FORM OF Exhibit 10.3
SECURITIES ACCOUNT
CONTROL AGREEMENT
This Securities Account Control Agreement ("Agreement") is dated as of
September 12, 2008, by and among XXXXXXX BANK, a Texas state banking
institution, in its capacity as a "securities intermediary" as defined in
Section 8-102 of the UCC, with its principal office located at 0000 Xxxxx
Xxxxxx, Xxxxxxxx, Xxxxx 00000 ("Securities Intermediary"), AMERICAN CHURCH
MORTGAGE COMPANY, a Minnesota corporation, with its principal office located at
00000 Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000 ("Pledgor"), and BEACON
BANK, a Minnesota banking corporation, as lender under the hereinafter described
Credit Agreement, with its principal office located at 00000 Xxxxxxx 0,
Xxxxxxxxx, Xxxxxxxxx 00000 ("Secured Party").
Pledgor is the borrower under that certain Loan and Security Agreement
dated as of September 12, 2008 (as the same may be amended, extended, renewed,
increased, restated or replaced from time to time, the "Credit Agreement") by
and between Pledgor, as borrower, and Secured Party, as lender.
This Agreement refers and applies to the securities account number _____
_________ (the "ICA Account") established by and in the name of Pledgor,
including, without limitation, all investment property, financial assets,
securities and other property now or hereafter held therein (the "Assets"). As
of the date of execution of this Agreement, the Assets described on Exhibit A
are held in the ICA Account. This Agreement supplements, rather than replaces,
Securities Intermediary's account agreement, terms and conditions and other
standard documentation in effect from time to time with respect to the ICA
Account ("Account Documentation"), or related services provided by Securities
Intermediary in connection with the ICA Account ("Account Services"), which
Account Documentation shall continue to apply to the ICA Account and such
Account Services, to the extent not conflicting with the provisions of this
Agreement; in the event of any such conflict, or in the event of a conflict
among the provisions of any other agreement between Securities Intermediary and
Pledgor and this Agreement, the provisions of this Agreement shall control.
Terms used and not defined herein shall have the meaning set forth in the Credit
Agreement.
Pledgor has advised Securities Intermediary that Pledgor has granted a
security interest in the ICA Account to Secured Party. Pledgor desires that
Securities Intermediary enter into this Agreement with Pledgor and Secured Party
to establish "control" and perfect Secured Party's security interest in the ICA
Account.
Therefore, in consideration of the provisions of this Agreement and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Control.
(a) Securities Intermediary shall comply with entitlement orders respecting
the ICA Account originated by Secured Party without further consent by Pledgor.
(b) Securities Intermediary shall make trades of Assets held in the ICA
Account only at the direction of Secured Party (and not Pledgor) and shall not
comply with entitlement orders or other directions concerning the ICA Account
originated by Pledgor.
(c) Without limiting the foregoing, upon the instructions of Secured Party,
Securities Intermediary shall disburse any or all of the Assets in the ICA
Account to Secured Party, or sell some or all of the Assets in the ICA Account
and remit the sale proceeds (less Securities Intermediary's normal sales charge)
to Secured Party.
(d) Securities Intermediary, Pledgor and Secured Party agree that
Securities Intermediary will comply with instructions originated by Secured
Party directing disposition of the funds in the ICA Account without further
consent by Pledgor. Upon receipt of a notice of Secured Party's exclusive
control of the ICA Account, which notice states that it is a "Notice of
Exclusive Control" and attached to which is a copy of this Agreement ("Notice of
Exclusive Control"), and following a reasonable time period not to exceed two
(2) business days to allow Securities Intermediary to take appropriate action as
a result of receipt of the Notice of Exclusive Control, Securities Intermediary
will comply with instructions received from the Secured Party. Until Securities
Intermediary receives a Notice of Exclusive Control, Pledgor retains the right
to access the cash in the ICA Account or to direct the investment, reinvestment
and liquidation of proceeds of the Bonds. Until Securities Intermediary receives
a Notice of Exclusive Control, Pledgor may remove Assets from the ICA Account,
but only with the written consent of Secured Party. If Pledgor wishes to remove
Assets from the ICA Account, it shall give at least fifteen (15) days' prior
written notice to Secured Party (the "Bond Removal Notice") in accordance with
Section 4(b) of the Credit Agreement. If Pledgor is in compliance (both before
and after the release of the requested Assets) with the Borrowing Base and the
collateral coverage covenant under Section 12(b) of the Credit Agreement and is
otherwise not in default thereunder, Secured Party shall within five (5) days of
receipt of the Bond Removal Notice consent in writing to the release of the
requested Assets and provide to Pledgor and the Securities Intermediary such
documentation as is required to terminate any lien or security interest of
Secured Party in and to such Assets.
(e) Securities Intermediary is fully entitled to rely on instructions from
Secured Party and is under no obligation to inquire or determine whether
Pledgor's obligations to Secured Party are in default or whether Secured Party
is entitled, under any separate agreement between Pledgor and Secured Party, to
give any instructions. Securities Intermediary may rely on notices and
instructions received hereunder which Securities Intermediary believes in good
faith come from the appropriate party.
(f) After Securities Intermediary's receipt of the Notice of Exclusive
Control from Secured Party, and without limiting Secured Party's control of the
ICA Account, the parties agree that instructions received from Secured Party
shall direct reasonable services and transactions as are offered by Securities
Intermediary in the normal course of its business in regard to securities or
deposit accounts. Securities Intermediary shall not be required to provide
extraordinary services or documentation regarding the ICA Account unless
Securities Intermediary confirms that such extraordinary services or
documentation are available. If there is any additional cost associated
therewith, Secured Party agrees to pay such additional cost.
2. Name of Account. Secured Party and Pledgor hereby instruct Securities
Intermediary, and Securities Intermediary hereby agrees, to change the name of
the ICA Account to "Beacon Bank Securities Collateral Account for American
Church Mortgage Company." Securities Intermediary hereby agrees that the name of
the ICA Account will not be changed thereafter without the prior written consent
of Secured Party.
3. Financial Assets Election. Securities Intermediary hereby agrees that
each item of property (including, without limitation, all Assets and any
investment property, financial asset (as defined in Section 8-102 of the UCC),
security, instrument or cash) credited to the ICA Account shall be treated as a
"financial asset" within the meaning of Section 8-102 of the UCC.
4. Securities Intermediary's Representations and Warranties. Securities
Intermediary hereby represents and warrants to Secured Party that:
(a) The ICA Account is not a margin account and does not include checking
or credit card features;
(b) Exhibit "A" attached hereto is a complete and accurate statement of the
Assets and credit balances credited to the ICA Account as of the dates set forth
in the statement;
(c) Except for the claims and interest of Secured Party and Pledgor in the
ICA Account and liens to secure normal fees and commissions owed to Securities
Intermediary by Pledgor with respect to the operation of the ICA Account and for
the purchase price of Assets which will be held in the ICA Account ("Permitted
Liens"), Securities Intermediary does not know of any claim to or interest in
the ICA Account. In the event that Securities Intermediary has or subsequently
obtains by agreement, by operation of law or otherwise a security interest in
the ICA Account or any financial assets, cash or other property credited
thereto, Securities Intermediary hereby agrees that such security interest shall
be subordinate to the security interest of the Secured Party;
(d) Securities Intermediary has not entered into any agreement with any
third party pursuant to which Securities Intermediary has agreed to comply with
entitlement orders from that third party with respect to the ICA Account.
(e) The ICA Account is a "securities account" as defined in Section 8-501
of the UCC.
5. Securities Intermediary's Covenants.
(a) Securities Intermediary waives and releases all liens, encumbrances,
claims and right of set off it may have against the ICA Account, except for
Permitted Liens.
(b) Securities Intermediary shall send copies of all statements and
confirmations regarding the ICA Account simultaneously to Pledgor and to Secured
Party.
(c) Securities Intermediary shall promptly notify Secured Party and Pledgor
if any person asserts a lien, encumbrance or adverse claim against the ICA
Account.
(d) Securities Intermediary shall report all dividends, interest, gains and
other profits with respect to the ICA Account in the name of Pledgor.
(e) The Securities Intermediary agrees that certificated securities held in
the ICA Account will be held with proper endorsements to the Securities
Intermediary or in blank or Securities Intermediary will promptly deliver
possession of such certificated securities to Secured Party.
(f) Securities Intermediary shall not:
i. Obtain a lien on the ICA Account for its own benefit, except for a
lien on the ICA Account to secure Permitted Liens;
ii. Agree with any third party that Securities Intermediary will
comply with entitlement orders from the third party with respect to the ICA
Account;
iii. Permit margin activity in the ICA Account or add checking or
credit card features to the ICA Account; or
iv. Permit the Pledgor to terminate the ICA Account.
6. Securities Intermediary's Liability. Securities Intermediary shall have
no liability to Pledgor or Secured Party under this Agreement for any claim,
loss, cost or expense except to the extent directly caused by the gross
negligence or willful misconduct of Securities Intermediary. Securities
Intermediary shall not be liable for any claim, loss, cost or expense resulting
from any computer malfunction, interruption of communication facilities, labor
difficulties, acts of God, war, terrorist attacks, or other causes, in each case
beyond Securities Intermediary's reasonable control. In no event shall
Securities Intermediary have any responsibility for consequential, indirect,
special or exemplary damages, whether or not it has notice thereof. This
Agreement does not create any obligation or duty of Securities Intermediary
other than those expressly set forth herein. Securities Intermediary shall have
no responsibility or liability to Pledgor for complying with entitlement orders
concerning the ICA Account originated by Secured Party. Securities Intermediary
shall have no duty to investigate or make any determination as to whether a
default exists under any agreement between Pledgor or Secured Party prior to
complying with an entitlement order originated by Secured Party.
7. Indemnification. Pledgor indemnifies and holds Securities Intermediary
harmless for any losses, claims, liabilities, and expenses incurred by
Securities Intermediary arising from this Agreement except for such losses,
claims, liabilities, and expenses arising directly from the gross negligence or
willful misconduct of the Securities Intermediary and Secured Party,
respectively.
8. Amendments. This Agreement may be amended or modified from time to time
only in a writing executed by each of the parties hereto.
9. Notices. Any notice or request hereunder shall be given (i) to Pledgor
and Securities
Intermediary at their respective addresses as set forth above, or (ii) to
Secured Party at the Atlanta address as set forth above, or in each case at such
other address as such party may hereafter specify in a written notice given to
the other parties, except that the Notice of Exclusive Control must be sent to
the following person, department and address, or such other person, department
and address as Securities Intermediary may hereafter specify in a written notice
given to the other parties:
Xxxxxxx Bank, as Collateral Agent
0000 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxx
Facsimile: (000) 000-0000
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to its
choice of law provisions, and applicable federal law and regulations.
11. Statements. At Secured Party's request, Securities Intermediary shall
provide to Secured Party a copy of Pledgor's ICA Account statements and Pledgor
consents to Securities Intermediary's provision of the statements. Securities
Intermediary shall not be required to provide other information or documentation
regarding the ICA Account unless (a) Securities Intermediary confirms that such
other information or documentation is available, (b) if there is an additional
cost associated therewith, Secured Party agrees to pay such additional cost, and
(c) Pledgor consents in writing that Securities Intermediary may provide such
other information or documentation to Secured Party.
12. Termination. This Agreement shall continue in full force and effect
until terminated by Securities Intermediary upon not less than sixty (60)
calendar days' written notice to each of the other parties, by Secured Party
upon notice to the other parties, or by Pledgor with the prior written consent
of Secured Party. In the event of any termination, all fees incurred under this
Agreement shall become immediately due and payable. This Agreement shall
automatically terminate upon (a) Securities Intermediary's receipt of written
notice from Secured Party of (i) the irrevocable payment in full of all of
Pledgor's obligations due and owing to Secured Party, and (ii) the termination
or expiration of the obligations of Secured Party to make any loans or otherwise
extend credit to Pledgor under the Credit Agreement, or (b) the closure of the
ICA Account. Upon termination of this Agreement, if Securities Intermediary has
not received a Notice of Exclusive Control, Securities Intermediary shall remit
the funds in the ICA Account to Pledgor. If Securities Intermediary has received
a Notice of Exclusive Control, Securities Intermediary shall remit the funds in
the ICA Account to Secured Party.
13. Jury Trial Waiver. EACH PARTY WAIVES THE RIGHT TO ANY JURY TRIAL IN ANY
ACTION ARISING WITH RESPECT TO THIS AGREEMENT.
14. Counterparts. This Agreement may be executed in any number of several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -
SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, this Securities Account Control Agreement has been signed by
the parties as of the date written above.
Securities Intermediary:
XXXXXXX BANK, a Texas state banking institution
By:
-----------------------------------------
Name:
-----------------------------------------
Title:
-----------------------------------------
[EXECUTION CONTINUED ON THE FOLLOWING PAGES]
Pledgor:
AMERICAN CHURCH MORTGAGE COMPANY,
a Minnesota corporation
---------------------------------------
By:
---------------------------------------
Title:
---------------------------------------
[EXECUTION CONTINUED ON THE FOLLOWING PAGE]
Secured Party:
BEACON BANK,
a Minnesota banking corporation
-------------------------------------
By:
-------------------------------------
Title:
-------------------------------------
[END OF SIGNATURES]
10582-8
4025840v2
Xxxxx/beacon/am/secagre
Sixth Draft 9/11/08
EXHIBIT A
STATEMENT OF ASSETS
(see attached)
