Exhibit 10.1
CREDIT AGREEMENT
dated as of November 7, 2002
by and among
INTEREP NATIONAL RADIO SALES, INC., as BORROWER
and
THE OTHER ENTITIES PARTY HERETO, as GUARANTORS
and
THE LENDERS PARTY HERETO
and
GUGGENHEIM INVESTMENT MANAGEMENT, LLC, as COLLATERAL AGENT
Section Page
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1. DEFINITIONS ......................................................... 1
2. MAKING OF LOANS ..................................................... 12
2.1 Making of Loans and Issuance of Warrant ....................... 12
2.2 Closing ....................................................... 12
2.3 Optional Prepayment ........................................... 13
2.4 Repayment of Loans ............................................ 13
2.5 Use of Proceeds ............................................... 13
2.6 Interest on Notes ............................................. 13
2.7 Receipt of Payments ........................................... 14
2.8 Application of Payments ....................................... 14
2.9 Sharing of Payments ........................................... 14
2.10 Access ........................................................ 15
2.11 Taxes ......................................................... 15
3. COLLATERAL AGENT'S REPRESENTATIONS AND WARRANTIES ................... 15
3.1 Investment Intention .......................................... 15
3.2 Accredited Investor ........................................... 16
4. CREDIT PARTIES' REPRESENTATIONS AND WARRANTIES ...................... 16
4.1 Authorized and Outstanding Shares of Capital Stock ............ 16
4.2 Authorization and Issuance of Stock ........................... 16
4.3 Securities Laws ............................................... 16
4.4 Corporate Existence; Compliance with Law ...................... 17
4.5 Subsidiaries .................................................. 17
4.6 Corporate Power; Authorization; Enforceable Obligations ....... 17
4.7 Financial Statements .......................................... 18
4.8 Property Interests ............................................ 18
4.9 Material Contracts; Indebtedness; Liens ....................... 19
4.10 Environmental Protection ...................................... 19
4.11 Labor Matters ................................................. 20
4.12 Other Ventures ................................................ 21
4.13 Taxes ......................................................... 21
4.14 No Litigation ................................................. 21
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TABLE OF CONTENTS
CREDIT AGREEMENT
Section Page
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4.15 Brokers .................................................................. 22
4.16 Employment Agreements .................................................... 22
4.17 Patents, Trademarks, Copyrights and Licenses ............................. 22
4.18 No Material Adverse Effect ............................................... 22
4.19 ERISA .................................................................... 22
4.20 SEC Documents ............................................................ 24
4.21 Ordinary Course of Business .............................................. 25
4.22 Insurance ................................................................ 25
4.23 Accounts Receivable ...................................................... 25
4.24 Minute Books ............................................................. 25
4.25 Full Disclosure .......................................................... 25
5. COVENANTS ....................................................................... 25
5.1 Affirmative and Financial Covenants ...................................... 25
5.2 Negative Covenants ....................................................... 30
6. CONDITIONS PRECEDENT ............................................................ 32
6.1 Conditions Precedent ..................................................... 32
6.2 Additional Conditions .................................................... 33
7. EVENTS OF DEFAULT; RIGHTS AND REMEDIES .......................................... 34
7.1 Events of Default ........................................................ 34
7.2 Remedies ................................................................. 36
7.3 Waivers by the Credit Parties ............................................ 36
7.4 Right of Set-Off ......................................................... 36
8. INDEMNIFICATION ................................................................. 37
9. COLLATERAL AGENT ................................................................ 37
9.1 Collateral Agency Provisions ............................................. 37
10. MISCELLANEOUS ................................................................... 40
10.1 Complete Agreement; Modification of Agreement; Sale of Interest .......... 40
10.2 Fees and Expenses ........................................................ 41
10.3 No Waiver by Lender ...................................................... 42
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TABLE OF CONTENTS
CREDIT AGREEMENT
Section Page
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10.4 Remedies ....................................................... 42
10.5 Waiver of Jury Trial ........................................... 42
10.6 Severability ................................................... 42
10.7 Binding Effect; Benefits ....................................... 42
10.8 Conflict of Terms .............................................. 42
10.9 Governing Law .................................................. 43
10.10 Notices ........................................................ 43
10.11 Survival ....................................................... 43
10.12 Section and Other Headings ..................................... 43
10.13 Counterparts ................................................... 43
10.14 Publicity ...................................................... 44
10.15 Confidentiality ................................................ 44
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TABLE OF CONTENTS
CREDIT AGREEMENT
Section Page
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Schedule A - Lender
Schedule B - Credit Parties
Schedules
Schedule 4.1 - Stock and Warrants
Schedule 4.5 - Subsidiaries
Schedule 4.7 - Financial Statements; Other Obligations
Schedule 4.8 - Ownership and Properties
Schedule 4.9 - Material Contracts and Indebtedness
Schedule 4.10 - Environmental Matters
Schedule 4.12 - Other Ventures
Schedule 4.13 - Taxes
Schedule 4.14 - Litigation
Schedule 4.15 - Brokers
Schedule 4.16 - Employment Contracts
Schedule 4.17 - Patents, Trademarks, Etc.
Schedule 4.18 - Material Adverse Effect
Schedule 4.19 - ERISA
Schedule 4.22 - Insurance
Exhibits
Exhibit A Form of Warrant
Exhibit B Form of Guarantee
Exhibit C Form of Security Agreement
Exhibit D Form of Note
Exhibit E Opinion of Counsel to the Credit Parties
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CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of November 7, 2002, by and among Interep
National Radio Sales, Inc., a New York corporation, as borrower ("Interep"), and
each of the entities listed as a guarantor on the signature pages hereto, as
guarantors (each such entity and any Additional Guarantor, a "Guarantor" and
collectively, the "Guarantors"; Interep and each Guarantor individually, a
"Credit Party" and collectively, the "Credit Parties"), and each of the entities
listed as a Lender on the signature pages hereto (individually, a "Lender" and,
collectively, the "Lenders") and Guggenheim Investment Management, LLC, as
collateral agent (the "Collateral Agent").
W I T N E S S E T H :
WHEREAS, Interep has requested the Lenders to make to Interep certain
senior secured Loans in the aggregate principal amount of $10,000,000 as
provided herein, and the Lenders have agreed to make such senior secured Loans
to Interep, upon the terms and conditions hereinafter provided;
WHEREAS, in connection with the making of the senior secured Loans by
the Lenders, Interep has agreed to issue to the Collateral Agent, upon the terms
and conditions hereinafter provided, a warrant in the form of Exhibit A attached
hereto (the "Warrant") exercisable for 225,000 shares of Class A Common Stock,
$0.01 par value, of Interep ("Class A Common Stock");
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. DEFINITIONS
"Additional Guarantor" shall mean any Subsidiary of any Credit Party
that becomes a Guarantor pursuant to Section 5.1(k).
"Affiliate" shall mean, with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary
voting power in the election of directors of such Person, (ii) each Person that
controls, is controlled by or is under common control with such Person or any
Affiliate of such Person, (iii) each of such Person's officers, directors, joint
ventures and partners, (iv) any trust or beneficiary of a trust of which such
Person is the sole trustee or (v) any lineal descendants, ancestors, spouse or
former spouses (as part of a marital dissolution) of such Person (or any trust
for the benefit of such Person). For the purpose of this definition, "control"
of a Person shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Credit Agreement including all amendments,
modifications and supplements hereto and any appendices, exhibits and schedules
hereto or thereto, and shall refer to the Agreement as the same may be in effect
at the time such reference becomes operative.
"Backlog Amount" shall mean, with respect to any National
Representative Contract at any time, an amount equal to the product of (x) 85%
of the average monthly xxxxxxxx by the radio stations party to such National
Representative Contract, calculated based on such xxxxxxxx actually made by such
radio stations during the 12-month period ending on such date, times (y) the
commission rate applicable to such National Representative Contract times (z)
the number of months remaining until the termination of such National
Representative Contract.
"Backlog Amount Report" shall mean a report prepared by the Credit
Parties detailing the Backlog Amount for each National Representative Contract
to which any Credit Party is a party and the details necessary for the
calculation of such Backlog Amount, all in a form to be agreed upon by Interep
and the Collateral Agent.
"Balance Sheet" shall have the meaning set forth in Section 4.7(a)
hereof.
"Business Day" shall mean any day that is not a Saturday, a Sunday or a
day on which banks are required or permitted to be closed in the State of New
York.
"Capital Expenditures" shall mean all payments for any fixed assets or
improvements or for replacements, substitutions or additions thereto, that have
a useful life of more than one year and which are required to be capitalized
under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as a capital lease in a note to such balance sheet, other than, in the
case of Interep or a Subsidiary of Interep, any such lease under which Interep
or such Subsidiary is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Cash Equivalents" shall mean (i) marketable direct obligations issued
or unconditionally guaranteed by the United States of America or any agency
thereof maturing within one year from the date of acquisition thereof; (ii)
commercial paper maturing no more than six months from the date of creation
thereof and at the time of their acquisition having the highest rating
obtainable from either Standard & Poor's Corporation ("S&P) or Xxxxx'x Investors
Service, Inc. ("Moody's"); (iii) certificates of deposit maturing no more than
one year from the date of creation thereof, issued by any
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commercial bank incorporated under the laws of the United States of America,
having combined capital, surplus and undivided profits of not less than
$200,000,000 and having a rating of at least "A-1" by S&P or "P-1" by Moody's
and (iv) shares of any money market fund that (A) has at least 95% of its assets
invested continuously in the types of investments described in clauses (i)
through (iii) above, (B) has net assets of not less than $200,000,000 and (C) is
rated at least "A-1" by S&P or "P-1" by Moody's.
"Change of Control" shall mean any of the following: (a) any person or
group of persons (within the meaning of the Exchange Act) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC
under the Exchange Act) of 30% or more of either the issued and outstanding
shares of common stock of Interep or the voting power of the issued and
outstanding capital stock of Interep; (b) any Credit Party shall be a party to a
merger or consolidation in which such Credit Party is not the survivor or in
which such Credit Party's stockholders immediately prior thereto own less than a
majority of the outstanding voting stock of the survivor, provided, however,
that any merger or consolidation of any Credit Party other than Interep into or
with another Credit Party shall not be deemed a "Change of Control"; (c) any
Credit Party shall have sold, leased or otherwise transferred all or
substantially all of its assets to any Person other than a Credit Party, or (d)
Interep shall fail to have beneficial ownership (within the meaning of Rule
13d-3 promulgated by the SEC under the Exchange Act) of all of the issued and
outstanding shares of capital stock of each Guarantor.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC) taxes
at the time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) Interep's or any of its Subsidiaries'
employees, payroll, income or gross receipts, (ii) Interep's or any of its
Subsidiaries' ownership or use of any of its assets, or (iii) any other aspect
of Interep's or any of the Subsidiaries' business.
"Class A Common Stock" shall have the meaning set forth in the Recitals
of this Agreement.
"Closing" shall have the meaning set forth in Section 2.2 hereof.
"Closing Date" shall have the meaning set forth in Section 2.2 hereof.
"Closing Fee" shall mean a fee in an amount equal to 3.00% of the
aggregate principal amount of the Loans made by the Lenders at the Closing,
payable by the Credit Parties to the Collateral Agent.
"COBRA" shall have the meaning set forth in Section 4.19(m) hereof.
"Collateral" shall mean, collectively the Collateral, as such term is
defined in the Security Agreement and the Pledged Collateral, as such term is
defined in the Pledge Agreement.
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"Collateral Documents" shall mean the Guaranty, the Security Agreement and
the Pledge Agreement.
"Compensation" shall mean, with respect to any Person, all payments and
accruals commonly considered to be compensation, including, without limitation,
all wages, salary, deferred payment arrangements, bonus payments and accruals,
profit sharing arrangements, payments in respect of stock option or phantom
stock option or similar arrangements, stock appreciation rights or similar
rights, incentive payments, pension or employment benefit contributions or
similar payments, made to or accrued for the account of such Person or otherwise
for the direct or indirect benefit of such Person.
"Default" shall mean any event which, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.
"EBITDA" shall mean, with respect to any Person for any period, the result
of (i) such Person's and its Subsidiaries' consolidated net earnings (or loss),
minus (ii) the aggregate amount of all extraordinary gains of such Person and
its Subsidiaries for such period, plus (iii) the aggregate amount of all
extraordinary losses, non-cash expenses, interest expense, income taxes, and
depreciation and amortization of such Person and its Subsidiaries for such
period, as determined in accordance with GAAP.
"Eligible Accounts Receivable" shall mean those accounts receivable created
by any Credit Party in the ordinary course of its business, that arise out of
any Credit Party's sale of goods or rendition of services; provided, however,
that Eligible Accounts Receivable shall not include (i) accounts receivable that
are not payable in Dollars and (ii) accounts receivable that are not subject to
a valid and perfected first priority Lien in favor of the Collateral Agent.
"Environmental Laws" shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable real estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include but are not limited to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C.(S) 9601 et seq.) ("CERCLA"); the Hazardous Material Transportation Act,
as amended (49 U.S.C.(S) 1801 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C.(S) 136 et seq.); the Resource Conservation
and Recovery Act, as amended (42 U.S.C.(S) 6901 et seq.) ("RCRA"); the Toxic
Substance Control Act, as amended (15 U.S.C.(S) 2601 et seq.); the Clean Air
Act, as amended (42 U.S.C.(S) 740 et seq.); the Federal Water Pollution Control
Act, as amended (33 U.S.C.(S) 1251 et seq.); the Occupational Safety and Health
Act, as amended (29 U.S.C.(S) 651 et seq.) ("OSHA"); and the Safe Drinking Water
Act, as amended (42 U.S.C.(S) 300f et seq.), and any and all
4
regulations promulgated thereunder, and all analogous state and local
counterparts or equivalents and any transfer of ownership notification or
approval statutes.
"Environmental Liabilities and Costs" shall mean all liabilities,
obligations, responsibilities, remedial actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including,
without limitation, all fees, disbursements and expenses of counsel, experts and
consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any person or entity, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute or
common law (including, without limitation, any thereof arising under any
Environmental Law, permit, order or agreement with any Governmental Authority)
and which relate to any health or safety condition regulated under any
Environmental Law or in connection with any other environmental matter or Spill
or the presence of a hazardous substance or threatened Spill of any Hazardous
Substance.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Credit Party, any
trade or business (whether or not incorporated) under common control with such
Credit Party and which, together with such Credit Party, are treated as a single
employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC,
excluding the Lenders, the Collateral Agent and each other person which would
not be an ERISA Affiliate if the Collateral Agent did not own any issued and
outstanding shares of Stock of such Credit Party.
"Event of Default" shall have the meaning set forth in Section 7.1
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
"Financials" shall mean the financial statements referred to in Section
4.7(a) hereof.
"Fiscal Year" shall mean the twelve month period ending December 31.
Subsequent changes of the fiscal year of Interep shall not change the term
"Fiscal Year," unless the Required Lenders shall consent in writing to such
changes.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time, except that for
purposes of the financial covenants contained in Section 5.1(h) hereof, GAAP
shall be as in effect on the date of the most recent Financials and shall be
applied in a manner consistent therewith.
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"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
of such Person guaranteeing any Indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary obligor")
in any manner including, without limitation, any obligation or arrangement of
such Person (a) to purchase or repurchase any such primary obligation, (b) to
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof.
"Guaranty" shall mean that certain Guaranty, dated as of the Closing
Date, executed by the Guarantors in favor of the Collateral Agent, for the
benefit of the Lenders, in the form of Exhibit B attached hereto.
"Hazardous Substance" shall have the meaning set forth in Section 4.10
hereof.
"Indebtedness" of any Person shall mean (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (including, without limitation, reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers' acceptances,
whether or not matured, but not including obligations to trade creditors
incurred in the ordinary course of business), (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreements 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), (iv) all Capital Lease Obligations,
(v) all Guaranteed Indebtedness, (vi) all Indebtedness referred to in clause
(i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in 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 Indebtedness and (vii) all liabilities
under Title IV of ERISA.
"Interest Payment Date" shall have the meaning assigned to such term in
Section 2.6(a) hereof.
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"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Lender" shall have the meaning set forth in the first paragraph of
this Agreement.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
as to assets owned by the relevant Person under the Uniform Commercial Code or
comparable law of any jurisdiction).
"Loan" shall have the meaning set forth in Section 2.1.
"Loan Documents" shall mean this Agreement, the Notes, the Collateral
Documents and all other agreements, instruments, documents and certificates,
including, without limitation, pledges, powers of attorney, consents,
assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, and
delivered to the Lenders or the Collateral Agent, in connection with this
Agreement or the transactions contemplated hereby, other than the Warrant.
"Material Adverse Effect" shall mean material adverse effect on (i) the
business, assets, operations, prospects or financial or other condition of the
Credit Parties, taken as a whole or (ii) Interep's or the other Credit Parties',
taken as a whole, ability to pay the Obligations in accordance with the terms
hereof and the other Loan Documents.
"Material Contracts" shall mean (i) all of each Credit Party's and its
Subsidiaries' contracts, agreements, leases or other instruments to which such
Credit Party or its Subsidiaries is a party or by which such Credit Party, its
Subsidiaries or their properties are bound, which involve annual payments by or
to such Credit Party or its Subsidiaries of more than $1,000,000 or which are
filed as exhibits to any filing with the SEC, (ii) all of each Credit Party's
and its Subsidiaries' loan agreements, credit agreements, indentures, mortgages,
deeds of trust, pledge and security agreements, factoring agreements, letters of
credit or other debt instruments (iii) all material operating or capital leases
for equipment or conditional sales contracts which involve annual payments by or
to such Credit Party or its Subsidiaries of more than $1,000,000 to which any
Credit Party or any of its Subsidiaries is a party, (iv) all agreements pursuant
to which any Credit Party or its Subsidiaries has agreed not to compete in radio
advertising representation or to otherwise restrict its radio representation
activities, (v) all contracts for the employment of any officer or employee to
which any Credit Party or any of its Subsidiaries is a Party, (vi) each
consulting agreement which involves an aggregate
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annual payment of $1,000,000 or more, (vii) any guarantees by any Credit Party
or any of its Subsidiaries, (viii) all distributor and sales agency agreements,
(ix) all National Representative Contracts to which any Credit Party or any of
its Subsidiaries is a party and which have generated, over the 12 month period
ended June 30, 2002, or for determination dates occurring after the date of this
Agreement, over the most recently ended four fiscal quarters of Interep ending
on such date, not less that $100,000 of commission revenue and (x) all other
material contracts not made in the ordinary course of business.
"Maturity Date" shall mean November 7, 2007
"Maximum Lawful Rate" shall have the meaning set forth in Section
2.6(d) hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which Interep, any of its Subsidiaries or
any ERISA Affiliate is making, is obligated to make, has made or been obligated
to make, contributions on behalf of participants who are or were employed by any
of them.
"National Representative Contract" shall mean, with respect to any
Credit Party, a contract between such Credit Party and a radio station or a
group of radio stations providing such Credit Party commissions for advertising
representation services provided.
"Non-Guarantor Subsidiary" shall mean any existing, newly established
or acquired Subsidiary of any Credit Party, that is not a Guarantor party to
this Agreement and that has aggregate revenues, together with all other such
Subsidiaries, during any consecutive 12-month period, of less than $5,000,000.
"Non-Recourse Debt" shall mean Indebtedness (i) as to which no Credit
Party (a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (b) is directly or
indirectly liable (as a guarantor or otherwise), or (c) constitutes the lender;
and (ii) a default with respect to which (including any rights that the holders
thereof may have to take enforcement action against a Non-Guarantor Subsidiary)
would not permit (upon notice, lapse of time or both) any holder of any other
Indebtedness (other than the Notes issued hereby) of any Credit Party to declare
a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders thereof have been notified in writing that they will not have any
recourse to the capital stock or assets of any Credit Party.
"Notes" shall have the meaning set forth in Section 2.1.
"Obligations" shall mean all amounts owing by the Credit Parties to the
Lenders or the Collateral Agent and any of their respective assignees pursuant
to any of the Loan Documents, including, without limitation, all principal,
interest, fees, expenses,
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attorneys' fees and any other sum payable by the Credit Parties under any of the
Loan Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" shall have the meaning set forth in Section 4.19(a)
hereof.
"Permitted Indebtedness" shall mean, with respect to any Credit Party,
(i) taxes or assessments or other governmental charges or levies, either not yet
due and payable or to the extent that nonpayment thereof is permitted by the
terms of this Agreement; (ii) obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation; (iii) bids, tenders, contracts (other than contracts for the
payment of money) or leases to which any Credit Party is a party as lessee made
in the ordinary course of business; (iv) public or statutory obligations of any
Credit Party; (v) all deferred taxes, (vi) all unfunded pension fund and other
employee benefit plan obligations and liabilities but only to the extent
permitted to remain unfunded under applicable law, (vii) Capital Lease
Obligations not in excess of an aggregate of $2,500,000 at any time outstanding,
(viii) intercompany Indebtedness to any other Credit Party; provided, however,
that if Interep is the obligor on such Indebtedness, it is expressly
subordinated to the Loan, (ix) Indebtedness with respect to a performance,
surety or appeal bond incurred in the ordinary course of business and (x)
Indebtedness by any Non-Guarantor Subsidiary of Non-Recourse Debt.
"Permitted Liens" shall mean the following: (i) Liens for taxes or
assessments or other governmental charges or levies, either not yet due and
payable or to the extent that nonpayment thereof is permitted by the terms of
this Agreement; (ii) pledges or deposits securing obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which any
Credit Party is a party as lessee made in the ordinary course of business; (iv)
Liens arising solely by virtue of any statutory or common law provision relating
to bankers' liens, rights of set-off or similar rights and remedies as to
deposit accounts or other funds maintained with a creditor depository
institution; (v) workers, mechanics, suppliers, carriers, warehousemen's or
other similar liens arising in the ordinary course of business and securing
indebtedness, not yet due and payable; (vi) deposits securing or in lieu of
surety, appeal or customs bonds in proceedings to which any Credit Party is a
party; (vii) Liens arising in the ordinary course of business in connection with
obligations that are not overdue or which are being contested in good faith and
by appropriate proceedings, including, but not limited to, Liens under bid,
performance and other surety bonds, supercedes and appeal bonds, landlord Liens
arising under leases of real property, Liens on advance or progress payments
received from customers under contracts for the sale, lease or license of goods,
software or services and upon the products being sold or licensed, in each case
securing performance of the underlying contract or the repayment of such
advances in the event final acceptance of performance under such contracts does
not occur, and Liens upon
9
funds collected temporarily from others pending payment or remittance on their
behalf; (viii) Liens securing Capital Lease Obligations permitted pursuant to
the definition of Permitted Indebtedness hereunder, (ix) zoning restrictions,
easements, licenses, or other restrictions on the use of real property or other
minor irregularities in title (including leasehold title) thereto, so long as
the same do not materially impair the use, value, or marketability of such real
property, leases or leasehold estates; and (x) Liens existing on the date hereof
and described on Schedule 4.9 hereto.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Plan" shall have the meaning set forth in Section 4.19(a) hereof.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of the
Closing Date, executed by Interep, XxXxxxxx Guild, Inc., Interep New Media, Inc.
and Interep Interactive, Inc., in favor of the Collateral Agent, for the benefit
of the Lenders, pledging such Credit Parties' equity interests in other Credit
Parties.
"Prepayment Premium" shall mean, with respect to any prepayment of
principal of the Loans, an amount equal to such principal amount prepaid
multiplied by the following percentage:
If prepaid during the 12-month period
ending on the following anniversary
dates of the Closing Date %
------------------------------------- -
First anniversary 5%
Second anniversary 4%
Third anniversary 3%
Fourth anniversary 2%
Fifth anniversary 1%
"Required Lenders" shall mean Persons who hold at least a majority of
the outstanding principal amount of the Loans.
"Restricted Payment" shall mean (i) the declaration of any dividend or
the incurrence of any liability to make any other payment or distribution of
cash or other property or assets in respect of any Credit Party's Stock or (ii)
any payment on account of the purchase, redemption or other retirement of any
Credit Party's Stock or any other
10
payment or distribution made in respect of any Stock of any Credit Party, either
directly or indirectly.
"Retiree Welfare Plan" shall refer to any Welfare Plan providing for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"SEC" shall mean the U.S. Securities and Exchange Commission, or any
successor thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
all rules and regulations promulgated thereunder.
"Security Agreement" shall mean that certain Security Agreement, dated
as of the Closing Date, executed by the Credit Parties in favor of the
Collateral Agent, for the benefit of the Lenders, in the form of Exhibit C
attached hereto.
"Spill" shall have the meaning set forth in Section 4.10 hereof.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, limited liability company membership interest,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the SEC under the Exchange
Act).
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership or other entity in which such Person and/or
one or more Subsidiaries of such Person shall have an interest (whether in the
form of voting or participation in profits or capital contribution) of more than
50%.
"Taxes" shall have the meaning set forth in Section 2.11(a) hereof.
"Transaction Documents" shall mean the Loan Documents and the Warrant.
"Warrant" shall have the meaning set forth in the Recitals of this
Agreement.
11
"Welfare Plan" shall mean any welfare plan, as defined in Section 3(1)
of ERISA, which is maintained or contributed to by Interep, any of its
Subsidiaries or any ERISA Affiliate.
"Withdrawal Liability" means, at any time, the aggregate amount of the
liabilities, if any, pursuant to Section 4201 of ERISA, and any increase in
contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
References to this "Agreement" shall mean this Purchase Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
2. MAKING OF LOANS
2.1 Making of Loans and Issuance of Warrant. Subject to the terms and
conditions set forth in this Agreement, the Lenders agree, severally and not
jointly, to make a senior secured loan ("Loan") to Interep on the Closing in an
amount equal to the amount set forth opposite each such Lender's name on
Schedule A. The aggregate principal amount of all of the Loans to be made on the
Closing Date shall be $10,000,000. Each Loan made by a Lender shall be evidenced
by a promissory note (individually, a "Note" and together with each other Note,
the "Notes"), executed by Interep and payable to such Lender, substantially in
the form of Exhibit D hereto.
(a) Subject to the terms and conditions set forth in this Agreement,
Interep agrees to issue to the Collateral Agent, on the Closing Date, the
Warrant.
2.2 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place on November 7, 2002 or such date and time as shall
be mutually agreed to by the parties hereto (the "Closing Date") at the offices
of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, or such
other place as shall be mutually agreed to by the parties hereto. On the Closing
Date, Interep will
12
deliver to each Lender a Note payable to such Lender evidencing the Loan by
such Lender. On the Closing Date, Interep will deliver to the Collateral Agent
the Warrant and the Closing Fee.
2.3 Optional Prepayment. Interep shall have the right, on 10 days prior
written notice to the Lenders, to voluntarily prepay all or any portion (in
multiples of not less than $500,000) of the amount outstanding on the Loans, on
a pro rata basis among each of the Lenders. Each prepayment shall be accompanied
by the payment of all accrued and unpaid interest on the Loans through the date
of payment and the applicable Prepayment Premium.
2.4 Repayment of Loans. Interep promises to repay the entire unpaid
principal amount of, and any unpaid and accrued interest on, the Loans on the
Maturity Date.
2.5 Use of Proceeds. The proceeds of the Loans shall be used solely for
working capital needs of the Credit Parties, Capital Expenditures permitted
under Section 5.2(k) and to pay related transaction costs, fees and expenses.
2.6 Interest on Notes. (a) Interep shall pay, in cash, interest on the
Loans to each Lender, quarterly in arrears on the first day of each fiscal
quarter commencing on January 1, 2003, through the date of repayment in full
(each, an "Interest Payment Date"), at a rate per annum equal to 8.125%, on such
Lender's ratable share of the aggregate principal amount of the Loans.
(b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate for such Loan during such
extension.
(c) So long as any Event of Default shall be continuing, the rate of
interest applicable to the Loans shall be increased by 2% per annum above the
rate of interest otherwise applicable to the Loans.
(d) Notwithstanding anything to the contrary set forth in this Section
2.6, if at any time until payment in full of the Loans, the interest rate
payable on any of the Loans exceeds the highest rate of interest permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto (the "Maximum Lawful Rate"), then in such
event and so long as the Maximum Lawful Rate would be so exceeded, the rate of
interest payable on such Loans shall be equal to the Maximum Lawful Rate;
provided, however, that if at any time thereafter the interest rate payable on
such of the Loans is less than the Maximum Lawful Rate, Interep shall continue
to pay interest thereunder at the Maximum Lawful Rate until such time as the
total interest received by the Lenders is equal to the total interest which they
would have received had the interest rate on such Loans been (but for the
operation of this paragraph) the applicable interest rate payable since the
Closing Date. Thereafter, the interest rate
13
payable on such Loans shall be the applicable interest rate pursuant to clauses
(a) through (c) above unless and until such rate again exceeds the Maximum
Lawful Rate, in which event this paragraph shall again apply. In no event shall
the total interest received by any Lender for any Loans pursuant to the terms
hereof exceed the amount which it could lawfully have received for such Loans
had the interest due hereunder for such Loans been calculated for the full term
thereof at the Maximum Lawful Rate. In the event the Maximum Lawful Rate is
calculated pursuant to this paragraph, such interest shall be calculated at a
daily rate equal to the Maximum Lawful Rate divided by the number of days in the
year in which such calculation is made. In the event that a court of competent
jurisdiction, notwithstanding the provisions of this Section 2.6(d), shall make
a final determination that a Lender has received interest hereunder or under any
of the Loan Documents in excess of the Maximum Lawful Rate, such Lender shall,
to the extent permitted by applicable law, promptly apply such excess first to
any interest due or accrued and not yet paid on the Loans, then to the
outstanding principal of the Loans, then to other unpaid Obligations and
thereafter shall refund any excess to Interep or as a court of competent
jurisdiction may otherwise order.
2.7 Receipt of Payments. Interep shall make each payment on the Loans
not later than 5:00 P.M. (New York City time) on the day when due in lawful
money of the United States of America in immediately available funds to each
Lender's respective depository bank in the United States as designated by such
Lender from time to time for deposit in such Lender's depositary account. For
purposes only of computing interest on the Loans, all payments shall be applied
by each Lender to the Loans on the day payment has been credited by such
Lender's depository bank to such Lender's account in immediately available
funds.
2.8 Application of Payments. All payments hereunder shall be applied in
the following order: (i) then due and payable or accrued interest on the Loans;
(ii) then due and payable fees and expenses; (iii) then outstanding principal of
the Loans; and (iv) then other unpaid Obligations.
2.9 Sharing of Payments. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Loans held by it in excess of its ratable share
of payments on account of all Loans, such Lender shall forthwith purchase from
each other Lender such participations in the Loan held by it as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each other Lender; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender, such
purchase shall be rescinded and such Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery together with an amount equal
to such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Interep agrees
that any Lender so purchasing a participation from another Lender pursuant to
this Section 2.9 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of
14
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of Interep in the amount of such participation. Interep further
agrees to make all payments on the Loans to all Lenders on a pro rata basis,
based on the principal amount of the Notes held by each.
2.10 Access. The Collateral Agent and any of its officers, employees
and/or agents shall have the right, at their own expense prior to an Event of
Default and at Interep's expense during the continuance of an Event of Default
and during normal business hours, to visit and inspect the properties and
facilities of Interep and its Subsidiaries and to inspect, audit and make
extracts from all of Interep's and its Subsidiaries' records, files, corporate
books and books of account and to discuss the affairs, finances and accounts of
Interep and its Subsidiaries with the principal officers of Interep, all at such
reasonable times, upon reasonable notice and as often as the Collateral Agent
may reasonably request. Interep shall deliver any document or instrument
reasonably necessary for the Collateral Agent, as such Person may request, to
obtain records from any service bureau maintaining records for Interep or its
Subsidiaries. Upon the Collateral Agent's request to Interep, Interep shall
instruct its and its Subsidiaries' banking and other financial institutions to
make available to the Collateral Agent such information and records as the
Collateral Agent may reasonably request. Following the occurrence and during the
continuance of an Event of Default, all of the rights granted to the Collateral
Agent under this Section 2.10 shall also be available to each Lender.
2.11 Taxes. (a) Interep agrees to pay any present stamp or documentary
taxes or any other sales, transfer, exercise, mortgage recording or property
taxes, charges or similar levies that arise from any payment made hereunder or
under the Notes or from the execution, sale, transfer, delivery or registration
of, or otherwise with respect to, any of the Transaction Documents.
(b) Without prejudice to the survival of any other agreement of Interep
hereunder, the agreements and obligations of Interep contained in this Section
2.11 shall survive the payment in full of the Loans.
3. COLLATERAL AGENT'S REPRESENTATIONS AND WARRANTIES
The Collateral Agent makes the following representations and warranties
to Interep, each and all of which shall survive the execution and delivery of
this Agreement and the Closing hereunder:
3.1 Investment Intention. The Collateral Agent is acquiring the Warrant
for its own account, for investment purposes and not with a view to the
distribution thereof. The Collateral Agent will not, directly or indirectly,
offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of the
Warrant or the Class A Common Stock issuable upon the exercise thereof (or
solicit any offers to buy, purchase, or otherwise acquire any of the Warrant or
the Class A Common Stock, issuable upon the exercise thereof) except in
compliance with the Securities Act.
15
3.2 Accredited Investor. The Collateral Agent is an "accredited
investor" (as that term is defined in Rule 501 of Regulation D under the
Securities Act) and by reason of its business and financial experience, it has
such knowledge, sophistication and experience in business and financial matters
as to be capable of evaluating the merits and risks of the prospective
investment, is able to bear the economic risk of such investment and is able to
afford a complete loss of such investment.
4. CREDIT PARTIES' REPRESENTATIONS AND WARRANTIES
Each Credit Party, jointly and severally, makes the following
representations and warranties to each Lender and the Collateral Agent, each and
all of which shall survive the execution and delivery of this Agreement and the
Closing hereunder:
4.1 Authorized and Outstanding Shares of Capital Stock. After giving
effect to the Closing, the authorized capital stock of Interep consists of
20,000,000 shares of Class A Common Stock, $0.01 par value, of which 5,308,684
shares are issued and outstanding, 10,000,000 shares of Class B Common Stock,
$0.01 par value, of which 4,241,345 shares are issued and outstanding, and
1,000,000 shares of Preferred Stock, par value $0.01 per share, of which 400,000
shares are designated as Series A Convertible Preferred Stock and of which
110,000 shares are issued and outstanding. All of such issued and outstanding
shares are validly issued, fully paid and non-assessable. Except as set forth on
Schedule 4.1, (i) there is no existing option, warrant, call, commitment or
other agreement to which Interep is a party requiring, and there are no
convertible securities of Interep outstanding which upon conversion would
require, the issuance of any additional shares of Stock of Interep or other
securities convertible into shares of equity securities of Interep, and (ii)
there are no agreements to which Interep is a party with respect to the voting
or transfer of the Stock of Interep. Except as set forth on Schedule 4.1, there
are no stockholders' preemptive rights or rights of first refusal or other
similar rights with respect to the issuance of Stock by Interep. True and
correct copies of the certificate of incorporation and by-laws of Interep have
been delivered to each Lender and the Collateral Agent.
4.2 Authorization and Issuance of Stock. The issuance of the Warrant
has been duly authorized by all necessary corporate action and, upon delivery of
the Warrant, the Warrant will have been validly issued, free and clear of all
pledges, liens, encumbrances and preemptive rights. The issuance of the shares
of Class A Common Stock upon exercise of the Warrants has been duly authorized
by all necessary corporate action and, when issued upon such exercise, such
shares of Class A Common Stock will have been validly issued and fully paid and
non-assessable. Interep has duly reserved that number of shares of Class A
Common Stock issuable upon exercise of the Warrant for issuance pursuant to the
terms thereof.
4.3 Securities Laws. In reliance on the investment representations
contained in Sections 3.1 and 3.2, the offer, issuance, sale and delivery of the
Warrant and the Class A Common Stock issuable upon the exercise thereof, as
provided in the
16
Warrant and this Agreement, are exempt from the registration requirements of the
Securities Act and all applicable state securities laws, and are otherwise in
compliance with such laws. Neither Interep nor any Person acting on its behalf
has taken or will take any action (including, without limitation, any offering
of any securities of Interep under circumstances which would require the
integration of such offering with the offering of Warrant and the Class A Common
Stock issuable upon the exercise thereof under the Securities Act and the rules
and regulations of the SEC thereunder) which might subject the offering,
issuance or sale of the Warrant and the Class A Common Stock issuable upon the
exercise thereof, to the registration requirements of Section 5 of the
Securities Act.
4.4 Corporate Existence; Compliance with Law. Each of the Credit
Parties (i) is a corporation duly organized, validly existing and in good
standing under the laws of the state of its organization, as set forth on
Schedule 4.5; (ii) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership or lease of
property or the conduct of its business requires such qualification (except for
jurisdictions in which such failure to so qualify or to be in good standing
would not have a Material Adverse Effect); (iii) has the requisite corporate
power and authority and the legal right to own, pledge, mortgage or otherwise
encumber and operate its properties, to lease the property it operates under
lease, and to conduct its business as now being conducted; (iv) has, or has
applied for, all material licenses, permits, consents or approvals from or by,
and has made all material filings with, and has given all material notices to,
all Governmental Authorities having jurisdiction, to the extent required for
such ownership, operation and conduct; (v) is in compliance with its certificate
or articles of incorporation and by-laws; and (vi) is in compliance with all
applicable provisions of law, except for such non-compliance which would not
have a Material Adverse Effect.
4.5 Subsidiaries. There currently exist no Subsidiaries of Interep
other than as set forth on Schedule 4.5 hereto, which sets forth such
Subsidiaries, together with their respective jurisdictions of organization, and
the authorized and outstanding capital Stock of each such Subsidiary, by class
and number and percentage of each class owned by Interep or a Subsidiary of
Interep or any other Person. Except as set forth on Schedule 4.5 hereto, there
are no options, warrants, rights to purchase or similar rights covering capital
Stock for any such Subsidiary.
4.6 Corporate Power; Authorization; Enforceable Obligations. The
execution, delivery and performance by each Credit Party of this Agreement, the
other Transaction Documents to which it is a party and all instruments and
documents to be delivered by each Credit Party and the consummation of the other
transactions contemplated by any of the foregoing: (i) are within such Credit
Party's corporate power and authority; (ii) have been duly authorized by all
necessary or proper corporate action; (iii) are not in contravention of any
provision of such Credit Party's certificate of incorporation or by-laws; (iv)
will not violate any law or regulation, or any order or decree of any court or
governmental instrumentality; (v) will not conflict with or result in the breach
or termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument
17
to which any Credit Party is a party or by which any Credit Party or any Credit
Party's property is bound; (vi) will not result in the creation or imposition of
any Lien upon any of the property of any Credit Party other than the Liens
created pursuant to the Loan Documents; and (vii) do not require the consent or
approval of, or any filing with, any Governmental Authority or any other Person
(except (A) for those filings required by the registration rights provisions of
the Warrant and (B) to the extent previously obtained or made). At or prior to
the Closing Date, each of this Agreement and the other Transaction Documents
shall have been duly executed and delivered by each Credit Party thereto and
each shall then constitute a legal, valid and binding obligation of such Credit
Party, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
4.7 Financial Statements. (a) The audited consolidated balance sheet of
Interep and its Subsidiaries as at December 31, 2001, and the related
consolidated statements of income and cash flows for the year then ended, with
the opinion thereon of Xxxxxx Xxxxxxxx, the unaudited consolidated balance sheet
of Interep and its Subsidiaries as at June 30, 2002 and the related unaudited
consolidated statements of income, and cash flows for the six months then ended,
and the unaudited consolidated balance sheet of Interep and its Subsidiaries as
at August 31, 2002 (the "Balance Sheet") and the related unaudited consolidated
statements of income for the eight months then ended, copies of which have
previously been delivered to the Lenders, have been, except as noted therein,
prepared in conformity with GAAP consistently applied throughout the periods
involved and present fairly in all material respects the consolidated financial
position of Interep and its Subsidiaries as at the dates thereof, and the
consolidated results of its operations and cash flows for the periods then
ended, subject, in the case of the interim financial statements, to normal
year-end audit adjustments and absence of footnote disclosures.
(b) Except as set forth on Schedule 4.7, no Credit Party has any
material obligations, contingent or otherwise, including, without limitation,
liabilities for Charges, long-term leases or unusual forward or long-term
commitments which are not reflected in the Balance Sheet, other than those
incurred since August 31, 2002, in the ordinary course of business.
(c) Except as set forth on Schedule 4.7, no dividends or other
distributions have been declared, paid or made upon any shares of capital Stock
of any Credit Party, nor have any shares of capital Stock of any Credit Party
been redeemed, retired, purchased or otherwise acquired for value by any Credit
Party since December 31, 2001.
4.8 Property Interests. (a) No Credit Party owns any real estate. Each
Credit Party has valid leasehold interests in the leases described in Schedule
4.8 hereto, and, except as set forth on Schedule 4.8, good and marketable title
to, or valid leasehold
18
interests in, all of its other properties and assets free and clear of all
Liens, except Permitted Liens.
(b) All real property leased by each Credit Party is set forth on
Schedule 4.8. Each of such leases is valid and enforceable in accordance with
its terms (subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity)) and is in full force and effect. The Credit Parties have delivered
to each Lender true and complete copies of each of such leases set forth on
Schedule 4.8 and all documents affecting the rights or obligations of the Credit
Parties, including, without limitation, any non-disturbance and recognition
agreements, subordination agreements, attornment agreements and agreements
regarding the term or rental of any of the leases. Except as set forth on
Schedule 4.8, none of the Credit Parties nor, to their knowledge, any other
party to any such lease is in default of its obligations thereunder or has
delivered or received any notice of default under any such lease, nor has any
event occurred which, with the giving of notice, the passage of time or both,
would constitute a default under any such lease.
(c) Except as disclosed on Schedule 4.8, no Credit Party is obligated
under or a party to, any option, right of first refusal or any other contractual
right to purchase, acquire, sell, assign or dispose of any real property owned
or leased by such Credit Party.
4.9 Material Contracts; Indebtedness; Liens. The Credit Parties have
delivered to the Lenders and the Collateral Agent a true, correct and complete
list and description of all Material Contracts. Each Material Contract is a
valid and binding agreement of a Credit Party enforceable against such Credit
Party in accordance with its terms (subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity)), and none of the
Credit Parties has any knowledge that any Material Contract is not a valid and
binding agreement against the other parties thereto. Each Credit Party has
fulfilled all material obligations required pursuant to the Material Contracts
to have been performed by such Credit Party on its part. Except as set forth in
Schedule 4.9, none of the Credit Parties is in default or material breach, nor
to any Credit Party's knowledge is any third party in default or material
breach, under or with respect to any Material Contract. Except as set forth on
Schedule 4.9, none of the Credit Parties has any Indebtedness or Liens on its
assets except Permitted Indebtedness and Permitted Liens, respectively.
4.10 Environmental Protection. (a) To the Credit Parties knowledge,
except as set forth on Schedule 4.10, all real property owned, leased or
otherwise operated by each Credit Party (each, a "Facility") is free of
contamination from any
19
substance, waste or material (i) currently identified to be toxic or hazardous
pursuant to, or which may result in liability under, any Environmental Law or
(ii) within the definition of a substance which is toxic or hazardous under any
Environmental Law, including, without limitation, any asbestos, pcb, radioactive
substance, methane, volatile hydrocarbons, industrial solvents, oil or petroleum
or chemical liquids or solids, liquid or gaseous products, or any other material
or substance which has in the past or could at any time in the future cause or
constitute a health, safety, or environmental hazard to any Person or property
or result in any Environmental Liabilities and Costs ("Hazardous Substance") of
more than $100,000 or which, in either case, could have a Material Adverse
Effect. Except as set forth on Schedule 4.10, none of the Credit Parties has
caused or suffered to occur any release, spill, migration, leakage, discharge,
spillage, uncontrolled loss, seepage, or filtration of Hazard Substances at or
from the Facility (a "Spill") which could result in Environmental Liabilities
and Costs in excess of $100,000.
(b) Each Credit Party has generated, treated, stored and disposed of
any Hazardous Substances in full compliance with applicable Environmental Laws,
except for such non-compliances which would not have a Material Adverse Effect.
(c) Each Credit Party has obtained, or has applied for, and is in full
compliance with and in good standing under all permits required under
Environmental Laws (except for such failures which would not have a Material
Adverse Effect) and none of the Credit Parties has any knowledge of any
proceedings to substantially modify or to revoke any such permit.
(d) To the Credit Parties knowledge, except as set forth on Schedule
4.10, there are no investigations, proceedings or litigation pending or, to any
Credit Party's knowledge, threatened affecting or against any Credit Party or
the Facilities relating to Environmental Laws or Hazardous Substances.
(e) Since December 31, 2001, except for communications in connection
with the matters listed on Schedule 4.10, none of the Credit Parties has
received any communication or notice (including, without limitation, requests
for information) indicating the potential of Environmental Liabilities and Costs
against any Credit Party.
4.11 Labor Matters. (a) There are no strikes or other labor disputes
against any Credit Party pending or, to any Credit Party's knowledge,
threatened. Hours worked by and payment made to employees of the Credit Parties
have not been in material violation of the Fair Labor Standards Act or any other
applicable law dealing with such matters. All payments due from each Credit
Party on account of employee health and welfare insurance have been paid or
accrued as a liability on the books of such Credit Party. There is no organizing
activity involving any Credit Party pending or, to any Credit Party's knowledge,
threatened by any labor union or group of employees. There are no representation
proceedings pending or, to any Credit Party's knowledge, threatened with the
National Labor Relations Board, and no labor organization or group of employees
of any Credit Party has made a pending demand for recognition. There are
20
no complaints or charges against any Credit Party pending or, to any Credit
Party's knowledge, threatened to be filed with any federal, state, local or
foreign court, governmental agency or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by any Credit Party of any individual.
(b) No Credit Party is, or during the five years preceding the date
hereof was, a party to any labor or collective bargaining agreement and there
are no labor or collective bargaining agreements which pertain to employees of
any Credit Party.
4.12 Other Ventures. Except as set forth on Schedule 4.12, none of the
Credit Parties is engaged in any joint venture or partnership with any other
Person.
4.13 Taxes. Except as set forth on Schedule 4.13, all federal, state,
local and foreign tax returns, reports and statements required to be filed by
each Credit Party have been timely filed with the appropriate Governmental
Authority and all such returns, reports and statements are true, correct and
complete in all material respects. All Charges and other impositions due and
payable for the periods covered by such returns, reports and statements have
been paid prior to the date on which any fine, penalty, interest or late charge
may be added thereto for nonpayment thereof, or any such fine, penalty,
interest, late charge or loss has been paid. Proper and accurate amounts have
been withheld by each Credit Party from its employees for all periods in full
and complete compliance with the tax, social security and unemployment
withholding provisions of applicable federal, state, local and foreign law and
such withholdings have been timely paid to the respective governmental agencies.
None of the Credit Parties has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges. No
tax audits or other administrative or judicial proceedings are pending or
threatened with regard to any Charges for which any Credit Party may be liable
and no assessment of Charges is proposed against any Credit Party. None of the
Credit Parties has filed a consent pursuant to IRC Section 341(f) or agreed to
have IRC Section 341(f)(2) apply to any dispositions of subsection (f) assets
(as such term is defined in IRC Section 341(f)(4)). None of the property owned
by any Credit Party is property which such company is required to treat as being
owned by any other Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, and in effect immediately prior to
the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property"
within the meaning of IRC Section 168(h). None of the Credit Parties has agreed
or has been requested to make any adjustment under IRC Section 481(a) by reason
of a change in accounting method or otherwise. None of the Credit Parties has
any obligation under any written tax sharing agreement.
4.14 No Litigation. Except as disclosed on Schedule 4.14, no action,
claim or proceeding is now pending or, to the knowledge of any Credit Party,
threatened against any Credit Party, at law, in equity or otherwise, before any
court, board, commission, agency or instrumentality of any federal, state, or
local government or of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators.
21
4.15 Brokers. Except as set forth on Schedule 4.15, no broker or finder
acting on behalf of any Credit Party brought about the consummation of the
transactions contemplated pursuant to this Agreement and none of the Credit
Parties has any obligation to any Person in respect of any finder's or brokerage
fees (or any similar obligation) in connection with the transactions
contemplated by this Agreement. The Credit Parties are solely responsible for
the payment of all such finder's or brokerage fees.
4.16 Employment Agreements. Except as set forth on Schedule 4.16, there
are no employment, consulting or management agreements covering management of
any Credit Party.
4.17 Patents, Trademarks, Copyrights and Licenses. Each Credit Party
owns all licenses, patents, patent applications, copyrights, service marks,
trademarks and registrations and applications for registration thereof, and
trade names necessary to continue to conduct its business as heretofore
conducted by it and now being conducted by it, each of which is listed, together
with Patent and Trademark Office or Copyright Office application or registration
numbers, where applicable, on Schedule 4.17 hereto. To the Credit Parties'
knowledge, such Credit Party conducts its businesses without infringement or
claim of infringement of any license, patent, copyright, service xxxx,
trademark, trade name, trade secret or other intellectual property right of
others, except as set forth on Schedule 4.17 hereto. To the Credit Parties'
knowledge, there is no infringement by others of any license, patent, copyright,
service xxxx, trademark, trade name, trade secret or other intellectual property
right of any Credit Party, except as set forth on Schedule 4.17 hereto.
4.18 No Material Adverse Effect. Except as set forth on Schedule 4.18,
no event has occurred since December 31, 2001 which has had or could be
reasonably expected to have a Material Adverse Effect.
4.19 ERISA. (a) Schedule 4.19 sets forth: (i) all "employee benefit
plans", as defined in Section 3(3) of ERISA, and any other employee benefit
arrangements or payroll practices, including, without limitation, severance pay,
sick leave, vacation pay, salary continuation for disability, consulting or
other compensation agreements, retirement, deferred compensation, bonus, stock
purchase, hospitalization, medical insurance, life insurance and scholarship
programs (the "Plans") maintained by any Credit Party or to which any Credit
Party contributed or is obligated to contribute thereunder, and (ii) all
"employee pension benefit plans", as defined in Section 3(2) of ERISA (the
"Pension Plans"), maintained by any Credit Party or any of its ERISA Affiliates
to which such Credit Party or any of its ERISA Affiliates contributed or is
obligated to contribute thereunder.
(b) No Lender will have (i) any obligation to make any contribution to
any Multiemployer Plan or (ii) any withdrawal liability from any such
Multiemployer Plan under Section 4201 of ERISA which it would not have had if it
had not made the Loan to Interep at the Closing in accordance with the terms of
this Agreement.
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(c) The Pension Plans intended to be qualified under Section 401(a) of
the IRC are so qualified and the trusts maintained pursuant thereto are exempt
from federal income taxation under Section 501 of the IRC, and nothing has
occurred with respect to the operation of any such Pension Plans which could
cause the loss of such qualification or exemption or the imposition of any
material liability, penalty, or tax under ERISA or the IRC.
(d) All contributions required by law or pursuant to the terms of the
Plans (without regard to any waivers granted under Section 412 of the IRC) to
any funds or trusts established thereunder or in connection therewith have been
made by the due date thereof (including any valid extension) and no accumulated
funding deficiencies exist in any of the Pension Plans.
(e) There is no "amount of unfunded benefit liabilities" as defined in
Section 4001(a)(18) of ERISA in any of the respective Pension Plans. Each of the
respective Pension Plans are fully funded in accordance with the actuarial
assumptions used by the PBGC to determine the level of funding required in the
event of the termination of the Pension Plan and all benefit liabilities do not
exceed the assets of such Pension Plans.
(f) There has been no "reportable event" as that term is defined in
Section 4043 of ERISA and the regulations thereunder with respect to the Pension
Plans which would require the giving of notice, or any event requiring
disclosure under Sections 4041(c)(3)(C), 4063(a) or 4068(f) of ERISA.
(g) There is no material violation of ERISA with respect to the filing
of applicable reports, documents, and notices regarding the Plans with the
Secretary of Labor and the Secretary of the Treasury or the furnishing of such
documents to the participants or beneficiaries of the Plans.
(h) True, correct and complete copies of the following documents, with
respect to each of the Plans, have been made available or delivered to each
Lender by the Credit Parties: (A) any plans and related trust documents, and
amendments thereto, (B) the most recent Forms 5500 (including any schedules
thereto) and the most recent actuarial valuation report, if any, (C) the most
recent IRS determination letter, if applicable, (D) summary plan descriptions,
(E) material written communications to employees relating to the Plans and (F)
written descriptions of all non-written agreements relating to the Plans.
(i) There are no material pending actions, claims or lawsuits which
have been asserted or instituted against the Plans, the assets of any of the
trusts under such Plans or the Plan sponsor or the Plan administrator, or
against any fiduciary of the Plans with respect to the operation of such Plans
(other than routine benefit claims), nor does any Credit Party have knowledge of
facts which could form the basis for any such claim or lawsuit.
23
(j) All amendments and actions required to bring the Plans into
conformity in all material respects with all of the applicable provisions of
ERISA and other applicable laws have been made or taken except to the extent
that such amendments or actions are not required by law to be made or taken
until a date after the Closing Date.
(k) The Plans have been maintained, in all material respects, in
accordance with their terms and with all provisions of ERISA (including rules
and regulations thereunder) and other applicable Federal and state law, and no
Credit Party or "party in interest" or "disqualified person" with respect to the
Plans has engaged in a "prohibited transaction" within the meaning of Section
4975 of the IRC or Section 406 of ERISA.
(l) None of the Credit Parties or any ERISA Affiliate has (i)
terminated any Pension Plan or (ii) incurred any outstanding liability under
Section 4062 of ERISA to the PBGC or to a trustee appointed under Section 4042
of ERISA for which liability remains unsatisfied.
(m) None of the Credit Parties or any ERISA Affiliate maintains
retired life and retired health insurance plans which are Welfare Plans and
which provide for continuing benefits or coverage for any participant or any
beneficiary of a participant except as may be required under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") and at the
expense of the participant or the participant's beneficiary. Each Credit Party
and all ERISA Affiliates which maintains a Welfare Plan has complied with the
notice and continuation requirements of COBRA and the regulations thereunder.
(n) None of the Credit Parties or any ERISA Affiliate has
contributed or been obligated to contribute to a Multiemployer Plan as of the
Closing.
(o) None of the Credit Parties or any ERISA Affiliate has withdrawn
in a complete or partial withdrawal from any Multiemployer Plan prior to the
Closing Date, nor has any of them incurred any liability due to the termination
or reorganization of a Multiemployer Plan.
(p) None of the Credit Parties, any ERISA Affiliate or any
organization to which any Credit Party is a successor or parent corporation,
within the meaning of Section 4069(b) of ERISA, has engaged in any transaction,
within the meaning of Section 4069 of ERISA.
4.20 SEC Documents. Interep has made available to each Lender and the
Collateral Agent a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by Interep with the SEC since
December 31, 2001 and prior to the date of this Agreement (the "SEC Documents"),
which are all the documents (other than preliminary material) that Interep was
required to file with the SEC since such date. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the
24
case may be, and the rules and regulations of the SEC thereunder applicable to
such SEC Documents, and none of the SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.21 Ordinary Course of Business. Except as set forth on Schedule 4.21
or in response to the events described therein, since December 31, 2001, each
Credit Party has conducted its operations only in the ordinary course of
business consistent with past practice.
4.22 Insurance. Schedule 4.22 hereto contains a complete and correct
list of all policies of insurance of any kind or nature covering each Credit
Party, including, without limitation, policies of life, fire, theft, employee
fidelity and other casualty and liability insurance, indicating the type of
coverage, name of insured, the insurer, the premium, the expiration date of each
policy and the amount of coverage, and such policies are in full force and
effect. Complete and correct copies of each such policy have been furnished or
made available to the Lenders and the Collateral Agent. Such policies are in
amounts customary for the industry in which the Credit Parties operate.
4.23 Accounts Receivable. All accounts receivable of each Credit Party
as shown on the Balance Sheet are collectible in the ordinary course of business
by such Credit Party, net of the reserves for bad debts shown on the Balance
Sheet.
4.24 Minute Books. The minute books of each Credit Party, as
previously made available to each Lender, accurately reflect all formal
corporate action of the stockholders and Board of Directors of such Credit
Party.
4.25 Full Disclosure. No information contained in this Agreement, any
other Transaction Document, the Financials or any written statement furnished by
or on behalf of any Credit Party pursuant to the terms of this Agreement
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which made.
5. COVENANTS
5.1 Affirmative and Financial Covenants. Each Credit Party covenants
and agrees, jointly and severally, that from and after the date hereof (except
as otherwise provided herein, or unless the Required Lenders have given their
prior written consent) so long as any principal amount under the Loans is
outstanding, it shall:
(a) Books and Records. Keep adequate records and books of account
with respect to its business activities, in which proper entries, reflecting all
of its financial
25
transactions are made in a manner sufficient to permit preparation of financial
statements in accordance with GAAP.
(b) Financial and Business Information.
(i) Monthly Information. Commencing with the month ending
October 31, 2002, deliver to each Lender as soon as practicable after the end of
each month, but in any event within 30 days thereafter (except after the end of
December and January for which delivery will in any event be within 60 days
thereafter): (A) a copy of the unaudited internal consolidated revenue and
expense report of Interep and its Subsidiaries for such month and for the
portion of such year ending with such month, (B) an accounts receivable report
listing all accounts receivable of the Credit Parties as at the end of such
month, including the amount of each such account receivable, the name, address
and other contact information of the obligor with respect to each such account
receivable and the aging of each such account receivable and (C) a weekly
pacings chart, if generated, including comparative information for prior years.
(ii) Quarterly Information. Deliver to each Lender as soon as
practicable after the end of each of the first three quarterly fiscal periods in
each Fiscal Year of Interep, but in any event within 45 days thereafter, (A) an
unaudited consolidated balance sheet of Interep and its Subsidiaries as at the
end of such quarter, (B) unaudited consolidated statements of income, retained
earnings and cash flows of Interep and its Subsidiaries for such quarter and (in
the case of the second and third quarters) for the portion of the Fiscal Year
ending with such quarter, setting forth in comparative form in each case the
projected consolidated figures for such period and the actual consolidated
figures for the comparable period of the prior Fiscal Year, (C) the Backlog
Amount Report as at the end of such quarter and (D) a report detailing any
changes of more than $1,000,000 in the Backlog Amount since the previous Backlog
Amount Report delivered to the Lenders. Such financial statements shall be (1)
prepared in accordance with GAAP consistently applied subject to normal year-end
audit adjustments and absence of footnote disclosures and (2) certified by the
principal financial or accounting officer of Interep.
(iii) Annual Information. Deliver to each Lender as soon as
practicable after the end of each Fiscal Year of Interep, but in any event
within 90 days thereafter, (A) an audited consolidated balance sheet of Interep
and its Subsidiaries, if any, as at the end of such year, and (B) audited
consolidated statements of income, retained earnings and cash flows of Interep
and its Subsidiaries, if any, for such year; setting forth in each case in
comparative form the figures for the previous year. Such statements shall be (1)
prepared in accordance with GAAP consistently applied, (2) in reasonable detail
and (3) certified by or such other firm of independent certified public
accountants of recognized national standing selected by Interep and reasonably
acceptable to the Required Lenders.
(iv) Filings. Deliver to each Lender, promptly upon their
becoming available, one copy of each report, notice or proxy statement sent by
Interep to its stockholders generally, and of each regular or periodic report
(pursuant to the
26
Exchange Act) and any registration statement, prospectus or other writing (other
than transmittal letters) (including, without limitation, by electronic means)
pursuant to the Securities Act filed by Interep with (i) the SEC or (ii) any
securities exchange on which shares of common stock of Interep are listed.
(v) Projections. Deliver to each Lender within 15 days prior to
the beginning of each Fiscal Year projected consolidated income statements of
Interep and its Subsidiaries, if any, for such Fiscal Year, on a quarterly basis
together with appropriate supporting details.
(vi) Notices; Other Information. Promptly notify the Collateral
Agent, and following the occurrence and during the continuance of an Event of
Default, each Lender in writing of any (i) termination or notice of termination
of any National Representative Contract that is a Material Contract or (ii)
threat, notice or commencement of any litigation, investigation or other
proceeding by any Person with respect to any Credit Party involving a claim for
an aggregate amount of $1,000,000 or more or a claim that is otherwise material
to such Credit Party. If requested by the Collateral Agent, or following the
occurrence and during the continuance of an Event of Default any Lender, the
Credit Parties will deliver to the Collateral Agent or such Lender, as the case
may be, such other information respecting any Credit Party's business, financial
condition or prospects as the Collateral Agent or such Lender may, from time to
time, reasonably request.
(c) Communication with Accountants. Following the occurrence and
during the continuance of an Event of Default, authorize each Lender to
communicate directly with its independent certified public accountants and tax
advisors and authorizes those accountants to disclose to such Lender any and all
financial statements and other supporting financial documents and schedules
including copies of any management letter with respect to the business,
financial condition and other affairs of each Credit Party. At or before the
Closing Date, the Credit Parties shall deliver a letter addressed to such
accountants and tax advisors instructing them to comply with the provisions of
this Section 5.1(c).
(d) Tax Compliance. Pay all transfer, excise or similar taxes (not
including income or franchise taxes) in connection with the issuance, delivery
or transfer by Interep to the Collateral Agent of the Warrant and the Class A
Common Stock issuable upon the exercise thereof, and shall indemnify and save
the Collateral Agent harmless without limitation as to time against any and all
liabilities with respect to such taxes. No Credit Party shall be responsible for
any taxes in connection with the transfer of the Warrant and the Class A Common
Stock issuable upon the exercise thereof by any holder thereof. The obligations
of the Credit Parties under this Section 5.1(d) shall survive the payment,
prepayment or redemption of the Loans and the termination of this Agreement.
(e) Insurance. Maintain insurance covering, without limitation, fire,
theft, burglary, public liability, property damage, product liability, workers'
27
compensation, directors' and officers' insurance and insurance on all property
and assets material to the operation of its business, all in amounts customary
for its industry. Each Credit Party shall pay all insurance premiums payable by
it.
(f) Employee Plans. (i) With respect to other than a Multiemployer
Plan, for each Plan and Pension Plan intended to be qualified under Section
401(a) of the IRC hereafter adopted or maintained by any Credit Party or any
ERISA Affiliate, (A) seek, or cause its ERISA Affiliates to seek, and receive
determination letters from the IRS to the effect that such Plan or Pension Plan
is qualified within the meaning of Section 401(a) of the IRC; and (B) from and
after the adoption of any such Plan or Pension Plan, cause such plan to be
qualified within the meaning of Section 401(a) of the IRC and to be administered
in all material respects in accordance with the requirements of ERISA and
Section 401(a) of the IRC.
(ii) With respect to each Welfare Plan hereafter adopted or
maintained by any Credit Party or any ERISA Affiliate, to the extent applicable,
comply, or cause its ERISA Affiliates to comply, with the notice and
continuation coverage requirements of Section 4980B of the IRC and the
regulations thereunder.
(iii) Shall not, directly or indirectly, and shall not permit any
ERISA Affiliate to directly or indirectly by reason of an amendment or
amendments to, or the adoption of, one or more Pension Plans, permit the present
value of all benefit liabilities, as defined in Title IV of ERISA, (using the
actuarial assumptions utilized by the PBGC upon termination of a plan) to exceed
the fair market value of assets allocable to such benefits by more than $50,000,
or to increase to the extent security must be provided to any Pension Plan not
under Section 401(a)(29) of the IRC. The Credit Parties shall not establish or
become obligated to any new Retiree Welfare Plan, which would result in the
present value of future liabilities under any such plans to exceed $50,000.
Neither the Credit Parties nor any of their ERISA Affiliates shall establish or
become obligated to any new unfunded Pension Plan, which would result in the
present value of future liabilities under any such plans to exceed $50,000. The
Credit Parties shall not directly or indirectly, and shall not permit any ERISA
Affiliate to (a) satisfy any liability under any Pension Plan by purchasing
annuities from an insurance company or (b) invest the assets of any Pension Plan
with an insurance company, unless, in each case, such insurance company is rated
AA by Standard & Poor's Corporation and the equivalent by each other nationally
recognized rating agency at the time of the investment.
(iv) The Credit Parties and any ERISA Affiliate shall not
contribute or become obligated to contribute to any Multiemployer Plan.
(g) Compliance with Law. Comply with all laws, including
Environmental Laws, applicable to it, except where the failure to comply would
not be reasonably likely to result in a Material Adverse Effect.
28
(h) Financial Covenants. Maintain on a consolidated basis:
(i) Minimum EBITDA. EBITDA for Interep and its Subsidiaries,
measured on a fiscal quarter-end basis for the 12-month period ending on such
fiscal quarter end of not less than the amount set forth below for the
corresponding 12-month period:
12-Month Period Ending Amount
---------------------- ------
September 30, 2002 $10,000,000
December 31, 2002 and
each fiscal quarter thereafter $12,500,000
(ii) Minimum Cash and Cash Equivalents. An aggregate amount of
cash and Cash Equivalents at the end of each month of not less that $7,000,000.
(iii) Minimum Accounts Receivable. A balance of Eligible Accounts
Receivable of the Credit Parties, measured as at the end of each fiscal quarter,
of not less than the amount set forth below for the corresponding aging of the
Eligible Accounts Receivable as of such date:
Accounts Receivable Aged Less than Balance Amount
---------------------------------- --------------
151 days $15,000,000
121 days $11,250,000
91 days $ 7,500,000
(iv) Minimum Contract Backlog. An aggregate Backlog Amount for
all National Representative Contracts of the Credit Parties, measured as at the
end of each fiscal quarter, of not less than $200,000,000.
(i) Maintenance of Existence and Conduct of Business. (i) Do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence, and its rights and franchises; (ii) at all times
maintain, preserve and protect all of its patents, material trademarks and trade
names, and preserve all the remainder of its material assets, in use or useful
in the conduct of its business and keep the same in good repair, working order
and condition (taking into consideration ordinary wear and tear) and from time
to time make, or cause to be made, all needful and proper repairs, renewals and
replacements, betterments and improvements thereto consistent with industry
practices and (iii) continue to conduct business solely in its existing lines of
29
business and businesses related thereto including the broader media advertising
representation business.
(j) Board Observer. Provide the Required Lenders with the right to
designate one observer, without voting rights, who will be entitled to attend,
but not participate in, all meetings of Interep's Board of Directors (including
any committees thereof); provided, however, that Interep, in its sole
discretion, may exclude such observer from any meeting or portion thereof when
such observer's attendance would result in a breach of a confidentiality
obligation of Interep. Any observer designated by the Required Lenders shall be
entitled to notice of all meetings of Interep's Board of Directors (including
committee meetings) and to all information provided to directors. Interep shall
have no obligation for any expenses incurred by any such observer.
(k) Additional Guarantors. If at any time all Non-Guarantor
Subsidiaries have aggregate revenues of $5,000,000 or more during any
consecutive 12-month period, then Interep shall promptly designate in writing to
the Collateral Agent one or more such Non-Guarantor Subsidiaries to become
parties to the Loan Documents pursuant to this Section 5.1(k), such that all
remaining undesignated Non-Guarantor Subsidiaries shall have aggregate revenues
of less than $5,000,000 during any consecutive 12-month period. If Interep fails
to designate Non-Guarantor Subsidiaries pursuant to the preceding sentence, the
Collateral Agent may so designate the Non-Guarantor Subsidiaries pursuant to the
preceding sentence. Each Credit Party agrees to cause each Subsidiary designated
pursuant to this Section 5.1(k) (i) to execute a supplement, amendment or
joinder or otherwise become a party to the Guaranty, this Agreement and any
other Loan Document identified by the Collateral Agent and (ii) to take such
actions necessary or advisable to grant to the Collateral Agent for the benefit
of the Lenders, a perfected security interest in the Collateral (including the
equity securities of, or owned by, such Subsidiary) with respect to such
Subsidiary, including the filing of UCC financing statements in such
jurisdictions as may be required by the Loan Documents or by law or as may be
reasonably requested by the Collateral Agent.
5.2 Negative Covenants. Each Credit Party covenants and agrees that
from and after the date hereof (except as otherwise provided herein, or unless
the Required Lenders have given their prior written consent) so long as any
principal amount is outstanding under the Loans, it shall not:
(a) Permitted Acquisitions or Investments. Directly or indirectly in
any transaction or related series of transactions, acquire or invest in, whether
for cash, debt, Stock, or other property or assets or by guaranty of any
obligation, any assets or business of any Person other than (i) acquisitions by
any Credit Party from another Credit Party or investments therein, (ii) buyouts
by the Credit Parties of national representative contracts with any radio
station or group of radio stations from another national representative, (iii)
acquisitions, other than those described in clause (ii) above, involving an
aggregate purchase price of not more than $2,500,000 in any Fiscal Year or (iv)
investments in Cash Equivalents.
30
(b) Sales of Assets; Liquidation. (i) Sell, transfer, convey or
otherwise dispose of any assets or properties or (ii) liquidate, dissolve or
wind up any Credit Party except for transfers to the Credit Parties, whether
voluntary or involuntary; provided, however, that the foregoing shall not
prohibit (i) the sale of inventory in the ordinary course of business, (ii) the
sale of surplus or obsolete equipment and fixtures, (iii) transfers resulting
from any casualty or condemnation of assets or properties, or (iv) sales of any
assets other than accounts receivable, including National Representation
Contracts of any Credit Party.
(c) Employee Loans. Make or accrue any loans or other advances of
money to any employee of any Credit Party, other than (i) loans to employees
used for job related moving expenses of such employees in an aggregate amount
outstanding not to exceed $500,000 at any time and (ii) loans to employees
(other than the loans described in clause (i) above) in the ordinary course of
business in an aggregate amount outstanding not to exceed $100,000 at any one
time.
(d) Transactions with Affiliates. Enter into or be a party to any
transaction with any Affiliate of any Credit Party, except (i) transactions
expressly permitted hereby, (ii) transactions in the ordinary course of and
pursuant to the reasonable requirements of the Credit Parties' business and upon
fair and reasonable terms that are fully disclosed to the Lenders and are no
less favorable to any Credit Party than would be obtained in a comparable
arm's-length transaction with a Person not an Affiliate of a Credit Party, (iii)
transactions between the Credit Parties, (iv) payment of compensation to
employees and directors' fees, (v) sales of capital stock of Interep to any
Affiliate that do not, individually or in the aggregate, result in a Change of
Control, (vi) any of the transactions described in Interep's July 22, 2002 Proxy
Statement under the caption "Certain Relationships and Related Transactions" and
(vii) any purchases of Interep capital stock by Interep's Stock Growth Plan,
provided that the funds for such purchases are employee funds.
(e) Indebtedness. Incur or suffer to exist any Indebtedness
except: (i) Indebtedness existing on the date hereof and listed on Schedule 4.9
and refinancings thereof which do not result in an increase in the then
outstanding principal amount thereof and which do not have maturity dates or
require principal payments thereunder prior to the Maturity date; (ii) Permitted
Indebtedness; (iii) Indebtedness owing by any Credit Party to another Credit
Party, (iv) Indebtedness of the Credit Parties with respect to the buyouts of
national representative contracts permitted pursuant to Section 5.2(a) not
exceeding the then outstanding and unpaid aggregate purchase price payable by
the Credit Parties with respect to all such national representative contracts,
(v) indemnification obligations of the Credit Parties in favor of radio stations
incurred in the ordinary course in connection with the buyout of national
representative contracts from Xxxx Media Group, Inc. and its subsidiaries,
permitted pursuant to Section 5.2(a), (vi) Indebtedness evidenced by this
Agreement, the Notes and the other Loan Documents and (vii) Indebtedness of the
Credit Parties other than described in clauses (i) through (vi) above, not
exceeding $5,000,000 in aggregate principal outstanding at any time, so long
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as such Indebtedness is unsecured and is subordinated to the Obligations in form
and substance satisfactory to the Required Lenders.
(f) Liens. Incur or suffer to exist any Liens on any assets of
any Credit Party, whether now owned or hereafter acquired, except Permitted
Liens.
(g) Restricted Payments. Directly or indirectly make any
Restricted Payments or prepay, redeem, defease, purchase or otherwise acquire
any Indebtedness of any Credit Party other than the Obligations, other than (i)
payment of non-cash (i.e., "PIK") dividends payable pursuant to the terms of
Interep's Series A Convertible Preferred Stock or any other series or class of
capital stock of Interep and (ii) payment of dividends by a Credit Party other
than Interep to another Credit Party.
(h) Mergers and Subsidiaries. (i) Directly or indirectly, by
operation of law or otherwise, merge with, consolidate with, or otherwise
combine with any Person other than another Credit Party, provided that in any
merger or combination involving Interep, Interep is the surviving entity in such
transaction or (ii) create a Subsidiary that is not a Non-Guarantor Subsidiary,
unless the Credit Parties and such Subsidiary shall have executed such documents
and taken such actions as may be required under Section 5.1(k) hereof.
(i) Management Compensation. Increase the salary and bonus in any
calendar year of the officers of any Credit Party, except consistent with past
practices of such Credit Party.
(j) Amendment to Certificate of Incorporation and By-Laws.
Authorize adopt or approve any amendment to the certificate of incorporation or
the by-laws of any Credit Party that would materially adversely affect the
rights and remedies of the Lenders or the Collateral Agent under this Agreement,
it being agreed that any increase in the number of authorized shares of common
stock of such Credit Party or the authorization or any increase in the number of
any other class of capital stock of such Credit Party would not be so materially
adverse.
(k) Capital Expenditures. Permit Capital Expenditures by all
Credit Parties in the aggregate in any Fiscal Year to exceed $2,000,000.
6. CONDITIONS PRECEDENT
6.1 Conditions Precedent. The obligation of each Lender to make
the Loans pursuant to Section 2.1 hereof, is subject to the condition that such
Lender shall have received, on the Closing Date, the following, each dated the
Closing Date unless otherwise indicated, in form and substance satisfactory to
such Lender and the Collateral Agent:
(a) Favorable opinions of Salans, counsel to the Credit Parties,
substantially in the form attached hereto as Exhibit E, it being understood that
to the
32
extent that such opinion of counsel to the Credit Parties shall rely upon any
other opinion of counsel, each such other opinion shall be in form and substance
reasonably satisfactory to the Lenders and shall provide that the Lenders may
rely thereon.
(b) Resolutions of the board of directors of each Credit Party,
certified by the Secretary or Assistant Secretary of such Credit Party, as of
the Closing Date, to be duly adopted and in full force and effect on such date,
authorizing (i) the consummation of each of the transactions contemplated by
this Agreement and (ii) specific officers to execute and deliver this Agreement
and each other Transaction Document to which it is a party.
(c) Governmental certificates, dated the most recent practicable
date prior to the Closing Date, with telegram updates where available, showing
that each Credit Party is organized and in good standing in the state of its
organization and is qualified as a foreign corporation and in good standing in
all other jurisdictions in which it is qualified to transact business.
(d) A copy of the certificate of incorporation and all amendments
thereto of each Credit Party, certified as of a recent date by the Secretary of
State of the state of its organization, and copies of each Credit Party's
by-laws, certified by the Secretary or Assistant Secretary of such Credit Party
as true and correct as of the Closing Date.
(e) The letter from the Credit Parties to their accountants
referred to in Section 5.1(c).
(f) Each of the Notes duly executed by Interep.
(g) Each of the Collateral Documents, duly executed by the
parties thereto.
(h) The Warrant to be issued to the Collateral Agent duly
executed by Interep.
(i) UCC-1 financing statements reflecting each Credit Party as
the debtor in favor of the Collateral Agent, for the benefit of the Lenders, in
form and substance satisfactory to the Collateral Agent.
(j) Certificates of the Secretary or an Assistant Secretary of
each Credit Party , dated the Closing Date, as to the incumbency and signatures
of the officers of such Credit Party executing this Agreement, the Notes, the
Warrant, each other Transaction Document to which it is a party and any other
certificate or other document to be delivered pursuant hereto or thereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.
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(k) Certificate of the Chairman of the Board or the Senior Vice
President of each Credit Party, dated the Closing Date, stating that all of the
representations and warranties of such Credit Party contained herein or in the
other Transaction Documents are true and correct on and as of the Closing Date
as if made on such date and that no breach of any covenant contained in Section
5 has occurred or would result from the Closing hereunder.
6.2 Additional Conditions. The obligation of each Lender to make
the Loans pursuant to Section 2.1 is subject to the additional conditions
precedent that:
(a) Such Lender shall have received evidence that the insurance
policies provided for in Section 4.22 are in full force and effect, certified by
the insurer thereof.
(b) The Credit Parties shall have paid all reasonable fees and
expenses of Lenders' counsel, Weil, Gotshal & Xxxxxx LLP.
(c) The Credit Parties shall have paid the Closing Fee and all
fees required to be paid by them pursuant to Section 10.2 for which the Credit
Parties shall have received an invoice on or prior to the Closing Date.
(d) Except as disclosed pursuant to Section 4, there shall not
have occurred any event or condition since December 31, 2001 which could have a
Material Adverse Effect.
(e) All of the representations and warranties of each Credit
Party contained herein or in the other Transaction Documents shall be true and
correct on and as of the Closing Date as if made on such date and no breach of
any covenant contained in Section V shall have occurred or would result from the
Closing hereunder.
(f) The Closing shall have occurred no later than November 8,
2002.
(g) All required consents and approvals from any third parties to
consummate the transactions contemplated hereby shall have been obtained.
7. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
7.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder and under the Notes:
(a) Any Credit Party shall fail to make any payment of principal
of, or interest on or any other amount owing in respect of, the Loans, or any of
the other Obligations when due and payable or declared due and payable which, in
the case of interest, shall have remained unremedied for a period of 2 Business
Days and in the case of any amount other than principal or interest, shall have
remained unremedied for a period of 10 days.
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(b) Any Credit Party shall fail or neglect to perform, keep or
observe any of the provisions of Sections 5.1(h) or 5.2 hereof.
(c) Any Credit Party shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents, and the same shall remain unremedied for a period of 30 days after
Interep shall receive written notice of any such failure from any Lender or the
Collateral Agent.
(d) A default shall occur under any other agreement, document or
instrument to which any Credit Party is a party or by which or any property of
any Credit Party is bound, and such default (i) involves the failure to make any
payment (whether of principal, interest or otherwise) due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) in respect of
any Indebtedness of any Credit Party in an aggregate amount exceeding
$1,000,000, or (ii) causes (or permits any holder of such Indebtedness or a
trustee to cause) such Indebtedness or a portion thereof in an aggregate amount
exceeding $1,000,000, to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment.
(e) Any representation or warranty herein or in any Loan Document
or in any written statement pursuant thereto or hereto, report, financial
statement or certificate made or delivered to any Lender by any Credit Party
pursuant hereto or thereto shall be untrue or incorrect in any material respect,
as of the date when made.
(f) Any of the assets of a value of $1,000,000 or more of any
Credit Party shall be attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and shall
remain unstayed or undismissed for 60 consecutive days; or any Credit Party
shall have concealed, removed or permitted to be concealed or removed, any part
of its property, with intent to hinder, delay or defraud its creditors or any of
them or made or suffered a transfer of any of its property or the incurring of
an obligation which may be fraudulent under any bankruptcy, fraudulent
conveyance or other similar law.
(g) A case or proceeding shall have been commenced against any
Credit Party in a court having competent jurisdiction seeking a decree or order
in respect of any Credit Party (i) under title 11 of the United States Code, as
now constituted or hereafter amended, or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of any
Credit Party or of any substantial part of its or their properties, or (iii)
ordering the winding-up or liquidation of the affairs of any Credit Party and
such case or proceeding shall remain undismissed or unstayed for 60 consecutive
days or such court shall enter a decree or order granting the relief sought in
such case or proceeding.
(h) any Credit Party shall (i) file a petition seeking relief
under title 11 of the United States Code, as now constituted or hereafter
amended, or any other
35
applicable federal, state or foreign bankruptcy or other similar law, (ii)
consent to the institution of proceedings thereunder or to the filing of any
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
any Credit Party's or of any substantial part of any Credit Party properties,
(iii) fail generally to pay its debts as such debts become due, or (iv) take any
corporate action in furtherance of any such action.
(i) Final judgment or judgments (after the expiration of all
times to appeal therefrom) for the payment of money in excess of $1,000,000 in
the aggregate shall be rendered against any Credit Party and the same shall not
be (i) fully covered by insurance, or (ii) vacated, stayed, bonded, paid or
discharged for a period of 30 days.
(j) (i) With respect to any Plan, a prohibited transaction within
the meaning of Section 4975 of the IRC or Section 406 of ERISA occurs which in
the reasonable determination of the Agent could result in direct or indirect
liability to any Credit Party, (ii) with respect to any Title IV Plan, the
filing of a notice to voluntarily terminate any such plan in a distress
termination, (iii) with respect to any Multiemployer Plan, any Credit Party or
any ERISA Affiliate shall incur any Withdrawal Liability, (iv) with respect to
any Pension Plan subject to Section 412 of the Code or Section 302 of ERISA, any
Credit Party or any ERISA Affiliate shall incur an accumulated funding
deficiency or request a funding waiver from the IRS, or (v) with respect to any
Title IV Plan or Multiemployer Plan which has an ERISA Event not described in
clauses (ii) - (iv) hereof, in the reasonable determination of the Required
Lenders there is a reasonable likelihood for termination of any such plan by the
PBGC; provided, however, that the events listed in clauses (i)-(v) hereof shall
constitute Events of Default only if the liability, deficiency or waiver request
of any Credit Party or any ERISA Affiliate, whether or not assessed, exceeds
$1,000,000 in any case set forth in (i) - (v) above, or exceeds $1,000,000 in
the aggregate for all such cases.
7.2 Remedies. If any Event of Default specified in Section 7.1
shall have occurred and be continuing, the Required Lenders may, without notice,
declare all Obligations to be forthwith due and payable, whereupon all such
Obligations shall become and be due and payable, without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by the
Credit Parties; provided, however, that upon the occurrence of an Event of
Default specified in Section 7.1(f), (g) or (h) hereof, such Obligations shall
become due and payable without declaration, notice or demand by any Lender.
Any Lender may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in its best interests, including any action
(or the failure to act) pursuant to the Loan Documents.
7.3 Waivers by the Credit Parties. Except as otherwise provided
for in this Agreement and applicable law, the Credit Parties waive (i)
presentment, demand and protest and notice of presentment, dishonor notice of
intent to accelerate and notice of
36
acceleration, (ii) all rights to notice and a hearing prior to Lender's taking
possession or control of, or to Lender's replevy, attachment or levy upon, the
Collateral or any bond or security which might be required by any court prior to
allowing such Lender to exercise any of their remedies, and (iii) the benefit of
all valuation, appraisal and exemption laws. The Credit Parties acknowledge that
they have been advised by counsel of its choice with respect to this Agreement,
the other Loan Documents and the transactions evidenced by this Agreement and
the other Loan Documents.
7.4 Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default, each Lender 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 such
Lender to or for the credit or the account of Interep against any and all of the
obligations of Interep now or hereafter existing under this Agreement and the
Notes held by such Lender irrespective of whether or not Interep shall have made
any demand under this Agreement or the Notes and although such obligations may
be unmatured. Each Lender agrees promptly to notify Interep after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of the Lenders under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which the Lenders may have.
8. INDEMNIFICATION
Each Credit Party agrees to indemnify and hold harmless each
Lender, the Collateral Agent and their Affiliates and their respective officers,
directors and employees from and against any losses, liabilities, obligations,
damages, penalties, actions, proceedings, judgments, suits, claims, costs, fees,
expenses and disbursements (including, without limitation, reasonable attorneys'
fees and disbursements) of any kind ("Losses") which may be imposed upon,
incurred by or asserted against such Lender, the Collateral Agent or such other
indemnified Persons as a result of such Lender or the Collateral Agent having
entered into this Agreement or any of the other Loan Documents or relating to or
arising out of any untrue representation, breach of warranty or failure to
perform any covenants or agreement by any Credit Party contained herein or in
any certificate or document delivered pursuant hereto or arising out of, under
or pursuant to any Environmental Law applicable to any Credit Party or any
Hazardous Materials located at, on, under, or Released from any Facility or by
any Credit Party or otherwise relating to or arising out of the transactions
contemplated hereby; provided, however, that no Credit Party shall be liable for
such indemnification to such indemnified Person to the extent that any such
Losses result from such indemnified Person's gross negligence or willful
misconduct.
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9. COLLATERAL AGENT
9.1 Collateral Agency Provisions.
(a) Appointment. Guggenheim Investment Management, LLC is hereby
appointed to act on behalf of all the Lenders as the Collateral Agent under this
Agreement and the other Loan Documents. The provisions of this Section 9.1 are
solely for the benefit of the Collateral Agent and such Lenders, and no Credit
Party nor any other Person shall have any rights as a third party beneficiary of
any of the provisions hereof. In performing its functions and duties under this
Agreement, the Collateral Agent shall act solely as an agent of the respective
Lenders and does not assume and shall not be deemed to have assumed any
obligation toward or relationship of agency or trust with or for any Credit
Party or any other Person. The Collateral Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement. The
duties of the Collateral Agent shall be mechanical and administrative in nature
and the Collateral Agent shall not have, or be deemed to have, by reason of this
Agreement or otherwise a fiduciary relationship in respect of any Lender.
(b) Actions. If the Collateral Agent shall request instructions
from the Required Lenders or all Lenders affected thereby with respect to any
act or action (including failure to act) in connection with this Agreement, then
the Collateral Agent shall be entitled to refrain from such act or taking such
action unless and until the Collateral Agent shall have received instructions
from the Required Lenders or all Lenders affected thereby, as the case may be,
and the Collateral Agent shall not incur liability to any Person by reason of so
refraining. The Collateral Agent shall be fully justified in failing or refusing
to take any action hereunder (a) if such action would, in the opinion of the
Collateral Agent, be contrary to law or the terms of this Agreement, (b) if such
action would, in the opinion of the Collateral Agent, expose the Collateral
Agent to any liability or (c) if the Collateral Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Collateral Agent as a result of the Collateral Agent
acting or refraining from acting hereunder in accordance with the instructions
of the Required Lenders or all affected Lenders, as applicable.
(c) Collateral Agent's Reliance, etc. Neither the Collateral
Agent nor any of its Affiliates nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement, except for damages
caused by its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Collateral Agent: (i) may
treat the payee of any Note as the holder thereof until the Collateral Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Collateral Agent; (ii) may consult with
legal counsel, independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or
38
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of any Credit Party or to inspect the Collateral including
the books and records of any Credit Party; (v) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto or thereto; and (vi) shall incur no liability under or
in respect of this Agreement by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopy, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
(d) Lender Credit Decisions. Each Lender acknowledges that it
has, independently and without reliance upon the Collateral Agent or any other
Lender and based on such financial statements and other documents and
information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Collateral Agent or any other 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. Each Lender acknowledges the potential conflict of interest of each
other Lender as a result of the Lenders holding disproportionate interests in
the Loans, and expressly consents to, and waives any claim based upon, such
conflict of interest.
(e) Successor Collateral Agent. The Collateral Agent may resign
at any time by giving not less than 30 days' prior written notice thereof to the
Lenders and Interep. Upon any such resignation, the Required Lenders shall have
the right to appoint a successor Collateral Agent. If no successor Collateral
Agent shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the resigning Collateral Agent's
giving notice of resignation, then the resigning Collateral Agent may, on behalf
of the Lenders, appoint a successor Collateral Agent, which shall be a Lender,
if a Lender is willing to accept such appointment, or otherwise shall be a
commercial bank or financial institution or a subsidiary of a commercial bank or
financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State
thereof, has a combined capital and surplus of at least $300,000,000. If no
successor Collateral Agent has been appointed pursuant to the foregoing by the
30th day after the date such notice of resignation was given by the resigning
Collateral Agent, such resignation shall become effective and the Required
Lenders shall thereafter perform all the duties of the Collateral Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
Collateral Agent as provided above. So long as no Event of Default has occurred
and is continuing, any successor Collateral Agent appointed by the Collateral
Agent or the Required Lenders shall not be a direct competitor of Interep or an
Affiliate of a direct competitor of Interep, if such Affiliate is not a bank or
other financial institution, and shall be subject to the prior approval of
Interep, such approval not to be unreasonably
39
withheld or delayed. Upon the acceptance of any appointment as the Collateral
Agent hereunder by a successor Collateral Agent, such successor Collateral Agent
shall succeed to and become vested with all the rights, powers, privileges and
duties of the resigning Collateral Agent. Upon the earlier of the acceptance of
any appointment as the Collateral Agent hereunder by a successor Collateral
Agent or the effective date of the resigning Collateral Agent's resignation, the
resigning Collateral Agent shall be discharged from its duties and obligations
under this Agreement, except that any indemnity rights or other rights in favor
of such resigning Collateral Agent shall continue. After any resigning
Collateral Agent's resignation hereunder, the provisions of this Section 9.1
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Collateral Agent under this Agreement.
(f) Indemnification by the Lenders. The Lenders agree to
indemnify the Collateral Agent (to the extent the Collateral Agent is not
reimbursed by the Credit Parties and without limiting the obligations of Interep
hereunder), ratably on a pro rata basis based on the principal amount
outstanding on the Loans from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Collateral Agent in any way relating to or arising
out of this Agreement or any other Loan Document or any action taken or omitted
by the Collateral Agent in connection therewith; provided, however, that no
Lender shall be liable to the extent it is finally judicially determined that
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements arose primarily from the Collateral
Agent's gross negligence or willful misconduct.
10. MISCELLANEOUS
10.1 Complete Agreement; Modification of Agreement; Sale of
Interest. (a) The Transaction Documents constitute the complete agreement
between the parties with respect to the subject matter hereof and thereof,
supercede any previous agreement or understanding between them relating hereto
or thereto and may not be modified, altered or amended except as provided
therein, or in the case of the Loan Documents by an agreement in writing signed
by the Credit Parties and the Lenders in accordance with Section 10.1(d) hereof.
The Credit Parties may not sell, assign or transfer any of the Loan Documents or
any portion thereof, including, without limitation, their rights, title,
interests, remedies, powers and duties hereunder or thereunder. Subject to
Section 10.1(c) hereof, the Credit Parties hereby consent to any Lender's sale
of participations, assignment, transfer or other disposition, at any time or
times of any of the Loan Documents or of any portion thereof or interest
therein, including, without limitation, such Lender's rights, title, interests,
remedies, powers or duties thereunder, whether evidenced by a writing or not.
(b) In the event any Lender assigns or otherwise transfers all
or any part of the Notes, Interep shall, upon the request of such Lender issue
new Notes to effectuate such assignment or transfer.
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(c) Following the receipt of Interep's written consent, which consent
may not be unreasonably withheld, and at any time or times following the
occurrence and during the continuance of an Event of Default without the need
for such written consent, any Lender may sell, assign, transfer or negotiate to
one or more other lenders, commercial banks, insurance companies, other
financial institutions or any other Person all or a portion of its rights and
obligations under the Notes held by such Lender and this Agreement; provided,
however, that so long as no Event of Default has occurred and is continuing, no
such assignment or transfer shall be made by any Lender to any direct
competitor, or to an Affiliate of a direct competitor, of Interep; provided,
further however, that an Affiliate for such purposes shall not include in any
event any entity which is a bank or other financial institution, or is otherwise
engaged primarily in lending. The acceptance of such assignment by any assignee
shall constitute the agreement of such assignee to be bound by the terms of this
Agreement applicable to such Lender. From and after the effective date of such
an assignment, (x) the assignees thereunder shall, in addition to the rights and
obligations hereunder held by it immediately prior to such effective date, have
the rights and obligations hereunder that have been assigned to it pursuant to
such assignment and (y) the assignor thereunder shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such assignment,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an assignment and acceptance covering all or the remaining
portion of an assignor's rights and obligations under this Agreement, such
assignor shall cease to be a party hereto).
(d) No amendment or waiver of any provision of this Agreement, the
Notes or any other Loan Document, nor consent to any departure by any Credit
Party therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by each Lender affected thereby do any of the
following: (i) subject such Lender to any additional obligations, (ii) reduce
the principal of, or interest on, any Loan or other amounts payable hereunder or
the Notes or release or discharge any Credit Party from its obligations to make
such payments, (iii) postpone any date fixed for any payment of principal of, or
interest on, any Loans or other amounts payable hereunder or the Notes, (iv)
change the aggregate unpaid principal amount of any Loan or any Note, or the
number of Lenders, which shall be required for such Lenders or any of them to
take any action hereunder, or (v) amend this Section 10.1(d).
10.2 Fees and Expenses. The Credit Parties shall pay all reasonable
out-of-pocket expenses of the Lenders in connection with the preparation of the
Transaction Documents and the transactions contemplated thereby, including all
reasonable legal expenses. If, at any time or times, regardless of the existence
of an Event of Default (except with respect to paragraph (iii) below, which
shall be subject to an Event of Default having occurred and be continuing), any
Lender shall employ
41
counsel or other advisors for advice or other representation or shall incur
reasonable legal or other costs and expenses in connection with:
(i) any amendment, modification or waiver, or consent with
respect to, any of the Loan Documents or advice in connection with the
administration of the loans made pursuant hereto or its rights hereunder or
thereunder;
(ii) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by any Lender, any Credit Party or any other Person)
in any way relating to any of the Loan Documents or any other agreements to be
executed or delivered in connection herewith; or
(iii) any attempt to enforce any rights of such Lender against
any Credit Party or any other Person, that may be obligated to such Lender by
virtue of any of the Loan Documents;
then, and in any such event, the reasonable attorneys' and other parties' fees
arising from such services, including those of any appellate proceedings, and
all expenses, costs, charges and other fees incurred by such counsel and others
in any way or respect arising in connection with or relating to any of the
events or actions described in this Section shall be payable, on demand, by the
Credit Parties, jointly and severally, to such Lender and shall be additional
Obligations under this Agreement and the other Loan Documents. Without limiting
the generality of the foregoing, such expenses, costs, charges and fees may
include: paralegal fees, costs and expenses; accountants' and investment
bankers' fees, costs and expenses; court costs and expenses; photocopying and
duplicating expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram charges; secretarial overtime
charges; and expenses for travel, lodging and food paid or incurred in
connection with the performance of such legal services.
10.3 No Waiver by Lender. Any Lender's failure, at any time or times,
to require strict performance by any Credit Party of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of any Lender thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by any Lender of an Event of
Default by any Credit Party under the Loan Documents shall not suspend, waive or
affect any other Event of Default by any Credit Party under this Agreement and
any of the other Loan Documents whether the same is prior or subsequent thereto
and whether of the same or of a different type. None of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Event of
Default by any Credit Party under this Agreement and no defaults by any Credit
Party under any of the other Loan Documents shall be deemed to have been
suspended or waived by any Lender, unless such suspension or waiver is by an
instrument in writing signed by an officer of such Lender and the Required
Lenders and directed to any Credit Party specifying such suspension or waiver.
42
10.4 Remedies. The Lenders' rights and remedies under this Agreement
shall be cumulative and nonexclusive of any other rights and remedies which the
Lenders may have under any other agreement, including without limitation, the
Loan Documents, the other Transaction Documents, by operation of law or
otherwise.
10.5 Waiver of Jury Trial. The parties hereto waive all right to trial
by jury in any action or proceeding to enforce or defend any rights under the
Transaction Documents.
10.6 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
10.7 Binding Effect; Benefits. This Agreement and the other Transaction
Documents shall be binding upon, and inure to the benefit of, the successors of
the Credit Parties and the Lenders and the assigns, transferees and endorsees of
the Lenders.
10.8 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
10.9 Governing Law. Except as otherwise expressly provided in any of
the Transaction Documents, in all respects, including all matters of
construction, validity and performance, this Agreement and the Obligations
arising hereunder shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York applicable to contracts made and
performed in such state, without regard to the principles thereof regarding
conflict of laws, and any applicable laws of the United States of America. The
Lenders and the Credit Parties agree to submit to personal jurisdiction and to
waive any objection as to venue in the federal or New York State courts located
in the County of New York, State of New York. Service of process on any Lender,
the Collateral Agent or any Credit Party in any action arising out of or
relating to any of the Transaction Documents shall be effective if mailed to
such party at the address listed in Section 10.10 hereof. Nothing herein shall
preclude any Lender, the Collateral Agent or any Credit Party from bringing suit
or taking other legal action in any other jurisdiction.
10.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or whenever any of the parties desires to give or serve upon
another any such communication with respect to this Agreement, each such notice,
demand, request,
43
consent, approval, declaration or other communication shall be in writing and
either shall be delivered in person with receipt acknowledged or by registered
or certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback addressed to the respective party hereto at the
address specified for such party on Schedule A and Schedule B; provided, however
that any party may substitute such other address by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited with the United
States mail. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the Persons
designated above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or
other communication.
10.11 Survival. The representations and warranties of the Credit Parties
in this Agreement shall survive the execution, delivery and acceptance hereof by
the parties hereto and the closing of the transactions described herein or
related hereto.
10.12 Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
10.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
10.14 Publicity. Neither any Lender, the Collateral Agent nor any Credit
Party shall issue any press release or make any public disclosure regarding the
transactions contemplated hereby unless such press release or public disclosure
is approved by the other party in advance. Notwithstanding the foregoing, each
of the parties hereto may, in documents required to be filed by it with the SEC
or other regulatory bodies, make such statements with respect to the
transactions contemplated hereby as each may be advised by counsel is legally
necessary or advisable, and may make such disclosure as it is advised by its
counsel is required by law, subject to, in the case of any Credit Party, advance
consultation with the Lenders and the Collateral Agent.
10.15 Confidentiality. Each of the Lenders and the Collateral Agent
(together, the "Recipients") agrees as follows:
(a) Pursuant to various provisions of this Agreement, the Recipients
and their respective agents (including, without limitation, the board observer
contemplated in Section 5.1(j)) will have access to information regarding the
current and projected business, financial condition and results of operations of
the Credit Parties, including non-public records, reports, data, business plans,
financial statements and
44
projections (together, the "Information"), whether or not marked
as confidential and whether in written, electronic or oral form. In order to
induce the Credit Parties to disclose and permit access to the Information to
the Recipients, the Recipients agree as provided in the following subparagraphs
of this Section 10.15.
(b) The Recipients agree and acknowledge that the Information
constitutes trade secrets (including useful combinations of secret and
non-secret information) and non-public confidential information owned by the
Credit Parties. The Recipients shall not use the Information for any purpose
other than for the purposes contemplated under this Agreement and shall maintain
the Information in strict confidence. The Recipients shall not disclose any of
the Information to any third party other than to their attorneys or advisors or
to assignees of, or participants in, or prospective assignees of or prospective
participants in, the Loans or the Warrant who have executed confidentiality
agreements substantially similar to this Section 10.15. The Recipients will not
permit disclosure within their respective organizations beyond the extent
necessary to fulfill the purposes contemplated under this Agreement. Other than
for such purposes, the Recipients will not copy, reproduce or appropriate for
their benefit or that of any other party the Information or any portion thereof.
(c) The Recipients acknowledge that some of the Information will
constitute, when disclosed and for some period thereafter, material, non-public
information for purposes of the federal securities laws. Accordingly, the
Recipients acknowledge that there are securities laws restrictions on their
trading in the Class A Common Stock of Interep whenever they are in possession
of such Information.
(d) The Recipients will cause their respective officers, directors,
employees and agents to abide by the terms and conditions of this Section 10.15
and will safeguard the Information from access by unauthorized persons through
appropriate, reasonable measures.
(e) If any Recipient is required by any law, rule, regulation,
subpoena, interrogatories or similar process, to disclose any Information, such
Recipient shall notify Interep promptly so that it may seek an appropriate
protective order or other relief.
(f) The following will be excluded from the application of
subparagraphs (a)-(e): Information which (i) can be shown by written records to
have been in a Recipient's lawful possession at the time of its disclosure by
the Credit Parties to it and is not covered by another confidentiality agreement
in favor of any Credit Party, (ii) is now, or later becomes, part of general
industry or public knowledge, but not as a result of the actions or omissions of
any Recipient in violation of this Agreement, (iii) is received by a Recipient
lawfully and in good faith from a third party without breach of its own
confidentiality obligations in favor of any Credit Party or (iv) is required to
be disclosed by applicable law, rule, regulation or judicial or administrative
process, so long as the Recipients comply with the provisions of subparagraph
(e) of this Section 10.15.
45
(g) Because the Credit Parties would not have an adequate remedy at
law to protect their interest in their trade secrets, proprietary or
confidential information and similar commercial assets, the Credit Parties shall
be entitled to injunctive relief or specific performance, in addition to such
other remedies and relief that would, in the event of a breach of the provisions
of this Section 10.15 by any Recipient be available to the Credit Parties. If
any Recipient is found by a court of law to have breached any provision of this
Agreement, the Recipients shall reimburse the Credit Parties for all reasonable
costs incurred by them, including, without limitation, attorneys' fees and
disbursements.
46
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
Interep National Radio Sales, Inc.
By: /s/ Xxxxxxx X. XxXxxxx, Xx.
-------------------------------
Name: Xxxxxxx X. XxXxxxx, Xx.
Title: Chief Financial Officer and Senior
Vice President
GUARANTORS:
----------
AMERICAN RADIO SALES, INC.
By: /s/ Xxxxxxx X. XxXxxxx, Xx.
-------------------------------
Name: Xxxxxxx X. XxXxxxx, Xx.
Title: Chief Financial Officer and Senior
Vice President
XxXXXXXX GUILD, INC.
By: /s/ Xxxxxxx X. XxXxxxx, Xx.
-------------------------------
Name: Xxxxxxx X. XxXxxxx, Xx.
Title: Chief Financial Officer and Senior
Vice President
D&R RADIO, INC
By: /s/ Xxxxxxx X. XxXxxxx, Xx.
-------------------------------
Name: Xxxxxxx X. XxXxxxx, Xx.
Title: Chief Financial Officer and Senior
Vice President
INFINITY RADIO SALES, INC.
By: /s/ Xxxxxxx X. XxXxxxx, Xx.
-------------------------------
Name: Xxxxxxx X. XxXxxxx, Xx.
Title: Chief Financial Officer and Senior
Vice President
ALLIED RADIO PARTNERS, INC.
By: /s/ Xxxxxxx X. XxXxxxx, Xx.
-------------------------------
Name: Xxxxxxx X. XxXxxxx, Xx.
Title: Chief Financial Officer and Senior
Vice President
XXXXXXXXX SPANISH MEDIA, L.L.C.
By: /s/ Xxxxxxx X. XxXxxxx, Xx.
-------------------------------
Name: Xxxxxxx X. XxXxxxx, Xx.
Title: Chief Financial Officer and Senior
Vice President
47
Lenders:
-------
UPPER COLOMBIA CAPITAL COMPANY, L.L.C.
By: /s/ Xxxx Xxxxxx
-------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
COLLATERAL AGENT:
----------------
Guggenheim Investment Management, LLC,
as Collateral Agent
By: /s/ Xxxx Xxxxxx
-------------------------------
Name: Xxxx Xxxxxx
Title: Managing Director
48
DISCLOSURE SCHEDULES
The following items are the Schedules referred to in the Credit
Agreement, dated as of November 7, 2002 (the "Agreement"), among Interep
National Radio Sales, Inc, a New York corporation ("Interep") and the
Guarantors, Lenders and Collateral Agent (each as defined in the Agreement).
Capitalized terms used in these Schedules and not otherwise defined have the
meanings given to them in the Agreement.
SCHEDULE 4.1
Options: As of September 30, 2002, options to acquire an aggregate of
4,895,156 shares of Interep's Class B common stock were outstanding. Such
options were granted pursuant to Interep's 1999 Stock Incentive Plan or to prior
actions of the Board of Directors.
Warrants: As of the date hereof, warrants to acquire 692,500 shares
of Class A common stock are outstanding, having been issued in connection with
the issuance of an aggregate of 110,000 shares of Interep's Series A convertible
preferred stock in 2002. On the Closing Date, Interep will issue warrants to
purchase 225,000 shares of its Class A common stock to the Collateral Agent.
Series A convertible preferred stock: As of the Closing Date, there
are 110,000 shares of Series A convertible preferred stock outstanding as of the
Closing Date, which are, as of the Closing Date, convertible into 2,750,000
shares of Class A common stock.
SCHEDULE 4.5
Jurisdiction Holders of Number of Percentage of
of Authorized Outstanding Outstanding Shares/Interests Shares/Interests
Subsidiary Name Organization Capital Capital Capital so Held so Held
------------------- ---------------- ------------- ------------- -------------- ----------------- -----------------
Allied Radio Partners, Inc. New York 2,000 shares 1,790 shares Interep 1,790 shares 100%
of common
stock, par
value $1.00
per share
American Radio Sales, Inc. New York 1,000 shares 100 shares Interep 100 shares 100%
of common
stock, par
value $0.01
per share
Xxxxxxxxx Spanish Media, L.L.C. New York LLC N/A Interep N/A 95%
membership
interests
McGavren N/A 5%
Guild, Inc.
Cybereps, Inc. Delaware 40,000,000 24,553,155 Interep 12,950,001 shares* 52.7%*
shares of shares* Interactive,
common Inc.
1
Jurisdiction Holders of Number of Percentage of
of Authorized Outstanding Outstanding Shares/Interests Shares/Interests
Subsidiary Name Organization Capital Capital Capital so Held so Held
------------------- ---------------- ------------- ------------- ------------ ------------------ -----------------
stock, par Other 11,603,154 shares* 47.3%*
value $0.001 shareholders
per share
1,000,000 1 share Interep 1 share 100%
shares of Interactive,
Series A Inc.
preferred
stock, par
value $0.001
per share
D&R Radio, Inc. New York 200 shares 196 shares Interep 196 shares 100%
of common
stock, no
par value
Infinity Radio Sales, Inc. New York 200 shares 10 shares Interep 10 shares 100%
of common
stock, no
par value
Interep Interactive, Inc. Delaware 20,000,000 12,000,000 Interep New 12,000,000 shares 100%
shares of shares Media, Inc.
common
stock, par
value $0.01
per share
Interep New Media, Inc New York 1,000 shares 1,000 shares Interep 1,000 shares 100%
of common
stock, par
value $0.01
per share
McGavren Guild, Inc. New York 250 shares 250 shares Interep 250 shares 100%
of common
stock, no
par value
Xxxxxxxx and Xxxxxxx, Inc. New York 1,000 shares 100 shares Interep 100 shares 100%
of common
stock, $0.01
per share
Public Radio Network, Inc. New York 1,000 shares 100 shares Interep 100 shares 100%
of common
stock, par
value $0.01
per share
Streaming Audio, Inc. Delaware 100 shares 100 shares Interep 100 shares 100%
of common Interactive,
stock, par Inc.
2
Holders of Number of Percentage of
Jurisdiction Authorized Outstanding Outstanding Shares/Interests Shares/Interests
Subsidiary Name of Organization Capital Capital Capital so Held so Held
--------------------- ------------------ ------------ -------------- -------------- ------------------ ------------------
value $0.01
per share
Warrants to acquire shares of common stock of Interep
Interactive, Inc.
Xxxx Guild holds a warrant to acquire 3,000,000 shares of common
stock of Interep Interactive, Inc. ("Interep Interactive").
Options to acquire shares of common stock of Cybereps, Inc.
Based solely upon a review of documents signed in connection with
the acquisition of Cybereps, Inc. ("Cybereps") there are currently outstanding
employee stock options to acquire 839,004 shares of common stock of Cybereps.
Options to acquire shares of common stock of Streaming Audio,
Inc.
Pursuant to a Call Option Agreement, dated December 29, 2000,
between Interep Interactive and Cybereps, Cybereps holds an option exercisable
until December 31, 2003 to purchase all, but not less than all, of the
outstanding capital stock of Streaming Audio, Inc. ("Streaming Audio").
Restrictions on Transfer.
The shares held by Interep Interactive in Cybereps are subject to
a Stockholders Agreement, dated December 29, 2000 (the "Cybereps Stockholders
Agreement") and cannot be transferred, pledged or otherwise encumbered.
Rights to acquire Cybereps stock.
Interep Interactive holds the right, pursuant to the Cybereps
Stockholders Agreement, to purchase up to its proportionate percentage share (as
defined therein) of all new securities (as defined therein) that Cybereps may
issue from time to time.
SCHEDULE 4.7
When Interep or a Subsidiary agrees to buyout a representation
contract between a radio station or group of radio stations and another rep
firm, Interep or such Subsidiary customarily agrees to indemnify and hold the
radio station or group harmless from any buyout liabilities incurred pursuant to
the terminated contract. These indemnification liabilities are currently
reflected in Interep's Balance Sheets under "Current Liabilities--Representation
contract buyouts payable" and "Representation contract buyouts payables".
3
The Subsidiaries are guarantors of Interep's obligations under
Interep's 10% Senior Subordinated Notes due 2008.
Pursuant to the Asset Purchase Agreement, dated as of September
1, 1999, among Interep, it subsidiary, Xxxxxxxx and Xxxxxxx, Inc. ("M&A") and
certain other parties, M&A is contingently liable for the payment of up to $1.5
million of additional purchase price should M&A achieve certain cash flow
targets. The target for 2001 was met and M&A will pay $500,000 on November 15,
2002. Assuming the targets are achieved, $500,000 would be payable on September
15, 2003 and $500,000 would be payable on September 15, 2004.
The terms of Interep's Certificate of Incorporation governing its
Series A convertible preferred stock provide for the payment of cumulative
annual dividends at the rate of 4% per annum which, at Interep's option may be
paid in cash or in kind in the form of additional shares of the Series A
convertible preferred stock.
During 2002, Interep's Stock Growth Plan has purchased from
Interep a total of 519,596 shares of Interep's Class B common stock.
SCHEDULE 4.8
4.8(b). See the attached spreadsheet for a list of real estate
leases.
SCHEDULE 4.9
4
4.9(a). In addition to the list of master radio group contracts
and contracts with various radio stations that has been separately provided to
the Collateral Agent and the Lenders, the following is a list of Material
Contracts:
(1) 10% Series A Senior Subordinated Notes due 2008 in the aggregate
outstanding principal amount of $99,000,000
(2) Indenture, dated July 2, 1998, among Interep, the guarantors as
defined therein and Summit Bank, as trustee in respect of
the 10% Series A Senior Subordinated Notes due 2008.
(3) Supplemental Indenture, dated as of March 22, 1999, among American
Radio Sales, Inc., Interep, the Guarantors and Summit Bank as Trustee
(4) Guaranties by the Subsidiaries of Interep's obligations under the 10%
Series A Senior Subordinated Notes due 2008.
(5) Interep's office lease for its premises at 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx. (See Schedule 4.8).
(6) Revolving Credit Agreement, dated December 29, 2000, between Streaming
Audio, Inc. and Interep Interactive in which Interep Interactive has
agreed to provide Streaming Audio, Inc. with revolving credit in an
amount not to exceed $1,000,000 through December 31, 2002 and in an
amount not to exceed $1,500,000 through December 31, 2003.
(7) Registration Rights Agreement among the Interep Employee Stock
Ownership Plan, the Interep Stock Growth Plan and Interep.
(8) Lease, dated January 1, 1990, between Xxxxx X. Guild, doing business
as The Tuxedo Park Executive Conference Center and Interep, as amended
by Amendment of Lease, dated December 3, 1998, between Xxxxx Guild
1990 Trust No. 1 (successor in interest to The Tuxedo Park Executive
Conference Center) and Interep.
(9) Amended and Restated Services Agreement, dated as of January 2, 2001,
between Interep and Media Financial Services, Inc.
(10) Fifth Amended and Restated Employment Agreement, dated as of March 1,
1999, between Interep and Xxxxx X. Guild.
(11) Amended and Restated Employment Agreement, dated as of April 1, 2000,
between Interep and Xxxx X. Guild.
5
(12) Supplemental Income Agreement, dated December 31, 1986, between
Interep and Xxxxx X. Guild.
(13) Form of Indemnification Agreement for directors and officers.
(14) 1999 Stock Incentive Plan.
(15) Form of Stock Option Agreement.
(16) Lease Agreement, dated as of June 30, 1999 between Bronxville Family
Partnership, L.P. and Interep.
(17) Agreement, dated as of November 30, 1999 between Interep and Xxxxx X.
Guild.
(18) Agreement, dated as of November 30, 1999 between Interep and Xxxxx X.
Guild.
(19) Agreement, dated as of November 30, 1999 between Interep and Xxxx X.
Guild.
(20) Form of Stock Purchase Agreement used in connection with sale of
units consisting of Series A convertible preferred stock and warrants
to acquire Class A common stock.
(21) Form of warrant used in connection with sale of units consisting of
Series A convertible preferred stock and warrants to acquire Class A
common stock.
(22) Form of Registration Rights Agreement used in connection with sale of
units consisting of Series A convertible preferred stock and warrants
to acquire Class A common stock.
(23) Xxxxxx Xxxxxxxx provides various consulting services to Interep and
the Subsidiaries, including assistance with regard to new station rep
contracts. His agreement with Interep is not written.
(24) Employment Agreement, dated December 1, 1999, between Interep,
Interep Interactive and Xxxx Guild.
(25) Employment Agreement, dated September 15, 1999, between M&A, Interep
and Xxxxxx Xxxxx.
(26) Employment Agreement, dated September 15, 1999, between M&A, Interep
and Xxxxxxx XxXxxxxx.
(27) Employment-At-Will Agreement, dated September 1, 1999, between M&A
and Xxxxx X. Xxxxxxx.
6
(28) Employment-At-Will Agreement, dated September 1, 1999, between M&A and
Xxxxxxxxx Xxxxxx-Xxxxxx.
(29) Employment-At-Will Agreement, dated September 1, 1999, between M&A and
Xxxx Xxxxxx.
(30) Employment-At-Will Agreement, dated September 1, 1999, between M&A and
Xxxxx Xxxxxx.
4.9(c). Indebtedness and Liens:
(1) Interep is obligated under its 10% Series A Senior Subordinated Notes
due 2008 in the aggregate outstanding principal amount of $99,000,000.
The Subsidiaries are guarantors of Interep's obligations under the 10%
Senior Subordinated Notes due 2008.
(2) When Interep or a Subsidiary agrees to buyout a representation
contract between a radio station or group of radio stations and
another rep firm, Interep or such Subsidiary customarily agrees to
indemnify and hold the radio station or group harmless from any buyout
liabilities incurred pursuant to the terminated contract. The buyout
liability payable to the former rep firm is generally an amount equal
to the average monthly commissions earned by the former rep firm over
the 12-month period prior to such termination times the number of
months remaining in the term of the terminated contract, plus two
months.
(3) Interep agreed to pay $10,403,500 to settle a number of buyout
disputes with Xxxx Communications, Inc. ("Xxxx") in May 2002 involving
stations operated by, among others, Emmis Communications Corporation
("Emmis"), Entercom Communications Corp. ("Entercom") and Cumulus
Media Inc. ("Cumulus"). These station groups concurrently provided
Xxxx with affidavits of confession of judgment in amounts equal to the
stipulated buyout amounts relating to their stations. Interep agreed
that, should it default on its obligation to Xxxx and the confessions
of judgment be enforced, Interep would then grant each of these
station groups a security interest in, and the right of set off or
recoupment with respect to, any and all amounts then payable by them
to Interep up to the amount of the judgments entered against them.
With respect to Cumulus, Interep agreed that this security interest
would be a first priority security interest.
SCHEDULE 4.10
None.
SCHEDULE 4.12
Interep Interactive holds 51% of the outstanding common stock of
Cybereps.
SCHEDULE 4.13
7
None.
SCHEDULE 4.14
Xxxx Media Group ("Xxxx") claims it is entitled to be bought out
by Interep of its Representation Agreement, dated September 30, 1999 with
Chancellor Media Corporation of Ohio (the "WYGY Contract"). Interep believes the
successor-in-interest to Chancellor Media Corporation of Ohio terminated the
WYGY Contract prior to the time that the station in question became a client of
Interep. While no specific threat to commence litigation has been made, Xxxx has
advised Interep that it has turned the matter over to counsel. The amount in
controversy is approximately $400,000.
SCHEDULE 4.15
None.
SCHEDULE 4.16
All employment agreements are identified in Schedule 4.9,
items 10-15 and 24-30.
SCHEDULE 4.17
Copyrights: Interep and its Subsidiaries hold copyrights in and
to the sales and marketing research reports that it prepares as part of its
business. These works are not registered with the United States Copyright
Office.
Trademarks
Registered Trademarks:
Trademark Registration Date Registration Number
---------------------------------- ------------------------- -----------------------
Allied Radio Partners 7/15/97 2,079,087
Converging Media 20:20 8/13/02 2,608,028
Country Radio Format Network 8/23/94 1,850,836
E-Radio 1/18/00 2,309,898
E-Radio Sales 6/20/00 2,360,699
Interep 8/23/88 1,501,570
Interep (and design) 8/23/88 1,501,571
Interep Interactive and design 4/18/00 2,343,602
Internet 2/26/85 1,322,486
Radio 20:20 5/1/01 2,447,356
Radio 2000 3/14/00 2,328,970
Radioexchange 6/18/02 2,580,769
Selling Today...Innovating For Tomorrow 4/11/00 2,340,620
8
Registration
Trademark Registration Date Number
---------------------------------- ------------------------- -----------------------
Shop Healthy Sweepstakes 7/23/02 2,598,139
Stationscan 2/18/97 2,038,896
The Power of Country Radio Tour 94 5/6/97 2,058,570
U Can Win 12/15/98 2,211,596
Urban Radio Format Network 8/23/94 1,850,838
Pending Trademark Applications:
Date Application
Trademark Filed Serial Number
---------------------------------- ---------------------- ------------------
Conversion Media 2020 5/4/00 76/039614
Conversion Media Marketing 5/4/00 76/039616
Conversion Media Sales 5/4/00 76/039615
Eradio 9/9/02 78/162011
E-Radio 20:20 3/30/01 78/055962
E-Radio Resource 05/31/02 78/132341
Radio 2005 5/4/00 76/039613
Radioxchange 12/10/01 78/097565
The Interep Radio Store and design 4/18/00 76/028618
Infringement disputes: The internet top level domain name
"x-xxxxx.xxx" is assigned to Technical Staffing Corporation of Santa Rosa,
California ("TSC"). Interep has previously placed TSC on notice that TSC has no
legitimate right or interest in the domain name "x-xxxxx.xxx," and of Interep's
intention to enforce its exclusive rights in and to the E-RADIO xxxx against
infringement or dilution by TSC, or by any assignee or licensee of the domain
name from TSC. On or about September 15, 2002, Interep became aware of the use
of the domain name "x-xxxxx.xxx" by a third party, Lucrative Technologies, Inc.,
of Shoreview, Minnesota ("LTI"). Interep has issued a demand letter to LTI and
has notified TSC of its intention to exercise its rights against TSC.
SCHEDULE 4.18
None.
SCHEDULE 4.19
List of employee benefit plans:
Group Term Life Insurance
Group Health Insurance
Group Dental Insurance
Group Long-Term Disability Insurance
Medical Spending Account
Dependent Care Account
9
List of employee pension benefit plans:
The Interep National Radio Sales, Inc. Stock Growth Plan and Trust
The Interep National Radio Sales, Inc. Wealth Attainment Plan (401k)
SCHEDULE 4.22
See attached.
10
