Exhibit 10.4
CUSTODY CONTROL AGREEMENT
THIS CUSTODY CONTROL AGREEMENT (the "Agreement") dated as of October
30, 1998, is entered into by and between AMERICAN CAPITAL STRATEGIES, LTD., a
Delaware corporation (the "Company") and LASALLE NATIONAL BANK, a national
banking association ("Agent"), as custodian, but subject to its rights as agent
for certain Banks pursuant to the Credit Agreement and the Security Agreement
(defined below).
PRELIMINARY STATEMENT
WHEREAS, the Company has requested that the Agent act as custodian for
the purpose of receiving and holding certain property from time to time as
custodian and as agent for the benefit of the Banks pursuant to the Credit
Agreement and the Security Agreement;
WHEREAS, the Company, the Agent and certain lenders ("Banks") have
entered into a certain Credit Agreement dated as of October 30, 1998 (as
amended, amended and restated, supplemented, extended or otherwise modified from
time to time, the "Credit Agreement"); and
WHEREAS, subject to the terms and conditions of the Credit Agreement,
the Banks thereunder have agreed to make a credit facility available to the
Company on the condition that, among other things, the Company enter into a
certain Security and Pledge Agreement dated as of October 30, 1998 (as amended,
amended and restated, supplemented, extended or otherwise modified from time to
time, the "Security Agreement") and grant the Agent for the benefit of the Banks
a perfected, first-priority interest in all of its property (including all
Property hereunder).
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. As used herein, the following terms shall
have the meanings assigned thereto below:
"Authorized Employee" means any employee of the Company listed on
Schedule I hereto and any other Company employee hereafter authorized in writing
by an existing Authorized Employee to act as an Authorized Employee of Company
hereunder; provided, that any Authorized Employee may send the Agent a notice
informing them of any other Authorized Employee who ceases to be an Authorized
Employee.
"Property" means securities, notes, loan documents, loan files and
other property reasonably acceptable to Agent.
"Termination Date" means the date upon which this Agreement is
terminated pursuant to Sections 3.04 or 3.05 hereto.
Capitalized terms not defined herein shall have the meaning given to
them in the Credit Agreement.
ARTICLE 2
CUSTODIAN
SECTION 2.1 Designation and Appointment of Agent as Custodian. The
Agent is hereby designated as, and hereby agrees to perform the duties and
obligations of, custodian under and as set forth in this Agreement, but subject
to its duties as perfection agent and bailee, as agent for the benefit of the
Banks under the Credit Agreement and the Security Agreement. The Agent
acknowledges and agrees that it is acting and will act with respect to the
Property for the benefit of the Banks and is not, and shall not at any time in
the future be, subject with respect to the Property, in any manner or to any
extent, to the direction or control of the Company, except as expressly
permitted by this Agreement. The Agent agrees to act in accordance with this
Agreement, subject to its rights and duties under the Credit Agreement and the
Security Agreement. The Agent shall serve as custodian from the date hereof
until the Termination Date.
SECTION 2.2 Duties of Custodian. At all times that the Agent shall be
the custodian, it shall duly discharge its duties of receiving and holding the
Property in accordance with this Agreement. As to any matters not expressly
provided for by this Agreement, the Agent shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the written instructions of the Company (executed by an Authorized
Employee); provided, that the Agent shall not be required to take any action
which is contrary to this Agreement, the Credit Agreement or applicable law, or
which is not reasonably incidental to its duties and responsibilities under this
Agreement or the Credit Agreement or is of a type unrelated to its business.
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SECTION 2.3 Property. (a) From time to time the Company may deliver
Property to the Agent. Each delivery of Property shall be contained in a redwell
file folder labeled by transaction and tabbed by individual document and
accompanied by a list in the form of Schedule II hereto itemizing each document
(and the corresponding tab number) included in such Property and indicating
whether it is an original or copy. All supplemental deliveries of Property
relating to transactions for which Property was previously delivered (each, an
"Existing Transaction") shall be delivered with an addendum in the same format
referring to the Schedule II delivered for such Existing Transaction. Each
delivery of Property shall include a note power executed in blank (if such
Property includes senior or subordinated debt), a stock power executed in blank
(if such Property includes capital stock) and assignments of security documents
(if such transaction is secured, and in recordable form if such security
documents include a mortgage or deed of trust) and such notices and consents as
may be required by the Agent, all consistent with the forms delivered on the
Closing Date. Promptly after receipt of each delivery of Property, the Agent
shall confirm receipt of such Property in the manner set forth on Schedule II.
The acknowledgment by the Agent of Property delivered hereunder shall be based
solely on a confirmation of receipt of the documents listed on Schedule II. The
Agent shall have no obligation to conduct a review of the adequacy or
sufficiency of any Property and makes no representation or warranty as to the
existence, validity, legality, enforceability, recordability, genuineness,
authorization, collectability, insurability, effectiveness or suitability of any
Property for any purpose. All Property shall be delivered to the Agent at the
address set forth in Section 3.03. At all times, the Company shall remain the
owner of the Property, provided, that at all times until the Credit Agreement is
terminated and all obligations thereunder have been paid in full, all property
shall be held by the Agent hereunder pursuant to the security interest in favor
of the Agent for the benefit of the Banks. All such Property shall be held by
the Agent pursuant to the terms of this Agreement, the Credit Agreement and the
Security Agreement. Such Property shall be placed by the Agent for safekeeping
in a fire resistant facility located on the Agent's premises and shall be held
in a manner which allows such Property to be released within two business days
following the Agent's receipt of notice pursuant to the terms set forth in
Section 2.04 below.
(b) Property held by the Agent shall at all times be individually
segregated from the securities and other property of all persons other than the
Company and marked in an appropriate manner (including by attaching tags or
labels to the Property or by placing the Property in labeled containers that
contain only the Company's Property) to identify clearly the Company's
ownership, both upon physical inspection thereof and upon examination of the
books and records of the Agent.
SECTION 2.4 Removal of Property. (a) Subject to clause (c) below, the
Company shall have the right, upon reasonable advance written notice (by
facsimile or otherwise) signed by an Authorized Employee, to remove all or any
portion of the Property from the Agent; provided that the Company executes and
delivers to the Agent a Release Request in the form of Schedule III hereto.
(b) Subject to clause (c) below, other than as described in the this
Section 2.04 and as otherwise required by law, the Agent shall have no authority
to release any Property to any other Person.
(c) Notwithstanding anything to the contrary in clauses (a) or (b)
above or elsewhere in this Agreement, (i) removal of Property shall be permitted
only if permitted by the terms of the Credit Agreement (and if after giving
effect to such release no Unmatured Event of Default or Event of Default would
exist or result therefrom) and (ii) upon the occurrence and during the
continuance of an Unmatured Event of Default or Event of Default, the Agent
shall have all rights and remedies under the Credit Agreement and the Security
Agreement, including, but not limited to, the right to deny release of and
access to the Property.
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SECTION 2.5 Liens or Encumbrances. The Company hereby acknowledges and
agrees that the Agent and the Banks have been granted a perfected first-priority
security interest in and to the Property under the Security Agreement and that
the rights of the Agent to the Property in connection therewith overrides any
custodial duties hereunder. Except pursuant to the Credit Agreement and the
Liens granted to the Agent for the benefit of the Banks under the Security
Agreement, the Property will not be subject to any Lien in favor of the Agent
and the Agent shall not assign, hypothecate, pledge or otherwise dispose of the
Property, except in accordance with this Agreement, the Credit Agreement and the
Security Agreement. The Agent shall have no liability to the Company or any
other Person for action or failure to act hereunder (including the refusal to
release or make available Property) if it is acting in accordance with the
Credit Agreement and the Security Agreement.
SECTION 2.6 Maintenance of Records. The Agent shall implement and
maintain administrative and operating procedures pursuant to which it shall keep
and maintain all records and information necessary to permit the regular
identification of all Property held or released by it.
SECTION 2.7 Visitation Rights and Other Information. From time to time
prior to the occurrence and continuance of an Event of Default, upon reasonable
prior notification, during normal business hours, any Authorized Employee shall
have the right (i) to visit the Agent's office where the Property is maintained,
(ii) to examine the facilities for the storage and safekeeping of the Property,
(iii) to review the procedures with which such Property is stored and
catalogued, (iv) to examine and make copies of and abstracts from any documents
relating to the Property, and (v) to discuss matters relating to the Property
and the Agent's performance hereunder with any officer of the Agent having
knowledge of such matters. The Agent shall provide to the Company such other
information concerning the Property as it may from time to time reasonably
request. The Agent acknowledges and agrees that the Securities and Exchange
Commission shall, at all times upon reasonable prior notice, have the right to
inspect the Property through its employees and agents. The Agent shall also have
the right to make all Property available to any Bank for inspection.
SECTION 2.8 Agent's Liability. The Agent shall have no liability
whatsoever by reason of any error of judgment for any act done or step taken or
omitted by it, or for any mistake of fact or law for anything which it may do or
refrain from doing in connection herewith, unless caused by or arising out of
its own negligence or willful misconduct. Without limitation on the foregoing,
the Agent shall have no duties whatsoever to any Person (including any
stockholder, officer, director or Affiliate of the Company) other than as
expressly set forth herein and the rights of the Agent as the collateral agent
for the Banks shall override any custodial duties hereunder. The Company hereby
indemnifies and agrees to hold the Agent, each Bank and each of the officers,
directors, employees, Affiliates and agents thereof (each an "Indemnified
Party") harmless from and against any and all actions, causes of action, suits,
losses, liabilities, damages and expenses, including Attorney Costs
(collectively, "Indemnified Liabilities") incurred by the Indemnified Parties or
any of them as a result of, or arising out of, or relating to, the execution,
delivery, performance or enforcement of this Agreement, except for any such
Indemnified Liabilities arising out of the applicable Indemnified Party's gross
negligence or willful misconduct.
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ARTICLE 3
MISCELLANEOUS
SECTION 3.1 Fees and Expenses of the Custodian. The Company agrees to
pay the Agent the fees and expenses set forth on Schedule IV hereto in
accordance with the terms thereof for the services rendered hereunder. Such fees
and expenses shall be subject to adjustment from time to time in accordance with
the Agent's customary practice. The Company shall also reimburse the Agent on
demand for all out of pocket expenses (including Attorney Costs) incurred in
connection with its duties as custodian hereunder.
SECTION 3.2 Amendments, Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by each party hereto,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 3.3 Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
if personally delivered, mailed by certified or registered mail,
postage-prepaid, return receipt requested, or sent by overnight courier or
telecopied to the following address. All Property shall be delivered to the
Agent at the address listed below.
(i) if to the Company:
American Capital Strategies, Ltd.
0 Xxxxxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
(ii) if to the Agent:
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxxx
Telecopy No.: (000) 000-0000
with a copy of Schedule II with each delivery of Property to:
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx and
Xxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
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or such other address as may hereafter be furnished to the other parties by like
notice.
SECTION 3.4 Binding Effect; Assignability; Term. This Agreement shall
be binding upon and inure to the benefit of the Company and the Agent and their
respective successors and permitted assigns. The Company may not assign at any
time its rights and obligations hereunder and interests herein without the prior
written consent of the Agent. The Agent may not assign any of its rights, duties
and obligations hereunder or any interest herein without the Company's prior
written consent unless a Default or Event of Default has occurred and is
continuing under the Credit Agreement in which case no such consent shall be
necessary. This Agreement shall create and constitute the continuing obligations
of the parties hereto in accordance with its terms, and shall remain in full
force and effect until the Termination Date, provided that the provisions of
Section 2.08 shall be continuing and shall survive the termination of this
Agreement.
SECTION 3.5 Resignation and Removal. The Agent may resign at any time
by giving written notice thereof to the Company not less than 60 days prior to
the effective date of such resignation (unless such resignation is tendered in
connection with the termination of the Credit Agreement, in which case such
resignation may be effective concurrently with such termination and repayment of
all obligations under the Credit Agreement). The Agent may be removed by the
Company at any time, with or without cause, by giving written notice thereof to
the Agent not less than thirty (30) days prior to the effective date of such
removal; provided, that no such removal shall be permitted at any time when the
Credit Agreement is in effect without (a) the prior written consent of the Agent
and (b) the execution and delivery of a custody agreement with a custodian
satisfactory to the Agent that has agreed to act as bailee and perfection agent
for the Agent and the Banks on terms satisfactory to the Agent. Upon any such
resignation or removal, the Company shall have the right to appoint a successor
Agent. Any such successor shall, upon its acceptance thereof, succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
custodian, and the retiring custodian shall be discharged from its duties and
obligations as custodian under this Agreement.
SECTION 3.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
ILLINOIS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE.
SECTION 3.7 Execution in Counterparts; Severability. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
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SECTION 3.8 General. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Property if it
takes such action for that purpose as any Company requests in writing, but
failure of the Agent to comply with any such request shall not of itself be
deemed a failure to exercise reasonable care, and no failure of the Agent to
preserve or protect any right with respect to such Property against prior
parties, or to do any act with respect to the preservation of such Property not
so requested by the Company, shall be deemed of itself a failure to exercise
reasonable care in the custody or preservation of such Property.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF
THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS SET FORTH ON THE SIGNATURE
PAGES HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN WRITING TO THE
AGENT AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR
WITHOUT THE STATE OF ILLINOIS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
THE COMPANY AND THE AGENT (BY ACCEPTING THE BENEFITS HEREOF) HEREBY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT, OR ANY INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.
[signature page to follow]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
AMERICAN CAPITAL STRATEGIES, LTD.
By:
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Name:
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Title:
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LASALLE NATIONAL BANK
By:
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Name:
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Title:
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8
AMERICAN CAPITAL STRATEGIES
SCHEDULE I
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AUTHORIZED EMPLOYEES SPECIMEN SIGNATURE
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Xxxxx Xxxxxx
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Xxxx Xxxxxxxxxx
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Xxxxxxx X. Xxxxxx
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Xxxxxxxx Xxxxxxxx
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Xxxx Xxxxxxxx
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Xxxxx Xxxxxxx
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SCHEDULE II
PORTFOLIO COMPANY [COMPANY NAME]
Transaction Date: ___________________
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Tab Document Delivered (Title, Parties and Date) Original Copy
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[Documents Delivered]
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American Capital Strategies, Ltd. certifies that the above
listed documents are all of the documents relating to the transaction
described above.
AMERICAN CAPITAL STRATEGIES, LTD.
By:
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Its:
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Received documents listed above this
LASALLE NATIONAL BANK, as custodian
By:
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Its:
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SCHEDULE III
RELEASE REQUEST
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxxx
Re: Custody Control Agreement between American Capital
Strategies, Ltd. (the "Company") and LaSalle National
Bank dated as of October 30, 1998 ("Agreement")
American Capital Strategies, Ltd. hereby requests release of
the following items of property relating to the following transactions
("Released Property")
[Describe Document(s)]
[Describe Transaction(s)]
The Released Property should be delivered as follows
[Specify Delivery Instructions]
American Capital Strategies, Ltd.
By:
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Name:
-----------------------------
Title:
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Consent of Agent
By: _________________________
[ATTENTION CUSTODIAN:
RELEASE REQUIRES WRITTEN CONSENT OF
XXXXXXX XXXXXX, XXXX XXXXXXX OR
ANOTHER AUTHORIZED REPRESENTATIVE
OF AGENT UNDER THE CREDIT AGREEMENT
REFERRED TO IN THE AGREEMENT]
SCHEDULE IV
LASALLE NATIONAL BANK
LOAN CUSTODY FEE SCHEDULE
A. Review and certification of files $35.00 per document set
B. Storage and warehouse of files $ 1.30 per document set/month
D. Delivery, legal, other out-of pocket At cost
miscellaneous expenses
F. Release/Reinstatement Fees
Releases: $ 7.50 per document set
Reinstatements: $15.00 per document set
Fees due to LaSalle National Bank will be billed monthly and fees will be due
and owing when incurred.
The undersigned agrees with the terms of this schedule and will pay fees
directly to LaSalle National Bank.
American Capital Strategies, Ltd.
Accepted:
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Name of Officer:
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Title:
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Date:
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Billing Address: 0 Xxxxxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Phone:(000) 000-0000 x00
Fax:(000) 000-0000
Email: xxxx_xxxxxxxx@xxxxx.xxx