Exhibit 10.5
CONFORMED COPY
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CREDIT AGREEMENT
BETWEEN
XXXXXXXXXX.XXX INC.
AND
USA NETWORKS, INC.
DATED AS OF JANUARY 24, 2000
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS........................................................1
1.1 Defined Terms....................................................1
1.2 Other Definitional Provisions....................................8
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS....................................8
2.1 Commitment.......................................................8
2.2 Procedure for Borrowing..........................................8
2.3 Repayment of Loan; Evidence of Indebtedness......................8
2.4 Prepayments......................................................9
2.5 Interest Rates...................................................9
2.6 Computation of Interest.........................................10
2.7 Payments........................................................10
2.8 Taxes...........................................................10
SECTION 3. REPRESENTATIONS AND WARRANTIES....................................11
3.1 Financial Condition.............................................11
3.2 No Change.......................................................11
3.3 Existence; Compliance with Law..................................14
3.4 Power; Authorization; Enforceable Obligations...................15
3.5 No Legal Bar....................................................16
3.6 No Material Litigation..........................................16
3.7 No Default......................................................16
3.8 Intellectual Property...........................................16
3.9 Taxes...........................................................18
3.10 Federal Regulations............................................19
3.11 ERISA..........................................................19
3.12 Investment Company Act; Other Regulations......................21
3.13 Purpose of Loan................................................21
3.14 Environmental Matters..........................................22
SECTION 4. CONDITIONS PRECEDENT..............................................22
4.1 Conditions to Loan..............................................22
SECTION 5. AFFIRMATIVE COVENANTS.............................................24
5.1 Financial Statements............................................25
5.2 Certificates; Other Information.................................25
5.3 Payment of Obligations..........................................26
5.4 Conduct of Business and Maintenance of Existence................26
5.5 Maintenance of Property; Insurance..............................26
5.6 Inspection of Property; Books and Records; Discussions..........26
5.7 Notices.........................................................26
5.8 Environmental Laws..............................................27
5.9 Further Assurances..............................................27
5.10 Additional Collateral..........................................27
PAGE
SECTION 6. NEGATIVE COVENANTS................................................28
6.1 Limitation on Indebtedness......................................28
6.2 Limitation on Liens.............................................28
6.3 Limitation on Fundamental Changes...............................29
6.4 Limitation on Sale of Assets....................................29
6.5 Limitation on Dividends.........................................29
6.6 Limitation on Capital Expenditures..............................29
6.7 Limitation on Investments, Loans and Advances...................29
6.8 Limitation on Transactions with Affiliates......................30
6.9 Limitation on Negative Pledge Clauses...........................30
6.10 Limitation on Lines of Business................................30
SECTION 7. EVENTS OF DEFAULT.................................................30
SECTION 8. MISCELLANEOUS.....................................................33
8.1 Amendments and Waivers..........................................33
8.2 Notices.........................................................33
8.3 No Waiver; Cumulative Remedies..................................33
8.4 Survival of Representations and Warranties......................33
8.5 Payment of Expenses and Taxes...................................34
8.6 Successors and Assigns; Participations and Assignments..........34
8.7 Set-off.........................................................34
8.8 Counterparts....................................................35
8.9 Severability....................................................35
8.10 Integration....................................................35
8.11 GOVERNING LAW..................................................35
8.12 Submission To Jurisdiction; Waivers............................35
8.13 Acknowledgments................................................36
8.14 WAIVERS OF JURY TRIAL..........................................36
8.15 Confidentiality................................................36
Exhibits
A - Form of Note
B - Form of Warrant Agreement
C - Form of Collateral Agreement
D - Form of Closing Certificate
E - Form of Legal Opinions
- ii -
CREDIT AGREEMENT, dated as of January 24, 2000, between XXXXXXXXXX.XXX
INC., a California corporation (the "BORROWER"), and USA NETWORKS, INC., a
Delaware corporation (together with its successors and assigns, the "LENDER").
WHEREAS, the Borrower is willing to borrow and the Lender is willing to
lend a loan up to the amount of $10,000,000 pursuant to the terms set forth
herein.
NOW THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
"AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote 10% or more of the
securities having ordinary voting power for the election of directors
of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
"AGREEMENT": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"BORROWER PERMITS": as defined in Section 3.3(c) hereto.
"BORROWER BENEFIT PLANS": as defined in Section 3.11(a)
hereto.
"BORROWER SEC DOCUMENTS": as defined in Section 3.1 hereto.
"BUSINESS DAY": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.
"CAPITAL STOCK": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"CASH EQUIVALENTS": (a) securities with maturities of six
months or less from the date of acquisition issued or fully guaranteed
or insured by the United States Government or any agency thereof, (b)
certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition and overnight bank
deposits of the Lender or of any commercial bank having capital and
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surplus in excess of $5,000,000,000, (c) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least
A-1 by Standard and Poor's Rating Group ("S&P") or P-1 by Xxxxx'x
Investors Service, Inc. ("MOODY'S"), (e) securities with maturities of
six months or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such
state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may
be) are rated at least AA by S&P or Aa2 by Moody's, (f) securities with
maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition or (g) shares of money
market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this
definition.
"CLOSING DATE": the first date on which the conditions
precedent set forth in subsection 4.1 shall be satisfied and there has
been an initial notice of borrowing.
"CODE": the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL": all assets of the Borrower, now owned or
hereinafter acquired, upon which a Lien is purported to be created by
any Security Document.
"COLLATERAL AGREEMENT": the Collateral Agreement, dated as of
January 24, 2000, made by the Borrower in favor of the Lender
substantially in the form of Exhibit C.
"COMMITMENT": the commitment of the Lender to make the Loan on
the during the Commitment Period.
"COMMITMENT PERIOD": the period from and including the date
hereof to but not including the earliest of (i) the Merger, (ii)
termination of the Merger Agreement or (iii) such earlier date on which
the Commitment shall terminate as provided herein.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"COMPANY DISCLOSURE SCHEDULE": as defined in the Merger
Agreement.
"COMPANY GOVERNMENTAL APPROVALS": as defined in the Merger
Agreement.
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"COMPANY REQUIRED CONSENTS": as defined in the Merger
Agreement.
"CONTRACT": any note, bond, mortgage, indenture, contract,
agreement, commitment, lease, license, permit, franchise, arrangement
or other instrument or obligations whether or not in writing.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of
any security issued by such Person or of any Contract to which such
Person is a party or by which it or any of its property is bound.
"DEFAULT": any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"DOLLARS" and "$": dollars in lawful currency of the United
States of America.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any
time hereafter be in effect.
"EQUITY SECURITIES": as defined in the Merger Agreement.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"EVENT OF DEFAULT": any of the events specified in Section 7,
PROVIDED that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"EXCHANGE ACT": the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"FINANCIAL STATEMENTS": with respect to the Borrower, means
the Borrower's (i) audited balance sheet as of December 31, 1998; (ii)
statement of cash flows and statement of changes in shareholders'
equity for the year ended December 31, 1998; (iii) unaudited balance
sheet as of September 30, 1999; and (iv) unaudited statement of
operations for the three month period ended September 30, 1999, in each
case which were provided by the Borrower to the Lender on or prior to
the date hereof.
"FINANCING LEASE": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.
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"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time.
"GOVERNMENTAL AUTHORITY": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING
PERSON"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "PRIMARY OBLIGATIONS") of
any other third Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain
working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; PROVIDED, HOWEVER, that the
term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person
may be liable are not stated or determinable, in which case the amount
of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as
determined by the Borrower in good faith.
"INDEBTEDNESS": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and not
outstanding for more than 45 days), (b) any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of acceptances issued or
created for the account of such Person, (e) all liabilities secured by
any Lien on any property owned by such Person even though such Person
has not assumed or otherwise become liable for the payment thereof and
(f) all Guarantee Obligations of such Person.
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"INSOLVENCY": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"IP LICENSES": as defined in Section 3.8(i)(B) hereto.
"KNOWLEDGE": with respect to a natural Person, the actual
knowledge of such Person and, with respect to a non-natural Person, the
actual knowledge of such Person's officers and directors (or similar
representatives).
"LIABILITIES": any Indebtedness, liability, claim, loss, or
obligation of any kind, whether accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, absolute, contingent, inchoate or
otherwise.
"LIEN": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"LOAN": the loan made by the Lender in one or more drawings
hereunder during the Commitment Period in an aggregate principal amount
not to exceed $10,000,000.
"LOAN DOCUMENTS": this Agreement, the Note, the Security
Documents and the Warrant Agreement.
"MATERIAL ADVERSE CHANGE": with respect to any Person, a
change, development or effect that, together with all such other
changes, developments or effects, individually or in the aggregate, has
had, or is reasonably likely to have, a Material Adverse Effect on such
Person.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise)
or prospects of the Borrower or (b) the validity or enforceability of
this or any of the other Loan Documents or the rights or remedies of
the Lender hereunder or thereunder.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"MERGER": as defined in the Merger Agreement.
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"MERGER AGREEMENT": Agreement and Plan of Merger, dated as of
January 24, 2000 between the Borrower and USANi Sub LLC, a Delaware
limited liability company and an affiliate of USA Networks, Inc.
"MERGER SUB: as defined in the Merger Agreement.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NET CASH AMOUNT": as defined in the Merger Agreement.
"NEWCO": as defined in the recitals hereto.
"NON-EXCLUDED TAXES": as defined in subsection 2.8.
"NOTE": a promissory note of the Borrower evidencing the Loan
of the Lender, substantially in the form of Exhibit A with appropriate
insertions as to the date and principal amount.
"ORDER": any applicable order, judgment, injunction, writ or
decree.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"PROPOSED INTELLECTUAL PROPERTY AGREEMENTS": as defined in
Section 3.8(i)(D) hereto.
"REGULATION U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. ss. 2615.
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"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"RESPONSIBLE OFFICER": the chief executive officer and the
president of the Borrower or, with respect to financial matters, the
chief financial officer of the Borrower.
"SEC": the Securities and Exchange Commission.
"SECURITIES ACT": the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"SECURITY DOCUMENTS": the collective reference to the
Collateral Agreement and any other security documents hereafter
delivered to the Lender granting a Lien on any asset or assets of any
Person to secure the obligations and liabilities of the Borrower
hereunder and under any of the other Loan Documents or to secure any
guarantee of any such obligations and liabilities.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"SUBSIDIARY": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person.
"SYSTEMS": as defined in Section 3.8(viii) hereto.
"TAX" or "TAXES": as defined in Section 3.9(a) hereto.
"TAX RETURN": as defined in Section 3.9(b) hereto.
"TERMINATION DATE": one year from the Closing Date or such
earlier date upon which the Loan becomes due and payable pursuant to
the terms hereof.
"TRANSACTIONS": as defined in the Merger Agreement.
"WARN": as defined in Section 3.11(l) hereto.
"WARRANT AGREEMENT": as defined in the Merger Agreement.
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"YEAR 2000 COMPLIANT": as defined in Section 3.8(vii) hereto.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in any Note or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in any Note, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Borrower not defined in subsection 1.1 and accounting terms partly defined
in subsection 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 COMMITMENT. Subject to the terms and conditions hereof, the Lender
agrees to make the Loan to the Borrower in one or more drawings during the
Commitment Period in an aggregate principal amount not to exceed $10,000,000.
Any portion of the Commitment not drawn on the last day of the Commitment Period
will expire at the close of business on such day.
2.2 PROCEDURE FOR BORROWING. The Borrower may borrow under the
Commitment during the Commitment Period on any Business Day, PROVIDED that the
Borrower shall give the Lender irrevocable notice which notice must be received
by the Lender prior to 10:00 a.m., New York City time at least one Business Day
prior to the requested drawdown and which must specify (i) the amount to be
drawn which must be at least $1,000,000 in excess thereof and an integral
multiple of $100,000 and (ii) the requested Business Day of the drawing. The
Lender will make the requested amount of the Loan available to the Borrower
prior to 2:00 p.m., New York City time, on the Business Day requested by the
Borrower in funds immediately available to the Borrower. Such borrowing will be
made available to the Borrower by wire transfer to the account of the Borrower
specified in the notice of borrowing.
2.3 REPAYMENT OF LOAN; EVIDENCE OF INDEBTEDNESS. (a) The Borrower
hereby unconditionally promises to pay to the Lender the then unpaid principal
amount of the Loan on the Termination Date. The Borrower hereby further agrees
to pay accrued unpaid interest as herein provided on the principal amount of the
Loan on each March 31, June 30, September 30, December 31 and on the Termination
Date from the Closing Date through the Termination Date.
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(b) The Lender shall maintain an account evidencing
indebtedness of the Borrower to the Lender resulting from the Loan, including
the amounts of principal and interest payable and paid to the Lender from time
to time under this Agreement.
(c) The accounts of the Lender maintained pursuant to
subsection 2.3(b) shall, to the extent permitted by applicable law, be PRIMA
FACIE evidence of the existence and amounts of the obligations of the Borrower
therein recorded; PROVIDED, HOWEVER, that the failure of the Lender to maintain
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loan made to
such Borrower by the Lender in accordance with the terms of this Agreement.
2.4 PREPAYMENTS. (a) The Borrower may at any time and from time to time
prepay the Loan, in whole or in part, without premium or penalty, upon at least
four Business Days irrevocable notice to the Lender, specifying the date and
amount of prepayment; PROVIDED if the Merger Agreement has not been terminated,
no such prepayment shall be permitted unless the Merger has occurred. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein together with accrued interest to such
date on the amount prepaid. Amounts prepaid on account of the Loan may not be
reborrowed. Partial prepayments shall be in an aggregate principal amount of
$1,000,000 or a whole multiple of $100,000 in excess thereof.
(b) The Loan shall be prepaid in the following amounts within
one Business Day of receipt: (i) 100% of the net proceeds of any sale or
issuance of Capital Stock (except issuances of Common Stock pursuant to stock
option plans and warrants outstanding or in effect on the date hereof) or
incurrence of Indebtedness (other than Indebtedness permitted by Section 6.1) by
the Borrower; and (ii) 100% of the net proceeds of any sale or other disposition
(including as a result of casualty or condemnation) by the Borrower of any
assets (except for the sale of inventory in the ordinary course of business
permitted by Section 6.4(b)).
(c) The Loan shall be prepaid in full (i) immediately, if the
Merger Agreement is terminated and any payment is required to be made by
Borrower pursuant to Section 8.3 of the Merger Agreement and (ii) within 45 days
following any termination of the Merger Agreement if the Borrower shall have
materially breached any of its representations and warranties or covenants
thereunder.
2.5 INTEREST RATES. (a) The Loan shall bear interest at 7 1/2% per
annum.
(b) If all or a portion of (i) any principal of any Loan, (ii)
any interest payable thereon, or (iii) any other amount payable hereunder shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise), the principal of the Loan and any such overdue interest, commitment
fee or other amount shall bear interest at a rate per annum which is 9 1/2%.
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(c) Interest accruing pursuant to paragraph (b) of this
subsection shall be payable from time to time on demand.
2.6 COMPUTATION OF INTEREST. Interest shall be calculated on the basis
of a 360-day year for the actual days elapsed.
2.7 PAYMENTS. All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest or otherwise,
shall be made without set off or counterclaim and shall be made prior to 12:00
Noon, New York City time, on the due date thereof to the Lender by wire transfer
of immediately available funds to an account designated by the Lender. If any
payment hereunder becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day, and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
2.8 TAXES. All payments made by the Borrower under this Agreement and
the Note shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Lender as a result of a present or former
connection between the Lender and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority thereof or
therein (other than any such connection arising solely from the Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or the Note). If any such non-excluded taxes, levies,
imposts, duties, charges, fees deductions or withholdings ("NON-EXCLUDED TAXES")
are required to be withheld from any amounts 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 Non-Excluded
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement. Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Lender a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Lender the required receipts or other required documentary
evidence, the Borrower 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. The agreements in this subsection shall survive the termination of
this Agreement and the payment of the Loan and all other amounts payable
hereunder.
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SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Loan,
the Borrower hereby represents and warrants to the Lender that:
3.1 FINANCIAL CONDITION. The Borrower has made available to the Lender
a true and complete copy of each form, report, schedule, registration statement
and definitive proxy statement filed by the Borrower with the SEC since January
1, 1997 (as such documents have since the time of their filing been amended or
supplemented, the "BORROWER SEC DOCUMENTS"), which are all of the documents that
the Borrower was required to file with the SEC since January 1, 1997. Except as
set forth in Section 3.1(d) of the Company Disclosure Schedule, as of their
respective dates, the Borrower SEC Documents complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable,
and none of the Borrower SEC Documents (including all financial statements
included therein and all exhibits and schedules thereto and documents
incorporated by reference therein) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Financial State ments delivered by the
Borrower to the Lender comply as to form in all material respects with
applicable accounting requirements and with the rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of the unaudited Financial Statements, as
permitted by Exchange Act Form 10-Q) and fairly present (subject, in the case of
the unaudited Financial Statements, to normal, recurring audit adjustments that,
individually and in the aggregate, were not material) the financial position of
the Borrower as at the dates thereof and the results of each of their operations
and cash flows for the periods then ended. There are no Liabilities of any kind
required to be disclosed under GAAP that are not disclosed, reflected or
reserved against in the Financial Statements of the Borrower, except for such
Liabilities incurred in the ordinary course of business consistent with past
practice since the date of the Borrower's most recent audited Financial
Statements or as set forth in Section 3.1(d) of the Company Disclosure Schedule
or as would not have a Material Adverse Effect with respect to the Borrower.
3.2 NO CHANGE. Except as disclosed in Section 3.1(p) of the Company
Disclosure Schedule, since the date of the Borrower's most recent audited
Financial Statements:
(i) there has not been any Material Adverse Change with
respect to the Borrower;
(ii) there has not been any declaration, setting aside or
payment of any dividend or other distribution with respect to any
shares of capital stock of the Borrower, or any repurchase, redemption
or other acquisition by the Borrower of any outstanding shares of
capital stock or other securities of, or other
12
ownership interests in, the Borrower or any split, combination or
reclassification of any of the Borrower's capital stock or issuance or
authorization relating to the issuance of any other securities in
respect of, in lieu of or in substitution for shares of the Borrower's
capital stock;
(iii) there has not been any amendment to, or change in, the
Articles of Incorporation or By-laws of the Borrower or modification
through merger, liquidation, reorganization, restructuring or in any
other fashion to the corporate structure or ownership of any Subsidiary
of the Borrower;
(iv) there has not been any incurrence, creation or assumption
by the Borrower of any Indebtedness or any Lien on any material asset,
and the Borrower has not issued or sold any debt securities or warrants
or other rights to acquire any debt securities of the Borrower or
entered into any "keep well" or other agreement to maintain any
financial statement condition of another Person or enter into any
arrangement having the economic effect of any of the foregoing;
(v) there has not been any change in any method of accounting
or accounting practice by the Borrower, except for any such change
required by reason of a concurrent change in GAAP or to conform a
Subsidiary's accounting policies and practices to those of the
Borrower;
(vi) there has not been any sale or transfer by the Borrower
of any of material assets of the Borrower, cancellation of any
Indebtedness or claims or waiver of any material rights by the
Borrower;
(vii) the Borrower has not made any loans, advances or capital
contributions to or investments in, any other Person, other than travel
and entertainment advances to employees of the Borrower in the ordinary
course of business consistent with past practices;
(viii) except for this Agreement and any other Loan Documents,
the Borrower has not entered into any material transaction or incurred
any material expenditure other than in the ordinary course of business
consistent with past practice;
(ix) there has not been any adverse change in a material
customer or material supplier relationship, including any cancellation
or termination or written notice of cancellation or termination by any
material customer or material supplier of its relationship or a
material portion of its relationship with the Borrower or any material
decrease in the usage or purchase of the products or services of the
Borrower by any such customer or any material decrease or limitation of
services or supplies of the products or services to the Borrower by any
such supplier which
13
would have, individually or in the aggregate, a Material Adverse Effect
with respect to the Borrower;
(x) there has not been any waiver or release of any material
right of claim of the Borrower, including any write-off or other
compromise of any account receivable of the Borrower or any Subsidiary,
other than in the ordinary course of business and consistent with past
practices;
(xi) there has not been, to the Knowledge of the Borrower, any
assertion by any advertiser, subscriber and/or customer of the Borrower
which, if substantiated, would have a Material Adverse Effect with
respect to the Borrower;
(xii) there has not been any material change in the policies
under which the Borrower extends discounts, credits or warranties to
customers or otherwise deals with its customers;
(xiii) there has not been any grant of exclusive promotion or
sponsorship with respect to any portion of any website of the Borrower;
(xiv) the Company has not authorized for issuance, issued,
delivered, sold or agreed or committed to issue, sell or deliver
(whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), pledge or
otherwise encumber any shares of capital stock or other Equity
Securities of the Company;
(xv) except with respect to annual bonuses made in the
ordinary course of business consistent with past practice, the Borrower
has not adopted or amended in any material respect any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, pension, retirement, employment or other employee
benefit agreement, trust, plan or other arrangement for the benefit or
welfare of any director, officer or employee of the Borrower or
increase in any manner the compensation or fringe benefits of any
director, officer or employee of the Borrower or pay any benefit not
required by any existing agreement or place any assets in any trust for
the benefit of any director, officer or employee of the Borrower (in
each case, except with respect to employees in the ordinary course of
business consistent with past practice);
(xvi) there has not been any grant or transfer of any rights
of value or modify or change in any material respect any existing
material license, lease, Contract or other document;
(xvii) the Borrower has not adopted a plan of complete or
partial liquidation or resolutions providing for or authorizing such a
liquidation or a
14
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization other than as is necessary in order to effect the
Merger;
(xviii) the Borrower has not settled or compromised any
shareholder derivative suits arising out of the transactions
contemplated hereby or any other litigation (whether or not commenced
prior to the date of this Agreement) or settled, paid or compromised
any claims not required to be paid, individually in an amount in excess
of $100,000 and in the aggregate in an amount in excess of $1,000,000,
other than in consultation and cooperation with the Lender, and, with
respect to any such settlement, with the prior written consent of the
Lender;
(xix) the Borrower has not entered into any transaction or
series of transactions with any Affiliate of the Borrower (other than a
wholly-owned Subsidiary of the Borrower) or otherwise that would be
required to be disclosed pursuant to Item 404 of Regulation S-K under
the Securities Act other than on terms and conditions substantially as
favorable to the Borrower or such Subsidiary as would be obtainable by
the Borrower or such Subsidiary at the time of such transaction with a
Person that is not an Affiliate of the Borrower;
(xx) there has not been any acquisition or agreement to
acquire (x) by merging or consolidating with, or by purchasing a
substantial portion of the stock or assets of, or by any other manner,
any business or any other Person or (y) any assets that are material,
individually or in the aggregate, to the Borrower taken as a whole,
except purchases of inventory in the ordinary course of business
consistent with past practice; and
(xxi) there has been no agreement by the Borrower, whether
written or oral, to do any of the foregoing.
3.3 EXISTENCE; COMPLIANCE WITH LAW. (a) The Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California, has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted, and
is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure so to qualify would not have a Material
Adverse Effect with respect to the Borrower. Section 3.1(a) of the Company
Disclosure Schedule sets forth, as of the date hereof, a true and complete list
of all of the Borrower's Subsidiaries, including (x) the jurisdiction of
incorporation of each such Subsidiary and (y) the percentage of each such
Subsidiary's outstanding capital stock, and the nature of such capital stock,
owned by the Borrower and/or another Subsidiary of the Borrower, as the case may
be. All of the outstanding shares of capital stock in each of the Subsidiaries
of the Borrower are duly authorized, validly issued, fully paid and
nonassessable and, except as set forth in Section 3.1(a) of the Company
Disclosure Schedule, are owned (of record and beneficially)
15
by the Borrower and/or by another Subsidiary of the Borrower, as the case may
be, free and clear of all Liens, and are not subject to preemptive rights
created by statute, such Subsidiary's Articles of Incorporation or By-laws (or
similar constituent documents) or any agreement to which such Subsidiary is a
party or by which such Subsidiary is bound. Other than as set forth in Section
3.1(a) of the Company Disclosure Schedule, the Borrower does not directly or
indirectly own any Equity Securities in any Person.
(b) The execution, delivery and performance by the Borrower of
this Agreement and the other Loan Documents to which the Borrower is party and
the consummation of the Loan do not and will not (i) contravene or conflict with
or result in any violation or breach of any provision of the Articles of
Incorporation or By-laws of the Borrower, (ii) assuming all Company Governmental
Approvals and Company Required Consents have been made or obtained, contravene
or conflict with or result in a violation or breach of any provision of any Law
or order binding upon or applicable to the Borrower or any of their respective
assets, (iii) require any consent or other action by any Person under,
constitute a default under or give rise to a right of termination, cancellation,
change of any right or obligation, or acceleration of any right or obligation or
to the loss of any benefit or adverse modification of the effect (including an
increase in the price paid by, or cost to, the Borrower) of, or under any
provision of any agreement or other instrument to which the Borrower is a party
or that is binding upon the Borrower or their properties or assets or any
license, franchise, permit or other similar authorization held by the Borrower
or (iv) result in the creation or imposition of any Lien on any asset of the
Borrower, except with respect to clauses (iii) and (iv) as set forth in Section
3.1(h) of the Company Disclosure Schedule; PROVIDED, HOWEVER, that clauses (ii)
through (iv) above address only those matters that, individually or in the
aggregate, would have a Material Adverse Effect with respect to the Borrower.
(c) The Borrower holds all permits, licenses, variances,
exemptions, orders and approvals of all Governmental Authorities, except where
any such failure so to hold, individually and in the aggregate, would not have a
Material Adverse Effect with respect to the Borrower (the "BORROWER PERMITS").
The Borrower is in compliance with the terms of the Borrower Permits in all
material respects. The businesses of the Borrower are not being conducted in
violation of any Requirement of Law. No investigation or review by any
Governmental Authority with respect to the Borrower is pending or, to the
Knowledge of the Borrower, threatened, nor, to the Knowledge of the Borrower,
has any Governmental Authority indicated an intention to conduct the same.
3.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The Borrower has the
corporate or other entity power and authority, and the legal right, to make,
deliver and perform the Loan Documents and to borrow hereunder and has taken all
necessary corporate or other entity action to authorize the borrowings on the
terms and conditions of this Agreement and any Note and to authorize the
execution, delivery and performance of the Loan Documents. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with
16
the borrowings hereunder or with the execution, delivery, performance, validity
or enforceability of the Loan Documents. This Agreement has been, and each other
Loan Document will be, duly executed and delivered on behalf of the Borrower.
This Agreement constitutes, and each other Loan Document when executed and
delivered will constitute, a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
3.5 NO LEGAL BAR. The execution, delivery and performance of the Loan
Documents, the borrowings hereunder and the use of the proceeds thereof will not
violate any Requirement of Law or Contractual Obligation of the Borrower and
will not result in, or require, the creation or imposition of any Lien on any of
its or their respective properties or revenues pursuant to any such Requirement
of Law or Contractual Obligation except for Liens created under the Loan
Documents in favor of the Lender.
3.6 NO MATERIAL LITIGATION. As of the date of this Agreement, except as
set forth in Section 3.1(i) of the Company Disclosure Schedule, there is no
suit, claim, action or proceeding pending, or, to the Knowledge of the Borrower,
threatened against the Borrower or an Affiliate of the Borrower that,
individually or in the aggregate, would have a Material Adverse Effect with
respect to the Borrower, nor is there any Order of any Governmental Authority
outstanding against the Borrower or an Affiliate of the Borrower that,
individually or in the aggregate, would have a Material Adverse Effect with
respect to the Borrower.
3.7 NO DEFAULT. The Borrower is not in default under or with respect to
any of its Contractual Obligations in any respect which could reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
3.8 INTELLECTUAL PROPERTY.
(i) DISCLOSURE.
(A) Section 3.1(m)(i)(A) or Section 3.1(m)(i)(B) of
the Company Disclosure Schedule sets forth all United States and
foreign patents and patent applications, trademark and service xxxx
registrations and applications, Internet domain name registrations and
applications and copyright registrations and applications owned or
licensed by the Borrower specifying as to each item, as applicable; the
nature of the item, including the title; the owner of the item; the
jurisdictions in which the item is issued or registered or in which an
application for issuance or registration has been filed; and the
issuance, registration, or application numbers and dates.
17
(B) Section 3.1(m)(i)(B) of the Company Disclosure
Schedule sets forth all material licenses, sublicenses and other
agreements or permissions ("IP LICENSES") under which the Borrower is a
licensor or licensee or otherwise is authorized to use or practice any
Intellectual Property.
(C) Except as set forth in Section 3.1(m)(i)C) of the
Company Disclosure Schedule, all Intellectual Property that is material
to the business or development of the Company has been developed by
employees of the Company and all such employees have executed a
Proprietary Rights Assignment and Non- Disclosure Agreement.
(D) Section 3.1(m)(i)(D) of the Company Disclosure
Schedule sets forth and describes the status of any material agreements
involving Intellectual Property currently in negotiation or proposed
("PROPOSED INTELLECTUAL PROPERTY AGREEMENTS") by the Borrower.
(ii) OWNERSHIP. The Borrower owns, free and clear of all
Liens, and has the unrestricted right to use, sell or license, all Intellectual
Property in its possession, except for failures to own free and clear or to have
the unrestricted right to use, sell, or license that, individually and in the
aggregate, would not have a Material Adverse Effect with respect to the Borrower
and except for technology licensed to the Company and listed on Section
3.1(m)(i)(B) of the Company Disclosure Schedule. Notwithstanding the foregoing,
the Borrower currently possesses free and clear of all liens or assignments, all
Intellectual Property rights necessary in order for the Borrower to continue
operating its current business.
(iii) CLAIMS. Except as set forth in Section 3.2(m)(ii) of the
Company Disclosure Schedule, the Borrower and its Affiliates have not been a
party to any Claim, nor, to the Borrower's Knowledge, is any such Claim
threatened, that challenges the validity, enforceability, ownership, or right to
use, sell or license, any Intellectual Property in the possession of the
Borrower. To the Borrower's Knowledge, no third party is infringing upon any
such Intellectual Property.
(iv) ADMINISTRATION AND ENFORCEMENT. The Borrower has taken
all necessary and desirable actions to maintain and protect each item of
Intellectual Property owned by the Borrower except for failures to take such
actions that, individually and in the aggregate, would not have a Material
Adverse Effect with respect to the Borrower.
(v) PROTECTION OF TRADE SECRETS AND TECHNOLOGY. The Borrower
has taken all reasonable precautions to protect the secrecy, confidentiality and
value of its trade secrets and the proprietary nature and value of its
Technology, including requiring all employees and contractors to execute a
Proprietary Rights and Non-Disclosure Agreement.
18
(vi) SOFTWARE. All material Software used by the Borrower
performs in conformance with its documentation, except for failures to perform
that, individually and in the aggregate, would not have a Material Adverse
Effect with respect to the Borrower. The Transactions will not require any third
party consents under the terms of the documentation related to the Software
other than (A) as set forth in Section 3.1(m)(vi) of the Company Disclosure
Schedule or (B) such consents that, individually and in the aggregate, would not
have a Material Adverse Effect with respect to the Borrower.
(vii) YEAR 2000 COMPLIANCE. All Software, hardware, databases
and embedded control systems (collectively, the "SYSTEMS") used by the Borrower
are Year 2000 Compliant, except for failures to be Year 2000 Compliant that,
individually and in the aggregate, would not have a Material Adverse Effect with
respect to the Borrower. As used herein, the term "YEAR 2000 COMPLIANT" means
that the Systems (i) accurately process date and time data (including
calculating, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, the years 1999 and 2000 and leap year calculations and
(ii) operate accurately with other software and hardware that use standard date
format (4 digits) for representation of the year.
(viii) EFFECT OF TRANSACTION. The Borrower is not, nor, as a
result of the execution and delivery of this Agreement, the consummation of the
Transactions or the performance of the Borrower's obligations hereunder, will
be, in violation of any agreement relating to any Intellectual Property, except
for violations that, individually and in the aggregate, would not have a
Material Adverse Effect with respect to the Borrower.
3.9 TAXES. (a) Other than Taxes that individually and in the aggregate
are not material (i) all federal, state, county, local, foreign and other taxes
(including, without limitation, income, profits, premium, estimated, excise,
sales, use, occupancy, gross receipts, franchise, ad valorem, severance, capital
levy, production, transfer, withholding, employment, unemployment compensation,
payroll related and property taxes, import duties and other governmental charges
and assessments), whether or not measured in whole or in part by net income, and
including deficiencies, interest, additions to tax or interest, penalties with
respect thereto and expenses associated with contesting any proposed adjustment
related to any of the foregoing (hereinafter "TAXES" or, individually, a "TAX")
required to be paid on or before the date hereof by or with respect to the
Borrower have been timely paid, and (ii) any Taxes required to be paid by or
with respect to the Borrower after the date hereof and on or before the Closing
Date shall be timely paid.
(b) All material returns and reports required to be filed
(hereinafter "TAX RETURNS" or, individually, a "TAX RETURN") by or with respect
to the Borrower with respect to Taxes on or before the date hereof have been
timely filed. All material Tax Returns required to be filed by or with respect
to the Borrower after the date hereof and on or before the Closing Date shall be
prepared and timely filed, in a manner consistent with prior years and
applicable laws and regulations. No penalties or other charges in a material
19
amount are or will become due with respect to the late filing of any Tax Return
of the Borrower or payment of any Tax of the Borrower, required to be filed or
paid on or before the Closing Date.
(c) With respect to all Tax Returns filed by or with respect
to the Borrower, except as set forth in Section 3.1(j) of the Company Disclosure
Schedule, (i) the statute of limitations for the assessment of Taxes has expired
with respect to all periods ending on or before June 30, 1992; (ii) no audit is
in progress and no extension of time has been executed with respect to any date
on which any Tax Return was or is to be filed and no waiver or agreement has
been executed for the extension of time for the assessment or payment of any
Tax; and (iii) there is no unassessed deficiency proposed or threatened against
the Borrower.
(d) Except as set forth in Section 3.1(j) of the Company
Disclosure Schedule, the Borrower has not been nor is a party to any tax sharing
agreement or similar arrangement.
(e) Except as set forth in Section 3.1(j) of the Company
Disclosure Schedule, the Borrower has not been part of a group of affiliated
corporations that has filed a consolidated federal income tax return.
3.10 FEDERAL REGULATIONS. No part of the proceeds of the Loan will be
used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect. If requested by the Lender, the Borrower will furnish
to the Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-1 or FR Form U-1 referred to in Regulation U, as the
case may be.
3.11 ERISA. The following representations and warranties contained in
this Section 3.11 are qualified by such exceptions which, individually and in
the aggregate, would not have a Material Adverse Effect with respect to the
Borrower:
(a) Section 3.1(l)(i) of the Company Disclosure Schedule
contains a true and complete list of each "employee benefit plan" (within the
meaning of section 3(3) of ERISA, including multiemployer plans within the
meaning of ERISA section 3(37)), stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, welfare benefit, collective
bargaining, bonus, incentive, deferred compensation and all other employee
benefit plans, agreements, programs, policies or other arrangements, whether or
not subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the Transactions contemplated by this
Agreement or otherwise), whether formal or informal, oral or written, legally
binding or not, under which any employee or former employee of the Borrower has
any present or future right to benefits or under which the Borrower has any
present or future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "BORROWER
20
BENEFIT PLANS." Where appropriate all references to the "Borrower" in this
Section 3.11 refer to the Borrower and any member of its "controlled group"
within the meaning of Section 414 of the Code.
(b) The Borrower has, with respect to each Borrower Benefit
Plan, if applicable, delivered or made available to the Lender true and complete
copies of: (i) all plan texts and agreements and related trust agreements (or
other funding vehicles); (ii) the most recent summary plan descriptions and
material employee communications; (iii) the most recent annual report (including
all schedules thereto); (iv) the most recent annual audited financial statement
and opinion; (v) if the plan is intended to qualify under Code section 401(a),
the most recent determination letter received from the IRS; and (vi) all
material communications with any governmental entity or agency (including the
PBGC and the IRS) given or received within the past three years.
(c) Except as set forth in Section 3.1(l)(iii) of the Company
Disclosure Schedule, all amounts properly accrued as liabilities to or expenses
of any Borrower Benefit Plan have been properly reflected on the Borrower's most
recent financial statements to the extent required by GAAP. Since the date of
the Borrower's most recent financial statements, there has been no amendment or
change in interpretation by the Borrower relating to any Borrower Benefit Plan
which would materially increase the cost thereof.
(d) No Borrower Benefit Plan is subject to either Code section
412 or Title IV of ERISA.
(e) Each Borrower Benefit Plan is in material compliance with
all applicable Requirements of Law. Each Borrower Benefit Plan which is intended
to qualify under Code section 401(a) has been issued a favorable determination
letter by the IRS and has not been amended in a manner, and no event has
occurred since such date, which would cause any such plan to fail to remain so
qualified. Each Borrower Benefit Plan that requires registration with a relevant
government body has been so registered.
(f) Except as set forth in Section 3.1(1)(vi) of the Company
Disclosure Schedule, there are no actions, liens, suits or claims pending or, to
Borrower's Knowledge, threatened (other than routine claims for benefits) with
respect to any Borrower Benefit Plan as to which the Borrower has or could
reasonably be expected to have any direct or indirect actual or contingent
material liability.
(g) Each Borrower Benefit Plan which is a "group health plan"
(as defined in ERISA section 607(1)) is in material compliance with the
provisions of COBRA (within the meaning of Code section 4980B), Health Insurance
Portability and Accountability Act and any other applicable, federal, state or
local Law.
21
(h) There are no (i) Borrower Benefit Plans maintained by the
Borrower pursuant to which welfare benefits are provided to current or former
employees beyond their retirement or other termination of service, other than
coverage mandated by COBRA, the cost of which is fully paid by the current or
former employees or their dependents; or (ii) unfunded Borrower Benefit Plan
obligations with respect to any employee of the Borrower which are not fairly
reflected by reserves shown on the Financial Statements of the Borrower.
(i) Except as set forth in Section 3.1(1)(ix) of the Company
Disclosure Schedule, the consummation of the Transactions will not (i) entitle
any current or former employee of the Borrower to severance pay, unemployment
compensation or any similar payment or (ii) accelerate the time of payment or
vesting, or increase the amount of any compensation due to, any current or
former employee of the Borrower.
(j) No Borrower Benefit Plan is a "multiemployer plan" or
"multiple employer plan" within the meaning of the Code or ERISA or the
regulations promulgated thereunder.
(k) Neither the Borrower nor any Borrower Benefit Plan, or to
the Borrower's Knowledge any "disqualified person" (as defined in Code section
4975) or any "party in interest" (as defined in ERISA section 3(18)), has
engaged in any non-exempt prohibited transaction (within the meaning of Code
section 4975 or ERISA section 406) which could reasonably be expected to result
in any material liability to the Borrower.
(l) None of the Borrower's employees is represented by a
union, and to Borrower's Knowledge no union organizing efforts have been
conducted within the last five years or are now being conducted. The Borrower
does not currently have, nor to Borrower's Knowledge, is there now threatened, a
strike, picket, work stoppage, work slowdown or other organized labor dispute.
The Borrower has not as of the date hereof incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act, as it may have been
amended from time to time ("WARN") or any similar state law.
3.12 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The Borrower is not an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
3.13 PURPOSE OF LOAN. The proceeds of the Loan shall be used by the
Borrower first to repay any outstanding Indebtedness and thereafter for working
capital purposes in the ordinary course of business.
22
3.14 ENVIRONMENTAL MATTERS. (i) The Borrower has obtained and is in
material compliance with the terms and conditions of all Environmental Laws;
(ii) no asbestos in a friable condition or equipment containing polychlorinated
biphenyls or leaking underground or above-ground storage tanks are contained in
or located at any facility owned, leased or controlled by the Borrower; (iii)
the Borrower is in material compliance with all applicable Environmental Laws,
and has fully disclosed all known material past and present non-compliance with
Environmental Laws, and all known past discharges, emissions, leaking or
releases known to the Borrower of any substance or waste regulated under or
defined by Environmental Laws that could reasonably be expected to form the
basis of any claim, action, suit, proceeding, hearing or investigation under any
applicable Environmental Laws; and (iv) the Borrower has not received notice of
any past or present events, conditions, circumstances, activities, practices,
incidents, actions or plans that have resulted in or threaten to result in any
common law or legal liability, or otherwise form the basis of any claim, action,
suit, proceeding, hearing or investigation under any applicable Environmental
Laws; PROVIDED, HOWEVER, that clauses (i) through (iv) above address only those
matters that, individually or in the aggregate, would have a Material Adverse
Effect with respect to the Borrower.
3.15 SUBSIDIARIES. The Borrower has no, and will not have any,
Subsidiaries.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS TO LOAN. The agreement of the Lender to make the Loan is
subject to the satisfaction, immediately prior to or concurrently with the
making of such Loan on the Closing Date, of the following conditions precedent:
(a) LOAN DOCUMENTS. The Lender shall have received this
Agreement, executed and delivered by a duly authorized officer of the Borrower,
the Collateral Agreement, executed and delivered by a duly authorized officer
the Borrower; and the Lender shall have received a Note duly completed and
executed and delivered by a duly authorized officer of the Borrower.
(b) CLOSING CERTIFICATE. The Lender shall have received a
certificate from the Borrower, dated the Closing Date, substantially in the form
of Exhibit D, with appropriate insertions and attachments, satisfactory in form
and substance to the Lender, executed by the President or any Vice President and
the Secretary or any Assistant Secretary of the Borrower.
(c) CORPORATE PROCEEDINGS OF THE BORROWER. The Lender shall
have received a copy of the resolutions, in form and substance satisfactory to
the Lender, of the Board of Directors of the Borrower authorizing (i) the
execution, delivery and performance of this Agreement and the other Loan
Documents, (ii) the borrowings contemplated hereunder and (iii) the granting by
it of the Liens created pursuant to the Security
23
Documents, certified by the Secretary or an Assistant Secretary of the Borrower
as of the Closing Date, which certificate shall be in form and substance
satisfactory to the Lender and shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded.
(d) CORPORATE DOCUMENTS. The Lender shall have received true
and complete copies of the certificate of incorporation and by-laws of the
Borrower, certified as of the Closing Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of the Borrower.
(e) CONSENTS, LICENSES AND APPROVALS. The Lender shall have
received a certificate of a Responsible Officer of the Borrower (i) attaching
copies of all consents, authorizations and filings referred to in subsection
3.4, and (ii) stating that such consents, licenses and filings are in full force
and effect, and each such consent, authorization and filing shall be in form and
substance satisfactory to the Lender.
(f) LEGAL OPINIONS. The Lender shall have received the
executed legal opinion of Coudert Brothers, counsel to the Borrower,
substantially in the form of Exhibit E;
Such legal opinion shall cover such other matters incident to the transactions
contemplated by this Agreement as the Lender may reasonably require;
(g) ACTIONS TO PERFECT LIENS. The Lender shall have received
evidence in form and substance satisfactory to it that all filings, recordings,
registrations and other actions, including, without limitation, the filing of
duly executed financing statements on form UCC-1, necessary or, in the opinion
of the Lender, desirable to perfect the Liens created by the Security Documents
shall have been completed.
(h) LIEN SEARCHES. The Lender shall have received the results
of a recent search by a Person satisfactory to the Lender, of the Uniform
Commercial Code, judgement and tax lien filings which may have been filed with
respect to personal property of the Borrower, and the results of such search
shall be satisfactory to the Lender.
(i) INSURANCE. The Lender shall have received evidence in form
and substance satisfactory to it that all of the requirements of subsection 5.5
hereof and Section 4.2 of the Collateral Agreement have been met.
(j) WARRANTS. The Lender shall have received Warrants for
328.084 shares of common stock of the Borrower with an exercise price of $19.05
per share pursuant to the Warrant Agreement.
4.2 CONDITIONS TO EACH ADVANCE. The agreement of the Lender to make any
advance in respect of the Loan requested to be made by it on any date
(including, without
24
limitation, its initial advance) is subject to the satisfaction of the following
conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Borrower in or pursuant to the Loan
Documents shall be true and correct in all material respects on and as of such
date as if made on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the Loan
requested to be made on such date.
(c) ADDITIONAL MATTERS. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement, the other Loan Documents and the
Merger Agreement shall be satisfactory in form and substance to the Lender, and
the Lender shall have received such other documents and legal opinions in
respect of any aspect or consequence of the transactions contemplated hereby or
thereby as it shall reasonably request.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date thereof that the conditions contained in
this subsection have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitment remains in
effect or any amount is owing to the Lender hereunder or under any other Loan
Document, the Borrower shall:
5.1 FINANCIAL STATEMENTS. Furnish to the Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the balance sheet
of the Borrower as at the end of such year and the related statements of income
and retained earnings and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, reported on without
a "going concern" or like qualification or exception, or qualification arising
out of the scope of the audit, by Ernst & Young or other independent certified
public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited balance sheet of the Borrower as at the end
of such quarter and the related unaudited statements of income and retained
earnings and of cash flows of the Borrower for such quarter and the portion of
the fiscal year through the end of such quarter, setting forth
25
in each case in comparative form the figures for the previous year, certified by
a Responsible Officer as being fairly stated in all material respects (subject
to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
5.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsections 5.1(a) and (b), a certificate of a Responsible
Officer stating that, to the best of such Officer's knowledge, during such
period (i) no Subsidiary has been formed or acquired (or, if any such Subsidiary
has been formed or acquired, the Borrower has complied with the requirements of
subsection 5.10 with respect thereto, (ii) the Borrower has not changed its
name, its principal place of business, its chief executive office or the
location of any material item of tangible Collateral without complying with the
requirements of this Agreement and the Security Documents with respect thereto
and (iii) the Borrower has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Loan Documents to be observed, performed or satisfied by it, and that such
Officer has obtained no knowledge of any Default or Event of Default except as
specified in such certificate;
(b) within five days after the same are sent, copies of all
financial statements and reports which the Borrower sends to its stockholders,
and within five days after the same are filed, copies of all financial
statements and reports which the Borrower may make to, or file with, the
Securities and Exchange Commission or any successor or analogous Governmental
Authority; and
(c) promptly, such additional financial and other information
as the Lender may from time to time reasonably request.
5.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower.
5.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to subsection 6.3; comply with all Contractual
26
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, have a Material Adverse Effect.
5.5 MAINTENANCE OF PROPERTY; INSURANCE. Keep all property useful and
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business; and furnish to the Lender, upon written request,
full information as to the insurance carried.
5.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of the Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower with
officers and employees of the Borrower and with its independent certified public
accountants.
5.7 NOTICES. Promptly give notice to Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or (ii) litigation, investigation or proceeding which
may exist at any time between the Borrower and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may be,
could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower in
which the amount involved is $100,000 or more and not covered by insurance or in
which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to any
Plan, a failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution
of proceedings or the taking of any other action by the PBGC or the Borrower or
any Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan;
and
27
(e) any material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of the Borrower taken
as a whole.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
5.8 ENVIRONMENTAL LAWS. (a) Comply with, and ensure compliance by all
tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply with and maintain, and ensure that all tenants and subtenants
obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws except to the extent that failure to do so could not be reasonably expected
to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws except to the extent
that the same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not be reasonably expected to have a
Material Adverse Effect.
5.9 FURTHER ASSURANCES. Upon the request of the Lender, promptly
perform or cause to be performed any and all acts and execute or cause to be
executed any and all documents (including, without limitation, financing
statements and continuation statements) for filing under the provisions of the
Uniform Commercial Code or any other Requirement of Law which are necessary or
advisable to maintain in favor of the Lender Liens on the Collateral that are
duly perfected in accordance with all applicable Requirements of Law.
5.10 ADDITIONAL COLLATERAL. With respect to any assets acquired after
the Closing Date by the Borrower that are intended to be subject to the Lien
created by any of the Security Documents but which are not so subject (other
than immaterial assets a Lien on which cannot be perfected by filing UCC-1
financing statements), promptly (and in any event within 30 days after the
acquisition thereof): (i) execute and deliver to the Lender such amendments to
the relevant Security Documents or such other documents as the Lender shall deem
necessary or advisable to grant to the Lender a Lien on such assets, (ii) take
all actions necessary or advisable to cause such Lien to be duly perfected in
accordance with all applicable Requirements of Law, including, without
limitation, the filing of financing statements in such jurisdictions as may be
requested by the Lender, and (iii) if requested by the Lender, deliver to the
Lender legal opinions relating to the matters described in clauses (i) and (ii)
immediately preceding, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Lender.
28
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitment remains in
effect or any amount is owing to the Lender hereunder or under any other Loan
Document, the Borrower shall not directly or indirectly:
6.1 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except Indebtedness of the Borrower under this
Agreement.
6.2 LIMITATION ON LIENS. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, PROVIDED that adequate reserves with
respect thereto are maintained on the books of the Borrower in conformity with
GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business which
are not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower; and
(f) Liens created pursuant to the Security Documents.
6.3 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger other than
pursuant to the Merger Agreement, consolidation or amalgamation, or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution), or
convey, sell, lease, assign, transfer or otherwise dispose of, all or
substantially all of its property, business or assets, or make any material
change in its present method of conducting business.
29
6.4 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, business or assets (including,
without limitation, receivables and leasehold interests), whether now owned or
hereafter acquired, except:
(a) the sale or other disposition of obsolete or worn out
property in the ordinary course of business; PROVIDED that the net cash proceeds
of each such transaction are applied to the prepayment of the Loan;
(b) the sale of inventory in the ordinary course of business;
and
6.5 LIMITATION ON DIVIDENDS. Declare or pay any dividend (other than
dividends payable solely in common stock of the Borrower) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any shares of any class of Capital Stock of the Borrower or any warrants or
options to purchase any such Stock, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower (such
declarations, payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein called "RESTRICTED
PAYMENTS") other than pursuant to, or as expressly provided in, the Merger
Agreement.
6.6 LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make (by way
of the acquisition of securities of a Person or otherwise) any expenditure in
respect of the purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations) except for
expenditures in the ordinary course of business not exceeding $500,000 in the
aggregate for the Borrower for the life of this Agreement.
6.7 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person (including,
without limitation, any Subsidiary), except:
(a) extensions of trade credit in the ordinary course of
business; and
(b) investments in Cash Equivalents.
6.8 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or business and (c) upon fair and reasonable
terms no less favorable to the Borrower than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate.
30
6.9 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into with any Person
any agreement, other than this Agreement, which prohibits or limits the ability
of the Borrower to create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired.
6.10 LIMITATION ON LINES OF BUSINESS. Enter into any business, except
for those businesses in which the Borrower are engaged on the date of this
Agreement or which are directly related thereto.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of the Loan
when due in accordance with the terms thereof or hereof; or the Borrower shall
fail to pay any interest on the Loan, or any other amount payable hereunder,
within five days after any such interest or other amount becomes due in
accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan Document
shall prove to have been incorrect in any material respect on or as of the date
made or deemed made; or
(c) The Borrower shall default in the observance or
performance of any agreement contained in Section 4 or Section 5 of the
Collateral Agreement; or
(d) The Borrower shall default in the observance or
performance of any other agreement contained in this Agreement or any other Loan
Document (other than as provided in paragraphs (a) through (c) of this Section),
and such default shall continue unremedied for a period of 30 days; or
(e) The Borrower shall (i) default in any payment of principal
of or interest of any Indebtedness (other than the Loan), beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or agreement
under which such Indebtedness was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated
maturity; or
31
(f) (i) The Borrower shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Borrower shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against the Borrower any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or (iv)
the Borrower shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) the Borrower shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Lender, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Lender is likely to, incur any liability in connection with a withdrawal
from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, could reasonably be expected
to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Borrower involving in the aggregate a liability (not paid or fully covered
by insurance) of $250,000 or more, and all such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal within 60 days
from the entry thereof; or
32
(i) (i) Any of the Security Documents shall cease, for any
reason, to be in full force and effect, or the Borrower or any other Loan Party
which is a party to any of the Security Documents shall so assert or (ii) the
Lien created by any of the Security Documents shall cease to be enforceable and
of the same effect and priority purported to be created thereby; or
(j) (i) Any Person or "group" (within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended) other than
pursuant to the Merger (A) shall have acquired beneficial ownership of 40% or
more of any outstanding class of Capital Stock having ordinary voting power in
the election of directors of the Borrower or (B) shall obtain the power (whether
or not exercised) to elect a majority of the Borrower's directors or (ii) the
Board of Directors of the Borrower shall not consist of a majority of Continuing
Directors; "CONTINUING DIRECTORS" shall mean the directors of the Borrower on
the Closing Date and each other director, if such other director's nomination
for election to the Board of Directors of the Borrower is recommended by a
majority of the then Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower, automatically the Commitment shall immediately terminate and the Loan
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement shall immediately become due and payable, and (B) if such event is any
other Event of Default, either or both of the following actions may be taken:
(i) the Lender may, by notice to the Borrower declare the Commitment to be
terminated forthwith, whereupon the Commitment shall immediately terminate; and
(ii) the Lender may, by notice to the Borrower, declare the Loan hereunder (with
accrued interest thereon) and all other amounts owing under this Agreement to be
due and payable forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by both the Borrower and the Lender or, in the case of
a waiver, by the party waiving compliance.
8.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, [three] days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in
33
the case of the Borrower and the Lender, and as set forth in Schedule I in the
case of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto:
The Borrower: Xxxxxxxxxx.xxx Inc.
0000 Xxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Coudert Brothers
000 00xx Xx., 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. St.Clair
Telephone: (000) 000-0000
Fax: (000) 000-0000
The Lender: USA Networks, Inc.
Carnegie Hall Tower
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or
34
statement delivered pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement and the making of the Loan hereunder.
8.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay or
reimburse the Lender for all its out-of-pocket costs and expenses incurred in
connection with the preparation and execution of, and any amendment, supplement
or modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Lender, (b) to pay or reimburse the Lender for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the other Loan Documents and any such other documents,
including, without limitation, the fees and disbursements of counsel to the
Lender, (c) to pay, indemnify, and hold the Lender harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold the Lender
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents, the Merger Agreement, the Merger or the use of the proceeds of the
Loan in connection with the Merger and any such other documents, including,
without limitation, any of the foregoing relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of the Borrower or any of the facilities and properties owned, leased
or operated by the Borrower (all the foregoing in this clause (d), collectively,
the "indemnified liabilities"), PROVIDED that the Borrower shall have no
obligation hereunder to the Lender with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of the Lender. The
agreements in this subsection shall survive repayment of the Loan and all other
amounts payable hereunder.
8.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lender and their respective successors and assigns, except that the Borrower may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Lender.
8.7 SET-OFF. In addition to any rights and remedies of the Lender
provided by law, the Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against
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such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Lender or any
branch or agency thereof to or for the credit or the account of the Borrower.
The Lender agrees promptly to notify the Borrower after any such set-off and
application made by the Lender, PROVIDED that the failure to give such notice
shall not affect the validity of such set-off and application.
8.8 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
8.9 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.10 INTEGRATION. This Agreement and the other Loan Documents represent
the agreement of the Borrower and the Lender with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgement in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
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(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in subsec tion 8.2 or at such other address of
which the Lender shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential damages.
8.13 ACKNOWLEDGMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) the Lender has no fiduciary relationship with or duty to
the Borrower arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Lender and the Borrower
in connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lender or among the Borrower and the Lender.
8.14 WAIVERS OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
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8.15 CONFIDENTIALITY. Each Lender agrees to keep confidential all
non-public information provided to it by the Borrower pursuant to this Agreement
that is designated by the Borrower in writing as confidential; PROVIDED that
nothing herein shall prevent any Lender from disclosing any such information (i)
to its employees, directors, agents, attorneys, accountants and other
professional advisors, (ii) upon the request or demand of any Governmental
Authority having jurisdiction over the Lender, (iii) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (iv) which has been publicly disclosed other
than in breach of this Agreement, or (v) in connection with the exercise of any
remedy hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
XXXXXXXXXX.XXX INC.
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: Chief Financial Officer
USA NETWORKS, INC.
By: /s/ Xxxx Xxxxxxxxxxxx
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Name: Xxxx Xxxxxxxxxxxx
Title:
