Prepared and filed by St Ives Financial

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LuGnRg/Y7N0DHEmOch09uKiSaOZwiQsQf8zx8b1ty9qXd31tW6GK5Y1O01O0XaUY pe9NUYUgdRM20fLCDlrHSw== 0001125282-05-004070.txt : 20050803 0001125282-05-004070.hdr.sgml : 20050803 20050803154535 ACCESSION NUMBER: 0001125282-05-004070 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050802 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050803 DATE AS OF CHANGE: 20050803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PXRE GROUP LTD CENTRAL INDEX KEY: 0001091748 STANDARD INDUSTRIAL CLASSIFICATION: TITLE INSURANCE [6361] IRS NUMBER: 980214719 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15259 FILM NUMBER: 05995663 BUSINESS ADDRESS: STREET 1: PXRE HOUSE STREET 2: 110 PITTS BAY ROAD CITY: PEMBROKE STATE: D0 ZIP: HM 08 BUSINESS PHONE: 4412965858 MAIL ADDRESS: STREET 1: P O BOX HM 1282 CITY: HAMILTON BERMUDA STATE: D0 ZIP: HM FX 8-K 1 b408047_8k.htm CURRENT REPORT Prepared and filed by St Ives Financial

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

August 2, 2005
Date of Report (Date of earliest event reported)

PXRE GROUP LTD.
(Exact name of registrant as specified in its charter)

Bermuda	1-15259	98-0214719
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(I.R.S. Employer Identification No.)

PXRE House 110 Pitts Bay Road Pembroke HM 08 Bermuda	P.O. Box HM 1282 Hamilton HM FX Bermuda
(Address, including zip code, of principal executive offices)	(Mailing address)

(441) 296-5858
(Registrant's telephone number, including area code)

NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Back to Contents

Item 1.01. Entry into a Material Definitive Agreement

On August 2, 2005, PXRE Reinsurance Ltd. entered into a $200 million letter of credit facility with Citibank Ireland Financial Services plc. (the “Letter of Credit Facility Agreement”). The Letter of Credit Facility Agreement is a 3-year secured facility that allows PXRE Reinsurance Ltd. to issue up to $200 million in letters of credit. The Committed Letter of Credit Facility Agreement, the Insurance Letters of Credit – Master Agreement, and the Pledge Agreement are attached as Exhibits 99.1, 99.2. and 99.3.

Item 9.01. Financial Statements and Exhibits

Exhibit No. Description

99.1	Letter of Credit Facility Agreement, dated August 2, 2005, by and between Citibank Ireland Financial Services plc and PXRE Reinsurance Ltd.


99.2	Insurance Letters of Credit – Master Agreement, dated August 2, 2005, by and between Citibank Ireland Financial Services plc and PXRE Reinsurance Ltd.

99.3	Pledge Agreement, dated August 2, 2005, by and between Citibank Ireland Financial Services plc and PXRE Reinsurance Ltd.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		PXRE Group Ltd. (Registrant)

		By: /s/ John M. Modin
		Name: John M. Modin
		Title: Executive Vice President & Chief Financial Officer


Date: August 2, 2005

EX-99.1 2 b408047ex_99-1.htm LETTER OF CREDIT FACILITY AGREEMENT Prepared and filed by St Ives Financial

Exhibit 99.1

	Peadar Mac Canna	Citibank Ireland Financial Services plc
	Vice President	1 North Wall Quay
	Trade Business Management	Dublin 1, Ireland

		Tel+353 (1) 622 4567
		Fax+353 (1) 622 2741
		peadar.maccanna@citigroup.com

2 August 2005

John Modin
Executive Vice President
PXRE Reinsurance Ltd
110 Pitts Bay Road
Pembroke HM 08
Bermuda

Dear John:

Committed letter of credit facility

Further to recent discussions, Citibank Ireland Financial Services plc (the “Bank”) is pleased to confirm its committed letter of credit issuance facility (the “Facility”) subject to the terms and conditions set out in this letter (the “Letter”).

Amount

The Facility shall be in a maximum aggregate amount of US$200,000,000 (the “Facility Limit”).

Facility Documents

The Company shall enter into the following documents in relation to the Facility:

(a)	Insurance Letters of Credit – Master Agreement (Form 3/CIFS) (the “Master Agreement”);
(b)	Pledge Agreement (the “Pledge Agreement”);
(c)	Custodial Undertaking Account Control Agreement (the “Account Control Agreement”);
(d)	Resolutions by the Board of Directors of the Company authorizing the entering into the Facility Documents (the “Resolutions”) certified by a secretary of the Company; and
(e)	General Communications Indemnity (the “General Communications Indemnity”).

The Master Agreement will set forth the method of establishing letters of credit under the Facility. In the event of any inconsistency between the terms of this Letter and the terms of any Facility Document, the terms of this Letter shall prevail.

Citibank Ireland Financial Services plc 1 North Wall Quay, Dublin 1, Ireland Tel +353 1 622 2000 Fax +353 1 622 6261

Conditions precedent

	The Company shall not request the issue of any Credit (as defined in the Master Agreement) until the Bank has received the documents and other evidence specified below in a form and substance reasonably satisfactory to the Bank (each a “Condition Precedent”):

(a)	the enclosed duplicate of this Letter, duly executed on behalf of the Company before 8 August 2005;

(b)	the other Facility Documents together with any document to be delivered under the Facility Documents, duly executed on behalf of the Company;

(c)	evidence that all registrations, filings and other steps necessary (other than any specifically referred to as conditions subsequent) to perfect any security interest created pursuant to the Facility Documents have been fulfilled;

(d)	certified copies of the constitutional documents of the Company; and

(e)	such other documents and other evidence as the Bank may reasonably require from time to time.

Utilisation requests

Notwithstanding clause 1(a) of the Master Agreement, the Bank hereby agrees to issue during the term of the Facility upon request from the Company a Credit, provided that the Bank shall be entitled to decline any request to issue a Credit without liability to the Company or any third party to whom the Company owes an obligation if:

(a)	such request would cause the Bank to be in breach of any law of any jurisdiction (including non-exclusively any breach of sanctions imposed by the law of the United States of America); or

(b)	the Credit requested is in a currency other than US dollars, GB pounds sterling, Canadian dollars or Euros; or

(c)	the Company fails to deposit in an securities account with Citibank N.A. New York branch or such other bank or branch of the Bank as requested by the Bank pursuant to clause 1(a)(ii) of the Master Agreement a deposit in the amount of the Required Account Value (as defined in the Pledge Agreement) in accordance with the terms of the Pledge Agreement (it being understood that, unless otherwise requested by the Bank, the Collateral required under the Pledge Agreement shall be deposited in the Company’s account with Citibank N.A. New York branch).

Citibank Ireland Financial Services plc 1 North Wall Quay, Dublin 1, Ireland Tel +353 1 622 2000 Fax +353 1 622 6261

Fees

The Company shall pay to the Bank in advance on the date of this Letter and on each Quarter Day a letter of credit fee (the “Utilization Fee”) in an amount equal to 0.275% (on an annualised basis) of the Facility Limit less the principal amount of undrawn credit on that Quarter Day. The Utilization Fee payable on the date of this Letter shall be pro-rated for the number of days until 1 July 2005.

The Company shall pay to the Bank on the date of this Letter and on each Quarter Day a commitment fee (the “Commitment Fee”) in an amount equal to 0.10% (on an annualised basis) of the principal amount of undrawn credit on that Quarter Day.

Repayment and expiry

The Facility shall expire on 29 July 2008 (the “Expiry Date”), provided that Credits that were issued prior to the Expiry Date shall remain outstanding for the term of such Credit. The Bank and the Company shall commence negotiations, without being under any obligation, on the renewal of the Facility at least 60 days before the Expiry Date.

Representations and warranties

The Company repeats the representations, warranties and undertakings laid out in clauses 1(f) and (g) of the Master Agreement in favour of the Bank in relation to this Letter as if they were more fully laid out herein, on the date of acceptance of this Letter and on each day it requests to issue a Credit (by reference to the facts and circumstances then existing) until this Letter has expired or terminated.

The Bank represents and warrants to the Company that:

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

(b)	this Letter constitutes the Bank’s legal, valid, binding and enforceable obligation effective in accordance with its terms; and

(c)	all necessary authorisations to enable or entitle the Bank to enter into this Letter have been obtained and are in full force and effect and will remain in such force and effect at all times during the subsistence of this Letter.

Costs and expenses

The Company undertakes to indemnify the Bank, on demand, for and against all actions, proceedings, losses, damages, charges, costs, expenses, claims and demands which you may incur, pay or sustain (apart from the Bank’s own or its affiliates’, directors’, employees’ or agents’ gross negligence, bad faith or wilful misconduct) in connection with this Letter (including non-exclusively the cost of all registrations and any other reasonable legal fees that the Bank incurs in relation to the Facility).

Citibank Ireland Financial Services plc 1 North Wall Quay, Dublin 1, Ireland Tel +353 1 622 2000 Fax +353 1 622 6261

Certificates

Any demand, notification or certificate issued by the Bank specifying any amount due under this Letter or any Facility Document or any determination of any ratio shall, in the absence of manifest error, be conclusive and binding on the Company.

Instructions by Company

Notwithstanding clause 5 of the General Communications Indemnity, except as explicitly provided in this Letter, the Master Agreement, the Pledge Agreement and the Account Control Agreement, neither the Bank nor any of its affiliates (a) shall have the right to refuse to accept any instruction or communication given or made by the Company in respect of the Facility or any account maintained with the Bank or any affiliate and (b) shall have the right to charge any fee in respect of such instruction or communication during the term of the Facility.

Miscellaneous

The rights of each party to this Letter and the Facility Documents may be exercised as often as necessary; are cumulative and not exclusive of its rights under the general law; and may be waived only in writing and specifically. Delay in exercising or non-exercise of any such right is not a waiver of that right.

If any provision of this Letter or any Facility Document is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect (i) the legality, validity or enforceability in that jurisdiction of any other provision of that document; or (ii) the legality, validity or enforceability in any other jurisdiction of that or any other provision of that document.

In no event shall the Bank be liable on any theory of liability for any special, indirect, consequential or punitive damages except to the extent any such damages arise from the gross negligence, bad faith or wrongful misconduct of the Bank or the Bank’s affiliates, directors, employees, advisors or agents, and the Company hereby waives, releases and agrees (for itself and on behalf of the other members of the Group) not to sue upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its or their favour.

Clauses 12, 13 and 14 of the Master Agreement shall apply in respect of this Letter.

The terms of this Letter may not be waived, modified or amended unless such waiver, modification or amendment is in writing and signed by you. The Bankmay not assign any of its rights hereunder without the prior written consent of the Company, provided that the prior written consent of the Company shall not be required for assignments to any holding company, subsidiary or affiliate of Citigroup Inc. The Company may not assign any of its rights hereunder without the prior written consent of the Bank.

Citibank Ireland Financial Services plc 1 North Wall Quay, Dublin 1, Ireland Tel +353 1 622 2000 Fax +353 1 622 6261

Definitions and interpretation

Unless otherwise defined herein, terms defined in any Facility Document shall have the same meanings when used in this Letter. The following terms shall have the following meanings.

	Business Day means a day (other than a Saturday or a Sunday) on which banks are generally open in London, Dublin and New York.

	Facility Documents means the documents specified in paragraphs 3(a) through 3(e) and any other document pursuant to which a security interest, guarantee or other form of credit support is created or exists in favour of the Bank in respect of the obligations of the Company under this Letter.

	Group means the Company and each other person from time to time included in the consolidated financial statements of the Company.

	Quarter Day means 1 January, 1 April, 1 July and 1 October, provided that if any such day would otherwise fall on a day that is not a Business Day, such Quarter Day shall be the next succeeding Business Day.

In this Letter (unless otherwise provided):

(a)	words importing the singular shall include the plural and vice versa;

	references to:

	(i)	paragraphs are to be construed as references to the paragraphs of this Letter;

	(ii)	any document shall be construed as references to that document, as amended, varied, novated or supplemented;

	(iii)	any statute or statutory provision shall include any statute or statutory provision which amends, extends, consolidates or replaces the same;

	(iv)	any document or person being acceptable or approved or satisfactory shall be construed as meaning acceptable to or approved by or satisfactory to the Bank in its reasonable discretion;

	(v)	a person shall be construed so as to include that person's assignors, transferees or successors in title and shall be construed as including references to an individual, firm, partnership, joint venture, company, corporation, body corporate, unincorporated body of persons or any state or any agency of a state; and

	(vi)	time are to London time.

Citibank Ireland Financial Services plc 1 North Wall Quay, Dublin 1, Ireland Tel +353 1 622 2000 Fax +353 1 622 6261

The headings in this Letter are for convenience only and shall be ignored in construing this Letter.

Governing law

This Letter shall be governed by English law and for the benefit of the Bank the Company irrevocably submit to the jurisdiction of the English Courts in respect of any dispute which may arise from or in connection with this Letter or any Credit.

A person who is not a party to this Letter has no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any terms of this Letter.

Yours faithfully

/s/ P. Arch
For and on behalf of Citibank Ireland Financial Services plc

Citibank Ireland Financial Services plc 1 North Wall Quay, Dublin 1, Ireland Tel +353 1 622 2000 Fax +353 1 622 6261

Accepted and agreed on

/s/ Robert P. Myron
For and on behalf of PXRE Reinsurance Ltd

Citibank Ireland Financial Services plc 1 North Wall Quay, Dublin 1, Ireland Tel +353 1 622 2000 Fax +353 1 622 6261

Subsidiary of Citibank, N.A. Directors: Aidan M Brady, Maurice F Doyle, Mark Fitzgerald, Andrew Géczy (U.S.A.), Adrian Gray (U.K.),
Brian Hayes, John Keffer (U.S.A.), Frank McCabe, Daniel Nagy (U.S.A.)
Registered in Ireland: Registration Number 132781. Registered Office: 1 North Wall Quay, Dublin 1.

EX-99.2 3 b408047ex_99-2.htm INSURANCE LETTER OF CREDIT Prepared and filed by St Ives Financial
Exhibit 99.2

Insurance Letters of Credit – Master Agreement

Form 3/CIFS

To: Citibank Ireland Financial Services plc

Insurance Letter of Credit Department

2^nd Floor

1 North Wall Quay

Dublin 1

Republic of Ireland

Dear Sirs,

Insurance Letters of Credit – Master Agreement

Insurance/Reinsurance Companies or Brokers

The purpose of this letter is to record our agreement (the “Agreement”) to the following method of establishing letters of credit or similar or equivalent instruments acceptable to you (each a “Credit” and collectively the “Credits”) on our behalf in favour of beneficiaries located in the United States of America or elsewhere (the “Beneficiary” or “Beneficiaries” as the context may require). In connection with this Agreement, we have also separately agreed with you the contractual or security arrangements that will apply in respect of our obligations under or pursuant to this Agreement.

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

(a) you will, upon receipt of an application form for the establishment of a Credit in such form as reasonably acceptable to you for this purpose and which may, without limitation, be received by you via any electronic system(s) or transmission arrangement(s) acceptable to you (referred to in this Agreement in relation to any Credit as an “application form”) completed by us or on our behalf in accordance with the terms of our banking mandate(s) or other authorities lodged with you or arrangement(s) made with you from time to time and indicating therein the name of the Beneficiary and the amount and term of the Credit required, establish on our behalf an irrevocable clean sight Credit (or such other form of Credit as may be required by the application form relating thereto) available, in whole or in part, by the Beneficiary’s sight draft on Citibank Ireland Financial Services plc or otherwise as may be required by the terms of the Credit, for a term of up to 15 months (subject to the extension right set forth in Clause 4 below); provided, however, that:

(i) unless otherwise agreed between you and us, the opening of any Credit hereunder shall, in every instance, be at your option and nothing herein shall be construed as obliging you to open any Credit;

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

(a) forthwith at your request to deposit, or maintain a deposit, at a bank approved by you or with Citibank, N.A. at their branch at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB or, if notified by you, at such other branch as you may designate or at another bank approved by you, in an account or accounts in our name either cash or securities or a combination of cash and securities of such amount and combination as required under the Pledge Agreement, dated as of August 2, 2005, between us and you or under any other form of contractual or security arrangement required by you (a “Deposit”); and

(b) should a Deposit have been requested, to execute the Bank’s standard form charge documentation to the extent required to perfect the Bank’s interest in such Deposit in relation to any accounts opened pursuant to (ii) (a) above; and

(iii) without prejudice to the generality of (i) above, the opening of any Credit hereunder shall be dependent upon you being satisfied, in your reasonable discretion, that a Deposit has been carried out and that the documentation required to be executed under (ii)(b) above has been validly executed;

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(b) we undertake to reimburse you, on demand, the amount of any and all drawings under each Credit;

(c) we undertake to indemnify you, on demand, for and against all actions, proceedings, losses, damages, charges, costs, expenses, claims and demands which you may incur, pay or sustain by reason of or arising in any way whatsoever (apart from your own or your affiliates’, directors’, employees’, agents’ or advisers’ gross negligence, bad faith or wilful misconduct) in connection with each Credit and/or this Agreement;

(d) we undertake to pay to you, on demand, such reasonable fees and/or commissions of such amount(s) and/or at such rate(s) as shall have been agreed between you and us in connection with each Credit;

(e) we hereby irrevocably authorise you to make any payments and comply with any demands which may be claimed from or made upon you in connection with each Credit without any reference to or further authority from us and we hereby agree that it shall not be incumbent upon you to enquire or to take notice whether or not any such payments or demands claimed from or made upon you in connection with each Credit are properly made or to enquire or to take notice whether or not any dispute exists between ourselves and the Beneficiary thereof and we further agree that any payment which you shall make in accordance with the terms and conditions of each Credit shall be binding upon us and shall be accepted by us as conclusive evidence that you were liable to make such payment or comply with such demand; and

(f) we represent and warrant to you and undertake that:

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

(ii) this Agreement constitutes our legal, valid, binding and enforceable obligation effective in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and general principles of equity; and

(iii) all necessary authorisations to enable or entitle us to enter into this Agreement have been obtained and are in full force and effect and will remain in such force and effect at all times during the subsistence of this Agreement;

(g)      we represent and warrant to you that:

(i) we are not unable to pay our debts as they fall due;

(ii) we have not been deemed or declared to be unable to pay our debts under applicable law;

(iii) we have not suspended making payments on any of our material debts;

(iv) we have not by reason of actual or anticipated financial difficulties commenced negotiations with any of our creditors with a view to rescheduling any of our material indebtedness;

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

(vi) no moratorium has been declared in respect of any of our material indebtedness;

(vii) no analogous or similar event or concept to those set out in Clauses 1(g)(i) to 1(g)(vi) above has occurred or is the case under the laws of any jurisdiction; and

(viii) any Credit required by us will contain wording in compliance with the regulations and requirements laid out by National Association of Insurance Commissioners (“NAIC”) or the equivalent replacement governing body from time to time existing.

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(h) you represent and warrant to us that any Credit will be issued by you or the bank or institution issuing the Credit (the “Issuing Bank”) in compliance with the model regulations and requirements set by the NAIC, should such Credit require to be in such compliance.

2. [Intentionally Omitted.]

3. [Intentionally Omitted.]

4. Any Credit established hereunder may, if requested by us on the application form relating thereto and subject to your reasonable consent, bear a clause to the effect that it will automatically be extended for successive periods of one year (or such other period as may be stated in the relevant application form) unless the Beneficiary has received from the Issuing Bank by registered mail (or other appropriate receipted delivery) notification of intention not to renew such Credit at least 30 days (or such other period as may be stated in the relevant application form) (the “Notice Period”) prior to the end of the original term or, as the case may be, of a period of extension. The Issuing Bank shall be under no obligation to us to send the Beneficiary such notification (and without such notification to the Beneficiary the Credit will be automatically extended as provided above) unless you shall have received by registered mail or other means acceptable to you notification from us of our election not to renew such Credit at least 10 days prior to the commencement of the Notice Period relating to the original term or, as the case may be, a period of extension. We understand that receipt by you of any such notice may result in the whole of such Credit being cancelled and, save as is provided above, you reserve the right, at your sole option and discretion, to give or procure the giving at any time to the Beneficiary of notification of intention not to renew any Credit and that if you exercise such said right you will give us notice in writing thereof as soon as is reasonably possible.

5. You may, at your sole option, arrange for the issuance of any Credit as being subject to either (i) the Uniform Customs and Practice for Documentary Credits (1993 Revision) ICC Publication No. 500 or (ii) the International Chamber of Commerce Publication No. 590 – the International Standby Practices 1998, (or any subsequent version of either); provided however that you shall agree such modifications thereof as may be required by any regulatory or other authority having jurisdiction as to the acceptability of the Credit in question.

6. [Intentionally Omitted.]

7. [Intentionally Omitted.]

8. If, at our request, a Credit expressly chooses a state or country law other than New York, U.S.A. or English law, or is silent with respect to the International Chamber of Commerce Publication No. 500 – Uniform Customs and Practice for Documentary Credits (the “UCP”), the International Chamber of Commerce Publication No. 590 – International Standby Practices 1998 (the “ISP”) or a governing law, Citibank Ireland Financial Services plc shall not be liable for any payment, cost, expense or loss resulting from any action or inaction taken by Citibank Ireland Financial Services plc if such action or inaction is justified under UCP, ISP, New York law or English law or the law governing the Credit.

9. We understand that Citibank Ireland Financial Services plc may carry out any of its obligations under this Agreement through any offices or branches of Citibank Ireland Financial Services plc wheresoever situated and may wish to exercise any of its rights under this Agreement through offices or branches of Citibank Ireland Financial Services plc wheresoever situated.

10. Subject to NAIC (or other applicable regulatory body) requirements, we further understand that Citibank Ireland Financial Services plc also reserves the right to issue any Credit through any third party correspondent of its choice that is reasonably acceptable to us and/or to have any Credit confirmed by Citibank, N.A. and, in such circumstances, Citibank Ireland Financial Services plc will be required to guarantee reimbursement to such correspondent (and/or to Citibank, N.A., as the case may be) of any payments which such correspondent (and/or Citibank, N.A., as the case may be) may make under the Credit in question and such guarantee (howsoever described) shall also be treated mutatis mutandis as a Credit for the purpose of this Agreement.

11. The provisions of the foregoing paragraphs shall be equally applicable to any increase, extension, renewal, partial renewal, modification or amendment of or substitute instrument for any Credit to which they apply. If for any reason any amount paid under any Credit is repaid, in whole or in part, by the Beneficiary thereof, you shall treat (or procure the treatment of) such repayment as a reinstatement of an amount (equal to such repayment) under such Credit. The value date applied by you to any such reinstatement shall not be earlier than the date of such repayment and you shall not be liable for any loss of any nature which we may suffer or incur and which may arise from any inadvertent or erroneous drawing unless you or your affiliates, directors, employees or agents acted in bad faith or with gross negligence or wilful misconduct.

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12. Any notice or demand to be served on us by you hereunder must be served on us either by overnight courier at our address stated on the signature page of this Agreement (or such other address as we may notify you of from time to time) or by facsimile to such numbers as we may notify you of from time to time.

Unless otherwise stated, any notice or demand to be served on you by us hereunder must be served on you either by overnight courier at your address stated at the beginning of this Agreement (or such other address as you may notify us of from time to time) or by facsimile to such number as you may notify us of from time to time.

Any notice or demand:

(a) sent by overnight courier to any address maintained in the Republic of Ireland or the United Kingdom (if any) shall be deemed to have been served on us at 10am (London time) on the first Business Day after the date of posting (in the case of an address in the Republic of Ireland) and on the second Business Day after posting (in the case of an address in the United Kingdom) or, in the case of an address maintained outside the Republic of Ireland or the United Kingdom (or a notice or demand to you), shall be deemed to have been served on the relevant party at 10am (London time) on the third Business Day after and exclusive of the date of dispatch; or

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

In proving such service by overnight courier it shall be sufficient to show that the letter containing the notice or demand was properly addressed and posted and such proof of service shall be effective notwithstanding that the letter was in fact not delivered or was returned undelivered.

In this Clause “Business Day” shall be construed as a reference to a day (other than a Saturday or a Sunday) on which banks are generally open (x) in London, with regard to notices sent to you and (y) in New York, with regard to notices sent to us.

13. With our prior written consent (which shall not be unreasonably withheld), you shall have a full and unfettered right to (a) assign the whole or any part of the rights under or the benefit of this Agreement or (b) (subject to Clause 14 below) novate your rights and obligations under this Agreement, provided that our consent shall not be required for assignments to any holding company, subsidiary or affiliate of Citigroup Inc. The words “you” and “your” wherever used herein shall be deemed to include your permitted assignees and novatees and other successors, whether immediate or derivative, who shall be entitled to enforce and proceed upon this Agreement in the same manner as if named herein. You shall be entitled to impart any information concerning us to any such permitted assignee, novatee or other successor or any participant or proposed assignee, novatee, successor or participant, provided that such party shall be under similar confidentiality obligations as agreed between you and us.

14.

14.1 The person who is for the time being liable to perform your obligations under this Agreement (a “Transferring Bank”) shall be entitled to novate at any time, upon service of a notice in the form attached as Schedule One to this Agreement (a “Novation Notice”) on us, any or all of its rights and obligations under, and the benefit of, this Agreement to any Permitted Transferee. With effect from the date on which a Novation Notice is executed by the Transferring Bank and the Permitted Transferee and served on us (the “Novation Date”), the provisions of Clause 14.2 shall have effect (but not otherwise).

For the purposes of this Clause 14 “Permitted Transferee” shall mean any holding company, subsidiary or affiliate of Citigroup Inc.

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

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

(b) we shall release and discharge the Transferring Bank from further performance of its obligations arising in favour of us on and after the Novation Date under this Agreement and all claims and demands whatsoever in respect thereof against the Transferring Bank, except for claims arising from gross negligence, bad faith, or wilful misconduct of the Transferring Bank, and we shall accept the liability of the Permitted Transferee in respect of such obligations in place of the liability of the Transferring Bank;

(c) the Transferring Bank shall release and discharge us from further performance of our obligations arising in favour of the Transferring Bank on and after the Novation Date under this Agreement and all claims and demands whatsoever in respect thereof by the Transferring Bank;

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

14.3 Without prejudice to the automatic novation of the Transferring Bank’s rights and obligations pursuant to Clause 14.2 we undertake to sign and return promptly each acknowledgement of the Novation Notice from time to time delivered to us promptly following receipt of the same from the Transferring Bank.

15.

15.1 We hereby irrevocably authorise you to debit and credit, on our behalf, any account or accounts which are held in our name with Citibank, N.A.

15.2 We hereby agree that Citibank N.A. shall be entitled to rely on and action any credit or debit made by you in accordance with Clause 15.1.

16. This Agreement shall be governed by English law and for your benefit we hereby irrevocably submit to the jurisdiction of the English Courts in respect of any dispute which may arise from or in connection with this Agreement. The terms of this Agreement may not be waived, modified or amended unless such waiver, modification or amendment is in writing and signed by you and us nor may we assign any of our rights here under without your prior written consent (which consent shall not be unreasonably withheld).

17.

17.1 Subject to this Clause and to Clause 15.2 a person who is not a party to this Agreement has no rights under the Contracts (Rights of Third Parties) Act 1999 (the “Third Parties Act”) to enforce any terms of this Agreement.

17.2 Citibank, N.A. may enforce the terms of Clause 15.2 subject to and in accordance with this Clause and Clause 16 and the provisions of the Third Parties Act.

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

17.4 If Citibank, N.A. brings proceedings to enforce the terms of Clause 15.2 we shall only have available to us by way of defence, set-off or counterclaim a matter that would have been available by way of defence, set-off or counterclaim if Citibank, N.A. had been party to this Agreement.

17.5 Citibank, N.A. may not take proceedings to enforce Clause 15.2 unless and until it gives notice in writing to us in any manner as is permitted by Clause 12, agreeing irrevocably to the provisions of Clause 16.

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Yours faithfully,
For and on behalf of
PXRE Reinsurance Ltd.

     /s/ Robert P. Myron
(Signature(s))

Dated August 2, 2005

Address:      110 Pitts Bay Road
Pembroke HM 08
Bermuda

Accepted for and on behalf
of CITIBANK IRELAND FINANCIAL
SERVICES PLC

By:     /s/ P. Arch

Dated:     August 2, 2005

SCHEDULE ONE

Form of Novation Notice for Clause 14

To:      [          ]

Date:

Dear Sirs

Insurance Letters of Credit – Master Agreement (Form 3/CIFS) dated [     ] and made between Citibank Ireland Financial Services plc and PXRE Reinsurance Ltd. (the “Agreement”)

We refer to Clause 14 of the Agreement. We hereby notify you that we wish to exercise our option to novate under Clause 14 thereof so that with effect from today’s date the rights, liabilities and obligations of [name of Transferring Bank] shall be novated to [name of Permitted Transferee] in the manner set out in Clause 14 thereof.

The relevant address for the purposes of Clause 4(a) and Clause 12 is as follows:

[insert new address]

Yours faithfully

_______________________________
for and on behalf of
[TRANSFERRING BANK]

_______________________________
for and on behalf of
[PERMITTED TRANSFEREE]

[NAME OF COUNTERPARTY]:

(1) acknowledges receipt of the Novation Notice; and

(2) agrees that with effect from the date of the Novation Notice the rights, liabilities and obligations of [                   ] are novated to [                    ] in the manner set out in Clause 14 of the Agreement.

_______________________________
for and on behalf of
[NAME OF COUNTERPARTY]

EX-99.3 4 b408047ex_99-3.htm PLEDGE AGREEMENT Prepared and filed by St Ives Financial
Exhibit 99.3

PLEDGE AGREEMENT

PLEDGE AGREEMENT, dated as of August 2, 2005, (this “Agreement”) made among PXRE Reinsurance Ltd., a company organized and existing under the laws of Bermuda whose address of its registered or principal office is at 110 Pitts Bay Road, Pembroke HM 08, Bermuda (the “Pledgor”), and Citibank Ireland Financial Services PLC, (the “Pledgee”).

PRELIMINARY STATEMENTS.

(1) The Pledgor and the Pledgee have entered into one or more Master Agreements (as defined in Annex A) pursuant to which the Pledgee may, from time to time, issue for the account of the Pledgor letters of credit or similar or equivalent instruments (each a “Credit” and, collectively, the “Credits”).

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

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

(4) The Pledgor has opened account number 851573 (together with any successor account opened and maintained for this purpose, the “Account”) with Citibank N.A. New York Offices at its office at 111 Wall Street, New York, New York 10043, U.S.A (the “Bank”).

NOW, THEREFORE, in consideration of the premises and in order to induce the Pledgee to enter into transactions with and to provide services to the Pledgor and its subsidiaries pursuant to separate agreements or arrangements between such persons and the Pledgee, the parties hereto hereby agree as follows:

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

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

(i) the Account;

(ii) the Securities and any Instruments or other Financial Assets credited to the Account or otherwise acquired by the Pledgee in any manner and under its control as Collateral (the “Pledged Securities”) including, without limitation Securities of the type and in the aggregate amounts specified in Schedule 1 hereto and any Securities Account and Security Entitlement in respect of the Account, the Pledged Securities or any of them;

(iii) all additional Investment Property (including without limitation Securities, Security Entitlements, Financial Assets, or other property), and all funds, cash or cash equivalents (together with any applicable Account or Securities Account) from time to time (A) received, receivable or otherwise distributed in respect of or in exchange or substitution for any other Collateral (all such funds, cash or cash equivalents to be Financial Assets for the purposes of this Agreement) or (B) otherwise acquired by the Pledgee in any manner and delivered to the Pledgee or under the control of the Pledgee as Collateral; and

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

Section 3.     Security of Obligations. This Agreement secures the payment of all obligations of the Pledgor now or hereafter existing under each Master Agreement (including all contingent obligations with respect to credit(s) issued by the Pledgee for the Pledgor’s account) and this Agreement, whether for principal, interest, fees, expenses or otherwise and the payment of any and all expenses (including reasonable counsel fees and expenses) incurred by the Pledgee in enforcing any rights under this Agreement (all such obligations being the “Secured Obligations”). This Agreement is intended to convey to the Pledgee control of all Security Entitlements in, and the right to direct dispositions of all cash deposits from, the Account for the purposes of sections 9-106(c) and 9-104(b) of the NYUCC.

Section 4.     Delivery of Security Collateral.

(a) On or prior to the date hereof, the Pledgor shall transfer or credit, or cause to be transferred or credited, all of the Pledged Securities to the Pledgee or to an Account or a Securities Account under arrangements reasonably acceptable to the Pledgee. Pledgor shall deliver all other Collateral to the Pledgee or to a Securities Intermediary subject to the control of the Pledgee under arrangements reasonably acceptable to the Pledgee. Upon the occurrence of and during the continuance of an Event of Default (as hereinafter defined), the Pledgee shall have the right, at any time it reasonably determines is necessary or desirable to enable the Pledgee to better perfect or protect the security interests granted hereunder, upon notice to the Pledgor, to transfer to or to register in the name of the Pledgee or any of its nominees any or all of the Collateral.

(b) At any time during the continuance of an Event of Default and upon thirty (30) days notice, the Pledgee may require the Pledgor to transfer the Collateral from the Account to an account at Citibank, N.A. (London, England branch) and to execute a replacement deposit agreement (in substantially the customary form used by the Pledgee, a copy of which deposit agreement has been provided to Pledgor) in substitution for this Agreement.

Section 5.     Use of Proceeds. Proceeds that are received in respect of any Collateral shall be held as cash held as Collateral as provided in Section 2 of this Agreement.

Section 6.     Representations and Warranties. The Pledgor represents and warrants as follows:

(a) The Pledgor is a company duly organized and validly existing under the laws of its incorporation and has all requisite corporate power and authority (including, without limitation, all governmental licenses, permits and other approvals except where such failure would not have a material adverse effect on the Pledgor’s business) to execute, deliver and perform this Agreement.

(b) The execution, delivery and performance by the Pledgor of this Agreement, and the consummation of the transactions contemplated hereby, are within the Pledgor’s corporate powers and have been duly authorized by all necessary corporate action.

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

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(d) No consent of any other Person and no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other third party is required either (i) for the grant by the Pledgor of the security interest granted hereby, for the pledge by the Pledgor of the Collateral pursuant hereto or for the execution, delivery or performance of this Agreement by the Pledgor, (ii) for the perfection or maintenance of the pledge and security interest created hereby (including the first priority nature of such pledge or security interest) or (iii) for the exercise by the Pledgee of its rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement, except (x) as may be required in connection with the disposition of any portion of the Collateral by laws affecting the offering and sale of securities generally and (y) as have been previously obtained and are in full force and effect.

(e) This Agreement has been duly executed and delivered by the Pledgor. This Agreement constitutes, or when executed and delivered will constitute, the legal, valid and binding obligation of the Pledgor enforceable against the Pledgor in accordance with its terms, subject as to enforceability to applicable bankruptcy, insolvency reorganization, moratorium and similar laws affecting creditors’ rights generally and equitable principles (whether enforcement is sought by proceedings in equity or at law).

(f) The Pledgor is the legal and beneficial owner of the Collateral and the Pledgor has and shall at all times have rights in, and good and marketable title to, the Collateral, free and clear of all Liens and “adverse claims” (as such term is defined in Section 8-102(a)(1) of the NYUCC), save as may have been disclosed by the Pledgor to the Pledgee in writing prior to the date of this Agreement. Liens in favour of Citibank, N.A. and its affiliates securing the Pledgor’s reimbursement obligations to Citibank, N.A. in connection with the issuance of letters of credit shall be deemed to have been disclosed in writing to the Pledgee.

(g) To the best of the Pledgor’s knowledge, no default has occurred under or with respect to any Collateral as of the date hereof.

(h) (i) This Agreement and the pledge of the Collateral pursuant hereto create a valid security in the Collateral, securing the payment of the Secured Obligations, (ii) this Agreement and the related Account Control Agreement, dated August __, 2005, by and among the Pledgor, the Pledgee and Citibank, N.A. New York Offices are sufficient to perfect such security interest to the extend perfection is governed by the NYUCC. and (iii) assuming the Pledgee has no notice of any Liens or “adverse claims” (as such terms is defined in Section 8- 102(a)(1) of the NYUCC) with respect to the Collateral, the Pledgee will take the Collateral free and clear of any Liens and adverse claims.

(i) The Pledgor is subject to civil and commercial law with respect to its obligations hereunder, and the execution, delivery and performance by the Pledgor of its obligations under this Agreement constitute private and commercial acts rather than public or governmental acts. Neither the Pledgor nor any of its properties has any immunity from jurisdiction of any court or from set-off or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the laws of its jurisdiction of organization.

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(j) (A)      This Agreement is in proper legal form under all applicable laws of the United States of America and the Pledgor’s jurisdiction of organization for the enforcement thereof against the Pledgor in accordance with its terms. To ensure the legality, validity, enforceability or admissibility into evidence of this Agreement it is not necessary that this Agreement or any other document be filed or recorded with any governmental authority of the Pledgor’s jurisdiction of organization or that any stamp or similar tax be paid on or in respect of this Agreement or any other document delivered pursuant hereto.

(B)      It is not necessary (X) in order for the Pledgee to enforce any rights or remedies under this Agreement or (Y) solely by reason of the execution, delivery and performance of this Agreement by the Pledgee, that the Pledgee be licensed or qualified with any governmental authority of the Pledgor’s jurisdiction of organization or of the United States of America or be entitled to carry on business in the Pledgor’s jurisdiction of organization or the United States of America.

(k) The Pledgor shall cause Securities of the type specified in Schedule 1 to be pledged as Collateral so that at all times the Adjusted Value (as defined in Schedule 1) of such Securities shall equal or exceed an amount equal to 100% of the aggregate amount of the then outstanding Credits (the “Required Account Value”); and without limiting the foregoing, if at any time the Pledgor is not in compliance with the requirements of this subsection (k), the Pledgor shall forthwith cause additional Securities of the type specified in Schedule 1 to be held as Collateral pursuant to Section 2 to the extent required to cause the Pledgor to be in compliance with this subsection (k).

Section 7.     Further Assurances.

(a) The Pledgor agrees that from time to time, at the expense of the Pledgor, the Pledgor will promptly execute and deliver all further Instruments and documents, and take all further action, that may be necessary and that the Pledgee may reasonably request, in order to continue, perfect and protect any pledge, assignment or security interest granted or purported to be granted hereby or to enable the Pledgee to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, the Pledgor will execute and file such financing or continuation statements, or amendments thereto, and such other Instruments or notices, as may be necessary and as the Pledgee may request, in order to perfect and preserve the pledge, assignment and security interest granted or purported to be granted hereby.

Section 8.     Distributions; Entitlement Orders.

(a) Other than upon and during the continuance of an Event of Default, the Pledgor shall be entitled to receive and retain any and all distributions paid in respect of the Pledged Securities; provided, however, that any and all

(i) distributions paid or payable other than in cash in respect of, and Instruments, Financial Assets and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Collateral; and

(ii) cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any Collateral,

shall be forthwith delivered to the Pledgee to hold as Collateral and shall, if received by the Pledgor, be received in trust for the benefit of the Pledgee, be segregated from the other property or funds of the Pledgor and be forthwith delivered to the Pledgee as Collateral in the same form as so received (with any necessary endorsement) to the extent the Collateral is less than the Required Account Value.

(b) The Pledgee shall only be entitled to give Entitlement Orders to the Bank with regard to financial assets in the Account without the further consent of the Pledgor after the occurrence and during the continuance of an Event of Default.

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(c) For the purposes of this Section 8 and Sections 4, 10 and 14 hereof, the term “Event of Default” shall mean a failure of the Pledgor to perform in any material respect any of its obligations under each Master Agreement or this Agreement, which failure shall continue unremedied for seven (7) Business Days after written notice thereof shall have been given by the Pledgee to the Pledgor.

(d) The Pledgee shall execute and deliver (or cause to be executed and delivered) to the Pledgor all such proxies and other instruments as the Pledgor may reasonably request for the purpose of enabling the Pledgor to receive the interest payments that it is authorized to receive and retain pursuant to paragraph (a) above.

Section 9.     Transfer and Other Liens. The Pledgor shall not (i) sell, assign or otherwise dispose of, or grant any option with respect to, any of the Collateral, or (ii) create or suffer to exist any Lien upon or with respect to any of the Collateral, including any right to give any Entitlement Order with respect to the Collateral, except for the pledge, assignment and security interest created by this Agreement.

Section 10.     Pledgee Appointed Attorney-in-Fact. The Pledgor hereby irrevocably appoints the Pledgee as the Pledgor’s attorney-in-fact, with full authority during the continuance of an Event of Default in the place and stead of the Pledgor and in the name of the Pledgor or otherwise, from time to time to take any action and to execute any instrument that the Pledgee may reasonably deem necessary to accomplish the purposes of this Agreement.

Section 11.     Pledgee May Perform. If the Pledgor fails to perform any agreement contained herein, after receipt of a written request from the Pledgee to do so, the Pledgee may (but shall have no obligation to) itself perform, or cause performance of, such agreement, and the reasonable expenses of the Pledgee incurred in connection therewith shall be payable by the Pledgor under Section 15(b) hereof.

Section 12.     The Pledgee’s Duties. The powers conferred on the Pledgee hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Pledgee shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not the Pledgee has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. The Pledgee shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Pledgee accords its own property.

Section 13.     Security Interest Absolute. The obligations of the Pledgor under this Agreement are independent of the Secured Obligations and any agreement with respect to the Secured Obligations, and a separate action or actions may be brought and prosecuted against the Pledgor to enforce this Agreement, irrespective of whether any action is brought against the Pledgor or whether the Pledgor is joined in any such action or actions. All rights of the Pledgee and the pledge, assignment and security interest hereunder, and all obligations of the Pledgor hereunder, shall be absolute and unconditional, irrespective of:

(a) any lack of validity or enforceability of each Master Agreement or any other agreement or instrument relating thereto;

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

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

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

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

(f) any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Pledgor or a third party grantor of a security interest.

Section 14.     Remedies. If an Event of Default shall have occurred and be continuing:

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

(b) All cash proceeds received by the Pledgee in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Pledgee, be held by the Pledgee as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Pledgee pursuant to Section 15) in whole or in part by the Pledgee against all or any part of the Secured Obligations in such order as the Pledgee shall elect. Any surplus of such cash or cash proceeds held by the Pledgee and remaining after payment in full of all the Secured Obligations shall be paid over to the Pledgor or to whomsoever may be lawfully entitled to receive such surplus.

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

Section 15.     Indemnity and Expenses.

(a) The Pledgor agrees to indemnify the Pledgee and its affiliates and its (and its affiliates’) officers, directors, employees, agents, attorneys and advisors (each, an “Indemnified Person”) from and against any and all claims, damages, losses and liabilities growing out of or resulting from this Agreement (including, without limitation, enforcement of this Agreement), except claims, damages, losses or liabilities resulting from such Indemnified Person’s gross negligence, bad faith, or willful misconduct.

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

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Section 16.     Amendments; Waivers; Etc. No amendment or waiver of any provision of this Agreement, and no consent to any departure by the Pledgor herefor, shall in any event be effective unless the same shall be in writing and signed by the Pledgee, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of the Pledgee to exercise, and no delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

Section 17.     Addresses for Notices. All notices and other communications provided for hereunder shall be in writing (including telecopier or telegraphic communication) and, mailed, telegraphed, telecopied, or delivered if to the Pledgor, Attention: Bob Myron, Senior Vice Preseident and Chief Financial Officer, at 110 Pitts Bay Road, Pembroke HM 08, Bermuda, Telephone +1 (441) 296-5858, Facsimile +1 (441) 296-6162 or, as to either party, at such other address as shall be designated by such party in a written notice to each other party complying as to delivery with the terms of this Section 17. All such notices and communications shall, when mailed or telecopied, be effective five Business Days after deposit in the mail, or when telecopied, delivered to the telegraph company or confirmed by telex answerback, respectively, except that notices and communications to the Pledgee shall not be effective until received by the Pledgee. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof.

Section 18.     Continuing Security Interest; Assignments. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the payment in full in cash of the Secured Obligations, (b) be binding upon the Pledgor and the Pledgee and their respective successors and permitted assigns and (c) inure, together with the rights and remedies of the Pledgee and its respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), with the Pledgor’s prior written consent (which shall not be unreasonably withheld, provided that the Pledgor’s consent shall not be required for assignments to any holding company, subsidiary or affiliate of Citigroup Inc.), the Pledgee may assign or otherwise transfer to any other Person all or any portion of its rights and obligations under this Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Pledgee herein or otherwise. The Pledgor will, at its own expense, make, execute, endorse, acknowledge, file and/or deliver to the Pledgee such confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, reports and other assurances or instruments and take such further steps related to the Collateral and other property or rights covered by the security interest hereby granted, which the Pledgee deems reasonably necessary to perfect, preserve or protect its security interest in the Collateral, including any actions which may be required as a result of any amendment or supplement to applicable laws, including the NYUCC.

Section 19.     Release and Termination.

(a) Upon the later of the payment in full in cash of the Secured Obligations or any termination as provided in each Master Agreement, the pledge, assignment and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Pledgor. Upon any such termination, the Pledgee will, at the Pledgor’s expense execute and deliver to the Pledgor such documents as the Pledgor shall reasonably request to evidence such termination.

(b) If at any time the Adjusted Value of the Securities pledged exceeds the Required Account Value at such time, the Pledgee shall release such excess to the Pledgor as soon as reasonably practicable thereafter, but in any event within five (5) Business Days after receipt of written notice from the Pledgor requesting the release of such excess.

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Section 20.     Governing Law; Terms. This Agreement shall be governed by and construed in accordance with the laws of the state of New York, except to the extent that the validity or perfection of the security interest hereunder in respect of any particular collateral is mandatorily governed by the laws of a jurisdiction other than the state of New York, in which case the laws of such other jurisdiction shall govern such matters.

Section 21.     Jurisdiction, Venue.

(a) The Pledgor hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of any New York State or Federal court (to the extent such court has subject matter jurisdiction) sitting in New York City and any appellate court from any thereof in any action or proceeding arising out of or relating to this Agreement or for the recognition and enforcement of any judgment, and the Pledgor hereby irrevocably and unconditionally agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court or in such Federal court. The Pledgor hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. The Pledgor hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or federal court. The Pledgor hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. The Pledgor irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to such Pledgor at its address specified in Section 17. The Pledgor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law.

(b) Nothing in this Section 21 shall affect the right of the Pledgee to serve legal process in any other manner permitted by applicable law or affect any right which the Pledgee would otherwise have to bring any action or proceeding against the Pledgor or its property in the courts of any other jurisdiction.

(c) To the extent that the Pledgor has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution or otherwise) with respect to itself or its property, the Pledgor, to the extent permitted by law, hereby irrevocably waives such immunity in respect of its obligations under this Agreement and, without limiting the generality of the foregoing, agrees that the waives set forth in this subsection (c) shall have the fullest scope permitted under the United States Foreign Sovereign Immunities Act of 1976, as amended, and are intended to be irrevocable for purposes of such Act.

SECTION 22.     WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PLEDGEE IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

Section 23.     Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement.

9

Section 24.     Severability. If any term or provision of this Agreement is or shall become illegal, invalid or unenforceable in any jurisdiction, all other terms and provisions of this Agreement shall remain legal, valid and enforceable in such jurisdiction and such illegal, invalid or unenforceable provision shall be legal, valid and enforceable in any other jurisdiction.

Section 25.     Termination of Prior Agreement. The parties agree that any prior pledge agreement with respect to the Collateral is terminated as of the effective date of this Agreement.

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

PXRE REINSURANCE LTD.

BY:

  /s/ Robert P. Myron
Name: Robert P. Myron
Title: SVP & CFO

CITIBANK IRELAND FINANCIAL SERVICES PLC

BY:

  /s/ David Astwood
Name:
Title:

SCHEDULE 1

The Pledgor shall provide security in the form of cash, or alternatively Eligible Securities (as defined below) with an Adjusted Value (as defined below) equal to 100% of the Secured Obligations (as defined in the Pledge Agreement), provided, however, that only Type A Eligible Securities shall be permitted as security for the first $100,000,000 of the Secured Obligations.

“Eligible Securities” shall consist of Type A Eligible Securities and Type B Eligible Securities.

“Type A Eligible Securities” shall be defined as several:

Securities issued by the US Government

Federal Home Loan Mortgage Corp. (“Freddie Macs”)

Federal Home Loan Bank

Federal National Mortgage Association (“Fannie Maes”)

Government National Mortgage Corporation (“GNMAs”)

in each case rated AAA.

“Type B Eligible Securities” shall be defined as Securities issued by corporations, in each case rated AA or AA equivalent or better, and not more than 10% by value of the collateral shall be represented by bonds issued by any one issuer and each bond within the charged portfolio shall mature not more than 10 years after the date on which it comes within the charged portfolio.

“Adjusted Value” shall mean:

(i) with respect to Type A Eligible Securities, 91% of the fair market value of such securities;

(ii) with respect to Type B Eligible Securities, 86% of the fair market value of such securities;

(iii) with respect to cash, 100% of the value of such cash amounts.

ANNEX A

          CERTAIN DEFINED TERMS

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

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

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

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

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

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

“Master Agreement” means each agreement (as from time to time amended, varied supplemented, novated or assigned) between the Pledgor (or by any person for or on behalf of the Pledgor) and the Pledgee, pursuant to which the Pledgee has established, maintained, amended, renewed or substituted or arranged for the establishment, maintenance, amendment, renewal or substitution of a Credit.

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

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

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

“Required Account Value” has the meaning specified therefor in Section 6(k) hereof.

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

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

“Security Control” means “control” as defined in Section 9-115(1)(e) of the NYUCC.

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

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

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

(b)      NYUCC Terms. Terms defined or referenced in the NYUCC and not otherwise defined or referenced herein are used herein as therein defined or referenced. In particular, the following terms are used herein as defined or referenced in the respective NYUCC sections indicated below: “Account”: Section 9-106; “Entitlement Order”: Section 8-102(a)(8); “Financial Asset”: Section 8-102(a)(9); “Instrument”: Section 9-105(I)(i); “Investment Property”: Section 9-115(1)(f); “Person”: Section 1-201(30); “Securities Account”: Section 8-501(a); “Security”: Section 8-102(a)(15).

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To:	Citibank Ireland Financial Services plc
	Insurance Letter of Credit Department
	2^nd Floor
	1 North Wall Quay
	Dublin 1
	Republic of Ireland


		(i)	unless otherwise agreed between you and us, the opening of any Credit hereunder shall, in every instance, be at your option and nothing herein shall be construed as obliging you to open any Credit;


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


			(a)	forthwith at your request to deposit, or maintain a deposit, at a bank approved by you or with Citibank, N.A. at their branch at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB or, if notified by you, at such other branch as you may designate or at another bank approved by you, in an account or accounts in our name either cash or securities or a combination of cash and securities of such amount and combination as required under the Pledge Agreement, dated as of August 2, 2005, between us and you or under any other form of contractual or security arrangement required by you (a “Deposit”); and


			(b)	should a Deposit have been requested, to execute the Bank’s standard form charge documentation to the extent required to perfect the Bank’s interest in such Deposit in relation to any accounts opened pursuant to (ii) (a) above; and


		(iii)	without prejudice to the generality of (i) above, the opening of any Credit hereunder shall be dependent upon you being satisfied, in your reasonable discretion, that a Deposit has been carried out and that the documentation required to be executed under (ii)(b) above has been validly executed;


	(c)	we undertake to indemnify you, on demand, for and against all actions, proceedings, losses, damages, charges, costs, expenses, claims and demands which you may incur, pay or sustain by reason of or arising in any way whatsoever (apart from your own or your affiliates’, directors’, employees’, agents’ or advisers’ gross negligence, bad faith or wilful misconduct) in connection with each Credit and/or this Agreement;


	(d)	we undertake to pay to you, on demand, such reasonable fees and/or commissions of such amount(s) and/or at such rate(s) as shall have been agreed between you and us in connection with each Credit;


	(e)	we hereby irrevocably authorise you to make any payments and comply with any demands which may be claimed from or made upon you in connection with each Credit without any reference to or further authority from us and we hereby agree that it shall not be incumbent upon you to enquire or to take notice whether or not any such payments or demands claimed from or made upon you in connection with each Credit are properly made or to enquire or to take notice whether or not any dispute exists between ourselves and the Beneficiary thereof and we further agree that any payment which you shall make in accordance with the terms and conditions of each Credit shall be binding upon us and shall be accepted by us as conclusive evidence that you were liable to make such payment or comply with such demand; and


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


		(ii)	this Agreement constitutes our legal, valid, binding and enforceable obligation effective in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and general principles of equity; and


		(ii)	we have not been deemed or declared to be unable to pay our debts under applicable law;


		(iii)	we have not suspended making payments on any of our material debts;


		(iv)	we have not by reason of actual or anticipated financial difficulties commenced negotiations with any of our creditors with a view to rescheduling any of our material indebtedness;


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


		(vi)	no moratorium has been declared in respect of any of our material indebtedness;


		(vii)	no analogous or similar event or concept to those set out in Clauses 1(g)(i) to 1(g)(vi) above has occurred or is the case under the laws of any jurisdiction; and


5.	You may, at your sole option, arrange for the issuance of any Credit as being subject to either (i) the Uniform Customs and Practice for Documentary Credits (1993 Revision) ICC Publication No. 500 or (ii) the International Chamber of Commerce Publication No. 590 – the International Standby Practices 1998, (or any subsequent version of either); provided however that you shall agree such modifications thereof as may be required by any regulatory or other authority having jurisdiction as to the acceptability of the Credit in question.

9.	We understand that Citibank Ireland Financial Services plc may carry out any of its obligations under this Agreement through any offices or branches of Citibank Ireland Financial Services plc wheresoever situated and may wish to exercise any of its rights under this Agreement through offices or branches of Citibank Ireland Financial Services plc wheresoever situated.


		Unless otherwise stated, any notice or demand to be served on you by us hereunder must be served on you either by overnight courier at your address stated at the beginning of this Agreement (or such other address as you may notify us of from time to time) or by facsimile to such number as you may notify us of from time to time.


	(a)	sent by overnight courier to any address maintained in the Republic of Ireland or the United Kingdom (if any) shall be deemed to have been served on us at 10am (London time) on the first Business Day after the date of posting (in the case of an address in the Republic of Ireland) and on the second Business Day after posting (in the case of an address in the United Kingdom) or, in the case of an address maintained outside the Republic of Ireland or the United Kingdom (or a notice or demand to you), shall be deemed to have been served on the relevant party at 10am (London time) on the third Business Day after and exclusive of the date of dispatch; or


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


	In proving such service by overnight courier it shall be sufficient to show that the letter containing the notice or demand was properly addressed and posted and such proof of service shall be effective notwithstanding that the letter was in fact not delivered or was returned undelivered.


	In this Clause “Business Day” shall be construed as a reference to a day (other than a Saturday or a Sunday) on which banks are generally open (x) in London, with regard to notices sent to you and (y) in New York, with regard to notices sent to us.


	13.	With our prior written consent (which shall not be unreasonably withheld), you shall have a full and unfettered right to (a) assign the whole or any part of the rights under or the benefit of this Agreement or (b) (subject to Clause 14 below) novate your rights and obligations under this Agreement, provided that our consent shall not be required for assignments to any holding company, subsidiary or affiliate of Citigroup Inc. The words “you” and “your” wherever used herein shall be deemed to include your permitted assignees and novatees and other successors, whether immediate or derivative, who shall be entitled to enforce and proceed upon this Agreement in the same manner as if named herein. You shall be entitled to impart any information concerning us to any such permitted assignee, novatee or other successor or any participant or proposed assignee, novatee, successor or participant, provided that such party shall be under similar confidentiality obligations as agreed between you and us.


	14.1	The person who is for the time being liable to perform your obligations under this Agreement (a “Transferring Bank”) shall be entitled to novate at any time, upon service of a notice in the form attached as Schedule One to this Agreement (a “Novation Notice”) on us, any or all of its rights and obligations under, and the benefit of, this Agreement to any Permitted Transferee. With effect from the date on which a Novation Notice is executed by the Transferring Bank and the Permitted Transferee and served on us (the “Novation Date”), the provisions of Clause 14.2 shall have effect (but not otherwise).


		For the purposes of this Clause 14 “Permitted Transferee” shall mean any holding company, subsidiary or affiliate of Citigroup Inc.


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


		(b)	we shall release and discharge the Transferring Bank from further performance of its obligations arising in favour of us on and after the Novation Date under this Agreement and all claims and demands whatsoever in respect thereof against the Transferring Bank, except for claims arising from gross negligence, bad faith, or wilful misconduct of the Transferring Bank, and we shall accept the liability of the Permitted Transferee in respect of such obligations in place of the liability of the Transferring Bank;


		(c)	the Transferring Bank shall release and discharge us from further performance of our obligations arising in favour of the Transferring Bank on and after the Novation Date under this Agreement and all claims and demands whatsoever in respect thereof by the Transferring Bank;