EXHIBIT 99.5
STUDENT ADVANTAGE, INC.
000 XXXXXX XXXXXX
XXXXXX, XX 00000
November 13, 2003
Scholar, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Xx. Xxxx Xxxxxxx
c/o The Princeton Review
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Reservoir Capital Partners, L.P.
Reservoir Capital Master Fund, L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Gentlemen,
Reference is made to that certain Loan Agreement, dated as of June 25,
2001, by and among Student Advantage, Inc., as borrower (the "Borrower"),
certain of its subsidiaries as guarantors, Scholar, Inc., a Delaware corporation
("Scholar"), Xxxx Xxxxxxx, an individual residing in the State of New York
("Xxxxxxx" or "Xx. Xxxxxxx")) and each of the lenders party thereto other than
Scholar and Xxxxxxx (collectively, the "Reservoir Lenders") (as modified and
supplemented and in effect on the date hereof by eleven amendments thereto, the
"Loan Agreement"). Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Loan Agreement. Reference is also made to that
certain Purchase and Sale Agreement, to be entered into by the Borrower and
NCSN, Inc. (the "Sale Agreement").
This letter agreement sets forth our agreement that, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
notwithstanding the provisions of the Loan Agreement or any other Loan
Documents:
1. Upon and in connection with the "closing" of the transactions
contemplated by the Sale Agreement, the Borrower agrees to assign to the
Reservoir Lenders without recourse, and the Reservoir Lenders agree, subject to
the conditions set forth below in this paragraph, to accept from the Borrower in
full and complete satisfaction of any and all amounts and any other obligations
(whether known or unknown, now existing or hereafter arising) owed to any of the
Reservoir Lenders in connection with or under the Loan Agreement or any other
Loan Document, all right, title and interest of the Borrower in and to one or
more promissory notes, in the aggregate outstanding principal amount of at least
$4,250,000, issued, in the form attached
hereto as EXHIBIT A (collectively, the "NCSN Notes"), to the Borrower (or any of
its Subsidiaries) by NCSN, Inc. (or one of its affiliates) (the "NCSN Entity")
under a Note Purchase Agreement, in the form attached hereto as EXHIBIT B, which
NCSN Notes shall be in genuine and unaltered form, duly indorsed to one or more
of the Reservoir Lenders (or their respective designees) in blank and without
recourse , together with the security agreement executed, in the form attached
hereto as EXHIBIT C-1, by the NCSN Entity securing such NCSN Notes, and one or
more Common Stock Purchase Warrant(s), in the form attached hereto as EXHIBIT
C-2, issued by the NCSN Entity; provided, however, in the event that prior to
the "closing" under the Sale Agreement, the Borrower receives the "notice" from
NCSN, Inc. contemplated by the proviso in Section 1.2(a) of the Sale Agreement ,
the Borrower shall provide a copy of such notice to the agent for the Reservoir
Lenders within one (1) business day after receipt, and the Reservoir Lenders
shall, within one (1) business day thereafter (but in no event less than two (2)
business days prior to such closing) notify the Borrower whether the Reservoir
Lenders will nonetheless accept such assignment (and will provide or consent to
the provision by the Borrower of the Waiver and Release (as defined in Section
1.2(a) of the Sale Agreement)) or whether the Reservoir Lenders will only accept
payment of $4,250,000 in cash in lieu of such assignment (but in full
satisfaction as if such assignment had been made), provided that in the event
the Reservoir Lenders fail to timely provide such response, they will be deemed
to have agreed to accept the payment of the $4,250,000 in cash in lieu of the
assignment. All such assignments shall be by endorsements and/or assignments in
form and substance reasonably acceptable to the Borrower and the Reservoir
Lenders (and shall, among other things, include typical "accredited investor"
representations). Upon the consummation of the assignment (or payment of cash in
lieu of assignment) described in the first sentence of this paragraph (the
"Letter Agreement Closing Date"), no Reservoir Lender shall thereafter be
entitled to any payments, or any benefits, rights or remedies, under or in
connection with the Loan Agreement or any other Loan Document and none of the
Reservoir Lenders shall thereafter be deemed to be a Lender (as defined in the
Loan Agreement). Notwithstanding the releases provided in the first sentence of
this paragraph, the Borrower agrees to pay $25,000 (which $25,000 shall include
an invoice dated on or about August 1, 2003 in the amount of approximately
$14,000) of the reasonable fees and expenses of Milbank, Tweed, Xxxxxx & XxXxxx
LLP in connection with this letter agreement and the Loan Agreement and the
transactions contemplated hereby and thereby, and which amount shall also
include all amounts which may be payable by the Borrower or its Subsidiaries in
connection with paragraph 2 hereof (other than any amounts due under the last
sentence of paragraph 2), such amount to be paid on the Letter Agreement Closing
Date to the extent that statements therefor have been previously provided to the
Borrower; provided that Reservoir shall allocate, towards payment of the legal
fees and expenses of Xxxxxxx incurred in connection with this letter agreement
and the Loan Agreement and the transactions contemplated hereby and thereby, a
portion of the foregoing amount and any and all other amounts received in
respect of legal fees and expenses relating to this letter agreement and the
Loan Agreement and the transactions contemplated hereby and thereby. The
obligations of the parties to effect the transactions contemplated by this
paragraph 1 shall terminate if the Letter Agreement Closing Date shall not have
occurred by the earlier of (i) April 30, 2004 and (ii) the date of the
termination of the Sale Agreement, in which case, all provisions of the Loan
Agreement and each other Loan Document shall remain in full force and effect
without regard to the modifications contemplated by this paragraph.
2. In connection with the occurrence of the Letter Agreement Closing Date,
(i) each Reservoir Lender shall execute and deliver to the Borrower any and all
termination statements, releases, re-assignments, or other such documents as may
be reasonably requested by the Borrower (and at the Borrower's expense) to
reflect the foregoing release and satisfaction, and shall return and deliver to
the Borrower any and all Collateral (as defined in the Loan Documents)
(including, without limitation, any and all promissory notes (whether the
VoiceFX Notes (defined below) or otherwise) issued to the Borrower or any
Subsidiary of Borrower and all stock certificates which were previously
delivered to a Reservoir Lender in possession or control of any of the Reservoir
Lenders and any and all promissory notes issued by Borrower to any Reservoir
Lender (all without any representation or warranty, except that such Collateral
is free and clear of any liens, claims or encumbrances created by or against any
Reservoir Lender), and (ii) the Borrower shall execute and deliver to the
Reservoir Lenders (a) any and all documents and instruments, or provide such
other materials and information, as may be reasonably requested by the Reservoir
Lenders to vest title to the NCSN Notes in the Reservoir Lenders, and (b) a
certificate certifying that the "Closing" of the Sale Agreement has occurred and
attaching copies of the executed NCSN Notes, the Note Agreement, the Warrant(s)
and the Security Agreement. The Borrower shall also cause to be delivered to the
Reservoir Lenders copies of any legal opinions and certificates delivered to the
Borrower pursuant to the Note Agreement. The Borrower is hereby appointed,
effective as of the Letter Agreement Closing Date, as the attorney in fact for
each Reservoir Lender to execute, deliver and/or file any items consistent with
clause (i) above to the extent not provided by a Reservoir Lender. To the extent
not provided in connection with the Letter Agreement Closing Date, the Borrower
agrees to execute and deliver to the Reservoir Lenders any and all further
documents and instruments, or provide such further materials and information,
and take such further actions as may be reasonably requested by the Reservoir
Lenders to vest title to the NCSN Notes in the Reservoir Lenders, the foregoing
to be at the cost and expense of the Reservoir Lenders. To the extent not
provided in connection with the Letter Agreement Closing Date, each of the
Reservoir Lenders agrees to execute and deliver to the Borrower any and all
further documents and instruments, or provide such further materials and
information, and take such further actions as may be reasonably requested by the
Borrower to implement the releases and satisfactions set forth in paragraph 1
hereof which shall be at the cost and expense of the Borrower.
3. Upon receipt of payment by Xx. Xxxxxxx of the Final Xxxxxxx Amount (as
defined below) on the Letter Agreement Closing Date (the date of such payment is
referred to herein as the "Release Date"), all amounts and any other obligations
owed (whether known or unknown, now existing or hereafter arising) to Xx.
Xxxxxxx in connection with or under the Loan Agreement or any other Loan
Document, including without limitation, the Xxxxxxx Fee, and any and all
interest and other amounts, shall be deemed to have been paid in full and fully
satisfied, Xx. Xxxxxxx shall no longer be entitled to any payments, or any
benefits, rights or remedies, under or in connection with the Loan Agreement or
any other Loan Document and Xx. Xxxxxxx shall no longer be deemed to be a Lender
(as defined in the Loan Agreement). For purposes of this letter agreement,
"Final Xxxxxxx Amount" means the result obtained by subtracting (i) the sum of
all amounts paid by the Borrower to Xx. Xxxxxxx after the date hereof from (ii)
$550,000. Upon receipt by Xx. Xxxxxxx of the Final Xxxxxxx Amount in accordance
with this paragraph 3, all rights, remedies and/or benefits of Xx. Xxxxxxx under
the Loan Agreement and each other Loan Document (including, without limitation,
the Xxxxxxx Fee)
shall terminate and be of no further force and effect. The obligations of the
parties to effect the transactions contemplated by this paragraph 3 shall
terminate if the Letter Agreement Closing Date shall not have occurred by the
earlier of (i) April 30, 2004 and (ii) the date of the termination of the Sale
Agreement, in which case all provisions of the Loan Agreement and each other
Loan Document shall remain in full force and effect without regard to the
modifications contemplated by this paragraph.
4. Upon receipt of payment by Scholar of the Final Scholar Amount (as
defined below) on the Letter Agreement Closing Date (the date of such payment is
referred to herein as the "Release Date"), all amounts and any other obligations
owed (whether known or unknown, now existing or hereafter arising) to Scholar in
connection with or under the Loan Agreement or any other Loan Document,
including without limitation, any and all interest and other amounts, shall be
deemed to have been paid in full and fully satisfied, Scholar shall no longer be
entitled to any payments, or any benefits, rights or remedies, under or in
connection with the Loan Agreement or any other Loan Document and Scholar shall
no longer be deemed to be a Lender (as defined in the Loan Agreement). For
purposes of this letter agreement, "Final Scholar Amount" means the result
obtained by subtracting (i) the sum of all amounts paid by the Borrower to
Scholar after the date hereof from (ii) $2,250,000. Upon receipt by Scholar of
the Final Scholar Amount in accordance with this paragraph 4, all rights,
remedies and/or benefits of Scholar under the Loan Agreement and each other Loan
Document shall terminate and be of no further force and effect. The obligations
of the parties to effect the transactions contemplated by this paragraph 4 shall
terminate if the Letter Agreement Closing Date shall not have occurred by the
earlier of (i) April 30, 2004 and (ii) the date of the termination of the Sale
Agreement, in which case, all provisions of the Loan Agreement and each other
Loan Document shall remain in full force and effect without regard to the
modifications contemplated by this paragraph.
5. Notwithstanding any provision in Article II of the Loan Agreement, in
Section 3 of Amendment No. 10 to Loan Agreement, dated as of April 30, 2003, or
in any other provision of the Loan Agreement, to the contrary, no payment of
interest, principal or any other amount shall be due and payable under or in
connection with the Loan Agreement or any other Loan Document and no Term Loan
Interest Payment Date or Revolving Loan Interest Payment Date shall occur,
including, without limitation, any such amounts which would be due or payable as
of September 30, 2003, unless and until the occurrence of the earliest of the
following (the "Trigger Date"): (i) April 30, 2004, (ii) the Maturity Date, and
(iii) the date of the termination of the Sale Agreement , in which case, all
provisions of the Loan Agreement and each other Loan Document shall remain in
full force and effect without regard to the modifications contemplated by this
paragraph.
6. The Borrower represents and warrants as follows, as of the Letter
Agreement Closing Date:
(a) It has full corporate power and authority to execute and deliver
this letter agreement and to perform its obligations hereunder and to consummate
the transactions contemplated hereby, including without limitation to assign and
transfer (pursuant to this letter agreement) the NCSN Notes.
(b) The execution and delivery by it of this letter agreement and
the performance by it of its obligations hereunder have been duly and validly
authorized by its Board of Directors, no other corporate action on its part or
the part of its stockholders being necessary except to the extent that it has
already been obtained. This letter agreement has been duly and validly executed
and delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
(c) The delivery at the Closing of the NCSN Notes in the manner
provided in Paragraph 2 will transfer to the Reservoir Lenders good and valid
title to the NCSN Notes free and clear of all liens, claims or encumbrances
created by or against the Borrower (other than those under the Security
Agreement or which have been or will be released or terminated no later than the
Letter Agreement Closing Date).
(d) The execution and delivery by it of this letter agreement do
not, the performance by it of its obligations under this letter agreement and
the consummation of the transactions contemplated hereby will not: (i) conflict
with or result in a violation or breach of any of the terms, conditions or
provisions of the certificate or articles of incorporation or by-laws (or other
comparable corporate charter documents) of the Borrower or any Subsidiary; (ii)
conflict with or result in a violation or breach of any term or provision of any
law, rule or order applicable to it or any Subsidiary or any of their respective
assets, or (iii) (A) result in a violation of, (B) constitute a default under,
(C) require it or any Subsidiary to obtain any consent, approval or action of,
any Person as a result or under the terms of, (D) result in or give to any
Person any right of acceleration in or with respect to, or (E) result in the
creation or imposition of any Lien upon it or any Subsidiary or any of their
respective assets under, any contract to which it or any Subsidiary is a party
or by which any of their respective assets is bound, which in the case of
clauses (i) or (iii) above would have a Material Adverse Effect.
7. The Borrower has previously received payment of approximately $500,000
in principal and interest from Interactive Partners, LLC ("VoiceFX") under and
in connection with certain promissory notes issued to the Borrower by VoiceFX
(the "VoiceFX Notes") in connection with the sale by the Borrower of the VoiceFX
division, which amounts were retained by the Borrower (the "VoiceFX Amounts").
This is to confirm and agree that notwithstanding any provision in 2.07(b) of
the Loan Agreement or in any other provision of the Loan Agreement, to the
contrary, any obligation of the Borrower to pay such VoiceFX Amounts and any
other amounts received or hereafter received on account of the VoiceFX Notes is
hereby waived, effective as of the date of the receipt by the Borrower of the
first amount of the Retained Amounts from VoiceFX, unless and until a Trigger
Date occurs (unless the Release Date shall have occurred), at which time any
payments becoming due and payable after the date hereof shall be paid in
accordance with the Loan Agreement. Furthermore, the Lenders hereby waive any
and all Defaults or Events of Default arising therefrom, including, without
limitation, the retention by the Borrower of the Retained Amounts and any other
amounts under and in connection with the VoiceFX Notes.
8. Upon the effectiveness of the releases by the Reservoir Lenders,
Xxxxxxx and Scholar provided in paragraphs 1, 3 and 4 hereof, the parties agree
that the Loan Agreement and the other Loan Documents shall be deemed terminated
and all liens released.
9. Notwithstanding anything to the contrary in the Loan Agreement or any
other Loan Document, the Reservoir Lenders hereby consent to the transactions
contemplated by the "Settlement Agreement and General Release" (a copy of which
is attached hereto as EXHIBIT D) by and between Xxxxxxx X. Xxxxxxxxx, as the
Liquidating Trustee for the bankruptcy estates of XxxxxxxXxxx.xxx, Inc.,
Campus24, Inc., and XxxxxxxXxxxxxx.xxx, Inc., the reorganized debtors, and the
Borrower, and General Motors Corporation, a Delaware corporation, including,
without limitation, the payment of the "Cash Portion" and the issuance of the
"Note" as contemplated thereby, which consent shall be effective as of the
earliest date of any of the foregoing.
Except as specifically provided in this letter agreement, the Loan
Agreement and all of the other Loan Documents remain in full force and effect.
Kindly acknowledge your agreement to the foregoing by signing and
returning to me the enclosed copy of this letter.
Very truly yours,
STUDENT ADVANTAGE, INC.
By: /s/ Xxxxx Xxxxx
-------------------------
Xxxxx Xxxxx
VP Finance and Chief Financial Officer
ACCEPTED AND AGREED:
SCHOLAR, INC.
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Officer
/s/ Xxxx X. Xxxxxxx
------------------------------------
Xxxx Xxxxxxx
RESERVOIR CAPITAL PARTNERS, L.P.,
individually and as Administrative Agent
By: Reservoir Capital Group, L.L.C.,
its General Partner
By: /c/ Xxxxx Xxxx
-------------------------------------
Name: Xxxxx Xxxx
Title: President
RESERVOIR CAPITAL MASTER FUND, L.P.
By: Reservoir Capital Group, L.L.C.,
its General Partner
By: /c/ Xxxxx Xxxx
--------------------------------------
Name: Xxxxx Xxxx
Title: President
ACCEPTED AND AGREED BY THE
SUBSIDIARY GUARANTORS:
XXXXXXX000.XXX, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
--------------------------------------
Xxxxxxx X. Xxxxx, Xx., President
STUDENT ADVANTAGE SECURITIES CORPORATION
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------------
Xxxxxxx X. Xxxxx, Xx., President
XXXXXXXXXX.XXX, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------------
Xxxxxxx X. Xxxxx, Xx., President
THE DIGITAL PUBLISHING COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------------
Xxxxxxx X. Xxxxx, Xx., President
OFFICIAL COLLEGE SPORTS NETWORK, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------------
Xxxxxxx X. Xxxxx, Xx., President
SA DIS II, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------------
Xxxxxxx X. Xxxxx, Xx., President
U-WIRE, INC.
By: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------------------
Xxxxxxx X. Xxxxx, Xx., President
