Exhibit 10.3

 

ACCOUNT CONTROL AGREEMENT

 

ACCOUNT CONTROL AGREEMENT (the “Agreement”) dated as of June 22, 2011 among
CAPITAL ONE, NATIONAL ASSOCIATION, having an address at 275 Broadhollow Road,
Melville, NY 11747 (“Bank”), BRT RLOC LLC, a New York limited liability company,
having an address at c/o BRT Realty Trust, 60 Cutter Mill Road, Suite 303, Great
Neck, New York 11021 (“Debtor”), and CAPITAL ONE, NATIONAL ASSOCIATION, as Agent
for the Lenders (as defined below), having an address at 275 Broadhollow Road,
Melville NY 11747 (together with its successors and assigns, hereinafter
referred to as “Secured Party”).

 

W I T N E S S E T H:

 

A.                                   Pursuant to a Loan and Security Agreement
dated as of June 22, 2011 (as the same may be amended, restated, replaced,
supplemented, consolidated or otherwise modified, the “Loan Agreement”) among,
inter alios, Secured Party, Debtor, BRT Realty Trust and the lenders from time
to time party thereto (“Lenders”), Lenders have agreed to provide financing to
Debtor secured by certain of the assets of Debtor, including, without
limitation, account number 7047759476 maintained at Bank and any and all amounts
therein from time to time (collectively, the “Account”);

 

B.                                     In order to secure the prompt and
complete performance by Debtor of all of its obligations and liabilities to
Secured Party and Lenders under the Loan Agreement  and all documents,
instruments and agreements executed in connection therewith (collectively, the
“Obligations”), Debtor has granted to Secured Party, for its benefit and for the
ratable benefit of Lenders, a security interest in the Account; and

 

C.                                     Secured Party, Debtor and Bank have
agreed to enter into this Agreement to provide for the control of the Account by
Secured Party and to perfect Secured Party’s security interests in the Account.

 

NOW THEREFORE, in consideration of the mutual promises contained herein and for
other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

1.                                      Exclusive
Control.                                             Upon Bank’s receipt of a
notice substantially in the form of Exhibit A hereto (a “Notice of Exclusive
Control”), Bank shall neither accept nor comply with any instruction issued by
any person with respect to the disposition of any funds contained in the Account
(an “Order”) from Debtor or any third party for the payment of any funds from
the Account to any third person nor permit Debtor or any third party, other than
Secured Party, to withdraw any funds in the Account without the specific prior
written consent of Secured Party, except as required by law.  Upon receipt of a
Notice of Exclusive Control, Bank shall comply with all Orders originated by
Secured Party concerning the Account and all other requests or instructions from
Secured Party regarding disposition and/or delivery of funds contained in the
Account, without further consent or direction from Debtor or any third party and
without regard to any inconsistent or conflicting Orders given to Bank by Debtor
or any third party, except as required by law.

 

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2.                                      Security Interest.  As collateral
security for the Obligations, Debtor hereby grants to Secured Party, for its
benefit and for the benefit of Lenders, a present and continuing lien and
security interest in (i) the Account, (ii) and all contract rights and
privileges in respect of the Account, (iii) all cash, checks, money orders and
other items of value of Debtor now or hereafter paid, deposited, credited, held
in or to the Account and (iv) all proceeds of the foregoing.   Debtor further
agrees to execute, acknowledge, deliver, file or do, at its sole cost and
expense, all other acts, assignments, notices, agreements or other instruments
as Secured Party may reasonably require in order to effectuate, assure, secure,
assign, transfer and convey unto Secured Party any of the rights granted by this
Section. Bank makes no representation as to the perfection of Secured Party’s
security interest(s) referred to in this paragraph or otherwise in this
Agreement.

 

3.                                      Priority of Lien. Bank hereby
acknowledges and agrees that:

 

(a)                                  Bank has received notice of the existence
of the security interest of Secured Party in the Account, and recognizes the
security interest granted to Secured Party by Debtor;

 

(b)                                 Except as otherwise required by law, Bank
shall not enter into any other agreement with any third party relating to any of
the Account or agree that it will comply with any Orders concerning the Account
originated by any such third party without the prior written consent of Secured
Party; and

 

(c)                                  Bank hereby waives any and all rights it
may have at law or otherwise to set off, or make any claim, against the Account,
except Bank expressly reserves all of Bank’s present and future rights (whether
described as rights of setoff, banker’s lien, chargeback or otherwise, and
whether available to Bank under law or any other agreement between Bank and
Debtor concerning the Account or otherwise) with respect to (i) any item
deposited to the Account and returned unpaid, or with respect to which Bank
fails to receive final settlement, whether for insufficient funds or for any
other reason, including but not limited to the claim of a forged instrument;
(ii) any item subject to a claim against Bank of breach of transfer or
presentment warranty under the Uniform Commercial Code, as adopted in the
applicable state; (iii) any automated clearing house entry credited to the
Account and returned unpaid or subject to an adjustment entry under applicable
clearing house rules, whether for insufficient funds or for any other reason;
(iv) any credit to the Account from a merchant card transaction, against which a
contractual demand for chargeback has been made; (v) any credit to the Account
made in error; and (vi) Bank’s usual and customary charges for services rendered
in connection with the Account including the payment of Bank’s fees and expenses
for maintenance of the Account.  Items, entries, and transactions described in
clauses (i) through (vi) of this paragraph are hereinafter collectively referred
to as “Returned Items.”

 

(d)                                 Bank shall send or make available via Bank’s
internet banking system or otherwise, a monthly report to Debtor and Secured
Party containing information specifying the amount deposited into the Account
for the previous month.

 

(e)                                  Deposits received for deposit in the
Account shall be deemed to bear the valid and legally binding endorsement of the
payee and to comply with all of Bank’s

 

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requirements for the supplying of missing endorsements, now or hereafter in
effect.  Bank shall not be responsible for the effect of processing of any check
or other instrument bearing a legend.

 

4.                                      Control of Deposit Account. Bank and
Debtor each acknowledge and agree that the Account maintained hereunder is
subject to the sole dominion, control and discretion of Secured Party and its
authorized agents or designees upon the receipt of a Notice of Exclusive Control
by Bank.  At all times during the effectiveness of this Agreement, Debtor hereby
absolutely, irrevocably and unconditionally instructs, and Bank hereby agrees,
that, except as required by law, Bank shall not comply with any Orders or other
instructions concerning the Account from Debtor or any third party without the
prior written consent of Secured Party and Debtor shall have no right to close
any such account or right of withdrawal with respect to any such account, except
with the prior written consent of Secured Party, in each case after the receipt
of a Notice of Exclusive Control by Bank.

 

5.              Fees.

 

(a)                                  To compensate Bank for performing the
herein-described services, Debtor agrees to pay the fees owed to Bank.  Bank
shall debit the Account under advice on a monthly basis for its reasonable and
customary fees and charges relating to the Account and shall include its fees in
an account analysis statement required pursuant to Section 3(d) herein.  Debtor
agrees to pay Bank, upon demand, all costs and expenses, including reasonable
attorneys’ fees and disbursements, incurred by Bank in the preparation,
negotiation and administration of this Agreement (including any amendments
hereto or additional instruments or agreements required hereunder); and Debtor
authorizes Bank to charge the Account for such costs and expenses.

 

(b)                                 Debtor agrees to pay Bank for all Returned
Items and for all service charges, returned check fees and any other charges to
which Bank may be entitled for servicing and maintaining the Account
(collectively with Returned Items, the “Charges”) and authorizes Bank to charge
the Account for such Charges.

 

6.                                      Termination.

 

(a)                                  Bank may resign from obligations under this
Agreement at any time after thirty (30) days’ prior written notice to the other
parties hereto. With respect to the appointment of a successor to Bank, Debtor
and Secured Party shall use reasonable efforts to designate such a bank promptly
after receipt of notice of resignation by Bank, and shall take all reasonable
actions necessary to cause such designated successor promptly to assume the
obligations of Bank hereunder.  Bank hereby agrees that it shall promptly take
all reasonable action necessary to facilitate the transfer of all funds held in
the Account to the replacement depository selected by Secured Party.

 

(b)                                 Secured Party may terminate this Agreement
at any time upon thirty (30) days’ prior written notice to the other parties
hereto.

 

(c)                                  Debtor may not unilaterally terminate this
Agreement or close the Account established hereunder.

 

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7.                                      Indemnification.  Bank shall not be
liable for any claims, suits, actions, costs, damages, liabilities or expenses
(“Liabilities”) in connection with the subject matter of this Agreement other
than Liabilities caused by the gross negligence or willful misconduct of Bank,
and Debtor and Secured Party and their respective successors and assigns hereby
agree to indemnify and hold harmless Bank and the directors, officers, employees
and agents of Bank and the successors and assigns of Bank from and against any
and all Liabilities, legal fees, law suits or legal proceedings, including,
without limitation, reasonable fees and disbursements of legal counsel incurred
by Bank in any action or proceeding between Debtor or Secured Party and  Bank or
between Bank and any third party or otherwise, without regard to the merit or
lack of merit thereof, arising from or in connection with any acts or omissions
taken by Bank or any director, officer, employee or agent of any of them, as
applicable, in connection with this Agreement.  Notwithstanding anything to the
contrary contained herein, Bank shall not be liable for any action taken or
omitted by it in good faith except to the extent that a court of competent
jurisdiction determines that Bank’s gross negligence or willful misconduct was
the primary cause of any loss to Debtor or Secured Party.  Bank may execute any
of its powers or perform any of its duties hereunder directly or through agents
or attorneys and may consult with counsel, accountants and other skilled persons
to be selected and retained by it at the cost and expense of Debtor.  Nothing
contained herein shall be deemed to prohibit Bank from complying with its
customary procedures in the event that it is served with any legal process with
respect to any of the Account.

 

The parties hereto agree that Bank’s sole responsibility to Secured Party,
Debtor or any third party for errors made by Bank in processing any deposits
made into the Account shall be to process a correcting entry in the next
regularly scheduled processing of the work after receipt of notification from
Secured Party, Debtor or any third party of such error or after discovery of
such error by Bank, as the case may be, unless such error was due to Bank’s
gross negligence or willful misconduct.  Bank shall not be liable for any damage
or loss resulting from any delay or failure of performance arising out of the
acts or omissions of any third parties, including, but not limited to, various
communication services, courier services, the Federal Reserve System, any other
bank or any third party who may be affected by funds transactions, fire,
mechanical, computer or electrical failures or other unforeseen contingencies,
strikes or other causes beyond the reasonable control of Bank.  In no event
shall Bank be liable for lost profits or consequential, special, direct (except
for those direct damages attributable to Bank’s gross negligence or willful
misconduct), indirect or punitive damages, even if Bank has been advised of the
possibility of the foregoing.

 

8.                                      Successors and Assigns; Assignments.

 

(a)                                  This Agreement shall bind and inure to the
benefit of and be enforceable by Bank, Debtor and Secured Party and their
respective successors and assigns.

 

(b)                                 Any corporation into which Bank in its
individual capacity may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which Bank in its individual capacity shall be a party, or any
corporation to which substantially all the corporate trust business of Bank in
its individual capacity may be transferred, shall be Bank under this Agreement
without further act.

 

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9.                                      Amendments; Other Agreements.  This
Agreement may be further amended from time to time in writing by all parties
hereto.  This Agreement is supplemented by the terms of Bank’s deposit account
agreement with Debtor, and to the extent the terms of such agreement conflict
with this Agreement, the specific terms of this Agreement shall control.

 

10.                               Notices.  Notices to each party hereto shall
be sent to the address set forth on the respective signature pages hereto or, in
each case, to such other address as shall be designated in writing by the
respective party to the other parties hereto. Unless otherwise expressly
provided herein, all such notices, to be effective, shall be in writing
(including by facsimile), and shall be deemed to have been duly given or made
(a) when delivered by hand or by nationally recognized overnight carrier, or
(b) upon receipt after being deposited in the mail, certified mail and postage
prepaid.

 

11.                               Governing Law and Venue.  This Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
York (without regard to conflicts of laws principles applied in New York).  Any
action or proceeding arising out of or concerning this Agreement shall be heard
by a judge sitting without a jury and shall be heard exclusively in state court
of the State of New York.  Bank, Debtor and Secured Party hereby submit to the
exclusive jurisdiction of the state courts of the State of New York located in
New York City, Nassau County and Suffolk County and any federal court sitting
therein for the purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby.  Bank, Debtor, and
Secured Party irrevocably waive, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.  New York
shall be deemed to be Bank’s “jurisdiction” within the meaning of Section 9-304
of the Uniform Commercial Code in effect from time to time in the State of New
York.

 

12.                               Certain Matters Affecting Bank.  Bank may rely
and shall be protected in acting or refraining from acting upon any notice
(including but not limited to electronically confirmed facsimiles of such
notice) believed by it to be genuine and to have been signed or presented by the
proper party or parties.  The duties and obligations of Bank set forth in this
Agreement shall be determined solely by the express provisions of this
Agreement, Bank shall not be liable except for the performance of such party’s
duties and obligations as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement against Bank.

 

13.                               Interpleader.  If at any time Bank, in good
faith, is in doubt as to the action it should take under this Agreement, Bank
shall have the right to commence an interpleader action at Debtor’s sole cost
and expense and to take no further action except in accordance with joint
instructions from Secured Party and Debtor or in accordance with the final order
of the court in such action.

 

14.                               No Precedent in Negotiation. Each of Secured
Party and Debtor respectively agrees that it shall not cite or refer to this
Agreement as a precedent in any negotiation of any other clearing account
agreement to which Secured Party, Debtor or any of their respective affiliates
and Bank shall be party.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement in several
counterparts (each of which shall be deemed an original) as from the date first
above written.

 

 

 

Bank:

 

 

 

 

 

 

 

CAPITAL ONE, NATIONAL ASSOCIATION

 

 

 

 

 

 

 

 

By:

/s/ Paul Kesicki

 

 

Name:

Paul Kesicki

 

 

Title:

Vice President

 

 

 

 

 

 

Address:

 

 

 

 

 

 

275 Broadhollow Road

 

 

Melville NY 11747

 

 

Attention: Bob Bernard

 

SIGNATURE PAGE TO

ACCOUNT CONTROL AGREEMENT

 

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Debtor:

 

 

 

 

 

 

BRT RLOC LLC

 

 

 

 

 

 

 

 

 

 

By:

/s/ Mark H. Lundy

 

 

Name:

Mark H. Lundy

 

 

Title:

Senior Vice President

 

 

 

 

 

 

Address:

 

 

c/o BRT Realty Trust

 

 

60 Cutter Mill Road, Suite 303,

 

 

Great Neck, New York 11021

 

 

Attention: David Kalish

 

 

Telephone Number (for information only): (516) 773-2715

 

SIGNATURE PAGE TO

ACCOUNT CONTROL AGREEMENT

 

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Secured Party:

 

 

 

 

 

 

CAPITAL ONE, NATIONAL

 

 

ASSOCIATION, as Agent

 

 

 

 

 

 

 

 

 

 

By:

/s/ Paul Kesicki

 

 

Name:

Paul Kesicki

 

 

Title:

Vice President

 

 

 

 

 

 

Address:

 

 

275 Broadhollow Road

 

 

Melville NY 11747

 

 

Attention: Bob Bernard

 

 

Telephone Number (for information only): (631) 531-2172

 

SIGNATURE PAGE TO

ACCOUNT CONTROL AGREEMENT

 

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EXHIBIT A

 

Form of Notice of Exclusive Control

 

[Date]

 

Capital One, National Association

275 Broadhollow Road

Melville NY 11747

Attention: Bob Bernard

 

Re:                               BRT RLOC LLC

Capital One, National Association Account No.: 7047759476

(hereinafter referred to as the “Account”)

 

Dear Capital One, National Association:

 

As referenced in the Account Control Agreement June 22, 2011 among BRT RLOC LLC,
Capital One, National Association, as agent, and Capital One, National
Association (a copy of which is attached), we notify you that we will hereafter
exercise exclusive control over the Account. You are instructed not to accept
any directions or instructions with respect to the Account from any person other
than the undersigned unless otherwise ordered by a court of competent
jurisdiction.

 

 

 

Very truly yours,

 

 

 

CAPITAL ONE, NATIONAL ASSOCIATION, as Agent

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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