DEPOSIT ACCOUNT CONTROL AGREEMENT
Exhibit
4.8
This
Agreement is entered into as of August __, 2006, among KH Funding Company
(“Company”), Xxxxx Fargo Bank, N.A. (“Lender”) and Bank of America, N.A.
(“Bank”) with respect to the following:
A. Bank
has
agreed to establish and maintain for Company deposit account number ____________
(the “Account”).
B. Company
has assigned to Lender a security interest in the Account and in checks and
other payment instructions (“Checks”) deposited in the Account.
C. Company,
Lender and Bank are entering into this Agreement to evidence Lender’s security
interest in the Account and such Checks and to provide for the disposition
of
net proceeds of Checks deposited in the Account.
Accordingly,
Company, Lender and Bank agree as follows:
1. (a) This
Agreement evidences Lender’s control over the Account. Notwithstanding anything
to the contrary in the agreement between Bank and Company governing the Account,
Bank will comply with instructions originated by Lender as set forth herein
directing the disposition of funds in the Account without further consent of
the
Company.
(b) Company
represents and warrants to Lender and Bank that it has not assigned or granted
a
security interest in the Account or any Check deposited in the Account, except
to Lender.
(c) Company
will not permit the Account to become subject to any other pledge, assignment,
lien, charge or encumbrance of any kind, other than Lender’s security interest
referred to herein.
(d) The
Account may receive merchant card deposits and chargebacks. Company acknowledges
and agrees that during the Activation Period (defined below), chargebacks will
be blocked from debiting the Account. Company further acknowledges and agrees
that, prior to the Activation Period, it will arrange with its merchant card
vendor for chargebacks to be directed towards an unblocked account.
2. During
the Activation Period (as defined below), Bank shall prevent Company from making
any withdrawals from the Account. Prior to the Activation Period, Company may
operate and transact business through the Account in its normal fashion,
including making withdrawals from the Account, but covenants to Lender it will
not close the Account. Bank shall have no liability in the event Company
breaches this covenant to Lender.
Company
and Lender acknowledge and agree that Bank may debit the Account for any ACH
credit entries that may have been originated by Company but that have not
settled at the time of Bank’s receipt of the Notice (defined below) or for any
entries, whether credit or debit, that are subsequently returned thereafter.
A
reasonable period of time following the commencement of the Activation Period,
and continuing on each Business Day thereafter, Bank shall transfer all
collected and available balances in the Account to Lender at its account
specified in the Notice (as defined below). The “Activation Period” means the
period which commences within a reasonable period of time not to exceed two
Business Days after Bank’s receipt of a written notice from Lender in the form
of Exhibit A (the “Notice”). A “Business Day” is each day except Saturdays,
Sundays and Bank holidays. Funds are not available if, in the reasonable
determination of Bank, they are subject to a hold, dispute or legal process
preventing their withdrawal.
3. Bank
agrees it shall not offset, charge, deduct or otherwise withdraw funds from
the
Account, except as permitted by Section 4, until it has been advised in writing
by Lender that all of Company’s obligations that are secured by the Checks and
the Account are paid in full. Lender shall notify Bank promptly in writing
upon
payment in full of Company’s obligations by means of a letter substantially in
the form of the Termination Notice (defined below).
4. Bank
is
permitted to charge the Account:
(a) for
its
fees and charges relating to the Account or associated with this Agreement;
and
(b) in
the
event any Check deposited into the Account is returned unpaid for any reason
or
for any breach of warranty claim.
5.
(a) If
the
balances in the Account are not sufficient to compensate Bank for any fees
or
charges due Bank in connection with the Account or this Agreement, Company
agrees to pay Bank on demand the amount due Bank. Company will have breached
this Agreement if it has not paid Bank, within five days after such demand,
the
amount due Bank.
(b) If
the
balances in the Account are not sufficient to compensate Bank for any returned
Check, Company agrees to pay Bank on demand the amount due Bank. If Company
fails to so pay Bank immediately upon demand, Lender agrees to pay Bank within
five days after Bank’s demand to Lender to pay any amount received by Lender
with respect to such returned Check. The failure to so pay Bank shall constitute
a breach of this Agreement.
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(c) Company
hereby authorizes Bank, without prior notice, from time to time to debit any
other account Company may have with Bank for the amount or amounts due Bank
under subsection 5(a) or 5(b).
6.
(a) Bank
will
send information regarding deposits to the Account to the address specified
below for Company or as otherwise specified in writing by Company to Bank,
and
will send a copy of each such deposit advice to the address specified below
for
Lender.
(b) In
addition to the original Bank statement provided to Company, Bank will provide
Lender with a duplicate of such statement.
7.
(a) Bank
will
not be liable to Company or Lender for any expense, claim, loss, damage or
cost
(“Damages”) arising out of or relating to its performance under this Agreement
other than those Damages which result directly from its acts or omissions
constituting negligence or intentional misconduct.
(b) In
no
event will Bank be liable for any special, indirect, exemplary or consequential
damages, including but not limited to lost profits.
(c) Bank
will
be excused from failing to act or delay in acting, and no such failure to r
delay shall constitute a breach of this Agreement or otherwise give rise to
any
liability of Bank, if (i) such failure or delay is caused by circumstances
beyond Bank’s reasonable control, including but not limited to legal constraint,
emergency conditions, action or inaction of governmental, civil or military
authority, fire, strike, lockout or other labor dispute, war, riot, theft,
flood, earthquake or other natural disaster, breakdown of public or private
or
common carrier communications or transmission facilities, equipment failure,
or
negligence or default of Company or Lender or (ii) such failure or delay
resulted from Bank’s reasonable belief that the action would have violated any
guideline, rule or regulation of any governmental authority.
(d) Bank
shall have no duty to inquire or determine whether Company’s obligations to
Lender are in default or whether Lender is entitled to provide the Notice to
Bank. Bank may rely on notices and communications it believes in good faith
to
be genuine and given by the appropriate party.
(e) Notwithstanding
any of the other provisions in this agreement, in the event of the commencement
of a case pursuant to Xxxxx 00, Xxxxxx Xxxxxx Code, filed by or against Company,
or in the event of the commencement of any similar case under then applicable
federal or state law providing for the relief of debtors or the protection
of
creditors by or against Company, Bank may act as Bank deems necessary to comply
with all applicable provisions of governing statutes and shall not be in
violation of this Agreement as a result.
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(f) Bank
shall be permitted to comply with any writ, levy order or other similar judicial
or regulatory order or process concerning the Account or any Check and shall
not
be in violation of this Agreement for so doing.
8. Company
and Lender shall jointly and severally indemnify Bank against, and hold it
harmless from, any and all liabilities, claims, costs, expenses and damages
of
any nature (including but not limited to allocated costs of staff counsel,
other
reasonable attorney’s fees and any fees and expenses) in any way arising out of
or relating to disputes or legal actions concerning Bank’s provision of the
services described in this Agreement. This section does not apply to any cost
or
damage attributable to the gross negligence or intentional misconduct of Bank.
Company’s and Lender’s obligations under this section shall survive termination
of this Agreement.
9. Company
and Lender shall jointly and severally pay to Bank, upon receipt of Bank’s
invoice, all costs, expenses and attorneys’ fees (including allocated costs for
in-house legal services) incurred by Bank in connection with the enforcement
of
this Agreement and any instrument or agreement required hereunder, including
but
not limited to any such costs, expenses and fees arising out of the resolution
of any conflict, dispute, motion regarding entitlement to rights or rights
of
action, or other action to enforce Bank’s rights in a case arising under Xxxxx
00, Xxxxxx Xxxxxx Code. Company agrees to pay Bank, upon receipt of Bank’s
invoice, all costs, expenses and attorneys’ fees (including allocated costs for
in-house legal services) incurred by Bank in the preparation and administration
of this Agreement (including any amendments hereto or instruments or agreements
required hereunder).
10. Termination
and Assignment of this Agreement shall be as follows:
(a) Lender
may terminate this Agreement by providing notice substantially in the form
of
Attachment I (“Termination Notice”) to Company and Bank that all of Company’s
obligations which are secured by Checks and the Account are paid in full. Lender
may also terminate or it may assign this Agreement upon 30 days’ prior written
notice to Company and Bank. Bank may terminate this Agreement upon 30 days’
prior written notice to Company and Lender. Company may not terminate this
Agreement except with the written consent of Lender and upon prior written
notice to Bank.
(b) Notwithstanding
subsection 10(a), Bank may terminate this Agreement at any time by written
notice to Company and Lender if either Company or Lender breaches any of the
terms of this Agreement, or any other agreement with Bank.
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11.
(a) Each
party represents and warrants to the other parties that (i) this Agreement
constitutes its duly authorized, legal, valid, binding and enforceable
obligation; (ii) the performance of its obligations under this Agreement and
the
consummation of the transactions contemplated hereunder will not (A) constitute
or result in a breach of its certificate or articles of incorporation, by-laws
or partnership agreement, as applicable, or the provisions of any material
contract to which it is a party or by which it is bound or (B) result in the
violation of any law, regulation, judgment, decree or governmental order
applicable to it; and (iii) all approvals and authorizations required to permit
the execution, delivery, performance and consummation of this Agreement and
the
transactions contemplated hereunder have been obtained.
(b) The
parties each agree that it shall be deemed to make and renew each representation
and warranty in subsection 11(a) on and as of each day on which Company uses
the
services set forth in this Agreement.
12.
(a) This
Agreement may be amended only by a writing signed by Company, Lender and Bank;
except that Bank’s charges are subject to change by Bank upon 30 days’ prior
written notice to Company.
(b) This
Agreement may be executed in counterparts; all such counterparts shall
constitute but one and the same agreement.
(c) This
Agreement controls in the event of any conflict between this Agreement and
any
other document or written or oral statement. This Agreement supersedes all
prior
understandings, writings, proposals, representations and communications, oral
or
written, of any party relating to the subject matter hereof.
(d) This
Agreement shall be interpreted in accordance with Maryland law without reference
to that state’s principles of conflicts of law.
13. Any
written notice or other written communication to be given under this Agreement
shall be addressed to each party at its address set forth on the signature
page
of this Agreement or to such other address as a party may specify in writing.
Except as otherwise expressly provided herein, any such notice shall be
effective upon receipt.
14. Nothing
contained in the Agreement shall create any agency, fiduciary, joint venture
or
partnership relationship between Bank and Company or Lender. Company and Lender
agree that nothing contained in this Agreement, nor any course of dealing among
the parties to this Agreement, shall constitute a commitment or other obligation
on the part of Bank to extend credit to Company or Lender.
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15. Each
of
the Company, Lender and the Bank respectively agrees that it shall not cite
or
refer to this Agreement as a precedent in any negotiation of any other Deposit
Account Control Agreement to which the Company, Lender or any of its affiliates
and the Bank shall be party.
In
Witness Whereof, the parties hereto have executed this Agreement by their duly
authorized officers as of the day and year first above written.
|
KH
FUNDING COMPANY
(“Company”)
|
|||
| By: _____________________________ | Address for notices: | ||
| Name: Xxxxxx X. Xxxxxx | |||
| Title: President and Chief Executive Officer |
|
XXXXX
FARGO BANK, N.A.
(“Lender”)
|
|||
| By: _____________________________ | Address for notices: | ||
| Name: __________________________ | |||
| Title: ___________________________ |
|
BANK
OF AMERICA, N.A.
(“Bank”)
|
|||
| By: _____________________________ | Address for notices: | ||
| Name: __________________________ | |||
| Title: ___________________________ |
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EXHIBIT
A
[Letterhead
of Lender]
| To: |
Bank
of America, N.A.
[Address]
|
| Re: |
[Name
of Company]
Account
No. ____________________________
|
Ladies
and Gentlemen:
Reference
is made to the Deposit Account Control Agreement dated ____________ (the
“Agreement”) among [Company Name], us and you regarding the above-described
account (the “Account”). In accordance with Section 2 of the Agreement, we
hereby give you notice of our exercise of control of the Account and we hereby
instruct you to transfer funds to our account as follows:
Bank
Name: ________________________
Bank
Address: ________________________
ABA
No.: ________________________
Account
Name: ________________________
Account
No.: ________________________
Beneficiary’s
Name: ________________________
Very
truly yours,
________________________________
as
Lender
By:
_____________________________
Name:
__________________________
Title:
___________________________
ATTACHMENT
I
[Letterhead
of Lender]
________________,
200_
Bank
of
America, National Association
_________________
_________________
Attn:
____________
Re: Termination
of Deposit Account Control Agreement
Ladies
and Gentlemen:
Reference
is made to that certain _____________________________ dated as of ________,
2000_ (as amended, supplemented, amended and restated or otherwise modified
from
time to time, the “Agreement”
among
you, ______________ (the “Company”), and us as (“Lender”). You are hereby
notified that the Agreement is terminated with respect to the undersigned,
and
you have no further obligations to the undersigned thereunder. Notwithstanding
any previous instructions to you, you are hereby instructed to accept all future
directions with respect to the Account from the Company. This notice terminates
any obligations you may have to the undersigned with respect to the
Account.
Very
truly yours,
XXXXX
FARGO BANK, N.A.
as
Lender
By:
_____________________________
Name:
ACKNOWLEDGED
AND AGREED: Title:
BANK
OF
AMERICA, N. A.
as
Bank
By:
_____________________________
Name:
Title:
