Information redacted pursuant to
a confidential treatment request.
DEPOSIT ACCOUNT CONTROL
AGREEMENT
(ELAVON DESIGNATED DEPOSIT
ACCOUNT)
THIS DEPOSIT
ACCOUNT CONTROL AGREEMENT (as amended and in effect from time to
time, this “Agreement”) is dated August 1, 2008 by
and among BancorpSouth Bank (together with its successors and
assigns, “Bank”), Hancock 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).
WHEREAS, Bank
maintains for the use of the Company the following deposit
account:
——
(the “Elavon Designated Deposit Account”)
which deposit
account is hereinafter referred to as the “Deposit
Account”;
WHEREAS, Bank
additionally maintains for the use of the Company the following
deposit account (among others):
——
(the “Concentration Account”)
which deposit
account is hereinafter referred to as the “Concentration
Account”;
WHEREAS, Bank
additionally maintains for the use of the Company the following
deposit account (among others):
——
(the “Operating Account”)
which deposit
account is hereinafter referred to as the “Operating
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 Account, (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 the Deposit Account, (c) all funds and cash
balances or other amounts in or attributable to the 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 Account and has
identified the Company as the sole owner of the Deposit Account,
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 Account 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 Account 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 the
Deposit Account; the Deposit Account is 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 the 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
only apply to the Deposit Account.
(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 the Deposit Account or as to any other matter relating
to the 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).
2
With respect to
the Deposit 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 Deposit Account, and Bank shall not at any time
honor, any instructions with respect to the Deposit Account, other
than those approved in writing by Agent. Notwithstanding the
foregoing, until Agent otherwise advises Bank in writing, any
entity identified by ACH company identification number 1841010148
(such entity being Elavon, Inc. f/k/a NOVA Information Systems,
Inc. as of the date of this Agreement) (hereinafter referred to as
“Elavon”) shall have access to the Deposit Account to
the extent expressly provided in Section 3(b)
herein.
3.
Remittance of Funds; Use of Cash Management Facilities
.
(a) Unless
the Bank is otherwise directed by Agent, each banking day the Bank
shall cause all Deposit Account Collateral in excess of $200,000 in
the aggregate to be deposited into the Concentration Account in
immediately available funds.
(b) Notwithstanding
any provision of this Agreement to the contrary, until Agent
otherwise advises Bank in writing, Elavon shall have access to the
Deposit Account via ACH Debit Entry (assuming sufficient funds are
available therein on the Effective Entry Date). As used in this
subsection (b), the terms “ACH”, &ldquo
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