Exhibit 7
---------
FORM OF PLEDGE AGREEMENT
This PLEDGE AGREEMENT, dated as of December 16,1994 (this "Agreement"),
is made by ______________, a ______________________ (the "Borrower"), acting
through ________, its ________________, to CITIBANK N.A., a national banking
association (the "Bank").
PRELIMINARY STATEMENTS
A. The Borrower and the Bank have entered into a Credit Agreement,
dated as of December 16, 1994 (said Credit Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "Credit Agreement").
Capitalized terms that are used in this Agreement but are not otherwise defined
in this Agreement shall have the respective meanings assigned to those terms in
the Credit Agreement.
B. The Borrower is the owner of the shares of stock described in
Schedule I and issued by the corporations named therein.
C. It is a condition precedent to the making of Advances by the Bank
under the Credit Agreement that the Borrower shall have made the pledge and
assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Bank to make Advances under the Credit Agreement, the Borrower hereby agrees
as follows:
SECTION 1. Pledge. The Borrower hereby pledges and assigns to the Bank,
------
and hereby grants to the Bank a security interest in, the following property
(the "Pledged Collateral") and all of the Borrower's right, title and interest
in, to and under the Pledged Collateral:
(a) the shares described in Schedule I and the certificates
representing such shares (as hereinafter described in this paragraph
(a), the "Pledged Shares"), and all dividends (including, but not
limited to, stock dividends), cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares for any reason,
including, but not limited to, any change in the number or kind of
outstanding shares of any securities of any issuer of any of such
shares, or any successor to any such issuer, by reason of any
recapitalization, merger, consolidation, reorganization, separation,
liquidation, stock split, stock dividend, combination of shares or
other similar corporate event; provided, however, that in no event
-------- -------
shall such shares include shares that when aggregated with any and all
shares pledged in the aggregate by the other members of the Family
Group (hereinafter defined) to the Bank represent
-1-
ten percent (10%) or more of the outstanding shares of any issuer; and
(b) any and all cash collateral accounts and custody or
safekeeping accounts now or hereafter established with the Bank in the
name of the Borrower or the Bank but under the sole control and
dominion of the Bank (individually, a "Collateral Account" and
collectively, the "Collateral Accounts"), all funds and other property
at any time delivered or transferred or credited to, or deposited or
held in, any one or more of the Collateral Accounts and all
certificates and instruments, if any, from time to time representing or
evidencing any one or more of the Collateral Accounts; and
(c) all proceeds of any and all of the foregoing Pledged
Collateral (including, but not limited to, proceeds that constitute
property of the types described above in this Section 1).
For purposes of this Section 1, "Family Group" means Brush Creek, Ltd., a Texas
limited partnership, Tallulah, Ltd., a Texas limited partnership, Xxxx Xxxx, the
Xxxxxx X. Xxxx Trust, the Xxxx Xxxx Xxxx Trust, the Xxxxx Xxxx Xxxxxxx Trust,
the Xxxxxx Xxxxx Xxxxxxx Xxxx Trust, the Xxxxxxxxxx Xxxxxx Xxxx Trust, the
Xxxxxx Xxxxxxxx Xxxx Trust, the Xxxxxxx Xxxxxx Xxxx, III Trust, the Xxxxxxxx
Xxxx Xxxx Trust and the Xxxxx Xxx Xxxx Trust.
SECTION 2. Security for Obligations. This Agreement secures the payment
------------------------
of all obligations of the Borrower now or hereafter existing under the Credit
Agreement, the Note, any Hedging Agreement and this Agreement, whether for
principal, interest, fees, expenses or otherwise (all such obligations of the
Borrower being collectively the ("Obligations"). Without limiting the generality
of the foregoing, this Agreement secures the payment of all amounts which
constitute part of the Obligations and would be owed by the Borrower to the Bank
under the Credit Agreement and the Note but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower.
SECTION 3. Delivery of Pledged Collateral. All certificates or
------------------------------
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of the Bank pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Bank. The Bank shall have the right, at any time in its
discretion and without notice to the Borrower, to transfer to or to register in
the name of the Bank or any of its nominees (including, but not limited to, any
clearing corporation or custodian bank (as those terms are defined in the
Uniform Commercial Code in effect in the State of New York) and any nominee of
any such clearing corporation or custodian bank) any or all of the Pledged
Collateral, subject only to the revocable rights specified in Section 7(a);
provided
--------
-2-
that the Bank shall not have the right at any time that the Pledged Shares are
beneficially owned by the Borrower, to loan any of the Pledged Shares to any
Person to cover a short position or for any other purpose or to create any
security interest in any of the Pledged Shares. In addition, the Bank shall have
the right at any time to exchange certificates or instruments representing or
evidencing any Of the Pledged Collateral for certificates or instruments of
smaller or larger denominations.
SECTION 4. Representations and Warranties. The Pledgor
------------------------------
represents and warrants as follows:
(a) The Pledged Shares have been duly authorized and
validly issued and are fully paid and non-assessable and the Pledged
Shares are "restricted securities" within the meaning of Rule 144
(hereinafter defined).
(b) The Borrower is the sole legal and beneficial owner of the
Pledged Collateral free and clear of any lien, security interest,
option or other charge, encumbrance or restriction (including, but not
limited to, any restriction (contractual or otherwise) on the
transferability of the Pledged Shares) except for the security interest
created by this Agreement and except for restrictions imposed by Rule
144 ("Rule 144") under the Securities Act of 1933, as from time to time
amended (the "Securities Act"), upon the transferability of the Pledged
Shares by the Borrower but not upon the transferability of the Pledged
Shares by the Bank.
(c) The Pledge and assignment of the Pledged Collateral
pursuant to this Agreement creates a valid and perfected first priority
security interest in the Pledged Collateral, securing the payment of
the Obligations.
(d) No consent of any other person or entity and no
authorization, approval, consent or other action by, and no notice to
or filing or registration with, any governmental authority or
regulatory body is required for (i) the pledge and assignment by the
Borrower of the Pledged Collateral pursuant to this Agreement, (ii) the
execution, delivery or performance of this Agreement by the Borrower,
(iii) the creation, perfection or maintenance of the security interest
created hereby (including, but not limited to, the first priority
nature of such security interest) or (iv) the exercise by the Bank of
the voting or other rights provided for in this Agreement or the
remedies in respect of the Pledged Collateral pursuant to this
Agreement (except as may be required in connection with any disposition
of any portion of the Pledged Collateral by laws affecting the offering
and sale of securities generally).
(e) The Pledged Shares of each respective issuer thereof
indicated on Schedule I do not constitute ten percent or more of the
issued and outstanding shares of stock of such issuer.
-3-
(f) The Borrower acquired the Pledged Shares on the respective
dates, in the respective manners and for the respective payments or
other considerations indicated on Schedule I. As calculated under
paragraph (d) of Rule 144, a minimum of three years has elapsed or is
deemed to have elapsed since the later of (i) the date of the
acquisition by the Borrower of the Pledged Shares from the respective
issuers thereof indicated on Schedule I or from any "affiliate" (such
term being used in this Section 4(f) as that term is defined in
paragraph (a)(1) of Rule 144) of any of such issuers and (ii) the date
of payment by the Borrower of the full purchase price or other
consideration paid or given to acquire the Pledged Shares from the
respective issuers thereof indicated on Schedule I or from any
affiliate of any of such issuers.
(g) If so indicated on Schedule I with respect to any issuer
of the Pledged Shares, the Borrower is a director on the board of
directors of such issuer, and the Borrower's term as such a director
expires on the date indicated on Schedule I with respect to such
issuer.
(h) If so indicated on Schedule I with respect to any issuer
of the Pledged Shares, the Borrower beneficially owns shares of
securities of such issuer that in the aggregate exceed ten percent of
the issued and outstanding securities of such issuer.
(i) As indicated on Schedule I with respect to any issuer of
the Pledged Shares, the Pledged Shares issued by such issuer either are
listed or admitted to trading on the national securities exchange, if
any, indicated for such issuer on Schedule I or are quoted on the
Nasdaq National Market as indicated for such issuer on Schedule I.
(j) No order of the Securities and Exchange Commission and no
provision of any federal or state securities laws or state "Blue Sky"
laws is or will be violated or contravened by any of (i) the making of
any Advance to the Borrower, (ii) the application of the proceeds of
any Advance, (iii) the repayment by the Borrower of all or any portion
of any Advance, (iv) the payment by the Borrower of any interest on any
Advance, (v) the pledge and assignment by the Borrower of the Pledged
Collateral pursuant to this Agreement, (vi) the execution, delivery or
performance of this Agreement by the Borrower or (vii) the creation,
perfection or maintenance of the security interest created hereby.
(k) The Borrower's federal tax identification is __- ________.
(l) There are no conditions precedent to the effectiveness of
this Agreement that have not been satisfied or waived.
-4-
(m) The Borrower, independently and without reliance upon the
Bank and based on such documents and information as the Borrower has
deemed appropriate, has made the Borrower's own credit analysis and
decision to enter into this Agreement.
SECTION 5. Further Assurances. The Borrower agrees that at any
------------------
time and from time to time, at the expense of the Borrower, the
Borrower will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or
desirable, or that the Bank may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted
hereby or to enable the Bank to exercise and enforce its rights and
remedies hereunder with respect to any of the Pledged Collateral.
SECTION 6. Collateral Accounts. Without limiting the generality of
-------------------
Section 5, the Borrower, promptly upon request by the Bank, shall establish with
the Bank one or more Collateral Accounts and shall maintain each such Collateral
Account with the Bank so long as the Note shall remain unpaid in whole or in
part or the Bank shall have any Commitment under the Credit Agreement. It shall
be a term and condition of each Collateral Account, notwithstanding any term or
condition to the contrary in any other agreement relating to such Collateral
Account and except as otherwise provided by the provisions of this Section and
Section 12, that no amount (including, but not limited to, interest on any
Collateral Account that is an interest-bearing account) shall be paid or
released from such Collateral Account to or for the account of, or withdrawn
from such Collateral Account by or for the account of, the Borrower or any other
person or entity. Each Collateral Account shall be subject to such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect. Any cash deposited from time to time in any one or more of the
Collateral Accounts shall be held by the Bank as Pledged Collateral or as cash
proceeds received by the Bank in respect of any sale of, collection from, or
other realization upon all or any part of the Pledged Collateral and shall not
constitute payment of any of the Obligations until applied by the Bank against
the Obligations pursuant to Section 12. The Bank may release Collateral to the
Borrower from time to time in the event the Bank determines in its sole
discretion that after any such release of Collateral the Bank will be adequately
secure; provided, however that any such release of Pledged Shares shall be to
-------- -------
the transfer agent of the issuer of such Pledged Shares.
SECTION 7. Voting Rights; Dividends; Etc.
-----------------------------
(a) So long as no Event of Default or event which, with the
giving of notice or the lapse of time, or both, would become an Event
of Default shall have occurred and be continuing:
-5-
(i) The Borrower shall be entitled to exercise or retrain
from a exercising any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement or the Credit
Agreement.
(ii) The Borrower shall be entitled to receive and retain any
and all dividends paid in respect of the Pledged Collateral; provided
--------
that any and all
(A) dividends (including, but not limited to, stock
dividends) paid or payable other than in cash in respect of,
and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any
of the Pledged Collateral for any reason, including, but not
limited to, any change in the number or kind of outstanding
shares of any securities of any issuer of any of the Pledged
Shares, or any successor to any such issuer, by reason of any
recapitalization, merger, consolidation, reorganization,
separation, liquidation, stock split, stock dividend,
combination of shares or other similar corporate event,
(B) dividends and other distributions paid or payable in
cash in respect of any of the Pledged Collateral in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in
respect of principal of, or in redemption of, or in exchange
for, any of the Pledged Collateral, shall be, and shall be
forthwith delivered to the Bank to hold as, Pledged Collateral
and shall, if received by the Borrower, be received in trust
for the benefit of the Bank, be segregated from the other
property or funds of the Borrower, and be forthwith delivered
to the Bank as Pledged Collateral in the same form as so
received (with any necessary indorsement or assignment).
(iii) The Bank shall execute and deliver (or cause to be
executed and delivered) to the Borrower all such proxies and other
instruments as the Borrower may reasonably request for the purpose
of enabling the Borrower to exercise the voting and other rights
which the Borrower is entitled to exercise pursuant to Section
7(a)(i) and to receive the dividends which the Borrower is
authorized to receive and retain pursuant to Section 7(a)(ii).
-6-
(b) Upon the occurrence and during the continuance of an Event
of Default or an event which, with the giving of notice or the lapse of
time, or both, would become an Event of Default:
(i) All rights of the Borrower (A) to exercise or retrain
from exercising the voting and other consensual rights which
the Borrower would otherwise be entitled to exercise pursuant
to Section 7(a)(i) shall, upon notice to the Borrower by the
Bank, cease and (b) to receive the dividends which the
Borrower would otherwise be authorized to receive and retain
pursuant to Section 7(a) (ii) shall automatically cease, and
all such rights shall thereupon become vested in the Bank
which shall thereupon have the sole right to exercise or
retrain from exercising such voting and other consensual
rights and to receive and hold as Pledged Collateral such
dividends.
(ii) All dividends which are received by the Borrower
contrary to the provisions of Section 7(b)(i) shall be
received in trust for the benefit of the Bank, shall be
segregated from other property and funds of the Borrower and
shall be forthwith paid over to the Bank as Pledged Collateral
in the same form as so received (with any necessary
indorsement).
SECTION 8. Transfers and Other Liens. The Borrower will not (a) sell,
-------------------------
assign (by operation of law or otherwise) or otherwise dispose of, or grant any
option with respect to, any of the Pledged Collateral, or (b) create or permit
to exist any lien, security interest, option, right of first refusal or other
charge or encumbrance upon or with respect to any of the Pledged Collateral,
except for the security interest under this Agreement.
SECTION 9. Bank Appointed Attorney-in-Fact. The Borrower hereby
-------------------------------
appoints the Bank the Borrower's attorney-in-fact, with full authority in the
place and stead of the Borrower and in the name of the Borrower or otherwise,
from time to time in the Bank's discretion to take any action and to execute any
instrument which the Bank may deem necessary or advisable to accomplish the
purposes of this Agreement (subject to the rights of the Borrower under Section
7), including, without limitation, to receive, indorse and collect all
instruments made payable to the Borrower representing any dividend or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same and to file any reports or other filings
required by Rule 144 with the Securities and Exchange Commission or any other
governmental authority or regulatory body that may be substituted therefor or
with any national securities exchange.
SECTION 10. Bank May Perform. If the Borrower fails to perform any
----------------
agreement contained herein, the Bank may itself perform, or cause performance
of, such agreement, and the expenses
-7-
of the Bank incurred in connection therewith shall be payable by the Borrower
under Section 13.
SECTION 11. Bank's Duties. The powers conferred on the Bank hereunder
-------------
are solely to protect the Bank's interest in the Pledged Collateral and shall
not impose any duty upon the Bank to exercise any such powers. Except for the
safe custody of any Pledged Collateral in the Bank's possession and the
accounting for moneys actually received by the Bank hereunder, the Bank shall
have no duty as to any of the Pledged Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any of the Pledged Collateral, whether or not the Bank
has or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any of the Pledged Collateral. The Bank shall be deemed to have
exercised reasonable care in the custody and preservation of any of the Pledged
Collateral in the Bank's possession if such Pledged Collateral is accorded
treatment substantially equal to that which the Bank accords it own property.
SECTION 12. Remedies upon Default. If any Event of Default shall have
---------------------
occurred and be continuing:
(a) The Bank may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to the Bank, all the rights and remedies
of a secured party on default under the Uniform Commercial Code in
effect in the State of New York at that time (the "Code") (whether or
not the Code applies to the affected Collateral), and may also, without
notice except as specified below, sell the Pledged Collateral or any
part thereof in one or more parcels at public or private sale, at any
exchange, at any broker's board or at any of the Bank's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Bank may deem commercially reasonable which may
include block transactions and/or sales at prices which are below the
current prices quoted on any open market. The Borrower agrees that, to
the extent notice of sale shall be required by law, at least three days
notice to the Borrower of the time and place of any public sale or the
time after which any private sale is to be made shall constitute
reasonable notification. The Bank shall not be obligated to make any
sale of any of the Pledged Collateral regardless of notice of sale
having been given. The Bank may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
(b) The Bank also may, without notice to the Borrower except
as required by law and at any time or from time to time, in addition to
other rights and remedies provided for herein or otherwise available to
the Bank, charge, set-off and
-8-
otherwise apply all or any part of any Collateral Account against all
or any part of the Obligations in such order as the Bank shall elect.
(c) Any cash held by the Bank as Pledged Collateral and all
cash proceeds received by the Bank in respect of any sale of,
collection from, or other realization upon all or any part of the
Pledged Collateral may, in the discretion of the Bank, be deposited
into one or more of the Collateral Accounts or otherwise held by the
Bank as collateral for, and/or then or at any time thereafter be
applied (after payment of any amounts payable to the Bank pursuant to
Section 13) in whole or in part by the Bank against, all or any part of
the Obligations in such order as the Bank shall elect. Any surplus of
such cash or cash proceeds held by the Bank and remaining after payment
in full of all the Obligations shall be paid over to the Borrower or to
whomsoever may be lawfully entitled to receive such surplus.
SECTION 13. Expenses. The Borrower will upon demand pay to the Bank the
--------
amount of any and all reasonable expenses, including, but not limited to, the
reasonable fees and expenses of the Bank's counsel and of any experts and
agents, which the Bank may incur in connection with (a) the administration of
this Agreement, (b) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Pledged Collateral, (c) the exercise
or enforcement of any of the rights of the Bank hereunder or (d) the failure by
the Borrower to perform or observe any of the provisions hereof.
SECTION 14. Amendments, Etc. No amendment or waiver of any provision of
---------------
this Agreement, and no consent to any departure by the Borrower from any
provision of this Agreement, shall in any event be effective unless the same
shall be in writing and signed by the Bank, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 15. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing (including, but not limited to,
telephone facsimile communications) and sent via certified or registered mail,
return receipt requested, via telephone facsimile, via personal delivery or via
express courier or delivery service to the Borrower or the Bank, as the case may
be, at the respective addresses or telephone facsimile numbers of the Borrower
and the Bank specified in the Credit Agreement, or, as to either party, at such
other address or telephone facsimile number as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. All such notices and other communications shall be deemed given
(a) when receipted for (or upon the date of attempted delivery when delivery is
refused) if sent via certified or registered mail, return receipt requested, via
personal delivery or via express courier or delivery service,
-9-
and (b) when received if sent via telephone facsimile (confirmation of such
receipt via telephone facsimile being deemed receipt).
SECTION 16. Continuing Security Interest; Assignments under Credit
------------------------------------------------------
Agreement. This Agreement shall create a continuing security interest in the
---------
Pledged Collateral and shall (a) remain in full force and effect until the later
of (i) the payment in full in cash of the obligations and all other amounts
payable under this Agreement and (ii) the expiration or termination of the
Commitment, (b) be binding upon the Borrower and the heirs, executors,
administrators, legal representatives, successors and assigns of the Borrower,
and (c) inure to the benefit of, and be enforceable by, the Bank and the
successors, transferees and assigns of the Bank. Without limiting the generality
of the foregoing clause (c) and subject to the provisions of the Credit
Agreement, (a) the Bank, without any notice to or consent of the Borrower, may
sell participations to one or more persons or entities in or to all or any
portion of the Bank's rights nd obligations under the Credit Agreement
(including, but not limited to, all or any portion of the Commitment, the
Advances and the Note), and (b) the Bank, with the prior written consent of the
Borrower, which consent shall not be unreasonably withheld, may assign,
syndicate or otherwise transfer all or any portion of the Bank's rights and
obligations under the Credit Agreement (including, but not limited to, all or
any portion of the Commitment, the Advances and the Note) to any other person or
entity, and such other person or entity shall thereupon become vested with all
the benefits in respect thereof granted to the Bank herein or otherwise;
provided that, any other provision of this Agreement to the contrary
notwithstanding, the Bank may at any time create a security interest in all or
any portion of the Bank's rights under the Credit Agreement (including, but not
limited to, the Advances owing to the Bank and the Note held by the Bank) in
favor of any Federal Reserve Bank in accordance with Regulation A of the Board
of Governors of the Federal Reserve System. Upon the later of the payment in
full in cash of the Obligations and all other amounts payable under this
Agreement and the expiration or termination of the Commitment the security
interest granted hereby shall terminate. Upon any such termination, the Bank
will at the Borrower's expense, (i) return stock certificates evidencing
ownership in Michaels and Sterling as shall not have been sold or otherwise
applied pursuant to the terms hereof to the then acting transfer agent for
Michaels or Sterling, as appropriate, with instructions that restrictive legends
by reapplied to such certificates after which such certificates are to be
returned to the Borrower or its designee by the transfer agent and (i) return to
the Borrower all other the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof and execute and deliver to the
Borrower such documents as the Borrower shall reasonably request to evidence
such termination.
SECTION 17. Sections and Schedules. Unless stated otherwise in this
----------------------
Agreement, references in this Agreement to Sections and Schedules are references
to Sections of, and Schedules attached to,
-10-
this Agreement. Each Schedule attached to this Agreement is by this reference
incorporated in this Agreement.
SECTION 18. Governing Law; Terms. This Agreement shall be governed by,
--------------------
and construed in accordance with, the laws of the State of New York, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Pledged Collateral are governed by the
laws of a jurisdiction other than the State of New York. Unless otherwise
defined herein or in the Credit Agreement, terms defined in Article 9 of the
Code are used herein as therein defined.
IN WITNESS WHEREOF, the Borrower has duly executed and delivered this
Agreement as of the date first above written.
-------------
By: ____________________________
________, as its ________
-------
-11-
Schedule I
to
Pledge Agreement
by
_______________, as Borrower,
to
Citibank, N.A., a national banking association
A. Issuer: Michaels Stores, Inc., a Delaware corporation
("Michaels")
The Pledged Shares issued by Michaels are quoted on
the over-the-counter (NASDAQ).
Borrower beneficially owns shares of securities of
Michaels that in the aggregate exceed percent of the
issued and outstanding securities of Michaels.
(1) Stock Certificate No.: _____________
Class of Stock: Common Stock
Number of Shares: ___________
Date acquired by Borrower: ______________
Manner of acquisition by Borrower:
Acquisition from _____________ in a [private]
transaction
Nature of payment by Borrower:
Transfer to __________ of ___________
(2) Stock Certificate No.: _______________
Class of Stock: Common Stock
Number of Shares: ___________
Date acquired by Borrower: ___________
Manner of acquisition by Borrower:
Acquisition from ________ in a [private]
transaction
Nature of payment by Borrower:
Transfer to __________ of _____________
B. Issuer: Sterling Software, Inc., a Delaware corporation
("Sterling")
The Pledged Shares issued by Sterling are quoted on
the New York Stock Exchange (NYSE).
Borrower beneficially owns shares of securities of
Sterling that in the aggregate exceed - percent of
the issued and outstanding securities of Sterling.
-12-
(1) Stock Certificate No.: ______________
Class of Stock: Common Stock
Number of Shares: ___________
Date acquired by Borrower: ______________
Manner of acquisition by Borrower:
Acquisition from _________ in a [private]
transaction
Nature of payment by Borrower:
Transfer to __________ of __________
(2) Stock Certificate No.: ________________
Class of Stock: Common Stock
Number of Shares: ___________
Date acquired by Borrower: ___________
Manner of acquisition by Borrower: Acquisition
from _________ in a [private]
transaction
Nature of payment by Borrower:
Transfer to __________ of __________
-13-
===============================================================================
FORM OF FIRST AMENDMENT
to
PLEDGE AGREEMENT
among
____________________,
as the Borrower
and
CITIBANK, N.A.
Effective as of May 5, 1995
===============================================================================
THIS FIRST AMENDMENT TO PLEDGE AGREEMENT (the "First Amendment") dated as
of May 5, 1995, is among __________________, a _________________________ (the
"Borrower"), acting through ________________ its _________________, and
CITIBANK, N.A., a national banking association (the "Bank").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower, the Bank entered into that certain Credit Agreement
dated as of December 16, 1994 (the "Credit Agreement") pursuant to which the
Borrower and the Bank also entered into that certain Pledge Agreement dated as
of December 16, 1994 (the "Pledge Agreement") pursuant to which the Bank agreed
to made certain Advances to the Borrower; and
WHEREAS, the Borrower has requested and the Bank has agreed to amend
certain provisions of the Pledge Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms. All capitalized terms which are defined in the
-------------
Pledge Agreement or the Credit Agreement, but which are not defined in this
First Amendment, shall have the same meanings as defined in the Pledge Agreement
or the Credit Agreement. Unless otherwise indicated, all section references in
this First Amendment refer to the Pledge Agreement.
Section 2. First Amendment Advance. The Bank agrees, provided that the
-----------------------
additional conditions precedent hereto are satisfied, to make an initial Advance
as defined in the Credit Agreement (the "First Amendment Advance").
Section 3. Amendments to the Pledge Agreement.
----------------------------------
3.1 Schedule I. Schedule I to the Pledge Agreement is hereby deleted and
----------
Schedule I hereto is inserted in lieu thereof.
3.2 Section 1(a). Section 1(a) of the Pledge Agreement is hereby amended
------------
by inserting in the first line thereof after the phrase "Schedule I" and
before the phrase "and the certificates" the following:
"and any other shares delivered to the Bank pursuant hereto and any
shares shown on the account of the Bank on the books of a clearing
corporation and registered in the name of the clearing corporation,
another clearing corporation, a custodian bank or a nominee of any of
them".
3.3 Section 3. Section 3 of the Pledge Agreement is hereby amended by
---------
inserting in at the end of the fourth line thereof after the phrase "in
blank," and before the phrase "all in form" as such phrase appears in the
fifth line thereof, the following:
"or shall be shown on the account of the Bank on the books of a
clearing corporation and registered in the name of the clearing
corporation, another clearing corporation, a custodian bank or a
nominee of any of them".
Section 4. Additional Conditions Precedent to the Advance.
----------------------------------------------
4.1 Conditions Precedent to the Advance. The obligation of the Bank to
-----------------------------------
make the First Amendment Advance shall be subject to the following
conditions precedent:
(a) In addition to the conditions precedent as set forth in Article
III of the Credit Agreement, the Borrower will execute and deliver the
following items:
(i) Federal Reserve Form U-1 relating to the pledged shares
described on Schedule I hereto; and
(ii) Undated stock powers relating to the pledged shares on
Schedule I hereto executed in blank or registered in the name of
the Bank or such nominee or nominees as the Bank shall specify.
(b) The Borrower will deliver to the Bank the stock certificates
evidencing the pledged shares (if certificated) as further described
on Schedule I hereto, or otherwise cause perfection of the Bank's
first and prior security interest in the pledged shares in the event
that any of such pledged shares are uncertificated.
(c) The Bank shall have received multiple counterparts, as requested,
of this First Amendment, executed and delivered by a duly authorized
representative of the Borrower.
(d) No Event of Default as defined in the Credit Agreement shall have
occurred and be continuing as of the date of this First Amendment.
Section 5. Representations and Warranties. The Borrower hereby affirms
------------------------------
that as of the date of execution and delivery of this First Amendment, except as
affected by the transactions contemplated in this First Amendment, all of the
representations and warranties contained in the Credit Agreement and the Pledge
Agreement are true and correct in all material respects as though
-2-
made on and as of the date hereof and no Event of Default shall have occurred
and be continuing.
Section 6. Miscellaneous.
-------------
6.1 Confirmation. The provisions of the Pledge Agreement (as amended by
------------
this First Amendment) shall remain in full force and effect in accordance
with their terms following the effectiveness of this First Amendment.
6.2 Ratification and Affirmation of Guarantors. The Guarantor under the
------------------------------------------
Credit Agreement hereby expressly (i) acknowledges the terms of this First
Amendment, (ii) ratifies and affirms his obligations under the Guaranty
Agreement, (iii) acknowledges, renews and extends his continued liability
under said Guaranty Agreement and agrees that said Guaranty Agreement
remains in full force and effect.
6.3 Counterparts. This First Amendment may be executed by one or more of
------------
the parties hereto in any number of separate counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
6.4 No Oral Agreement. THIS WRITTEN FIRST AMENDMENT AND THE OTHER
-----------------
DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
6.5 GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed effective as of the date first written above.
BORROWER:
-------------------------------------------------
By:
----------------------------------------------
, its
-------------- --------------------------
GUARANTOR:
-------------------------------------------------
, individually
----------------- -----------------
-3-
Schedule I
to
First Amendment to Pledge Agreement
among
______________, as Borrower,
and
Citibank, N.A.
A. Issuer: Sterling Software, Inc., a Delaware corporation ("Sterling")
The Pledged Shares issued by Sterling are quoted on the New York
Stock Exchange (NYSE) .
Borrower beneficially owns shares of securities of Sterling that
in the aggregate exceed ____ percent of the issued and
outstanding securities of Sterling.
(1) Stock Certificate No.: ________
Class of Stock: Common Stock
Number of Shares: ________
Date acquired by Borrower: _____________________
Manner of acquisition by Borrower:
_____________________________________
Nature of payment by Borrower:
Transfer to ________________ of __________________
B. Issuer: Michaels Stores, Inc., a Delaware corporation ("Michaels")
The Pledged Shares issued by Michaels are quoted on the over-the-
counter (NASDAQ).
Borrower beneficially owns shares of securities of Michaels that
in the aggregate exceed ____ percent of the issued and
outstanding securities of Michaels.
-4-
(1) Stock Certificate No.: __________
Class of Stock: Common Stock
Number of Shares: __________
Date acquired by Borrower: ____
Manner of acquisition by Borrower:
______________________________
Nature of payment by Borrower:
Transfer to ________________ of __________________
(2) Stock Certificate No.: __________
Class of Stock: Common Stock
Number of Shares: __________
Date acquired by Borrower: _____
Manner of acquisition by Borrower:
______________________________________
Nature of payment by Borrower:
Transfer to ________________ of ____________________
-5-
================================================================================
FORM OF SECOND AMENDMENT
to
PLEDGE AGREEMENT
among
______________________
as the Borrower
and
CITIBANK, N.A.
Effective as of September 30, 1996
================================================================================
THIS SECOND AMENDMENT TO PLEDGE AGREEMENT (the "Second Amendment") dated as
----------------
of September 30, 1996, is among ______________________, a ___________
________________ (the "Borrower"), acting through ______________________ its
--------
______________________, and CITIBANK, N.A., a national banking association (the
"Bank").
----
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower and the Bank entered into that certain Credit
Agreement dated as of December 16, 1994 (the "Credit Agreement") pursuant to
----------------
which the Borrower and the Bank also entered into that certain Pledge Agreement
dated as of December 16, 1994 as amended by the First Amendment to Pledge
Agreement dated as of May 5, 1995 (the "Pledge Agreement") pursuant to which the
----------------
Bank agreed to made certain Advances to the Borrower; and
WHEREAS, the Borrower has requested and the Bank has agreed to amend
certain provisions of the Pledge Agreement and the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms. All capitalized terms which are defined in the
-------------
Pledge Agreement or the Credit Agreement, but which are not defined in this
Second Amendment, shall have the same meanings as defined in the Pledge
Agreement or the Credit Agreement. Unless otherwise indicated, all section
references in this Second Amendment refer to the Pledge Agreement.
Section 2. Amendments to the Pledge Agreement. Schedule I. Schedule I to
----------------------------------
the Pledge Agreement is hereby deleted in its entirety and Schedule I hereto is
inserted in lieu thereof.
Section 3. Representations and Warranties. The Borrower hereby affirms
------------------------------
that as of the date of execution and delivery of this Second Amendment, all of
the representations and warranties contained in the Credit Agreement and the
Pledge Agreement are true and correct in all material respects as though made on
and as of the date hereof and no Event of Default shall have occurred and be
continuing.
Section 4. Confirmation. The provisions of the Pledge Agreement (as
------------
amended by this Second Amendment) shall remain in full force and effect in
accordance with their terms following the effectiveness of this Second
Amendment.
Section 5. Ratification and Affirmation of Guarantors. The Guarantor
------------------------------------------
under the Credit Agreement hereby expressly (i) acknowledges the terms of this
Second Amendment and the amendment of even date herewith to the Credit
Agreement, (ii) ratifies and affirms his obligations under the Guaranty
Agreement, (iii) acknowledges,
renews and extends his continued liability under said Guaranty Agreement and
agrees that said Guaranty Agreement remains in full force and effect.
Section 6. Counterparts. This Second Amendment may be executed by one or
------------
more of the parties hereto in any number of separate counterparts, and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 7. No Oral Agreement. THIS WRITTEN SECOND AMENDMENT AND THE OTHER
-----------------
DOCUMENTS EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Section 8.5 GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY,
-------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be duly executed effective as of the date first written above.
BORROWER:
-------------------------------------------------
By:
----------------------------------------------
, Its
-------------------------- --------------
GUARANTOR: By:
----------------------------------------------
, individually
--------------------------------
WITNESS: By:
----------------------------------------------
Name:
--------------------------------------------
2
Schedule I
to
the Pledge Agreement
between
__________, as Borrower,
and
Citibank, N.A.
A. Issuer: Sterling Software, Inc., a Delaware corporation
(1) Stock Certificate No.: _________
Class of Stock: Common Stock
Number of Shares: _______
Date acquired by Borrower: _________
Manner of acquisition by Borrower:
_____________________________________
B. Issuer: Sterling Commerce, Inc., a Delaware corporation
(1) Stock Certificate No.: _________
Class of Stock: Common Stock
Number of Shares: _______
Date acquired by Borrower: _________
Manner of acquisition by Borrower:
_____________________________________
C. Issuer: Michaels Stores, Inc., a Delaware corporation
(1) Stock Certificate No.: __________
Class of Stock: Common Stock
Number of Shares: _______
Date acquired by Borrower: ________
Manner of acquisition by Borrower:
_____________________________________
(2) Stock Certificate No.: _________
Class of Stock: Common Stock
Number of Shares: _________
Date acquired by Borrower: _____
Manner of acquisition by Borrower:
_____________________________________
4
(3) Stock Certificate No.: _________
Class of Stock: Common Stock
Number of Shares: _________
Date acquired by Borrower: _____
Manner of acquisition by Borrower:
______________________________________
5
