EXHIBIT 10.26
PORTFOLIO RESERVE(R) PLUS LOAN, LETTER OF CREDIT AND COLLATERAL ACCOUNT
AGREEMENT -- DEMAND FACILITY
This Agreement (as described below) establishes the terms and conditions that
will govern the Borrower's uncommitted demand Loan and Letter of Credit facility
more particularly described below (collectively, the "Facility") from ▇▇▇▇▇▇▇
▇▇▇▇▇ Bank USA. The Facility is secured by a pledge of assets held in a special
securities account established and maintained with ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇
& ▇▇▇▇▇ Incorporated in accordance with this Agreement. This Agreement becomes
effective only upon the Bank's sending notice to Borrower in writing that
Borrower's Loan and/or Letter of Credit has been approved.
DEFINITIONS
In this Agreement, the following definitions apply:
"Account Application" means the WCMA(R) Collateral Account Application (or CMA
Collateral Account Application if Borrower is an individual) Borrower has
completed and submitted to MLPF&S and the Bank in connection with the Securities
Account.
"Advance" means an advance made by the Bank to the Borrower under this Agreement
or, as the case may be, the Outstanding Principal Balance of any such advance.
"Agreement" means, collectively, this Portfolio Reserve(R) Plus Loan, Letter of
Credit and Collateral Account Agreement, the Applications, the Account
Application, the Approval Letters, and any other amendments, riders,
supplements, pledges, guarantees, acknowledgements, documents or agreements
identified by the Bank as being part of the "Agreement."
"Alternate Rate" means the floating rate of interest advised by the Bank based
on the United States federal funds rate, as determined by the Bank in its
discretion, plus an additional percentage rate deemed adequate by the Bank to
compensate it for funding the relevant Advance, funding any draw under a Letter
of Credit or any other amount, and for the Bank's profit. The Alternate Rate
will change when and as the federal funds rate changes. A written statement by
the Bank to the Borrower of the Alternate Rate will be conclusive evidence of
such rate.
"Application" means, individually and collectively, the Loan Application
Borrower has completed and submitted in connection with the Loan and/or the
Letter of Credit Application Borrower has completed and submitted in connection
with a Letter of Credit.
"Approval Letter" means, individually and collectively, the letter or letters
the Bank will send to the Borrower if a Loan Application and/or a Letter of
Credit Application is approved, which letter or letters will contain certain
terms relating to the Loan or Letter of Credit, as the case may be, as described
below in Section 1 of this Agreement. The Approval Letter is deemed to be part
of this Agreement and includes any renewal or amendment letter related thereto
signed by the Bank.
"Bank" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA, its successors and assigns.
"Bankruptcy" means with respect to any Person, that a proceeding shall be
instituted by or against such Person seeking to adjudicate a bankruptcy or
insolvency, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of its or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or protection of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian, or other similar official for it or for any
substantial part of its property or such Person shall take any action to
authorize any of the actions set forth above in this definition.
"Borrower" means, individually and collectively, the one or more Persons which
(who) execute(s) the Application as the Applicant(s). If more than one Person
executes the Application, then, each such Person shall be individually, jointly
and severally liable as the Borrower for all Obligations under this Agreement,
and the term "Borrower" shall mean and refer to each, any and all such Persons,
as may be more fully described in Section 5 below.
"Borrowing Power" means, with respect to each type of Eligible Collateral, the
dollar amount the Bank is willing to lend (including, without limitation, the
amount of Total Letter of Credit Exposure the Bank will accept), against such
type of Eligible Collateral, as determined by the Bank from time to time in its
discretion. Borrowing Power may be expressed as the dollar equivalent of the
aggregate Value of such type of Eligible Collateral multiplied by a percentage
(the "Borrowing Percentage") applicable to such type of Eligible Collateral.
Such Borrowing Percentage shall be determined (and may be changed) by the Bank
from time to time in its discretion. With respect to Eligible Collateral
consisting of more than one type of asset or property, the aggregate Borrowing
Power of such Eligible Collateral shall be the sum of the Borrowing Power with
respect to each type of Eligible Collateral. Collateral which does not
constitute "Eligible Collateral" shall have no Borrowing Power.
"Business Day" means a day on which most banks are open in New York City and the
Bank is open for business; provided that, with respect to Advances bearing
interest at the LIBOR Rate, "Business Day" means a day on which deposits in
Dollars and any other relevant currency may be dealt in on the London Interbank
Market and most banks in London, England and the Bank are open for business.
"Cash Collateral" means cash and proceeds which shall or are to be deposited
into the Cash Collateral Account as described in Section 2 (f) below and the
other provisions of this Agreement, pursuant to such documents as shall be
required by the Bank at such time.
"Cash Collateral Account" means the account established with the Bank (or a
designee of the Bank) and in the name of the Bank or its designee(s), into which
cash and proceeds constituting Cash Collateral shall be deposited and held as
collateral security in connection with outstanding Letters of Credit and Letter
of Credit Exposure, pursuant to the terms of the Agreement.
"Collateral" has the meaning given to that term in Section 18 below.
"Draft" means any draft, drawing, presentment or other request for payment under
a Letter of Credit.
"Eligible Collateral" means such Collateral which meets the criteria for
"Eligible Collateral" as set forth in Section 22 below, as such criteria may be
changed by the Bank in its discretion from time to time.
"Facility Fee" has the meaning given to that term in Section 3 below.
"Facility Fee Percentage" means the percentage designated in the Approval Letter
as the Facility Fee Percentage.
"Guarantor" means each Person, if any, which (who) guarantees any of the
Obligations hereunder, whether pursuant to a Guaranty and Amendment to this
Agreement, an Unsecured Guaranty, or otherwise.
"Interest Period" means a period by reference to which interest is calculated on
an Advance.
"Interest Rate" means the annual interest rate applied to the Outstanding
Principal Balance, as described in Section 7 and Section 9 below and as
indicated in the Approval Letter.
"ISA Account" means the Insured Savings(SM) account, established pursuant to the
Account Application and this Agreement.
"Legal Requirements(s)" means, as to any Person, trust agreement, partnership
agreement, operating agreement, articles of organization, certificate of
formation, certificate of incorporation, by-laws, operating agreement,
managerial agreement, or other organizational or governing documents of such
person, and all applicable laws, rules, regulations, ordinances, judgments,
orders, decrees, injunctions, arbitral awards, permits, licenses,
authorizations, directions and requirements of all governments, departments,
commissions, boards, courts, authorities, agencies, and officials and officers
thereof, that are now or at any time in the future in effect.
"Letter of Credit" means each letter of credit which is issued or which may be
issued by the Bank pursuant to this Agreement.
"Letter of Credit Application" means the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA Portfolio
Reserve(R) Plus Letter of Credit Application Borrower has completed and
submitted to the Bank in connection with a Letter of Credit.
"Letter of Credit Exposure" means, in relation to a Letter of Credit issued or
to be issued by the Bank at any particular time, an amount (as conclusively
determined by the Bank) equal to the Bank's maximum outstanding liability
(whether actual or contingent) under such Letter of Credit at that time. "Total
Letter of Credit Exposure" means, at any particular time, the
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aggregate Letter of Credit Exposure with respect to all Letters of Credit
outstanding at such time.
"Letter of Credit Fee" means the Letter of Credit Fee described in Section 2(f)
below.
"LIBOR" means, with regard to a particular Advance and Interest Period, the
interest rate per annum at which deposits in U.S. dollars are offered in London,
England to prime banks in the London Interbank market for such Interest Period
as displayed on Telerate Screen page 3750 as of 11:00 a.m. (London time) two
Business Days before the first day of such Interest Period in an amount
substantially equal to that Advance and for periods comparable to such Interest
Period. Telerate Screen page 3750 means the display designated as page 3750 on
the Dow ▇▇▇▇▇ Telerate Service. If such rate does not appear on Telerate Screen
page 3750 on any relevant date for the determination of LIBOR, then LIBOR means
an interest rate equal to the rate per annum, as determined by the Bank two
Business Days prior to the first delay of the Interest Period, at which deposits
in Dollars are offered to MLIB by leading banks in the London Interbank Market
in an amount comparable to that Advance and for periods equal to that Interest
Period, it being understood and agreed that a written statement by the Bank of
LIBOR shall be conclusive evidence of such rate absent manifest error.
"LIBOR Rate," has the meaning given in Section 7 below.
"Loan" means the aggregate of Advances made hereunder, including, without
limitation, all principal, interest and other amounts due with respect thereto.
"Loan Application" means the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA Portfolio Reserve(R) Plus
Loan Application Borrower has completed and submitted to the Bank in connection
with a Loan.
"Loan Party" means each Borrower, Pledgor and Guarantor, each in their
respective capacities with respect to this Agreement.
"Loan Term" means the maximum length of the term of the Loan, as indicated in
the Approval Letter.
"Maintenance Requirement" means the obligation to maintain at all times Eligible
Collateral in the Securities Account and Cash Collateral Account with an
aggregate Maintenance Value, as determined by the Bank in its discretion, of not
less than the Outstanding Principal Balance.
"Maintenance Value" of Eligible Collateral means, at any time, the sum of the
amounts obtained by multiplying the aggregate Value of each type of Eligible
Collateral maintained in the Securities Account and Cash Collateral Account at
such time by a percentage "(the "Maintenance Percentage") applicable to such
type of Eligible Collateral. The Maintenance Percentage for each type of asset
constituting Eligible Collateral shall be determined (and may be changed) by the
Bank from time to time in its discretion. Collateral which does not constitute
"Eligible Collateral" shall have no Maintenance Value.
"MLIB" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ International Bank Limited, a bank organized under
the laws of England.
"Margin Stock" means margin stock as defined under Regulation U. Margin Stock
includes, principally, stocks registered on a national securities exchange or on
the Federal Reserve Board's list of marginable OTC stocks, debt securities
convertible into margin stock and most shares of mutual funds.
"Maximum Amount" means the Dollar amount designated in the Approval Letter then
in effect as the Maximum Amount of the Facility which is permitted to be
outstanding at any time.
"▇▇▇▇▇▇▇ ▇▇▇▇▇ Group" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. and its subsidiaries.
"Minimum Advance Amount" means the Dollar amount designated in the Approval
Letter then in effect as the minimum principal amount of any Advance under the
Facility.
"MLPF&S" means ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇, Incorporated.
"Obligations" means, collectively, all of the indebtedness, liabilities and
obligations of the Borrower, each Guarantor and the other respective Loan
Parties to the Bank under this Agreement and the related documents, whether
existing now or arising in the future, absolute or contingent, liquidated or
unliquidated, and whether or not currently contemplated, including without
limitation, the Outstanding Principal Balance, all interest and other amounts
due from time to time hereunder, any obligation to provide Cash Collateral with
respect to outstanding Letters of Credit, and all other indebtedness,
liabilities, and obligations arising under, and transactions contemplated by,
this Agreement (as amended, modified, supplemented, and reviewed from time to
time).
"Outstanding Principal Balance" means, at any particular time, the sum of the
following at such time: (i) the aggregate Principal Amount of the Loan
outstanding, (ii) the Total Letter of Credit Exposure with respect to
outstanding Letters of Credit, and (iii) the aggregate Reimbursement Obligations
outstanding.
"Outstanding Total Balance" means, at any particular time, the sum of all
Obligations outstanding at such time, including: (i) the Outstanding Principal
Balance, and (ii) all accrued and unpaid interest, fees and other amounts then
due and owing to the Bank by the Loan Parties under this Agreement.
"Periodic Payment" means the amount described in Section 6 below, to be repaid
by Borrower to the Bank on a monthly, quarterly or other periodic basis, as
indicated in the Approval Letter.
"Person" means any natural person, company, corporation, firm, partnership
(limited or general), joint venture, limited liability company or limited
liability partnership, association, organization, trust, state or agency of a
state (in each case, whether or not having a separate legal personality) or any
other legal entity.
"Pledgor" means each Person, if any, which (who) pledges to the Bank (on a
recourse or non-recourse basis) any Collateral to secure the Obligations (or to
secure the obligations of any Guarantor with respect to the guaranty of such
Obligations). Pledgors shall include, without limitation, Borrower, any
Guarantor which (who) has also pledged Collateral to secure its obligations
under its guaranty or the Obligations hereunder, any spouse of a Borrower who
executes a spouse's pledge and consent agreement with respect to a jointly held
Securities Account, and any other Person who executes a pledge agreement with
respect to a Facility.
"Principal Amount" means the principal amount of the Loan, consisting of the
aggregate principal amount of the Advances constituting the Loan hereunder.
"Regulation U" means Regulation U issued by the Board of Governors of the
Federal Reserve System, as amended and supplemented from time to time, and any
successor regulation.
"Remedy Event" means any of the events described in Section 11 of this
Agreement.
"Reimbursement Obligations" means, with respect to each Letter of Credit which
may be issued under this Agreement from time to time, the Borrower's obligation
to reimburse the Bank for the amount of any Draft paid under such Letter of
Credit, as more fully described in Section 2 (f) below.
"Securities Account" means the securities account, including the ISA(R) account,
established pursuant to the Account Application and this Agreement.
"Security Interest" has the meaning given to that term in Section 18 below.
"Spread" means the percentage amount set forth in the Approval Letter as the
"spread" and as described in Section 7 below.
"UCC" means the Uniform Commercial Code in effect in the State of New York from
time to time; provided that, as used in Section 18 below regarding maintenance
of the Security Interest in the Collateral, the term UCC shall include the
Uniform Commercial Code in effect in any State which any be applicable to such
Security Interest or the Collateral.
"Value" means, with respect to any security, financial asset or other item of
Collateral, the "value" assigned to such item of Collateral by the Bank from
time to time in accordance with the Bank's standard valuation procedures, as
such procedures may be modified, amended or supplemented by the Bank from time
to time in its discretion. Such Value may be different than the price quoted for
a security or other asset on any applicable security exchange.
GENERAL TERMS
1.
(a) Borrower has applied for a Loan and/or Letter of Credit pursuant to the
Application. The Loan Parties agree that this Agreement will govern any such
Loan and/or Letter of Credit.
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(b) If the Bank approves Borrower's Loan Application, the Bank will send to
Borrower a completed Approval Letter signed by the Bank. Among other things,
the Approval Letter will set forth the following terms of the Loan:
(i) the Maximum Amount;
(ii) the Interest Rate;
(iii) the Facility Fee Percentage, if any;
(iv) the Minimum Advance Amount;
(v) the Spread;
(vi) the frequency and amounts (or the manner in which the amounts are
determined) of the Periodic Payments;
(vii) the initial Maintenance Requirement and Aggregate Borrowing Power of
the Eligible Collateral (expressed as the applicable Borrowing
Percentage(s) and Maintenance Percentage(s) and/or as aggregate
dollar amounts based on the Eligible Collateral there in the
Securities Account); and
(viii) the Loan Term.
(c) If the Bank approves Borrower's Letter of Credit Application with respect to
a Letter of Credit, the Bank will send to the Borrower a signed Approval
Letter setting forth the Maximum Amount with respect to the Facility and the
terms of the Letter of Credit, including:
(i) the issue date;
(ii) the maximum stated amount thereof;
(iii) the beneficiary;
(iv) the expiration date;
(v) the applicable Letter of Credit Fee;
(vi) any other terms the Bank deems relevant.
The Loan Parties acknowledge and agree that the terms set forth in each Approval
Letter are part of this Agreement.
ADVANCES AND RENEWALS OF INTEREST PERIODS AND LETTERS OF CREDIT
2.
(a) Should the Bank approve Borrower's Loan Application or Letter of Credit
Application, the Bank agrees, upon the terms and subject to the conditions
set forth in this Agreement, to make available to the Borrower an
uncommitted Facility consisting of Advances and/or Letters of Credit with an
Outstanding Principal Balance at any one time up to the Maximum Amount.
Prior to the end of the Loan Term, the Borrower may request Advances (in
amounts not less than the Minimum Advance Amount) or Letters of Credit, and
any Advances which the Bank makes and the Borrower repays may be reborrowed,
provided that, at no time shall an Advance be accepted or Letter of Credit
be issued, if upon such Advance or issuance of such Letter of Credit, the
Outstanding Principal Balance shall exceed the lesser of the Maximum Amount
or the aggregate Borrowing Power of the Collateral. The Bank shall not
consider funding any Advance or issuing any Letter of Credit if such funding
or issuance would cause the Outstanding Principal Balance to exceed the
lesser of the Maximum Amount or the aggregate Borrowing Power of the
Collateral. The Borrower shall at all times also maintain sufficient
Eligible Collateral subject to the Security Interest securing the
Obligations so as to satisfy the Maintenance Requirement. Notwithstanding
the foregoing, approval and subsequent funding of any Advance and the
approval and subsequent issuance of any Letter of Credit shall be in the
sole discretion of the Bank.
(b) The Borrower may request an Advance or request a renewal of an Interest
Period (for all or part of an outstanding Advance) verbally unless the Bank
in its discretion requires such request to be in writing. All requests must
be received by the Bank no later than 11:00 a.m. (New York City time) three
Business Days prior to the date of such Advance or for renewals, three
Business Days prior to the last day of the Interest Period for such Advance.
The Bank will send to the Borrower written confirmation of any such verbal
request. If the Bank has not received written notice from the Borrower of
any exception or objection to any such confirmation prior to the time in
which the Advance or renewal is made, the Borrower shall be deemed to have
approved such confirmation and such confirmation shall be presumed
conclusively to be correct with respect to all matters set forth therein.
(c) The Loan Parties acknowledge: (i) that any request for an Advance or to
renew an Interest Period (for all or part of an outstanding Advance) is
irrevocable; (ii) that the Bank has no obligation to make any Advance or to
renew an Interest Period (for all or part of any outstanding Advance); (iii)
that the amount of the Advance or the amount of the outstanding Advance for
which renewal of the Interest Period is requested, must not be less than the
Minimum Advance Amount indicated in the Approval Letter and in integrals of
$100,000.00 in excess thereof unless the Bank determines otherwise in its
discretion; (iv) at no time shall an Advance be funded or Letter of Credit
be issued if upon such funding or issuance the Outstanding Principal Balance
shall exceed the lesser of the Maximum Amount and the aggregate Borrowing
Power of the Collateral; and (v) no Advance or Interest Period shall extend
beyond the Loan Term.
(d) A request for an Advance or request for renewal of an Interest Period (for
all or part of an outstanding Advance) must specify: (i) the date of such
Advance or renewal (which for renewals is the last day of the Interest
Period for such outstanding Advance); (ii) the amount of the Advance; and
(iii) the duration of the Interest Period to be applicable to such Advance.
(e) If the Borrower fails to request the renewal of an Interest Period for any
portion of an Advance by the required time, the Bank will (at the Bank's
discretion, and subject to the Bank's right to demand payment in full at any
time) renew the Interest Period for such Advance after the last day of the
Interest Period for such Advance for successive one month Interest Periods
not to extend beyond the Loan Term, and interest shall accrue and be payable
on such Advance at the LIBOR Rate for such Interest Periods, subject to the
terms and conditions of this Agreement with respect to the availability of
LIBOR.
(f) Letters of Credit: (i) From time to time the Borrower may submit a Letter of
Credit Application to the Bank requesting the issuance of a Letter of
Credit, each such Letter of Credit to be in form and substance satisfactory
to the Bank in its discretion. The terms of any Letter of Credit Application
shall be incorporated in this Agreement for purposes of any Letter of Credit
issued pursuant thereto, and in the event of any conflict, the terms in this
Agreement shall govern. The Bank may, in its sole and absolute discretion,
agree to issue such Letter of Credit, and such issuance shall be subject to
the provisions of Section 2 (a) above and the other applicable provisions of
this Agreement. At or prior to the issuance of each Letter of Credit (and as
a condition to the issuance of such Letter of Credit), the Borrower shall
pay to the Bank a fee in the amount set forth in the related Approval Letter
(the "Letter of Credit Fee"). No Letter of Credit will be issued until the
associated Letter of Credit Fee has been paid. The Borrower will absolutely
and unconditionally reimburse to the Bank the full amount of each Draft paid
by the Bank under a Letter of Credit (each such obligation to reimburse the
Bank being a "Reimbursement Obligation"). Each payment of an outstanding
Reimbursement Obligation shall be due and payable to the Bank immediately
(on the date the corresponding Draft is honored by the Bank), in same day
funds, whether or not demand is made by the Bank. If the Bank in its
discretion agrees (and provided, among other things, that there is Eligible
Collateral with sufficient Borrowing Power and it is permitted by applicable
law), such Reimbursement Obligation may be satisfied by the funding of an
Advance, the proceeds of such Advance being paid directly to the Bank as
payment of the Reimbursement Eligible Obligation. The Borrower shall, in
connection with such Advance, submit a Loan Application to the Bank (if one
is not already on file) and the Bank will notify Borrower of its Approval of
such an Advance by providing to the Borrower an Approval Letter related
thereto signed by the Bank. (ii) Upon demand of the Bank, and at any other
time in which Cash Collateral is required to be provided by the Borrower
under this Agreement, the Borrower shall deposit with the Bank Cash
Collateral in an amount equal to 105% of the Total Letter of Credit Exposure
at such time. Any such Cash Collateral shall be deposited into the Cash
Collateral Account and held by the Bank as collateral to secure, and for
application to, the Reimbursement Obligations and other amounts which may
become due with respect to any outstanding Letters of Credit or any other
Obligations under this Agreement in the order and priority which the Bank
determines in its sole discretion. Should
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the Borrower fail to provide Cash Collateral as required under this
Agreement, the Bank may liquidate Collateral and deposit the proceeds
thereof into the Cash Collateral Account as Cash Collateral, as set forth
below with respect to Remedy Events. All funds deposited into and held in
the Cash Collateral Account from time to time may be invested (or left
uninvested or placed in interest bearing deposits) by the Bank in its
discretion. The proceeds of any such investment and deposit interest shall
be applied in the same manner as the principal of such account. The Bank or
its designee(s) shall have exclusive control over the Cash Collateral
Account and all amounts, securities, financial assets and other property
therein. The obligation to provide Cash Collateral pursuant to the
applicable terms of this Agreement shall be a payment obligation of the
Borrower.
FACILITY FEE
3. If required by the applicable Approval Letter, the Borrower shall pay a
Facility Fee:
(a) prior to each Advance, in an amount equal to the product determined by
multiplying (i) the Facility Fee Percentage, by (ii) the amount of such
Advance and by (iii) a fraction equal to the quotient determined by dividing
the number of days between the date of such Advance and the next annual
anniversary date of this Agreement by 360; and
(b) on the annual anniversary date of this Agreement during each year this
Agreement is in effect, in an amount equal to the product determined by
multiplying (i) the Facility Fee Percentage by (ii) the aggregate unpaid
principal amount of all Advances outstanding on such anniversary date.
Notwithstanding the foregoing, the total amount of all Facility Fees payable
during any 12-month period after the date of this Agreement shall not exceed
an amount equal to the product determined by multiplying (x) the Facility
Fee Percentage by (y) the Maximum Amount minus the daily average Total
Letter of Credit Exposure during such period.
LIMITATION ON USE OF LOAN PROCEEDS OR PROCEEDS OF ANY DRAWING ON A LETTER OF
CREDIT
4. UNLESS DISCLOSED IN WRITING TO THE BANK AT THE TIME OF THE APPLICATION, AND
APPROVED BY THE BANK, BORROWER MAY NOT USE ANY PORTION OF THE LOAN PROCEEDS
OR PROCEEDS OF ANY DRAWING ON A LETTER OF CREDIT TO FINANCE THE PURCHASE,
CARRY OR TRADING OF SECURITIES, OR TO REPAY ANY DEBTS INCURRED (A) TO
PURCHASE CARRY OR TRADE SECURITIES, OR (B) TO ANY MEMBER OF THE ▇▇▇▇▇▇▇
▇▇▇▇▇ GROUP. IN ANY EVENT, THE PROCEEDS OF ANY ADVANCE AND THE PROCEEDS OF
DRAWS ON ANY LETTER OF CREDIT SHALL BE USED ONLY FOR LAWFUL PURPOSES AND NO
SUCH PROCEEDS SHALL BE USED TO FINANCE GAMBLING ENTERPRISES, TO PURCHASE
MILITARY ARMS OR TO FINANCE OR MAKE CONTRIBUTIONS TO POLITICAL CANDIDATES OR
ORGANIZATIONS.
PROMISE TO PAY UPON DEMAND AND PROMISE TO MAINTAIN COLLATERAL
5. BORROWER AND GUARANTORS (JOINTLY AND SEVERALLY) PROMISES TO PAY TO THE BANK
OR TO THE BANK'S ORDER UPON DEMAND THE OUTSTANDING TOTAL BALANCE, OR SUCH
PART OF THE OUTSTANDING TOTAL BALANCE SPECIFIED BY THE BANK. IF ANY PORTION
OF SUCH OUTSTANDING TOTAL BALANCE CONSTITUTES TOTAL LETTER OF CREDIT
EXPOSURE WITH RESPECT TO OUTSTANDING LETTERS OF CREDIT AT THE TIME OF ANY
SUCH DEMAND, THE BORROWER AND GUARANTORS (JOINTLY AND SEVERALLY) SHALL AT
THE BANK'S REQUEST, PROVIDE TO THE BANK CASH COLLATERAL IN THE AMOUNTS
REQUIRED BY, AND PURSUANT TO THE PROVISIONS OF, SECTION 2 (F) ABOVE TO
SECURE SUCH TOTAL LETTER OF CREDIT EXPOSURE. BORROWER AND GUARANTORS
(JOINTLY AND SEVERALLY) ALSO PROMISE TO PAY ALL PERIODIC PAYMENTS AND ANY
OTHER AMOUNTS WHICH MAY BECOME DUE UNDER THIS AGREEMENT (WHETHER OR NOT
DEMANDED) WHEN SUCH PAYMENTS AND AMOUNTS BECOME DUE. THE PLEDGORS ALSO
PROMISE TO MAINTAIN SUCH COLLATERAL IN THE SECURITIES ACCOUNT AND CASH
COLLATERAL ACCOUNT AS THE BANK MAY REQUIRE FROM TIME TO TIME IN ACCORDANCE
WITH ITS MAINTENANCE REQUIREMENTS.
JOINT AND SEVERAL LIABILITY. If the Borrower consists of more than one Person
(each a "Co-Borrower"), references herein to "the Borrower" shall be read as
"each Co-Borrower", "all Co-Borrowers", or "any or all Co-Borrowers", jointly
and severally, whichever reading maximizes the Lender's rights and the
Co-Borrowers' obligations under this Agreement. All Co-Borrowers' Obligations
hereunder and, if more than one, all Guarantors' Obligations hereunder shall be
joint and several.
PAYMENTS
6.
(a) PERIODIC PAYMENTS ON THE FACILITY AS PROVIDED FOR IN THE APPROVAL LETTER.
THE BORROWER AND GUARANTOR (JOINTLY AND SEVERALLY) AGREE TO PAY ALL PERIODIC
PAYMENTS AS SET FORTH IN THE APPLICATION AND/OR IN THIS AGREEMENT. All
Periodic Payments and other payments must be made at the address indicated
on Borrower's periodic billing statement. Unless the Bank agrees in writing
otherwise, each Periodic Payment will be equal to all accrued but unpaid
interest, any payment of the Outstanding Principal Balance then due, and any
past due amounts. Any Loan Party may elect to make its Periodic Payments by
authorizing the Bank to directly debit its ▇▇▇▇▇▇▇ ▇▇▇▇▇ Working Capital
Management(SM) Account (or the Borrower's ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Management(R)
Account if such Loan Party is an individual), or such other account
specified by such Loan Party, or deposit account at another institution on a
periodic basis for the amount of the Periodic Payment. Borrower must pay
each Periodic Payment by the payment due date shown on the periodic billing
statement, even if the Borrower has paid more than the Periodic Payment in
any prior period. The Outstanding Total Balance will be due and payable with
the final Periodic Payment, which final payment shall be due on or prior to
the expiration of the Loan Term, provided however that, if any portion of
such Outstanding Total Balance constitutes Total Letter of Credit Exposure
with respect to any outstanding Letter of Credit as of such date, the
Borrower and Guarantors (jointly and severally) shall, at the Bank's
request, provide to the Bank Cash Collateral in the amounts required by, and
pursuant to the provisions of, Section 2 (f) above, to secure such Total
Letter of Credit Exposure until Bank's obligations and liabilities with
respect to such Letters of Credit are terminated and all Reimbursement
Obligation's with respect thereto and paid in full.
(b) All payments may be applied in any manner which the Bank elects, although,
generally, payments will first be applied to fees and charges Borrower owes
under this Agreement, then to interest, and finally to reduce the
Outstanding Principal Balance (including, without limitation, to provide
Cash Collateral to secure the outstanding Total Letter of Credit exposure).
(c) If the Bank in its discretion so advises the Borrower in the Approval Letter
(and provided, among other things, there is Eligible Collateral with
sufficient Borrowing Power and it is permitted by applicable law), any due
but unpaid interest may be added to the amount of the Advance to which it
relates (or, at the Bank's option, may be treated as a separate Advance) and
such amounts shall bear interest as provided for above.
(d) To the extent the Bank of MLPF&S receives any payment with respect to the
Obligations, the Facility or this Agreement, and all or any part of such
payment is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid by the Bank or MLPF&S or
paid over to a trustee, receiver or any other entity, whether under any
Bankruptcy law or otherwise, then this Agreement shall continue to be
effective or shall be reinstated, as the case may be, to the extent of such
payment or repayment by the Bank or MLPF&S, and, the indebtedness or part
thereof intended to be satisfied by such returned payment shall be revised
and continued in full force and effect as if said returned payment had not
been made.
INTEREST RATE
7.
(a) The Interest Rate for the Loan will be an interest rate equal to LIBOR, plus
an additional amount (the "Spread") expressed as partial or whole percentage
(%) points specified by the Bank and set forth in the Approval Letter (the
"LIBOR Rate"). Interest at the LIBOR Rate shall be calculated and payable on
each Advance by reference to successive
4
Interest Periods. In the case of each Advance, its first Interest Period
shall begin on the proposed date of that Advance and each subsequent
Interest Period shall begin on the last day of the previous Interest Period.
The Borrower may select an Interest Period of 1, 3, 6, or 12 months duration
(or such other period as the Bank in its discretion may agree to) provided
that no Interest Period may extend beyond the expiration date of the Loan
Term. For purposes of determining the last day of an Interest Period, each
Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day, except that, if the next
succeeding Business Day falls in the next succeeding calendar month, the
Interest Period shall end on the next preceding Business Day.
(b) Interest shall be due and payable with and on the date of each Periodic
Payment in an amount equal to the unpaid interest accrued during the
applicable Interest Period on the Advance to which it relates at the
interest rate applicable for that Interest Period. If Periodic Payments are
not scheduled, interest shall be due and payable at the end of each Interest
Period. (In the case of an Interest Period of 12 months or more, interest
shall also be due and payable every six months from the date of the relevant
Advance.) Accrued interest also shall be due and payable in full at any time
upon demand and on any other date that the relevant principal amount is due
hereunder.
(c) If the Alternate Rate shall be applicable to any Advance at any time,
interest shall be due and payable in arrears on the last Business Day of
each month, (d) Interest shall be calculated on the basis of actual days
elapsed over a year of 360 days. Interest shall accrue on the principal
amount of each Advance from and including the date of the Advance to but
excluding the date of the payment of such principal amount.
LOANS REPAID IN ADVANCE OF DUE DATE
8. Upon at least three Business Days' prior written notice to the Bank, the
Borrower has the right to repay the Outstanding Principal Balance of an
Advance, in whole or in part, in an amount of not less than $100,000 plus
the amount of any accrued but unpaid interest to the date of such payment on
the principal amount so paid and the Interest Differential (as that term is
defined in this Agreement). Each notice of repayment is irrevocable and must
specify that payment date and the principal amount of the Advance to be
repaid. The Borrower agrees that if repayment of an Advance is made for any
reason on any day other than the last day of the Interest Period applicable
to that Advance, the Borrower will pay the Bank, upon request, such amount
as the Bank reasonably determines will compensate it for any loss (including
loss of profit), cost or expense incurred by the Bank as a result of
repayment of such Advance, in whole or in part, on a date other than the
last day of the Interest Period applicable to such Advance, whether such
payment is made by the Borrower pursuant to this paragraph or is effected by
the Bank making a demand for payment and/or liquidating all or a portion of
the Securities Account or Cash Collateral Account upon the occurrence of a
Remedy Event or otherwise. Notice by the Bank to the Borrower of the amount
of the any such loss, cost of expense will be conclusive absent manifest
error.
OTHER CHARGES; DEFAULT INTEREST
9.
(a) ADDITIONAL PROVISIONS RELATED TO OTHER CHARGES. (i) Increased
Costs/Additional Costs. If, after the date of this Agreement, any change in
any applicable Legal Requirement or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law), and which
change is applicable generally to other financial institutions, shall change
the basis of taxation of payments to the Bank of the principal of or
interest on the indebtedness outstanding hereunder or any fees or other
amounts payable hereunder (other than changes in respect of taxes imposed on
the overall net income of the Bank), or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of or credit extended by, the
Bank or shall impose on the Bank any other condition affecting this
Agreement or the amount of the Obligations outstanding hereunder, and the
result of any of the foregoing shall be to increase the cost to the Bank of
maintaining the outstanding indebtedness hereunder or to reduce the amount
of any sum received or receivable by the Bank hereunder (whether of
principal, interest or otherwise), then the Borrowers and Guarantors
(jointly and severally) shall pay to the Bank such additional amount or
amounts as will compensate the Bank for such additional costs incurred or
reduction suffered. Such amounts shall, at the Bank's option, be payable on
demand or charged to or added to the next Periodic Payment due. (ii)
Illegality. If the Bank shall notify the Borrower that the introduction of
or any change in or in the interpretation of any Legal Requirement makes it
unlawful, or any central bank or other governmental authority asserts that
it is unlawful, for the Bank to perform its obligations hereunder to make or
maintain any Advance at the LIBOR Rate, the Borrower shall prepay in full
such Advance outstanding hereunder, together with interest accrued thereon,
unless the Borrower, within five Business Days of notice from the Bank,
elects (provided that such election is not illegal) to convert such LIBOR
Rate to the Alternate Rate, until the Bank shall notify the Borrower that
the circumstances causing such illegality no longer exist. (III) LIBOR
Availability. If the Bank determines that for any reason deposits in Dollars
are not offered to MLIB by leading banks in the London Interbank Market in
an amount comparable to a proposed Advance or an unpaid Advance for which
renewal of the Interest Period has been requested and for a period equal to
the requested Interest Period for such Advance, or that LIBOR applicable for
any requested Interest Period with respect to an Advance does not adequately
and fairly reflect the cost to the Bank of funding or maintaining such
Advance, the Bank will notify the Borrower that the requested Advance will
not be made or renewed, as the case may be. Upon receipt of such notice, the
Borrower may revoke any notice given to the Bank pursuant to Section 2(b)
regarding an Advance or renewal request. Whether or not the Borrower revokes
any such notice, new Advances will not be made and any outstanding Advance
will subject to the Bank's right to demand payment at any time, accrue
interest at the Alternate Rate, subject to the provisions of this Agreement,
until the Bank shall notify the Borrower that the above circumstances no
longer exist. (iv) Taxes. Any and all payments by any Loan Party under this
Agreement shall be made free and clear of any restrictions or conditions,
without set off or counterclaim, and without deduction or withholding,
whether for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto (all such taxes, levies imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes") or otherwise. In
addition, the Borrower and Guarantors (jointly and severally, shall pay any
present or future stamp, documentary, excise, property or similar taxes,
charges or levies that arise from any payment made under this Agreement or
from the execution, delivery or registration of, or otherwise with respect
to, this Agreement (all such taxes, charges and levies being hereinafter
referred to as "Other Taxes"). The Borrower and Guarantors, (jointly and
severally), shall indemnify the Bank for the full amount of Taxes and Other
Taxes, and for the full amount of taxes imposed by any jurisdiction on
amounts payable under this Section, paid by the Bank and any liability
(including, without limitation, penalties, additions to tax, interest and
expenses) arising therefrom or with respect thereto. This indemnification
payment shall, at the Bank's option, be payable on demand or charged to or
added to the next Periodic Payment due. Without prejudice to the survival of
any other agreement of the Loan Parties under this Agreement, the agreements
and obligations of the Loan Parties contained in this Section shall survive
the payment in full of principal and interest under this Agreement.
(b) To the extent permitted by applicable law, in the event the Borrower does
not make any payment to the Bank when due, the Interest Rate payable with
respect to the outstanding amount of the Loan (both before and after
judgement, if any) may, in the discretion of the Bank, increase, effective
as of the date when such payment was due, by two percent (2.00%) per annum
until all payments due (including any late payments and any amounts
accelerated) are paid to the Bank in full.
5
Notwithstanding the foregoing, should any Reimbursement Obligation not be
paid when due, such Reimbursement Obligation shall bear interest at a rate
of interest equal to two percent (2.00%) per annum above the Alternate Rate,
until such amounts are paid to the Bank in full. Any interest payable and
calculated pursuant to this Section 9 (b) ("Default Interest") shall be
payable on demand and such Default Interest: (i) which is not paid when due
may (to the extent permitted by applicable law) be added to the overdue sum
and itself bear interest accordingly; and (ii) constitutes an obligation
under this Agreement and is secured by the Collateral.
(c) Notwithstanding anything set forth in this Agreement to the contrary, in no
event shall the total amount of all charges payable under this Agreement
which are or would, under applicable law, be held to be in the nature of
interest, exceed the maximum rate permitted to be charged under applicable
law. Should the Bank receive any payment which is or would be in excess of
that permitted to be charged under any such applicable law, such payment
shall have been, and shall be deemed to have been, made in error, and at the
option of the Bank shall be applied against any of the Obligations or
returned to the Loan Parties; provided, however, if the Loan Parties are in
default under any of their obligations under this Agreement at the time any
such excess payment is received, such excess payments may be retained by the
Bank as additional Cash Collateral to secure the repayment of any amounts
due under this Agreement.
BANKRUPTCY
10. Each Loan Party must first notify the Bank in writing before filing any
petition seeking the protection of any state or federal bankruptcy statues,
and each Loan Party must not take any action (or fail to take any necessary
action) which may cause a petition in bankruptcy to be filed against any
Loan Party.
REMEDY EVENT
11. A Remedy Event will occur under this Agreement if:
(a) Borrower or any other Loan Party fails to make any payment when it is due as
required by this Agreement or breaches any other provision of this Agreement
(including, without limitation, any obligation to provide Cash Collateral);
(b) the Maintenance Value of the Eligible Collateral in the Securities Account
or Cash Collateral Account falls below the amount necessary to comply with
the Maintenance Requirement then in effect, and Borrower and/or any other
relevant Loan Party has not deposited additional Eligible Collateral or
reduced the Outstanding Principal Balance as required under Section 24
below;
(c) Borrower or any Loan Party makes, or the Bank discovers that Borrower or any
Loan Party has made, a material misrepresentation in connection with the
Application or the Loan or any Letter of Credit;
(d) Borrower or any Loan Party files, or there is filed against Borrower or any
other Loan Party, any petition seeking the protection of any state or
federal bankruptcy statues or the Borrower or any other Loan Party becomes
insolvent or is generally unable to pay his, her or its debts when due;
(e) an attachment is levied against all or any portion of the Securities Account
or Cash Collateral Account or any other Collateral directly or indirectly
securing the Obligations;
(f) the Bank determines that there is a material adverse change in the
Borrower's or any Loan Party's financial condition or prospects or in the
Collateral securing the Obligations;
(g) Borrower or any other Loan Party or the sole proprietor, majority
shareholder or controlling owner of Borrower or any other Loan Party dies or
is declared incompetent or of unsound mind;
(h) Borrower or any other Loan Party fails to satisfy any obligation to the Bank
or any other member of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group, or a default occurs under
any other agreement the Borrower or any other Loan Party has entered into
with the Bank or any other member of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group;
(i) final judgement for the payment of money is rendered against any Borrower or
any other Loan Party, and within thirty (30) days from the entry of such
judgement such judgement has not been discharged or stayed pending appeal or
has not been discharged within thirty (30) days from a final order of
affirmance on appeal;
(j) if Borrower or any other Loan Party is acting in the capacity of trustee of
a trust for the purpose hereof, they cease to be appropriately authorized to
act on behalf of such trust or such trust comes or is brought to an end;
(k) the Bank otherwise deems itself or its security interest in any of the
Collateral insecure or the Bank believes in good faith that the prospect of
payment or other performance by Borrower or any other Loan Party is impaired
or that the value of the Collateral or the Bank's Security Interest therein
is impaired;
(l) a default occurs under any guaranty, pledge, amendment or any other
agreement entered into in connection with this Agreement; or
(m) any action or legal proceeding is commenced seeking to enjoin or preclude
payment under, or the drawing of, a Letter of Credit or otherwise relating
to a Letter of Credit.
COSTS OF COLLECTION
12. If any Loan Party fails to make any payment under this Agreement as and when
required, the Loan Party must pay, to the extent permitted by applicable
law, the Bank's court and collection costs, any costs incurred in the
disposition of the Collateral, and, if the Loan or any other Obligation is
referred for collection to any attorney not employed by the Bank or one of
the Bank's affiliates, the Bank's reasonable attorney fees and expenses.
DELAY IN ENFORCEMENT, ORDER OF ENFORCEMENT
13. The Bank can choose to delay or not to enforce any of the Bank's rights
under this Agreement without losing any of such rights. The Bank may seek to
enforce any remedy against any Borrower or Guarantor or against any
collateral in the order and priority which it determines in its sole and
absolute discretion.
NO WAIVER
14. If the Bank chooses not to exercise or enforce any of its rights, it is not
waiving the right to enforce such rights at a later time or any of the
Bank's other rights. Any waiver of the Bank's rights under this Agreement
must be in writing.
STATEMENTS AND NOTICES
15. Statements and notices to any Loan Party will be sent to the address shown
on the Application or any other address which is on the books of the Bank,
unless such Loan Part notifies the Bank in writing of a change in address.
Each Loan Party must notify the Bank of any change in address or name. Each
Loan Party must send correspondence to the Bank at the address shown for
notices appearing on the periodic billing statement unless the Bank notifies
Borrower otherwise. If the Securities Account is linked to a WCMA account,
CMA account (each as defined in Section 17 below) or other securities
account maintained with MLPF&S, each Loan Party authorizes MLPF&S to send
all notices, monthly statements and other communications regarding the
Securities Account to the address designated for such account or accounts
from time to time.
WAIVERS
16. Each Loan Party waives its rights to require the Bank to do certain things,
to the extent permitted by applicable law. Those things are:
(a) to demand payments of amounts due (known as "presentment");
(b) to give notice that amounts due have not been paid (known as "notice of
dishonor"); and
(c) to obtain an official certification of nonpayment (known as "protest").
THE LOAN PARTIES, TO THE EXTENT PERMITTED BY LAW, WAIVE ANY RIGHT TO CLAIM
DEFENSE BASED ON MARSHALLING OF ASSETS OR GUARANTEES OR ELECTION OF REMEDIES.
ESTABLISHMENT OF THE SECURITIES ACCOUNT
17. MLPF&S shall establish the Securities Account (which shall include an ISA
account), which shall be known as the "(Pledgor's Name) Pledged Collateral
Account for ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA," (or such other title, including
abbreviations, acceptable to Bank), and each Loan Party agrees, as a
condition to the Bank extending the Loan and issuing any Letter of Credit,
to place Eligible Collateral in the Securities Account with Borrowing Power
sufficient to permit the Bank to make a Loan and/or issue Letters of Credit
in the amounts requested. The Loan Parties agree at all times to maintain
Eligible Collateral in the Securities Account (and Cash Collateral Account)
6
with Maintenance Value sufficient to satisfy the Bank's Maintenance
Requirements, until all Obligations under this Agreement have been satisfied
indefeasibly in full, the Bank's obligations and liability with respect to
all Letters of Credit are extinguished and this Agreement is terminated.
Loan Parties acknowledge that in establishing and maintaining the Securities
Account, MLPF&S is acting as the Bank's agent for purposes of perfecting the
Bank's Security Interest, and shall be deemed a party to this Agreement as
it relates to the Security Interest and the Securities Account. The Loan
Parties understand that the Securities Account is a special, limited version
of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Working Capital Management Account ("WCMA account") [or
a ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Management Account if Borrower is an individual ("CMA
Account") ] financial service. In accordance with the terms of the Insured
Savings Account Fact Sheet, available free credit balances in the Securities
Account will be deposited in the ISA account at least once each week. Each
Loan Party understands that amounts such person may owe from time to time in
connection with the Securities Account (such as payment for transactions)
may be satisfied, subject to your Security Interest, by MLPF&S from amounts
deposited in the ISA account.
SECURITY INTEREST
18.
(a) As security for the full payment and performance of the Obligations to the
Bank under and with respect to the Loan, any Letter of Credit and this
Agreement, each Loan Party hereby assigns, pledges, grants and conveys to
the Bank a continuing first priority lien and security interest (the
"Security Interest") in and to the following, whether now existing or owned
or hereinafter arising or acquired: (i) the Securities Account and all
stocks, bonds, securities, investment property, securities entitlements or
any other property or financial asset now or hereafter held in or credited
to the Securities Account; (ii) all credit balances, accounts, contract
rights, general intangibles, instruments, documents, money, certificates of
deposit, foreign exchange and all other property of whatever kind or
description now or hereafter held in or credited to the Securities Account;
(iii) any securities or other financial assets described in confirmations
and other reports delivered by MLPF&S to any Loan Party or the Bank in
connection with the Securities Account, which securities or other financial
assets are deemed to be in the Securities Account for purposes of this
Agreement; (iv) all dividends, distributions, interest and proceeds of or
with respect to any of the property described in clause (i), (ii) and (iii)
above, including, without limitation, proceeds of proceeds; and (v) all of
Borrower's right, title and interest in and to all monies, debts, claims,
securities, investment property, financial assets and other property
deposited with, or owed or owing to any Loan Party, by the Bank or any
member of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group (including, without limitation, any Cash
Collateral and other funds and proceeds in the Cash Collateral Account from
time to time), (vi) and the proceeds of any of the foregoing (collectively,
the "Collateral"). For purposes of this Agreement, the ISA account will be
deemed to be included in and a part of the Securities Account.
(b) Each Loan Party acknowledges that control over the Securities Account and
Cash Collateral Account, and all Collateral in the Securities Account and
Cash Collateral Account, shall be vested in the Bank and MLPF&S for all
purposes, including establishing and perfecting a security interest therein.
(c) All assets and property in or credited towards the Securities Account shall
be treated as a "financial asset" as that term is defined in the UCC.
(d) Each Loan Party will take all action which the Bank requests or which is
reasonably necessary to assure that the Bank has a continuing perfected
first priority Security Interest while this Agreement is in effect. Upon the
Bank's request, each Loan Party will execute and deliver to the Bank
financing statement(s) conforming to the UCC and in a form the Bank deems to
be acceptable. Upon the Bank's request, each Loan Party also agrees to
execute and deliver continuation statement(s) conforming to the UCC, and any
such other documents or instruments which the Bank requests to assist in
perfecting and protecting its Security Interest, each in a form the Bank
deems to be acceptable. If any Loan Party fails to deliver to the Bank
financing statements or continuation statements or other documents or
instruments which the Bank requests to assist in perfecting and protecting
its Security Interest, the Bank may, to the extent permitted by law and
without limiting the Bank's other rights under this Agreement, execute,
deliver and/or file in any Loan Party's name, as such Loan Party's
attorney-in-fact, or in the Bank's name such financial statements
continuation statements, instruments and documents. (e) If the location of
any Loan Party's chief executive office or residence changes, such Loan
Party will immediately notify the Bank in writing to that effect and will
execute and deliver to the Bank any additional financing statements or
similar documentation the Bank may reasonably request to assure the
continued effectiveness of the Bank's Security Interest. Once the Bank
agrees that all Obligations under this Agreement have been indefensibly paid
in full, the Bank's obligations and liability with respect to all Letters of
Credit are indefensibly extinguished and this Agreement is terminated, the
Bank's Security Interest in any Collateral in its possession will be
terminated and any such Collateral will be returned to the relevant Loan
Party.
BANK RIGHTS IN THE SECURITIES ACCOUNT
19.
(a) The Bank may provide MLPF&S with entitlement orders, instructions and
directions of any kind or character with respect to the Securities Account
at any time. The Bank's entitlement orders, directions or instructions may
include instructions to liquidate Collateral and other property in the
Securities Account, to pay credit balances from the Securities Account to
the Bank or the Bank's designees, or to move the Collateral from the
Securities Account to the Bank or into an account in the Bank's name or the
name of the Bank's designees (including, without limitation, the Cash
Collateral Account). MLPF&S shall comply with the Bank's entitlement orders,
directions and instructions in regard to the Securities Account without
further consent of any Loan Party and in following the Bank's entitlement
orders, instructions or directions, MLPF&S is under no duty to determine
whether a Remedy Event has occurred or is continuing. Each Loan Party
acknowledges and agrees that, notwithstanding any other provision of this
Agreement or any agreement between any Loan Party and MLPF&S, only the Bank
will be entitled to give entitlement orders, instructions or directions to
MLPF&S with respect to the Securities Account and no Loan Party will be
entitled to give entitlement orders, instructions or directions to MLPF&S
with respect to the Securities Account at any time. The Cash Collateral
Account and the cash and property therein shall also be completely
controlled by the Bank at all times. The Bank is entitled to receive
duplicates of any and all notices, confirmations and statements of account
that any Loan Party is entitled to receive with respect to the Securities
Account. MLPF&S is authorized to provide the Bank with any and all
information in its possession or control relating to the Securities Account,
and to provide the Bank with on-line access to MLPF&S systems relating to
the Securities Account.
TRANSACTIONS OF THE SECURITIES ACCOUNT
20. A Pledgor may request that the Bank permit the withdrawal or
substitution of Collateral from the Securities Account if the Value of the
Eligible Collateral remaining in the Securities Account and Cash Collateral
Account after the withdrawal or substitution continues to satisfy the Bank's
Maintenance Requirement and applicable securities credit regulations. A
Pledgor may not otherwise purchase, sell withdraw or substitute Collateral
in the Securities Account or Cash Collateral Account. The Bank will consider
requests to withdraw or substitute Collateral at its sole discretion. Each
Loan Party also understands that transactions made in the Securities Account
or Cash Collateral Account may be reversed if the transaction would result
in the breach of this Agreement or applicable law. Each Loan Party
7
irrevocably waives for the Bank's benefit any right it may have to instruct
any depository institution holding the ISA account to register a deposit in
each Loan Party's name on the books and records of the depository.
SPECIAL PROVISIONS REGARDING MARGIN STOCK
21. Under Regulation U of the Federal Reserve Board, an Advance or Letter of
Credit in which all or part of the proceeds of such Advance or draw on such
Letter of Credit are used to purchase or carry Margin Stock and which is
secured by Margin Stock (each a "Purpose Loan") is subject to special rules
governing the maximum amount which can be advanced, as well as withdrawals
and substitutions of collateral. If the Borrower has indicated that all or
any portion of the proceeds of any Advance or draw on a Letter of Credit
will be used to purchase or carry Margin Stock, a release or substitution of
Collateral will not be considered by the Bank if, following the funding of
such Advance or issue of such Letters of Credit, the amount by which the
Outstanding Principal Balance exceeds the Borrowing Power of the Collateral
would increase.
ELIGIBLE COLLATERAL
22. Subject to the Bank's rights under this Agreement (including without
limitation the Bank's right to change or limit the types of securities used
as Eligible Collateral as set forth in this Section 22 and its rights under
Section 20), the following securities and other assets shall constitute
Eligible Collateral under this Agreement: (1) securities and instruments
which are traded on a national securities exchange, NASDAQ or recognized
over-the-counter markets; (2) mutual fund shares; (3) unit investment
trusts; (4) negotiable certificates of deposit acceptable to the Bank; (5)
United States Treasury notes, bills or bonds; (6) corporate or municipal
bonds; (7) cash, cash balances, and any (8) other securities or investment
property which the Bank may approve in writing. Each Loan Party
acknowledges, however, that due to federal regulations, Borrower may not
hold in the Securities Account (or Cash Collateral Account) any security
issued by any member of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group, any security in an
investment company (mutual fund) as to which any member of the ▇▇▇▇▇▇▇ ▇▇▇▇▇
Group acts as investment advisor, or any interest in a unit investment trust
sponsored and advised by any member of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group. No Loan
Party may sell, assign, pledge, or grant a Security Interest in, the
Securities Account or Cash Collateral Account or the Collateral in the
Securities Account or Cash Collateral Account to anyone other than the Bank,
as provided in this Agreement, or to MLPF&S. Any interest MLPF&S may have in
the Securities Account or Cash Collateral Account and the Collateral is
subordinated to the Bank's Security Interest.
CONDITIONS PRECEDENT
23.
(a) It shall be a condition precedent to the Bank's considering making the
initial Advance or issuing the initial Letter of Credit that the Bank shall
have received: (i) evidence that a Securities Account has been properly
established and that there is sufficient Borrowing Power of Eligible
Collateral; and (ii) the Application, Account Application, such other
documents, opinions, certificates and other items as the Bank may reasonably
request.
(b) It shall be a condition precedent to the Bank's considering making any
Advance or renewing any Interest Period for an Advance or issuing any Letter
of Credit that on the date of each such Advance or the renewal of such
Interest Period or issuance of such Letter of Credit, as the case may be,
the following statements shall be true (and each such request for an Advance
or renewal of an Interest Period for an Advance or for the ISSUANCE of a
Letter of Credit shall constitute a reaffirmation of all Obligations, and a
representation and warranty by the Borrower and all other Loan Parties that
on the date of making or renewing such Advance or issuance of such Letter of
Credit such statements are true): (i) The Borrower has paid the Facility Fee
and/or Letter of Credit Fee payable in connection with this Agreement; (ii)
The representations and warranties contained in Section 29 are true and
correct with respect to each Loan Party on and as of the date of such
Advance or issuance of such Letter of Credit; (iii) No event has occurred or
is continuing or would result from the making or renewal of such Advance or
issuance of such Letter of Credit which would constitute a Remedy Event or
an event, act or condition which, with the passage of time or notice, or
both, would constitute a Remedy Event; and (iv) The Borrower has made a
request in accordance with, and has otherwise complied with the other
provisions of Section 2 of this Agreement, and (v) there is sufficient
Borrowing Power of Eligible Collateral.
REMEDIES
24.
(a) Upon the occurrence of a Remedy Event, the Bank may, at the Bank's option,
instruct MLPF&S to cancel any open orders and close any and all outstanding
contracts, liquidate all or any part of the Collateral, withdraw and/or sell
any such Collateral, and apply any or all of the Collateral, as well as the
proceeds of any such Collateral, to the payment of any outstanding
Obligations, and/or (in the Bank's discretion) for deposit into the Cash
Collateral Account to be held as Cash Collateral (pursuant to Section 2 (f)
above) for the payment of Reimbursement Obligations and other amounts which
may become due with respect to outstanding Letters of Credit or other
obligations. The Loan Parties will be responsible for any decrease in the
Value of the Collateral occurring prior to or during liquidation. Upon the
occurrence of a Remedy Event, the Bank may also setoff against any amount
owing to the Bank under this Agreement, any securities, cash or other
property of the Borrower or any Guarantor (or any Pledgor to the extent such
securities, cash or other property is Collateral or proceeds of Collateral)
including, without limitation the Cash Collateral Account and any deposit
account of such person with the Bank or its designee (including any deposit
with the Bank made in connection with the ISA account) in the Bank's
possession or control, directly or through MLPF&S as the Bank's agent or in
the possession or control of any other member of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group.
(b) The Bank may exercise any or all of the Bank's rights under this Section 24
without further demand for additional Collateral, or notice of sale or
purchase, or other notice or advertisement.
(c) At all times, there shall be maintained in the Securities Account and Cash
Collateral Account Eligible Collateral with an aggregate Maintenance Value
sufficient to meet the Maintenance Requirement in effect. If at any time the
Maintenance Value of the Eligible Collateral is less than the Maintenance
Requirement and Borrower has not reduced the Outstanding Principal Balance
or deposited in the Securities Account and/or Cash Collateral Account
additional funds and/or Eligible Collateral with an aggregate Maintenance
Value sufficient to increase the Value of all Eligible Collateral to at
least the Maintenance Requirement, then the Bank may, at that Bank's option,
from time to time, and without any obligation on the Bank's part to give
notice, instruct MLPF&S to cancel any open orders and close any or all
outstanding contracts, liquidate the Collateral, withdraw and/or sell any or
all Collateral and any proceeds of the Collateral and apply any or all of
the Collateral, as well as the proceeds of any such Collateral, to the
payment of any outstanding Obligations, and/or (in the Bank's discretion)
for deposit into the Cash Collateral Account to be held as Cash Collateral
(pursuant to Section 2 (b) above) for the payment of Reimbursement
Obligations and other amounts which may become due with respect to
outstanding Letters of Credit or other Obligations.
(d) Any sales or purchases made pursuant to this Section 24 may be made at the
Bank's discretion on any exchange or other market where such business is
usually transacted, or at public auction or private sale, and the Bank or
the Bank's agent may be the purchaser for the Bank's or the Bank's agent's
own account. It is understood that the giving of any prior demand or call or
prior notice of the time and place of such sale or purchase by the Bank or
the Bank's agent will not be considered a waiver of the Bank's right to sell
or buy without any such demand, call or notice as provided in this
Agreement.
(e) With respect any Advance, Borrower agrees to pay to the Bank additional
charges, if any, payable under Section 8 above, if the Principal Amount of
such Advance is reduced pursuant to this
8
Section on any date other than the last day of an Interest Period.
(f) In addition to the Bank's rights and remedies described in this Agreement,
the Bank shall have the right to exercise any one or more of the rights and
remedies of a secured creditor under the UCC or any other applicable law.
All the rights and remedies which are available to the Bank under this
Agreement or otherwise are cumulative and are in addition to any and all
other rights and remedies which are otherwise available to the Bank either
at law, equity, under related documents or otherwise. The Bank may exercise
any one or more of such rights and remedies simultaneously or successively.
OTHER ACCOUNT PROVISIONS
25. MLPF&S and each Loan Party acknowledge that no VISA(R) card, funds transfer
services, wire transfer, check writing or margin capabilities exist or will
be permitted with respect to the Securities Account without the Bank's
prior written consent. This Agreement does not create any obligations or
duties on MLPF&S to any Loan Party greater than or in addition to the
customary and usual obligations and duties which MLPF&S has as a
stockbroker and custodian of securities, except to the extent expressly
provided in this Agreement. All transactions in the Securities Account are
subject to the constitution, rules, regulations, customs and usages of the
exchange or market and its clearinghouse, if any, on which MLPF&S or its
agents (including MLPF&S' subsidiaries and affiliates) execute such
transactions. Each Pledgor agrees to pay customary brokerage fees in
connection with any transactions in the Securities Account made in
accordance with this Agreement.
ACCOUNT HOLDERS
26. Unless indicated otherwise on the Account Application, the Applicant shall
be the legal owner (the "accountholder") of the Securities Account. If more
than one natural person signs the Application as Applicant or Co-Applicant,
each such person shall be accountholder of the Securities Account. With
respect to natural persons, the legal ownership of the Securities Account
shall be in such form as the Applicant or Co-Applicant instructs in the
Account Application. In the event no designation is made, the Bank and
MLPF&S are authorized to deal with the accountholders as tenants in common
(without right of survivorship). Upon the occurrence of any event that
causes a change in legal ownership of the Securities Account, (including,
without limitation, death of an accountholder or divorce of married
accountholders), all accountholders or the surviving accountholder, as the
case may be, shall immediately give the Bank and MLPF&S written notice
thereof, and the Bank or MLPF&S may, in such event, take such action,
including requiring such documents or imposing such restrictions on the
Securities Account, as the Bank or MLPF&S may deem necessary in the
circumstances. Subject to the limitations in this Agreement, the
accountholder, the estate of a deceased accountholder and a departing
accountholder by assignment or divorce shall remain liable jointly and
severally for any obligations to the Bank or MLPF&S arising in connection
with the Loan, each Letter of Credit or the Securities Account. Subject to
the limitations in this Agreement, in the event of any such change of
ownership of the Securities Account, MLPF&S is authorized to divide or
retitle the Securities Account in accordance with the form of legal
ownership of the Securities Account as reflected on the records of MLPF&S
or by written instructions of the Bank and the accountholder(s), or by
obtaining a court order, as MLPF&S and the Bank may reasonably determine is
appropriate in the circumstances. With respect to natural persons, unless
agreed otherwise among the accountholders in a writing provided to MLPF&S,
joint accounts designated "with right of survivorship" (e.g. JTWROS) shall,
subject to the Bank's rights under this Agreement, vest the interest of a
deceased accountholder in the surviving accountholder(s) and Securities
Accounts designated "without right of survivorship" (e.g. TIC) shall,
subject to the Bank's rights under this Agreement, entitle the estate of a
deceased accountholder and the surviving accountholder(s) to equal shares
of the Securities Account. All accountholders agree to indemnify and hold
harmless MLPF&S and the Bank against any liability, loss or expense
incurred from acting in accordance with this Agreement in the event of a
change in ownership of the Loan, a Letter of Credit or any Obligations,
rights or interest under this Agreement or the Securities Account.
Accountholders may not change ownership of the Securities Account except in
accordance with this Section 26, and subject to the Bank's Security
Interest. No change in ownership of the Securities Account will be
effective until the change is consented to by the Bank and reflected in the
account records of MLPF&S. All statements, notices or other communications
sent or given to one accountholder by the Bank or MLPF&S shall be
considered notice to all accountholders.
HOLD HARMLESS; ARBITRATION WITH MLPF&S
27. Each Loan Party hereby agrees to hold harmless MLPF&S, its affiliates
(excluding the Bank), and its employees from any and all claims,
liabilities, and/or damages, in any way related to, or arising out of, or in
connection with, (i) granting the Security Interest, (ii) exercise of the
Bank's rights under this Agreement, including any action or inaction by
MLPF&S in following the Bank's instructions regarding the Securities Account
in accordance with this Agreement, and (iii) the use of any proceeds or
funds drawn under any Letter of Credit. EACH LOAN PARTY AGREES THAT ALL
CONTROVERSIES WHICH MAY ARISE BETWEEN MLPF&S AND ANY LOAN PARTY CONCERNING
THE SECURITIES ACCOUNT, INCLUDING, BUT NOT LIMITED TO, THOSE INVOLVING ANY
TRANSACTION OR THE CONSTRUCTION, PERFORMANCE, OR BREACH OF THIS OR ANY OTHER
AGREEMENT BETWEEN MLPF&S AND SUCH LOAN PARTY, WHETHER ENTERED INTO PRIOR TO,
ON OR SUBSEQUENT TO THE DATE HEREOF SHALL BE DETERMINED BY ARBITRATION. ANY
ARBITRATION UNDER THIS AGREEMENT SHALL BE CONDUCTED ONLY BEFORE THE NEW YORK
STOCK EXCHANGE, INC., THE AMERICAN STOCK EXCHANGE, INC., OR AN ARBITRATION
FACILITY PROVIDED BY ANY OTHER EXCHANGE, THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC. OR THE MUNICIPAL SECURITIES RULEMAKING BOARD, AND
IN ACCORDANCE WITH ITS ARBITRATION RULES THEN IN FORCE. EACH LOAN PARTY MAY
ELECT IN THE FIRST INSTANCE WHETHER ARBITRATION SHALL BE CONDUCTED BEFORE
THE NEW YORK STOCK EXCHANGE, INC., THE AMERICAN STOCK EXCHANGE, INC., OTHER
EXCHANGES, THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. OR THE
MUNICIPAL SECURITIES RULEMAKING BOARD, BUT IF SUCH LOAN PARTY FAILS TO MAKE
SUCH ELECTION, BY REGISTERED LETTER OR TELEGRAM ADDRESSED TO THE BANK AT THE
OFFICE WHERE THE SECURITIES ACCOUNT IS MAINTAINED, BEFORE THE EXPIRATION OF
FIVE DAYS AFTER RECEIPT OF A WRITTEN REQUEST FROM MLPF&S TO MAKE SUCH
ELECTION, THEN MLPF&S MAY MAKE SUCH ELECTION. JUDGMENT UPON THE AWARD OF THE
ARBITRATORS MAY BE ENTERED IN ANY COURT, STATE OR FEDERAL, HAVING
JURISDICTION. NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO
ARBITRATION, NOR SEEK TO ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT
AGAINST ANY PERSON WHO HAS INITIATED IN COURT A PUTATIVE CLASS ACTION; OR
WHO IS A MEMBER OF A PUTATIVE CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH
RESPECT TO ANY CLAIMS ENCOMPASSED BY THE PUTATIVE CLASS ACTION UNTIL:
I. THE CLASS CERTIFICATION IS DENIED;
II. THE CLASS IS DECERTIFIED; OR
III. THE CUSTOMER IS EXCLUDED FROM THE CLASS BY THE COURT.
SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT CONSTITUTE
A WAIVER OF ANY RIGHTS UNDER THIS AGREEMENT EXCEPT TO THE EXTENT STATED
HEREIN. EACH LOAN PARTY UNDERSTANDS AND EACH LOAN PARTY AND MLPF&S AGREES
THAT:
- ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
- THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE
RIGHT TO JURY TRAIL.
- PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM
COURT PROCEEDINGS.
9
- THE ARBITRATOR'S AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULINGS
BY THE ARBITRATORS IS STRICTLY LIMITED.
- THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS
WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
EACH LOAN PARTY HEREBY ACKNOWLEDGES THAT THIS SECTION APPLIES SOLELY TO
TRANSACTIONS BETWEEN MLPF&S AND THE LOAN PARTIES IN CONNECTION WITH THE
SECURITIES ACCOUNT AND THAT THIS SECTION DOES NOT OTHERWISE PERTAIN TO THE
FACILITY, THE LOAN OR THE ADVANCES MADE HEREUNDER, ANY LETTER OF CREDIT OR ANY
OBLIGATIONS RELATED TO THE FOREGOING.
FINANCIAL AND CREDIT INFORMATION
28. Borrower and each other Loan Party agrees:
(a) To notify the Bank immediately, in writing, of any change in such Person's
financial condition or prospects which would adversely affect such Person's
ability to repay or perform any Obligation(s) to the Bank according to the
terms of this Agreement;
(b) To supply to the Bank such current financial information or other
information as the Bank may reasonably request from time to time;
(c) That the Bank and any member of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group may share with one
another and any affiliated companies, or any Person authorized by such
Person, for legitimate business purposes, any information about such Person
which each may currently possess or obtain in the future, unless such Loan
Party notifies the Bank at the time of application for the Loan or Letter of
Credit that such Loan Party does not agree to such sharing of information;
(d) That the Bank, or anyone authorized by the Bank, may obtain, from time to
time, third party credit and investigative reports with respect to such Loan
Party, and may answer any questions about the Bank's credit experience with
such Loan Party; and
(e) That there may be additional documentation required to be filed or executed
by such Loan Party from time to time by applicable law or the policies and
procedures of MLPF&S or the Bank, and each Loan Party agrees to comply with
any requests for additional documents.
WARRANTIES AND COVENANTS
29. On a continuing basis, Borrower and each other Loan Party (to the extent
applicable) warrants and covenants to the Bank that:
(a) Except for the Bank's rights established under this Agreement, such Loan
Party owns the Collateral free of any interest or lien in favor of any third
party (other than any subordinated interest MLPF&S may have in the
Securities Account);
(b) The Security Interest is and shall remain a perfected and valid first
priority lien and security interest upon the Collateral;
(c) No Loan Party will pledge or hypothecate the Collateral or grant a security
interest in the Collateral to any third party during the term of this
Agreement;
(d) With respect to the issuer of any securities in the Securities Account, the
Loan Parties and their respective affiliates, in the aggregate, are not the
beneficial owners of more than five (5%) percent of the number of
outstanding shares of any class of equity securities;
(e) With respect to any securities in the Securities Account, no Loan Party
controls the issuer of such securities and such securities are not otherwise
"restricted securities" (as defined in Rule 144 of the Securities Act of
1933) nor are such securities otherwise subject to any restrictions on
pledge or transfer except as expressly disclosed to the Bank in writing;
(f) The Loan proceeds and the proceeds of each draw on Letters of Credit will be
used only in accordance with Section 4 above;
(g) Each Loan Party which is not a natural person has been duly organized or
formed under the jurisdiction of its organization or formation, and is in
good standing under the laws of the jurisdiction of its organization or
formation and is duly qualified to do business in all jurisdictions in which
the nature of its activities requires such qualification;
(h) Each Loan Party has the full right, power and authority to make, execute,
deliver and perform its obligations under this Agreement and the execution,
delivery and performance of this Agreement and the documents contemplated by
this Agreement and consummation of the transactions contemplated by this
Agreement have been duly authorized by all necessary action on the part of
such Loan Party;
(i) Neither the execution, delivery or performance by Borrower or any other Loan
Party of this Agreement and the related documents, the consummation of the
transactions contemplated by this Agreement, nor compliance with the
provisions of this Agreement will (i) violate any law, regulation, order,
judgment or decree binding on any Loan Party, (ii) violate or conflict with,
as applicable, any Loan Party's articles or certificate of incorporation,
by-laws, partnership agreement or other organizational or governing
documents, (iii) conflict with, cause a breach of, constitute a default
under, because for the acceleration of the maturity of, or create or result
in the creation or imposition of any lien, charge or encumbrance (other than
in the Bank's favor) on any of a Loan Party's property under, any agreement,
note indenture, instrument or other undertaking to which a Loan Party is a
party;
(j) No order, consent, license, authorization, recording or
registration is required to authorize or is required in connection with the
execution, delivery, and performance of, or the legality, validity, binding
effect or enforceability of, this Agreement, any documents executed or
delivered in connection with this Agreement or any transactions contemplated
by this Agreement (including, without limitation, the issuance of any Letter
of Credit);
(k) There are no actions, suits, litigations or investigations, pending or
threatened, against any Loan Party that could (i) have a material adverse
effect on the business, condition (financial or otherwise), obligations,
operations, performance, properties or prospects of such Loan Party, or (ii)
affect any Loan Party's ability to enter into and perform its obligations
under this Agreement or any of the transactions contemplated by this
Agreement (including, without limitation, the issuance of any Letter of
Credit);
(l) The operations of the Loan Parties are and have been in compliance in all
respects with all federal, state and local laws and regulations, including,
without limitation, tax, environmental and health and safety laws and
regulations;
(m) Since the date of the most recent financial statements of each Loan Party
delivered to the Bank, there has been no material adverse change in the
business, condition (financial or otherwise), obligations, operations,
performance, properties or prospects of any Loan Party;
(n) After giving effect to the Loan or any Letter of Credit, (i) the present
fair value of the assets of each Loan Party (plus, in the event a Loan Party
is a partnership, the sum of the excess of the fair value of each general
partner's nonpartnership assets over such general partner's nonpartnership
debts) exceeds the total amount of the liabilities of each Loan Party
(including, without limitation, contingent liabilities), (ii) each Loan
Party has capital and assets sufficient to carry on its business, (iii) each
Loan Party is not engaged and is not about to engage in a business or a
transaction for which its remaining assets are unreasonably small in
relation to such business or transaction and (iv) each Loan Party does not
intend to incur or believe that it will incur debts beyond its ability to
pay as they become due. No Loan Party be rendered insolvent by the
execution, delivery and performance of this Agreement or the documents
relating to this Agreement or by the consummation of the transactions
contemplated under this Agreement; and
(o) The location of each Loan Party's primary residence, if such Loan Party is a
natural person, or, if such Loan Party is not a natural person, such Loan
Party chief executive office and, if different, the location of such Loan
Party's principal place of business, are set forth in the Application (or
with respect to Guarantors and Pledgors, in the
10
Account Application or other documentation delivered in connection with this
Agreement), and each Loan Party agrees to provide the Lender with not less
that 30 days' prior written notice of any change of those locations.
MISCELLANEOUS
30. This Agreement shall be binding upon and inure to the benefit of the heirs,
legal representatives successors and assigns of all the parties to this
Agreement. The Bank may assign at the Bank's sole option all or part of the
Bank's rights, obligations and remedies under this Agreement Loan Party may
assign its rights, interests or obligations under this Agreement or any
document, Loan or Letter of Credit related to this Agreement
31
(a) BORROWER'S APPLICATION WILL BE ACCEPTED BY THE BANK IN THE STATE OF UTAH,
AND ALL DECISIONS MADE BY THE BANK WITH RESPECT TO THE LOAN AND LETTERS OF
CREDIT WILL BE MADE IN UTAH. THE TERMS OF THIS AGREEMENT WITH RESPECT TO
THE BANK SHALL BE GOVERNED BY AND INTERPRETED UNDER THE FEDERAL LAWS OF THE
UNITED STATES AND THE STATE OF UTAH, EXCEPT THAT: (I) WITH RESPECT TO THE
SECURITIES ACCOUNT AND THE SECURITY INTEREST, THIS AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED UNDER THE INTERNAL LAWS OF THE STATE OF NEW
YORK; AND (II) THE LETTERS OF CREDIT SHALL BE GOVERNED BY THE GOVERNING LAW
SET FORTH IN SUCH LETTER OF CREDIT (PROVIDED THAT THE REIMBURSEMENT
OBLIGATIONS AND OTHER OBLIGATIONS OF EACH LOAN PARTY SHALL BE GOVERNED BY
THE LAW GOVERNING THIS AGREEMENT). NONRESIDENT ALIENS AND FOREIGN
CORPORATIONS AGREE THAT THE FORM OF OWNERSHIP FOR THE SECURITIES ACCOUNT
SHALL BE GOVERNED (NOTWITHSTANDING THE LAWS OF ANY OTHER JURISDICTION TO
THE CONTRARY) BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(b) EACH LOAN PARTY AGREES TO SUBMIT TO THE JURISDICTION OF THE STATE COURTS OF
UTAH AND THE FEDERAL COURTS IN UTAH FOR THE PURPOSES OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF THIS AGREEMENT AND THE OBLIGATION AND EACH LOAN
PARTY CONSENTS TO SERVICE OF PROCESS BY CERTIFIED MAIL TO THE ADDRESS OF
EACH LOAN PARTY ON RECORD WITH THE BANK.
(c) WAIVER OF JURY TRIAL. EXCEPT TO THE EXTENT PROHIBITED BY APPLICABLE LAW
WITH CANNOT BE WAIVED, EACH LOAN PARTY AND THE BANK HEREBY 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 LOAN PARTY ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE BANK THAT THE
PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE
BANK HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT
AND ANY DOCUMENT RELATED THERETO. THE BANK MAY FILE AN ORIGINAL COUNTERPART
OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF ANY
LOAN PARTY, AS THE CASE MAY BE, TO THE WAIVER OF ITS RIGHTS TO TRIAL BY
JURY.
32. No amendment of any provision of this Agreement shall be effective unless
such amendment is in writing and signed by the Borrower and the Bank.
33. The heading of each provision of this Agreement is for descriptive purposes
only and shall not be deemed to modify or qualify any of the rights or
obligations described in each such provision.
34. If any provision of this Agreement is held to be invalid, illegal, void or
unenforceable, by reason of any law, rule, administrative order or judicial
or arbitral decision, such determination shall not affect the validity of
the remaining provisions of this Agreement.
35. This Agreement (as modified, supplemented and amended) constitutes the
entire agreement between and among Borrower, the other Loan Parties, the
Bank and MLPF&S regarding the matters contemplated by this Agreement, and
supersedes any and all prior agreements (whether written or oral) and may
not be contradicted by evidence of any alleged oral agreement.
SPECIAL PROVISIONS RELATED TO LETTERS OF CREDIT
36. Each Letter of Credit which may be issued shall be subject to the following
terms and provisions, and the Loan Parties agree to the following terms and
provisions in order to induce the Bank to enter into the Facility and to
consider the issuance of Letters of Credit.
(a) Limitation of Liability. (i) The obligation of the Borrower (or any
Guarantor) to pay any Reimbursement Obligation to the Bank shall be
absolute, unqualified, irrevocable and payable in the manner and method
provided for under this Agreement irrespective of any one or more of the
following circumstances: (A) any lack of validity or enforceability of this
Agreement, any Letter of Credit, or any other agreement, application,
amendment, guaranty, security agreement or instrument relating thereto, (B)
if there is more than one Loan Party, any change in the time, manner or
place of payment of or in any other term of all or any of the Obligations of
any other Loan Party, (C) the existence of any claim, set-off, defense or
other right that a Loan Party may have at any time against any beneficiary
or any transferee of any Letter of Credit (or any person or entity for whom
any such beneficiary or transferee may be acting), the Bank or any other
Person, whether in connection with any transaction contemplated by this
Agreement or any unrelated transaction (D) any exchange, release or
nonperformance of any property or collateral, or release or amendment or
waiver of or consent to depart from the terms of any guarantee or security
agreement, for all or any of the Obligations, (E) any payment by the Bank
against a draft, certificate or other document presented under a Letter of
Credit containing one or more non material or inconsequential discrepancies,
which discrepancies cause such presentation not to comply exactly with the
terms and conditions of the Letter of Credit, (F) any failure by the Bank to
issue a Letter of Credit (or any amendment thereto) as requested, (G) any
claim or potential claim for breach of warranty by the Bank or any Loan
Party against the beneficiary of any Letter of Credit, (H) any previous
Obligation, whether or not paid, arising from the Bank's payment against any
Draft, certificate or other document which appeared on its face to be signed
or presented by the proper party but was in fact signed or presented by a
party posing as the proper party, and (I) any action or inaction taken or
suffered by the Bank or any of its correspondents in connection with any
Letter of Credit or any related Draft, certificate or other document or
property, if taken in good faith (i.e., honesty in fact in the conduct or
transaction concerned, "Good Faith") and in conformity with applicable U.S.
or foreign laws, or Letter of Credit practices. (ii) Without limiting any
other provision of this Agreement, the Bank and any of its correspondents:
(A) may rely upon any oral, telephonic, telegraphic, facsimile, electronic,
written or other communication in Good Faith believed to have been
authorized by a Loan Party or a beneficiary, whether or not given or signed
by an authorized person, (B) shall not be responsible for errors, omissions,
interruptions or delays in transmission or delivery of any message, advice
or document in connection with any Letter of Credit, whether transmitted by
courier, mail, telex, any other telecommunication, or otherwise (whether or
not they be in cipher), or for errors in interpretation of technical terms
or in translation (and the Bank and its correspondents may transmit Letter
of Credit terms without translating them), (C) shall not be responsible for
the identity or authority of any signer or the form, accuracy, genuineness,
falsification or legal effect of any Draft, certificate or other documents
presented under any Letter of Credit if such Draft, certificate or other
documents on their face appear to be in order, (D) shall not be responsible
for any acts or omissions by or the solvency of the beneficiary of any
Letter of Credit or any other person or entity having any role in any
transaction underlying any Letter of Credit, (E) may accept or pay as
complying with the terms
11
and conditions of a Letter of Credit any Draft, certificate or other
documents appearing on their face (1) substantially to comply with the terms
and conditions of a Letter of Credit, (2) to be signed or presented by or
issued to any successor of the beneficiary or any other party in whose name
the Letter of Credit requires or authorizes that any Draft, certificate or
other document be signed, presented or issued, including any administrator,
executor, personal representative, trustee in bankruptcy, debtor in
possession, liquidator, receiver, or successor by merger or consolidation,
or any other person or entity acting as the representative of or in place of
any of the foregoing, or (3) to have been signed, presented or issued after
a change of name of the beneficiary, (F) may disregard (1) any requirement
stated in a Letter of Credit that a Draft, certificate or other document be
presented to it at a particular hour or place, and (2) any discrepancies
that do not reduce the value of the beneficiary's performance to the
Borrower in any transaction underlying a Letter of Credit, (G) shall not be
responsible for the effectiveness or suitability of any Letter of Credit for
any Loan Party's or beneficiaries' purpose, or be regarded as the drafter of
a Letter of Credit regardless of any assistance that the Bank may, in its
discretion, provide to any Person in preparing the text of a Letter of
Credit or amendment thereto, (H) shall not be liable to any Loan Party or
any other party for any consequential or special damages or for any damages
resulting from any change in the value of any goods or other property
covered by any Letter of Credit, (I) may honor a previously dishonored
presentation under a Letter of Credit, whether pursuant to court order, to
settle or compromise any claim that it wrongfully dishonored, or otherwise,
and shall be entitled to reimbursement to the same extent as if it had
initially honored plus reimbursement of any interest paid by it, (J) may
honor, upon receipt, any drawing that is payable upon presentation of a
statement advising negotiation or payment (even if such statement indicates
that a Draft, certificate or other document is being separately delivered)
and shall not be liable for any failure of any Draft, certificate or other
document to arrive or to conform in any way with the Draft, certificate or
other document referred to in the statement or any underlying contract, and
(K) may pay any paying or negotiating bank (designated or permitted by the
terms of a Letter of Credit) claiming that it rightfully honored under the
laws or practices of the place where it is located. None of the
circumstances described in this paragraph shall place the Bank or any of its
correspondents under any resulting liability to Borrower or any other
Person. All directions and correspondence relating to each Letter of Credit
are to be sent at the risk of the Loan Party and the beneficiary, and the
Bank shall not be liable or responsible for any inaccuracy, interruption,
error or delay in transmission or delivery by post, telegraph or cable or
for the accuracy of any translation.
(b) Independence. The Loan Parties acknowledge that the rights and obligations
of the Bank under each Letter of Credit are independent of the existence,
performance or nonperformance of any contract or arrangement underlying the
Letter of Credit, including contracts or arrangements between the Bank and
any Loan Party and between any Loan Party and the beneficiary of the Letter
of Credit. The Bank shall have no duty to notify Borrower or any other
Person of its receipt of any Draft, certificate or other document presented
under any Letter of Credit or of its decision to honor the Letter of Credit.
The Bank may, without incurring any liability to Borrower or any other
Person, or impairing its entitlement to reimbursement under this Agreement,
honor a Letter of Credit despite notice from Borrower or any other Person
of, and without any duty to inquire into, any defense to payment or any
adverse claims or other rights against the beneficiary of the Letter of
Credit or any other Person. The Bank shall have no duty to request or
require the presentation of any document, including any default certificate,
not required to be presented under the terms and conditions of a Letter of
Credit. The Bank shall have no duty to seek any waiver of discrepancies from
Borrower or any other Person or to grant any waiver of discrepancies which
Borrower or any other Person approves or requests. The Bank shall have no
duty to extend the expiration date or term of any Letter of Credit or to
issue a replacement letter of credit on or Before the expiration date of the
Letter of Credit or the end of such term.
(c) Non-Documentary Conditions. The Bank is authorized (but shall not be
required) to disregard any non-documentary conditions stated in a Letter of
Credit.
(d) Transfers; Information Exchange. Letters of Credit shall generally be
non-transferable. However, if, at Borrower's request and in the sole
discretion of the Bank, a Letter of Credit is issued in transferable form,
the Bank shall have no duty to determine the property identity of anyone
appearing in any transfer request, Draft, certificate or other document as
transferee, nor shall the Bank be responsible for the validity or
correctness of any transfer. The Bank may exchange information about this
Agreement, any Letter of Credit and related documents with its affiliates,
subsidiaries and proposed transferees.
(e) Extensions and Modifications of a Letter of Credit. This Agreement shall be
binding upon Borrower and each other Loan Party with respect to any
extension or modification of any Letter of Credit made at Borrower's request
or with Borrower's consent or otherwise made in the reasonable discretion of
the Bank. Each Loan Party's obligations to the Bank under this Agreement
shall not be reduced or impaired in any way by any agreement by the Bank and
the beneficiary of a Letter of Credit extending the Bank's time to honor and
to give notice of discrepancies and is binding on the Borrower and each
other Loan Party.
(f) Additional Collateral. In addition to the other provisions of this Agreement
regarding the obligation to provide Cash Collateral, if at any time any
party shall seek to restrain or preclude payment of or drawing under a
Letter of Credit or any court shall extend the term of a Letter of Credit or
take any action which has a similar effect, then, in each case, Borrower
shall provide the Bank with Cash Collateral satisfactory to the Bank as
described in Section 2 (f). As further security for the Obligations, the
Loan Parties hereby pledge and grant to the Bank a security interest in all
claims in respect of any transaction underlying any Letter of Credit. The
liens against any collateral pledged to the Bank hereunder or with respect
to the Obligations, shall remain in effect until the Bank's liability under
each Letter of Credit is extinguished and the Obligations are indefensibly
paid in full. Collateral securing a negotiable Letter of Credit will be
retained for 30 days (or more, if the above conditions are not satisfied)
following expiry of such Letter of Credit.
(g) Special Covenants. The Loan Parties will comply with all foreign and U.S.
Legal Requirements (including foreign exchange control regulations, U.S.
foreign assets control regulations and other trade-related regulations) now
or later applicable to any Letter of Credit, transactions related to any
Letter of Credit, or the execution, delivery and performance under this
Agreement and the related documents.
(h) Special Representations. Each Loan Party hereby represents and warrants
that: (i) there is no pending or threatened action which may materially
adversely affect its financial condition or business or which purports to
affect the validity or enforceability of any Letter of Credit or any
transaction related to any Letter of Credit; and (ii) neither the granting
of any collateral security for the Obligations, nor the issuance of any
Letter of Credit, nor the making of any payment thereunder or the use of any
proceeds thereof, constitutes or will constitute, or be part of, a
preferential or fraudulent transfer or conveyance to any one (including the
Bank and the beneficiary of any Letter of Credit) under any applicable law,
including Section 544, 547, 548 or 550 of the United States Bankruptcy Code.
Each request by Borrower for a Letter of Credit shall constitute the
representation and warranty of the Loan Parties that the foregoing
statements are true and correct as if made on the date of such request.
MISCELLANEOUS INDEMNITIES
37. The Borrower and each Guarantor, (jointly and severally) on demand, will
indemnify the Bank and its officers, agents, controlling persons, employees
and affiliates (each an "Indemnified Party") against, and defend and hold
such Indemnified Parties harmless from and against:
(a) any cost or increased cost in maintaining the Facility, the Securities
Account, the
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Obligations, all or any part of any Advance, any Letter of Credit or any
other amount outstanding under this Agreement or any reduction in the
effective return to the Bank under this Agreement or in the rate of overall
return on its capital below that which it would have been able to achieve
but for its entering into or giving effect to this Agreement, in each case,
which, in the Bank's determination, is sustained or incurred directly or
indirectly as a consequence of, or of compliance with, any present or future
law or regulation or any directive or the like (whether or not having the
force of law) of any governmental or other regulatory body or authority
including any law, regulation, directive or the like relating to reserve
assets, liquidity or monetary control or affecting the manner in which the
Bank allocates capital resources to its obligations under this Agreement;
(b) any funding and any other cost, expense or liability [including loss of
profit, reasonable legal fees (at all levels and in any Bankruptcy
proceeding) and taxes] sustained or incurred by the Bank (1) to render this
Agreement (including the Security Interest) or any Letter of Credit
enforceable and/or admissible in evidence in any enforcement proceedings
commenced by the Bank in connection with this Agreement or a Letter of
Credit, (2) in connection with the administration of, or in protecting or
enforcing the Bank's rights under, this Agreement, any amendment thereto
and/or any Letter of Credit, including any Bankruptcy proceeding, (3) as a
result of the occurrence or continuance of any Remedy Event (whether in
connection with any act or thing done as set out in Section 11 or
otherwise), or (4) as a result of the receipt or recovery by the Bank of all
or any part of an Advance or an overdue sum otherwise than on the last day
of an Interest Period applicable to an advance or, as the case may be, a
period selected by the Bank and applicable to that overdue sum;
(c) any stamp, documentary, registration or similar tax payable in connection
with this Agreement, any Advance or the entry into, registration,
performance, enforcement or admissibility in evidence of this Agreement
and/or any such amendment, supplement or waiver, promptly and in any event
before any interest or penalty becomes payable, together with any liability
with respect to or resulting from any delay in paying or omission to pay any
such tax; and
(d) any and all claims, damages, judgments, penalties, costs and expenses
(including attorney fees and court costs now or hereafter arising from the
enforcement of this clause) arising directly or indirectly from (i) the
activities of each Loan Party and/or any of its affiliates, its predecessors
in interest, guarantors, or third parties with whom it has a contractual
relationship (collectively, the "Borrower Parties"), (ii) this Agreement,
the Advances and/or any Letter of Credit issued hereunder, or (iii) the
violation by any of the Loan Parties or Borrower Parties of any Legal
Requirement, whether such claims, damages, judgments, or penalties, are
asserted by any governmental agency or any other person; provided that no
Indemnified Parties need be indemnified for any costs, expenses or
liabilities to the extent caused solely by such Indemnified Parties' gross
negligence or willful misconduct. The indemnities and other provisions set
forth in this Section shall survive the termination of this Agreement.
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