Common use of The Blocked Account Clause in Contracts

The Blocked Account. (a) Each Collateral Related Account for which a Blocked Account is required to be in place pursuant to this Section 6.15 and each Concentration Account owned or maintained by the Borrower Parties shall be maintained at a bank or financial institution which is reasonably acceptable to the Administrative Agent (each such bank, a “Cash Management Bank”). As of the Agreement Date, each deposit account of the Borrower Parties is listed on Schedule 6.15 and such schedule designates which accounts are Collateral Related Accounts and Concentration Accounts. Each (i) Concentration Account and (ii) Collateral Related Account maintained by any Borrower Party shall be subject to a control agreement (a “Blocked Account Agreement”) in form and substance satisfactory to the Administrative Agent and such bank or financial institution (each such account, a “Blocked Account”); provided, however, so long as the Borrower Parties have established and maintain a cash management system in which each store level depository account (“Store Level Account”) is swept (subject to maintaining nominal balances in such account in an amount not to exceed $1,000 per account) to a Concentration Account that is a Blocked Account no less frequently than once every five (5) Business Days (or at any time after an Activation Event, on a daily basis), then the Borrower Parties shall not be required to enter into a Blocked Account Agreement with respect to any such Store Level Account. Each such Blocked Account Agreement shall provide, among other things, that from and after the Agreement Date, the relevant Cash Management Bank, agrees, from and after the receipt of a notice (an “Activation Notice”) from the Administrative Agent (which Activation Notice shall be given by the Administrative Agent at any time at which (i) an Event of Default has occurred and is continuing or (ii) Availability for three (3) consecutive Business Days is less than the greater of (A) $20,000,000 or (B) thirty percent (30%) of the amount of the Revolving Loan Commitment then outstanding (the foregoing being referred to herein as an “Activation Event”)), to forward immediately all amounts in each Blocked Account, as the case may be to the Administrative Agent per its instructions and to commence the process of daily sweeps from such account to the Administrative Agent. (b) Notwithstanding anything to the contrary contained herein, upon and at all times after an Activation Event, all amounts deposited in the Collateral Related Accounts and the Concentration Accounts, all other proceeds of Collateral and all proceeds of Loans shall be used solely for (i) expenditures made in connection with the operations of the business of the Borrower Parties, (ii) repayment of outstanding Obligations, and/or (iii) Investments made in any account which is subject to a Blocked Account Agreement. (c) The Borrower Parties shall take all steps to ensure that all of their Credit Card Processors forward all items of payment to a Blocked Account including, without limitation, irrevocably instructing the Credit Card Processors to forward all payments owing to the Borrower Parties directly to a Blocked Account. (d) In the event that any Borrower Party shall at any time after an Activation Event receive any remittances of any of the foregoing directly or shall receive any other funds representing proceeds of the Collateral, such Borrower Party shall hold the same as trustee for the Administrative Agent, shall segregate such remittances from its other assets, and shall promptly deposit the same into a Blocked Account.

The Blocked Account. (a) Each Collateral Related Account for which Credit Party will, and will cause each of its Subsidiaries to, establish and maintain one or more blocked accounts (each, a “Blocked Account is required to be in place Account”) pursuant to this Section 6.15 and a lockbox arrangement, or other arrangement, in each Concentration Account owned or maintained by the Borrower Parties shall be maintained at a bank or financial institution which is reasonably case, acceptable to the Administrative Agent (with Xxxxx Fargo Bank, any Affiliate thereof or any other bank(s) as may be selected by the Credit Parties and approved by the Administrative Agent in its reasonable discretion. The Credit Parties shall issue to each such bank an irrevocable letter of instruction directing such bank to deposit all payments or other remittances received in the lockbox to the Blocked Account maintained at such bank, a “Cash Management Bank”). As of the Agreement Date, each deposit account of the Borrower Parties is listed on Schedule 6.15 and such schedule designates which accounts are Collateral Related Accounts and Concentration Accounts. Each (i) Concentration such Blocked Account and (ii) Collateral Related bank shall agree to the Administrative Agent’s standard Blocked Account maintained by any Borrower Party Agreement or such variation thereof as shall be subject to a control agreement (a “Blocked Account Agreement”) in form and substance mutually satisfactory to the Administrative Agent and such bank or financial institution (each such accountbank. During a Cash Sweep Period, a “Blocked Account”); provided, however, so long as the Borrower Parties have established and maintain a cash management system in all amounts which each store level depository account (“Store Level Account”) is swept (subject to maintaining nominal balances in such account in an amount not to exceed $1,000 per account) to a Concentration Account that is a shall be deposited into any Blocked Account no less frequently than once every five (5) Business Days (or at any time after an Activation Event, on a daily basis), then shall immediately become the Borrower Parties shall not property of and be required to enter into a Blocked Account Agreement with respect to any such Store Level Account. Each such Blocked Account Agreement shall provide, among other things, that from under the sole dominion and after the Agreement Date, the relevant Cash Management Bank, agrees, from and after the receipt exclusive control of a notice (an “Activation Notice”) from the Administrative Agent (which Activation Notice shall be given by the Administrative Agent at any time at which (i) an Event of Default has occurred and is continuing or (ii) Availability for three (3) consecutive Business Days is less than the greater of (A) $20,000,000 or (B) thirty percent (30%) of the amount of the Revolving Loan Commitment then outstanding (the foregoing being referred to herein as an “Activation Event”)), to forward immediately all amounts in each Blocked Account, as the case may be to the Administrative Agent per its instructions and to commence the process of daily sweeps from such account to the Administrative Agent, on behalf of the Lender Group, and no Credit Party shall have any right to withdraw such amounts from any Blocked Account. (b) Notwithstanding anything to the contrary contained hereinEach Credit Party will, upon and at all times after an Activation Eventwill cause each of its Subsidiaries to, all amounts deposited in the Collateral Related Accounts and the Concentration Accounts, all other proceeds of Collateral and all proceeds of Loans shall be used solely for (i) expenditures made in connection with the operations of the business of the Borrower Parties, (ii) repayment of outstanding Obligations, and/or (iii) Investments made in any account which is subject to a Blocked Account Agreement. (c) The Borrower Parties shall take all steps to ensure that all of their Credit Card Processors Account Debtors and all of their credit card processors forward all items of payment to a lockboxes established with the Blocked Account includingbanks. The Credit Parties shall cause each of their credit card processors to enter into an agreement, without limitationin form and substance satisfactory to the Administrative Agent, with applicable Credit Party pursuant to which the applicable Credit Party shall irrevocably instructing the Credit Card Processors instruct such credit card processor to forward all payments items of payment owing to the Borrower Credit Parties directly to a Blocked Account. (dc) In the event that any Borrower Credit Party shall at any time after an Activation Event receive any remittances of any of the foregoing directly or shall receive any other funds representing proceeds of the Collateral, such Borrower each Credit Party shall will, and will cause each of its Subsidiaries to, hold the same as trustee for the Administrative Agent, shall segregate such remittances from its other assets, and shall promptly deposit the same into a Blocked Account. All cash, cash equivalents, checks, notes, drafts or similar items of payment received by any Credit Party shall be deposited into a Blocked Account promptly upon receipt thereof by such Credit Party. (d) During a Cash Sweep Period, at the sole discretion of the Administrative Agent, if the Administrative Agent or any Affiliate of the Administrative Agent is a Blocked Account bank, on each Business Day the Administrative Agent shall, without further consent of any Credit Party, withdraw (or cause such Affiliate to withdraw) all immediately available funds in such Blocked Account, deposit the same in the account maintained by the Administrative Agent as described in Section 6.5(a), and apply the same against the Obligations in the manner provided for in Section 6.4. (e) During a Cash Sweep Period, at the sole discretion of the Administrative Agent, if any Blocked Account bank is not the Administrative Agent or any Affiliate of the Administrative Agent, all funds in the Blocked Account of such other bank shall be deposited into the Clearing Account on a daily basis in immediately available funds. On each Business Day on which any amount is deposited into the Clearing Account in immediately available funds, the Administrative Agent shall withdraw such amount from the Clearing Account, deposit the same in the account maintained by the Administrative Agent as described in Section 6.5(a), and apply the same against the Obligations in the manner provided for in Section 6.4. (f) After the Closing Date, except as otherwise permitted under the Security Agreement, no Credit Party shall open any deposit account or securities account unless the depository bank or securities intermediary, as applicable, for such account shall have entered into a Blocked Account Agreement with the Administrative Agent. In addition, no Credit Party shall maintain a balance in excess of the amount necessary to cover outstanding checks drawn on such account in any other deposit account or securities account unless and until such Credit Party has delivered to the Administrative Agent a Blocked Account Agreement in form and substance satisfactory to the Administrative Agent executed by such Credit Party, the Administrative Agent and the financial institution or securities intermediary, as applicable, where such account is located.