EXHIBIT
10.68
DEPOSIT
ACCOUNT CONTROL AGREEMENT (With
Future Notification)
This
DEPOSIT ACCOUNT CONTROL AGREEMENT (“Agreement”) is
made and entered into as of this 18 day of March, 2008 by
and among WACHOVIA BANK, NATIONAL ASSOCIATION as depositary
bank (the “ Bank
”), the Bank’s depositor customer, EN POINTE
TECHNOLOGIES SALES, INC. a California corporation (the “
Company
”), and IBM CREDIT, LLC, a Delaware limited liability
company (the “ Secured
Party ”).
The
Bank acknowledges that, as of the date hereof, it maintains in
the name of the Company the deposit account(s) identified on
Exhibit
A attached hereto and made a part hereof (each an
“ Account
” and, collectively, the “ Accounts
”). One or more of the Accounts may be served by one or
more lockboxes operated by the Bank, which lockboxes (if any)
also are listed on Exhibit A (each a
“ Lockbox
” and, collectively, the “ Lockboxes
”). The Account(s) and any Lockbox(es) are governed by
the terms and conditions of the Company’s commercial
deposit account agreement published by the Bank from time to
time and, with respect to any Lockbox, also may be governed by
a lockbox service description between the Bank and the Company
(collectively, with all applicable services descriptions
and/or agreements, the “ Deposit
Agreement ”).
The
Company hereby confirms to the Bank that the Company has
granted to the Secured Party a security interest in the
following (collectively, the “ Account
Collateral ”): (a) the Account(s), (b) the
Lockbox(es) and (c) the Items Collateral. The term “
Items
Collateral ” means, collectively, all checks,
drafts, instruments, cash and other items at any time received
in any Lockbox or for deposit in any Account (subject to
specific Lockbox instructions in effect for processing items),
wire transfers of funds, automated clearing house (“
ACH
”) entries, credits from merchant card transactions and
other electronic funds transfers or other funds deposited in,
credited to, or held for deposit in or credit to, any
Account.
The
parties desire to enter into this Agreement in order to set
forth their relative rights and duties with respect to the
Account Collateral. In consideration of the mutual covenants
herein as well as other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Control of the
Accounts
(a)
The
Statement of Facts is incorporated herein by reference. The Bank
represents that it is a “bank”. The Company and the
Bank acknowledge that each Account is a “deposit
account”. Each party to this Agreement acknowledges that this
Agreement is an “authenticated” record and that the
arrangements established under this Agreement constitute
“control” of each Account. Each of these terms is used
in this Agreement as defined in Article 9 of the Uniform Commercial
Code as adopted by the State of New York (the “ New York
UCC ”).
(b)
The
Company represents and warrants to the Secured Party that
Exhibit A
contains a complete and accurate list of all Accounts and Lockboxes
maintained by the Company with the Bank and subject to this
Agreement. The Company covenants for the benefit of the Secured
Party that the Company shall not open or maintain any deposit
account with the Bank other than the
Account(s).
As between the Company and the Secured Party, the Company and
the Secured Party acknowledge that the Accounts constitute
"Special Accounts" as such term is defined in the Agreement
for Inventory Financing dated March 18 , 2008 by and among the
Company and the Secured Party. Nothing in this Agreement shall
impose upon the Bank any duty to monitor or assure the
Company’s compliance with this Section 1(b) and the Bank
shall not have any liability with respect thereto or with
respect to any other matter referred to in this Section
1(b).
(c)
The
Bank confirms that, as of the date of this Agreement, the Company
and the Bank have not entered into any agreement (other than the
Deposit Agreement) with any person pursuant to which the Bank is
obligated to comply with instructions from such person as to the
disposition of funds in any Account or of Items Collateral. During
the term of this Agreement the Bank will not enter into any
agreement with any person other than the Secured Party pursuant to
which the Bank will be obligated to comply with instructions from
such person as to the disposition of funds in any Account or of
Items Collateral.
(d)
The
Company authorizes and directs the Bank to comply with all
instructions given by the Secured Party in accordance with this
Agreement and permissible under the Deposit Agreement, including
directing the disposition of funds in any Account or as to any
other matter relating to any Account or other Account Collateral,
without further consent by the Company.
(e)
The
Secured Party authorizes and instructs the Bank to (i) permit
the Company to have access to and disposition over the
Account(s) and Account Collateral and to otherwise deal with
same as provided in the Deposit Agreement and (ii) act upon
the instructions that the Bank shall receive from the Company
concerning the Lockbox and the Account Collateral until the
implementation by the Bank of the written instruction from the
Secured Party to the Bank substantially in the form of
Exhibit
B attached hereto and made a part hereof (the “
Notice
”) in accordance with the provisions of Section 7 of
this Agreement. The Secured Party’s right to give
instructions to the Bank regarding any Account Collateral also
shall include (but is not limited to) the right to give
“stop payment orders” to the Bank for any item
presented to the Bank against any Account even if it results
in dishonor of the item presented against the
Account.
(f)
Until
delivery of the Notice by the Secured Party in accordance with the
provisions of Section 7, the Secured Party shall not give any
instruction to the Bank or otherwise exercise control over the
Account(s) and the Account Collateral and, until the Bank shall
receive and implement the Notice as provided in Section 7, the Bank
shall not (and shall not be required by the provisions of this
Agreement to) honor and follow any instruction the Bank may receive
from the Secured Party with regard to the Account(s) and the
Account Collateral. Upon the implementation of the Notice by the
Bank, the Bank shall not permit any officer, agent or other
representative of the Company or its affiliates to direct the
disposition of funds in any Account, withdraw any amount from any
Account or otherwise exercise any authority or power with respect
to any Lockbox, Account or Account Collateral. Upon implementation
of the Notice by the Bank, all collected and available funds in any
Account shall only be withdrawn or transferred based on
instructions given by the Secured Party in accordance with this
Agreement.
(g)
Federal
Reserve Regulations and Operating Circulars, ACH or other clearing
house rules and other applicable law (including, without
limitation, the Uniform Commercial Code as adopted by the State in
which the respective Account identified on Exhibit A is located
(hereinafter, the “ Applicable
UCC ”)) and the Deposit Agreement shall also apply to
the Secured Party’s exercise
of
control over the Account(s) and the Account Collateral and to
the performance of services hereunder by the Bank. Each of the
Company and the Secured Party authorizes and instructs the
Bank to supply the Company’s or the Secured
Party’s endorsement, as appropriate, to any Items
Collateral that the Bank shall receive for deposit to any
Account.
2.
Statements and Other Information
If
so requested of the Bank by the Secured Party in writing, the Bank
will send to the Secured Party (in a manner consistent with the
Bank’s standard practices) at the Secured Party’s
address specified in Section 7, copies of all Account statements
and communications (but not canceled checks) that the Bank is
required to send to the Company under the Deposit Agreement. The
Bank also shall provide to each of the Company and the Secured
Party when requested (as a service under this Agreement and/or the
Deposit Agreement) copies of Account statements and other deposit
account information, including Account balances, by telephone and
by computer communication, to the extent practicable when requested
by the Company or by the Secured Party. The Company consents to the
Bank’s release of such Account information to the Secured
Party. The Bank’s liability for its failure to comply with
this Section 2 shall not exceed its cost of providing such
information.
3.
Setoff;
Returned Items and Charges
(a)
The
Bank will not exercise any security interest (except for the
security interest provided in Section 4-210, “Security
Interest of Collecting Bank in Items, Accompanying Documents and
Proceeds”, of the Applicable UCC), lien, right of setoff,
deduction, recoupment or banker’s lien or any other interest
in or against any Account or any other Account Collateral, and the
Bank hereby subordinates to the Secured Party any such security
interest (except for such security interest provided in such
Section 4-210 of the Applicable UCC), lien or right which the Bank
may have against any Account or other Account Collateral.
Notwithstanding the preceding sentence, the Secured Party and the
Company agree that the Bank at all times (including following
commencement of any bankruptcy or insolvency proceeding by or
against the Company) may set off and charge against any Account
(regardless of any agreement by the Company to compensate the Bank
by means of balances in the Account) all of the following as
permitted by the Deposit Agreement (collectively, the “
Permitted
Debits ”): (i) the face amount of each Returned Item
(hereinafter defined), (ii) usual and customary service charges and
fees, (iii) account maintenance fees, (iv) transfer fees, (v)
out-of-pocket fees and expenses (including attorneys’
reasonable fees) incurred by the Bank (including those in
connection with the negotiation, administration or enforcement of
this Agreement), and (vi) adjustments or corrections of posting or
encoding errors; whether any Permitted Debit shall have accrued or
been incurred before or after the date of this Agreement. “
Returned
Item ” means any (i) Items Collateral deposited into
or credited to an Account before or after the date of this
Agreement and returned unpaid or otherwise uncollected or subject
to an adjustment entry, whether for insufficient funds or any other
reason, and without regard to the timeliness of such return or
adjustment or the occurrence or timeliness of any other
party’s notice of nonpayment or adjustment; (ii) Items
Collateral subject to a claim against the Bank for breach of
transfer, presentment, encoding, retention or other warranty under
Federal Reserve Regulations or Operating Circulars, ACH or other
clearing house rules, or applicable law (including, without
limitation, Articles 3, 4 and 4A of the Applicable UCC); and (iii)
demand for chargeback in connection with a merchant card
transaction.
(b)
If
(i) the Bank were unable to set off or charge any Permitted Debit
against any Account because of insufficient funds in the Account,
or (ii) the Bank in good faith were to believe that
any
legal process or applicable law prohibited such setoff or
charge against any Account, or (iii) the Account were closed,
then: (A) the Bank may charge such Permitted Debits to and set
off same against any other Account; and (B) if there were
insufficient funds in the Account(s) against which to charge
or set off such Permitted Debits, then the Bank shall demand
(unless the Bank shall believe in good faith that any legal
process or applicable law prohibits such demand) that the
Company pay, and the Company shall pay, to the Bank promptly
upon the Company’s receipt of the Bank’s written
demand therefor, the full amount of all unpaid Permitted
Debits.
(c)
If (i) there were insufficient funds in the Account(s) against
which the Bank could charge or set off Permitted Debits and
the Company shall have failed to pay the Bank the full amount
of unpaid Permitted Debits as described in paragraph (b) of
this Section 3, and (ii) the Bank shall have received and
implemented the Notice as provided herein, then the Bank may
demand that the Secured Party pay, and the Secured Party shall
pay, to the Bank within five (5) business days of the Secured
Party's receipt of the Bank's written demand therefor, the
full amount of unpaid Permitted Debits; provided, however, (A)
as to unpaid Permitted Debits that are service charges, fees
or expenses, the Secured Party shall be required to pay to the
Bank only those service charges, fees or expenses attributable
to any Account that shall have been incurred in connection
with any Account on or after the date of this Agreement and on
or before the date of termination of this Agreement and (B) as
to (I) any unpaid Permitted Debit that is a Returned Item that
shall have been returned to the Bank as un-collectible
after
implementation of the Notice by the Bank , and (II) any
service charges or fees described in clauses (ii), (iii) and
(iv) of Section 3(a), the obligation of the Secured Party to
reimburse the Bank for such Returned Item, service charge or
fee shall be limited to the aggregate amount of funds in the
Account(s) that shall be withdrawn or transferred from
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