EXHIBIT 10.18
EXECUTION COPY
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US $30,000,000
Loan Agreement
between
PaineWebber Capital Inc.,
and
Roundtable Partners, L.L.C.
Dated as of June 19, 1998
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TABLE OF CONTENTS
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Heading Page Number
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ARTICLE I........................................................................1
Definitions and Accounting Terms........................................1
1.1. Certain Defined Terms.............................................1
1.2. Descriptive Headings; Certain Interpretations.....................9
1.3. Computation of Time Periods.......................................9
1.4. Accounting Terms.................................................10
ARTICLE II......................................................................10
Amount and Terms of the Advances.......................................10
2.1. Loan.............................................................10
2.2. Guarantee........................................................10
2.3. Scheduled Principal Repayment of the Loan........................10
2.4. Interest; Default Rate, Late Fee.................................10
2.5. Prepayments......................................................11
2.6. Payments and Computations........................................11
2.7. Taxes............................................................11
2.8. Use of Proceeds..................................................12
ARTICLE III.....................................................................12
Conditions to Effectiveness and Lending................................12
ARTICLE IV......................................................................14
Representations and Warranties.........................................14
ARTICLE V.......................................................................18
Covenants of the Borrower..............................................18
5.1. Affirmative Covenants............................................18
5.2. Negative Covenants...............................................23
ARTICLE VI......................................................................27
Events of Default......................................................27
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ARTICLE VII.....................................................................30
Miscellaneous..........................................................30
7.1 Amendments, Etc..................................................30
7.2 Notices, Etc.....................................................30
7.3 No Waiver; Remedies..............................................30
7.4. Costs and Expenses..............................................30
7.5. Right of Set-off................................................31
7.6. Binding Effect..................................................32
7.7. Assignment......................................................32
7.8. Confidentiality.................................................33
7.9. Governing Law...................................................33
7.10. Execution in Counterparts.......................................33
7.11. Jurisdiction, Etc...............................................33
7.12. Waiver of Jury Trial............................................34
7.13. Survival of Representations and Warranties......................34
7.14 Termination......................................................34
Schedule
Schedule IV(t) Intellectual Property
Schedule 5.2 (c)(iv) Existing Debt
Exhibits
Exhibit A Form of Note
Exhibit B Form of Guarantee
Exhibit C Form of Opinion of Xxxxxxx X. Xxxxxx, Esq.
Exhibit D Form of Opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Exhibit E Form of Assumption Agreement
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Loan Agreement, dated as of June 19, 1998 between PaineWebber Capital
Inc., a Delaware corporation (the "Lender"), and Roundtable Partners,
L.L.C., a Delaware limited liability company (the "Borrower").
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In consideration of the mutual benefits to be derived from this
Agreement and of the representations, warranties, conditions, agreements and
promises contained herein and other good and valuable consideration, the parties
agree as follows:
Article I
Definitions And Accounting Terms
1.1. Certain Defined Terms. (a) As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with
such Person. For purposes of this definition, the term "control"
(including the terms "controlling", "controlled by" and "under common
control with") of a Person means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of Voting Stock, by contract or
otherwise.
"Aggregate Debit Items" means all those items listed as debit items in
Exhibit A to Rule 15c3-3, of the SEC promulgated under the Securities
Exchange Act.
"Aggregate Indebtedness" has the meaning set forth in Rule 15c3-1 of
the SEC promulgated under the Securities Exchange Act.
"Assignment and Assumption" means an assignment and assumption of the
rights and obligations of this Agreement entered into by a Lender and an
assignee of the Lender.
"AMEX" means the American Stock Exchange, Inc., and any successor.
"Borrower Confidential Information" means information that the
Borrower, the Guarantor or any of their respective Significant Subsidiaries
furnishes to the Lender in connection with this Agreement and the
transactions contemplated hereby (other than the IPO), but does not include
any such information that is or becomes generally available to the public
or that is or becomes available to the Lender from a source other than the
Lender, the Borrower, the Guarantor or such Significant Subsidiary so long
as the Lender has no knowledge that such source is making such information
available in breach of a confidentiality agreement with the Borrower, the
Guarantor or any of their respective Affiliates.
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"Business Day" means a day of the year other than a Saturday or Sunday
on which banks are not required or authorized by law to close in the City
of New York or London, England; provided, however, that the term "Business
Day" as used in the definitions of Interest Determination Date means a day
of the year on which banks are not required or authorized to close in
London, England.
"Consolidated" refers to the consolidation of accounts in accordance
with GAAP.
"Consolidated Members' Equity" means the amount that would appear as
members' equity (excluding all the classes of Preferred Members' Equity) on
the Consolidated balance sheet of the Borrower and its Subsidiaries.
"Consolidated Stockholders' Equity" means the amount that would appear
as stockholders' equity (excluding all classes of Preferred Stock) on the
Consolidated balance sheet of the Guarantor and its Subsidiaries prepared
in accordance with GAAP.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Debt" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all obligations of such Person for
the deferred purchase price of property or services, (c) all obligations of
such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all obligations of such Person created or arising under
any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all obligations of
such Person as lessee under leases that have been or are required to be, in
accordance with GAAP, recorded as capital leases, (f) all obligations,
contingent or otherwise, of such Person in respect of acceptances, letters
of credit or similar extensions of credit, (g) all obligations relating to
short sales of securities, (h) all obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment (other than accrued,
but undeclared dividends) in respect of any capital stock of or other
ownership or profit interest in such Person or any other Person or any
warrants, rights or options to acquire such capital stock, valued, in the
case of Redeemable Preferred Stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends, (i)
all Debt of others referred to in clauses (a) through (h) above or clause
(j) below guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person through an
agreement (A) to pay or purchase such Debt or to advance or supply funds
for the payment or purchase of such Debt, (B) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily
for the purpose of enabling the debtor to make payment of such Debt or to
assure the holder of such Debt against loss, (C) to supply funds to or in
any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or
such
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services are rendered) primarily for the purpose of enabling the debtor to
make payment of such Debt or to assure the holder of such Debt against loss
or (D) otherwise to assure a creditor against loss, and (j) all Debt
referred to in clauses (a) through (i) above secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including, without limitation, accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Debt.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given
or lapse of time or both.
"Designated LIBOR Page" means (a) the display on Page 3750 of the Dow
Xxxxx Telerate Service for the purpose of displaying the London interbank
offered rates of major banks for United States Dollars (or such other page
as may replace that page on that service for the purpose of displaying such
rates) or (b) if no such rates appear on the Dow Xxxxx Telerate Service,
the display on the Reuters Monitor Money Rates Service for the purpose of
displaying the London interbank offered rates of major banks for United
States Dollars.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the Borrower's controlled group, or under common
control with the Borrower, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA Event" means (a) the occurrence of a reportable event, within
the meaning of Section 4043 of ERISA, with respect to any Plan unless the
30-day notice requirement with respect to such event has been waived by the
PBGC; (b) the application for minimum funding waiver with respect to a
Plan; (c) the provision by the administrator of any Plan of a notice of
intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a Plan amendment referred to in
Section 4041(e) of ERISA); (d) the cessation of operations at a facility of
the Borrower or the Guarantor or any of their respective ERISA Affiliates
in the circumstances described in Section 4062(e) of ERISA; (e) the
withdrawal by the Borrower or the Guarantor or any of their respective
ERISA Affiliates from a Multiple Employer Plan during a Plan year for which
it was a "substantial employer", as defined in Section 4001(a)(2) of ERISA;
(f) the failure by the Borrower or the Guarantor or any of their respective
ERISA Affiliates to make a payment to a Plan as a result of which the
conditions for the imposition of a Lien under Section 302(f)(1) of ERISA
are satisfied; (g) the adoption of an amendment to a Plan requiring the
provision of security to such Plan, pursuant to Section 307 of ERISA; or
(h) the receipt by Borrower or the Guarantor or any of their respective
ERISA Affiliates from the PBGC of any notice relating to (i) the
institution by the PBGC of proceedings to terminate a Plan, pursuant to
Section 4042 of ERISA or (ii) the occurrence of any event or condition
described in Section 4042 of ERISA that could constitute grounds for the
termination of, or the appointment of a trustee to
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administer, a Plan.
"Guarantor" means Knight/Trimark Group, Inc., a Delaware corporation
and any successor.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements,
currency future or option contracts and any agreement to purchase or
repurchase securities.
"Intellectual Property" means patents, patent applications, trademarks
(registered or unregistered) and service marks (and any applications or
registrations therefor), trade secrets, trade names, corporate names,
copyrights, copyright registrations (and any applications therefor), know-
how, inventions and other intellectual property and proprietary rights,
whether or not subject to statutory registration or protection, or other
similar type of proprietary intellectual property right.
"Interest Determination Date" means, with respect to any Interest
Reset Date, the second Business Day next preceding such Interest Reset
Date.
"Interest Payment Date" means the third Wednesday of each of each
month during the term of the Loan.
"Interest Reset Date" means the third Wednesday of each month during
the term of the Loan; provided, however, that the initial Interest Reset
Date shall be the Effective Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986.
"IPO" means the initial public offering of the Class A Common Stock,
par value $0.01 per share, of the Guarantor.
"Knight" means Knight Securities L.P., a New York limited partnership,
and any successor to the business of Knight including any Person that
succeeds to the business of Knight in connection with the Reorganization
(in which case, Knight shall be a reference to such Person and not to
Knight Securities L.P.).
"Lender Confidential Information" means information that the Lender or
any of its Affiliates furnished to the Borrower, the Guarantor or any of
their respective Affiliates in connection with this Agreement and the
transactions contemplated hereby (other than the IPO), but does not include
any such information that is or becomes generally available to the public
or that is or becomes available to the Borrower, the Guarantor or any of
their respective Affiliates from a source other than the Borrower, the
Guarantor or any of their respective Affiliates and other than the Lender
or any of its Affiliates so long as the Borrower, the Guarantor or their
Affiliates has no knowledge that such source is making such information
available in breach of a confidentiality agreement with the Lender or any
of its Affiliates.
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"Lender's Account" means the account of the Lender at Bank of New
York, ABA No. 000000000, account number 8900114177.
"LIBOR" means, for each Interest Reset Date, the determination by the
Lender on the Interest Determination Date immediately preceding such
Interest Reset Date of the arithmetic mean of the rates (unless the
Designated LIBOR Page by its terms provides only for a single rate, in
which case such single rate shall be used) for deposits in the London
interbank market in United States Dollars having a one month maturity
commencing on the Interest Reset Date immediately following the Interest
Determination Date that appears on the Designated LIBOR Page as of 11:00
a.m., London time, on such Interest Determination Date or, if no rates
appear on the Designated LIBOR Page, the Lender will request the principal
London offices of each of four major reference banks in the London
interbank market, as selected by the Lender, to provide the Lender with its
offered quotation for deposits in United States Dollars for the period of
one month commencing on the Interest Reset Date immediately following such
Interest Determination Date to prime banks in the London interbank market
at approximately 11:00 a.m., London time, on such Interest Determination
Date and in a principal amount that is representative, in the judgment of
the Lender, for a single transaction in United States Dollars in such
market at such time. If at least two such quotations are provided, LIBOR
determined on such Interest Determination Date will be the arithmetic mean
of such quotations. If fewer than two quotations are provided, LIBOR
determined on such Interest Determination Date will be the arithmetic mean
of the rates quoted at approximately 11:00 a.m. in the City of New York on
such Interest Determination Date for loans made on the Interest Reset Date
immediately following such Interest Determination Date in United States
Dollars to leading European banks having a one month maturity and in a
principal amount that is representative, in the judgment of the Lender, for
a single transaction in United Dates Dollars in such market at such time by
three major banks in the City of New York selected by the Lender; provided,
however, that if the banks so selected by the Lender are not quoting as
mentioned in this sentence, LIBOR with respect to such Interest
Determination Date will be LIBOR in effect on such Interest Determination
Date.
"Lien" means any mortgage, pledge, lien, security interest or other
charge or encumbrance of any kind, including the lien or retained security
title of a conditional vendor and any easement, right of way or other
encumbrance on title to real property.
"Margin Stock" means all "margin stock" (within the meaning of
Regulation U).
"Material Adverse Change" means any material adverse change in the
financial condition, results of operations, prospects or condition of the
properties of the Borrower or of the Borrower and its Subsidiaries
considered as a whole or in the prospects of the Guarantor and its
Subsidiaries considered as a whole, it being understood that neither (a)
the decline in market price of the securities of the Guarantor in and of
itself nor (b) the IPO shall constitute a Material Adverse Change.
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"Material Adverse Effect" means a material adverse effect on the
financial condition, results of operations, prospects or condition of the
properties of the Borrower or of the Borrower and its Subsidiaries
considered as a whole, or, after the Reorganization, of the Guarantor or of
the Guarantor and its Subsidiaries considered as a whole, it being
understood that neither (a) the decline in the market price of the
securities of the Guarantor in and of itself nor (b) the IPO shall
constitute a Material Adverse Effect.
"Maturity Date" means the first anniversary of the Effective Date.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower or any of its ERISA Affiliates
or the Guarantor or any of its ERISA Affiliates is making or accruing an
obligation to make contributions, or has within any of the preceding three
Plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single-employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any of its ERISA Affiliates and at least one Person other than
the Borrower and its ERISA Affiliates or the Guarantor or any of its ERISA
Affiliates and at least one Person other than the Guarantor and its ERISA
Affiliates or (b) was so maintained within the past five Plan years of such
plan and in respect of which the Borrower or any of its ERISA Affiliates or
the Guarantor or any of its ERISA Affiliates could have liability under
Section 4064 or 4069 of ERISA in the event such Plan has been or were to be
terminated.
"NASD" means the National Association of Securities Dealers, Inc., and
any successor.
"Net Capital" has the meaning specified in Rule 15c3-1 of the SEC
promulgated under the Securities Exchange Act.
"NYSE" means the New York Stock Exchange, Inc., and any successor.
"Outside IPO Date" means September 30, 1998.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association,
joint venture, limited liability company or other entity.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Preferred Members' Equity" means, with respect to any limited
liability company, membership interests issued by such limited
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liability company that are entitled to a preference or priority over any
other membership interests issued by such limited liability company upon
any distribution of such limited liability company's assets, whether by
dividend or upon liquidation.
"Preferred Stock" means, with respect to any corporation, capital
stock issued by such corporation that is entitled to a preference or
priority over any other capital stock issued by such corporation upon any
distribution of such corporation's assets, whether by dividend or upon
liquidation.
"Principal Payment Date" means the third Wednesday of December 1998
and March 1999.
"Qualified Investments" means, with respect to any Person, investments
in (a) notes, bonds or other obligations of the United States of America or
any agency thereof that as to principal and interest constitute direct
obligations or are guaranteed by the United States of America, (b)
certificates of deposit or other deposit instruments or account of banks or
trust companies organized under the laws of the United States or any state
thereof that have capital and surplus of at least $250,000,000 (or any part
of a bank holding company group having such capital and surplus in the
aggregate) and are members of the Federal Deposit Insurance Corporation,
(c) commercial paper of the Lender or commercial paper of other issuers
that is rated not less than prime-one or A-1 or their equivalents by
Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation,
respectively, or their successors or municipal bonds with at least the
equivalent rating, (d) any direct or indirect wholly-owned Subsidiary of
the Borrower or the Guarantor, (e) repurchase obligations of any bank or
trust company satisfying the requirements of clause (b) of this paragraph,
(f) securities with maturities of less than six months from the date of
acquisition backed by standby letters of credit issued by any commercial
bank satisfying the requirements of clause (b) of this paragraph, (g) money
market funds, 100% of the assets of which are invested in investments
described in clauses (a) through (c) and clauses (e) and (f), (h) equity
securities in which Knight or Trimark are making a market, provided that
any such securities (i) are quoted on the Nasdaq National Market, the
Nasdaq SmallCap Market or the Consolidated Quotation Service, (ii) are not
in the aggregate in excess of 5% of the issued and outstanding class of any
such securities of any issuer and (iii) do not have an aggregate initial
purchase price in excess of $2,500,000 and (i) any securities or other
assets not satisfying the criteria of clauses (a) through (h) not in excess
of $1,000,000 in the aggregate.
"Redeemable" means, with respect to any capital stock, Debt or other
right or obligations, any such right or obligations that (a) the issuer has
undertaken to redeem at a fixed or determinable date or dates, whether by
operation of a sinking fund or otherwise, or upon the occurrence of a
condition not solely within the control of the issuer or (b) is redeemable
at the option of the holder.
"Reorganization" means the exchange by all of the members of the
Borrower of their respective membership interests in the Borrower (other
than Preferred Members' Equity of the Borrower which is redeemed by the
Borrower) for shares of Class A
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Common Stock, par value $0.01 per share, or Class B Common Stock, par value
$0.01 per share, in each case, of the Guarantor such that after the
Reorganization, each of the Borrower (unless merged into the Guarantor or
liquidated or dissolved as permitted by this Agreement), Knight and Trimark
becomes a direct or indirect wholly-owned Subsidiary of the Guarantor.
"Regulations T, U and X" means Regulations T, U and X issued by the
Board of Governors of the Federal Reserve System.
"SEC" means the Securities and Exchange Commission, and any successor.
"Securities Act" means the Securities Act of 1933.
"Securities Exchange Act" means the Securities Exchange Act of 1934.
"Significant Subsidiary" means, at any time, each Subsidiary of a
Person that, at such time, constitutes one of the "significant
subsidiaries" of such Person, as defined in Regulation S-X issued by the
SEC. For the avoidance of doubt, Knight and Trimark shall be Significant
Subsidiaries of the Borrower prior to the Reorganization and shall be
Significant Subsidiaries of the Guarantor after the Reorganization.
"Single Employer Plan" means a single-employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) prior to the Reorganization is
maintained for employees of the Borrower or any of its ERISA Affiliates or
the Guarantor or any of its ERISA Affiliates and no Person other than the
Borrower, the Guarantor or their respective ERISA Affiliates and after the
Reorganization is maintained for employees of the Guarantor or any of its
ERISA Affiliates and no person other than the Guarantor or its ERISA
Affiliates or (b) was so maintained and in respect of which the Borrower or
any of its ERISA Affiliates or the Guarantor or any of its ERISA Affiliates
could have liability under Section 4069 of ERISA in the event such Plan has
been or were to be terminated.
"SIPA" means the Securities Investor Protection Act of 1970.
"SIPC" means the Securities Investor Protection Corporation, and any
successor.
"Street Loans" mean short term borrowings, whether or not
collateralized, made by any Significant Subsidiary of the Borrower or the
Guarantor for the purpose of purchasing or carrying securities or
commodities for any such Significant Subsidiary or for customers of any
such Significant Subsidiary.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company or trust of which (or in which) more
than 50% of (a) the issued and outstanding Voting Stock, (b) the interest
in the capital or profits of such partnership, limited liability company or
joint venture or (c) the beneficial interest in such trust is at the time
directly or indirectly owned or controlled by such Person, by such Person
and one or more of its other Subsidiaries or by one or more of such
Person's other
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Subsidiaries.
"Trimark" means Trimark Securities, L.P., a New York limited
partnership, and any successor to the business of Trimark including any
Person that succeeds to the business of Trimark in connection with the
Reorganization (in which case, Trimark shall be a reference to such Person
and not to Trimark Securities, L.P.).
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or Persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle
E of Title IV of ERISA.
(b) As used in this Agreement, the following terms shall have the
meanings set forth in the Article or Section opposite such term.
Defined Term Article or Section
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Effective Date III
Event of Default VI
GAAP 1.4
Guarantee 2.2
Indemnified Party 7.4(b)
Latest Balance Sheet IV(g)
Loan 2.1
Note 2.1
1.2. Descriptive Headings; Certain Interpretations. (a) Descriptive
headings are for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.
(b) Whenever any party makes any representation, warranty or other
statement to such party's knowledge, such party will be deemed to have made due
inquiry into the subject matter of such representation, warranty or other
statement.
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(c) Except as otherwise expressly provided in this Agreement, the
following rules of interpretation apply to this Agreement: (i) the singular
includes the plural and the plural includes the singular; (ii) "or" and "any"
are not exclusive and "include" and "including" are not limiting; (iii) a
reference to any agreement or other contract includes permitted supplements and
amendments; (iv) a reference to a law includes any amendment or modification to
such law and any rules or regulations issued thereunder; (v) a reference to a
Person includes its permitted successors and assigns; (vi) a reference to "GAAP"
refers to United States GAAP; and (vii) a reference in this Agreement to an
Article, Section, Exhibit or Schedule is to the Article, Section, Exhibit or
Schedule of this Agreement.
1.3. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
1.4. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the audited
financial statements for the fiscal year ended December 31, 1997 referred to in
paragraph (g) of Article IV ("GAAP").
Article II
Amount And Terms Of The Advances
2.1. Loan. The Lender agrees, subject to the terms of this
Agreement, to make a term loan (the "Loan") to the Borrower on the Effective
Date hereof in the principal amount of $30,000,000. The Borrower shall not be
entitled to reborrow all or any part of the principal of the Loan which shall be
paid or prepaid at any time. The Loan shall be evidenced by a promissory note
in the form of Exhibit A delivered to the Lender on the date hereof (the
"Note").
2.2. Guarantee. The obligations of the Borrower under this Agreement
and under the Note will be irrevocably guaranteed by the Guarantor pursuant to a
guarantee in the form of Exhibit B delivered to the Lender on the date hereof
(the "Guarantee").
2.3. Scheduled Principal Repayment of the Loan. On each Principal
Payment Date, the Borrower shall repay, and there shall become due and payable,
$5,000,000 of the principal of the Loan, and on the Maturity Date, the Borrower
shall repay, and there shall become due and payable $20,000,000 of the principal
of the Loan; provided, however, that, notwithstanding the foregoing, if the IPO
has been consummated on or prior to the Outside IPO Date, the Borrower shall
repay, and there shall become due and payable, on the Maturity Date, the entire
principal amount of the Loan and no such amounts shall be payable on any
Principal Payment Date.
2.4. Interest; Default Rate; Late Fee.
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(a) The outstanding principal of the Loan shall accrue and bear
interest at a rate per annum equal to the rate determined on the applicable
Interest Determination Date by reference to LIBOR plus 2%. Commencing on the
Effective Date, the rate at which interest on the Loan is payable will be reset
as of each Interest Reset Date. The interest rate in effect on each day during
the term of the Loan shall be (i) if such day is an Interest Reset Date, the
interest rate determined on the Interest Determination Date immediately
preceding such Interest Reset Date or (ii) if such day is not an Interest Reset
Date, the interest rate determined on the Interest Determination Date
immediately preceding the next preceding Interest Reset Date; provided, however,
that the interest rate in effect for the ten days immediately prior to the
Maturity Date shall be that in effect on the tenth day preceding the Maturity
Date.
(b) Prior to the stated or any accelerated maturity of the Loan, the
Borrower shall pay accrued and unpaid interest on the Loan, without setoff,
deduction or counterclaim monthly in arrears on each Interest Payment Date. On
the stated or any accelerated maturity of the Loan, the Borrower shall pay
accrued and unpaid interest thereon, without setoff, deduction or counterclaim.
(c) During the existence of any Event of Default, the outstanding
principal under the Note and, to the extent permitted by applicable law, any
interest, fees or any other amounts due and payable at such time hereunder shall
bear interest, from and including the date such Event of Default occurred until
such Event of Default is waived in writing by the Lender or fully cured to the
Lender's reasonable satisfaction, equal to the rate determined on the applicable
Interest Determination Date by reference to LIBOR plus 4%, compounded daily and
payable upon demand. Nothing in this Section 2.4(c) shall affect the Lender's
right to exercise any of its rights or remedies (including those provided in
Article VI) arising upon the occurrence of an Event of Default.
2.5. Prepayments. The Borrower may, upon at least three Business
Day's written notice to the Lender stating the proposed date and aggregate
principal amount of the prepayment, and if such notice is given the Borrower
shall, prepay the outstanding principal amount of the Loan in whole or in part,
together with accrued interest to the date of such prepayment on the principal
amount prepaid; provided, however, that (a) each partial prepayment shall be in
an aggregate principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof and (b) the Borrower shall be obligated to
reimburse the Lenders in respect thereof pursuant to Section 7.4(c).
2.6. Payments and Computations. (a) The Borrower shall make each
payment hereunder and under the Note not later than 11:00 A.M. (New York City
time) on the day when due in United States Dollars to the Lender at the Lender's
Account in same day funds.
(b) Computations of interest shall be made on the basis of a year of
360 days for the actual number of days (including the first day but excluding
the last day) occurring in the period for which such interest is payable.
(c) If the Maturity Date or any Principal Payment Date, Interest Reset
Date or Interest Payment Date would otherwise be a day that is not a Business
Day, the Maturity Date, or
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such Principal Payment Date, Interest Reset Date or Interest Payment Date, as
the case may be, shall be postponed to the next succeeding day that is a
Business Day, except that, in the case of any Interest Reset Date or Interest
Payment Date, if such Business Day is in the next succeeding calendar month,
such Interest Reset Date or Interest Payment Date, as the case may be, shall be
the immediately preceding Business Day.
2.7. Taxes. The Borrower shall pay and indemnify the Lender against
any present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies (but excluding withholding taxes, income taxes
and franchise taxes) that arise from any payment made hereunder or under the
Note or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or the Note.
2.8. Use of Proceeds. Substantially all of the proceeds of the Loan
shall be available to make cash distributions to certain members of the Borrower
of all or a portion of such members' shares of undistributed profits of the
Borrower through March 31, 1998 and to make cash distributions to each of the
Borrower's members of the total amount of profits of the Borrower attributable
to each such member's interest in the Borrower accrued from March 31, 1998 to
the date of the consummation of the Reorganization and the remainder shall be
available for working capital and general company purposes.
Article III
Conditions To Effectiveness And Lending
The obligations of the Lender to make the Loan shall become effective
on and as of the first date (the "Effective Date") on which the following
conditions have been satisfied or waived:
(a) There shall have occurred no Material Adverse Change since
December 31, 1997.
(b) There shall exist no action, suit, litigation or proceeding
or, to the knowledge of the Borrower, investigation affecting the
Borrower or any of its Significant Subsidiaries or the Guarantor or
any of its Significant Subsidiaries pending or, to the knowledge of
the Borrower, threatened before any court or arbitrator or before or
by any governmental agency or regulatory authority that (i) is
reasonably likely to have a Material Adverse Effect or (ii) adversely
affects the Lender's rights and interests with respect to the Loan or
the transactions contemplated hereby or affects the Borrower's ability
to perform its obligations under this Agreement or the Note or the
Guarantor's ability to perform its obligations under this Agreement
and the Guarantee.
(c) All governmental and third-party consents and approvals
necessary in connection with the execution, delivery and performance
by the Borrower of this Agreement or the Note and by the Guarantor of
this Agreement and the
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Guarantee, and all material governmental and third-party consents and
approvals necessary in connection with the transactions contemplated
hereby and thereby, shall have been obtained to the extent required to
be obtained on or prior to the Effective Date (without the imposition
of any conditions that are not acceptable to the Lender) and shall
remain in effect.
(d) The Borrower shall have notified the Lender in writing as to
the proposed Effective Date.
(e) The Borrower shall have paid all accrued fees and out-of-
pocket expenses of the Lender (including the reasonable fees and
expenses of counsel to the Lender) for which invoices have been
presented to the Borrower.
(f) On the Effective Date, the following statements shall be true
and the Lender shall have received a certificate signed by a duly
authorized officer of the Borrower, dated the Effective Date, stating
that:
(i) the representations and warranties contained in Article
IV are true and correct on and as of the Effective Date; and
(ii) no Default has occurred and is continuing.
(g) The Lender shall have received the Note, dated the Effective
Date, to the order of the Lender.
(h) The Lender shall have received the Guarantee, dated the
Effective Date, irrevocably guaranteeing the obligations hereunder and
under the Note.
(i) The Lender shall have received on or before the Effective
Date the following, each dated such date, in form and substance
reasonably satisfactory to the Lender:
(i) Certified copies of the resolutions of the Advisory
Committee of the Borrower approving this Agreement and the Note,
and of all documents evidencing other necessary company action
and governmental approvals, if any, with respect to this
Agreement and the Note.
(ii) Certified copies of the resolutions of the Board of
Directors of the Guarantor approving the Guarantee, and of all
documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to the Guarantor.
(iii) A certificate of an officer of the Borrower
certifying the names and true signatures of the officers of the
Borrower authorized to sign this Agreement and the Note and the
other documents to be delivered
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hereunder.
(iv) A certificate of an officer of the Guarantor certifying
the names and true signatures of the officers of the Guarantor
authorized to sign the Guarantee and the other documents to be
delivered hereunder.
(v) A legal opinion of Xxxxxxx X. Xxxxxx, Esq., General
Counsel of the Borrower, substantially in the form of Exhibit C.
(vi) A legal opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, special counsel for the Borrower, substantially in the form
of Exhibit D.
Article IV
Representations And Warranties
The Borrower represents and warrants as of the date hereof and as of
the Effective Date as follows:
(a) Organization, Standing and Power. Each of the Borrower, the
Guarantor and their respective Significant Subsidiaries is duly organized,
validly existing and in good standing under the laws of its state of
organization. The Borrower and each of its Significant Subsidiaries is
duly qualified to do business or licensed and is in good standing as a
foreign company or as a foreign limited partnership, as the case may be,
and in the case of Knight and Trimark, are registered as broker-dealers, in
each other jurisdiction in which it owns or leases properties or conducts
business (i) so as to require such qualification, licensing or registration
and (ii) in which the failure to so qualify or be licensed or registered
would have a Material Adverse Effect. Each of the Borrower, the Guarantor
and each of their respective Significant Subsidiaries has all requisite
power and authority, corporate or otherwise, and all material governmental
authorizations, to conduct its business and own its properties and, in the
case of the Borrower, to execute and deliver, and to perform its
obligations under, this Agreement and the Note and, in the case of the
Guarantor, to execute and deliver, and to perform its obligations under,
this Agreement and the Guarantee.
(b) Borrower Authority and No Conflicts. The execution, delivery and
performance by the Borrower of this Agreement and the Note, and the
consummation of the transactions contemplated hereby, have been duly
authorized by all necessary action on the part of the Borrower, and do not
and will not (i) require any consent or approval of the members of the
Borrower, (ii) violate any provision of any law (including the Securities
Act), rule, regulation (including Regulations T, U and X), order, writ,
judgment, injunction, decree, determination or award applicable to the
Borrower or any of its Significant Subsidiaries, (iii) violate the
certificate of formation or operating agreement of the Borrower, (iv)
result in the breach of, or constitute a default or an event which, with
notice or lapse of time or both, would constitute a default under, any
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indenture, loan or credit agreement or any agreement, lease or instrument
to which the Borrower or any of its Significant Subsidiaries is a party or
by which it or any of its Significant Subsidiaries or any of its properties
or the properties of any of its Significant Subsidiaries may be bound or
affected or (v) result in or require the creation or imposition of any Lien
upon or with respect to any of the properties of the Borrower or any of its
Significant Subsidiaries, except, in the cases of clauses (ii), (iv) and
(v), where such violation, breach, default or Lien could not reasonably be
expected to have a Material Adverse Effect.
(c) Guarantor Authority and No Conflicts. The execution, delivery and
performance by the Guarantor of this Agreement and of the Guarantee have
been duly authorized by all necessary corporate action on the part of the
Guarantor, and do not and will not (i) require any consent or approval of
the stockholders of the Guarantor, (ii) violate any provision of any law
(including the Securities Act), rule, regulation (including Regulations T,
U and X), order, writ, judgment, injunction, decree, determination or award
applicable to the Guarantor, (iii) violate the certificate of incorporation
or by-laws of the Guarantor, (iv) result in the breach of, or constitute a
default or an event which, with notice or lapse of time or both, would
constitute a default under, any indenture, loan or credit agreement or any
agreement, lease or instrument to which the Guarantor or any of its
Significant Subsidiaries is a party or by which it or any of its properties
or the properties of any of its Significant Subsidiaries may be bound or
affected or (v) result in or require the creation or imposition of any Lien
upon or with respect to any of the properties of the Guarantor or any of
its Significant Subsidiaries, except, in the cases of clauses (ii), (iv)
and (v), where such violation, breach, default or Lien could not reasonably
be expected to have a Material Adverse Effect.
(d) Consents. No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or
any other third party is required to be obtained or made by the Borrower in
connection with the execution, delivery and performance of this Agreement
or the Note, or by the Guarantor in connection with the execution, delivery
and performance of this Agreement or the Guarantee, other than
informational filings required to be made in the ordinary course which are
not a condition to the Borrower's performance under this Agreement or the
Note or to the Guarantor's performance under this Agreement or the
Guarantee.
(e) Execution, Delivery and Enforceability of this Agreement and the
Note. This Agreement has been, and the Note when delivered hereunder will
have been, duly executed and delivered by the Borrower. This Agreement is,
and the Note when executed and delivered hereunder will be, a legal, valid
and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally (whether
considered in a proceeding in equity or at law).
(f) Execution, Delivery and Enforceability of the Guarantee. This
Agreement
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has been, and the Guarantee when delivered hereunder will have been, duly
executed and delivered by the Guarantor. The Guarantee, when executed and
delivered hereunder, will be a legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally (whether considered in a proceeding in equity
or at law).
(g) Financial Statements. The Consolidated statement of financial
condition of the Borrower and its Subsidiaries as at December 31, 1997, and
the related Consolidated statements of income and of changes in members'
equity and of cash flows for the year then ended of the Borrower and its
Subsidiaries, certified by Price Waterhouse LLP, independent accountants,
and the Consolidated statement of financial condition of the Borrower and
its Subsidiaries as at March 31, 1998 (the "Latest Balance Sheet"), and the
related Consolidated statements of income and of changes in members' equity
and of cash flows of the Borrower and its Subsidiaries for the three months
then ended, duly certified by the principal financial and accounting
officer or Treasurer of the Borrower, copies of which have been furnished
to the Lender, fairly present, subject, in the case of the Latest Balance
Sheet and such statements of earnings and of changes in members' equity and
of cash flows for the three months then ended, to normal and year-end audit
adjustments, the Consolidated financial condition of the Borrower and its
Subsidiaries as at such dates and the Consolidated results of the
operations and cash flows of the Borrower and its Subsidiaries for the
periods ended on such dates, all in accordance with GAAP. Since December
31, 1997, there has been no Material Adverse Change.
(h) Litigation, Etc. There is no action, suit, litigation or
proceeding or, to the knowledge of the Borrower, investigation, affecting
the Borrower, the Guarantor or any of their respective Significant
Subsidiaries pending or, to the knowledge of the Borrower, threatened
before any court or arbitrator or before or by any governmental agency or
regulatory authority that (i) is reasonably likely to have a Material
Adverse Effect or (ii) adversely affects the Lender's rights or interests
with respect to the Loan or the transactions contemplated hereby or affects
the Borrower's ability to perform its obligations under this Agreement or
the Note or the Guarantor's ability to perform its obligations under this
Agreement or the Guarantee.
(i) Investment Company. Neither the Borrower nor the Guarantor is an
"investment company", as such term is defined in the Investment Company Act
of 1940.
(j) Margin Stock. No portion of the Loan is intended to be used for
the purpose of purchasing or carrying any Margin Stock.
(k) Taxes. Each of the Borrower, the Guarantor and their respective
Significant Subsidiaries has filed, has caused to be filed or has been
included in all tax returns (federal, state, local and foreign) required to
have been filed and has paid or
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caused to be paid all taxes shown to be due and payable on such returns,
except to the extent permitted under Section 5.1(a).
(l) Disclosure. No report, financial statement, exhibit, schedule or
other information furnished by the Borrower or the Guarantor or their
respective Subsidiaries to the Lender in writing in connection with the
negotiation of this Agreement, the Guarantee or the Note, contained or
contains any untrue statement of a material fact or omitted or omits to
state any material fact necessary in order to make the statement therein,
in light of the circumstances under which they were made, not misleading.
(m) Maintenance of Licenses, Etc. Each of Knight and Trimark are
member organizations in good standing of the NASD and is duly registered as
a broker-dealer with the SEC pursuant to the Securities Exchange Act. Each
of Knight and Trimark have paid all material assessments required to be
paid by it pursuant to the SIPA, except to the extent permitted under
Section 5.1(a).
(n) ERISA (i) The Borrower and each of its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA
and the Internal Revenue Code with respect to each Plan; (ii) no ERISA
Event has occurred or is reasonably expected to occur with respect to any
Plan; (iii) as of the last annual actuarial valuation date, the current
liability (as defined in Section 412 of the Internal Revenue Code) under
each Plan does not exceed the fair market value of the assets of such Plan
and there has been no material adverse change in the funding status of any
such Plan since such date; (iv) neither the Borrower nor any if its ERISA
Affiliates has incurred or is reasonably expected to incur any Withdrawal
Liability to any Multiemployer Plan; and (v) neither the Borrower nor any
of its ERISA Affiliates has been notified by the sponsor of a Multiemployer
Plan that such Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, and no such
Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated, within the meaning of Title IV of ERISA.
(o) Post Retirement Benefits. Except as set forth in the financial
statements referred to in paragraph (g) of this Article IV, none of the
Borrower, the Guarantor or any of their respective Significant Subsidiaries
have any material liability with respect to "expected post retirement
benefit obligations" within the meaning of Statement of Financial
Accounting Standards No. 106.
(p) Title. As of the date hereof, each of the Borrower and its
Significant Subsidiaries has good and valid title to all of their
respective properties of every kind and nature now purported to be owned by
it, including all of the assets reflected on the Latest Balance Sheet,
subject to dispositions of such assets in the ordinary course of business,
in each case free from all Liens other than Liens permitted by Section
5.2(b).
(q) No Defaults. None of the Borrower, the Guarantor or any of their
respective Significant Subsidiaries is in default under any Contractual
Obligation in any respect that (i) is reasonably likely to have a Material
Adverse Effect or (ii) adversely
-20-
affects the Lender with respect to the Loan or the transactions
contemplated hereby or affects the Borrower's ability to perform its
obligations under this Agreement or the Note or the Guarantor's ability to
perform its obligations under this Agreement or the Guarantee.
(r) Regulation X. Xxxxxx and Trimark are broker-dealers subject to
the provisions of Regulation T. Each of Knight and Trimark maintain
procedures and internal controls reasonably adapted to ensure that they do
not extend or maintain credit to or for their respective customers other
than in accordance with Regulation T.
(s) FOCUS Reports. The contents of the FOCUS Reports of each of
Knight and Trimark for the three months ended March 31, 1998, copies of
which have been furnished to the Lender, are true and correct as of the
date thereof.
(t) Intellectual Property. (i) The Borrower and its Subsidiaries have
all rights to Intellectual Property as are used or are necessary in
connection with the businesses of the Borrower and its Subsidiaries as
presently conducted, and the Borrower and its Subsidiaries (A) own or (B)
otherwise have the right to use, execute, reproduce, display, perform,
modify, enhance, distribute, prepare derivative works of and sublicense,
without payment to any other Person, all such Intellectual Property free
and clear of the claims of others and of all Liens. Set forth on Schedule
IV(t) is a true and complete list of all material Intellectual Property
described in clause (B) of the immediately preceding sentence other than
shrink-wrap software.
(ii) The conduct of the businesses of the Borrower and its
Subsidiaries as presently conducted does not, to the knowledge of the
Borrower, violate, conflict with or infringe the Intellectual Property
of any other Person. Except as set forth on Schedule IV(t), (i) no
claims are pending, or, to the knowledge of the Borrower, threatened
against any of the Borrower, the Guarantor or any of their respective
Subsidiaries by any Person with respect to the ownership, validity,
enforceability, effectiveness or use of any material Intellectual
Property used in connection with the businesses of the Borrower, the
Guarantor or any of their respective Subsidiaries and (ii) during the
past five years, none of the Borrower, the Guarantor or any of their
respective Subsidiaries have violated any material rights relating to
Intellectual Property of any Person.
(u) Ownership of Significant Subsidiaries. The Borrower owns, and has
the power and right to vote, 99.99% of the Voting Stock of each of Knight
and Trimark and of any other issued and outstanding securities convertible
into such Voting Stock.
(v) IPO. The Borrower has no reason to believe that the IPO will not
be consummated by the Outside IPO Date.
Article V
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Covenants Of The Borrower
5.1. Affirmative Covenants. So long as the Loan shall remain
unpaid, the Borrower and the Guarantor shall:
(a) Compliance with Laws, Etc. Comply, and cause each Significant
Subsidiary of the Borrower or the Guarantor, as the case may be, to comply,
in all material respects, with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority, domestic or
foreign, such compliance to include, without limitation, compliance with
ERISA and paying before the same become delinquent (including all
applicable extension periods) all taxes, assessments and governmental
charges or levies imposed upon the Borrower, the Guarantor or any of their
respective Significant Subsidiaries or upon any of their respective
properties, except to the extent such laws, rules, regulations, orders,
taxes, assessments or governmental charges or levies are being contested in
good faith and by appropriate proceedings and appropriate reserves are
being maintained in accordance with GAAP, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable
against its other creditors other than any Lien that attaches and becomes
enforceable against its other creditors after the consummation of the IPO
securing obligations that, when aggregated with all other obligations
secured by such Liens, is not in excess of $1,000,000. (b) Preservation of
Corporate Existence, Etc. Preserve and maintain, and cause each Significant
Subsidiary of the Borrower or the Guarantor, as the case may be, to
preserve and maintain, its existence, in the case of the Borrower and the
Guarantor, in the State of Delaware, and, in the case of Knight and
Trimark, in the State of New York prior to the Reorganization and in the
State of Delaware after the Reorganization, and duly qualify and remain
duly qualified or licensed, and cause each such Significant Subsidiary to
duly qualify and remain duly qualified or licensed, as a foreign
corporation, limited liability company or limited partnership, as the case
may be, in good standing, and cause Knight and Trimark to register and
remain registered as broker-dealer, in each other jurisdiction where its
ownership, leasing or operation of property or the conduct of its business
requires such qualification, licensing or registration, except where the
failure to so qualify or be licensed or registered would not have a
Material Adverse Effect; provided, however, that nothing contained in this
Section 5.1(b) shall prevent any merger or consolidation or liquidation or
dissolution permitted by Section 5.2(a).
(c) Maintenance of Insurance. Maintain, and cause each Significant
Subsidiary of the Borrower or the Guarantor, as the case may be, to
maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as is usually carried
by companies engaged in similar businesses and owning similar properties in
the same general areas in which the Borrower, the Guarantor or any of their
respective Significant Subsidiaries operates, except that the Borrower, the
Guarantor, or any such Significant Subsidiary may effect workmen's
compensation or similar insurance in respect of operations in any
jurisdiction either through an insurance fund operated by such jurisdiction
or by causing to be maintained a system or systems of
-22-
self-insurance which are in accord with applicable laws.
(d) Visitation Rights. At any reasonable time and from time to time,
permit the Lender, or any agents or representatives thereof, upon
reasonable notice by the Lender to the Borrower or the Guarantor, to
examine and make copies of and abstracts from the records and books of
account of, and visit the properties of, the Borrower, the Guarantor and
any of their respective Significant Subsidiaries, and to discuss the
affairs, finances and accounts of the Borrower, the Guarantor and any of
their respective Significant Subsidiaries with any of their respective
officers and with their respective independent accountants.
(e) Keeping of Books. Keep, and cause each of their respective
Significant Subsidiaries, to keep, proper books of record and account in
accordance with GAAP.
(f) Maintenance of License, Etc. Maintain, and cause each of their
respective Significant Subsidiaries to maintain, all licenses, memberships,
registrations, permits and governmental and regulatory approvals and
authorizations material to their respective businesses as conducted from
time to time, including, without limitation, causing each of Knight and
Trimark and their respective successors to remain a member organization in
good standing of the NASD and duly registered as a broker-dealer with the
SEC pursuant to the Securities Exchange Act.
(g) Reporting Requirements. Furnish to the Lender:
(i) as soon as possible and in any event within five days
after the Borrower knows of the occurrence of any Default and
which is continuing, notice of such Default and a certificate of
the principal financial and accounting officer or Treasurer of
the Borrower or the Guarantor setting forth details of such
Default and the action that the Borrower or the Guarantor (or any
of their respective Subsidiaries) proposes to take with respect
thereto;
(ii) prior to the Reorganization, as soon as available and
in any event within 60 days after the end of each of the first
three quarters of each fiscal year of the Borrower, the unaudited
Consolidated statement of financial condition of the Borrower and
its Subsidiaries as at the end of such quarter and the unaudited
Consolidated statements of income and of changes in members'
equity and of cash flows of the Borrower and its Subsidiaries for
the period commencing at the end of the previous fiscal year and
ending with the end of such quarter, setting forth in each case
in comparative form the corresponding figures for the
corresponding period of the previous fiscal year, all in
reasonable detail and duly certified (subject to normal audit and
year-end adjustments) by the principal financial and accounting
officer or Treasurer of the Borrower as having been prepared in
accordance with GAAP (except as disclosed and concurred to by the
Borrower's independent auditors);
-23-
(iii) after the Reorganization, as soon as available and in
any event within 60 days after the end of each of the first three
quarters of each fiscal year of the Guarantor, the unaudited
Consolidated statement of financial condition of the Guarantor
and its Subsidiaries as at the end of such quarter and the
unaudited Consolidated statements of income and of changes in
stockholders' equity and of cash flows of the Guarantor and its
Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures
for the corresponding period of the previous fiscal year, all in
reasonable detail and duly certified
(subject to normal audit and year-end adjustments) by the
principal financial and accounting officer or Treasurer of the
Guarantor as having been prepared in accordance with GAAP (except
as disclosed and concurred to by the Guarantor's independent
auditors);
(iv) prior to the Reorganization, as soon as available and
in any event within 120 days after the end of each fiscal year of
the Borrower, a copy of the annual audit report for such year for
the Borrower and its Subsidiaries, including the Consolidated
statement of financial condition of the Borrower and its
Subsidiaries as of the end of such fiscal year and the
Consolidated statements of income, of changes in members' equity
and of cash flows of the Borrower and its Subsidiaries for such
fiscal year;
(v) after the Reorganization, as soon as available and in
any event within 120 days after the end of each fiscal year of
the Guarantor, a copy of the annual audit report for such year
for the Guarantor and its Subsidiaries, including the
Consolidated statement of financial condition of the Guarantor
and its Subsidiaries as of the end of such fiscal year and the
Consolidated statements of income, of changes in stockholders'
equity and of cash flows of the Guarantor and its Subsidiaries
for such fiscal year;
(vi) concurrently with each set of financial statements
furnished to the Lender pursuant to subparagraph (ii) or (iv) of
this Section 5.1(g), a certificate of the principal financial and
accounting officer or Treasurer of the Borrower stating that he
has no knowledge that a Default has occurred and is continuing
or, if a Default has occurred and is continuing, a statement
setting forth details of such Default and the action that the
Borrower (or any Subsidiary of the Borrower) proposes to take
with respect thereto;
(vii) concurrently with each set of financial statements
furnished to the Lender pursuant to subparagraph (iii) or (v) of
this Section 5.1(g), a certificate of the principal financial and
accounting officer or Treasurer of the Guarantor stating that he
has no knowledge that a Default
-24-
and is continuing or, if a Default has occurred and is
continuing, a statement setting forth details of such Default and
the action that the Guarantor (or any Subsidiary of the
Guarantor) proposes to take with respect thereto;
(viii) promptly after the commencement thereof, notice of
all actions, suits, investigations, litigation and proceedings of
the type described in paragraph (h) of Article IV;
(ix) promptly after the sending or filing thereof, and to
the extent not required to be furnished by any other provision of
this Section 5.1(g), (A) copies of all proxy statements,
financial statements and reports which the Guarantor may send to
its public security holders, (B) copies of all regular, periodic
and special reports which the Guarantor may file with the SEC
pursuant to Section 13(a) of the Securities Exchange Act, or
which the Guarantor may file with any national securities
exchange or with the NASD and (C) copies of FOCUS Reports filed
by Knight and Trimark with the SEC;
(x) promptly after the occurrence thereof, notice of any
ERISA Event and, with respect to any Multiemployer Plan, any
withdrawal by the Borrower or any of its ERISA Affiliates or by
the Guarantor or any of its ERISA Affiliates from such Plan or
that a Multiemployer Plan is in reorganization insolvent or
terminated;
(xi) promptly after the occurrence thereof, notice of any
merger or consolidation permitted by Section 5.2(a) to which the
Borrower, the Guarantor or any of their respective Significant
Subsidiaries is a party; and
(xii) such other information respecting the business,
properties or condition of operations, financial or otherwise, of
the Borrower, the Guarantor or any of their respective
Subsidiaries as the Lender may from time to time reasonably
request.
(h) Consolidated Net Equity. Maintain (i) at all times prior to the
Reorganization, Consolidated Members' Equity at least equal to $25,000,000
and (ii) on and at all times after the Reorganization, Consolidated
Stockholders' Equity at least equal to $50,000,000.
(i) Ownership of Knight and Trimark. Maintain at all times ownership
of, and the power and right to vote, at least 99.99% of the issued and
outstanding shares of the Voting Stock of Knight and Trimark and ownership
of any other issued and outstanding securities convertible into such Voting
Stock.
(j) Compliance with Contractual Obligations. Comply, and cause their
respective Significant Subsidiaries to comply, with any Contractual
Obligation of the
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Borrower, the Guarantor or any of their respective Significant Subsidiaries
if non-compliance with such Contractual Obligation would be reasonably
likely to have a Material Adverse Effect.
(k) Maintenance of Property. Keep, and cause each of their respective
Significant Subsidiaries to keep, all of their respective properties in
good working order and condition, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
5.2. Negative Covenants. So long as the Loan shall remain unpaid,
the Borrower and the Guarantor shall not:
(a) Mergers, Etc. (i) Merge or consolidate, or permit any of their
respective Significant Subsidiaries to merge or consolidate, with or into
any Person or (ii) sell, assign, lease or otherwise dispose of, or permit
any of their respective Significant Subsidiaries to sell, assign, lease or
otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of their respective assets (whether
now owned or hereafter acquired) to any Person provided that (A)
Significant Subsidiaries of the Borrower and the Guarantor may merge with
or into the Borrower or the Guarantor or with or into any other wholly-
owned Subsidiary of the Borrower or the Guarantor so long as, in any such
merger with or into any other wholly-owned Subsidiary of the Borrower or
the Guarantor, the surviving corporations are a wholly-owned Subsidiary of
the Borrower or the Guarantor, (B) the Borrower may merge with or into the
Guarantor, (C) the Borrower may liquidate or dissolve so long as the
Guarantor has assumed all of the obligations of the Borrower hereunder and
under the Note pursuant to the Assumption Agreement in the form attached
hereto as Exhibit E and all or substantially all of the assets of the
Borrower are distributed to the Guarantor as part of such liquidation or
dissolution, (D) the Borrower may exchange the partnership interests of
Knight and Trimark held by it for equity interests in any wholly-owned
Subsidiary of the Borrower or the Guarantor so long as, after any such
exchange, Knight and Trimark remain direct or indirect wholly-owned
Subsidiaries of the Borrower or the Guarantor and (E) the Borrower may
distribute, by way of dividend, transfer or other disposition partnership
interests in Knight and Trimark (which shall mean at least 99.99% of the
Voting Stock of Knight and Trimark) to the Guarantor or to any other
wholly-owned Subsidiary of the Guarantor so long as after any such
dividend, transfer or disposition, Knight and Trimark (which shall mean at
least 99.99% of the Voting Stock of Knight and Trimark) are direct or
indirect wholly-owned Subsidiaries of the Guarantor; provided, however, in
each such case, that no Default shall have occurred and be continuing at
the time of such proposed transaction or would result therefrom.
(b) Liens, Etc. (i) Create or suffer to exist, or permit any of
their respective Significant Subsidiaries to create or suffer to exist, any
Lien on or with respect to any of the shares of capital stock or Debt of
any Significant Subsidiary of the Borrower or of the Guarantor, whether now
owned or hereafter acquired by the Borrower, the Guarantor, or any of their
respective Subsidiaries; or
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(ii) create or suffer to exist, or permit any of their respective
Significant Subsidiaries to create or suffer to exist, any Lien on or
with respect to any of the properties not referred to in the next
preceding clause (i) of the Borrower, the Guarantor or any their
respective Significant Subsidiaries, whether now owned or hereafter
acquired, or assign, or permit any of their respective Significant
Subsidiaries to assign, any account or chattel paper (as such terms
are defined in the Uniform Commercial Code as in effect from time to
time in the State of New York) not referred to in the next preceding
clause (i);
other than, in the case of clause (i) above, Liens permitted by clause
(A), (B) or (D) below and, in the case of clause (ii) above, Liens and
assignments of accounts or chattel paper permitted by any of clauses
(A) through (L) below (and in each case, other than clause (G) or (I),
in which the Debt or other obligation secured by such Lien or the
consideration for the accounts or chattel paper subject to such
assignment exceeds $1,000,000 in the aggregate to the extent (1)
possession of the property encumbered by or subject to such Lien or
assignment has not been lawfully taken on or after default, and such
property has not been lawfully retained after default in satisfaction
of the obligation secured by such Lien and has not been disposed of by
the Person in whose favor such Lien or assignment exists and (2) no
enforcement, execution, levy or foreclosure proceeding shall have been
commenced if (x) such proceeding shall continue undismissed or
unbonded or shall not be effectively stayed for a period of 60
consecutive days after the commencement thereof or (y) a final, non-
appealable order or decree ordering or approving the relief sought in
such proceeding shall be entered and shall remain unsatisfied for ten
days after entry thereof):
(A) Liens for taxes, assessments or governmental charges or
levies to the extent not required to be paid under Section 5.1(a);
(B) Liens imposed by law of landlords, carriers, warehousemen,
mechanics, materialmen and other similar Liens arising in the ordinary
course of business with respect to obligations not yet due or being
contested in good faith;
(C) Liens created or deposits made in the ordinary course of
business in connection with workmen's compensation, unemployment
insurance and other types of social security, the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
performance and return-of-money bonds and other similar obligations
(in each case exclusive of obligations which constitute Debt);
(D) any judgment Lien;
(E) easements, rights-of-way, restrictions and other similar
encumbrances on title to real property incurred in the ordinary course
of business and that do not interfere with the ordinary conduct of the
business of the Borrower, the Guarantor or any of their respective
Significant Subsidiaries;
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(F) purchase money Liens on property acquired or held by the
Borrower, the Guarantor or any of their respective Significant
Subsidiaries in the ordinary course of business to secure the purchase
price of such property or to secure Debt incurred solely for the
purpose of financing the acquisition, construction or improvement of
such property or other Liens existing on any such property or assets
at the time of acquisition (other than any such Liens created in
contemplation of such acquisition) that do not secure the purchase
price; provided, however, that no such Lien shall extend to or cover
any property other than the property being acquired, constructed on or
improved;
(G) Liens on Margin Stock or in respect of obligations to
repurchase securities and other Liens securing Street Loans and other
obligations to and for customers or brokers, and other Liens, so long
as any such Lien referred to in this clause (G) is incurred in the
ordinary course of business of the Borrower, the Guarantor or any of
their respective Significant Subsidiaries;
(H) Liens incurred by a Significant Subsidiary of the Borrower or
the Guarantor at any time when such Significant Subsidiary is not a
Significant Subsidiary of the Borrower or the Guarantor;
(I) any lease or sublease granted by the Borrower, the Guarantor
or any of their respective Significant Subsidiaries as lessor or
sublessor to another Person as lessee or sublessee in the ordinary
course of the business of the Borrower, the Guarantor or such
Significant Subsidiary;
(J) any assignment of an account or chattel paper (1) as part of
the sale of the business out of which such account or chattel paper
arose; (2) for the purpose of collection only, (3) under a contract to
an assignee who is also to do the performance under such contract or
(4) in whole or partial satisfaction of a pre-existing indebtedness;
(K) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any of
the Liens permitted by clause (F) or (H) above upon the same real
property or assets theretofore subject thereto without increase in the
amount of Debt secured thereby; and
(L) Liens not otherwise permitted hereunder which secure
obligations not exceeding $1,000,000 in aggregate principal at any
time outstanding.
(c) Debt. Create or suffer to exist, or permit any of their
respective Significant Subsidiaries to create or suffer to exist, any Debt
other than:
(i) Debt arising under this Agreement and the Note;
(ii) Debt which is subordinated in the right of payment to the
Loan on terms reasonably satisfactory to the Lender;
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(iii) Debt in respect of letters of credit issued for the
account of the Borrower, the Guarantor or any of their respective
Significant Subsidiaries in the ordinary course of business;
(iv) Debt existing on the date hereof and listed on Schedule
5.2(c)(iv);
(v) Debt of the Borrower, the Guarantor and their respective
Significant Subsidiaries in respect of sales of securities not yet
purchased in an aggregate principal amount not to exceed $80,000,000
at any time;
(vi) additional Debt of the Borrower, the Guarantor and their
respective Significant Subsidiaries in an aggregate principal amount,
when added to the aggregate principal amount of all other Debt of the
Borrower, the Guarantor and their respective Significant Subsidiaries,
other than Debt described in clauses (i) and (v) above, not to exceed
$30,000,000 at any time; and
(vii) any refinancings, refundings, renewals or extensions of
Debt permitted hereunder, provided that the principal amount thereof
is not increased.
(d) Net Capital. Permit (i) the Aggregate Indebtedness of Knight or
Trimark to exceed 1,500% of its Net Capital at any time; or, if Knight or
Trimark are operating under paragraph (a)(1)(ii) of Rule 15c3-1 of the SEC
promulgated under the Securities Exchange Act, permit the Net Capital of
Knight or Trimark to be less than the greater of $250,000 and 2% of
Knight's or Trimark's, as the case may be, Aggregate Debit Items at any
time; or
(ii) (A) Combined Net Capital of Knight and Trimark to be less
than $25,000,000 at any time for five Business Days or (B) Net Capital of
Knight to be less than $15,000,000 at any time for five Business Days.
(e) Investments, Loans, Acquisitions and Hedge Agreements. (i)
Purchase or acquire, or permit any of their respective Significant
Subsidiaries to purchase or acquire, any share of capital stock,
partnership interest, evidence of Debt or any other security of any other
Person, or make any investment in any other Person, other than, in the case
of Knight and Trimark, in connection with market making or in the ordinary
course of business of Knight or Trimark; (ii) purchase or acquire, or
permit any of their respective Significant Subsidiaries to purchase or
acquire, all or substantially all of the assets of any Person or any
division of any Person; (iii) make, or permit any of their respective
Significant Subsidiaries to make, any loan, advance or extension of credit
to, or contribution to the capital of, any other Person other than a direct
or indirect wholly-owned Subsidiary of the Borrower or the Guarantor other
than reimbursement of reasonable, bona fide and properly documented travel
and entertainment business expenses incurred on behalf of the Borrower, the
Guarantor or any of their respective Subsidiaries and loans to employees to
induce employment, the aggregate amount of any such outstanding loans not
to exceed $1,000,000 at any time; (iv) purchase, or permit any of their
respective Significant Subsidiaries to purchase, any real estate for sale
or
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investment; (v) enter, or permit any of their respective Significant
Subsidiaries to enter, into any Hedge Agreements other than, in the case
Knight and Trimark, in connection with market making or in the ordinary
course of business of Knight or Trimark; or (vi) make any commitment or
acquire any option or enter into any other arrangement, or permit any of
their respective Significant Subsidiaries to commit or acquire any option
or enter into any other arrangement, for the purpose of making any of the
foregoing investments, loans or acquisitions, other than, in the case of
Knight and Trimark, in connection with market making or in the ordinary
course of business; provided that nothing contained in this Section 5.2(e)
shall prohibit the Borrower and the Guarantor from making Qualified
Investments.
(f) Restricted Payments. Declare, order, pay or make any distribution
of property or payment of cash, or both, directly or indirectly to a
member, partner, stockholder or other equity holder of the Borrower, the
Guarantor or any of their respective Affiliates (other than a distribution
or a payment by a Subsidiary of the Borrower or the Guarantor or by the
Borrower to the Borrower or the Guarantor or to other wholly-owned
Subsidiaries of the Borrower or the Guarantor) for any reason including
salaries, debt repayment, consulting fees, management fees, expense
reimbursements, dividends, put, call or Redemption payments and any other
payments in respect of equity interests other than reasonable compensation
of any kind for actual services rendered paid by the Borrower, the
Guarantor or any of their respective Subsidiaries to their respective
employees, consultants, stockholders or members on terms no less favorable
to the Borrower, the Guarantor or such Subsidiary, as the case may be, than
those that might be obtained at the time in a comparable arm's length
employment, consulting or service arrangement and the reimbursement of
reasonable, bona fide and properly documented business expenses incurred on
behalf of the Borrower, the Guarantor or any of their respective
Subsidiaries, except any distribution or payment described in Section 2.8.
Article VI
Events of Default
If any of the following events ("Events of Default") shall occur and
be continuing;
(a) the Borrower shall fail to pay (i) principal of the Loan when due
or (ii) any interest on the Loan or any other amount payable under this
Agreement or the Note when due and such failure to pay interest or such
other amount shall remain unremedied for five Business Days;
(b) any representation or warranty made in writing by the Borrower
under or in connection with this Agreement or the Loan shall prove to have
been incorrect in any material respect when made;
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(c) the Borrower or the Guarantor shall fail to perform or observe any
term, covenant or agreement (other than Section 5.1(h)) contained in this
Agreement or in the Note on its part to be performed or observed and
(except in the case of a failure to perform or observe Section 5.1(i) or
5.2) any such failure shall remain unremedied for 30 days after any such
failure;
(d) the Borrower or the Guarantor shall fail to perform or observe
Section 5.1(h) and any such failure shall remain unremedied for ten days
after any such failure;
(e) the Borrower or the Guarantor or any of their respective
Significant Subsidiaries shall fail to pay any Debt which in aggregate
principal amount exceeds $1,000,000 or any interest or premium thereon,
when due (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise) and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to
such Debt; or the Borrower, the Guarantor or any of their respective
Significant Subsidiaries shall fail to perform or observe any term,
covenant or agreement on its part to be performed or observed under any
agreement or instrument evidencing or securing or relating to any such Debt
when required to be performed or observed, if the effect of such failure is
to accelerate, or to permit the holder or holders of such Debt or the
trustee or trustees under any such agreement or instrument to accelerate,
the maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased (other
than by a regularly scheduled defeasance), or an offer to prepay, redeem or
purchase such Debt shall be required to be made, in each case prior to the
stated maturity thereof;
(f) the Borrower, the Guarantor or any of their respective Significant
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, state or foreign bankruptcy, insolvency, reorganization 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
petition, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator or similar official for the Borrower, the
Guarantor or any of their respective Significant Subsidiaries or for a
substantial part of the property of any of them, (iv) make a general
assignment for the benefit of creditors, (v) become unable or fail
generally to pay its debts as they become due or (vi) take action for the
purpose of effecting any of the foregoing;
(g) any involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief against the Borrower, the Guarantor or any of their respective
Significant Subsidiaries or all or a substantial part of the property of
any of them, under Title 11 of the United States Code or any other federal,
state or foreign bankruptcy, insolvency, reorganization or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator or
similar official for the Borrower, the Guarantor or any of their respective
Significant Subsidiaries or for a
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substantial part of the property of any of them or (iii) the winding-up or
liquidation of the Borrower, the Guarantor or any of their respective
Significant Subsidiaries; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(h) SIPC shall apply for a protective order with respect to Knight or
Trimark under the SIPA;
(i) a judgment or order for the payment of money in excess of
$1,000,000 shall be rendered against the Borrower, the Guarantor or any of
their respective Significant Subsidiaries and either (i) an execution or
enforcement proceeding shall have been commenced by any creditor upon such
judgment or order and (A) such proceeding shall continue undismissed or
unbonded or shall not be effectively stayed for a period of 60 consecutive
days after the commencement thereof or (B) a final, non-appealable order or
decree ordering or approving the relief sought in such proceeding shall be
entered and shall remain unsatisfied for ten days after entry thereof or
(ii) such judgment or order shall continue unsatisfied or unbonded and in
effect for a period of 60 consecutive days during which execution or
enforcement thereof shall not be effectively stayed;
(j) (i) any Person or two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the SEC
promulgated under the Securities Exchange Act, as in effect on the date
hereof), directly or indirectly, of Voting Stock of the Borrower or the
Guarantor, as the case may be (or other securities convertible into such
Voting Stock) representing 50% or more of the combined voting power of all
Voting Stock of the Borrower or the Guarantor, as the case may be, other
than pursuant to (A) the Reorganization or (B) the IPO or (ii) during the
term of this Agreement, Persons who, at the date hereof were manager or
directors, as applicable, of the Borrower or the Guarantor, as the case may
be (together with any new managers or directors, as applicable, whose
election or nomination for election to the board of managers or directors
of the Borrower or the Guarantor, as the case may be, was approved by 66
2/3% of the managers or directors, as the case may be, who were either in
office at the beginning of such period or whose election or nomination for
election to the board of managers or directors, as applicable, of the
Borrower or the Guarantor, as the case may be, was previously so approved)
shall cease for any reason (other than due to death or disability or, in
the case of managers or directors in office on the date hereof, retirement
in the ordinary course or pursuant to contractual agreements in effect on
the date of this Agreement) to constitute a majority of the board of
managers or directors, as applicable, of the Borrower or the Guarantor, as
the case may be;
(k) the Borrower, the Guarantor or any of their respective ERISA
Affiliates shall incur, or shall be reasonably likely to incur, liability
in excess of $1,000,000 in the aggregate as a result of one or more of the
following: (i) the occurrence of any ERISA Event; (ii) the partial or
complete withdrawal of the Borrower, the Guarantor or any of their
respective ERISA Affiliates from a Multiemployer Plan; or (iii) the
reorganization or termination of a Multiemployer Plan; or
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(l) Knight shall, at any time, cease to clear all of its securities
trades through Affiliates of the Lender;
then, in the case of any such event specified in paragraph (f) or (g) above, the
Note, the principal thereof and interest thereon and all other amounts payable
under this Agreement shall automatically become and be forthwith due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower, and, in the case of any such
event specified in paragraphs (a) through (e) and (h) through (l) above, the
Lender may, by notice to the Borrower, declare the Note, all interest thereon
and all other amounts payable under this Agreement to be forthwith due and
payable, whereupon the Note, all such interest and all such other amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower.
Article VII
Miscellaneous
7.1. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Note nor consent to any departure by the Borrower or the
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
7.2. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telecopier) and mailed, telecopied or
delivered (by hand or by reputable overnight courier), if to the Lender at its
address at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Facsimile No.:
(000) 000-0000, Attention: Xxxx Xxxxxxx, or if to the Borrower, at its address
at Xxxxxxx Xxxxx (00xx Xxxxx), 000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxx Xxxx, Xxx Xxxxxx
00000, Facsimile No.: (000) 000-0000, Attention Xxxxxxx X. Xxxxxx; or at such
other address as shall be designated by such party in a written notice to the
other party. All such notices and communications shall be effective when
received or, if given by mail, on the fifth Business Day following the date on
which such notice or communication is posted.
7.3. No Waiver; Remedies. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under the Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
7.4. Costs and Expenses. (a) The Borrower shall pay on demand all
reasonable out-of-pocket costs and expenses of the Lender in connection with the
preparation, execution, delivery, modification, amendment and administration of
this Agreement, the Note and the other documents to be delivered hereunder,
including, without limitation, (i) all transportation, computer duplication and
messenger costs and expenses and (ii) the reasonable fees and expenses
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of special counsel for the Lender with respect thereto and with respect to
advising the Lender as to its rights and responsibilities under this Agreement.
The Borrower further agrees to pay on demand all costs and expenses of the
Lender, if any (including, without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of this Agreement, the Note and the other
documents to be delivered hereunder against the Borrower, including reasonable
fees and expenses of counsel for the Lender in connection with the enforcement
of rights under this Section 7.4(a).
(b) The Borrower agrees to indemnify and hold harmless the Lender and
its Affiliates and each of their respective officers, directors, employees,
agents, advisors, and representatives (each, an "Indemnified Party") from and
against any and all claims, damages, losses, liabilities and expenses (including
reasonable fees and disbursements of counsel), joint or several, that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or relating to any investigation,
litigation or proceeding or the preparation of any defense with respect thereto
arising out of or in connection with or relating to this Agreement, the Note,
any of the transactions contemplated hereby or thereby or any use made or
proposed to be made of the proceeds of the Loan whether or not such
investigation, litigation or proceeding is brought by the Borrower or any of its
members, the Guarantor or any of its shareholders, or any Subsidiaries or
creditors of the Borrower or the Guarantor, an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. The Borrower and the
Guarantor agree that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Borrower or the
Guarantor or their respective security holders, Subsidiaries or creditors
arising out of, related to or in connection with this Agreement, the Note or the
transactions contemplated hereby and thereby or the actual or proposed use of
the proceeds of the Loan, except to the extent that such liability is found in a
final non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
(c) If any payment of principal of the Loan is made by the Borrower to
the Lender's Account other than the Business Day immediately preceding an
Interest Payment Date, as a result of a payment pursuant to Section 2.5,
acceleration of the maturity of the Note pursuant to Article VI or for any other
reason, the Borrower shall, upon demand by the Lender, pay to the Lender any
amounts required to compensate the Lender for any additional losses, costs or
expenses that it may reasonably incur as a result of such payment, including any
loss (excluding loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by the
Lender to fund or maintain the Loan.
(d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreement and obligations of the Borrower contained in
Section 2.7 and in this Section 7.4 shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the Note.
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7.5. Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the declaration by the Lender that
the Note is due and payable pursuant to the provisions of Article VI, the Lender
and each of its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Lender or such Affiliate to
or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement and
the Note held by the Lender, whether or not the Lender shall have made any
demand under this Agreement or the Note and although such obligations may be
unmatured. The Lender agrees promptly to notify the Borrower after any such
set-off and application, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Lender
and its Affiliates under this Section 7.5 are in addition to other rights and
remedies (including other rights of set-off) that the Lender and its Affiliates
may have.
7.6. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Borrower, the Guarantor and the Lender and their
respective successors and assigns.
7.7. Assignment. (a) The Lender may assign to one or more Persons
with the written consent of the Borrower (not to be unreasonably withheld, it
being understood that it shall not be unreasonable for the Borrower to withhold
its consent if such assignment will result in any material increased costs to
the Borrower pursuant to Section 2.7) all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Note held by it). Upon the execution, delivery, acceptance and
recording of, from and after the effective date specified in, an Assignment and
Assumption (provided that the Borrower shall have consented thereto), (A) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Assumption, have the rights and obligations of the Lender hereunder and (B) the
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Assumption, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Assumption covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, the Lender shall
cease to be a party hereto).
(b) By executing and delivering an Assignment and Assumption, the
Lender and the assignee thereunder confirm to and agree with each other and the
parties hereto as follows: (i) other than as provided in such Assignment and
Assumption, the Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Agreement or the execution, legality,
validity, enforceability or genuineness of this Agreement or any other
instrument or document furnished pursuant hereto; (ii) the Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the Guarantor or the performance or
observance by the Borrower or the Guarantor of any of the obligations under this
Agreement or any other instrument or document furnished pursuant hereto;
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(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Article IV and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Assumption;
(iv) such assignee will, independently and without reliance upon the Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; and (v) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it.
(c) Within five Business Days after its receipt of such notice, the
Borrower, at its own expense, shall execute and deliver to such assignee in
exchange for the surrendered Note a new Note to the order of such assignee in an
amount equal to the principal amount of the Loan assumed by it pursuant to such
Assignment and Assumption and, if the Lender has retained any portion of the
Loan hereunder, a new Note to the order of the Lender in an amount equal to the
balance of the principal amount of the Loan.
(d) The Lender may, in connection with any assignment or proposed
assignment pursuant to this Section 7.7, disclose to the assignee, or proposed
assignee, any information relating to the Borrower furnished to the Lender by or
on behalf of the Borrower; provided that, prior to any such disclosure, the
assignee or proposed assignee shall agree to preserve the confidentiality of any
Borrower Confidential Information received by it from the Lender.
(e) The Borrower may not assign any of its rights under this Agreement
without the prior written consent of the Lender except as permitted by Section
5.2(a).
7.8. Confidentiality. (a) The Lender shall not, and shall not
permit its Affiliates, to disclose any Borrower Confidential Information to any
Person without the prior written consent of the Borrower, other than (i) to the
Lender's Affiliates and their officers, directors, employees, agents and
advisors and to actual or prospective assignees, and then only on a confidential
basis, (ii) as required by any law, rule or regulation or judicial process and
(iii) as requested or required by the SEC, the NYSE, the AMEX, the NASD or any
other federal, state, local or foreign governmental authority or self-regulatory
organization.
(b) The Borrower and the Guarantor shall not, and shall not permit
their respective Affiliates, to disclose any Lender Confidential Information to
any Person without the prior written consent of the Lender, other than (i) to
the Borrower's and the Guarantor's Affiliates and their officers, directors,
managers, employees, agents and advisors, and then only on a confidential basis,
(ii) as required by any law, rule or regulation or judicial process and (iii) as
requested or required by the SEC, the NYSE, the AMEX, the NASD or any other
federal, state, local or foreign governmental authority or self-regulatory
organization.
7.9. Governing Law. This Agreement and the Note shall be governed
by, and construed in accordance with, the laws of the State of New York.
7.10. Execution in Counterparts. This Agreement may be executed in
any
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number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
7.11. JURISDICTION, ETC. (A) EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE
UNITED STATES OF AMERICA SITTING IN NEW YORK, NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE NOTE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW,
IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.
(B) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTE IN
ANY NEW YORK STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.
7.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE NOTE OR THE ACTIONS OF THE LENDER IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
7.13. Survival of Representations and Warranties. All
representations and warranties made herein and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement and the Note.
7.14 Termination. This Agreement, other than Sections 2.7 and 7.4,
shall terminate and be of no further force and effect when all principal of and
interest on the Note and all other accrued non-contingent amounts payable
hereunder have been paid in full.
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In Witness Whereof, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
PaineWebber Capital Inc.
By:
Name:
Title:
Roundtable Partners, L.L.C.
By:
Name:
Title:
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Joinder
For value received, the undersigned agrees to comply with provisions
of the foregoing Loan Agreement applicable to it, effective as of the date of
said Loan Agreement.
Knight/Trimark Group, Inc.
By: _________________________________
Name:
Title:
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(Schedule 5.2(c)(iv))
Existing Debt
None.
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