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[CLIFFORD CHANCE LOGO]
EXHIBIT 10.36
EXECUTION COPY
BARCLAYS BANK PLC
AS SECURED PARTY
ALLIED WORLD ASSURANCE COMPANY, LTD
AS PLEDGOR
MELLON BANK, N.A.
AS BANK
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ACCOUNT CONTROL AGREEMENT
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CONTENTS
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CLAUSE
PAGE
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1. The
Account............................................... 3
2. Control By Secured
Party.................................. 3
3. Pledgor's Rights In
Account............................... 3
4. Priority Of Secured
Party's Security Interest............. 6
5. Statements,
Confirmations And Notices Of Adverse Claims... 6
6. Bank's
Responsibility..................................... 6
7.
Indemnity.................................................
7
8. Termination;
Survival..................................... 7
9. Governing
Law............................................. 8
10. Entire Agreement..........................................
8
11. Amendments................................................
8
12. Severability..............................................
8
13. Successors And Assigns....................................
8
14. Notices...................................................
8
15. Counterparts..............................................
8
16. Waiver Of Jury Trial......................................
8
17. Representations...........................................
9
EXHIBIT A.....................................................
EXHIBIT B.....................................................
Schedule 1....................................................
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THIS AGREEMENT dated as of 31 December 2003
BETWEEN
(1) BARCLAYS
BANK PLC, as Secured Party;
(2) ALLIED WORLD
ASSURANCE COMPANY, LTD, as Pledgor; and
(3) MELLON BANK,
N.A., as Bank
BACKGROUND
(A) Pledgor has
granted Secured Party a security interest in the financial
assets in
the securities account identified in Schedule 1 (the
"ACCOUNT"),
maintained
by Bank for Pledgor, (including any security entitlement) and
in the
Account.
(B) The parties
are entering into this agreement to provide for the control of
the
Account as a means to perfect the security interest of Secured
Party.
Bank has
no responsibility to Secured Party in respect to the validity
or
perfection
of such security interest otherwise than to act in accordance
with the
terms and conditions of this Agreement.
1. THE
ACCOUNT
Bank
represents and warrants to Secured Party that Bank maintains
the
Account.
Bank represents and warrants that except for the claim and
interest
of Pledgor and Secured Party, or as provided in Clause 4 of
this
Agreement,
Bank does not know of any claim to or interest in the Account
or any
financial assets credited thereto. Bank, Pledgor and Secured
Party
agree that
the Account is a securities account ("SECURITIES ACCOUNT") as
that term
is defined in Section 8-501(a) of the Uniform Commercial Code
as
in effect
from time to time in the State of New York (the "NYUCC"). Bank,
Pledgor
and Secured Party agree that each item of property (whether
investment
property, financial asset, security, instrument or cash)
credited
to the Account shall be treated as a financial asset
("FINANCIAL
ASSET")
within the meaning of Section 8-102(a)(9) of the NYUCC.
2. CONTROL
BY SECURED PARTY
Bank will
comply with all notifications it receives directing it to
transfer
or redeem any financial assets credited to the Account (each an
entitlement order ("ENTITLEMENT ORDER") as defined in Section
8-102(a)(8)
of the
NYUCC) originated by Secured Party and shall otherwise treat
Secured
Party as entitled to exercise the rights in respect of any
financial
asset credited to the Account without further consent by
Pledgor.
3.
PLEDGOR'S RIGHTS IN ACCOUNT
Subject to
this Clause 3, until Bank receives an entitlement order from
the
Secured Party, Bank may accept and comply with any entitlement
order
from
Pledgor with regard to the Account or any financial asset as
follows:
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3.1.1
Until Bank receives an entitlement order from Secured Party,
Bank
shall distribute to Pledgor all cash distributions received in
regard to financial assets in the Account. Cash distributions do
not
include any principal received upon redemption or maturity of a
financial asset, and any such cash will be held for the benefit
of
Secured Party.
3.1.2
Pledgor shall not direct Bank to release any of the financial
assets
in the Account or to close the Account and Bank agrees that it
will
not release any of the financial assets in the Account or close
the
Account without Secured Party's consent. For this purpose the
term
"release" shall be broadly construed to include release for any
purpose, including (without limitation) release for settlement of
a
sale, release for the purposes of substituting new financial
assets,
release "free" without consideration and any other manner of
leaving
the Account. Secured Party will consent to the release of the
financial assets provided that with respect to such financial
assets, the following procedure is adhered to:
(a) Pledgor will
determine (the "DETERMINATION") that the
financial assets remaining in the Account will be equal to or
exceed the required Adjusted Collateral Value (as more
specifically defined and described in a Credit Agreement dated
as of 31 December 2003 between Pledgor and Secured Party) (the
"REQUIRED ACCOUNT VALUE") and to determine this shall
diligently and in good faith:
(i) determine
that the financial asset is eligible as
collateral as specified in Exhibit A hereto; and
(ii) use the
mark-to-market value provided by pricing
services used by Bank in connection with the valuation
of financial assets under similar account control
arrangements or for Bank's trust accounts, in each
instance after applying the discount specified in
Exhibit A hereto; provided that in determining if the
remaining financial assets are sufficient Pledgor shall
use the mark-to-market values of the financial assets
reported by such services not more than the Business Day
(as hereinafter defined) prior to the withdrawal or
distribution of any financial asset. Any financial asset
that cannot be valued as provided herein and any
financial asset subject to Bank's lien specified in
Clause 4 shall have no value in determining if the
financial assets are to remain in the Account are
sufficient for the purposes of meeting the Required
Account Value.
(b) If following
the Determination, Pledgor has come to the
reasonable conclusion that by requesting a financial asset to
be released, the financial assets remaining in the account
will be equal to or in excess of the Required Account Value (a
"POSITIVE DETERMINATION"), Pledgor will fax:
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(i) the
instruction relating
