Exhibit 10.5
CONSENT, WAIVER AND AMENDMENT TO LOAN AGREEMENT
THIS CONSENT, WAIVER AND AMENDMENT TO LOAN AGREEMENT (the "Consent")
dated as of the 7th day of September, 2004, by and between XXXXXXXX WORLDWIDE,
INC., a California corporation, formerly known as DECIMA RESEARCH(the
"Borrower"), and SUNTRUST BANK, a Georgia banking corporation (the "Bank"),
recites and provides:
RECITALS
The Bank extends credit to the Borrower pursuant to the terms of the
letter agreement, dated as of February 6, 2002, between the Borrower, the
Guarantors and the Bank, as amended by a letter agreement dated May 20, 2004
(the "Loan Agreement"). Terms defined in the Loan Agreement shall have the same
defined meanings when such terms are used in this Consent.
The Borrower, its shareholders and Xxxxxx Interactive, Inc. (the
"Purchaser") have entered into an agreement pursuant to which the Purchaser,
directly or indirectly, will acquire all of the outstanding capital stock of the
Borrower (the "Acquisition"). Prior to the consummation of the Acquisition, the
Borrower proposes to pay a dividend of up to $7,000,000 to its shareholders (the
"Dividend Payment").
The Borrower has requested that the Bank and the Bank consent to the
foregoing transactions and waive any Default or Event of Default that might
otherwise result from the consummation of such transactions. The Borrower also
has requested that the Bank extend the Termination Date of the Guidance Line.
The Bank has agreed to such consent, waiver and extension, subject to the terms
and conditions of this Consent. Accordingly, for valuable consideration, the
receipt and sufficiency of which are acknowledged, the Borrower and the Bank
agree as follows:
AGREEMENT
1. Incorporation of Recitals. The foregoing recitals to this Consent are
incorporated in and made a part of this Consent to the same extent and the same
effect as if fully set forth herein.
2. Consent. Subject to the terms and conditions of this Consent, the Bank hereby
consents to the Acquisition and the Dividend Payment (the "Approved
Transactions").
3. Waiver. Subject to the terms and conditions of this Consent, the Bank waives
its right to declare a Default or an Event of Default by reason of the
consummation of the Approved Transactions.
4. Release of Stock. The Bank agrees that the Indebtedness shall no longer be
secured by the stock, membership interests and other ownership interests of
Subsidiaries of the Borrower and hereby agrees to release such security interest
and return to the Borrower all stock certificates and other certificates
currently held by the Bank.
5. Amendment. Subject to the terms and conditions of this Consent, the Borrower
and the Bank agree that the Loan Agreement is amended as follows:
(a) The definitions of the Acquisition and the Dividend Payment set
forth in the Recitals to this Consent are incorporated by reference in Schedule
of Definitions attached to the Loan Agreement.
(b) Section 2(a) of the Loan Agreement are amended to read as follows:
"(a) Amount. The aggregate principal amount of Advances under
the Guidance Line outstanding at any time shall not exceed
$1,500,000. The Advances shall be made in the sole and
absolute discretion of the Bank, and the Bank shall have no
obligation to make Advances even if the Borrower is in
compliance with all of the terms of the Loan Documents.
Advances made on any one or more occasions shall not obligate
the Bank to make Advances on any subsequent occasion. The
Guidance Line will mature on June 30, 2005 (the "Termination
Date").
(c) Section 2(b) of the Loan Agreement is amended to read as follows:
"(b) Use of Proceeds. The proceeds of Advances shall be used
to fund the Dividend Payment and pay current operating
expenses, carry accounts receivable and for other short-term
working capital needs of the Borrower."
(d) Section 3(b) of the Loan Agreement is amended to read as follows:
"(b) The Advances and the Term Loan may be prepaid in whole or
in part, at any time, without premium or penalty. Partial
prepayments of the Term Loan shall be applied to installments
due under the Term Note in the inverse order of maturity and
may not be reborrowed; provided that the Borrower may elect to
have all or a portion of such payment applied to satisfy the
installment that is due on the first day of the calendar month
following the date of such voluntary prepayment."
(e) Section 4(a) of the Loan Agreement is amended to read as follows:
"(a) Guaranty. The Indebtedness shall be guaranteed, jointly
and severally, by Xxxxxxx X. Xxxxxxxx and The Xxxxxxxx Family
Trust (the "Guarantors"), in accordance with the terms of a
Guaranty.
(f) The following is added to the end of Section 4 of the Loan
Agreement as paragraph (d) of such Section 4:
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"(d) Pledge Agreement. The Indebtedness shall be secured by an
assignment of deposit account and control agreement, or an
investment property security agreement and control agreement,
in each case, on the Bank's standard form, from The Xxxxxxxx
Family Trust (the "Pledgor") in favor of the Bank (as amended,
modified or supplemented from time to time, the "Pledge
Agreement"), and assigning to the Bank a deposit account in
the amount of $3,700,000, or a security account with
securities acceptable to the Bank with a margin value (as
determined by the Bank) of not less than $3,700,000 (the
"Pledged Collateral") maintained by the Pledgor with the
Bank."
(g) Section 7(a) of the Loan Agreement is amended to read as follows:
"(a) Financial Reporting Requirements. The Borrower, and, with
respect to item (3) below, the Guarantors, shall deliver, to
the Bank (1) within 180 days after the close of each fiscal
year of the Borrower, audited financial statements of the
Borrower and its Subsidiaries, prepared in accordance with
GAAP, including consolidated balance sheets, income
statements, statements of stockholders' equity and of cash
flows, and accompanied by an unqualified opinion of an
independent certified public accounting firm reasonably
acceptable to the Bank; (2) within 60 days after the end of
each fiscal quarter, unaudited financial statements of the
Borrower and its Subsidiaries, including consolidated balance
sheets and income statements, prepared in accordance with
GAAP, (3) within 270 days after the end of each calendar year,
the financial statement of The Xxxxxxxx Family Trust, a
grantor trust of Xxxxxxx X. and Jeralie X. Xxxxxxxx, and the
personal financial statement of Xxxxxxx X. Xxxxxxxx, each as
of the end of such calendar year; (4) promptly upon receipt,
copies of any reports submitted to the Borrower by independent
certified public accountants in connection with examination of
the financial statements of the Borrower made by such
accountants; and (5) such other information concerning the
Collateral or the financial condition of the Borrower or any
Subsidiary as the Bank from time to time may reasonably
request. All financial statements and reports shall be in form
and detail reasonably acceptable to the Bank and shall be
certified to be accurate by a duly authorized officer of the
Borrower to the best of such officer's knowledge."
(h) Section 7(h) of the Loan Agreement is deleted.
(i) Section 7(j) of the Loan Agreement is deleted.
6. Conditions to Effectiveness of this Consent. This Consent shall be effective
as of the date first above written (the "Effective Date"), provided the Bank
shall have received a
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counterpart of this Consent, duly executed by the Borrower and all of the
Guarantors, and the following conditions are satisfied:
(a) Before and after giving effect to this Consent, the representations
and warranties of the Borrower and the Guarantors in the Loan Documents shall be
true and correct as though made on the date hereof, except to the extent such
representations and warranties by their terms are made as of a specific date and
except for changes that are permitted by the terms of the Loan Documents.
(b) Before and after giving effect to this Consent, no Event of Default
and no Default shall have occurred and be continuing.
(c) No material adverse change in the business, assets, financial
condition or prospects of the Borrower or any Guarantor shall have occurred.
(d) The Bank shall have received the Pledged Collateral and fully
executed counterparts of the Pledge Agreement and the Guaranty from Xxxxxxx X.
Xxxxxxxx and The Xxxxxxxx Family Trust.
(e) The Borrower shall have paid to the Bank, in consideration of this
Consent, a fee of 0.25% of the sum of $1,500,000 (the maximum amount of the
Guidance Line) plus the outstanding principal balance of the Term Loan on the
Effective Date.
(f) The Borrower shall have paid to the Bank all costs and expenses
incurred by the Bank in connection with this Consent, including the fees and
expenses of its counsel.
7. No Implied Waivers. The Borrower and the Guarantors acknowledge and agree
that this Consent shall not constitute a waiver, express or implied, of any
other Default, Event of Default, covenant, term or provision of any Loan
Document, nor shall it create any obligation, express or implied, on the part of
the Bank to waive, or to consent to any amendment of, any existing or future
Default, Event of Default or violation of any covenant, term or provision of any
Loan Document. The Bank shall be entitled to require strict compliance by the
Borrower and the Guarantors with the Loan Documents, notwithstanding the
limited, express consent, waiver and amendment contained herein, and nothing
herein shall be deemed to establish a course of action or a course of dealing
with respect to requests by the Borrower or any Guarantor for waivers or
amendments of any Default, Event of Default, covenant, term or provision of any
Loan Document.
8. Successors and Assigns. This Consent shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns.
9. Counterparts. This Consent may be executed by the parties in any combination,
in one or more counterparts, all of which together shall constitute but one and
the same instrument.
10. Governing Law. This Consent and all other instruments referred to herein
shall be governed by, and shall be construed according to, the laws of the
Commonwealth of Virginia.
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11. Representations. The Borrower hereby confirms all of its representations and
warranties made in the Loan Agreement and represents and warrants to the Bank
that such representations and warranties are true as of the date of this
Consent, and, after giving effect to this Consent, no Default or Event of
Default has occurred and is continuing.
12. Ratification. Except for the amendments to the Loan Agreement contained
herein, the terms of the Loan Agreement and the other Loan Documents shall
remain in full force and effect and are ratified and affirmed by the Borrower
and the Guarantors.
[SIGNATURES ON FOLLOWING PAGES]
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WITNESS the following signatures.
SUNTRUST BANK
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Senior Vice President
XXXXXXXX WORLDWIDE, INC.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
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Title: Chief Financial Officer
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The undersigned Guarantors hereby acknowledge the foregoing provisions and agree
to be bound thereby.
THE XXXXXXXX FAMILY TRUST
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
Trustee
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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