Exhibit 10.5
ACCOUNT CONTROL AGREEMENT
October 30, 1998
LaSalle National Bank, with an office at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, Telecopy No. 312/904-6457, as agent for Lenders ("Agent");
American Capital Strategies, Ltd., a Delaware corporation, with an office at 0
Xxxxxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000, Telecopy No.
301/654-6714 ("Company"); and
LaSalle National Bank, with an office at 000 Xxxxx XxXxxxx Street, Room 1825,
Xxxxxxx, Xxxxxxxx 00000, Telecopy No. 312/904-1871, as securities intermediary
("Securities Intermediary")
hereby agree as follows:
PREAMBLE:
1. Securities Intermediary and Company shall enter into a
corporate custodian account agreement, dated as of November 9, 1998, a copy of
which is attached hereto as Exhibit A (the "Customer Agreement"), pursuant to
which Securities Intermediary shall establish its trust account number
00-0000000 in the name of Company (the "Account").
2. Company, the other Persons designated therein as Grantors
and Agent have entered into a Security and Pledge Agreement of even date
herewith (as from time to time amended, restated, supplemented or otherwise
modified, the "Security Agreement"), in which, Company has granted to Agent on
behalf of the Lender Parties a security interest in the Account, all financial
assets to be held in the Account, any free credit balance carried therein and
other items of "Collateral", as such term is defined in the Security Agreement
(collectively, the "Collateral").
3. Agent, Company and Securities Intermediary are entering
into this Account Control Agreement (this "Agreement") to provide for the
control of the Account and to perfect the security interest of Agent in the
Account and the financial assets and any free credit balance carried therein as
more fully described in the Security Agreement.
4 Company, various financial institutions and the Agent have
entered into a Credit Agreement of even date herewith (as from time to time
amended, restated, supplemented or otherwise modified, the "Credit Agreement"),
pursuant to which the execution and delivery of this Agreement by Agent, Company
and Securities Intermediary is a condition precedent to the effectiveness of the
Credit Agreement.
TERMS:
Section 1. The Account. Securities Intermediary hereby represents and
warrants to Agent and Company that (a) the Account has been established in the
name of Company as recited above, (b) Exhibit B attached hereto is a complete
and accurate statement of items of Collateral deposited in the Account as of the
date hereof, (c) Exhibit B does not reflect any financial assets which are
registered in the name of Company, payable to its order, or specially endorsed
to it which have not been endorsed to Securities Intermediary or in blank, (d)
the Customer Agreement, the security entitlements arising out of the financial
assets carried in the account and such free credit balances are valid and
legally binding obligations of Securities Intermediary, and (e) except for the
claims and interests of Agent, Company and, to the extent set forth in Section 3
hereof, Securities Intermediary in the Account, Securities Intermediary does not
know of any claim to or interest in the Account or in any financial asset
carried therein. Securities Intermediary will treat all property held by it in
the Account as financial assets under Article 8 of the Uniform Commercial Code
of Illinois (the "Code").
Section 2. Control. Securities Intermediary will comply with
entitlement orders originated by Agent concerning the Account without further
consent by Company. Securities Intermediary shall neither accept nor comply with
any entitlement order from Company withdrawing any item of Collateral from the
Account nor deliver any such Collateral to Company nor pay any free credit
balance or other amount owing from Securities Intermediary to Company with
respect to the Account or any other item of Collateral following receipt of a
written notice from Agent which states that Agent is exercising exclusive
control over the Collateral (a "Notice of Exclusive Control"); provided, that
prior to its receipt of a Notice of Exclusive Control, (a) all interest and
dividend payments received in respect of the Collateral will be paid by
Securities Intermediary to or otherwise at the direction of Company and (b)
Company may direct Securities Intermediary to transfer other items of Collateral
in the Account. After Securities Intermediary receives a Notice of Exclusive
Control, it will immediately (x) cease complying with instructions or
entitlement orders concerning the Account or any other item of Collateral
originated by Company or its representatives and (y) cause all cash, securities
and other property which may be or become payable or attributable to Company on
account of any Collateral, including cash or noncash proceeds thereof, to be
paid or delivered to Agent as specified by Agent on such notice or otherwise at
the direction of Agent.
Section 3. Priority of Lien. Securities Intermediary hereby consents to
and acknowledges the existence of the security interest granted pursuant to the
Security Agreement with respect to the Collateral. Securities Intermediary shall
not hypothecate any item of Collateral. Securities Intermediary hereby waives
and releases all liens, encumbrances, claims and rights of setoff Securities
Intermediary may have against the Account or any other item of Collateral (other
than rights of setoff in respect of any fees due and owing under the Customer
Agreement) and agrees that it will not assert any lien, encumbrance, claim or
right or the priority thereof against the Account or any other item of
Collateral (in each case in its capacity as Securities Intermediary but without
limitation on its rights as Agent under the Security Agreement and Credit
Agreement). Securities Intermediary will not agree with any third party that
Securities Intermediary will comply with entitlement orders concerning the
Account or any other item of Collateral originated by such third party without
the prior written consent of Agent and Company.
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Section 4. Statements, Confirmations and Notices of Adverse Claims.
Securities Intermediary will send copies of all statements regarding the Account
and confirmations and other correspondence concerning the Collateral
simultaneously to each of Company and Agent at the addresses set forth in the
heading of this Agreement. If Securities Intermediary learns that any person has
asserted any lien, encumbrance or adverse claim against the Account or any other
item of Collateral, Securities Intermediary will promptly notify Agent and
Company thereof.
Section 5. Responsibility of Securities Intermediary. Securities
Intermediary shall have no responsibility or liability to Agent for (a) making
trades of Collateral at the instruction of Company, or its authorized
representatives, or (b) complying with entitlement orders concerning the
Collateral from Company, or its authorized representatives, which are received
by Securities Intermediary, in any such case, before Securities Intermediary
receives a Notice of Exclusive Control. Securities Intermediary shall have no
responsibility or liability to Company for complying with a Notice of Exclusive
Control or complying with entitlement orders concerning the Collateral
originated by Agent. Securities Intermediary shall have no duty to investigate
or make any determination as to whether (a) the information contained in any
certificate delivered by Company pursuant to the Security Agreement is correct
or (b) the conditions for the issuance of a Notice of Exclusive Control or
entitlement order contained in any agreement between Company and Agent have
occurred. Neither this Agreement nor the Security Agreement imposes or creates
any obligation or duty of Securities Intermediary other than those expressly set
forth herein.
Section 6. Standard of Care. Securities Intermediary shall exercise
reasonable care and diligence in performing all of its obligations hereunder;
provided, however, that:
(a) Securities Intermediary shall be entitled to rely upon the
authenticity of, and the truth of any statement in, any certificate,
opinion of counsel, evidence of indebtedness, notice, consent,
instruction or other document reasonably believed by Securities
Intermediary to be genuine and to be signed by the proper party or
parties;
(b) Securities Intermediary shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
reliance upon the advice of its legal counsel;
(c) Securities Intermediary shall not be liable with respect
to any action taken or omitted to be taken by it in good faith at the
instruction of Agent; and
(d) Securities Intermediary shall be entitled to request the
written consent or instructions of Agent to Securities Intermediary's
taking any action hereunder requiring the exercise of its discretion
and to refrain from taking such action until it shall have received
written consent or instructions.
Section 7. Indemnity. Company agrees to indemnify and hold Securities
Intermediary harmless from and against any losses, liabilities and damages
incurred by Securities Intermediary as a consequence of any action taken or
omitted to be taken by it in the performance of its obligations hereunder, with
the exception of any losses, liabilities and damages arising from any breach by
Securities Intermediary of any provision of Section 6 hereof.
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Section 8. Tax Reporting. No items of income, gain, expense or loss
recognized in the Account shall be reported to the Internal Revenue Service or
any state or local taxing authority under the name and taxpayer identification
number of Agent.
Section 9. Customer Agreement. This Agreement supplements the Customer
Agreement between Securities Intermediary and Company. In the event of a
conflict between this Agreement and the Customer Agreement, the terms of this
Agreement will prevail. Regardless of any provision in the Customer Agreement,
Illinois shall be deemed to be Securities Intermediary's location for the
purposes of this Agreement and the perfection and priority of Agent's security
interest in the Collateral. The Securities Intermediary and Company may not
change the law governing the Customer Agreement without Agent's express written
consent.
Section 10. Termination. The rights and powers granted herein to Agent
have been granted in order to perfect its security interest in the Collateral,
are powers coupled with an interest and will neither be affected by the
bankruptcy of Company nor by the lapse of time. The obligations of Securities
Intermediary under Sections 2, 3 and 4 above shall continue in effect until the
earlier to occur of (a) the termination of the security interest of Agent in the
Collateral pursuant to the terms of the Security Agreement and the notification
by Agent to Securities Intermediary of such termination in writing and (b) the
termination of the Customer Agreement in accordance with its terms so long as
Securities Intermediary has given Agent at least thirty (30) days prior written
notice of such termination. Upon the occurrence of either such event, the
obligations of Securities Intermediary under Sections 2, 3 and 4 above with
respect to the operation and maintenance of the Account after the receipt of
such notice shall terminate and Agent shall have no further right to originate
entitlement orders concerning the Collateral. Upon the occurrence of an event
under clause (a), Securities Intermediary may take such steps as Company may
request to vest full ownership and control of the Collateral in Company,
including, but not limited to, transferring all of the Collateral to another
securities account in the name of Company or its designee. Upon the occurrence
of an event under clause (b), Securities Intermediary shall comply with Agent's
directions regarding transfer of the Collateral.
Section 11. 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 hereto 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.
Section 12. 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.
Section 13. 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 as if such invalid or unenforceable term or provision were omitted.
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Section 14. 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 assigns.
Section 15. Rules of Construction. 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. Except as otherwise defined herein all terms herein shall have the
meanings ascribed thereto in the Code.
Section 16. 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 three days after being sent by certified or registered
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.
Section 17. 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.
Section 18. Choice of Law. The parties hereto agree that certain
material events, occurrences and transactions relating to this Agreement bear a
reasonable relationship to Illinois. The validity, terms, performance and
enforcement of this Agreement shall be governed by the laws of Illinois which
are applicable to agreements which are executed, delivered and performed therein
without regard to conflicts of law provisions thereof.
[signature page follows]
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SIGNATURES:
LASALLE NATIONAL BANK,
as agent
By: _____________________________
Title: Vice President
AMERICAN CAPITAL STRATEGIES, LTD.
By: _____________________________
Title: _________________________
LASALLE NATIONAL BANK,
as securities intermediary
By: ______________________________
Title: __________________________
Exhibit A
Customer Agreement
[See Attached]
Exhibit B
Collateral
- To be provided at time of deposit.