Exhibit 10.49
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CREDIT AGREEMENT
between
XXX XXXXXX
and
SYNAPSE GROUP, INC.
Dated as of January 12, 2000
$25,000,000
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS ......................................... 1
Section 1.1 Definitions ......................................... 1
Section 1.2 Accounting Terms; GAAP .............................. 12
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITY ................. 12
Section 2.1 Term Loan ........................................... 12
Section 2.2 Notice of Borrowing ................................. 13
Section 2.3 Disbursement of Funds ............................... 13
Section 2.4 Note ................................................ 13
Section 2.5 Interest ............................................ 14
Section 2.6 Voluntary Prepayments ............................... 14
Section 2.7 Mandatory Prepayments ............................... 14
Section 2.8 Method and Place of Payment.......................... 15
Section 2.9 Taxes................................................ 15
Section 2.10 Warrants............................................. 16
Section 2.11 Fees................................................. 16
Section 2.12 Use of Proceeds...................................... 17
SECTION 3. CONDITIONS PRECEDENT................................. 17
Section 3.1 Conditions Precedent to the Loan..................... 17
SECTION 4. REPRESENTATIONS AND WARRANTIES....................... 19
Section 4.1 Corporate Status..................................... 19
Section 4.2 Corporate Power and Authority........................ 20
Section 4.3 No Violation......................................... 20
Section 4.4 Litigation........................................... 20
Section 4.5 Material Adverse Change.............................. 20
Section 4.6 Use of Proceeds; Margin Regulations.................. 20
Section 4.7 Governmental Approvals............................... 21
Section 4.8 No Default........................................... 21
Section 4.9 Licenses, etc........................................ 21
Section 4.10 Compliance With Law.................................. 21
Section 4.11 Subsidiaries and Stockholders........................ 21
Section 4.12 Solvency............................................. 22
Section 4.13 Title to Properties.................................. 22
Section 4.14 Investment Company................................... 22
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SECTION 5. AFFIRMATIVE COVENANTS................................ 22
Section 5.1 Information Covenants................................ 22
Section 5.2 Books, Records and Inspections....................... 27
Section 5.3 Maintenance of Insurance............................. 27
Section 5.4 Taxes................................................ 27
Section 5.5 Corporate Franchises................................. 28
Section 5.6 Compliance with Law.................................. 28
Section 5.7 Performance of Obligations........................... 28
Section 5.8 Maintenance of Properties............................ 28
SECTION 6. NEGATIVE COVENANTS................................... 28
Section 6.1 Capital Expenditures................................. 29
Section 6.2 Indebtedness......................................... 29
Section 6.3 Liens................................................ 29
Section 6.4 Restriction on Fundamental Changes................... 30
Section 6.5 Sale of Assets....................................... 30
Section 6.6 Dividends............................................ 30
Section 6.7 Transactions with Affiliates......................... 30
Section 6.8 Limitation on Modifications of Certain Documents..... 31
Section 6.9 Changes in Business.................................. 31
Section 6.10 Certain Restrictions................................. 31
Section 6.11 Investments.......................................... 31
Section 6.12 Fiscal Year; Fiscal Quarter.......................... 31
SECTION 7. EVENTS OF DEFAULT.................................... 31
Section 7.1 Events of Default.................................... 31
Section 7.2 Rights and Remedies.................................. 34
SECTION 8. MISCELLANEOUS........................................ 35
Section 8.1 Payment of Expenses, Indemnity, etc.................. 35
Section 8.2 Right of Setoff...................................... 36
Section 8.3 Notices.............................................. 36
Section 8.4 Successors and Assigns; Participation; Assignments... 37
Section 8.5 Amendments and Waivers............................... 39
Section 8.6 No Waiver; Remedies Cumulative....................... 39
Section 8.7 Governing Law; Submission to Jurisdiction............ 39
Section 8.8 Counterparts......................................... 40
Section 8.9 Effectiveness........................................ 41
Section 8.10 Headings Descriptive................................. 41
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Section 8.11 Marshalling; Recapture.............................. 41
Section 8.12 Severability........................................ 41
Section 8.13 Survival............................................ 41
Section 8.14 Limitation of Liability............................. 41
Section 8.15 Calculations; Computations.......................... 42
Section 8.16 Waiver of Trial by Jury............................. 42
Schedule 4.11 -- Existing Capitalization
Schedule 6.3 -- Existing Liens
Exhibit A -- Form of Note
Exhibit B -- Form of Assignment Agreement
Exhibit C -- Revolving Promissory Note
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CREDIT AGREEMENT, dated as of January 12, 2000, between Synapse Group,
Inc., a Delaware corporation ("Borrower"), and Xxx Xxxxxx ("Lender"), as may
from time to time hereafter be modified, supplemented or amended (this
"Agreement").
W I T N E S S E T H:
WHEREAS, Lender has agreed to extend credit to Borrower to enable
Borrower to borrow the Loan (as hereinafter defined) in an aggregate principal
amount not to exceed $25,000,000; and
WHEREAS, Borrower will use the proceeds of the Loan to repay in full
that certain credit facility by and among Borrower, Nationsbank, N.A., as
administrative agent and syndication agent and as lender, General Electric
Capital Corporation, as documentation agent and as lender, and the lenders party
thereto from time to time, dated March 5, 1998, as amended (the "Nationsbank
Facility").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and intending to be legally bound
hereby, Borrower and Lender hereby agree as follows:
SECTION 1. DEFINITIONS.
Section 1.1 Definitions. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural number the singular.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to (i) vote 5% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise. The term "Affiliate" shall not include
Lender or Affiliates of Lender.
"Agreement" shall have the meaning provided in the preamble of this
Agreement.
"Annual Financial Statements" shall have the meaning provided in
Section 5.1(c).
"Asset Sale" shall mean any sale, lease or other disposition
(including any such transaction effected by way of merger or consolidation) by
Borrower or any Subsidiary, of any asset, including without limitation any sale-
leaseback transaction, but excluding (i) dispositions of inventory and used,
surplus or worn out equipment in the ordinary course of business, (ii)
dispositions to a wholly-owned Subsidiary of Borrower, (iii) cash payments
otherwise permitted under this Agreement and (iv) sales or disposition of
inventory in connection with the Xxxxx Joint Venture (which shall not exceed $2
million in the aggregate).
"Assignee" shall have the meaning provided in Section 8.4(b).
"Assignment Agreement" shall have the meaning provided in Section
8.4(c).
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes.
"Borrower" shall have the meaning provided in the preamble of this
Agreement.
"Borrowing" shall mean the incurrence of the Loan from Lender on the
Closing Date.
"Business Day" shall mean any day excluding Saturday, Sunday and any
day which shall be in New York City or Connecticut a legal holiday or a day on
which banking institutions are authorized or required by law or other government
actions to close.
"Capital Expenditures" shall mean, for any period, the aggregate of
all expenditures (whether paid in cash or accrued as a liability, including the
portion of Capitalized Leases originally incurred during such period that is
capitalized on the consolidated balance sheet of Borrower and its Subsidiaries)
by Borrower and its
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Subsidiaries during such period that, in conformity with GAAP, are or should be
included in "purchase of property and equipment" or similar items reflected in
the consolidated statement of cash flows of Borrower and its Subsidiaries.
"Capitalized Lease" shall mean as applied to any Person, any lease of
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is or should be capitalized on a balance sheet of that
Person.
"Capitalized Lease Obligations" shall mean all obligations of Borrower
and its Subsidiaries under or in respect of Capitalized Leases.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) time deposits and certificates
of deposit of any Bank or any domestic commercial bank of recognized standing
having capital and surplus in excess of $500,000,000 with maturities of not more
than one year from the date of acquisition, (iii) fully secured repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clause (i) entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
the parent corporation of any domestic commercial bank of recognized standing
having capital and surplus in excess of $500,000,000 and commercial paper rated
at least A-1 or the equivalent thereof by Standard & Poor's Corporation or at
least P-1 or the equivalent thereof by Xxxxx'x Investor Services, Inc. and in
each case maturing within one year after the date of acquisition and (v) money
market funds investing in substantially any of the foregoing.
"Change of Control" shall mean, at any time, (i) any Person or "group"
(as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than
Lender, Xxxxxxx Xxxx and any trust or other estate planning vehicle established
from time to time for their benefit or for the benefit of members of either of
their immediate families either (A) becomes the "beneficial owner" (as defined
in Rule 13d-3 of the Exchange Act) directly or indirectly, of Voting Stock of
Borrower (or securities convertible into or exchangeable for such Voting Stock
of Borrower) representing 51% or more of the combined voting power of all Voting
Stock of Borrower (on a fully diluted basis) or (B) otherwise has the ability,
directly or indirectly, to elect a majority of the board of directors of
Borrower; or (ii) Xxxxxxx Xxxx and the Loeb
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Family Trust shall cease to own, in the aggregate, at least 27% of the Voting
Stock of Borrower.
"Closing Date" shall mean the first date on which the conditions
specified in Section 3.1 are satisfied (or waived) in accordance with Section
8.5.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute.
"Contingent Obligation" as applied to any Person shall mean any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) 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 (iv) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Credit Exposure" shall have the meaning provided in Section 8.4(b).
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Default Rate" shall have the meaning provided in Section 2.5(b).
"Dividends" shall have the meaning provided in Section 6.6.
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"Environmental Affiliate" shall mean, with respect to any Person, any
other Person whose liability for any Environmental Claim such Person has or may
have retained, assumed or otherwise become liable for (contingently or
otherwise), either contractually or by operation of law.
"Environmental Approvals" shall mean any permit, license, approval,
ruling, variance, exemption or other authorization required under applicable
Environmental Laws.
"Environmental Claim" shall mean, with respect to any Person, any
notice, claim demand or similar communication (written or oral) by any other
Person alleging potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned by such Person or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
"Environmental Laws" shall mean all federal, state, local and foreign
laws and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including without limitation, laws
and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time. Section references to ERISA are to ERISA,
as in effect at the date of this Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Controlled Group" means a group consisting of any ERISA Person
and all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control with such Person
that, together with such Person, are treated as a single employer under
regulations of the PBGC.
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"ERISA Event" means (a) a Reportable Event with respect to a Plan, (b)
a withdrawal by the Borrower from a Plan during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA, (c) a complete or partial withdrawal by the Borrower from a Multiemployer
Plan or notification that Multiemployer Plan is in reorganization, (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan, (e)
the occurrence of an event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer Plan,
or (f) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the
Borrower.
"ERISA Person" shall have the meaning set forth in Section 3(9) of
ERISA for the term "person."
"Event of Default" shall have the meaning provided in Section 7.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the regulations promulgated therein.
"Existing Environmental Conditions" shall have the meaning provided in
Section 5.1(i).
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System as constituted from time to time.
"Fees" shall mean all amounts payable pursuant to Section 2.11.
"Final Maturity Date" shall mean April 7, 2001.
"Fiscal Year" shall mean the twelve month fiscal period of Borrower
and its Subsidiaries commencing on January 1 of each calendar year and ending on
December 31 of each calendar year.
"Fully Diluted Equity Stock" shall have the meaning set forth in
Section 2.10.
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"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date hereof and consistent with those utilized in
the preparation of the financial statements referred to in Section 5.1.
"Xxxxx Joint Venture" shall mean Gift Business LLC, a Delaware limited
liability corporation and its business.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade payable on terms of 180 days or
less incurred in the ordinary course of business of such Person), (ii) all
indebtedness of such Person evidenced by a note, bond, debenture or similar
instrument, (iii) the principal component of all Capitalized Lease Obligations
of such Person, (iv) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all unreimbursed amounts drawn
thereunder, (v) all indebtedness of any other Person secured by any Lien on any
property owned by such Person, whether or not such indebtedness has been
assumed, (vi) all Contingent Obligations of such Person, and (vii) all payment
obligations of such Person under any interest rate protection agreement
(including, without limitation, any interest rate swaps, caps, floors, collars
and similar agreements) and currency swaps and similar agreements.
"Indemnitee" shall have the meaning provided in Section 8.1(d).
"Interest Payment Date" shall mean the last day of each Interest
Period (or, if any such date is not a Business Day, the next succeeding Business
Day).
"Interest Period" shall mean the period from the date of this
Agreement to but excluding the 90/th/ day thereafter, and thereafter each
successive 90-day period. If any Interest Period would begin or end on a date
which is not a Business Day, such Interest Period shall begin or end, as the
case may be, on the next succeeding Business Day and any Interest Period that
would extend beyond the Final Maturity Date shall end on the Final Maturity
Date. The Lender may, in its discretion, select Interest Periods of one day for
any day on or after the Loan shall have become due and payable in accordance
with the terms hereof.
"Investment" shall mean all investments in and all loans, advances and
extensions of credit to any Person, all stock, notes, bonds, leases or other
7
securities or evidences of indebtedness of or any capital contribution to any
corporation, partnership, firm, joint venture or other business entity.
"Lender" shall have the meaning provided in the preamble of this
Agreement.
"Lender's Office" shall mean the office of Lender as Lender hereafter
designates in writing as such to Borrower.
"LIBOR Rate" with respect to each Interest Period shall mean for any
day, as determined by the Lender, the interest rate per annum offered for
deposits in U.S. dollars for such Interest Period in the London interbank market
which appears on Telerate Page 3750 or such other page as may replace Telerate
Page 3750 on that service or such other service or services as may be nominated
by the British Bankers' Association for the purpose of displaying such rate
(collectively, "Telerate Page 3750") as of 11:00 A.M. London time on the second
Business Day prior to any such date. If the Interest Period is of a duration
falling between the Interest Periods for which such rates appear on Telerate
Page 3750, the LIBOR Rate shall be the rate determined by interpolation between
the rates for the next shorter and the next longer Interest Periods for which
such rate appears on Telerate Page 3750, as determined by the Lender, which
determination shall be conclusive in the absence of manifest error. In the
event that (i) more than one such LIBOR Rate is provided, the average of such
rates shall apply, or (ii) no such LIBOR Rate is published, then the LIBOR Rate
shall be determined from such comparable financial reporting company as the
Lender, in its discretion, shall determine.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same effect as any of
the foregoing and the filing of any financing statement or similar instrument
under the Uniform Commercial Code or comparable law of any jurisdiction,
domestic or foreign.
"Loan Commitment" shall mean $25,000,000, as such amount may be
reduced pursuant to Section 8.4.
"Loan Documents" shall mean this Agreement and the Note.
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"Loan" shall have the meaning provided in Section 2.1(a).
"Loeb Family Trust" shall mean any trust or other estate planning
vehicle established from time to time for the benefit of Xxxxxxx Xxxx or for the
benefit of members of his family.
"Margin Stock" shall have the meaning provided for such term in
Regulation U of the Federal Reserve Board.
"Material Adverse Effect" shall mean a material adverse effect upon
(i) the business, operations, properties, assets, prospects or condition
(financial or otherwise) of Borrower and its Subsidiaries, taken as a whole, or
(ii) the ability of Borrower to pay or perform its respective obligations,
liabilities and indebtedness under the Loan Documents as such payment or
performance becomes due in accordance with the terms thereof, or (iii) the
rights, remedies and powers of Lender under any Loan Document or the validity,
legality or enforceability thereof.
"Materials of Environmental Concern" shall mean and include chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products.
"Multiemployer Plan" shall mean a Plan which is a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.
"Nationsbank Facility" shall have the meaning provided in the Recitals
of this Agreement.
"Net Proceeds" shall mean all cash proceeds of (i) each Asset Sale by
Borrower or its Subsidiaries, in each case net of (x) reasonable expenses
incurred or reasonably expected to be incurred directly in connection with such
sale or disposition and (y) any income, franchise, transfer or other tax payable
by Borrower or its Subsidiaries in connection with such Asset Sale and (ii) each
issuance by Borrower or its Subsidiaries of any type of debt securities
(excluding the Working Capital Facility) or equity securities, in each case net
of (x) any underwriting discounts or commissions and (y) reasonable expenses
incurred or reasonably expected to be incurred directly in connection with such
issuance.
"Note" shall have the meaning provided in Section 2.4.
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"Notice of Borrowing" shall have the meaning provided in Section 2.2.
"Obligations" shall mean all obligations, liabilities and Indebtedness
of every nature of Borrower from time to time owing to Lender under or in
connection with any of the Loan Documents.
"Quarterly Financial Statements" shall have the meaning provided in
Section 5.1(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.
"Person" shall mean and include any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or agency, department or instrumentality
thereof.
"Plan" means any employee benefit plan covered by Title IV of ERISA,
the funding requirements of which:
(i) were the responsibility of the Borrower or a member of its
ERISA Controlled Group at any time within the five years immediately
preceding the date hereof,
(ii) are currently the responsibility of Borrower or a member of
its ERISA Controlled Group, or,
(iii) hereafter become the responsibility of Borrower or a member
of its ERISA Controlled Group,
including any such plans as may have been, or may hereafter be, terminated for
whatever reason.
"Pledged Stock" shall mean any and all capital stock of Borrower or
any of its Subsidiaries pledged under (i) the Nationsbank Facility, (ii) the
stock pledge agreement between Borrower, Nationsbank, N.A., as administrative
agent for the lenders signatory thereto, dated March 5, 1998, as amended, (iii)
the stock pledge agreement between NewSub Magazine Services LLC, NewSub Special
Services Inc. and Nationsbank, N.A. as agent for the benefit of agent and
lenders thereto and (iv)
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any other stock pledge agreement delivered to Nationsbank, N.A. pursuant to the
Nationsbank Facility.
"Purchasing Lender" shall have the meaning provided in Section 8.4(c).
"Reportable Event" has the meaning set forth in Section 4043(b) of
ERISA (other than a Reportable Event as to which the provision of 30 days notice
to the PBGC is waived under applicable regulations), or is the occurrence of any
of the events described in section 4068(f) or 4063(a) of ERISA.
"Solvent" means, when used with respect to any Person, that at the
time of determination, (i) the fair value of its assets is in excess of the
total amount of its liabilities, including all contingent liabilities required
(or which, upon the creation or incurring thereof, would be required) to be
included in the financial statements (including footnotes) of such Person in
accordance with GAAP on a consistent basis, (ii) it is then able and expects to
be able to pay its debts as they mature, and (iii) it has capital sufficient to
carry on its business as conducted and as proposed to be conducted.
"Subsidiary" of any Person shall mean and include (i) any corporation
50% or more of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person, directly or indirectly through
Subsidiaries, is either a general partner or has a 50% or more equity interest
at the time; notwithstanding the foregoing, the term "Subsidiary" shall not
include the Xxxxx Joint Venture.
"Taxes" shall have the meaning provided in Section 2.9.
"Termination Event" shall mean (i) a Reportable Event, or (ii) the
initiation of any action by the Borrower, any member of the Borrower's ERISA
Controlled Group or any Plan fiduciary to terminate a Plan or the treatment of
an amendment to a Plan as a termination under ERISA or (iii) the institution of
proceedings by the PBGC under Section 4042 of ERISA to terminate a Plan or the
appointment of a trustee to administer any Plan.
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"Transactions" shall mean each of the transactions contemplated by the
Loan Documents.
"Transferee" shall have the meaning provided in Section 8.4(d).
"Unfunded Benefit Liabilities" means with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all benefit
liabilities under such Plan as defined in Section 4001(a)(16) of ERISA, exceeds
(ii) the fair market value of all Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plan (on the basis
of assumptions prescribed by the PBGC for the purpose of Section 4044 of ERISA).
"Voting Stock" shall mean shares of capital stock issued by a
corporation, or equivalent in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or persons performing similar functions) of such Person, even if
the right to so vote has been suspended by the happening of such a contingency.
"Warrants" shall have the meaning provided in Section 2.10.
"Working Capital Facility" shall mean such working capital facilities
entered into by of Borrower (including substitutions, replacements or
modifications thereof) in an aggregate principal amount not to exceed $15
million on terms and conditions reasonably satisfactory to Lender; provided that
the form of Promissory Note attached hereto as Exhibit C shall be deemed
satisfactory to Lender.
Section 1.2 Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time.
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITY.
Section 2.1 Term Loan. (a) Subject to and upon the terms and
conditions herein set forth, Lender agrees to make a single loan (the "Loan") to
Borrower on the Closing Date of a sum not to exceed $25,000,000 (the "Loan
Commitment"). The Loan Commitment shall expire on January 14, 2000 if not
utilized on or prior to such date. All unutilized portions of the Loan
Commitment shall expire simultaneously with the making of the Loan on the
Closing Date. Once repaid, the Loan may not be reborrowed. The Loan shall
mature on the Final
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Maturity Date and shall be repaid in its entirety, without premium or penalty
other than interest accrued to such date and not paid, by Borrower on the Final
Maturity Date.
(b) The Loan may be voluntarily prepaid pursuant to Section 2.6.
Section 2.2 Notice of Borrowing. Whenever Borrower desires to borrow
hereunder, Borrower's chief financial officer, treasurer or assistant treasurer
shall give Lender, at Lender's Office prior to 10:00 A.M., New York City time,
at least one Business Days' prior written notice of the Loan. Such notice (a
"Notice of Borrowing") shall be irrevocable and shall specify (i) the aggregate
principal amount of the requested Loan, and (ii) the date of Borrowing (which
shall be a Business Day).
Section 2.3 Disbursement of Funds. On the date specified in the
Notice of Borrowing, Lender will make available the Loan of $25 million, in U.S.
dollars by wire transfer in immediately available funds to an account specified
in a written instrument signed by the treasurer or other authorized officer of
Borrower and delivered to Lender together with the Notice of Borrowing.
Section 2.4 Note. (a) Borrower's obligation to pay the principal
of, and interest on, the Loan shall be evidenced by a promissory note (the
"Note") duly executed and delivered by Borrower substantially in the form of
Exhibit A hereto in a principal amount equal to the Loan Commitment, with blanks
appropriately completed in conformity herewith. The Note issued to Lender shall
(i) be payable to the order of Lender, (ii) be dated the Closing Date, and (iii)
mature on the Final Maturity Date.
(b) Lender is hereby authorized, at its option, either (i) to endorse
on the schedule attached to its Note (or on a continuation of such schedule
attached to such Note and made a part thereof) an appropriate notation
evidencing the date and amount of the Loan evidenced thereby and the date and
amount of each principal and interest payment in respect thereof, or (ii) to
record such Loan and such payments in its books and records. Such schedule or
such books and records, as the case may be, shall constitute prima facie
evidence of the accuracy of the information contained therein.
13
Section 2.5 Interest. (a) Borrower agrees to pay interest in
respect of the unpaid principal amount of the Loan from the date of the making
of the Loan until the Loan shall be paid in full at a rate per annum which shall
be equal the sum of the LIBOR Rate in effect from time to time plus 275 basis
points (the "Rate"). The Rate shall increase by 200 basis points commencing on
October 1, 2000 and shall further increase by an additional 25 basis points each
three month period thereafter until the Loan shall be paid in full; provided
that in no event shall the aggregate amount of such increases exceed 300 basis
points; and further provided that any such increases shall only be payable with
respect to periods after such increases. Interest shall be computed on the
basis of a 360-day year and the actual number of days elapsed.
(b) In the event that, and for so long as, any Event of Default shall
have occurred and be continuing, the outstanding principal amount of the Loan
and, to the extent permitted by law, overdue interest in respect of the Loan,
shall bear interest at a rate per annum (the "Default Rate") equal to the sum of
two percent (2%) plus the interest rate otherwise applicable hereunder to such
principal amount in effect from time to time; provided that nothing in any Loan
Document shall permit Lender to receive interest in excess of the maximum rate
of interest permitted by law.
(c) Interest on the Loan shall accrue from and including the date of
the Borrowing thereof to but excluding the date of any repayment thereof and
shall be payable on each Interest Payment Date, upon any prepayment (on the
amount of principal prepaid), at maturity (whether on the Final Maturity Date,
by acceleration or otherwise) and, after such maturity, on demand.
Section 2.6 Voluntary Prepayments. Borrower shall have the right to
prepay the Loan in whole or in part from time to time on the following terms and
conditions: (i) Borrower shall give Lender written notice (or telephonic notice
promptly confirmed in writing), which notice shall be irrevocable, of its intent
to prepay the Loan, at least one Business Day prior to a prepayment, which
notice shall specify the date (which shall be a Business Day) and the amount of
such prepayment and (ii) each prepayment shall be in an aggregate principal
amount of $1,000,000 or any integral multiple of $150,000 in excess thereof,
unless the amount of the Loan is being paid in full.
Section 2.7 Mandatory Prepayments. On each date after the Closing
Date and until the Final Maturity Date on which Borrower receives Net Proceeds,
14
Borrower shall prepay the Loan in an amount equal to 100% of the amount of such
Net Proceeds; provided that Borrower shall not be required to make any such
prepayment if the Net Proceeds are less than $250,000 in the aggregate, or which
arise from sales or dispositions of assets of the Borrower to the Xxxxx Joint
Venture (which shall not exceed $2 million in the aggregate).
Section 2.8 Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 12:00 noon, New York City
time, on the date when due and shall be made in lawful money of the United
States of America by wire transfer in immediately available funds to such
account as specified by Lender and delivered to the treasurer of Borrower, and
any funds received by Lender after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day.
(b) Whenever any payment to be made hereunder or under the Note shall
be stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable at the applicable rate during
such extension.
(c) All payments made by Borrower hereunder and under the Note shall
be made irrespective of, and without any reduction for, any setoff or
counterclaims, including, without limitation, any setoff or counterclaims
arising due to a breach or alleged breach by Lender of any other agreement to
which Lender and Borrower or its Subsidiaries are parties.
Section 2.9 Taxes. (a) All payments made by Borrower under this
Agreement shall be made free and clear of, and without reduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any governmental
authority excluding, in the case of Lender, net income and franchise taxes
imposed on Lender by the jurisdiction under the laws of which Lender is
organized or in which Lender resides or any political subdivision or taxing
authority thereof or therein (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings being hereinafter called "Taxes"). If any
Taxes are required to be withheld from any amounts payable to Lender hereunder
or under the Note, the amounts so payable to Lender shall be increased to the
extent necessary to yield to Lender (after payment of all Taxes)
15
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement and the Note. Whenever any Taxes are
payable by Borrower, as promptly as possible thereafter, Borrower shall send to
Lender a certified copy of an original official receipt received by Borrower
showing payment thereof. If Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to Lender the required receipts
or other required documentary evidence, Borrower shall indemnify Lender for any
incremental taxes, interest or penalties that may become payable by Lender as a
result of any such failure. The agreements in this Section 2.9 shall survive
the termination of this Agreement and the payment of the Note and all other
Obligations.
(b) In the event that Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder in respect of the
Loan, in any such case because of (i) any change since the date of this
Agreement in any applicable law or governmental rule, regulation, guideline or
order or any interpretation thereof and including the introduction of any new
law or governmental rule, regulation, guideline or order, whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful, and/or (ii) other circumstances affecting Lender, then, and in any
such event, Lender shall, after making such determination, give notice to
Borrower of such determination. Thereafter, Borrower shall pay to Lender such
additional amounts (in the form of an increased rate of interest, or a different
method of calculating interest, or otherwise, as Lender in its sole discretion
shall determine) as shall be required to compensate Lender for such increased
costs or reduction in amounts received or receivable hereunder.
Section 2.1 Warrants. Lender shall have the right, (i) if any
portion of the Loan is outstanding on January 1, 2001, to purchase warrants (the
"Warrants") representing 0.75% of Borrower's fully-diluted equity securities
(including preferred and common stock) as determined in accordance with GAAP
("Fully Diluted Equity Stock") and (ii) if any portion of the Loan is
outstanding on April 1, 2001, to purchase Warrants representing 0.75% of
Borrower's Fully Diluted Equity Stock. The Warrants will be exercisable at a
price equal to $0.01 per share for a period of ten (10) years from their
respective dates of issuance, respectively. Such Warrants will have anti-
dilution provisions, tag along rights and demand and "piggy-back" registration
rights on the terms requested by Lender, and shall otherwise be in the form as
mutually agreed by Lender and Borrower at such time.
Section 2.1 Fees. Borrower shall pay an up-front fee of $250,000 to
Lender on the Closing Date. In addition, on October 1, 2000, Borrower shall pay
to
16
Lender a cash rollover fee in an amount equal to two percent (2%) of the
principal amount of the Loan outstanding on such date.
Section 2.1 Use of Proceeds. The proceeds of the Loan shall be used
solely to repay the Nationsbank Facility.
SECTION 3. CONDITIONS PRECEDENT.
Section 3.1 Conditions Precedent to the Loan. The obligation of
Lender to make the Loan is subject to the satisfaction or waiver in accordance
with Section 8.5 on the Closing Date of the following conditions precedent:
(a) Loan Documents.
(i) Credit Agreement. Borrower shall have executed and delivered this
Agreement to Lender.
(ii) Note. Borrower shall have executed and delivered to Lender the
appropriate Note in the amount, maturity and as otherwise provided herein.
(b) Opinion of Counsel. Lender shall have received a legal opinion,
dated the Closing Date, from Xxxx and Xxxx LLP, counsel to the Borrower, in form
reasonably satisfactory to Lender.
(c) Corporate Documents. Lender shall have received the Certificate
of Incorporation of Borrower, certified to be true, correct and complete by the
appropriate Secretary of State, together with a good standing certificate from
such Secretary of State as of a date not more than five days prior to the
Closing Date, together with a good standing certificate from the Secretaries of
State (or equivalent thereof) of each State in which Borrower is qualified to
transact business, as of a date not more than five days prior to the Closing
Date.
(d) Certified Resolutions, etc. Lender shall have received a
certificate of the secretary or assistant secretary of Borrower dated the
Closing Date certifying (i) the names and true signatures of the incumbent
officers of Borrower authorized to sign the applicable Loan Documents, (ii) the
By-Laws of Borrower as in effect on the Closing Date, (iii) the resolutions of
Borrower's Board of Directors approving and authorizing the execution, delivery
and performance of the Loan
17
Documents executed by Borrower, and (iv) that there have been no changes in the
Certificate of Incorporation of Borrower since the date of the most recent
certification thereof by the appropriate Secretary of State.
(e) Representations and Warranties. The representations and
warranties contained herein and in the Note (other than representations and
warranties which expressly speak only as of a different date) shall be true and
correct in all material respects on such date both before and after giving
effect to the making of the Loan.
(f) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date either before or after giving
effect to the making of the Loan.
(g) No Material Adverse Change. No event, act or condition shall have
occurred which, in the judgment of Lender, has had or could have a Material
Adverse Effect.
(h) No Injunction. No law or regulation shall have been adopted, no
order, judgment or decree of any governmental authority shall have been issued,
and no litigation shall be pending or threatened, which in the judgment of
Lender would enjoin, prohibit or restrain, or impose or result in the imposition
of any material adverse condition upon, the making or repayment of the Loan.
(i) Notice of Borrowing. Lender shall have received a fully executed
Notice of Borrowing in respect of the Loan.
(j) Evidence of Equity. Lender shall have received documents
satisfactory in form and substance to Lender evidencing a placement of private
equity securities by Borrower, yielding net proceeds of $25 million.
(k) Repayment of Certain Debt. Lender shall have received documents
satisfactory in form and substance to Lender evidencing that the Nationsbank
Facility shall have been paid off in full and all obligations thereunder shall
have been terminated, including, without limitation, a payoff letter or other
documentation satisfactory in form and substance to Lender evidencing the
release of any and all Pledged Stock.
18
(l) Financial Markets. There shall not have occurred any disruption
or adverse change in the financial or capital markets generally which could
reasonably be expected to have a Material Adverse Effect on Lender's ability to
assign this Agreement.
(m) Fees. Lender shall have been paid all Fees and other fees and
expenses due and payable hereunder on or before the Closing Date.
(n) Joint Venture. The Xxxxx Joint Venture transaction shall have
closed on terms satisfactory to Lender.
(o) Additional Matters. Lender shall have received such other
certificates, opinions, documents and instruments relating to the Transactions
as may have been reasonably requested by Lender, and all corporate and other
proceedings and all other documents (including, without limitation, all
documents referred to herein and not appearing as exhibits hereto) and all legal
matters in connection with the Transactions shall be satisfactory in form and
substance to Lender.
The providing of a Notice of Borrowing and the acceptance of the
proceeds of the Loan shall each constitute a representation and warranty by
Borrower to Lender that all of the conditions required to be satisfied under
this Section 3 in connection with the making of the Loan have been satisfied.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement and to make the
Loan, Borrower makes the following representations and warranties, which shall
survive the execution and delivery of this Agreement and the Note and the making
of the Loan:
Section 4.1 Corporate Status. Borrower and each of its Subsidiaries
(i) is a duly organized and validly existing corporation in good standing under
the laws of the jurisdiction of its incorporation, (ii) has the corporate power
and authority to own its property and assets and to transact the business in
which it is engaged or presently proposes to engage and (iii) is duly qualified
and is authorized to do business and is in good standing as a foreign
corporation in every jurisdiction in which it owns or leases real property or in
which the nature of its business requires it
19
to be so qualified, except where the failure to so qualify, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
Section 4.2 Corporate Power and Authority. Borrower has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of each of the Loan Documents and has taken all necessary corporate
action to authorize the execution, delivery and performance by it of such Loan
Documents. Borrower has duly executed and delivered each such Loan Document,
and each such Loan Document constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms.
Section 4.3 No Violation. Neither the execution, delivery or
performance by Borrower of the Loan Documents, nor compliance by it with the
terms and provisions thereof nor the consummation of the Transactions, (i) will
contravene any applicable provision of any law, statute, rule, regulation,
order, writ, injunction or decree of any court or governmental instrumentality
or (ii) will conflict or be inconsistent with or result in any breach of, any of
the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the property or assets of Borrower pursuant to
the terms of any indenture, mortgage, deed of trust, agreement or other
instrument to which Borrower is a party or by which it or any of its property or
assets is bound or to which it may be subject, or (iii) will violate any
provision of the Certificate of Incorporation or By-Laws of Borrower.
Section 4.4 Litigation. There are no actions, suits or proceedings
pending or threatened with respect to any of the Transactions or Loan Documents
or that could, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect.
Section 4.5 Material Adverse Change. Since September 30, 1999, there
has occurred no event, act or condition which has had, or could reasonably be
expected to have, a Material Adverse Effect.
Section 4.6 Use of Proceeds; Margin Regulations. All proceeds of the
Loan will be used by Borrower only in accordance with the provisions of Section
2.12. No part of the proceeds of the Loan will be used by Borrower to purchase
or carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Loan nor the
use of the
20
proceeds thereof will violate or be inconsistent with the provisions of
Regulations T, U or X of the Federal Reserve Board.
Section 4.7 Governmental Approvals. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection with
(i) the execution, delivery and performance of any Loan Document or the
consummation of any of the Transactions or (ii) the legality, validity, binding
effect or enforceability of any Loan Document.
Section 4.8 No Default. Neither Borrower nor its Subsidiaries is in
default under or with respect to any agreement, instrument or undertaking to
which it is a party or by which it or any of its property is bound in any
respect which could reasonably be expected to result in a Material Adverse
Effect. No Default or Event of Default exists.
Section 4.9 Licenses, etc. Borrower and its Subsidiaries have
obtained and hold in full force and effect, (i) all franchises, licenses,
permits, certificates, authorizations, qualifications, accreditations,
easements, rights of way and other rights, consents and approvals which are
necessary for the operation of their respective businesses as presently
conducted, (ii) all patents (including all applications, renewals, reissues,
extensions, divisions, and continuations thereof), trademarks (including both
registered and unregistered trademarks and applications therefor), service
marks, trade names, copyrights (including all registrations, renewals,
modifications and extensions thereof), software, propriety rights and know-how
and trade secrets which are necessary for the operation of their respective
business, except where the failure to so obtain the foregoing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 4.10 Compliance With Law. Borrower and each of its
Subsidiaries is in compliance with all laws, rules, regulations, orders,
judgments, writs and decrees (including, without limitation, ERISA and
Environmental Laws), except where the failure to so comply, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
Section 4.11 Subsidiaries and Stockholders. As of the Closing Date,
Borrower has no Subsidiaries except (a) xxxxxxxxxxxxxx.xxx, Inc., (b) NewSub
Special Services, Inc., or (c) NewSub Magazine Services LLC; Schedule 4.11
states
21
as of the date hereof the aggregate authorized and issued capitalization
of Borrower (including options, warrants and other rights to acquire any
interest); the outstanding shares of Borrower have been duly authorized and
validly issued and are fully paid and nonassessable.
Section 4.12 Solvency. Borrower is Solvent after giving effect to
the Transactions.
Section 4.13 Title to Properties. Borrower and each of its
Subsidiaries has good and marketable title to all its real and personal
properties, subject to no Liens of any kind, except for Liens permitted by
Section 6.3
Section 4.14 Investment Company. Borrower is not an "investment
company," or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended (15 U.S.C. (S) 80a-1, et. seq.). The
application of the proceeds of the Loan and repayment thereof by Borrower and
the performance by Borrower of the Transactions will not violate any provision
of said Act, or any rule, regulation or order issued by the Securities Exchange
Commission thereunder, in each case as in effect on the date hereof.
SECTION 5. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that on and after the Closing Date and
until the Obligations are paid in full:
Section 5.1 Information Covenants. Borrower will furnish to Lender:
(a) Monthly Reports. As soon as available, such monthly financial
statements and other monthly financial reports of Borrower as are prepared by
management in the ordinary course of business for financial planning and
oversight purposes and which are circulated to the Board of Directors and/or
investors.
(b) Quarterly Financial Statements. As soon as practicable and in
any event within 60 days after the end of each fiscal quarter (except the last
fiscal quarter of the Fiscal Year), deliver to Lender consolidated balance
sheets of Borrower and its Subsidiaries as at the end of such fiscal quarter,
and the related consolidated statements of income, stockholders' equity and cash
flows for such
22
fiscal quarter and for the period from the beginning of the then current Fiscal
Year through the end of such reporting period (the "Quarterly Financial
Statements"), accompanied by a certificate of the chief financial or accounting
officer of Borrower to the effect that such financial statements present fairly
the financial position of Borrower and its Subsidiaries as of the end of such
fiscal period and the results of their operations and the changes in their
financial position for such fiscal period, in conformity with GAAP (except for
the omission of footnotes thereto and normal year-end adjustments).
(c) Annual Financial Statements. As soon as practicable, and in any
event within 90 days after the end of each Fiscal Year of Borrower, deliver or
cause to be delivered to Lender (i) consolidated balance sheets of Borrower and
its Subsidiaries as at the end of such Fiscal Year, and the notes thereto, and
the related consolidated statements of income, stockholders' equity and cash
flows, and the respective notes thereto, for such Fiscal Year, setting forth
comparative financial statements for the preceding fiscal year (the Annual
Financial Statements"), all prepared in accordance with GAAP and containing
opinions of Xxxxxx Xxxxxxxx, or other such independent certified public
accountants selected by Borrower and approved by Lender, except those which are
unqualified as to the scope of the audit performed and as to the "going concern"
status of Borrower and without any exception not acceptable to Lender, (ii) a
report of the chief financial officer of Borrower providing a discussion and
analysis of such financial statements, and (iii) a letter from Borrower's
accountants specified in (i) above stating that in performing the audit
necessary to render an opinion on the financial statements delivered under this
Section 5.1(c), they obtained no knowledge of any Default or Event of Default by
Borrower in the fulfillment of the terms and provisions of this Agreement
insofar as they relate to financial matters (which at the date of such statement
remains uncured); or if the accountants have obtained knowledge of such Default
or Event of Default, a statement specifying the nature and period of existence
thereof.
(d) Special Reports. As soon practicable upon their becoming
available to Borrower, Borrower shall deliver to Lender a copy of (i) all
regular or special reports or effective registration statements which Borrower
or any Subsidiary shall file with the Securities and Exchange Commission (or any
successor thereto) or any securities exchange, (ii) any proxy statement
distributed by Borrower or any Subsidiary to its shareholders, bondholders or
the financial community in general, and (iii) any management letter or other
report submitted to Borrower or any
23
Subsidiary by independent accountants in connection with any annual, interim or
special audit of Borrower or any Subsidiary.
(e) Other Information. Borrower shall provide to Lender upon request
such other information and analyses as Lender may reasonably request in order to
analyze the financial statements and condition of Lender and its Subsidiaries
and shall provide Lender with an opportunity to meet with management of Borrower
and its accountants in connection therewith.
(f) Budgets. Not later than the last Business Day of each Fiscal
Year, deliver to Lender a capital and operating expense budget prepared on a
monthly basis and consolidated financial projections for Borrower and its
Subsidiaries for the next Fiscal Year, prepared in accordance with GAAP,
accompanied by a written statement of the assumptions used in connection
therewith, together with a certificate of the chief financial officer or
accounting officer of Borrower to the effect that such budget and financial
forecast and assumptions are reasonable and represent Borrower's good faith
estimate of its future financial requirements and performance. The financial
statements required to be delivered pursuant to clauses (b) and (c) above shall
be accompanied by a comparison of the actual financial results set forth in such
financial statements to those contained in the forecasts delivered pursuant to
this clause (f) together with an explanation of any material variations from the
results anticipated in such forecasts.
(g) Officer's Certificates. At the time of the delivery of the
financial statements under clauses (b) and (c) above, a certificate of the chief
financial officer or accounting officer of Borrower which certifies (i) that
such financial statements fairly present the financial condition and the results
of operations of Borrower and its Subsidiaries on the dates and for the periods
indicated, subject, in the case of interim financial statements, to normally
recurring year-end adjustments and (ii) that such officer has reviewed the terms
of the Loan Documents and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the business and condition of
Borrower and its Subsidiaries during the accounting period covered by such
financial statements, and that as a result of such review such officer has
concluded that no Default or Event of Default has occurred during the period
commencing at the beginning of the accounting period covered by the financial
statements accompanied by such certificate and ending on the date of such
certificate or, if any Default or Event of Default has occurred, specifying the
nature and extent thereof and, if continuing, the action Borrower proposes to
take in respect thereof.
24
(h) Notice of Default or Litigation. Promptly and in any event within
one Business Day after Borrower or any of its Subsidiaries obtains knowledge
thereof, notice of (i) the occurrence of any Default or Event of Default, (ii)
any litigation or governmental proceeding pending or threatened against Borrower
or any of its Subsidiaries which could result in a Material Adverse Effect, and
(iii) any other event, act or condition which could result in a Material Adverse
Effect.
(i) ERISA.
(i) Within ten (10) Business Days after the Borrower knows
or has reason to know, that an ERISA Event or a prohibited transaction (as
defined in Sections 406 of ERISA and 4975 of the Code) has occurred, and,
when known, any action taken or threatened by the IRS, the DOL or the PBGC
with respect thereto;
(ii) Upon request, or, in the event that such filing
reflects a significant change with respect to the matters covered thereby,
within three (3) Business Days after the filing thereof with the PBGC, the
DOL or the IRS, as applicable, copies of the following: (i) each annual
report (form 5500 series), including Schedule B thereto, filed with the
PBGC, the DOL or the IRS with respect to each Plan, (ii) a copy of each
funding waiver request filed with the PBGC, the DOL or the IRS with respect
to any Plan and all communications received by the Borrower from the PBGC,
the DOL or the IRS with respect to such request, and (iii) a copy of each
other filing or notice filed with the PBGC, the DOL or the IRS, with
respect to each Plan of the Borrower;
(iii) Upon request, copies of each actuarial report for any
Plan or Multiemployer Plan; and within three (3) Business Days after
receipt thereof by the Borrower, copies of the following (1) any notices of
the PBGC's intention to terminate a Plan or to have a trustee appointed to
administer such Plan; (2) any favorable or unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a) of
the Code; or (3) any notice from a Multiemployer Plan regarding the
imposition of withdrawal liability;
25
(iv) Within three (3) Business Days after the occurrence
thereof: (1) any changes in the benefits of any existing Plan which
increase the Borrower's annual costs with respect thereto by an amount in
excess of $250,000, or the establishment of any new Plan or the
commencement of contributions to any Plan to which the Borrower was not
previously contributing; or (2) any failure by the Borrower to make a
required installment or any other required payment under Section 412 of the
Code on or before the due date for such installment or payment; or
(v) Within three (3) business days after the Borrower knows
or has reason to know that any of the following events has or will occur:
(1) a Multiemployer Plan has been or will be terminated; (2) the
administrator or plan sponsor of a Multiemployer Plan intends to terminate
a Multiemployer Plan; or (3) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.
(j) Environmental. Promptly and in any event within two Business Days
after the existence of any of the following conditions and the Borrower's
knowledge thereof, other than those conditions which exist as of the Closing
Date ("Existing Environmental Conditions"), a certificate of the chief executive
officer or chief financial officer of Borrower specifying in detail the nature
of such condition and the proposed response thereto of Borrower, any of its
Subsidiaries or any of their respective Environmental Affiliates: (i) the
receipt by Borrower, any of its Subsidiaries or any of its Environmental
Affiliates of any communication (written or oral), whether from a governmental
authority, citizens group, employee or otherwise, that alleges that Borrower,
any of its Subsidiaries or Environmental Affiliate is not in compliance with
applicable Environmental Laws and such noncompliance, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, (ii)
Borrower, any of its Subsidiaries or any of its Environmental Affiliates shall
obtain actual knowledge that there exists any Environmental Claim pending or
threatened against Borrower, any of its Subsidiaries or any Environmental
Affiliate, which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect, or (iii) any release, emission, discharge or
disposal of any Material of Environmental Concern that could form the basis of
any Environmental Claim against Borrower, any of its Subsidiaries or any of
their Environmental Affiliates, which Environmental Claim, individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect.
With
26
respect to any Existing Environmental Condition, the requirement to furnish a
certificate, as described above, shall not arise unless and until there is an
adverse development relating to any Existing Environmental Condition which could
reasonably be expected to have a Material Adverse Effect.
(k) Other Information. From time to time, such other information or
documents (financial or otherwise) as Lender may reasonably request.
Section 5.2 Books, Records and Inspections. Borrower shall, and
shall cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries in conformity with GAAP and all
requirements of law shall be made of all dealings and transactions in relation
to its business and activities. Borrower shall, and shall cause each of its
Subsidiaries to, permit officers and designated representatives of Lender to
visit and inspect any of the properties of Borrower or any of its Subsidiaries,
and to examine the books of record and account of Borrower or any of its
Subsidiaries, and discuss the affairs, finances and accounts of Borrower or any
of its Subsidiaries with, and be advised as to the same by, its and their
officers and independent accountants, all upon reasonable notice and at such
reasonable times as Lender may desire.
Section 5.3 Maintenance of Insurance. Borrower shall, and shall
cause each of its Subsidiaries to, (a) maintain with financially sound and
reputable insurance companies insurance on itself and its properties in at least
such amounts and against at least such risks as are customarily insured against
in the same general area by companies engaged in the same or a similar business,
which insurance shall in any event not provide for materially less coverage than
the insurance in effect on the Closing Date, and (b) furnish to Lender from time
to time, upon written request, the policies under which such insurance is
issued, certificates of insurance and such other information relating to such
insurance as Lender may request.
Section 5.4 Taxes. (a) Borrower shall pay or cause to be paid, and
shall cause each of its Subsidiaries to pay or cause to be paid, when due, all
taxes, charges and assessments and all other lawful claims required to be paid
by Borrower or such Subsidiaries, except as contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves have been
established with respect thereto in accordance with GAAP.
27
(b) Borrower shall not, and shall not permit any of its Subsidiaries
to, file or consent to the filing of any consolidated tax return with any Person
(other than Borrower and its Subsidiaries).
Section 5.5 Corporate Franchises. Borrower shall, and shall cause
each of its Subsidiaries to, do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its patents,
trademarks, servicemarks, tradenames, copyrights, franchises, licenses, permits,
certificates, authorizations, qualifications, accreditations, easements, rights
of way and other rights, consents and approvals except where the failure to so
preserve any of the foregoing (other than existence) could not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 5.6 Compliance with Law. Borrower shall, and shall cause
each of its Subsidiaries to, comply with all applicable laws, rules, statutes,
regulations, decrees and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of their
business and the ownership of their property, including, without limitation, all
Environmental Laws, except such non-compliance as could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 5.7 Performance of Obligations. Borrower shall, and shall
cause each of its Subsidiaries to, perform all of its obligations under the
terms of (i) each mortgage, indenture, security agreement, debt instrument,
lease, undertaking and contract by which it or any of its properties is bound or
to which it is a party if the failure to so perform, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
and (ii) the Certificate of Incorporation and By-Laws of Borrower.
Section 5.8 Maintenance of Properties. Borrower shall, and shall
cause each of its Subsidiaries to, ensure that its properties used or useful in
its business are kept in good repair, working order and condition, normal wear
and tear excepted.
SECTION 6. NEGATIVE COVENANTS.
Borrower covenants and agrees that on and after the Closing Date and
until the Obligations are paid in full, without the prior written consent of
Lender:
28
Section 6.1 Capital Expenditures. Borrower shall not make or incur
(or commit to make or incur) and shall not permit any of its Subsidiaries to
make or incur (or commit to make or incur) any Capital Expenditures, other than
Capital Expenditures of Borrower and its Subsidiaries in the aggregate not in
excess of $20 million in any fiscal year.
Section 6.2 Indebtedness. Borrower shall not, and shall not permit
any of its Subsidiaries to, create, incur, assume, suffer to exist or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, other than (a) Indebtedness in connection with the Loan and this
Agreement, (b) Indebtedness between the Borrower and any wholly-owned
Subsidiary, (c) Indebtedness existing on the date hereof, if any, and described
on Schedule 6.2 (d) Indebtedness of Borrower and its Subsidiaries in the
aggregate not in excess of $3 million in any fiscal year, and (e) the Working
Capital Facility.
Section 6.3 Liens. Borrower shall not, and shall not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist, directly or
indirectly, any Lien on any of its property now owned or hereafter acquired,
other than:
(a) Liens existing on the Closing Date set forth on Schedule 6.3;
(b) Liens incurred pursuant to the Working Capital Facility;
(c) Liens incurred pursuant to Indebtedness permitted pursuant to
Section 6.2;
(d) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings diligently conducted and with respect to which
adequate reserves are being maintained in accordance with GAAP; and
(e) Statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by Law (other than any Lien
imposed by ERISA or pursuant to any Environmental Law) created in the ordinary
course of business for amounts not yet due or which are being contested in good
faith by appropriate proceedings diligently conducted and with respect to which
adequate bonds have been posted.
29
Section 6.4 Restriction on Fundamental Changes.
(a) Borrower shall not, and shall not permit any of its Subsidiaries
to, enter into any merger or consolidation, or liquidate, wind-up or dissolve
(or suffer any liquidation or dissolution), discontinue its business or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or any substantial part of its business or property, whether
now or hereafter acquired, except as otherwise permitted under Section 6.5 or in
connection with the Borrower's or its Subsidiaries' termination of its gift
business.
(b) Borrower shall not, and shall not permit any of its Subsidiaries
to, (i) acquire by purchase or otherwise any property or assets of, or stock or
other evidence of beneficial ownership of, any Person, except purchases of
inventory, equipment, materials and supplies in the ordinary course of
Borrower's or such Subsidiary's business, (ii) create any Subsidiary, or (iii)
enter into any partnership or joint venture except for the Xxxxx Joint Venture.
(c) Borrower shall not and shall not permit any of its Subsidiaries
to, except in connection with an initial public offering or the offering of the
Borrower's equity securities, amend its Certificate of Incorporation or By-Laws
or as required by GAAP, its accounting policies or reporting practices.
Section 6.5 Sale of Assets. Borrower shall not, and shall not permit
any of its Subsidiaries to, enter into any Asset Sale, except for Asset Sales,
the proceeds of which are paid in compliance with Section 2.7 hereof.
Section 6.6 Dividends. Borrower shall not, and shall not permit any
of its Subsidiaries to, declare or pay any dividends (other than dividends
payable solely in common stock), or return any capital to, its common or
preferred stockholders as such or authorize or make any other distribution,
payment or delivery of property or cash to its common or preferred stockholders
as such, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, any shares of any class of its capital stock now or hereafter
outstanding (or any options or warrants issued with respect to its capital
stock), or set aside any funds for any of the foregoing purposes (all the
foregoing "Dividends") except that any Subsidiary of the Borrower may declare
and pay Dividends to Borrower or any other wholly-owned Subsidiary of Borrower.
Section 6.7 Transactions with Affiliates. Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into any transaction or
series of
30
related transactions, whether or not in the ordinary course of business, with
any Affiliate, other than on terms and conditions substantially as favorable to
Borrower or such Subsidiary as would be obtainable at the time in a comparable
arm's-length transaction with a Person other than an Affiliate.
Section 6.8 Limitation on Modifications of Certain Documents.
Borrower shall not, and shall not permit any of its Subsidiaries to amend,
modify or waive, or permit the amendment, modification or waiver of, any
provision of any material contracts, except in the ordinary course of business.
Section 6.9 Changes in Business. Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into any business which is
substantially different from that conducted by Borrower or such subsidiary, as
the case may be, on the Closing Date.
Section 6.10 Certain Restrictions. Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into any agreement which restricts the
ability of Borrower or any of its Subsidiaries to, in accordance with the terms
of this Agreement, (a) enter into amendments, modifications or waivers of the
Loan Documents, (b) sell, transfer or otherwise dispose of its assets, (c)
create, incur, assume or suffer to exist any Lien upon any of its property, (d)
create, incur, assume, suffer to exist or otherwise become liable with respect
to any Indebtedness, or (e) pay any Dividend except pursuant to Working Capital
Facility or capitalized leases permitted hereunder.
Section 6.11 Investments. Other than those Investments existing as of
the Closing Date, loans or advances made to employees in the ordinary course,
and loans or other Investments made by the Borrower after the Closing Date in or
to the Xxxxx Joint Venture not to exceed $3 million in the aggregate. Borrower
shall not, and shall not permit any of its Subsidiaries to make any Investment
except Borrower and its Subsidiaries may acquire and hold Cash Equivalents.
Section 6.12 Fiscal Year; Fiscal Quarter. Borrower shall not, and
shall not permit any of its Subsidiaries to, change its fiscal year or any of
its fiscal quarters.
SECTION 7. EVENTS OF DEFAULT
Section 7.1 Events of Default. Each of the following events, acts,
occurrences or conditions shall constitute an "Event of Default" under this
Agree-
31
ment, regardless of whether such event, act, occurrence or condition is
voluntary or involuntary or results from the operation of law or pursuant to or
as a result of compliance by any Person with any judgment, decree, order, rule
or regulation of any court or administrative or governmental body:
(a) Failure to Make Payments. Borrower shall (i) default in the
payment when due of any principal of the Loan or (ii) default, and such default
shall continue unremedied for three or more Business Days, in the payment when
due of any interest on the Loan or in the payment when due of any other amounts
owing hereunder.
(b) Breach of Representation or Warranty. Any representation or
warranty made by Borrower herein or in any other Loan Document or in any
certificate or statement delivered pursuant hereto or thereto shall prove to be
false or misleading in any material respect on the date as of which made or
deemed made.
(c) Breach of Covenants.
(i) Borrower shall fail to perform or observe any agreement,
covenant or obligation arising under Section 5.1, 5.5, 5.7 or 6.
(ii) Borrower shall fail to perform or observe any agreement,
covenant or obligation arising under this Agreement (except those described in
subsections (a), (b) and (c)(i) above), and such failure shall continue for 15
days.
(d) Default Under Other Agreements. Borrower shall default in the
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) of any amount owing in respect of any
Indebtedness (other than the Obligations) in the aggregate principal amount of
$250,000 or more; or Borrower shall default in the performance or observance of
any obligation or condition with respect to any such Indebtedness or any other
event shall occur or condition exist, if the effect of such default, event or
condition is to accelerate the maturity of any such Indebtedness or to permit
(without regard to any required notice or lapse of time) the holder or holders
thereof, or any trustee or agent for such holders, to accelerate the maturity of
any such Indebtedness, or any such Indebtedness shall become or be declared to
be due and payable prior to its stated maturity other than as a result of a
regularly scheduled payment.
32
(e) Bankruptcy, etc. (i) Borrower or any of its Subsidiaries shall
commence a voluntary case concerning itself under the Bankruptcy Code; or (ii)
an involuntary case is commenced against Borrower or any of its Subsidiaries and
the petition is not controverted within 10 days, or is not dismissed within 30
days, after commencement of the case; or (iii) a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or substantially all
of the property of Borrower or any of its Subsidiaries or Borrower or any of its
Subsidiaries commences any other proceedings under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to Borrower or any of its Subsidiaries or there is commenced
against Borrower or any of its Subsidiaries any such proceeding which remains
undismissed for a period of 30 days; or (iv) any order of relief or other order
approving any such case or proceeding is entered; or (v) Borrower or any of its
Subsidiaries is adjudicated insolvent or bankrupt; or (vi) Borrower or any of
its Subsidiaries suffers any appointment of any custodian or the like for it or
any substantial part of its property to continue undischarged or unstayed for a
period of 30 days; or (vii) Borrower or any of its Subsidiaries makes a general
assignment for the benefit of creditors; or (viii) Borrower or any of its
Subsidiaries shall fail to pay, or shall state that it is unable to pay, or
shall be unable to pay, its debts generally as they become due; or (ix) Borrower
or any of its Subsidiaries shall call a meeting of its creditors with a view to
arranging a composition or adjustment of its debts; or (x) Borrower or any of
its Subsidiaries shall by any act or failure to act consent to, approve of or
acquiesce in any of the foregoing; or (xi) any corporate action is taken by
Borrower or any of its Subsidiaries for the purpose of effecting any of the
foregoing.
(f) ERISA. (i) Any Termination Event shall occur, or (ii) any Plan
shall incur an "accumulated funding deficiency" (as defined in Section 412 of
the Code or Section 302 of ERISA) of at least $250,000, whether or not waived or
(iii) Borrower shall have engaged in a transaction which is prohibited under
Section 4975 of the Code or Section 406 of ERISA which could reasonably be
expected to result in the imposition of liability in excess of $250,000 on
Borrower or any member of its ERISA Controlled Group, or (iv) Borrower shall
fail to pay when due an amount in excess of $250,000 which it shall have become
liable to pay to the PBGC, any Plan or a trust established under Title IV of
ERISA, or (v) any other event or condition shall occur or exist with respect to
any Plan which could subject Borrower or any member of its ERISA Controlled
Group to any tax, penalty or other liability in excess of $250,000.
33
(g) Change of Control. A Change of Control shall have occurred.
(h) Judgments. One or more judgments or decrees in an aggregate
amount of $250,000 or more shall be entered by a court or courts of competent
jurisdiction against Borrower or any of its Subsidiaries (other than any
judgment as to which the insurer has not disputed coverage) and (i) any such
judgments or decrees shall not be stayed, discharged, paid, bonded or vacated
within 30 days or (ii) enforcement proceedings shall be commenced by any
creditor on any such judgments or decrees, which are not stayed or terminated
with 30 days.
(i) Environmental Matters. (i) Any proper Environmental Claim shall
have been filed, subsequent to the Closing Date, against Borrower or any of its
Subsidiaries or any Environmental Affiliate thereof which, if determined
adversely, could reasonably be expected to have a Material Adverse Effect, (ii)
any release, emission, discharge or disposal of any Material of Environmental
Concern shall have occurred, subsequent to the Closing Date, and such event
could be the basis of a valid Environmental Claim against Borrower or any of its
Subsidiaries or any Environmental Affiliate thereof which, if determined
adversely, could reasonably be expected to have a Material Adverse Effect, (iii)
Borrower or any of its Subsidiaries or its Environmental Affiliate shall have
failed to obtain, subsequent to the Closing Date, any Environmental Approval
necessary for the management, use, control, ownership, or operation of its
business, property or assets or any such Environmental Approval shall be
revoked, terminated, or otherwise cease to be in full force and effect, in each
case, if the existence of such condition could reasonably be expected to have a
Material Adverse Effect, or (iv) any change or degradation of any environmental
matter enumerated in subparagraphs (i) through (iii) above, existing or
occurring on or prior to the Closing Date, which could reasonably be expected to
have a Material Adverse Effect.
Section 7.2 Rights and Remedies. Upon the occurrence of any Event of
Default described in Section 7.1(e), the unpaid principal amount of and any and
all accrued interest on the Loan and any and all Obligations shall automatically
become immediately due and payable, with all additional interest from time to
time accrued thereon and without presentation, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by
Borrower, and the obligation of Lender to make the Loan hereunder shall
thereupon terminate; and upon the occurrence and during the continuance of any
other Event of Default, Lender may, by written notice
34
to Borrower, declare the unpaid principal amount of and any and all accrued and
unpaid interest on the Loan and any other Obligations to be, and the same shall
thereupon be, immediately due and payable with all additional interest from time
to time accrued thereon and without presentation, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by
Borrower.
SECTION 8. MISCELLANEOUS
Section 8.1 Payment of Expenses, Indemnity, etc. Borrower shall:
(a) pay all reasonable out-of-pocket costs and expenses of Lender in
connection with the negotiation, preparation, execution and delivery of the Loan
Documents and the documents and instruments referred to therein, and any
amendment, waiver or consent relating to any of the Loan Documents;
(b) pay all reasonable out-of-pocket costs and expenses of Lender in
connection with the preservation of rights under, and enforcement of, the Loan
Documents and the documents and instruments referred to therein or in connection
with any restructuring or rescheduling of the Obligations (including, without
limitation, the reasonable fees and disbursements of counsel for Lender);
(c) pay, and hold Lender harmless from and against, any and all
present and future stamp, excise and other similar taxes with respect to the
foregoing matters and hold Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to Lender) to pay such taxes; and
(d) indemnify Lender, its officers, directors, employees,
representatives and agents (each an "Indemnitee") from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements of any
kind or nature whatsoever (including, without limitation, the fees and
disbursements of counsel for such Indemnitee in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, asserted against or incurred by any Indemnitee
as a result of, or arising out of, or in any way related to or by reason of, any
of the Transactions or the execution, delivery or performance
35
of any Loan Document; provided no indemnification shall be made for any of the
foregoing arising out of or in connection with any gross negligence or willful
misconduct of Lender.
Section 8.2 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, Lender is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to
Borrower or any of its Subsidiaries or to any other Person, any such notice
being hereby expressly waived, to set off any other indebtedness or other
obligation at any time held or owing by the Lender to or for the credit or the
account of Borrower or any of its Subsidiaries against and on account of the
Obligations of Borrower or any of its Subsidiaries to Lender under this
Agreement or the Note, and all other claims of any nature or description arising
out of or connected with this Agreement or the Note, irrespective of whether or
not Lender shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
Section 8.3 Notices. All notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopy, as
follows:
(a) if to Lender, to it at:
Five Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
and
(b) if to the Borrower, to it at:
Synapse Group, Inc.
Four Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attn: Xxxxxxx Xxxx
Xxxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
36
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other party hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
Section 8.4 Successors and Assigns; Participation; Assignments.
(a) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Borrower, Lender, all future holders of the Note and
their respective successors and assigns, except that Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Lender. Nothing in this Agreement, express or implied, shall
be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Lender's affiliates) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
(b) Assignments. Lender may, in accordance with applicable law, at
any time assign to any other Person (each an "Assignee") all or any part of its
interest in the Loan owing to it, the Note held by it, the Loan Commitment and
any other interest hereunder (its "Credit Exposure"). Borrower and Lender agree
that to the extent of any assignment the Assignee shall be deemed to have the
same rights and benefits under the Loan Documents and the same rights of setoff
as Lender hereunder; provided that Borrower shall be entitled to continue to
deal solely and directly with the Lender in connection with the interests so
assigned to the Assignee unless and until such Assignee becomes a Purchasing
Lender pursuant to clause (c) below.
(c) Assignments to Purchasing Lenders. Lender may at any time and
from time to time assign to one or more Persons ("Purchasing Lenders") all or
any part of its Credit Exposure pursuant to a supplement to this Agreement,
substantially in the form of Exhibit B hereto (a "Assignment Agreement"),
37
executed by such Purchasing Lender and Lender. Any such partial assignment
shall be an assignment of an identical percentage of Lender's Loan and Loan
Commitment hereunder. Upon (i) such execution of such Assignment Agreement,
(ii) delivery of an executed copy thereof to Borrower and (iii) payment by such
Purchasing Lender to Lender of an amount equal to the purchase price agreed
between Lender and such Purchasing Lender, Lender shall be released from its
obligations hereunder to the extent of such assignment and such Purchasing
Lender shall for all purposes be a party to this Agreement and shall have all
the rights and obligations of Lender under this Agreement to the same extent as
if it were an original party hereto, and no further consent or action by
Borrower or Lender shall be required. Such Assignment Agreement shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender as a party and the resulting
adjustment of the Loan Commitment, if any, arising from the purchase by such
Purchasing Lender of all or a portion of the Credit Exposure of Lender. Promptly
after the consummation of any transfer to a Purchasing Lender pursuant hereto,
Lender and Borrower shall make appropriate arrangements so that a replacement
Note is issued to Lender and a new Note is issued to Purchasing Lender, in each
case in principal amounts reflecting such transfer.
(d) Disclosure of Information. Borrower authorizes Lender to disclose
to any Assignee (each, a "Transferee") and any prospective Transferee any and
all financial and other information in Lender's possession concerning Borrower
which has been delivered to Lender by Borrower pursuant to this Agreement or
which has been delivered to Lender by Borrower in connection with Lender's
credit evaluation of Borrower prior to entering into this Agreement, provided
that such recipient agrees to hold such information as confidential.
(e) Confidentiality. The Lender agrees that it will not disclose
Confidential Information (as defined below) to any Person other than (i) as may
be consented to by the Borrower, (ii) as may be required by law or pursuant to
legal process or as necessary to enforce its rights and perform its obligations
under this Agreement and the other Loan Documents and (iii) to prospective
participants and purchasing lenders ("Participants") and those of the Lenders'
or such Participants' directors, officers, employees, examiners and professional
advisors ("Representatives") who have a need to know the Confidential
Information in accordance with customary banking practices and who receive the
Confidential Information having been made aware of the restrictions of this
Section. As used herein, the term "Confidential Information" means all
information contained in materials relating to the Borrower and its Subsidiaries
provided to the Lender by the Borrower or its representatives or agents other
than (x) information which is at the time so provided
38
or thereafter becomes generally available to the public other than as a result
of a disclosure by the Lender or a Participant or any Representatives thereof,
(y) information which was available to the Lender prior to its disclosure to the
Lender by the Borrower, its representatives or agents and (z) information which
becomes available to the Lender from a source other than the Borrower, its
representatives or agents.
Section 8.5 Amendments and Waivers. Neither this Agreement nor the
Note nor any terms hereof or thereof may be amended, supplemented, modified or
waived except in accordance with the provisions of this Section 8. Lender and
Borrower may, from time to time, enter into written amendments, supplements,
modifications or waivers for the purpose of adding, deleting, changing or
waiving any provisions to this Agreement or the Note. Any such amendment,
supplement, modification or waiver shall apply to and shall be binding upon
Borrower, Lender and all future holders of the Note. In the case of any waiver,
Borrower and Lender shall be restored to their former position and rights
hereunder and under the outstanding Note, and any Default or Event of Default
waived shall be deemed to be cured and not continuing, but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.
Section 8.6 No Waiver; Remedies Cumulative. No failure or delay on
the part of Lender or any holder of the Note in exercising any right, power or
privilege hereunder or under the Note and no course of dealing between Borrower
or its Subsidiaries and Lender or the holder of the Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under the Note preclude any other or further exercise
thereof of the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies herein expressly provided are cumulative
and not exclusive of any rights or remedies which Lender or the holder of the
Note would otherwise have. No notice to or demand on Borrower or any of its
Subsidiaries in any case shall entitle Borrower or any of its Subsidiaries to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Lender or the holder of the Note to any
other or further action in any circumstances without notice or demand.
Section 8.7 Governing Law; Submission to Jurisdiction. (a) THIS
AGREEMENT AND THE NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND THEREUNDER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK),
39
WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN
NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTE, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH NEW YORK STATE
COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE
PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT
SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS IN THE
COURTS OF ANY JURISDICTION.
(c) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the Note in
any New York State or federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each of the parties hereto irrevocably consents to service of
process in the manner provided for notices in Section 8.3. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
Section 8.8 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts,
40
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
Section 8.9 Effectiveness. This Agreement shall become effective on
the date on which Lender and Borrower shall have each signed a counterpart
hereof and Borrower shall have delivered the same to Lender.
Section 8.10 Headings Descriptive. The headings of the several
Sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
Section 8.11 Marshalling; Recapture. Lender shall be under no
obligation to marshal any assets in favor of Borrower or any of its Subsidiaries
or any other party or against or in payment of any or all of the Obligations.
To the extent Lender receives any payment by or on behalf of Borrower or any of
its Subsidiaries, which payment or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
Borrower or any of its Subsidiaries or its estate, trustee, receiver, custodian
or any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the obligation
or part thereof which has been paid, reduced or satisfied by the amount so
repaid shall be reinstated by the amount so repaid and shall be included within
the liabilities of Borrower or any of its Subsidiaries to Lender as of the date
such initial payment, reduction or satisfaction occurred.
Section 8.12 Severability. In case any provision in or obligation
under this Agreement or the Note shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
Section 8.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 2.9 and 8.1 shall survive the execution and
delivery of this Agreement and the Note and the making and repayment of the Loan
hereunder.
Section 8.14 Limitation of Liability. No claim may be made by
Borrower, any of its Subsidiaries or any other Person against Lender or any of
its Affiliates, directors, officers, employees, attorneys or agents for any
special, indirect, consequential or punitive damages in respect of any claim for
breach of contract or
41
any other theory of liability arising out of or related to the transactions
contemplated by this Agreement or any act, omission or event occurring in
connection herewith; and Borrower and each of its Subsidiaries hereby waives,
releases and agrees not to xxx upon any claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor.
Section 8.15 Calculations; Computations. The financial statements to
be furnished to Lender pursuant hereto shall be made and prepared in accordance
with GAAP consistently applied throughout the periods involved and consistent
with GAAP as used in the preparation of the financial statements referred to in
Section 5.1
Section 8.16 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF BORROWER AND LENDER HEREBY IRREVOCABLY WAIVES ALL RIGHT
OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR THE NOTE OR ANY MATTER ARISING HEREUNDER OR
THEREUNDER.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
SYNAPSE GROUP, INC.
BORROWER:
By: /s/ Xxxxxxx Xxxx
---------------------
Name: Xxxxxxx Xxxx
Title: President
XXX XXXXXX
LENDER:
/s/ Xxx Xxxxxx
---------------------
Xxx Xxxxxx
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