EXHIBIT 4.10
SECURITIES ACCOUNT CONTROL AGREEMENT
This agreement, dated as of September 17, 2002 (the
"Agreement") sets forth the Agreement between Deutsche Bank Alex. Brown, a
division of Deutsche Bank Securities Inc. (the "Intermediary"), Zix Corporation,
f/k/a Zixit Corporation (the "Debtor"), and Promethean Asset Management LLC,
(the "Secured Party"). All references herein to the "UCC" shall mean the Uniform
Commercial Code as in effect in the State of New York.
SECTION 1. ESTABLISHMENT OF SECURITIES ACCOUNT. The
Intermediary hereby confirms that:
(a) Account Number and Name. The Intermediary has established
account number [omitted] and the account is maintained in the name of the Debtor
at Intermediary's offices located at 300 South Grand Ave., 40th Floor, Los
Angeles, CA 90071 (such account is the "Securities Account");
(b) Status as a Securities Account. The Securities Account is
a "securities account" as such term is defined in Section 8-501(a) of the UCC;
and
(c) Account Contents. All positions in and investment
property, financial assets, funds and other property credited to the Securities
Account are "Pledged Securities."
SECTION 2. MAINTENANCE OF SECURITIES ACCOUNT.
(a) Compliance with Entitlement Orders and Other Instructions.
Intermediary will comply with entitlement orders and other instructions
originated by Secured Party concerning the Pledged Securities without further
consent by Debtor. Intermediary will be entitled to rely on instructions from a
person it reasonably believes to be authorized by Secured Party to give such
instructions. Such instructions and entitlement orders may be given to
Intermediary orally, provided that the same shall be promptly thereafter
transmitted in writing in substantially the form of Exhibit A hereto. Upon
receipt by Intermediary from Secured Party of a Notice of Sole Control (as
defined below), Intermediary will cease complying with instructions or
entitlement orders concerning the Securities Account or any Pledged Securities
originated by the Debtor in accordance with section 2(f) hereof and cease making
any distributions to the Debtor of or relating to Pledged Securities (including
any dividends or interest thereon). The receipt by Intermediary of a Notice of
Sole Control shall not function or be construed in any manner to terminate this
Agreement or to alter the provisions hereof except as expressly set forth
herein. A Notice of Sole Control may be rescinded or withdrawn by Secured Party
by written notice delivered to Intermediary specifically identifying the Notice
of Sole Control being rescinded and expressly stating that Debtor shall be
allowed to resume access to the Securities Account in accordance with the terms
of this Agreement.
(b) Provision of Statements and Other Information. Upon
request by Secured Party, the Intermediary will (i) send copies of any given
monthly statement concerning the Securities Account to the Secured Party, and
(ii) provide Secured Party with the then current
1
Account balance and/or aggregate market value. Such statements shall be sent to
the Debtor and/or the Secured Party at the address for each set forth in this
Agreement or as otherwise directed by Secured Party pursuant to its request as
aforesaid.
(c) Intermediary's Duties With Respect to Agreements between
the Debtor and the Secured Party. The Intermediary shall have no duty or
obligation whatsoever of any kind or character to determine whether or not an
event of default exists under any agreement between the Debtor and the Secured
Party. The Intermediary shall honor entitlement orders and/or a Notice of Sole
Control irrespective of any knowledge of the Intermediary whether or not an
event of default shall exist or the Secured Party shall have any agreement with
the Debtor limiting or conditioning its right to give such entitlement orders or
Notice of Sole Control. The Intermediary shall have no duty to investigate the
circumstances under which the Secured Party is entitled to give any entitlement
orders or Notice of Sole Control.
(d) Tax Reporting. All items of income, gain, expense and loss
recognized in the Securities Account shall be reported to the Internal Revenue
Service and all state and local taxing authorities under the name and taxpayer
identification number of the Debtor.
(e) Voting Rights. Until such time as the Intermediary
receives a Notice of Sole Control, in substantially the form of Exhibit B
hereto, the Debtor may direct the Intermediary with respect to the voting of the
Pledged Securities.
(f) Asset Transfers or Dispositions. The Debtor may conduct
trades in the Securities Account in its normal course of business, absent a
Notice of Sole Control, provided, however, the Intermediary shall not honor any
instruction to close the Securities Account or to transfer or withdraw any money
or position in the Securities Account such that after giving effect thereto the
market value of the Securities Account shall be less than $5,000,000 or such
other amount as may be hereafter specified by the Secured Party and the Company
in writing (the "Minimum Balance"). Debtor agrees that it will not request or
undertake checkwriting privileges for the Securities Account. For avoidance of
doubt, the Debtor shall be permitted to withdraw, transfer or otherwise utilize
funds credited to the Securities Account and other Pledged Securities so long as
the aggregate market value of all funds and all other Pledged Securities
credited to the Securities Account shall be greater than the Minimum Balance
both before and after giving effect to any such withdrawal, transfer or
utilization. The Debtor must monitor the market value of the Securities Account,
and if the market value of the Securities Account falls below $5,000,000 at the
close of business on a business day, the Debtor must immediately notify the
Intermediary of that condition and must also notify Secured Party in accordance
with Section 4(q) of that certain Securities Purchaser Agreement of even date
herewith by and among Debtor and the Buyers identified therein.
SECTION 3. CONFIRMATION OF THE PRIORITY OF THE INTERMEDIARY'S
LIEN AND RIGHT OF SET-OFF. In the event that the Intermediary has or
subsequently obtains by agreement, by operation of law or otherwise any security
interest in, or right of set-off with respect to, the Pledged Securities to
secure any obligations now or hereafter owed to the Intermediary by the Debtor,
THE SECURED PARTY AND THE INTERMEDIARY HEREBY AGREE THAT, NOTWITHSTANDING ANY
AGREEMENT OR PROVISION OF LAW TO THE CONTRARY, THAT ANY SECURITY INTEREST OF THE
INTERMEDIARY
2
SHALL BE SUBJECT AND SUBORDINATE TO THE SECURITY INTEREST OF THE SECURED PARTY,
EXCEPT FOR (i) ANY SECURITY INTEREST OR LIEN IN FAVOR OF THE INTERMEDIARY ON THE
PLEDGED SECURITIES FOR THE PAYMENT OF ANY MARGIN LOANS OR (ii) ANY SECURITY
INTEREST OR LIEN IN FAVOR OF THE INTERMEDIARY ON THE PLEDGED SECURITIES FOR
PAYMENT OF CUSTOMARY FEES OWING TO INTERMEDIARY WITH RESPECT TO THE ROUTINE
OPERATION AND MAINTENANCE OF THE SECURITIES ACCOUNT. THE DEBTOR REPRESENTS THAT
IT HAS NO MARGIN LOANS OUTSTANDING IN THE SECURITIES ACCOUNT AS OF THE DATE OF
THIS AGREEMENT. THE INTERMEDIARY AGREES THAT IT WILL NOT EXTEND ANY NEW CREDIT
AFTER THE DATE OF THIS AGREEMENT TO DEBTOR SECURED BY THE PLEDGED SECURITIES
WITHOUT SECURED PARTY'S PRIOR CONSENT. DEBTOR HEREBY AGREES THAT IT SHALL NOT
REQUEST, NOR SHALL IT ACCEPT, ANY SUCH LOANS. FURTHERMORE, IF AND TO THE EXTENT
THE INTERMEDIARY SHALL HAVE ANY RIGHTS OF SET-OFF WITH RESPECT TO THE PLEDGED
SECURITIES, THE INTERMEDIARY SHALL NOT EXERCISE ANY SUCH RIGHT OF SET-OFF UNLESS
AND UNTIL THE INTERMEDIARY OBTAINS THE CONSENT OF THE SECURED PARTY.
SECTION 4. CHOICE OF LAW. Both this Agreement and the
Securities Account shall be governed by, and construed in accordance with, the
laws of the State of New York. Regardless of any provision in any other
agreement, for purposes of the UCC, New York shall be deemed to be the
Intermediary's jurisdiction and the Securities Account shall be governed by the
laws of the State of New York.
SECTION 5. CONFLICT WITH OTHER AGREEMENTS.
(a) In the event of any conflict between this Agreement (or
any portion hereof) and any other agreement now existing or hereafter entered
into, including without limitation any agreement between Debtor and Intermediary
relating to the establishment or maintenance of the Securities Account, the
terms of this Agreement shall prevail.
(b) No amendment or modification of this Agreement or waiver
of any right hereunder shall be binding on any party hereto unless it is in
writing and is signed by all of the parties hereto.
(c) The Intermediary has not entered into, and until the
termination of this Agreement will not enter into, any agreement with any other
person relating to the Pledged Securities pursuant to which it has agreed or
will agree to comply with entitlement orders (as defined in Section 8-102(a)(8)
of the UCC) of such other person.
(d) The Intermediary has not entered into, and until the
termination of this Agreement will not enter into, any agreement with the Debtor
or the Secured Party purporting to limit or condition the obligation of the
Intermediary to comply with Entitlement Orders as set forth in Section 2(a)
hereof.
(e) Intermediary and Debtor agree that they will not amend any
agreement, effecting the Pledged Securities, that relates to the establishment
or maintenance of the Securities Account, without the Secured Party's prior
written consent.
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
INTERMEDIARY. The Intermediary hereby makes the following representations,
warranties and covenants:
3
(a) Enforceable Agreement. This Agreement is the valid and
legally binding obligation of the Intermediary and the Intermediary shall not
change the name or account number of the Securities Account without the prior
written consent of the Secured Party;
(b) Adverse Claims. Except for the claims and interest of the
Secured Party, the Intermediary and the Debtor in the Pledged Securities, the
Intermediary does not know of any claim to, or interest in, the Pledged
Securities. If any person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution or
similar process) against the Pledged Securities, the Intermediary will promptly
notify the Secured Party and Debtor thereof;
(c) Registration of Pledged Securities. The Pledged Securities
are, and at all relevant times shall be (i) registered in the name of the
Intermediary or credited to the securities account of the Intermediary on the
books of a clearing corporation or (ii) registered in the name of Debtor and
indorsed to the Intermediary or in blank pursuant to an effective endorsement
and delivered by the Intermediary to the relevant transfer agent for
re-registration in the name of the Intermediary. Intermediary agrees to notify
Secured Party (x) upon the receipt of certificates representing re-registered
Pledged Securities and (y) in the event the Pledged Securities have not been
re-registered in the name of the Intermediary within 18 days following delivery
to the transfer agent, in which case Intermediary shall, promptly upon Secured
Party's request, endeavor to deliver such certificates (together with any stock
power) to Secured Party;
(d) Pledged Securities: The Pledged Securities and each item
of property (whether investment property, financial asset, security, instrument
or cash) credited to the Securities Account shall be treated as a "financial
asset";
(e) Rights to the Account and Pledged Securities. The Debtor
has rights in the Securities Account and the Pledged Securities; and
(f) Proceeds. With respect to financial assets held in the
Securities Account, and any proceeds thereof consisting of demand or time
deposits not represented by certificates of deposit, all said demand or time
deposits shall be held in accounts in the name of, established with and at all
times maintained at the offices of the Intermediary at 300 South Grand Ave.,
40th Floor, Los Angeles, CA 90071, for the benefit of Secured Party.
SECTION 7. INDEMNIFICATION OF SECURITIES INTERMEDIARY. Debtor
and Secured Party hereby agree that (a) the Intermediary is released from any
and all liabilities to the Debtor and the Secured Party arising from the terms
of this Agreement and the compliance of the Intermediary with the terms hereof,
except to the extent that such liabilities arise from the Intermediary's gross
negligence or willful misconduct and (b) the Debtor, its successors and assigns
shall at all times indemnify and save harmless the Intermediary and its
affiliates and agents from and against any and all claims, actions and suits of
others arising out of the terms of this Agreement or the compliance of the
Intermediary with the terms hereof, except to the extent that such arises from
the gross negligence and willful misconduct of the Intermediary, its affiliates
or its agents, and from and against any and all liabilities, losses, damages,
costs,
4
charges, counsel fees and other expenses of every nature and character arising
by reason of the same (including any fees or charges with respect to the
Securities Account), until the termination of this Agreement.
SECTION 8. ASSIGNMENTS PROHIBITED. Each party hereto agrees
that it shall not assign its rights hereunder and any purported or attempted
assignment of rights hereunder shall be null and void and of no effect.
SECTION 9. SUCCESSORS. Subject to the provisions of Section 8
with respect to voluntary assignment of its rights, the terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their respective corporate successors or heirs and personal representatives who
obtain such rights solely by operation of law.
SECTION 10. NOTICES. Any notice, request or other
communication required or permitted to be given under this Agreement shall be in
writing and deemed to have been properly given when delivered in person, or when
sent by telecopy or other electronic means and electronic confirmation of error
free receipt is received or two days after being sent by certified or registered
United States mail, return receipt requested, postage prepaid, addressed to the
party at the address set forth below. Any party may change its address for
notices in the manner set forth herein.
Debtor:
Name: Zix Corporation
Address: 2711 N. Haskell Avenue, Suite 2300, LB36
Dallas, TX 75204-2960
Telephone: 214-370-2000
Facsimile: 214-515-7385
Attention: General Counsel
Secured Party:
Name: Promethean Asset Management L.L.C.
Address: 750 Lexington Ave., 22nd Floor
New York, New York 10022
Telephone: 212-702-5200
Facsimile: 212-758-9334
Attention: David M. Kittay
Greg Carney
Intermediary:
Name: Deutsche Bank Alex. Brown
Address: 300 South Grand Avenue, 40th Floor
Los Angeles, CA 90071
Attention: Halsey Smith
Telephone: 213-437-2502
Facsimile: 213-437-2531 and
Attention: Bruce Treitman
Telephone: 213-437-2542
Facsimile: 213-437-2520
5
SECTION 11. TERMINATION.
(a) Termination of this Agreement. The rights and powers
granted herein to the Secured Party have been granted in order to perfect its
security interests in the Securities Account, are powers coupled with an
interest and will not be affected by the bankruptcy of the Debtor. The
obligations of the Intermediary to the Secured Party pursuant to this Agreement
shall continue in effect until the Secured Party has notified the Intermediary
of such termination in writing in substantially the form of Exhibit C hereto.
The termination of this Agreement shall not terminate the Securities Account or
alter the obligations of the Intermediary to the Debtor pursuant to any other
agreement with respect to the Pledged Securities.
(b) Termination of Account. The Intermediary may, upon 30 days
written notice to Debtor and to Secured Party, resign as securities intermediary
hereunder and transfer the Pledged Securities to another institution. The
Secured Party shall have the right to identify the institution and the account
to which Pledged Securities shall be transferred by sending an Entitlement Order
to the Intermediary at any time prior to the expiration of the thirtieth (30th)
day after written notice from the Intermediary is sent to the Secured Party. If
the Intermediary has not, prior to the expiration of the 30th day, received an
Entitlement Order from the Secured Party directing transfer, the Intermediary
then may honor an Entitlement Order from the Debtor. If neither the Secured
Party nor the Debtor has delivered an Entitlement Order with respect to the
Pledged Securities, the Intermediary may, at its option, deposit the assets with
a court of competent jurisdiction or establish a successor account at another
institution. Any such successor account established by the Intermediary at
another institution shall be maintained in the same name as the Securities
Account; but other than the name in which the account is maintained, the
Intermediary shall have no obligation to establish an account with the same or
even similar terms as the Securities Account.
SECTION 12. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, all of which shall constitute one and the same
instrument, and any party hereto may execute this Agreement by signing and
delivering one or more counterparts; provided that a facsimile signature shall
be considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original and not a
facsimile thereof.
Balance of Page Intentionally Left Blank
Signature Page Follows
6
IN WITNESS WHEREOF, the parties have executed this Securities
Account Control Agreement as of the date first above written.
ZIXIT CORPORATION
By: /s/ Ronald A. Woessner
-----------------------------------
Name: Ronald A. Woessner
-----------------------------
Title: S.V.P.
-----------------------------
PROMETHEAN ASSET MANAGEMENT LLC
By: /s/ James F. O'Brien, Jr.
-----------------------------------
Name: James F. O'Brien, Jr.
-----------------------------
Title: President
-----------------------------
DEUTSCHE BANK ALEX. BROWN
By: /s/ Bruce Treitman
----------------------------------
Name: Bruce Treitman
Title: Branch Manager
7
EXHIBIT A
[Letterhead of Secured Party]
[Date]
Mr. Halsey Smith
Mr. Bruce Treitman
Deutsche Bank Alex. Brown
300 South Grand Ave.
40th Floor
Los Angeles, CA 90071
Re: Entitlement Order for Securities
Account No. (the "Securities Account")
Ladies and Gentlemen:
As referenced in the Agreement, dated _______, 2002 (the
"Agreement"), among _____________ (the "Debtor"), you and the undersigned (a
copy of which is attached), pursuant to Section 2 of the Agreement, we hereby
give you the following entitlement order with respect to account number
________________:
The Pledged Securities should be transferred by you to
_________________ for credit to Account No. ____________ maintained in the name
_________________.
Very truly yours,
[NAME OF SECURED PARTY]
--------------------------------
By:
-----------------------------
Name:
Title:
cc:
8
EXHIBIT B
[Letterhead of Secured Party]
[Date]
Mr. Halsey Smith
Mr. Bruce Treitman
Deutsche Bank Alex. Brown
300 South Grand Ave.
40th Floor
Los Angeles, CA 90071
Re: Notice of Sole Control
for Securities Account No.
Ladies and Gentlemen:
As referenced in the Agreement, dated _______, 2002 (the "Agreement"),
among Zix Corporation (the "Debtor"), you and the undersigned (a copy of which
is attached) we hereby give you notice of our sole control over the Pledged
Securities.
You are hereby instructed not to accept any direction, instructions or
entitlement orders with respect to the Pledged Securities described above from
any person other than the undersigned, unless you receive a written notice from
the undersigned that this "Notice of Sole Control" is rescinded or withdrawn, or
as otherwise ordered by a court of competent jurisdiction.
You are instructed to deliver a copy of this notice by
facsimile transmission to the Debtor.
Very truly yours,
cc: By:
----------------------------------------- ---------------------------
Name:
Title:
9
EXHIBIT C
[Letterhead of Secured Party]
[Date]
Mr. Halsey Smith
Mr. Bruce Treitman
Deutsche Bank Alex. Brown
300 South Grand Ave.
40th Floor
Los Angeles, CA 90071
Re: Termination of Agreement
You are hereby notified that the Agreement, dated ________,__ 2002 (the
"Agreement"), among you, Zix Corporation (the "Debtor") and the undersigned (a
copy of which is attached) is terminated and you have no further obligations to
the undersigned pursuant to such Agreement. Notwithstanding any previous
instructions to you, you are hereby instructed to accept all future directions
with respect to Securities Account number ______ and the Pledged Securities from
the Debtor. This notice terminates any obligations you may have to the
undersigned with respect to such account; however, nothing contained in this
notice shall alter any obligations which you may otherwise owe to the Debtor
pursuant to any other agreement.
You are instructed to deliver a copy of this notice by
facsimile transmission to Zix Corporation
Very truly yours,
[Name of Secured Party]
By:
Name:
cc:
10