ACCOUNT CONTROL AGREEMENT (Security Entitlement) August __ 2006
Exhibit
4.7
(Security
Entitlement)
August
__
2006
Xxxxx
Fargo Bank, N.A.,
as
Trustee, a national banking association, whose address is 000 Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxx, XX 00000, Attn:
Xxxxxx X. Xxxxxxxx, Vice President (“Creditor”);
KH
Funding Company,
a
Maryland corporation, whose address is 00000 Xxxxxxxx Xxxxx, Xxxxx 000 Xxxxxx
Xxxxxx, XX 00000 Attn: Xxxxxx X. Xxxxxx, President (“Debtor”);
and
Lincoln
Financial Advisors Corporation,
whose
address is PG Box 2239, Mail Stop lH-50, Fort Xxxxx, IN 4680 1-2239 (“Broker”);
hereby agree as follows:
RECITALS
A. Broker
and Debtor have entered into a customer agreement (as from time to time amended,
modified, supplemented, or restated, the “Customer
Agreement”),
pursuant to which Broker has established its securities account number(s)
___________________________________
in the
name of Debtor (collectively, the “Account”).
B. Debtor
and Creditor have entered into a Trust Indenture dated August 4, 2004, as
subsequently amended, and a Security Agreement dated May 18, 2005 (as both
may
be from time to time amended, modified, supplemented, or restated, collectively
the “Security
Instruments”),
pursuant to which Debtor has granted Creditor a security interest in, among
other things, the Account and the investment securities maintained in the
Account.
C. Creditor,
Debtor and Broker are entering into this Agreement to provide for the control
of
the Account and to perfect the security interest of Creditor in the Account
as
more fully described in the Security Instruments.
AGREEMENT
1. The
Account.
Broker
hereby represents and warrants to Creditor and Debtor that (i) the Account
has
been established in the name of Debtor as recited above, (ii) the Customer
Agreement, the security entitlements ‘arising out of the financial assets
carried in the Account and any free credit balances are valid and legally
binding obligations of Broker, and (iii) except for the claims and interest
of
Creditor and of Debtor in the Account, Broker does not know of any claim to
or
interest in the Account or in any financial asset carried therein except a
security interest held by National Financial Services, LLC, the clearing
broker-dealer that executes and clears transactions for LFA and its customers
and a security interest in favor of Broker to secure margin obligations on
the
Account. Creditor acknowledges that the Account is currently fully
margined.
2. Priority
of Lien.
Broker
hereby acknowledges that it has received notice of the existence of the Security
Instruments and of the security interest of Creditor in the Account and
recognizes the security interest granted therein to Creditor by Debtor. Creditor
hereby acknowledges that the Account is a margin account. Broker subordinates
in
favor of Creditor any security interest, lien, encumbrance, claim or right
of
setoff it may have, now or in the future, against the Account or any financial
asset carried in the Account or any credit balance in the Account, except that
Broker will retain its prior lien on property in the Account to secure payment
for property purchased for the Account, margin obligations, and Broker’s
commissions and fees for the Account. Broker will not agree with any third
party
that Broker will comply with entitlement orders concerning the Account
originated by such third party without the prior written consent of Creditor
and
Debtor.
3. Control.
Broker
will comply with entitlement orders originated by Creditor concerning the
Account without further consent by Debtor. Except as otherwise provided in
Section 2 above, Broker shall make trades of financial assets held in the
Account at the instruction of Debtor, or its authorized representatives, and
comply with entitlement orders concerning the Account from Debtor, or its
authorized representatives, until such time as Creditor delivers a written
notice to Broker which states that an Event of Default (as such term is defined
in the Security Instruments) has occurred and is continuing and that Creditor
is
thereby exercising exclusive control over the Account. Such notice may be
referred to herein as the “Notice of Exclusive Control.” No later than the
opening of business two Business Days after the Business Day Broker receives
a
Notice of Exclusive Control from Creditor, Broker shall cease complying with
instructions or entitlement orders given by Debtor. For purposes of this
Agreement, a “Business Day” is any day other than a Saturday, Sunday, a legal
holiday, or a day on which banks in the State of Indiana are authorized to
be
closed. Receipt of a Notice of Exclusive Control by Broker shall mean actual
receipt by the person(s) and the department specified below:
Lincoln
Financial Advisors Corporation
Director
of Account Services, Mail Stop lH-50
Attn: Xxxxx
Xxxxxxxx
X.X.
Xxx
0000
Xxxx
Xxxxx, Xxxxxxx 00000-0000
4. Statements,
Confirmations and Notices of Adverse Claims.
Upon
the request of Creditor, Broker will send copies of all statements,
confirmations and other correspondence concerning the Account to Creditor at
the
address set forth in the heading of this Agreement. If Broker acquires knowledge
that any person asserts any lien, encumbrance or adverse claim against the
Account or in any financial asset carried therein, Broker will promptly notify
Creditor and Debtor thereof.
5. Responsibility
of Broker.
Except
for permitting a withdrawal or payment in violation of Section 3 above Broker
shall have no responsibility or liability to Creditor for making trades of
financial assets held in the Account at the instruction of Debtor, or its
authorized representatives, which are received by Broker before Broker receives
a Notice of Exclusive Control. Broker shall have no responsibility or liability
to Debtor for complying with a Notice of Exclusive Control or complying with
entitlement orders concerning the Account originated by Creditor. Broker shall
have no duty to investigate or make any determination as to whether an Event
of
Default exists and shall comply with a Notice of Exclusive Control even if
it
believes that an Event of Default does not exist. Neither this Agreement nor
the
Security Instruments impose or create any obligation or duty of Broker other
than those expressly set forth herein. Creditor and Debtor hereby agree to
indemnify, defend, and hold harmless Broker, its officers, directors, employees,
and agents against claims, liabilities, and expenses arising out of this
agreement (including reasonable attorneys’ fees and disbursements), except to
the extent the claims, liabilities, or expenses are caused by Broker’s gross
negligence or willful misconduct.
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6. Tax
Reporting.
All
items of income, gain, expense and loss recognized in the Account shall be
reported to the Internal Revenue Service and all state and local taxing
authorities under the name and taxpayer identification number of
Debtor.
7. Customer
Agreement.
This
Agreement supplements the Customer Agreement among the parties hereto. In the
event of a conflict between this Agreement and the Customer Agreement, the
terms
of this Agreement will prevail.
8. Termination.
The
rights and powers granted herein to Creditor 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 death or bankruptcy of Debtor
nor
by the lapse of time. The obligations of Broker under Sections 3, 4,
5 and
6
above shall continue in effect until the security interest of Creditor in the
Account has been terminated pursuant to the terms of the Security Instruments
and Creditor has notified Broker of such termination in writing. Upon receipt
of
such notice the obligations of Broker under Sections 3, 4, 5 and
6
above with respect to the operation and maintenance of the Account after the
receipt of such notice shall terminate, Creditor shall have no further right
to
originate entitlement orders concerning the Account and Broker may take such
steps as Debtor may request to vest full ownership and control of the Account
in
Debtor, including, but not limited to, removing the name of Creditor from the
Account or transferring all of the financial assets and credit balances in
the
Account to another securities account in the name of Debtor or its
designee.
9. This
Agreement.
This
Agreement, the schedules and 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.
10. 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.
11. 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 if such invalid or
unenforceable term or provision were omitted.
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 or heirs and
personal representatives.
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13. 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.
14. 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
next
to such parties’ name at the heading of this Agreement. Any party may change its
address for notices in the manner set forth above.
15. Choice
of Law.
The
parties hereto agree that this Agreement shall be governed by the laws of the
State of Indiana.
16. Counterparts.
This
Agreement may be executed in any number 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. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Agreement.
Any
party delivering an executed counterpart of this Agreement by telefacsimile
also
shall deliver an original executed counterpart of this Agreement but the failure
to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
[SIGNATURE
PAGE IMMEDIATELY FOLLOWS]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement as of the date
first above written.
| Debtor: | ||
| |
KH
FUNDING
COMPANY |
|
| By: | ||
| Name: | ||
| Title: | ||
| Creditor: | ||
| XXXXX FARGO BANK, N.A. | ||
| By: | ||
| Name: | ||
| Title: | ||
| Broker: | ||
|
LINCOLN
FINANCIAL ADVISORS
CORPORATION
|
||
| By: | ||
| Name: | ||
| Title: | ||
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