Exhibit 3
FORM OF
LOAN AGREEMENT
Xxxxxx Xxxxxxx & Co. International Limited ("MSIL"), with Xxxxxx Xxxxxxx
& Co. Incorporated ("MS&Co.") as agent, (together with MSIL, "Xxxxxx Xxxxxxx")
agrees to extend to Xxxx X. XxXxxx and Xxxxx X. XxXxxx, (together, the
"Borrowers") who are the beneficial owners of an account held at Xxxxxx Xxxxxxx
numbered _______________ (the "Account"), for the consideration described below,
a loan (the "Loan") for up to twenty-five million dollars ($25,000,000) subject
to the following terms and representations:
1. In consideration of Xxxxxx Xxxxxxx'x extension of the Loan, Borrowers
agree to deposit with Xxxxxx Xxxxxxx as collateral for the Loan (1) that
number of shares of Class A common stock of XxXxxx, Inc. (the "Company")
with a current market value of not less than $75 million, (2) cash and
securities acceptable to Xxxxxx Xxxxxxx with a value of at least $4
million (the "Additional Securities"), and (3) all of the proceeds of
the Loan (the "Reinvestment Securities"), which may be invested in the
Account in securities acceptable to Xxxxxx Xxxxxxx. The Shares, the
Additional Securities and the Reinvestment Securities shall constitute
the "Collateral."
2. Borrowers promise to pay interest on the unpaid principal amount of the
Loan (including any unpaid interest) from the date the Loan is made
until it is paid in full at a rate equal to Xxxxxx Xxxxxxx'x base rate
as customarily applied to its margin accounts minus .25% (currently, a
base rate of 7.0% for a total of 6.75%). Interest shall be computed on
the basis of the actual number of days elapsed over a year of 360 days
and the base rate (broker's call) is subject to change without notice,
however, Xxxxxx Xxxxxxx shall not otherwise change the rate without
notice.
3. All payments hereunder shall be made at the office of Xxxxxx Xxxxxxx set
forth above or such other office as Xxxxxx Xxxxxxx may notify Borrowers,
in lawful money of the United States of America and in immediately
available funds.
4. Borrowers agree and represent that, as of the date of execution of this
Agreement, there are no existing liens, pledges or encumbrances against
the Collateral, other than (1) an Underwriter's Lock-Up Agreement
("Lock-Up") applicable to the Shares, which shall expire on June 10,
1997, and (2) the Investor Agreement, dated as of April 1, 1996 and
amended on October 23, 1996, by and among the Company, IES Investments
Inc., Midwest Capital Group, Inc., MWR Investments, Inc., Xxxxx X.
XxXxxx, Xxxx X. XxXxxx and the stockholders of the Company whose
signatures appear on Appendix I to the Investor Agreement, which will
expire on ________________. Borrowers further agree and represent that
they have obtained a consent from the Company in order to permit the
Borrowers to pledge the Shares to Xxxxxx Xxxxxxx or any affiliate. The
parties agree that the Lock-up does not restrict Borrowers' ability to
pledge the Collateral to Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxx agrees to
abide by the terms of the Lock-up as Pledgee. Borrowers agree and
represent that the Collateral deposited with Xxxxxx Xxxxxxx will not be
withdrawn unless either the Loan is satisfied in full or Xxxxxx Xxxxxxx
consents to such withdrawal. Borrowers represent that Borrowers will not
sell any shares of the Company through Xxxxxx Xxxxxxx, any other broker
or dealer, or through any other means, or pledge additional shares of
the Company to any other broker or dealer, during the term of this
Agreement without the first giving notice to and requesting consent from
Xxxxxx Xxxxxxx in the form attached hereto as Exhibit A and any sale or
pledge without
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Xxxxxx Xxxxxxx'x consent, shall be considered an event of default,
triggering Borrowers' obligation to immediately repay the Loan and
interest in full; except that Borrowers may make gifts of shares of the
Company to family members, charities or foundations without notice to or
consent from Xxxxxx Xxxxxxx.
5. The Borrowers agree that to the extent that the market value of the
Reinvestment Securities, together with the Additional Securities, falls,
such that the market value is less than or equal to 75% of the proceeds
of this Loan, the Borrowers shall deposit additional cash and/or
securities of a type acceptable to Xxxxxx Xxxxxxx which shall also
constitute Collateral, so the value of the Reinvestment Securities
together with the additional deposit is at least equal to 85% of the
proceeds of this Loan. Xxxxxx Xxxxxxx agrees that to the extent that the
market value of the Reinvestment Securities, together with the
Additional Securities, rises, such that the market value is greater than
105% of that total, the Borrowers shall have the right to withdraw cash
and/or securities representing such excess. Xxxxxx Xxxxxxx'x rights and
remedies under the Customer's Agreement signed by the Borrowers shall
not be limited by this provision or any other term of this Agreement.
The representations and warranties of the Borrowers contained in this
Agreement will be deemed repeated on each date on which Collateral is
transferred to Xxxxxx Xxxxxxx.
6. Borrowers represent and warrant that (i) Borrowers acquired the Shares
on the dates listed on the Schedule to this Agreement and, as of those
dates, made full payment of the purchase price, (ii) Borrowers do not
know or have reason to believe that the Company has not complied with
the reporting requirements contained in Rule 144(c)(1) under the
Securities Act of 1933; (iii) Borrowers have the requisite power and
authority to execute and deliver this Agreement and any agreements or
other documents executed by them or to be executed by them in connection
herewith (collectively, the "Loan Documents"), (iv) Borrowers'
execution, delivery and performance of the Loan Documents will not
violate any law, rule, regulation or judgment applicable to or agreement
binding upon him; and (v) each of the Loan Documents constitutes their
legal, valid and binding obligation enforceable in accordance with its
terms except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally or by general equity
principles. Borrowers undertake to inform Xxxxxx Xxxxxxx of any changes
in any of the representations or warranties made by Borrowers under any
section of this Agreement.
7. Xxxxxx Xxxxxxx shall have a security interest in the Collateral, and its
interest therein shall be first and fully perfected. Further, Xxxxxx
Xxxxxxx shall have a continuing security interest in the proceeds of any
sales of the Collateral and its interest therein shall be first and
fully perfected and subject to no other liens, pledges and encumbrances
until such time as the Loan has been repaid in full. In the event of a
breach or default under this Agreement or the Customer Agreement, Xxxxxx
Xxxxxxx shall have all rights and remedies available to a secured
creditor under any applicable law in addition to the rights and remedies
provided herein.
8. Borrowers agree to repay the Loan at any time upon Xxxxxx Xxxxxxx'x
written demand or in the event that Borrowers are in default with
respect to any of the provisions of this Agreement or upon any of the
events listed in paragraph 9 of this Agreement. If Borrowers refuse or
are unable to repay the Loan as provided herein, Xxxxxx Xxxxxxx shall
have the right to liquidate the Collateral (in addition to the rights
specified in paragraph 9 of this
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Agreement), and any resulting deficit shall be for Borrowers' account
and risk. Any loan made pursuant to this Agreement may be prepaid
voluntarily without penalty at any time.
9. Xxxxxx Xxxxxxx is hereby authorized, in its discretion, (a) upon
Xx. XxXxxx'x death, or the undersigned's breach of this Agreement,
(b) upon a breach, repudiation, misrepresentation or default (howsoever
characterized) by the undersigned of any other Agreement with MSIL,
MS&Co., or any affiliate of either entity, (c) upon the filing by or
against the undersigned of a petition or other proceeding in
bankruptcy, insolvency, or for the appointment of a receiver, (d) upon
the levy of an attachment against the accounts of the undersigned,
(e) upon the failure of the undersigned to fulfill or discharge any
obligations relating to the purchase or sale of securities or
commodities, including but not limited to the failure to make a payment
on demand, or (f) should Xxxxxx Xxxxxxx for any reason whatsoever deem
it necessary or desirable for its protection, to cancel any outstanding
orders for the purchase or sale of any securities or other property, or
to sell any or all of the securities and commodities or other property
which may be in its possession or control (either individually or
jointly with others), or to buy in any securities, commodities or other
property of which the account or accounts of Borrowers may be short.
Such sale, purchase or cancellation may be made on the exchange or
other market where such business is then usually transacted, or at
public auction or at private sale, without advertising the same and
with two days notice to Borrowers of the time or place of sale or to
the personal representatives of Borrowers, and without prior tender,
demand or call of any kind upon Borrowers or upon the personal
representatives of Borrowers, all of which are expressly waived, and
Xxxxxx Xxxxxxx may purchase the whole or any part thereof free from any
right of redemption, and Borrowers shall remain liable for any
deficiency; it being understood that a prior tender, demand or call of
any kind from Xxxxxx Xxxxxxx, or prior notice from Xxxxxx Xxxxxxx, of
the time and place of such sale or purchase shall not be considered a
waiver of its right to sell or buy any securities and/or commodities
and/or other property held by Xxxxxx Xxxxxxx or any of its affiliates,
or which Borrowers may owe to Xxxxxx Xxxxxxx, at any time as provided
herein.
10. CHOICE OF DISPUTE RESOLUTION. ANY DISPUTE BORROWERS MAY HAVE WITH
XXXXXX XXXXXXX ARISING OUT OF, RELATING TO OR IN CONNECTION WITH THIS
AGREEMENT SHALL BE DETERMINED BY ARBITRATION OR LITIGATION IN COURT AT
THE ELECTION OF BORROWER. REGARDLESS OF WHETHER BORROWERS CHOOSE TO
PROCEED BY ARBITRATION OR LITIGATION, BORROWERS AND XXXXXX XXXXXXX
AGREE TO FOLLOW THE PROCEDURES AND ABIDE BY THE REQUIREMENTS LISTED
BELOW.
11. ARBITRATION:
. 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.
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. THE ARBITRATORS' 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.
ANY ARBITRATION SHALL BE CONDUCTED ONLY BEFORE THE NEW YORK STOCK
EXCHANGE, INC., THE AMERICAN STOCK EXCHANGE, INC., THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC. OR ANY OTHER SELF-REGULATORY ORGANIZATION OF WHICH
XXXXXX XXXXXXX IS A MEMBER. BORROWER HAS THE RIGHT TO ELECT ARBITRATION BEFORE
ONE OF THE FOREGOING ORGANIZATIONS, BUT IF BORROWER FAILS TO MAKE SUCH ELECTION
BY CERTIFIED LETTER ADDRESSED TO XXXXXX XXXXXXX BEFORE THE EXPIRATION OF TEN
DAYS AFTER RECEIPT OF A WRITTEN REQUEST FROM XXXXXX XXXXXXX TO MAKE SUCH
ELECTION, THEN XXXXXX XXXXXXX MAY MAKE SUCH ELECTION. NOTHING IN THIS AGREEMENT
SHALL BE CONSTRUED AS CONSENT BY XXXXXX XXXXXXX TO AN AWARD OF PUNITIVE DAMAGES.
THE AWARD OF THE ARBITRATORS, OR THE MAJORITY OF THEM, SHALL BE FINAL, AND
JUDGMENT UPON THE AWARD RENDERED 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; 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.
12. LITIGATION IN COURT:
(A) UNLESS THE PARTIES OTHERWISE AGREE IN WRITING WHEN ANY DISPUTE
ARISES, ANY LITIGATION MUST BE INSTITUTED IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR THE SUPREME COURT OF THE
STATE OF NEW YORK FOR THE COUNTY OF NEW YORK. (B) ANY RIGHT TO TRIAL BY
JURY WITH RESPECT TO ANY CLAIM OR ACTION IS HEREBY WAIVED BY ALL PARTIES
TO THIS AGREEMENT.
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13. Borrowers hereby waives presentment, demand (except as expressly
required herein), notice, protest and all other demands or notices in
connection with the delivery, acceptance, performance, default or
enforcement of this Agreement. No course of action or delay or omission
of the holder in exercising any right or remedy hereunder or under the
Loan Documents shall constitute or be deemed to be a waiver of any right
or remedy hereunder or under the Loan Documents, and a waiver on one
occasion shall not operate as a bar to or waiver of any such right or
remedy on any future occasion.
14. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the principles of
conflicts of laws.
WHEREFORE, the parties have made and entered into this Agreement as of
the date first herein below written.
NOTICE: THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE IN PARAGRAPH
11.
NOTICE OF AND REQUEST FOR CONSENT TO SALE OR PLEDGE
Pursuant to the Loan agreement executed among Xxxxxx Xxxxxxx & Co.
International Limited ("MSIL"), Xxxxxx Xxxxxxx & Co. Incorporated ("MS&Co." and
with MSIL, "Xxxxxx Xxxxxxx") and Xxxx X. XxXxxx and Xxxxx X. XxXxxx
("Borrowers"), Borrowers hereby notify Xxxxxx Xxxxxxx of Borrowers' intention to
sell or pledge ________ shares of Class A common stock of XxXxxx, Inc. to or
through _________. Xxxxxx Xxxxxxx shall have 5 days from the date of receipt of
the Notice to respond to Borrowers.
By:
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