EXHIBIT 10.1
LOAN AND PLEDGE AGREEMENT
This LOAN AND PLEDGE AGREEMENT is dated 10/2/01 (the "Agreement"), and is made
by and among Deutsche Bank AG, London branch ("DBL"), with Deutsche Banc Alex.
Xxxxx Inc., as agent ("DBAB", and, together with DBL, "Deutsche Bank"), RSA
Security Inc. (the "Borrower"), and DBAB, as Collateral Custodian (as defined
herein).
DEUTSCHE BANK AG IS NOT REGISTERED AS A BROKER DEALER UNDER THE U.S. SECURITIES
EXCHANGE ACT OF 1934. DEUTSCHE BANC ALEX. XXXXX INC. ("DBAB") HAS ACTED SOLELY
AS AGENT IN CONNECTION WITH THIS TRANSACTION AND HAS NO OBLIGATION, BY WAY OF
ISSUANCE, ENDORSEMENT, GUARANTEE OR OTHERWISE WITH RESPECT TO THE PERFORMANCE OF
EITHER PARTY UNDER THE TRANSACTION. DEUTSCHE BANK AG, LONDON BRANCH IS NOT A
MEMBER OF THE SECURITIES INVESTOR PROTECTION CORPORATION (SIPC).
WHEREAS Borrower is obligated to pay to DBL (i) on October 2, 2001 the amount of
$22,549,500 and (ii) on October 3, 2001 the amount of $22,272,000 (collectively,
the "Payments") in satisfaction of the transactions described on Exhibit A
hereto (the "Transactions");
WHEREAS the parties hereto intend to form a new agreement whereby DBL extends
credit to Borrower in the amount of the Payments, which extension of credit will
be secured by a pledge of certain collateral;
NOW THEREFORE, for adequate consideration which is hereby acknowledged, the
parties hereto agree as follows:
1. DBL agrees to loan (the "Loan") to Borrower an amount equal to the
Payments, the unpaid principal amount of which shall accrue interest at a
per diem rate equal to the Federal Funds Effective Rate as published on
Federal Reserve Statistical Release H15 (the "Interest Rate"; the amount of
the Loan, along with accrued interest, shall be the "Maturity Amount") plus
50 basis points.
2. Borrower shall use the proceeds of such Loan exclusively to make the
Payments in final settlement of the Transactions.
3. Borrower agrees to repay the Maturity Amount on October 23, 2001 (the
"Maturity Date"). Any amounts remaining unpaid following the Maturity Date
shall accrue interest at an annual rate equal to the Effective Federal
Funds Rate plus 150 basis points.
4. As collateral for the Loan, Borrower hereby pledges to Deutsche Bank (i)
$22,410,750 (the "Cash Collateral") and 2,801,344 shares (the "Collateral
Shares") of common stock (the "Shares") of Borrower, which have been
credited to a securities account maintained at DBAB, as "securities
intermediary" (as defined in Article 8 of the NYUCC; the "Collateral
Custodian"), numbered 145-00091 and titled "RSA Security Inc. as Pledgor;
Deutsche Bank as Pledgee" (the "Account"), (ii) all securities entitlements
in respect thereof, (iii) all income and profits on any of the foregoing,
(iv) all interest, dividends and other payments and distributions with
respect to any of the foregoing and (v) all proceeds of any of the
foregoing (collectively, the "Collateral"). Borrower represents that (i) it
owns the Collateral free and clear of any liens, pledges or encumbrances
(other than applicable securities law restrictions), (ii) it shall not
subject the Collateral to other liens, pledges or encumbrances during the
term of this Agreement, and (iii) Deutsche Bank shall have a continuing
first priority perfected security interest in the Collateral during the
term of this Agreement. Borrower acknowledges and agrees that to the extent
the Collateral is insufficient to pay all amounts due to DBL hereunder,
DBL's deficiency claim against Borrower will be pari passu with the claims
of general unsecured creditors. The Cash Collateral shall earn interest at
the Interest Rate.
5. The Borrower shall, at the expense of the Borrower and in such manner and
form as Deutsche Bank may reasonably require, give, execute, deliver, file
and record any financing statement, notice, instrument, document, agreement
or other paper that may be necessary or desirable in order to (i) create,
preserve, perfect, substantiate or validate the security interest created
under this Agreement, (ii) create or maintain control (within the meaning
of Section 8-106 of the UCC) with respect to any such security interests in
any investment property (as defined in Section 9-115 of the UCC) or (iii)
enable Deutsche Bank to exercise and enforce its rights hereunder with
respect to such security interest. To the extent permitted by applicable
law, the Borrower hereby authorizes Deutsche Bank to execute and file, in
the name of the Borrower or otherwise, UCC financing or continuation
statements (which may be carbon, photographic, photostatic or other
reproductions of this Agreement or of a financing statement relating to
this Agreement) that Deutsche
Bank may reasonably deem necessary or appropriate to further perfect, or
maintain the perfection of, its security interests created under this
Agreement.
6. Deutsche Bank, the Borrower and the Collateral Custodian agree that the
Collateral Custodian is authorized, and Collateral Custodian agrees to,
comply only with instructions and other entitlement orders (within the
meaning of Article 8 of the NYUCC) originated by Deutsche Bank in respect
of the Account and the Collateral, in each case without further consent by
the Borrower. The parties agree that Deutsche Bank shall not provide any
such instructions or orders prior to the occurrence of an Event of Default
(as such term is defined below).
Deutsche Bank, the Borrower and the Collateral Custodian hereby agree that
the Collateral is to be treated as a "financial asset" under Article 8 of
the NYUCC. The Collateral Custodian represents it is a "securities
intermediary" under Article 8 of the NYUCC and that it has its location in
the State of New York. Deutsche Bank, the Borrower and the Collateral
Custodian agree that the State of New York shall be the location of the
Collateral Custodian for purposes of this Agreement and the Account.
7. To the extent Borrower issues new securities (in any form, whether debt,
equity or other, but excluding issuances of securities in the normal course
of business pursuant to the Borrower's existing stock purchase and stock
incentive plans) on or before the Maturity Date, Borrower agrees to use the
net proceeds from such issuance to pay the Maturity Amount prior to
applying such cash to any other purpose. Borrower agrees that, without the
prior written consent of DBL, neither Borrower nor any of Borrower's
affiliates (whether now existing or hereafter created or acquired) will:
a. transfer, assign, pledge or otherwise dispose of (including, without
limitation, to an affiliate) assets in the amount of $1,000,000 or
more except in the ordinary course of business;
b. transfer, assign, pledge or otherwise dispose of (collectively, a
"Transfer") any assets to XX Xxxxx or any other counterparties to any
existing equity derivatives transactions (broadly interpreted) ( any
such derivatives transactions with XX Xxxxx or any of its affiliates,
the "Other Derivatives"), except for a Transfer of Shares to XX Xxxxx
or one or more of its affiliates, which shall be allowed if (i)
Borrower gives notice to Deutsche Bank of its intention to effect a
Transfer to XX Xxxxx or any such affiliate at least 2 Business Days
prior to such Transfer, and (ii) either (A) XX Xxxxx and any such
affiliates are prohibited from making a subsequent Transfer of such
Shares prior to the Maturity Date or (B) pursuant to such notice
Borrower releases Deutsche Bank from its restrictions with respect to
the Transfer of the Collateral Shares (i.e. Deutsche Bank is free to
Transfer the Collateral Shares without the occurrence of an Event of
Default, and free of any other restrictions arising under this
Agreement);
c. create or suffer to exist any Lien on or with respect to any of its
properties, or the capital stock of itself or of any of its affiliates
for the purpose of securing any creditors, or assigns, or permit any
affiliate to assign, any accounts or other rights to receive income
except mortgages, liens or encumbrances in favor of Deutsche Bank,
unless they otherwise exist on the date hereof. As used herein, "Lien"
means any lien, security interest or other charge or encumbrance of
any kind, or any other type of preferential arrangement, including,
without limitation, any easement, right of way or other encumbrance on
title to real property, but does not include any lien, security
interest or other charge or encumbrance on property subject to
purchase money financing incurred in the ordinary course of business
or any lien, security interest or other charge or encumbrance arising
in connection with any Debt all of the proceeds of which are used to
repay, in whole or in part, the Maturity Amount;
d. create or suffer to exist, any Debt other than: (i) Debt owed to DBL,
(ii) Debt existing on the date of this Agreement which has been fully
disclosed to DBL, (iii) purchase money financing incurred in the
ordinary course of business or (iv) Debt all of the proceeds of which
are used to pay, in whole or in part, the Maturity Amount. As used
herein, "Debt" means, without limitation, (a) all indebtedness of such
person for borrowed money, (b) all obligations of such person for the
deferred purchase price of property or services, but not including
accounts payable incurred in the ordinary course of business, (c) all
obligations of such person evidenced by notes, bonds, debentures or
other similar instruments, (d) all obligations of such person created
or arising under any conditional sale or other title retention
agreement with respect to property acquired by such person (even
though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale
of such property), (e) all obligations of such person as lessee under
leases that have been or should be, in accordance with GAAP, recorded
as capital leases, (f) all obligations, contingent or otherwise, of
such person in respect of acceptances, letters of credit or similar
extensions of credit, (g) all obligations, contingent or otherwise
valued on the basis of notional value, of such person in respect of
interest rate swap, cap or collar
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agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts or OTC options or
swaps or other similar agreements, (h) all Debt of others referred to
in clauses (a) through (g) above guaranteed directly or indirectly in
any manner by such person.
8. If (i) Borrower fails to pay the Maturity Amount to DBL on or before the
Maturity Date, (ii) the price of the Shares has dropped below $5 (adjusted
for any stock splits, reverse stock splits or other similar dilutive or
concentrative corporate actions), (iii) any representation by Borrower
hereunder proves to be incorrect or misleading in any material respect when
made, or (iv) any of the following occurs with respect to the Borrower: (A)
the filing or commencement of any case, petition or proceeding by or
against the Borrower under any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar law; (B) the filing or commencement of
any case, petition or proceeding by or against the Borrower for the
appointment of a receiver, trustee, custodian or similar official for the
Borrower or any substantial portion of its property or assets; (C) the levy
of an attachment against any property or accounts of the Borrower
(including the Account); (D) the making by the Borrower of a general
assignment for the benefit of creditors; (E) Borrower is or becomes
insolvent or becomes unable to pay its debts as they become due or admits
in writing its inability generally to pay its debts as they become due; (F)
the occurrence or existence of a default, event of default or other similar
condition or event (however described) in respect of Borrower under one or
more agreements or instruments (other than any of the Other Derivatives)
which has resulted in an aggregate amount of not less than $500,000
becoming due, or which entitles the holder thereof to declare such amount
due and payable, under such agreements or instruments, before it would
otherwise have been due and payable; or (G) a default by Borrower in making
one or more payments on the due date thereof in an aggregate amount of not
less than $500,000 under such agreements or instruments (the occurrence of
any event described in clause (i), (ii), (iii) or (iv) of this Section 8
being referred to herein as an "Event of Default"), Borrower agrees that:
a. DBL shall have the immediate right to foreclose on and apply the
Collateral and exercise all of the rights of a secured party under the
New York Uniform Commercial Code. Such foreclosure may be made on any
recognized exchange or other market where such business is then
usually transacted, or at public auction or at private sale without
advertising (if permitted by applicable law) and without any notice of
the time or place of sale (if permitted by applicable law) to the
Borrower or to the personal representatives of the Borrower, all of
which are expressly waived by Borrower (if permitted by applicable
law). Deutsche Bank may purchase the whole or any part thereof free
from any right of redemption, which rights the Borrower hereby
expressly waives to the fullest extent permitted under applicable law.
The Borrower shall remain liable for any deficiency. If DBL sells all
or any portion of the Collateral Shares and applies such proceeds
towards the Maturity Amount, and the net proceeds received by DBL upon
resale of such Collateral Shares, when combined with Cash Collateral,
exceed the Maturity Amount, DBL shall promptly refund in cash such
difference to Borrower. In the event that such net proceeds, when
combined with Cash Collateral, are less than the Maturity Amount,
Borrower shall be liable for such difference to DBL promptly after
receipt of notice thereof; and
b. The Maturity Amount, may, at the option of Deutsche Bank (and without
prior notice to Borrower), immediately be reduced by set-off against
any amount payable (whether at such time or in the future or upon the
occurrence of a contingency) by Deutsche Bank or its affiliates to
Borrower or any of its affiliates.
9. In the event DBL chooses following the occurrence of an Event of Default to
sell any of the Collateral Shares (collectively, the "Covered Shares"),
Borrower shall satisfy the following conditions:
(i) Borrower shall provide Deutsche Bank with an effective
registration statement covering all of the Covered Shares,
consistent with the requirements of Section 5 of the
Securities Act of 1933 (as amended) ("Securities Act") and
the Rules promulgated thereunder (and no stop order by the
Securities and Exchange Commission shall be in effect with
respect to such registration statement), such that the
Covered Shares, when sold pursuant thereto, shall constitute
freely transferable and tradable securities, and not
"restricted" securities.
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(ii) Borrower shall make arrangements reasonably acceptable to
Deutsche Bank for satisfying any prospectus delivery
requirements under the Securities Act.
(iii) Borrower shall provide such undertakings, representations
and warranties, indemnities and legal opinions, and an
opportunity to perform "underwriter's" due diligence, as
Deutsche Bank may reasonably request, all consistent with
Deutsche Bank's internal policies regarding comparable U.S.
initial distributions of securities.
(iv) Deutsche Bank and Borrower shall have entered into an
agreement substantially similar to Deutsche Bank's standard
form of equity underwriting agreement (which shall include,
without limitation, provisions relating to the
indemnification of, and contribution in connection with the
liability of, Deutsche Bank and its affiliates and
provisions relating to the delivery to Deutsche Bank of
officers' certificates, legal opinions and accountants'
comfort letters) in connection with public sales by Deutsche
Bank under the registration statement;
(v) Borrower shall pay Deutsche Bank a one-time fee in the
amount of USD 250,000, which fee shall be payable
immediately upon the occurrence of both (x) Deutsche Bank's
agreement with Borrower to act as underwriter and (y) such
underwriting being with respect to greater than 100,000
Shares in the aggregate through one or more such offerings.
(vi) Borrower agrees to indemnify and hold harmless Deutsche
Bank, the directors, officers, employees and agents of
Deutsche Bank, each person who controls Deutsche Bank within
the meaning of either the Securities Act or the Securities
Exchange Act of 1934, as amended, (the "1934 Act") (or any
similar statutes then in effect), against any and all
losses, claims, damages, liabilities or expenses, joint or
several, to which Deutsche Bank or such person may become
subject under the Securities Act, the 1934 Act or other
Federal or state statutory law or regulation, at common law
or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions or investigations or
proceedings commenced or threatened in respect thereof)
arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained or
incorporated by reference in any registration statement
filed by Borrower in connection with the issuance or sale of
any Covered Shares and, in each case, used by Deutsche Bank
or any person acting on its behalf in connection with the
sale of any Covered Shares, or arise out of or are based
upon the omission or alleged omission to state in any such
registration statement a material fact required to be stated
or incorporated by reference therein or necessary to make
the statements therein, in light of the circumstances under
which they are made, not misleading, and agrees to reimburse
each such indemnified party for any legal or other expenses
reasonably incurred by them in connection with investigating
or defending any action, investigation or proceeding.
The Borrower will have the right, at its option, to assume
the defense of any litigation or proceeding in respect of
which indemnity may be sought hereunder, including the
employment of counsel reasonably satisfactory to the
indemnified parties and the payment of the fees and expenses
of such counsel, in which event, except as
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provided below, the Borrower shall not be liable for the
fees and expenses of any other counsel retained by any
indemnified party in connection with such litigation or
proceeding. In any such litigation or proceeding the defense
of which the Borrower shall have so assumed, any indemnified
party shall have the right to participate in such litigation
or proceeding and to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the Borrower and such
indemnified party shall have mutually agreed in writing to
the retention of such counsel or (ii) the named parties to
any such litigation or proceeding (including any impleaded
parties) include the Borrower and such indemnified party and
representation of both parties by the same counsel would, in
the opinion of counsel to such indemnified party, be
inappropriate due to actual or potential conflicts of
interest between the Borrower and such indemnified party. In
no event shall the Borrower be obligated with respect to the
fees and expense of one counsel for all indemnified parties.
Upon receipt by an indemnified party of notice of a claim,
action or proceeding against such indemnified party in
respect of which indemnity may be sought hereunder, such
indemnified party shall promptly notify the Borrower with
respect thereto. In addition, an indemnified party shall
promptly notify the Borrower after any action is commenced
(by the way of service with a summons or other legal process
giving information as to the nature and basis of the claim)
against such indemnified party in respect of which indemnity
may be sought hereunder. In any event, failure to notify the
Borrower shall not relieve the Borrower from any liability
which the Borrower may have on account of this indemnity or
otherwise, except to the extent the Borrower shall have been
prejudiced by such failure. No indemnified party shall
settle any claim for which indemnification may be sought by
it hereunder without the prior written consent of the
Borrower, which consent shall not be unreasonably withheld.
10. Notwithstanding Borrower's obligation to satisfy the conditions listed in
Section 8 above, DBL may, following the occurrence of an Event of Default,
sell Covered Shares using any of the methods described in Section 7(a)
above. Borrower acknowledges and agrees that the Covered Shares are
considered "restricted shares" as defined in Rule 144 of the Securities Act
of 1933, as amended, and as such, may be sold after the occurrence of an
Event of Default in private sales at prices that are lower than sales of
shares on an exchange or over the counter market.
11. Each party represents that the individual(s) executing and delivering this
Agreement are duly empowered and authorized to do so, and it has duly
executed and delivered this Agreement.
12. This Agreement and its enforcement shall be governed by the laws of the
State of New York, except to the extent that remedies provided by the laws
of any jurisdiction other than New York are governed by the laws of such
jurisdiction. Any litigation must be instituted in the United States
District Court for the Southern District of New York or the Supreme Court
of the State of New York for the County of New York. Any right to trial by
jury with respect to any claim or action is hereby waived by all the
parties to this Agreement.
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Please confirm that the foregoing correctly sets forth the terms of our
agreement by sending a return executed acknowledgement hereof to the Structured
Equity Products Documentation Group, via facsimile number (000) 000-0000.
Regards,
DEUTSCHE BANK AG LONDON REVIEWED BY:
By:/s/ Xxxxxxx Xxxxx By: /s/Xxxxx Xxxxxxxxxxxx
----------------------------------------- ------------------------
Name: Xxxxxxx Xxxxx
Title: Attorney-in-Fact
By:/s/Xxxxxx Xxxxxx By: /s/Xxxxx Xxxxxxxxx
----------------------------------------- ------------------------
Name: Xxxxxx Xxxxxx
Title: Attorney-in-Fact
DEUTSCHE BANC ALEX. XXXXX INC.
acting solely as Agent and Collateral Custodian
By: /s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
By: /s/Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
AGREED AND ACCEPTED AS OF DATE FIRST ABOVE WRITTEN
RSA SECURITY INC.
By: /s/Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title/Capacity: Chief Financial Officer
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Exhibit A
Confirmation
1. Issuer Written Put - Share Option Transaction - DBS Reference No. 25749
dated as of April 25, 2000 as amended by First Transaction Amendment DBS
Reference No. 25749-A dated as of June 19, 2000, as further amended by
Second Transaction Amendment for 25749-A dated as of December 28, 2000.
2. Issuer Written Put - Share Option Transaction - DBS Reference No. 10753
dated as of February 24, 2000 as amended by First Transaction Amendment DBS
Reference No. 10753-A dated as of June 19, 2000, as further amended by
Second Transaction Amendment for 10753-A dated as of December 28, 2000.
3. Issuer Written Put - Share Option Transaction - DBS Reference No. 24694
dated as of October 23, 2000, as amended by Confirmation Addendum - DBS
Reference No. 24694 dated as of October 23, 2000.
4. Issuer Written Put - Share Option Transaction - DBAB Reference No.
866[WT14579256] March 12, 2001.
5. Issuer Written Put - Share Option Transaction - DBS Reference No. 23325
dated as of February 28, 2000 as amended by Transaction Amendment for DBS
Reference Numbers: 23324 and 23325 dated December 18, 2000, as further
amended by Second Transaction Amendment for DBAB Reference Number - 23325-A
[000095.96.WT15925629.32] dated as of May 16, 2001.
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