Information redacted pursuant to
a confidential treatment request.
DEPOSIT ACCOUNT CONTROL
AGREEMENT
THIS DEPOSIT
ACCOUNT CONTROL AGREEMENT (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
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.
(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).
2
(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:
502-795-13; CFN: [___]; Reference: Hancock 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 i
|
