Exhibit 99.2
This LOAN AND SECURITY AGREEMENT is entered into as of October 25,
2001, by and between NetRatings, Inc., a Delaware corporation ("Lender"),
Jupiter Media Metrix, Inc., a Delaware corporation (the "Company"), AdRelevance,
Inc., a Washington corporation ("AdRelevance"), IRG Acquisition Corp, a
California corporation ("IRG"), Jupiter Communications, Inc., a Delaware
corporation ("JCI"), MMXI Holdings, Inc., a Delaware corporation ("Holdings"),
Net Market Makers, Inc., a California corporation ("NMM") (AdRelevance, IRG,
JCI, Holdings and NMM, collectively, the "Identified Subsidiaries") (the Company
and the Identified Subsidiaries each individually a "Borrower" and collectively
the "Borrowers").
RECITALS
Borrowers wish to obtain a loan or loans from time to time from Lender,
and Lender desires to make such loan or loans to Borrowers for the purpose of
providing the Borrowers with sufficient working capital to allow the
consummation of the proposed transaction pursuant to that certain Agreement and
Plan of Merger dated October 25, 2001 by and among Lender, Acquisition Sub, LLC
and the Company. This Agreement sets forth the terms on which Lender will
advance credit to the Borrowers, and the Borrowers will repay the amounts owing
to Lender.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following
terms shall have the following definitions:
"Accounts" means all presently existing and hereafter
arising accounts, contract rights, and all other forms of obligations owing to
each Borrower arising out of the sale or lease of goods (including, without
limitation, the licensing of software and other technology) or the rendering of
services by such Borrower, whether or not earned by performance, and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by such Borrower and such Borrower's Books relating to
any of the foregoing.
"Affiliate" means, with respect to any Person, any
Person that owns or controls directly or indirectly such Person, any Person that
controls or is controlled by or is under common control with such Person, and
each of such Person's senior executive officers, directors, and partners.
"Agent" means a nationally-recognized accounting firm
which is one of the recognized "Big Five" accounting firms, chosen by Lender.
"Availability Period" means from the date of this
Agreement and continuing up to the earliest of (a) the third day immediately
preceding the mailing to the Company's stockholders of the proxy statement
relating to the adoption of the Merger Agreement by the Company's stockholders,
(b) termination of the Merger Agreement or (c) the occurrence of an Event of
Default.
"Borrower's Books" means all of each Borrower's books
and records including: ledgers; records concerning such Borrower's assets or
liabilities, the Collateral, business operations or financial condition; and all
computer programs, or tape files, and the equipment, containing such
information.
"Borrowing Criteria" means the criteria set forth on
Exhibit C hereto.
"Borrowing Notice" has the meaning set forth in
Section 2.1.
"Business Day" means any day that is not a Saturday,
Sunday, or other day on which banks in the State of California are authorized or
required to close.
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"Change in Control" shall mean a transaction in which
any "person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of a sufficient number of shares of all classes of stock then outstanding of any
Borrower ordinarily entitled to vote in the election of directors, empowering
such "person" or "group" to elect a majority of the Board of Directors of such
Borrower, who did not have such power before such transaction.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means the property described on Exhibit
A attached hereto.
"Contingent Obligation" means, as applied to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to (i) any indebtedness, lease, dividend, letter of credit
or other obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted or
sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable; (ii) any obligations with respect to
undrawn letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designed to protect such Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.
"Copyrights" means all copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or hereafter
existing, created, acquired or held.
"Credit Extension" or "Credit Extensions" means a
cash loan or cash loans extended to each Borrower hereunder.
"Daily Balance" means the amount of the Obligations
owed at the end of a given day.
"Disbursements Statement" means the Statement of U.S.
Cash Receipts and Disbursements attached as Attachment 1 to the Borrowing
Criteria listed on Exhibit C.
"Effective Date" has the meaning set forth in Section
3.2(c).
"Equipment" means all present and future machinery,
equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and
attachments in which any Borrower has any interest.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the regulations thereunder.
"Event of Default" has the meaning assigned in
Article 8.
"GAAP" means generally accepted accounting principles
as in effect from time to time.
"HSR Date" has the meaning set forth in Section
6.13(a).
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"Indebtedness" means (a) all indebtedness for
borrowed money or the deferred purchase price of property or services, including
without limitation reimbursement and other obligations with respect to surety
bonds and letters of credit, (b) all obligations evidenced by notes, bonds,
debentures or similar instruments, (c) all capital lease obligations and (d) all
Contingent Obligations.
"Insolvency Proceeding" means any proceeding
commenced by or against any Person under any provision of the United States
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.
"Intellectual Property Collateral" means all of each
Borrower's right, title, and interest in and to the following:
(a) Copyrights, Trademarks and Patents;
(b) All trade secrets, and all intellectual property
rights in computer software and computer software products now or hereafter
existing, created, acquired or held;
(c) All design rights which may be available to such
Borrower now or hereafter existing, created, acquired or held;
(d) All claims for damages by way of past, present
and future infringement of any of the rights included above, with the right, but
not the obligation, to xxx for and collect such damages for said use or
infringement of the intellectual property rights identified above;
(e) All licenses or other rights to use any of the
Copyrights, Patents or Trademarks, and all license fees and royalties arising
from such use to the extent permitted by such license or rights;
(f) All amendments, renewals and extensions of any of
the Copyrights, Trademarks or Patents; and
(g) All proceeds and products of the foregoing,
including without limitation all payments under insurance or any indemnity or
warranty payable in respect of any of the foregoing.
"Intellectual Property Security Agreement" has the
meaning set forth in Section 3.1(c).
"Inventory" means all present and future inventory in
which each Borrower has any interest, including merchandise, raw materials,
parts, supplies, packing and shipping materials, work in process and finished
products intended for sale or lease or to be furnished under a contract of
service, of every kind and description now or at any time hereafter owned by or
in the custody or possession, actual or constructive, of such Borrower,
including such inventory as is temporarily out of its custody or possession or
in transit and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any of
the foregoing and any documents of title representing any of the above, and each
Borrower's Books relating to any of the foregoing.
"Investment" means any beneficial ownership of
(including stock, partnership interest or other securities) any Person, or any
loan, advance or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"Lender Expenses" means all: reasonable costs or
expenses (including reasonable attorneys' fees and expenses) incurred by Lender
or Agent in connection with the preparation, negotiation, administration and
enforcement of the Loan Documents; reasonable Collateral audit fees; and
Lender's reasonable attorneys' fees and expenses incurred in amending, enforcing
or defending the Loan Documents (including fees and
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expenses of appeal), incurred before, during and after an Insolvency Proceeding,
whether or not suit is brought, Lender Expenses shall not include any fees and
costs associated with the Agent.
"LIBOR" means the rate per annum (rounded upward, if
necessary, to the next higher 1/16th of 1%) at which United States dollar
deposits would be offered in the London Interbank market at approximately 11:00
a.m. London time on the date on which a Borrowing Notice is received by Lender
for a period of time equal to the LIBOR Period and in an amount substantially
equal to the principal amount of the requested Credit Extension.
"LIBOR Period" means the period commencing on the
Effective Date of a Credit Extension and ending on the day which is three
hundred and sixty five days after the Closing Date. If the LIBOR Period would
otherwise end on a day which is not a Business Day, such LIBOR Period shall end
on the next succeeding Business Day; provided, however, that if such next
succeeding Business Day falls in a new calendar month, then such LIBOR Period
shall end on the immediately preceding Business Day.
"Lien" means any mortgage, lien, deed of trust,
charge, pledge, security interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement,
any Note or Notes executed by Borrowers, the Intellectual Property Security
Agreement and any other agreement entered into between any Borrower and Lender
in connection with this Agreement, all as amended or extended from time to time.
"Maturity Date" has the meaning set forth in Section
2.3.
"Material Adverse Effect" means a material adverse
effect on (i) the business operations, condition (financial or otherwise) or
prospects of any Borrower and its Subsidiaries, or (ii) the ability of each
Borrower to repay the Obligations or otherwise perform its obligations under the
Loan Documents or (iii) the value or priority of Lender's security interests in
the Collateral.
"Merger" means the merger as contemplated under the
Merger Agreement.
"Merger Agreement" means the Agreement and Plan of
Merger, dated as of October 25, 2001, by and among Lender, Acquisition Sub, LLC
and Borrower.
"Negotiable Collateral" means all of each Borrower's
present and future letters of credit of which it is a beneficiary, notes,
drafts, instruments, securities, documents of title, and chattel paper, and such
Borrower's Books relating to any of the foregoing.
"Note" or "Notes" has the meaning set forth in
Section 2.1.
"Obligations" means all Credit Extensions, debt,
principal, interest, Lender Expenses and other amounts owed to Lender by each
Borrower pursuant to the Loan Documents, whether absolute or contingent, due or
to become due, now existing or hereafter arising, including any interest that
accrues after the commencement of an Insolvency Proceeding and including any
debt, liability, or obligation owing from any Borrower to other Persons that
Lender has obtained by assignment or otherwise.
"Patents" means all patents, patent applications and
like protections including without limitation improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the
same.
"Permitted Indebtedness" means:
(h) Indebtedness of each Borrower in favor of Lender
arising under this Agreement or any other Loan Document;
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(i) Indebtedness existing on the Closing Date and
disclosed in the Schedule;
(j) Indebtedness secured by a Lien described in
clause (p) of the defined term "Permitted Liens," provided (i) such Indebtedness
does not exceed the lesser of the cost or fair market value of the equipment
financed with such Indebtedness and (ii) such Indebtedness does not exceed
$50,000 in the aggregate at any given time; and
(k) Trade payables or other account payables incurred
in the ordinary course of business.
"Permitted Investment" means:
(l) Investments existing on the Closing Date and
disclosed in the Schedule; and
(m) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having rating of at least A-2 or P-2 from either
Standard & Poor's Corporation or Xxxxx'x Investors Service, (iii) certificates
of deposit maturing no more than one (1) year from the date of investment
therein issued by a commercial lending institution; (iv) tax exempt securities
having a rating of at least A+ or A by Standard & Poor's Corporation or Xxxxx'x
Investors Service; and (v) money market accounts.
"Permitted Liens" means any of the following:
(n) Any Liens existing on the Closing Date and
disclosed in the Schedule or arising under this Agreement or the other Loan
Documents provided that except as specifically noted, such Liens have no
priority over any of Lender's security interests;
(o) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in good
faith by appropriate proceedings, provided the same have no priority over any of
Lender's security interests; and
(p) Liens (i) upon or in any equipment which was not
financed by Lender acquired or held by any Borrower or any of its Subsidiaries
to secure the purchase price of such equipment or indebtedness incurred solely
for the purpose of financing the acquisition of such equipment, or (ii) existing
on such equipment at the time of its acquisition, provided that the Lien is
confined solely to the property so acquired and improvements thereon, and the
proceeds of such equipment; and
(q) (i) Deposits and pledges made in the ordinary
course of a Borrower's business obligations securing incurred in respect of
workers' compensation, unemployment insurance or other forms of governmental
insurance or benefits, or (ii) obligations on surety or appeal bonds provided
that such obligations have no priority over any of Lender's security interest.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.
"Projected Effective Date" has the meaning set forth
in Section 6.13(b).
"Proxy Mailing Date" has the meaning set forth in
Section 6.13(a).
"Reserve Amount" has the meaning set forth in Section
6.13(b).
"Responsible Officer" means each of the Chief
Executive Officer and the Chief Financial Officer of each Borrower.
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"Schedule" means the schedule of exceptions attached
hereto approved by Lender, if any.
"Subsidiary" means any corporation, company or
partnership in which (i) any general partnership interest or (ii) more than 50%
of the stock or other units of ownership which by the terms thereof has the
ordinary voting power to elect the Board of Directors, managers or trustees of
the entity, at the time as of which any determination is being made, is owned by
each Borrower, either directly or through an Affiliate.
"Total Cash Disbursements" has the meaning set forth
on the Disbursements Statement.
"Total Cash Receipts" has the meaning set forth on
the Disbursements Statement.
"Trademarks" means any trademark and servicemark
rights, whether registered or not, applications to register and registrations of
the same and like protections, and the entire goodwill of the business of each
Borrower connected with and symbolized by such trademarks.
"U.S. Cash Balance" means the aggregate balances in
the Borrowers' deposit, securities and other accounts maintained by each
Borrower at financial or similar institutions located in the United States or
maintained by any Borrower in any institution located outside of the United
States plus the aggregate cash equivalents held by Borrowers less the cash
balances subject to certain permitted Liens as set forth in Section 1.1C(2) to
the Schedule.
1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the
terms "financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT.
2.1 Credit Extensions.
(a) Borrowers jointly and severally promise to pay to
the order of Lender, in lawful money of the United States of America, the
aggregate unpaid principal amount of all Credit Extensions and other Obligations
extended hereunder by Lender to each Borrower. Borrowers shall also pay interest
on the unpaid principal amount of such Credit Extensions at rates in accordance
with the terms hereof.
(b) Subject to and upon the terms and conditions of
this Agreement, Borrowers may request Credit Extensions in an aggregate
principal amount not to exceed Twenty-Five Million Dollars ($25,000,000).
Borrowers may prepay all or any part of a Credit Extension without penalty or
premium. Any principal prepayment shall be accompanied by payment of the
interest accrued and unpaid with respect to such prepaid principal.
(c) Borrowers may request a Credit Extension at any
time during the Availability Period provided that each Borrower has met the
Borrowing Criteria.
(d) Each Credit Extension shall be in the amount of
Five Million ($5,000,000).
(e) Each Credit Extension shall be used solely for
payment of operating expenses, trade debt and other debt all of which are
incurred in the ordinary course of Borrowers' business and in payment of
reasonable attorneys' fees and costs incurred by the Company in connection with
the Merger and for payment of those expenses set forth in Section 7.11 of the
Schedule.
(f) Each Credit Extension shall be evidenced by a
promissory note in the form attached hereto as Exhibit D (the "Note").
(g) Whenever Borrowers desire a Credit Extension,
Borrowers will deliver to Lender an irrevocable written notice signed by a
Responsible Officer specifying the amount of the requested Credit
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Extension, providing instructions for the wire transfer of such funds and
certifying that the Borrowers have satisfied each of the Borrowing Criteria (the
"Borrowing Notice"). Each such Borrowing Notice shall be in substantially the
form of Exhibit B hereto. Lender is authorized to honor a Credit Extension
request under this Agreement, based upon instructions received from a
Responsible Officer. Borrowers shall indemnify and hold Lender harmless for any
damages or loss suffered by Lender as a result of such reliance. Lender will
wire the Credit Extension to the Borrowers' account in accordance with the
wiring instructions provided by the Borrowers within five (5) Business Days of
Borrowers' satisfaction of the conditions precedent set forth in Sections 3.1
and/or 3.2.
2.2 Interest Rates and Calculations.
(a) Interest Rate. Except as set forth in Section
2.2(b), each Credit Extension shall bear interest, on the outstanding Daily
Balance thereof, at a rate equal LIBOR plus 25 basis points.
(b) Default Rate. All Obligations shall bear
interest, from and after the occurrence and during the continuance of an Event
of Default, at a rate equal to the lesser of (i) five (5) percentage points
above the interest rate applicable immediately prior to the occurrence of the
Event of Default, or (ii) the maximum rate allowed by law.
(c) Interest Calculations. All interest chargeable
under the Loan Documents shall be computed on the basis of a three hundred sixty
(360) day year for the actual number of days elapsed.
2.3 Maturity Date; Payments.
(a) The Obligations shall be immediately due and
payable without any notice, demand or any other action by Lender on the earliest
to occur of: (i) October 25, 2002; (ii) the occurrence of an Event of Default;
(iii) immediately upon the termination of the Merger Agreement if and only if
such termination occurs pursuant to Sections 8.01(e), 8.01(f), 8.01(h), or
8.01(j) thereof; or (iv) the closing of any equity, quasi-equity or debt
financing (a "Financing") by any Borrower (collectively, the "Maturity Date").
Notwithstanding the foregoing, in the event that the proceeds from a Financing
(the "Financing Proceeds") are less than the outstanding Obligations at such
time, Obligations in the amount of the Financing Proceeds shall become
immediately due and payable pursuant to Section 2.3(a)(iv), Borrowers shall pay
the Financing Proceeds to Lender upon the closing of the Financing and the
balance of the Obligations shall remain outstanding and payable by Borrowers in
accordance with the terms of this Agreement; provided, however, that any
Obligations remaining unpaid pursuant to this Section 2.3(a)(iv) shall remained
secured by the first priority, perfected security interest of Lender and shall
become immediately due and payable, without notice or demand, upon the next
Maturity Date.
(b) All Lender Expenses incurred prior to the date of
this Agreement shall be paid by Borrower concurrent with the execution of this
Agreement by the Borrowers. In additional, all unpaid Lender Expenses accrued
prior to the Effective Date (as defined below) of each Credit Extension shall be
paid in full by Borrowers prior to such Effective Date. Furthermore, subject to
Section 2.3(a), all other unpaid Lender Expenses shall be paid in full by
Borrowers within five (5) Business Days of receiving written demand from Lender
for the payment of the same.
2.4 Term. This Agreement shall become effective on the Closing
Date and, subject to Section 12.7, shall continue in full force and effect for
so long as any Obligations remain outstanding or Borrowers have the right to
request Credit Extensions under this Agreement. Notwithstanding anything to the
contrary herein, Lender shall have no obligation to make any Credit Extensions
pursuant to a Borrowing Notice under this Agreement upon the termination of the
Availability Period. Notwithstanding any termination of further Credit
Extensions, Lender's Lien on the Collateral shall remain in effect for so long
as any Obligations are outstanding.
3. CONDITIONS OF LOANS.
3.1 Conditions Precedent to Initial Credit Extensions. The
obligation of Lender to honor the initial Credit Extension request is subject to
the condition precedent that Lender shall have received, in form and substance
satisfactory to Lender, the following:
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(a) this Agreement duly executed by each Borrower;
(b) a certificate of the Secretary of each Borrower
with respect to incumbency and resolutions authorizing the execution and
delivery of this Agreement;
(c) an intellectual property security agreement duly
executed by each Borrower in the form attached hereto as Exhibit D (the
"Intellectual Property Security Agreement");
(d) evidence of insurance as required by the terms
hereof (including evidence that Lender is a loss payee and additional insured
under such insurance as required by Section 6.7) acceptable to Lender in its
reasonable discretion; and
(e) such other documents, and completion of such
other matters, as Lender may reasonably deem necessary or appropriate.
3.2 Conditions Precedent to all Credit Extensions. The
obligation of Lender to honor each Credit Extension request, including the
initial Credit Extension request, is further subject to the following
conditions:
(a) Lender shall have received a Borrowing Notice as
provided in Section 2.1;
(b) Each Borrower shall have satisfied all of the
Borrowing Criteria;
(c) the representations and warranties contained in
Section 5 shall be true and correct in all material respects on and as of the
date of the Borrowing Notice for such Credit Extension and on the date that the
funds representing such Credit Extension are wired to Borrowers (the "Effective
Date") as though made at and as of each such date, and no Event of Default shall
have occurred and be continuing, or would exist after each Effective Date
(provided, however, that those representations and warranties expressly
referring to another date shall be true, correct and complete in all material
respects as of such date). The delivery of each Borrowing Notice and the making
of each Credit Extension shall be deemed to be a representation and warranty by
each Borrower on the date of each Borrowing Notice and each Effective Date as to
the accuracy of the facts referred to in Section 3.1 and Section 3.2;
(d) the representations and warranties contained in
the Merger Agreement shall be true and correct in all material respects on and
as of the date of the Borrowing Notice for such Credit Extension and on the
Effective Date for such Credit Extension as though made at and as of each such
date, and no Event of Default shall have occurred and be continuing or would
exist after such Effective Date.
(e) all appropriate financing statements and other
similar documents shall have been duly and properly recorded with the offices of
the appropriate Secretaries of State or all other offices in which such a filing
is necessary or appropriate to perfect the security interest of Lender and
subject to those Permitted Liens set forth in Section 1.1C(2) of the Schedule to
the extent such Permitted Liens are valid and enforceable, Lender shall have a
duly perfected, first priority security interest in all of the Collateral;
(f) Borrowers shall have used best efforts to obtain
such landlord waivers as Lender deems reasonably necessary, in form and
substance acceptable to Lender. Notwithstanding the foregoing, the Borrower
shall not be required to obtain a waiver from the landlord with respect to the
premises located at 00 Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx;
(g) Lender shall have received payment in full of all
unpaid Lender Expenses accrued through the Effective Date; and
(h) Lender shall have received an account control
agreement, in form and substance satisfactory to Lender, executed by each
Borrower and the financial, depository or other institution with whom such
Borrower maintains any deposit, security, investment or similar account.
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4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each Borrower grants and
pledges to Lender a continuing security interest in all presently existing and
hereafter acquired or arising Collateral in order to secure prompt repayment of
all Obligations and in order to secure prompt performance by Borrowers of each
of their respective covenants and duties under the Loan Documents. Such security
interest constitutes a valid, first priority security interest in the presently
existing Collateral, and will constitute a valid, first priority security
interest in Collateral acquired after the date hereof, subject to those
Permitted Liens set forth in Section 1.1C(2) of the Schedule to the extent that
such Permitted Liens are valid and enforceable.
4.2 Delivery of Additional Documentation Required. Each
Borrower shall from time to time execute and deliver to Lender, at the request
of Lender, all Negotiable Collateral, all financing statements and other
documents that Lender may reasonably request, in form satisfactory to Lender, to
perfect and continue the perfection of Lender's security interests in the
Collateral and in order to fully consummate all of the transactions contemplated
under the Loan Documents.
4.3 Right to Inspect. Agent shall have the right, upon
reasonable prior notice, from time to time during Borrower's usual business
hours, to inspect each Borrower's Books and to make copies thereof and to check,
test, and appraise the Collateral in order to verify each Borrower's financial
condition or the amount, condition of, or any other matter relating to, the
Collateral. Notwithstanding the foregoing, prior to the occurrence of an Event
of Default, Agent shall not make copies of the customer list.
5. REPRESENTATIONS AND WARRANTIES.
Each Borrower, on a joint and several basis with the other
Borrowers, represents and warrants as follows:
5.1 Due Organization and Qualification. Each Borrower and each
Subsidiary is a corporation, limited liability corporation or limited
partnership duly existing under the laws of its state of organization and
qualified and licensed to do business in any state in which the conduct of its
business or its ownership of property requires that it be so qualified, except
for those jurisdictions where the failure to be so qualified or licensed
individually or in the aggregate has not had and would not reasonably be
expected to have a Material Adverse Effect.
5.2 Due Authorization; No Conflict. The execution, delivery,
and performance of the Loan Documents are within such Borrower's powers, have
been duly authorized, and are not in conflict with nor constitute a breach of
any provision contained in each Borrowers' Certificate of Incorporation or
Bylaws, nor will they constitute an event of default under any material
agreement to which any Borrower is a party or by which any Borrower is bound. No
Borrower is in default under any agreement to which it is a party or by which it
is bound which default has not had and would not reasonably be expected to have
a Material Adverse Effect.
5.3 No Prior Encumbrances. Each Borrower has good and
marketable title to the Collateral in which it holds an interest, free and clear
of Liens, except Permitted Liens.
5.4 Bona Fide Accounts. The Accounts are bona fide existing
obligations. The property and services giving rise to such Accounts has been
delivered or rendered to the account debtor or to the account debtor's agent for
immediate and unconditional acceptance by the account debtor. Borrowers have not
received notice of any actual or imminent Insolvency Proceeding of any account
debtor whose total obligations to Borrower exceed Two Hundred Thousand Dollars
($200,000).
5.5 Merchantable Inventory. All Inventory is in all material
respects of good and marketable quality, free from all material defects, except
for Inventory for which adequate reserves have been made in accordance with
GAAP.
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5.6 Intellectual Property Collateral. Borrowers are the sole
owners of the Intellectual Property Collateral registered with or subject to an
application on file with the United States Patent and Trademark Office or the
United States Copyright Office, as applicable, except for non-exclusive licenses
granted by Borrowers to their respective customers in the ordinary course of
business. In addition, Borrowers are the sole owners of all other Intellectual
Property Collateral or have sufficient ownership rights in all other
Intellectual Property Collateral to grant a security interest therein. Except as
set forth on the Schedule, each of the Patents is valid and subsisting and
enforceable, and no part of the Intellectual Property Collateral has been judged
by a court of competent jurisdiction to be invalid or unenforceable, in whole or
in part, and no claim has been made that any part of the Intellectual Property
Collateral violates the rights of any third party. Except as set forth in the
Schedule, each Borrower's rights as a licensee of intellectual property do not
give rise to more than five percent (5%) of its gross revenue in any given
month, including without limitation revenue derived from the sale, licensing,
rendering or disposition of any product or service. Except as set forth in the
Schedule, none of the Borrowers is a party to, or bound by, any agreement that
restricts the grant by any Borrower of a security interest in such Borrower's
rights under such agreement.
5.7 Name; Location of Chief Executive Office. Except as
disclosed in the Schedule, Borrower has not done business under any name other
than that specified on the signature page hereof. The chief executive office and
each other office or location of each Borrower is located at the address
indicated on the Schedule. Each Borrower's Collateral is located only at the
location(s) set forth on the Schedule.
5.8 Solvency, Payment of Debts. Borrowers, taken as a whole,
are generally able to pay their debts (including trade debts) as they mature.
5.9 Subsidiaries. The Schedule sets forth a true and complete
list of each Borrower's subsidiaries and none of the Borrowers owns any stock,
partnership interest or other equity securities of any other Person, except for
Permitted Investments.
5.10 Bank Accounts; Investment Accounts. None of any
Borrower's bank accounts, investment accounts or other similar accounts located
in the United States is maintained or invested with a Person other than such
Persons identified on the Schedule.
5.11 Priority of Lender's Lien. Upon and after the Effective
Date of the initial Credit Extension, Lender will have a first priority, duly
perfected and enforceable Lien in all of the Collateral, except for those
Permitted Liens set forth in Section 1.1C(2) of the Schedule to the extent that
such Permitted Liens are valid and enforceable.
5.12 Arrangements with Xxx Xxxxxxx. The Company has terminated
its arrangements with Xx. Xxxxxxx regarding the letter of credit and has no
further obligation to Xx. Xxxxxxx under such arrangement.
5.13 Full Disclosure. No representation, warranty or other
statement made by any Borrower in any certificate or written statement furnished
to Lender in connection with the Loan Documents contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained in such agreements, certificates or statements not
misleading.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, until payment in full
of all outstanding Obligations, and for so long as Lender may have any
commitment to extend any Credit Extension hereunder:
6.1 Compliance with Covenants Under Merger Agreement. From the
date of this Agreement and continuing until the termination of the Merger
Agreement, each Borrower shall comply with all agreements and covenants set
forth in the Merger Agreement to which such Borrower is subject.
6.2 Good Standing. Each Borrower shall maintain its and each
of its Subsidiaries' corporate existence and good standing in its jurisdiction
of incorporation and maintain qualification in each jurisdiction in
10
which the failure to so qualify could have a Material Adverse Effect. Borrowers
shall maintain, and shall cause each their respective Subsidiaries to maintain,
in force all necessary licenses, approvals and agreements, except where the
failure to maintain such licenses, approvals and agreements has not had and
would not reasonably be expected to have a Material Adverse Effect.
6.3 Government Compliance. Borrowers shall meet, and shall
cause each Subsidiary to meet, the minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA. Borrowers shall comply,
and shall cause each Subsidiary to comply, with all statutes, laws, ordinances
and government rules and regulations to which it is subject, except where the
failure to so comply has not had and would not reasonably be expected to have a
Material Adverse Effect.
6.4 Financial Statements, Reports, Certificates. Upon and
after termination of the Merger Agreement, Borrowers shall deliver the following
to Agent: (a) as soon as available, but in any event within thirty (30) days
after the end of each calendar month, an unaudited balance sheet for the Company
and unaudited income and cash flow statements for the Borrowers' operations
during such period, prepared in accordance with GAAP, consistently applied, in a
form acceptable to Agent and certified by a Responsible Officer; (b) as soon as
available, but in any event within fifteen (15) days after the end of each
calendar month, a report setting forth all transfer of funds by any Borrower to
any deposit or other account maintained by any Borrower outside of the United
States; (c) as soon as available, but in any event within ninety (90) days after
the end of Borrowers' fiscal year, audited consolidated financial statements of
Borrowers prepared in accordance with GAAP, consistently applied, together with
an unqualified opinion on such financial statements of an independent certified
public accounting firm reasonably acceptable to Agent; (d) if applicable, copies
of all statements, reports and notices sent or made available generally by
Borrower to its security holders and all reports on Forms 10-K and 10-Q filed
with the Securities and Exchange Commission; (e) promptly upon receipt of notice
thereof, a report of any legal actions pending or threatened against Borrowers
or any Subsidiary that could result in damages or costs to any Borrower or any
Subsidiary of Fifty Thousand Dollars ($50,000) or more; and (f) within thirty
(30) days of the last day of each fiscal quarter, a report signed by Borrowers,
in form acceptable to Agent, listing any applications or registrations that
Borrowers have made or filed in respect of any Patents, Copyrights or Trademarks
and the status of any outstanding applications or registrations, as well as any
material change in any Borrower's intellectual property, including but not
limited to any subsequent ownership right of Borrowers in or to any Trademark,
Patent or Copyright not specified in Exhibits A, B, and C of the Intellectual
Property Security Agreement delivered to Agent by each Borrower in connection
with this Agreement.
6.5 Inventory; Returns. Each Borrower shall keep all Inventory
in good and marketable condition, free from all material defects except for
Inventory for which adequate reserves have been made. Returns and allowances, if
any, as between each Borrower and its account debtors shall be on the same basis
and in accordance with the usual customary practices of such Borrower, as they
exist at the time of the execution and delivery of this Agreement. Borrowers
shall promptly notify Agent of all returns and recoveries and of all disputes
and claims, where the return, recovery, dispute or claim involves more than
Fifty Thousand Dollars ($50,000).
6.6 Taxes. Each Borrower shall make, and shall cause each
Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law, and
will execute and deliver to Agent, on demand, appropriate certificates attesting
to the payment or deposit thereof; and each Borrower will make, and will cause
each Subsidiary to make, timely payment or deposit of all material tax payments
and withholding taxes required of it by applicable laws, including, but not
limited to, those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and will, upon request, furnish Agent
with proof satisfactory to Agent indicating that each Borrower or a Subsidiary
has made such payments or deposits; provided that a Borrower or a Subsidiary
need not make any payment if the amount or validity of such payment is contested
in good faith by appropriate proceedings and is reserved against (to the extent
required by GAAP) by such Borrower.
6.7 Insurance.
(a) Each Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where such
Borrower's business is
11
conducted on the date hereof. Each Borrower shall also maintain insurance
relating to such Borrower's business, ownership and use of the Collateral in
amounts and of a type that are customary to businesses similar to such
Borrower's.
(b) All such policies of insurance shall be in such form, with
such companies, and in such amounts as are reasonably satisfactory to Lender.
All such policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Lender, showing Lender as loss payee
thereof, and all liability insurance policies shall show the Lender as an
additional insured and shall specify that the insurer must give at least twenty
(20) days notice to Lender before canceling its policy for any reason. Prior to
the date of this Agreement and upon Lender's request thereafter, each Borrower
shall deliver to Lender certified copies of such policies of insurance and
evidence of the payments of all premiums therefor. All proceeds payable under
any such policy shall, at the option of Lender, be payable to Lender to be
applied on account of the Obligations.
6.8 Depository Accounts. Each Borrower shall maintain only the
depository and operating accounts with those Persons identified on the Schedule.
6.9 Registration of Intellectual Property Rights.
(a) Each Borrower shall register or cause to be registered on
an expedited basis (to the extent not already registered) with the United States
Patent and Trademark Office or the United States Copyright Office, as
applicable: (i) those Copyrights listed on Exhibit A to the Intellectual
Property Security Agreement identified by Lender as material and those
intellectual property rights listed on Exhibits B and C to the Intellectual
Property Security Agreement delivered to Lender by each Borrower in connection
with this Agreement, within thirty (30) days of the date of this Agreement, (ii)
all registrable Trademarks and Patents any Borrower has developed as of the date
of this Agreement which are material to any Borrower's business as currently
operated and as contemplated to be operated and which have not yet been
registered and all Copyrights reasonably identified by Lender as material
Copyrights and which have not yet been registered, in each case within thirty
(30) days of the date of this Agreement; provided, however, that in the event
Lender identifies any Patent, Trademark or Copyright as material after the date
of this Agreement, Borrower shall have thirty (30) days from the date of such
determination to cause such Patents, Trademarks or Copyrights to be registered
on an expedited basis, and (iii) those additional intellectual property rights
developed or acquired by any Borrower from time to time in connection with any
product or service and reasonably deemed material by Lender, prior to the sale
or licensing of such product or the rendering of such service to any third
party, and prior to any Borrower's use of such product (including without
limitation major revisions or additions to the intellectual property rights
listed on such Exhibits A, B and C). Borrowers shall give Agent written notice
of all such applications or registrations within five (5) days thereof.
(b) In connection with Borrower's obligations hereunder,
Borrowers shall execute and deliver such additional instruments and documents
from time to time as Lender shall reasonably request to perfect Lender's
security interest in the Intellectual Property Collateral.
(c) Borrowers shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents and Copyrights unless
Borrowers have obtained the prior written consent of Lender that no such action
is necessary, which consent shall not be unreasonably withheld; provided,
however, that no breach of this Section 6.9(c)(i) shall be deemed to have
occurred for failure by Borrower to take appropriate action to so protect,
defend and maintain the validity and enforceability of the Trademarks, Patents
and Copyrights if Borrowers have provided written notice of the need to take
such measures to Agent promptly following any Borrower's learning of the same
and Lender fails to respond to such request for consent on a timely basis, it
being understood that the timeliness of Lender's response will depend on Agent
having sufficiently timely notice from Borrower, (ii) use their best efforts to
detect infringements of the Patents and use their best efforts to detect
infringements of the Trademarks and Copyrights where any such infringement of
any Trademark or Copyright, whether individually or in the aggregate, could be
expected to have a Material Adverse Effect and promptly advise Lender in writing
of infringements detected and (iii) not allow any Trademarks, Patents or
Copyrights to be abandoned, forfeited or dedicated to the public without the
written consent of Lender, which shall not be unreasonably withheld; provided,
however, that no breach of this Section 6.9(c)(iii) shall be deemed to have
occurred if Borrowers have provided at least sixty (60) days prior written
notice to Agent of the need to take action so as to avoid any such abandonment,
forfeiture or dedication to the public and Lender fails to respond to such
request for consent on a timely basis, it
12
being understood that the timeliness of Lender's response will depend on Agent
having sufficiently timely notice from Borrower.
(d) Subject to attorney-client privilege, Agent may audit
Borrowers' Intellectual Property Collateral to confirm compliance with this
Section, provided that Borrowers shall not be obligated to provide any
information that could reasonably be expected to interfere with or impair its
position in the pending litigation between Borrowers and Lender. Lender shall
have the right, but not the obligation, to take, at Borrowers' sole expense, any
actions that Borrowers are required under this Section to take but which any
Borrower fails to take, after fifteen (15) days' notice to Borrowers. Borrowers
shall reimburse and indemnify Lender for all reasonable costs and reasonable
expenses incurred in the reasonable exercise of its rights under this Section.
6.10 Priority of Lender's Security Interest. Borrowers shall protect,
defend and maintain the validity, perfection, enforceability and priority of the
first priority, senior Lien granted to Lender in all of the Collateral.
6.11 Disbursements Statement. As soon as available but in any event
within ten (10) days after the end of each calendar month, Borrowers shall
deliver to Agent a Disbursements Statement projecting the Total Cash Receipts of
Borrowers and the Total Cash Disbursements of Borrowers for the three month
period commencing on the date of the Disbursements Statement.
6.12 Further Assurances. At any time and from time to time Borrowers
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Lender to effect the purposes of this
Agreement.
6.13 Final Credit Extension.
(a) If the date on which the proxy statement is mailed to the
Company's stockholders (the "Proxy Mailing Date") occurs after the expiration of
the waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended or earlier termination of such waiting period (the "HSR Date"),
Borrower shall have a U.S. Cash Balance, as of the Proxy Mailing Date, equal to
the greater of (a) Five Million Dollars ($5,000,000) or (b) the amount equal to
(i) the aggregate Total Cash Disbursements per the Disbursements Statement for
the two month period commencing on the Proxy Mailing Date, less (ii) the
aggregate Total Cash Receipts per the Disbursements Statement for the two month
period commencing on the Proxy Mailing Date. If Borrower fails to meet such U.S.
Cash Balance criteria, subject to Borrower's satisfaction of the conditions
precedent in Section 3.1 and/or Section 3.2, which conditions may be waived in
Lender's discretion, notwithstanding Paragraph 1 of the Borrowing Criteria set
forth on Exhibit C, Borrower shall borrow from Lender a final Credit Extension
of Five Million Dollars ($5,000,000).
(b) If the Proxy Mailing Date occurs prior to the HSR Date,
Borrower shall have a U.S. Cash Balance, as of the Proxy Mailing Date, in an
amount equal to (i) the aggregate Total Cash Disbursements for the period
commencing on the Proxy Mailing Date and ending on the projected Effective Date
(as defined in the Merger Agreement) as determined in good faith by Lender (the
"Projected Effective Date"), less (ii) the aggregate Total Cash Receipts per the
Disbursements Statement for the period commencing on the Proxy Mailing Date and
ending on the Projected Effective Date (the "Reserve Amount"). If Borrower fails
to meet such U.S. Cash Balance criteria, subject to Borrower's satisfaction of
the conditions precedent in Section 3.1 and/or Section 3.2, which conditions may
be waived in Lender's discretion, notwithstanding Paragraph 1 of the Borrowing
Criteria on Exhibit C, Borrower shall borrow from Lender a final Credit
Extension in the amount of Five Million Dollars ($5,000,000), or a multiple
thereof, to increase the U.S. Cash Balance as of the Proxy Mailing Date to an
amount equal to or exceeding the Reserve Amount.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as Lender may have any commitment to make any Credit
Extensions hereunder, Borrowers will not do any of the following:
13
7.1 Dispositions. Convey, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer"), or permit any of their Subsidiaries to
Transfer, all or any part of its business or property, other than: (i) Transfers
set forth on the Schedule, (ii) Transfers of Inventory in the ordinary course of
business; or (iii) Transfers of non-exclusive licenses and similar arrangements
for the use of the property of each Borrower or their Subsidiaries in the
ordinary course of business.
7.2 Change in Business; Change in Control, Executive Office or
State of Incorporation. Engage in any business, or permit any of their
Subsidiaries to engage in any business, other than the businesses currently
engaged in by the Borrowers and any business substantially similar or related
thereto (or incidental thereto); or cease to conduct business in the manner
conducted by Borrowers as of the Closing Date; or suffer or permit a Change in
Control; or without thirty (30) days prior written notification to Lender,
change the location of the Collateral (other than Inventory), relocate their
respective chief executive office or any other office or change their state of
incorporation; or without Lender's prior written consent, change the date on
which their fiscal years end.
7.3 Mergers or Acquisitions. Merge or consolidate, or permit
any of their Subsidiaries to merge or consolidate, with or into any other
business organization, or acquire, or permit any of their Subsidiaries to
acquire, all or substantially all of the capital stock or property of another
Person.
7.4 Indebtedness. Create, incur, assume or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 Encumbrances. Create, incur, assume or suffer to exist any
Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of
their Subsidiaries so to do, except for Permitted Liens. Agree with any Person
other than Lender not to grant a security interest in, or otherwise encumber,
any of its property, or permit any Subsidiary to do so, except for Permitted
Liens.
7.6 Distributions. Except as set forth in Section 7.6 of the
Schedule, pay any dividends or make any other distribution or payment on account
of or in redemption, retirement or purchase of any capital stock, or permit any
of their Subsidiaries to do so.
7.7 Investments. Except as set forth in Section 7.7 of the
Schedule, directly or indirectly acquire or own, or make any Investment in or to
any Person, or permit any of their Subsidiaries so to do, other than Permitted
Investments; or maintain or invest any of its property with a Person other than
Lender or permit any of their Subsidiaries to do so unless such Person has
entered into a control agreement with Lender, in form and substance satisfactory
to Lender; or suffer or permit any Subsidiary to be a party to, or be bound by,
an agreement that restricts such Subsidiary from paying dividends or otherwise
distributing property to Borrowers.
7.8 Transactions with Affiliates. Except as set forth in
Section 7.8 of the Schedule, directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of a Borrower except for
transactions that are in the ordinary course of such Borrowers' business, upon
fair and reasonable terms that are no less favorable to the Borrower involved
than would be obtained in an arm's length transaction with a non-affiliated
Person.
7.9 Inventory and Equipment. Store the Inventory or the
Equipment with a bailee, warehouseman, or other third party unless the third
party has been notified of Lender's security interest and Lender (a) has
received an acknowledgment from the third party that it is holding or will hold
the Inventory or Equipment for Lender's benefit or (b) is in pledge possession
of the warehouse receipt, where negotiable, covering such Inventory or
Equipment. Store or maintain any Equipment or Inventory at a location other than
the locations set forth on the Schedule.
7.10 Compliance. Become an "investment company" or be
controlled by an "investment company," within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of
its important activities, the business of extending credit for the purpose of
purchasing or
14
carrying margin stock, or use the proceeds of any Credit Extension
for such purpose. Fail to meet the minimum funding requirements of ERISA, permit
a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur,
fail to comply with the Federal Fair Labor Standards Act or violate any law or
regulation, which violation could have a Material Adverse Effect, or a material
adverse effect on the Collateral or the priority of Lender's Lien on the
Collateral, or permit any of their Subsidiaries to do any of the foregoing.
7.11 Use of Credit Extensions. Except as set forth in Section
7.11 of the Schedule, use the Credit Extensions for any purpose other than the
payment of operating expenses, trade debt and other debt all of which are
incurred in the ordinary course of Borrowers' business and in payment of
reasonable attorneys' fees and costs incurred by the Company in connection with
the Merger.
7.12 Negative Pledge Agreements. Permit the inclusion in any
contract to which it becomes a party of any provisions that could restrict or
invalidate the creation of a security interest in any of Borrowers' property.
7.13 Transfers to Foreign Deposit Accounts. Borrowers shall
not transfer funds to any depository or other account maintained outside of the
United States except to meet operating expenses, trade debt and other debt
incurred in the ordinary course of Borrower's business and in payment of those
expenses set forth in Section 7.11 of the Schedule.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
Event of Default by Borrowers under this Agreement:
8.1 Payment Default. If Borrowers fail to pay, when due, any
of the Obligations;
8.2 Covenant Default. If any Borrower fails to perform any
obligation under Article 6, or violates any of the covenants contained in
Article 7 of this Agreement, or fails or neglects to perform, keep, or observe
any other material term, provision, condition, covenant, or agreement contained
in this Agreement, in any of the Loan Documents, or in any other present or
future agreement between such Borrower and Lender and as to any default under
such other term, provision, condition, covenant or agreement that can be cured,
has failed to cure such default within ten (10) days after such Borrower
receives notice thereof or such Borrower becomes aware thereof;
8.3 Violation Merger Agreement Provisions. If the Company
violates the covenants or provisions contained in Section 5.02(b)(x) or Section
6.16 of the Merger Agreement.
8.4 Material Adverse Effect. If, after the termination of the
Merger Agreement, there occurs any circumstance or circumstances that would
reasonably be expected to have a Material Adverse Effect; provided, however,
that no Event of Default shall be deemed to have occurred until the 90th day
after the occurrence of such circumstance or circumstances.
8.5 Attachment. If, after the termination of the Merger
Agreement, any material portion of any Borrower's assets is attached, seized,
subjected to a writ or distress warrant, or is levied upon, or comes into the
possession of any trustee, receiver or person acting in a similar capacity and
such attachment, seizure, writ or distress warrant or levy has not been removed,
discharged or rescinded within ten (10) days, or if any Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs, or if a judgment or other
claim becomes a lien or encumbrance upon any material portion of any Borrower's
assets, or if a notice of lien, levy, or assessment is filed of record with
respect to any of any Borrower's assets by the United States Government, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after any Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by any Borrower;
15
8.6 Insolvency. If, after the termination of the Merger
Agreement, any Borrower becomes insolvent, or if an Insolvency Proceeding is
commenced by any Borrower, or if an Insolvency Proceeding is commenced against
any Borrower and is not dismissed or stayed within thirty (30) days;
8.7 Other Agreements. If, after the termination of the Merger
Agreement, there is a default or other failure to perform in any agreement to
which any Borrower is a party or by which it is bound resulting in a right by a
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of Two Hundred Fifty Thousand Dollars
($250,000); or which could have a Material Adverse Effect;
8.8 Judgments. If, after the termination of the Merger
Agreement, a judgment or judgments for the payment of money in an amount,
individually or in the aggregate, of at least Two Hundred Fifty Thousand Dollars
($250,000) shall be rendered against any Borrower and shall remain unsatisfied
and unstayed for a period of twenty (20) days; or
8.9 Misrepresentations. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Lender, including any
Borrowing Notice, by any Responsible Officer pursuant to this Agreement or to
induce Lender to enter into this Agreement or any other Loan Document.
9. LENDER'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Lender may, at its election, without notice
of its election and without demand, do any one or more of the following, all of
which are authorized by the Borrowers:
(a) Cease advancing money or extending credit to or
for the benefit of any Borrower under this Agreement or under any other
agreement between such Borrower and Lender;
(b) Settle or adjust disputes and claims directly
with account debtors for amounts, upon terms and in whatever order that Parent
reasonably considers advisable;
(c) Make such payments and do such acts as Lender
considers necessary or reasonable to protect its security interest in the
Collateral. Each Borrower agrees to assemble the Collateral if Lender so
requires, and to make the Collateral available to Lender as Lender may
designate. Each Borrower authorizes Lender to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Lender's determination appears to be prior or superior
to its security interest and to pay all expenses incurred in connection
therewith. With respect to any Borrower's owned premises, each Borrower hereby
grants Lender and Lender a license to enter into possession of such premises and
to occupy the same, without charge, in order to exercise any of Lender's rights
or remedies provided herein, at law, in equity, or otherwise;
(d) Set off and apply to the Obligations any and all
(i) amounts and deposits of each Borrower held by Lender, or (ii) indebtedness
at any time owing to or for the credit or the account of Borrower held by
Lender;
(e) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Lender is hereby granted a license or other right,
solely pursuant to the provisions of this Section 9.1, to use, without charge,
each Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Lender's exercise of its rights under this Section 9.1, each
Borrower's rights under all licenses and all franchise agreements shall inure to
Lender's benefit;
16
(f) Dispose of the Collateral by way of one or more
contracts or transactions, for cash or on terms, in such manner and at such
places (including each Borrower's premises) as Lender determines is commercially
reasonable, and apply any proceeds to the Obligations in whatever manner or
order Lender deems appropriate;
(g) Lender may credit bid and purchase at any public
sale; and
(h) Any deficiency that exists after disposition of
the Collateral as provided above will be paid immediately by Borrowers.
9.2 Power of Attorney. Effective only upon the occurrence and
during the continuance of an Event of Default, each Borrower hereby irrevocably
appoints Lender (and any of Lender's designated officers, or employees) as each
such Borrower's true and lawful attorney to: (a) send requests for verification
of Accounts or notify account debtors of Lender's security interest in the
Accounts; (b) endorse such Borrower's name on any checks or other forms of
payment or security that may come into Lender's possession; (c) sign such
Borrower's name on any invoice or xxxx of lading relating to any Account, drafts
against account debtors, schedules and assignments of Accounts, verifications of
Accounts, and notices to account debtors; (d) dispose of any Collateral; (e)
make, settle, and adjust all claims under and decisions with respect to each
such Borrower's policies of insurance; (f) settle and adjust disputes and claims
respecting the accounts directly with account debtors, for amounts and upon
terms which Lender determines to be reasonable; (g) file, in its sole
discretion, one or more financing or continuation statements and amendments
thereto, relative to any of the Collateral without the signature of each such
Borrower where permitted by law; and (h) transfer the Intellectual Property
Collateral into the name of Lender or a third party to the extent permitted
under the California Uniform Commercial Code; provided Lender may exercise such
power of attorney to sign the name of such Borrower on any of the documents
described in Section 4.2 regardless of whether an Event of Default has occurred,
including without limitation to modify, in its sole discretion, any intellectual
property security agreement entered into between such Borrower and Lender
without first obtaining such Borrower's approval of or signature to such
modification by amending Exhibits A, B, and C, thereof, as appropriate, to
include reference to any right, title or interest in any Copyrights, Patents or
Trademarks acquired by such Borrower after the execution hereof or to delete any
reference to any right, title or interest in any Copyrights, Patents or
Trademarks in which such Borrower no longer has or claims to have any right,
title or interest. The appointment of Lender as each Borrower's attorney in
fact, and each and every one of Lender's rights and powers, being coupled with
an interest, is irrevocable until all of the Obligations have been fully repaid
and performed and Lender's obligation to provide Credit Extensions hereunder is
terminated.
9.3 Accounts Collection. After the occurrence of an Event of
Default, Lender may, through Agent, notify any Person owing funds to any
Borrower of Lender's security interest in such funds and verify the amount of
such Account. Each Borrower shall collect all amounts owing to such Borrower for
Lender, receive in trust all payments as Lender's trustee, and immediately
deliver such payments to Lender in their original form as received from the
account debtor, with proper endorsements for deposit.
9.4 Lender Expenses. If any Borrower fails to pay any amounts
or furnish any required proof of payment due to third Persons, as required under
the terms of this Agreement, then Lender may do any or all of the following
after reasonable notice to such Borrower: (a) make payment of the same or any
part thereof; or (b) obtain and maintain insurance policies of the type
discussed in Section 6.8 of this Agreement, and take any action with respect to
such policies as Lender deems prudent. Any amounts so paid or deposited by
Lender shall constitute Lender Expenses, shall be immediately due and payable,
and shall bear interest at the then applicable rate hereinabove provided, and
shall be secured by the Collateral. Any payments made by Lender shall not
constitute an agreement by Lender to make similar payments in the future or a
waiver by Lender of any Event of Default under this Agreement.
9.5 Liability of Agent and Lender for Collateral. So long as
Lender complies with reasonable practices, Lender shall not in any way or manner
be liable or responsible for: (a) the safekeeping of the Collateral; (b) any
loss or damage thereto occurring or arising in any manner or fashion from any
cause; (c) any diminution in the value thereof; or (d) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person whomsoever.
All risk of loss, damage or destruction of the Collateral shall be borne by
Borrowers.
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9.6 Remedies Cumulative. Lender's rights and remedies under
this Agreement, the Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default on Borrowers' part shall be deemed a continuing waiver. No
delay by Lender shall constitute a waiver, election, or acquiescence by it. No
waiver by Lender shall be effective unless made in a written document signed on
behalf of Lender and then shall be effective only in the specific instance and
for the specific purpose for which it was given.
9.7 Demand; Protest. Each Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, notice of any default, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of accounts, documents, instruments, chattel
paper, and guarantees at any time held by Lender on which such Borrower may in
any way be liable.
10. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the Company, any Borrower, Lender or to Agent,
as the case may be, at its addresses set forth below:
If to Company: Jupiter Media Metrix, Inc.
00 Xxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx, General Counsel
FAX: (000) 000-0000
If to Borrowers: c/o Jupiter Media Metrix, Inc.
00 Xxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx, General Counsel
FAX: (000) 000-0000
with a copy to: Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxx, Esq.
FAX: (000) 000-0000
If to Lender: NetRatings, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxx, General Counsel
FAX: (000) 000-0000
with a copy to: Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxx X. Xxxxx, Esq.
FAX: (000) 000-0000
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If to Agent: ___________________________
___________________________
___________________________
Attn:______________________
FAX: (___) ________________
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE.
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard to
principles of conflicts of law. Each of the Borrowers and Lender hereby submits
to the exclusive jurisdiction of the state and Federal courts located in the
County of Santa Xxxxx, State of California.
12. GENERAL PROVISIONS.
12.1 Successors and Assigns. This Agreement shall bind and
inure to the benefit of the respective successors and permitted assigns of each
of the parties; provided, however, that neither this Agreement nor any rights
hereunder may be assigned by any Borrower without Lender's prior written
consent, which consent may be granted or withheld in Lender's sole discretion.
Lender shall have the right without the consent of or notice to any Borrower to
sell, transfer, negotiate, or grant participation in all or any part of, or any
interest in, Lender's obligations, rights and benefits hereunder.
12.2 Indemnification. Each Borrower shall defend, indemnify
and hold harmless Lender and its respective officers, employees, and agents
against: (a) all obligations, demands, claims, and liabilities claimed or
asserted by any other party in connection with the transactions contemplated by
this Agreement; and (b) all losses or Lender Expenses in any way suffered,
incurred, or paid by Lender as a result of or in any way arising out of,
following, or consequential to transactions between Lender and such Borrower
whether under this Agreement, or otherwise (including without limitation
reasonable attorneys' fees and expenses), except for losses caused by Lender's
gross negligence or willful misconduct.
12.3 Time of Essence. Time is of the essence for the
performance of all obligations set forth in this Agreement.
12.4 Severability of Provisions. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
12.5 Amendments in Writing; Integration. Neither this
Agreement nor the other Loan Documents can be amended or terminated orally. All
prior agreements, understandings, representations, warranties, and negotiations
between the parties hereto with respect to the subject matter of this Agreement
and the other Loan Documents, if any, are merged into this Agreement and the
other Loan Documents.
12.6 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement.
12.7 Survival. All covenants, representations and warranties
made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding or Lender has any obligation to make any Credit
Extensions to Borrowers. The obligations of Borrowers to indemnify Lender with
respect to the expenses, damages, losses, costs and liabilities described in
Section 12.2 shall survive until all applicable statute of limitations periods
with respect to actions that may be brought against Lender have run.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
LENDER: BORROWERS:
NetRatings, Inc. Jupiter Media Metrix, Inc.
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxx X. Xxxxxxxx
--------------------------------- ----------------------------
Title: Chief Executive Officer, President Title: Chief Financial Officer
and Director ----------------------------
---------------------------------
Jupiter Communications, Inc.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------
Title: Vice President
----------------------------
MMXI Holdings, Inc.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------
Title: Vice President
----------------------------
Net Market Makers, Inc.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------
Title: Vice President
----------------------------
IRG Acquisition Corp.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------
Title: Vice President
----------------------------
AdRelevance, Inc.
By: /s/ Xxxx Xxxxxxx
----------------------------
Title: President
----------------------------
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