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EXHIBIT 10.11
OBLIGOR FILE NAME OBLIGOR # OBLIGATION NUMBER OFFICER # AMOUNT
NEURAL APPLICATIONS
CORPORATION 34786 $2,000,000.00
- --------------------------------------------------------------------------------
Chicago, Illinois
Dated as of September 14, 1998
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MASTER NOTE
(CORPORATION, PARTNERSHIP, OR JOINT VENTURE)
This Note has been executed by Neural Applications Corporation, a corporation
formed under the laws of the State of Delaware ("Borrower"); if more than one
entity executes this Note, the term "Borrower" refers to each of them
individually and some or all of them collectively, and their obligations
hereunder shall be joint and several.* If a land trustee executes this Note,
"Borrower" as used in sections 6 and 7 below also includes any beneficiary(ies)
of the land trust.**
FOR VALUE RECEIVED, on or before September 30, 1999, the scheduled maturity
date hereof, Borrower promises to pay to the order of THE NORTHERN TRUST
COMPANY, an Illinois banking corporation (hereafter, together with any
subsequent holder hereof, called "Lender"), at its main banking office at 50
South LaSalle Street, Chicago, Illinois 60675, or at such other place as Lender
may direct, the aggregate unpaid principal balance of each advance (a "Loan"
and collectively the "Loans") made by Lender to Borrower hereunder. The total
principal amount of Loans outstanding at any one time hereunder shall not
exceed Two Million UNITED STATES DOLLARS ($2,000,000.00).
Lender is hereby authorized by Borrower at any time and from time to time
at Lender's sole option to attach a schedule (grid) to this Note and to endorse
thereon notations with respect to each Loan specifying the date and principal
amount thereof, the Interim Maturity Date (as defined below) (if applicable),
the applicable interest rate and rate option, and the date and amount of each
payment of principal and interest made by Borrower with respect to each such
Loan. Lender's endorsements as well as its records relating to Loans shall be
rebuttably presumptive evidence of the outstanding principal and interest on
the Loans, and, in the event of inconsistency, shall prevail over any records
of Borrower and any written confirmations of Loans given by Borrower.
If Borrower wishes to obtain a Loan under this Note, Borrower shall notify
Lender orally or in writing on a banking day. Any such notice shall be
irrevocable; if the notice is received after 10:00 AM Chicago time the Loan may
not be available until the next banking day. Additional procedures for "Bank
Offered Rate" Loans, if available, are set forth below.
Each request for a Loan shall be deemed to be a representation and
warranty by Borrower to Lender that: (i) no Event of Default or Unmatured Event
of Default (in each case as defined below) has occurred and is continuing as of
the date of such request or would result from the making of the Loan; and (ii)
Borrower's representations and warranties herein are true and correct as of
such date as though made on such date. Upon receipt of each Loan request Lender
in its sole discretion shall have the right to request that Borrower provide to
Lender, prior to Lender's funding of the Loan, a certificate executed by
Borrower's President, Treasurer, or Chief Financial Officer (if Borrower is a
corporation), or a general partner or joint venturer of Borrower (if Borrower is
a partnership or joint venture) to such effect.
1. INTEREST.
Borrower agrees to pay interest on the unpaid principal amount from time
to time outstanding hereunder at the following rate per year: [CHECK ONE ONLY]
[XXXX] (i) The "Prime-Based Rate", which shall mean the Prime Rate plus minus
one and one-half percent (1.500%).
[N/A] ***(ii) The "Bank Offered Rate", which shall be equal to that rate of
interest offered by Lender and accepted by Borrower and fixed for
periods of up to one year ("Interest Period(s)") (the last day of any
Interest Period being referred to as an "Interim Maturity Date").
Other description_____________________________________________________
______________________________________________________________________
"Prime Rate" means that rate of interest announced from time to time by Lender
called its prime rate, which rate may not at any time be the lowest rate
charged by Lender. Changes in the rate of interest on the Loans resulting from
a change in the Prime Rate shall take effect on the date set forth in each
announcement of a change in the Prime Rate.
Without limiting Borrower's obligation to repay all outstanding Loans in
full on the scheduled maturity date, each Loan at the Bank Offered Rate shall
be due and payable in full on its Interim Maturity Date. After the maturity of
any Loan, whether by acceleration or otherwise, such Loan shall bear interest
until paid, at a rate equal to two percent (2%) in addition to the rate in
effect immediately prior to maturity (but not less than the Prime Rate in
effect at maturity).
If this Note bears interest at the Bank Offered Rate and Borrower requests
a Loan, Lender shall in its sole discretion offer or decline to offer a Bank
Offered Rate (and if it offers a Bank Offered Rate, the rate of such Bank
Offered Rate shall be in Lender's sole discretion), and Borrower shall
irrevocably accept or decline such particular Bank Offered Rate and the related
Loan and confirm such acceptance in writing by letter or other written
communication dated and sent the date of such borrowing. Any confirmation by
Lender of the rate and Interest Period for any Bank Offered Rate Loan shall be
conclusive in the absence of manifest error. Without limiting Borrower's
obligations under any other document or instrument, Lender may rely without
inquiry upon any person whom it reasonably believes to be a party authorized to
accept or decline such Bank Offered Rate and the related Loan. Lender has no
obligation to make a new Loan to Borrower when a Loan at the Bank Offered Rate
matures on its Interim Maturity Date.
Interest shall be computed for the actual number of days elapsed on the
basis of a year consisting of 360 days, including the date a Loan is made and
excluding the date a Loan or any portion thereof is paid or prepaid. Interest
shall be due and payable as follows:
[X] Monthly, on the LAST day of each month, beginning September 30, 1998
with all accrued but unpaid interest being due and payable in full
with the final principal payment due hereunder.
[N/A] Quarterly, on the ________ day of each ___________, ____________,
________________, and _____________________ in each year, beginning
____________________, with all accrued but unpaid interest being due
and payable in full with the final principal payment due hereunder.
[N/A] Other _______________________________________________________________.
*Insert "N/A" in any blank in this Note which is not applicable. **Land trustee
may not sign upon direction of individual beneficiary(ies) unless Loans are for
business purposes. ***Do not use if collateral includes real estate.
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In addition, if the Bank Offered Rate is available under this Note, interest on
any Loan at the Bank Offered Rate, if not otherwise previously due and payable
as indicated above, shall be due and payable in full on the last day of each
Interest Period. After maturity interest shall be payable on demand.
2. PREPAYMENTS.
Borrower may prepay without penalty or premium any principal bearing
interest at the Prime-Based Rate. If Borrower prepays any principal bearing
interest at the Bank Offered Rate in whole or in part, or if the maturity of any
such Bank Offered Rate principal is accelerated, then, to the fullest extent
permitted by law Borrower shall also pay Lender for all losses (including but
not limited to interest rate margin and any other losses of anticipated
profits) and expenses incurred by reason of the liquidation or re-employment of
deposits acquired by Lender to make the Loan or maintain principal outstanding
at the Bank Offered Rate. Upon Lender's demand in writing specifying such
losses and expenses, Borrower shall promptly pay them; Lender's specification
shall be deemed correct in the absence of manifest error. Each Loan bearing
interest at the Bank Offered Rate shall be conclusively deemed to have been
funded by or on behalf of Lender by the purchase of a deposit corresponding in
amount to such Loan and in maturity to the Interest Period specified by Lender.
3. REFERENCES TO PREVIOUS NOTES, FACILITY TYPE, COLLATERAL, GUARANTIES, LOAN
& OTHER AGREEMENTS. (CHECK AS APPLICABLE)
LINE OF CREDIT: This Note has been executed pursuant to a line of credit. At
the present time Lender intends to make available to Borrower credit as
outlined herein or in any related letter until the maturity day indicated above
unless in Lender's sole judgment there has occurred an adverse change in the
assets, condition or prospects of Borrower or any guarantor. THE LINE OF CREDIT
MAY BE CANCELLED OR REDUCED BY LENDER AT LENDER'S SOLE OPTION WITHOUT PRIOR
NOTICE TO BORROWER OR ANY OTHER PERSON OR ENTITY. THE LINE OF CREDIT IS
REVOCABLE NOTWITHSTANDING PAYMENT OF ANY FEES OR MAINTENANCE OF ANY ACCOUNT
BALANCES, AS AND IF PROVIDED IN ANY ACCOMPANYING LETTER OR OTHER DOCUMENT
PERTAINING TO SUCH FEES AND/OR BALANCES. Any such fees and/or balances shall be
deemed compensation to Lender for being prepared to respond to Borrower's
requests for credit under this Note.
[N/A] This Note amends, restates, renews and replaces in its entirety the
note dated _________________ in the amount of $____________, and any previously
renewed note(s). Borrower hereby expressly confirms that all collateral and
guaranties given for such prior note(s) shall secure or guarantee this Note. All
amounts outstanding under such previous note(s) shall be deemed automatically
outstanding hereunder.
[X] This Note is secured without limitation as provided in the following
and all related documents, in each case as amended, modified, renewed, restated
or replaced from time to time.
[N/A] Security Agreement dated as of _________________________________.
[N/A] Mortgage dated as of ____________________________________________
on property all or part of which is commonly known as ___________
_________________________________________________________________
________________________________________________________________.
[X] Pledge Agreement dated as of September 14, 1998.
[N/A] Other (describe)_________________________________________________
________________________________________________________________.
[X] Payment of this Note has been unconditionally guaranteed by Robert B.
Staib (each individually and all collectively referred to as "guarantor") as
provided in separately executed guaranties.
[N/A] This Note has been executed pursuant to a __________ Agreement, dated
as of the date hereof, as amended, modified, restated, renewed, or replaced
from time to time, containing covenants and other terms, to which reference is
hereby made.
4. USE OF PROCEEDS. CHECK ONE:
[X] Borrower represents and warrants that the proceeds of this Note will
be used solely for business purposes, and not for personal, family or household
use, within the meaning of Federal Truth-in-Lending and similar state laws and
regulations.
[N/A] ****Borrower represents that the proceeds of this Note will be used
for personal, family or household use. IF THIS OPTION IS CHECKED, THE FIRST
LOAN MUST BE IN THE AMOUNT OF $25,001 OR MORE
If Loan proceeds will be used to purchase or refinance the purchase of any
property describe:
_______________________________________________________________________________
_______________________________________________________________________________.
Notwithstanding any other provision hereof, if this Note is covered by
Regulation Z of the Federal Reserve Board (Truth in Lending) or any like
disclosure requirement, this Note shall be secured by collateral referenced
herein or in any other document only if disclosed in a related disclosure
statement.
5. REPRESENTATIONS.
Borrower hereby represents and warrants to Lender that:
(a) Borrower and any "Subsidiary" (as defined below) are existing and in
good standing under the laws of their state of formation, are duly
qualified, in good standing and authorized to do business in each
jurisdiction where failure to do so might have a material adverse impact on
the consolidated assets, condition or prospects of Borrower; the execution,
delivery and performance of this Note and all related documents and
instruments are within Borrower's powers and have been authorized by all
necessary corporate, partnership or joint venture action;
(b) the execution, delivery and performance of this Note and all related
documents and instruments have received any and all necessary governmental
approval, and do not and will not contravene or conflict with any provision
of law or of the partnership or joint venture or similar agreement, charter
or by-laws of Borrower or any agreement affecting Borrower or its property;
and
(c) there has been no material adverse change in the business, condition,
properties, assets, operations or prospects of Borrower or any guarantor
since the date of the latest financial statements provided on behalf of
Borrower or any guarantor to Lender prior to the execution of this Note.
"Subsidiary" means any corporation, partnership, joint venture, trust, or other
legal entity of which Borrower owns directly or indirectly fifty percent (50%)
or more of the outstanding voting stock or interest, or of which Borrower has
effective control, by contract or otherwise.
6. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute
an "Event of Default":
(a) failure to pay, when and as due, any principal, interest or other
amounts payable hereunder; failure to comply with or perform any agreement or
covenant of Borrower contained herein; or failure to furnish (or caused to be
furnished to) Lender when and as requested by Lender (but not more often than
once every twelve months) fully completed personal financial statement(s) of
any individual guarantor on Lender's then-standard form together with such
supporting information as Lender may reasonably request; or
(b) any default, event of default, or similar event shall occur or
continue under any other instrument, document, note, agreement, or guaranty
delivered to Lender in connection with this Note, or any such instrument,
document, note, agreement, or guaranty shall not be, or shall cease to be,
enforceable in accordance with its terms; or
(c) there shall occur any default or event of default, or any event or
condition that might become such with notice or the passage of time or both, or
any similar event, or any event that requires the prepayment of borrowed money
or the acceleration of the maturity thereof, under the terms of any evidence of
indebtedness or other agreement issued or assumed or entered into by Borrower,
any Subsidiary, any general partner or joint venturer of Borrower, or any
guarantor, or under the terms of any indenture, agreement, or instrument under
which any such evidence of indebtedness or other agreement is issued, assumed,
secured, or guaranteed, and such event shall continue beyond any applicable
period of grace; or
(d) any representation, warranty, schedule, certificate, financial
statement, report, notice, or other writing furnished by or on behalf of
Borrower, any Subsidiary, any general partner or joint venture of Borrower, or
any guarantor to Lender is false or misleading in any material respect on the
date as of which the facts therein set forth are stated or certified; or
(e) any guaranty of or pledge of collateral security for this Note shall
be repudiated or become unenforceable or incapable of performance; or
(f) Borrower or any Subsidiary shall fail to maintain their existence in
good standing in their state of formation or shall fail to be duly qualified,
in good standing and authorized to do business in each jurisdiction where
failure to do so might have a material adverse impact on the consolidated
assets, condition or prospects of Borrower; or
(g) Borrower, any Subsidiary, any general partner or joint venturer of
Borrower, or any guarantor shall die, become incompetent, dissolve, liquidate,
merge, consolidate, or cease to be in existence for any reason; or any general
partner or joint venturer of Borrower shall withdraw or notify any partner or
joint venturer of Borrower of its or his/her intention to withdraw as a partner
or joint venturer (or to become a limited partner) of Borrower; or any general
or limited partner or joint venturer of Borrower shall fail to make any
contribution required by the partnership or joint venture agreement of Borrower
as and when due under such agreement; or there shall be any change in the
partnership or joint venture agreement of Borrower from that in force on the
date hereof which may have a material adverse impact on the ability of Borrower
to repay this Note; or
(h) any person or entity presently not in control of a corporate,
partnership or joint venture Borrower, any corporate general partner or joint
venturer of Borrower, or any guarantor, shall obtain control directly or
indirectly of Borrower, such a corporate general partner or joint venturer, or
any guarantor, whether by purchase or gift of stock or assets, by contract, or
otherwise; or
(i) any proceeding (judicial or administrative) shall be commenced against
Borrower, any Subsidiary, any general partner or joint venturer of Borrower, or
any guarantor, or with respect to any assets of Borrower, any Subsidiary, any
general partner or joint venturer of Borrower, or any guarantor which shall
threaten to have a material and adverse effect on the assets, condition or
prospects of Borrower, any Subsidiary, any general partner or joint venturer of
Borrower, or any guarantor; or final judgment(s) and/or settlement(s) in an
aggregate amount in excess of Two Hundred Fifty Thousand UNITED STATES DOLLARS
($250,000.00) in excess of insurance for which the insurer has confirmed
coverage in writing, a copy of which writing has been furnished to Lender, shall
be entered or agreed to in any suit or action commenced against Borrower, any
Subsidiary, any general partner or joint venturer of Borrower, or any guarantor;
or
(j) Borrower shall grant or any person (other than Lender) shall obtain a
security interest in any collateral for this Note; Borrower or any other person
shall perfect (or attempt to perfect) such a security interest; a court shall
determine that Lender does not have a first-priority security interest in any
of the collateral for this Note enforceable in accordance with the terms of the
related documents; or any notice of a federal tax lien against Borrower or any
general partner or joint venturer of Borrower shall be filed with any public
recorder; or
****If this box is checked and a land trustee is signing the Note, do not take
real estate as collateral.
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(k) there shall be any material loss or depreciation in the value of any
collateral for this Note for any reason, or Lender shall otherwise reasonably
deem itself insecure; or, unless expressly permitted by the related documents,
all or any part of any collateral for this Note or any direct, indirect, legal,
equitable or beneficial interest therein is assigned, transferred or sold
without Lender's prior written consent; or
(l) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
liquidation, dissolution, or similar proceeding, domestic or foreign, is
instituted by or against Borrower, any Subsidiary, any general partner or
joint venturer of Borrower, or any guarantor; or Borrower, any Subsidiary, any
general partner or joint venturer of Borrower, or any guarantor shall take any
steps toward, or to authorize, such a proceeding; or
(m) Borrower, any Subsidiary, any general partner or joint venturer of
Borrower, or any guarantor shall become insolvent, generally shall fail or be
unable to pay its debts as they mature, shall admit in writing its inability to
pay its debts as they mature, shall make a general assignment for the benefit
of its creditors, shall enter into any composition or similar agreement, or
shall suspend the transaction of all or a substantial portion of its usual
business.
7. DEFAULT REMEDIES.
(a) Upon the occurrence and during the continuance of any Event of Default
specified in Section 6(a)-(k), Lender at its option may declare this Note
(principal, interest and other amounts) immediately due and payable without
notice or demand of any kind. Upon the occurrence of any Event of Default
specified in Section 6(l)-(m), this Note (principal, interest and other
amounts) shall be immediately and automatically due and payable without action
of any kind on the part of Lender. Upon the occurrence and during the
continuance of any Event of Default, Lender may exercise any rights and
remedies under this Note, any related document or instrument (including without
limitation any pertaining to collateral), and at law or in equity.
(b) Lender may, by written notice to Borrower, at any time and from time
to time, waive any Event of Default or "Unmatured Event of Default" (as defined
below), which shall be for such period and subject to such conditions as shall
be specified in any such notice. In the case of any such waiver, Lender and
Borrower shall be restored to their former position and rights hereunder, and
any Event of Default or Unmatured Event of Default so waived shall be deemed to
be cured and not continuing; but no such waiver shall extend to or impair any
subsequent or other Event of Default or Unmatured Event of Default. No failure
to exercise, and no delay in exercising, on the part of Lender of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies of Lender herein provided are cumulative and not exclusive of any
rights or remedies provided by law. "Unmatured Event of Default" means any
event or condition which would become an Event of Default with notice or the
passage of time or both.
8. NO INTEREST OVER LEGAL RATE.
Borrower does not intend or expect to pay, nor does Lender intend or
expect to charge, accept or collect any interest which, when added to any fee
or other charge upon the principal which may legally be treated as interest,
shall be in excess of the highest lawful rate. If acceleration, prepayment or
any other charges upon the principal or any portion thereof, or any other
circumstance, result in the computation or earning of interest in excess of the
highest lawful rate, then any and all such excess is hereby waived and shall
be applied against the remaining principal balance. Without limiting the
generality of the foregoing, and notwithstanding anything to the contrary
contained herein or otherwise, no deposit of funds shall be required in
connection herewith which will, when deducted from the principal amount
outstanding hereunder, cause the rate of interest hereunder to exceed the
highest lawful rate.
9. PAYMENTS, ETC.
All payments hereunder shall be made in immediately available funds, and
shall be applied first to accrued interest and then to principal; however, if
an Event of Default occurs, Lender may, in its sole discretion, and in such
order as it may choose, apply any payment to interest, principal and/or lawful
charges and expenses then accrued. Borrower shall receive immediate credit on
payments received during Lender's normal banking hours if made in cash,
immediately available funds, or by debit to available balances in an account at
Lender; otherwise payments shall be credited after clearance through normal
banking channels. Borrower authorizes Lender to charge any account of Borrower
maintained with Lender for any amounts of principal, interest, taxes, duties,
or other charges or amounts due or payable hereunder, with the amount of such
payment subject to availability of collected balances in Lender's discretion;
unless Borrower instructs otherwise, all Loans shall be credited to an
account(s) of Borrower with Lender. LENDER AT ITS OPTION MAY MAKE LOANS
HEREUNDER UPON TELEPHONIC INSTRUCTIONS AND IN SO DOING SHALL BE FULLY ENTITLED
TO RELY SOLELY UPON INSTRUCTIONS, INCLUDING WITHOUT LIMITATION INSTRUCTIONS TO
MAKE TRANSFERS TO THIRD PARTIES, REASONABLY BELIEVED BY LENDER TO HAVE BEEN
GIVEN BY AN AUTHORIZED PERSON, WITHOUT INDEPENDENT INQUIRY OF ANY TYPE. All
payments shall be made without deduction for or on account of any present or
future taxes, duties or other charges levied or imposed on this Note or the
proceeds, Lender or Borrower by any government or political subdivision
thereof. Borrower shall upon request of Lender pay all such taxes, duties or
other charges in addition to principal and interest, including without
limitation all documentary stamp and intangible taxes, but excluding income
taxes based solely on Lender's income.
10. SETOFF.
At any time and without notice of any kind, any account, deposit or other
indebtedness owing by Lender to Borrower, and any securities or other property
of Borrower delivered to or left in the possession of Lender or its nominee or
bailee, may be set off against and applied in payment of any obligation
hereunder, whether due or not.
11. NOTICES.
All notices, requests and demands to or upon the respective parties hereto
shall be deemed to have been given or made when deposited in the mail, postage
prepaid, addressed if to Lender to its main banking office indicated above
(Attention: Division Head, Private Banking Division), and if to Borrower to its
address set forth below, or to such other address as may be hereafter
designated in writing by the respective parties hereto or, as to Borrower, may
appear in Lender's records.
12. MISCELLANEOUS
This Note and any document or instrument executed in connection herewith
shall be governed by and construed in accordance with the internal law of the
State of Illinois, and shall be deemed to have been executed in the State of
Illinois. Unless the context requires otherwise, wherever used herein the
singular shall include the plural and vice versa, and the use of one gender
shall also denote the other. Captions herein are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof;
references herein to Sections or provisions without reference to the document in
which they are contained are references to this Note. This Note shall bind
Borrower, its heirs, trustees (including without limitation successor and
replacement trustees), executors, personal representatives, successors and
assigns, and shall inure to the benefit of Lender, its successors and assigns,
except that Borrower may not transfer or assign any of its rights or interest
hereunder without the prior written consent of Lender. Borrower agrees to pay
upon demand all expenses (including without limitation attorneys' fees, legal
costs and expenses, and time charges of attorneys who may be employees of
Lender, in each case whether in or out of court, in original or appellate
proceedings or in bankruptcy) incurred or paid by Lender or any holder hereof in
connection with the enforcement or preservation of its rights hereunder or under
any document or instrument executed in connection herewith. Borrower expressly
and irrevocably waives notice of dishonor or default as well as presentment,
protest, demand and notice of any kind in connection herewith. If there shall
be more than one person or entity constituting Borrower, each of them shall be
primarily, jointly and severally liable for all obligations hereunder.
13. WAIVER OF JURY TRIAL, ETC.
BORROWER HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S SOLE AND
ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH RESPECT TO,
ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR ANY DOCUMENT OR INSTRUMENT
EXECUTED IN CONNECTION HEREWITH SHALL BE SUBJECT TO LITIGATION IN COURTS HAVING
SITUS WITHIN OR JURISDICTION OVER COOK COUNTY, ILLINOIS. BORROWER HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT
LOCATED IN OR HAVING JURISDICTION OVER SUCH COUNTY, AND HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO REQUEST OR DEMAND TRIAL BY JURY, TO TRANSFER OR
CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT BY LENDER IN
ACCORDANCE WITH THIS PARAGRAPH, OR TO CLAIM THAT ANY SUCH PROCEEDING HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
[X] See Rider attached hereto and incorporated herein by reference.
Lender is hereby authorized by Borrower without notice to Borrower to fill
in any blank spaces and dates and strike inapplicable terms herein or in any
related document to conform to the terms upon which the Loan(s) evidenced
hereby are or may be made, for which purpose Lender shall be deemed to have
been granted an irrevocable power of attorney coupled with an interest.
Address for Notices:
2600 Crosspark Road
----------------------------------------
NEURAL APPLICATIONS CORPORATION Corallville, IA 52241
- ------------------------------------ ----------------------------------------
By: /s/ Robert B. Staib
--------------------------------- ----------------------------------------
Title: Robert B. Staib Attention:
----------------------------- -----------------------------
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PLEDGE AGREEMENT
(Multiple Collateral Options)
(Loans to Debtor and/or Third Party)
Dated as of September 14, 1998
This Pledge Agreement (as modified from time to time, the "Agreement") has been
executed by Robert B. Staib*, an individual ("Debtor"), as debtor, in favor of
THE NORTHERN TRUST COMPANY, an Illinois banking corporation, as secured party
and pledgee (together with any successor, assign or subsequent holder, "Secured
Party"), with its main banking office at 50 South LaSalle Street, Chicago,
Illinois 60675. If more than one person or entity executes this Agreement, the
term "Debtor" refers to each of them individually and some or all of them
collectively, and their obligations hereunder shall be joint and several. If
any party comprising "Debtor" is a trustee(s), "Trust Agreement" means the
governing trust agreement and/or instruments governing the trust, as modified
from time to time, and all related documents and instruments, and "Debtor" also
refers to the trustee(s) as such and the trust individually and collectively.
In consideration of Secured Party's making loans and extensions of credit
and/or considering making loans or extensions of credit, to Debtor and/or Neural
Applications Corporation, a Delaware corporation (Debtor and such individuals or
entities being collectively referred to as the "Borrower(s)"), and other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor agrees as follows:
1. DEFINITIONS. As used in this Agreement:
(a) Unless otherwise defined herein, all terms that are defined in the
Uniform Commercial Code of the State in which the main banking office of
Secured Party is located shall have the same meanings herein as in such Code.
(b) "Guarantor" means any person or entity, or any persons or entities
severally, now or hereafter guarantying payment or collection of all or any
part of the "Liabilities" (as hereinafter defined).
(c) "Prime Rate" means that floating rate of interest per year announced
from time to time by Secured Party called its prime rate, which at any time
may not be the lowest rate charged by Secured Party, computed for the actual
number of days elapsed on the basis of a year of 360 days.
(d) "Subsidiary" means any corporation, partnership, joint venture, trust,
or other legal entity of which Borrower or Debtor owns directly or indirectly
50% or more of the outstanding voting stock or interest, or of which Borrower
or Debtor has effective control, by contract or otherwise.
2. PLEDGE. Debtor hereby assigns, pledges, hypothecates, delivers, sets over
and transfers to Secured Party and grants to Secured Party a continuing security
interest in the following, in each case whether certificated or uncertificated,
whether now owned or hereafter acquired, wherever located (any or all of such,
the "Collateral"):
(a) CHECK AS MANY AS APPLY
STOCKS AND/OR BONDS. The securities (stocks and/or bonds) listed on
Exhibit A.
N/A U.S. GOVERNMENT SECURITIES. The marketable obligations and securities
issued, guaranteed or insured by the United States, or for which the full faith
and credit of the United States is pledged for the repayment of principal and
interest thereof, or marketable obligations issued, guaranteed, or insured by
any agency, instrumentality, or corporation of the United States for which the
credit of such agency, instrumentality or corporation is pledged for the
repayment of principal and interest thereof, as described in Exhibit A attached
hereto.
N/A SECURITIES ACCOUNT. Account No. in the name of Debtor with (name of
securities account firm), now located at (hereafter referred to as the
"Bailee"), any successor and/or replacement account, and any and all securities,
security entitlements, financial assets, investment property, commodity
contracts, money, instruments, documents, goods, chattel paper, accounts,
general intangibles, deposit accounts, partnership and limited liability company
interests, and other property and rights of any nature now or hereafter held in
or constituting part of such account(s)(such account and any successor and/or
replacement account, the "Securities Account"). (ALSO EXECUTE DIRECTION LETTER
IN FORM OF EXHIBIT B AND UCC FORM)
N/A SPECIFIED SECURITIES IN SECURITIES ACCOUNT & RELATED RIGHTS. The securities
listed in Exhibit A attached hereto which are presently held in Account No.
in the name of Debtor with (name of securities account firm),
now located at (hereafter referred to as the "Bailee"), and (without
limiting any restrictions set forth herein) as may be held hereafter in any
successor and/or replacement account or by Secured Party, together with any and
all replacements and substitutions thereof or thereto and Debtor's security
entitlements and other rights under and pursuant to such account(s) in
connection with such securities, replacements and substitutions (such account
and any successor and/or replacement account, the "Securities Account"). (ALSO
EXECUTE DIRECTION LETTER IN FORM OF EXHIBIT C AND UCC FORM)
N/A PERCENTAGE OF BALANCE IN SECURITIES ACCOUNT & RELATED RIGHTS. percent
( %) (according to market value of principal balance) of the securities
held in Account No. in the name of Debtor with
*Insert "N/A" in any blank which is not applicable. EXHIBITS REFERRED TO IN THE
TEXT WHICH DO NOT PERTAIN TO THE PARTICULAR COLLATERAL PLEDGED NEED NOT BE
ATTACHED.
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5
(name of securities account firm), now located at
(hereafter referred to as the "Bailee") and (without limiting any restrictions
set forth herein) as may be held hereafter in any successor and/or replacement
account or by Secured Party, together with any and all replacements and
substitutions thereof or thereto and Debtor's security entitlements and other
rights under and pursuant to such account(s) in connection with such securities,
replacements and substitutions (such account and any successor and/or
replacement account, the "Securities Account"). Secured Party shall have the
right at any time and from time to time in its sole discretion to designate
which securities in the Securities Account or which may be held by Secured Party
shall constitute Collateral. (ALSO EXECUTE DIRECTION LETTER IN FORM OF EXHIBIT
D AND UCC FORM)
N/[A] BANK DEPOSITS. Deposit account and/or certificate of deposit
number in the name of Debtor in the amount of $
(the "Deposit") held by Secured Party or
[name & address of other
institution where deposit is held] (Secured Party or other institution in its
capacity as issuer of the Deposit, the "Bailee"), as well as each renewal,
replacement and substitution of, interest credited to and all sums due or to
become due on, the Deposit (including without limitation any increase in the
amount of the Deposit from any source whatsoever). (IF DEPOSIT IS ISSUED BY
ANYONE OTHER THAN SECURED PARTY, ALSO EXECUTE DIRECTION LETTER IN FORM OF
EXHIBIT E)
(IF MORE THAN ONE "DEPOSIT," "SECURITIES ACCOUNT" OR "BAILEE" IS INDICATED,
SUCH TERMS AS USED IN THIS AGREEMENT APPLY TO EACH SUCH DEPOSIT, SECURITIES
ACCOUNT OR BAILEE.)
(b) With respect to any Collateral referred to in (a), but without limiting (a):
(i) all stock and bond powers, certificates and instruments;
(ii) all replacements, substitutions, interest, cash and stock dividends,
warrants, options, and other rights and amounts paid, accrued, received,
receivable, or distributed with respect thereto from time to time.
(c) With respect to the foregoing, all products and proceeds thereof, including
without limitation insurance proceeds and payments under the Securities Investor
Protection Act of 1970, as amended.
3. LIABILITIES. The Collateral shall secure the payment and performance of the
following (collectively referred to as the "Liability(ies)"): (a) all
obligations and liabilities of Borrower or Debtor to Secured Party howsoever
created, evidenced or arising, whether direct or indirect, absolute or
contingent, now due or to become due, or now existing or hereafter arising,
including without limitation future advances and letters of credit issued for
the account of or at the request of Borrower or Debtor; (b) any guaranty by
Debtor of any obligations of Borrower to Secured Party, and any obligation of
Debtor as co-signer, endorser, or the like with respect to any note or other
obligation of Borrower; (c) all liabilities and obligations of Debtor under this
Agreement or in connection herewith; and (d) all agreements relating to any of
the foregoing. This Agreement shall continue and remain in effect
notwithstanding that at any particular time there may be no Liabilities
outstanding. Notwithstanding the foregoing the Collateral shall not secure any
Liabilities subject to Regulation Z of the Federal Reserve Board or any
equivalent state disclosure requirement unless disclosed in a disclosure
statement pertaining to such Liabilities.
4. REPRESENTATIONS.
(a) Debtor hereby represents and warrants to Secured Party that:
(i) [APPLICABLE IF DEBTOR IS A CORPORATION, PARTNERSHIP, JOINT VENTURE OR
TRUST] Debtor and any Subsidiary are existing and in good standing under the
laws of their state of formation, are duly qualified, in good standing and
authorized to do business in each jurisdiction where failure to do so might have
a material adverse impact on the consolidated assets, condition or prospects of
Debtor; the execution, delivery and performance of this Agreement and all
related documents and instruments are within Debtor's powers (including without
limitation, if Debtor is a trust, Debtor's powers as trustee pursuant to the
Trust Agreement and applicable law) and have been authorized by all necessary
corporate, partnership, joint venture, and/or trust action.
(ii) [APPLICABLE IF DEBTOR IS AN INDIVIDUAL] Debtor has capacity to enter
into and perform its obligations hereunder.
(iii) The execution, delivery and performance of this Agreement have
received any and all necessary governmental approval, and do not and will not
contravene or conflict with any provision of law or of the partnership or joint
venture or similar agreement, charter or by-laws of Debtor or any agreement
affecting Debtor or its property, including without limitation (if applicable)
the Trust Agreement.
(iv) There has been no material adverse change in the business, condition,
properties, assets, operations or prospects of Debtor, Borrower or any Guarantor
since the date of the latest financial statements provided on behalf of Debtor,
Borrower or any Guarantor to Secured Party.
(v) Debtor does not do business, nor has it done business during the five
(5) years and six months prior to the date of this Agreement, under any name
except as shown above.
(vi) The Collateral is duly and validly authorized and issued,
non-assessable, fully paid and paid for, issued and outstanding, and Debtor is
the legal and equitable owner of the Collateral, with the right (including
without limitation, if applicable, under the Trust Agreement) to pledge, assign
and deliver the Collateral to secure the Liabilities and do or cause to be done
all other actions provided for or referenced in this Agreement or any related
document or instrument, free and clear of all liens, claims, encumbrances and
security interests of any nature except any in favor of Secured Party.
(vii) TO THE EXTENT THE COLLATERAL INCLUDES UNCERTIFICATED SECURITIES OR
DEPOSITS, DEBTOR HAS REQUESTED THE ISSUER THEREOF TO MARK ITS BOOKS TO REFLECT
THIS PLEDGE TO THE SECURED PARTY.
(viii) Sale of the Collateral by Secured Party is not prohibited or
regulated by any federal or state law or regulation or any agreement binding
upon Debtor, including without limitation (if applicable) the Trust Agreement,
and requires no registration or filing with, or consent or approval of, any
governmental body, regulatory authority or securities exchange.
(ix) No financing statement, notice of judgment, or any similar instrument
(unless filed on behalf of Secured Party) covering any of the Collateral is on
file in any public office.
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(b) The request or application by Borrower or Debtor for any Liability secured
hereby shall be a representation and warranty by Debtor as of the date of such
request or application that: (i) no Event of Default or Unmatured Event of
Default (in each case as defined herein) has occurred or is continuing as of
such date; and (ii) Debtor's representations and warranties herein are true
and correct as of such date as though made on such date.
5. DEPOSITORIES. Without limiting any other provision hereof, Secured Party
may at its option from time to time transfer, or cause any Bailee to transfer,
the Collateral into a "pledge position" at any depository now or hereafter
holding the Collateral, and do or cause to be done, execute (or cause to be
executed) such other documents, and take (or cause to be taken) such other
actions as Secured Party may deem necessary or appropriate in connection
therewith.
6. APPOINTMENT OF SUB-AGENTS; REGISTRATION IN NOMINEE NAME.
(a) The Secured Party shall have the right to appoint one or more
sub-agents for the purpose of retaining physical possession of any certificates
or instruments representing or evidencing the Collateral, which may be held (in
the discretion of Secured Party) in the name of Secured Party or any nominee or
nominees of Secured Party or a sub-agent appointed by Secured Party. In
addition, Secured Party shall at all times have the right to exchange
certificates or instruments representing or evidencing Collateral for
certificates or instruments of smaller or larger denominations for any purpose
consistent with its performance of this Agreement.
(b) For the better perfection of Secured Party's rights in and to the
Collateral and to facilitate implementation of such rights, Debtor shall, upon
written request of Secured Party, cause all the certificates, notes, documents
and other instruments evidencing, representing or otherwise comprising the
Collateral to be registered or otherwise put into the name of Secured Party or a
nominee or nominees of Secured Party subject only to the revocable voting rights
specified herein.
(c) Debtor hereby consents and agrees that the issuers of, or any
depository, registrar, transfer agent or similar party for any of, the
Collateral shall be entitled to accept the provisions hereof as conclusive
evidence of the right of Secured Party to effect any transfer pursuant hereto,
notwithstanding any notice or direction to the contrary heretofore or hereafter
given by Debtor or any other person to any such issuer or any such depository,
registrar, transfer agent or similar party.
7. VOTING RIGHTS. Upon the occurrence and during the continuance of an Event
of Default, any and all voting or similar rights with respect to the Collateral
shall be exercisable only by Secured Party.
8. COVENANTS OF PLEDGOR. Debtor agrees that so long as this Agreement
remains in effect, it will:
(a) Promptly deliver any cash, securities or other property received with
respect to the Collateral, whether as proceeds of the disposition thereof,
dividends with respect thereto, or otherwise, to be held by Secured Party
as Collateral. NOTWITHSTANDING THE FOREGOING, UNTIL SECURED PARTY NOTIFIES
DEBTOR TO THE CONTRARY OR AN EVENT OF DEFAULT (AS DEFINED BELOW) OCCURS,
DEBTOR MAY CONTINUE TO RECEIVE REGULAR CASH DIVIDENDS AND INTEREST PAYMENTS
ON THE COLLATERAL.
(b) Defend the Collateral against the claims and demands of all persons
other than Secured Party and promptly pay all taxes, assessments, and
charges upon the Collateral, and not sign (or permit to be signed) any
documents creating or perfecting a lien upon or a security interest in any
of the Collateral except in favor of Secured Party, or otherwise create,
suffer, or permit to exist any liens or security interests upon any
Collateral other than in favor of Secured Party.
(c) Keep at its address for notices set forth under or opposite its
signature hereto its records concerning the Collateral, which records shall
be of such character as will enable Secured Party to determine at any time
the status of the Collateral; furnish to Secured Party such information
concerning the Collateral as Secured Party may from time to time reasonably
request; and permit Secured Party from time to time to inspect, audit, and
make copies of, and extracts from, all records and all other papers in the
possession of Debtor pertaining to the Collateral.
(d) Make appropriate entries upon its financial statements and its books
and records disclosing Secured Party's security interest in the Collateral.
(e) Provide to Secured Party from time to time such financial statements of
and other information concerning the Collateral, Debtor (including without
limitation, if applicable, the trust under the Trust Agreement) and any
general partner or joint venturer of Debtor (audited, if requested by
Secured Party) as Secured Party shall reasonably request.
(f) Except if and to the extent specifically permitted by this Agreement,
not sell, transfer, grant an option or similar right with respect to, or
otherwise dispose of, or agree to dispose of, any Collateral or any
interest therein.
9. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute
an "Event of Default":
(a) failure to pay, when and as due, any principal, interest or other
amounts payable hereunder or in connection with any of the Liabilities, or
failure to comply with or perform any agreement or covenant of Debtor contained
herein; or
(b) any default, event of default, or similar event shall occur or continue
under any other instrument, document, note, agreement, or guaranty delivered to
Secured Party in connection with this Agreement, or any such instrument,
document, note, agreement, or guaranty shall not be, or shall cease to be,
enforceable in accordance with its terms; or
(c) there shall occur any default or event of default, or any event that
might become such with notice or the passage of time or both, or any similar
event, or any event that requires the prepayment of borrowed money or the
acceleration of the maturity thereof, under the terms of any evidence of
indebtedness or other agreement issued or assumed or entered into by Borrower,
Debtor, any Subsidiary, any general partner or joint venturer of Borrower or
Debtor, or any Guarantor, or under the terms of any indenture, agreement, or
instrument under which any such evidence of indebtedness or other agreement is
issued, assumed, secured, or guaranteed, and such event shall continue beyond
any applicable period of grace; or
(d) any representation, warranty, schedule, certificate, financial
statement, report, notice, or other writing furnished by or on behalf of
Borrower, Debtor, any Subsidiary, any general partner or joint venturer of
Borrower or Debtor, or any Guarantor to Secured Party is false or misleading in
any material respect on the date as of which the facts therein set forth are
stated or certified; or
(e) any guaranty of or pledge of collateral security for the Liabilities,
including without limitation this Agreement, shall be repudiated or become
unenforceable or incapable of performance; or
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(f) Debtor, Borrower or any Subsidiary shall fail to maintain their
existence in good standing in their state of formation or shall fail to be
authorized, licensed, or qualified to do business in each jurisdiction where
failure to do so might have a material adverse impact on the consolidated
assets, condition or prospects of Borrower or Debtor; or
(g) Borrower, Debtor, any general partner or joint venturer of Debtor or
Borrower, or any Guarantor shall die, become incompetent, dissolve, liquidate,
merge, consolidate, or cease to be in existence for any reason, or any general
partner or joint venturer of Debtor or Borrower shall withdraw or notify any
partner or joint venturer of Borrower or Debtor of its or his/her intention to
withdraw as a partner or joint venturer (or to become a limited partner) of
Borrower or Debtor; or any general or limited partner or joint venturer of
Debtor or Borrower shall fail to make any contribution required by the
partnership or joint venture agreement of Debtor or Borrower as and when due
under such agreement; or there shall be any change in the partnership or joint
venture agreement of Debtor or Borrower from that in force on the date hereof
which may have a material adverse impact on the ability of Borrower to repay the
Liabilities; or the trust under the Trust Agreement shall terminate in whole or
in part or be the subject of a distribution of other than income; or
(h) any person or entity presently not in control of a corporate,
partnership or joint venture Debtor or Borrower, any corporate general partner
or joint venturer of Debtor or Borrower, or any Guarantor, shall obtain control
directly or indirectly of Debtor or Borrower, such a general partner or joint
venturer, or any Guarantor, whether by purchase or gift of stock or assets, by
contract, or otherwise; or
(i) any proceeding (judicial or administrative) shall be commenced against
Borrower, Debtor, any Subsidiary, any general partner or joint venturer of
Debtor or Borrower, or any Guarantor, or with respect to any assets of Borrower,
Debtor, any Subsidiary, any general partner or joint venturer of Borrower or
Debtor, or any Guarantor, which shall threaten to have a material and adverse
effect on the future operations or financial condition of Borrower, Debtor, any
Subsidiary, any general partner or joint venturer of Debtor or Borrower, or any
Guarantor; or final judgment(s) and/or settlement(s) in an aggregate amount in
excess of Two Hundred Fifty thousand UNITED STATES DOLLARS ($250000 in excess of
insurance for which the insurer has confirmed coverage in writing, a copy of
which writing has been furnished to Secured Party, shall be entered in any suit
or action commenced against Debtor, Borrower, any Subsidiary, any general
partner or joint venturer of Debtor or Borrower, or any Guarantor; or
(j) Debtor shall grant or any person (other than Secured Party) shall
obtain a security interest in any Collateral; Debtor or any other person shall
perfect (or attempt to perfect) such a security interest; a court shall
determine that Secured Party does not have a first-priority security interest in
any of the Collateral enforceable in accordance with the terms hereof; or any
notice of a federal tax lien against Borrower or Debtor or any general partner
or joint venturer of Borrower or Debtor shall be filed with any public recorder;
or
(k) there shall be any material loss or depreciation in the value of the
Collateral for any reason, or Secured Party shall otherwise reasonably deem
itself insecure; or there shall be any levy, judicial seizure, or attachment of
any of the Collateral; or
(l) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
liquidation, dissolution, or similar proceeding, domestic or foreign, is
instituted by or against Borrower, Debtor, any Subsidiary, any general partner
or joint venturer of Borrower or Debtor, or any Guarantor; or Borrower, Debtor,
any Subsidiary, any general partner or joint venturer of Borrower, or Debtor, or
any Guarantor shall take any steps toward, or to authorize, such a proceeding;
or
(m) Borrower, Debtor, any Subsidiary, any general partner or joint venturer
of Debtor or Borrower, or any Guarantor shall become insolvent, generally shall
fail or be unable to pay its (his)(her) debts as they mature, shall admit in
writing its (his)(her) inability to pay its (his)(her) debts as they mature,
shall make a general assignment for the benefit of its (his)(her) creditors,
shall enter into any composition or similar agreement, or shall suspend the
transaction of all or a substantial portion of its (his)(her) usual business.
10. DEFAULT REMEDIES.
(a) Notwithstanding any provision of any document or instrument evidencing
or relating to any Liability: (i) upon the occurrence and during the continuance
of any Event of Default specified in Section 9(a)-(k), Secured Party at its
option may declare the Liabilities immediately due and payable without notice or
demand of any kind; and (ii) upon the occurrence of any Event of Default
specified in Section 9(l)-(m), the Liabilities shall be immediately and
automatically due and payable without action of any kind on the part of Secured
Party. Upon the occurrence and during the continuance of any Event of Default,
Secured Party may exercise any rights and remedies under this Agreement, any
related document or instrument (including without limitation any pertaining to
Collateral), and at law or in equity.
(b) If any Event of Default shall have occurred and be continuing, then, in
addition to having the right to exercise any rights and remedies of a secured
party upon default under the Uniform Commercial Code in effect in the State
where the main banking office of Secured Party or any Collateral is
located, Secured Party may, in its sole discretion:
(i) without being required to give any prior notice to Debtor apply the
cash (if any) then held by it hereunder, toward the Liabilities in such order as
Secured Party shall determine in its sole discretion; and
(ii) if there shall be no such cash or the cash so applied shall be
insufficient to pay all obligations in full, sell the Collateral, or any part
thereof, at any public or private sale, for cash, upon credit or for future
delivery, as Secured Party shall deem appropriate. The Secured Party shall be
authorized at any such sale (to the extent it deems it advisable to do so, in
its sole discretion) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the Collateral
then being sold for their own account for investment and not with a view to the
distribution or resale thereof, and upon consummation of any such sale Secured
Party shall have the right to assign, transfer and deliver to the purchaser(s)
thereof the Collateral so sold. Each such purchaser at any such sale shall hold
the property sold absolutely free from any claim or right on the part of Debtor,
and Debtor hereby waives (to the extent permitted by law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
To the extent that notice of sale shall be required to be given by law, Secured
Party shall give Debtor at least ten days; written notice of Secured Party's
intention to make any such public or private sale or sales. Secured Party
shall not be obligated to make any sale of Collateral if it shall determine not
to do so, regardless of the fact that notice of sale of Collateral may have been
given. Secured Party may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case sale
of all or any part of the Collateral is made on credit or for future delivery,
the Collateral so sold may be retained by Secured Party until the sale price is
paid by the purchaser thereof, but Secured Party shall not incur any liability
in case any such purchaser shall fail to take up and pay for the
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Collateral so sold; in the case of any such failure, such Collateral may be
sold again upon like notice. As an alternative to exercising the power of
sale herein conferred upon it, Secured Party may proceed by a suit at law
or in equity to foreclose this Agreement and to sell the Collateral, or any
portion thereof, pursuant to a judgment or decree of a court of competent
jurisdiction. The proceeds of sale of Collateral sold pursuant hereto shall
be applied by Secured Party in such order as it shall determine.
(c) Secured Party may, by written notice to Debtor, at any time and from
time to time, waive any Event of Default or "Unmatured Event of Default" (as
defined below), which shall be for such period and subject to such conditions
as shall be specified in any such notice. In the case of any such waiver,
Secured Party and Debtor shall be restored to their former position and rights
hereunder, and any Event of Default or Unmatured Event of Default so waived
shall be deemed to be cured and not continuing; but no such waiver shall extend
to or impair any subsequent or other Event of Default or Unmatured Event of
Default. No failure to exercise, and no delay in exercising, on the part of
Secured Party of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies of Secured Party herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
"Unmatured Event of Default" means any event or condition which would become an
Event of Default with notice or the passage of time or both.
11. POWERS OF SECURED PARTY. Secured Party may, from time to time, at its
option (but shall have no duty to):
(a) perform any agreement of Debtor hereunder that Debtor shall have
failed to perform;
(b) take any other action which Secured Party deems necessary or desirable
for the preservation of the Collateral or Secured Party's interest therein
and the carrying out of this Agreement, including without limiting the
generality of the foregoing: (i) any action to collect or realize upon the
Collateral; (ii) the discharge of taxes, liens, security interests or other
encumbrances at any time levied or placed on the Collateral; or (iii) the
discharge or keeping current of any obligation of Debtor having effect on
the Collateral; or (iv) receiving, endorsing and collecting all checks and
other orders for the payment of money made payable to Debtor representing
any dividend, interest payment or other distribution payable or
distributable in respect of the Collateral or any part thereof, and to give
full discharge for the same;
(c) file, or cause to be filed, photocopies or carbon copies of any
financing statement respecting any right of Secured Party in the
Collateral, and any such photocopy or carbon copy of the signature of
Debtor on such photocopy or carbon copy shall be deemed an original for
purposes of such filing. Debtor hereby authorizes Secured Party to sign
financing statements on Debtor's behalf to be filed in all jurisdictions in
which such authorization is permitted; and
(d) (without limiting any other provision hereof) in its discretion request
that any uncertificated securities or deposits constituting Collateral
hereunder be delivered to it in definitive form. Upon receipt of such
request from Secured Party, Debtor will immediately take all steps
(including, without limitation, the payment by Debtor of all costs and
expenses of issuance and transfer) required to cause such uncertificated
securities or deposits to be issued and delivered in definitive form to
Secured Party, together with any and all documents (executed in blank)
required to effect the transfer of definitive securities or deposits in
definitive form to Secured Party. The parties expressly agree that such
securities or deposits when issued in definitive form shall continue to
constitute Collateral for purposes of this Agreement.
Debtor hereby appoints Secured Party as Debtor's attorney-in-fact, which
appointment is and shall be deemed to be irrevocable and coupled with an
interest, for purposes of performing acts and signing and delivering any
agreement, document, or instrument, on behalf of Debtor in accordance with this
Section. Debtor immediately will reimburse Secured Party for all expenses so
incurred by Secured Party, together with interest thereon at 3% in addition to
the Prime Rate.
12. FURTHER ASSURANCES. Debtor agrees to do (or cause to be done) such further
acts and things, and to execute and deliver (or cause to be executed and
delivered) such additional conveyances, assignments, agreements, and
instruments, as Secured Party may at any time request in connection with the
administration or enforcement of this Agreement or related to the Collateral or
any part thereof or in order better to assure and confirm unto Secured Party
its rights, powers and remedies hereunder.
13. ADDITIONAL PROVISIONS RE SECURITIES ACCOUNT AND DEPOSIT PLEDGE. The
following additional provisions pertaining to the Bailee do not limit any of
Secured Party's rights or powers under other provisions hereof:
(a) Debtor agrees to cause Bailee to hold the Collateral as bailee and
agent for Secured Party; Debtor hereby acknowledges that Bailee does and shall
hold such property as bailee and agent of Secured Party. Debtor agrees to
execute a direction letter to Bailee in the form attached hereto as Exhibit
B (whole Securities Account), Exhibit C (specified securities in Securities
Account), Exhibit D (percentage of Securities Account, with Secured Party having
right to designate specified securities from time to time in its sole
discretion), and/or (unless Secured Party is also the issuer of the deposit)
Exhibit E (deposit), as applicable. All terms of the direction letter,
including without limitation the agreement and acknowledgment of Bailee, are
incorporated into this Agreement as agreements of Debtor, and Debtor agrees to
cause Bailee to comply with its agreements and obligations under such letter,
and to agree to and acknowledge such letter as provided therein. Upon the
execution of the direction letter by Debtor, Bailee and Secured Party, as
provided therein, the direction letter shall constitute an agreement among
Debtor, Bailee and Secured Party.
(b) Except as otherwise specified herein or in any direction letter, Bailee
shall act or not act with respect to the Collateral solely in accord with
entitlement orders and instructions (including without limitation instructions
to sell or otherwise dispose of any Collateral, to designate securities as
Collateral (if applicable), and to deliver any Collateral to Secured Party)
given from time to time by Secured Party. If applicable (see Exhibit D),
securities designated by Secured Party shall be and be deemed Collateral, and a
security interest as provided in Section 2 above shall be deemed granted
therein, but without limiting Secured Party's security interest in the
percentage of the Account. Secured Party may exercise any rights and powers
hereunder or in connection with this Agreement or the direction letter,
including without limitation the agreement and acknowledgement of Bailee,
without the consent of Debtor.
(c)[APPLICABLE IF THIS AGREEMENT INCLUDES A PLEDGE OF AN ENTIRE SECURITIES
ACCOUNT OR A PERCENTAGE OF A SECURITIES ACCOUNT: APPLICABLE ONLY TO SUCH
COLLATERAL] Notwithstanding the foregoing, until Secured Party notifies Bailee
in writing to the contrary, Bailee shall permit withdrawals from the Securities
Account so long as the total market value of the assets in the Securities
Account all times equals or exceeds $ N/A (the "Minimum Account Balance") (this
figure refers to the entire Securities Account, even if a percentage of the
Securities
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Account is pledged). Debtor agrees to take all steps, including without
limitation placing additional assets in the above-referenced Securities Account,
to ensure that the value of the assets in the Securities Account at all times
equals or exceeds the Minimum Account Balance as determined by Secured Party.
(d) Debtor hereby directs and authorizes Bailee, as agent with respect to
the Securities Account, to effect replacements and substitutions of Collateral
on behalf of Debtor. Without limiting any other provision hereof, all such
replacements and substitutions shall be conclusively deemed to be Collateral and
Debtor shall be deemed to have granted a security interest in such items and
assigned such items to Secured Party, as more fully provided in Section 2 above.
All substitutions and replacements shall be satisfactory to Secured Party in its
sole discretion, and (without limiting any other provision hereof or of any
direction letter) if Secured Party so requests no substitution or replacement
may be made except with the prior consent of Secured Party.
14. OBLIGATIONS UNCONDITIONAL; WAIVER OF DEFENSES. Debtor irrevocably agrees
that no fact or circumstance whatsoever which might at law or in equity
constitute a discharge or release of, or defense to the obligations of, a
guarantor or surety shall limit or affect any obligations of Debtor under this
Agreement or any document or instrument executed in connection herewith. Without
limiting the generality of the foregoing.
(a) Secured Party may at any time and from time to time, without notice to
Debtor, take any or all of the following actions without affecting or impairing
the liability of Debtor on this Agreement:
(i) renew or extend time of payment of the Liabilities;
(ii) accept, substitute, release or surrender any security for the
Liabilities; and
(iii) release any person primarily or secondarily liable on the Liabilities
(including without limitation Borrower, any indorser, and any Guarantor).
(b) No delay in enforcing payment of the Liabilities, nor any amendment,
waiver, change, or modification of any terms of any document or instrument which
evidences or is given in connection with the Liabilities, shall release Debtor
from any obligation hereunder. The obligations of Debtor under this Agreement
are and shall be primary, continuing, unconditional and absolute
(notwithstanding that at any time or from time to time all of the Liabilities
may have been paid in full), irrespective of the value, genuineness, regularity,
validity or enforceability of any documents or instruments respecting or
evidencing the Liabilities. In order to hold Debtor liable or exercise rights or
remedies hereunder, there shall be no obligation on the part of Secured Party,
at any time, to resort for payment to Borrower or any Guarantor or to any other
security for the Liabilities. Secured Party shall have the right to enforce this
Agreement irrespective of whether or not other proceedings or steps are being
taken against any other property securing the Liabilities or any other party
primarily or secondarily liable on any of the Liabilities.
(c) Debtor irrevocably waives presentment, protest, demand, notice of
dishonor or default, notice of acceptance of this Agreement, notice of any loans
made, extensions granted or other action taken in reliance hereon, and all
demands and notices of any kind in connection with this Agreement or the
Liabilities.
(d) So long as this Agreement remains in effect or any Liabilities are
outstanding, Debtor waives any claim or other right which Debtor might now have
or hereafter acquire against Borrower or any other person primarily or
contingently liable on the Liabilities (including without limitation any maker,
indorser or Guarantor) or that arises from the existence or performance of
Debtor's obligations under this Agreement, including without limitation any
right of subrogation, reimbursement, exoneration, contribution, indemnification,
or participation in any claim or remedy of Secured Party against Borrower or any
other collateral security for the Liabilities, which Secured Party now has or
hereafter acquires, however arising.
15. SECURED PARTY MAY ALSO BE BAILEE OR TRUSTEE. Debtor hereby irrevocably
waives, releases and forever relinquishes any claim or right of any nature
whatsoever based upon the fact that Bailee or a trustee of any Debtor, Borrower
or Guarantor which is a trust is or may be Secured Party itself or a direct or
indirect parent, subsidiary or affiliate of Secured Party, and hereby
irrevocably consents to any such circumstance. The rights and powers of Secured
Party shall not in any way be restricted by reason of any such present or future
circumstance
16. NOTICES. All notices, requests and demands to or upon the respective
parties hereto shall be deemed to have been given or made when deposited in the
mail, postage prepaid, addressed if to Secured Party to its main banking office
indicated above (Attention: Division Head, ***), and if to Debtor to its address
set forth below, or to such other address as may be hereafter designated in
writing by the respective parties hereto or, as to Debtor, may appear in Secured
Party's records.
***Private Banking
17. MISCELLANEOUS. This Agreement and any document or instrument executed
in connection herewith shall be governed by and construed in accordance with the
internal law of the State of Illinois, and shall be deemed to have been executed
in such State. Unless the context requires otherwise, wherever used herein the
singular shall include the plural and vice versa, and the use of one gender
shall also denote the others. Captions herein are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof;
references herein to Sections or provisions without reference to the document in
which they are contained are references to this Agreement. This Agreement shall
bind Debtor, its (his) (her) heirs, trustees (including without limitation
successor and replacement trustees), executors, personal representatives,
successors and assigns, and shall inure to the benefit of Secured Party, its
successors and assigns, except that Debtor may not transfer or assign any of its
(his) (her) rights or interest hereunder without the prior written consent of
Secured Party. Debtor agrees to pay upon demand all expenses (including without
limitation attorneys' fees, legal costs and expenses, and time charges of
attorneys who may be employees of Secured Party, in each case whether in or out
of court, in original or appellate proceedings or in bankruptcy) incurred or
paid by Secured Party or any holder hereof in connection with the enforcement or
preservation of its rights hereunder or under any document or instrument
executed in connection herewith. If there shall be more than one person or
entity constituting Debtor, each of them shall be primarily, jointly and
severally liable for all obligations hereunder.
18. WAIVER OF JURY TRIAL, ECT. DEBTOR HEREBY IRREVOCABLY AGREES THAT,
SUBJECT TO SECURED PARTY'S SOLE AND ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR
OTHER PROCEEDINGS WITH RESPECT TO, ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY DOCUMENT OR INSTRUMENT EXECUTED IN CONNECTION HEREWITH SHALL BE
SUBJECT TO LITIGATION IN COURTS HAVING SITUS WITHIN OR JURISDICTION OVER COOK
COUNTY, ILLINOIS. DEBTOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED IN OR HAVING JURISDICTION OVER SUCH
COUNTY, AND HEREBY IRREVOCABLY WAIVES ANY RIGHT SHE (HE) (IT) MAY HAVE TO
REQUEST OR DEMAND TRIAL BY JURY, TO TRANSFER OR CHANGE THE VENUE OF ANY SUIT,
ACTION OR OTHER PROCEEDING BROUGHT BY SECURED PARTY IN ACCORDANCE WITH THIS
Page 6
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EXHIBIT A TO PLEDGE AGREEMENT
Listing of Pledged Stocks and Bonds
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1. 2. 3. 4. 5. 6. 7.
No. of
Name of Issuer Class/Series Certificate No. CUSIP No. Units/Shares CUSIP No. Par Value
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UAL Common Stock 63500
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11
PARAGRAPH, OR TO CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
N/A See Rider attached hereto and incorporated herein by reference.
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Type Name Robert B. Staib
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- --------------------------------------------
By: -----------------------------------------
Title:
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Secured Party is hereby authorized by Debtor without notice to Debtor to fill
in any blank spaces and dates and strike inapplicable terms herein or in any
related document to conform to the terms of the transaction and/or
understanding evidenced hereby, for which purpose Secured Party shall be deemed
to have been granted an irrevocable power of attorney coupled with an interest.
By:
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Title:
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Address for notices:
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Attention:
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12
RIDER TO
MASTER NOTE (FORM 9601)
DATED AS OF September 14, 1998 EXECUTED BY Neural Applications Corporation (the
"Borrower") IN FAVOR OF THE NORTHERN TRUST COMPANY (the "Lender")
(COMMITTED LINE OF CREDIT)
1. This Rider is attached to and forms an integral part of the
above-referenced Master Note (as amended, the "Note"). Capitalized terms defined
in the remainder of the Note and not otherwise defined in this Rider shall have
the same meaning in this Rider as in the remainder of the Note. Wherever
possible this Rider and the remainder of the Note shall be construed so as to
be consistent with each other; however, if and to the extent that the terms of
this Rider conflict or are inconsistent with the remainder of the Note, the
terms of this Rider shall prevail. Except as modified by this Rider the terms of
the remainder of the Note shall apply.
2. The first paragraph of Section 3 ("LINE OF CREDIT") is deleted and the
following is substituted.
"COMMITTED LINE OF CREDIT: This Note has been executed pursuant to a
committed line of credit. By its acceptance of this Rider to this Note,
Lender shall be deemed to have agreed to make available to Borrower Loans
as outlined herein or in any related letter until the maturity date
indicated above unless and until any 'Event of Default' (as defined below)
occurs, in which case Lender shall have no obligation whatsoever to make
any Loan hereunder or otherwise to extend credit to Borrower. Lender shall
have no obligation to give Borrower or any other person or entity prior
notice of the existence of any Event of Default or any decision not to make
any Loan or otherwise extend credit to Borrower."
Dated as of September 14, 1998.
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Type Name NEURAL APPLICATIONS CORPORATION
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By: Robert B. Staib
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Title:
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