[BB&T Letterhead]
March 24, 1998
Xx. Xxxx X. Xxxxxxx
000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
RE: Secured Loan In The Original Principal Amount Of $2,750,000.00,
Loan #432-0041770, Note #00013
Dear Xx. Xxxxxxx:
This letter sets forth certain of the terms under which BRANCH BANKING AND
TRUST COMPANY (the "Bank") has agreed to make a loan to Interactive Magic, Inc.
("Borrower") in the principal amount of Two Million Seven Hundred Fifty Thousand
and 00/100 Dollars ($2,750,000.00) (the "Loan"). The Loan shall be secured by
the pledge and assignment of, and the grant of a security interest to the Bank
in your securities account with NationsBank Xxxxxxxxxx Securities LLC (the
"Broker"), Account No. 110-70541, together with all securities entitlements and
other financial assets and investment property held therein at any time (whether
now owned or hereafter acquired), including, without limitation, stocks, bonds,
units, mutual funds, government securities, instruments, debentures, and
property of every kind comprising the Account, whether certificated,
uncertificated or otherwise representing a book entry position, right, interest
or claim thereto, and all proceeds and noncash proceeds therefrom, including,
without limitation, interest, cash dividends, stock dividends and other
distributions paid on or in connection with any such security entitlement,
financial asset and other investment property, and any cash or cash equivalents
held at any time in the Account (collectively, the "Securities Account").
1. To evidence the Loan, Xxxxxxxx has executed and delivered to the Bank a
promissory note in the form of Exhibit "A" attached hereto (the "Note").
2. To secure payment of all indebtedness and obligations evidenced by the
Note (including all extensions, renewals, modifications and substitutions
thereof), you hereby pledge and assign, and grant a first priority security
interest to the Bank in all of your right, title, and interest in the Securities
Account. You hereby represent and warrant to the Bank that you are the only
owner of the Securities Account, that you have not assigned, pledged or granted
a security interest in the Securities Account, or any part thereof, to any other
person or entity, and that assigning, pledging and granting a security interest
in the Securities Account to the Bank does not and will not violate any
provision of any contract executed by you in connection with the Securities
Account. You shall execute the Broker's Control Agreement/Pledged Collateral
Account Agreement in the form attached hereto which upon execution by all of the
parties
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thereto shall serve to perfect the Bank's security interest in and confirm the
Bank's right of exclusive control over the Securities Account.
3. If requested by the Bank, you agree to take any and all actions,
including your execution of any other agreements, instruments or documents in
form and content satisfactory to the Bank, which the Bank deems necessary and
proper, in its sole discretion, to further perfect and/or maintain the Bank's
perfected security interest in the Securities Account. In the event you should
receive during the term of the Loan any investment properties or other financial
assets which comprise any part of the principal assets of the Securities
Account, you agree to immediately deliver the same, in the exact form received,
to the Bank to be held by the Bank as collateral for the Loan.
4. You hereby agree to indemnify and hold the Broker, its officers and
employees, harmless from and against any and all claims, causes of action,
liabilities, lawsuits, demands and/or damages, including, without limitation,
any and all costs, including court costs and reasonable attorneys' fees, that
may arise or result from the Broker complying, without your further consent,
with the instructions and orders of the Bank, as secured creditor, given in
connection with the Bank's exercise of its control over and secured rights in
the Securities Account.
5. Prior to an event of default hereunder or under the Note or related Loan
documents thereto, you and your agent, if any, may exercise voting rights and
execute trades (both purchases and sales) with respect to any securities
entitlements and other financial assets and investment property that are
credited to or held in the Securities Account; provided, however, that you and
your agent, if any, may not withdraw any securities entitlements or other
financial assets and investment properties, including any proceeds therefrom, or
any cash or cash equivalents credited to or held in the Securities Account
without the prior written consent of the Bank. Notwithstanding the foregoing
withdrawal restriction, you may, prior to an event of default, receive (i)
ordinary cash dividends declared and paid from time to time on any securities
entitlements or other financial assets and investment properties credited to or
held in the Securities Account and (ii) interest paid on cash or cash
equivalents credited to or held in the Securities Account. Upon an event of
default, however, the Bank shall have the right to cause the Broker to cease all
trading in the Securities Account by you or your agent, if any, and to
accumulate any and all cash dividends, interest and other profits and proceeds
realized therein from time to time for the benefit of the Bank, as secured
creditor.
6. Without the prior written consent of the Bank, you and your agent, if
any, shall not margin (including, selling short, borrowing securities or
otherwise causing credit to be extended), encumber, pledge, or hypothecate the
Securities Account, or any part thereof, except to the Bank. Further, without
the prior written consent of the Bank, you and your agent, if any, shall not
engage in the trading of commodity future contracts or options with respect to
the Securities Account. Should the market value of the Securities Account at any
time fall below $3,300,000.00 and you are unable to deposit such cash and/or
financial assets as may be required to restore the Securities Account's market
value to the aforementioned level within five (5) days, the Bank shall have the
right to declare the Note in default and cause the Broker to
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cease all trading in the Securities Account by you and your agent, if any,
and/or cause the Broker (i) to pay to the Bank sufficient cash or cash
equivalents from the Securities Account, and/or sell sufficient securities
entitlements or other financial assets and investment properties credited or
held therein, and pay the proceeds therefrom to the Bank, to pay the outstanding
indebtedness due under the Note, and/or (ii) to transfer or deliver to the Bank
or its agent any or all of the securities entitlements or other financial assets
and investment properties credited or held in the Securities Account at any
time.
7. In addition to the failure to comply with the terms of paragraph 6
above, any of the following events shall also constitute a default under this
letter agreement: (i) failure of Borrower to pay to the Bank when due the
indebtedness evidenced by the Note or the occurrence of any other default under
the terms of the Note or related Loan documents thereto, (ii) should the Bank's
security interest in the Securities Account fail to be a first priority,
perfected security interest therein, or should such security interest be deemed
invalid for any reason, (iii) should you assign, pledge or grant a security
interest in the Securities Account to any third party, or (iv) should any
representation or warranty made to the Bank in connection with the Loan
evidenced by the Note prove to be false or misleading in any material respect.
Upon the occurrence of any such event of default, the Bank may, in its sole
discretion and upon notification to the Broker, cause the Broker (i) to pay to
the Bank sufficient cash or cash equivalents from the Securities Account and/or
sell sufficient securities entitlements or other financial assets and investment
properties credited or held therein, and pay the proceeds therefrom to the Bank,
to pay the outstanding indebtedness due under the Note, and/or (ii) to transfer
or deliver to the Bank any or all of the securities entitlements or other
financial assets and investment properties credited or held in the Securities
Account at any time. In addition to the legal rights specified in this letter
agreement, the Bank shall have all rights of a secured creditor under the North
Carolina Uniform Commercial Code.
8. This letter agreement shall be binding upon you and your heirs, personal
representatives, executors, administrators, and assigns, and upon the Bank and
its successors and assigns.
9. This letter agreement is made in and shall be governed by the laws of
the State of North Carolina.
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When you have read and understand the terms of this letter agreement,
including the attachments hereto, please so acknowledge by signing your name in
the space provided below, and return an executed original of this agreement to
the Bank. Your business is greatly appreciated and we look forward to a strong
and mutually beneficial banking relationship.
Yours truly,
BRANCH BANKING AND TRUST COMPANY
By /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx, Vice President
Read and agreed to this 2nd
day of April, 1998.
/s/ X. X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx, Borrower/Pledgor
Tax I.D. No. ###-##-####
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Notice of the foregoing letter agreement, and the assignment, pledge and
security interest created in the Account and Investment Property held therein
(whether now owned or hereafter acquired) in favor of Branch Banking and Trust
Company is acknowledged hereby, and the undersigned Xxxxxx has noted the same
upon its records of the Account. The undersigned Broker herewith agrees that, in
accordance with the Broker's Collateral Account Agreement attached hereto and
without further consent of the above referenced owners of the Account, it will
comply with the instructions and orders of the Bank with respect to the exercise
by the Bank of its secured rights in the Account and Investment Property held
therein at any time.
Dated: ________________,19__.
NationsBank Xxxxxxxxxx Securities, LLC
By
-------------------------------------
Xxx X. Xxxxxx, Managing Director
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Notary Public of
I, Xxxxxx X. Xxxx, Notary Public of Wake County, do hereby certify that Xxxx X.
Xxxxxxx personally appeared before me this day and acknowledged the due
execution of the foregoing instrument in writing.
Witness my hand and seal, this 2nd day of April, 1998.
My Commission Expires: 8-11-98 /s/ Xxxxxx X. Xxxx
-------------------------
Notary Public
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