SECURITIES ACCOUNT CONTROL
AGREEMENT
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 1046005132 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
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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
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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
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