Exhibit 10.12
LINE OF CREDIT AND GUARANTY AGREEMENT
December 6, 1999
Boston Safe Deposit & Trust Company
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
Staples, Inc., with a mailing address at 000 Xxxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxxx 00000 ("Customer") hereby agrees with your bank ("Bank") as
follows regarding a line of credit for demand loans to be made by your Bank from
time to time to employees of Customer ("Loans"):
1. Line of Credit. Subject to the terms and conditions hereof, Bank shall
make available a line of credit (the "Line of Credit") for demand loans of U.S.
dollars to Eligible Employees (as defined herein) during the period from the
date hereof through the earlier of: (i) November 30, 2000 or (ii) the date on
which the Tracking Stock (as hereinafter defined) becomes publicly-traded. The
maximum principal amount of Loans outstanding at any one time under the Line of
Credit shall at no time exceed $30,000,000.
2. Loans. (a) Each Loan shall be in a minimum amount of $100,000 and a
maximum amount of $3,500,000. Each Loan shall be evidenced by a demand
promissory note of the Eligible Employee obligated thereon in the form of
Exhibit A hereto (a "Note") and shall be secured by such Eligible Employee's
Xxxxxxx.xxx common stock and, prior to the issuance of such stock, all of such
Eligible Employee's rights or options with respect to the same (the "Tracking
Stock") pursuant to a Pledge Agreement in the form of Exhibit B hereto (a
"Pledge Agreement"). As used herein, the term "Eligible Employee" shall mean an
employee of Customer designated by the Customer as eligible to obtain Loans who:
(i) is not a debtor in any pending case under the federal Bankruptcy Code or any
state insolvency or receivership law and whose assets are not subject to any
receivership, assignee or trust mortgage for the benefit of creditors, (ii) has
delivered to the bank a short-form personal financial statement on a form
supplied by the Bank, and (iii) has a prior credit history acceptable to Bank in
its sole discretion. Each Loan shall be issued by the Bank subject to the terms
and conditions of this Agreement.
(b) The proceeds of the Loans shall be used by Eligible Employees to
finance the cost to exercise their respective rights to purchase Tracking Stock,
which shall be delivered to Bank by Customer's transfer agent within ten
Business Days of the disbursement of the proceeds of the related Loan. Upon sale
of any Tracking Stock by an Eligible Employee, the proceeds of such sale shall
be applied first to the repayment of the Loan used by such Eligible Employee to
finance the exercise of his or her right to purchase the same, plus accrued
interest and late fees thereon and costs of collection with respect thereto,
with any proceeds of sale in excess of such amount to be paid: (i) so long as an
Employee Default by such Eligible Employee shall not have occurred and be
continuing, to the Eligible Employee obligated on such Loan, or (ii) if an
Employee Default by such Eligible Employee shall have occurred and be continuing
and (A) the Customer shall have purchased the Note of such Eligible Employee
pursuant to Section 4(c), to the Customer, and (B) if the Customer shall not
have purchased the Note of such Eligible Employee pursuant to Section 4(c), to
all other obligations of such Eligible Employee to the Bank incurred on or after
the date of this Agreement in such order as Bank may determine in its sole
discretion.
(c) Prior to the disbursement of any proceeds of a Loan, the Customer shall
provide to the Bank a certificate as to the eligibility of the employee for
whose account such proceeds shall be disbursed to purchase Tracking Stock and as
to whether or not such employee is an "affiliate" of the Customer for purposes
of Rule 144 of the Securities and Exchange Commission ("Affiliate Status"), and
a statement as to the number of shares of Tracking Stock to be issued to such
employee.
3. Interest. (a) As used herein, the following terms shall have the
following meanings:
i. "Call Rate" shall mean the rate quoted from time to time in the "Money
Rates" section of The Wall Street Journal as "Call Money," or if no
such rate is quoted or The Wall Street Journal is not available, the
generally prevailing rate for loans to members of the New York Stock
Exchange secured by stock exchange collateral provided by Reuters or a
similar source of recognized standing selected by the Bank. In the
event Bank determines that for any reason no rate comparable to Call
Money is available on a given day, the Loans shall bear interest on
such date at the Prime Rate (as hereinafter defined) minus 1% per
annum unless a penalty rate is applicable to such Loan pursuant to the
Note evidencing the same.
ii. "Standard Notice" shall mean an irrevocable notice provided to the
Bank in writing (including by facsimile) or by telephone confirmed in
writing on a Business Day which is at least one Business Day in
advance in case of
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notification of request for a Loan. Standard Notice must be provided no later
than 1:00 p.m., Eastern Standard Time on the last day permitted for such notice.
(b) Interest on the Loans shall be payable monthly in arrears on the first
day of each month commencing on the first day of the month succeeding that in
which the proceeds of a Loan are disbursed. Interest on the Loans shall be
calculated on the basis of the actual number of days elapsed and a year of 360
days. Each change in the Call Rate shall be reflected by a simultaneous change
in the rate of interest payable on the Loans. In the event any payment of
interest required to be made under a Note is not made within 15 calendar days of
the date when due, the Eligible Employee obligated thereon shall pay a late
charge to the Bank of 5% of the amount due or $25, whichever is greater. Such
charge must be paid within 30 days of the date it is assessed and will be
charged only once on each late payment. If any payment due under the Guaranty is
not made on or within five Business Days of the date when due, such amount shall
thereafter bear interest payable on demand at a fluctuating rate per annum equal
to the greater of: (a) two percent (2%) above the Call Rate (or one percent (1%)
above the Prime Rate, if the Call Rate is unavailable) in effect on such due
date, or (b) two percent (2%) above the Call Rate (or one percent (1%) above the
Prime Rate, if the Call Rate is unavailable) in effect from time to time
thereafter. As used in this Agreement, "Prime Rate" shall mean the rate quoted
as the "Prime Rate" in the "Money Rates" section of The Wall Street Journal. In
the event the Call Rate or the Prime Rate is reported as a range of rates, the
rate used to calculate the interest rates under this Agreement shall be the
highest such rate reported. Each change in the Call Rate or the Prime Rate shall
be reflected in a corresponding change in the fluctuating rate payable pursuant
to this subsection 3(b).
(c) If due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), in each case after the date of this
Agreement, there shall be any increase in the cost to the Bank of agreeing to
make or making, funding or maintaining any Loan (excluding for purposes of this
subsection 3(c) any such increased costs resulting from changes in the basis of
taxation of overall net income or overall gross income of the Bank by the United
States or any political subdivision thereof), then the Eligible Employee
obligated on a Note shall, from time to time, within 5 Business Days after
demand by the Bank, pay to the Bank additional amounts sufficient to compensate
the Bank for such increased costs.
(d) If the Bank determines that compliance with any law or regulation or
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law) introduced or changed after the date of
this Agreement affects the amount of capital required to be maintained by the
Bank and that the
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amount of such capital is increased by or based upon the existence of the Bank's
commitment to lend hereunder, then, within 5 Business Days after demand by the
Bank, each Eligible Employee shall pay to the Bank additional amounts sufficient
to compensate the Bank in the light of such circumstances.
(e) Bank shall notify Eligible Employees and the Customer promptly after
the occurrence of any event described in subsections (c) and (d) above, and
Customer's liability to Bank pursuant to such subsections shall be limited to
amounts accruing after the date of such notice. Demand by the Bank pursuant to
subsections 3(c) or (d) shall be accompanied by a certificate as to the amount
of such increased cost or required capital, respectively, showing calculations
of the amount claimed in reasonable detail. Bank's determination of any such
increased cost (using any reasonable method of averaging, attribution or
allocation), as set forth in such a certificate shall, if correctly calculated,
be deemed prima facie evidence of such amount.
4. Guaranty. (a) The Customer hereby unconditionally guarantees full and
punctual payment, performance and fulfillment to the Bank of all liabilities,
obligations and undertakings of Eligible Employees to the Bank pursuant to the
Loans, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising or acquired (the "Obligations") on November
30, 2004 or earlier upon the occurrence of an Employee Default or a Customer
Default as provided herein or under the circumstances described in subsection
9(b).
(b) The Customer's agreement contained in this Section 4 ("the Guaranty")
shall operate as a continuing, absolute and unconditional guaranty of the full
and punctual payment and performance of the Obligations, and not of their
collectibility only, and the Bank shall be entitled to enforce the Guaranty
against all assets of the Customer for the full amount of the Obligations
notwithstanding limitations on the Bank's recourse against assets of Eligible
Employees contained in the Notes. If an Employee Default shall occur, the
liability of the Customer with respect to the Obligations of the defaulting
Eligible Employee shall become immediately due and payable, and if a Customer
Default shall occur, the liability of the Customer with respect to all
Obligations of all Eligible Employee shall become immediately due and payable to
the Bank upon written notice to Customer. The Customer waives any right that the
Customer may have to require the Bank first to proceed against an Eligible
Employee or any other person. The Customer also waives any right that the
Customer may have to require the Bank to realize on any security held by the
Bank before proceeding against the Customer for the enforcement of the Guaranty.
(c) Bank agrees to consider joint requests by Customer and particular
Eligible Employees to sell such Eligible Employees' Tracking Stock prior to
enforcing its rights under the Guaranty with respect to such Tracking Stock, but
shall be under no obligation to do so. Bank agrees that, prior to making demand
upon an Eligible
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Employee for payment of a Loan following an Employee Default, it will provide
Customer with notice of such Employee Default and, except when stayed from
enforcing the Guaranty against the Customer as a result of proceedings under the
federal Bankruptcy Code or any state insolvency or receivership law or by court
order, or under circumstances in which the prospects for obtaining repayment of
such Loan from the defaulting Eligible Employee would be impaired by delay, to
permit Customer to promptly purchase the Note of such Eligible Employee at a
purchase price equal to the outstanding principal balance thereof, accrued
interest and late fees thereon, and costs of collection with respect thereto,
prior to making demand upon such Eligible Employee, without waiving its right to
proceed first against such Eligible Employee for the enforcement of such Note.
(d) Upon purchase by the Customer of the Note of any Eligible Employee, the
Bank shall endorse and transfer to the Customer the Note of such Eligible
Employee and (unless the Tracking Stock of such Eligible Employee has been sold
by Bank) shall deliver to the Customer the Pledge Agreement of such Eligible
Employee and the Tracking Stock of such Eligible Employee, in each case without
recourse, warranty or representation. The Customer waives any other right that
it may have against the Bank as a result of any such payment by the Customer
under the Guaranty, whether arising by way of subrogation, contribution,
reimbursement or otherwise.
(e) The liability of the Customer under the Guaranty shall be unlimited.
The Customer agrees, as a principal and not as a surety only, to pay to the
Bank, on demand, all costs and expenses paid or incurred by the Bank (including
court costs and attorneys' fees) in connection with the Obligations or the
Guaranty and the enforcement of either of them, including without limitation
costs and expenses paid or incurred by the Bank in connection with any
proceedings under the federal Bankruptcy Code or any other law relating to
insolvency.
(f) The Customer waives presentment, demand, protest, notice of acceptance,
notice of the Obligations incurred and all other notices of any kind and all
defenses which may be available to the Customer except for notices expressly
provided for herein. The Customer warrants to the Bank that it has adequate
means to obtain from Eligible Employees, on a continuing basis, information
concerning the financial condition of the Eligible Employees, and that it is not
relying on the Bank to provide such information, now or in the future. The
Customer agrees to the provisions of any instrument, security or other writing
evidencing or securing any of the Obligations and agrees that the obligations of
the Customer hereunder shall not be released or discharged, in whole or in part,
by: (i) any renewals, extensions or postponements of the time of payment of any
of the Obligations or any other forbearance or indulgence with respect thereto;
(ii) any rescissions, waivers, amendments or modifications of any of the terms
of any agreement evidencing, securing or otherwise executed in connection with
the Obligations; or (iii) the substitution or release of any security for the
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Obligations or of any other person primarily or secondarily liable on any of the
Obligations, whether or not notice thereof shall be given to the Customer. The
enforcement of the Guaranty shall not be affected by the delay, neglect or
failure of the Bank to take any action with respect to any security, right,
obligation, endorsement, guaranty or other means of collecting the Obligations
which it may at any time hold, including perfection or enforcement thereof. The
Customer agrees that the Customer shall be and remain bound upon the Guaranty
irrespective of any action, delay or omission by the Bank in dealing with any
Eligible Employee, any of the Obligations, any Tracking Stock or other
collateral therefor, or any person at any time liable with respect to the
Obligations, and irrespective of any defense which any Eligible Employee may
assert to the underlying debt, including but not limited to failure of
consideration, breach of warranty, fraud, payment, statute of frauds,
bankruptcy, lack of legal capacity, statute of limitations, lender liability,
accord and satisfaction or usury.
(g) If for any reason an Eligible Employee is under no legal obligation to
discharge any of the Obligations, or if any of the Obligations shall have become
irrecoverable from an Eligible Employee by operation of law or for any other
reason, or if any security for or other guaranty of the Obligations shall be
found invalid, the Customer shall nonetheless be and remain bound on the
Guaranty. The Guaranty shall continue to be effective or be reinstated,
notwithstanding any prior termination, if at any time any payment made or value
received with respect to any of the Obligations is rescinded or must otherwise
be returned by the Bank due to the insolvency or bankruptcy of an Eligible
Employee or otherwise, all as though such payment had not been made or value
received.
5. Representations, Warranties and Covenants.
(a) To induce Bank to make the Loans, the Customer makes the following
representations and warranties:
(i) That the Customer is a duly organized and validly existing corporation
in good standing under the laws of the State of Delaware, with corporate powers
adequate for the making and performing of this Agreement, for the issuance of
the Guaranty and the other agreements of the Customer referred to herein, and
for the carrying on of the business now conducted by it. The Customer is duly
qualified as a foreign corporation to do business wherever necessary to carry on
its present operations and is in good standing in every jurisdiction where such
qualification is necessary.
(ii) That Customer has good and marketable title in fee to such of its
fixed assets as are real property and good and marketable title to its other
properties and assets, subject to no mortgage, pledge, lien, charge, security
interest, title retention agreement or other encumbrance except for encumbrances
permitted by the Senior Credit Agreement (as hereinafter defined), and that the
obligations of the Customer
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pursuant to the Senior Credit Agreement (as hereinafter defined) are unsecured
except for rights of setoff of the Banks referred to therein.
(iii) That the financial statements of the Customer contained in the
Customer's Annual Report on Form 10-K for the fiscal year ended January 31,
1999, and the Customer's Quarterly Report on Form 10-Q for the quarter ended
October 31, 1999, in each case filed with the Securities and Exchange
Commission, are complete and correct and present fairly the financial position
of the Customer as of the dates thereof and for the periods included therein,
and have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, subject, as to
interim statements, to audit and year-end adjustments. There are no material
contingent liabilities or liabilities for taxes of the Customer as at the date
of the aforementioned Quarterly Report on Form 10-Q which are not reflected in
said statements of financial condition.
(iv) That there has been no material adverse change in the condition,
financial or otherwise, of the Customer since the date as of the aforementioned
Quarterly Report on Form 10-Q other than normal seasonal variations occurring in
the ordinary course of business.
(v) That the Customer has filed or caused to be filed all federal, state
and local tax returns which are required to be filed, and has paid or caused to
be paid all taxes as shown on said returns or any assessment received by it, to
the extent that such taxes have become due, except as otherwise permitted by the
provisions of this Agreement.
(vi) That there are no actions, suits or proceedings pending or, to the
knowledge of the Customer, threatened against the Customer at law or in equity
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, which in the reasonable
opinion of Customer is likely to result in a material adverse change to the
business, properties or assets or in the condition, financial or otherwise, of
the Customer.
(vii) That the Customer is not a party to any contract or agreement or
subject to any restrictions which materially and adversely affects its business
or assets or financial condition. Neither the execution nor delivery nor
compliance with the terms and provisions of this Agreement or the Guaranty will
be contrary to the provisions of, or constitute a default under, the charter or
by-laws of the Customer or any agreement to which the Customer is a party.
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(viii) That the making and performance of this Agreement and the Guaranty
are within the Customer's corporate powers and have been duly authorized by all
necessary corporate action, and that this Agreement and the Guaranty are legal
and binding obligations of the Customer enforceable in accordance with their
respective terms (subject to bankruptcy and similar laws of general application
affecting the rights and remedies of creditors).
(ix) That no approval or authorization of, or registration, qualification
or filing with, any governmental authority is required in connection with the
execution, delivery or performance by the Customer of this Agreement or the
Guaranty or the consummation of the transactions contemplated hereby or thereby.
(x) That the Customer possesses all patents, patent rights or licenses,
trademarks, trademark rights, trade names, trade name rights and copyrights
which are required to conduct its businesses as now conducted without known
conflict with the rights of others.
(xi) That Company is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
extension of credit under this Agreement will be used to purchase or carry any
such margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
(xii) That the most recent annual report filed by the Customer pursuant to
Section 104 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including without limitation, all related financial and actuarial
statements, is complete and correct, and no event has occurred and is continuing
which would permit the Pension Benefit Guaranty Corporation ("PBGC") established
under ERISA to institute proceedings to terminate any pension plan or other type
of employee benefit which the PBGC has elected to insure, established or
maintained by the Customer.
(b) The Customer hereby covenants and agrees with the Bank as follows:
(i) To comply with the covenants contained in the Revolving Credit
Agreement dated as of November 13, 1997 among the Customer, BankBoston, N.A. as
Administrative Agent, The Chase Manhattan Bank as Syndication Agent, Fleet
National Bank as Documentation Agent and the Co-Agents named therein, or any
agreement pursuant to which the loans contemplated thereby are refinanced or the
Commitments of the Banks (as those terms are defined therein) are replaced
(together, the "Senior Credit Agreement"), as the same may be amended from time
to time.
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(ii) At any time that Mellon Bank, N.A. shall cease to be a lender pursuant
to the Senior Credit Agreement, to provide to the Bank: (A) notice of the
amendment of any provision of the Senior Credit Agreement promptly after the
same is executed, (B) copies of the financial statements, certificates and
the same are provided to the Agent thereunder, and (C) copies of the notices
referred to in (167)6.5 of the Senior Credit Agreement, at the time the same are
provided to the Agent thereunder, or in the event that the Senior Credit
Agreement in effect on the date hereof is replaced, comparable notices,
financial statements, certificates and information required to be provided to
the Agent under such replacement Senior Credit Agreement.
(iii) In the event that the Customer grants to the Agent under the Senior
Credit Agreement any collateral or rights in property of the Customer for the
benefit of the Banks referred to therein, the Customer shall grant to the Bank
an equal and ratable security interest or mortgage on such property to secure
the Customer's obligations under the Guaranty.
(iv) That the Customer shall provide to the Bank quarterly, within 30 days
after the end of each fiscal quarter of the Customer, a list of Eligible
Employees including a statement as to any change in the Affiliate Status of any
such Eligible Employee or any individual previously identified to the Bank as an
Eligible Employee.
(v) That the Tracking Stock is fully paid and non-assessable and is not
subject to any lien, security interest, right or claim on the part of Customer
except for: (A) the Customer's right to purchase non-vested Tracking Stock from
Eligible Employees and (B) a junior security interest therein to secure such
right. Bank acknowledges that it holds, and will cause its agents (including the
Fiduciary under any Pledge Agreement) to hold, each Eligible Employee's Tracking
Stock to perfect the Customer's junior security interest therein, and that, upon
prior payment in full of all Obligations (as defined in each Eligible Employee's
Pledge Agreement), it will deliver the Collateral described in such Pledge
Agreement to the Customer.
(vi) The security interest of the Customer in the Collateral described in
the Pledge Agreement shall be fully subordinate and junior to Bank's security
interest in such assets, regardless of the time Bank's security interest with
regard to such assets attaches, and regardless of the future granting of loans
or credits to Eligible Employees by Bank. Customer agrees that it will do
nothing to interfere with Bank's prior security interest in such Collateral
whether by undertaking to collect or enforce its rights in such Collateral or
otherwise until all indebtedness of the Eligible Employee who owns the same to
the Bank shall be paid in full.
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6. Conditions Precedent. (a) The Bank's agreement to extend the Line of
Credit is subject to the conditions that:
i. On or before the date hereof the Customer shall have delivered to the
Bank the documents, instruments and certificates listed on Exhibit C hereto and
such other documents and materials as the Bank may reasonably require.
ii. On or before the date of each Loan, the Eligible Employee to be
obligated thereon shall have executed and delivered to the Bank: (i) the Note
evidencing such Loan, (ii) the Pledge Agreement securing such Note, (iii) the
document or instrument evidencing such Eligible Employee's rights with respect
to the Tracking Stock, accompanied by five stock powers or other instrument of
transfer executed in blank, and (iv) such other documents, instruments and
materials as Bank may reasonably require.
(b) The Bank's agreement to make each Loan to an employee of the Customer
is subject to the further conditions precedent that: (i) no Customer Default
shall have occurred and be outstanding hereunder, (ii) the employee to be
obligated thereon is at the time an Eligible Employee, and (iii) no Employee
Default with respect to such employee shall have occurred and be outstanding as
to any prior Loan to such employee.
7. Employee Defaults.
(a) The following shall constitute Employee Defaults with respect to a
Note:
(i) Default in the payment or performance of any Obligation by the
Eligible Employee obligated thereon.
(ii) Death of the Eligible Employee obligated thereon.
(iii) Such employee shall cease to be an employee of Customer or shall
cease to be an Eligible Employee.
(iv) Customer shall notify Bank that the employee obligated thereon is
no longer eligible to participate in Customer's program of obtaining Loans for
Eligible Employees from the Bank.
(v) The employee obligated thereon shall become subject to any
injunction or temporary restraining order restricting the sale of the Tracking
Stock or any order prohibiting the Bank from selling such employee's Tracking
Stock shall be entered by any court, or such employee shall become the subject
of any investigative or administrative proceeding or any civil or criminal
action alleging violation of state or
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federal securities laws.
(vi) The employee obligated thereon shall sell or transfer all or
substantially all of his or her assets, or become insolvent, or fail generally
to pay his or her debts as they become due, or if a receiver is appointed for
such employee or any part of the property of such employee or if such employee
shall make an assignment or grant a trust mortgage for the benefit of (or
composition with) the creditors of such employee, or if a material adverse
change shall occur in the financial condition of such employee.
(vii) The filing of a petition in bankruptcy by or against the
employee obligated thereon or the commencement of any proceedings by or against
such employee under any insolvency or other laws relating to the relief of
debtors; or the taking of any action by such employee to accomplish any of the
foregoing.
(b) Upon the occurrence of an Employee Default all of the Obligations
of the defaulting employee shall become immediately due and payable, and the
liability of the Customer pursuant to the Guaranty with respect to such
Obligations shall (unless Bank otherwise elects) become immediately due and
payable without demand, presentment or notice, notwithstanding any prior
acceptance by Bank of periodic payments of interest on such employee's Note or
other Obligations.
8. Customer Defaults. (a) The following shall constitute Customer
Defaults:
(i) The Customer shall default in the payment or performance of any
obligation contained in the Senior Credit Agreement, as the same may be amended
from time to time, and such default shall continue beyond any applicable grace
period, whether or not such default is waived.
(ii) The Customer shall default in the payment or performance of any
obligation contained in this Agreement, including default in the payment of any
sums due pursuant to the Guaranty continuing for five Business Days following
demand by Bank.
(b) Upon the occurrence of a Customer Default, all Obligations shall
become immediately due and payable, and the liability of the Customer pursuant
to the Guaranty shall (unless Bank otherwise elects) become immediately due and
payable without demand, presentment or notice.
9. Bank's Rights and Remedies. (a) Upon the occurrence of an Employee
Default, Bank shall have the rights and remedies of a secured party under the
UCC with respect to the Tracking Stock pledged by the defaulting employee of
Customer.
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Notwithstanding the enumeration of Employee Defaults, all Loans shall at all
times be payable on demand. Upon the occurrence of a Customer Default, Bank
shall have the rights and remedies of a secured party under the UCC with respect
to all Tracking Stock pledged as security for the Obligations. The Customer
hereby agrees that five Business Days' notice of the time and place of any
public sale of Tracking Stock, or the time after which a private sale or other
disposition of Tracking Stock shall take place, sent by telefacsimile to the
Customer at 508/___-____, attention: Chief Financial Officer, shall constitute
reasonable notification. The term "Business Day" shall mean a day on which the
Bank's offices in Boston, Massachusetts are open for business.
(b) Upon the occurrence of an Employee Default or a Customer Default,
Bank may take control of any proceeds of Tracking Stock. Any deposits or other
sums at any time credited by or due from the Bank to the Customer shall at all
times constitute collateral for the Obligations and the Guaranty. Bank may apply
or set-off deposits against the Obligations and the Guaranty regardless of the
adequacy of any other collateral at any time after the occurrence and during the
continuance of a Customer Default. Upon the occurrence and during the
continuance of a Customer Default, Bank may apply the net proceeds of any sale
of Tracking Stock to the Obligations of the owner of such Tracking Stock, and
may apply the proceeds of any set-off to the Customer's obligations under the
Guaranty, in each case in such order as it may determine.
(c) Bank shall have the option at any time within 90 days after the
date on which Mellon Bank, N.A. ceases to be a lender to the Customer pursuant
to the Senior Credit Agreement to require the Customer to refinance all
outstanding Loans or to repay all outstanding Loans pursuant to the Guaranty.
(d) In the event that: (i) the Commitments of the Banks under the
Senior Credit Agreement are reduced or (ii) the principal balance of the Loans
outstanding thereunder is repaid following an Event of Default thereunder, the
Customer shall upon demand by Bank deliver to Bank cash collateral (and a pledge
agreement covering the same) in an amount computed by multiplying: (A) the
amount of such reduction of Commitments or repayment of Loans, by a fraction,
(B) the numerator of which shall be $30,000,000 and (C) the denominator of which
shall be the maximum amount of the Commitments, or the principal balance of the
Loans outstanding under the Senior Credit Agreement, as the case may be, prior
to such reduction or repayment.
10. Customer's Agreement to Indemnify Bank. Customer agrees to
indemnify Bank and hold it harmless from any loss, cost (including legal costs
and reasonable attorneys' fees) or damage it may suffer as a result of: (i) any
failure of the Customer or an employee of Customer to comply with the terms of
this Agreement or a Note, (ii) obligations and responsibilities imposed by state
or federal securities laws, (iii) Bank's
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foreclosure upon any Tracking Stock to satisfy an Employee Default or
enforcement of any Note, or (iv) all other claims, demands, suits, liabilities
or obligations arising out of Bank's agreement to make the Loans as provided
herein.
11. Miscellaneous. (a) The Customer shall from time to time designate,
and shall at all times maintain, a management employee authorized to certify as
to the eligibility of employees to obtain Loans hereunder, and shall promptly
notify Bank in the event that: (i) an employee to whom a Loan is outstanding
shall cease to be so eligible or (ii) any change shall occur in the Affiliate
Status of any such employee.
(b) This Agreement and the Guaranty represent the entire understanding
between the Bank and the Customer with regard to the Loans, and their respective
provisions may not be modified, waived or amended except by a writing signed by
the Bank and the Customer. This Agreement is entered into solely for the benefit
of the Customer and the Bank, and no other party, including Eligible Employees
designated by the Customer from time to time, shall have any rights hereunder.
THE CUSTOMER WAIVES TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS AGREEMENT OR
THE GUARANTY.
(c) Except as provided in subsection 9(a), all notices provided for
hereunder shall be in writing to the parties at their respective addresses set
forth on page one, or to such other address as any party may designate in
writing to the other. Notices shall be deemed effective upon receipt if
delivered by hand or telephone or given by facsimile, one (1) Business Day after
delivery to a reputable overnight courier service and three (3) Business Days
after being deposited in the mails.
(d) This Agreement and the Guaranty shall be binding upon and inure to
the benefit of the Customer and the Bank and their respective successors and
assigns. The invalidity or unenforceability of any one or more phrases, clauses
or sections of this Agreement or the Guaranty shall not affect the validity or
enforceability of the remaining portions of this Agreement or the Guaranty. This
Agreement and the Guaranty are intended to take effect as a sealed instrument
and shall be construed in accordance with and governed by the laws (other than
the conflict of laws rules) of Massachusetts.
Please indicate below your concurrence in the terms of this Agreement and
your acceptance of the Guaranty.
STAPLES, INC.
By____________________________
13
Agreed and accepted:
BOSTON SAFE DEPOSIT & TRUST COMPANY
By_____________________________________
14
EXHIBIT A
DEMAND LOAN NOTE
Maximum Principal Amount: Date:_______________
$_____________________ Boston, Massachusetts
ON DEMAND, for value received, the undersigned, jointly and severally if
more than one ("Borrower"), promise to pay to the order of BOSTON SAFE DEPOSIT
AND TRUST COMPANY (the "Bank") at such place as the Bank may from time to time
designate, the aggregate principal amount outstanding when demand is made, with
interest thereon and any fees, expenses and charges, as provided below. At no
time shall the outstanding principal amount borrowed exceed the maximum
principal amount described above. The entries on the records of the Bank,
including any appearing on this Demand Loan Note ("this Note"), will be prima
facie evidence of the aggregate principal amount outstanding under this Note,
the interest accrued on such amount and other fees and charges due.
All payments hereunder including any prepayments of principal shall be
applied first to unpaid accrued interest, then to other fees, expenses and
charges due, including collection costs, and the balance, if any, to principal.
Principal repaid may not be reborrowed.
INTEREST
Interest shall accrue at a floating annual rate equal to the rate quoted as
"Call Money" from time to time in the "Money Rates" section of The Wall Street
Journal, or if no such rate is quoted or The Wall Street Journal is not
available, the generally prevailing rate for loans to members of the New York
Stock Exchange secured by stock exchange collateral provided by Reuters or a
similar source of recognized standing selected by the Bank. In the event Bank
determines that for any reason no rate comparable to Call Money is available on
a given day, the Loans shall bear interest on such date at the Prime Rate (as
hereinafter defined) minus 1% per annum. "Prime Rate" shall mean the rate quoted
as the "Prime Rate" in the "Money Rates" section of The Wall Street Journal. In
the event "Call Money" or the "Prime Rate" is reported as a range of rates, the
rate used to calculate the interest rates under this Note will be the highest
such rate reported. The interest rate of this Note will change on the date
reported in The Wall Street Journal as the effective date of the change in Call
Money or the Prime Rate.
In the event the interest rate indices stated above cease to be available,
the Bank may substitute any similar index, whether reported in The Wall Street
Journal or
any other newspaper, and the Bank's selection shall be conclusive and binding on
the Borrower. In such event, and until the Bank selects a substitute index,
interest shall accrue at the rate in effect at the time the index in question
was determined by the Bank to be unavailable.
Interest will begin to accrue on the day any proceeds of loans made under
this Note are disbursed. Interest will continue to accrue at the rate described
above, both before and after demand for payment, on the outstanding principal
until all principal amounts have been paid in full. The rate of interest shall
never exceed the maximum rate allowable under applicable law.
Interest will be calculated on the basis of actual days elapsed in a 360
day year and will be payable in arrears. The first interest payment will be due
on the first day of the month immediately following any advance hereunder.
Subsequent interest payments will be due on the same day of every month
thereafter.
INTEREST PAYMENT OPTIONS
Borrower chooses to make monthly interest payments as indicated below:
Payment Method #1: Borrower authorizes Lender to take payments out of
Borrower's Checking Account maintained with Boston Safe Deposit and Trust
Company, number ----------, titled --------------------------, on or after
the first business day of each month. Borrower will keep a large enough
balance in this account to cover the full amount of the required payments.
Payment Method #2: Lender will send Borrower a xxxx each month, and
Borrower will mail or deliver the required payment so that Lender will
receive it no later than the first day of each month.
Payment Method #3: Borrower authorizes Lender to take payments out of
either the principal or income or both of Borrower's Investment Account,
number ----------, titled ----------------------------, on or after the
first business day of each month. Borrower will maintain this Investment
Account, in order to ensure that there are sufficient funds or assets in
the Investment Account in order to meet Borrower's monthly payments.
Borrower may request in writing a change in the Payment Option at any time.
ii
LATE CHARGES AND OTHER CHARGES
In the event any payment of interest required to be made hereunder is not
made within 15 calendar days of the first day of each month, the date it is due,
the Borrower shall pay a late charge to the Bank of 5% of the amount due or $25,
whichever is greater. This charge must be paid within 30 days of the date it is
assessed and will be charged only once on each late payment.
If any amount due as the principal of this Note is not paid in full on or
within five business days of the date of demand, such amount shall thereafter
bear interest payable on demand at a fluctuating rate per annum equal to the
greater of: (a) two percent (2%) above the Call Money rate (or one percent (1%)
above the Prime Rate, if the Call Money rate is unavailable) in effect on such
due date, or (b) two percent (2%) above the Call Money rate (or one percent (1%)
above the Prime Rate, if the Call Money rate is unavailable) in effect from time
to time thereafter.
If due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), in each case after the date of this
Note, there shall be any increase in the cost to the Bank of agreeing to make or
making, funding or maintaining any loan under this Note (excluding any such
increased costs resulting from changes in the basis of taxation of overall net
income or overall gross income of the Bank by the United States or any political
subdivision thereof), then the Borrower shall, from time to time, within 5
business days after demand by the Bank, pay to the Bank additional amounts
sufficient to compensate the Bank for such increased costs.
If the Bank determines that compliance with any law or regulation or any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) introduced or changed after the date of
this Note affects the amount of capital required to be maintained by the Bank
and that the amount of such capital is increased by or based upon the existence
of the Bank's loans hereunder, then, within 5 business days after demand by the
Bank, the Borrower shall pay to the Bank additional amounts sufficient to
compensate the Bank in the light of such circumstances.
Bank shall notify the Borrower promptly after the occurrence of any event
described in the two immediately preceding paragraphs, and Borrower's liability
to Bank pursuant to such subsections shall be limited to amounts accruing after
the date of such notice. Demand by the Bank pursuant to such paragraphs shall be
accompanied by a certificate as to the amount of such increased cost or required
capital, respectively, showing calculations of the amount claimed in reasonable
detail. Bank's determination of any such increased cost (using any reasonable
method of averaging, attribution or
iii
allocation), as set forth in such a certificate shall, if correctly calculated,
be deemed prima facie evidence of such amount.
WIRE TRANSFER AUTHORIZATION
Borrower hereby authorizes the Bank to wire transfer funds upon Borrower's
telephone, oral or written request, and agrees to hold the Bank harmless from
any and all claims, liabilities or damages, including reasonable attorney's fees
arising directly or indirectly from this authorization. The Bank shall be under
no obligation to verify the authenticity of any transfer request purporting or
which the Bank reasonably believes to be made by Borrower.
PREPAYMENT
At any time or times before the Bank has exercised its demand right under
this Note, Borrower may make partial payments of principal without penalty. All
payments shall be made to the Bank's loan servicing center in Pittsburgh,
Pennsylvania, or at such other place as the Bank may from time to time designate
in writing.
SECURITY INTEREST DISCLOSURE
As security for payment of this note and the obligations provided for
herein, Borrower gives Lender a security interest in all the assets more fully
described in a Pledge Agreement of even date, and any modifications thereof (the
"Pledge Agreement").
To the extent permitted by law, the Bank has the right to apply funds from
any deposit account(s) of borrower or cosigner with the Bank to pay all or any
portion of any amount outstanding under this Note or otherwise to the Bank,
subject to the limitations on recourse set forth below.
In addition to any right of setoff given to the Bank by law against any
property of Borrower, the Bank shall have a lien on and security interest in all
property of Borrower now or hereafter on deposit with the Bank, subject to the
limitations on recourse set forth below. Such lien and security interest may be
enforced without demand upon or notice to Borrower, shall continue in full force
unless specifically waived or released by the Bank in writing, and shall not be
deemed waived by any delay of the Bank in enforcing the lien or security
interest.
Recourse of the holder of this note against the property of the Borrower
other than the Collateral described in the Pledge Agreement above is limited to
50% of the original principal amount hereof, less any principal paid from time
to time by the Borrower (other than from such Collateral or proceeds thereof),
plus all accrued interest
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and costs of collection, as provided below.
COLLECTION COSTS
Borrower promises to pay on demand, to the extent permitted under
applicable law, all costs and expenses, including reasonable attorneys' fees,
incurred or paid by the Bank in enforcing this Note, whether or not litigation
is commenced, and in selling or otherwise disposing of all or any part of any
property pledged to secure this Note. All such costs and expenses shall be
secured by such collateral.
JOINT LIABILITY
If more than one person has signed this Note, their obligations shall be
joint and several, and the liability of each shall be absolute and unconditional
and without regard to the liability of any other party hereto.
WAIVER
Unless prohibited by applicable law, Borrower, all co-Borrowers, any
endorser and any other party hereto, and each of them (1) waives presentment,
demand, notice, protest, and all other demands and notices in connection with
the delivery, acceptance, performance, default or enforcement of this Note or of
any document or instrument evidencing any security for the payment of this Note,
except for demand for payment hereunder and any notices provided for in the
Pledge Agreement; (2) assents to any one or more extensions or postponements of
the time of payment or any other indulgences, to any additions or substitutions,
exchanges or releases of collateral and/or the addition, substitution or release
of any one or more parties or persons primarily or secondarily liable hereunder,
and (3) agrees that no such action, failure to act or failure to exercise any
right or remedy, on the part of the Bank shall in any way affect or impair the
obligations of any of them or be construed as a waiver by Bank of, or otherwise
affect, any of Bank's rights under this Note, under any endorsement or guaranty
of this Note or under any document or instrument evidencing any security for
payment of this Note. No delay or omission by the Bank in exercising in whole or
in part any right or remedy hereunder shall operate as a waiver thereof or of
any other right or remedy. A waiver of any right or remedy, in whole or in part,
on any one occasion shall not be construed as a bar to enforcing or as a waiver
of that or any other right or remedy on any future occasion.
ADDRESS CHANGE
Borrower shall notify the Bank of any change in the Borrwer's address of
record. Any such notice shall be directed to the Bank at the address for
payments, or to such other address as the Bank may direct. In the event such
notice is not given by the
v
Borrower, Borrower shall be deemed to have waived the right to receive any
notice which otherwise would be required under this Note or by applicable law,
unless such waiver is specifically prohibited by applicable law or regulation.
ENTIRE AGREEMENT
The terms and conditions of the Pledge Agreement are deemed to be
incorporated herein by reference. Such terms and conditions, together with the
terms and conditions of this Note, constitute the entire agreement of the
parties and supersede all prior agreements and understandings, both written and
oral, of the parties hereto with respect to the subject matter of this Note or
of any such agreement. The captions and headings of the various sections of this
Note are for convenience only and are not to be considered as defining or
limiting, in any way the scope or intent of the provisions hereof. Neither this
Note nor such Pledge Agreement may be modified or amended except by a writing
signed by the Bank.
FINANCIAL INFORMATION/FURTHER DOCUMENTS
At Lender's request, Borrower will give Lender a completed and signed
personal financial statement in such form as Lender may require. Borrower will
execute any documents or instruments required by Lender to perfect its security
interest or as otherwise may be required by Lender, as Lender may request from
time to time.
GENERAL PROVISIONS
This Note inures to the benefit of the Bank and to the benefit of its
successors and assigns. This Note is binding on each Borrower and on any
executor, administrator or legal representative of any Borrower.
No security interest granted to the Bank by Borrower in any dwelling of
any Borrower shall secure payment of this Note unless specific reference is
made to this Note. Other collateral securing other obligations of Borrower to
the Bank may also secure this Note.
GOVERNING LAW
This Note will take effect as a sealed instrument and will be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts.
If any provision of this Note is deemed to be in conflict with applicable law,
it will considered to be modified to comply with the law or, if not capable of
such modification, such provision will be deemed to be deleted from this Note.
Notwithstanding any such modification or deletion, the remaining provisions will
remain valid and enforceable.
vi
By signing below, Borrower agrees to the terms of this agreement.
__________________________________________
Borrower (Seal)
__________________________________________
Borrower (Seal)
__________________________________________
Borrower (Seal)
__________________________________________
Borrower (Seal)
Borrower's Address of Record:
__________________________________________
Name
__________________________________________
Address
__________________________________________
City State Zip Code
vii
EXHIBIT B
PLEDGE AGREEMENT
(Xxxxxxx.xxx Tracking Stock)
This Pledge Agreement is entered into between the Borrower named below and
Boston Safe Deposit & Trust Company, a Massachusetts trust company with a
principal place of business located at Xxx Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000 ("Bank") on the date indicated below.
1. Collateral. The undersigned (the "Borrower"), whose place of business is
located at ___________________, Massachusetts _______ and whose residence is
located at _________________________________________ hereby grants to the Bank a
security interest in the following collateral, whether now owned or existing or
hereafter acquired or arising:
___ shares of Xxxxxxx.xxx stock ("Tracking Stock"); all proceeds of the
foregoing, including personal property purchased with cash proceeds
(together the "Collateral").
2. Obligations. A security interest in the Collateral is granted to Bank to
secure all obligations of the Borrower to the Bank incurred on or after the date
of this Agreement, whether direct or indirect, including without limitation: (i)
obligations arising out of loans or extensions of credit by Bank to Borrower,
including without limitation a loan evidenced by the promissory note of the
Borrower dated the date hereof in the principal amount of $____________ (the
"Note"), (ii) obligations of the Borrower hereunder, and (iii) all other fees,
costs, taxes and charges that may be assessed, advanced or incurred by Bank
hereunder or by Fiduciary under the Fiduciary Agreement (as those terms are
hereinafter defined), including legal fees and other costs of collection, plus
interest thereon, whether now existing or hereafter arising, direct or indirect,
primary or secondary, absolute or contingent, due or to become due, and whether
arising under the Note, this Agreement or otherwise (all such obligations being
referred to together herein as the "Obligations").
3. Perfection of Security Interest. Borrower agrees to promptly deliver to
Bank all payments and distributions with respect to the Collateral in the form
received and bearing any necessary endorsements. Bank may at any time notify
Staples, Inc. to make payments and distributions on the Collateral directly to
the Bank. Borrower agrees to deliver to Bank promptly upon receipt any notices
under or amendments relating to the Collateral. Borrower agrees to execute such
financing statements under the Uniform Commercial Code as Bank may from time to
time require, and to pay the cost of filing the
same. Bank may file as a financing statement a photocopy of a financing
statement or of this Agreement.
4. Deposit Account. Bank may charge any deposit account of Borrower with
Bank for the payment of any amount due hereunder, under the Note or with respect
to any other Obligation.
5. Representations and Warranties.
(a) Borrower hereby represents and warrants that Borrower is the true
owner of the Collateral and the custody account referred to in the Fiduciary
Agreement (the "Custody Account") and that Borrower has good and marketable
title to the Collateral, free and clear of any option, security interest, lien
or other charge or encumbrance except the security interest created hereby, a
security interest junior to that created hereby in favor of Staples, Inc., and
the right of Staples, Inc. to repurchase unvested Tracking Stock. Borrower also
represents and warrants, if there is more than one Borrower, that, subject to
the terms of the Fiduciary Agreement, one or all of such Borrowers are the sole
and joint beneficial owners of the Custody Account and the Collateral and that
no person who is not a party to this Agreement has any ownership rights of any
nature whatsoever in the Custody Account or the Collateral. Borrower will defend
such title against the claims and demands of all persons at its own expense.
(b) Borrower hereby represents and warrants that all of the Collateral
is and shall be genuine, has and shall have been duly and validly authorized and
issued, and is free and clear of any restriction on transfer, except for
compliance with applicable provisions of state and federal securities laws.
Borrower hereby represents and warrants to Bank that: to the extent that any
portion of the Collateral is or may be subject to Rule 144 of the Securities and
Exchange Commission ("Rule 144"), Borrower is [___] is not [___] an "affiliate"
of Staples, Inc. and the Collateral does not include any "restricted securities"
as defined in Rule 144.
6. Bank as Borrower's Attorney. Borrower hereby makes, constitutes and
appoints the Bank as Borrower's true and lawful attorney-in-fact for Borrower
and in Borrower's name, place and stead, and on Borrower's behalf, to take any
action deemed necessary by the Bank to perfect and maintain perfection of the
security interests granted hereby or to otherwise fulfill the purposes of this
Agreement, and acknowledges that such appointment is coupled with an interest.
As Borrower's attorney-in-fact, Bank is hereby authorized, at any time after the
occurrence of an Event of Default: (i) to receive, endorse and collect all
checks and other orders or instruments for the payment of money made payable to
Borrower representing any dividend or interest payment or other distribution
payable in respect of any or all Collateral and to give full discharge for the
same, (ii) to execute endorsements, assignments or other instruments of
conveyance or transfer with
ii
respect to any or all of the Collateral, (iii) to demand, xxx for, collect,
receive and give acquittances for any moneys due with respect to any or all of
the Collateral, (iv) to file any claims or take any action or institute any
proceedings that Bank may deem necessary or advisable for the collection of any
or all of the Collateral or otherwise to enforce the rights of Bank with respect
thereto, and (v) to complete, execute and file with the Securities and Exchange
Commission and any stock exchange on which the Tracking Stock is listed one or
more notices of sale of securities pursuant to Rule 144 or other filings deemed
necessary or desirable to comply with state and federal securities laws, hereby
granting to Bank full power and authority as such attorney to do, take and
perform all and every act and thing whatsoever requisite, proper or necessary to
be done in the exercise of the rights and powers herein granted, as fully to all
intents and purposes as Borrower might or could do if personally present.
7. Indemnification. Borrower hereby indemnifies and holds harmless the Bank
from and against all liabilities and costs (including without limitation
attorneys' fees) arising out of any sale of securities constituting Collateral
or by reason of any breach of any representation, warranty or covenant of
Borrower contained herein, whether express or implied, and all other reasonable
expenses incurred by the Bank in enforcing the payment of any Obligations,
including without limitation expenses incurred in satisfying any applicable
securities laws or regulations and any liabilities arising under any such
securities laws.
8. Default. If Borrower shall default in the payment of any Obligation when
due, or in the performance of any covenant contained herein, or if any
representation made by the Borrower herein shall be determined by Bank to be
false in any material respect when made, or if an event of default as defined in
any agreement between Borrower and Bank shall occur, Bank shall have the rights
and remedies of a secured party under the Uniform Commercial Code as well as the
rights and remedies provided for herein. Upon any such default, Bank may: (i)
transfer or direct the Fiduciary to transfer into Bank's name, or into the name
of its nominee, all or any part of the Collateral, (ii) subject to the Uniform
Commercial Code, retain the Collateral for its own account, and (iii) sell all
or any part of the Collateral. Whenever notice of sale or other disposition of
the Collateral is required by law, such notice shall be deemed sufficient if
given by regular mail at least 5 business days before the date of any public
sale or 5 days before the date after which a private sale or other disposition
shall be made. Expenses of retaking, holding, and preparing the Collateral for
sale or other disposition, and expenses of sale or other disposition of
Collateral, shall include reasonable attorneys' fees, and all such expenses
shall constitute an Obligation secured by the Collateral. Upon transfer of any
Collateral into the name of Bank or its nominee, Bank shall be entitled to
receive all dividends and other distributions on the Collateral, and shall hold
all the rights and privileges of ownership of the Collateral.
iii
9. Restrictions on Resale. Borrower hereby confirms his or her
understanding that Bank's right to resell the Collateral or securities or
instruments issued pursuant thereto may be restricted. Borrower hereby agrees
that any sale of the Collateral in accordance with such restrictions shall be
deemed commercially reasonable notwithstanding that a better price could have
been obtained by another method or to a buyer other than those permitted by the
terms of such restrictions.
10. Custody of Collateral. (a) Bank shall give to Collateral the same
degree of care and protection that it gives to its own property, provided,
however, that Bank shall have no liability to Borrower for any losses, costs,
expenses or damages due to any acts or omissions of brokers or other third
parties, or due to any acts of God or other causes beyond its control. Bank
shall have no duty to preserve any rights with respect to any Collateral,
including, without limitation, rights against prior parties, or to take or to
notify Borrower of the need to take, any action respecting any rights,
privileges or options relating to any Collateral. If Borrower shall request
Lender to sell or otherwise dispose of or refrain from selling or otherwise
disposing of the Collateral or any part thereof, Bank may, at its option and in
its sole discretion, proceed in accordance with such request; provided, however,
that neither Bank nor Fiduciary shall have any responsibility or liability for
any loss to Borrower that may result from their compliance or refusal to comply
with such request.
(b) So long as this Agreement continues in effect, Borrower authorizes and
directs the Mellon Bank Corporation subsidiary identified on the signature page
hereto ("Fiduciary") that serves as custodian under the Collateral Custody
Agreement between Borrower and Fiduciary dated the date hereof, as the same may
be amended from time to time (the "Fiduciary Agreement") to hold the Collateral
in its possession as agent for the benefit of the Bank in accordance with the
provisions of this Agreement and under and subject to the exclusive direction
and control of Bank and forthwith to turn over the Collateral, or any part
thereof, to Bank upon Bank's demand. If Borrower has not already done so,
Borrower shall deliver all Collateral to Fiduciary immediately upon receipt of
the same.
(c) Fiduciary represents and warrants that it has not consented to, and has
no knowledge of, any financing statement or notice against the Collateral or the
Custody Account or any of the assets to be placed in the Custody Account as of
the date of this Agreement, and will not consent to any such statement or notice
subsequent to this date. Fiduciary agrees, by signing where indicated below,
that it has no lien or other interest in the Collateral except to the extent
described herein, and will not request, claim or assert any such lien or
interest until Bank has notified the Fiduciary that there remain no outstanding
Obligations; provided, however, that Fiduciary will retain its prior lien on the
Collateral to secure the Borrower's obligations to
iv
pay for property purchased by Fiduciary for deposit or credit to the account of
the Borrower, and customary commissions and fees assessed by the Fiduciary.
(d) Borrower hereby acknowledges that if a loan is obtained from Bank by
Borrower, and such Obligation is collaterally secured by assets in the Custody
Account, there may arise a conflict between the obligations of Bank or its
affiliate as Fiduciary under the Fiduciary Agreement and the Bank's rights as
lender and secured party. In such event, Borrower expressly agrees that Bank's
rights as lender and secured party shall take precedence over its obligations as
Fiduciary, or those of its affiliate.
(e) This Agreement shall operate as an amendment to the Fiduciary Agreement
to the extent necessary to effect the intents and purposes hereof; provided,
however, that the Fiduciary Agreement defines the extent of the Fiduciary's
liability to Borrower in connection with the Collateral and the Custody Account,
and the Fiduciary assumes no additional liabilities to Borrower under this
Agreement. In the event that the Fiduciary Agreement is terminated, Fiduciary
shall immediately notify Bank and transfer all Collateral in its possession to
the custody of Bank.
11. Miscellaneous. This agreement shall be governed by Massachusetts law
and shall benefit the Bank and its successors and assigns. This agreement is
executed as an instrument under seal.
Borrower:
Dated:________________________ ______________________________
Signature
______________________________
Print name
______________________________
Address
______________________________
City/State/Zip
Fiduciary:
BOSTON SAFE DEPOSIT & TRUST COMPANY
By_____________________________________
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