LOCKBOX AND ACCOUNT CONTROL AGREEMENT
Exhibit 10.5
THIS LOCKBOX AND ACCOUNT CONTROL AGREEMENT (this “Agreement”) is made as of March 17, 2010, by
and among Lightyear Network Solutions, LLC (the “Depositor”), Fifth Third Bank, an Ohio banking
corporation (the “Bank”), and First Savings Bank, F.S.B. (the “Factor”).
R E C I T A L S
WHEREAS, the Factor and the Depositor have advised the Bank that Factor is making or has made
financial accommodations to the Depositor which are secured by, among other things, the proceeds of
the Depositor’s accounts receivable; and
WHEREAS, at the Factor’s request the Depositor has established a special account at the Bank
(as described below, the “Limited Access Lockbox Account”); and
WHEREAS, the Factor and the Depositor have agreed that the transfer of funds out of the
Limited Access Lockbox Account shall be restricted as set forth below.
NOW, THEREFORE, in consideration of the foregoing premises and for other valuable
consideration the receipt of which is hereby acknowledged, the parties agree as follows:
A G R E E M E N T
1. The Limited Access Lockbox Account. The Limited Access Lockbox Account is Account
No. 7380314745 and the title of the Limited Access Lockbox Account shall be: “Lightyear Network
Solutions, LLC for the Benefit of First Savings Bank, F.S.B., as Factor, Lockbox Account.”
The Depositor and the Factor agree to promptly provide the Bank with any documents,
resolutions, and/or instructions needed to establish or maintain the Limited Access Lockbox Account
and the Lockbox (as such term is defined below). The Depositor hereby agrees to abide by and be
bound by the terms of the Lockbox Terms and Conditions as set forth in the Fifth Third Treasury
Management Terms and Conditions as established by the Bank from time to time and incorporated
herein by reference (“Lockbox Agreement”).
2. Accounts; Payment of Account Charges and Service Charges. The Depositor shall open
and maintain at the Bank an account, titled in its own name bearing Account No. 7380314950 (the
“Operating Account”) that the Bank may debit for any fees, charges or expenses owed to the Bank
(collectively, the “Account Charges”) and from which the Bank may obtain reimbursement for any
deposit items that are posted or transferred in error or returned to the Limited Access Lockbox
Account or the Operating Account, for any overdrafts created on the Limited Access Lockbox Account
or the Operating Account, and for any reversals or cancellations of payment orders and other
electronic funds transfers arising in the Limited Access Lockbox Account or the Operating Account
(collectively, the “Adjustments”).
The Depositor and Factor acknowledge that in order for the Bank to provide the services
contemplated in this Agreement, the Bank may, from time to time, use other internal Bank services
and products (collectively, the “Other Services”). The Factor and the Depositor agree that the
Depositor may be required to purchase such Other Services and pay to the Bank the Bank’s customary
charges for the Other Services.
At all time, the Depositor shall keep no less than $50,000 in funds in the Operating Account
to pay the Account Charges and Adjustments (the “Minimum Funding Balance”).
3. Lockbox. For the purpose of receipt of funds into the Limited Access Lockbox
Account, the Depositor has established a lockbox, under the Lockbox Agreement, into which the Bank
will accept remittances, such lockbox commonly known as the “Lockbox”.
4. Notices; Delivery of Statements; Authorization. Any notices required under this
Agreement shall be directed as set forth below and effective: (a) when received if delivered via
U.S. Mail, postage prepaid, or overnight courier; and (b) when confirmed received by the recipient
if delivered via facsimile transmission.
If to the Bank:
|
Fifth Third Bank | ||
| 5050 Xxxxxxxx Drive | |||
| MD 1MOC2Q | |||
| Xxxxxxxxxx, XX 00000 | |||
| Attention: XXXXXXX XXXXXXXX | |||
| OR Depositor Services | |||
| Fax: (000) 000-0000 | |||
| AND | |||
| Fifth Third Bank | |||
| 000 X Xxxx Xx, Xxxxx 000 | |||
| XX 000000 | |||
| Xxxxxxxxx, XX 00000 | |||
| ATTN: Xxxx-Xxxxxx Xxxxxx, XX | |||
| Fax: 000-000-0000 | |||
| AND | |||
| Fifth Third Bank | |||
| 000 X Xxxx Xx, Xxxxx 000 | |||
| XX 000000 | |||
| Xxxxxxxxx, XX 00000 | |||
| ATTN: Xxx Xxxxxxx, TMO | |||
| Fax: 000-000-0000 | |||
If to Depositor:
|
Lightyear Network Solutions, LLC | ||
| 0000 Xxxxxxxxx Xxxxxxx | |||
| Xxxxxxxxxx, XX 00000 | |||
| Attn:Xxxx Xxxxxx | |||
If to the Factor:
|
First Savings Bank, F.S.B. | ||
| 000 Xxxx Xxxxx xxx Xxxxx Xxxxxxx | |||
| Xxxxxxxxxxx, Xxxxxxx 00000 | |||
| Attn: Xxx Xxxxx |
2
The Depositor authorizes the Bank to release any and all information about the Limited Access
Lockbox Account and the Lockbox to the Factor upon the Factor’s request. The Depositor and the
Factor instruct the Bank to send an original or a copy of the periodic account statement related to
the Limited Access Lockbox Account to the notice addresses for Factor and Depositor set forth in
this paragraph. Bank shall provide Factor with such information relating to the Restricted Access
Lockbox Account as Factor shall reasonably request, including, without limitation, the ability to
access such information online.
5. Restrictions on Depositor. Without further consent from the Depositor, the
Depositor irrevocably authorizes and instructs the Bank to comply with the Factor’s instructions to
transfer funds from the Limited Access Lockbox Account to Factor or an account maintained by
Factor, as directed by Factor in its sole discretion. The Depositor waives its authority to
transfer, withdraw, or otherwise disburse funds from the Limited Access Lockbox Account and
acknowledges that the Factor shall have exclusive control of funds credited to the Limited Access
Lockbox Account. The Depositor waives its authority to modify or terminate this Agreement, the
Limited Access Lockbox Account or the Lockbox Agreement, documents, resolutions, and account
instructions, without the Factor’s express written permission.
6. Security Interest; Control. Depositor hereby grants a security interest and lien to, and
control in favor of, Factor in the Limited Access Lockbox Account and Lockbox. This Agreement
constitutes notice to Bank of Factor’s security interest and lien in (a) the Lockbox and the
Limited Access Lockbox Account; (b) all contract rights and claims in respect of the Lockbox and
the Limited Access Lockbox Account; and, (c) all cash, checks, money orders and other items of
value payable to Depositor now or hereafter paid, deposited, credited, held (whether for
collection, provisionally or otherwise) or otherwise in the possession or under the control of Bank
or any agent, bailee or custodian of Bank, including, without limitation, contained or deposited
into the Lockbox or the Limited Access Lockbox Account, and all proceeds of the foregoing
(collectively, “Receipts”). Without limiting the forgoing, but subject to Section 7, as collateral
security for the payment of all obligations and liabilities of Depositor to Factor, Depositor
hereby assigns, pledges and transfers to and grants exclusive control over to Factor all of
Depositor’s rights, title and interest in and to the Limited Access Lockbox Account and the
Lockbox, and all sums now or hereafter on deposit in or payable or withdrawable from the Limited
Access Lockbox Account, and/or the Lockbox, and any interest accrued or payable thereon, and grants
to Factor a security interest therein. Bank acknowledges that this Agreement constitutes notice of
Factor’s security interest in the Limited Access Lockbox Account, the Lockbox and the Receipts and
the proceeds thereof and that this Agreement is a control agreement for the purpose of perfecting
Factor’s security interest in the Limited Access Lockbox Account. Subject to Section 7, Depositor
hereby agrees that Bank, on behalf of Factor, shall be entitled to exercise, upon the written
instructions of Factor, any and all rights that Factor may have under its loan documents with
Depositor or under applicable law with respect to the Lockbox, the Limited Access Lockbox Account,
and all Receipts and the proceeds thereof. Subject to Section 7, Depositor hereby authorizes and
irrevocably appoints Factor as Depositor’s attorney-in-fact. Subject to Section 7, Factor may take
any action which Factor deems necessary or appropriate to preserve or protect Factor’s assignment
of, pledge of, and security interest in and control of the Limited Access Lockbox Account and the
Lockbox, including, without limitation, the transfer of the Limited Access Lockbox Account and/or
the Lockbox to Factor’s own name or the name of any designee. Subject to Section 7, Depositor
agrees that Factor shall have exclusive possession and control of the Limited Access Lockbox
Account and, at its option by providing written notice to the Bank, exclusive control over the
Lockbox. Subject to Section 7, Depositor hereby agrees with Factor and Bank that only payments to
Factor’s order may be drawn under the Limited Access Lockbox Account. Subject to Section 7,
without further consent by the Depositor, only Factor shall have the right, power and authority
(which right, power and authority is irrevocable), to demand, collect, withdraw, receipt for or xxx
for all amounts that enter any of the Limited Access Lockbox Account and Lockbox, and the Limited
Access Lockbox Account and the
3
Lockbox shall each be deemed to be blocked in favor of and
controlled by Factor and the Lockbox and the Limited Access Lockbox Account shall be under the sole
dominion and control of Factor. Subject to Section 7, Depositor shall not have any control over
the use of or any right to withdraw any amount from the Limited Access Lockbox Account or the
Lockbox.
7. Trigger Events. Notwithstanding any provision of this Agreement to the contrary
(including without limitation, Sections 5 and 6), unless and until the Factor has notified the Bank
in writing (including by e-mail or fax) that an “Event of Default” has occurred under any agreement
between the Factor and the Depositor, (a) the Depositor shall have the right (without any consent
from the Factor) to access, transfer, withdraw or otherwise disburse funds from the Limited Access
Lockbox Account and the Lockbox, and (b) the Factor shall not exercise its right to exercise
exclusive control over the Limited Access Lockbox Account or the Lockbox.
8. Bank’s Setoff Waiver. The Bank waives any right of setoff that it may have with
respect to funds credited to, deposit it or otherwise contained in the Limited Access Lockbox
Account or the Lockbox. The parties agree that this setoff waiver will not affect the Bank’s
rights or ability to debit the Operating Account for any Account Charges and Adjustments and to
maintain the Minimum Funding Balance.
9. Duty to Inspect. The Factor and the Depositor will use their respective
commercially reasonable efforts to inspect all Limited Access Lockbox Account statements and
reports when received, and immediately notify the Bank of any errors. The Factor or the Depositor
must notify the Bank within sixty (60) calendar days after receipt of the statement or report
containing or reflecting an error. Except to the extent required by law or except for manifest
errors, the failure by the Factor or the Depositor to notify the Bank of errors within this time
limit will relieve the Bank of any and all liability with respect to such an error.
10. Deposit Account Terms. The Depositor agrees to comply with the terms applicable
to the Other Services and the deposit accounts described herein as established by the Bank from
time to time. If there is any inconsistency between the terms of this Agreement and the agreements
applicable to the deposit accounts and Other Services or the Lockbox Agreement, the terms of this
Agreement shall prevail.
11. Force Majeure. The Bank shall not be responsible for actions or omissions caused
by events beyond its control, including without limitation fire, casualty, breakdown in equipment
or failure of telecommunications or data processing services, lockout, strike, unavoidable
accidents, acts of God, riot, war, or the issuance or operation of any adverse governmental law,
ruling, regulation, order or decree, or an emergency that prevents the Bank from operating
normally.
12. Indemnification of the Bank. Provided the Bank has not engaged in willful
misconduct or been grossly negligent, the Depositor agrees to indemnify and hold the Bank harmless
from and against any and all claims, demands, losses, liabilities, actions, causes of action and
expenses (including without limitation attorneys fees (which may include the allocable cost of the
Bank’s Legal Department) and court costs), incurred by the Bank in connection with the Limited
Access Lockbox Account, the Operating Account, and this Agreement. This indemnity shall survive
the termination of this Agreement.
13. Limits on the Bank’s Liability to the Factor. The Factor agrees that the Bank’s
liability to Factor for failing to perform in accordance with the terms of this Agreement for a
single claim shall be limited to the actual, direct damages, proximately caused by the Bank’s error
or omission. The Bank shall not be liable in any event to the Factor for any special, incidental
or consequential damages which the Factor may incur or suffer in connection with this Agreement,
regardless of whether the Bank knew of the likelihood of such loss or damage, and regardless of the
basis, theory, or nature of the delays
4
resulting from computer malfunction, systems failures,
interruption of communications facilities, or other causes not reasonably within the Bank’s
control. This paragraph shall survive the termination of this Agreement.
14. Termination of Agreement. Except as otherwise stated, the parties agree that this
Agreement, the Factor’s authority to control the Limited Access Lockbox Account and the Lockbox,
and the Bank’s obligations to the Factor and the Depositor pursuant to this Agreement, will only
terminate: (a) after the Bank receives the Factor’s instructions (as provided in paragraph 4) to
terminate this Agreement and turn control of the Limited Access Lockbox Account to the Factor;
(b) upon thirty (30) calendar days notice by the Bank (as provided in paragraph 4) to the Depositor
and the Factor; or (c) twenty (20) calendar days following notice from Bank to Factor and Depositor
that Factor and/or Depositor are in default or breach of the terms of this Agreement or any other
agreement with the Bank and such default has not been cured within such twenty (20) calendar day
period. Upon termination of this Agreement for any reason, the Limited Access Lockbox Account
shall be transferred into Factor’s name, and disbursement of the remaining Limited Access Lockbox
Account funds shall be made to the Factor, and Bank agrees to continue for sixty (60) calendar days
to forward all collections in the Lockbox to Factor. The Depositor may not unilaterally instruct
the Bank to terminate this Agreement or close the Limited Access Lockbox Account or the Lockbox.
15. Headings; Severability. The headings of the paragraphs of this Agreement are for
convenience only and shall not be construed as adding meaning to the provisions. If a court
determines that any part of this Agreement is unenforceable, the parties agree that only the
portion of this Agreement that is so determined to be unenforceable and shall be stricken and that
the remaining parts shall be unaffected.
16. Choice of Law; Venue. The parties agree that: (a) this Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of Ohio (the “Governing
State”); and (b) that the venue for any action related to this Agreement shall be; State Court -
Any state or local court of the Governing State, Federal Court — United States District Court for
the District of the Governing State, or at the option of the Bank, any court in which the Bank
shall initiate legal or equitable proceedings and which has subject matter jurisdiction over the
matter in controversy, shall have exclusive jurisdiction to hear and determine any claims or
disputes among the parties pertaining directly or indirectly to this Agreement or to any matter
arising in connection with this Agreement.
17. Independent Contractor. The Factor and the Depositor agree that in performing the
services under this Agreement, the Bank will be acting as an independent contractor and not as an
employer, employee, partner, or agent of the Factor or the Depositor.
18. Financial Information. Depositor agree to promptly furnish to the Bank, from time
to time financial statements and such other information regarding its operations, assets, business
affairs, and financial condition, as Bank may reasonably request.
19. Rights in Limited Access Lockbox Account. (a) Subject to Section 7, Depositor
cannot, and will not, withdraw any monies from the Limited Access Lockbox Account and Lockbox until
such time as Factor advises Bank in writing that Factor no longer claims any interest in the
Limited Access Lockbox Account and the Lockbox and the monies deposited and to be deposited in the
Limited Access Lockbox Account; and (b) Depositor will not permit the Limited Access Lockbox
Account or the Lockbox to become subject to any other pledge, assignment, lien, charge or
encumbrance of any kind, nature or description, other than Factor’s security interest referred to
herein.
20. Representations. Depositor represents, warrants and covenants that (i) at no time
shall either the Limited Access Lockbox Account or the Lockbox be pledged or assigned to or control
given to
5
any person or entity other than the Factor, and (ii) it has not assigned or granted a
security interest in or control of the Limited Access Lockbox Account or the Lockbox or any funds
now or hereafter deposited in the Limited Access Lockbox Account or the Lockbox to any person or
entity other than the Factor.
21. Bank Acknowledgements. Bank agrees that the Limited Access Lockbox Account and the
Lockbox is held in the name of the Depositor and that, to the best of its knowledge, no other
person or entity is shown by its records to have an interest in the Limited Access Lockbox Account
or the Lockbox. To the best of its knowledge, Bank has not executed any document or otherwise
agreed to block the Limited Access Lockbox Account or the Lockbox in favor of any person other than
Factor, or acknowledge a lien or security interest of or control by any person other than Factor in
the Limited Access Lockbox Account and the Lockbox. Bank agrees that it will not execute any
document or otherwise agree to block the Limited Access Lockbox Account or the Lockbox in favor of
any person other than Factor, or acknowledge a lien or security interest of or control by any
person other than Factor in the Limited Access Lockbox Account or the Lockbox.
22. Miscellaneous. This Agreement may be amended only by a writing signed by
Depositor, Factor and Bank. This Agreement may be executed in counterparts; all such counterparts
shall constitute but one and the same agreement. 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. To the extent
that the terms of any agreement governing the Account or the Lockbox are inconsistent with the
terms and provisions of this Agreement, the terms and provisions of this Agreement shall be deemed
to be controlling. The Recitals to this Agreement to this Agreement are incorporated herein and a
part of this Agreement.
23. WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE
WAIVED, EACH PARTY HERETO HEREBY ABSOLUTELY, IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND COVENANTS
THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY
IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT
IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A
MATERIAL INDUCEMENT UPON WHICH THE OTHER PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING
INTO THIS AGREEMENT, THE PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH OTHER PARTY TO THE WAIVER OF ITS RIGHTS
TO TRIAL BY JURY.
[SIGNATURE PAGE TO FOLLOW]
6
IN WITNESS WHEREOF, the parties have executed this Agreement to be executed, as a
sealed instrument, on the date set forth above.
| LIGHTYEAR NETWORK SOLUTIONS, LLC |
||||
| By: | /s/ J. Xxxxxxx Xxxxxxxxx, III | |||
| Name: | J. Xxxxxxx Xxxxxxxxx, III | |||
| Title: | President | |||
| FIFTH THIRD BANK |
||||
| By: | /s/ Xxxxxxx Xxx | |||
| Name: | Xxxxxxx Xxx | |||
| Title: | Senior Commercial Lender | |||
| FIRST SAVINGS BANK, F.S.B. |
||||
| By: | /s/ Xxx Xxxxx | |||
| Xxx Xxxxx, Vice President |
||||
