SECURITIES ACCOUNT CONTROL AGREEMENT
Exhibit 2.4
EXECUTION VERSION
This Securities Account Control Agreement (the “Agreement”) dated as of September 25, 2008
among Hanover Capital Mortgage Holdings, Inc. (the “Debtor”), JWH Holding Company, LLC (the
“Secured Party”) and Regions Bank (the “Securities Intermediary”). Capitalized terms used but not
defined herein shall have the meanings assigned in the Loan and Security Agreement, to be entered
into as of September 26, 2008, between Debtor and the Secured Party (the “Security Agreement”).
All references herein to the “UCC” shall mean the Uniform Commercial Code as in effect in the State
of New York.
1. Establishment of Securities Account. The Secured Party and the Debtor do hereby
appoint the Securities Intermediary as securities intermediary, and the Securities Intermediary
does hereby accept the appointment as securities intermediary and agrees to act on the terms and
conditions described herein. The Securities Intermediary hereby confirms that (i) the Securities
Intermediary has established account number 0000000000 in the name “Regions Bank as Securities
Intermediary for JWH Holding Company, LLC” (such account and any successor account the “Securities
Account”), (ii) the Securities Account is a “securities account” as such term is defined in
§8-501(a) of the UCC, (iii) the Securities Intermediary shall, subject to the terms of this
Agreement, treat the Debtor as entitled to exercise the rights that comprise any financial asset
credited to the account, (iv) all property delivered to the Securities Intermediary pursuant to
the Security Agreement will be promptly credited to the Securities Account, and (v) all securities
or other property underlying any financial assets credited to the Securities Account shall be
registered in the name of the Securities Intermediary, endorsed to the Securities Intermediary or
in blank or credited to another securities account maintained in the name of the Securities
Intermediary and in no case will any financial asset credited to the Securities Account be
registered in the name of the Debtor, payable to the order of the Debtor or specially endorsed to
the Debtor except to the extent the foregoing have been specially endorsed to the Securities
Intermediary or in blank.
2. “Financial Assets” Election. The Securities Intermediary hereby agrees that each
item of property (whether investment property, financial asset, security, instrument or cash)
credited to the Securities Account shall be treated as a “financial asset” within the meaning of
§8-102(a)(9) of the UCC.
3. Entitlement Orders. If at any time the Securities Intermediary shall receive an
“entitlement order” (within the meaning of §8-102(a)(8) of the UCC) issued by the Secured Party
and relating to the Securities Account, the Securities Intermediary shall comply with such
entitlement order without further consent by the Debtor or any other person.
4. Subordination of Lien; Waiver of Set-Off. In the event that the Securities
Intermediary has or subsequently obtains by agreement, operation of law or otherwise a security
interest in the Securities Account or any security entitlement credited thereto, the Securities
Intermediary hereby agrees that such security interest shall be subordinate to the security
interest of the Secured Party. The financial assets and other items deposited to the Securities
Account will not be subject to deduction, set-off, banker’s lien, or any other right in favor of
any person other than the Secured Party (except that the Securities Intermediary may set off (i)
all amounts due to it in respect of its customary fees and expenses for the routine
2
maintenance and operation of the Securities Account, and (ii) the face amount of any checks
which have been credited to the Securities Account but are subsequently returned unpaid because of
uncollected or insufficient funds).
5. Choice of Law. Both this Agreement and the Securities Account shall be governed
by the laws of the State of New York. Regardless of any provision in any other agreement, for
purposes of the UCC, New York shall be deemed to be the Securities Intermediary’s jurisdiction and
the Securities Account (as well as the securities entitlements related thereto) shall be governed
by the laws of the State of New York.
6. Conflict with other Agreements. There are no other agreements entered into
between the Securities Intermediary and the Debtor with respect to the Securities Account. In the
event of any conflict between this Agreement (or any portion thereof) and any other agreement now
existing or hereafter entered into, the terms of this Agreement shall prevail.
7. Amendments. No amendment or modification 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 all
of the parties hereto.
8. Notice of Adverse Claims. Except for the claims and interest of the Secured
Party and of Debtor in the Securities Account, the Securities Intermediary does not know of any
claim to, or interest in, the Securities Account or in any “financial asset” (as defined in
§8-102(a) of the UCC) credited thereto. If any person asserts any lien, encumbrance or adverse
claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar
process) against the Securities Account or in any financial asset carried therein, the Securities
Intermediary will promptly notify the Secured Party and Debtor thereof.
9. Maintenance of Securities Account. In addition to, and not in lieu of, the
obligation of the Securities Intermediary to honor entitlement orders as agreed in §3 hereof, the
Securities Intermediary agrees to maintain the Securities Account as follows:
a. Sole Control with Secured Party. Except as expressly provided in this Section 9,
the Securities Intermediary agrees that it will take all instruction with respect to the account
solely from the Secured Party.
b. Voting Rights. Until such time as the Securities Intermediary receives
instructions from the Secured Party to the contrary, the Debtor shall direct the Securities
Intermediary with respect to the voting of any financial assets credited to the Securities Account.
c. Permitted Investments. Until such time as the Securities Intermediary receives
instructions from the Secured Party to the contrary, the Debtor shall direct the Securities
Intermediary with respect to the selection of investments to be made; provided, however, that the
Securities Intermediary shall not honor any instruction to purchase any investments other than
investments of a type described on Exhibit A hereto.
d. Income on Investments. Until such time as the Securities Intermediary receives
instructions from the Secured Party to the contrary, the Debtor shall have the right to instruct
the Securities Intermediary to transfer any interest or dividends earned with respect to
3
any of the financial assets credited to the Securities Account to it, and the Securities
Intermediary will comply with any such instructions.
e. Income on Investments. Until such time as the Securities Intermediary receives
instructions from the Secured Party to the contrary, the Debtor shall have the right to instruct
the Securities Intermediary to transfer any cash received on account of the principal of any of the
financial assets credited to the Securities Account to the Secured Party to be applied to amounts
owing under the Security Agreement.
f. Statements and Confirmations. The Securities Intermediary will promptly send
copies of all statements, confirmations and other correspondence concerning the Securities Account
and/or any financial assets credited thereto simultaneously to each of the Debtor and the Secured
Party at the address set forth in Section 12 of this Agreement.
g. Tax Reporting. All items of income, gain, expense and loss recognized in the
Securities Account shall be reported to the Internal Revenue Service and all state and local taxing
authorities under the name and taxpayer identification number of the Debtor.
10. Instructions. The Secured Party agrees with the Debtor that it will not provide
instructions to the contrary to the Securities Intermediary pursuant to clauses b. through e. of
Section 9 above until the earlier of (i) February 15, 2009, (ii) the date on which the Secured
Party demands repayment of the loans made pursuant to the Security Agreement or (iii) the
occurrence of either of the following: (a) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (1) liquidation, reorganization or other relief in
respect of the Debtor or its debts, or of a substantial part of its assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or
(2) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar
official for the Debtor or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered; or (b) the Debtor shall (1) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other relief under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (2) consent to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (a) of this clause (iii), (3) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar
official for the Debtor or for a substantial part of its assets, (4) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (5) make a general
assignment for the benefit of creditors or (6) take any action for the purpose of effecting any of
the foregoing.
11. Representations, Warranties and Covenants of the Securities Intermediary. The
Securities Intermediary hereby makes the following representations, warranties and covenants:
| a. | The Securities Account has been established as set forth in Section 1 above and the Securities Account will be maintained in the manner set forth herein until termination of this Agreement. The Securities |
4
| Intermediary shall not change the name or account number of the Securities Account without the prior written consent of the Secured Party. |
| b. | No financial asset is or will be registered in the name of Debtor, payable to its order, or specially endorsed to it, except to the extent such financial asset has been endorsed to the Securities Intermediary or in blank. | ||
| c. | This Securities Account Control Agreement is the valid and legally binding obligations of the Securities Intermediary. | ||
| d. | The Securities Intermediary has not entered into, and until the termination of this Agreement will not enter into, any agreement with any other person relating to any of the Securities Account and/or any financial assets credited thereto pursuant to which it has agreed to comply with entitlement orders (as defined in §8-102(a) (8) of the UCC) of such person. The Securities Intermediary has not entered into any other agreement with the Debtor or Secured Party purporting to limit or condition the obligation of the Securities Intermediary to comply with entitlement orders as set forth in Section 3 hereof. |
12. Successors. The terms of this Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto and their respective corporate successors and permitted
assigns.
13. Notices. Any notice, request 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 and electronic
confirmation of error free receipt is received, or two days after being sent by certified or
registered United States mail, return receipt requested, postage prepaid, addressed to the party
at the address set forth below.
| Debtor: | Hanover Capital Mortgage Holdings, Inc. | |||
| 000 Xxxxxxxxx Xxxxx, Xxxxx 000 | ||||
| Xxxxxx, Xxx Xxxxxx 00000 | ||||
| Attn: General Counsel | ||||
| (000) 000-0000 Facsimile | ||||
| Secured Party: | JWH Holding Company, LLC | |||
| 0000 X. Xxx Xxxxx Xxxxxxxxx, 00xx Xxxxx | ||||
| Xxxxx, Xxxxxxx 00000-0000 | ||||
| Attn: General Counsel | ||||
| (000) 000-0000 Facsimile | ||||
| Securities Intermediary: | Regions Bank | |||
| Corporate Trust Department | ||||
| 0000 0xx Xxxxxx Xxxxx |
0
| 00xx Xxxxx Xxxxxxxxxx, Xxxxxxx 00000 |
||||
| Attn: Xxxxx Xxxxxx | ||||
| (000) 000-0000 Direct | ||||
| (000) 000-0000 Facsimile | ||||
| Xxxxx.xxxxxx@xxxxxxx.xxx |
Any party may change its address for notices in the manner set forth above.
14. Termination. The rights and powers granted herein to the Secured Party have
been granted in order to perfect its security interest in the Securities Account and are powers
coupled with an interest and will neither be affected by the bankruptcy of Debtor nor by the lapse
of time. The obligations of the Securities Intermediary hereunder shall continue in effect until
the security interest of the Secured Party in the Securities Account has been terminated pursuant
to the terms of the Security Agreement and the Secured Party has notified the Securities
Intermediary of such termination in writing. Following the termination of this Agreement, all
rights with respect to the Securities Account shall accrue to Debtor and the Securities
Intermediary shall follow all entitlement orders given by the Debtor and its successors and
assigns and shall not follow entitlement orders from any other person.
15. 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.
16. Liability of the Securities Intermediary. The Securities Intermediary shall not
be liable for any action taken or omitted by it in good faith, including, but not limited to any
loss to the financial assets in the Securities Account resulting from the investment(s) enumerated
in Exhibit A hereto or any loss resulting from the liquidation of any investment(s) prior to such
investment’s maturity date for the purpose of making required payments under this Agreement,
except to the extent that a court of competent jurisdiction determines that the Securities
Intermediary’s gross negligence or willful misconduct was the primary cause of any loss to the
Secured Party or the Debtor. The Securities Intermediary may rely upon any notice, instruction,
request or other instrument delivered by the Secured Party or Debtor, not only as to its due
execution, validity and effectiveness, but also as to the truth and accuracy of any information
contained therein, which Securities Intermediary shall believe in good faith to be genuine and to
have been signed or presented by the person or parties purporting to sign the same. The
Securities Intermediary shall have no implied duties or obligations and shall not be charged with
knowledge or notice of any fact or circumstance not specifically set forth herein. In no event
shall the Securities Intermediary be liable for incidental, indirect, special, consequential or
punitive damages (including, but not limited to lost profits), even if the Securities Intermediary
has been advised of the likelihood of such loss or damage and regardless of the form of action.
The Securities Intermediary shall not be obligated to take any legal action or commence any
proceeding in connection with the Securities Account, this Agreement or the underlying Security
Agreement, or to appear in, prosecute or defend any such legal action or proceeding.
6
The Securities Intermediary is authorized, in its sole discretion, to comply with orders issued or
process entered by any court with respect to the Securities Account, without determination by the
Securities Intermediary of such court’s jurisdiction in the matter. If any portion of the Security
Account is at any time attached, garnished or levied upon under any court order, or in case the
payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or
enjoined by any court order, or in case any order, judgment or decree shall be made or entered by
any court affecting such property or any part thereof, then and in any such event, the Securities
Intermediary is authorized, in its sole discretion, to rely upon and comply with any such order,
writ, judgment or decree which it is advised by legal counsel selected by it is binding upon it
without the need for appeal or other action; and if the Securities Intermediary complies with any
such order, writ, judgment or decree, it shall not be liable to any of the parties hereto or to any
other person or entity by reason of such compliance even though such order, writ, judgment or
decree may be subsequently reversed, modified, annulled, set aside or vacated
17. Rights and Duties of the Securities Intermediary. This Agreement shall
represent the entire understanding of the parties hereto, and the Securities Intermediary shall
only be required to perform the duties expressly described herein, and no further duties shall be
implied from this Agreement or any other written or oral agreement by and among the Securities
Intermediary, the Secured Party and the Debtor made previous or subsequent to this Agreement,
unless such written amendment to this Agreement is executed by all parties to this Agreement. The
Securities Intermediary may rely upon any written instructions believed in good faith to be
genuine when signed and presented by the requesting party and shall not have a duty to inquire or
investigate the validity of any such written instruction. The Securities Intermediary shall be
permitted to execute any and all powers under this Agreement directly or through its agents and/or
attorneys, and shall be allowed to seek counsel from any professional regarding the performance of
this Agreement, which professionals shall be selected at the sole discretion of the Securities
Intermediary. Should the Securities Intermediary receive conflicting directions or become
uncertain as to its duties under this Agreement, it shall be permitted (a) to immediately abstain
from further action until such duties are expressly defined in writing by the parties hereto, and
shall only be required to protect and keep the financial assets in their current investment(s)
until such time as a written agreement among the parties is executed or a court of competent
jurisdiction shall render an order directing further action, or (b) to petition any court of
competent jurisdiction (by means of an interpleader action or other appropriate action) for
instructions regarding such uncertainty, and pay all financial assets into such court for holding
and disposition. Upon release of the financial assets to a court as provided in the preceding
sentence, the Securities Intermediary shall be fully released from any and all further
obligations, except for the provision of written notice to the other parties to this Agreement,
setting forth in such notice the date of release of the financial assets, the party to whom
released, the amount released and a statement setting forth Securities Intermediary’s release from
further obligations to any other party to this Agreement.
18. Indemnification of Securities Intermediary. From and at all times after the
date of this Agreement, the Secured Party and the Debtor, jointly and severally, shall, to the
fullest extent permitted by law, defend, indemnify and hold harmless Securities Intermediary and
each director, officer, employee, attorney, agent and affiliate of the Securities Intermediary
(collectively, the “Indemnified Parties”) against any and all actions, claims (whether or
not valid), losses, damages, liabilities, costs and expenses of any kind or nature whatsoever
7
(including without limitation reasonable attorneys’ fees, costs and expenses) incurred by or
asserted against any of the Indemnified Parties from and after the date hereof, whether direct,
indirect or consequential, as a result of or arising from or in any way relating to any claim,
demand, suit, action or proceeding (including any inquiry or investigation) by any person,
including without limitation the Secured Party or the Debtor, whether threatened or initiated,
asserting a claim for any legal or equitable remedy against any person under any statute or
regulation, including, but not limited to, any federal or state securities laws, or under any
common law or equitable cause or otherwise, arising from or in connection with the negotiation,
preparation, execution, performance or failure of performance of this Agreement or any
transactions contemplated herein, whether or not any such Indemnified Party is a party to any such
action, proceeding, suit or the target of any such inquiry or investigation; provided, however,
that no Indemnified Party shall have the right to be indemnified hereunder for any liability
finally determined by a court of competent jurisdiction, subject to no further appeal, to have
resulted primarily from the gross negligence or willful misconduct of such Indemnified Party. Each
Indemnified Party shall, in its sole discretion, have the right to select and employ separate
counsel with respect to any action or claim brought or asserted against it, and the reasonable
fees of such counsel shall be paid upon demand by the Secured Party and the Debtor jointly and
severally. The obligations of the Secured Party and the Debtor under this Section 17 shall
survive any termination of this Agreement and the resignation or removal of the Securities
Intermediary.
19. Resignation and Succession of Securities Intermediary. The Securities
Intermediary may resign and be discharged of all duties and obligations under this Agreement by
providing thirty (30) days written notice of such resignation to both the Secured Party and the
Debtor. If no successor securities intermediary shall have been named by the Secured Party and
the Debtor at the expiration of the thirty (30) day notice period, the Securities Intermediary
shall have no further obligations hereunder except to hold the financial assets as a depository.
Upon notification by the Secured Party and the Debtor of the appointment of a successor securities
intermediary, the Securities Intermediary shall promptly deliver the financial assets and all
materials and instruments in its possession which relate to the Securities Account to such
successor, and the duties of the resigning Securities Intermediary shall terminate in all
respects, and it shall be released and discharged from all further obligations herein. The
Securities Intermediary shall have the right to withhold an amount equal to any amount due and
owing the Securities Intermediary, plus any costs and fees incurred by the Securities Intermediary
in connection with the termination of this Agreement.
20. Termination of the Securities Intermediary. The Securities Intermediary may
be discharged from its duties under this Agreement upon thirty days (30) written notice from the
Secured Party and the Debtor and upon the payment of any and all costs and fees due to the
Securities Intermediary. In such event, the Securities Intermediary shall be entitled to rely
upon written instructions from the Secured Party as to the disposition and delivery of the
financial assets in the Securities Account. Upon thirty (30) days after receipt of such written
notice of termination, if no successor has been named, the Securities Intermediary shall
immediately cease further action under this Agreement and shall have no further obligations
hereunder except to hold the financial assets as a depository.
8
21. Force Majeure. No party to this Agreement shall be liable to any other party
for losses arising out of, or the inability to perform its obligations under the terms of this
Agreement, due to acts of God, which shall include, but shall not be limited to, fire, floods,
strikes, mechanical failure, war, riot, nuclear accident, earthquake, terrorist attack, computer
piracy, cyber-terrorism or other acts beyond the control of the parties hereto.
22. Severability. If any provision of this Agreement or the application thereof to
any party or circumstance shall be invalid, illegal or unenforceable to any extent, the remainder
of this Agreement and the application thereof shall not be affected and shall be enforceable to
the fullest extent permitted by law.
23. Use of Regions Name. No party to this Agreement shall, without prior written
consent of the Securities Intermediary, publish or print or cause to be published or printed any
printed or other material in any language, including prospectuses, notices, reports, internet web
sites and promotional material, which mentions “Regions Bank” by name or logo or the rights,
powers, or duties of the Securities Intermediary under this Agreement.
24. Exhibits. The Exhibits attached hereto are by this reference incorporated into
this Agreement and made a part hereof.
24. Representatives. The applicable persons designated on Exhibit B hereto have
been duly appointed to act as the representatives of the Secured Party and the Debtor hereunder
and have full power and authority to execute and deliver any written directions, to amend, modify
or waive any provision of this Agreement and to take any and all other actions on behalf of the
Secured Party or the Debtor, as applicable, under this Agreement, all without further consent or
direction from, or notice to, it or any other party.
25. USA PATRIOT ACT. The Secured Party and the Debtor acknowledge that a portion
of the identifying information set forth on Exhibit B is being requested by the Securities
Intermediary in connection with the USA PATRIOT Act, Pub.L.107-56 (the “Act”), and the Secured
Party and Debtor agree to provide any additional information requested by the Securities
Intermediary in connection with the Act or any similar legislation or regulation to which the
Securities Intermediary is subject, in a timely manner. The Secured Party and the Debtor each
represent that its respective identifying information set forth on Exhibit B, including without
limitation, its Taxpayer Identification Number assigned by the Internal Revenue Service or any
other taxing authority, is true and complete on the date hereof and will be true and complete at
the time of any disbursement of the financial assets in the Securities Account.
26. Fees. The Debtor shall also agree to pay compensation for the services rendered
by the Securities Intermediary under this Agreement. Compensation for services rendered by the
Securities Intermediary shall be paid per the instructions set forth on Exhibit C, and the Debtor
agrees to pay or reimburse the Securities Intermediary for all expenses and
9
disbursements, including attorney’s fees, incurred in connection with the preparation,
execution, performance, delivery, modification or termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
| HANOVER CAPITAL MORTGAGE HOLDINGS, INC. |
||||
| By: | /s/ Xxxx X. Xxxxxxxx | |||
| Name: | Xxxx X. Xxxxxxxx | |||
| Title: | President and Chief Executive Officer | |||
| JWH HOLDING COMPANY, LLC |
||||
| By: | /s/ Miles X. Xxxxxxx, III | |||
| Name: | Miles X. Xxxxxxx, III | |||
| Title: | Treasurer | |||
| REGIONS BANK, as SECURITIES INTERMEDIARY |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | Corporate Trust Officer | |||
Exhibit A
Permitted Investments
1. Asset-backed securities whose cash flows are backed by the principal and interest payments of a
set of mortgage loans, with prime loan collateral rated AAA guaranteed by any of (a) the Federal
National Mortgage Association, (b) the Government National Mortgage Association, or (c) the Federal
Home Loan Mortgage Corporation; and
2. Any security issued or guaranteed as to principal or interest by the United States, or by a
person controlled or supervised by and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the United States, in each case owned by
the Debtor, which are held in the Securities Account.
Exhibit B
Secured Party
| 1. | Taxpayer Identification Number: 00-0000000 | ||
| 2. | Company Representative: The following individual/s is hereby designated as representative of the Secured Party under the Agreement. |
| Name: Xxxxxx X. Xxxxxxx | Specimen Signature: | /s/ Xxxxxx X. Xxxxxxx | ||||
| Name: Miles X. Xxxxxxx, III | Specimen Signature: | /s/ Miles X. Xxxxxxx, III | ||||
Debtor
| 1. | Taxpayer Identification Number: XXXXX | ||
| 2. | Company Representative: The following individual/s is hereby designated as representative of the Debtor under the Agreement. |
| Name: Xxx X. Xxxxxxxxx | Specimen Signature: | /s/ Xxx X. Xxxxxxxxx | ||||
| Name: Xxxxxx X. XxXxxxxx | Specimen Signature: | /s/ Xxxxxx X. XxXxxxxx | ||||
| Name: Xxxx X. Xxxxxxx | Specimen Signature: | /s/ Xxxx X. Xxxxxxx | ||||
Exhibit C
Fee Schedule
These fees are based upon our current understanding of our duties under of the above-referenced
agreement. Regions Bank reserves the right to adjust its fees should its duties change under the
agreement.
agreement. Regions Bank reserves the right to adjust its fees should its duties change under the
agreement.
ACCEPTANCE FEE: |
$500.00 | |
ANNUAL ADMINISTRATION FEE: |
$1,750.00 | |
TRANSACTION FEES: |
Waived | |
Wire Fee: |
||
Check Disbursement: |
||
LEGAL FEES: |
If any, at cost | |
OUT OF POCKET EXPENSES: |
5% of Annual Fee |
