Exhibit 4.12
PORTFOLIO RESERVE LOAN AND COLLATERAL ACCOUNT AGREEMENT
This Agreement establishes the terms and conditions that will govern Borrower's
Loan (the "Loan") from ▇▇▇▇▇▇▇ ▇▇▇▇▇ bank USA. The Loan 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 your sending notice to
Borrower in writing that Borrower's Loan has been approved.
DEFINITIONS
In this Agreement, "Borrower" means the individual or individuals (individually
and jointly, if more than one) or the corporation, partnership (general or
limited), limited liabilitiy company, sole proprietorship or other legal entity
which signs the Application as Applicant, "You," "your" and "Bank" means ▇▇▇▇▇▇▇
▇▇▇▇▇ Bank USA. "MLPF&S" means ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated. "▇▇▇▇▇▇▇ ▇▇▇▇▇ Group" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. and its
subsidiaries. "Loan Party" means, individually and collectively, Borrower and
any person who guarantees to the Bank the payment and/or performance of
Borrower's obligations under this Agreement and/or pledges collateral to the
Bank to secure the Borrower's obligations under this Agreement. "Agreement"
means this Portfolio Reserve Loan and Collateral Account Agreement, the
Application, the Account Application, the Approval Letter, and any other
documents or agreements identified by you as being part of the "Agreement."
"Application" means the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA Portfolio Reserve Loan
Application Borrower has completed and submitted to you in connection with the
Loan. "Approval Letter" means the letter the Bank will send to the loan parties
if the Application is approved, which will contain the terms relating to my Loan
described in paragraph 1 below. "Account Application" means the WCMA Collateral
Account Application (or CMA Collateral Account Application if Borrower is an
individual) Borrower has completed and submitted to MLPF&S and you in connection
with the Securities Account.
"Securities Account" means the cash securities account, including the ISA
account established pursuant to the Account Application and this Agreement. "ISA
account" means the Insured Savings account, established pursuant to the Account
Application and this Agreement. "Collateral" has the meaning given to that term
in paragraph 17 below. "Security Interest" has the meaning given to that term in
paragraph 17 below. "Borrowing Power" means the amount you are willing to lend
against a fully paid for security, as determined by you from time to time in
your discretion. "Maintenance Requirement" means the Value of Collateral which
must be maintained in the Securities Account, as determined by you from time to
time in your discretion. "Value" means the value assigned to the Collateral by
you from time to time in accordance with your standard valuation procedures, as
such procedures may be modified, amended or supplemented by you from time to
time in your discretion.
"Periodic Payment" means the amount described in paragraph 4 below, to be paid
by Borrower to you on a monthly, quarterly or other periodic basis, as indicated
in the Approval Letter. "Principal Amount" means the principal amount of the
Loam made by you to Borrower, as indicated in the Approval Letter. "Interest
Rate" means the annual interest rate applied to my Outstanding Principal
Balance, as described in Paragraph 5 below and as indicated in the Approval
Letter. "Fixed Rate," "LIBOR Rate," and "Prime Rate" have the meanings given
those terms in Paragraph 5 below. "Outstanding Principal Balance" means the
original Principal Amount, less the aggregate amount of any principal payments
made by borrower under the Loan. "Outstanding Total Balance" means the
Outstanding Principal Balance plus accrued but unpaid interest and all other
amounts then owing by Borrower under this Agreement. "Loan Term" means the
length of the term of the Loan, as indicated in the Approval Letter.
GENERAL TERMS
1. Borrower has applied for a Loan pursuant to the Application. If you approve
Borrower's Application, you will send to Borrower a completed Approval Letter
signed by you. Among other things, the Approval Letter will set forth the
following terms of my Loan:
(a) the Principal Amount,
(b) the Interest Rate,
(c) the frequency and amounts (or the manner in which the amount is determined)
of the Periodic Payment, and
(d) the Loan Term.
Borrower acknowledges and agrees that the terms set forth in the Approval Letter
are part of this Agreement.
LIMITATION ON USE OF LOAN PROCEEDS
2. UNLESS DISCLOSED IN WRITING TO YOU AT THE TIME OF THE APPLICATION, AND
APPROVED BY YOU, BORROWER MAY NOT USE ANY PORTION OF THE LOAN PROCEEDS TO
FINANCE THE PURCHASE OF SECURITIES, OR TO REPAY ANY DEBTS INCURRED (A) TO
PURCHASE, CARRY OR TRADE SECURITIES OR (B) TO ANY MEMBER OR THE ▇▇▇▇▇▇▇ ▇▇▇▇▇
GROUP.
PROMISE TO PAY, PROMISE TO MAINTAIN COLLATERAL
3. Borrower promises to pay to you or your order when DUE THE principal Amount,
interest, and all other amounts and charges permitted under and payable in
accordance with this Agreement. Borrower also promises to maintain such
Collateral in the Securities Account as you may require from time to time in
accordance with your Maintenance Requirements.
PAYMENTS
4. Borrower's Periodic Payments must be made at the address indicated on
Borrower's periodic billing statement. Unless you agree 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.
Borrower may elect to make its Periodic Payments by authorizing you to directly
debit its ▇▇▇▇▇▇▇ ▇▇▇▇▇ Working Capital Management Account (or the Borrower's
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Management Account if Borrower is an individual), or such
other account specified by Borrower, 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 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.
Borrower's payments may be applied in any manner which you elect, although,
generally, payments will first be applied to fees and charges Borrower owns
under this Agreement, then to interest, and finally to reduce the Outstanding
Principal Balance.
INTEREST RATE
5. The Interest Rate for the Loan will be calculated on the basis of a year of
365 days (366 days in the case of a leap year). Interest will begin to accrue on
the date the Loan proceeds are disbursed to Borrower or, if different, the date
indicated in the Approval Letter. The Interest Rate for the Loan will be one of
the following, as requested by Borrower, approved by you, and specified in the
Approval Letter:
a) Fixed Rate: the Interest Rate is fixed for the Loan Term.
b) Prime Rate: the floating "Prime Rate" as published in THE WALL STREET JOURNAL
(U.S. Eastern Edition) plus an additional amount expressed as partial or whole
percentage (%) points specified by the Bank and set forth in the Approval
Letter. The Prime Rate will change as and when the Prime Rate as published in
THE WALL STREET JOURNAL changes. In the event THE WALL STREET JOURNAL does not
publish a Prime Rate, the Prime Rate shall be the rate as determined by the Bank
in good faith.
c) LIBOR Rate: the LIBOR Rate, plus an additional amount expressed as partial or
whole percentage (%) points specified by the Bank and set forth in the Approval
Letter. The LIBOR Rate will be set by the Bank on the first business day of each
week and will be equal to the three (3) month (or such other LIBOR period as may
be specified in the Approval Letter) LIBOR Rate as published in THE WALL STREET
JOURNAL "Money Rates" table on such day. If THE WALL STREET JOURNAL does not
publish such a LIBOR Rate, the LIBOR Rate shall be: (i) the rate equal to the
rate ▇▇▇▇▇▇▇ ▇▇▇▇▇ International Bank Limited ("MLIB") offers to take deposits
from leading banks in the London Inter Bank Market, for the corresponding time
period or (ii) if no such offers are being made by MLIB, the rate as determined
by the Bank in good faith. In no event will the Interest Rate charged by the
Bank, (including the default interest described in paragraph 7(b)) exceed the
highest rate allowed by applicable state and federal law.
FIXED RATE LOANS PAID IN ADVANCE OF DUE DATE
6. With respect to Fixed Rate Loans, Borrower acknowledges that the Interest
Rate is set by the Bank on the assumption that the entire principal amount of
the Loan will remain outstanding for the entire Loan Term. Accordingly, Borrower
agrees that in the event all or any portion of the Loan is paid in advance of
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its due date, Borrower will pay to the Bank, upon request, such amount as the
Bank shall determine will compensate it for any hardship (including loss of
profit), cost of expense incurred by it as a result of such early payment.
Borrower further agrees that the amount payable by Borrower under this paragraph
will, in any event, be no less than an amount equal to 1% of the amount of the
loan being paid in advance of its due date times the number of years (up to a
maximum of 5 years) remaining in the Loan Term, with partial years counted as an
entire year. The foregoing liability, if any, constitutes an obligation under
this Agreement and is secured by the Collateral.
OTHER CHARGES; DEFAULT INTEREST
7. (a) You reserve the right to charge (a) any third party costs you may incur
at Borrower's request, or (b) any stamp, documentary, registration or similar
tax payable in connection with this Agreement or the Loan, together with any
liability with respect to or resulting from any delay in paying or omission to
pay any such tax. Such costs and charges may, at your option, be charged or
added to the Outstanding Principal Balance or to Borrower's next Periodic
Payment.
(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%) until all payments due
(including any late payments and any amounts accelerated) are paid to the Bank
in full. Any default interest payable: (i) which is not paid when due may 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.
BANKRUPTCY
8. Borrower must first notify you in writing before filing any petition seeking
the protection of any state or federal bankruptcy statutes, and Borrower must
not take any action (or fail to take any necessary action) which may cause a
petition in bankruptcy to be filed against Borrower.
DEFAULT
9. A default ("Default") will occur under this Agreement if: (a) Borrower fails
to make any payment when it is due as required by this Agreement or breaches any
other provision of this Agreement; (b) the Value of the Collateral in the
Securities Account falls below the applicable Maintenance Requirement, and
Borrower has not deposited additional Collateral or reduced the Outstanding
Principal Balance as required under paragraph 21 below; (c) Borrower or any Loan
Party makes, or you discover that Borrower or any Loan Party has made, a
material misrepresentation in connection with the Application and the Loan; (d)
Borrower or any Loan Party files, or there is filed against Borrower or any Loan
Party, any petition seeking the protection of any state or federal bankruptcy
statutes 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 any other
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collateral directly or indirectly securing the Loan; (f) you determine that
there is a material adverse change in the Borrower's or any Loan Party's
financial condition or prospects or the Collateral securing the loan; (g) a Loan
Party or the sole proprietor, majority shareholder or controlling owner of a
Loan Party dies or is declared incompetent or of unsound mind; or (h) Borrower
or any other Loan Party fails to satisfy any obligation to you 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 you or any other
member or the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group.
ACCELERATION UPON DEFAULT
10. If a Default occurs, you may declare due and payable the Outstanding Total
Balance. With respect to Fixed Rate Loans, Borrower acknowledges and agrees that
additional changes, calculated in accordance with paragraph 6 above, will be due
and payable in connection with the acceleration of the Outstanding Principal
Balance pursuant to this paragraph. If Borrower fails to pay the amounts
described in the preceding two sentences in full upon your demand, you may, in
addition to any other rights you may have, exercise all of your rights and
remedies under this Agreement, including, but not limited to, those described in
paragraph 21 below.
COSTS OF COLLECTION
11. If Borrower fails to make any payment under this Agreement as and when
required, Borrower must pay, to the extent permitted by applicable law, your
court and collection costs, any costs incurred in the disposition of the
Collateral, and, if the Loan is referred for collection to any attorney not
employed by you or one of your affiliates, your reasonable attorney fees and
expenses.
DELAY IN ENFORCEMENT
12. You can choose to delay or not to enforce any of your rights under this
Agreement without losing them.
NO WAIVER
13. If you choose not to exercise or enforce any of your rights, you are not
waiving the right to enforce such rights at a later time or any of your other
rights. Any waiver of your rights under this Agreement must be in writing.
STATEMENTS AND NOTICES
14. Statements and notices will be sent to the address shown on the Application,
unless Borrower notifies you in writing of a change in address. Borrower must
notify you of any change in address or name. Borrower must send correspondence
to you at the address shown for notices appearing on the periodic billing
statement unless you notify Borrower otherwise. If the Securities Account is
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linked to a WCMA account, CMA account (each as defined in paragraph 16 below) or
other securities account maintained with MLPF&S, Borrower authorizes MLPF&S to
send all notices, monthly statements and other communications regarding the
Securities Account to the address designated for such account or account from
time to time.
WAIVERS
15. Borrower waives Borrower's rights to require you 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").
PARAGRAPHS 16 THROUGH 24 GOVERN THE ESTABLISHMENT AND MAINTENANCE OF THE
SECURITIES ACCOUNT THE MLPF&S AND BORROWER'S PLEDGE AND GRANT TO YOU OF A
SECURITY INTEREST IN THE COLLATERAL.
ESTABLISHMENT OF THE SECURITIES ACCOUNT
16. MLPF&S shall establish the Securities Account (which shall include an ISA
account), which shall be known as "(Borrower's Name) Pledged Collateral Account
for ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA," (or such other title, including abbreviations,
acceptable to Bank), and Borrower agrees, as a condition to your obligation to
extend the Loan, to place Collateral in the Securities Account with Borrowing
Power sufficient to permit the Bank to make a Loan in the Principal Amount.
Borrower agrees at all times to maintain Collateral in the Securities Account
with Value sufficient to satisfy your Maintenance Requirements, until all of
Borrower's obligations under this Agreement have been satisfied indefeasibly in
full. Borrower acknowledges that in establishing and maintaining the Securities
Account, MLPF&S is acting as your agent for purposes of perfecting your Security
Interest, and shall be deemed a party to this Agreement as is relates to the
Security Interest and the Securities Account.
Borrower understands 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. Borrower
understands that amounts Borrower 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
17. As security for Borrower's obligation to you under the Loan and this
Agreement, Borrower hereby assigns, pledges, grants, and conveys to you a
continuing first priority lien and security interest (the "Security Interest")
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in (a) The Securities Account and all stocks, bonds, or other securities or
securities entitlements or any other property or financial asset now or
hereafter in the Securities Account; (b) all credit balances, accounts, contract
rights, general intangibles, instruments, documents, money, certificates of
deposit and all other property of whatever kind or description now or hereafter
in the Securities Account; (c) any securities or other financial assets
described in confirmations and other reports delivered by MLPF&S to Borrower or
you in connection with the Securities Account, which securities are deemed to be
in the Securities Account for purposes of this Agreement; (d) all dividends,
interest and proceeds of any such property, including without limitation,
proceeds or proceeds; and (e) all of Borrower's right, title and interest in and
to all monies, debts, claims, securities, financial assets and other property
deposited by Borrower with or owed or owing to Borrower by the Bank or any
member of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group (collectively, the "Collateral"). Terms used
in this Agreement which are not defined shall have the meanings set forth in the
Uniform Commercial Code, as in effect from time to time in New Your (the "UCC").
For purposes of this Agreement, the ISA account will be deemed to be included in
and a part of the Securities Account. Borrower acknowledges that control over
the Securities Account, and all Collateral in the Securities Account, shall be
in the Bank and MLPF&S for all purposes, including establishing and perfecting a
security interest therein.
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.
Borrower will take all action which you request or which is reasonably necessary
to assure that you have a continuing perfected first priority Security Interest
while this Agreement is in effect. Upon your request, Borrower will execute and
deliver to you financing statement(s) conforming to the UCC and in a form you
deem to be acceptable. Upon your request, Borrower also agrees to execute and
deliver continuation statement(s) conforming to the UCC in a form you deem to be
acceptable. If Borrower fails to deliver to you financing statements or
continuation statements you request, you may, to the extent permitted by law and
without limiting your other rights under this Agreement, execute and file in
Borrower's name, as Borrower's attorney-in-fact, such documents. If the location
of Borrower's chief executive office changes, Borrower will immediately notify
you in writing to that effect and will execute and deliver to you any additional
financing statements or similar documentation you may reasonably request to
assure the continued effectiveness of your Security Interest. Once you agree
that Borrower has fully and indefeasibly performed Borrower's obligations under
this Agreement, your Security Interest in any Collateral in your possession will
be terminated and any such Collateral will be returned to Borrower.
CERTAIN BANK RIGHTS IN THE SECURITIES ACCOUNT
18. You may provide MLPF&S entitlement orders or other instructions with respect
to the Securities Account at any time. Your instructions may include
instructions to liquidate Collateral and other property in the Securities
Account, to pay credit balances from the Securities Account to you or your
designees, or to move the Collateral from the Securities Account to you or into
an account in your name or the name of your designees. In following your
instructions, MLPF&S is under no duty to Borrower whatsoever to determine
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whether a Default has occurred or is continuing. Borrower understands that you
have ultimate control over all instructions made with respect to the Securities
Account, and that if there is a conflict between the instructions you and
Borrower give to MLPF&S with respect to the Securities Account, your
instructions will prevail.
You are entitled to receive duplicates of any and all notices, confirmations and
statements of account that Borrower is entitled to receive with respect to the
Securities Account. MLPF&S is authorized to provide you with any and all
information in its possession or control relating to the Securities Account, and
to provide you with on-line access to MLPF&S systems relating to the Securities
Account.
MY TRANSACTIONS IN THE SECURITIES ACCOUNT
19. Borrower may request withdrawals of Collateral from the Securities Account
if the Value of the Collateral remaining in the Securities Account after the
withdrawal continues to satisfy your Maintenance Requirement and applicable
securities credit regulations. Borrower also may purchase, sell or substitute
Collateral in the Securities Account if the Value of the Collateral remaining in
the Securities Account after the purchase, sale or substitution continues to
satisfy your Maintenance Requirement and applicable securities credit
regulations. Borrower understands that Borrower will not be permitted to execute
any transaction in the Securities Account if, following the transaction,
Borrower will not be in compliance with your Maintenance Requirement and
applicable securities credit regulations. Borrower also understands that
transactions made in the Securities Account may be reversed if the transaction
would result in Borrower's breach of this Agreement.
Borrower irrevocably waives for your benefit any right Borrower may have to
instruct any depository institution holding Borrower's ISA account to register
Borrower's deposit in Borrower's name on the books and records of the
depository.
ELIGIBLE COLLATERAL
20. Subject to your rights under this Agreement (including without limitation
your right to change or limit the types of securities used as collateral as set
forth in this paragraph 20 and your rights under paragraph 18), the following
securities are eligible to be held as 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; or (7) any other securities which you may approve in writing.
BORROWER ACKNOWLEDGES, HOWEVER, THAT DUE TO FEDERAL REGULATIONS, BORROWER MAY
NOT HOLD IN THE SECURITIES 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. Borrower acknowledges that if Borrower violates any of the
restrictions on eligible Collateral provided for in this Agreement (including
the restrictions described in the preceding sentence), you may, in exercising
(and without limiting) your remedies under this Agreement, liquidate all or a
portion of any securities placed into the Securities Account in violation of
this Agreement.
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You reserve the right to change or limit in your discretion the types of
securities which Borrower may use as Collateral. In addition, Borrower may not
borrow any amounts on margin (including short sales) using the Securities
Account or any Collateral in the Securities Account. Borrower may not sell,
assign, pledge or grant a Security Interest in the Securities Account or the
Collateral in the Securities Account to anyone other than you, as provided in
this Agreement, or MLPF&S. Any interest MLPF&S may have in the Securities
Account and the Collateral is subordinated to your Security Interest.
REMEDIES
21. (a) Upon the occurrence of a Default, you may, at your option, instruct
MLPF&S to cancel any open orders and close any and all outstanding contracts,
liquidate the Collateral, withdraw and/or sell any such Collateral, and apply
any such Collateral, as well as the proceeds of any such Collateral to all
unpaid amounts owing under the Loan and this Agreement. Borrower will be
responsible for any decrease in the Value of the Collateral occurring prior to
or during liquidation. Upon the occurrence of a Default, you may also setoff,
against any amount owing to you under this Agreement, any securities, cash or
other property of Borrower (including without limitation any deposit account of
Borrower with you, including any deposit with you made in connection with the
ISA account) in your possession, directly or through MLPF&S as your agent or in
the possession of any other member of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group.
(b) You may exercise any or all of your rights under this paragraph 21 without
further demand for additional Collateral, or notice of sale or purchase, or
other notice or advertisement. If at any time the Value of the Collateral is les
than the Maintenance Requirement and Borrower has not reduced the Outstanding
Principal Balance or deposited in the Securities Account additional funds and/or
securities eligible to be held as Collateral (as defined in Section 20 above)
with a Value sufficient to increase the Value of the Collateral to at least the
Maintenance Requirement, then you may, at your option, from time to time, and
without any obligation on your 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 reduce the amount owing to you under the Loan. Any sales or
purchases made pursuant to this paragraph 21 may be made at your discretion on
any exchange or other market where such business is usually transacted, or at
public auction or private sale, and you or your agent may be the purchaser for
your or your 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
you or your agent will not be considered a waiver of your right to sell or buy
without any such demand, call or notice as provided in this Agreement.
(c) With respect a Fixed Rate Loan, Borrower agrees to pay to you additional
charges, if any, payable under paragraph 6 above, if the Outstanding Principal
Balance is reduced pursuant to this paragraph.
(d) In addition to your rights and remedies described in this Agreement, you
have the right to exercise any one or more of the rights and remedies of a
secured creditor under the UCC. All the rights and remedies which are available
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to you under this Agreement are cumulative and are in addition to any and all
other rights and remedies which are otherwise available to you either at law,
equity or otherwise. You may exercise any one or more of such rights and
remedies simultaneously or successively.
OTHER ACCOUNT PROVISIONS
22. MLPF&S and Borrower each acknowledge that no VISA card, funds transfer
service, wire transfer, check writing or margin capabilities exist or will be
permitted with respect to the Securities Account without your prior written
consent.
This Agreement does not create any obligations or duties on MLPF&S to Borrower
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. Borrower agrees to pay
customary brokerage fees in connection with any transactions in the Securities
Account made in accordance with this Agreement.
23. 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 account holder of the Securities Account. With respect to
natural persons, the legal ownership of the Securities Account shall be in such
form as the Borrower 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).
Subject to the limitations in this Agreement, all accountholders agree that (i)
with respect to Borrowers which are not natural persons, each person designated
by accountholder from time to time shall have authority to transact any business
on behalf of the Securities Account, (ii) with respect to a Securities Account
in the name of more than one natural person, each accountholder has authority to
transact any business on behalf of the Securities Account as fully and
completely as if each accountholder were the sole owner of the Securities
Account, and (iii) MLPF&S may accept orders and instructions, written or oral,
with respect to the Securities Account from each such person or accountholder
referred to in (i) and (ii) above, without notice to accountholder, for the
receipt, transfer and withdrawal of funds and for the purchase, sale, exchange,
transfer or other disposition of securities and other property.
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 or the
Securities Account.
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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 your rights under
this Agreement, vest the interest of a deceased accountholder in the surviving
accountholder(s) and Securities Account designated "without right of
survivorship" (e.g. TIC) shall, subject to your 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 you 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 or Securities Account.
Borrower may not change ownership of the Securities Account except in accordance
with this paragraph 23, and subject to your Security Interest. No change in
ownership of the Securities Account will be effective until the change is
consented to by you and reflected in the account records of MLPF&S. All
statements, notices or other communications sent or given to one accountholder
by your or MLPF&S shall be considered notice to all accountholders. Subject to
the limitations in this Agreement, in the event MLPF&S receives inconsistent
instructions from two or more accountholders, reasonably believes instructions
received from one accountholder is not mutually agreeable to all accountholders,
or receives a court order with respect to the Securities Account, MLPF&S may,
but is not obligated to, restrict activity in the Securities Account, require
that all instructions of any accountholder be in writing signed by all
accountholders, suspend or terminate the service and/or file an interpleader
action in an appropriate court at the expense of the accountholders.
HOLD HARMLESS; ARBITRATION WITH MLPF&S
24. Borrower hereby agrees to hold harmless MLPF&S, its affiliates (excluding
you), 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, Borrower's
granting the Security Interest, your exercise of rights under this Agreement,
including any action or inaction by MLPF&S in following your instructions
regarding the Securities Account in accordance with this Agreement.
Borrower agrees that all controversies which may arise between MLPF&S and
Borrower 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 Borrower, whether entered into prior to,
on or subsequent to the date hereof shall be determined by arbitration. Any
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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. Borrower 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 Borrower fails to make such election, by registered letter or
telegram addressed to you 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.
- Arbitration is final and binding on the parties.
- The parties are waiving their right to seek remedies in court, including
the right to jury trial.
- Pre-arbitration discovery is generally more limited than and different from
court proceedings.
- 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.
FINANCIAL AND CREDIT INFORMATION
25. Borrower agrees:
(a) To notify you immediately, in writing, of any change in Borrower's financial
condition or prospects which would adversely affect Borrower's ability to repay
any obligation(s) to you according to the Loan terms;
(b) To supply to you such current financial information or other information as
you may reasonably request from time to time;
(c) That you and any member of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group may share with one
another and any affiliated companies, or any person authorized by Borrower, for
legitimate business purposes, any information about Borrower which each may
currently possess or obtain in the future, unless Borrower notifies you at the
time of application for the Loan that Borrower does not agree to such sharing of
information;
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(d) That you, or anyone authorized by you, may obtain, from time to time, third
party credit and investigative reports with respect to the Borrower, and may
answer any questions about your credit experience with Borrower; and
(e) That there may be additional documentation required to be filed or executed
by Borrower from time to time by applicable law or the policies and procedures
of MLPF&S or the Bank, and Borrower agrees to comply with any requests for
additional documents.
WARRANTIES AND COVENANTS
26. On a continuing basis, Borrower warrants and covenants to you that:
(a) Except for your rights established under this Agreement, Borrower 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) Borrower will not pledge or hypothecate the Collateral or grant a security
interest in 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,
Borrower and its affiliates, in the aggregate, are not the beneficial owners of
more than three (3%) percent of the number of outstanding shares of any class of
equity securities;
(e) With respect to any securities in the Securities Account, Borrower does not
control the issuer of such securities;
(f) The Loan proceeds will be used only in accordance with paragraph 2 above;
(g) Borrower has been duly organized or formed under the jurisdiction of its
organization or formation. Borrower 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) Borrower 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 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 the Borrower;
(i) Neither the execution, delivery or performance by Borrower 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 Borrower, (ii)
violate or conflict with, as applicable, Borrower'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, be cause 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 your favor) on any of Borrower's property under, any agreement, note,
indenture, instrument or other undertaking to which Borrower 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 in connection with this Agreement or
any transactions contemplated by this Agreement;
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(k) There are no actions, suits, litigations or investigations, pending or
threatened, against Borrower that could (i) have a material adverse effect on
the business, condition (financial or otherwise), obligations, operations,
performance, properties or prospects of Borrower or (ii) affect Borrower's
ability to enter into and perform its obligations under this Agreement or any of
the transactions contemplated by this Agreement;
(l) The operations of Borrower 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 an regulation;
(m) Since the date of the most recent financial statements of Borrower delivered
to you, there has been no material adverse change in the business, condition
(financial or otherwise), obligations, operations, performance, properties or
prospects of Borrower;
(n) After giving effect to the Loan, (i) the present fair value of Borrower's
assets (plus, in the event Borrower 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 Borrower's
liabilities (including, without limitation, contingent liabilities), (ii)
Borrower has capital and assets sufficient to carry on its business, (iii)
Borrower 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) Borrower does not intend to incur or
believe that it will incur debts beyond its ability to pay as they become due.
Borrower will not be rendered insolvent by the execution, delivery and
performance of documents relating to this Agreement or by the consummation of
the transactions contemplated under this Agreement; and
(o) The address of the chief executive office of Borrower is as set forth in the
Application.
MISCELLANEOUS
27. This Agreement shall be binding upon and inure to the benefit of the heirs,
successors and assigns of all the parties to this Agreement. You may assign at
your sole option all or part of your rights, obligations and remedies under this
Agreement.
28. (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 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: (1) with respect to the Securities Account and your Security
Interest, this Agreement shall be governed by and interpreted under the laws of
the State of New York; (ii) Notwithstanding the choice of law provisions of this
paragraph which shall govern the contractual obligations of the parties under
this Agreement, the legal ownership of the Securities Account shall be governed
by and interpreted under the internal laws of the state where the chief
executive office of the Borrower is located, with respect to a Borrower which is
incorporated under the laws of a state in the United States. 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.
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(b) Borrower 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 Loan and Borrower consents to
service of process by certified mail to Borrower's address of record.
(c) Except to the extent prohibited by applicable law which cannot be waived,
Borrower waives, and covenants that Borrower will not assert any right to trial
by jury in any forum in respect of any issue, claim, demand, action or cause of
action arising out of this Agreement and the Loan.
29. 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.
30. 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.
31. 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.
32. This Agreement constitutes the entire agreement between Borrower, you and
MLPF&S regarding the matters contemplated by this Agreement, and supersedes any
and all prior agreements (whether written or oral).
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January 12, 2001
Dimensional Visions, Inc.
Attn: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇. #▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA (the "Bank") is pleased to advise you that your
application for a securities-based loan (the "Loan") has been approved. Your
Loan will be governed by the provisions of the Portfolio Reserve Loan and
Collateral Account Agreement (Form #F5059 6/98) and is made on the following
terms:
1. Maximum Principal Amount $500,000.00, of which $100,000.00 was disbursed
on January 12, 2001 (the "Initial Disbursement Date") by wire transfer, in
accordance with your instructions. Interest on that portion of the Loan will
begin to accrue as of the Initial Disbursement Date. The remaining amount of the
Loan will be disbursed to you in installments. For each requested loan
disbursement, you must submit a Loan Disbursement Request in the form attached
to this letter. In addition, each loan disbursement is subject to the following
terms and conditions:
(i) there must be eligible collateral in the Securities Account in an
amount sufficient to support the Outstanding Principal Amount after
giving effect to the requested disbursement, and you must otherwise be
in compliance with the terms and conditions of the Portfolio Reserve
Loan and Collateral Account Agreement;
(ii) each disbursement request must be in an amount no less than $25, 001
(iii) the Loan Term for each disbursement shall end on the expiration of
the Loan Term applicable to the initial disbursement.
2. Interest Rate: 3-Month LIBOR Rate (adjusted weekly), plus 2.5%
3. Loan Term: 1 year
4. Frequency of Periodic Payments: Monthly
5. All Periodic Payments, other than the final one, will consist of
interest only. Your Periodic Payments (plus any fees or charges, if applicable)
will be calculated at the end of each calendar month and are payable by the 15th
day of the following month. The exact payment amount will depend on the number
of days in the billing period and the Outstanding Principal Amount. The
repayment of the Outstanding Principal Amount will be due and payable with your
final Periodic Payment on January 13, 2002. We will send you a billing statement
each billing cycle setting forth the exact amount of each Periodic Payment.
6. If you do not agree with the terms and conditions of your Loan as set
forth in this Approval Letter, you may repay the amount disbursed to you on the
Initial Disbursement Date in good funds no later than the fifth calendar day
(excluding Saturdays, Sundays and legal holidays) following the Initial
Disbursement Date. If you repay the outstanding portion of the Loan in
accordance with this paragraph, the Bank's agreement to make the Loan stall
terminate and no fees or interest due under the terms of the Portfolio Reserve
Loan and Collateral Agreement will be charged to you.
Thank you for your interest in ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA. We look forward to
serving you and providing you assistance in meeting your financing needs.
Sincerely,
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Assistant Vice President
▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA
