1
U.S. $10,000,000
CREDIT AGREEMENT
BY AND BETWEEN
GAMI INVESTMENTS, INC.
Xxx Xxxxx Xxxxxxxxx Xxxxx
XXXXXXX, XXXXXXXX 00000
AND
TRANSMEDIA NETWORK, INC.,
TRANSMEDIA RESTAURANT COMPANY, INC.,
TRANSMEDIA SERVICE COMPANY, INC., AND
TMNI INTERNATIONAL INCORPORATED
00000 Xxxxxxxx Xxxxxxxxx
XXXXX, XXXXXXX 00000
DATED AS OF June 30, 1999
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INDEX
Page
ARTICLE I DEFINITIONS AND INTERPRETATIONS..................................................................1
SECTION 1.01 DEFINED TERMS...............................................................................1
SECTION 1.02. ACCOUNTING TERMS............................................................................7
SECTION 1.03. INTERPRETATION..............................................................................7
SECTION 1.04. RECITALS, SCHEDULES AND EXHIBITS............................................................8
ARTICLE II THE LOAN.........................................................................................8
SECTION 2.01. THE LOAN....................................................................................8
SECTION 2.02. THE NOTE....................................................................................8
SECTION 2.03. INTEREST RATE...............................................................................8
SECTION 2.04. INTEREST ON OVERDUE AMOUNTS.................................................................9
SECTION 2.05. BORROWING PROCEDURES........................................................................9
SECTION 2.06. PAYMENTS OF PRINCIPAL AND INTEREST..........................................................9
SECTION 2.07. APPLICATION OF PAYMENTS; REINSTATEMENT......................................................9
SECTION 2.08. ADDITIONAL AMOUNTS..........................................................................9
SECTION 2.09. TAXES ON PAYMENTS..........................................................................10
SECTION 2.10. INITIAL FEE AND RIGHTS OFFERING WARRANT....................................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................................................11
SECTION 3.01. ORGANIZATION; CORPORATE POWERS.............................................................11
SECTION 3.02. AUTHORIZATION..............................................................................11
SECTION 3.03. GOVERNMENTAL APPROVAL......................................................................11
SECTION 3.04. ENFORCEABILITY.............................................................................11
SECTION 3.05. FINANCIAL MATTERS..........................................................................11
SECTION 3.06. NO MATERIAL ADVERSE CHANGE.................................................................12
SECTION 3.07. LITIGATION.................................................................................12
SECTION 3.08. COMPLIANCE WITH LAWS.......................................................................12
SECTION 3.09. ENVIRONMENTAL PROTECTION...................................................................12
SECTION 3.10. AGREEMENTS.................................................................................12
SECTION 3.11. FEDERAL RESERVE REGULATIONS................................................................13
SECTION 3.12. TAXES......................................................................................13
SECTION 3.13. EMPLOYEE BENEFIT PLANS.....................................................................13
SECTION 3.14. INVESTMENT COMPANY ACT.....................................................................13
SECTION 3.15. PATENTS, TRADEMARKS, ETC...................................................................13
SECTION 3.16. SUBSIDIARIES...............................................................................13
SECTION 3.17. SOLVENCY...................................................................................13
SECTION 3.18. LABOR DISPUTES.............................................................................14
SECTION 3.19. COMPLETE DISCLOSURE........................................................................14
SECTION 3.20. VOTE REQUIRED..............................................................................14
SECTION 3.21. TAKEOVER STATUS............................................................................14
SECTION 3.22. REPORTING COMPANY; FORM S-3................................................................14
SECTION 3.23. TRADING ON NYSE............................................................................14
ARTICLE IV CONDITIONS TO THE LOAN..........................................................................14
SECTION 4.01. CONDITIONS TO LOAN CLOSING.................................................................14
ARTICLE V AFFIRMATIVE COVENANTS...........................................................................16
SECTION 5.01. EXISTENCE..................................................................................16
SECTION 5.02. BUSINESSES AND PROPERTIES; COMPLIANCE WITH LAWS............................................16
SECTION 5.03. INSURANCE..................................................................................16
(i)
3
SECTION 5.04. OBLIGATIONS AND TAXES......................................................................16
SECTION 5.05. FINANCIAL STATEMENTS; REPORTS..............................................................17
SECTION 5.06. LITIGATION AND OTHER NOTICES...............................................................18
SECTION 5.07. ERISA......................................................................................18
SECTION 5.08. MAINTAINING RECORDS; ACCESS AND INSPECTIONS................................................18
SECTION 5.09. USE OF PROCEEDS............................................................................19
SECTION 5.10. RIGHTS OFFERING COVENANTS..................................................................19
SECTION 5.11. NET WORTH..................................................................................19
ARTICLE VI NEGATIVE COVENANTS............................................................................19
SECTION 6.01. INDEBTEDNESS...............................................................................20
SECTION 6.02. NEGATIVE PLEDGE............................................................................20
SECTION 6.03. SALE OF ASSETS.............................................................................21
SECTION 6.04. LIQUIDATIONS, CONSOLIDATIONS, MERGERS OR PURCHASES OF ASSETS...............................21
SECTION 6.05. INVESTMENTS, LOANS AND ADVANCES............................................................21
SECTION 6.06. RESTRICTED PAYMENTS........................................................................21
SECTION 6.07. TRANSACTIONS WITH AFFILIATES...............................................................22
SECTION 6.08. LINE OF BUSINESS...........................................................................22
SECTION 6.09 CERTAIN DOCUMENTS..........................................................................22
ARTICLE VII DEFAULTS......................................................................................22
SECTION 7.01. EVENTS OF DEFAULT..........................................................................22
SECTION 7.02. REMEDIES UPON DEFAULT......................................................................24
ARTICLE VIII MISCELLANEOUS.................................................................................25
SECTION 8.01. NOTICES....................................................................................25
SECTION 8.02. SURVIVAL OF AGREEMENT......................................................................26
SECTION 8.03. SUCCESSORS AND ASSIGNS.....................................................................26
SECTION 8.04. EXPENSES OF THE LENDER; INDEMNITY..........................................................26
SECTION 8.05. RIGHT OF SETOFF............................................................................27
SECTION 8.06. APPLICABLE LAW.............................................................................27
SECTION 8.07. WAIVERS....................................................................................28
SECTION 8.08. AMENDMENTS.................................................................................28
SECTION 8.09. SEVERABILITY...............................................................................28
SECTION 8.10. COUNTERPARTS...............................................................................28
SECTION 8.11. HEADINGS...................................................................................28
SECTION 8.12. CONSENT TO JURISDICTION....................................................................28
SECTION 8.13. WAIVER OF JURY TRIAL.......................................................................28
SECTION 8.14. INTEREST LIMITATION........................................................................29
SECTION 8.15. LOAN DOCUMENTS.............................................................................29
SECTION 8.16. JOINT AND SEVERAL LIABILITY................................................................29
(ii)
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INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
EXHIBIT Form of Promissory Note
EXHIBIT Form of Borrowing Request
EXHIBIT Form of Opinion of Counsel
EXHIBIT D Form of Rights Offering Warrant
EXHIBIT E Second Amended and Restated Investment Agreement
EXHIBIT F Form of Standby Purchase Agreement
EXHIBIT G Preferred Stock Designation
SCHEDULES
SCHEDULE 1.01 Existing Investments
SCHEDULE 3.06 Subsidiaries
SCHEDULE 3.07 Litigation
SCHEDULE 3.10 Burdensome Contracts; Defaults
SCHEDULE 6.01 Existing Indebtedness
SCHEDULE 6.02 Existing Liens
(iii)
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "AGREEMENT") is entered into as of June 30,
1999, between GAMI INVESTMENTS, INC., its successors and assigns (the "LENDER"),
and TRANSMEDIA NETWORK, INC., a Delaware corporation ("TMN"), TRANSMEDIA
RESTAURANT COMPANY, INC., a Delaware corporation ("RESTAURANT"), TRANSMEDIA
SERVICE COMPANY, INC., a Delaware corporation ("SERVICE") and TMNI INTERNATIONAL
INCORPORATED, a Delaware corporation ("TMNI" -- TMN, Restaurant, Service and
TMNI are each referred to herein individually as a "BORROWER" and collectively
as "Borrowers").
RECITALS
A. The Borrowers have requested that the Lender extend credit to
the Borrowers in order to enable the Borrowers to borrow, on the date hereof, a
maximum aggregate principal amount of $10,000,000 (the "LOAN") for the purpose
of providing working capital and for other general corporate purposes from time
to time on a nonrevolving credit basis.
B. Each of Restaurant, Service and TMNI are wholly-owned
Subsidiaries of TMN.
C The Lender is willing to make the Loan to the Borrowers, and
the Borrowers are willing to borrow from the Lender, subject to the terms and
conditions herein set forth.
AGREEMENT
NOW, THEREFORE, for and in consideration of the Recitals and the mutual
covenants and agreements herein set forth and other consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 1.01 DEFINED TERMS. As used in this Agreement, the
following terms shall have the meanings specified below:
"ACQUISITION" shall mean the acquisition by the Borrowers from
SignatureCard, Inc. of certain assets related to the membership program operated
under the Dining A La Card trade name and service xxxx in accordance with the
terms of the Asset Purchase Agreement.
"AFFILIATE" shall mean, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power
(a) to direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, membership
interests, by contract, or otherwise, or (b) to vote ten percent (10%) or more
of the securities (on a fully diluted basis) having ordinary voting power for
election of directors, managing general partners or similar officials of the
other Person.
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"AGREEMENT" shall mean this Credit Agreement as from time to
time amended, supplemented, restated or otherwise modified and in effect.
"ASSET PURCHASE AGREEMENT" means that certain Asset Purchase
Agreement dated as of March 17, 1999 executed by TMN and SignatureCard, Inc., as
amended, supplemented or modified.
"BACK-END FEE" shall mean $500,000, payable by Borrowers to
Lender in accordance with the terms of SECTION 2.10 below.
"BOARD" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or legal holiday in the States of Illinois and Florida on which banks are
open for business in Chicago, Illinois and Miami, Florida.
"CLOSING DATE" shall mean the date hereof.
"CHASE BRIDGE LOAN FACILITY" shall mean that certain
$35,000,000 senior secured revolving credit facility made available to TMN by
The Chase Manhattan Bank of even date herewith to fund the Acquisition.
"COMMON STOCK" shall mean TMN's common stock, par value $.02
per share.
"DEFAULT" shall mean any event that with notice or lapse of
time or both would constitute an Event of Default.
"DOLLARS" and the symbol "$" shall mean the lawful currency of
the United States of America.
"EGI-TRANSMEDIA" shall mean EGI-Transmedia Investors, L.L.C.,
a Delaware limited liability company.
"ENVIRONMENTAL LAWS" shall mean all laws relating to
environmental, health or safety matters, including those relating to fines,
orders, injunctions, penalties, damages, contribution, cost recovery,
compensation, losses or injuries resulting from the release or threatened
release of hazardous substances or materials and to the generation, use,
storage, transportation, or disposal of hazardous substances or materials, in
any manner applicable to the Borrowers or their respective Subsidiaries or their
respective properties, each as heretofore and hereafter amended or supplemented,
and any analogous future or present local, state or federal statutes, rules and
regulations promulgated thereunder or pursuant thereto, and any other present or
future law, ordinance, rule, regulation, permit or permit condition or order
addressing environmental, health or safety issues of or by the federal
government, any state or any political subdivision thereof, or any agency, court
or body of the federal government, any state or any political subdivision
thereof, exercising executive, legislative, judicial, regulatory or
administrative functions which are applicable to the Borrowers or their
respective Subsidiaries or their respective properties.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA AFFILIATE" shall mean any corporation, trade or
business that is along with any Borrower a member of a controlled group of
trades or businesses, or a member of any group of organizations within the
meaning of Sections 414(b) or (c) of the Internal Revenue Code of 1986, as
amended,
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and any and all regulations thereunder, or is otherwise treated as a
single employer with any Borrower pursuant to Section 4001(b)(1) of ERISA, and
any and all regulations thereunder.
"EVENT OF DEFAULT" shall mean the Events of Default specified
in SECTION 7.01.
"EXISTING WARRANT" shall mean collectively those certain
warrants to purchase an aggregate of 1,200,000 shares of TMN's Common Stock,
dated as of March 3, 1998 and expiring March 3, 2003, held by Samstock,
EGI-Transmedia, Halmostock Limited Partnership and Xxxxxx X. Xxxxxxx, as
Trustee.
"FINANCIAL OFFICER" shall mean either the President or the
Chief Financial Officer of a Borrower.
"GUARANTY" shall mean any obligation, contingent or otherwise,
of any Person guarantying or having the economic effect of guarantying any
Indebtedness of any other Person in any manner, whether directly or indirectly,
and including any obligation of such Person, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (b) to purchase property,
securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, or (c) to maintain working
capital, equity capital or other financial condition of the primary obligor so
as to enable the primary obligor to pay such Indebtedness (including any
obligation to make capital contributions, loans or other payments pursuant to a
keep well guaranty or similar instrument); provided, however, that the term
"Guaranty" shall not include endorsements for collection or deposit, in either
case in the ordinary course of business.
"INDEBTEDNESS" shall mean, with respect to any Person, without
duplication, all (a) obligations of such Person for borrowed money, (b)
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) obligations of such Person upon which interest charges are
contractually specified, (d) obligations of such Person under conditional sale
or other title retention agreements relating to property purchased by such
Person, (e) obligations of such Person issued or assumed as the deferred
purchase price of property or services (other than trade payables and accrued
expenses incurred in the ordinary course of business not yet due and payable),
(f) Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) Guaranties of such Person,
(h) capital lease obligations of such Person, (i) obligations of such Person
under interest rate protection agreements, and (j) obligations of such Person
under or with respect to letters of credit and bankers' acceptances.
"INITIAL FEE" shall mean $500,000, payable by Borrowers to
Lender on the Closing Date.
"INTELLECTUAL PROPERTY" shall mean all copyrights, patents,
trademarks, tradenames, and all applications and licenses therefor.
"INTEREST PAYMENT DATE" shall mean the first Business Day of
each calendar month.
"INVESTMENT" shall mean, with respect to any Person, all
advances, loans or extensions of credit to any other Person, all purchases or
commitments to purchase any stock, bonds, notes, debentures or other securities
of any other Person, and any investment in any other Persons, including
partnerships or joint ventures.
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"INVESTMENT AGREEMENT AMENDMENT" shall mean that certain
Second Amended and Restated Investment Agreement of even date herewith executed
by TMN, Samstock, EGI-Transmedia and Halmostock Limited Partnership, in the form
of EXHIBIT E, as amended from time to time.
"LIEN" shall mean, with respect to any asset, any lien,
mortgage, security interest, charge or encumbrance of any kind, including the
rights of a vendor, lessor, or similar party under any conditional sale
agreement or other title retention agreement or lease substantially equivalent
thereto.
"LOAN" shall mean the Loan defined in RECITAL A.
"LOAN DOCUMENTS" shall mean collectively this Agreement, the
Note, and the reports, certificates, financial statements and other agreements
and instruments executed and delivered by the Borrowers in connection herewith
or therewith.
"MANAGEMENT FEE" shall mean the quarterly fee for
management services payable by TMN to Equity Group Investments, L.L.C. in the
quarterly amount of $62,500.00.
"MARGIN STOCK" shall have the meaning assigned to such term in
Regulation U of the Board.
"MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse
effect upon the business, operations, properties, assets, liabilities, operating
results, cash flows or condition (financial or otherwise) of the Borrowers and
their respective Subsidiaries, taken as a whole or (b) a material impairment of
the ability of the Borrowers to perform the obligations to, or the validity or
enforceability of, or impairment of the rights or remedies of, or benefits to,
the Lender under the Loan Documents.
"MATURITY DATE" shall mean the earliest to occur of (a)
December 30, 1999, (b) the date all Obligations shall be due and payable
hereunder, whether by acceleration or otherwise, and (c) the Rights Offering
Closing Date.
"MULTIEMPLOYER PLAN" shall mean a plan described in Section
3(37) or 4001(a)(3) of ERISA that is maintained for employees of either a
Borrower or any ERISA Affiliate or to which contributions are or have been made
by a Borrower or any ERISA Affiliate.
"NOTE" shall mean the Promissory Note to be executed and
delivered by the Borrowers on the Closing Date, in substantially the form
contained in EXHIBIT A.
"OBLIGATIONS" shall mean (a) (i) the principal and interest
(including interest accruing after the commencement of any proceeding against or
with respect to a Borrower under the Bankruptcy Code, 11 U.S.C. ss. 101 et seq.,
or any other federal or state bankruptcy, insolvency, receivership or similar
law, at the rate specified herein) on the Loan, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment, or
otherwise, and (ii) all other monetary obligations of the Borrowers to the
Lender under this Agreement and the other Loan Documents, whether now existing
or hereafter arising, and (b) all other obligations of the Borrowers under this
Agreement and the other Loan Documents, whether now existing or hereafter
arising.
"PENSION PLAN" shall mean any Plan and any Multiemployer Plan
that is subject to the provisions of Section 302 of ERISA or Title IV of ERISA.
"PERMITTED INVESTMENTS" shall mean (a) the purchase of direct
obligations of the government of the United States of America, or any agency
thereof, or obligations unconditionally
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guaranteed by the United States of America; (b) certificates of deposit of any
bank organized or licensed to conduct a banking business under the laws of the
United States of America or any State thereof having capital, surplus and
undivided profits of not less than $100,000,000; (c) Investments in commercial
paper which, at the time of acquisition, is accorded the highest rating by
Standard & Poor's Corporation, Xxxxx'x Investors Services, Inc. or any other
nationally recognized credit rating agency of similar standing; (d) other
Investments existing as of the date of execution hereof as shown on SCHEDULE
1.01 hereof, including Investments in the Subsidiaries listed thereon; (e)
ordinary course advances made by a Borrower to another Borrower; (f) Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers, customers or other debtors or in settlement of
delinquent obligations arising in the ordinary course of business; (g)
promissory notes or other debt obligations received in connection with asset
dispositions permitted hereunder; and (h) loans and advances to any employee or
officer of any Borrower in the ordinary course of business not to exceed
$300,000 in the aggregate principal amount at any one time outstanding.
"PERSON" shall mean and include natural persons, corporations
(business, municipal or not-for-profit), limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
"PLAN" shall mean any employee benefit plan (within the
meaning of Section 3(3) of ERISA), that is maintained for employees of, or
sponsored, participated in or contributed to by a Borrower or any ERISA
Affiliate.
"PREFERRED STOCK" shall mean the Series A senior convertible
redeemable preferred stock of TMN issued and sold pursuant to the Rights
Offering.
"PREFERRED STOCK DESIGNATION" shall mean the Certificate of
Designation of Preferred Stock covering the Preferred Stock to be filed by TMN
with the Secretary of State of Delaware in substantially the form of EXHIBIT G.
"PRIME RATE" shall mean on any date the rate of interest
designated by The Chase Manhattan Bank or its successor from time to time as its
prime rate, base rate or reference rate. The Prime Rate is not necessarily
intended to be the lowest rate of interest charged by such Person in connection
with extensions of credit. Changes in the rate of interest on the Loan shall
take effect simultaneously with each change in the Prime Rate. If The Chase
Manhattan Bank or its successor shall cease to report a Prime Rate, then Prime
Rate shall be deemed to be the average prime rate, base rate or reference rate
reported by the three (3) largest (measured by total assets) banking
institutions in the continental United States then announcing such an interest
rate. The applicable Prime Rate shall be determined by the Lender, and such
determination shall be conclusive absent manifest error.
"PROXY PROPOSALS" shall mean each of the following: (a) the
issuance of the Rights Offering Warrant, (b) the proposed increase in the
authorized shares of TMN's Common Stock and preferred stock, and (c) any other
matter submitted for the approval by TMN's stockholders in connection with the
Rights Offering, the Rights Offering Warrant, and related matters.
"REGISTRATION STATEMENT" shall mean that certain registration
statement of TMN on Form S-2 registering the Rights, the Preferred Stock and the
Common Stock into which the Preferred Stock is convertible.
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"REGULATION G, T, U OR X" shall mean Regulation G, T, U or X
of the Board, as each of the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"REPORTABLE EVENT" shall mean any Reportable Event within the
meaning of Section 4043(b) of Title IV of ERISA or the regulations issued
thereunder.
"RESTRICTED PAYMENTS" shall mean the Restricted Payments
specified in SECTION 6.06.
"RIGHTS" shall mean the nontransferable rights offered to
stockholders of TMN pursuant to the Rights Offering.
"RIGHTS OFFERING" shall mean that certain offering of
nontransferable rights to stockholders of TMN to purchase an aggregate of up to
$10,000,000 newly issued Series A senior convertible redeemable preferred stock
of TMN, par value $.10 per share, on terms and conditions acceptable to Lender.
"RIGHTS OFFERING CLOSING DATE: shall mean the date on which
the Preferred Stock is issued and sold by TMN to Samstock and such other
stockholders of TMN as have elected to purchase Preferred Stock pursuant to
the Rights Offering.
"RIGHTS OFFERING DEFAULT EVENT" shall mean the occurrence of
any of the following: (a) failure by the required percentage of TMN's
stockholders to approve each of the Proxy Proposals upon presentation thereof to
a vote of TMN's stockholders, (b) failure by TMN or its Board of Directors to
recommend that TMN's stockholders vote in favor of the Proxy Proposals or the
withdrawal by TMN or its Board of Directors of such recommendation or any
modification of such recommendation which could reasonably be expected to
adversely affect such approval by TMN's stockholders, or (c) failure by any
stockholder of TMN who is a member of either senior management or the Board of
Directors of TMN to vote in favor of the Proxy Proposals.
"RIGHTS OFFERING EVENT" shall mean each of the following: (a)
the preparation for filing of an initial draft with the Securities and Exchange
Commission of (i) a proxy statement containing the Proxy Proposals, and (ii) the
Registration Statement , (b) the execution and delivery of the Standby Purchase
Agreement (or, subject to Lender's approval, preparation of the final form of
the Standby Purchase Agreement) and the Investment Agreement Amendment, (c) the
preparation for filing with the Secretary of State of Delaware of the Preferred
Stock Designation, and (d) the preparation of the final form of the Rights
Offering Warrant, in each of the foregoing cases, in form and substance
reasonably satisfactory to the Lender.
"RIGHTS OFFERING PROCEEDS" shall mean all cash proceeds
received by the Borrowers from the Rights Offering.
"RIGHTS OFFERING WARRANT" shall mean the warrant issued by TMN
to Samstock, upon receipt of the necessary stockholder approval, and the closing
of the Rights Offering, to purchase an aggregate of 1,000,000 shares of TMN's
Common Stock substantially in the form of EXHIBIT D (with such modifications as
Lender and Borrowers shall approve).
"SAMSTOCK" shall mean Samstock, L.L.C., a Delaware limited
liability company.
"STANDBY PURCHASE AGREEMENT" shall mean that certain Standby
Purchase Agreement by and between TMN and Samstock in a form substantially
similar to EXHIBIT F (with such modifications as Lender and Borrowers shall
approve), as amended from time to time.
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"SUBSIDIARY" shall mean, as to any Person (a) any corporation,
more than fifty percent (50%) 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 and/or
one or more Subsidiaries of such Person and (b) any partnership, association,
joint venture, limited liability company or other entity in which such Person
and/or one or more Subsidiaries of such Person has greater than a fifty percent
(50%) equity interest at the time.
"TAXES" shall mean the Taxes defined in SECTION 2.09.
"TRANSACTION FEE" shall mean the fee approved by the board of
directors of TMN payable by TMN to Equity Group Investments, L.L.C. on the
closing of the Acquisition in the amount of one percent (1%) of the value of the
Acquisition.
"TRANSACTIONS" shall mean, collectively, the execution,
delivery and performance by the Borrowers of this Agreement and each of the
other Loan Documents, the borrowing of the Loan by the Borrowers hereunder, the
issuance of the Rights Offering Warrant, the Rights Offering (and completion of
the transactions contemplated in the Standby Purchase Agreement), the Investment
Agreement Amendment and all other transactions contemplated by this Agreement,
the other Loan Documents and the Standby Purchase Agreement.
SECTION 1.02 ACCOUNTING TERMS. Except as otherwise herein
specifically provided: (a) each accounting term used herein shall have the
meaning given it under generally accepted accounting principles in effect in the
United States of America from time to time applied on a consistent basis; and
(b) each reference to generally accepted accounting principles shall mean
generally accepted accounting principles in effect in the United States of
America from time to time applied on a consistent basis.
SECTION 1.03 INTERPRETATION. In this Agreement and each other Loan
Document, unless a clear contrary intention appears:
(a) the singular number includes the plural number and
vice versa;
(b) reference to any Person includes such Person's
successors and assigns but, if applicable, only if
such successors and assigns are permitted by the Loan
Documents, and reference to a Person in a particular
capacity excludes such Person in any other capacity;
(c) reference to either gender includes the other gender;
(d) reference to any agreement (including this Agreement
and the Schedules and Exhibits hereto, and the other
Loan Documents), document or instrument means such
agreement, document or instrument as amended,
supplemented, restated or modified and in effect from
time to time in accordance with the terms thereof
and, if applicable, the terms hereof and the other
Loan Documents, and reference to any promissory note
includes any promissory note which is an extension or
renewal thereof or a substitute or replacement
therefor;
(e) reference to any law, rule, regulation, order,
decree, requirement, policy, guideline, directive or
interpretation means as amended, modified, codified,
replaced or
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reenacted, in whole or in part, and in
effect on the determination date, including rules and
regulations promulgated thereunder;
(f) reference to any Article, Section, Schedule, or
Exhibit means such Article or Section of this
Agreement, or Schedule or Exhibit to this Agreement;
(g) "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to this Agreement
as a whole and not to any particular Article, Section
or other provision hereof;
(h) "including" (and with correlative meaning "include")
means including without limiting the generality of
any description preceding such term; and
(i) relative to the determination of any period of time,
"from" means "from and including" and "to" means "to
but excluding".
SECTION 1.04 RECITALS, SCHEDULES AND EXHIBITS. The Recitals,
Schedules and Exhibits in and to this Agreement are incorporated in and
expressly made a part of this Agreement.
ARTICLE II
THE LOAN
SECTION 2.01 THE LOAN. Subject to the terms and conditions of this
Agreement, the Lender shall make available to the Borrowers on the Closing Date
a term loan in an aggregate maximum principal amount of $10,000,000.
Repayments and prepayments of the Loan shall not be subject to reborrowing.
SECTION 2.02 THE NOTE. The Loan shall be evidenced by the Note. At
the Lender's option, the Lender may, and is hereby authorized by the Borrowers
to, endorse on the schedules attached to the Note, or otherwise record in the
Lender's internal records, an appropriate notation evidencing the date and
amount of the Loan, each payment of principal of any portion of the Loan, each
payment of interest on the Loan and the other information provided for on such
schedule; provided, however, that the failure of the Lender to make such a
notation or any error in such a notation shall not affect the obligation of the
Borrowers to repay the Loan in accordance with the terms of the Note and this
Agreement.
SECTION 2.03 INTEREST RATE. Except as set forth in SECTION 2.04
below, the Borrowers shall pay the Lender interest on the outstanding principal
balance of the Loan from time to time at a rate equal to the Prime Rate plus
4.0% per annum. The records of the Lender as to the interest rate applicable to
the Loan shall be binding and conclusive absent manifest error. Interest shall
be payable from the Closing Date to the day of repayment of the Loan. Interest
and all fees owing hereunder shall be computed on the basis of the actual number
of days elapsed on the basis of a year consisting of 360 days, and shall be
payable as provided in SECTIONS 2.04, 2.06 AND 2.11 below.
SECTION 2.04 INTEREST ON OVERDUE AMOUNTS. If the Borrowers shall
default in the payment when due of the principal of or interest on the Loan or
any other amount becoming due hereunder, by scheduled maturity, acceleration or
otherwise, or if there shall otherwise occur an Event of Default, the Borrowers
shall on demand from time to time from the Lender pay interest, to the extent
permitted by law, on such defaulted amount from the day after the due date
thereof to the date of actual payment (after as well as before judgment) (or on
the amount otherwise outstanding hereunder from the date of Default into which
matured such Event of Default until the date such Event of Default is cured or
otherwise no longer exists),
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at a rate per annum computed on the basis of the actual number of days elapsed
on the basis of a year consisting of 360 days, equal to the Prime Rate plus 8.0%
per annum.
SECTION 2.05 BORROWING PROCEDURES. On the Closing Date, Borrower
shall deliver to Lender a request for borrowing in the form attached hereto as
EXHIBIT B. The request for borrowing pursuant to this SECTION 2.05 shall be
deemed to be a representation that all of the representations and warranties of
the Borrowers contained in this Agreement and the other Loan Documents are true
and correct in all material respects as if made on such date, except to the
extent that such representations and warranties expressly related to an earlier
date, and that no Default or Event of Default shall have occurred and be
continuing.
SECTION 2.06 PAYMENTS OF PRINCIPAL AND INTEREST. If not sooner
paid, the outstanding principal amount of the Loan, together with all accrued
and unpaid interest thereon and all other amounts owing hereunder, shall be due
and payable on the Maturity Date. All principal payments of the Loan shall be
accompanied by accrued interest on the principal amount being repaid to the date
of payment. Interest on the Loan shall be due and payable monthly in arrears on
each Interest Payment Date. The Borrowers shall pay to the Lender upon the
Borrowers' receipt thereof all Rights Offering Proceeds, which amounts shall be
applied by the Lender pursuant to SECTION 2.07 below. All payments by the
Borrowers pursuant to this Agreement, the Note or any other Loan Document,
whether in respect of principal, interest, or otherwise, shall be made without
setoff or counterclaim (other than reimbursement or offset of the Initial Fee to
the extent required pursuant to SECTION 2.10 below) in same day funds by the
Borrowers to the Lender. The Borrowers shall have the right at any time and from
time to time to prepay the advances under the Loan in whole or in part without
premium or penalty upon at least one (1) Business Day's prior written notice to
the Lender. All payments required to be made to the Lender shall be made not
later than 11:00 a.m., Chicago time, on the date due by wire transfer to such
account as the Lender shall specify from time to time by notice to the
Borrowers. Funds received after that time shall be deemed to have been received
by the Lender on the next following Business Day. Whenever any payment to be
made shall otherwise be due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in computing interest, if any, in connection with such
payment.
SECTION 2.07 APPLICATION OF PAYMENTS; REINSTATEMENT. The Lender
shall, at its option, apply all payments received hereunder first to all fees,
expenses and other costs due hereunder and under the other Loan Documents, next
to accrued but unpaid interest on the Loan, and next to the outstanding
principal balance of the Loan. To the extent that the Borrowers make a payment
or payments to the Lender, which payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then, to
the extent of such payment received, the Obligations or part thereof intended to
be satisfied shall be revived and shall continue in full force and effect, as if
such payments had not been received by the Lender.
SECTION 2.08 ADDITIONAL AMOUNTS. If the implementation of or any
change in any law or regulation or in the interpretation by any court or
administrative or governmental authority charged with their administration shall
impose on the Lender any condition not existing on the date of this Agreement
regarding this Agreement, the Loan or the Note, and the result shall be to: (i)
increase the cost to the Lender of making or maintaining the Loan, or (ii)
reduce any amounts payable by the Borrowers hereunder, then, within thirty (30)
days after written demand by the Lender, the Borrowers shall pay to the Lender,
from time to time as specified by the Lender, additional amounts which shall be
sufficient to compensate the Lender for such increased cost or reduction in
payment. If any such amount is not paid within thirty (30) days after written
demand by the Lender, the Borrowers shall pay the Lender interest at the
interest
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rate specified in SECTION 2.04 above on each such amount from the date
when payment was due until paid in full.
SECTION 2.09 TAXES ON PAYMENTS. All payments made by the Borrowers
under the Note or this Agreement shall be made free and clear of, and without
deduction or withholding for or on account of, any future income, stamp or other
taxes, levies, imposts, deductions, charges, or withholdings imposed, assessed,
levied or collected by the United States of America or any political subdivision
or taxing authority thereof or therein, but excluding taxes imposed on net
income of the Lender by the United States of America or any state or any
political subdivision or taxing authority thereof or therein (all such
non-excluded taxes, levies, imposts, deduction, charges or withholdings being
hereinafter called "TAXES"). If any Taxes are required to be withheld from any
amounts so payable to the Lender hereunder or under the Note, the amounts so
payable to the Lender shall be increased to the extent necessary to yield to the
Lender (after payment of all Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in the Note or this
Agreement. Whenever any Tax is paid by the Borrowers, as promptly as possible
thereafter, the Borrowers shall send to the Lender a certified copy of any
original official receipt received by the Borrowers showing payment thereof. If
the Borrowers fail to pay any Taxes when due to the appropriate taxing
authority, the Borrowers shall indemnify the Lender for any incremental taxes,
interest or penalties that may become payable by the Lender as a result of any
such failure.
SECTION 2.10 INITIAL FEE AND RIGHTS OFFERING WARRANT. As
consideration for execution of this Agreement and the Standby Purchase
Agreement, and the Lender or its Affiliates entering into and consummating the
Transactions, and the Lender's making the Loan available to the Borrowers, the
Borrowers have agreed to pay to Lender the Initial Fee (subject to reimbursement
or offset as set forth below) and to issue to Samstock the Rights Offering
Warrant, each of which Initial Fee and Rights Offering Warrant shall be deemed
fully earned on the Closing Date regardless of whether the Loan is disbursed in
whole or in part. Upon receipt of the necessary approval of TMN's stockholders
of the Proxy Proposals, the closing of the Rights Offering, the issuance of the
Rights Offering Warrant and the payment in full of the Obligations, Lender shall
reimburse (or offset against the Obligations) to Borrowers the Initial Fee. If
the Proxy Proposals are not approved by the stockholders of TMN, or the Rights
Offering Warrant is not issued for any reason, or the Rights Offering is
withdrawn or canceled by TMN for any reason or there occurs an Event of Default,
Borrowers shall immediately pay to Lender the Back-End Fee, which shall be
deemed fully earned on the Closing Date (but only payable as aforesaid)
regardless of whether the Loan is disbursed in whole or in part.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Lender to execute this Agreement and perform its
obligations hereunder, each Borrower represents and warrants to the Lender as
follows:
SECTION 3.01 ORGANIZATION; CORPORATE POWERS. Such Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or formed, has the requisite power and
authority, including all material licenses, registrations, permits, franchises,
consents and approvals, to own its property and assets and to carry on its
business as now conducted and is qualified to do business and in good standing
in every jurisdiction where such qualification is required, except where failure
to so qualify would not reasonably be likely to have a Material Adverse Effect.
Such Borrower has all requisite corporate power and authority to consummate the
Transactions.
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SECTION 3.02 AUTHORIZATION. The execution and delivery of this
Agreement and the other Loan Documents, and the consummation of the
Transactions: (a) have been duly authorized by all requisite corporate action of
such Borrower (other than the approval of the Proxy Proposals by TMN's
stockholders), including, without limitation, the approval by a majority of the
Disinterested Directors of TMN (within the meaning of Section 3.1 of the Amended
and Restated Investment Agreement dated March 3, 1998 by and among TMN,
Samstock, EGI-Transmedia, and Halmostock Limited Partnership); and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation or the
certificate or articles of incorporation or the by-laws of such Borrower, (B)
any order of any court, or any rule, regulation or order of any other agency of
government binding upon such Borrower or any of its Subsidiaries, or (C) any
provisions of any material indenture, agreement or other instrument to which
such Borrower or any of its Subsidiaries is a party or by which such Borrower or
any of its Subsidiaries or any of their respective properties or assets are or
may be bound; (ii) be in conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under any material
indenture, agreement or other instrument referred to in (b)(i)(C) above; or
(iii) result in the creation or imposition of any Lien upon any property or
assets of such Borrower or any of its Subsidiaries.
SECTION 3.03 GOVERNMENTAL APPROVAL. No registration or filing with
or consent or approval of, or other action by, any federal, state or other
governmental agency, authority or regulatory body or any other Person is or will
be required in connection with the execution or delivery of this Agreement or
the other Loan Documents, or the consummation of the Transactions other than (a)
the filing with the Securities and Exchange Commission of (i) a proxy statement
containing the Proxy Proposals, and (ii) the Registration Statement (and the
declaration of its effectiveness by the Securities and Exchange Commission), (b)
the filing of the Certificate of Amendment to TMN's Certificate of Incorporation
and the Preferred Stock Designation with the Delaware Secretary of State and (c)
those which such Borrower has obtained and/or made.
SECTION 3.04 ENFORCEABILITY. This Agreement constitutes, and each
of the other Loan Documents when duly executed and delivered by such Borrower
will constitute, legal, valid and binding obligations of such Borrower, in each
case enforceable in accordance with their respective terms.
SECTION 3.05 FINANCIAL MATTERS. The audited consolidated financial
statements of the Borrowers and their Subsidiaries dated September 30, 1998, and
the unaudited consolidated financial statements of the Borrowers and their
Subsidiaries dated March 31, 1999, and the related consolidated statements of
income or operations, stockholders' equity and cash flows for the fiscal periods
ended on such dates:
(a) were prepared in accordance with generally accepted
accounting principals consistently applied
throughout the periods covered thereby, except as
otherwise expressly noted therein;
(b) fairly present the financial condition of the
Borrowers and their Subsidiaries as of the dates
thereof and results of operations for the periods
covered thereby (subject, in the case of such
unaudited financial statements, to the absence of
footnotes and to normal year-end adjustments); and
(c) show all material indebtedness and other
liabilities, direct or contingent, of the
Borrowers and their Subsidiaries as of the dates
thereof, including liabilities for taxes, material
commitments and material contingent obligations.
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SECTION 3.06 NO MATERIAL ADVERSE CHANGE. Since March 31, 1999,
there has been no change that could reasonably be expected to have a Material
Adverse Effect.
SECTION 3.07 LITIGATION. Except as listed on SCHEDULE 3.07, there
are no actions, suits or proceedings at law or in equity or by or before any
arbitrator or any governmental instrumentality or other agency or regulatory
authority now pending or, to the best of such Borrower's knowledge, threatened
against or affecting such Borrower or its Subsidiaries, or the businesses,
assets or rights of such Borrower or its Subsidiaries: (a) which involve this
Agreement or any of the other Loan Documents or any of the transactions
contemplated hereby or thereby; or (b) as to which, if adversely determined,
could individually or in the aggregate have a Material Adverse Effect.
SECTION 3.08 COMPLIANCE WITH LAWS. Such Borrower is not in
violation of any law, including any Environmental Law, or in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court or governmental agency or instrumentality, where such violation or default
could reasonably be expected to have a Material Adverse Effect.
SECTION 3.09 ENVIRONMENTAL PROTECTION. Neither such Borrower nor
any of its Subsidiaries has received: (a) any claim or notice of violation,
lien, complaint, suit, order or other claim or notice to the effect that it is
or may be liable to any Person as a result of the (i) environmental condition of
such Borrower's or any Subsidiary's property or any other property or (ii) the
release or threatened release of any hazardous substances or materials; or (b)
any letter or request for information under any Environmental Law; and, to the
best of such Borrower's knowledge, none of the operations of such Borrower nor
any of its Subsidiaries are the subject of any federal or state investigation
evaluating whether any remedial action is needed to respond to a release or
threatened release of any hazardous substance or material at such Borrower's
property or at any other location, including any location to which such Borrower
or any Subsidiaries has transported, or arranged for the transportation of, any
hazardous substances or materials.
SECTION 3.10 AGREEMENTS. Except as listed on SCHEDULE 3.10,
neither such Borrower nor any of its Subsidiaries is a party to any agreement or
instrument or subject to any restriction that has or could have a Material
Adverse Effect. Except as listed on SCHEDULE 3.10, neither such Borrower nor any
of its Subsidiaries is in default in any material manner in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any material agreement or instrument to which it is a party.
SECTION 3.11 FEDERAL RESERVE REGULATIONS. Such Borrower is not
engaged principally, or as of one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying Margin Stock. No
part of the proceeds of the Loan will be used, whether directly or indirectly,
and whether immediately, incidentally or ultimately: (a) to purchase or carry
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying Margin Stock or to refund indebtedness originally incurred for such
purpose; or (b) for any purpose which entails a violation of, or which is
inconsistent with, the provisions of Regulations of the Board, including
Regulations G, T, U or X thereof.
SECTION 3.12 TAXES. Such Borrower has filed or caused to be filed
all federal, state and local tax returns which are required to be filed by it,
and has paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which such Borrower is contesting in good faith by
appropriate proceedings, and with respect to which such Borrower shall have set
aside on its books adequate reserves.
SECTION 3.13 EMPLOYEE BENEFIT PLANS. Such Borrower and each Plan
is in compliance with those provisions of ERISA, the Internal Revenue Code of
1986, as amended, and the Age
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Discrimination in Employment Act, as amended, and
the regulations and published interpretations thereunder which are applicable to
such Borrower or such Plan, except where failure to so comply is not reasonably
likely to result in a Material Adverse Effect. As of the date hereof, no
Reportable Event has occurred or is reasonably likely to occur with respect to
any Pension Plan as to which such Borrower was required to file a report with
the Pension Benefit Guaranty Corporation. No Pension Plan (other than a
Multiemployer Plan) has any material amount of unfunded benefit liabilities
(within the meaning of Section 4001(a)(18) of ERISA) or any accumulated funding
deficiency (within the meaning of Section 302(a)(2) of ERISA), whether or not
waived, and neither such Borrower nor any ERISA Affiliate has incurred or
expects to incur any material withdrawal liability under Subtitle E of Title IV
of ERISA to a Multiemployer Plan. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
could result in a Material Adverse Effect.
SECTION 3.14 INVESTMENT COMPANY ACT . Such Borrower is not an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or a company controlled by such an "investment
company".
SECTION 3.15 PATENTS, TRADEMARKS, ETC. To the best of such
Borrower's knowledge, such Borrower and its Subsidiaries have obtained and
protected all Intellectual Property necessary to own their respective properties
and assets and carry on and operate their respective businesses as heretofore
and hereafter anticipated to be conducted. To the best of such Borrower's
knowledge, (a) no event is threatened or has occurred which permits, or after
notice or lapse of time, would permit, the revocation or termination of such
properties, and (b) there is no past, present or threatened occurrence that is
reasonably likely to preclude or materially impair such Borrower's and such
Subsidiaries' ability to retain or obtain any authorization necessary for the
operation of their respective businesses.
SECTION 3.16 SUBSIDIARIES. Such Borrower does not have any
Subsidiaries other than as listed on SCHEDULE 3.16, and is not a partner or
joint venturer in any partnerships or joint ventures.
SECTION 3.17 SOLVENCY Such Borrower has capital sufficient to
carry on its business and all businesses and transactions in which it plans to
engage and is now solvent and able to pay its debts as they mature. As of the
date of this Agreement, such Borrower owns property having a value, both at fair
valuation and at present fair salable value, greater than the amount required to
pay such Borrower's debts.
SECTION 3.18 LABOR DISPUTES. Such Borrower is not a party to any
labor dispute which could have, individually or in the aggregate, a Material
Adverse Effect. There are no strikes or walkouts relating to any labor contracts
to which such Borrower is subject. Such Borrower is not party to any collective
bargaining agreement to the benefit of which any of its employees is entitled.
SECTION 3.19 COMPLETE DISCLOSURE All factual information furnished
by or on behalf of such Borrower or its Subsidiaries to the Lender for purposes
of or in connection with this Agreement or the Transactions is, and all other
such factual information hereafter furnished by or on behalf of such Borrower or
its Subsidiaries will be, true and accurate in all material respects on the date
as of which such information is furnished and not incomplete by omitting to
state any material fact necessary to make such information not materially
misleading at such time in light of the circumstances under which such
information was provided.
SECTION 3.20 VOTE REQUIRED. (a) No vote of the holders of any
class or series of capital stock or other securities of TMN or any other
Borrower is required to approve or effect this Agreement, the other Loan
Documents, any Rights Offering Event, any Transaction or any transactions
contemplated hereby and thereby, including without limitation under applicable
law, applicable stock
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exchange rules or regulations, the certificate of incorporation (including
without limitation Article Seventh of TMN's Certificate of Incorporation) or the
by-laws of TMN or any other Borrower or any contract, agreement or permit of any
kind whatsoever applicable to TMN, any other Borrower or their assets, except
that the Proxy Proposals identified in clauses (a) and (b) of the definition of
"Proxy Proposals" under Section 1.01 of this Agreement require the approval of
TMN's stockholders as referenced in SECTION 3.20(B) below.
(b) The affirmative vote of the holders of no more than a majority
of the outstanding shares of TMN's Common Stock is the only vote of the holders
of any class or series of capital stock or other securities of TMN or any other
Borrower necessary to approve the Proxy Proposals.
SECTION 3.21 TAKEOVER STATUS. The requirements of Section 203 of
the Delaware General Corporation Law are not applicable to TMN or any other
Borrower in connection with the transactions contemplated by this Agreement, the
other Loan Documents, any Rights Offering Event, or any other Transactions.
SECTION 3.22 REPORTING COMPANY; FORM S-3. TMN is subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, and
its Common Stock is registered under Section 12 thereof. TMN is eligible to
register for resale shares of its Common Stock to be sold by parties other than
TMN on a registration statement on Form S-3 under the Securities Act of 1933, as
amended.
SECTION 3.23 TRADING ON NYSE. TMN's Common Stock is listed for
trading on The New York Stock Exchange, and trading in TMN's Common Stock on The
New York Stock Exchange has not been suspended as of the date hereof.
ARTICLE IV
CONDITIONS TO THE LOAN
SECTION 4.01 CONDITIONS TO LOAN CLOSING. The obligation of the
Lender to make the Loan hereunder is subject to the following conditions
precedent, all of which shall be in form and substance satisfactory to the
Lender in its sole and absolute discretion:
(a) LEGAL OPINION. The Lender shall have received a
written opinion of counsel for each Borrower, in
substantially the form contained in EXHIBIT C.
(b) AUTHORIZATION AND ORGANIZATIONAL DOCUMENTATION. The
Lender shall have received: (i) a copy of the
certificate of incorporation of each Borrower,
certified by the Secretary of State of the state of its
incorporation as of a recent date, and a certificate
as to the good standing of each Borrower from such
Secretary of State, dated as of a recent date; (ii) a
certificate of the Secretary or an Assistant Secretary
of each Borrower, dated the Closing Date and
certifying (A) that attached thereto is a true and
complete copy of the by-laws of such Borrower, as in
effect on the date of such certificate, (B) that
attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of
such Borrower, authorizing the execution, delivery
and performance of this Agreement and the other Loan
Documents, the borrowing by such Borrower hereunder,
and, subject to receipt of stockholder approval of
the Proxy Proposals, the consummation of the
Transactions, and that such resolutions have not been
modified, rescinded or
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amended and are in full force and effect, (C) that the
certificate or articles of incorporation of such
Borrower, have not been amended since the date of
the certification thereto furnished pursuant to (i)
above, and (D) as to the incumbency and specimen
signature of each officer of such Borrower, executing
this Agreement and the other Loan Documents; and (iii)
such other documents as the Lender or its counsel may
reasonably request.
(c) NOTE. The Lender shall have received the Note, duly
executed and delivered by the Borrowers, payable to
the order of the Lender and otherwise complying with
the provisions of SECTION 2.02 above.
(d) INSURANCE. The Lender shall have received
satisfactory evidence of the insurance required by
SECTION 5.03 below.
(e) CERTIFICATION. The Lender shall have received a
certificate, dated as of the Closing Date, whereby the
Borrowers certify that: (i) the representations and
warranties set forth in ARTICLE III are true and
correct in all material respects with the same effect as
though made on and as of the date hereof, except to the
extent they expressly relate to an earlier date (in
which case they shall be true and correct in all
material respects on and as of such date), and (ii) the
Borrowers are in compliance in all material respects
with all the terms and provisions contained herein and
in the other Loan Documents on their part to be observed
or performed, and at the time of and immediately after
such borrowing of the Loan, no Default or Event of
Default shall have occurred and be continuing.
(f) SEARCHES. The Lender shall have received recently
dated judgment and state and federal tax lien search
reports for each Borrower.
(g) ACQUISITION. The Lender shall have received
satisfactory evidence of the consummation of the
Acquisition and the closing of the Chase Bridge Loan
Facility.
(h) RIGHTS OFFERING EVENTS. The Lender shall have
received satisfactory evidence of the completion and
occurrence of each of the Rights Offering Events.
(i) WAIVER. The Lender shall have received satisfactory
evidence of the waiver of the "Early Amortization
Event" specified in Section 14(x) of the Security
Agreement dated as of December 1, 1996 among TNI
Funding Company I, L.L.C., The Chase Manhattan Bank,
TNI Funding I, Inc. and TMN.
(j) FEES. The Lender shall have received the fees and
reimbursement of expenses to be paid on the Closing
Date pursuant to the terms of this Agreement and the
Standby Purchase Agreement, including without
limitation the Initial Fee and the Transaction Fee.
(k) FURTHER ASSURANCES. The Lender shall have received
all further documents, notifications and other
assurances reasonably required by the Lender in
connection with the Loan.
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ARTICLE V
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees with the Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on the
Note, or any other expense or amount payable hereunder shall be unpaid, unless
the Lender shall otherwise consent in writing, it shall, and it shall cause each
of its Subsidiaries to:
SECTION 5.01 EXISTENCE. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and qualify and remain qualified in each jurisdiction where
qualification is necessary or desirable in view of its business operations or
ownership of its properties, except where the failure to so qualify would not
reasonably be likely to have a Material Adverse Effect.
SECTION 5.02 BUSINESSES AND PROPERTIES; COMPLIANCE WITH LAWS. At
all times, maintain and operate its business in substantially the manner in
which it is presently conducted and operated; comply in all material respects
with all laws and regulations applicable to the operation of such business,
including all Environmental Laws, whether now in effect or hereafter enacted and
with all other applicable laws and regulations; take all action which may be
reasonably required to obtain, preserve, renew and extend all franchises,
registrations, licenses, permits and other authorizations which may be material
to the operation of such business; and at all times maintain, preserve and
protect all property material to the conduct of such business and keep its
property in good repair, working order and condition (ordinary wear and tear
excepted) and from time to time make, or cause to be made, all reasonably
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times.
SECTION 5.03 INSURANCE. Maintain insurance (with financially sound
and responsible insurance carriers), to such extent and against such risks, loss
or damage to, or liability in connection with, its property, business, persons
and such other contingencies, as is customary with companies of established
reputations similarly situated and in the same or similar business.
SECTION 5.04 OBLIGATIONS AND TAXES. Pay and discharge promptly
when due all Indebtedness, and taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of its
property before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise, which, if unpaid,
might give rise to liens or charges upon such properties or any part thereof;
provided, however, that such Borrower shall not be required to pay and discharge
or to cause to be paid and discharged any such tax, assessment, charge, levy or
claim so long as the validity or amount thereof shall be contested in good faith
by appropriate proceedings and such Borrower shall have set aside on its books
adequate reserves with respect thereto.
SECTION 5.05 FINANCIAL STATEMENTS; REPORTS. Furnish (or cause to be
furnished) to the Lender:
(a) within ninety (90) days after the end of each fiscal
year of such Borrower, the audited, consolidated and
consolidating balance sheets and statements of
income, retained earnings, and cash flows, together
with supporting schedules (which shall include, upon
the reasonable request of the Lender with respect to
matters which it desires to review, the working
papers with respect to such Borrower's financial
statements) of such Borrower, all in reasonable
detail and accompanied by an unqualified opinion
thereon by KPMG Peat Marwick or such other firm or
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independent certified public accountants of
recognized standing selected by such Borrower and
reasonably acceptable to the Lender;
(b) as soon as available, but in any event not later than
forty-five (45) days after the end of each of the first
three (3) quarterly periods of each fiscal year of
such Borrower, the management prepared unaudited,
consolidated and consolidating financial statements of
such Borrower, including a balance sheet of such
Borrower as at the end of such fiscal quarter and
related unaudited statements of income, retained
earnings, and cash flows, all for the period from
the beginning of such fiscal year to the end of such
fiscal quarter, setting forth in each case
corresponding figures for the like period of the
preceding fiscal year; all in reasonable detail,
prepared in accordance with generally accepted
accounting principles applied on a basis consistently
maintained throughout the period involved and with
prior periods, subject to normal year-end audit
adjustments, and certified by a Financial Officer of
such Borrower;
(c) concurrently with the delivery of the items referred
to in clauses (a) and (b) above, a certificate of the
Financial Officer of such Borrower (i) stating that,
to the best of his or her knowledge, no condition or
event which would constitute a Default or Event of
Default has occurred and is continuing, or if such a
condition or event has occurred, the certificate
shall specifically state such condition or event, and
(ii) demonstrating compliance, as of the dates of the
financial statements being furnished at such time,
with the covenant set forth in SECTION 5.11 hereof;
(d) promptly after the same are sent or otherwise
publicly available, copies of all proxy statements,
financial statements and reports which such Borrower
sends to its stockholders, and promptly after the
same are filed, copies of all regular, periodic and
special reports (including reports on Forms 10-K,
10-Q and 8-K), and all registration statements which
such Borrower files with the Securities and Exchange
Commission or any governmental authority which may be
substituted therefore, or with any national
securities exchange; and
(e) promptly, from time to time, such other information
regarding the operations, business, affairs, and
financial condition of such Borrower and any of its
Subsidiaries as the Lender may reasonably request.
All financial statements required to be furnished to the Lender under this
SECTION 5.05 shall be prepared in accordance with generally accepted accounting
principles applied on a basis consistent with the accounting practices of the
Borrowers reflected in its financial statements referred to in SECTION 3.05
hereof, or to the extent such treatment has changed, with a reconciliation
thereof.
SECTION 5.06 LITIGATION AND OTHER NOTICES. Give the Lender prompt
written notice of the following:
(a) ORDERS; INJUNCTIONS. The issuance by any court or
governmental agency or authority of any injunction,
order, decision or other restraint prohibiting, or
having the effect of prohibiting, the making of the
Loan or the initiation of any litigation or similar
proceeding seeking any such injunction, order or
other restraint.
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(b) LITIGATION. The filing or commencement of any action,
suit or proceeding against such Borrower or its
Subsidiaries whether at law or in equity or by or
before any court or any federal, state, municipal or
other governmental agency or authority and which, if
adversely determined against such Borrower or its
Subsidiaries, could have a Material Adverse Effect.
(c) ENVIRONMENTAL MATTERS. Any violation by such Borrower
or its Subsidiaries of any Environmental Law which
could have a Material Adverse Effect or which, to
such Borrower's knowledge, is the subject of an
investigation or enforcement action by any
governmental authority or other third party.
(e) DEFAULT. Any Default or Event of Default, specifying
the nature and extent thereof and the action (if any)
which is proposed to be taken with respect thereto.
(f) MATERIAL ADVERSE EFFECT. Any development in the
business or affairs of such Borrower or its
Subsidiaries which could have a Material Adverse
Effect.
SECTION 5.07 ERISA. Comply with the applicable provisions of ERISA
and the provisions of the Internal Revenue Code of 1986 relating thereto, except
where failure to so comply is not reasonably likely to result in a Material
Adverse Effect, and: (a) furnish to the Lender as soon as possible, and in any
event within 30 days after such Borrower knows or has reason to know thereof,
notice of: (i) the establishment by such Borrower or any ERISA Affiliate of any
Pension Plan; (ii) the commencement by such Borrower of contributions to a
Multiemployer Plan; (iii) any failure by such Borrower or any ERISA Affiliate to
make contributions required by Section 302 of ERISA (whether or not such
requirement is waived pursuant to Section 303 of ERISA); and (iv) the occurrence
of any Reportable Event with respect to any Pension Plan for which the reporting
requirement is not waived, together with a statement of a Financial Officer of
such Borrower setting forth details as to such Reportable Event and the action
which such Borrower proposes to take with respect thereto, together with a copy
of the notice of such Reportable Event given to the Pension Benefit Guaranty
Corporation if any notice is required to be so given; (b) promptly after receipt
thereof, a copy of any notice such Borrower or any Subsidiary may receive from
the Pension Benefit Guaranty Corporation relating to its intention to terminate
any Pension Plan, or to appoint a trustee to administer any Pension Plan; and
(c) promptly after receipt thereof, a copy of any notice of withdrawal liability
from any Multiemployer Plan.
SECTION 5.08 MAINTAINING RECORDS; ACCESS AND INSPECTIONS. Maintain
financial records in accordance with generally accepted practices and, upon
reasonable notice, at all reasonable times and as often as the Lender may
reasonably request, permit any authorized representative designated by the
Lender to visit and inspect the properties and financial records of such
Borrower and its Subsidiaries and make extracts from such financial records at
such Borrower's expense, and permit any authorized representative designated by
the Lender to discuss the affairs, finances and condition of such Borrower and
its Subsidiaries with such Borrower's chief financial officer and such other
officers as such Borrower shall deem appropriate and such Borrower's independent
public accountants, and such Borrower will use its best efforts to make such
officers and accountants promptly available for such discussions.
SECTION 5.09 USE OF PROCEEDS. Use the proceeds of the Loan only for
working capital and general corporate purposes.
SECTION 5.10 RIGHTS OFFERING COVENANTS. As promptly as practicable
after the Closing Date, the Borrowers and TMN shall commence and diligently
pursue to completion each of the following:
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(a) Prepare and file with the Securities and Exchange
Commission (i) a proxy statement containing the Proxy
Proposals, and (ii) the Registration Statement, and
use their best efforts to cause the Registration
Statement to be declared effective as soon after
filing such statement as practicable and to remain
effective through the Rights Offering Closing Date
and to cover the issuance and sale of the Preferred
Stock pursuant to the Rights Offering;
(b) take all necessary action in accordance with
applicable law and TMN's Certificate of Incorporation
and By-laws to (i) amend TMN's Certificate of
Incorporation and By-laws to the extent necessary to
increase the number of authorized shares of preferred
stock and Common Stock, and to make such other
necessary amendments, in order to effectuate the
Transactions, (ii) mail to TMN's stockholders the
proxy statement referred to in the defined term
"Rights Offering Event", (iii) recommend to TMN's
stockholders a vote in favor of each Proxy Proposal,
(iv) duly convene a meeting of TMN's stockholders for
the purpose of voting on the Proxy Proposals, and
(v) file with the Secretary of State of Delaware the
Preferred Stock Designation;
(c) use their best efforts to (i) ensure that the
Preferred Stock (and the Common Stock into which it is
convertible) and the Common Stock underlying the
Rights Offering Warrant are listed on The New York
Stock Exchange, and (ii) effectuate the Transactions;
and
(d) deliver to Lender, on or before the date on which the
Registration Statement is declared effective by the
Securities and Exchange Commission, a fully executed
Standby Purchase Agreement.
SECTION 5.11 NET WORTH. The Borrowers and their consolidated
Subsidiaries shall at all times have and maintain an aggregate net worth of at
least $20,000,000.00.
ARTICLE VI
NEGATIVE COVENANTS
Each Borrower covenants and agrees with the Lender that, so long as
this Agreement shall remain in effect or the principal of or interest on the
Note, or any other expense or amount payable hereunder shall be unpaid, unless
the Lender shall otherwise consent in writing, it will not, and it will not
permit any of its Subsidiaries to, either directly or indirectly:
SECTION 6.01 INDEBTEDNESS. Incur, create, assume or permit to
exist any Indebtedness, except: (a) Indebtedness incurred pursuant to this
Agreement and the other Loan Documents; (b) Indebtedness incurred in the
ordinary course of business with respect to customer deposits, trade payables
and other unsecured current liabilities not the result of borrowing and not
represented by any note or other evidence of Indebtedness; (c) Indebtedness
existing on the date hereof and listed on SCHEDULE 6.01 attached hereto; (d)
Indebtedness secured by the Liens permitted under SECTION 6.02(E) below; (e)
Indebtedness incurred pursuant to the Chase Bridge Loan Facility; (f)
Indebtedness incurred pursuant to interest rate protection agreements entered
into in the ordinary course of business and not for speculation; (g) a
securitized receivables purchase transaction (referred to as the PARCO Facility
under the Chase Bridge Loan Facility documents) entered into by the Borrowers
and a special purpose subsidiary of TMN secured by rights to receive and related
assets, which obligations related thereto are not recourse to any of the
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Borrowers, (h) unsecured Indebtedness of the Borrowers incurred in connection
with the acquisition of franchises of a Borrower in an aggregate principal
amount not exceeding $8,000,000 at any time outstanding, provided, that the
terms of such Indebtedness and the related acquisitions of such franchises must
conform to the following conditions: (i) any such unsecured Indebtedness shall
be expressly subordinate to all of the Borrowers' and their Subsidiaries'
obligations under the Chase Bridge Loan Facility and the Obligations, (ii) such
unsecured Indebtedness shall not require the payment of any interest or other
similar charges to any creditor of the Borrowers or their Subsidiaries prior to
the repayment in full of all of the Obligations hereunder, (iii) such unsecured
Indebtedness shall have a maturity equal to or greater than four (4) years, (iv)
the aggregate of the purchase prices for all such acquisitions of franchises
shall not exceed $12,000,000, and (v) any such acquisition of a franchise by the
Borrowers or their Subsidiaries and the related incurrence of Indebtedness will
be subject to the prior written approval of Lender (which approval shall not be
unreasonably withheld); and (i) additional unsecured Indebtedness in an
aggregate principal amount not exceeding $500,000.00 at any time outstanding.
SECTION 6.02 NEGATIVE PLEDGE. Incur, create, assume or permit to
exist any Lien on any property or assets now owned or hereafter acquired by it,
including inventory, fixed assets and intangible assets, or on any income or
rights in respect of any thereof, except: (a) deposits or pledges to secure
payment of workers' compensation, unemployment insurance, old age pensions, or
other social security laws, or to secure statutory obligations; (b) Liens for
property taxes, assessments or other governmental charges or taxes due and
payable, the validity or amount of which in good faith is being contested or
litigated; (c) mechanics', carriers', workmen's, repairmen's, or other like
liens arising in the ordinary course of business securing obligations which are
not overdue for a period of sixty (60) days or more or which are in good faith
being contested or litigated; (d) existing Liens reflected in the financial
statements referred to in SECTION 3.05 hereof, or additional existing Liens
listed in SCHEDULE 6.02 attached hereto and made a part hereof; (e) Liens
granted to the Person financing the acquisition of property, plant or equipment
or other property acquired by such Borrower or its Subsidiaries, including Liens
related to capitalized lease obligations if (i) limited to the particular assets
acquired, (ii) the debt secured by the Lien does not exceed the acquisition cost
of a particular asset for which the Lien is granted, (iii) such transaction does
not otherwise violate this Agreement, and (iv) the aggregate amount of all
Indebtedness secured by Liens permitted under this clause (e) does not exceed
$250,000 at any one time outstanding; (f) Liens arising out of attachments,
judgments or awards as to which an appeal or other appropriate proceedings for
contest or review are timely commenced (and as to which foreclosure and other
enforcement proceedings shall not have been commenced unless fully bonded or
otherwise effectively stayed) and as to which appropriate reserves have been
established in accordance with generally accepted accounting principles; (g)
possessory Liens which (i) occur in the ordinary course of business, (ii) secure
normal trade debt which is not yet due and payable, and (iii) do not secure
Indebtedness for borrowed money; (h) Liens arising by virtue of any statutory or
common law provision relating to banker's liens, rights of setoff or similar
rights with respect to deposit accounts of such Borrower or any of its
Subsidiaries; (i) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar encumbrances on real property which do
not materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of business of such Borrower and its
Subsidiaries; (j) licenses, leases and subleases granted by a Borrower in the
ordinary course of its business; (k) any Lien existing on any asset prior to a
Borrower's acquisition thereof; provided, that (i) such Lien is not created in
contemplation of or in connection with such acquisition, (ii) such Lien shall
not apply to any other assets of any Borrower and (iii) such Lien shall secure
only those obligations which it secures on the date of such acquisition; (l)
Liens securing the Chase Bridge Loan Facility; (m) Liens securing the Revolving
Securitization receivables purchase transaction identified on SCHEDULE 6.01; and
(n) Liens securing the securitized receivables purchase transaction permitted
under SECTION 6.01(G) above.
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SECTION 6.03 SALE OF ASSETS. Sell, lease, assign, transfer or
otherwise dispose of all or substantially all of its assets or properties,
including the equity interest in any Subsidiary, except: (a) sales of assets
necessary to consummate the Revolving Securitization receivables purchase
transaction identified on SCHEDULE 6.01 and the securities receivable purchase
transaction permitted under SECTION 6.01(G) above and (b) sales, leases,
assignments, transfers or other dispositions of assets by a Borrower to another
Borrower or by a Subsidiary of a Borrower to a Borrower.
SECTION 6.04 LIQUIDATIONS, CONSOLIDATIONS, MERGERS OR PURCHASES OF
ASSETS. Liquidate, dissolve (whether voluntarily or involuntarily), merge into
or consolidate or combine with any other Person, or purchase, lease or otherwise
acquire (in one transaction or a series of related transactions) all or
substantially all of the property or assets of any Person (other than purchases
or other acquisitions of inventory, materials, leases, property and equipment in
the ordinary course of business), except: (a) a Borrower may merge into another
Borrower so long as TMN is the survivor if TMN is involved in the merger, (b) a
Subsidiary of a Borrower may merge into that Borrower, so long as the Borrower
is the surviving entity, (c) a Subsidiary of a Borrower may be dissolved if the
Board of Directors of the applicable Borrower determines such dissolution is in
the best efforts of the applicable Borrower and such dissolution is not
reasonably likely to result in a Material Adverse Effect, and (d) for
acquisitions of franchises of Borrowers pursuant to the terms and subject to the
limitations set forth in SECTION 6.01(H) above.
SECTION 6.05 INVESTMENTS, LOANS AND ADVANCES. Make or suffer to
exist any Investments except for (a) Permitted Investments, and (b) Investments
permitted under or made in compliance with the Revolving Securitization
receivables purchase transactions identified on SCHEDULE 6.01 or permitted under
SECTION 6.01(G) with excess funds received in connection therewith.
SECTION 6.06 RESTRICTED PAYMENTS. Declare or pay, directly or
indirectly, any dividends or make any other distribution, whether in cash,
property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any partnership interests or capital accounts
or any shares of capital stock, warrants, options or any of its other
securities, or directly or indirectly redeem, purchase, retire or otherwise
acquire for a consideration, any partnership interests or capital accounts or
any shares of any class of capital stock, warrants, options or any of its other
securities, or set apart any sum for the aforesaid purposes (collectively
"RESTRICTED PAYMENTS"), except that (a) a Borrower's Subsidiaries may make
Restricted Payments to such Borrower and to the Borrowers' other Subsidiaries,
(b) a Borrower may make Restricted Payments to another Borrower, (c) a Borrower
may declare and pay dividends with respect to its capital stock payable solely
in shares of its common stock, (d) a Borrower may make Restricted Payments
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of that Borrower consistent with past practice, and (e)
TMN may make Restricted Payments required, contemplated, or permitted by the
terms of the Preferred Stock Designation, the Rights Offering Warrant and the
Existing Warrant.
SECTION 6.07 TRANSACTIONS WITH AFFILIATES. Sell or transfer any
assets to, or purchase or acquire any assets of, or otherwise engage in any
material transaction with, or permit any Affiliate to sell or transfer assets
to, or purchase or acquire any assets of, or otherwise engage in any other
material transaction with any other Affiliate, except, in each case, in the
ordinary course of such Borrower's or such Subsidiaries business and upon fair
and reasonable terms no less favorable to such Borrower or Subsidiary than would
be obtained in a comparable arm's-length transaction with a Person other than an
Affiliate, provided that this SECTION 6.07 shall not apply to (a) the
Transactions, (b) the Rights Offering (including the purchase, redemption or
conversion of the Preferred Stock issued pursuant thereto, and the payment of
distributions on such Preferred Stock), (c) the Revolving Securitization
receivables purchase transactions identified on SCHEDULE 6.01 and permitted
under SECTION 6.01(G) above, (d) payment of the Management Fee, (e) payment of
the Transaction Fee, or (f) the exercise of rights under the Existing Warrant.
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SECTION 6.08 LINE OF BUSINESS. Engage, directly or indirectly, in
any business other than the businesses in which it is engaged on the Closing
Date and businesses reasonably related thereto.
SECTION 6.09 CERTAIN DOCUMENTS. Except as contemplated by the
Proxy Proposals, amend, modify, terminate or waive: any material term or
provision of its certificate or articles of incorporation or by-laws, or other
organizational or investment documents or agreements, without in each case, the
prior written consent of the Lender, which shall not be unreasonably withheld or
delayed, provided that this SECTION 6.09 shall not apply to any such amendments,
modification and waivers necessary to effectuate the Transactions.
ARTICLE VII
DEFAULTS
SECTION 7.01 EVENTS OF DEFAULT. Each of the following events
shall constitute events of default ("EVENTS OF DEFAULT") hereunder:
(a) any representation or warranty made by or on behalf
of any Borrower in connection with this Agreement or
the other Loan Documents or any Transaction shall
prove to have been false or misleading in any
material respect when made, and to the extent capable
of being remedied, the condition giving rise to such
representation or warranty being incorrect or untrue
shall continue unremedied for thirty (30) days after
written notice thereof from the Lender to Borrowers;
(b) default shall be made in the payment of any principal
on the Loan when and as the same shall become due and
payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest
on the Loan or any other amount (other than an amount
referred to in clause (b) above) due under this
Agreement or the other Loan Documents, within five
(5) Business Days after the same shall become due and
payable;
(d) default shall be made in the due observance of any
covenant, condition or agreement on the part of the
Borrower contained in SECTION 5.01, 5.05, 5.10 OR
5.11 or ARTICLE VI;
(e) default shall be made in the due observance or
performance of any other covenant, condition or
agreement to be observed or performed by the Borrower
pursuant to the terms of this Agreement or any other
Loan Document (other than those covered in clauses
(b) - (d) above) and such default shall continue
unremedied for a period of thirty (30) days after the
earlier of: (i) written notice from the Lender of
such default; or (ii) actual knowledge by a Borrower
of such default;
(f) any Borrower or any of any Borrower's Subsidiaries
shall: (i) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the
United States Code or any other federal or state
bankruptcy, insolvency or similar law; (ii) consent to
the institution of, or fail to controvert in a
timely and appropriate manner, any such proceeding
or the filing of any such petition; (iii) apply
for or consent to the appointment of a receiver,
trustee, custodian,
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sequestrator or similar official for such Borrower or
such Subsidiary or for a substantial part of their
respective properties or assets; (iv) file an answer
admitting the material allegations of a petition filed
against it in any such proceeding; (v) make a general
assignment for the benefit of creditors; (vi) become
unable generally, or admit in writing its inability, to
pay its debts as they become due; (vii) suspend the
transaction of all or a substantial portion of its usual
business; or (viii) take corporate action for the
purpose of effecting any of the foregoing;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of
competent jurisdiction seeking: (i) relief in respect of
any Borrower or any of any Borrower's Subsidiaries of a
substantial part of any of their respective properties
or assets, under Title 11 of the United States Code or
any other federal or state bankruptcy, insolvency or
similar law; (ii) the appointment of a receiver,
trustee, custodian, sequestrator or similar official for
any Borrower or any of any Borrower's Subsidiaries or
for a substantial part of their respective properties;
or (iii) the winding-up or liquidation of any Borrower
or any of any Borrower's Subsidiaries; and such
proceeding or petition shall continue undismissed for
sixty (60) days or an order or decree approving or
ordering any of the foregoing shall continue unstayed
and in effect for sixty (60) days;
(h) a default shall be made with respect to any Indebtedness
of any Borrower or any of any Borrower's Subsidiaries,
if the effect of any such default shall be to
accelerate, or to permit the holder or obligee of any
such Indebtedness (or any trustee or agent on behalf of
such holder or obligee) to accelerate (with or without
notice or lapse of time or both) the maturity of the
Indebtedness in an aggregate amount of $1,000,000 or
more; or any payment of principal or interest,
regardless of amount, on any Indebtedness of any
Borrower or any of any Borrower's Subsidiaries in an
aggregate principal amount of $1,000,000 or more, shall
not be paid when due, whether at maturity, by
acceleration or otherwise (after giving effect to any
applicable cure period specified in the instrument
evidencing or governing such Indebtedness);
(i) a Reportable Event shall have occurred with respect to
any Pension Plan or a notice of intent to terminate a
Pension Plan shall have been furnished to the affected
parties (as provided in Section 4041(c)(1) of ERISA); or
the Pension Benefit Guaranty Corporation shall have
instituted proceedings to terminate any Pension Plan, or
a trustee shall have been appointed by a United States
District Court to administer any Pension Plan, if in any
such case such Pension Plan then has an amount of
unfunded benefit liabilities (within the meaning of
Section 4001(a)(18) of ERISA) or any Borrower or any
ERISA Affiliate incurs withdrawal liability which could
reasonably be expected to result in a Material Adverse
Effect;
(j) a final judgment or judgments for the payment of money
in excess of $2,000,000 in the aggregate shall be
rendered by a court or other tribunal against any
Borrower or Borrowers or any of their Subsidiaries and
shall remain undischarged for a period of thirty (30)
consecutive days during which execution of such judgment
shall not have been stayed effectively;
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(k) any Loan Document shall cease to be in full force and
effect, enforceable in accordance with its terms, or
any Borrower shall assert the invalidity of any such
instrument;
(l) there occurs a default or event of default by any
Borrower under or in connection with the Chase Bridge
Loan Facility, the Investment Agreement Amendment or
the Standby Purchase Agreement (or any document
executed by any Borrower pursuant to the Standby
Purchase Agreement), which remains uncured after the
expiration of any applicable cure period;
(m) there shall occur a Rights Offering Default Event;
and
(n) there shall occur a Purchase Termination Event or
Potential Purchase Termination Event under or in
connection with the existing Revolving Securitization
receivables purchase transaction identified on
SCHEDULE 6.01, or a Termination Event or Potential
Termination Event under or in connection with the
securitized receivables purchase transaction
permitted under SECTION 6.01(G) or the Chase Bridge
Loan Facility.
SECTION 7.02 REMEDIES UPON DEFAULT. Upon the occurrence of any
Event of Default (other than an event described in SECTION 7.01 (F) or (G)), and
at any time thereafter during the continuance of such event, the Lender may, by
written or telegraphic notice to the Borrowers, declare the Note to be forthwith
due and payable, whereupon the principal of the Note, together with accrued
interest thereon and all other liabilities of the Borrowers accrued hereunder
and under the other Loan Documents, shall become forthwith due and payable both
as to principal and interest, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrowers,
anything contained herein or in any Note to the contrary notwithstanding. Upon
the occurrence of any event described in SECTION 7.01 (F) OR (G), the principal
amount outstanding under the Note, together with all accrued interest thereon
and all other liabilities of the Borrowers accrued hereunder and under the other
Loan Documents, shall automatically become due and payable, both as to principal
and interest, without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrowers, anything contained
herein or in the Note to the contrary notwithstanding. Without limitation to the
foregoing, upon the occurrence of an Event of Default, Lender shall be entitled
to all rights and remedies available to it hereunder, under the other Loan
Documents, under the Standby Purchase Agreement, under the Investment Agreement
Amendment, at law or in equity. Notwithstanding anything to the contrary
contained above in this SECTION 7.02, and without limitation to the Lender's
ability to take the actions set forth above in this SECTION 7.02, upon the
occurrence of any Event of Default, at any time thereafter during the
continuance of such event, in addition to any other rights to designate
directors of Lender under Article IV of the Investment Agreement Amendment
(other than Section 4.7 thereof), Samstock shall have the right to designate
such additional number of directors (which individuals may be designated in
Samstock's sole discretion without obtaining the acceptance of approval of the
Disinterested Directors (as defined in the Investment Agreement Amendment) or
any other person or entity), and TMN shall take all necessary or appropriate
action to increase the number of directors constituting TMN's Board of Directors
and/or obtain resignations of individuals then serving as directors (other than
directors designated by Samstock), and assist in the nomination and election as
directors of such additional designees of Samstock, such that, after taking all
of the same into account, the number of individuals designated by Samstock under
this SECTION 7.02 and Article IV of the Investment Amendment serving as
directors of TMN shall constitute at least a majority of the total number of
directors of TMN, effective as soon as practicable, but in any event no later
than five (5) Business Days after Lender notifies TMN in writing of its intent
to exercise the right provided herein and the identity of the individuals
Samstock desires to so designate (and, if applicable, the
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individuals Samstock desires to resign). With respect to the foregoing, the
Borrowers and TMN acknowledge and agree that (I) the provisions of this SECTION
7.02 are reasonable and necessary to protect the proper and legitimate interests
of the Lender, and (II) the Lender would be irreparably damaged in the event any
of the provisions of this SECTION 7.02 were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the Lender shall be entitled to preliminary and permanent injunctive relief to
prevent breaches of the provisions of this SECTION 7.02 by the Borrowers or TMN
without the necessity of proving actual damages or of posting any bond, and to
enforce specifically the terms and provisions hereof, which rights shall be
cumulative and in addition to any other remedy to which the Lender may be
entitled hereunder, under any other Loan Documents or at law or in equity.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01NOTICES. (a) Notices and other communications
provided for herein and in the other Loan Documents shall be in writing and
shall be delivered personally or mailed, by certified or registered mail,
postage prepaid (or in the case of facsimile communication, delivered by telex,
graphic scanning or other facsimile communications equipment) or delivered by
overnight courier addressed:
IF TO THE LENDER:
GAMI Investments, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY TO:
Xxxxxxxxx & Xxxxxxxxxxx, P.C.
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
IF TO THE BORROWERS:
Transmedia Network, Inc.
Transmedia Restaurant Company, Inc.
Transmedia Service Company, Inc.
TMNI International Incorporated
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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WITH A COPY TO:
Xxxxxx, Xxxxx & Bockius, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) 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, in each case addressed to such party as provided
in this SECTION 8.01 or in accordance with the latest unrevoked direction from
such party.
SECTION 8.02 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by the Borrowers herein and in the other
Loan Documents shall be considered to have been relied upon by the Lender and
shall survive the making by the Lender of the Loan and the execution and
delivery to the Lender of the Note evidencing the Loan and shall continue in
full force and effect until the Note and all accrued interest thereon and all
other Obligations then due and payable have been fully paid and performed and
the Lender has no further commitment to lend hereunder.
SECTION 8.03 SUCCESSORS AND ASSIGNS. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of the Borrowers or the Lender that are contained
in this Agreement shall bind and inure to the benefit of their respective
successors and assigns. The Borrowers may not assign or transfer any of their
rights or obligations hereunder without the prior written consent of the Lender.
The Lender shall have the right to make assignments of the Loan to an Affiliate
of the Lender.
SECTION 8.04 EXPENSES OF THE LENDER; INDEMNITY. (a) Each Borrowers
agrees to pay (on the Closing Date) all reasonable costs and expenses incurred
by the Lender (including the reasonable fees and expenses of the Lender's
counsel) in connection with the preparation and administration of this Agreement
and the other Loan Documents, and with any amendments, modifications or waivers
of the provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or incurred by the Lender (including the
reasonable fees and expenses of the Lender's counsel) in connection with the
enforcement of its rights and remedies in connection with this Agreement or the
other Loan Documents. Each Borrower further agrees that it shall indemnify the
Lender from and hold it harmless against any documentary taxes, assessments or
charges made by any governmental authority by reason of the execution and
delivery of this Agreement or any of the other Loan Documents.
(b) Each Borrower agrees to indemnify the Lender and its
Affiliates, directors, officers, employees and agents against, and to hold the
Lender and such Persons harmless from, any and all losses, claims, damages,
liabilities, penalties, actions, judgments, investigations, proceedings,
litigation, suits, costs, and related expenses (collectively, "INDEMNIFIED
LIABILITIES"), including legal fees and expenses, incurred by or asserted
against the Lender or any such Persons arising out of, in any way connected
with, or as a result of: (i) this Agreement or the other Loan Documents; (ii)
the performance by the parties hereto and thereto of their respective rights and
obligations hereunder and thereunder; (iii) consummation of the Transactions;
(iv) the environmental condition or operation of such Borrower's and its
Subsidiaries' properties, including the release, presence, spillage, disposal,
discharge, transporting, emission or leakage of hazardous materials, which is
at, in, on, under, about, from or affecting such properties, including any
damage or injury resulting from any such hazardous materials to or affecting
such Borrower's or its Subsidiaries' properties or the soil, water, air,
vegetation, buildings, personal property, persons or animals
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located on such properties or on any other property or otherwise; or (v) any
violation of any Environmental Laws. The foregoing indemnity includes the cost
of remedial action to the extent required to cause such Borrower's or it's
Subsidiaries' properties to be in compliance with all applicable Environmental
Laws. Notwithstanding the foregoing, this indemnity shall not apply to any such
Indemnified Liabilities arising solely and directly from the gross negligence or
willful misconduct of the Lender.
(c) The provisions of this SECTION 8.04 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement or the other Loan Documents, the consummation of the Transactions
contemplated hereby, the repayment of any of the Loan, the invalidity or
unenforceability of any term or provision of this Agreement or any of the other
Loan Documents, or any investigation made by or on behalf of the Lender. All
amounts due under this SECTION 8.04 shall be payable within thirty (30) days
after written demand in reasonable detail therefor.
SECTION 8.05 RIGHT OF SETOFF. The Lender is hereby authorized at
any time and from time to time after the occurrence and during the continuance
of an Event of Default to setoff and apply any and all indebtedness and other
obligations at any time owing by the Lender or its Affiliates to or for the
credit or the account of any Borrower or any Borrower's Affiliates to amounts
then due and payable under this Agreement and the other Loan Documents,
irrespective of whether or not the Lender shall have made any demand under this
Agreement or any of the other Loan Documents. The rights of the Lender under
this SECTION 8.05 are in addition to other rights and remedies (including other
rights of setoff) which the Lender may have under applicable law.
SECTION 8.06 APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THE RIGHTS, DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF THE
PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK. THE PARTIES HERETO INTEND
THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW
SHALL APPLY TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 8.07 WAIVERS. No failure or delay of the Lender in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lender hereunder and under the
other Loan Documents, and under or in connection with the Rights Offering
Warrant, the Rights Offering, and the Transactions, are cumulative and not
exclusive of any rights or remedies which it would otherwise have. No waiver of
any provision of this Agreement, the Note or the other Loan Documents, or
consent to any departure by any Borrower therefrom shall in any event be
effective unless the same shall be authorized as provided in SECTION 8.08, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice or demand on any Borrower in any case
shall entitle such Borrower or any other Borrower to any other or further notice
or demand in similar or other circumstances.
SECTION 8.08 AMENDMENTS. Neither this Agreement nor any other Loan
Document, nor any provision hereof or thereof, may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Borrowers and the Lender.
SECTION 8.09 SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement, the Note or the other Loan Documents
should be held invalid, illegal or unenforceable
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in any respect, the validity, legality and enforceability of the remaining
provisions contained herein or therein shall not in any way be affected or
impaired thereby.
SECTION 8.10 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which when taken together shall constitute but one contract.
SECTION 8.11 HEADINGS. Article and Section headings and the Index
used herein are for convenience of reference only and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Agreement.
SECTION 8.12 CONSENT TO JURISDICTION. Each Borrower hereby
irrevocably agrees that any suit, action, proceeding or claim against it arising
out of or in any way relating to this Agreement or any of the other Loan
Documents, or any judgment entered by any court in respect thereof, may be
brought or enforced in the state or federal courts located in Xxxx County,
Illinois or New York County, New York, and each Borrower consents, for itself
and in respect to its property, to the non-exclusive jurisdiction of these
courts, and each Borrower hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the venue
of any proceeding brought in Xxxx County, Illinois, or New York County, New
York, and further irrevocably waives any claims that any such proceeding has
been brought in an inconvenient forum.
SECTION 8.13 WAIVER OF JURY TRIAL. EACH BORROWER HEREBY EXPRESSLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHT, POWER, OR REMEDY UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR UNDER OR IN CONNECTION WITH ANY AMENDMENT,
INSTRUMENT, DOCUMENT, OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, AND AGREES THAT ANY SUCH ACTION
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE TERMS AND PROVISIONS OF
THIS SECTION 8.13 CONSTITUTE A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO
THIS AGREEMENT.
SECTION 8.14 INTEREST LIMITATION. Anything in this Agreement, the
Note or any other Loan Document to the contrary notwithstanding, the Borrowers
shall never be required to pay interest at a rate in excess of the highest
lawful rate, and if the effective rate of interest that would otherwise be
payable under this Agreement, the Note or any other Loan Document would exceed
the highest lawful rate, or if any holder of the Note shall receive monies that
are deemed to constitute interest which would increase the effective rate of
interest payable under this Agreement, the Note or any other Loan Document to a
rate in excess of the highest lawful rate, then: (a) the amount of interest that
would otherwise be payable under this Agreement, the Note and the other Loan
Documents shall be reduced to the amount allowed under applicable law; and (b)
any interest paid in excess of the highest lawful rate shall, at the option of
the holders of the Note, be either refunded to the payor or credited on the
principal of the Note. If at any time the effective rate of interest which would
otherwise be payable under this Agreement, the Note, or any other Loan Document
exceeds the highest lawful rate, the rate of interest to accrue under this
Agreement, the Note and the other Loan Documents shall be limited to the highest
lawful rate, but any subsequent reductions in such interest rate shall not
become effective to reduce such interest rate below the highest lawful rate
until the total amount of interest accrued hereunder and under the Note and the
other Loan Documents equals the total amount of interest that would have accrued
if interest had been computed without giving effect to this SECTION 8.14.
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SECTION 8.15 LOAN DOCUMENTS. In the event of any conflict or
inconsistency between the terms and provisions of this Agreement and those of
any other Loan Document, the terms and provisions of this Agreement shall govern
and control to the extent of such conflict or inconsistency.
SECTION 8.16 JOINT AND SEVERAL LIABILITY. The obligations and
liability of the Borrowers under this Agreement and the other Loan Documents
shall be joint and several.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all as of the day and year
first above written.
TRANSMEDIA NETWORK, INC., a Delaware corporation
Attest: . By:
----------------------------------- --------------------------------------------
Its: Its:
----------------------------------- --------------------------------------------
TRANSMEDIA RESTAURANT COMPANY, INC., a Delaware
corporation
Attest: By:
----------------------------------- --------------------------------------------
Its: Its:
----------------------------------- --------------------------------------------
TRANSMEDIA SERVICE COMPANY, INC., a Delaware
corporation
Attest: By:
----------------------------------- --------------------------------------------
Its: Its:
----------------------------------- --------------------------------------------
TMNI INTERNATIONAL INCORPORATED,
a Delaware corporation
Attest: By:
----------------------------------- --------------------------------------------
Its: Its:
----------------------------------- --------------------------------------------
GAMI INVESTMENTS, INC.
By:
--------------------------------------------
Its:
--------------------------------------------
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EXHIBIT A
Form of Promissory Note
A-1
36
EXHIBIT B
Form of Borrowing Request
B-1
37
EXHIBIT C
Form of Opinion of Counsel
C-1
38
EXHIBIT D
Form of Rights Offering Warrant
39
EXHIBIT E
Second Amended and Restated Investment Agreement
40
EXHIBIT F
Form of Standby Purchase Agreement
41
EXHIBIT G
Preferred Stock Designation
42
SCHEDULE 1.01
Existing Investments
[TO BE ATTACHED]
43
SCHEDULE 3.07
Litigation
[TO BE ATTACHED]
44
SCHEDULE 3.10
Burdensome Contracts; Defaults
[TO BE ATTACHED]
45
SCHEDULE 3.06
Subsidiaries
Borrower Subsidiaries
TMN Restaurant
Service
TMNI
TNI Funding Company I, L.L.C.
Restaurant None
Service None
TMNI None
46
SCHEDULE 6.01
Existing Indebtedness
[TO BE ATTACHED]
47
SCHEDULE 6.02
Existing Liens
None.
