DEPOSIT ACCOUNT CONTROL AGREEMENT (Blocked Account)
(Blocked Account)
This
Deposit Account Control Agreement (Blocked Account) (this
“Agreement”) is entered into as of May 4, 2018, by
Fusion Connect, Inc., a Delaware corporation
(“Borrower”), Wilmington Trust, National Association, a
national banking association (“First Lien Secured
Party”), and East West Bank, a California banking corporation
(“Deposit Holder”). All references herein to the
“Uniform Commercial Code” refers to the Uniform
Commercial Code as in effect from time to time in the State of New
York. Terms defined in the Uniform Commercial Code have the same
meanings when used herein.
RECITALS
A. Borrower,
First Lien Secured Party, as administrative agent and collateral
agent (in such capacities, the “First Lien Agent”), the
guarantors from time to time party thereto and the lenders from
time to time party thereto are parties to that certain First Lien
Credit and Guaranty Agreement, dated as of May 4, 2018 (as the same
may hereafter be amended, supplemented, amended and restated or
otherwise modified from time to time, the “Credit
Agreement”).
B. On
the date hereof, First Lien Secured Party will deposit $62,000,000
of the proceeds of certain term loans being made under the Credit
Agreement into the Account (as defined below), which Account shall
constitute the Escrow Cash Collateral Account under and as defined
in the Credit Agreement.
C. Borrower
has granted to (a) First Lien Secured Party a first-priority
security interest in the account listed under Schedule A to this
Agreement and related rights and property (the
“Account”) pursuant to that certain First Lien Pledge
and Security Agreement, dated as of May 4, 2018, executed by
Borrower and the other grantors from time to time party thereto in
favor of First Lien Secured Party, as the First Lien Agent, and (b)
Wilmington Trust, National Association (“Second Lien Secured
Party”), as administrative agent and collateral agent (in
such capacities, the “Second Lien Agent”) under that
certain Second Lien Credit and Guaranty Agreement, dated as of May
4, 2018 (as the same may hereafter be amended, supplemented,
amended and restated or otherwise modified from time to time),
among Borrower, the Second Lien Agent, the guarantors from time to
time party thereto and the lenders from time to time party thereto,
a second-priority security interest in the Account pursuant to that
certain Second Lien Pledge and Security Agreement, dated as of May
4, 2018, executed by Borrower and the other grantors from time to
time party thereto in favor of Second Lien Secured
Party.
D. Borrower
and First Lien Secured Party are requesting that Deposit Holder
enter into this Agreement to perfect First Lien Secured
Party’s security interests in the Account by control (and to
enable First Lien Secured Party to hold and control the Account as
gratuitous bailee and gratuitous agent for Second Lien Secured
Party in accordance with that certain Intercreditor Agreement,
dated as of May 4, 2018, among the First Lien Representative, the
Second Lien Representative and each Additional First Lien
Obligations Representative from time to time party thereto and each
Additional Second Lien Obligations Representative from time to time
party thereto, each as defined therein).
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E. Deposit
Holder is willing to act as Deposit Holder, but only under the
terms of this Agreement. Deposit Holder has no obligation or duties
with respect to any other agreements between Borrower and First
Lien Secured Party or Second Lien Secured Party.
AGREEMENT
1.
Security
Interest.
Deposit
Holder acknowledges the security interests of First Lien Secured
Party and Second Lien Secured Party in the Account. Borrower
ratifies and confirms the security interests it has granted to each
of First Lien Secured Party and Second Lien Secured Party in the
Account. This Agreement evidences First Lien Secured Party’s
control over the Account.
2.
Control
of Account by First Lien Secured Party; Borrower’s Rights in
Account.
2.1 Notwithstanding any
separate agreement Borrower may have with Deposit Holder, First
Lien Secured Party shall be entitled at any time to give Deposit
Holder instructions as to the withdrawal or disposition of
available funds from time to time credited to the Account, or as to
any other matters relating to the Account, all without further
consent of Borrower or any other person. Deposit Holder shall, and
is fully entitled to, rely upon any such instructions from First
Lien Secured Party even if such instructions are contrary to any
instructions or demands that Borrower may give to Deposit Holder.
Between Borrower and First Lien Secured Party, First Lien Secured
Party agrees that that it shall provide instructions to Deposit
Holder in accordance with the terms of the Credit
Agreement.
2.2 Deposit Holder
acknowledges and agrees that (a) in accordance with paragraph 2.1
above, it shall comply with the instructions originated by First
Lien Secured Party directing disposition of any available funds
from time to time credited to the Account without further consent
of Borrower; (b) First Lien Secured Party now has exclusive control
of the Account for purposes of Sections 9-312(b) and 9-314 of the
Uniform Commercial Code, (c) Borrower does not have a right to make
withdrawals or otherwise transact on the Account and (d) the
Account will be maintained as a “deposit account” as
defined in Section 9-102(a)(29) of the Uniform Commercial Code.
Notwithstanding anything to the contrary contained herein, if at
any time Deposit Holder shall receive conflicting orders or
instructions from First Lien Secured Party and Borrower, Deposit
Holder shall follow the orders or instructions of First Lien
Secured Party, and not the orders or instructions of
Borrower.
2.3 Borrower represents
and warrants to First Lien Secured Party and Deposit Holder that it
has not assigned or granted a security interest in the Account,
except to First Lien Secured Party and Second Lien Secured Party.
Borrower will not permit the Account to become subject to any other
pledge, assignment, lien, charge or encumbrance of any kind, other
than security interests of First Lien Secured Party and Second Lien
Secured Party referred to herein.
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3.
Deposit
Holder’s Responsibility.
3.1 Deposit Holder
shall have no duty to inquire or determine whether Borrower’s
obligations to First Lien Secured Party are in default or whether
First Lien Secured Party or Borrower is entitled, under any
separate agreement between First Lien Secured Party and Borrower,
to give any instructions relating to the Account. Deposit Holder
shall have no responsibility or liability to First Lien Secured
Party or Borrower for complying with any order or instruction,
whether oral or written, concerning the Account, except to the
extent such compliance would violate the provisions of this
Agreement, or Deposit Holder acted with gross negligence or engaged
in willful misconduct. Deposit Holder shall have no responsibility
or liability to First Lien Secured Party or Borrower for losses or
liabilities resulting from any failure to comply with instructions
relating to the Account or delay in complying with such
instructions if the failure or delay is due to circumstances beyond
Deposit Holder’s reasonable control, including without
limitation interruptions of communications facilities, civil
unrest, acts of God, wars, or terrorist attacks, and provided
Deposit Holder had reasonable opportunity to act thereon. Without
limiting the foregoing, in no event shall Deposit Holder have any
liability for indirect, punitive, exemplary or consequential loss
or damages, including without limitation lost profits, whether or
not any claim for such loss or such damages is based on tort or
contract or Deposit Holder knew or should have known the likelihood
of such damages in any circumstances.
3.2 Upon reasonable
opportunity for Deposit Holder to act after receipt of First Lien
Secured Party’s instructions to that effect and continuing on
each Business Day thereafter, Deposit Holder shall transfer all
available balances in the Account to First Lien Secured Party at
the account specified in such instructions. Any disposition of
funds Deposit Holder makes in response to instructions from First
Lien Secured Party is subject to Deposit Holder’s standard
policies, procedures and documentation governing the type of
disposition made. Borrower agrees to pay all fees for the transfer
of funds as per instructions. Funds are not available if, in the
reasonable determination of Deposit Holder, they are subject to a
dispute or legal process preventing their withdrawal. A
“Business Day” is each day except Saturdays, Sundays,
or a day on which Deposit Holder is authorized or required by
applicable law, regulation or executive order to close in New
York.
3.3 Deposit Holder may
rely on notices and communications it believes in good faith to be
genuine and given by the appropriate party.
4.
Priority
of Security Interests; Rights Reserved by Deposit
Holder.
Deposit
Holder agrees that all of its present and future rights against the
Account are subordinate to the security interests of First Lien
Secured Party and Second Lien Secured Party therein; provided, however, that it is agreed that
nothing herein subordinates or waives, and that Deposit Holder
expressly reserves, all of its present and future rights (whether
described as rights of setoff, banker’s lien, chargeback or
otherwise, and whether available to Deposit Holder under the law or
under any other agreement between Deposit Holder and Borrower
concerning the Account or otherwise) with respect to (a) items
deposited to the Account and returned unpaid, whether for
insufficient funds or for any other reason, and without regard to
the timeliness of return of any such item; (b) overdrafts on the
Account; (c) automated clearing house entries; (d) claims of breach
of the Uniform Commercial Code’s transfer or presentment
warranties made against Deposit Holder in connection with items
deposited to the Account; and (e) Deposit Holder’s usual and
customary charges for services rendered in connection with the
Account, to the extent that, in each case, Borrower has not
separately paid or reimbursed Deposit Holder therefore. To the
extent the Account is a certificate of deposit or time deposit,
Deposit Holder will be entitled to deduct any applicable early
withdrawal penalty prior to disbursing funds from such Account in
response to instructions from First Lien Secured
Party.
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5.
Statements.
In
addition to the original deposit account statement for the Account
which is provided to Borrower, Deposit Holder will send duplicate
statements to First Lien Secured Party. Borrower authorizes Deposit
Holder to provide any additional information relating to the
Account to First Lien Secured Party upon its request without
Borrower’s further consent.
6.
Notice
of Adverse Claims; Record of Security Interest.
6.1 Deposit Holder
represents to First Lien Secured Party that Deposit Holder has not
received notice of any lien, encumbrance or other claim to the
Account from any other person (other than Second Lien Secured
Party) and has not entered into, and covenants with First Lien
Secured Party that it will not enter into, any agreement with any
other person by which Deposit Holder is obligated to comply with
instructions from such other person as to the disposition of funds
from the Account or other dealings with the Account. Deposit Holder
will use commercially reasonable efforts, subject to applicable
law, to promptly notify First Lien Secured Party if any other
person claims that it has a property interest in the Account (other
than Second Lien Secured Party) or seeks to enter into a deposit
account control agreement or similar agreement with respect to the
Account.
6.2 Deposit Holder
further represents and warrants that it has marked its books and
records to indicate the security interests of First Lien Secured
Party and Second Lien Secured Party in and liens upon the
Account.
7.
Returned
Items.
Borrower and First
Lien Secured Party understand and agree that Deposit Holder will
pay returned items by debiting the Account. Borrower agrees to pay
the amount of any returned item immediately upon demand to the
extent that there are not sufficient funds in the Account to cover
such amount on the day of the debit. First Lien Secured Party
agrees that First Lien Secured Party will pay any such amount that
is not paid in full by Borrower within twenty (20) days after
written demand on First Lien Secured Party by Deposit Holder, up to
the amount of any proceeds received by First Lien Secured Party
under this Agreement. Borrower further agrees to make additional
deposits into the Account as necessary to maintain a balance in the
Account equal to the Escrow Cash Amount (as defined in the Credit
Agreement). “Returned item” means (a) any item
deposited to the Account and returned unpaid, whether for
insufficient funds or for any other reason and without regard to
timeliness of the return or on any drawee’s notice of
non-payment; (b) any item subject to a Commercial Code or
Regulation CC (12 CFR Section 229), as in effect from time to time;
(c) 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 any other
reason; (d) any credit to the Account from a merchant card
transaction, against which a contractual demand of chargeback has
been made; and (e) any credit made to the Account in
error.
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8.
Indemnity.
Borrower and, to
the extent not indemnified by Borrower with ten (10) Business
Days’ prior written demand, First Lien Secured Party, agree
to indemnify Deposit Holder, its officers, directors, employees and
agents against claims, demands, losses, liabilities, damages, costs
and reasonable expenses arising out of this Agreement including any
reasonable fees and costs incurred by Deposit Holder in complying
with instructions or requests given by First Lien Secured Party
hereunder, and including reasonable attorneys’ fees and
disbursements and the reasonable estimate of the allocated costs
and expenses of in-house legal counsel and staff, except to the
extent the claims, losses, liabilities, damages, costs or expenses
are caused by Deposit Holder’s gross negligence or willful
misconduct as determined by a final non-appealable judgment of a
court of competent jurisdiction. IN NO EVENT WILL DEPOSIT HOLDER BE
LIABLE TO ANY PARTY FOR PUNITIVE, EXEMPLARY, CONSEQUENTIAL,
INDIRECT OR SPECIAL DAMAGES.
9.
Termination.
First
Lien Secured Party may terminate this Agreement at any time by
written notice to Deposit Holder and Borrower. Deposit Holder may
terminate this Agreement on thirty (30) days’ prior written
notice to First Lien Secured Party and Borrower. Borrower may not
terminate this Agreement except with written consent of First Lien
Secured Party.
10.
Governing
Law.
10.1 This
Agreement and the rights and obligations of the parties hereunder
(including any claims sounding in contract law or tort law arising
out of the subject matter hereof and any determinations with
respect to post-judgment interest) shall be governed by, and shall
be construed and enforced in accordance with, the laws of the State
of New York, without regard to conflict of laws principles thereof
that would result in the application of any law other than the law
of the State of New York.
10.2 Deposit
Holder’s jurisdiction for purposes of Section 9-304 of the
Uniform Commercial Code shall be the State of New
York.
11.
Entire
Agreement.
This
Agreement is the entire agreement among the parties regarding the
subject matter hereof and supersedes any prior agreements and
contemporaneous oral agreements of the parties concerning its
subject matter. This Agreement will control over any conflicting
agreement between Deposit Holder and Borrower.
12.
Amendments.
No
amendment of, or waiver of a right under, this Agreement will be
binding unless it is in writing and signed by Borrower, First Lien
Secured Party and Deposit Holder.
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13.
Severability.
To the
extent a provision of this Agreement is unenforceable, this
Agreement will be construed as if the unenforceable provision were
omitted.
14.
Successors
and Assigns.
The
provisions of this Agreement shall be binding upon and inure to the
benefit of Deposit Holder, First Lien Secured Party and Borrower
and their respective successors and assigns.
15.
Notices.
All
notices, instructions and/or communications to a party under this
Agreement will be in writing and will be sent to the party’s
address set forth below or to such other address as the party may
notify the other parties.
First Lien Secured
Party:
Wilmington
Trust, National Association
00
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx,
XX 00000
Attention:
Xxxx Xxxxx
Email: xxxxxx@xxxxxxxxxxxxxxx.xxx
Borrower:
Address:
000 Xxxxxxxxx Xxx, Xxxxx 0000
Xxx
Xxxx, XX 00000
Attention:
General Counsel
Email: xxxxxxxxx@xxxxxxxxxxxxx.xxx
Deposit Holder:
East
West Bank
Address:
0000 Xxxxx Xxxxx #000X
Xx
Xxxxx, XX 00000
Attention:
Central Relationship Service
Email: xxxxxxxxxxxxxxxxxxxxxxxxxx@xxxxxxxxxxxx.xxx
With
copy to:
East
West Bank
Telecommunications
Lending
000 Xxxxx Xxx Xxxxxx Xxx, 0xx
Xxxxx
Xxxxxxxx,
XX 00000
Email: xxxxxxx.xxxx@xxxxxxxxxxxx.xxx
xxxxx.xxxx@xxxxxxxxxxxx.xxx
To the
extent that Deposit Holder is precluded from making demand or
giving notice hereunder by reason of the commencement of a
bankruptcy or similar proceeding, then such demand or notice shall
be deemed to have been made or given at the commencement of such
proceeding.
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16.
Deposit
Account Agreement.
The
Account shall also be governed by the Deposit Holder’s
account agreement and applicable fee schedules, provided however
that in event of conflict, this Agreement shall
control.
17.
No
agency, etc.
Nothing
contained in this Agreement shall create any agency, fiduciary,
joint venture or partnership relationship between or among
Borrower, First Lien Secured Party and Deposit Holder.
18.
Counterparts.
This
Agreement may be executed in counterparts, each of which shall be
an original, and all of which shall constitute one and the same
agreement.
19.
Waiver
of Jury Trial.
EACH
OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
HEREUNDER OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO
BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN
ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL
AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 19 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
[Signature
pages follow.]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the
day and year first above written.
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FIRST
LIEN SECURED PARTY
Wilmington Trust,
National Association, a National Banking Association
By: /s/ Xxxxxx X.
Xxxxx
Name:
Xxxxxx X. Xxxxx
Title:
Vice President
BORROWER
Fusion
Connect, Inc., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxx,
Xx.
Name:
Xxxxx X. Xxxxxxxx, Xx.
Title:
Executive Vice Present and General Counsel
DEPOSIT
HOLDER
East
West Bank, a California Banking Corporation
By: /s/ Xxxxxxx
Xxxx
Name:
Xxxxxxx Xxxx
Title:
Senior Vice President
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[Signature Page to
Deposit Account Control Agreement]
