Exhibit 10.7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is entered into as of June 30,
1999, between GAMI INVESTMENTS, INC., its successors and assigns (the "Lender"),
and TRANSMEDIA NETWORK, INC., a Delaware corporation ("TMN"), TRANSMEDIA
RESTAURANT COMPANY, INC., a Delaware corporation ("Restaurant"), TRANSMEDIA
SERVICE COMPANY, INC., a Delaware corporation ("Service") and TMNI INTERNATIONAL
INCORPORATED, a Delaware corporation ("TMNI" -- TMN, Restaurant, Service and
TMNI are each referred to herein individually as a "Borrower" and collectively
as Borrowers").
RECITALS
A. The Borrowers have requested that the Lender extend credit to the
Borrowers in order to enable the Borrowers to borrow, on the date hereof, a
maximum aggregate principal amount of $10,000,000 (the "Loan") for the purpose
of providing working capital and for other general corporate purposes from time
to time on a nonrevolving credit basis.
B. Each of Restaurant, Service and TMNI are wholly-owned Subsidiaries
of TMN.
C. The Lender is willing to make the Loan to the Borrowers, and the
Borrowers are willing to borrow from the Lender, subject to the terms and
conditions herein set forth.
AGREEMENT
NOW, THEREFORE, for and in consideration of the Recitals and the mutual
covenants and agreements herein set forth and other consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"Acquisition" shall mean the acquisition by the Borrowers from
SignatureCard, Inc. of certain assets related to the membership program operated
under the Dining A La Card trade name and service xxxx in accordance with the
terms of the Asset Purchase Agreement.
(Page 217 of 252 Pages)
"Affiliate" shall mean, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power
(a) to direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, membership
interests, by contract, or otherwise, or (b) to vote ten percent (10%) or more
of the securities (on a fully diluted basis) having ordinary voting power for
election of directors, managing general partners or similar officials of the
other Person.
"Agreement" shall mean this Credit Agreement as from time to
time amended, supplemented, restated or otherwise modified and in effect.
"Asset Purchase Agreement" means that certain Asset Purchase
Agreement dated as of March 17, 1999 executed by TMN and SignatureCard, Inc., as
amended, supplemented or modified.
"Back-End Fee" shall mean $500,000, payable by Borrowers to
Lender in accordance with the terms of Section 2.10 below.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Business Day" shall mean any day other than a Saturday,
Sunday or legal holiday in the States of Illinois and Florida on which banks are
open for business in Chicago, Illinois and Miami, Florida.
"Closing Date" shall mean the date hereof.
"Chase Bridge Loan Facility" shall mean that certain
$35,000,000 senior secured revolving credit facility made available to TMN by
The Chase Manhattan Bank of even date herewith to fund the Acquisition.
"Common Stock" shall mean TMN's common stock, par value $.02
per share.
"Default" shall mean any event that with notice or lapse of
time or both would constitute an Event of Default.
"Dollars" and the symbol "$" shall mean the lawful currency of
the United States of America.
"EGI-Transmedia" shall mean EGI-Transmedia Investors, L.L.C.,
a Delaware limited liability company.
(Page 218 of 252 Pages)
"Environmental Laws" shall mean all laws relating to
environmental, health or safety matters, including those relating to fines,
orders, injunctions, penalties, damages, contribution, cost recovery,
compensation, losses or injuries resulting from the release or threatened
release of hazardous substances or materials and to the generation, use,
storage, transportation, or disposal of hazardous substances or materials, in
any manner applicable to the Borrowers or their respective Subsidiaries or their
respective properties, each as heretofore and hereafter amended or supplemented,
and any analogous future or present local, state or federal statutes, rules and
regulations promulgated thereunder or pursuant thereto, and any other present or
future law, ordinance, rule, regulation, permit or permit condition or order
addressing environmental, health or safety issues of or by the federal
government, any state or any political subdivision thereof, or any agency, court
or body of the federal government, any state or any political subdivision
thereof, exercising executive, legislative, judicial, regulatory or
administrative functions which are applicable to the Borrowers or their
respective Subsidiaries or their respective properties.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any corporation, trade or
business that is along with any Borrower a member of a controlled group of
trades or businesses, or a member of any group of organizations within the
meaning of Sections 414(b) or (c) of the Internal Revenue Code of 1986, as
amended, and any and all regulations thereunder, or is otherwise treated as a
single employer with any Borrower pursuant to Section 4001(b)(1) of ERISA, and
any and all regulations thereunder.
"Event of Default" shall mean the Events of Default specified
in Section 7.01.
"Existing Warrant" shall mean collectively those certain
warrants to purchase an aggregate of 1,200,000 shares of TMN's Common Stock,
dated as of March 3, 1998 and expiring March 3, 2003, held by Samstock,
EGI-Transmedia, Halmostock Limited Partnership and Xxxxxx X. Xxxxxxx, as
Trustee.
"Financial Officer" shall mean either the President or the
Chief Financial Officer of a Borrower.
"Guaranty" shall mean any obligation, contingent or otherwise,
of any Person guarantying or having the economic effect of guarantying any
Indebtedness of any other Person in any manner, whether directly or indirectly,
and including any obligation of such Person, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (b) to purchase property,
securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, or (c) to maintain working
capital, equity capital or other financial condition of the primary obligor so
as to enable the primary obligor to pay such Indebtedness (including any
obligation to make capital contributions, loans or other payments pursuant to a
keep well guaranty or similar instrument); provided, however,
(Page 219 of 252 Pages)
that the term "Guaranty" shall not include endorsements for collection or
deposit, in either case in the ordinary course of business.
"Indebtedness" shall mean, with respect to any Person, without
duplication, all (a) obligations of such Person for borrowed money, (b)
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) obligations of such Person upon which interest charges are
contractually specified, (d) obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by such
Person, (e) obligations of such Person issued or assumed as the deferred
purchase price of property or services (other than trade payables and accrued
expenses incurred in the ordinary course of business not yet due and payable),
(f) Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) Guaranties of such Person,
(h) capital lease obligations of such Person, (i) obligations of such Person
under interest rate protection agreements, and (j) obligations of such Person
under or with respect to letters of credit and bankers' acceptances.
"Initial Fee" shall mean $500,000, payable by Borrowers to
Lender on the Closing Date.
"Intellectual Property" shall mean all copyrights, patents,
trademarks, tradenames, and all applications and licenses therefor.
"Interest Payment Date" shall mean the first Business Day of
each calendar month.
"Investment" shall mean, with respect to any Person, all
advances, loans or extensions of credit to any other Person, all purchases or
commitments to purchase any stock, bonds, notes, debentures or other securities
of any other Person, and any investment in any other Persons, including
partnerships or joint ventures.
"Investment Agreement Amendment" shall mean that certain
Second Amended and Restated Investment Agreement of even date herewith executed
by TMN, Samstock, EGI-Transmedia and Halmostock Limited Partnership, in the form
of EXHIBIT E, as amended from time to time.
"Lien" shall mean, with respect to any asset, any lien,
mortgage, security interest, charge or encumbrance of any kind, including the
rights of a vendor, lessor, or similar party under any conditional sale
agreement or other title retention agreement or lease substantially equivalent
thereto.
"Loan" shall mean the Loan defined in Recital A.
(Page 220 of 252 Pages)
"Loan Documents" shall mean collectively this Agreement, the
Note, and the reports, certificates, financial statements and other agreements
and instruments executed and delivered by the Borrowers in connection herewith
or therewith.
"Management Fee" shall mean the quarterly fee for management
services payable by TMN to Equity Group Investments, L.L.C. in the quarterly
amount of $62,500.00.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U of the Board.
"Material Adverse Effect" shall mean (a) a material adverse
effect upon the business, operations, properties, assets, liabilities, operating
results, cash flows or condition (financial or otherwise) of the Borrowers and
their respective Subsidiaries, taken as a whole or (b) a material impairment of
the ability of the Borrowers to perform the obligations to, or the validity or
enforceability of, or impairment of the rights or remedies of, or benefits to,
the Lender under the Loan Documents.
"Maturity Date" shall mean the earliest to occur of (a)
December 30, 1999, (b) the date all Obligations shall be due and payable
hereunder, whether by acceleration or otherwise, and (c) the Rights Offering
Closing Date.
"Multiemployer Plan" shall mean a plan described in Section
3(37) or 4001(a)(3) of ERISA that is maintained for employees of either a
Borrower or any ERISA Affiliate or to which contributions are or have been made
by a Borrower or any ERISA Affiliate.
"Note" shall mean the Promissory Note to be executed and
delivered by the Borrowers on the Closing Date, in substantially the form
contained in EXHIBIT A.
"Obligations" shall mean (a) (i) the principal and interest
(including interest accruing after the commencement of any proceeding against or
with respect to a Borrower under the Bankruptcy Code, 11 U.S.C. ss. 101 et seq.,
or any other federal or state bankruptcy, insolvency, receivership or similar
law, at the rate specified herein) on the Loan, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment, or
otherwise, and (ii) all other monetary obligations of the Borrowers to the
Lender under this Agreement and the other Loan Documents, whether now existing
or hereafter arising, and (b) all other obligations of the Borrowers under this
Agreement and the other Loan Documents, whether now existing or hereafter
arising.
"Pension Plan" shall mean any Plan and any Multiemployer Plan
that is subject to the provisions of Section 302 of ERISA or Title IV of ERISA.
"Permitted Investments" shall mean (a) the purchase of direct
obligations of the government of the United States of America, or any agency
thereof, or obligations unconditionally guaranteed by the United States of
America; (b) certificates of deposit of any bank organized or
(Page 221 of 252 Pages)
licensed to conduct a banking business under the laws of the United States of
America or any State thereof having capital, surplus and undivided profits of
not less than $100,000,000; (c) Investments in commercial paper which, at the
time of acquisition, is accorded the highest rating by Standard & Poor's
Corporation, Xxxxx'x Investors Services, Inc. or any other nationally recognized
credit rating agency of similar standing; (d) other Investments existing as of
the date of execution hereof as shown on Schedule 1.01 hereof, including
Investments in the Subsidiaries listed thereon; (e) ordinary course advances
made by a Borrower to another Borrower; (f) Investments (including debt
obligations) received in connection with the bankruptcy or reorganization of
suppliers, customers or other debtors or in settlement of delinquent obligations
arising in the ordinary course of business; (g) promissory notes or other debt
obligations received in connection with asset dispositions permitted hereunder;
and (h) loans and advances to any employee or officer of any Borrower in the
ordinary course of business not to exceed $300,000 in the aggregate principal
amount at any one time outstanding.
"Person" shall mean and include natural persons, corporations
(business, municipal or not-for-profit), limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"Plan" shall mean any employee benefit plan (within the
meaning of Section 3(3) of ERISA), that is maintained for employees of, or
sponsored, participated in or contributed to by a Borrower or any ERISA
Affiliate.
"Preferred Stock" shall mean the Series A senior convertible
redeemable preferred stock of TMN issued and sold pursuant to the Rights
Offering.
"Preferred Stock Designation" shall mean the Certificate of
Designation of Preferred Stock covering the Preferred Stock to be filed by TMN
with the Secretary of State of Delaware in substantially the form of EXHIBIT G.
"Prime Rate" shall mean on any date the rate of interest
designated by The Chase Manhattan Bank or its successor from time to time as its
prime rate, base rate or reference rate. The Prime Rate is not necessarily
intended to be the lowest rate of interest charged by such Person in connection
with extensions of credit. Changes in the rate of interest on the Loan shall
take effect simultaneously with each change in the Prime Rate. If The Chase
Manhattan Bank or its successor shall cease to report a Prime Rate, then Prime
Rate shall be deemed to be the average prime rate, base rate or reference rate
reported by the three (3) largest (measured by total assets) banking
institutions in the continental United States then announcing such an interest
rate. The applicable Prime Rate shall be determined by the Lender, and such
determination shall be conclusive absent manifest error.
(Page 222 of 252 Pages)
"Proxy Proposals" shall mean each of the following: (a) the
issuance of the Rights Offering Warrant, (b) the proposed increase in the
authorized shares of TMN's Common Stock and preferred stock, and (c) any other
matter submitted for the approval by TMN's stockholders in connection with the
Rights Offering, the Rights Offering Warrant, and related matters.
"Registration Statement" shall mean that certain registration
statement of TMN on Form S-2 registering the Rights, the Preferred Stock and the
Common Stock into which the Preferred Stock is convertible.
"Regulation G, T, U or X" shall mean Regulation G, T, U or X
of the Board, as each of the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Reportable Event" shall mean any Reportable Event within the
meaning of Section 4043(b) of Title IV of ERISA or the regulations issued
thereunder.
"Restricted Payments" shall mean the Restricted Payments
specified in Section 6.06.
"Rights" shall mean the nontransferable rights offered to
stockholders of TMN pursuant to the Rights Offering.
"Rights Offering" shall mean that certain offering of
nontransferable rights to stockholders of TMN to purchase an aggregate of up to
$10,000,000 newly issued Series A senior convertible redeemable preferred stock
of TMN, par value $.10 per share, on terms and conditions acceptable to Lender.
"Rights Offering Closing Date: shall mean the date on which
the Preferred Stock is issued and sold by TMN to Samstock and such other
stockholders of TMN as have elected to purchase Preferred Stock pursuant to the
Rights Offering.
"Rights Offering Default Event" shall mean the occurrence of
any of the following: (a) failure by the required percentage of TMN's
stockholders to approve each of the Proxy Proposals upon presentation thereof to
a vote of TMN's stockholders, (b) failure by TMN or its Board of Directors to
recommend that TMN's stockholders vote in favor of the Proxy Proposals or the
withdrawal by TMN or its Board of Directors of such recommendation or any
modification of such recommendation which could reasonably be expected to
adversely affect such approval by TMN's stockholders, or (c) failure by any
stockholder of TMN who is a member of either senior management or the Board of
Directors of TMN to vote in favor of the Proxy Proposals.
"Rights Offering Event" shall mean each of the following: (a)
the preparation for filing of an initial draft with the Securities and Exchange
Commission of (i) a proxy statement containing the Proxy Proposals, and (ii) the
Registration Statement , (b) the execution and delivery of the Standby Purchase
Agreement (or, subject to Lender's approval, preparation of the final form
(Page 223 of 252 Pages)
of the Standby Purchase Agreement) and the Investment Agreement Amendment, (c)
the preparation for filing with the Secretary of State of Delaware of the
Preferred Stock Designation, and (d) the preparation of the final form of the
Rights Offering Warrant, in each of the foregoing cases, in form and substance
reasonably satisfactory to the Lender.
"Rights Offering Proceeds" shall mean all cash proceeds
received by the Borrowers from the Rights Offering.
"Rights Offering Warrant" shall mean the warrant issued by TMN
to Samstock, upon receipt of the necessary stockholder approval, and the closing
of the Rights Offering, to purchase an aggregate of 1,000,000 shares of TMN's
Common Stock substantially in the form of EXHIBIT D (with such modifications as
Lender and Borrowers shall approve).
"Samstock" shall mean Samstock, L.L.C., a Delaware limited
liability company.
"Standby Purchase Agreement" shall mean that certain Standby
Purchase Agreement by and between TMN and Samstock in a form substantially
similar to EXHIBIT F (with such modifications as Lender and Borrowers shall
approve), as amended from time to time.
"Subsidiary" shall mean, as to any Person (a) any corporation,
more than fifty percent (50%) of whose stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person and/or
one or more Subsidiaries of such Person and (b) any partnership, association,
joint venture, limited liability company or other entity in which such Person
and/or one or more Subsidiaries of such Person has greater than a fifty percent
(50%) equity interest at the time.
"Taxes" shall mean the Taxes defined in Section 2.09.
"Transaction Fee" shall mean the fee approved by the board of
directors of TMN payable by TMN to Equity Group Investments, L.L.C. on the
closing of the Acquisition in the amount of one percent (1%) of the value of the
Acquisition.
"Transactions" shall mean, collectively, the execution,
delivery and performance by the Borrowers of this Agreement and each of the
other Loan Documents, the borrowing of the Loan by the Borrowers hereunder, the
issuance of the Rights Offering Warrant, the Rights Offering (and completion of
the transactions contemplated in the Standby Purchase Agreement), the Investment
Agreement Amendment and all other transactions contemplated by this Agreement,
the other Loan Documents and the Standby Purchase Agreement.
SECTION 1.02. Accounting Terms. Except as otherwise herein specifically
provided: (a) each accounting term used herein shall have the meaning given it
under generally accepted
(Page 224 of 252 Pages)
accounting principles in effect in the United States of America from time to
time applied on a consistent basis; and (b) each reference to generally accepted
accounting principles shall mean generally accepted accounting principles in
effect in the United States of America from time to time applied on a consistent
basis.
SECTION 1.03. Interpretation. In this Agreement and each other Loan
Document, unless a clear contrary intention appears:
(a) the singular number includes the plural number and
vice versa;
(b) reference to any Person includes such Person's
successors and assigns but, if applicable, only if
such successors and assigns are permitted by the Loan
Documents, and reference to a Person in a particular
capacity excludes such Person in any other capacity;
(c) reference to either gender includes the other gender;
(d) reference to any agreement (including this Agreement
and the Schedules and Exhibits hereto, and the other
Loan Documents), document or instrument means such
agreement, document or instrument as amended,
supplemented, restated or modified and in effect from
time to time in accordance with the terms thereof
and, if applicable, the terms hereof and the other
Loan Documents, and reference to any promissory note
includes any promissory note which is an extension or
renewal thereof or a substitute or replacement
therefor;
(e) reference to any law, rule, regulation, order,
decree, requirement, policy, guideline, directive or
interpretation means as amended, modified, codified,
replaced or reenacted, in whole or in part, and in
effect on the determination date, including rules and
regulations promulgated thereunder;
(f) reference to any Article, Section, Schedule, or
Exhibit means such Article or Section of this
Agreement, or Schedule or Exhibit to this Agreement;
(g) "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to this Agreement
as a whole and not to any particular Article, Section
or other provision hereof;
(h) "including" (and with correlative meaning "include")
means including without limiting the generality of
any description preceding such term; and
(i) relative to the determination of any period of time,
"from" means "from and including" and "to" means "to
but excluding".
(Page 225 of 252 Pages)
SECTION 1.04. Recitals, Schedules and Exhibits. The Recitals, Schedules
and Exhibits in and to this Agreement are incorporated in and expressly made a
part of this Agreement.
ARTICLE II
THE LOAN
SECTION 2.01. The Loan. Subject to the terms and conditions of this
Agreement, the Lender shall make available to the Borrowers on the Closing Date
a term loan in an aggregate maximum principal amount of $10,000,000. Repayments
and prepayments of the Loan shall not be subject to reborrowing.
SECTION 2.02. The Note. The Loan shall be evidenced by the Note. At the
Lender's option, the Lender may, and is hereby authorized by the Borrowers to,
endorse on the schedules attached to the Note, or otherwise record in the
Lender's internal records, an appropriate notation evidencing the date and
amount of the Loan, each payment of principal of any portion of the Loan, each
payment of interest on the Loan and the other information provided for on such
schedule; provided, however, that the failure of the Lender to make such a
notation or any error in such a notation shall not affect the obligation of the
Borrowers to repay the Loan in accordance with the terms of the Note and this
Agreement.
SECTION 2.03. Interest Rate. Except as set forth in Section 2.04 below,
the Borrowers shall pay the Lender interest on the outstanding principal balance
of the Loan from time to time at a rate equal to the Prime Rate plus 4.0% per
annum. The records of the Lender as to the interest rate applicable to the Loan
shall be binding and conclusive absent manifest error. Interest shall be payable
from the Closing Date to the day of repayment of the Loan. Interest and all fees
owing hereunder shall be computed on the basis of the actual number of days
elapsed on the basis of a year consisting of 360 days, and shall be payable as
provided in Sections 2.04, 2.06 and 2.11 below.
SECTION 2.04. Interest on Overdue Amounts. If the Borrowers shall
default in the payment when due of the principal of or interest on the Loan or
any other amount becoming due hereunder, by scheduled maturity, acceleration or
otherwise, or if there shall otherwise occur an Event of Default, the Borrowers
shall on demand from time to time from the Lender pay interest, to the extent
permitted by law, on such defaulted amount from the day after the due date
thereof to the date of actual payment (after as well as before judgment) (or on
the amount otherwise outstanding hereunder from the date of Default into which
matured such Event of Default until the date such Event of Default is cured or
otherwise no longer exists), at a rate per annum computed on the basis of the
actual number of days elapsed on the basis of a year consisting of 360 days,
equal to the Prime Rate plus 8.0% per annum.
SECTION 2.05. Borrowing Procedures. On the Closing Date, Borrower shall
deliver to Lender a request for borrowing in the form attached hereto as EXHIBIT
B. The request for borrowing pursuant to this Section 2.05 shall be deemed to be
a representation that all of the
(Page 226 of 252 Pages)
representations and warranties of the Borrowers contained in this Agreement and
the other Loan Documents are true and correct in all material respects as if
made on such date, except to the extent that such representations and warranties
expressly related to an earlier date, and that no Default or Event of Default
shall have occurred and be continuing.
SECTION 2.06. Payments of Principal and Interest. If not sooner paid,
the outstanding principal amount of the Loan, together with all accrued and
unpaid interest thereon and all other amounts owing hereunder, shall be due and
payable on the Maturity Date. All principal payments of the Loan shall be
accompanied by accrued interest on the principal amount being repaid to the date
of payment. Interest on the Loan shall be due and payable monthly in arrears on
each Interest Payment Date. The Borrowers shall pay to the Lender upon the
Borrowers' receipt thereof all Rights Offering Proceeds, which amounts shall be
applied by the Lender pursuant to Section 2.07 below. All payments by the
Borrowers pursuant to this Agreement, the Note or any other Loan Document,
whether in respect of principal, interest, or otherwise, shall be made without
setoff or counterclaim (other than reimbursement or offset of the Initial Fee to
the extent required pursuant to Section 2.10 below) in same day funds by the
Borrowers to the Lender. The Borrowers shall have the right at any time and from
time to time to prepay the advances under the Loan in whole or in part without
premium or penalty upon at least one (1) Business Day's prior written notice to
the Lender. All payments required to be made to the Lender shall be made not
later than 11:00 a.m., Chicago time, on the date due by wire transfer to such
account as the Lender shall specify from time to time by notice to the
Borrowers. Funds received after that time shall be deemed to have been received
by the Lender on the next following Business Day. Whenever any payment to be
made shall otherwise be due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in computing interest, if any, in connection with such
payment.
SECTION 2.07. Application of Payments; Reinstatement. The Lender shall,
at its option, apply all payments received hereunder first to all fees, expenses
and other costs due hereunder and under the other Loan Documents, next to
accrued but unpaid interest on the Loan, and next to the outstanding principal
balance of the Loan. To the extent that the Borrowers make a payment or payments
to the Lender, which payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy act, state
or federal law, common law or equitable cause, then, to the extent of such
payment received, the Obligations or part thereof intended to be satisfied shall
be revived and shall continue in full force and effect, as if such payments had
not been received by the Lender.
SECTION 2.08. Additional Amounts. If the implementation of or any
change in any law or regulation or in the interpretation by any court or
administrative or governmental authority charged with their administration shall
impose on the Lender any condition not existing on the date of this Agreement
regarding this Agreement, the Loan or the Note, and the result shall be to: (i)
increase the cost to the Lender of making or maintaining the Loan, or (ii)
reduce any amounts payable by the Borrowers hereunder, then, within thirty (30)
days after written demand by the
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Lender, the Borrowers shall pay to the Lender, from time to time as specified by
the Lender, additional amounts which shall be sufficient to compensate the
Lender for such increased cost or reduction in payment. If any such amount is
not paid within thirty (30) days after written demand by the Lender, the
Borrowers shall pay the Lender interest at the interest rate specified in
Section 2.04 above on each such amount from the date when payment was due until
paid in full.
SECTION 2.09. Taxes on Payments. All payments made by the Borrowers
under the Note or this Agreement shall be made free and clear of, and without
deduction or withholding for or on account of, any future income, stamp or other
taxes, levies, imposts, deductions, charges, or withholdings imposed, assessed,
levied or collected by the United States of America or any political subdivision
or taxing authority thereof or therein, but excluding taxes imposed on net
income of the Lender by the United States of America or any state or any
political subdivision or taxing authority thereof or therein (all such
non-excluded taxes, levies, imposts, deduction, charges or withholdings being
hereinafter called "Taxes"). If any Taxes are required to be withheld from any
amounts so payable to the Lender hereunder or under the Note, the amounts so
payable to the Lender shall be increased to the extent necessary to yield to the
Lender (after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in the Note or this
Agreement. Whenever any Tax is paid by the Borrowers, as promptly as possible
thereafter, the Borrowers shall send to the Lender a certified copy of any
original official receipt received by the Borrowers showing payment thereof. If
the Borrowers fail to pay any Taxes when due to the appropriate taxing
authority, the Borrowers shall indemnify the Lender for any incremental taxes,
interest or penalties that may become payable by the Lender as a result of any
such failure.
SECTION 2.10. Initial Fee and Rights Offering Warrant. As consideration
for execution of this Agreement and the Standby Purchase Agreement, and the
Lender or its Affiliates entering into and consummating the Transactions, and
the Lender's making the Loan available to the Borrowers, the Borrowers have
agreed to pay to Lender the Initial Fee (subject to reimbursement or offset as
set forth below) and to issue to Samstock the Rights Offering Warrant, each of
which Initial Fee and Rights Offering Warrant shall be deemed fully earned on
the Closing Date regardless of whether the Loan is disbursed in whole or in
part. Upon receipt of the necessary approval of TMN's stockholders of the Proxy
Proposals, the closing of the Rights Offering, the issuance of the Rights
Offering Warrant and the payment in full of the Obligations, Lender shall
reimburse (or offset against the Obligations) to Borrowers the Initial Fee. If
the Proxy Proposals are not approved by the stockholders of TMN, or the Rights
Offering Warrant is not issued for any reason, or the Rights Offering is
withdrawn or canceled by TMN for any reason or there occurs an Event of Default,
Borrowers shall immediately pay to Lender the Back-End Fee, which shall be
deemed fully earned on the Closing Date (but only payable as aforesaid)
regardless of whether the Loan is disbursed in whole or in part.
(Page 228 of 252 Pages)
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Lender to execute this Agreement and perform its
obligations hereunder, each Borrower represents and warrants to the Lender as
follows:
SECTION 3.01. Organization; Corporate Powers. Such Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or formed, has the requisite power and
authority, including all material licenses, registrations, permits, franchises,
consents and approvals, to own its property and assets and to carry on its
business as now conducted and is qualified to do business and in good standing
in every jurisdiction where such qualification is required, except where failure
to so qualify would not reasonably be likely to have a Material Adverse Effect.
Such Borrower has all requisite corporate power and authority to consummate the
Transactions.
SECTION 3.02. Authorization. The execution and delivery of this
Agreement and the other Loan Documents, and the consummation of the
Transactions: (a) have been duly authorized by all requisite corporate action of
such Borrower (other than the approval of the Proxy Proposals by TMN's
stockholders), including, without limitation, the approval by a majority of the
Disinterested Directors of TMN (within the meaning of Section 3.1 of the Amended
and Restated Investment Agreement dated March 3, 1998 by and among TMN,
Samstock, EGI-Transmedia, and Halmostock Limited Partnership); and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation or the
certificate or articles of incorporation or the by-laws of such Borrower, (B)
any order of any court, or any rule, regulation or order of any other agency of
government binding upon such Borrower or any of its Subsidiaries, or (C) any
provisions of any material indenture, agreement or other instrument to which
such Borrower or any of its Subsidiaries is a party or by which such Borrower or
any of its Subsidiaries or any of their respective properties or assets are or
may be bound; (ii) be in conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under any material
indenture, agreement or other instrument referred to in (b)(i)(C) above; or
(iii) result in the creation or imposition of any Lien upon any property or
assets of such Borrower or any of its Subsidiaries.
SECTION 3.03. Governmental Approval. No registration or filing with or
consent or approval of, or other action by, any federal, state or other
governmental agency, authority or regulatory body or any other Person is or will
be required in connection with the execution or delivery of this Agreement or
the other Loan Documents, or the consummation of the Transactions other than (a)
the filing with the Securities and Exchange Commission of (i) a proxy statement
containing the Proxy Proposals, and (ii) the Registration Statement (and the
declaration of its effectiveness by the Securities and Exchange Commission), (b)
the filing of the Certificate of Amendment to TMN's Certificate of Incorporation
and the Preferred Stock Designation with the Delaware Secretary of State and (c)
those which such Borrower has obtained and/or made.
(Page 229 of 252 Pages)
SECTION 3.04. Enforceability. This Agreement constitutes, and each of
the other Loan Documents when duly executed and delivered by such Borrower will
constitute, legal, valid and binding obligations of such Borrower, in each case
enforceable in accordance with their respective terms.
SECTION 3.05. Financial Matters. The audited consolidated financial
statements of the Borrowers and their Subsidiaries dated September 30, 1998, and
the unaudited consolidated financial statements of the Borrowers and their
Subsidiaries dated March 31, 1999, and the related consolidated statements of
income or operations, stockholders' equity and cash flows for the fiscal periods
ended on such dates:
(a) were prepared in accordance with generally accepted
accounting principals consistently applied throughout
the periods covered thereby, except as otherwise
expressly noted therein;
(b) fairly present the financial condition of the
Borrowers and their Subsidiaries as of the dates
thereof and results of operations for the periods
covered thereby (subject, in the case of such
unaudited financial statements, to the absence of
footnotes and to normal year-end adjustments); and
(c) show all material indebtedness and other liabilities,
direct or contingent, of the Borrowers and their
Subsidiaries as of the dates thereof, including
liabilities for taxes, material commitments and
material contingent obligations.
SECTION 3.06. No Material Adverse Change. Since March 31, 1999, there
has been no change that could reasonably be expected to have a Material Adverse
Effect.
SECTION 3.07. Litigation. Except as listed on Schedule 3.07, there are
no actions, suits or proceedings at law or in equity or by or before any
arbitrator or any governmental instrumentality or other agency or regulatory
authority now pending or, to the best of such Borrower's knowledge, threatened
against or affecting such Borrower or its Subsidiaries, or the businesses,
assets or rights of such Borrower or its Subsidiaries: (a) which involve this
Agreement or any of the other Loan Documents or any of the transactions
contemplated hereby or thereby; or (b) as to which, if adversely determined,
could individually or in the aggregate have a Material Adverse Effect.
SECTION 3.08. Compliance with Laws. Such Borrower is not in violation
of any law, including any Environmental Law, or in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court or
governmental agency or instrumentality, where such violation or default could
reasonably be expected to have a Material Adverse Effect.
(Page 230 of 252 Pages)
SECTION 3.09. Environmental Protection. Neither such Borrower nor any
of its Subsidiaries has received: (a) any claim or notice of violation, lien,
complaint, suit, order or other claim or notice to the effect that it is or may
be liable to any Person as a result of the (i) environmental condition of such
Borrower's or any Subsidiary's property or any other property or (ii) the
release or threatened release of any hazardous substances or materials; or (b)
any letter or request for information under any Environmental Law; and, to the
best of such Borrower's knowledge, none of the operations of such Borrower nor
any of its Subsidiaries are the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release or
threatened release of any hazardous substance or material at such Borrower's
property or at any other location, including any location to which such Borrower
or any Subsidiaries has transported, or arranged for the transportation of, any
hazardous substances or materials.
SECTION 3.10. Agreements. Except as listed on Schedule 3.10, neither
such Borrower nor any of its Subsidiaries is a party to any agreement or
instrument or subject to any restriction that has or could have a Material
Adverse Effect. Except as listed on Schedule 3.10, neither such Borrower nor any
of its Subsidiaries is in default in any material manner in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any material agreement or instrument to which it is a party.
SECTION 3.11. Federal Reserve Regulations. Such Borrower is not engaged
principally, or as of one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock. No part
of the proceeds of the Loan will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately: (a) to purchase or carry Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
Margin Stock or to refund indebtedness originally incurred for such purpose; or
(b) for any purpose which entails a violation of, or which is inconsistent with,
the provisions of Regulations of the Board, including Regulations G, T, U or X
thereof.
SECTION 3.12. Taxes. Such Borrower has filed or caused to be filed all
federal, state and local tax returns which are required to be filed by it, and
has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which such Borrower is contesting in good faith by
appropriate proceedings, and with respect to which such Borrower shall have set
aside on its books adequate reserves.
SECTION 3.13. Employee Benefit Plans. Such Borrower and each Plan is in
compliance with those provisions of ERISA, the Internal Revenue Code of 1986, as
amended, and the Age Discrimination in Employment Act, as amended, and the
regulations and published interpretations thereunder which are applicable to
such Borrower or such Plan, except where failure to so comply is not reasonably
likely to result in a Material Adverse Effect. As of the date hereof, no
Reportable Event has occurred or is reasonably likely to occur with respect to
any Pension Plan as to which such Borrower was required to file a report with
the Pension Benefit Guaranty Corporation. No Pension Plan (other than a
Multiemployer Plan) has any material amount of
(Page 231 of 252 Pages)
unfunded benefit liabilities (within the meaning of Section 4001(a)(18) of
ERISA) or any accumulated funding deficiency (within the meaning of Section
302(a)(2) of ERISA), whether or not waived, and neither such Borrower nor any
ERISA Affiliate has incurred or expects to incur any material withdrawal
liability under Subtitle E of Title IV of ERISA to a Multiemployer Plan. There
has been no prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan which could result in a Material Adverse Effect.
SECTION 3.14. Investment Company Act. Such Borrower is not an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or a company controlled by such an "investment
company".
SECTION 3.15. Patents, Trademarks, etc. To the best of such Borrower's
knowledge, such Borrower and its Subsidiaries have obtained and protected all
Intellectual Property necessary to own their respective properties and assets
and carry on and operate their respective businesses as heretofore and hereafter
anticipated to be conducted. To the best of such Borrower's knowledge, (a) no
event is threatened or has occurred which permits, or after notice or lapse of
time, would permit, the revocation or termination of such properties, and (b)
there is no past, present or threatened occurrence that is reasonably likely to
preclude or materially impair such Borrower's and such Subsidiaries' ability to
retain or obtain any authorization necessary for the operation of their
respective businesses.
SECTION 3.16. Subsidiaries. Such Borrower does not have any
Subsidiaries other than as listed on Schedule 3.16, and is not a partner or
joint venturer in any partnerships or joint ventures.
SECTION 3.17. Solvency. Such Borrower has capital sufficient to carry
on its business and all businesses and transactions in which it plans to engage
and is now solvent and able to pay its debts as they mature. As of the date of
this Agreement, such Borrower owns property having a value, both at fair
valuation and at present fair salable value, greater than the amount required to
pay such Borrower's debts.
SECTION 3.18. Labor Disputes. Such Borrower is not a party to any labor
dispute which could have, individually or in the aggregate, a Material Adverse
Effect. There are no strikes or walkouts relating to any labor contracts to
which such Borrower is subject. Such Borrower is not party to any collective
bargaining agreement to the benefit of which any of its employees is entitled.
SECTION 3.19. Complete Disclosure. All factual information furnished
by or on behalf of such Borrower or its Subsidiaries to the Lender for purposes
of or in connection with this Agreement or the Transactions is, and all other
such factual information hereafter furnished by or on behalf of such Borrower or
its Subsidiaries will be, true and accurate in all material respects on the date
as of which such information is furnished and not incomplete by omitting to
state any material fact necessary to make such information not materially
misleading at such time in light of the circumstances under which such
information was provided.
(Page 232 of 252 Pages)
SECTION 3.20. Vote Required. (a) No vote of the holders of any class or
series of capital stock or other securities of TMN or any other Borrower is
required to approve or effect this Agreement, the other Loan Documents, any
Rights Offering Event, any Transaction or any transactions contemplated hereby
and thereby, including without limitation under applicable law, applicable stock
exchange rules or regulations, the certificate of incorporation (including
without limitation Article Seventh of TMN's Certificate of Incorporation) or the
by-laws of TMN or any other Borrower or any contract, agreement or permit of any
kind whatsoever applicable to TMN, any other Borrower or their assets, except
that the Proxy Proposals identified in clauses (a) and (b) of the definition of
"Proxy Proposals" under Section 1.01 of this Agreement require the approval of
TMN's stockholders as referenced in Section 3.20(b) below.
(b) The affirmative vote of the holders of no more than a majority of
the outstanding shares of TMN's Common Stock is the only vote of the holders of
any class or series of capital stock or other securities of TMN or any other
Borrower necessary to approve the Proxy Proposals.
SECTION 3.21. Takeover Status. The requirements of Section 203 of the
Delaware General Corporation Law are not applicable to TMN or any other Borrower
in connection with the transactions contemplated by this Agreement, the other
Loan Documents, any Rights Offering Event, or any other Transactions.
SECTION 3.22. Reporting Company; Form S-3. TMN is subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, and
its Common Stock is registered under Section 12 thereof. TMN is eligible to
register for resale shares of its Common Stock to be sold by parties other than
TMN on a registration statement on Form S-3 under the Securities Act of 1933, as
amended.
SECTION 3.23. Trading on NYSE. TMN's Common Stock is listed for trading
on The New York Stock Exchange, and trading in TMN's Common Stock on The New
York Stock Exchange has not been suspended as of the date hereof.
ARTICLE IV
CONDITIONS TO THE LOAN
SECTION 4.01. Conditions to Loan Closing. The obligation of the Lender
to make the Loan hereunder is subject to the following conditions precedent, all
of which shall be in form and substance satisfactory to the Lender in its sole
and absolute discretion:
(a) Legal Opinion. The Lender shall have received a
written opinion of counsel for each Borrower, in
substantially the form contained in EXHIBIT C.
(b) Authorization and Organizational Documentation. The
Lender shall have received: (i) a copy of the
certificate of incorporation of each Borrower,
(Page 233 of 252 Pages)
certified by the Secretary of State of the state of
its incorporation as of a recent date, and a
certificate as to the good standing of each Borrower
from such Secretary of State, dated as of a recent
date; (ii) a certificate of the Secretary or an
Assistant Secretary of each Borrower, dated the
Closing Date and certifying (A) that attached thereto
is a true and complete copy of the by-laws of such
Borrower, as in effect on the date of such
certificate, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the
Board of Directors of such Borrower, authorizing the
execution, delivery and performance of this Agreement
and the other Loan Documents, the borrowing by such
Borrower hereunder, and, subject to receipt of
stockholder approval of the Proxy Proposals, the
consummation of the Transactions, and that such
resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that
the certificate or articles of incorporation of such
Borrower, have not been amended since the date of the
certification thereto furnished pursuant to (i)
above, and (D) as to the incumbency and specimen
signature of each officer of such Borrower, executing
this Agreement and the other Loan Documents; and
(iii) such other documents as the Lender or its
counsel may reasonably request.
(c) Note. The Lender shall have received the Note, duly
executed and delivered by the Borrowers, payable to
the order of the Lender and otherwise complying with
the provisions of Section 2.02 above.
(d) Insurance. The Lender shall have received
satisfactory evidence of the insurance required by
Section 5.03 below.
(e) Certification. The Lender shall have received a
certificate, dated as of the Closing Date, whereby
the Borrowers certify that: (i) the representations
and warranties set forth in Article III are true and
correct in all material respects with the same effect
as though made on and as of the date hereof, except
to the extent they expressly relate to an earlier
date (in which case they shall be true and correct in
all material respects on and as of such date), and
(ii) the Borrowers are in compliance in all material
respects with all the terms and provisions contained
herein and in the other Loan Documents on their part
to be observed or performed, and at the time of and
immediately after such borrowing of the Loan, no
Default or Event of Default shall have occurred and
be continuing.
(f) Searches. The Lender shall have received recently
dated judgment and state and federal tax lien search
reports for each Borrower.
(Page 234 of 252 Pages)
(g) Acquisition. The Lender shall have received
satisfactory evidence of the consummation of the
Acquisition and the closing of the Chase Bridge Loan
Facility.
(h) Rights Offering Events. The Lender shall have
received satisfactory evidence of the completion and
occurrence of each of the Rights Offering Events.
(i) Waiver. The Lender shall have received satisfactory
evidence of the waiver of the "Early Amortization
Event" specified in Section 14(x) of the Security
Agreement dated as of December 1, 1996 among TAI
Funding Company I, L.L.C., The Chase Manhattan Bank,
TNI Funding I, Inc. and TMN.
(j) Fees. The Lender shall have received the fees and
reimbursement of expenses to be paid on the Closing
Date pursuant to the terms of this Agreement and the
Standby Purchase Agreement, including without
limitation the Initial Fee and the Transaction Fee.
(k) Further Assurances. The Lender shall have received
all further documents, notifications and other
assurances reasonably required by the Lender in
connection with the Loan.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees with the Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on the
Note, or any other expense or amount payable hereunder shall be unpaid, unless
the Lender shall otherwise consent in writing, it shall, and it shall cause each
of its Subsidiaries to:
SECTION 5.01. Existence. Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and
qualify and remain qualified in each jurisdiction where qualification is
necessary or desirable in view of its business operations or ownership of its
properties, except where the failure to so qualify would not reasonably be
likely to have a Material Adverse Effect.
SECTION 5.02. Businesses and Properties; Compliance with Laws. At all
times, maintain and operate its business in substantially the manner in which it
is presently conducted and operated; comply in all material respects with all
laws and regulations applicable to the operation of such business, including all
Environmental Laws, whether now in effect or hereafter enacted and with all
other applicable laws and regulations; take all action which may be reasonably
required to obtain, preserve, renew and extend all franchises, registrations,
licenses, permits and other authorizations which may be material to the
operation of such business; and at all times maintain,
(Page 235 of 252 Pages)
preserve and protect all property material to the conduct of such business and
keep its property in good repair, working order and condition (ordinary wear and
tear excepted) and from time to time make, or cause to be made, all reasonably
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times.
SECTION 5.03. Insurance. Maintain insurance (with financially sound and
responsible insurance carriers), to such extent and against such risks, loss or
damage to, or liability in connection with, its property, business, persons and
such other contingencies, as is customary with companies of established
reputations similarly situated and in the same or similar business.
SECTION 5.04. Obligations and Taxes. Pay and discharge promptly when
due all Indebtedness, and taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise, which, if unpaid, might
give rise to liens or charges upon such properties or any part thereof;
provided, however, that such Borrower shall not be required to pay and discharge
or to cause to be paid and discharged any such tax, assessment, charge, levy or
claim so long as the validity or amount thereof shall be contested in good faith
by appropriate proceedings and such Borrower shall have set aside on its books
adequate reserves with respect thereto.
SECTION 5.05. Financial Statements; Reports. Furnish (or cause to be
furnished) to the Lender:
(a) within ninety (90) days after the end of each fiscal
year of such Borrower, the audited, consolidated and
consolidating balance sheets and statements of
income, retained earnings, and cash flows, together
with supporting schedules (which shall include, upon
the reasonable request of the Lender with respect to
matters which it desires to review, the working
papers with respect to such Borrower's financial
statements) of such Borrower, all in reasonable
detail and accompanied by an unqualified opinion
thereon by KPMG Peat Marwick or such other firm or
independent certified public accountants of
recognized standing selected by such Borrower and
reasonably acceptable to the Lender;
(b) as soon as available, but in any event not later than
forty-five (45) days after the end of each of the
first three (3) quarterly periods of each fiscal year
of such Borrower, the management prepared unaudited,
consolidated and consolidating financial statements
of such Borrower, including a balance sheet of such
Borrower as at the end of such fiscal quarter and
related unaudited statements of income, retained
earnings, and cash flows, all for the period from the
beginning of such fiscal year to the end of such
fiscal quarter, setting forth in each case
corresponding figures for the like period of the
preceding fiscal year; all in reasonable detail,
prepared in accordance with
(Page 236 of 252 Pages)
generally accepted accounting principles applied on a
basis consistently maintained throughout the period
involved and with prior periods, subject to normal
year-end audit adjustments, and certified by a
Financial Officer of such Borrower;
(c) concurrently with the delivery of the items referred
to in clauses (a) and (b) above, a certificate of the
Financial Officer of such Borrower (i) stating that,
to the best of his or her knowledge, no condition or
event which would constitute a Default or Event of
Default has occurred and is continuing, or if such a
condition or event has occurred, the certificate
shall specifically state such condition or event, and
(ii) demonstrating compliance, as of the dates of the
financial statements being furnished at such time,
with the covenant set forth in Section 5.11 hereof;
(d) promptly after the same are sent or otherwise
publicly available, copies of all proxy statements,
financial statements and reports which such Borrower
sends to its stockholders, and promptly after the
same are filed, copies of all regular, periodic and
special reports (including reports on Forms 10-K,
10-Q and 8-K), and all registration statements which
such Borrower files with the Securities and Exchange
Commission or any governmental authority which may be
substituted therefore, or with any national
securities exchange; and
(e) promptly, from time to time, such other information
regarding the operations, business, affairs, and
financial condition of such Borrower and any of its
Subsidiaries as the Lender may reasonably request.
All financial statements required to be furnished to the Lender under this
Section 5.05 shall be prepared in accordance with generally accepted accounting
principles applied on a basis consistent with the accounting practices of the
Borrowers reflected in its financial statements referred to in Section 3.05
hereof, or to the extent such treatment has changed, with a reconciliation
thereof.
SECTION 5.06. Litigation and Other Notices. Give the Lender prompt
written notice of the following:
(a) Orders; Injunctions. The issuance by any court or
governmental agency or authority of any injunction,
order, decision or other restraint prohibiting, or
having the effect of prohibiting, the making of the
Loan or the initiation of any litigation or similar
proceeding seeking any such injunction, order or
other restraint.
(b) Litigation. The filing or commencement of any action,
suit or proceeding against such Borrower or its
Subsidiaries whether at law or in equity or by or
before any court or any federal, state, municipal or
other governmental
(Page 237 of 252 Pages)
agency or authority and which, if adversely
determined against such Borrower or its Subsidiaries,
could have a Material Adverse Effect.
(c) Environmental Matters. Any violation by such Borrower
or its Subsidiaries of any Environmental Law which
could have a Material Adverse Effect or which, to
such Borrower's knowledge, is the subject of an
investigation or enforcement action by any
governmental authority or other third party.
(e) Default. Any Default or Event of Default, specifying
the nature and extent thereof and the action (if any)
which is proposed to be taken with respect thereto.
(f) Material Adverse Effect. Any development in the
business or affairs of such Borrower or its
Subsidiaries which could have a Material Adverse
Effect.
SECTION 5.07. ERISA. Comply with the applicable provisions of ERISA and
the provisions of the Internal Revenue Code of 1986 relating thereto, except
where failure to so comply is not reasonably likely to result in a Material
Adverse Effect, and: (a) furnish to the Lender as soon as possible, and in any
event within 30 days after such Borrower knows or has reason to know thereof,
notice of: (i) the establishment by such Borrower or any ERISA Affiliate of any
Pension Plan; (ii) the commencement by such Borrower of contributions to a
Multiemployer Plan; (iii) any failure by such Borrower or any ERISA Affiliate to
make contributions required by Section 302 of ERISA (whether or not such
requirement is waived pursuant to Section 303 of ERISA); and (iv) the occurrence
of any Reportable Event with respect to any Pension Plan for which the reporting
requirement is not waived, together with a statement of a Financial Officer of
such Borrower setting forth details as to such Reportable Event and the action
which such Borrower proposes to take with respect thereto, together with a copy
of the notice of such Reportable Event given to the Pension Benefit Guaranty
Corporation if any notice is required to be so given; (b) promptly after receipt
thereof, a copy of any notice such Borrower or any Subsidiary may receive from
the Pension Benefit Guaranty Corporation relating to its intention to terminate
any Pension Plan, or to appoint a trustee to administer any Pension Plan; and
(c) promptly after receipt thereof, a copy of any notice of withdrawal liability
from any Multiemployer Plan.
SECTION 5.08. Maintaining Records; Access and Inspections. Maintain
financial records in accordance with generally accepted practices and, upon
reasonable notice, at all reasonable times and as often as the Lender may
reasonably request, permit any authorized representative designated by the
Lender to visit and inspect the properties and financial records of such
Borrower and its Subsidiaries and make extracts from such financial records at
such Borrower's expense, and permit any authorized representative designated by
the Lender to discuss the affairs, finances and condition of such Borrower and
its Subsidiaries with such Borrower's chief financial officer and such other
officers as such Borrower shall deem appropriate and such Borrower's independent
public accountants, and such Borrower will use its best efforts to make such
officers and accountants promptly available for such discussions.
(Page 238 of 252 Pages)
SECTION 5.09. Use of Proceeds. Use the proceeds of the Loan only for
working capital and general corporate purposes.
SECTION 5.10. Rights Offering Covenants. As promptly as practicable
after the Closing Date, the Borrowers and TMN shall commence and diligently
pursue to completion each of the following:
(a) Prepare and file with the Securities and Exchange
Commission (i) a proxy statement containing the Proxy
Proposals, and (ii) the Registration Statement, and
use their best efforts to cause the Registration
Statement to be declared effective as soon after
filing such statement as practicable and to remain
effective through the Rights Offering Closing Date
and to cover the issuance and sale of the Preferred
Stock pursuant to the Rights Offering;
(b) take all necessary action in accordance with
applicable law and TMN's Certificate of Incorporation
and By-laws to (i) amend TMN's Certificate of
Incorporation and By-laws to the extent necessary to
increase the number of authorized shares of preferred
stock and Common Stock, and to make such other
necessary amendments, in order to effectuate the
Transactions, (ii) mail to TMN's stockholders the
proxy statement referred to in the defined term
"Rights Offering Event", (iii) recommend to TMN's
stockholders a vote in favor of each Proxy Proposal,
(iv) duly convene a meeting of TMN's stockholders for
the purpose of voting on the Proxy Proposals, and (v)
file with the Secretary of State of Delaware the
Preferred Stock Designation;
(c) use their best efforts to (i) ensure that the
Preferred Stock (and the Common Stock into which it
is convertible) and the Common Stock underlying the
Rights Offering Warrant are listed on The New York
Stock Exchange, and (ii) effectuate the Transactions;
and
(d) deliver to Lender, on or before the date on which the
Registration Statement is declared effective by the
Securities and Exchange Commission, a fully executed
Standby Purchase Agreement.
SECTION 5.11. Net Worth. The Borrowers and their consolidated
Subsidiaries shall at all times have and maintain an aggregate net worth of at
least $20,000,000.00.
ARTICLE VI
NEGATIVE COVENANTS
Each Borrower covenants and agrees with the Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on the
Note, or any other expense or amount payable
(Page 239 of 252 Pages)
hereunder shall be unpaid, unless the Lender shall otherwise consent in writing,
it will not, and it will not permit any of its Subsidiaries to, either directly
or indirectly:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except: (a) Indebtedness incurred pursuant to this Agreement
and the other Loan Documents; (b) Indebtedness incurred in the ordinary course
of business with respect to customer deposits, trade payables and other
unsecured current liabilities not the result of borrowing and not represented by
any note or other evidence of Indebtedness; (c) Indebtedness existing on the
date hereof and listed on Schedule 6.01 attached hereto; (d) Indebtedness
secured by the Liens permitted under Section 6.02(e) below; (e) Indebtedness
incurred pursuant to the Chase Bridge Loan Facility; (f) Indebtedness incurred
pursuant to interest rate protection agreements entered into in the ordinary
course of business and not for speculation; (g) a securitized receivables
purchase transaction (referred to as the PARCO Facility under the Chase Bridge
Loan Facility documents) entered into by the Borrowers and a special purpose
subsidiary of TMN secured by rights to receive and related assets, which
obligations related thereto are not recourse to any of the Borrowers, (h)
unsecured Indebtedness of the Borrowers incurred in connection with the
acquisition of franchises of a Borrower in an aggregate principal amount not
exceeding $8,00,000 at any time outstanding, provided, that the terms of such
Indebtedness and the related acquisitions of such franchises must conform to the
following conditions: (i) any such unsecured Indebtedness shall be expressly
subordinate to all of the Borrowers' and their Subsidiaries' obligations under
the Chase Bridge Loan Facility and the Obligations, (ii) such unsecured
Indebtedness shall not require the payment of any interest or other similar
charges to any creditor of the Borrowers or their Subsidiaries prior to the
repayment in full of all of the Obligations hereunder, (iii) such unsecured
Indebtedness shall have a maturity equal to or greater than four (4) years, (iv)
the aggregate of the purchase prices for all such acquisitions of franchises
shall not exceed $12,000,000, and (v) any such acquisition of a franchise by the
Borrowers or their Subsidiaries and the related incurrence of Indebtedness will
be subject to the prior written approval of Lender (which approval shall not be
unreasonably withheld); and (i) additional unsecured Indebtedness in an
aggregate principal amount not exceeding $500,000.00 at any time outstanding.
SECTION 6.02. Negative Pledge. Incur, create, assume or permit to exist
any Lien on any property or assets now owned or hereafter acquired by it,
including inventory, fixed assets and intangible assets, or on any income or
rights in respect of any thereof, except: (a) deposits or pledges to secure
payment of workers' compensation, unemployment insurance, old age pensions, or
other social security laws, or to secure statutory obligations; (b) Liens for
property taxes, assessments or other governmental charges or taxes due and
payable, the validity or amount of which in good faith is being contested or
litigated; (c) mechanics', carriers', workmen's, repairmen's, or other like
liens arising in the ordinary course of business securing obligations which are
not overdue for a period of sixty (60) days or more or which are in good faith
being contested or litigated; (d) existing Liens reflected in the financial
statements referred to in Section 3.05 hereof, or additional existing Liens
listed in Schedule 6.02 attached hereto and made a part hereof; (e) Liens
granted to the Person financing the acquisition of property, plant or equipment
or other property acquired by such Borrower or its Subsidiaries, including Liens
related to capitalized lease obligations if (i) limited to
(Page 240 of 252 Pages)
the particular assets acquired, (ii) the debt secured by the Lien does not
exceed the acquisition cost of a particular asset for which the Lien is granted,
(iii) such transaction does not otherwise violate this Agreement, and (iv) the
aggregate amount of all Indebtedness secured by Liens permitted under this
clause (e) does not exceed $250,000 at any one time outstanding; (f) Liens
arising out of attachments, judgments or awards as to which an appeal or other
appropriate proceedings for contest or review are timely commenced (and as to
which foreclosure and other enforcement proceedings shall not have been
commenced unless fully bonded or otherwise effectively stayed) and as to which
appropriate reserves have been established in accordance with generally accepted
accounting principles; (g) possessory Liens which (i) occur in the ordinary
course of business, (ii) secure normal trade debt which is not yet due and
payable, and (iii) do not secure Indebtedness for borrowed money; (h) Liens
arising by virtue of any statutory or common law provision relating to banker's
liens, rights of setoff or similar rights with respect to deposit accounts of
such Borrower or any of its Subsidiaries; (i) easements, rights of way,
restrictions, minor defects or irregularities in title and other similar
encumbrances on real property which do not materially detract from the value of
the property subject thereto or interfere with the ordinary conduct of business
of such Borrower and its Subsidiaries; (j) licenses, leases and subleases
granted by a Borrower in the ordinary course of its business; (k) any Lien
existing on any asset prior to a Borrower's acquisition thereof; provided, that
(i) such Lien is not created in contemplation of or in connection with such
acquisition, (ii) such Lien shall not apply to any other assets of any Borrower
and (iii) such Lien shall secure only those obligations which it secures on the
date of such acquisition; (l) Liens securing the Chase Bridge Loan Facility; (m)
Liens securing the Revolving Securitization receivables purchase transaction
identified on Schedule 6.01; and (n) Liens securing the securitized receivables
purchase transaction permitted under Section 6.01(g) above.
SECTION 6.03. Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of all or substantially all of its assets or properties,
including the equity interest in any Subsidiary, except: (a) sales of assets
necessary to consummate the Revolving Securitization receivables purchase
transaction identified on Schedule 6.01 and the securities receivable purchase
transaction permitted under Section 6.01(g) above and (b) sales, leases,
assignments, transfers or other dispositions of assets by a Borrower to another
Borrower or by a Subsidiary of a Borrower to a Borrower.
SECTION 6.04. Liquidations, Consolidations, Mergers or Purchases of
Assets. Liquidate, dissolve (whether voluntarily or involuntarily), merge into
or consolidate or combine with any other Person, or purchase, lease or otherwise
acquire (in one transaction or a series of related transactions) all or
substantially all of the property or assets of any Person (other than purchases
or other acquisitions of inventory, materials, leases, property and equipment in
the ordinary course of business), except: (a) a Borrower may merge into another
Borrower so long as TMN is the survivor if TMN is involved in the merger, (b) a
Subsidiary of a Borrower may merge into that Borrower, so long as the Borrower
is the surviving entity, (c) a Subsidiary of a Borrower may be dissolved if the
Board of Directors of the applicable Borrower determines such dissolution is in
the best efforts of the applicable Borrower and such dissolution is not
reasonably likely to result in a Material Adverse Effect, and (d) for
acquisitions of franchises of Borrowers pursuant to the terms and subject to the
limitations set forth in Section 6.01(h) above.
(Page 241 of 252 Pages)
SECTION 6.05. Investments, Loans and Advances. Make or suffer to exist
any Investments except for (a) Permitted Investments, and (b) Investments
permitted under or made in compliance with the Revolving Securitization
receivables purchase transactions identified on Schedule 6.01 or permitted under
Section 6.01(g) with excess funds received in connection therewith.
SECTION 6.06. Restricted Payments. Declare or pay, directly or
indirectly, any dividends or make any other distribution, whether in cash,
property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any partnership interests or capital accounts
or any shares of capital stock, warrants, options or any of its other
securities, or directly or indirectly redeem, purchase, retire or otherwise
acquire for a consideration, any partnership interests or capital accounts or
any shares of any class of capital stock, warrants, options or any of its other
securities, or set apart any sum for the aforesaid purposes (collectively
"Restricted Payments"), except that (a) a Borrower's Subsidiaries may make
Restricted Payments to such Borrower and to the Borrowers' other Subsidiaries,
(b) a Borrower may make Restricted Payments to another Borrower, (c) a Borrower
may declare and pay dividends with respect to its capital stock payable solely
in shares of its common stock, (d) a Borrower may make Restricted Payments
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of that Borrower consistent with past practice, and (e)
TMN may make Restricted Payments required, contemplated, or permitted by the
terms of the Preferred Stock Designation, the Rights Offering Warrant and the
Existing Warrant.
SECTION 6.07. Transactions with Affiliates. Sell or transfer any assets
to, or purchase or acquire any assets of, or otherwise engage in any material
transaction with, or permit any Affiliate to sell or transfer assets to, or
purchase or acquire any assets of, or otherwise engage in any other material
transaction with any other Affiliate, except, in each case, in the ordinary
course of such Borrower's or such Subsidiaries business and upon fair and
reasonable terms no less favorable to such Borrower or Subsidiary than would be
obtained in a comparable arm's-length transaction with a Person other than an
Affiliate, provided that this Section 6.07 shall not apply to (a) the
Transactions, (b) the Rights Offering (including the purchase, redemption or
conversion of the Preferred Stock issued pursuant thereto, and the payment of
distributions on such Preferred Stock), (c) the Revolving Securitization
receivables purchase transactions identified on Schedule 6.01 and permitted
under Section 6.01(g) above, (d) payment of the Management Fee, (e) payment of
the Transaction Fee, or (f) the exercise of rights under the Existing Warrant.
SECTION 6.08. Line of Business. Engage, directly or indirectly, in any
business other than the businesses in which it is engaged on the Closing Date
and businesses reasonably related thereto.
SECTION 6.09. Certain Documents. Except as contemplated by the Proxy
Proposals, amend, modify, terminate or waive: any material term or provision of
its certificate or articles of incorporation or by-laws, or other organizational
or investment documents or agreements, without in each case, the prior written
consent of the Lender, which shall not be unreasonably withheld or
(Page 242 of 252 Pages)
delayed, provided that this Section 6.09 shall not apply to any such amendments,
modification and waivers necessary to effectuate the Transactions.
ARTICLE VII
DEFAULTS
SECTION 7.01. Events of Default. Each of the following events shall
constitute events of default ("Events of Default") hereunder:
(a) any representation or warranty made by or on behalf
of any Borrower in connection with this Agreement or
the other Loan Documents or any Transaction shall
prove to have been false or misleading in any
material respect when made, and to the extent capable
of being remedied, the condition giving rise to such
representation or warranty being incorrect or untrue
shall continue unremedied for thirty (30) days after
written notice thereof from the Lender to Borrowers;
(b) default shall be made in the payment of any principal
on the Loan when and as the same shall become due and
payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest
on the Loan or any other amount (other than an amount
referred to in clause (b) above) due under this
Agreement or the other Loan Documents, within five
(5) Business Days after the same shall become due and
payable;
(d) default shall be made in the due observance of any
covenant, condition or agreement on the part of the
Borrower contained in Section 5.01, 5.05, 5.10 or
5.11 or Article VI;
(e) default shall be made in the due observance or
performance of any other covenant, condition or
agreement to be observed or performed by the Borrower
pursuant to the terms of this Agreement or any other
Loan Document (other than those covered in clauses
(b) - (d) above) and such default shall continue
unremedied for a period of thirty (30) days after the
earlier of: (i) written notice from the Lender of
such
(f) any Borrower or any of any Borrower's Subsidiaries
shall: (i) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of
the United States Code or any other federal or state
bankruptcy, insolvency or similar law; (ii) consent
to the institution of, or fail to controvert in a
timely and appropriate manner, any such proceeding or
the filing of any such
(Page 243 of 252 Pages)
petition; (iii) apply for or consent to the
appointment of a receiver, trustee, custodian,
sequestrator or similar official for such Borrower or
such Subsidiary or for a substantial part of their
respective properties or assets; (iv) file an answer
admitting the material allegations of a petition
filed against it in any such proceeding; (v) make a
general assignment for the benefit of creditors; (vi)
become unable generally, or admit in writing its
inability, to pay its debts as they become due; (vii)
suspend the transaction of all or a substantial
portion of its usual business; or (viii) take
corporate action for the purpose of effecting any of
the foregoing;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of
competent jurisdiction seeking: (i) relief in respect
of any Borrower or any of any Borrower's Subsidiaries
of a substantial part of any of their respective
properties or assets, under Title 11 of the United
States Code or any other federal or state bankruptcy,
insolvency or similar law; (ii) the appointment of a
receiver, trustee, custodian, sequestrator or similar
official for any Borrower or any of any Borrower's
Subsidiaries or for a substantial part of their
respective properties; or (iii) the winding-up or
liquidation of any Borrower or any of any Borrower's
Subsidiaries; and such proceeding or petition shall
continue undismissed for sixty (60) days or an order
or decree approving or ordering any of the foregoing
shall continue unstayed and in effect for sixty (60)
days;
(h) a default shall be made with respect to any
Indebtedness of any Borrower or any of any Borrower's
Subsidiaries, if the effect of any such default shall
be to accelerate, or to permit the holder or obligee
of any such Indebtedness (or any trustee or agent on
behalf of such holder or obligee) to accelerate (with
or without notice or lapse of time or both) the
maturity of the Indebtedness in an aggregate amount
of $1,000,000 or more; or any payment of principal or
interest, regardless of amount, on any Indebtedness
of any Borrower or any of any Borrower's Subsidiaries
in an aggregate principal amount of $1,000,000 or
more, shall not be paid when due, whether at
maturity, by acceleration or otherwise (after giving
effect to any applicable cure period specified in the
instrument evidencing or governing such
Indebtedness);
(i) a Reportable Event shall have occurred with respect
to any Pension Plan or a notice of intent to
terminate a Pension Plan shall have been furnished to
the affected parties (as provided in Section
4041(c)(1) of ERISA); or the Pension Benefit Guaranty
Corporation shall have instituted proceedings to
terminate any Pension Plan, or a trustee shall have
been appointed by a United States District Court to
administer any Pension Plan, if in any such case such
Pension Plan then has an amount of unfunded benefit
liabilities (within the meaning of Section
4001(a)(18) of ERISA) or any Borrower or any ERISA
(Page 244 of 252 Pages)
Affiliate incurs withdrawal liability which could
reasonably be expected to result in a Material
Adverse Effect;
(j) a final judgment or judgments for the payment of
money in excess of $2,000,000 in the aggregate shall
be rendered by a court or other tribunal against any
Borrower or Borrowers or any of their Subsidiaries
and shall remain undischarged for a period of thirty
(30) consecutive days during which execution of such
judgment shall not have been stayed effectively;
(k) any Loan Document shall cease to be in full force and
effect, enforceable in accordance with its terms, or
any Borrower shall assert the invalidity of any such
instrument;
(l) there occurs a default or event of default by any
Borrower under or in connection with the Chase Bridge
Loan Facility, the Investment Agreement Amendment or
the Standby Purchase Agreement (or any document
executed by any Borrower pursuant to the Standby
Purchase Agreement), which remains uncured after the
expiration of any applicable cure period;
(m) there shall occur a Rights Offering Default Event;
and
(n) there shall occur a Purchase Termination Event or
Potential Purchase Termination Event under or in
connection with the existing Revolving Securitization
receivables purchase transaction identified on
Schedule 6.01, or a Termination Event or Potential
Termination Event under or in connection with the
securitized receivables purchase transaction
permitted under Section 6.01(g) or the Chase Bridge
Loan Facility.
SECTION 7.02. Remedies Upon Default. Upon the occurrence of any Event
of Default (other than an event described in Section 7.01 (f) or (g)), and at
any time thereafter during the continuance of such event, the Lender may, by
written or telegraphic notice to the Borrowers, declare the Note to be forthwith
due and payable, whereupon the principal of the Note, together with accrued
interest thereon and all other liabilities of the Borrowers accrued hereunder
and under the other Loan Documents, shall become forthwith due and payable both
as to principal and interest, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrowers,
anything contained herein or in any Note to the contrary notwithstanding. Upon
the occurrence of any event described in Section 7.01 (f) or (g), the principal
amount outstanding under the Note, together with all accrued interest thereon
and all other liabilities of the Borrowers accrued hereunder and under the other
Loan Documents, shall automatically become due and payable, both as to principal
and interest, without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrowers, anything contained
herein or in the Note to the contrary notwithstanding. Without limitation to the
foregoing, upon the occurrence of an Event of Default, Lender shall be entitled
to all rights and remedies available to it
(Page 245 of 252 Pages)
hereunder, under the other Loan Documents, under the Standby Purchase Agreement,
under the Investment Agreement Amendment, at law or in equity. Notwithstanding
anything to the contrary contained above in this Section 7.02, and without
limitation to the Lender's ability to take the actions set forth above in this
Section 7.02, upon the occurrence of any Event of Default, at any time
thereafter during the continuance of such event, in addition to any other rights
to designate directors of Lender under Article IV of the Investment Agreement
Amendment (other than Section 4.7 thereof), Samstock shall have the right to
designate such additional number of directors (which individuals may be
designated in Samstock's sole discretion without obtaining the acceptance of
approval of the Disinterested Directors (as defined in the Investment Agreement
Amendment) or any other person or entity), and TMN shall take all necessary or
appropriate action to increase the number of directors constituting TMN's Board
of Directors and/or obtain resignations of individuals then serving as directors
(other than directors designated by Samstock), and assist in the nomination and
election as directors of such additional designees of Samstock, such that, after
taking all of the same into account, the number of individuals designated by
Samstock under this Section 7.02 and Article IV of the Investment Amendment
serving as directors of TMN shall constitute at least a majority of the total
number of directors of TMN, effective as soon as practicable, but in any event
no later than five (5) Business Days after Lender notifies TMN in writing of its
intent to exercise the right provided herein and the identity of the individuals
Samstock desires to so designate (and, if applicable, the individuals Samstock
desires to resign). With respect to the foregoing, the Borrowers and TMN
acknowledge and agree that (I) the provisions of this Section 7.02 are
reasonable and necessary to protect the proper and legitimate interests of the
Lender, and (II) the Lender would be irreparably damaged in the event any of the
provisions of this Section 7.02 were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
Lender shall be entitled to preliminary and permanent injunctive relief to
prevent breaches of the provisions of this Section 7.02 by the Borrowers or TMN
without the necessity of proving actual damages or of posting any bond, and to
enforce specifically the terms and provisions hereof, which rights shall be
cumulative and in addition to any other remedy to which the Lender may be
entitled hereunder, under any other Loan Documents or at law or in equity.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices. (a) Notices and other communications provided
for herein and in the other Loan Documents shall be in writing and shall be
delivered personally or mailed, by certified or registered mail, postage prepaid
(or in the case of facsimile communication, delivered by telex, graphic scanning
or other facsimile communications equipment) or delivered by overnight courier
addressed:
(Page 246 of 252 Pages)
If to the Lender:
GAMI Investments, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx & Xxxxxxxxxxx, P.C.
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Borrowers:
Transmedia Network, Inc.
Transmedia Restaurant Company, Inc.
Transmedia Service Company, Inc.
TMNI International Incorporated
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxx & Bockius, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt, in each case addressed to such party as provided
in this Section 8.01 or in accordance with the latest unrevoked direction from
such party.
SECTION 8.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrowers herein and in the other
Loan Documents shall be considered to have been relied upon by the Lender and
shall survive the making by the Lender of the Loan and
(Page 247 of 252 Pages)
the execution and delivery to the Lender of the Note evidencing the Loan and
shall continue in full force and effect until the Note and all accrued interest
thereon and all other Obligations then due and payable have been fully paid and
performed and the Lender has no further commitment to lend hereunder.
SECTION 8.03. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the Borrowers or the Lender that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns. The Borrowers may not assign or transfer any of their rights or
obligations hereunder without the prior written consent of the Lender. The
Lender shall have the right to make assignments of the Loan to an Affiliate of
the Lender.
SECTION 8.04. Expenses of the Lender; Indemnity. (a) Each Borrowers
agrees to pay (on the Closing Date) all reasonable costs and expenses incurred
by the Lender (including the reasonable fees and expenses of the Lender's
counsel) in connection with the preparation and administration of this Agreement
and the other Loan Documents, and with any amendments, modifications or waivers
of the provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or incurred by the Lender (including the
reasonable fees and expenses of the Lender's counsel) in connection with the
enforcement of its rights and remedies in connection with this Agreement or the
other Loan Documents. Each Borrower further agrees that it shall indemnify the
Lender from and hold it harmless against any documentary taxes, assessments or
charges made by any governmental authority by reason of the execution and
delivery of this Agreement or any of the other Loan Documents.
(b) Each Borrower agrees to indemnify the Lender and its Affiliates,
directors, officers, employees and agents against, and to hold the Lender and
such Persons harmless from, any and all losses, claims, damages, liabilities,
penalties, actions, judgments, investigations, proceedings, litigation, suits,
costs, and related expenses (collectively, "Indemnified Liabilities"), including
legal fees and expenses, incurred by or asserted against the Lender or any such
Persons arising out of, in any way connected with, or as a result of: (i) this
Agreement or the other Loan Documents; (ii) the performance by the parties
hereto and thereto of their respective rights and obligations hereunder and
thereunder; (iii) consummation of the Transactions; (iv) the environmental
condition or operation of such Borrower's and its Subsidiaries' properties,
including the release, presence, spillage, disposal, discharge, transporting,
emission or leakage of hazardous materials, which is at, in, on, under, about,
from or affecting such properties, including any damage or injury resulting from
any such hazardous materials to or affecting such Borrower's or its
Subsidiaries' properties or the soil, water, air, vegetation, buildings,
personal property, persons or animals located on such properties or on any other
property or otherwise; or (v) any violation of any Environmental Laws. The
foregoing indemnity includes the cost of remedial action to the extent required
to cause such Borrower's or it's Subsidiaries' properties to be in compliance
with all applicable Environmental
(Page 248 of 252 Pages)
Laws. Notwithstanding the foregoing, this indemnity shall not apply to any such
Indemnified Liabilities arising solely and directly from the gross negligence or
willful misconduct of the Lender.
(c) The provisions of this Section 8.04 shall remain operative and in
full force and effect regardless of the expiration of the term of this Agreement
or the other Loan Documents, the consummation of the Transactions contemplated
hereby, the repayment of any of the Loan, the invalidity or unenforceability of
any term or provision of this Agreement or any of the other Loan Documents, or
any investigation made by or on behalf of the Lender. All amounts due under this
Section 8.04 shall be payable within thirty (30) days after written demand in
reasonable detail therefor.
SECTION 8.05. Right of Setoff. The Lender is hereby authorized at any
time and from time to time after the occurrence and during the continuance of an
Event of Default to setoff and apply any and all indebtedness and other
obligations at any time owing by the Lender or its Affiliates to or for the
credit or the account of any Borrower or any Borrower's Affiliates to amounts
then due and payable under this Agreement and the other Loan Documents,
irrespective of whether or not the Lender shall have made any demand under this
Agreement or any of the other Loan Documents. The rights of the Lender under
this Section 8.05 are in addition to other rights and remedies (including other
rights of setoff) which the Lender may have under applicable law.
SECTION 8.06. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THE RIGHTS, DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND
THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW
SHALL APPLY TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 8.07. Waivers. No failure or delay of the Lender in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Lender hereunder and under the other Loan Documents, and
under or in connection with the Rights Offering Warrant, the Rights Offering,
and the Transactions, are cumulative and not exclusive of any rights or remedies
which it would otherwise have. No waiver of any provision of this Agreement, the
Note or the other Loan Documents, or consent to any departure by any Borrower
therefrom shall in any event be effective unless the same shall be authorized as
provided in Section 8.08, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice or
demand on any Borrower in any case shall entitle such Borrower or any other
Borrower to any other or further notice or demand in similar or other
circumstances.
(Page 249 of 252 Pages)
SECTION 8.08. Amendments. Neither this Agreement nor any other Loan
Document, nor any provision hereof or thereof, may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrowers and the Lender.
SECTION 8.09. Severability. In the event any one or more of the
provisions contained in this Agreement, the Note or the other Loan Documents
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall not in any way be affected or impaired thereby.
SECTION 8.10. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which
when taken together shall constitute but one contract.
SECTION 8.11. Headings. Article and Section headings and the Index used
herein are for convenience of reference only and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Agreement.
SECTION 8.12. Consent to Jurisdiction. Each Borrower hereby irrevocably
agrees that any suit, action, proceeding or claim against it arising out of or
in any way relating to this Agreement or any of the other Loan Documents, or any
judgment entered by any court in respect thereof, may be brought or enforced in
the state or federal courts located in Xxxx County, Illinois or New York County,
New York, and each Borrower consents, for itself and in respect to its property,
to the non-exclusive jurisdiction of these courts, and each Borrower hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the venue of any proceeding brought in Xxxx
County, Illinois, or New York County, New York, and further irrevocably waives
any claims that any such proceeding has been brought in an inconvenient forum.
SECTION 8.13. WAIVER OF JURY TRIAL. EACH BORROWER HEREBY EXPRESSLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHT, POWER, OR REMEDY UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR UNDER OR IN CONNECTION WITH ANY AMENDMENT,
INSTRUMENT, DOCUMENT, OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, AND AGREES THAT ANY SUCH ACTION
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE TERMS AND PROVISIONS OF
THIS SECTION 8.13 CONSTITUTE A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO
THIS AGREEMENT.
SECTION 8.14. Interest Limitation. Anything in this Agreement, the Note
or any other Loan Document to the contrary notwithstanding, the Borrowers shall
never be required to pay interest at a rate in excess of the highest lawful
rate, and if the effective rate of interest that would otherwise be payable
under this Agreement, the Note or any other Loan Document would exceed the
highest lawful rate, or if any holder of the Note shall receive monies that are
deemed to constitute
(Page 250 of 252 Pages)
interest which would increase the effective rate of interest payable under this
Agreement, the Note or any other Loan Document to a rate in excess of the
highest lawful rate, then: (a) the amount of interest that would otherwise be
payable under this Agreement, the Note and the other Loan Documents shall be
reduced to the amount allowed under applicable law; and (b) any interest paid in
excess of the highest lawful rate shall, at the option of the holders of the
Note, be either refunded to the payor or credited on the principal of the Note.
If at any time the effective rate of interest which would otherwise be payable
under this Agreement, the Note, or any other Loan Document exceeds the highest
lawful rate, the rate of interest to accrue under this Agreement, the Note and
the other Loan Documents shall be limited to the highest lawful rate, but any
subsequent reductions in such interest rate shall not become effective to reduce
such interest rate below the highest lawful rate until the total amount of
interest accrued hereunder and under the Note and the other Loan Documents
equals the total amount of interest that would have accrued if interest had been
computed without giving effect to this Section 8.14.
SECTION 8.15. Loan Documents. In the event of any conflict or
inconsistency between the terms and provisions of this Agreement and those of
any other Loan Document, the terms and provisions of this Agreement shall govern
and control to the extent of such conflict or inconsistency.
SECTION 8.16. Joint and Several Liability. The obligations and
liability of the Borrowers under this Agreement and the other Loan Documents
shall be joint and several.
(Page 251 of 252 Pages)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the day and year
first above written.
TRANSMEDIA NETWORK, INC., a
Delaware corporation
Attest: /s/ Xxxxx Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
-------------------------- --------------------------------
Its: Vice President Its Executive Vice President and
Chief Financial Officer
TRANSMEDIA RESTAURANT
COMPANY, INC., a Delaware corporation
Attest: /s/ Xxxxx Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
-------------------------- --------------------------------
Its: President Its Vice President
TRANSMEDIA SERVICE COMPANY,
INC., a Delaware corporation
Attest: /s/ Xxxx X. Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
-------------------------- --------------------------------
Its: Director Its Vice President
-------------------------
TMNI INTERNATIONAL INCORPORATED,
a Delaware corporation
Attest: /s/ Xxxx X. Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
-------------------------- --------------------------------
Its: President Its Vice President
-------------------------
GAMI INVESTMENTS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
--------------------------------
Its Vice President
(Page 252 of 252 Pages)
