EXHIBIT 10.2
EXECUTION COPY
July 17, 2003
Fleet National Bank
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxx
Vice President
Banc of America Strategic Solutions, Inc.
000 Xxxxxxx Xxxxxx
NY1-503-05-06
Attn: Xxxx Xxxxxxxx
Managing Director
RE: AMENDED AND RESTATED JUNIOR CREDIT PARTICIPATION AGREEMENT
Gentlemen:
Reference is made to the Second Amended and Restated Credit Agreement
between, on one hand, Nextera Enterprises, Inc., a Delaware corporation (the
"Company"), and on the other hand, Fleet National Bank, as agent ("Agent") for
itself and the other lenders party thereto (the "Lenders"), dated as of December
31, 2002, as amended by that certain First Amendment dated as of July 8, 2003
and that certain Second Amendment dated the date hereof (as the same may be
further amended, restated, supplemented, or otherwise modified from time to
time, the "Credit Agreement"), together with any other agreements, supplements,
documents and instruments relating thereto or executed in connection therewith,
all as from time to time amended and supplemented (collectively, the "Credit
Documents").
The undersigned, Knowledge Universe, Inc., a Delaware corporation with an
address at 0000 0xx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxxxxx 00000 ("Junior
Credit Participant"), has requested that Agent and Lenders sell to Junior Credit
Participant a Junior Credit Participation (as hereinafter defined) in the
advances, loans and other financial accommodations presently outstanding and
which may hereafter be extended by Agent and Lenders to Company, pursuant to the
Credit Documents and all other indebtedness now or hereafter owed by Company to
Agent and Lenders in connection therewith or otherwise, and Agent and Lenders
have agreed to do so, all on the terms and conditions hereinafter set forth.
Junior Credit Participant previously purchased a $5,000,000 Junior Credit
Participation pursuant to that certain Junior Credit Participation Agreement
dated as of December 31, 2002 (the "Prior Credit Participation Agreement") and
wishes to purchase an additional junior participation in the amount of
$2,500,000. Junior Credit Participant requests that the Prior Junior
Credit Participation Agreement bet deemed of no further force and effect, and be
replaced, in all respects, by this Amended and Restated Junior Credit
Participation Agreement.
In consideration of these premises, the mutual covenants herein contained
and for other valuable consideration, Junior Credit Participant hereby agrees
with Agent and Lenders as follows:
1. Certain Defined Terms.
(a) "Obligations" as used in this Agreement shall mean and
include, without limitation, the advances, loans and other
financial accommodations and all other obligations and
liabilities now or hereafter owed by Company to Agent and
Lenders under the Credit Documents or otherwise, whether
direct or indirect and whether fixed or contingent, and shall
also include interest or charges accruing after the filing of
a bankruptcy petition or similar proceeding, whether or not
such interest or charges are recoverable from the Company.
(b) "Paid in Full", "Payment in Full", "Repaid in Full", or
"Repayment in Full" or any similar terms when used in
connection with the Obligations shall mean the final
indefeasible payment in full of such Obligations in cash or
immediately available funds and termination of all lending
commitments or, in the case of Obligations consisting of
contingent obligations in respect of letters of credit,
bankers' acceptances or other reimbursement or payment type
guaranties under the Credit Documents, the setting apart of
cash sufficient to discharge such portion of the Obligations
in an account for the exclusive benefit of the holders
thereof, in which such holders shall be granted a first
priority perfected security interest which shall have been
retained by Agent and Lenders, in each case, for a period of
time in excess of all applicable preference or other similar
periods under the U.S. Bankruptcy Code and other applicable
insolvency laws, state or Federal.
(c) "Permitted Cash Payment Conditions" shall mean, as to each
particular Permitted Cash Payment, each of the following:
(i) immediately before and after giving effect to any
Permitted Cash Payment there is no Default or Event of
Default which has occurred and is continuing under any
Credit Document;
(ii) for any period, such Permitted Cash Payment shall be
payable no sooner than the day that the subject funds
are received by the Agent in immediately available funds
(or, if later, the day that such funds become
immediately available) and shall be paid promptly after
the Lenders' receipt of any and all payments of
principal and interest owing to them for the same
period;
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(iii) the Company shall have delivered to the Lenders a
written certificate (together with independent written
evidence) signed by the Chief Financial Officer of the
Company which certifies that the Company is in
compliance with the Investment Banking Benchmarks set
forth in Section 5.3 of the Credit Agreement and due to
be completed on or before the scheduled date of such
Permitted Cash Payment; and
(iv) the Company shall be in compliance with all financial
and other covenants and provisions to be performed or
observed by it under any Credit Document immediately
before and after giving effect to any such Permitted
Cash Payment.
(d) Other Terms. Capitalized terms not otherwise defined herein
shall have the respective meanings assigned to them in the
Credit Documents.
2. Sale and Purchase of Junior Credit Participation. Junior Credit
Participant hereby agrees to purchase, and does hereby purchase, from Agent and
Lenders and Agent and Lenders hereby agree to sell, and do hereby sell, to
Junior Credit Participant an undivided Junior Credit Participation of Seven
Million Five Hundred Thousand Dollars ($7,500,000) Dollars (the "Junior Credit
Participation") in the Obligations and in the property, security interests
and/or guarantees received by Agent and Lenders as security for the Obligations
(the "Collateral"), and in all moneys received by Agent and Lenders on account
of the Obligations and/or as proceeds of the Collateral (the "Collections"),
except as hereinafter provided. Receipt of the purchase price of the Junior
Credit Participation is acknowledged by Agent and Lenders. ($5,000,000
previously was paid and $2,500,000 has been paid on the date hereof). Agent and
Lenders have provided to Junior Credit Participant a Participation Certificate
in the form attached hereto as Exhibit A.
3. Application of Proceeds. Agent and Lenders may apply all or any part of
the proceeds of the Collateral, payments received from Company and credits for
Company's account to all or any part of the Obligations and in such order as
Agent and Lenders may elect in Agent's and Lenders' sole and absolute
discretion, except that unless an Event of Default has occurred under the Credit
Agreement or any Credit Document, Agent and Lenders shall not amend Section 5.3
of the Credit Agreement (dealing with distributions upon the occurrence of one
or more Transactions (as defined in the Credit Agreement)) without the prior
written consent of the Junior Credit Participant. Specifically, and without
limitation of the foregoing, Junior Credit Participant acknowledges that Agent
and Lenders may, and intend to, apply the proceeds of the Collateral, in the
event of a liquidation or other disposition of the Collateral after the
occurrence of an Event of Default under the Credit Agreement or any Credit
Document, first to the portion of the Loans not sold to Junior Credit
Participant; accordingly, the effect of this Agreement is to subordinate Junior
Credit Participant's interests in the Obligations to Agent's and Lenders'
interests in all of the Obligations upon the occurrence of an Event of Default,
and Junior Credit Participant acknowledges and agrees to the same.
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4. Freedom of Dealing. It is understood and agreed by Junior Credit
Participant that, in Agent's and Lenders' sole and absolute discretion, Agent
and Lenders may continue to extend additional advances, loans and other
financial accommodations to Company, including, without limitation, after
default and/or commencement and during the continuation of any case under the
U.S. Bankruptcy Code with respect to Company ("Post-Petition Advances") and the
Junior Credit Participation shall be subject and subordinate to such
Post-Petition Advances and in the security therefor on the same terms and
conditions as are set forth herein.
5. Reservation of Rights. Agent and Lenders shall have the sole right to
manage, perform, modify, restructure, extend, supplement and enforce the Credit
Documents, Obligations and the Collateral, and to waive, discharge, exercise and
enforce all privileges, rights and remedies exercisable or enforceable by Agent
and Lenders thereunder, for the joint benefit of Agent and Lenders and Junior
Credit Participant, in accordance with Agent's and Lenders' sole and absolute
discretion and the exercise of Agent's and Lenders' business judgment, and
without charge to Junior Credit Participant for any costs or expenses incurred
by Agent and Lenders in connection therewith; provided, however, that Junior
Credit Participant shall pay its pro rata share of any out-of-pocket expenses
(including, without limitation, the fees and expenses of Agent's and Lenders'
counsel) of recovery, defense and enforcement of the Obligations and the
Collateral which exceeds the amount recovered from Company or from the
Collateral or otherwise for Company's account ONLY if as to such expenses any of
the following conditions apply: (A) such expenses may be satisfied out of
Collateral liquidations, payments or other recoveries later received (or
reserved for such purpose) on the Obligations in accordance with Section 3
above, or (B) such expenses were incurred at Junior Credit Participant's
request, or (C) such expenses were incurred on account of any action or threat
of action, or breach of any obligation to the Agent or the Lenders with respect
to the Obligations or the Credit Documents, by Junior Credit Participant or any
affiliate or representative thereof. Agent and Lenders will use normal prudence
and business judgment in handling the collection and enforcement of the
Obligations and realization upon the Collateral, but shall not be liable to
Junior Credit Participant for any action taken or omitted to be taken in good
faith or on the written advice of counsel. With respect to any actions or
inaction taken by Agent and Lenders in good faith or on the written advice of
counsel, Junior Credit Participant expressly releases Agent and Lenders from any
and all liability and responsibility (express or implied), for any loss,
depreciation of or delay in collecting or failing to realize on any Collateral,
the Obligations or any guaranties therefor and for any mistake, omission or
error in judgment in passing upon or accepting any Collateral or in making
examinations or audits or for granting indulgences or extensions to Company, any
account debtor or any guarantor. Junior Credit Participant hereby pledges,
assigns and grants to Agent and Lenders any right it may have to seek recovery
on account of the Junior Credit Participation, including, without limitation,
any right to commence litigation, vote to accept or reject a Chapter 11 plan or
to otherwise vote on or direct any part of any bankruptcy case or any similar
proceeding affecting the Obligations.
6. No Representations or Warranties. Agent and Lenders make no
representation or warranty (express or implied) and shall have no
responsibility, as to the validity, value, enforceability or collectibility of
the Obligations or the Credit Documents, or as to the title to, validity,
priority, value, perfection or sufficiency of the Collateral, or any other
guarantees or collateral of any kind, or as to the financial condition of
Company or any account debtors. Junior
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Credit Participant is thoroughly familiar with and has complete and current
information concerning the financial condition and creditworthiness of Company.
7. Independent Credit Decision. Junior Credit Participant acknowledges
that it has received and reviewed copies of all of the Credit Documents. Agent
and Lenders may, from time to time, in Agent's and Lenders' discretion and
without notice to or consent of Junior Credit Participant, amend, modify, renew
and/or release in whole or in part the Obligations, the Credit Documents, the
Collateral and any guaranties therefor, as well as extend advances, loans and
other financial accommodations to Company in excess of any formulas under the
Credit Documents, without notice to or the consent of Junior Credit Participant.
Agent and Lenders shall, from time to time, furnish Junior Credit Participant
with copies of such other papers and documents relating to the Obligations and
the Collateral and with statements describing the status of the Obligations and
the Collateral, as Junior Credit Participant may reasonably request, but it is
expressly agreed that Junior Credit Participant shall have no access and no
right to review, examine, or audit Agent's and Lenders' books, records, and
accounts relating to the Obligations or the Company, except for copies of the
Credit Documents as the Junior Credit Participant may request.
8. Distributions. Interest shall accrue from the date hereof on the
outstanding principal on the Junior Credit Participation at a rate equal to ten
percent (10%) per annum, compounded monthly, based on the calendar year, but in
no case shall the interest rate exceed the maximum rate allowed by law. The
Company may make and the Junior Credit Participant may receive and retain on a
current cash basis payments of accrued interest and principal repayment on the
Junior Credit Participation (the "Permitted Cash Payments") in accordance with
the terms and conditions of this Amended and Restated Junior Credit
Participation Agreement, so long as the Permitted Cash Payment Conditions are
and shall continue to be satisfied. Such Permitted Cash Payments shall be in an
amount equal to the accrued, scheduled, mandatory cash payments of principal and
interest on the Junior Credit Participation in accordance with the terms and
conditions of this Amended and Restated Junior Credit Participation Agreement,
including, without limitation, subordination terms; provided, however, that
Permitted Cash Payments on account of (i) principal, shall not exceed $73,529
per month at any time, except that in addition to such amount, the Company shall
also be permitted to make the following principal payments on the following
dates, provided that the Permitted Cash Payment Conditions are and continue to
be satisfied on each such payment date: $500,000 on October 31, 2003, $500,000
on December 31, 2003 and $1,500,000 on January 1, 2005; and (ii) interest, for
any period, shall not exceed interest at an annual rate in excess of the rate of
interest actually paid to the Lenders for the same period (without respect to
the rate of interest charged after the occurrence of a Default or Event of
Default under the Credit Documents); and provided, further, that interest at a
greater rate may PIK for later payment in cash after all of the Loans owing to
the Agent and Lenders have been Repaid in Full in cash. The Company shall not be
entitled to make-up payments that are disallowed as a result of this Section 8;
rather, any such disallowed payment shall be paid directly to the Lenders as a
permanent additional prepayment of the then-outstanding Loans in such manner and
order as Agent and Lenders deem appropriate in their sole and absolute
discretion. Notwithstanding the foregoing, after termination of the Credit
Documents and Payment in Full to Agent and Lenders of Agent's and Lenders' share
and the shares of Agent's and Lenders' other senior participants in all
principal and interest on the Obligations and the other items chargeable
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to Company's account and due to Agent and Lenders (including, without
limitation, attorneys' fees and legal expenses), Agent and Lenders remit to
Junior Credit Participant any monies or other payment actually received by them
that remain following such Payment in Full on the Obligations.
9. Subordinated Status.
(a) Junior Credit Participant's Junior Credit Participation in the
Obligations, the Collateral and the Collections is in all
respects junior and subordinate to Agent's and Lenders'
interests and those of Agent's and Lenders' other senior
participants (if any) therein, and accordingly Agent and
Lenders and such other senior participants shall first be
Repaid in Full all of Agent's and Lenders' respective shares
in the Obligations (including, without limitation,
indebtedness of Company to Agent and Lenders, Post-Petition
Advances and all charges, commissions, interest, costs,
expenses and attorney's fees chargeable to Company in
connection with the Obligations or the Collateral) prior to
any repayment of all or any part of the Junior Credit
Participation (except only for Permitted Cash Payments on
Junior Credit Participant's interest in the Obligations, as
provided above).
(b) All Collections received shall be applied first to the payment
of all costs and expenses incurred in effecting such
Collections (including, without limitation, any costs,
expenses, attorneys' fees and charges relating to the
Obligations, Collateral and Collections), then to the unpaid
balance of all Obligations, in such amount and/or order as
Agent and Lenders elect in Agent's and Lenders' sole and
absolute discretion, such Collections to be first retained and
applied by Agent and Lenders until Repayment in Full of the
principal of and interest on Agent's and Lenders' share and
the shares of Agent's and Lenders' other senior participants
in all such Obligations (except only for Permitted Cash
Payments on Junior Credit Participant's interest in the
Obligations, as provided above) and, except to the extent any
order of any court provides otherwise, after termination of
the Credit Documents, any surplus to be remitted to Junior
Credit Participant.
(c) The Obligations, the Collateral and the Collections thereon
shall be held by Agent and Lenders in Agent's and Lenders' own
name, but, to the extent of Junior Credit Participant's junior
interest therein, as agent and trustee for Junior Credit
Participant and subject to Junior Credit Participant's rights
with respect thereto as herein set forth. Agent and Lenders do
not assume, have made no warranties and shall not have (except
only for the contractual obligations specifically set forth
herein) any fiduciary obligations or duties or other liability
to Junior Credit Participant for the repayment of the Junior
Credit Participation or any interest equivalent thereon.
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(d) The Junior Credit Participation may not be re-sold,
sub-participated, assigned, pledged or otherwise disposed of
by Junior Credit Participant. Junior Credit Participant hereby
represents and warrants that no portion of the proceeds of the
Obligations has been advanced to or for the account of Junior
Credit Participant by Company, that no portion of Junior
Credit Participant's payment to Agent and Lenders for the
Junior Credit Participation represents, directly or
indirectly, any proceeds of the Obligations and that this
Agreement is valid, binding and enforceable with respect to
Junior Credit Participant.
10. Assigned Interests. Upon Payment in Full of principal, interest and
charges with respect to Agent's and Lenders' interest and of Agent's and
Lenders' other senior participants in the Obligations and termination of the
Credit Documents, Agent and Lenders agree to assign to Junior Credit Participant
all Collateral for the Obligations and Agent's and Lenders' rights with respect
thereto without representations, warranties or recourse of any kind or nature
whatsoever.
11. Administrative Charges. Notwithstanding anything to the contrary
contained in this Agreement, Junior Credit Participant shall not share in and
Agent and Lenders shall retain as Agent's and Lenders' sole property and for
Agent's and Lenders' exclusive benefit all interest charges, commissions and
fees and administrative, handling and service charges with respect to the
Obligations and the Collateral (except only for Permitted Cash Payments on
Junior Credit Participant's interest in the Obligations, as provided above).
12. Waiver of Jury Trial. JUNIOR CREDIT PARTICIPANT, AGENT AND LENDERS
EACH HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
IN CONNECTION WITH THIS AMENDED AND RESTATED JUNIOR CREDIT PARTICIPATION
AGREEMENT AND FURTHER HEREBY WAIVES ANY RIGHT OF OFFSET OR RIGHT TO INTERPOSE
ANY COUNTERCLAIM IN ANY SUCH ACTION. EACH OF THE PARTIES HERETO EXPRESSLY
SUBMITS IN ADVANCE TO THE NONEXCLUSIVE JURISDICTION OF THE SUPERIOR COURT OF
SUFFOLK COUNTY IN THE COMMONWEALTH OF MASSACHUSETTS AND THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS IN ANY ACTION OR PROCEEDING
RELATING TO ANY CLAIM, DISPUTE OR OTHER MATTER PERTAINING DIRECTLY OR INDIRECTLY
TO THIS AMENDED AND RESTATED JUNIOR CREDIT PARTICIPATION AGREEMENT.
13. Notices. All notices hereunder by Agent and Lenders to Junior Credit
Participant shall be deemed given if addressed to Junior Credit Participant, at
its address set forth above and sent by registered or certified mail, return
receipt requested, or sent by telex or telecopy. All notices hereunder by Junior
Credit Participant to Agent and Lenders shall be deemed given if addressed to
Agent and Lenders at Agent's and Lenders' address set forth above and directed
to the attention of Xxxx X. Xxxx, Vice President, and delivered by certified or
registered mail, return receipt requested, or by telex or telecopy.
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14. Headings. The Section headings in this Amended and Restated Junior
Credit Participation Agreement are for convenience of reference only and shall
not be deemed to alter or affect the meaning or interpretation of any of the
provisions hereof.
15. Severability. If any provision of this Amended and Restated Junior
Credit Participation Agreement shall for any reason be held to be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof, but this Amended and Restated Junior Credit
Participation Agreement shall be construed as if such invalid or unenforceable
provision had never been contained herein.
16. Effective Date. This Amended and Restated Junior Credit Participation
Agreement shall be effective upon the receipt by Agent of a counterpart hereof
execution by or on behalf of Lenders, Junior Credit Participant and Company.
17. Amendments. This Amended and Restated Junior Credit Participation
Agreement (a) may not be amended, modified or terminated orally or by any course
of dealing, except an agreement in writing signed by Agent and Lenders and
Junior Credit Participant, (b) shall remain in full force and effect until all
Obligations and Post-Petition Advances are Paid in Full and the Credit Documents
are terminated, unless, prior thereto, Agent and Lenders, in Agent's and
Lenders' discretion, determine to repurchase the Junior Credit Participation,
(c) shall be binding upon and inure to the benefit of the respective legal
representatives, executors, heirs, administrators, successors and assigns of the
parties hereto and shall be governed by and interpreted in accordance with the
laws of the Commonwealth of Massachusetts, and (d) may be executed in
counterparts, all of which shall constitute a complete agreement.
IN WITNESS WHEREOF, Junior Credit Participant has executed this instrument
under seal as of this 17th day of July, 2003.
KNOWLEDGE UNIVERSE, INC.,
as Junior Credit Participant
By: /s/ Xxxxxxx X. Xxxxx
--------------------------
Name: Xxxxxxx X. Xxxxx
Title: Secretary
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ACCEPTED AND AGREED TO:
FLEET NATIONAL BANK
By: /s/ Xxxx X. Lucy
----------------------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
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BANC OF AMERICA STRATEGIC SOLUTIONS, INC.
By: /s/ Xxxx Xxxxxxxx
----------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Managing Director
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CONSENTED TO:
NEXTERA ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
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EXHIBIT A
Participation Certificate
Date: July 17, 2003
Amount of Certificate: $7,500,000
Fleet National Bank ("Agent") hereby certifies that Knowledge
Universe, Inc. ("Junior Credit Participant"), pursuant to the terms
and subject to the conditions of an Amended and Restated Junior
Credit Participation Agreement dated as of July 17, 2003 between
Agent, Lenders (as defined in such Amended and Restated Junior
Credit Participation Agreement) and Junior Credit Participant, has
purchased an undivided junior participation interest in the Term
Loan (as defined in such Amended and Restated Junior Credit
Participation Agreement) in the above-referenced amount.
THIS CERTIFICATE AMENDS, RESTATES AND REPLACES IN ITS ENTIRETY THE PARTICIPATION
CERTIFICATE ISSUED IN CONNECTION WITH THE PRIOR CREDIT PARTICIPATION AGREEMENT
("PRIOR PARTICIPATION CERTIFICATE"), WHICH PRIOR PARTICIPATION CERTIFICATE IS
DEEMED OF NO FURTHER FORCE AND EFFECT.
THIS CERTIFICATE IS NOT TRANSFERABLE except as provided in the above referenced
Amended and Restated Junior Credit Participation Agreement.
FLEET NATIONAL BANK, as Agent for itself and
the other Lenders
By: /s/ Xxxx X. Lucy
-----------------------------------------
Xxxx X. Xxxx, Vice President
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