Securities Account Control Agreement
Revised May 5, 2020
This Securities Account Control Agreement (the "Agreement") is entered into by and among Brex Treasury LLC, a Delaware limited liability company ("Broker-Dealer"), Brex Finance I LLC, a Delaware limited liability company, ("Purchaser"), and the company applying for entry to the Brex Instant Payout Program* and its representatives ("Seller"). The parties agree as follows:
Seller has granted, and does hereby further grant, to Purchaser, a security interest in its Brex Cash account (collectively, together with any other securities account maintained by Broker-Dealer for Seller as described in Section 10 below, the "Account") to secure all existing and future obligations of any nature whatsoever of Seller and/or any one or more of its existing or future affiliates to Purchaser (collectively, the "Secured Obligations"). For the avoidance of doubt, the parties agree that the Secured Obligations shall include, without limitation, (a) any amounts due Purchaser in connection with any factoring or other arrangement between Seller or any of its affiliates, on the one hand, and Purchaser on the other hand, including any proceeds of accounts receivable or other payment rights sold or otherwise transferred to Purchaser and any amounts due Purchaser in connection with any breach of any representation or warranty by Seller or any of its affiliates in the Instant Payouts Customer Agreement, (b) any reimbursement or indemnification obligations due Purchaser, (c) Fees, Chargebacks, Adjustments, or expenses (including attorneys' fees and expenses) due Purchaser, and (d) any other liabilities of any nature whatsoever of Seller or any of its affiliates to Purchaser; in each case in clauses (a) through (d) above whether such amounts, obligations or liabilities are existing, future, contingent or otherwise. The parties are entering into this Agreement to perfect Purchaser's security interest in the Account by way of "control," for purposes of UCC §8-106(d)(2) and UCC §9-314(a).
1. The Account
Seller represents and warrants to Purchaser that:
- Broker-Dealer maintains the Account for Seller.
- The Account is not subject to any lien, claim or right of setoff or recoupment, except for the rights of Purchaser and Broker-Dealer contemplated by this Agreement.
Broker-Dealer represents and warrants to Purchaser that:
- Broker-Dealer maintains the Account for Seller.
- To Broker-Dealer's knowledge, the Account is not subject to any lien, claim or right or setoff or recoupment, except for the rights of Purchaser and Broker-Dealer contemplated by this Agreement.
- The Account is a "securities account" as that term is defined in UCC §8-501.
- Broker-Dealer is a person that in the ordinary course of its business maintains securities accounts for others, is acting in that capacity with respect to the Account, and is a "securities intermediary" with respect to the Account, as that term is defined in UCC §8-102(a)(14).
The parties agree that all property in the Account at any time will be treated as a "financial asset," as that term is defined in UCC §8-102(a)(9) (collectively, "Financial Assets").
The parties agree that, for purposes of this Agreement and UCC §8-110(e)(i), the Broker- Dealer's "jurisdiction" shall be the State of Delaware. References in this Agreement to the "UCC" shall be to the Uniform Commercial Code as in effect in any applicable jurisdiction, including, to the extent applicable, the State of Delaware.
2. Control by Purchaser
SELLER, PURCHASER, AND BROKER-DEALER AGREE THAT BROKER-DEALER WILL COMPLY WITH INSTRUCTIONS ORIGINATED BY PURCHASER DIRECTING DISPOSITION OF FINANCIAL ASSETS IN THE ACCOUNT, TOGETHER WITH ANY OTHER ENTITLEMENT ORDERS ORIGINATED BY PURCHASER WITH RESPECT TO THE ACCOUNT, IN EACH CASE WITHOUT FURTHER CONSENT BY, OR NOTICE TO, SELLER.
Except as otherwise expressly provided in this Agreement, from and after the date of this Agreement (a) Broker-Dealer shall comply only with orders or instructions regarding the Account originated by Purchaser, and (b) Broker-Dealer shall not comply with orders or instructions regarding the Account originated by Seller.
Broker-Dealer and Seller severally agree not to permit the Account to become subject to any other control agreement or lien while this Agreement is in place.
3. Restrictions Affecting Account
Seller acknowledges that it has agreed, in the Instant Payouts Customer Agreement, to (i) make the representations and warranties relating to Seller contained in Section 3.1 of that agreement, and (ii) to make the representations, warranties, and covenants in Section 3.2 of that agreement that relate to the accounts contemplated in the Transactions.
Broker-Dealer may not close the Account until Purchaser confirms that the Secured Obligations have been paid in full by Seller. Broker-Dealer is allowed to rely on Purchaser's representations with respect to amounts paid.
Except as otherwise provided in this Section 3 or except as otherwise waived by Purchaser, Broker-Dealer will not comply with orders from Seller at any time regarding the Account unless Purchaser has confirmed that the value of the Financial Assets in the Account exceeds the outstanding amount of the Secured Obligations at such time (any such Financial Assets in an amount exceeding the outstanding amount of the Secured Obligations being "Excess Financial Assets"). Except as otherwise provided below, Seller may withdraw Excess Financial Assets from the Account.
Without limiting Purchaser's other rights under this Agreement, if Purchaser notifies Broker-Dealer (an "Exclusive Control Notice"), or if Broker-Dealer otherwise becomes aware (an "Exclusive Control Event"), that Seller or any of its affiliates has defaulted in the payment or performance of any their respective obligations to Purchaser, including any default in the payment of any Secured Obligation, Broker-Dealer may, and Broker-Dealer shall if so requested by Purchaser, in each case without further consent by Seller:
- cease complying with any and all instructions or other entitlement orders from Seller regarding the Account or any Financial Assets, and
- comply with all instructions or other entitlement orders from Purchaser regarding the Account or any Financial Assets, including any instruction to sell or otherwise liquidate any or all of the Financial Assets, or to distribute any or all of the Financial Assets to Purchaser or to whomever Purchaser may designate.
Broker-Dealer shall not have any duty or obligation to determine the validity, propriety, regularity of form or content of any Exclusive Control Notice or to determine if any Exclusive Control Event has occurred.
Unless an Exclusive Control Event has occurred or Purchaser has provided an Exclusive Control Notice to Broker-Dealer, and except as otherwise provided in any other agreement between Seller and Purchaser, Seller shall be entitled to provide withdrawal instructions or other entitlement orders with respect to Excess Financial Assets held in the Account.
4. Priority of Purchaser's Security Interest
Broker-Dealer subordinates in favor of Purchaser any security interest, lien or right of setoff or recoupment Broker-Dealer may have at any time with respect to the Account or any Financial Assets in the Account, provided that the foregoing shall not affect Broker-Dealer's right to recover payment of ordinary and customary fees and charges due Broker-Dealer pursuant to agreements it may have with Seller.
5. No Third-Party Control
Broker-Dealer represents and warrants to Purchaser that it has not entered into any currently effective agreement whereby any third party has any right to give any instruction or entitlement order regarding the Account or any Financial Assets in the Account. Until this Agreement is terminated, Broker-Dealer will not enter into any agreement with any third party that recognizes any lien or claim regarding any Financial Assets in the Account, nor will Broker-Dealer agree with any third party that Broker-Dealer will comply with any instruction or entitlement order originated by any third party.
6. Statements, Confirmations and Notices of Adverse Claims
Broker-Dealer may, and Broker-Dealer shall if so requested by Purchaser, provide copies of all statements and confirmations for the Account to Purchaser and, except as otherwise prohibited by law, provide any other information to Purchaser regarding the Account or Seller.
If Broker-Dealer becomes aware that any person is asserting any lien, encumbrance, security interest or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution, or similar process or any claim of control) against the Account or any Financial Assets in the Account, Broker-Dealer shall promptly notify Purchaser of the same.
7. Broker-Dealer's Rights and
Broker-Dealer will not lend securities, make margin loans, or take similar actions with respect to any Financial Assets in the Account while this Agreement is in effect.
With respect to the parties' rights and obligations under this Agreement, Broker-Dealer will not close Seller's Account or change the Account number without first providing notice to Purchaser.
Broker-Dealer will not be liable to Seller, Purchaser, or any of their respective affiliates for complying with instructions or other entitlement orders originated by Purchaser, and without regard to whether Seller notifies Broker-Dealer that an Exclusive Control Event has not occurred or that Purchaser is not entitled to issue an Exclusive Control Notice or entitlement order.
This Agreement does not create any obligation on Broker-Dealer except for those expressly set forth in this Agreement. Without limiting the foregoing, Broker-Dealer need not investigate whether Purchaser is entitled to give an Exclusive Control Notice or any other instruction or entitlement order or whether an Exclusive Control Event has occurred. Broker-Dealer may rely on notices and communications it reasonably believes are given by the appropriate party.
In no event shall Broker-Dealer or Purchaser be liable to Seller or any of its affiliates for any punitive, exemplary or consequential damages or any damages other than, or in addition to, actual out-of-pocket damages.
Purchaser and Seller jointly and severally indemnify Broker-Dealer, and its officers, directors, employees and agents, against all claims, liabilities and expenses which any such indemnified parties may incur arising out of this Agreement (including reasonable attorney's fees and disbursements), except to the extent the claims, liabilities or expenses are caused by the gross negligence, willful misconduct or bad faith of any indemnified party.
9. Termination; Survival
Purchaser may terminate this Agreement by written notice to Broker-Dealer.
Except as otherwise provided in this Section 9, this Agreement may be terminated by Broker-Dealer at any time by written notice delivered to Purchaser and Seller not less than 30 days prior to the effective termination date; provided that, before such termination, Broker-Dealer and Seller shall make arrangements to transfer all Financial Assets in the Account to another securities intermediary reasonably acceptable to Purchaser that shall have executed, together with Seller, a securities account control agreement in favor of Purchaser in respect of such Financial Assets in substantially the same form as this Agreement, or otherwise in form and substance satisfactory to Purchaser. If Purchaser gives Broker-Dealer notice, prior to the expiration of such 30-day period, that Purchaser, Seller and such substitute securities intermediary have not entered into a substitute securities account control agreement, Broker-Dealer shall, if so instructed by Purchaser, transfer all funds and other Financial Assets in the Account to such other financial institution or institutions as Purchaser may direct. Seller grants to Purchaser a power of attorney to execute and deliver and otherwise enter into, in each case in the name of and on behalf of Seller, any substitute or replacement securities account control agreements contemplated above, provided that Seller shall not be bound by any provisions of such securities account control agreement(s) to the extent such provisions are materially more burdensome on Seller than those contained in this Agreement. The foregoing power of attorney is coupled with an interest and shall not be revocable until the Secured Obligations have been repaid in full.
Any rights or remedies of Broker-Dealer under Sections 7 or 8 of this Agreement will survive termination of this Agreement.
10. Successor Accounts; Proceeds
The Account will include securities accounts and cash sweep accounts, any substitute or replacement securities account or cash sweep account, and any account, including any subaccount, maintained by Broker-Dealer into which any property from the Account is transferred, unless Purchaser expressly agrees in writing prior to the transfer that the account into which such property is transferred will not be subject to this Agreement. Purchaser's security interest in the Account and the Financial Assets extends to any proceeds thereof. For the avoidance of doubt, any deposit account held in or through the Account shall be treated as a Financial Asset and shall be considered part of the Account.
11. Governing Law
This Agreement will be governed by the laws of the State of New York, without regard to any conflict of law principle which gives effect to the laws of any other jurisdiction.
12. Entire Agreement; Amendments
This Agreement is the entire agreement of the parties concerning its subject matter, and supersedes any prior agreements or contemporaneous oral agreements concerning its subject matter.
No amendment of, or waiver of a right under, this Agreement will be binding unless it is in writing and signed by the party to be charged.
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
This Agreement shall be binding on the parties and their respective successors and assigns, provided that Seller may not assign any of its rights or obligations under this Agreement without first obtaining the written consent of Purchaser and Broker-Dealer.
Except as otherwise provided herein, any notice or other communication to a party under this Agreement must be in writing; must be sent to the party's address set forth herein or to such other address as the party may designate to the other parties; and will be effective upon receipt. Notwithstanding the foregoing, Purchaser may give notices to Broker-Dealer by electronic means or by any other means agreeable to Broker-Dealer and Purchaser from time to time.
Seller represents that it has carefully reviewed the Binding Arbitration Section 3.5 of the Platform Agreement ("Disputes Agreement"), which includes a provision requiring arbitration of many potential claims unless Seller has provided notice to the contrary in accordance with the terms thereof (the "Arbitration Provision"). The Disputes Agreement, to which Seller has already agreed, is incorporated herein by reference, and provides that all claims arising from or relating to the provision of or servicing of the Secured Obligations described therein must be resolved by binding arbitration if Seller has not opted out in a timely fashion. Thus, Seller will not have the following important rights:
- Seller may not file or maintain a lawsuit in any court except a small claims court.
- Seller gives up its right to have a jury decide its claim.
- Seller will not be afforded the procedural, pre-trial discovery, and appellate rights in an arbitration proceeding that it might enjoy in a court or judicial proceeding.
- Seller may not join or participate in a class action, act as a class representative or a private attorney general, or consolidate its claim with the claims of others.
- Seller will have to pay certain fees in order to commence an arbitration proceeding, unless Seller requests that Purchaser pay those fees for it.
Seller has the right to reject the Arbitration Provision by delivering a written notice to Purchaser at the following address within thirty (30) days following the date of this Agreement.
Brex Finance I LLC
405 Howard Street, 2nd Floor
San Francisco, CA 94105
17. Setoff; Purchaser's Rights; Cross-Collateralization
Seller hereby grants to Purchaser a right of setoff and recoupment against any amounts owing at any time by Purchaser to or for the benefit of Seller. All rights of setoff or recoupment set forth in this agreement are in addition to, and not in lieu of, all other rights of setoff and recoupment available to Purchaser.
To the extent any security interest or right of setoff or recoupment, or any other right or remedy, granted by Seller to or for the benefit of Purchaser is invalid or unenforceable in any jurisdiction at any time, such security interest, right or remedy, as applicable, shall be ineffective only to the extent of such invalidity or unenforceability, only for such duration and only in such jurisdiction, without impairing any other rights or remedies available to Purchaser.
SELLER ACKNOWLEDGES AND AGREES THAT THE OBLIGATIONS SECURED HEREBY INCLUDE ALL EXISTING AND ANY FUTURE OBLIGATIONS OF SELLER TO PURCHASER, WITHOUT REGARD TO WHETHER SUCH OBLIGATIONS ARE RELATED OR UNRELATED.
Delivery of this Agreement may be made by electronic means by providing Seller access to the Agreement on the Brex mobile phone application or website. This Agreement may be stored in electronic form and any such electronic record shall have the same effect, validity, and enforceability as an original hereof. If the parties have previously entered into a securities account control agreement (or similar agreement) with respect to the Account, this Agreement shall act to amend and restate such previous agreement, but shall not impair the validity, perfection or priority of any security interest or other lien arising thereunder.
*Capitalized terms that are not defined herein have the definitions provided in the Platform Agreement or in the Instant Payouts Customer Agreement.