Information redacted pursuant to a confidential treatment request. DEPOSIT ACCOUNT CONTROL AGREEMENT
EXHIBIT 10.18
Information
redacted pursuant to a confidential treatment request.
THIS DEPOSIT ACCOUNT CONTROL AGREEMENT (this “Agreement”)
is dated August 1, 2008 by and
among BancorpSouth Bank (together with its successors and assigns, “Bank”), Xxxxxxx Fabrics, Inc.
(together with its successors and assigns, the “Company”) and General Electric Capital Corporation,
in its capacity as agent (in such capacity, together with its successors and assigns, “Agent”)
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf of Lenders (as
defined in the Loan Agreement).
W I T N E S S E T H
WHEREAS, Bank maintains for the use of the Company the following deposit accounts:
01-210513 (the “Concentration Account”)
01-236083 (the “Operating Account”)
which deposit accounts are hereinafter referred to collectively as the “Deposit Accounts”, and
individually, each as a “Deposit Account”;
WHEREAS, Bank additionally maintains for the use of the Company the following deposit
accounts:
01-230662 (the “Salaried Payroll Account”)
60-550191 (the “Hourly Payroll Account”)
which deposit accounts are hereinafter referred to collectively as the “Payroll Accounts”, and
individually, each as a “Payroll Account”;
WHEREAS, the Company maintains numerous deposit accounts with numerous financial institutions
(including Bank) throughout the United States into which are deposited revenues generated by
Company’s various stores, which deposit accounts are hereinafter referred to collectively as the
“Store Accounts”, and individually, each as a “Store Account”;
WHEREAS, pursuant to the Loan and Security Agreement dated as of
August 1, 2008, by and among the Company, certain of Company’s affiliates and subsidiaries, Agent and Lenders (as amended,
restated, supplemented or otherwise modified and in effect, the “Loan Agreement”), Agent and the
Lenders have a security interest in, among other things, all right, title and interest of the
Company in and to the following, whether now or hereafter existing or arising (collectively, the
“Deposit Account Collateral”): (a) the Deposit Accounts, (b) all cash, checks, money orders,
drafts, instruments, electronic funds transfers and other items and forms of remittances and all
funds and other amounts at any time paid, deposited or credited (whether for collection,
provisionally or otherwise), held or otherwise in the possession or under the control of, or in
transit to, Bank or any agent or custodian thereof for credit to or to be deposited
in any Deposit Account, (c) all funds and cash balances or other amounts in or attributable to
any Deposit Account, and (d) any and all proceeds of any of the foregoing; and
WHEREAS, the Company, Agent and Bank desire to enter into this Agreement in order to set forth
their relative rights and duties with respect to the Deposit Account Collateral.
NOW, THEREFORE, in order for the Company to comply with the requirements of Agent and Lenders
under the Loan Agreement and the other financing arrangements with the Company, the Company, Bank
and Agent agree as follows:
1. Deposit Account Collateral. Bank hereby represents, warrants and covenants with
and to Agent and Lenders that: Bank has established and will maintain the Deposit Accounts and has
identified the Company as the sole owner of the Deposit Accounts, subject to the rights of Agent
therein as provided herein; the records of Bank do not reflect, and it has not received any notice
of, any assignment or pledge of, or security interest in the Deposit Accounts or any of the other
Deposit Account Collateral (other than the pledge and security interest of Agent referred to
herein), or any notice of any adverse claim with respect to any of the same; Bank has not entered
and will not enter into any agreement with any person other than Agent by which it is obligated for
any reason to comply with instructions from such other person as to the disposition of funds in or
from the Deposit Accounts or with respect to any other dealings with any of the Deposit Account
Collateral; Bank will not agree that any person other than the Company or Agent is Bank’s customer
with respect to any Deposit Account; the Deposit Accounts are each a “deposit account” as such term
is defined in the UCC (as hereinafter defined); Bank acknowledges that it holds and will hold
possession of the Deposit Account Collateral consisting of instruments and money as bailee for
Agent and for the benefit of Agent, subject to the terms and provisions of this Agreement; and Bank
is hereby irrevocably authorized and instructed to change the designation of the customer on any
Deposit Account to Agent upon the request of Agent and Bank shall so change the customer promptly
upon such request by Agent. The Company hereby confirms to Bank that the Company has granted to
Agent, as collateral security for the Company’s obligations to the Agent and Lenders under the Loan
Agreement, a security interest in and Lien on the Deposit Account Collateral, and Bank hereby
acknowledges such security interest in and Lien on the Deposit Account Collateral. This Agreement
shall be inapplicable to any account maintained by Company at Bank other than the Deposit Accounts,
the Payroll Accounts and the Store Accounts.
2. Control.
(a) Notwithstanding any term or provision of this Agreement or other agreement between Bank
and the Company or otherwise, the Company hereby irrevocably authorizes and directs the Bank to
comply with, and the Bank hereby agrees to comply with, all instructions originated by the Agent in
accordance with this Agreement, including directing the disposition of funds in any Deposit Account
or as to any other matter relating to any Deposit Account or other Deposit Account Collateral,
without further consent by the Company (which instructions may include the giving of stop payment
orders for any items being presented to a Deposit Account for payment).
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(b) With respect to the Concentration Account, Bank shall not permit the Company or any of its
affiliates or any other person to withdraw any amounts from, to draw upon or otherwise exercise any
authority or powers with respect to the Concentration Account, and Bank shall not at any time
honor, any instructions with respect to the Concentration Account, other than those approved in
writing by Agent. Notwithstanding the foregoing, until Agent otherwise advises Bank in writing,
Company shall have access to the Concentration Account to the extent expressly provided in
Section 3(d) herein.
(c) With respect to the Operating Account, until the Agent otherwise advises Bank in writing,
Company shall have access to the Operating Account to the extent expressly provided in Section
3(d) herein.
3. Remittance of Funds; Use of Cash Management Facilities.
(a) Unless the Company is otherwise directed by Agent, the Company shall cause all Deposit
Account Collateral to be deposited into the Concentration Account. Each banking day, Bank shall
transfer to Agent all available funds in the Concentration Account by wire to DeutscheBank Trust
Company Americas, ABA #021 011 033; Account Name: General Electric Capital Corporation; Account
Number: 000-000-00; CFN: [___]; Reference: Xxxxxxx Fabrics or such other account as Agent may
from time to time designate to Bank pursuant to the terms hereof (the “Agent Payment Account”).
(b) Unless otherwise agreed to in writing between Agent and the Company, the proceeds of the
loans and advances made by Agent and Lenders to the Company pursuant to the terms and conditions
set forth in the Loan Agreement and related documents, agreements, and instruments that are
deposited into the Operating Account will be utilized by the Company to fund, subject to the terms
and conditions set forth in this Agreement, (i) all transactions made by Company on the Payroll
Accounts and (ii) all other transactions made by Company on the Operating Account. Each banking
day, or so often as may be required, Company, through use of Bank’s cash management facilities,
shall transfer available funds in the Operating Account to the Payroll Accounts in such amounts as
are sufficient, in the Company’s determination, to fund all transactions made on the Payroll
Accounts. Nothing contained in this subsection (b) or any other provision contained in
this Agreement or otherwise shall or shall be construed to obligate or create in any way any
liability or responsibility on the part of Agent or any Lender to fund or to ensure that the
Company has sufficient funds to make the payments specified in this subsection or any other
payments related to the operation of the Company’s business.
(c) Bank will permit transactions on the Deposit Accounts and the Payroll Accounts only to the
extent that sufficient funds are available therein. Bank may reject any ACH Debit Entry for the
Payroll Accounts if sufficient funds are not available therein at least two (2) banking days prior
to the Effective Entry Date. As used in this subsection (c), the terms “ACH”, “Debit”, “Entry” and
“Effective Entry Date” shall have the respective meanings ascribed in Bank’s cash management
agreements with the Company.
(d) Notwithstanding any provision of this Agreement to the contrary, until Agent otherwise
advises Bank in writing, Company shall have access to the Deposit Accounts via Bank’s cash
management facilities solely for the following purposes (with reference
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parenthetically to the name of Bank’s cash management products which may be used by Customer
to accomplish such purposes):
(i) Concentration Account: Company may deposit Deposit Account Collateral into
the Concentration Account (Express Deposit Services). Company may originate ACH entries to
transfer funds to the Concentration Account from any Store Account (InView).
(ii) Operating Account: Company may make transfers from the Operating Account
and may originate outgoing wires from the Operating Account (InView). Company may run
fraud, error detection and reconciliation cash management products on the Operating Account
(Positive Pay).
(iii) Payroll Accounts: Company may make transfers from the Payroll Accounts.
Company may run fraud, error detection and reconciliation cash management products on the
Payroll Accounts (Positive Pay).
(iv) All Accounts: In addition, with regard to all Deposit Accounts, including
the Concentration Account, all Payroll Accounts, and all Store Accounts maintained at Bank,
Company may view all transactions on all such accounts and may retrieve all balance
information concerning all such accounts (InView).
4. Indemnity; Bank’s Responsibility. The Company agrees to indemnify, defend and hold
harmless Bank against any loss, liability or expense (including reasonable fees and disbursements
of counsel) incurred in connection with this Agreement, including any action taken by Bank pursuant
to the instructions of Agent, except to the extent due to the gross negligence or willful
misconduct of Bank or breach of any of the provisions hereof. The Company confirms and agrees that
neither Bank nor Agent or Lenders shall have any liability to the Company for wrongful dishonor of
any items or transaction as a result of any instructions of Agent or otherwise in accordance with
the terms of this Agreement. Bank shall have no duty to inquire or determine whether the
obligations of the Company to Agent or Lenders are in default, or whether Agent or Lenders are
authorized by the Loan Agreement, applicable law or otherwise to take any action, or whether Agent
is entitled to give any such instructions, and Bank is fully entitled to rely upon such
instructions from Agent (even if such instructions are contrary or inconsistent with any
instructions or demands given by the Company).
5. Statements, Confirmations and Notices of Adverse Claims. At such time or times as
Agent may request, Bank will promptly report to Agent the amounts received in and held in the
Deposit Accounts and will furnish to Agent any copies of bank statements, deposit tickets,
deposited items, debit and credit advices and other records maintained by Bank under the terms of
its arrangements with the Company (as in effect on the date hereof). Agent will reimburse Bank for
its reasonable expenses in providing such items to Agent. Upon receipt of notice of any lien,
encumbrance or adverse claim against any Deposit Account Collateral, Bank will promptly notify
Agent and the Company thereof.
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6. Subordination of Bank’s Security Interest; Setoff Rights; Bank’s Fees and Expenses.
(a) In the event that at any time Bank has a security interest in or lien upon any of the
Deposit Account Collateral, such security interest and lien of Bank shall be subject and
subordinate to the security interest and lien of Agent therein. Bank shall not for any reason
charge, debit, deduct or offset, or exercise any security interest or lien rights, against any
checks, automated clearinghouse transfers or other form of remittances at any time deposited in or
credited to any Deposit Account, except that Bank may setoff against funds in the
Deposit Accounts (i) for all amounts due to Bank in respect of its fees and expenses as provided in
Section 6(c) hereof that are unpaid and outstanding, (ii) for the amount of any checks,
automated clearinghouse transfers, items or other form of remittances that have been credited to
any Deposit Account and subsequently returned unpaid or lawfully demanded to be refunded by any
paying or collecting bank(whether for insufficient funds or any other reason), (iii) for the amount
of any checks, automated clearinghouse transfers, items or other form of remittances which have
been credited to any Deposit Account incorrectly by reason of inadvertent error which is corrected
as soon as practicable after the discovery of such error, and (iv) for any overdrafts arising as a
result of any of the foregoing; provided, that, Bank shall first setoff for such
amounts due to it against funds held in the Operating Accounts before any other Deposit Account.
(b) In the event that the funds in the Operating Account or any other Deposit Account are
insufficient to reimburse Bank for any amounts specified in Section 6(a) above, Agent shall
reimburse Bank upon demand for all such amounts; provided, that, (i) in respect of
amounts specified under clause (i) of Section 6(a) above, Agent shall have first
received written demand from Bank for payment of such fees and expenses prior to the date that is
60 days after the date such fees or expenses were due and payable to Bank, and (ii) in respect of
amounts specified in clauses (ii), (iii) and (iv) of Section 6(a)
above, Agent received final payment in respect thereof and Agent has received notice of failure of
the Company to pay Bank prior to the date that is 90 days after such check, automated clearinghouse
transfer items, or other form of remittance is returned to Bank or such demand is made to Bank or
such error was discovered by Bank. The Company shall reimburse Agent for any amounts paid by Agent
to Bank under this Section 6(b) or otherwise under this Agreement promptly upon demand by
Agent (without inquiry as to, and regardless of, any dispute between the Company and Bank). Such
amounts shall be paid to Agent by Company (or at Agent’s option, Agent may charge any loan account
of the Company or its affiliates maintained by Agent) without offset, defense or counterclaim.
(c) As compensation for Bank’s services rendered to Agent and to Company under this Agreement,
Bank shall be entitled to the fees and expenses set forth in Exhibit “A” hereto.
7. Termination.
(a) This Agreement may be terminated by Bank at any time on not less than thirty (30) days’
prior written notice to each of the Company and Agent. This Agreement may be terminated by Agent
at any time upon receipt by Bank of Agent’s written notice of termination. This Agreement may not
be terminated by the Company without the express prior written consent of Agent and, in that case,
Agent and the Company shall jointly notify Bank in writing of such termination.
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(b) In the event that this Agreement is terminated for any reason, unless otherwise instructed
by Agent, Bank will, on the effective dated of such termination, transfer all available funds in
the Deposit Accounts to the Agent Payment Account.
8. Notices. All notices hereunder to Bank shall be in writing, sent by telecopier and
by nationally recognized overnight courier with instructions to deliver the next business day, and
shall be deemed to have been given or made when Bank has had a reasonable period of time to act
thereon (but in no event longer than two business days after Bank has received such notice). All
notices to any other party hereunder shall be in writing and deemed to have been given or made: if
delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next business day, one (1) business day after
sending; and if by certified mail, return receipt requested, five (5) days after mailing. All
notices to any party shall be given to its address set forth below (or to such other address as any
party may designate by notice in accordance with this Section).
9. Customer Agreements. This Agreement supplements all other agreements between the
Company and Bank with respect to the Deposit Accounts, as such agreements may now exist or may
hereafter be amended and whether now existing or hereafter arising, including, but not limited to,
all agreements pertaining to use of Bank’s cash management facilities and the daily transmission
limits set forth therein. No consent of Agent or the Lenders shall be required to amend any such
other agreement or for the Company and Bank to enter into any additional agreement. In the event
of any inconsistency between this Agreement and the terms of such other agreements of the Company
or its affiliates with Bank, the terms of this Agreement control.
10. Governing Law. This Agreement shall be governed by the laws of the State of New
York. Notwithstanding anything to the contrary contained in any other agreement among any of the
parties hereto, for purposes of the UCC, the State of New York shall be deemed to be Bank’s
jurisdiction within the meaning of Section 9-304 of the UCC. All references to the “UCC” herein
shall mean the Uniform Commercial Code as in effect on the date hereof in the State of New York.
11. Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other means of
electronic transmission shall have the same force and effect as the delivery of an original
executed counterpart of this Agreement. Any party delivering an executed counterpart of any such
agreement by telefacsimile or other means of electronic transmission shall also deliver an original
executed counterpart, but the failure to do so shall not affect the validity, enforceability or
binding effect of such agreement.
12. Successors and Assigns. Agent and Lenders are relying upon this Agreement in
providing financing to the Company and this Agreement shall be binding upon the Company and Bank
and their respective successors and assigns and inure to the benefit of Agent and Lenders and their
respective successors and assigns.
[SIGNATURE PAGE FOLLOWS]
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XXXXXXX FABRICS, INC.
| By: | /s/ Xxxxxx X. Xxxxxxxx | ||
| Name: | Xxxxxx X. Xxxxxxxx | ||
| Title: | Senior Vice President and Chief Financial Officer |
Address for Notices:
Xxx Xxxxxxx Xxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Fair
Telecopy: 000-000-0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Fair
Telecopy: 000-000-0000
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent
CORPORATION, as Agent
| By: | /s/ Xxxxxxx X. Xxxxxx | ||
| Name: | Xxxxxxx X. Xxxxxx | ||
| Title: | Its Duly Authorized Signatory |
Address for Notices:
000 Xxxxxxx 0 X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attn:Xxxxxxx Fabrics Account Manager
Telecopy: 000-000-0000
Xxxxxxx, XX 00000-0000
Attn:Xxxxxxx Fabrics Account Manager
Telecopy: 000-000-0000
BANCORPSOUTH BANK
| By: | /s/ Xxx Xxxxxxxxxx | ||
| Name: | Xxx Xxxxxxxxxx | ||
| Title: | Executive Vice President |
Address for Notices:
Corporate Banking Department
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Banking Dept.
Telecopy: 000-000-0000
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Banking Dept.
Telecopy: 000-000-0000
with a copy to:
Cash Management Department
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Cash Management Department
Telecopy: 000-000-0000
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: Cash Management Department
Telecopy: 000-000-0000
with a copy to:
Cash Management Department
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxx X
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Cash Management Dept.
Telecopy: 000-000-0000
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxx X
Xxxxxx, Xxxxxxxxxxx 00000
Attention: Cash Management Dept.
Telecopy: 000-000-0000
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