EXHIBIT 99.3
PLEDGED COLLATERAL
ACCOUNT CONTROL AGREEMENT/1/
TO: McDonald Investment, Inc.
000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
DATE: February 1, 2001
Dear Xx. Xxxxx:
Simultaneously with the execution of this Agreement, the undersigned Xxxx
X. Xxxxxxxxx (hereinafter "Pledgor") and eMachines, Inc. ("Pledgee") entered
into a Securities Account Pledge Agreement dated as of [Date] (the "Pledge
Agreement") pursuant to which a security interest, in all present and future
assets of Pledgor in the account no. ___________ entitled "[Account Name],
maintained with you by Pledgor (the "Securities Account"), has been granted by
Pledgor to Pledgee (the "Pledge"). In connection therewith, Pledgor and Pledgee
hereby instruct you and you acknowledge and agree that:
1. The assets contained from time to time in the Securities Account are
pledged according to the terms of the Pledge Agreement. As long as the
assets are pledged to Pledgee, McDonald Investment, Inc. will not
invade the assets to cover margin debits or calls in any other Account
of Pledgor; McDonald Investment, Inc. agrees that except for liens
resulting from transactions in the Securities Account or for payment
of its customary fees and commissions pursuant to the agreement with
Pledgor governing the Securities Account, it acknowledges that neither
it, its subsidiaries nor its affiliates has a present lien on the
pledged assets and has not received notice of any other security
interest in such assets. In the event any such notice is received,
McDonald Investment, Inc. will promptly notify Pledgee. Pledgor herein
represents that the pledged assets are free and clear of any other
lien or encumbrances, and agrees that no further or additional liens
or encumbrances will be placed on the pledged assets without the
express written consent of Pledgee and McDonald Investment, Inc.
2. Pledgor shall be entitled to collect all interest and dividend
payments and all other amounts paid in cash with respect to the
Collateral, provided, however, that in no event prior to the
expiration of the Pledge Agreement, may Pledgor withdraw funds which
would cause the value of the Collateral to decrease below $300,000.
Pledgee and Pledgor acknowledge and agree that McDonald Investment,
Inc. shall not be held responsible for any market decline in the value
of the held pledged assets or to notify Pledgee or Pledgor of any such
decline in the market value of
__________________________
the assets or to take any action with regard to such assets except
upon the specific written directions stated herein.
3. McDonald Investment, Inc. will provide to Pledgor, with a duplicate
copy to Pledgee, a monthly statement of assets and a confirmation
statement of each transaction effected in the Securities Account after
such transaction is effected.
Upon written notice by the Authorized Officers of Pledgee that an "Event of
Default" exists as of the date thereof under the Pledge Agreement (a "Notice of
Default"), McDonald Investment, Inc. shall accept instructions regarding the
Securities Account only from Pledgee and shall dispose of or transfer the assets
in the Securities Account as directed by Pledgee. McDonald Investment, Inc.
shall have no duty or obligation whatsoever of any kind or character to have
knowledge of the terms of the Pledge Agreement or to determine whether or not an
Event of Default exists. Pledgor hereby agrees to indemnify and hold harmless
McDonald Investment, Inc., its affiliates, officers and employees from and
against any and all claims, causes of action, liabilities, lawsuits, demands
and/or damages including, without limitation, any and all court costs and
reasonable attorneys' fees, that may result by reason of McDonald Investment,
Inc. complying with such instructions.
So long as this Agreement remains in effect, Pledgee shall be entitled to
receive duplicates of any and all notices that Pledgor is entitled to receive.
Any notice or statement sent to Pledgee shall be sent to General Counsel,
eMachines, Inc., 00000 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx, 00000. The General
Counsel can be reached at (000) 000-0000.
Any notice sent to McDonald Investment, Inc., including any Notice of
Default, shall be sent to the attention of Xxxxxx X. Xxxxx at 000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxx 00000. Xx. Xxxxx can be reached at 1-800-
643-5590.
Notwithstanding anything to the contrary contained herein or in the Pledge
Agreement, this Agreement shall not impose or create any obligations or duties
upon McDonald Investment, Inc. greater than or in addition to the customary and
usual obligations and duties of McDonald Investment, Inc. to Pledgor except and
to the extent that shall henceforth accept instructions in connection with the
Securities Account as provided in this Agreement.
The parties acknowledge that the Securities Account constitute "Securities
Account" within the meaning of Section 8501 of the Uniform Commercial Code
("UCC"), McDonald Investment, Inc. is a "Securities Intermediary" within the
meaning of Section 8102(a)(14) of the UCC and that all property held in the
Securities Account constitute "Financial Assets" and/or "Security Entitlements"
within the meanings of Section 8102(a)(9) and 8102(a)(17), respectively. The
provisions of this agreement constitute "Control" over the Securities Account
within the meaning of Section 8106(c) of the UCC.
This Agreement shall be binding upon and inure to the benefit of the heirs,
successors and assigns of the respective parties hereto and shall be construed
in accordance with the laws of the State of California without regard to its
conflict of law principles and the rights and remedies of the parties shall be
determined in accordance with such laws.
-7-
If any term or provision of this Agreement is determined to be invalid or
unenforceable, the remainder of this Agreement shall be construed in all
respects as if the invalid or unenforceable term or provision were omitted.
This Agreement may not be altered or amended in any manner without the express
written consent of Pledgor, Pledgee and McDonald Investment, Inc.. This
Agreement may be executed in any number of counterparts, all of which shall
constitute one original agreement.
This Agreement may be terminated by McDonald Investment, Inc. upon thirty
(30) days' written notice to Pledgor and Pledgee. Upon delivery of such notice,
McDonald Investment, Inc. shall be under no further obligation except to hold
the pledged assets in accordance with the terms of this Agreement, pending
receipt of written instructions from Pledgor and Pledgee, jointly regarding the
further disposition of the pledged assets.
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IN WITNESS WHEREOF, Pledgor and Pledgee have caused this Agreement to be
executed by their duly authorized officers all as of the date first above
written.
PLEDGOR
XXXX X. XXXXXXXXX
By: /s/ XXXX X. XXXXXXXXX
___________________________________
Print: Xxxx X. Xxxxxxxxx
___________________________________
Date: 2/2/01
___________________________________
PLEDGEE
eMACHINES, INC.
By: /s/ XXXXX XXXX
___________________________________
Print: Xxxxx Xxxx
___________________________________
Title: VP, Business & Legal Affairs
___________________________________
Date: 2/2/01
___________________________________
ACKNOWLEDGED AND AGREED:
McDonald Investment, Inc.
By: /s/ ^illegible signature^ Date: 2/5/01
___________________________________ _______________________
(Title Managing Director )
_________________________
By: /s/ ^illegible signature^ Date: 2/5/01
___________________________________ _______________________
(Title Assoc. Vice President )
__________________________
