EXHIBIT (d)(5)
CONSENT AGREEMENT
AGREEMENT dated as of the 3rd day of July, 2001 among Systems
Holding, Inc., a Delaware corporation (hereinafter referred to as
"Holdco"), Electronic Retailing Systems International, Inc., a
Delaware corporation (hereinafter referred to as "Parent"), and
Electronic Retailing Systems International, Inc., a Connecticut
corporation (hereinafter referred to as the "Subsidiary").
W I T N E S S T H:
WHEREAS, on or about July 6, 2000 the Parent has issued
certain 10% Guaranteed Secured Notes due August 1, 2001 (together
with all further promissory notes subsequently issued pursuant
thereto, or pursuant to such subsequent notes, on account of
interest thereunder, and any additional notes executed in exchange
for or replacement of such notes, hereinafter referred to,
collectively, as the "10% Notes"), and certain 8% Guaranteed
Secured Notes due August 1, 2004 (together with all further
promissory notes subsequently issued pursuant thereto, or pursuant
to such subsequent notes, on account of interest thereunder, and
any additional notes executed in exchange for or replacement of
such notes, hereinafter referred to as the "8% Notes");
WHEREAS, the 10% Notes and the 8% Notes have been guaranteed
by the Subsidiary pursuant to a Guaranty Agreement dated as of
July 6, 2000 (hereinafter referred to as the "Guaranty Agreement")
executed by the Subsidiary and acknowledged by the Parent, and
have been secured under the Conditional Assignment and Security
Agreement dated as of July 6, 2000 (hereinafter referred to as the
"Security Agreement") executed to United States Trust Company of
New York, as collateral agent (hereinafter referred to as the
"Collateral Agent"), by the Parent and the Subsidiary; and
WHEREAS, Holdco has proposed to acquire certain 10% Notes,
and obtain an option (hereinafter referred to as the "Option") to
acquire certain 8% Notes, pursuant to the terms set forth in
certain letters, copies of which Holdco has delivered to the
Parent and Subsidiary;
WHEREAS, the Parent and the Subsidiary have determined that
it is advisable and in their respective best interests for Holdco
to acquire such 10% Notes, and obtain the option to acquire such
8% Notes, as aforesaid; and
WHEREAS, Holdco, or its principals, have delivered to the
Parent a proposal dated April 30, 2001 to acquire, for cash, the
shares of common stock, $.01 par value (hereinafter referred to as
the "Parent Common Stock"), of Parent not contributed to Holdco,
through the merger (hereinafter referred to as the "Merger") into
Parent of a subsidiary of Holdco pursuant to a merger agreement
(hereinafter referred to as the "Merger Agreement") among the
Parent, Holdco and such subsidiary;
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
SECTION I
CONSENTS
A. Initial Proposed Consents. Each of the Parent and the
Subsidiary hereby consents to and agrees to effectuate the
amendment, effective immediately upon receipt by Holdco of
consents thereto by the Super-Required Holders (as defined in the
Securities Agreement), of each of the 10% Notes, and of each of
the 8% Notes, so that: (a) Paragraph (b) of Section 6.4 thereof
shall be modified by deleting the phrase "to the reasonable
satisfaction of the Required Holders, confirmation of which the
Required Holders shall not unreasonably withhold or delay upon
request of the Maker;" and substituting in lieu thereof the
following: "pursuant to the following provisions (or provisions in
all material respects with equivalent effect thereto):
This indebtedness, and the payment thereof (including,
without limitation, the payment of the principal
hereof, any premium thereon and all interest under, and
all other liabilities due under or with respect
thereto), shall be subordinate in all respects in right
of payment to, and may not be paid (absolutely or
contingently, in whole or in part, before or after a
bankruptcy or insolvency of the maker) until subsequent
to, the prior and indefeasible payment in full of any
and all principal of, premium on, interest under, and
other liabilities due under or with respect to any and
all 8% Guaranteed Secured Notes issued by the maker on
or about July 6, 2000 (together with all further
promissory notes subsequently issued pursuant thereto
[or pursuant to any such further notes] on account of
interest thereunder, and any additional notes executed
and delivered by the maker in exchange or replacement
of such notes, respectively).
; provided, however, that, subject to the occurrence of the
Initial Closing (as defined under those certain Letters of
Transmittal executed to Systems Holding, Inc. by the Required
Holders) up to $500,000 of unsecured indebtedness for
borrowed money to Holdco may be incurred by the Maker free of
any restriction under this clause (i), and if the Initial
Closing does not occur on or prior to the date specified
under such Letters of Transmittal such indebtedness shall be
subordinated as hereinabove provided."; and
(b) Section 11 thereof is amended by adding the phrase
"Notwithstanding the foregoing, any documents or other materials
furnished pursuant to Section 6.3 hereof may be sent by first
class mail, postage prepaid; and any signature, in the name and on
behalf of the Maker (or any attestation thereof) on any
Supplemental Note, or any Note delivered in exchange for or in
replacement of this Note, or on any amendment or supplement
thereto, may be affixed by the Maker in facsimile form (provided
the corporate seal of the Maker is affixed thereon).
For purposes of this Agreement, the foregoing amendments under
this Paragraph A are referred to, collectively, as the "Initial
Proposed Amendments".
B. Closing Proposed Consents. Each of the Parent and the
Subsidiary undersigned hereby consents to and agrees to effectuate
the amendment, effective immediately prior to the Initial Closing
(as hereinafter defined), and following the receipt of consents
thereto by the Super-Required Holders, of:
(i) each of the 10% Notes, so that: (a) Sections 6.2,
6.3 and 6.4 thereof are deleted in their entirety; (b) all
references to each of the Guaranty Agreement, the Subsidiary
Guarantor, the Security Agreement and any Collateral Event of
Default contained in Sections 8.1 and 8.2 thereof shall be
deleted; (c) a reference to ", unless the holder or holders
thereof shall have waived such default after its occurrence" shall
be added to Paragraph (f) of Section 8.1 thereof after the first
reference therein to "Additional Notes"; (d) the text following
the caption of Section 16 thereof shall be deleted in its entirety
and the phrase "Notwithstanding any other provision contained in
this Note or elsewhere, this Note shall not be guaranteed pursuant
to the Guaranty Agreement nor secured by the provisions of the
Security Agreement." inserted in lieu thereof; and (v) so as to
confirm that each Supplemental Note referenced under any 10% Note
shall be substantially in the form of the underlying note, as
amended hereby;
(ii) each of the 8% Notes, so that: (a) Section 6.3
thereof is deleted in its entirety; (b) a reference to ", unless
the holder or holders thereof shall have waived such default after
its occurrence" shall be added to Paragraph (f) of Section 8.1
thereof after the first reference therein to "Notes" and each
reference to "or the Additional Notes" contained in said paragraph
shall be deleted; and (c) Section 16 thereof is amended by adding
at the end thereof the phrase "Notwithstanding the foregoing or
any other document or agreement, the second sentence of paragraph
(b) of Section 2.3 of the Security Agreement shall not be
construed to constrain the exercise or conversion of any NewCheck
Securities (as defined thereunder) in accordance with its terms
(provided that any securities or other property issued upon such
exercise or conversion shall continue to constitute NewCheck
Securities [or proceeds thereof] thereunder).";
(iii) the Guaranty Agreement, so as: (a) to modify the
definition of "Notes" thereunder to refer solely to the "8% Notes"
(as defined thereunder); and (b) to delete the reference under
clause (ii) of Section 1.1 thereof to "and the Security Agreement
(as defined in the Notes)" and substitute in lieu thereof a
reference to "and (solely insofar as securing the payment and
performance of the 8% Notes) the Security Agreement (as defined in
the Notes)"; and
(iv) the Security Agreement, so as: (a) to modify the
definition of "Notes" thereunder to refer solely to the 8% Notes
(as defined thereunder); (b) to delete the period at the end of
the second sentence of Paragraph (b) of Section 2.3 thereof and
add in lieu thereof a reference to "; and provided, that the
foregoing covenant shall not constrain the exercise or conversion
of any NewCheck Securities in accordance with its terms (it being
acknowledged that any securities or other property issued upon
such exercise or conversion shall continue to constitute NewCheck
Securities [or proceeds thereof] hereunder)." ; and (c) to delete
clause (b)(y) of Section 3.1 thereof.
For purposes of this Agreement: (x) the foregoing amendments
under this Section 4.2 are referred to, collectively, as the
"Closing Proposed Amendments"; and (y) the "Initial Closing" shall
mean the effectiveness of the assignment and transfer to Holdco of
10% Notes by the Required Holders thereof (as such term is defined
in the 10% Notes), prior notice of the time and date of which
Holdco shall deliver to the Parent and the Subsidiary.
C. Additional Proposed Consents. Subject to the exercise
of the Option and following the receipt (prior or subsequent to
such exercise) of the consents thereto by the Super-Required
Holders, each of the Parent and the Subsidiary hereby consents to
and agrees to effectuate the amendment, effective immediately
prior to the Option Closing (as hereinafter defined), of:
(i) each of the 8% Notes, so that: (a) Sections 6.2,
6.3 and 6.4 thereof are deleted in their entirety; (b) all
references to each of the Guaranty Agreement, the Subsidiary
Guarantor, the Security Agreement and any Collateral Event of
Default contained in Sections 8.1 and 8.2 thereof shall be
deleted; (c) the text following the caption of Section 16 thereof
shall be deleted in its entirety and the phrase "Notwithstanding
any other provision contained in this Note or elsewhere, this Note
shall not be guaranteed pursuant to the Guaranty Agreement nor
secured by the provisions of the Security Agreement." inserted in
lieu thereof; and (d) so as to confirm that each Supplemental Note
referenced under any 8% Note shall be substantially in the form of
the underlying note, as amended hereby;
(ii) the Guaranty Agreement, so as to delete Sections 1
and 2 thereof in their entirety; and
(iii) the Security Agreement, so as to delete Sections
II and III in their entirety.
For purposes of this Agreement: (x) the foregoing amendments under
this Paragraph C are referred to, collectively, as the "Additional
Proposed Amendments"; and (y) the "Option Closing" shall mean the
effectiveness of the assignment and transfer to Holdco of 8% Notes
by the Required Holders thereof (as such term is defined in the 8%
Notes), prior notice of the time and date of which Holdco shall
deliver to the Parent and the Subsidiary.
D. Form of Amendment. The parties acknowledge that the
Parent and the Subsidiary do not pursuant to this Agreement
require any particular form of amendment or other document
effectuating any of the Initial Proposed Amendments, the Closing
Proposed Amendments or the Additional Proposed Amendments, and
agree that any such form effectuating the substance thereof shall
be acceptable; and agree to enter into any form of amendment or
other document effectuating the substance thereof.
SECTION II
CONTINGENT ISSUANCE
A. Contingent Issuance. The Parent hereby agrees that, in
the event: (x) the Initial Closing shall occur; and (y) Holdco and
the Parent shall not have entered into the Merger Agreement on or
prior to December 31, 2001, the Merger Agreement shall be
terminated by any party prior to closing thereunder, or the Merger
shall not have been consummated on or prior to December 31, 2001,
then, in exchange for the assignment to the Parent of the benefits
of Holdco's rights to purchase any or all of the 8% Notes for a
price to the holder, in each case, equal to $500 per $1,000
principal amount of such notes (plus 50% of the accrued on unpaid
interest thereon), the Parent shall issue, as and when directed by
Holdco, in a transaction exempt from the registration requirements
of the Securities Act of 1933, as amended (and subject to reliance
by the Parent on such reasonable representations and agreements
from the recipients as shall reasonably support such exemption), a
number of shares (hereinafter referred to as the "New Securities")
of Parent Common Stock equal (after giving effect to such
issuance) to the product obtained by multiplying: (x) an aggregate
of five percent of the outstanding Parent Common Stock, on a
fully-diluted basis, by (y) a fraction, the numerator of which
shall be the aggregate principal amount of all 10% Notes
theretofore acquired by Holdco or its assigns and the denominator
of which shall be the aggregate principal amount of all 10% Notes.
B New Securities. In the event that, after the issuance
of the New Securities, any party offers to acquire, directly or
indirectly, a "controlling interest" in the Parent, the Parent
shall use its best efforts to ensure that such offer is not
accepted until the offeror shall first, by written notice, have
offered to purchase from the holders of all New Securities their
entire interest in the New Securities on the same terms per share
and the same price per share applicable to the "controlling
interest" proposed to be sold. Such holders shall have the right
and option, in their respective sole discretion, to sell such
interest upon such terms by giving written notice of such election
to the Parent and such offeror within 30 days after the receipt of
the applicable offer pursuant to this Paragraph B. For purposes
hereof, a "controlling interest" shall entail the possession,
direct or indirect of the power of cause the direction of the
management and policies of the Parent, whether through ownership
of voting securities, or otherwise. The Parent agrees to enter
into such additional agreements for the benefit of the holders or
prospective holders of New Securities reasonably in evidence of
its commitments under this Paragraph B.
SECTION III
FOREBEARANCE
Holdco hereby agrees that, in the event it acquires a
sufficient number of 10% Notes so as to constitute the Required
Holder thereunder, any and all defaults thereunder, now or
hereafter arising, are hereby waived until such time as Holdco, in
its sole discretion, delivers notice of revocation of its waiver
hereunder, in whole or in part.
SECTION IV
MISCELLANEOUS
A. Notices. All notices, requests or instruction hereunder
shall be in writing and delivered personally, sent by registered
or certified mail, postage prepaid, by telecopy (or like
transmission) or by express mail by a reputable courier, as
follows:
(1) if to the Parent of or the Subsidiary:
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: President
(2) if to Holdco:
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Chairman of the Board
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice
of change of address shall be effective only upon receipt. All
notices and other communications given to any party hereto in
accordance with the provisions hereof shall be deemed to have
been given on the date of receipt, provided that any notice or
other communication that is received other than during regular
business hours of the recipient shall be deemed to have been
given at the opening of business on the next business day of the
recipient.
B. Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement between the
parties hereto with respect to the transactions contemplated
hereby, and supersede all prior understandings, arrangements and
agreements with respect to the subject matter hereof. No
modification hereof shall be effective unless in writing and
signed by the party against which it is sought to be enforced.
C. Modification. This Agreement may not be amended or
modified except by a written instrument signed by each of the
parties thereto.
D. Further Action. Each of the parties hereto shall use
such party's reasonable best efforts to take such actions as may
be necessary or reasonably requested by the other parties hereto
to carry out and consummate the transactions contemplated by this
Agreement.
E. Expense. Each of the parties hereto shall bear such
party's own expenses in connection with this Agreement and the
transactions contemplated hereby.
F. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut
applicable in the case of agreements made and to be performed
entirely within such state.
G. Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns. The Parent and the Subsidiary hereby acknowledge that
Holdco may assign any and all rights to acquire the 10% Notes
and/or the 8% Notes, and related arrangements, to one or more of
its stockholders and, accordingly, the rights of Holdco hereunder
shall inure to the benefit thereof, respectively, and be
enforceable thereby.
H. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above-written.
SYSTEMS HOLDING, INC.
By s/Norton Xxxxxxxxx
----------------------------
Norton Xxxxxxxxx
Chairman of the Board
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a
Delaware corporation
By s/Norton Xxxxxxxxx
---------------------------
Norton Xxxxxxxxx
Chairman of the Board
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., a
Connecticut corporation
By s/Norton Xxxxxxxxx
---------------------------
Norton Xxxxxxxxx
Chairman of the Board
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corp\ers\agreent\systems holding info stmt
