EXHIBIT 10.5
EXECUTION COPY
 
SECURITIES ACCOUNT CONTROL AGREEMENT
 
This Securities Account Control Agreement, dated as of January 10, 2003 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, this “Control Agreement”), is entered into among FIBERNET TELECOM GROUP,
INC., as pledgor (the “Pledgor”), DEUTSCHE BANK AG NEW YORK BRANCH, (the
“Pledgee”) and DEUTSCHE BANK TRUST COMPANY AMERICAS, as securities intermediary
(in such capacity, the “Securities Intermediary”). All references herein to the
“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York.
 
RECITALS
 
A.    Pursuant to the Amended and Restated Credit Agreement, dated as of
February 9, 2001 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the “Credit Agreement”), among Devnet L.L.C., a
Delaware limited liability company (“Devnet”), FiberNet Operations, Inc., a
Delaware corporation (“FiberNet” and, together with Devnet, the “Borrowers”),
the financial institutions from time to time parties thereto as lenders (each
individually referred to herein as a “Lender” and, collectively, as the
“Lenders”), Deutsche Bank AG New York Branch, as administrative agent for the
Lenders (in such capacity, the “Administrative Agent”), TD Securities (USA)
Inc., as syndication agent for the Lenders (in such capacity, the “Syndication
Agent”) and Wachovia Investors, Inc., as documentation agent for the Lenders (in
such capacity, the “Documentation Agent”), the Pledgee has extended commitments
to make Loans or issue Letters of Credit to, and for the benefit of, the
Borrowers;
 
B.    It is a condition precedent to the effectiveness of the Ninth Amendment to
the Credit Agreement, dated as of January 10, 2003 (the “Ninth Amendment”),
among the Borrowers, the Lenders, the Administrative Agent, the Syndication
Agent and the Documentation Agent, that the Grantor execute this Control
Agreement and the Security Agreement, dated as of the date hereof (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
“Security Agreement”), between the Pledgee and the Pledgor, pursuant to which
the Pledgor has granted a security interest in a securities account (within the
meaning of the UCC) to the Pledgee as security for the Letter of Credit
Obligations;
 
D.    The Pledgor has duly authorized the execution, delivery and performance of
this Control Agreement; and
 
E.    It is in the best interests of the Pledgor to execute this Control
Agreement as the Pledgor will derive substantial direct and indirect benefits
from the Loans made to the Borrowers, and the Letters of Credit issued for the
benefit of the Borrowers, by the Pledgee pursuant to the Ninth Amendment and the
Credit Agreement.

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AGREEMENT
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in order to induce the Pledgee to make
Loans and issue Letters of Credit to or for the benefit of the Borrowers
pursuant to the Credit Agreement, and to induce the Secured Parties to enter
into any Interest Rate Agreements, the parties hereto agree, for the benefit of
each Secured Party, as follows:
 
Section 1.    Establishment of Securities Account.  The Securities Intermediary
hereby confirms and agrees that:
 
(a)    The Securities Intermediary has established the account listed on
Schedule I hereto in the name indicated on such schedule (such account and any
successor accounts, the “Securities Accounts”) and the Securities Intermediary
shall not change the name or account number of the Securities Accounts without
the prior written consent of the Pledgee;
 
(b)    All securities or other property underlying any financial assets credited
to the Securities Accounts shall be registered in the name of the Securities
Intermediary, endorsed to the Securities Intermediary or in blank or credited to
another securities account or accounts maintained in the name of the Securities
Intermediary, and in no case shall any financial asset credited to any
Securities Account be registered in the name of the Pledgor, payable to the
order of the Pledgor or specially indorsed to the Pledgor except to the extent
the foregoing have been specially indorsed to the Securities Intermediary or in
blank;
 
(c)    All property delivered to the Securities Intermediary pursuant to the
Security Agreement will be promptly credited to the relevant Securities Account
as directed by the Pledgee; and
 
(d)    The Securities Accounts are “securities accounts” as defined in Section
8-501 (a) of the UCC.
 
Section 2.    “Financial Assets” Election.  The Securities Intermediary hereby
agrees that each item of property (whether investment property, financial asset,
security, instrument or cash) credited to the Securities Accounts shall be
treated as a “financial asset” within the meaning of Section 8-102(a)(9) of the
UCC.
 
Section 3.    Entitlement Orders.  If and to the extent that (i) amounts on
deposit or credited to the Securities Accounts exceed $2,316,855.07 or (ii) the
Borrower repays or otherwise reduces the Letter of Credit Obligations (and
permanently cancels the Revolving Loan Commitments of the Pledgee by a
corresponding amount), the Pledgee agrees to issue an entitlement order
directing the Securities Intermediary to release to the Pledgor cash in an
amount equal to such excess or the corresponding dollar amount by which the LOC
Pro Rata Share of the Pledgee is reduced by such repayment or reduction and
cancellation, as applicable. If at any time the Securities Intermediary shall
receive an “entitlement order” (within the meaning of Section 8-102(a)(8) of the
UCC) issued by the Pledgee directing transfer or redemption of any financial
asset relating to any of the Securities Accounts, the Securities Intermediary
shall comply with such entitlement order without further consent of the Pledgor
or any other Person. The Pledgor shall have no right to issue entitlement orders
directly to the

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Securities Intermediary to transfer, withdraw or redeem any financial asset
relating to any of the Securities Accounts.
 
Section 4.    Subordination of Lien; Waiver of Set-Off.  In the event that the
Securities Intermediary has or subsequently obtains by agreement, by operation
of law or otherwise a security interest in the Securities Accounts or any
security entitlement credited thereto, the Securities Intermediary hereby agrees
that such security interest shall be subordinate to the security interest of the
Pledgee in such Securities Accounts or security entitlement. The financial
assets and other items deposited to the Securities Accounts will not be subject
to deduction, set-off, banker’s lien, or any other right in favor of any Person
other than the Pledgee (except that the Securities Intermediary may set off (i)
all amounts due to the Securities Intermediary in respect of customary fees and
expenses for the routine maintenance and operation of the Securities Accounts,
(ii) the face amount of any checks which have been credited to the Securities
Accounts but are subsequently returned unpaid because of uncollected or
insufficient funds, and (iii) all amounts due to the Securities Intermediary in
respect of any indemnity obligation of the Pledgor hereunder).
 
Section 5.    Choice of Law.  Both this Control Agreement and the Securities
Accounts shall be governed by the laws of the State of New York without regard
to the conflict of law rules thereof, other than Sections 5-1401 and 5-1402 of
the New York General Obligations Law. Regardless of any provision in any other
agreement, for purposes of the UCC, New York shall be deemed to be the
Securities Intermediary’s jurisdiction and each Securities Account (as well as
the securities entitlements related thereto) shall be governed by the laws of
the State of New York.
 
Section 6.    Conflict with Other Agreements.
 
(a)    In the event of any conflict between this Control Agreement (or any
portion thereof) and any other agreement now existing or hereafter entered into,
the terms of this Control Agreement shall prevail.
 
(b)    No amendment or modification of this Control 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 Securities Intermediary hereby confirms and agrees that:
 
(i)    There are no other agreements entered into between the Securities
Intermediary and the Pledgor with respect to the Securities Accounts;
 
(ii)   It has not entered into, and until the termination of this Control
Agreement will not enter into, any agreement with any other Person relating to
the Securities Accounts and/or any financial assets credited thereto pursuant to
which it has agreed to comply with entitlement orders (as defined in Section
8-102(a)(8) of the UCC) of such other Person; and
 
(iii)  It has not entered into, and until the termination of this Control
Agreement will not enter into, any agreement with the Pledgor or the Pledgee
purporting to limit

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or condition the obligation of the Securities Intermediary to comply with
entitlement orders as set forth in Section 3 hereof.
 
Section 7.    Adverse Claims.  Except for the claims and interest of the Pledgee
and of the Pledgor in each Securities Account, the Securities Intermediary does
not know of any claim to, or interest in, the Securities Accounts or in any
“financial asset” (as defined in Section 8-102(a) of the UCC) credited thereto.
If any Person asserts any lien, encumbrance or adverse claim (including any
writ, garnishment, judgment, warrant of attachment, execution or similar
process) against any Securities Account or in any financial asset carried
therein, the Securities Intermediary will promptly notify the Pledgee and
Pledgor thereof.
 
Section 8.    Maintenance of Securities Account.  In addition to, and not in
lieu of, the obligation of the Securities Intermediary to honor entitlement
orders as agreed in Section 3 hereof, the Securities Intermediary agrees to
maintain the Securities Accounts as follows:
 
(a)    Control.  The Securities Intermediary agrees that at all times it will
take all instruction with respect to the Securities Accounts solely from the
Pledgee.
 
(b)    Voting Rights.  At all times the Pledgee shall direct the Securities
Intermediary with respect to the voting of any financial assets credited to the
Securities Accounts.
 
(c)    Permitted Investments.  Investments shall be made into the Goldman Sachs
Financial Square Treasury Fund, or such similar fund as directed by the Pledgee,
provided, however, that the Securities Intermediary shall not honor any
instruction to purchase any investments other than as permitted pursuant to the
Credit Agreement.
 
(d)    Statements and Confirmations.  The Securities Intermediary will promptly
send copies of all statements, confirmations and other correspondence concerning
the Securities Accounts and/or any financial assets credited thereto
simultaneously to each of the Pledgor and the Pledgee at the address of each set
forth in Section 12 of this Control Agreement.
 
Section 9.    Representations, Warranties and Covenants of the Securities
Intermediary.  The Securities Intermediary hereby makes the following
representations, warranties and covenants:
 
(a)  the Securities Accounts have been established as set forth in Section 1
above and the Securities Accounts will be maintained in the manner set forth
herein until termination of this Control Agreement; and
 
(b)  this Control Agreement is the valid and legally binding obligation of the
Securities Intermediary.
 
Section 10.    Indemnification of Securities Intermediary.  The Pledgor and the
Pledgee hereby agree that (a) the Securities Intermediary is released from any
and all liabilities to the Pledgor and the Pledgee arising from the terms of
this agreement and the compliance of the Securities Intermediary with the terms
hereof, except to the extent that such

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liabilities arise from the Securities Intermediary’s willful misconduct or gross
negligence and (b) the Pledgor, its successors and assigns shall at all times
indemnify and save harmless the Securities Intermediary from and against any
loss, liability or expense incurred without gross negligence, willful misconduct
or bad faith on the part of the Securities Intermediary, its officers, directors
and agents, arising out of or in connection with the execution and performance
of this Control Agreement or the maintenance of the Securities Accounts,
including the costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of their powers
or duties hereunder, until the termination of this Control Agreement.
 
Section 11.    Successors; Assignment.  This Control Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
successors, legal representatives and permitted assigns. The Pledgor shall not
assign any of its rights or obligations hereunder without the prior written
consent of the Pledgee.
 
Section 12.    Notices.  Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing addressed to the respective party as set forth below and may be
personally served, telexed, or sent by telefacsimile, overnight courier service
or United States mail and shall be deemed to have been given: (a) if delivered
in person, when delivered; (b) if delivered by telecopy, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. Eastern Standard
Time or, if not, on the next succeeding Business Day; or (c) if delivered by
overnight courier, two days after delivery to such courier properly addressed;
provided, however, that notices to the Securities Intermediary shall not be
effective until received.
 
If to the Pledgee:
 
Deutsche Bank AG New York Branch
31 West 52nd Street
New York, New York 10019
Attn: Alexander Richarz
Telecopy: (212) 469-3713
 
If to Securities Intermediary:
 
Deutsche Bank Trust Company Americas
280 Park Avenue, Ninth Floor
MS NYC 030914
New York, New York 10018
Attn: Hugo Gindraux
Telecopy: 212-454-2227

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If to the Pledgor:
 
FiberNet Telecom Group, Inc.
570 Lexington Avenue
3rd Floor
New York, New York 10022
Attn.: President
Telecopy: (212) 421-8920
 
or to such other address as the party addressed shall have previously designated
by written notice to the serving party, given in accordance with this Section.
 
Section 13.    Termination.  The obligations of the Securities Intermediary to
the Pledgee pursuant to this Control Agreement and the rights and powers of the
Pledgee in connection herewith shall continue in effect until the security
interests of the Pledgee in each of the Securities Accounts have been terminated
pursuant to the terms of the Security Agreement and the Pledgee has notified the
Securities Intermediary of such termination in writing. The Pledgee agrees to
provide a Notice of Termination in substantially the form of Exhibit A hereto to
the Securities Intermediary upon the request of the Pledgor on or after the
termination of the Pledgee’s security interest in the Securities Accounts
pursuant to the terms of the Security Agreement. The termination of this Control
Agreement shall not terminate the Securities Accounts or alter the obligations
of the Securities Intermediary to the Pledgor pursuant to any other agreement
with respect to the Securities Accounts.
 
Section 14.    Headings.  Section and subsection headings contained in this
Control Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Control Agreement for any purpose, and shall not in
any way define or affect the meaning, construction or scope of any of the
provisions hereof.
 
Section 15.    Amendment, Modification.  No amendment, modification, termination
or waiver of any provision of this Control Agreement, or consent to any
departure by the Pledgee therefrom, shall be effective unless the same shall be
in writing and signed by the Pledgee, the Securities Intermediary and the
Pledgor. Each amendment, modification, termination or waiver shall be effective
only in the specific instance and for the specific purpose for which it was
given.
 
Section 16.    Severability.  The invalidity, illegality or unenforceability in
any jurisdiction of any provision in or obligation under this Control Agreement
shall not affect or impair the validity, legality or enforceability of the
remaining provisions or obligations under this Control Agreement or of such
provision or obligation in any other jurisdiction.
 
Section 17.    Definitions; Rules of Interpretation.  Unless otherwise defined
herein or unless the context otherwise requires, terms used in this Control
Agreement, including its preamble and recitals, have the meanings provided in
the Credit Agreement (including the principles of interpretation set forth in
Section 1.3 of the Credit Agreement). All references herein to the security
interest granted to, assignment or pledge to or other rights or interests
granted hereby to the Pledgee shall be deemed to be rights or interests granted
to the Pledgee

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solely for its own benefit and not in its capacity as Administrative Agent under
the Credit Agreement.
 
Section 18.    Counterparts.  This Control Agreement and any amendments,
waivers, consents or supplements hereto or in connection herewith may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Control Agreement shall
become effective upon the execution of a counterpart hereof by each of the
parties hereto and receipt by the Pledgor and the Pledgee of written or
telephonic notification of such execution and authorization of delivery thereof.
 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Control Agreement
as of the date first written above.
 
FIBERNET TELECOM GROUP, INC.,
as Pledgor
 
By:
       

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Name
   
Title:
     
DEUTSCHE BANK AG NEW YORK BRANCH,
as Pledgee
     
By:
       

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Name:
   
Title:
     
By:
       

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Name:
   
Title:
     
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Securities Intermediary
     
By:
       

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Name:
   
Title:
     
By:
       

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Name:
   
Title:

S-1

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SCHEDULE I
 
SECURITIES ACCOUNTS
 
DBTCO Americas as securities intermediary for FiberNet Telecom Group, Inc.;
Account No. 29793.

Sch.-1

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EXHIBIT A
 
NOTICE OF TERMINATION
 
[Letterhead of Pledgee]
 
[Date]
 
Deutsche Bank Trust Company Americas
280 Park Avenue, Ninth Floor
MS NYC 030914
New York, New York 10018
Attention: Hugo Gindraux
 
Re:    Termination of Control Agreement
 
Ladies and Gentlemen:
 
You are hereby notified that the Control Agreement, dated January 10, 2003,
among FIBERNET TELECOM GROUP, INC. (the “Pledgor”), you and the undersigned (a
copy of which is attached) is terminated and you have no further obligations to
the undersigned pursuant to such Control Agreement. Notwithstanding any previous
instructions to you, you are hereby instructed to accept all future directions
with respect to securities account number 29793 from the Pledgor. This notice
terminates any obligations you may have to the undersigned with respect to such
accounts as well as the authority of the undersigned to issue any instructions
with respect to such accounts; however nothing contained in this notice shall
alter any obligations which you may otherwise owe to the Pledgor pursuant to any
other agreement.
 
You are instructed to deliver a copy of this notice by facsimile transmission to
the Pledgor.
 
Very truly yours,
 
DEUTSCHE BANK AG NEW YORK BRANCH
By:
 

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Name:
   
Title:

 

 
By:
 

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Name:
   
Title:

 
cc:  FIBERNET TELECOM GROUP, INC.

A-1