DEPOSIT ACCOUNT CONTROL AGREEMENT
---------------------------------
(No Notification)
-----------------
This DEPOSIT ACCOUNT CONTROL AGREEMENT
("Agreement") is made and entered into as
of this ____ day of February 2005 by and
among WACHOVIA BANK, NATIONAL
ASSOCIATION as depositary bank (the
"Bank"), the Bank's depositor customer, XRG,
INC., a Florida Corporation (the
"Company"), and CAPCO FINANCIAL, a Washington
Corporation "Secured Party").
Statement of Facts
------------------
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 Secured Party has provided financing to
Company pursuant to one or more
written agreements (the "Financing
Documents"). In connection therewith, the
Company hereby confirms to the Bank that
the Company has granted to the Secured
Party a security interest in its property
including but not limited to its
deposit accounts, cash, accounts, accounts
receivable and proceeds thereof, as
set forth in the Financing Documents
(collectively, the "Account Collateral"),
which includes: (a) 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 provide for control
by Secured Party of the Account Collateral
and to perfect the security interest
of the Secured Party in 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
Florida (the "Florida UCC").
<PAGE>
(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). Nothing
in this Agreement shall impose upon the
Bank any duty to monitor or assure the
Company's compliance with 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. The Bank shall neither
accept nor comply with any instruction from
the Company withdrawing any funds or
other property from the Account or deliver
any of the funds or property of the
Account to the Company without the specific
prior written consent of the Secured
Party.
(e) The Secured Party hereby authorizes and
instructs the Bank to act solely
upon the instructions of the Secured Party
concerning the Account Collateral,
including the Lockbox(es) and the
Account(s), which instructions may include,
but are not limited to, instructions to:
(i) direct disposition of funds in the
Account(s) (including, but not limited to,
dispositions to or for the benefit of
the Secured Party and/or the Bank), (ii)
withdraw any amount from the
Account(s), and (iii) otherwise exercise
any authority or power with respect to
the Lockbox(es), the Account(s) and other
Account Collateral, which instructions
shall be delivered to the Bank 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 the right to give "stop
payment orders" to the Bank for any item
presented to it against any Account
even if it results in dishonor of the item
presented against the Account.
(f) Effective as of the date of this
Agreement, all Items Collateral received by
the Bank in a Lockbox (subject to specific
Lockbox instructions for processing
the contents of mail received in the
Lockbox) shall be deposited to the Account
listed opposite such Lockbox in Exhibit A;
all other Items Collateral received
directly by the Bank for credit to an
Account shall be credited to such Account,
and; all available funds in an Account
shall automatically and without further
direction on each banking day (defined in
Section 7) be remitted solely to the
deposit account of the Secured Party set
forth in Exhibit B attached hereto and
made a part hereof. The Bank shall not
permit any of the officers, agents or
other representatives of the Company or any
of its affiliates to direct the
disposition of funds in any Account or to
otherwise exercise any authority or
power with respect to any Lockbox, Account
or other Account Collateral.
(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
<PAGE>
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 the
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.
The Secured Party, Company and Bank 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/or charge for
Permitted Debits, as defined below,
only in accordance with the terms of
subsections 3(b) and 3(c) herein. The term
"Permitted Debits" means the following
items (regardless of any agreement by the
Company to compensate the Bank by means of
balances in the Account), as
permitted by the Deposit Agreement: (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.
<PAGE>
(b) All Permitted Debits shall be charged
against Company's general account
number 2000021178524 with the Bank (the
"General Account"). In the event: (i)
the Bank were unable to set off or charge
any Permitted Debit against the
Company's General Account because of
insufficient funds in the General Account,
or (ii) the Bank in good faith were to
believe that any legal process or
applicable law prohibited such setoff or
charge against the General Account, or
(iii) the General Account were closed,
then: (A) the Bank may charge such
Permitted Debits to and set off same
against any other account of the Company
excluding the Account(s) which are set
forth on Exhibit A hereof; and (B) if
there were insufficient funds in the
account(s) (excluding the Account(s) as set
forth in Exhibit A hereof) 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 there were insufficient funds in the
account(s) of the Company, excluding
the Account(s) set forth on Exhibit A
hereof, against which the Bank could
charge or set off Permitted Debits pursuant
to subsections (a) and (b) of this
Section 3 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, 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, as to unpaid Permitted
Debits that are service charges, fees
or expenses, the Secured Party shall be
required to pay to th
