITIES"). State Street shall not be responsible for any
property of the Company not delivered to State Street. State Street shall
maintain separate books and records for the assets of each Company.
Upon receipt of "PROPER INSTRUCTIONS" (as such term is defined in Section
4 hereof), State Street shall on behalf of the Company from time to time to
employ one or more sub-custodians located in the United States. State Street may
employ as sub-custodian for the Company's foreign securities foreign banking
institutions and foreign securities depositories, but only in accordance with
the applicable provisions of Section 3. State Street shall have no more or less
responsibility or liability to the Company on account of any actions or
omissions of any such sub-custodian so employed than any such sub-custodian has
to State Street, provided that State Street has not acted with negligence or
engaged in fraud or willful misconduct in choosing and monitoring such
sub-custodian.
SECTION 2. DUTIES OF STATE STREET With RESPECT TO PROPERTY OF THE ACCOUNT HELD
BY STATE STREET IN THE UNITED STATES.
Section 2.1 Holding Securities. State Street shall hold and physically
segregate for the account of the Company all non-cash property to be held by it
in the United States including all
1
domestic securities owned by the Company other than securities which are
maintained pursuant to Section 2.8 in a clearing agency which acts as a
securities depository or in a book-entry system authorized by the U.S.
Department of the Treasury (each, a "U.S. SECURITIES SYSTEM").
Section 2.2 Delivery Of Securities. State Street shall release and deliver
domestic securities of the Account held by State Street or in a U.S. Securities
System account of State Street only upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties, and only
in the following cases:
1. Upon sale of such securities for the account of the Company and
receipt of payment therefore;
2. Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Company;
3. In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.8. hereof;
4. To the depository agent in connection with tender or other similar
offers for securities of the Account;
5. To the issuer thereofor its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to
State Street;
6. To the issuer thereof, or its agent for transfer into the name of
the Company or into the name of any nominee or nominees of State
Street or into the name or nominee name of any agent appointed
pursuant to Section 2.7 or into the name or nominee name of any
sub-custodian appointed pursuant to Section 1 provided that, where
they are not transferred into the name of the Company, State
Street shall reflect in its books and records that the assets are
held on behalf of the Company; or for exchange for a different
number of bonds, certificates or other evidence representing the
same aggregate face amount or number of units; provided that, in any
such case, the new investments are to be delivered to State Street.
7. Upon the sale of such securities for the account of the Company, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any
such case, State Street shall have no responsibility or liability
for any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from State
Streets Own negligence or willful misconduct;
8. For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities. or pursuant to
provisions for conversion contained in such
2
securities, or pursuant to any deposit agreement; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to State Street;
9. In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
State Street;
10. For delivery in connection with any loans of securities made by the
Company, but only against receipt of adequate collateral as
agreed upon from time to time by State Street and the Company, which
may be in the form of cash or obligations issued by the United
States government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be credited to
State Street's account in the book-entry system authorized by the
U.S. Department of the Treasury, State Street will not be held
liable or responsible for the delivery of securities prior to the
receipt of such collateral;
11. For delivery as security in connection with any borrowings by the
Company requiring a pledge of Account assets, but only against
receipt of amounts borrowed;
12. For delivery in accordance with the provisions of any agreement
among the Company, State Street and a broker-dealer registered under
the Securities Exchange Act of 1934 (the "EXCHANGE ACT") and a
member of The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Company;
13. For delivery in accordance with the provisions of any agreement
among the Company, State Street, and a futures commission merchant
registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission ("CFTC")
and/or any contract market, or any similar organization or
organizations, regarding deposits in connection with transactions by
the Company;
14. For any other purpose, but only upon receipt of Proper Instructions
from the Company, specifying the securities to be delivered, setting
forth the purpose for which such delivery is to be made, and naming
the person or persons to whom delivery of such securities shall be
made.
Section 2.3 Registration Of Securities. Domestic securities held by State
Street (other than bearer securities) shall be registered in the name of the
Company or in the name of any nominee of the Company or of any nominee of State
Street which nominee shall be assigned exclusively with respect to the Account,
or in the name or nominee name of any agent appointed
3
pursuant to Section 2.7 or in the name or nominee name of any sub-custodian
appointed pursuant to Section 1. All securities accepted by State Street on
behalf of the Company under the terms of this Agreement shall be in "street
name" or other good delivery form. If, however, the Company directs State Street
to maintain Account securities in "street name," State Street shall use
reasonable efforts only to timely collect income due to the Company on such
securities and to notify the Company of relevant corporate actions including.
without limitation, pendency of calls, maturities, tender or exchange offers.
Section 2.4 Bank Accounts. State Street shall open and maintain a separate
bank account or accounts in the United States in the name of the Company,
subject only to draft or order by State Street acting pursuant to the terms of
this Agreement on behalf of the Company, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the Account. Funds held by State Street for the Account may be deposited by
State Street to its credit as custodian in the banking department of State
Street or in such other banks or trust companies as it may in its discretion
deem necessary or desirable. Such funds shall be deposited by State Street in
its capacity as custodian and shall be withdrawable by State Street only in that
capacity.
Section 2.5 Collection Of Income. Subject to the provisions of Section
2.3, State Street shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which the
Company shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments with
respect to bearer domestic securities if, on the date of payment by the issuer,
such securities are held by State Street or its agent, and shall credit such
income, as collected, to the Account. Without limiting the generality of the
foregoing, State Street shall detach and present for payment all coupons and
other income items requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder. Income due on securities
loaned pursuant to the provisions of Section 2.2(10) shall be the responsibility
of the Company. State Street will have no duty or responsibility in connection
therewith, other than to provide the Company with such information or data as
may be necessary to assist the Company in arranging for the timely delivery to
State Street of the income to which the Company is properly entitled.
Section 2.6 Payment Of Account Monies. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed appropriate by
the parties, State Street shall pay out monies in the following cases only:
1. Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the Account, but only (a)
against the delivery of such securities or evidence of title to such
options, futures contracts or options on futures contracts to State
Street (or any bank, banking firm or trust company doing business in
the United States or abroad as a custodian which has been designated
by State Street as its agent for this purpose) registered in the
name of the Company or in the name of a nominee of the Company or of
State Street referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase
4
effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.8 hereof; (c) in the case of
repurchase agreements entered into between the Company and State
Street, or another bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities either in certificate
form or through an entry crediting State Street's account at the
Federal Reserve Bank with such securities or (ii) against delivery
of the receipt evidencing purchase by the Company of securities
owned by State Street along with written evidence of the agreement
by State Street to repurchase such securities from the Company; or
(d) for transfer to a time deposit account of the Company in any
bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from the Company as
defined herein;
2. In connection with conversion, exchange or surrender of securities
as set forth in Section 2.2 hereof;
3. For the payment of any expense or liability incurred by the Company,
including but not limited to the following payments for the Account:
interest, taxes, management, accounting, transfer agent and legal
fees, and operating expenses thereof whether or not such expenses
are to be in whole or part capitalized or treated as deferred
expenses;
4. For payment of the amount of dividends received in respect of
securities sold short;
5. For any other purpose, but only upon receipt of Proper Instructions
from the Company specifying the amount of such payment and naming
the person or persons to whom such payment is to be made.
Section 2.7 Appointment Of Agents. State Street may at any time or times
in its discretion appoint (and may at any time remove) any other bank or trust
company as its agent to carry out such of the provisions of this Section 2 as
State Street may from time to time direct; provided, however, that the
appointment of any agent shall not relieve State Street of its responsibilities
or liabilities hereunder.
Section 2.8 Deposit Of Account Assets In U.S. Securities Systems. State
Street may deposit and/or maintain securities of the Account in a U.S.
Securities System subject to the following provisions:
1. State Street may keep securities of the Company in a U.S. Securities
System provided that such securities are represented in an account
of State Street in the U.S. Securities System ("U.S. SECURITIES
SYSTEM ACCOUNT") which account shall not include any assets of State
Street other than assets held as a fiduciary, custodian or otherwise
for customers;
5
2. The records of State Street with respect to securities of the
Company which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Company;
3. State Street shall pay for securities purchased for the Account upon
(a) receipt of advice from the U.S. Securities System that such
securities have been transferred to the U.S. Securities System
Account, and (b) the making of an entry on the records of State
Street to reflect such payment and transfer for the Account. State
Street shall transfer securities sold for the Account upon (a)
receipt of advice from the U.S. Securities System that payment for
such securities has been transferred to the U.S. Securities System
Account, and (b) the making of an entry on the records of State
Street to reflect such transfer and payment for the Account. Copies
of all advices from the U.S. Securities System of transfers of
securities for the Account shall identify the Company, be
maintained for the Company by State Street and be provided to the
Company at its request. Upon request, State Street shall furnish the
Company confirmation of each transfer to or from the Account in the
form of a written advice or notice and shall furnish to the Company
copies of daily transaction sheets reflecting each day's
transactions in the U.S. Securities System with respect to the
Account;
4. State Street shall provide the Company with any report obtained by
State Street on the U.S. Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the U.S. Securities System;
5. Anything to the contrary in this Agreement notwithstanding, State
Street shall be liable to the Company for any loss or damage to the
Company resulting from use of the U.S. Securities System by reason
of any negligence, misfeasance or misconduct of State Street or any
of its agents or of any of its or their employees or from failure of
State Street or any such agent to enforce effectively such rights
as it may have against the U.S. Securities System; at the election
of the Company, it shall be entitled to be subrogated to the rights
of State Street with respect to any claim against the U.S.
Securities System or any other person which State Street may have as
a consequence of any such loss or damage if and to the extent that
the Company has not been made whole for any such loss or damage.
Section 2.9 Segregated Account. State Street shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts for and on
behalf of the Company, into which account or accounts shall be transferred cash
and/or securities, including securities maintained in an account by State Street
pursuant to Section 2.8 hereof(a) in accordance with the provisions of any
agreement among the Company, State Street and a broker-dealer registered under
the Exchange Act and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered national
securities exchange (or the CFTC or any registered contract market), or of any
similar organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Company, (b) for purposes of
6
segregating cash or government securities in connection with options purchased
or sold by the Company or commodity futures contracts or options thereon
purchased or sold by the Company, and (c) for any other purpose upon receipt of
Proper Instructions from the Company.
Section 2.10 Ownership Certificates for Tax Purposes. State Street shall
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other payments with
respect to domestic securities of the Account held by it and in connection with
transfers of securities.
Section 2.11 Proxies. State Street shall, with respect to the domestic
securities held by it hereunder, cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise than in
the name of the Company or a nominee of the Company, all proxies without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Company such proxies, all proxy so1iciting materials and
all notices received relating to such securities.
Section 2.12 Communications Relating To Securities. Subject to the
provisions of Section 2.3, State Street shall transmit promptly to the Company
all written information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations frights in connection
therewith and notices of exercise focal and put options written by the Company
and the maturity of futures contracts purchased or sold by the Company) received
by State Street from issuers of the securities being held for the Company. With
respect to tender or exchange offers, State Street shall transmit promptly to
the Company all written information received by State Street from issuers of the
securities whose tender or exchange is sought and from the party (or its agents)
making the tender or exchange offer. If the Company desires to take action with
respect to any tender offer, exchange offer or any other similar transaction,
the Company shall notify State Street at least three business days prior to the
date on which State Street is to take such action.
SECTION 3. DUTIES OF STATE STREET WITH RESPECT TO PROPERTY OF THE ACCOUNT HELD
OUTSIDE THE UNITED STATES.
Section 3.1 Definitions. As used throughout this Agreement, the following
capitalized terms shall have the indicated meanings:
"FOREIGN ASSETS" means any of the Company's investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Company's
transactions in such investments.
"FOREIGN SECURITIES SYSTEM" means a system for the central handling of
securities or equivalent book-entries in the country where it is incorporated.
or a transnationa1 system for the central handling of securities or equivalent
book-entries.
7
"FOREIGN SUB-CUSTODIAN" means a foreign banking institution, including a
majority-owned or indirect subsidiary of a United States bank, bank holding
company, or a foreign branch of a United States bank.
Section 3.2 Holding Securities. State Street shall identify on its books
as belonging to the Company the foreign securities held by each Foreign
Sub-Custodian or Foreign Securities System. State Street may hold foreign
securities for all of its customers, including the Company, with any Foreign
Sub-Custodian in an account that is identified as belonging to State Street for
the benefit of its customers, provided however, that (a) the records of State
Street with respect to foreign securities of the Company which are maintained in
such account shall identify those securities as belonging to the Company and
(b), to the extent permitted and customary in the market in which the account is
maintained, State Street shall require that securities so held by the Foreign
Sub-Custodian be held separately from any assets of such Foreign Sub-Custodian
or of other customers of such Foreign Sub-Custodian.
Section 3.3 Foreign Securities Systems. Foreign securities shall be
maintained in a Foreign Securities System in a designated country through all
arrangements implemented by State Street or a Foreign Sub-Custodian, as
applicable, in such country.
Section 3.4 Transactions in Foreign Custody Account.
3.4.1 Delivery of Foreign Assets. State Street or a Foreign Sub-Custodian
shall release and deliver foreign securities of the Company held by State Street
or such Foreign Sub-Custodian, or in a Foreign Securities System account, only
upon receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following cases:
(i) upon the sale of such foreign securities for the Company in
accordance with commercially reasonable market practice in the
country where such foreign securities are held or traded, including.
without limitation: (A) delivery against expectation of receiving
later payment; or (B) in the case of a sa1e effected through a
Foreign Securities System, in accordance with the rules governing
the operation of the Foreign Securities System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other similar
offers for foreign securities of the Company;
(iv) to the issuer thereof or its agent when such foreign securities are
called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name of
State Street (or the name of the respective Foreign Sub-Custodian or
of any nominee of State Street or such Foreign Sub-Custodian) or
for exchange for a different number of bonds,
8
certificates or other evidence representing the same aggregate
face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with market custom;
provided that in any such case the Foreign Sub-Custodian shall
have no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Foreign Sub-Custodian's
own negligence or willful misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or
pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
(ix) for delivery as security in connection with any borrowing by the
Company requiring a pledge of assets by the Company;
(X) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other purpose, but only upon receipt of Proper
Instructions specifying the foreign securities to be delivered and
naming the person or persons to whom delivery of such securities
shall be made.
3.4.2 Payment of Fund Monies. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties, State
Street shall pay out, or direct the respective Foreign Sub-Custodian or the
respective Foreign Securities System to pay out, monies of the Company in the
following cases only:
(i) upon the purchase of foreign securities for the Company, unless
otherwise directed by Proper Instructions, by (A) delivering money
to the seller thereofor to A dealer therefor (or an agent for such
seller or dealer) against expectation of receiving later delivery
of such foreign securities; or (B) in the case of a purchase
effected through a Foreign Securities System, in accordance with
the rules governing the operation of such Foreign Securities
System;
(ii) in connection with the conversion, exchange or surrender of
foreign securities of the Company;
9
(iii) for the payment of any expense or liability of the Company,
including but not limited to the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees under
this Agreement, legal fees, accounting fees, and other operating
expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Company, including transactions executed with or
through State Street or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vi) for payment of part or all of the dividends received in reflect of
securities sold short;
(vii) in connection with the borrowing or lending of foreign securities;
and
(viii) for any other purpose, but only upon receipt of Proper Instructions
specifying the amount of such payment and naming the person or
persons to whom such payment is to be made.
3.4.3 Market Conditions. Notwithstanding any provision of this Agreement
to the contrary settlement and payment for Foreign Assets received for the
account of the Company and delivery of Foreign Assets maintained for the account
of the Company may be effected in accordance with the customary established
securities trading or processing practices and procedures in the country or
market in which the transactions occurs, including, without limitation,
delivering Foreign Assets to the purchaser thereof or to a dealer therefor (or
an agent for such purchaser or dealer) with the expectation of receiving later
payment for such Foreign Assets from such purchaser or dealer.
State Street shall provide to the Company from time to time information with
respect to custody and settlement practices in countries in which State Street
employs a Foreign Sub-Custodian.
Section 3.5 Registration of Foreign Securities. The foreign securities
maintained in the custody of a Foreign Sub-Custodian (other than bearer
securities) shall be registered in the name of the Company or in the name of
State Street or in the name of any Foreign Sub-Custodian or in the name of any
nominee of the foregoing and the Company agrees to hold any such nominee
harmless from any liability as a holder of record of such foreign securities.
State Street or a Foreign Sub-Custodian shall not be ob1igated to accept
securities on behalf of the Company under the terms of this Agreement unless the
form of such securities and the manner in which they are delivered are in
accordance with reasonable market practice.
Section 3.6 Bank Accounts. State Street shall identify on its books as
belonging to the Company cash (including cash denominated in foreign currencies)
deposited with State Street.
10
Where State Street is unable to maintain, or market practice does not facilitate
the maintenance of, cash on the books of State Street, a bank account or bank
accounts shall be opened and maintained outside the United States on behalf of
the Company with a Foreign Sub-Custodian. All accounts referred to in this
Section shall be subject only to draft or order by State Street (or, if
applicable, such Foreign Sub-Custodian) acting pursuant to the terms of this
Agreement on behalf of the Company to hold cash received by or from or for the
account of the Company. Cash maintained on the books of State Street (including
its branches, subsidiaries and affiliates), regardless of currency denomination,
is maintained in bank accounts established under, and subject to the laws of,
The Commonwealth of Massachusetts.
Section 3.7 Collection of Income. State Street shall use reasonable
commercial efforts to collect all income and other payments with respect to the
Foreign Assets held hereunder to which the Company shall be entitled and shall
credit such income, as collected, to the Company. In the event that
extraordinary measures are required to collect such income, the Company and
State Street shall consult as to such measures and as to the compensation and
expenses of State Street relating to such measures.
Section 3.8 Shareholder Rights. With respect to the foreign securities
held pursuant to this Section 3, State Street will use reasonable commercial
efforts to facilitate the exercise of voting and other shareholder rights,
subject always to the laws, regulations and practical constraints that may exist
in the country where such securities are issued. The Company acknowledges that
local conditions, including lack of regulation, onerous procedural obligations,
lack of notice and other factors may have the effect of severely limiting the
ability of the Company to exercise shareholder rights.
Section 3.9 Communications Relating to Foreign Securities. State Street
shall transmit promptly to the Company written information with respect to
materials received by State Street via the Foreign Sub-Custodians from issuers
of the foreign securities being held for the account of the Company (including,
without limitation, pendency of calls and maturities of foreign securities and
expirations frights in connection therewith). With respect to tender or exchange
offers. State Street shall transmit promptly to the Company written information
with respect to materials so received by State Street from issuers of the
foreign securities whose tender or exchange is sought or from the party (or its
agents) making the tender or exchange offer. State Street shall not be liable
for any untimely exercise of any tender, exchange or other right or power in
connection with foreign securities or other property of the Company at any time
held by it unless (i) State Street or the respective Foreign Sub-Custodian is in
actual possession of such foreign securities or property and (ii) State Street
receives Proper Instructions with regard to the exercise of any such right or
power, and both (i) and (ii) occur at least three business days prior to the
date on which State Street is to take action to exercise such right or power.
Section 3.10 Liability of Foreign Sub-Custodians. Each agreement pursuant
to which State Street employs a Foreign Sub-Custodian shall, to the extent
possible, require the Foreign Sub-Custodian to exercise reasonable care in the
performance of its duties, and to indemnify, and hold harmless, State Street
from and against any loss, damage, cost, expense, liability or claim arising
out of or in connection with the Foreign Sub-Custodian's performance of such
11
obligations. At the Company's election, it shall be entitled to be subrogated to
the rights of State Street with respect to any claims against a Foreign
Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Company has not been made whole
for any such loss, damage, cost, expense, liability or claim.
Section 3.11 Tax Law. State Street shall have no responsibility or
liability for any obligations now or hereafter imposed on the Company or State
Street as custodian for the Company by the tax law of the United States or of
any state or political subdivision thereof. It shall be the responsibility of
the Company to notify State Street of the obligations imposed on the Company or
State Street as custodian for the Company by the tax law of countries other than
those mentioned in the above sentence, including responsibility for withholding
and other taxes, assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of State Street with regard to
such tax law shall be to use reasonable efforts to assist the Company with
respect to any claim for exemption or refund under the tax law of counties for
which the Company has provided such information.
Section 3.12 Liability of State Street. State Street shall be liable for
the acts or omissions of a Foreign Sub-Custodian to the same extent as set forth
with respect to sub-custodians generally in the Contract and, regardless of
whether assets are maintained in the custody of a Foreign Sub-Custodian or a
Foreign Securities System, State Street shall not be liable for any loss,
damage, cost, expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism, or any other
loss where the Sub-Custodian has otherwise acted with reasonable care.
SECTION 4. PROPER INSTRUCTIONS.
Proper instructions as used throughout this Agreement means a writing signed or
initialed by one or more of such persons as the Company shall have from time to
time authorized. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered Proper
Instructions if State Street reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Company shall cause all oral instructions to be confirmed in
writing. Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices, provided that the Company and
State Street agree to security procedures, including but not limited to, the
security procedures selected by the Company in the Funds Transfer Operating
Guidelines attached hereto. Proper instructions may also include joint
instructions as described in the Control Agreement by and among Platinum
Underwriters Bermuda, Ltd.; Platinum Re (UK) Limited; and State Street but only
when the instructions relate to the Collateral Accounts estab1ished under the
Control Agreement.
SECTION 5. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY.
STATE Street may in its discretion, without express authority from the Company:
12
1. Make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Agreement, provided that all such payments shall be accounted for to
the Company;
2. Surrender securities in temporary form for securities in definitive
form;
3. Endorse for collection, in the name of the Company, checks, drafts
and other negotiable instruments; and
4. In general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Account except as
otherwise directed by the Company.
SECTION 6. EVIDENCE OF AUTHORITY.
State Street shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper reasonably believed
by it to be genuine and to have been properly executed by or on behalf of the
Company. State Street may receive and accept a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company ("CERTIFIED RESOLUTION")
as conclusive evidence (a) of the authority of any person to act in accordance
with such resolution or (b) of any determination or of any action by the Company
as described in such resolution, and such resolution may be considered as in
full force and effect until receipt by State Street of written notice to the
contrary.
SECTION 7. DUTIES WITH RESPECT TO ACCOUNTS AND RECORDS AND VALUATION OF ASSETS.
Section 7.1 Accounts and Records. State Street will prepare and maintain,
under the direction of and as interpreted by Company, Company's accountants
and/or other advisors, in complete, accurate and current form certain accounts
and records with respect to portfolio transactions and as set forth on Exhibit A
hereto, and as otherwise agreed upon by the parties. Company will advise State
Street in writing of all applicable record retention requirements. State Street
will preserve such accounts and records during the term of this Agreement in the
manner and for the periods agreed upon by the parties. Company will furnish, in
writing or its electronic or digital equivalent, accurate and timely information
needed by State Street to complete such accounts and records when such
information is not readily available from generally accepted securities industry
services or publications.
Section 7.2 Delivery of Accounts and Records. Company will turn over or
cause to be turned over to State Street all accounts and records needed by State
Street to perform its duties and responsibilities hereunder fully and properly.
State Street may rely conclusively on the completeness and correctness of such
accounts and records.
Section 7.3 Accounts and Records Property of Company. State Street
acknowledges that all of the accounts and records maintained by State Street
pursuant hereto are the property of Company, and will be made available to
Company for inspection or reproduction within a
13
reasonable period of time, upon demand. State Street will assist Company's
independent auditors, or upon the prior written approval of Company, or upon
demand, any regulatory body, in any requested review of Company's accounts and
records, provided that Company will reimburse State Street for all expenses and
employee time invested in any such review outside of routine and normal periodic
reviews. Upon receipt from Company of the necessary information or instructions,
State Street will supply information from the books and records it maintains for
Company that Company may reasonably request for tax returns, questionnaires,
periodic reports to shareholders and such other reports and information requests
as Company and State Street may agree upon from time to time.
Section 7.4 Valuation of Assets. State Street will value the Assets of the
Account in accordance with Company's Proper Instructions utilizing the
information sources designated by Company ("PRICING SOURCES") on the Price
Source and Methodology Authorization Matrix, incorporated herein by this
reference.
SECTION 8. RECORDS.
State Street shall, at the Company's request, supply the Company with a
tabulation of securities owned by the Company and held by State Street and
shall, when requested to do so by the Company and for such compensation as shall
be agreed upon between the Company and State Street, include certificate numbers
in such tabulations. State Street may create and maintain additional records
relating to its activities and obligations under this Agreement in such manner
as shall be agreed between State Street and the Company.
SECTION 9. REPORTS TO COMPANY BY INDEPENDENT PUBLIC ACCOUNTANTS.
State Street shall provide the Company, at such times as the Company may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a U.S. Securities System or a Foreign
Securities System, relating to the services provided by State Street under this
Agreement; such reports, shall be of sufficient scope and in sufficient detail,
as may reasonably be required by the Company to provide reasonable assurance
that any material inadequacies would be disclosed by such examination, and, if
there are no such inadequacies, the reports shall so state.
SECTION 10. COMPENSATION OF STATE STREET.
State Street shall be entitled to compensation for its services and expenses in
accordance with Schedule A hereto for the term of this Agreement.
SECTION 11. RESPONSIBILITY OF STATE STREET.
So long as and to the extent that it is in the exercise of reasonable care,
State Street shall not be responsible for tile title, validity or genuineness of
any property or evidence of title thereto received by ii or delivered by it
pursuant to this Agreement and shall be held harmless in acting
14
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. State Street shall be held to the
exercise of reasonable care in carrying out the provisions of this Agreement,
but shall be kept indemnified by and shall be without liability to the Company
for any action taken or omitted by it in good faith without negligence,
including, without limitation, acting in accordance with any Proper Instruction.
It shall be entitled to rely on and may act upon advice of counsel (who may be
counsel for the Company) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. State Street shall
be without liability to the Company for any loss, liability, claim or expense
resulting from or caused by any factors reasonably related to the systemic risk
of holding foreign assets in a particular country including, but not limited to,
such country's political environment, economic and financial infrastructure
(including any Foreign Securities System operating in the country), prevailing
or developing custody and settlement practices, and laws and regu1ations,
app1icab1e to the safekeeping and recovery of foreign assets held in custody in
that country.
Except as may arise from State Street's own negligence or willful misconduct or
the negligence or willful misconduct of a sub-custodian or agent, State Street
shall be without liability to the Company for any loss, liability, claim or
expense resulting from or caused by: (a) events or circumstances beyond the
reasonable control of State Street or any sub-custodian or Securities System or
any agent or nominee of any of the foregoing including, without limitation, the
interruption, suspension or restriction of trading on or the closure of any
securities market, power or other mechanical or technological failures or
interruptions, computer viruses or communications disruptions, work stoppages,
natural disasters, or other similar events or acts; (b) errors by the Company or
its duly-authorized investment manager or investment advisor in their
instructions to State Street provided such instructions have been given in
accordance with this Agreement; (c) the insolvency of or acts or omissions by a
Securities System; (d) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to State Street's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (e) any
delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of State Street, the Company,
State Street's sub-custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such securities including
non-receipt of bonus, dividends and rights and other accretions or benefits; (f)
delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System; and
(g) any provision of any present or future law or regu1ation or order of the
United States of America, or any state thereof, or any other country, or
political subdivision thereofor of any court of competent jurisdiction.
State Street shall be liable for the acts or omissions of a Foreign
Sub-custodian hereunder to the same extent as set forth with respect to
sub-custodians generally in this Agreement.
If the Company requires State Street to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of State Street, result in State Street or its nominee assigned to
the Company being liable for the payment of money or
15
incurring liability of some other form, the Company, as a prerequisite to
requiring State Street to take such action, shall provide indemnity to State
Street in an amount and form satisfactory to it.
If the Company requires State Street, its affiliates, subsidiaries or agents, to
advance cash or securities for any purpose (including, but not limited to,
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that State Street or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Company shall be security
therefor and should the Company fail to repay State Street promptly, State
Street shall be entitled to utilize available cash and to dispose of the
Company's assets to the extent necessary to obtain reimbursement.
In no event shall State Street be liable for indirect, special or consequential
damages.
SECTION 12. TERM AND TERMINATION.
This Agreement shall become effective as of the date first above written. The
initial term of this Agreement is for a period of three (3) years. Thereafter.
either Company or State Street may terminate this Agreement by notice in
writing, delivered or mailed postage prepaid, to the other party and received
not less than ninety (90) days prior to the date upon which such termination
will take effect. Upon termination hereof:
1. Company shall (a) pay to State Street such compensation as may be
due as of the date of such termination and shall likewise reimburse
State Street for its costs, expenses and disbursements; (b)
designate a successor record keeper (which may be Company) by Proper
Instruction; and (c) designate a successor custodian (which may be
Company) by Proper Instruction.
2. Upon payment of all sums due to it from Company, State Street shall
(a) deliver all accounts and records to the successor recordkeeper
(or, if none, to Company) at the office of State Street; and (b)
deliver to the successor custodian at the office of State Street,
duly endorsed and in the form for transfer, all Assets of Company
then held by it hereunder and shall transfer to an account of the
successor custodian all of the Assets of Company held in any
Securities System.
in the event that no successor custodian has been designed on or before the date
when such termination shall become effective, then State Street shall have the
right to deliver to a bank or trust company, which is a bank doing business in
the United States (including any state) of its own selection and having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $10,000,000 all Assets held by State Street,
its agents or its sub-custodians on behalf of Company and all instruments held
by State Street, its agents or its sub-custodians relative thereto and all other
property held by it hereunder and to transfer to an account of such successor
custodian all of the Assets held in any Securities System. Thereafter, such bank
or trust company shall be the successor of State Street hereunder.
16
In the event that Assets remain in the possession of State Street after the date
of termination hereof owing to failure of Company to designate a successor
custodian, State Street shall be entitled to fair compensation for its services
during such period as State Street retains possession of such Assets, and the
provisions hereof relating to the duties and obligations of State Street as
custodian shall remain in full force and effect. in the event that accounts and
records remain in the possession of State Street after the date of termination
hereof for any reason other than State Street's failure to deliver the same,
State Street shall be entitled to compensation for storage thereof during such
period, and shall be entitled to destroy the same if not removed by Company
within twenty (20) days after written demand.
SECTION 13. AMENDMENT.
This Agreement may be amended by written agreement signed by the Company and
State Street at any time or from time to time.
SECTION 14. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Agreement, State Street and the Company
may from time to time agree on such provisions interpretive of or in addition to
the provisions of this Agreement as may in their joint opinion be consistent
with the general tenor of this Agreement. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations. No interpretive or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Agreement.
SECTION 15. MASSACHUSETTS LAW TO APPLY.
This Agreement shall be construed and the provisions thereof interpreted under
and in accordance with laws of The Commonwealth of Massachusetts.
SECTION 1 6. PRIOR AGREEMENTS.
This Agreement supersedes and terminates, as of the date hereof all prior
Agreements between the Company and State Street relating to the custody of the
Company's assets.
SECTION 1 7. NOTICES.
Any notice instruction or other instrument required to be given hereunder may
be delivered in person to the offices of the parties as set forth herein during
normal business hours or delivered prepaid registered mail or by telex, cable or
telecopy to the parties at the following addresses or such other addresses as
may be notified by any party from time to time.
17
1. To the Company: Platinum Underwriters Holdings, Ltd.
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Rider 17A
Attention: Dawna L. Ferguson
Telephone: 441-295-5950
Facsimile: 441-292-4720
Platinum Underwriters Bermuda, Ltd.
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
Attention: Dawna L. Ferguson
Telephone: 441-295-5950
Facsimile: 441-292-4720
Platinum Regency Holdings
Goodbody Secretarial Limited
International Financial Services Centre
25/28 North Wall Quay, Dublin 1
Ireland
Attention: Sarah Cleary
Telephone: 011-353-1-649-2000
Facsimile: 011-353-1-649-2649
Platinum Re (UK) Limited
52 Lime Street
London EC3M 7NL
UK
Attention: Guy Butler
Telephone: 011-44-207-220-8100
Facsimile: 011-44-207-623-6610
Platinum Underwriters Finance, Inc.
195 Broadway, 28th Floor
New York,NY 10007
Attention: Michael E. Lombardozzi
Telephone: 212-238-9547
Facsimile: 212-809-7565
18
2.To State Street: State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, MO 64105
Attention: Vice President, Insurance Services
Telephone: (816) 871-41OO
Facsimile: (816) 871-9675
Such notice, instruction or other instrument shall be deemed to have been served
in the case of a registered letter at the expiration of five business days after
posting, in the case of cable twenty-four hours after dispatch and, in the case
of telex, immediately on dispatch and if delivered outside normal business hours
it shall be deemed to have been received at the next time after delivery when
normal business hours commence and in the case of cable, telex or telecopy on
the business day after the receipt thereof. Evidence that the notice was
properly addressed, stamped and put into the post shall be conclusive evidence
of posting.
SECTION 18. REPRODUCTION OF DOCUMENTS.
This Agreement and all schedules, exhibits, attachments and amendments hereto
may be reproduced by any photographic, photo static, microfilm, micro-card,
miniature photographic or other similar process. The parties hereto each agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 19. REMOTE ACCESS SERVICES ADDENDUM.
State Street and the Company agree to be bound by the terms of the Remote Access
Services Addendum attached hereto.
SECTION 20. ASSIGNMENT.
Neither this Agreement nor any rights or obligations hereunder may be assigned
by either party, whether voluntarily, involuntarily or by operation of law,
without the prior written consent of the other, such consent not to be
unreasonably withheld, except to entities controlled by, under common control
with or controlling the assigning party, provided that such assignee has
financial capacity at least equal to that of the assignor.
SECTION 21. SHAREHOLDER COMMUNICATIONS.
Securities and Exchange Commission Rule 1 4b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, State Street needs the Company to indicate whether it authorizes State
Street to provide the
19
Company's name, address, and share position to requesting companies whose
securities are held in the Account. If the Company tells State Street "no,"
State Street will not provide this information to requesting companies. If the
Company tells State Street "yes" or does not check either "yes" or "no" below,
State Street is required by the rule to treat the Company as consenting to
disclosure of this information for all securities owned by the Company or any
funds or accounts established by the Company. For the Company's protection, the
Rule prohibits the requesting company from using the Company's name and address
for any purpose other than corporate communications. Please indicate below
whether the Company consents or objects by checking one of the alternatives
below.
Yes |X| State Street is authorized to release the Company's
name, address, and share positions.
No | | State Street is not authorized to release the
Company's name, address, and share positions.
SECTION 22. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to State Street that it has full capacity
and authority to enter into this Agreement and to perform its obligations under
this Agreement and it has taken all necessary action to authorize the execution,
delivery and performance by it of this Agreement.
20
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative as of the
day and year first written above. under its corporate seal.
PLANTINUM UNDERWRITERS PLANTINUM RE (UK) LIMITED
HOLDINGS, LTD.
By: By:
----------------------------- -------------------------------
Name: Name:
--------------------------- -----------------------------
Its: , Duly Authorized Its: , Duly Authorized
---------- ---------
PLATINUM REGENCY HOLDINGS PLANTINUM UNDERWRITERS FINANCE, INC.
By: By:
----------------------------- -------------------------------
Name: Name:
--------------------------- -----------------------------
Its: , Duly Authorized Its: , Duly Authorized
---------- ---------
PLATINUM UNDERWRITERS BERMUA, LTD. STATE STREET BANK AND TRUST COMPANY
By: By:
----------------------------- -------------------------------
Name: Name:
--------------------------- -----------------------------
Its: , Duly Authorized Its: , Duly Authorized
---------- ---------
21
FUNDS TRANSFER OPERATING GUIDELINES
1. OBLIGATION OF THE SENDER: State STREET Bank and Trust Company ("State
Street") is authorized to promptly debit Client's (as named below) account(s)
upon the receipt of a payment order in compliance with any of the Security
Procedures chosen by the Client, from those offered on the attached selection
form (and any updated selection forms hereafter executed by the Client), for
funds transfers and in the amount of money that State Street has been instructed
to transfer. State Street shall execute payment orders in compliance with the
delivery methods and Security Procedures indicated on the attached selection
form (and any updated section forms hereafter executed by the Client) and with
the Client's (or its investment Manager's) instructions on the execution date
provided that such payment order is received by the customary deadline for
processing such a request, unless the payment order specifies a later time.
State Street will use reasonable efforts to execute on the execution date
payment orders received after the customary deadline, but if it is unable to
execute any such payment order on the execution date, such payment order will be
deemed to have been received on the next business day.
2. SECURITY PROCEDURES: The Client acknowledges that the selected Security
Procedures were selected by the Client from Security Procedures offered by State
Street. The Client agrees that the Security Procedures are reasonable and
adequate for its wire transfer transactions and agrees to be bound by any
payment orders, amendments and cancellations, whether or not authorized, issued
in its name and accepted by State Street after being confirmed by any of the
selected Security Procedures. The Client also agrees to be bound by any other
valid and authorized payment order accepted by State Street. The Client shall
restrict access to confidential information relating to the Security Procedures
to authorized persons as communicated in writing to State Street. The Client
must notify State Street immediate1y if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in the
Client's authorized personnel. State Street shall verify the authenticity of all
instructions according to the selected Security Procedures.
3. ACCOUNT NUMBERS: State Street shall process all payment orders on the basis
of the account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the account
number, the account number shall take precedence and govern. Financial
institutions that receive payment orders initiated by State Street at the
instruction of the Client may also process payment orders on the basis of
account numbers, regardless of any name included in the payment order. State
Street will also rely on any financial institution identification numbers
included in any payment order, regardless of any financial institution name
included in the payment order.
4. REJECTION: State Street reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of State Street's receipt of such payment
order; (b) if initiating such payment order would cause State Street, in State
Street's sole judgment, to exceed any applicable volume, aggregate dollar,
network, time, credit or similar limits upon wire transfers; or (c) if State
Street, in good faith, is unable to satisfy itself that the transaction has been
properly authorized.
5. CANCELLATION OR AMENDMENT: State Street shall use reasonable efforts to act
on all authorized requests to cancel or amend payment orders received in
compliance with the selected Security Procedures provided that such requests are
received in a timely manner affording State Street a reasonable opportunity to
act. However, State Street assumes no liability if the request for amendment or
cancellation cannot be satisfied.
6. ERRORS: State Street shall assume no responsibility for failure to detect any
erroneous payment order provided that State Street complies
1
with the payment order instructions as received and State Street complies with
the selected Security Procedures. The Security Procedures are established for
the purpose of authenticating payment orders only and not for the detection of
errors in payment orders.
7. INTEREST AND LIABILITY LIMITS: State Street shall assume no responsibility
for lost interest with respect to the refundable amount of any unauthorized
payment order, unless State Street is notified of the unauthorized payment order
within thirty (30) days of notification by State Street of the acceptance of
such payment order. In no event shall State Street be liable for special,
indirect or consequential damages, even if advised of the possibility of such
damages and even for failure to execute a payment order.
8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS: When
the Client initiates or receives ACH credit and debit entries pursuant to these
Guidelines and the rules of the National Automated Clearing House Association,
the New England Clearing House Association and the Mid-America Payment Exchange
or other similar body, State Street or its agent will act as an Originating
Depository Financial Institution and/or Receiving Depository Financial
Institution, as the case may be, with respect to such entries. Credits given by
State Street or its agent with respect to an ACH credit entry are provisional
until final settlement for such entry is received from the Federal Reserve Bank.
If such final settlement is not received, the Client agrees to promptly refund
the amount credited to the Client in connection with such entry, and the party
making payment to the Client via such entry shall not be deemed to have paid the
amount of the entry.
9. CONFIRMATIONS: Confirmation of State Street's execution of payment orders
shall ordinarily be provided within 24 hours. Notice may be delivered through
State Street's information systems, account statements, advices, or by facsimile
or callback. The Client must report any objections to the execution of a payment
order within 30 days.
10. MISCELLANEOUS: State Street and the Client agree to cooperate to attempt to
recover any funds erroneously paid to wrong parties, regardless of any fault of
State Street or the Client, but the party responsible for the erroneous payment
shall bear all costs and expenses incurred in trying to effect such recovery.
These Guidelines may not be amended except by a written agreement signed by the
parties.
11. LIABILITY ON FOREIGN ACCOUNTS: State Street shall not be required to repay
any deposit made at a non-U.S. branch of State Street, or any deposit made with
State Street and denominated in a non-U.S. dollar currency, if repayment of
such deposit or the use of assets denominated in the non-U.S. dollar currency is
prevented, prohibited or otherwise blocked due to: (A) an act of war,
insurrection or civil strife; (b) any action by a non-U.S. government or
instrumentality or authority asserting governmental, military or police power of
any kind, whether such authority be recognized as a de facto or a de jure
government, or by any entity, political or revolutionary movement or otherwise
that usurps, supervenes or otherwise materially impairs the normal operation of
civil authority; or (c) the closure of a non-U.S. branch of State Street in
order to prevent, in the reasonable judgment of State Street, harm to the
employees or property of State Street. The obligation to repay any such deposit
shall not be transferred to and may not be enforced against any other branch of
State Street.
The foregoing provisions constitute the disclosure required by Massachusetts
General Laws, Chapter 167D, Section 36.
While State Street is not obligated to repay any deposit made at a non-U.S.
branch or any deposit denominated in a non-U.S. currency during the period in
which its repayment has been prevented, prohibited or otherwise blocked, State
Street will repay such deposit when and if all circumstances preventing,
prohibiting or otherwise blocking repayment cease to exist.
2
SECURITY PROCEDURES SELECTION FORM
PLEASE SELECT AT LEAST two of the funds transfer security procedures indicated
below.
| | SWIFT
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a
cooperative society owned and operated by member financial institutions
that provides te1ecommunication services for its membership. Participation
is limited to securities brokers and dealers, clearing and depository
institutions, recognized exchanges for securities, and investment
management institutions. SWIFT provides a number of security features
through encryption and authentication to protect against unauthorized
access, loss or wrong delivery of messages, transmission errors, loss of
confidentiality and fraudulent changes to messages.
Selection of this security procedure would be most appropriate for
existing SWIFT members.
| | REMOTE BATCH TRANSMISSION
Wire transfer instructions are delivered via Computer-to-Computer
(CPU-CPU) data communications between the Client and/or its agent and
State Street and/or its agent. Security procedures include encryption
and/or the use of a test key by those individuals authorized as Automated
Batch Verifiers or a callback procedure to those individuals.
Clients selecting this option should have an existing facility for
completing (CPU-CPU) transmissions. This delivery mechanism is typically
used for high-volume business such as shareholder redemptions and dividend
payments.
| | AUTOMATED CLEARING HOUSE (ACH)
State Street or its agent receives an automated transmission from a Client
For the initiation of payment (credit) or collection (debit) transactions
through the ACH network. The transactions contained on each transmission
or tape must be authenticated by the Client. The transmission is sent from
the Client's or its agent's system to State Street's or its agent's system
with encryption.
| | REPETITIVE WIRES
For situations where funds are transferred periodically from an existing
authorized account to the same payee (destination bank and account number)
and only the date and currency amount are variable, a repetitive wire may
be implemented. Repetitive wires will be subject to a $10 million limit.
If the payment order exceeds the $10 million limit, the instruction will
be confirmed by Telephone Confirmation (Call Back) or Test Key prior to
execution. Repetitive wire instructions must be reconfirmed annually.
Clients may establish Repetitive Wires by following the agreed upon
security procedures as described by Telephone Confirmation (Call Back) or
Test Key.
This alternative is recommended whenever funds are frequently transferred
between the same two accounts. If this option is selected, choose either
Telephone Confirmation or Test Key to be used as a secondary procedure
when over $10 million.
| | STANDING INSTRUCTIONS
Funds are transferred by State Street to a counter party on the Client's
established list of authorized counter parties. Only the date and the
dollar amount are variable. Clients may establish Standby Instructions by
following the agreed upon security procedures as described by Telephone
Confirmation (Call Back) or Test Key. Additional paperwork will be
required from insurance Clients using 1031 drawdowns.
This option is used for transactions that include but are not limited to
Foreign Exchange Contracts, Time Deposits and Tri-Party Repurchase
Agreements. If this option is selected, choose either Telephone
Confirmation or Test Key to be used as a secondary procedure when over
$10 million.
| | TELEPHONE CONFIRMATION (CALL BACK)
This procedure requires Clients to designate individuals as authorized
initiators and authorized verifiers. State Street will verify that the
instruction contains the signature of an authorized person and, prior to
execution of the payment order, will contact someone other than the
originator at the Client's location to authenticate the instruction.
Selection of the alternative is appropriate for Clients who do not have
the capability to use other security procedures. Please complete the
Telephone Confirmation Instructions attached as a Schedule hereto.
| | TEST KEY
Test Key confirmation will be used to verify all non-repetitive funds
transfer instructions received via facsimile or phone. State Street will
provide test keys if this option is chosen. State Street will verify that
the instruction contains the signature of an authorized person and, prior
to execution of the payment order, will authenticate the test key provided
with the corresponding test key at State Street.
Selection of this alternative is appropriate for Clients who do not have
the capability to use other security procedures.
The individual signing below must be authorized to sign contract on behalf of
the Client. The execution of payment orders under the selected Security
Procedures is governed by the Funds Transfer Operating Guidelines, which are
incorporated by reference.
PLATINUM UNERWRITERS HOLDINGS, LTD.
CLIENT
By:
----------------------------------
Authorized Signature
- -------------------------------------
Type or Print Name
- -------------------------------------
Title
- -------------------------------------
Date
3
PLATINUM REGENCY HOLDINGS PLATINUM RE (UK) LIMITED
By: By:
------------------------------ ------------------------------
Authorized Signature Authorized Signature
- --------------------------------- ---------------------------------
Type or Print Name Type or Print Name
- --------------------------------- ---------------------------------
Title Title
- --------------------------------- ---------------------------------
Date Date
PLATINUM UNDERWRITERS BERMUDA, LTD. PLATINUM UNDERWRITERS FINANCE, INC.
By: By:
------------------------------ ------------------------------
Authorized Signature Authorized Signature
- --------------------------------- ---------------------------------
Type or Print Name Type or Print Name
- --------------------------------- ---------------------------------
Title Title
- --------------------------------- ---------------------------------
Date Date
4
SCHEDULE TO FUNDS TRANSFER OPERATING GUIDELINES
AND SECURITY PROCEDURES SELECTION FORM
CLIENT: PLANTINUM UNDERWRITERS HOLDINGS, LTD.
------------------------------------------------------------------------
Company Name
ACCOUNT NUMBER(S): CIW1
--------------------------------------------------------------
KEY CONTACT INFORMATION
Who shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
- --------------------------------- ---------------------------------
Name Name
- --------------------------------- ---------------------------------
Adress Address
- --------------------------------- ---------------------------------
City/State/Zip Code City/State/Zip Code
- --------------------------------- ---------------------------------
Telephone Number Telephone Number
- --------------------------------- ---------------------------------
Facsimile Number Facsimile Number
- ---------------------------------
SWIFT Number
TELEPHONE CONFIRMATION INSTRUCTIONS
Authorized Initiators (Please type or Print) - Please provide a listing of your
staff members who are currently authorized to INITIATE wire transfer
instructions.
NAME TITLE SPECIMEN SIGNATURE
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
Authorized Verifiers (Please Type or Print) - Please provide a list of your
staff members who will be CALLED BACK to verify the initiation of repetitive
wires of $10 million or more and all non-repetitive wire instructions.
NAME CALLBACK PHONE NUMBER DOLLAR LIMITATION (IF ANY)
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- ------------------------------------------------ ------------------------
APPROVAL (FOR STATE STREET USE ONLY) DATE
1
SCHEDULE TO FUNDS TRANSFER OPERATING GUIDELINES
AND SECURITY PROCEDURES SELECTION FORM
CLIENT: PLANTINUM REGENCY HOLDINGS
------------------------------------------------------------------------
Company Name
ACCOUNT NUMBER(S): CIW2
--------------------------------------------------------------
KEY CONTACT INFORMATION
Who shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
- --------------------------------- ---------------------------------
Name Name
- --------------------------------- ---------------------------------
Adress Address
- --------------------------------- ---------------------------------
City/State/Zip Code City/State/Zip Code
- --------------------------------- ---------------------------------
Telephone Number Telephone Number
- --------------------------------- ---------------------------------
Facsimile Number Facsimile Number
- ---------------------------------
SWIFT Number
TELEPHONE CONFIRMATION INSTRUCTIONS
Authorized Initiators (Please type or Print) - Please provide a listing of your
staff members who are currently authorized to INITIATE wire transfer
instructions.
NAME TITLE SPECIMEN SIGNATURE
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
Authorized Verfiers (Please Type or Print) - Please provide a list of your
staff members who will be CALLED BACK to verify the initiation of repetitive
wires of $10 million or more and all non-repetitive wire instructions.
NAME CALLBACK PHONE NUMBER DOLLAR LIMITATION (IF ANY)
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- --------------------- --------------------- -----------------------
- ------------------------------------------------ ------------------------
APPROVAL (FOR STATE STREET USE ONLY) DATE
2
SCHEDULE TO FUNDS TRANSFER OPERATING GUIDELINES
AND SECURITY PROCEDURES SELECTION FORM
CLIENT: PLATINUM UNDERWRITERS BERMUDA, LTD.
-------------------------------------------------------------
Company Name
ACCOUNT NUMBER(S): CIW3
--------------------------------------------------
KEY CONTACT INFORMATION
Who shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
---------------------------- -------------------------------
Name Name
---------------------------- -------------------------------
Address Address
---------------------------- -------------------------------
City/State/Zip Code City/State/Zip Code
---------------------------- -------------------------------
Telephone Number Telephone Number
---------------------------- -------------------------------
Facsimile Number Facsimile Number
----------------------------
SWIFT Number
TELEPHONE CONFIRMATION INSTRUCTIONS
Authorized Initiators (Please Type or Print) -- Please provide a
listing of your staff members who are currently authorized to
INITIATE wire transfer instructions:
NAME TITLE SPECIMEN SIGNATURE
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
Authorized Verifiers (Please Type or Print) -- Please provide a
listing of your staff members who will be CALLED BACK to verify the
initiation of repetitive wires of $10 million or more and all
non-repetitive wire instructions:
NAME CALLBACK PHONE NUMBER DOLLAR LIMITATION (IF ANY)
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
----------------------------------------------------- -----------------------
APPROVAL (FOR STATE STREET USE ONLY) DATE
--------------------- --------------------- -----------------------
3
SCHEDULE TO FUNDS TRANSFER OPERATING GUIDELINES
AND SECURITY PROCEDURES SELECTION FORM
CLIENT: PLATINUM RE (UK) LIMITED
-------------------------------------------------------------
Company Name
ACCOUNT NUMBER(S): CIW5
--------------------------------------------------
KEY CONTACT INFORMATION
Who shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
--------------------------- ---------------------------
Name Name
--------------------------- ---------------------------
Address Address
--------------------------- ---------------------------
City/State/Zip Code City/State/Zip Code
--------------------------- ---------------------------
Telephone Number Telephone Number
--------------------------- ---------------------------
Facsimile Number Facsimile Number
---------------------------
SWIFT Number
TELEPHONE CONFIRMATION INSTRUCTIONS
Authorized Initiators (Please Type or Print) -- Please provide a
listing of your staff members who are currently authorized to
INITIATE wire transfer instructions:
NAME TITLE SPECIMEN SIGNATURE
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
Authorized Verifiers (Please Type or Print) -- Please provide a
listing of your staff members who will be CALLED BACK to verify the
initiation of repetitive wires of $l0 million or more and all
non-repetitive wire instructions:
NAME CALLBACK PHONE NUMBER DOLLAR LIMITATION (IF ANY)
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
---------------------------------------------------- -------------------
APPROVAL (FOR STATE STREET USE ONLY) DATE
4
SCHEDULE TO FUNDS TRANSFER OPERATING GUIDELINES
AND SECURITY PROCEDURES SELECTION FORM
CLIENT: PLATINUM UNDERWRITERS FINANCE. INC.
-------------------------------------------------------------
Company Name
ACCOUNT NUMBER(S): CIW6
--------------------------------------------------
KEY CONTACT INFORMATION
Who shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
--------------------------- ---------------------------
Name Name
--------------------------- ---------------------------
Address Address
--------------------------- ---------------------------
City/State/Zip Code City/State/Zip Code
--------------------------- ---------------------------
Telephone Number Telephone Number
--------------------------- ---------------------------
Facsimile Number Facsimile Number
---------------------------
SWIFT Number
TELEPHONE CONFIRMATION INSTRUCTIONS
Authorized Initiators (Please Type or Print) -- Please provide a
listing of your staff members who are currently authorized to
INITIATE wire transfer instructions:
NAME TITLE SPECIMEN SIGNATURE
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
Authorized Verifiers (Please Type or Print) - Please provide a
listing of your staff members who will be CALLED BACK to verify the
initiation of repetitive wires of $10 million or more and all
non-repetitive wire instructions.
NAME CALLBACK PHONE NUMBER DOLLAR LIMITATION (IF ANY)
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
--------------------- --------------------- -----------------------
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APPROVAL (FOR STATE STREET USE ONLY) DATE
5
REMOTE ACCESS SERVICES ADDENDUM
State Street Bank and Trust Company ("State Street") has developed
proprietary accounting and other systems, and has acquired licenses for other
such systems, which it utilizes in conjunction with the services we provide to
you (the "Systems"). In this regard, we maintain certain information in
databases under our control and ownership that we make available on a remote
basis to our customers (the "Remote Access Service").
The Services. This addendum shall govern use of all Systems that State
Street may from time to time agree to provide you, the Customer, and your
designated investment advisors, consultants or other third parties authorized by
State Street who agree to abide by the terms of this addendum ("Authorized
Designees") in order to provide Remote Access Services for the purpose of
obtaining and analyzing reports and information.
Security Procedures. You agree to comply, and to cause your Authorized
Designees to comply, with remote access operating standards and procedures and
with user identification or other password control requirements and other
security procedures as may be issued from time to time by State Street for use
of the Systems and access to the Remote Access Services. You agree to advise
State Street immediately in the event that you learn or have reason to believe
that any person to whom you have given access to the Systems or the Remote
Access Services has violated or intends to violate the terms of this addendum
and you will cooperate with State Street in seeking injunctive or other
equitable relief. You agree to discontinue use of the Systems and Remote Access
Services, if requested, for any security reasons cited by State Street.
Fees. Fees and charges (if any) for the use of the Systems and the Remote
Access Services and related payment terms shall be as set forth in Schedule A.
You shall be responsible for any tariffs, duties or taxes imposed or levied by
any government or governmental agency by reason of the transactions contemplated
by this addendum, including, without limitation, federal, state and local taxes,
use, value added and personal property taxes (other than income, franchise or
similar taxes which may be imposed or assessed against State Street). Any
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.
Proprietary Information/Injunctive Relief. The Systems and Remote Access
Services and the databases, computer programs, screen formats, report formats,
interactive design techniques, formulae, processes, systems, software, know-how,
algorithms, programs, training aids, printed materials, methods, books, records,
files, documentation and other information made available to you by State Street
as part of the Remote Access Services and through the use of the Systems and all
copyrights, patents, trade secrets and other proprietary rights of State Street
and its relevant licensors related thereto are the exclusive, valuable and
confidential property of State Street and its relevant licensors, as applicable
(the "Proprietary information"). You agree on behalf of yourself and your
Authorized Designees to keep the Proprietary Information confidential and to
limit access to your employees and Authorized Designees (under a similar duty of
confidentiality) who require access to the Systems for the purposes intended.
The foregoing shall not apply to Proprietary information in the public domain or
required by law to be made public.
6
You agree to use the Remote Access Services only in connection with the
proper purposes of this addendum. You will not, and will cause your employees
and Authorized Designees not to, (i) permit any third party to use the Systems
or the Remote Access Services, (ii) sell, rent, license or otherwise use the
Systems or the Remote Access Services in the operation of a service bureau or
for any purpose other than as expressly authorized under this addendum, (iii)
use the Systems or the Remote Access Services for any fund, trust or other
investment vehicle without the prior written consent of State Street, or (iv)
allow or cause any information transmitted from State Street's databases,
including data from third party sources, available through use of the Systems or
the Remote Access Services, to be redistributed or retransmitted for other than
use for or on behalf of yourse1f, as our Customer.
You agree that neither you nor your Authorized Designees will modify the
Systems in any way, enhance or otherwise create derivative works based upon the
Systems, nor will you or your Authorized Designees reverse engineer, decompile
or otherwise attempt to secure the source code for all or any part of the
Systems.
You acknowledge that the disclosure of any Proprietary Information, or of
any information which at law or equity ought to remain confidential, will
immediately give rise to continuing irreparable injury inadequately compensable
in damages at law, and that State Street and its licensor, if applicable, shall
be entitled to obtain immediate injunctive relief against the breach or
threatened breach of any of the foregoing undertakings, in addition to any other
legal remedies which may be available.
Limited Warranties. State Street represents and warrants that it has the
right to grant access to the Systems and to provide the Remote Access Services
contemplated herein. Because of the nature of computer information technology
and the necessity of relying upon third-party sources, and data and pricing
information obtained from third parties, the Systems and Remote Access Services
are provided "AS IS," and you and your Authorized Designees shall be solely
responsible for the investment decisions, regulatory reports and statements
produced using the Remote Access Services. State Street and its relevant
licensors will not be liable to you or your Authorized Designees for any direct
or indirect, special, incidental, punitive or consequential damages arising out
of or in any way connected with the Systems or the Remote Access Services, nor
shall either party be responsible for delays or nonperformance under this
Agreement arising out of any cause or event beyond such party's control.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, STATE STREET FOR ITSELF
AND ITS RELEVANT LICENSORS EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES
CONCERNING THE SYSTEM AND THE SERVICES TO BE RENDERED HEREUNDER, WHETHER EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
Infringement. State Street will defend or, at our option, settle any claim
or action brought against you to the extent that it is based upon an assertion
that access to any proprietary System
7
developed and owned by State Street or use of the Remote Access Services through
any such proprietary System by you under this addendum constitutes direct
infringement of any United States patent or copyright or misappropriation of a
trade secret, provided that you notify State Street promptly in writing of any
such claim or proceeding and cooperate with State Street in the defense of such
claim or proceeding. Should any such proprietary System or the Remote Access
Services accessed thereby or any part thereof become, or in State Street's
opinion be likely to become, the subject of a claim of infringement or the like
under the patent or copyright or trade secret laws of the United States, State
Street shall have the right, at State Street's sole option, to (i) procure for
you the right to continue using such System or Remote Access Services, (ii)
replace or modify such System or Remote Access Services so that the System or
the Remote Access Services becomes noninfringing, or (iii) terminate this
Agreement without further obligation.
Termination. Either party may terminate this Addendum in accordance with
Section 12 of the Custodian and Accounting Services Agreement or immediately for
failure of the other party to comply with any material term and condition of the
addendum by giving the other party written notice of termination. This addendum
shall in any event terminate within ninety (90) days after the termination of
any State Street custodian, accounting or other services agreement applicable to
you. In the event of termination, you will return to State Street all copies of
documentation and other confidential information in your possession or in the
possession of your Authorized Designees. The foregoing provisions with respect
to confidentiality and infringement will survive termination for a period of
three (3) years.
Miscellaneous. Except as provided in the next sentence, this addendum
constitutes our entire understanding with respect to access to the Systems and
the Remote Access Services. If any State Street custody, accounting or other
services agreement with you contains terms and conditions relating to computer
systems or data access, this addendum shall constitute an amendment and
supplement to them, and in the event of any inconsistency the provisions
providing the greatest benefit to State Street shall control. This addendum
cannot be modified or altered except in a writing duly executed by both of us
and shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.
8
Schedule A
STATE STREET BANK AND TRUST COMPANY
INVESTMENT ACCOUNTING AND CUSTODY FEE SCHEDULE
FOR
PLATINUM UNDERWRITERS HOLDINGS LTD.
AND AFFILIATES
I. INVESTMENT ACCOUNTING
ASSUMPTIONS
> $1.0 billion in assets
> Daily processing of investment transactions
> Transactions to be provided to State Street in required file
format for loading into PAM
> Monthly pricing of portfolios to be provided by designated
third party or Platinum Underwriters Holdings Ltd..
INVESTMENT ACCOUNTING SERVICES
Provide Platinum Underwriters with outsourcing of investment accounting
including:
> Account for assets on a GAAP and statutory basis
> On-line, real-time access to PAM for Securities
> Internal management reporting -- standard reports from PAM
system
> On-line access to impromptu report writer for custom reporting
> Reconciliation of PAM to custody records for par value/shares
> Standard PAM journals (cash, transaction and valuation)
provided in ASCII file format
INVESTMENT ACCOUNTING SERVICES FEES
ASSETS ACCOUNTED FOR
> Up to first $1.0 billion 1.2 BASIS POINTS
> Thereafter .8 BASIS POINTS
> IMPLEMENTATION FEE - One-time conversion fee of $20,000
for structuring of the portfolios on PAM for Securities
and converting the "current" tax lot level position
information. There will be an incremental charge
of $5,000/rnonth for each month of historical investment
information back loaded into PAM if required.
Please Note: The above fee schedule is based on information provided by Platinum
Underwriters Holding, Ltd.. Significant changes in portfolio composition and
activity may necessitate a revision of these terms. This fee schedule is
confidential and is intended for Platinum Underwriters internal use only.
FEE CALCULATION AND BILLING
Fees will be calculated on a quarterly basis in advance and derived by
multiplying the applicable basis point rates above by the total invested
assets accounted for at the beginning of each quarterly billing period.
The effective date for billing will begin with
9
the first month-end reporting period State Street becomes the "book of
record". The implementation fee is due upon contract signing.
Schedule A
STATE STREET BANK AND TRUST COMPANY
INVESTMENT ACCOUNTING AND CUSTODY FEE SCHEDULE
FOR
PLATINUM UNDERWRITERS HOLDINGS LTD.
AND AFFILIATES
II. CUSTODY
Maintain custody of fund assets. Settle portfolio purchases and sales. Report
buy and sell fails. Determine and collect portfolio income. Make cash
disbursements and report cash transactions. Monitor corporate actions. On-line
access to portfolio information via In-sight.
DOMESTIC CUSTODY
> Annual Asset Based Fee .25 basis points
> Transaction charge for domestic trades $7.50 per trade
> Options/Futures $8.00 per transaction
> Third party money market investments $7.50 per transaction
> Third Party F/X $7.50 per transaction
> Wire transfers $6.OO per transaction
> Physicals $25.OO
Investments in State Street or SSGA investment products and F/X transactions
initiated through State Street are free of charge.
III. OUT-OF-POCKET EXPENSES
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but are
not limited to, the following:
> Overnight Mailings > Pre-approved Travel
> Follow-up Training > Annual Audit Letter
> External Pricing
IV. TERMS
The above referenced fee proposal is part of a three-year agreement
between Platinum Underwriters Holdings Ltd. and State Street to provide
investment accounting and custody services. State Street agrees to fix the
above fee rates for three years from the date of the signed investment
accounting and custody agreement; provided that significant changes in
portfolio composition and activity may necessitate a revision of these
terms.
10
Schedule A
STATE STREET BANK AND TRUST COMPANY
INVESTMENT ACCOUNTING AND CUSTODY FEE SCHEDULE
FOR
PLATINUM UNDERWRITERS HOLDINGS LTD.
AND AFFILIATES
PLATINUM UNDERWRITERS HOLDINGS LTD. PLATINUM REGENCY HOLDINGS
By By
---------------------------- ----------------------------------
Title Title
---------------------------- ----------------------------------
Date Date
---------------------------- ----------------------------------
PLATINUM UNDERWRITERS BERMUDA, LTD. PLATINUM UNDERWRITERS FINANCE, INC.
By By
---------------------------- ----------------------------------
Title Title
---------------------------- ----------------------------------
Date Date
---------------------------- ----------------------------------
PLATINUM RE (UK) LIMITED STATE STREET BANK AND TRUST COMPANY
By By
---------------------------- ----------------------------------
Title Title
---------------------------- ----------------------------------
Date Date
---------------------------- ----------------------------------
11
EXHIBIT A
Schedule of Investment Accounting and Recordkeeping Functions
The PAM Software's standard reports listed below will be made available to
Client via dial-in access to the PAM Software. Client acknowledges that the
timeliness of the reports generated by State Street in performing the Services
as set forth below are based upon the timeliness of delivery of all necessary
data.
A. MONTHLY OBLIGATIONS. State Street will provide to Client the following on a
Statutory and GAAP basis:
1.Transaction Recording and Review. All reports listed below will be made
available via on-line to Client within two (2) business days after
Client's Designated Custodian has provided to State Street all final
custodian bank statements via on-line.
Reports:
> Transaction Journal Report
> Transaction Ledger Report
> Asset Reconciliation Report
A. The Transaction Journal Report will be available in a PAM ASCII
file format for posting to Client's general ledger system. State
Street will input and review of all manager directed trades
originating from Client and outside managers. Client must ensure
that all trades are promptly and accurately reported to State Street
daily. In addition, the Client will review the Transaction Ledger
report sent by State Street monthly or on an interim basis if
requested.
B. Any exceptions found in the custodian bank asset reconciliation
process will be investigated and State Street will use reasonable
efforts to resolve within twenty-four (24) hours. Any discrepancies
will be resolved by making corrections to accounting system records
or by notifying the custodian bank in writing via email or facsimile
of a bank error to be corrected by the custodian bank. Client will
be copied on all custodian bank correspondence.
C. State Street will set up and review all new security master
files. Client will have the primary responsibility for providing all
necessary descriptive data on newly acquired securities.
2. Cash Processing. All reports listed below will be made available via
on-line to Client within two (2) business days after Client's Designated
Custodian has provided State Street with all necessary cash detail via
on-line. Cash Processing includes cash settlements, cash processing,
suspense processing and inquiries of overdues.
Reports:
> Cash Journal Report
12
EXHIBIT A
Schedule of Investment Accounting and Recordkeeping Functions
> Open Receivable/Payable Report
> Unapplied Cash Report
A. The Cash Journal Report will be available in a PAM ASCII file
format for posting to Client's general ledger system.
B. Client shall supply State Street with written instructions to
identify and record appropriate general ledger accounts to be offset
for repetitive miscellaneous cash transactions and advise State
Street on an as-needed basis for non-repetitive miscellaneous items.
C. Client shall verify that (i) the total cash receipt and
disbursement activity, and ending balances, by account, agree with
the bank provided data; and (ii) open item listings appear
reasonable and in-line with Client expectations. State Street shall
not be responsible or liable for any incorrect information.
D. Client must ensure that investment managers promptly respond to
State Street inquiries regarding discrepancies resulting from
trading activity initiated by them.
3. Valuation of Assets. All reports listed below will be made available
via on-line to Client within two (2) business days after Client, Client's
Designated Custodian, or agreed upon market data vendor has provided State
Street with all the necessary market prices.
Reports:
> Valuation Journal
> Holdings Report
> GAAP Holdings Report
> Missing Prices Report
> Income Earned Report
A. The Valuation Journal will be available in a PAM ASCII file
format for posting to Client's general ledger system.
B. In order for State Street to value Client's portfolios Client
must provide State Street with (i) all transaction positions for the
month to be evaluated and (ii) pricing data.
C. Upon receipt of all transaction positions for the month to be
evaluated, State Street will use reasonable efforts to provide
missing pricing data from the agreed upon market data vendor or
Client. However, Client is responsible for any and all missing
prices not supplied to State Street via the agreed upon market data
vendor. In order to aide Client in determining those securities yet
to be priced for the month, State Street will make
13
available to Client the Missing Prices Report within twenty-four
(24) hours after pricing is provided by the Client or agreed upon
market data vendor.
D. Client is required to monitor below investment grade securities
and advise State Street in writing, no later than three (3) days
prior to the delivery of all reports, if any permanent impairment
recording is necessary.
E. Client is responsible for reviewing and assuring all investment
results for material reasonableness.
4. Realized Gain/Loss. All reports listed below will be made available
via on-line to Client within two (2) business days after Client has
provided State Street with the necessary transaction information.
Reports:
> Realized Gain/Loss Report
B. QUARTERLY AND ANNUAL OBLIGATIONS. State Street will provide the following
on a quarterly and annual basis as necessary:
1. Regu1atory (Statutory) Reporting. All reports listed below will be
made available via on-line to Client within seven (7) business days
after delivery of the month end reports.
Reports:
> Schedule D - All Parts
> Schedule DA - Parts I and II
> Schedule DB
> Risk Based Capital Report
> Schedule E -- Securities on Deposit Report
> Statutory Reconciliation Report by Book Value
> Statutory Reconciliation Report by Carry Value
> Statutory Holdings Report
State Street will also make available to Client the formatted file for Schedule
D All Parts and DA Parts I and II for interface to Client's annual statement
package provided the annual statement package is a PAM Software approved annual
statement package.
2. GAAP Reporting. Within seven (7) business days after delivery of the
month-end reports, State Street will make available via on-line all
final and reconciled reports listed below:
Reports:
> GAAP Maturity Distribution Report
> GAAP Footnote Disclosure Report
14
EXHIBIT H
Control Agreement
J-7
CONTROL AGREEMENT
Control Agreement dated as of November____, 2002, by and among ST. PAUL
REINSURANCE COMPANY LIMITED ("PARTY A"), PLATINUM RE (UK) LIMITED ("PARTY B"),
and STATE STREET BANK AND TRUST COMPANY ("CUSTODIAN") (the "AGREEMENT").
WHEREAS, pursuant to a custodian and investment accounting agreement
between Custodian and various affiliated parties including Party B (as amended,
the "CUSTODIAN AGREEMENT"), Custodian acts as custodian for Party B's assets
and, as such Custodian, has established a custodial account in the name of Party
B in which the Collateral, as defined below (together with other assets of Party
B) is held; and
WHEREAS, Party A and Party B have entered into a retrocession agreement,
dated as of November _, 2002 (the "RETROCESSION AGREEMENT") and a security
agreement, dated as of November, 2002 in the form attached hereto as Exhibit A
(the "SECURITY AGREEMENT") pursuant to the terms of which, Party B will from
time to time grant a continuing first priority security interest over certain
assets specified by Party B and identified in writing to Custodian as Collateral
as defined in the Security Agreement (the "COLLATERAL") to secure Party B's
obligations under the Retrocession Agreements; and
WHEREAS, Party A, Party B and Custodian are entering into this Agreement
for the purpose of appointing Custodian to serve as collateral agent for Party A
and to serve as securities intermediary as herein provided in order to provide
Party A with control of the Collateral Accounts and the Collateral credited
thereto and held therein (each as defined below), in each case for the purpose
of perfecting and establishing the priority of Party A's security interest in
such Collateral;
NOW, THEREFORE, in consideration of the mutual promises set forth herein,
it is agreed as follows:
1. APPOINTMENT AND ESTABLISHMENT OF ACCOUNTS.
1.1 Party A hereby appoints Custodian as collateral agent on its behalf
and Custodian hereby accepts such appointment. In addition, Custodian agrees to
act as securities intermediary and/or depositary bank, as applicable, with
respect to the Collateral Accounts and the Collateral held therein pursuant
hereto.
1.2 The Custodian has established and will maintain a segregated account
(which may include one or more sub-accounts) entitled "Platinum Re (UK) Limited
for the Benefit of St. Paul Reinsurance Company Limited" (the "Securities
Account"); and a separate and segregated deposit account or accounts (as defined
in Section 9-102 of the UCC) entitled "Platinum Re (UK) Limited for the Benefit
of St. Paul Reinsurance Company Limited" (the "Deposit Account", and together
with the Securities Account, the "COLLATERAL ACCOUNTS"), all as more
particularly described on the attached Schedule 1, hereto. Each party hereto
agrees that (i) the Securities Account constitutes a "securities account" within
the meaning of Article 8 of the UCC, and (ii) all property now or hereafter
held, credited or carried by, in or to the credit of Securities
1
Account (other than "Identified Securities", as defined in Section 5(vi), and
cash) shall be treated as "financial assets" within the meaning of UCC Section
8-102(a)(9). Each of the Collateral Accounts shall be maintained separately and
apart from any other account or sub-account of Party B. The Custodian shall not
change the name of the Collateral Accounts without the prior written consent of
Party A. Except for specified "Identified Securities", as provided hereinafter,
Party B agrees that all financial assets credited to the Collateral Accounts
shall be registered in the name of the Custodian, endorsed to the Custodian or
in blank or credited to another securities account maintained in the name of the
Custodian, and except for such Identified Securities, no financial asset
credited to the Collateral Accounts shall be registered in the name of Party B,
payable to the order of Party B or specially endorsed to Party B except to the
extent the foregoing have been specially endorsed to the Custodian or in blank.
1.3 The Custodian agrees that it shall promptly notify Party A and Party B
in writing after becoming aware that any financial asset which constitutes
Collateral is registered or endorsed otherwise than as provided in the foregoing
Section 1.2; provided, however, that the Custodian shall have no liability
hereunder for the failure to deliver such notice except to the extent such
failure results from its negligence or misconduct.
1.4 Party B, from time to time, shall instruct Custodian in writing by any
of the means mutually agreed to between Party B and Custodian (which shall
constitute "Proper instructions" under the Custodian Agreement), to segregate
and hold in a separate account the Collateral for the benefit of Party A,
whereupon any such Collateral, other than cash Collateral, shall be credited to
and held in the Securities Account, and any such cash Collateral shall be
credited to and held in the Deposit Account. Custodian shall have no
responsibility for determining the adequacy of any Collateral required hereunder
or under the Retrocession Agreement, nor will it assume responsibility for any
calculations related to any Collateral requirements under the Retrocession
Agreement.
1.5 All Cash Proceeds (as defined in UCC Section 9-l02(a)(9)) of the
Collateral received by the Custodian, except for the Distributions (as defined
in the Security Agreement (the "Distributions")), shall be deposited in the
Collateral Accounts and become part of the Collateral.
2. Account Control.
2.1 Security interest. This Agreement is intended by Party A and Party B
to grant "control" of the Collateral Accounts to Party A for purposes of the
perfection and priority of Party A's security interest in such Collateral
pursuant to Article 8 and Article 9 of the UCC, and Custodian hereby
acknowledges that it has been advised of Party B's grant to Party A of a
security interest in the Collateral Accounts and the Collateral held therein.
Notwithstanding the foregoing, Custodian makes no representation or warranty
with respect to the creation or enforceability of any security interest in the
Collateral Accounts or the Collateral held therein. Custodian shall promptly and
in the exercise of due care and reasonable commercial standards comply with
"entitlement orders" (as that term is defined in UCC Section 8-102(a)(8)),
including but not limited to a Notice of Exclusive Control substantially in the
form attached hereto as Exhibit B ("NOTICE OF EXCLUSIVE CONTROL"), originated by
Party A and concerning the Collateral, without the further consent of Party B,
including without limitation any entitlement order originated by Party A
instructing the Custodian to deliver any or all of the Collateral to Party A
2
or its designees.
2.2 Control by Party B. Unless and except to the extent it has received a
contrary entitlement order from Party A pursuant to Section 2.1, and except as
provided in Section 2.3(i), below: (i) Custodian shall take actions with respect
to the Collateral in the Collateral Accounts upon the instructions of Party B,
and (ii) Custodian shall have no responsibility or liability to Party A or Party
B for actions taken in accordance with such instructions. All entitlement orders
and other instructions and communications that Party B is entitled, or desires,
to give or make under this Agreement may be given or made either by Party B
itself or its investment advisor as designated in writing by Party B to the
Custodian from time to time.
2.3 Control by Party A.
(i) Party A agrees to provide Custodian, in the form of Exhibit C attached
(as may be amended from time to time), the names and signatures of authorized
parties who may give notices, instructions, or entitlement orders concerning the
Collateral Accounts and the Collateral held therein. All entitlement orders and
other instructions and communications that Party A is entitled, or desires, to
give or make under this Agreement may be given or made either by Party A itself
or its attorney in fact, as designated in writing by Party A to the Custodian
from time to time. Other means of notice, instruction, or entitlement orders may
be used provided that Party A and Custodian agree to appropriate security
procedures. Upon receipt by Custodian of a Notice of Exclusive Control, and
unless and until such Notice of Exclusive Control has been revoked in writing by
Party A, Custodian shall thereafter follow only the instructions of Party A with
respect to the Collateral Accounts and shall comply with any entitlement order
or instructions (within the meaning of Sections 8-102, 9-104, and 9-106 of the
UCC) received from Party A, without further consent of Party B or any other
person, and Custodian will not comply with entitlement orders or instructions
concerning the Collateral originated by Party B without the prior written
consent of Party A.
(ii) Party A represents and warrants to Party B that Party A will only
issue to Custodian a Notice of Exclusive Control if Party A has determined in
good faith that an event has occurred which entitles Party A to exercise its
rights as a secured party with respect to the Collateral in the Collateral
Accounts.
(iii) Custodian shall have no responsibility or liability to Party B for
complying with a Notice of Exclusive Control or complying with entitlement
orders or instructions originated by Party A concerning the Collateral Accounts
and the Collateral held therein. Custodian shall have no duty to investigate or
make any determination to verify compliance by Party A or Party B with
applicable law. Nor shall Custodian have any duty to verify the occurrence of an
event entitling Party A to exercise its rights as a secured party with respect
to the Collateral in the Collateral Accounts, and Custodian shall be fully
protected in complying with a Notice of Exclusive Control whether or not Party B
may allege that no such event has occurred.
(iv) As between Party A and Custodian, notwithstanding any provision
contained herein or in any other document or instrument to the contrary,
Custodian shall not be liable for any action taken or omitted to be taken at the
instruction of Party A, or any action taken or omitted to be taken under or in
connection with this Agreement, except for Custodian's own negligence or willful
misconduct in carrying out such instructions.
3
3. DISTRIBUTIONS. Custodian shall transfer the Distributions to the Party B
within ten (10) days following the end of each calendar month, upon proper
written instructions by Party B, to Party B's custodial account or any other
account designated by Party B unless Custodian has received a Notice of
Exclusive Control and, if any Notice of Exclusive Control is in effect, until
such Notice of Exclusive Control has been revoked or rescinded in writing by
Party A. The Distributions shall not be considered Collateral.
4. RELEASE OF COLLATERAL; RELEASE OF SECURITY INTEREST.
4.1 Release of Collateral. As soon as reasonably practicable after
receiving joint instructions from Party A and Party B, Custodian will release
Collateral held in the Collateral Accounts in accordance with such instructions.
Notwithstanding the foregoing, Custodian will release Collateral held in the
Collateral Accounts upon receipt from Party B of a Substitution Notice as
defined in the Security Agreement notifying Custodian of Party B's intention to
substitute Qualified Assets as defined in the Security Agreement and in
accordance with instructions from Party B that comport with such Substitution
Notice, provided, that no contrary instructions have been received from Party A,
and that no Notice of Exclusive Control is then in effect.
4.2 Release of Security Interest. Party A agrees to notify Custodian
promptly in writing when all obligations of Party B to Party A under the
Retrocession Agreement and the Security Agreement have been fully satisfied or
Party A otherwise no longer claims any interest in the Collateral in the
Collateral Accounts, whichever is sooner; at which time Custodian shall have no
further liabilities or responsibilities hereunder and Custodian's obligations
under this Agreement shall terminate.
5. DUTIES AND SERVICES OF CUSTODIAN.
(i) Custodian agrees that it is acting as a securities intermediary, as
defined in Section 8-102 of the UCC with respect to the Collateral in the
Securities Account, except Identified Securities. Custodian agrees, with respect
to the Deposit Account, that it is acting as a "bank" as such term is used in
Section 9-102(a)(29) of the UCC. The parties hereto acknowledge that the
Custodian Agreement is governed by the laws of The Commonwealth of Massachusetts
and that, as a consequence, the jurisdiction of Custodian as securities
intermediary and as bank is The Commonwealth of Massachusetts.
(ii) Custodian shall have no duties, obligations, responsibilities or
liabilities with respect to the Collateral Accounts and the Collateral held
therein except as and to the extent expressly set forth in this Agreement and
the Custodian Agreement, and no implied duties of any kind shall be read into
this Agreement against Custodian including, without limitation, the duty to
preserve, exercise or enforce rights in the Collateral and the Collateral
Accounts. Custodian shall not be liable or responsible for anything done or
omitted to be done by it in good faith and in the absence of negligence and may
rely and shall be protected in acting upon any notice, instruction, entitlement
orders, or other communication which it reasonably believes to be genuine and
authorized.
(iii) As between Party B and Custodian, except for the rights of control
in favor of Party A agreed to herein, nothing herein shall be deemed to modify,
limit, restrict, amend or supersede the terms of the Custodian Agreement, and
Custodian shall be and remain entitled to all of the rights, indemnities,
powers, and protections in its favor under the Custodian
4
Agreement, which shall apply fully to Custodian's actions and omissions
hereunder. Instructions under this Agreement from Party B's authorized
representative given in accordance with the terms of the Custodian Agreement
shall also constitute Proper Instructions under the Custodian Agreement.
(iv) As between Custodian and Party A, Party A shall indemnify and hold
Custodian harmless with regard to any losses or liabilities of Custodian
(including reasonable attorneys' fees) imposed on or incurred by Custodian
arising out of any action or omission of Custodian in accordance with any
notice, instruction, or entitlement order of Party A under this Agreement except
for actions or omissions due to Custodian's own negligence or willful
misconduct.
(v) The parties hereto acknowledge that no "security entitlement" under
the UCC shall exist with respect to any cash or to any financial asset held in
the Collateral Accounts which is registered in the name of Party B, payable to
the order of the Party B, or specially indorsed to Party B or any third party
(each such asset an "IDENTIFIED SECURITY"), except to the extent such Identified
Security has been specially indorsed by Party B to Custodian or in blank. The
parties further acknowledge and agree that any such cash and/or Identified
Securities received by Custodian and credited to the Collateral Accounts from
time to time shall (so long as so credited to the Collateral Accounts and so
long as this Agreement remains in effect) be held by Custodian for the benefit
of and on behalf of Party A, not in its capacity as a "securities intermediary"
(as defined in the UCC), but in its capacity as a collateral agent under and
subject to the terms of this Agreement.
(vi) For avoidance of doubt, Party A hereby acknowledges that any
Collateral in the Collateral Accounts issued outside the United States ("FOREIGN
SECURITY SYSTEM ASSETS") which may be held by Custodian, a sub-custodian within
Custodian's network of sub-custodians (each a "SUB-CUSTODIAN") or a depository
or book-entry system for the central handling of securities and other financial
assets in which Custodian or the Sub-Custodian are participants may not permit
Party B to have a security entitlement under the UCC with respect to such
Foreign Security System Assets (and such property shall be deemed for purposes
of this Agreement not to be a financial asset held within the Collateral
Accounts). The parties hereby further acknowledge that Custodian gives no
assurance that a security entitlement is created under the UCC with respect to
Party B's assets held in Euroclear or Clearstream or their successors.
(vii) Custodian shall from time to time employ one or more sub-custodians
in accordance with the terms of the Custodian Agreement.
6. FORCE MAJEURE; SPECIAL DAMAGES. Custodian shall not be liable for delays,
errors or losses occurring by reason of circumstances beyond its control,
including, without limitation, acts of God, market disorder, terrorism,
insurrection, war, riots, failure of transportation or equipment, or failure of
vendors, communication or power supply. In no event shall Custodian be liable to
any person for indirect, consequential or special damages, even if Custodian has
been advised of the possibility or likelihood of such damages.
7. COMPLIANCE WITH LEGAL PROCESS AND JUDICIAL ORDERS. Custodian shall have no
responsibility or liability to Party A or Party B or to any other person or
entity for acting in accordance with any judicial or arbitral process, order,
writ, judgment, decree or claim of lien relating to the Collateral Accounts and
the Collateral held therein subject to this Agreement notwithstanding that such
order or process is subsequently modified, vacated or otherwise
5
determined to have been without legal force or effect.
8. CUSTODIAN REPRESENTATIONS. Custodian agrees and confirms, as of the date
hereof, and at all times until the termination of this Agreement, that it has
not entered into, and until the termination of this Agreement will not enter
into, any agreement (other than the Custodian Agreement) with any other person
or entity relating to the Collateral or the Collateral Accounts under which it
has agreed to comply with entitlement orders (as defined in Section 8-102 of the
UCC) of such other person or entity.
9. Access To Reports. Upon any pledge, release, or substitution of Collateral in
the Collateral Accounts, Custodian shall notify Party A within one business day
of such change. Custodian will provide to Party A a copy of a statement of the
Collateral Accounts and the Collateral held therein within five (5) business
days of the end of the calendar month; provided, however, that Custodian's
failure to forward a copy of such statement to Party A shall not give rise to
any liability hereunder.
10. INTERPLEADER. Notwithstanding any provision contained in this Agreement to
the contrary, in the event of any dispute concerning this Agreement or the
disposition of any of the Collateral or the Collateral Accounts, Custodian shall
have the absolute right, at its election, to (a) refrain from taking any action
(other than to hold the Collateral in accordance with the Custodian Agreement)
until directed by written instructions signed by Party B and Party A or by final
order of a court of competent jurisdiction; or (b) in the event of litigation
between Party B and Party A, deliver all of the Collateral in the Collateral
Accounts to the clerk of any court in which such litigation is pending, or file
suit in interpleader and deliver the Collateral in the Collateral Accounts to
the court in which the action is commenced, and obtain an order from the court
requiring the parties to interplead and litigate in such court their claims and
rights among themselves, whereupon Custodian shall thereby be relieved from any
further liability respecting the Collateral and the Collateral Accounts.
11. FEES AND EXPENSES OF CUSTODIAN. In addition to the terms of the Custodian
Agreement, Party B hereby agrees to pay and reimburse Custodian for any
advances, fees, costs, expenses (including, without limitation, reasonable
attorney's fees and costs) and disbursements that may be paid or incurred by
Custodian in connection with this Agreement or the arrangement contemplated
hereby, including any that may be incurred in performing its duties or
responsibilities pursuant to the terms of this Agreement. Any fees, expenses or
other amounts that may be owing to Custodian from time to time pursuant to the
terms hereof, or of the Custodian Agreement shall be secured by any lien,
encumbrance or other right Custodian may have under the Custodian Agreement or
applicable law, and Custodian shall be entitled to exercise its rights and
remedies against the Collateral and Collateral Accounts in accordance with the
term's and conditions of the Custodian Agreement.
It is hereby expressly acknowledged and agreed by the parties that Custodian
(including its agents) shall not be obligated to advance cash or investments to,
for or on behalf of Party B in the Collateral Accounts, provided, however, that
if Custodian does advance cash or investments to the Collateral Accoun1s for any
purpose (including but not limited to securities settlements, foreign exchange
contracts, assumed settlement or account overdraft) for the benefit of Party B,
any property at any time held pursuant to this Agreement and the Custodian
Agreement shall be security therefor and, should Party B fail to repay Custodian
promptly, Custodian shall be entitled to utilize available cash and to dispose
of Collateral in the Collateral Accounts to the
6
extent necessary to obtain reimbursement.
12. NOTICES. Any notice, instruction, entitlement order, or other instrument
required to be given hereunder, or requests and demands to or upon the
respective parties hereto, shall be in writing and may be sent by hand, or by
facsimile transmission, telex, or delivery by any recognized delivery service,
prepaid or, for termination of this Agreement only, by certified or registered
mail, and addressed as follows, or to such other address as any party may
hereafter notify the other respective parties hereto in writing:
If to Party A, then: If to Party B, then: If to Custodian, then:
St. Paul Reinsurance Company Platinum Re (UK) Limited State Street Bank and Trust Company
Limited 52 Lime Street 801 Pennsylvania Avenue
27 Camperdown Street London EC3M 7NL Kansas City, MO 64105
London El 8DS UK Attention: Vice President, Insurance
UK Attention: Guy Butler Services
Attention: Company Secretary Telephone: 011-44-207-220-8110 Telephone: (816) 871-4100
Telephone: Telecopy: 011-44-207-623-6610 Telecopy: (816) 871-9675
Telecopy: 01 1-44-207-488-6345
13. AMENDMENT. No amendment or modification of this Agreement will be effective
unless it is in writing and signed by each of the parties hereto.
14. TERMINATION. This Agreement shall continue in effect until Party A has
notified Custodian in writing that this Agreement is to be terminated. Upon
receipt of such notice, Party A shall have no further right to originate
entitlement orders concerning the Collateral Accounts and Party B shall be
entitled to originate entitlement orders concerning the Collateral for any
purpose and without limitation except as may be provided in the Custodian
Agreement. This Agreement may also be terminated by Custodian, Party A or, with
the prior written consent of Party A, Party B, and shall terminate in the event
of the termination of the Custodian Agreement, following thirty (30) days prior
written notice to the other parties hereto. Upon termination of this Agreement
by any party, all Collateral in the Collateral Accounts that has not been
released by Party A shall be transferred, within 30 days of such termination, to
a successor custodian designated in writing by Party B and acceptable to Party
A. In the event no successor is agreed upon, Custodian shall be entitled to
petition a court of competent jurisdiction to appoint a successor custodian and
shall be indemnified by Party B for any costs and expenses (including, without
limitation, attorneys' fees) relating thereto.
15. SEVERABILITY. In the event any provision of this Agreement is held illegal,
void or unenforceable, the remainder of this Agreement shall remain in effect.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts, without giving
effect to the conflict of law provisions thereof.
17. HEADINGS. Any headings appearing on this Agreement are for convenience only
and shall not affect the interpretation of any of the terms of this Agreement.
7
18. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, and all such counterparts taken
together shall constitute one and the same Agreement.
8
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers or duly authorized representatives as of the date
first above written.
ST. PAUL REINSURANCE COMPANY LIMITED
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
PLATINUM RE (UK) LIMITED
By:
------------------------------
Name:
-----------------------------
Title:
----------------------------
STATE STREET BANK AND TRUST COMPANY
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
9
EXHIBIT A
TO CONTROL AGREEMENT AMONG ST. PAUL REINSURANCE COMPANY LIMITED,
PLATINUM RE (UK) LIMITED AND STATE STREET BANK AND TRUST COMPANY
FORM OF THE SECURITY AGREEMENT
[See attached]
10
EXHIBIT B
TO CONTROL AGREEMENT AMONG ST. PAUL REINSURANCE COMPANY LIMITED, PLATINUM
RE (UK) LIMITED AND STATE STREET BANK AND TRUST COMPANY
[Letterhead of Party A]
[Date]
State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, MO 64105
Attention: Vice President, Insurance Services
NOTICE OF EXCLUSIVE CONTROL
We hereby instruct you pursuant to the terms of that certain Control Agreement
dated as of _____________, 2002 (as from time to time amended and supplemented,
the "CONTROL AGREEMENT") among the undersigned, Platinum Re (UK) Limited
(together with its successors and assigns, "PARTY B") and you, as Custodian,
that you (i) shall not follow any instructions or entitlement orders of Party B
with respect to the Collateral or the Collateral Accounts held by you for Party
B, and (ii) unless and until otherwise expressly instructed by the undersigned,
shall exc1usive]y follow the entitlement orders and instructions of the
undersigned with respect to the Collateral or the Collateral Accounts.
Very truly yours,
St. Paul Reinsurance Company Limited.
By: __________________________
Authorized Signatory
cc:
11
EXHIBIT C
TO CONTROL AGREEMENT AMONG ST. PAUL REINSURANCE COMPANY LIMITED, PLATINUM
RE (UK) LIMITED AND STATE STREET BANK AND TRUST COMPANY
AUTHORIZED PERSONS FOR ST. PAUL REINSURANCE COMPANY LIMITED
State Street Bank and Trust Company is directed to accept and act upon
written instructions received from any one of the following persons at St. Paul
Reinsurance Company Limited
Name Telephone/Fax Number Signature
- ---- -------------------- ---------
1. 1.Telephone 1.
------------------------
Facsimile
2. 2. Telephone 2.
------------------------
Facsimile
3. 3. Telephone 3.
------------------------
Facsimile
4. 4. Telephone 4.
------------------------
Facsimile
5. 5. Telephone 5.
------------------------
Facsimile
Authorized by: _____________________________
as authorized agent of St. Paul Reinsurance Company Limited
Name:
---------------------------
Title:
---------------------------
12
SCHEDULE I
TO CONTROL AGREEMENT AMONG ST. PAUL REINSURANCE COMPANY LIMITED, PLATINUM
RE (UK) LIMITED AND STATE STREET BANK AND TRUST COMPANY
COLLATERAL ACCOUNTS
Deposit Account
- --------------------------------------------------------------------------------
Description Number
- --------------------------------------------------------------------------------
Platinum Re (UK) fbo St. Paul Re 54798137
- --------------------------------------------------------------------------------
Securities Account
- --------------------------------------------------------------------------------
Description Number
- --------------------------------------------------------------------------------
Platinum Re (UK) fbo St. Paul Re CIW8
- --------------------------------------------------------------------------------
13
EXHIBIT I
Investment Advisory Agreement
J-8
ALLIANCE CAPITAL MANAGEMENT L.P.
Discretionary Investment Advisory Agreement
With
Platinum Re (UK) Limited
Dated November___, 2002
(Effective Date)
Alliance Capital Management L.P. (the "Adviser") and Platinum Re
(UK) Limited (the "Client") hereby agree as of the above date that the Adviser
shall act as discretionary investment manager with respect to certain assets of
the Client described below (the "Investment Account") on the following terms and
conditions:
1. The investment Account
The Investment Account established for the Client refer collectively
to the Collateral Accounts defined in and subject to a certain Control Agreement
by and among the Client, St. Paul Reinsurance Company Limited and State Street
Bank and Trust Company, dated as of November___, 2002 and established as a
condition of the 100% Quota Share Retrocession Agreement (Traditional) (the
"Quota Share Retrocession Agreement"), by and between the Client and St. Paul
Reinsurance Company Limited, dated as of November___, 2002, shall initially
consist of cash, cash equivalents, stocks, bonds, and other securities placed in
the Investment Account by the Client or which shall become part of such
Investment Account as a result of transactions.
All cash, securities and other assets in the Investment Account
shall be held by such other party as the Client shall designate as trustee or
custodian for such account (each, a "Custodian"). The Adviser shall not be
responsible for any custodial arrangements involving the assets of the
Investment Account or for the payment of any custodial charges and fees, nor
shall the Adviser have possession or custody of any such assets. All payments,
distributions and other transactions in cash, securities or other assets in
respect of the investment Account shall be made directly to or from the
Custodian for such Investment Account, and the Adviser shall have no
responsibility or liability with respect to transmittal or safekeeping of such
cash, securities or other assets of an Investment Account, or the acts or
omissions of any Custodian or others with respect thereto. The Client may make
additions to or withdrawals from the Investment Account established for it,
provided the Adviser receives at least three (3) business days' prior written
notice of withdrawals. Should the Client fail to provide the Adviser with timely
written notice of any additions to or withdrawals from its Investment Account,
the Adviser shall not be liable for any resulting investment or other loss, if
any, which shall be incurred by or charged to the applicable investment Account,
as the case may be. The Client agrees to provide or instruct the
Custodian for its Investment Account to provide to the Adviser such information
as the Adviser may reasonably request as being necessary or appropriate to the
performance of the Adviser's responsibilities to the Client under this
Agreement.
2. Services of Adviser
By execution of this Agreement, the Adviser accepts its appointment
as investment manager for the Investment Account with full discretion and agrees
to supervise and direct the investments of the Investment Account in accordance
with the written investment objectives, policies and restrictions of the Client
previously furnished to the Adviser as the same may be amended by the Client
from time to time. In the performance of its services, the Adviser will not be
liable for any error in judgment or any acts or omissions to act except those
resulting from the Adviser's negligence, willful misconduct, malfeasance or
material breach of this Agreement. Nothing herein shall in any way constitute a
waiver or 1imitation of any right of any person under the Federal securities
laws or any state securities laws
The Adviser will make available to the Client a daily report on the
positions of each of the investments in the Investment Account and a monthly
written report of the inventory of investments in the Investment Account
established for the Client. It is agreed that the Adviser, in the maintenance of
its records, does not assume responsibility for the accuracy of information
furnished by any Client or any other person.
3. Funding Policy
The Client shall from time to time inform the Adviser in writing of
the funding policy applicable to it and of its cash disbursement requirements.
The Adviser shall make its investment decisions for an Investment Account in
accordance with such funding policy and requirements.
4. Investment Objectives, Policies and Restrictions
It will be the responsibility of the Client to notify the Adviser in
writing of any modifications to Schedule A. The Client is also required to
notify the Adviser in writing of specific restrictions governing its Investment
Account under the current or future laws of any jurisdiction or by virtue of the
terms of any other contract or instrument purporting to bind the Client or the
Adviser.
5. Delivery of Client Documentation
No later than the date of this Agreement, the Client will provide
the Adviser with copies of all documents relevant to the Adviser's management of
the Investment Account established for the Client, (i.e. trust agreement,
pension plan documents, by-laws, etc.), including the Client's written statement
of investment objectives, policies and restrictions referred to above. The
Client further agrees to promptly deliver to the Adviser true and complete
copies of
2
all amendments of supplements to such documents. The Client will indemnify and
hold harmless the Adviser against any and all losses, costs, claims and
liabilities which it may suffer or incur arising out of any failure by the
Client to provide to the Adviser the documents required to be furnished in
accordance with the above provisions.
6. Discretionary Authority
The Adviser, whenever it deems appropriate may (i) buy, sell,
exchange, convert, liquidate or otherwise trade in any stock, bonds and other
securities (including money market instruments) and contracts relating to the
same, and (ii) subject to its duty to seek best execution, place orders for the
execution of such transactions with or through such brokers, dealers or issuers
as the Adviser in its absolute discretion may select.
It is understood that, to the extent permitted by Schedule A, the
Adviser or Alliance Capital Global Derivatives Corporation, an affiliate of the
Adviser, may also effect transactions for the Investment Account of the Client
in options and futures and other commodity contracts. In such event, the Client
will execute any additional documentation which the Adviser deems necessary to
enable it or its affiliate to engage in such transactions on behalf of its
Investment Account. The Client represents and warrants that it is familiar with
the requirements of the Commodity Exchange Act and the National Futures
Association pertaining to commodity pool operators and has determined that it is
in compliance with such requirements, to the extent applicable.
7. Brokerage Transactions
Fixed-income securities transactions for the investment Account will
generally be effected in dealer markets where the Adviser will act as agent for
the Client in the purchase or sale of fixed-income securities at a net price
that includes a mark-up from the dealer. The Adviser will issue instructions to
such issuers, brokers and dealers for the placement of orders for the Investment
Account and instruct such dealers to forward to the Client copies of all
confirmations promptly after the execution of transactions for the Client's
investment Account.
8. Aggregation of Transactions
The Client authorizes the Adviser in its discretion to aggregate
purchases and sales of securities for its Investment Account with purchases and
sales of securities of the same issuer for other clients of the Adviser
occurring on the same day. When transactions are so aggregated, the actual
prices applicable to the aggregated transactions will be averaged, and the
Investment Account and the accounts of other participating clients of the
Adviser will be deemed to have purchased or sold their proportionate share of
the securities involved at the average price so obtained.
9. Transaction Procedures
All transactions will be settled by payment to, or delivery by, the
applicable Custodian of all cash, securities or other assets due to or from the
investment Account. The
3
Adviser may issue such instructions to a Custodian as may be appropriate in
connection with the settlement of transactions initiated by the Adviser.
Instructions of the Adviser to a Custodian shall be transmitted in writing or,
at the option of the Adviser, orally and confirmed in writing as soon as
practical thereafter. The Adviser will take reasonable measures to insure that
broker-dealers and issuers selected by the Adviser perform their obligations
with respect to the Investment Accounts.
10. Fees
The compensation of the Adviser for its services under this
Agreement shall be calculated and paid by the Client in respect of the
Investment Account established for it, in accordance with the Fee Schedule
attached hereto as Exhibit A, as the same may be amended from time to time by
mutual agreement between the Client and the Adviser. It is understood that, in
the event that such fees are to be billed to and paid by the Custodian for an
Investment Account, the Client will provide written authorization to the
Custodian to pay the fees of the Adviser directly from the Investment Account.
The Client shall be responsible solely for the fee due to the Adviser in respect
of the Investment Account established for such Client.
11. Confidential Relationship
All information provided by the Client or a Custodian to the Adviser
shall be held as confidential by the Adviser; provided, however, as is necessary
to carry out the purposes of this Agreement or as may be required by law, the
Adviser shall be permitted to disclose or communicate to a proper party any
information received from the Client or a Custodian or developed by the Adviser
under the terms of this Agreement. All recommendations, advice and other work
product of the Adviser developed under the terms of this Agreement and disclosed
to the Client or a Custodian shall be held as confidential, except as required
by law. Notwithstanding the foregoing, Client hereby authorizes the Adviser to
disclose through whatever means it deems appropriate (CHECK THE APPROPRIATE
BOXES BELOW):
PLATINUM RE (UK) LIMITED
(a) Yes |X| No | | that the Client is an investment management client of
the Adviser;
(b) Yes |X| No | | the type of assets that the Adviser is managing for the
Client from time to time (e.g., fixed-income assets);
and/or
(c) Yes |X| No | | solely in the limited context of the Adviser's
responses to Request for Proposals ("RFPs"), the
Adviser is also authorized by the Client to disclose in
such RFPs, the value of the assets managed for the
Client by the Adviser from time to time.
4
If the Client does not check either "yes" or "no" to any of the requested
disclosure authorizations indicated in (a) through (c) above, the Client shall
be deemed to have no objection to the Adviser disclosing the indicated
information. The Client may revoke these authorizations in respect of itself, at
any time by written notice to the Adviser.
12. Services to Other Clients
It is understood that the Adviser performs investment advisory
services for various clients including investment companies. The Client agrees
that the Adviser may give advice and take action with respect to any of its
other clients which may differ from advice given, or the timing or nature of
action taken, with respect to the investment Account established for it, so long
as it is the Adviser's policy, to the extent practical, to allocate investment
opportunities to the Investment Account over a period of time on a fair and
equitable basis relative to other clients.
Nothing in this Agreement shall limit or restrict the Adviser or any
of its directors, officers, affiliates or employees from buying, selling or
trading in any securities or other assets for its or their own account or
accounts, and the Client acknowledges that the Adviser, its directors, officers,
affiliates and employees, and other clients of the Adviser, may at any time
have, acquire, increase, decrease or dispose of positions in investments which
are at the same time being acquired, held or disposed of for the Investment
Account.
The Adviser will not have any obligation to initiate the purchase or
sale, or to recommend for purchase or sale, for the Investment Account any
security or other asset which the Adviser, its directors, officers, affiliates
or employees may purchase, hold or sell for its or their own accounts or for the
accounts of any other clients of the Adviser.
13. Non-Public Information
The Adviser will have no obligation to purchase or sell for the
Investment Account the securities of any issuer on the basis of any material
non-public information as may come into its possession.
14. Representations by the Client
The Client represents and warrants as to itself that (i) the
appointment of the Adviser as discretionary investment adviser entitled to give
entitlement orders or other instructions and communications to the Custodian is
authorized by the governing documents (including, but not limited to the Quota
Share Retrocession Agreement and all documents related thereto) relating to the
Investment Account and that the terms of this Agreement do not violate any
provisions thereof or any obligation by which it is bound, whether arising by
contract, operation of law or otherwise; (ii) this Agreement has been duly
authorized by appropriate action and when executed and delivered will be binding
upon it in accordance with its terms; and (iii) it will deliver to the Adviser
such evidence of such authority as the Adviser may reasonably require, whether
by way of a certified resolution or otherwise.
5
15. Representations by Adviser
The Adviser represents that (i) it is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act") and (ii) that it has all other regulatory authority and capacity to enter
into this Agreement and perform its duties hereunder.
16. Indemnification
The Adviser agrees to indemnify and hold the Client harmless from
any and all expenses, damages, costs and fees, including reasonable attorney's
fees, which may be incurred by reason of the Adviser's negligence, willful
misconduct, malfeasance, material breach of this Agreement or violation of
applicable law.
17. Valuation
In computing the market value of any security held in the Investment
Account, the Adviser shall value such security through independent, recognized
pricing services utilized by the Adviser for pricing securities held in its
advisory accounts generally. Any other security or asset shall be valued in a
manner determined in good faith by the Adviser to reflect its fair market value.
18. Receipt of Disclosure Statement
The Client acknowledges receipt of Part II of the Advisers current
Form ADV in compliance with Rule 204-3(b) under the Advisers Act more than forty
eight (48) hours prior to the date of execution of this Agreement.
19. Notices
Unless otherwise specified herein, all notices, instructions and
advice with respect to security transactions or any other matters contemplated
by this Agreement shall be deemed duly given when received by the Client and the
Adviser, as applicable, at their addresses appearing below. In respect of the
investment Account, the Adviser may rely upon any notice (written or oral) from
any person whom the Adviser reasonably believes to be an authorized
representative of the Client.
20. Specimen Signatures
The Adviser will forward from time to time to the Client and the
Custodian for the Client's investment Account, a list of names and specimen
signatures of persons authorized to act on behalf of the Adviser. The Client
will forward to the Adviser a list of names and specimen signatures of persons
authorized to act on behalf of the Client shall cause the
6
Custodian of its Investment Account to forward a like list and specimen
signatures to the Adviser.
21. Invalid Provisions
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future law, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or its severance from this Agreement.
22. Termination; Assignment; Amendment
This Agreement may be terminated at any time by the Client in
respect of its Investment Account by giving to the Adviser at least thirty (30)
days prior written notice of such termination. This Agreement may be terminated
at any time by the Adviser in respect of the investment Account by giving to the
Client at least thirty (30) days prior written notice of such termination. Fees
paid in advance of the effectiveness of the termination will be prorated to the
date of termination specified in the notice of termination, and any unearned
portion thereof will be refunded to the Client. No assignment, as that term is
defined in the Advisers Act, shall be made by the Adviser without the written
consent of the Client. No assignment shall be deemed to result from changes in
the directors, officers or employees of the Adviser except as may be provided in
the Advisers Act. The Adviser agrees that it will notify the Client of any
change in the membership of the general partners of the Adviser within a
reasonable time after such change. This Agreement may be amended or modified at
any time by mutual agreement of the Client and the Adviser in writing.
23. Counterparts
This Agreement may be executed in two or more counterparts, each one
of which shall be deemed to be an original.
24. Governing Law
To the extent Federal law does not apply, this Agreement shall be
construed in accordance with and governed by the laws of the State of New York.
25. Entire Agreement
This Agreement constitutes the entire agreement of the parties with
respect to management of the Investment Account.
7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective representatives as of the date first above written.
PLATINUM RE (UK) LIMITED
BY:
-----------------------
Name:
Title:
ADDRESS: 52 Lime Street
London EC3M TNL
UNITED KINGDOM
Attention: Guy Butler
ALLIANCE CAPITAL MANAGEMENT L.P.
BY: Alliance Capital Management
Corporation, its General Partner
BY:
---------------------------------
Louis T. Mangan
Assistant Secretary
ADDRESS: 1345 Avenue of the Americas
New York, New York 10105
Attn: Holly Spencer
cc: Managing Director, Institutional Asset
Management
8
New Account Documentation
for
Platinum Re (UK) Limited
The Adviser will require the documents identified below to establish its
investment management relationship with Platinum Underwriters Bermuda, Ltd.
1. Fully executed advisory agreement (with fee schedule attached).
2. Accurate list of securities to be transferred to new account unless
initially consisting of cash or cash equivalents.
3. Written statement of investment objectives, guidelines and restrictions,
if any.
4. Form W-9/W-8, as applicable.
5. List of Authorized Signatories.
6. Certified resolution of the Board of Directors or appropriate Committee
authorizing appointment of the Adviser as investment adviser.
9
EXHIBIT A
ALLIANCE CAPITAL MANAGEMENT L.P.
FIXED INCOME INSURANCE ASSET MANAGEMENT FEES
PREPARED FOR
Platinum Re (UK) Limited
- --------------------------------------------------------------------------------
FOR MINIMUM FIXED INCOME ACCOUNT SIZE OF $I BILLION
Fee Assets
--- ------
0.19% on the first $100 million
0.14% on the next $150 million
0.11% on the next $250 million
0.10% on the balance
FOR FIXED INCOME ASSETS LESS THAN $1 BILLION
Fee Assets
--- ------
0.20% on the first $l00 million
0.15% on the next $150 million
0.12% on the next $250 million
0.10% on the balance
SCHEDULE A
INVESTMENT GUIDELINES
INVESTMENT GUIDELINES
PLATINUM RE (UK) LIMITED
ST. PAUL RE (UK)
INVESTMENT OBJECTIVE:
The Fund's assets are managed to provide a high degree of investment income
subject to risk, guidelines, appropriate liquidity considerations, and tax
efficiency.
Other objectives include to maintain or enhance the Platinum Group's
[Financial/Credit] rating and to generate a superior long-term total rate of
return versus a benchmark.
PORTFOLIO DURATION:
The targeted duration of the portfolio will be that of the liability stream,
which Platinum will provide as needed. If no liability stream is available, a
duration target of 3.5 years will apply. The portfolio could deviate as much as
+/- one year away from this target. There is no limitation placed on the
duration of individual securities.
PORTFOLIO CREDIT QUALITY:
The average quality of the managed fund should be no less than A/A2.
- --------------------------------------------------------------------------------------------------------------------
SECURITY PARAMETERS: DIVERSIFICATION
LIMITS
- --------------------------------------------------------------------------------------------------------------------
SECURITY: RATING:
- --------------------------------------------------------------------------------------------------------------------
i. GOVERNMENT Government securities issued by OECD AA-/Aa3 or 100% per issuer
Governments better 100% of portfolio
- --------------------------------------------------------------------------------------------------------------------
ii. MONEY Repurchase and reverse repurchase 3% per issuer
MARKETS agreements 100% of portfolio
------------------------------------------------------------------------------------------
Negotiable Certificates of Deposit and Time A-/A3 or 3% per issuer
Deposits, Demand Notes and Funding better 100% of portfolio
Agreements
------------------------------------------------------------------------------------------
Commercial paper, including finance A1/P1 or 3% per issuer
company paper and asset-backed commercial better 100% of portfolio
paper
- --------------------------------------------------------------------------------------------------------------------
iii. MORTGAGE Mortgage backed securities whose collateral A1/A2 or 5% per issuer
BACKED is guaranteed by FNMA, FHLMC or GNMA better 30% of portfolio
SECURITIES - agency mortgage backed securities (pass-
AND throughs and CMOs)
ASSET- ------------------------------------------------------------------------------------------
BACKED Asset-backed securities (an asset-backed A/A2 or 5% per issuer
SECURITIES security issued by a discreet master trust better 20% of portfolio
will be thought of as an individual issuer) -
Public and 144a asset-backed securities
------------------------------------------------------------------------------------------
Publicly issued private label pass-throughs A/A2 or 5% per issuer
and CMOs (excluding 1/Os and P/Os) better 30% of portfolio
- --------------------------------------------------------------------------------------------------------------------
iv. COMMERCIAL Commercial mortgage backed securities A/A2 or 3% per issuer
MORTGAGE (including REITS) better 10% of portfolio
BACKED
SECURITIES
- --------------------------------------------------------------------------------------------------------------------
v. MUNICIPAL BONDS Municipal securities, including "general A-/A3 or 3% per issuer -
obligation" and "revenue" bonds* better 100% of portfolio
-------------------------------------------
Greater than 3% per issuer
BBB- 10% of portfolio
/Baa3, less
than A-/A3
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
vi. CORPORATE Notes, debentures, medium term notes or A-/A3 or 3% per issuer
SECURITIES secured securities** better 50% of portfolio
------------------------------------------
BBB-/Baa3 3% per issuer
or better 20% of portfolio
------------------------------------------------------------------------------------------
Credit default swaps (only when the swap A-/A3 or 3% per issuer
{unfunded version} can create more investment better 50% of portfolio
income than the bond for the same reference
entity).***
------------------------------------------
BBB-/Baa3 3% per issuer
or better 20% of portfolio
- --------------------------------------------------------------------------------------------------------------------
vii. PREFERRED STOCKS Preferred Stocks including Perpetual, BBB-/Baa3 2.5% per issuer
Sinking Fund, Adjustable Rate and Fixed or better 10% of portfolio
Rate
- --------------------------------------------------------------------------------------------------------------------
viii. SOVEREIGN Sovereign securities AA-/Aa3 or 50% per issuer
AND better 50% of portfolio
SUPRANATIONAL ------------------------------------------------------------------------------------------
SECURITIES Supranational securities AA-/Aa3 or 50% per issuer
better 50% of portfolio
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The per issuer limitations are a function of the market value of the combined
accounts (US, Bermuda and UK).
The maximum percentage for all securities rated BBB/Baa is 20% of the portfolio.
A maximum of 3O% of the portfolio to be invested in iii. Above.
- --------------------------------------------------------------------------------
OTHER RESTRICTIONS:
Futures and options are permitted, provided the instrument is used as a hedge,
with specific prior approval from Platinum.
- - Swaps
- - Futures
- - Exchange traded options
- - Over-the-counter options
Structured securities or securities with embedded options are permitted.
Leverage is not permitted.
In the case of a split rating, the lower of the ratings available shall apply.
Should a security be downgraded below investment grade (BBB-/Baa3) the manager
must notify and consult with Platinum as soon as reasonably practicable,
regarding the optimal timing of the disposal.
For securities with variable principal repayment, the estimated duration should
be used with respect to the duration restrictions.
All holdings must be denominated in the base currency of the relevant portfolio
(but including legacy currencies in the case of Euros).
WITHHOLDING TAXES:
No investments shall be made that give rise to withholding taxes unless the
after-tax returns are competitive with unavailable returns on which withholding
taxes are not imposed, which will ordinarily only occur where the investor is
able to utilize the withheld taxes as a credit against its domestic income tax
liability. In general investments made with respect to the Bermuda account will,
in the case of securities issued by U.S. issuers, be limited to securities that
are eligible for the "portfolio interest exemption"- i.e., essentially
securities that are in registered form and not issued by a 10% or more
shareholder of Platinum Holdings.
KEY:
* General obligation bonds are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue or special tax bonds are payable only from the revenues derived
from a particular facility or class of facilities or, in some cases, from
the proceeds of a special excise or other tax, but not from general tax
revenues. Municipal bonds will be utilized when there is an after-tax
benefit to the portfolio.
** No more than 25% of the portfolio assets can be invested in an industry.
*** For Credit Default Swaps, the rating of the reference entity will serve as
the rating for the Swap.
EXHIBIT J
Security Agreement
J-9
----------------------------------------------
SECURITY AGREEMENT
Dated as of November___, 2002
between
PLATINUM RE (UK) LIMITED,
as Debtor,
and
ST. PAUL REINSURANCE COMPANY LIMITED,
as Secured Party
----------------------------------------------
THIS SECURITY AGREEMENT (this "Agreement"), dated as of November __,
2002, is made and entered into by and between PLATINUM RE (UK) LIMITED, a
company incorporated in the United Kingdom (the "Debtor"), and ST. PAUL
REINSURANCE COMPANY LIMITED, a company incorporated in the United Kingdom (the
"Secured Party").
PRELIMINARY STATEMENTS
1. The Debtor and the Secured Party entered into that certain 100% Quota
Share Retrocession Agreement (Traditional), dated as of November__, 2002 (as
such agreement may be amended, modified or supplemented from time to time, the
"Retrocession Agreement").
2. The Debtor and the Secured Party have appointed the Custodian (as
hereinafter defined) to hold the Collateral (as hereinafter defined) as
collateral agent and securities intermediary on behalf of the Secured Party
pursuant to that certain Control Agreement, dated as of November___, 2002 among
the Debtor, the Custodian and the Secured Party (the "Control Agreement"). The
Debtor has also appointed the Investment Adviser (as hereinafter defined) to
give advice from time to time in relation to the investment of such Collateral
pursuant to that certain Discretionary Investment Advisory Agreement, dated as
of November___, 2002 among the Debtor and the Investment Adviser (the
"Investment Advisory Agreement").
3. The parties hereto desire to enter into this Agreement, among other
things, to grant to the Secured Party a continuing security interest in and to
all of the Collateral as security for the Obligations (as hereinafter defined).
4. This Agreement is being entered into pursuant to the terms of
subsection (iv) of Section "Security" of the Retrocession Agreement.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
(a) For all purposes of this Agreement capitalized terms used and
not defined herein shall have the meanings assigned to such terms in the
Retrocession Agreement, the Control Agreement and the Investment Advisory
Agreement (such meanings to be equally applicable to both the singular and
plural forms of the terms defined) and all references in this Agreement to
Sections are to Sections of this Agreement unless specified otherwise.
(b) Except for the terms defined in this Agreement, the Retrocession
Agreement, the Control Agreement or the Investment Advisory Agreement all terms
defined in
Article 8 or 9 of the UCC which are used in this Agreement shall have the
meaning specified in such Articles.
(c) As used in this Agreement, the following terms shall have the
following meanings:
"Collateral" has the meaning assigned to that term in Section
2.01(a).
"Collateral Accounts" mean Deposit Account and Securities Account.
"Control Agreement" has the meaning assigned to that term in the
Preliminary Statements.
"Custodian" means State Street Bank and Trust Company, a
Massachusetts trust company, as Custodian for the Debtor pursuant to the
Custodian Agreement, or such other custodian as the Debtor may from time to time
appoint with the prior written consent of the Secured Party.
"Custodian Lien" means the lien on the Collateral Accounts in favor
of the Custodian created pursuant to the Control Agreement.
"Custodian Agreement" means that certain Custodian and Investment
Accounting Agreement dated as of November 1, 2002 among the Custodian, the
Debtor and certain related parties, as amended or supplemented from time to
time.
"Deposit Account" means the separate, segregated Deposit Account
listed on Schedule I hereto and any other deposit accounts and sub-accounts
which are established by the Custodian under, and subject to, the Control
Agreement.
"Distributions" means, with respect to Collateral, all interest,
income and other payments and distributions of cash or other property in the
nature of income with respect to that Collateral. Distributions will not include
any item of property acquired by the Secured Party upon any disposition or
liquidation of Collateral.
"Ending Asset Value" has the meaning assigned to that term in
Section 3.02(a).
"Ending Reserves" has the meaning assigned to that term in Section
3.02(a).
"Excess Reserves" has the meaning assigned to that term in Section
3.02(b).
"Event of Default" means a failure by the Debtor to pay any amount
due under the Retrocession Agreement within 90 days of the due date for payment.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
2
"Insolvency Event" means any one or more of the following: (a) the
Debtor becomes unable or admits inability to pay its debts as they fall due, or
(b) the appointment of an administrator, receiver manager or administrative
receiver with respect to any of the assets or undertaking of the Debtor, or (c)
the presentation of any petition or making of any order for the administration
or winding up of the Debtor or the taking of any other step in insolvency
proceedings with respect to the Debtor, or (d) the grant of any moratorium in
respect of the indebtedness of the Debtor or the entry into or proposal by the
Debtor of any composition or compromise with its creditors.
"Investment Adviser" means Alliance Capital Management L.P. or such
other investment adviser as the Debtor may from time to time appoint with the
prior written consent of the Secured Party.
"Investment Advisory Agreement" has the meaning assigned to that
term in the Preliminary Statements.
"Investment Guidelines" has the meaning assigned to that term in the
Investment Advisory Agreement.
"Local Business Day" means:
(a) in relation to a transfer of cash or other property (other than
securities) under this Agreement, a day on which commercial banks are open for
business (including dealings in foreign exchange and foreign currency deposits)
in the place where the relevant account is located and, if different, in the
principal financial center, if any, of the currency of such payment;
(b) in relation to a transfer of securities under this Agreement, a
day on which the clearance system agreed between the parties for delivery of the
securities is open for the acceptance and execution of settlement instructions
or, if delivery of the securities is contemplated by other means, a day on which
commercial banks are open for business (including dealings in foreign exchange
and foreign currency deposits) in the place(s) agreed between the parties for
this purpose;
(c) in relation to a valuation under this Agreement, a day on which
commercial banks are open for business (including dealings in foreign exchange
and foreign currency deposits) in the place of location of the Custodian and in
the place(s) agreed between the parties for this purpose; and
(d) in relation to any notice or other communication under this
Agreement, in the place specified in the address for notice most recently
provided by the recipient.
"Notification Time" means 1:00 p.m., New York time, on a Local
Business Day.
"Notice of Exclusive Control" has the meaning assigned to that term
in the Control Agreement.
3
"Obligations" means all present and future obligations from time to
time of the Debtor under the Retrocession Agreement and this Agreement,
including but not limited to obligations relating to (a) reinsured losses and
allocated loss expenses paid by the Secured Party, but not recovered from the
Debtor, (b) reserves for reinsured losses reported and outstanding, (c) reserves
for reinsured losses incurred but not reported, and (d) reserves for allocated
reinsured loss expenses and unearned premiums.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Proceeds" has the meaning assigned to that term in Section
9-102(a)(64) of the UCC and, in any event, shall include, without limitation,
the following property: (i) whatever is acquired upon the sale, lease, license,
exchange, or other disposition of the Collateral, (ii) whatever is collected on,
or distributed on account of, the Collateral), (iii) rights arising out of the
Collateral, (iv) to the extent of the value of collateral, claims arising out of
the loss, nonconformity, or interference with the use of defects or infringement
of rights in, or damage to, the Collateral, or (v) to the extent of the value of
collateral and to the extent payable to the Debtor or the Secured Party,
insurance payable by reason of the loss or nonconformity of, defects or
infringement of rights in, or damage to, the Collateral.
"Property" means, with respect to any Person, any money, cash, cash
equivalents, securities, investments, financial assets, security entitlements or
other investment property.
"Qualifying Assets" means and includes any security that conforms
with the criteria set forth in the Investment Guidelines.
"Reinsurance Contracts" has the meaning assigned to that term in the
Retrocession Agreement.
"Relevant Event" means any one or more of the fo11owing: (a) an
Event of Default, or (b) the Debtor's failure to perform or otherwise comply or
procure compliance with any of its obligations under the Retrocession Agreement,
other than a failure constituting an Event of Default, if such failure continues
for five Local Business Days after receiving from the Secured Party a written
notice thereof, or (c) the Debtor's failure to perform or otherwise comply with
any of its obligations under this Agreement, or (d) any Insolvency Event, or
(e) the Investment Adviser's failure to comply with any investment objectives,
policies and restrictions as in effect from time to time under the Investment
Advisory Agreement, or (f) the Custodian's failure to perform or otherwise
comply with any of its obligations under the Control Agreement, or (g) the
Custodian's failure to perform or otherwise comply with any of its obligations
under the Custodian Agreement, if such failure impairs the security interest
granted to the Secured Party under this Agreement.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and all Federal, state, local and foreign laws, rules and regulations,
the rules of the National Association of
4
Securities Dealers and all orders, judgments, decrees or other determinations of
any Governmental Authority or arbitrator, applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Retrocedant Ceding Commission" has the meaning assigned to that
term in the Retrocession Agreement.
"Retrocession Agreement" has the meaning assigned to that term in
the Preliminary Statements.
"Securities Account" means the separate, segregated Securities
Account listed on Schedule I hereto and any other securities accounts and
sub-accounts which are established by the Custodian under, and subject to, the
Control Agreement.
"Settlement Day" means, in relation to a date, (i) with respect to a
transfer of cash or other property (other than securities), the next Local
Business Day and (ii) with respect to a transfer of securities, the first Local
Business Day after such date on which settlement of a trade in the relevant
securities, if effected on such date, would have been settled in accordance with
customary practice when settling through the clearance system agreed between the
parties for delivery of such securities or, otherwise, on the market in which
such securities are principally traded (or, in either case, if there is no such
customary practice, on the first Local Business Day after such date on which it
is reasonably practicable to deliver such securities).
"Substitute Credit Support" has the meaning assigned to that term in
Section 306(a).
"Substitution Notice" has the meaning assigned to that term in
Section 3.06(a).
"UCC" means the Uniform Commercial Code as in effect from time to
time in the Commonwealth of Massachusetts. All terms used herein without
definitions that are defined in the UCC shall have the respective meanings given
to those terms in the UCC, except where the context otherwise requires.
"USD" means United States Dollars.
ARTICLE II
SECURITY INTEREST
Section 2.01 Grant of Security Interest. (a) The Debtor hereby
assigns, pledges, conveys, sets over and transfers unto the Secured Party, and
does hereby grant to the Secured Party, a continuing first priority security
interest (subject to the Custodian Lien) in all of the right, title and interest
of the Debtor in, to and under all of the following, whether now existing or
hereafter from time to time acquired (collectively, the "Collateral"):
(i) the Deposit Account, including any credit or other balances of
account credited thereto or carried therein or other amounts transferred
thereto;
5
(ii) the Securities Account, including any credit or other balances
of account credited thereto or carried therein or other amounts
transferred thereto;
(iii) all Qualifying Assets, all other Property transferred or
required to be transferred from time to time in, or credited to or
required to be credited from time to time to, the Collateral Accounts;
provided, however, that, except as expressly provided in Section 4.04,
Distributions shall not constitute Collateral;
(iv) all rights, claims and causes of action, if any, that the
Debtor may have against any Person in respect of the foregoing; and
(v) all Proceeds of any or all of the other Collateral.
(b) The Debtor agrees that this Agreement, the security interest
granted pursuant to this Agreement and all rights, remedies, powers and
privileges provided to the Secured Party under this Agreement are in addition to
and not in any way affected or limited by any other security now or at any time
held by the Secured Party to secure payment and performance of the Obligations.
Section 2.02 Security for Obligations. The Collateral secures the
prompt and complete payment and performance of all the Obligations.
Section 2.03 Continued Perfection of Security Interest. This
Agreement shall create a continuing security interest in the Collateral and
shall remain in full force and effect until the payment and performance in full
of the Obligations. The security interest created under this Agreement shall not
be impaired by any intermediate payment or performance of the whole or any part
of the Obligations but shall secure the ultimate balance of the Obligations. The
Debtor agrees that it will not take any actions or fail to perform any of its
duties or obligations under this Agreement so that after giving effect to such
action or inaction the Secured Party will then, or with the passage of time,
cease to have a first priority perfected security interest (subject to the
Custodian Lien) in any of the Collateral; provided, however, that investments,
cash, securities, interest, dividends, financial assets or any other Property
withdrawn from the Collateral Accounts in accordance with Section 3.02(b),
3.06(b), 4.03(a) or 6.01 shall not be Collateral from and after the time of such
withdrawal.
Section 2.04 Power of Attorney. The Debtor hereby irrevocably
appoints the Secured Party as its attorney-in-fact with right of substitution,
so that the Secured Party or any other Person empowered by the Secured Party
shall be authorized, without need of further authorization from the Debtor, at
any time upon the occurrence of and during the continuance of any Relevant
Event, in the Secured Party's discretion to take any and all actions authorized
or permitted to be taken by the Secured Party under this Agreement or by law,
including but not limited to the power to:
(a) take any action and execute or otherwise authenticate any
instrument or other record which the Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including but not
6
limited to, perfection of the security interest created under this
Agreement in any jurisdiction in any part of the world;
(b) execute any transfer, bill of sale or other assurance in
respect of the Collateral;
(c) exercise all the rights and powers of the Debtor in
respect of the Collateral;
(d) ask for, demand, collect, sue for, recover, receive and
give acquittance and receipts for moneys due and to become due under
or in connection with the Collateral;
(e) receive, indorse, and collect any drafts or other
instruments, documents and chattel paper, in connection therewith;
and
(f) file any claims or take any action or institute any
proceedings which the Secured Party may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce
the rights of the Secured Party with respect to any of the
Collateral.
The Debtor hereby confirms and ratifies any and all actions and
things performed or done by the Secured Party as the Debtor's attorney-in-fact
or any of its representatives in each case pursuant to the powers granted
hereunder.
This special power of attorney shall be deemed coupled with an
interest, and cannot be revoked by the Debtor until all of the Obligations have
been paid and performed in full and the Retrocession Agreement has been
terminated.
ARTICLE III
CREDIT SUPPORT OBLIGATIONS
Section 3.01 Initial Deposit of Collateral. On the date of this
Agreement, the Debtor is transferring, or causing to be transferred, into the
Collateral Accounts Qualifying Assets having a fair market value as at the date
of this Agreement at least equal to 100% of the premia ceded by the Secured
Party to the Debtor under the Retrocession Agreement.
Section 3.02 Excess Reserves. (a) As of the end of each calendar
quarter, the Debtor shall calculate the fair market value of the Assets held in
the Collateral Accounts as of the last day of such quarter (such amount, the
"Ending Asset Value") and the aggregate loss, loss adjustment expense reserves,
unearned premium reserves, Retrocedant Ceding Commission and other reserves
related to the Reinsurance Contracts as reflected in Debtor's management
accounts, as of the last day of such quarter (the "Ending Reserves") and shall
provide such calculation to the Secured Party within forty-five days of the end
of such quarter.
7
(b) The excess of the Ending Reserves over the Ending Asset Value,
if any, shall be the "Excess Reserves". To the extent the Ending Reserves exceed
the Ending Asset Value, the Debtor shall within 3 Local Business Days deposit
sufficient Qualifying Assets with a fair market value equal to such Excess
Reserves. To the extent the Ending Asset Value exceeds the Ending Reserves, the
Secured Party shall, upon the Debtor's request, join the Debtor in instructing
the Custodian to release Collateral with a fair market value equal to the amount
of such excess, provided, however, that no Relevant Event has occurred and is
continuing.
Section 3.03 Disputed Calculations or Valuations. Upon receipt of
the quarterly calculation from the Debtor, the Secured Party shall have the
right to reasonably object to such calculation and to offer a reasonable
proposal for the amount of the reserves described in Section 3.02 hereof. If the
parties in good faith are not able to resolve the disagreement within two weeks
of the Secured Party's indication of disagreement, the parties shall mutually
agree upon an independent actuarial firm to determine an appropriate level of
aggregate reserves as described in Section 3.02 hereof with respect to the
Reinsurance Contracts, such level to be no more than the amount proposed by the
Secured Party and no less than the amount reported by the Debtor, and both
parties agree to be bound by such determination. In such case the Debtor shall
deposit sufficient Qualifying Assets with a fair market value equal to Excess
Reserves (if any) within 3 Local Business Days after receipt of the actuary
report. The fees and expenses of the actuarial firm shall be shared equally by
the Debtor and the Secured Party.
Section 3.04 Transfers. Subject to Section 3.03 and unless otherwise
agreed between the parties from time to time, if an obligation to transfer
Qualified Assets or Collateral has become due by the Notification Time, then the
relevant transfer will be made not later than the close of business on the
Settlement Day relating to the date such obligation has become due; if an
obligation becomes due after the Notification Time, then the relevant transfer
will be made not later than the close of business on the Settlement Day relating
to the day after the date such obligation became due.
Section 3.05 Calculations. The parties agree that valuations
calculated by the Debtor or, as the case may be, by the Secured Party for the
purpose of this Agreement shall prevail over any valuations performed by or for
the Investment Adviser pursuant to the terms of the Investment Advisory
Agreement.
Section 3.06 Substitutions.
(a) The Debtor (acting, where applicable, through the Investment
Adviser) may on any Local Business Day by notice (a "Substitution Notice")
inform the Secured Party and the Custodian that it wishes to substitute the
Qualified Assets specified in that Substitution Notice (the "Substitute Credit
Support") for certain Qualified Assets specified in the Substitution Notice and
held in the Collateral Accounts (the "Original Credit Support").
(b) Following the service of such Substitution Notice, the Original
Credit Support shall be released, upon written instructions by the Debtor, to
the Debtor against delivery of the Substitute Credit Support (or an undertaking
for such delivery) in accordance
8
with the customary settlement procedures; provided, however, that no Relevant
Event has occurred and is continuing.
ARTICLE IV
COLLATERAL
Section 4.01 No Duty. Except to the extent otherwise required by
applicable law, the Secured Party will have no duty with respect to Collateral,
including, without limitation, any duty to collect any Distributions, or enforce
or preserve any rights pertaining to Collateral.
Section 4.02 Custodians.
(a) The Debtor shall appoint the Custodian to hold Collateral in
accordance with the Control Agreement, and the Debtor shall cause all such
Collateral to be transferred to, and held by, the Custodian.
(b) The Debtor shall be liable for the acts or omissions of the
Custodian and the Investment Adviser to the same extent that the Debtor would be
liable under this Agreement for its own acts or omissions.
Section 4.03 Maintenance of Collateral Accounts. In addition to, and
not in limitation or in lieu of, the obligation of Custodian to honor
entitlement orders as provided in the Control Agreement,
(a) the Secured Party agrees that until such time, if any, that the
Secured Party delivers a Notice of Exclusive Control to the Custodian, the
Debtor shall be entitled (i) subject to Section 3.06(b), to give entitlement
orders and all other forms of instructions to invest, through the Investment
Adviser, where applicable, the Collateral held in the Collateral Accounts solely
in cash or categories of securities defined as Qualified Assets, which upon
their acquisition shall constitute the Collateral, (ii) subject to Section
4.04,to receive and give entitlement orders and all other forms of instructions
with respect to all Distributions (subject, where applicable, to prior deduction
by the Custodian of any fees or expenses owed to Custodian by the Debtor for the
provision of its custodial services from time to time), and (iii) to exercise,
or to direct the Custodian to exercise on its behalf, any voting rights attached
to any of the Collateral (but only in a manner consistent with the terms of this
Agreement); provided that the Debtor shall not have the authority to (x)
terminate or close the Collateral Accounts, or (y) sell, transfer, exchange,
assign, lease or hire out, factor, discount, license, lend, part with its
interest in or otherwise dispose of any of the Collateral or permit the same to
occur, or agree to do any of the foregoing, without prior written consent of the
Secured Party, except, in each case, as expressly permitted under this
Agreement. The Secured Party agrees that (i) until a Relevant Event occurs or
unless a Relevant Event would be caused by a proposed substitution of Collateral
by the Debtor, it shall not give entitlement orders, deliver Notice of Exclusive
Control or give any other forms of instructions with regard to the Collateral
Accounts and the financial assets and other Property on deposit therein or
credited thereto (other than joint instructions in accordance with this
Agreement), and (ii) it shall join the Debtor in giving
9
instructions requested by or on behalf of the Debtor so long as no Relevant
Event then exists or would be caused by the execution of such instructions.
(b) if at any time the Secured Party delivers a Notice of Exclusive
Control to the Custodian, the Debtor agrees that, from and after delivery
thereof until the written revocation or rescission of such notice by the Secured
Party, (i) the Secured Party shall be the sole Person to give all entitlement
orders and other demands and instructions with respect to the Collateral
Accounts or any financial asset credited thereto or carried therein or any other
Collateral, (ii) if it has received any Collateral from the Custodian in
violation of the terms of the Control Agreement, it shall hold such Collateral
in trust for the Secured Party and shall promptly thereafter deliver such
Collateral to the Secured Party and (iii) it shall execute and deliver, and use
its best efforts to cause the Custodian to execute and deliver, to the Secured
Party all proxies and other instruments as the Secured Party may reasonably
request for the purpose of enabling the Secured Party to exercise any voting or
other consensual rights pertaining to any Collateral. Notice of Exclusive
Control shall be deemed to be revoked or rescinded upon receipt by the Custodian
from the Secured Party of written notice thereof. The Secured Party agrees to
deliver a notice of revocation or rescission upon request of the Debtor at any
time when no Relevant Event has occurred or is continuing.
Section 4.04 Distributions. Subject, where applicable, to prior
deduction by the Custodian of any fees or expenses owed to the Custodian by the
Debtor for the provision of its custodial services from time to time, the
Custodian shall transfer the Distributions to the Debtor within 10 days
following the end of each calendar month, upon proper written instructions by
the Debtor, to Debtor's custodial account held with the Custodian or any other
account designated by the Debtor; provided, however, that the Secured Party has
not delivered a Notice of Exclusive Control that has not been revoked or
rescinded by the Secured Party, and that a Relevant Event has not occurred and
is continuing. The Secured Party shall execute such instructions, if any, as may
be required to permit such credit to be effected. Any Distributions (or portion
thereof) not transferred pursuant to this Section 4.04 shall constitute
Collateral and will be subject to the security interest granted under Section
2.01(a) or otherwise will be subject to the set-off provided in Section
6.01(c).
ARTICLE V
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Debtor represents, warrants and covenants, which
representations, warranties and covenants shall be deemed to be repeated as of
each date on which the Debtor transfers, or causes to be transferred, any
Qualified Assets into the Collateral Accounts and shall survive execution and
delivery of this Agreement and the payment in full of the Obligations, as
follows:
Section 5.01 Power to Grant Security Interest. The Debtor has the
power to grant a security interest in any Collateral pursuant hereto and has
taken all necessary actions to authorize the granting of that security interest.
10
Section 5.02 Necessary Filings. All filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect, to
the extent a security interest may be perfected thereby, the security interest
granted by the Debtor to the Secured Party hereby in respect of the Collateral
have been accomplished, and the first priority security interest granted to the
Secured Party pursuant to this Agreement (subject to the Custodian Lien) in and
to the Collateral constitutes a valid first priority perfected security interest
which is superior and prior to the rights of all other Persons (other than the
Custodian Lien) and enforceable against the Debtor (including in Bermuda) and,
in each case, subject to no other Liens, sales, assignments, conveyances,
settings over or transfers.
Section 5.03 No Liens. The Debtor is the owner of all Collateral
free from any Lien or other right, title or interest of any Person (other than
the Custodian Lien), and the Debtor shall defend such Collateral against all
claims and demands of all Persons at any time claiming the same or any interest
therein adverse to the Secured Party.
Section 5.04 Other Financing Statements. There is no financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) covering or purporting to cover any interest of any kind in
the Collateral, and so long as any of the Obligations remain unpaid, the Debtor
will not execute or authorize to be filed in any public office any financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to the Collateral, except financing
statements filed or to be filed in respect of and covering the security
interests granted hereby.
Section 5.05 Consents. No consent of any Person and no
authorization, approval or other action by, and no notice to or filing with, any
Governmental Authority of any jurisdiction is required as of the date of the
execution and delivery of this Agreement for (i) the grant by the Debtor of the
pledge, assignment and security interest granted hereby with respect to the
Collateral, (ii) the execution, delivery or performance of this Agreement by the
Debtor, (iii) the pledge, assignment and security interest created hereby with
respect to the Collateral (including the first priority nature of such pledge,
assignment and security interest with respect to the Collateral (subject to the
Custodian Lien)) other than the execution and delivery of the Control Agreement
and filing of appropriate financing statements or similar filings or
notifications in respect of the Collateral or (iv) the exercise by the Secured
Party of the rights provided for in this Agreement or the remedies in respect of
the Collateral pursuant to this Agreement.
(b) The Debtor shall use its best efforts to obtain after the date
of the execution and delivery of this Agreement such other consents,
authorizations, and approvals and obtain such other actions by, and provide such
notices to or make such filings with, any Governmental Authority of any
jurisdiction as may be, in the reasonable judgment of the Secured Party,
necessary after the date of this Agreement (i) for the grant by the Debtor of
the pledge, assignment and security interest granted hereby or for the
execution, delivery or performance of this Agreement by the Debtor, (ii) for the
pledge, assignment and security interest created hereby with respect to the
Collateral (including the first priority nature of such pledge. assignment and
security interest with respect to the Collateral (subject to the Custodian
Lien)) or (iii) for the exercise by the Secured Party of the rights, remedies
and powers provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement.
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Section 5.06 Further Actions. The Debtor will, at its own expense,
make, execute, endorse, acknowledge, or otherwise authenticate and file and/or
deliver to the Secured Party from time to time such confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates and other assurances, instruments or other records, and take such
further steps relating to the Collateral and other property or rights covered by
the interests hereby granted, which the Secured Party, upon written direction,
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interests in the Collateral.
Section 5.07 Financing Statements. The Debtor agrees to execute or
otherwise authenticate (if necessary) and deliver to the Secured Party such
financing statements (or similar statement or instrument of registration under
the law of any jurisdiction), in form acceptable to the Secured Party as it may
from to time reasonably request or as are necessary or desirable time in its
reasonable opinion to establish and maintain the security interests
contemplated hereunder as valid, enforceable and first priority security
interests (subject to the Custodian Lien) as provided herein and the other
rights and security contemplated herein, all in accordance with the UCC as
enacted in any and all relevant jurisdictions or any other Requirement of Law.
The Debtor will pay any applicable filing fees and related expenses. The Debtor
authorizes the Secured Party to file any such financing statements without the
signature of the Debtor.
ARTICLE VI
REMEDIES UPON OCCURRENCE OF RELEVANT EVENT
Section 6.01 Remedies; Obtaining and Disposition of the Collateral
Upon Default. The Debtor agrees that, if any Relevant Event has occurred and is
continuing, then and in every such case, subject to any Requirements of Law, the
Secured Party may:
(a) deliver a Notice of Exclusive Control, instructions or
entitlement orders with respect to the Collateral Accounts or the Collateral;
(b) 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 UCC to enforce
this Agreement and the security interest contained herein, and also may (A) if
applicable, require the Debtor to, and the Debtor hereby agrees that it will at
its expense and upon request of the Secured Party forthwith, assemble all or
part of the Collateral as directed by the Secured Party and make it available to
the Secured Party at a place to be designated by the Secured Party that is
reasonably convenient to both parties, or (B) 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 Secured Party's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the Secured Party
may deem commercially reasonable. The Debtor agrees that, to the extent notice
of sale shall be required by law, at least thirty (30) days' notice to the
Debtor 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 Secured
Party shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Secured Party may adjourn any public or private
sale from time to time
12
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;
(c) hold any money held by the Secured Party as Collateral and all
cash proceeds received by the Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral, as
collateral for, and/or, then, or at any time thereafter, apply such amounts, in
whole or in part, against all or any part of the Obligations, and to make any
currency conversions or effect any transaction in currencies which it thinks
fit, and to do so at such times and rates as it thinks proper; and
(d) exercise any and all rights and remedies of the Debtor under or
in respect of the Collateral.
Section 6.02 Waiver of Claims. Except as otherwise provided in this
Agreement, the Debtor hereby waives, to the extent permitted by all Requirements
of Law:
(a) all damages occasioned by taking of possession except any
damages which are the direct result of the gross negligence or willful
misconduct of the Secured Party or any Person acting on its behalf or
instruction;
(b) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Secured Party's
rights hereunder; and
(c) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any Requirement of Law
in order to prevent or delay the enforcement of this Agreement (including,
without limitation, any right to claim that such enforcement should be stayed
pending the outcome of any other action or proceeding (including any arbitration
proceeding)) or the absolute sale of the Collateral or any portion thereof, and
the Debtor, for itself and all who may claim under it, insofar as it or they now
or hereafter lawfully may, hereby waives the benefit of all such Requirements of
Law.
Any sale of, or the grant of options to purchase, or any other
realization upon, any Collateral shall operate to divest all right, title,
interest, claim and demand, either at law or in equity, of the Debtor therein
and thereto, and shall be a perpetual bar both at law and in equity against the
Debtor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under the Debtor.
Section 6.03 Deficiencies and Excess Proceeds. The Secured Party
shall transfer, or cause to be transferred, to the Debtor any proceeds and
Collateral remaining after exercising remedies under Section 6.01 and after
satisfaction in full of all amounts payable by the Debtor with respect to any
Obligations. For the avoidance of doubt, it is understood that the Debtor shall
remain liable to the extent of any deficiency between the amount of the proceeds
of the Collateral and the aggregate amount of the Obligations.
Section 6.04 Remedies Cumulative. No failure or delay on the part of
the Secured Party, in exercising any right, power or privilege hereunder and no
course of dealing between the Debtor and the Secured Party shall operate as a
waiver hereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further
13
exercise hereof or the exercise of any other right, power or privilege
hereunder. The rights, powers and remedies herein expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the Secured
Party would otherwise have. No notice to or demand on the Debtor in any case
shall entitle the Debtor to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Secured Party to
any other or further action in any circumstances without notice or demand.
Section 6.05 Discontinuance of Proceedings. In case the Secured
Party shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall have been discontinued or abandoned for any reason or shall
have been determined adversely to the Secured Party, then and in every such case
the Debtor, the Secured Party shall be restored to their former positions and
rights hereunder with respect to the Collateral subject to the security interest
created under this Agreement, and all rights, remedies and powers of the
Secured Party shall continue as if no such proceeding had been instituted.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Expenses.
(a) Except as otherwise provided in this Section 7.01(b) and
7.01(c), each party will pay its own costs and expenses (including any stamp,
transfer or similar transaction tax or duty payable on any transfer it is
required to make under this Agreement) in connection with performing its
obligations under this Agreement and neither party will be liable for any such
costs and expenses incurred by the other party.
(b) The Debtor shall promptly pay when due all taxes, assessments or
charges of any nature that are imposed with respect to Collateral upon becoming
aware of the same.
(c) All reasonable costs, expenses, charges and fees paid or
incurred by the Secured Party in the exercise of any of the rights, remedies or
powers granted hereunder shall be for the account of the Debtor, and the Debtor
undertakes promptly on demand to pay the same or, as the case may be, to
reimburse the Secured Party and/or its agents, representatives, successors and
assigns as the case may be, for any monies paid by it with interest thereon to
the extent that there are then insufficient funds available in the Collateral
Accounts for this purpose.
Section 7.02 Notices. All communications between the parties hereto
or notices provided herein to be given may be given to the following addresses:
If to the Secured Party:
St. Paul Reinsurance Company Limited
27 Camperdown Street
London El 8DS
14
United Kingdom
Attn: Company Secretary
Facsimile No.: 44-207-488-6345
If to the Debtor:
Platinum Re (UK) Limited
52 Lime Street
London EC3M 7NL
United Kingdom
Attn: Guy Butler
Facsimile No.: 44-207-623-66 10
All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be considered as properly given
(a) if delivered in person, (b) if sent by internationally recognized overnight
delivery service, or (c) if sent by facsimile transmission. Notice so given
shall be effective upon receipt by the addressee; provided, however, that if any
notice is tendered during normal business hours on a Local Business Day to an
addressee in accordance with this Section 7.02 and the delivery thereof is
refused by such addressee, such notice shall be effective upon such tender. Any
party shall have the right to change its address for notice hereunder to any
other location by the giving of 30 days notice to the other parties in the
manner set forth hereinabove.
Section 7.03 Instructions. All entitlement orders and other
instructions and communications that the Debtor is entitled, or desires, to give
or make under this Agreement may be given or made either by the Debtor itself or
by the Investment Adviser, acting on behalf of the Debtor. All entitlement
orders and other instructions and communications that the Secured Party is
entitled, or desires, to give or make under this Agreement may be given or made
either by the Secured Party itself or by its attorney in fact.
Section 7.04 Waiver; Amendment. This Agreement may be changed,
waived, discharged, or terminated only by an instrument in writing executed by
all of the parties hereto.
Section 7.05 Obligations Absolute. The obligations of the Debtor
under this Agreement shall be absolute and unconditional and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (a) any renewal, extension, amendment
or modification of, or addition or supplement to or deletion from, the
Retrocession Agreement or any other instrument or agreement referred to therein,
or any assignment or transfer of any thereof; (b) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such instrument or agreement or this Agreement or any exercise or non-exercise
of any right, remedy, power or privilege under or in respect of this Agreement
or the Retrocession Agreement or any other instrument or agreement referred to
therein; (c) any furnishing of any additional security to the Secured Party or
any acceptance thereof or any sale, exchange, release, surrender or realization
of or upon any security by the
15
Secured Party; or (d) any invalidity, irregularity or unenforceability of all or
part of the Obligations or of any security therefor.
Section 7.06 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided, however, that the Debtor may not
assign or transfer any of its rights or obligations hereunder without the prior
written consent of the Secured Party.
Section 7.07 Headings Descriptive, etc. The headings of the sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
Section 7.08 Governing Law; Submission to Jurisdiction and Venue.
This Agreement is a contract made under the laws of The Commonwealth of
Massachusetts of the United States of America and shall for all purposes be
governed by and construed in accordance with the laws of such Commonwealth. Any
legal action or proceeding against the Debtor with respect to this Agreement may
be brought in the courts of The Commonwealth of Massachusetts in the County of
Suffolk, or in the federal courts of the United States for the District of
Massachusetts, it being understood that nothing herein shall affect the right of
the Secured Party to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Debtor in any
jurisdiction, and, by execution and delivery of this Agreement, the Debtor
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. The Debtor agrees
that a judgment, after exhaustion of all available appeals, in any such action
or proceeding shall be conclusive and binding upon the Debtor, and may be
enforced in any jurisdiction, by a suit upon such judgment, a certified copy of
which shall be conclusive evidence of the judgment.
(b) The Debtor hereby irrevocably waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement brought in the
courts referred to in clause (a) above and hereby further irrevocably waives and
agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
Section 7.09 Waiver of Jury Trial. Each of the Debtor and the
Secured Party hereby irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim arising out or relating to this Agreement,
or any other instrument or document delivered hereunder or thereunder.
Section 7.10 Termination; Release. This Agreement shall terminate on
the earlier of (i) the irrevocable payment and performance in full or
termination or waiver of the Obligations (other than contingent surviving
obligations), as confirmed by a joint notice from the Debtor and the Secured
Party, or (ii) such time as the Debtor delivers a notice to the Secured Party
and the Custodian that the Ending Reserves so reported by the Debtor do not
exceed USD 100 million as of two consecutive calendar years ends, provided,
however, that no Relevant Event shall have occurred and be continuing. Upon such
termination, the Secured Party shall, at the Debtor's expense, execute and
deliver to the Debtor such documents, and take such other acts, as the Debtor
shall reasonably request to evidence, or give effect to, such termination.
16
Section 7.11 Reinstatement. Notwithstanding anything herein to the
contrary, this Agreement shall continue to be effective, or be reinstated, as
the case may be, if at any time payment, or any part thereof, of any of the
Obligations is rescinded or must otherwise be restored or returned by the
Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Debtor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Debtor or any substantial part of its property, or otherwise, all as though such
payments had not been made.
Section 7.12 Counterparts. This Agreement may be executed in
counterparts, each of which when so executed and delivered shall be an original,
and both of which shall together constitute one and the same instrument.
Section 7.13 Severability. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected and/or impaired thereby.
[SIGNATURE PAGE FOLLOWS.]
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
PLATINUM RE (UK) LIMITED, as Debtor
By:________________________________
Name:
Title:
ST. PAUL REINSURANCE COMPANY
LIMITED, as Secured Party
By:________________________________
Name:
Title:
SCHEDULE I
COLLATERAL ACCOUNTS
Deposit Account
Description Number
Platinum Re (UK) fbo St.Paul Re 54798137
Securities Account
Description Number
Platinum Re (UK) fbo St. Paul Re CIW8
S-1