LOAN AGREEMENT
Exhibit
10.2
This
Loan
Agreement (“Agreement”), dated as of __________, 200___, is made between
Citigroup Global Markets Inc. ("Xxxxx Xxxxxx" or “SB”) and the undersigned
(“Client”) to set forth the terms and conditions that will govern one or more
extensions of credit (each, an “Advance”) by SB to the Client.
1.)
a.)
Subject to the terms and conditions of this Agreement, SB agrees to make
one
or
more
Advances to the Client in an aggregate principal amount selected by the
Client
and approved by SB. The initial Advance is set forth in Schedule “A”. The Client
may use Advances for the purpose of purchasing, carrying or trading one
or more
“margin securities” as such term is defined in Regulation T promulgated by the
Federal Reserve Board or for any other purpose as the Client may desire.
All
Advances will comply with the requirements of Regulation T and other applicable
rules for margin accounts. SB will not under any circumstances be required
to
extend any type of credit to the Client unless the collateral that secures
the
Client’s obligation to repay each Advance (and accrued interest, if any) is
acceptable to SB. If the Client’s obligation to repay one or more Advances (and
accrued interest, if any) is guaranteed by a third party and the guarantor
pledges securities in the guarantor’s account at SB, the Client acknowledges
that such securities must be acceptable to SB.
b.) The
Client may obtain an Advance by (i) writing a check drawn on the Client’s
Account at SB, (ii) requesting SB to issue a branch check payable to the Client
in the amount of the Advance, (iii) by requesting SB to wire-transfer Federal
funds in the amount of the Advance to a bank account in the Client’s name, or
(iv) by any other means requested by the Client and agreed upon by
SB.
c.) SB
may,
in its sole discretion, obtain reports from, and provide information to, other
persons concerning the Client’s credit standing and business conduct. SB may ask
credit-reporting agencies for consumer reports of the Client’s credit history.
Upon the Client’s request, SB will inform the Client of the name and address of
the consumer reporting agency or agencies that furnish such consumer reports
to
SB.
2.)
SB
shall
charge the Client interest on the aggregate principal amount of Advances
outstanding, if any. Such interest shall be computed in the same manner
as that
set forth for securities margin accounts in the pamphlet prepared by SB
entitled
“Important New Account Information” (hereafter referred to as “New Account
Document”), which may be amended from time to time and which amendment shall
become binding upon written notice to the Client. The Client hereby acknowledges
receipt of the New Account Document. Interest shall be payable monthly.
If (i) a
sufficient amount of cash or money market fund shares is not available
in the
Client’s margin account at SB (“Account”) to pay the monthly interest amount, or
if the Client elects not to make interest payments from the Account, and
(ii)
sufficient Collateral acceptable to SB is in SB’s possession, the interest due
shall be added to the Client’s outstanding principal balance hereunder and
thereafter interest shall accrue on such amount until the Client’s outstanding
balance on all Advances has been repaid in full, whether before or after
demand
or termination of this Agreement. The Client understands that by adding
interest
to the outstanding principal balance of Client’s Advances, the amount of
additional Advances the Client may obtain shall be proportionately reduced.
In
no event shall the total interest and fees charged under this Agreement
exceed
the maximum interest rate or total fees permitted by law. In the event
any
excess interest or fees are collected, the same shall be refunded or credited
to
the Client.
3.)
The
Client agrees to pay on demand any balance owing with respect to all
Advances,
including interest, fees and any costs of collection (including reasonable
attorney’s fees, if any). The Client understands that SB may demand full or
partial payment of any balance outstanding hereunder at its sole option
and
without cause at any time, and that Advances hereunder are not for any
specific
term or duration. The Client may pay any amount outstanding hereunder at
any
time in whole or in part without penalty.
4.)
a.)
As
security for the Client’s obligations to SB under this Agreement, the Client
hereby
assigns, grants and conveys to SB a first priority lien and security interest
in
all cash, stocks, bonds, other securities, and instruments now or hereafter
in
Client’s Account and all other accounts maintained by the Client with SB, and
all dividends, interest and proceeds of such property, and any property
substituted by the Client (collectively, the “Collateral”). SB reserves the
right to require the Client at any time to deposit promptly into the Account
additional Collateral acceptable to SB, in good deliverable form and freely
saleable, and in such amount as SB reasonably prescribes or to substitute
new
Collateral acceptable to SB, in good deliverable form and freely saleable,
for
any Collateral that has previously been deposited into the Client’s Account. The
Client may, with SB’s approval (not to be unreasonably withheld) and upon such
terms and conditions as SB shall prescribe, substitute securities or other
property for Collateral in the Client’s Account. No withdrawal or substitution
may be made if after such withdrawal or substitution the minimum equity
level
required to be maintained on deposit with SB would not be on deposit in
the
Account. The Client agrees to take any action reasonably requested by SB
to
maintain and preserve SB’s first priority lien and security interest in the
Collateral.
b.)
In
accordance with its customary practices, but without affecting SB’s duties
to client,
SB may, in its sole discretion, borrow margin securities and effect, among
other
things,
short sale transactions with such borrowed securities. The Client understands
and agrees that such borrowed securities will be deemed Collateral for
purposes
of this Agreement.
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5.) Whenever
SB makes a demand upon the Client, or reasonably deems it necessary or
appropriate for its protection (which may include but is not limited to a
decline in the market value of the Collateral or a decline in the market value
of securities or other property in an SB account pledged by a guarantor as
security for the Client’s Advances), SB may require the Client to repay promptly
all or a specified amount of the outstanding balance of the Advances or to
deposit promptly into Client’s Account a specific amount of additional
Collateral. If the Client fails to do either of these things, SB may, in its
sole discretion, take one or more of the following actions: (a) reduce the
Loan
Limit to a level required by law or as determined by SB, in the manner and
in
the order described in Section 4 of this Agreement, (b) liquidate, withdraw
or
sell the Collateral and apply it to any amounts owed to SB, in the manner and
in
the order described in Section 4 of this Agreement, and (c) terminate the
Client’s borrowing privileges hereunder. Without limiting the generality of the
foregoing, any sale may be made in SB’s sole discretion on the exchange or
market where such business is then usually transacted, at public auction or
private sale. SB will attempt to make a good faith effort to notify the Client
before exercising any of the remedies set forth in this Section 5, but SB is
not
required to notify the Client before selling the Collateral and its failure
to
provide such notice will not in any way limit its rights under this Section
5.
In addition to SB’s rights under this Agreement, SB shall have the right to
exercise any one or more of the rights and remedies of a secured creditor under
the New York Uniform Commercial Code then in effect. All rights and remedies
under this Agreement are cumulative and are in addition to all other rights
and
remedies that SB may have at law or equity. Notwithstanding the foregoing,
to
the extent permitted by law, the Client expressly waives compliance with the
provisions of Section 202 of the New York Lien Law.
6.) This
Agreement shall be governed by, and construed in accordance with, the law of
the
State of New York, without regard to the conflict of laws rules of such
State.
7.) This
Agreement may not be assigned by the Client without SB’s prior written consent,
and shall be binding upon the Client’s heirs, executors, administrators,
successors and permitted assigns (whichever is applicable). SB may assign this
Agreement to any affiliated entity that is authorized by law to make advances
to
the Client without the Client’s consent or prior notice to the Client, and this
Agreement shall inure to the benefit of SB’s successors and assigns (whether by
merger, consolidation or otherwise).
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8.) This
Agreement may be amended with the written consent of both parties. Any such
amendment shall be effective as of the date established by both parties. This
Agreement may not be amended orally. Either the Client or SB may by joint
consent thereto, waive compliance with any provision of this Agreement. Such
waiver must be in writing. Any such waiver will not be deemed to be a waiver
of
any other provision of this Agreement. If any provision of this Agreement is
held to be invalid, illegal or unenforceable by reason of any law, rule,
administrative order or judicial decision, such determination shall not affect
the validity of the remaining provisions of this Agreement.
9.) SB
shall not be liable to the Client for: (a) any loss caused directly or
indirectly by causes that are beyond its reasonable control, including
government restrictions, exchange or market rulings, suspension of trading,
war,
strikes or other conditions commonly known as “Acts of God”, or (b) any
consequential, incidental, indirect or special damages, even if such damages
are
reasonably foreseeable.
10.) Each
party represents and warrants to the other that it has full authority to enter
into this Agreement and to perform its obligations hereunder. In addition,
the
Client represents and warrants to SB that (a) the Collateral is not subject
to
any lien, encumbrance or impediment to transfer (other than SB’s lien and
security interest and any restrictive legend restricting the sale of the
security under the Securities Act of 1933), and (b) while any Advance (and
accrued interest, if any) is outstanding, it will not pledge the Collateral
or
grant a security interest in the Collateral to a third party, enter into a
“lock-up” agreement or other agreement that affects the Collateral or permit the
Collateral to become subject to any lien, encumbrance or restriction other
than
as provided above, and (c) in the event SB liquidates and sells the Collateral,
all Collateral consisting of securities will be readily transferable into
“street name” in good deliverable form, and together with the securities of any
other person whose sales must be aggregated with the Client’s under applicable
law or rules, will be saleable under the Securities Act of 1933 and other
applicable law and rules. The Client shall be deemed to repeat each of these
representations each time an Advance is obtained hereunder.
11.) This
Agreement and the New Account Document reflect the entire agreement between
SB
and the Client concerning Advances to the Client and supersede any other
agreement, promise, representation or undertaking, whether written or oral,
concerning the Advances and the Account. In the event of a conflict between
the
provisions of this Agreement and the New Account Document, and any other
agreement between the Client and SB, this Agreement will govern.
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12.)
Without
the necessity of a judicial determination, the Client hereby agrees to
indemnify
and hold harmless SB and its directors, officers, employees, agents and
affiliates
from any and all claims (whether or not meritorious), liabilities, judgments,
damages, losses, costs and expenses of any nature whatsoever (including
reasonable attorney’s fees and expenses) in any way related to, or arising out
of or in connection with, this Agreement, including without limitation
the
Client’s grant of a first priority lien and security interest in the Collateral
and any action taken or omitted by SB at the Client’s request, or any untruth or
inaccuracy of any of the Client’s representations and warranties in this
Agreement.
13.) ARBITRATION
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Arbitration
is final and binding on the
parties.
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The
parties are waiving their right to seek remedies in court, including
the
right to jury trial.
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Pre-arbitration
discovery is generally more limited than and different from court
proceedings.
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The
arbitrators’ award is not required to include factual findings or legal
reasoning, and any party’s rights to appeal or to seek modification of
rulings by the arbitrators is strictly
limited.
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The
panel of arbitrators will typically include a minority of arbitrators
who
were or are affiliated with the securities
industry.
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The
Client agrees that all claims or controversies, whether such claims or
controversies arose prior, on or subsequent to the date hereof, between the
Client and SB and/or any of its present or former officers, directors, or
employees concerning or arising from (i) Client’s Account, (ii) Advances and any
other transaction involving SB or any predecessor firms by merger, acquisition
or other business combination and the Client, whether or not such transaction
occurred in Client’s Account, or (iii) the construction, performance or breach
of this Agreement or any other agreement between Client and SB, or any duty
arising from the business of SB or otherwise, shall be determined by binding
arbitration before, and only before, any self-regulatory organization or
exchange of which SB is a member. The Client may elect which of these
arbitration forums shall hear the matter by sending a registered letter or
telegram addressed to SB Inc. at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000,
Attn: Law Department. If the Client fails to make such election before the
expiration of five (5) days after receipt of a written request from SB to make
such election, SB shall have the right to choose the
forum.
No
person shall bring a putative or certified class action to arbitration, nor
seek
to enforce any pre-dispute arbitration agreement against any person who has
initiated in
court a putative class action; or who is a member of a putative class who has
not opted out of the class with respect to any claims encompassed by the
putative class action until: (i) the class certification is denied, (ii) the
class is decertified, or (iii) the customer is excluded from the class by the
court.
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Such
forbearance to enforce an agreement to arbitrate shall not constitute a waiver
of any rights under this Agreement except to the extent stated
herein.
CLIENT
NAME AND SIGNATURES
[S] (IF
CLIENT IS A CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY, INSERT THE NAME
OF
THE ENTITY AND THE NAME AND TITLE OF THE PERSON SIGNING FOR THE
ENTITY).
BY
SIGNING BELOW, THE CLIENT AGREES TO BE BOUND BY THE TERMS AND CONDITIONS OF
THIS
AGREEMENT. THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE BEGINNING
ON
PAGE 5 AT SECTION 13.
Print
Client Name
Client Signature
Account Number
CITIGROUP
GLOBAL MARKETS INC.
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By:
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