ACCOUNT CONTROL AGREEMENT
Exhibit
99.4
December 17,
2008
CITIBANK EUROPE plc, a banking
corporation organized and existing under the laws of the Republic of Ireland
(the “Secured Party”);
FLAGSTONE REASSURANCE SUISSE
S.A., a corporation organized and existing under the laws of Switzerland
(the “Customer”); and
JPMORGAN CHASE BANK,
N.A. (the “Bank”)
hereby agree as follows:
PREAMBLE
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1.
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The Bank will
establish at the request of the Customer a securities custody account
number G-00055 in the name of Customer (the “Account”). To the
extent that cash is credited to the Account, such Account is a deposit
account; to the extent that Financial Assets (as defined below) are
credited to the Account, such Account is a securities
account.
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2.
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The Customer
has granted the Secured Party a security interest in the Account pursuant
to agreement.
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3.
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The Secured
Party and the Customer and the Bank, at the request of the Secured Party
and the Customer, are entering into this Agreement to provide for the
control of the Account and to perfect the security interest of Secured
Party in the Account. It is understood that the Bank has no
responsibility with respect to the validity or perfection of the security
interest otherwise than to act in accordance with the terms of this
Agreement.
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DEFINITIONS
As used herein the following terms shall have
the following meanings:
Entitlement Holder shall mean
a person identified in the records of the Bank as the person having a Security
Entitlement against the Bank.
Entitlement Order shall mean a
notification communicated to the Bank directing transfer or redemption of a
Financial Asset which the Entitlement Holder has a Security
Entitlement.
Financial Assets shall mean
any securities and other property held in the Account, but does not include any
cash, time deposits, or other cash credit balance that may be maintained in the
Account.
Pledged Assets shall mean any
Financial Assets and any cash, time deposits or other cash credit balance which
may be maintained in the Account.
Security Entitlement shall
mean the rights and property interest of an Entitlement Holder with respect to a
Financial Asset specified in Part 5 of Article 8 of the New York Uniform
Commercial Code (the “UCC”).
TERMS
Section 1. The
Account. Pledged Assets currently maintained in the
Account do not reflect any Financial Assets which are registered in the name of
the Customer, payable to the Customer’s order, or specifically endorsed to the
Customer, which have not been endorsed to the Bank or in blank. To
the Bank’s knowledge, the Security Entitlements arising out of the Financial
Assets carried in the Account are valid and legally binding obligations of the
Bank, and, except for the claims and interest of the Secured Party and the
Customer in the Account (subject to any claim in favor of the Bank permitted
under Section 2 hereof), the Bank has not been notified in writing of any claim
to or interest in the Account.
Section
2. Pledged Assets.
The Secured Party and the
Customer agree that all securities that are or will be transferred into the
Account as Pledged Assets shall be fully paid for and that all trade settlements
of transactions for such securities shall be completed prior to transfer of such
securities into the Account as Pledged Assets. The Bank shall be
entitled to reverse any cash credit previously made to the Account due to error
or the non-receipt of any income or dividend distribution.
Section 3. Priority of
Lien. The Bank hereby acknowledges the security interest
granted to the Secured Party by the Customer. The Bank hereby waives
and releases all liens, encumbrances, claims and rights of setoff it may have
against the Account or any Pledged Assets carried in the Account, except that
the Bank shall retain a lien on any Pledged Assets in the Account for the
payment of its fees and for the payment of any Pledged Assets credited to the
Account for which payment or reimbursement to the Bank has not been made or
received. The Bank will not agree with any third party to comply with
Entitlement Orders concerning the Account originated by such third party without
the prior written consent of the Secured Party and the Customer.
Section
4. Control. The Bank will comply with Entitlement
Orders and other directions originated by the Secured Party concerning the
Account, including, without limitation, instructions directing disposition of
Pledged Assets (including any time deposits and cash balance) in the Account,
without further consent by the Customer. (Exhibit B attached hereto
contains the names of persons authorized to give to the Bank Entitlement Orders
and other directives regarding the Pledged Assets on behalf of the Secured
Party; in addition, Bank shall regard all Entitlement Orders and other
directions and instructions, including all Notices of Exclusive Control (defined
below), regarding the Pledged Assets which are sent via SWIFT from Secured Party
to Bank as duly authorized by the Secured Party.) Except as otherwise
provided by Section 3 above and 5 below, the Bank shall comply with Entitlement
Orders and other directions concerning Pledged Assets held in the Account at the
direction of the Customer or its authorized representatives, until such time as
the Secured Party delivers a written notice to the Bank in the form annexed
hereto as Exhibit C, that the Secured Party is thereby exercising exclusive
control over the Account (such notice may be referred to herein as the “Notice
of Exclusive Control”). After the Bank receives the Notice of
Exclusive Control, it will promptly cease complying with Entitlement Orders or
other directions concerning the Account originated by the Customer or its
representatives.
Section 5. Payment of
Income; Voting Rights; Withdrawals. Unless the Bank has
received a Notice of Exclusive Control, the Bank shall (a) without further
action by the Customer or Secured Party, (i) remit or make available to the
Customer all interest, dividends and other income on the Financial Assets in the
Account, and (ii) pursuant to the terms of the Account agreement with the
Customer, send to the Customer any proxies and other voting rights and corporate
actions received by the Bank in respect of the Pledged Assets and follow any
instructions and directions from the Customer in respect of such proxies and
rights, and (b) comply with each Entitlement Order and other directive received
from the Customer. Irrespective of whether the Bank has received a
Notice of Exclusive Control, the parties confirm that all income on the Pledged
Assets in the Account is, for tax purposes, income of the Customer, and the
Pledged Assets in the Account are assets subject to a security interest in favor
of the Secured Party.
Section 6. Statements,
Confirmations and Notices of Adverse Claims. The Bank will
send or make available by electronic means copies of all statements and
confirmations concerning the Account to each of the Customer and the Secured
Party, at the address set forth in the heading of this Agreement or such other
address or location as instructed by the Customer and the Secured
Party. Such statements will include (and will be made available to
Customer and Secured Party by secure electronic medium no later than the close
of next business day) a previous day’s detailed listing of unaudited valued
securities holdings of all Pledged Assets, which listing shall be prepared,
updated and available to each of the Grantor and the Secured Party not less
frequently than each day the Bank shall be
open for commercial banking business (“the Information”). Bank (a)
undertakes to provide a statement of holdings in the Account by 9am GMT each
day; (b) shall use its best endeavors to provide the Information no later than
9am GMT daily; and (c) undertakes in any event to provide the Information no
later than 9am EST each day. Such daily statements shall be prepared
by the Bank utilizing the same pricing information and sources the Bank
generally uses for this purpose and shall be sent by Bank via SWIFT MT 535 or
such other secure electronic medium the parties may agree upon from time to
time.. The inclusion of a security, cash or other asset in such list
of Pledged Assets will constitute a representation and warranty by the Bank that
as of the date of such statement it is not aware of any fact which would render
the representation in the second sentence of Section 1 untrue with respect to
such assets. If any person notifies the Bank of its assertion of any
lien, encumbrance or adverse claim against the Account or in any Financial Asset
contained therein, the Bank will promptly notify the Secured Party and the
Customer thereof.
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Section 7. Responsibility
of the Bank. The Bank shall have no responsibility or
liability to the Secured Party for executing settlements of Financial Assets
held in the Account at the direction of the Customer or its authorized
representatives, or complying with Entitlement Orders or other directions
concerning the Account from the Customer or its authorized representatives,
which are received by the Bank before the Bank has received, and had a
reasonable opportunity to comply with, a Notice of Exclusive
Control. The Bank shall have no responsibility or liability to the
Customer for complying with a Notice of Exclusive Control or complying with
Entitlement Orders or other directives concerning the Account originated by the
Secured Party. The Bank shall have no duty to investigate or make any
determination as to whether a default exists under any agreement between the
Customer and the Secured Party and shall comply with a Notice of Exclusive
Control even if it believes that no such default exists. The Customer
and Secured Party represent and warrant to Bank that the Secured Party may issue
a Notice of Exclusive Control hereunder without a default existing under any
agreement to which the Customer and Secured Party are parties. This
Agreement does not create any obligation or duty for the Bank other than those
expressly set forth herein.
Section 8. Standard of
Care. Notwithstanding any provision contained herein or in any
other document or instrument to the contrary, neither the Bank nor any of its
officers, employees or agents shall be liable for (i) following the instruction
of the Secured Party and (ii) in all other respects, shall not be liable for any
action taken or not taken by it (or them) under or in connection with this
Agreement, except for the Bank’s (or their) own gross negligence or willful
misconduct. In no event shall the Bank be liable for indirect,
special or consequential damages of any kind whatsoever (including lost profits
and lost business opportunity) even if it is advised of the possibility of such
damages and regardless of the form of action in which any such damages may be
claimed. Without limiting the foregoing, and notwithstanding any
provision to the contrary elsewhere, the Bank and its officers, employees and
agents.:
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a.
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shall have no
responsibilities, obligations or duties other than those expressly set
forth in this Agreement, and no implied duties, responsibilities or
obligations shall be read into this Agreement against the Bank; without
limiting the foregoing, the Bank shall have no duty to preserve, exercise
or enforce rights in the Pledged Assets (against prior parties or
otherwise);
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b.
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may in any
instance where the Bank determines that it lacks or is uncertain as to its
authority to take or refrain from taking certain action, or as to the
requirements of this Agreement under any circumstance before it, delay or
refrain from taking action unless and until it has received instructions
from the Secured Party or advice from legal counsel (or other appropriate
advisor), as the case may be;
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c.
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so long as it
and they shall have acted (or refrained from acting) in good faith, shall
not be liable for any error of judgment in any action taken, suffered or
omitted by, or for any act done or step taken, suffered or omitted by, or
for any mistake of fact or law, unless such action constitutes gross
negligence or willful misconduct on its (or their)
part;
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d.
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may consult
with legal counsel selected by it (or other experts for the Secured Party
or the Customer), and shall not be liable for any action taken or not
taken by it or them in good faith in accordance with the advice of such
experts;
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e.
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will not be
responsible to the Secured Party for any statement, warranty or
representation made by any party other than the Bank in connection with
this Agreement;
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f.
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will have no
duty to ascertain or inquire as to the performance or observance by the
Customer of any of the terms, conditions or covenants of any security
agreement with the Secured Party;
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g.
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will not be
responsible to the Secured Party or the Customer for the due execution,
legality, validity, enforceability, genuineness, effectiveness or
sufficiency of this Agreement, (provided, however, that the Bank warrants
below that the Bank has legal capacity to enter into this
Agreement);
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h.
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will not
incur any liability by acting or not acting in reliance upon any notice,
consent, certificate, statement or other instrument or writing believed by
it or them to be genuine and signed or sent by the proper party or
parties;
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i.
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will not
incur liability for any notice, consent, certificate, statement, wire
instruction, telecopy, or other writing which is delayed, canceled or
changed without the actual knowledge of the
Bank;
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j.
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shall not be
deemed to have or be charged with notice or knowledge of any fact or
matter unless a written notice thereof has been received by the Bank at
the address designated in this
Agreement;
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k.
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shall not be
obligated or required by any provision of this Agreement to expend or risk
the Bank’s own funds, or to take any action (including but not limited to
the institution or defense of legal proceedings) which in its or their
judgment may cause it or them to incur or suffer any expense or liability;
provided, however, if the Bank elects to take any such action it shall be
entitled to security or indemnity for the payment of the costs, expenses
(including but not limited to attorneys’ fees) and liabilities which may
be incurred therein or thereby, satisfactory to the
Bank;
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l.
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shall not
incur any liability for acts or omissions of any domestic or foreign
depository or book-entry system for the central handling of Financial
Assets or any domestic or foreign custodian or subcustodian;
and
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m.
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shall not be
responsible for the title, validity or genuineness of any Financial Asset
in or delivered into the Account.
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Section 9. Indemnification
of the Bank.
(a) The Customer agrees to indemnify
and hold the Bank and its directors, officers, agents and employees
(collectively the “Indemnitees”) harmless from and against any and all claims,
liabilities, losses, damages, fines, penalties, and expenses, including
out-of-pocket and incidental expenses and legal fees (collectively “Losses”)
that may be imposed on, incurred by, or asserted against, the Indemnitees or any
of them for following any Entitlement Orders, instructions or other directions
upon which the Bank is authorized to rely pursuant to the terms of this
Agreement.
(b) In addition to and not in
limitation of paragraph (a) immediately above, the Customer agrees to indemnify
and hold the Indemnitees and each of them harmless from and against any and all
Losses that may be imposed on, incurred by, or asserted against, the Indemnitees
or any of them in connection with or arising out of the Bank’s performance under
this Agreement, provided the Indemnitees have not acted with gross negligence or
engaged in willful misconduct.
(c) The
Secured Party agrees to indemnify and hold the Indemnitees harmless from and
against any and all claims, liabilities, losses, damages, fines, penalties, and
expenses, including out-of-pocket and incidental expenses and legal fees
(collectively “Losses”) that may be imposed on, incurred by, or asserted
against, the Indemnitees or any of them for following any Entitlement Orders,
instructions or other directions, originated by the Secured Party and upon which
the Bank is authorized to rely pursuant to the terms of this
Agreement.
(d) The
foregoing indemnifications shall survive any termination of this
Agreement
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Section 10. Compliance
with Legal Process and Judicial Orders. If any Pledged Assets
subject to this Agreement are at any time attached or levied upon, or in case
the transfer, delivery, redemption or withdrawal of any such Pledged Assets
shall be stayed or enjoined, or in the case of any other legal process or
judicial order affecting such Pledged Assets, the Bank is authorized to comply
with any such order in any matter as the Bank or its legal counsel reasonably
deems appropriate. If the Bank complies with any process, order,
writ, judgment or decree relating to the Pledged Assets subject to this
Agreement, then the Bank shall not be liable to the Customer or the Secured
Party or to any other person or entity even if such order or process is
subsequently modified, vacated or otherwise determined to have been without
legal force or effect.
Section 11. Force
Majeure. The Bank shall not be responsible for delays or
failures in performance resulting from acts beyond its control. Such
acts shall include but not be limited to acts of God, strikes, lockouts, riots,
acts of war or terrorism, epidemics, nationalization, expropriation, currency
restrictions, governmental regulations superimposed after the fact, fire,
communication line failures, power failures, earthquakes or other
disasters.
Section
12. Representations. Each of the parties represents
and warrants that (i) it is duly incorporated or organized and is validly
existing in good standing in its jurisdiction of incorporation or organization,
(ii) the execution, delivery and performance of this Agreement and all documents
and instruments to be delivered hereunder or thereunder have been duly
authorized, (iii) the person executing this Agreement on its behalf has been
duly authorized to act on its behalf, (iv) this Agreement constitutes its legal,
valid, binding and enforceable agreement, and (v) its entry into this Agreement
will not violate any agreement, law, rule or regulation by which it is bound or
by which any of its assets are affected.
Section 13. Customer
Agreement. In the event of a conflict between this Agreement and any
other agreement between the Bank and the Customer relating to the Account, the
terms of this Agreement will prevail, and in all other respects the terms of the
other agreement relating to the Account shall apply with respect to any matters
not covered by this Agreement. Regardless of any provision in any
such agreement, the State of New York shall be deemed to be the Bank’s location
for the purposes of this Agreement and the perfection and priority of the
Secured Party’s security interest in the Account.
Section
14. Termination. The rights and powers granted
herein to the Secured Party have been granted in order to perfect its security
interest in the Account, are powers coupled with an interest and will neither be
affected by the bankruptcy of the Customer nor by the lapse of
time. The obligations of the Bank under this Agreement shall continue
in effect (i) until the security interest of the Secured Party in the Account
has been terminated and the Secured Party has notified the Bank of such
termination in writing, or (ii) this Agreement is terminated. Any of
the parties may terminate this Agreement upon 30 days’ prior written notice to
both of the other parties hereto; provided, however, that any Pledged Assets
which have not been released by the Secured Party at or prior to the time of
termination shall be transferred to a substitute bank designated by the Customer
and acceptable to the Secured Party to be held as collateral pursuant to an
account control agreement substantially similar to this Agreement and acceptable
to the Secured Party or, if no such agreement shall be agreed upon by the
Customer and the Secured Party, then such Pledged Assets shall be transferred to
the Secured Party to be held pursuant to the Account Control and Security
Agreement between Customer and Secured Party as such agreement may be amended or
replaced by the parties thereto from time to time. The provisions of
Sections 7 and 8 shall survive the termination of this Agreement.
Section 15. Entire
Agreement. This Agreement and the exhibits hereto and the
agreements and instruments required to be executed and delivered hereunder set
forth the entire agreement of the parties with respect to the subject matter
hereof and supersede and discharge all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter and negotiations. There are no oral conditions precedent to
the effectiveness of this Agreement.
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Section
16. Amendments. No amendment, modification or
termination of this Agreement or waiver of any right hereunder shall be binding
on any party hereto unless it is in writing and is signed by the party to be
charged.
Section
17. Severability. If any term or provision set
forth in this Agreement shall be invalid or unenforceable, the remainder of this
Agreement, or the application of such terms or provisions to persons or
circumstances, other than those to which it is held invalid or unenforceable,
shall be construed in all respects as if such invalid or unenforceable term or
provision were omitted.
Section
18. Successors. The terms of this Agreement shall
be binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns.
Section 19. Rules of
Construction. In this Agreement, words in the singular number
include the plural, and in the plural include the singular; words of the
masculine gender include the feminine and the neuter, and when the sense so
indicates words of the neuter gender may refer to any gender and the word “or”
is disjunctive but not exclusive. The captions and section numbers
appearing in this Agreement are inserted only as a matter of
convenience. They do not define, limit or describe the scope or
intent of the provisions of this Agreement.
Section
20. Notices. Any notice, request, entitlement Order
or other communication required or permitted to be given under this Agreement
shall be in writing and deemed to have been properly given when delivered in
person, or when sent by telecopy or other electronic means (acceptable to the
Bank, if to the Bank) and electronic confirmation of error free receipt is
received, or after being sent by certified or registered United States mail,
return receipt requested, postage prepaid:
If to the
Bank:
JPMORGAN
CHASE BANK, N.A.
North American
Insurance – Client Services
4 New York Plaza –
15th
Floor
Xxx Xxxx,
XX 00000 XXX
Attention: Xxxxxxx X. Xxxxxxxxx,
Xx.
Telephone: x0 000 000
0000
Telecopier: x0 000 000
0000
If to the
Customer:
FLAGSTONE
REASSURANCE SUISSE X.X.
Xxx xx Xxxxxxx
0,
XX-0000,
Xxxxxxxx,
Xxxxxxxxxxx
Attention: Xxxxxxx
Xxxxxxxx
Telephone:x00 00 000 00
00
Telecopier:x00 00 000
0000
If to the Secured
Party:
CITIBANK EUROPE
PLC
Insurance Letter of
Credit Department
0 Xxxxx Xxxx
Xxxx
XXXX
Xxxxxx
0
Xxxxxxx
Attention: Peadar Mac
Canna
Telephone: x000 0 000
0000
with a copy
to:
Citicorp North
America, Inc.
0000 Xxxxxxxx
Xxxxxx
Xxxxx XX
00000
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Section
21. Counterparts. This Agreement may be executed in
any number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing and
delivering one or more counterparts.
Section 22. Choice of
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to laws as to
conflicts of laws, and shall be binding on the parties hereto and their
respective successors and assigns.
Section
23. Fees. The Customer shall pay to the Bank the
compensation agreed upon in writing from time to time and any other includable
expenses incurred in connection herewith.
Section 24. Consent to
Jurisdiction and Service. This Agreement shall be deemed to have
been made in New York County, New York, regardless of the order in which the
signatures of the parties shall be affixed hereto. The Secured
Party and the Customer each hereby absolutely and irrevocably consents and
submits to the jurisdiction of the courts of the State of New York and of any
Federal court located in the County and State of New York in connection with any
actions or proceedings brought against the Secured Party or the Customer by the
Bank or by the Secured Party or the Customer against the Bank and arising out of
or relating to this Agreement. Each party hereto hereby irrevocably
waives any objection on the grounds of venue, forum non conveniens, or any
similar grounds, and irrevocably consents to service of process by mail or in
any other manner permitted by New York law, and irrevocably waives its right to
any jury trial.
IN WITNESS WHEREOF, the parties hereto have
entered into this Agreement as of the date set forth above.
CITIBANK EUROPE
PLC
(Secured Party)
By: /s/ Xxxx
X'Xxxxx
Name: Xxxx
X'Xxxxx
Title:
FLAGSTONE REASSURANCE SUISSE
S.A.
(Customer)
By: /s/ Xxxxxxx
Xxxxxxxx
Name: Xxxxxxx
Xxxxxxxx
Title: Chief
Financial Officer
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JPMORGAN
CHASE BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxx X.
Xxxxxx
Name: Xxxxxx X.
Xxxxxx
Title: Vice
President
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EXHIBIT
B
List
of names of signers on behalf of Secured Party
Names of persons
authorized to give to the Bank entitlement orders and other directives regarding
the Pledged Assets on behalf of the Secured Party.
(In addition to the
persons named below, Bank shall regard all Entitlement Orders and other
directions, including all Notices of Exclusive Control (defined below),
regarding the Pledged Assets which are sent via SWIFT from Secured Party to Bank
as duly authorized by the Secured Party.)
PEADAR
MAC CANNA
XXXX
X’XXXXX
XXXX
ARCH
XXXXXXXX
XXXX
XXXX
XXXXXX
XXXX
XXXXX
XXXXXXX
XXXXXXXXXXX
XXXXXXXX
XXXXXXXX
XXXX
XXXXXX
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EXHIBIT
C
[to
be placed on Secured Party’s Letterhead]
NOTICE
OF EXCLUSIVE CONTROL
________________,
200__
JPMorgan Chase
Bank, N.A.
[Address]________________
________________________
________________________
Attention:________________
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Re:
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Account
Control Agreement dated as of October , 2008____
(the “Agreement”), among CITIBANK EUROPE PLC, as Secured Party, FLAGSTONE
REASSURANCE SUISSE S.A., as Customer, and JPMorgan Chase Bank, N.A., as
Bank, relating to Securities Account
No.__________
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Ladies and
Gentlemen:
This constitutes the Notice of Exclusive
Control referred to in the above referenced Agreement.
CITIBANK EUROPE PLC
By:_____________________
Name:
Title:
10
