RESTRICTED ACCOUNT AGREEMENT

  Exhibit 10.10 

RESTRICTED ACCOUNT AGREEMENT

          This Restricted Account Agreement (as amended, restated or supplemented from time to 

time, this “Agreement”) is entered into this 28^th day of September, 2007, by and among NORTH 

FORK BANK, a New York banking corporation with offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, 

▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (together with its successors and assigns, the “Bank”), ELEC 

COMMUNICATIONS CORP., a New York corporation with offices at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 

▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (together with its successors and assigns, the 

“Company”), and LV ADMINISTRATIVE SERVICES, INC., a Delaware corporation (together 

with its successors and assigns, the “Agent”). 

          WHEREAS, the Company, the Agent, Calliope Capital Corporation (“Calliope”), Valens 

Offshore SPV II, Corp. (“Valens”) and certain other purchasers (together with Calliope and 

Valens, collectively, the “Purchasers”) are party to a Securities Purchase Agreement (as 

amended, modified or supplemented from time to time, the “Purchase Agreement”) pursuant to 

which the Purchasers have provided financing to the Company. Unless otherwise defined herein, 

capitalized terms used herein shall have the meaning provided such terms in the Purchase 

Agreement; 

          WHEREAS, the Company and the Agent have retained the Bank to provide certain 

services with respect to the Restricted Account (as defined below); and 

          WHERERAS, the Company and the Creditor Parties have agreed that an amount of cash 

equal to $2,664468.28 shall be deposited by the Agent on behalf of the Company by wire 

transfer of immediately available funds into the Restricted Account, which cash shall be held by 

the Bank for the benefit of the Creditor Parties, as security for the Company’s obligations under 

the Purchase Agreement and the Related Agreements. For the purposes of this Agreement, the 

“Restricted Account” shall mean that certain deposit account (as defined in Section 9-102 of the 

Uniform Commercial Code as in effect in the State of New York on the date hereof) described 

on Exhibit B hereto, which Restricted Account shall be maintained at the Bank and shall be in 

the sole dominion and control of the Agent; 

          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.       The Bank is hereby authorized to accept for deposit into the Restricted Account 

the sum of $2,664468.28. The Bank hereby agrees to hold any and all monies, and other 

amounts from time to time on deposit and/or held in the Restricted Account for the benefit of the 

Creditor Parties and shall not release any monies held in the Restricted Account until such time 

as the Bank shall have received a notice from the Agent substantially in the form attached hereto 

as Exhibit A (a “Release Notice”). Following the receipt of a Release Notice from the Agent, the 

Bank agrees to promptly disburse the amount of cash referred to in such Release Notice to such 

account as the Agent shall determine in its sole discretion. The Bank hereby agrees that it will 

only comply with written instructions originated by the Agent directing disposition of funds in 

the Restricted Account. The Company hereby irrevocably authorizes the Bank to comply with 

any and all instructions given to the Bank by the Agent with respect to the Restricted Account 

without further consent by the Company. The Bank, the Company and the Agent agree that the 

Restricted Account is in the Agent’s sole dominion and control, for the benefit of the Creditor 

Parties.   

          2.       Each of the Company, the Agent and the Bank hereby agrees that the Restricted 

Account shall not be closed, and the account name and account number in respect thereof shall 

not be changed, in any case, without the consent of the Agent, except as specifically provided for 

in Section 9 below. 

          3.       The Bank hereby subordinates any claims and security interests it may have 

against, or with respect to, the Restricted Account (including any amounts from time to time on 

deposit therein) to the security interests of Agent therein, and agrees that no amounts shall be 

charged by it to, or withheld or set-off or otherwise recouped by it from, the Restricted Account 

or any amounts from time to time on deposit therein; provided that, in connection with all service 

charges and any other charges which the Bank is entitled to receive in connection with the 

servicing and maintaining of the Restricted Account (such charges, collectively, the “Charges”), 

each of the Company, the Agent and the Bank hereby agrees that the Bank will collect such 

Charges in the following manner: (i) first, the Bank will charge other deposit accounts 

maintained by the Company with the Bank, (ii) second, in the event that there are insufficient 

collected funds in such other deposit accounts to pay such Charges, the Bank will promptly 

notify the Company and the Agent with respect to same and, within seven (7) business days of 

the Company’s receipt of such notice, the Company shall pay to the Bank the full amount of such 

Charges then due, and (iii) third, if the Company fails to pay to the Bank such Charges then due 

within the time period set forth in the preceding clause (ii), the Bank will promptly provide a 

written notice to the Agent of such occurrence and, in such case, the Bank is hereby authorized, 

following a period of five (5) business days after the receipt of such written notice by the Agent, 

to deduct such Charges then due from the Restricted Account, unless, during such five (5) 

business day period, the Agent pays the amount of any such Charges then due to the Bank from 

its own account. Except for the payment of the Charges as set forth in the immediately 

preceding proviso, the Bank agrees that it shall not offset, deduct or claim against the Restricted 

Account unless and until the Agent has notified the Bank in writing that all of the Company’s 

obligations under the Purchase Agreement and the Related Agreements have been performed. 

          4.       The Company and the Bank agree that the maintenance by the Bank of the 

Restricted Account shall be as agent for the Creditor Parties. The Bank shall be responsible for 

the performance of only such duties as are set forth herein. The Bank’s duties hereunder, 

however, are merely ministerial, and the Bank shall have no liability or obligation to the 

Company or any Creditor Party or to any other person for any act or omission of the Bank in 

connection with the performance of the Bank’s duties in servicing and/or maintaining the 

Restricted Account, except for acts of gross negligence or willful misconduct by Bank. IN NO 

EVENT, HOWEVER, SHALL THE BANK HAVE ANY RESPONSIBILITY FOR 

CONSEQUENTIAL, INDIRECT, SPECIAL OR EXEMPLARY DAMAGES OR LOST 

PROFITS, WHETHER OR NOT IT HAS NOTICE THEREOF, AND REGARDLESS OF THE 

BASIS, THEORY OR NATURE OF THE ACTION UPON WHICH THE CLAIM IS 

ASSERTED, NOR SHALL IT HAVE ANY RESPONSIBILITY OR LIABILITY FOR THE 

2

VALIDITY OR ENFORCEABILITY OF ANY SECURITY INTEREST OR OTHER 

INTEREST OF THE AGENT OR THE COMPANY IN THE RESTRICTED ACCOUNT. In 

furtherance of and without limiting the foregoing, the Company and the Agent agree that the 

Bank shall not be liable for any damage or loss to them for 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 any similar or dissimilar cause beyond the 

reasonable control of the Bank. This paragraph shall survive the termination of this Agreement. 

          5.       Except where the Bank has been grossly negligent or has acted in bad faith, each 

of the Agent and the Company and their respective successors and assigns will release the Bank 

from and shall indemnify and hold the Bank harmless from and against any and all losses, 

claims, damages, liabilities, costs and expenses (including, without limitation, reasonable 

counsel fees, whether arising in an action or proceeding among the parties hereto or otherwise, 

without regard to the merit or lack of merit thereof) to which the Bank may become subject, or 

which it may suffer or incur, arising out of or based upon this Agreement or the actions 

contemplated hereby. This paragraph shall survive termination of this Agreement. 

          6.       The Bank shall be fully protected in acting on any order or direction by the Agent 

respecting the items received by the Bank or the monies or other items in the Restricted Account 

without making any independent inquiry whatsoever as to the Agent’s rights or authority to give 

such order or direction or as to the application of any payments made pursuant thereto. 

          7.       Nothing in this Agreement shall be deemed to prohibit the Bank from complying 

with its customary procedures in the event that it is served with any legal process with respect to 

the Restricted Account. 

          8.       The rights and powers granted in this Agreement to the Agent have been granted 

in order to protect and further perfect its security interests in the Restricted Account (including 

any amounts from time to time on deposit therein) and are powers coupled with an interest and 

will be affected neither by any purported revocation by the Company of this Agreement or the 

rights granted to the Agent hereunder or by the bankruptcy, insolvency, conservatorship or 

receivership of the Company or the Bank or by the lapse of time. 

          9.       This Agreement may not be amended or waived except by an instrument in 

writing signed by each of the parties hereto. This Agreement may be terminated by the Bank 

upon giving the Company and the Agent thirty (30) days prior written notice. The Agent shall 

designate a successor bank on or prior to the effective date of such termination and the Bank 

shall deliver the balance in the Restricted Account to such successor bank. Any notice required 

to be given hereunder may be given, and shall be deemed given when delivered, via telefax, U.S. 

mail return receipt requested or nationally recognized overnight courier to each of the parties at 

the address set forth above. This Agreement may be executed in any number of counterparts, 

each of which shall be an original and all of which, when taken together, shall constitute one 

agreement. Delivery of an executed signature page of this Agreement by facsimile transmission 

shall be effective as delivery of a manually executed counterpart hereof or thereof, as the case 

may be. This Agreement shall be governed by, and construed in accordance with, the laws of the 

3

State of New York, without regard to its conflict of laws principles. This Agreement sets forth 

the entire agreement between the parties hereto as to the matters set forth herein and supersede 

all prior communications, written or oral, with respect to the matters herein. EACH OF THE 

PARTIES HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT 

TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR 

CONTEMPLATED BY THIS AGREEMENT. THE BANK, THE COMPANY AND THE 

AGENT EACH HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE 

FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE COUNTY OF NEW 

YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THIS AGREEMENT OR 

ANY MATTERS CONTEMPLATED HEREBY OR THEREBY. 

*  *  *  *

4

Agreed and accepted this 28^th day of September, 2007. 

                                                                      NORTH FORK BANK 

                                                                      By: /s/ North Fork Bank_________  ____ 

                                                                      Name: 

                                                                      Title: 

                                                                      LV ADMINISTRATIVE SERVICES, INC., 

                                                                      as Agent 

                                                                      By: /s/ ▇▇▇ Regan___________________ 

                                                                      Name: ▇▇▇ ▇▇▇▇▇

                                                                      Title: Senior Managing Director

                                                                      ELEC COMMUNICATIONS CORP. 

                                                                      By: /s/ ▇▇▇▇ ▇. ▇▇▇▇                                    

                                                                      Name: ▇▇▇▇ ▇. ▇▇▇▇ 

                                                                      Title: Chief Executive Officer