EXHIBIT 10.24
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), dated as of the 31st day of January,
1997, is made and entered into on the terms and conditions hereinafter set
forth, by and between CAMPUS VOICE, L.L.C., a Delaware limited liability company
("Borrower"), and SIRROM INVESTMENTS, INC., a Tennessee corporation ("Lender").
RECITALS:
WHEREAS, Borrower has requested that Lender make available to Borrower
a loan in the original principal amount of Six Hundred Sixty Thousand and
No/100ths Dollars ($660,000.00) (the "Senior Loan"); and
WHEREAS, Borrower is indebted to SCCGS, Inc. ("SCCGS"), a Tennessee
corporation and corporate affiliate of Lender, for a purchase money loan in the
original principal amount of Three Hundred Thousand and No/100 Dollars
($300,000.00) (the "Junior Secured Loan") as evidenced by that Junior Secured
Promissory Note (the "Junior Secured Promissory Note") of this date made by
Borrower payable to the order of SCCGS in that original principal amount, and
for an additional purchase money loan in the original principal amount of One
Million Two Hundred Sixty-Three Thousand Two Hundred Twenty-Two and 83/100
($1,263,222.83) (the "Second Junior Secured Loan") as evidenced by that Second
Junior Secured Promissory Note (the "Second Junior Secured Promissory Note") of
this date made by Borrower payable to the order of SCCGS in that original
principal amount; and
WHEREAS, concurrently with the execution hereof, the Junior Secured
Promissory Note and the Second Junior Secured Promissory Note have been
negotiated to Lender (the Senior Loan, the Junior Secured Loan, and the Second
Junior Secured Loan are referred to herein collectively as the "Loans"); and
WHEREAS, in order to induce Lender to make the Loans to Borrower
through the extension of credit under the Senior Loan and the purchase of the
Junior Secured Promissory Note and the Second Junior Secured Promissory Note,
Borrower has made certain representations to Lender; and
WHEREAS, Lender, in reliance upon the representations and inducements
of Borrower, has agreed to make the Loans upon the terms and conditions
hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the agreement of Lender to make the
Loans, the mutual covenants and agreements hereinafter set forth, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
ARTICLE 1
THE LOANS
1.1 Evidence of Indebtedness and Repayment. The Loans shall be
evidenced by promissory notes in the original principal amounts of the
respective Loans, substantially in the form of Exhibit A attached hereto and
incorporated herein by this reference (the "Notes"), dated as of the date
hereof, executed by Borrower and now held by Lender. The Loans shall be payable
in accordance with the terms of the Notes and the Xxxx of Sale and Agreement
dated as of the date hereof among SCCGS, Borrower, Sirrom Capital Corporation
and Network Event Theater, Inc., a Delaware corporation ("NET") (the "Xxxx of
Sale and Agreement"). The Notes, this Agreement, the Xxxx of Sale and Agreement
and any other instruments and documents executed by Borrower now or hereafter
evidencing, securing or in any way related to the indebtedness evidenced by the
Notes are herein individually referred to as a "Loan Document" and collectively
referred to as the "Loan Documents."
1.2 Partial Prepayment. Borrower may prepay the indebtedness evidenced
by the Notes in whole or in part at any time and from time to time, without
premium or penalty.
1.3 Purpose. The purpose of the Senior Loan shall be to provide
additional working capital to Borrower and the purpose of the Junior Secured
Loan and of the Second Junior Secured Loan shall be to evidence the purchase
price of the "Assets," as defined in the Xxxx of Sale and Agreement.
1.4 Advances. Advances under the Senior Loan shall be made according to
the following schedule:
Advanced at closing $210,000.00
On or after 4/l/97 $150,000.00
On or after 7/l/97 $125,000.00
On or after 10/l/97 $100,000.00
On or after 1/l/98 $75,000.00
Lender shall not under any circumstances be obligated to advance more than the
scheduled amount. Borrower may request that less than a scheduled amount be
funded in any month, and the excess availability shall carry forward to future
months.
1.5 Conditions to Advances. Lender shall not be obligated to make any
advance under any of the Loans at a time that any Event of Default exists
hereunder or if any condition exists which, with the giving of notice, the
passing of time or both would cause an Event of Default. Borrower shall submit a
request for each advance in writing, and such request shall constitute
Borrower's certification that the conditions to funding are satisfied.
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1.6 Processing Fee. Concurrently with the execution hereof, Borrower
shall pay to Lender a processing fee in the amount of $6,600.00.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Borrower's Representations. Borrower hereby represents and warrants
to Lender as follows:
(a) LLC Status. Borrower is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware; and has the power as a limited liability company to
own and operate its properties, to carry on its business as now
conducted and to enter into and to perform its obligations under this
Agreement and the other Loan Documents to which it is a party. Borrower
is duly qualified to do business and in good standing in each state in
which a failure to be so qualified would have a material adverse effect
on Borrower's financial condition or its ability to conduct its
business in the manner now conducted.
(b) Subsidiaries. Borrower neither owns nor has an interest
in, directly or indirectly, any other corporation, partnership, joint
venture or other business organization ("Subsidiaries").
(c) Authorization. Borrower has full legal right, power and
authority to conduct its business and affairs. Borrower has full legal
right, power and authority to enter into and perform its obligations
under the Loan Documents, without the consent or approval of any other
person, firm, governmental agency or other legal entity, except as has
been finally obtained. The execution and delivery of this Agreement,
the borrowing hereunder, the execution and delivery of each Loan
Document to which Borrower is a party, and the performance by Borrower
of its obligations thereunder are within the powers of Borrower and
have been duly authorized by all necessary action properly taken, have
received all necessary governmental approvals, if any were required,
and do not and will not contravene or conflict with any provision of
law, any applicable judgment, ordinance, regulation or order of any
court or governmental agency, the operating agreement of Borrower, or
any agreement binding upon Borrower or its properties. The officer(s)
executing this Agreement, the Notes and all of the other Loan Documents
to which Borrower is a party are duly authorized to act on behalf of
Borrower.
(d) Validity and Binding Effect. This Agreement and the other
Loan Documents are the legal, valid and binding obligations of the
Borrower, enforceable in accordance with their respective terms,
subject to limitations imposed by bankruptcy, insolvency, moratorium or
other similar laws affecting the rights of creditors generally or the
application of general equitable principles.
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(e) Capitalization. As of the date hereof, the sole member of
Borrower is NET. As of the date hereof, Borrower shall not have
outstanding any or securities convertible or exchangeable for any
member interests, nor shall it have outstanding any rights or options
to subscribe for or to purchase its member interests. As of the date
hereof, Borrower shall not be subject to any obligation (contingent or
otherwise) to repurchase, redeem, retire or otherwise acquire any of
its member interests. Borrower has not violated any applicable federal
or state securities laws in connection with the offer, sale or issuance
of any of its member interests.
(f) Trademarks, Patents, Etc. To the best of Borrower's
knowledge, Schedule 2.1(f) is an accurate and complete list of all
patents, trademarks, tradenames, trademark registrations, service
names, service marks, copyrights, licenses, formulas and applications
therefor owned by Borrower or used or required by Borrower in the
operation of it's business, title to each of which is, except as set
forth in Schedule 2.1(f) hereto, held by Borrower free and clear of all
adverse claims, liens, security agreements, restrictions or other
encumbrances. There is no infringement action, lawsuit, claim or
complaint which asserts that Borrower's operations violate or infringe
the rights or the trade names, trademarks, trademark registration,
service name, service xxxx or copyright of others with respect to any
apparatus or method of Borrower or any adversely held trademark, trade
name, trademark registration, service name, service xxxx or copyright,
and Borrower is not in any way making use of any confidential
information or trade secrets of any person except with the consent of
such person. Notwithstanding the foregoing, Borrower makes no
representation or warranty under this Section as to any trademarks,
etc. acquired from SCCGS, Inc. under the Xxxx of Sale and Agreement.
(g) No Conflicts. Consummation of the transactions hereby
contemplated and the performance of the obligations of Borrower under
and by virtue of the Loan Documents will not result in any breach of,
or constitute a default under, any mortgage, security deed or
agreement, deed of trust, lease, bank loan or credit agreement,
operating agreement, operating agreement, license, franchise or any
other instrument or agreement to which Borrower is a party or by which
Borrower or its respective properties may be bound or affected or to
which Borrower has not obtained an effective waiver.
(h) Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of Borrower threatened, against or
affecting Borrower or involving the validity or enforceability of any
of the Loan Documents at law or in equity, or before any governmental
or administrative agency; and to Borrower's knowledge, Borrower is not
in default with respect to any order, writ, injunction, decree or
demand of any court or any governmental authority.
(i) Financial Statements. Borrower is a newly-formed entity
and has not yet prepared any financial statements.
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(j) Other Agreements; No Defaults. Borrower is not a party to
any indenture, loan or credit agreement, lease or other agreement or
instrument, or subject to any restriction, that could have a material
adverse effect on the business, properties, assets, operations or
conditions, financial or otherwise, of Borrower, or the ability of
Borrower to carry out its obligations under the Loan Documents to which
it is a party. Borrower is not in default in any respect in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument
material to its business to which it is a party, including but not
limited to this Agreement and the other Loan Documents, and no other
default or event has occurred and is continuing that with notice or the
passage of time or both would constitute a default or event of default
under any of same.
(k) Compliance With Law. Borrower has obtained all necessary
licenses, permits and approvals and authorizations necessary or
required in order to conduct its business and affairs as heretofore
conducted and as hereafter intended to be conducted. To Borrower's
knowledge, Borrower is in compliance with all laws, regulations,
decrees and orders applicable to it (including but not limited to laws,
regulations, decrees and orders relating to environmental, occupational
and health standards and controls, antitrust, monopoly, restraint of
trade or unfair competition), to the extent that noncompliance, in the
aggregate, could reasonably be expected to have a material adverse
effect on its respective business, operations, property or financial
condition or could materially adversely affect Borrower's ability to
perform its obligations under the Loan Documents.
(l) Debt. Borrower is a newly-formed entity and does not have
in effect any credit agreements, indentures, purchase agreements,
promissory notes or other evidences of indebtedness, guaranties,
capital leases or other instruments, agreements and arrangements
providing for or relating to extensions of credit (including agreements
and arrangements for the issuance of letters of credit or for
acceptance financing), other than the Loan Documents.
(m) Taxes. Borrower is a newly-formed entity and has not filed
or caused to be filed any tax returns.
(n) Small Business Concern. Borrower, together with its
"affiliates" (as that term is defined in Title 13, Code of Federal
Regulations, ss. 121.103), is a "small business concern" within the
meaning of the Small Business Investment Act of 1958, as amended, and
the regulations promulgated thereunder (in making this representation,
Borrower relies upon Lender's representation that the criteria set
forth in the SBA Form 480 are the only necessary criteria for this
determination). The information set forth in the Small Business
Administration Forms 480, 652 and Parts A and B of Form 1031 regarding
Borrower upon delivery, pursuant to Section 4.1 hereof, will be
accurate and complete. Borrower does not presently engage in, and it
will not hereafter engage in, any activities, and Borrower will not use
directly or indirectly, the proceeds from the Loans, for any purpose
for which a Small Business Investment Company is prohibited from
providing funds by the Small Business
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Investment Act and the regulations thereunder, including Title 13, Code
of Federal Regulations ss.107.720.
(o) Certain Transactions. As of the date of this Agreement,
Borrower is not indebted, directly or indirectly, to any of its
members, officers or directors or to their respective spouses or
children, in any amount whatsoever; none of said members, officers or
directors or any members of their immediate families, are indebted to
Borrower or have any direct or indirect ownership interest in any firm
or corporation other than NET which competes with Borrower, except that
shareholders, officers and/or directors of Borrower may own no more
than 4.9% of outstanding stock of publicly traded companies which may
compete with Borrower. No shareholder, officer or director or any
member of their immediate families, is, directly or indirectly (except
as an employee, shareholder, officer or director of NET) interested in
any material contract with Borrower. Borrower is not a guarantor or of
any indebtedness of any other person, firm or corporation.
(p) Statements Not False or Misleading. No representation or
warranty given as of the date hereof by Borrower contained in this
Agreement or any schedule attached hereto or any statement in any
document, certificate or other instrument furnished or to be furnished
by Borrower to Lender pursuant hereto, taken as a whole, contains or
will (as of the time so furnished) contain any untrue statement of a
material fact, or omits or will (as of the time so furnished) omit to
state any material fact which is necessary in order to make the
statements contained therein not misleading.
(q) Margin Regulations. Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying
margin stock. No proceeds received pursuant to this Agreement will be
used to purchase or carry any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended.
(r) Significant Contracts. Borrower is a newly-formed entity
with no material contracts.
(s) Environment. Borrower is a newly-formed entity with no
previous operations with respect to which environmental laws would
apply.
(t) Fees/Commissions. Borrower has not agreed to pay any
finder's fee, commission, origination fee or other fee or charge to any
person or entity with respect to the Loans and investment transactions
contemplated hereunder, except fees for legal and accounting services
rendered in connection with this transaction.
(u) ERISA. Borrower is in compliance in all material respect
with all applicable provisions of ERISA as defined in Section 3.11
hereof). Neither a reportable event nor a prohibited transaction (as
defined in ERISA) has occurred and is continuing with respect to any
Plan (as defined in Section 3.11 hereof); no notice of intent to
terminate a Plan has been
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filed nor has any Plan been terminated; no circumstances exist which
constitute grounds entitling the Pension Benefit Guaranty Corporation
(together with any entity succeeding to or all of its functions, the
"PBGC") to institute proceedings to terminate, or appoint a trustee to
administer, a Plan, nor has the PBGC instituted any such proceedings;
neither Borrower nor any commonly controlled entity (as defined in
ERISA) has completely or partially withdrawn from a multiemployer plan
(as defined in ERISA); Borrower and each commonly controlled entity has
met its minimum funding requirements under ERISA with respect to all of
its Plans and the present fair market value of all Plan property
exceeds the present value of all vested benefits under each Plan, as
determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA and the regulations thereunder
for calculating the potential liability of Borrower or any commonly
controlled entity to the PBGC or the Plan under Title IV or ERISA; and
neither Borrower nor any commonly controlled entity has incurred any
liability to the PBGC under ERISA.
(v) Title to Properties. To the best of Borrower's knowledge,
based on Lender's representations in the Xxxx of Sale and Agreement
(and subject to the qualifications set forth therein), Borrower has no
real properties and Borrower has good title to its other assets, free
and clear of all liens other than Permitted Liens (as defined in
Section 3.15 hereof).
(w) Limited Offering of Notes. Neither Borrower nor anyone
acting on its behalf has offered the Notes or any similar securities
for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof, with, any person
other than Lender or its affiliates. Neither Borrower nor anyone acting
on its behalf has taken, or will take, any action which would subject
the issuance or sale of the Notes to Section 5 of the Securities Act of
1933, as amended, or the registration or qualification provisions of
the blue sky laws of any state.
(x) Registration Rights. Borrower is not under any obligation
to register under the Securities Act of 1933, as amended, or the Trust
Indenture Act of 1939, as amended, any of its presently outstanding
securities or any of its securities that may subsequently be issued.
(y) Employees. Borrower has no current labor problems or
disputes which have resulted or Borrower reasonably believes could be
expected to have a material adverse effect.
(z) Issuance Taxes. All taxes imposed on Borrower in
connection with the issuance, sale and delivery of the Notes have been
or will be fully paid, and all laws imposing such taxes have been or
will be fully satisfied by Borrower.
ARTICLE 3
COVENANTS AND AGREEMENTS
Borrower covenants and agrees that during the term of this Agreement:
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3.1 Payment of Obligations. Borrower shall pay the indebtedness
evidenced by the Notes according to the terms thereof as additionally provided
in the Xxxx of Sale and Agreement, and shall timely pay or perform, as the case
may be, all of the other obligations of Borrower to Lender, direct or
contingent, however evidenced or denominated, and however and whenever incurred,
including but not limited to indebtedness incurred pursuant to any present or
future commitment of Lender to Borrower, together with interest thereon, and any
extensions, modifications, consolidations and/or renewals thereof and any notes
given in payment thereof.
3.2 Financial Statements and Reports. Borrower shall furnish to Lender
(i) as soon as practicable and in any event within ninety (90) days after the
end of each fiscal year of Borrower, an audited balance sheet of Borrower as of
the close of such fiscal year, an audited statement of earnings and retained
earnings of Borrower as of the close of such fiscal year and an audited
statement of cash flows for Borrower for such fiscal year, prepared in
accordance with generally accepted accounting principles consistently applied
and accompanied by an unqualified audit report prepared by an independent
certified public accountant acceptable to Lender showing the financial condition
of Borrower at the close of such year and the results of its operations during
such year and accompanied by a certificate of the President of Borrower, stating
that to the best of the knowledge of such officer, Borrower has kept, observed,
performed and fulfilled each covenant, term and condition of this Agreement and
the other Loan Documents during the preceding fiscal year and that no Event of
Default has occurred and is continuing (or if an Event of Default has occurred
and is continuing, specifying the nature of same, the period of existence of
same and the action Borrower proposes to take in connection therewith), (ii)
within twenty (20) days of the end of each calendar month, a status report
indicating the financial performance of Borrower during such month and the
financial position of Borrower as of the end of such month, (iii) within
forty-five (45) days of the end of each quarter, a balance sheet of Borrower as
of the close of such quarter and a statement of earnings and retained earnings
of Borrower as of the close of such quarter, all in reasonable detail, and
prepared substantially in accordance with generally accepted accounting
principles consistently applied (except for the absence of footnotes and subject
to year-end adjustments), and (iv) with reasonable promptness, such other
financial data as Lender may reasonably request. Without Lender's prior written
consent, Borrower shall not modify or change any accounting policies or
procedures in effect on the date hereof.
3.3 Maintenance of Books and Records; Inspection. Borrower shall
maintain its books, accounts and records in accordance with generally accepted
accounting principles consistently applied, and after reasonable notice from
Lender, permit Lender, its officers and employees and any professionals
designated by Lender in writing, at Borrower's expense, to visit and inspect any
of its properties, books and financial records, and to discuss its accounts,
affairs and finances with Borrower or the principal officers of Borrower during
reasonable business hours, all at such times as Lender may reasonably request;
provided that no such inspection shall materially interfere with the conduct of
Borrower's business.
3.4 Insurance. Without limiting any of the requirements of any of the
other Loan Documents, Borrower shall maintain, in amounts customary for entities
engaged in comparable
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business activities, (i) to the extent required by applicable law, worker's
compensation insurance (or maintain a legally sufficient amount of self
insurance against worker's compensation liabilities, with adequate reserves,
under a plan approved by Lender, such approval not to be unreasonably withheld
or delayed), and (ii) fire and "all risk" casualty insurance on its properties
against such hazards and in at least such amounts as are customary in Borrower's
business. Borrower will make reasonable efforts to obtain and maintain public
liability insurance in an amount, and at a cost, deemed reasonable to the
Borrower's Board of Directors. At the request of Lender, Borrower will deliver
forthwith a certificate specifying the details of such insurance in effect.
3.5 Taxes and Assessments. Borrower shall (i) file all tax returns and
appropriate schedules thereto that are required to be filed under applicable
law, prior to the date of delinquency, (ii) pay and discharge all taxes,
assessments and governmental charges or levies imposed upon Borrower upon its
income and profits or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and (iii) pay all taxes, assessments and
governmental charges or levies that, if unpaid, might become a lien or charge
upon any of its properties; provided, however, that Borrower in good faith may
contest any such tax, assessment, governmental charge or levy described in the
foregoing clauses (ii) and (iii) so long as appropriate reserves are maintained
with respect thereto.
3.6 Existence. Borrower shall maintain its existence and good standing
as a limited liability company in the state of its organization, and its
qualification and good standing as a foreign limited liability company in each
jurisdiction in which the failure to so qualify would have a material adverse
effect on Borrower.
3.7 Compliance with Law and Other Agreements. Except where the failure
to do so would not materially adversely affect Borrower's operations or its
ability to fulfill its obligations under the Loan Documents, Borrower shall
maintain its business operations and property owned or used in connection
therewith in compliance with (i) all applicable federal, state and local laws,
regulations and ordinances governing such business operations and the use and
ownership of such property, and (ii) all agreements, licenses, franchises,
indentures and mortgages to which Borrower is a party or by which Borrower or
any of its properties is bound. Without limiting the foregoing, Borrower shall
pay all of its indebtedness promptly in accordance with the terms thereof,
except to the extent that Borrower is contesting any such indebtedness in good
faith.
3.8 Notice of Default. Borrower shall give written notice to Lender of
the occurrence of any default, event of default or Event of Default under this
Agreement or any other Loan Document promptly upon the occurrence thereof.
3.9 Notice of Litigation. Borrower shall give notice, in writing, to
Lender of (i) any actions, suits or proceedings, instituted by any persons
whomsoever against Borrower or affecting any of the assets of Borrower wherein
the amount at issue is in excess of Twenty-Five Thousand and No/100ths Dollars
($25,000.00), and (ii) any dispute, not resolved within sixty (60) days of the
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commencement thereof, between Borrower on the one hand and any governmental
regulatory body on the other hand, which dispute might materially interfere with
the normal operations of Borrower.
3.10 Conduct of Business. Borrower will continue to engage in a
business of the same general type and manner as proposed to be conducted by it
on the date of this Agreement.
3.11 ERISA Plan. If Borrower has in effect, or hereafter institutes, a
pension plan that is subject to the requirements of Title IV of the Employee
Retirement Income Security Act of 1974, Pub. L. No. 93-406, September 2, 1974,
00 Xxxx. 000, 00 X.X.X.X. ss. 1001 et seq. (1975), as amended from time to time
("ERISA"), then the following warranty and covenants shall be applicable during
such period as any such plan (the "Plan") shall be in effect: (i) Borrower
hereby warrants that no fact that might constitute grounds for the involuntary
termination of the Plan, or for the appointment by the appropriate United States
District Court of a trustee to administer the Plan, exists at the time of
execution of this Agreement, (ii) Borrower hereby covenants that throughout the
existence of the Plan, Borrower's contributions under the Plan will meet the
minimum funding standards required by ERISA and Borrower will not institute a
distress termination of the Plan, and (iii) Borrower covenants that it will send
to Lender a copy of any notice of a reportable event (as defined in ERISA)
required by ERISA to be filed with the Labor Department or the Pension Benefit
Guaranty Corporation, at the time that such notice is so filed.
3.12 Dividends, Distributions, Stock Rights, etc. Except for payments
and distributions to NET of amounts allocable to NET under Section 2.2 of the
Xxxx of Sale and Agreement, Borrower shall not declare or pay any dividend of
any kind (other than stock dividends payable to all holders of any class of
capital stock), in cash or in property, on any class of the capital stock of
Borrower, or purchase, redeem, retire or otherwise acquire for value any shares
of such stock, nor make any distribution of any kind in cash or property in
respect thereof, nor make any return of capital of shareholders, nor make any
payments in cash or property in respect of any stock options, stock bonus or
similar plan (except as required or permitted hereunder), nor grant any
preemptive rights with respect to the capital stock of Borrower, without the
prior written consent of Lender.
3.13 Guaranties; Loans; Payment of Debt. Without Lender's prior express
written consent, Borrower shall not guarantee nor be liable in any manner,
whether directly or indirectly, or become contingently liable after the date of
this Agreement in connection with the obligations or indebtedness of any person
or entity whatsoever, except for the endorsement of negotiable instruments
payable to Borrower for deposit or collection in the ordinary course of
business. Without Lender's prior express written consent, which shall not be
unreasonably withheld, Borrower shall not (i) make any loan, advance or
extension of credit to any person other than in the normal course of its
business, or (ii) make any payment on any subordinated debt.
3.14 Debt. Without the express prior written consent of Lender,
Borrower shall not create, incur, assume or suffer to exist indebtedness of any
description whatsoever, excluding:
(a) the indebtedness evidenced by the Notes;
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(b) the endorsement of negotiable instruments payable to Borrower for
deposit or collection in the ordinary course of business; and
(c) trade debts incurred in the ordinary course of business.
Lender acknowledges that Borrower may in the future propose that Borrower become
liable for, or grant a security interest in its assets to secure, one or more
credit facilities extended to NET and its subsidiaries. Lender will discuss the
circumstances at the time such a proposal is made, but may consent or not
consent thereto, in its sole discretion.
3.15 No Liens. Borrower shall not create, incur, assume or suffer to
exist any lien, security interest, security title, mortgage, deed of trust or
other encumbrance upon or with respect to any of its properties, now owned or
hereafter acquired, except the following permitted liens (the "Permitted
Liens"):
(a) liens in favor of Lender;
(b) liens for taxes or assessments or other governmental charges or
levies if not yet due and payable; and
(c) liens in connection with the leasing of equipment in favor of the
Lessor of such equipment.
3.16 Mergers, Consolidations, Acquisitions and Sales. Without the prior
written consent of Lender, Borrower shall not (a) be a party to any merger,
consolidation or reorganization, nor (b) purchase or otherwise acquire all or
substantially all of the assets or stock of, or any partnership or joint venture
interest in, any other person, firm or entity, nor (c) sell, transfer, convey,
grant a security interest in or lease all or any substantial part of its assets,
nor (d) create any Subsidiaries nor convey any of its assets to any Subsidiary.
3.17 Transactions With Affiliates. Except as expressly permitted by the
Xxxx of Sale and Agreement, Borrower shall not enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any affiliate, except in the ordinary course of
and pursuant to the reasonable requirements of Borrower's business and upon fair
and reasonable terms no less favorable to Borrower than Borrower would obtain in
a comparable arm's length transaction with a person not an affiliate. For the
purposes of this Section 3.17, "affiliate" shall mean a person, corporation,
partnership or other entity controlling, controlled by or under common control
with Borrower. Notwithstanding the foregoing, in order to permit Borrower normal
operations without the need of evaluating minor transactions on a case-by-case
basis for compliance with this Section 3.17, an Event of Default shall not arise
under this Agreement on account of transactions that, in the aggregate, include
charges that would be excessive under this Section 3.17 in the total amount of
less than $25,000 in any fiscal year (it being understood that the $25,000
figure is calculated as the excessive charge to Borrower only, and does not
include the total value of the relevant transaction(s)).
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3.18 Environment. Borrower shall be and remain in compliance with the
provisions of all federal, state and local environmental, health, and safety
laws, codes and ordinances, and all rules and regulations issued thereunder, the
violation of which could have a material adverse effect on Borrower; notify
Lender immediately of any notice of a hazardous discharge or environmental
complaint received from any governmental agency or any other party; notify
Lender immediately of any hazardous discharge from or affecting its premises;
immediately contain and remove the same, in compliance with all applicable laws;
promptly pay any fine or penalty assessed in connection therewith; permit Lender
to inspect the premises, to conduct tests thereon, and to inspect all books,
correspondence, and records pertaining thereto; and at Lender's request, and at
Borrower's expense, provide a report of a qualified environmental engineer,
satisfactory in scope, form, and content to Lender, and such other and further
assurances reasonably satisfactory to Lender that the condition has been
corrected.
ARTICLE 4
CONDITIONS TO CLOSING
4.1 Closing of the Loans. The obligation of Lender to fund the Loans on
the date hereof (the "Closing Date") is subject to the fulfillment, on or prior
to the Closing Date, of each of the following conditions:
(a) Borrower shall have performed and complied in all material
respects with all of the covenants, agreements, obligations and
conditions required by this Agreement.
(b) Lender shall have received an opinion of the Borrower's
counsel, Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP, dated the Closing
Date, in form and substance satisfactory to Lender's counsel, Boult,
Xxxxxxxx Xxxxxxx & Xxxxx PLC and attached hereto as Exhibit B;
(c) Borrower shall have delivered to Lender the Notes executed by
Borrower, substantially in the form of Exhibit A attached hereto and
incorporated herein by this reference.
(d) Borrower shall have delivered to Lender the Xxxx of Sale and
Agreement, substantially in the form of Exhibit C attached hereto and
incorporated herein by this reference.
(e) Borrower shall have delivered to Lender a Security Agreement
executed by Borrower and a related UCC-1 Financing Statement executed
by Borrower, each of which is substantially in the form of Exhibit D
attached hereto and incorporated herein by this reference.
(f) Borrower shall have delivered to Lender the Small Business
Administration Forms 480, 652 and 1031 (Parts A and B) completed by
Borrower.
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(g) Borrower shall have delivered to Lender the Small Business
Administration Economic Impact Assessment completed by Borrower, a
form of which is attached hereto as Exhibit E and incorporated herein
by this reference.
(h) Borrower shall have delivered to Lender a Trademark and
Patent Security Agreement executed by Borrower and related UCC-1
Financing Statement(s) executed by the Borrower, in the form of
Exhibit F attached hereto and incorporated herein by this reference.
(i) Lender shall have received copies of the operating agreement
and publicly filed organizational documents of Borrower, certified by
the Secretary of State or other appropriate public official in the
jurisdiction in which Borrower is organized.
(j) Lender shall have received certified (as of the date of this
Agreement) copies of all actions taken by Borrower authorizing the
execution, delivery and performance of the Loan Documents.
(k) Lender shall have received a certificate as to the legal
existence and good standing of the Borrower, issued by the Secretary
of State or other appropriate public official in the jurisdiction in
which the Borrower is organized.
ARTICLE 5
DEFAULT AND REMEDIES
5.1 Events of Default. The occurrence of any of the following shall
constitute an Event of Default hereunder:
(a) Default in the payment of the principal of or interest on the
indebtedness evidenced by the Notes in accordance with the terms of
the Notes, which default is not cured within five (5) days;
(b) Any misrepresentation by Borrower or any member or affiliate
of Borrower as to any material matter hereunder or under any of the
other Loan Documents, or delivery by Borrower of any schedule,
statement, resolution, report, certificate, notice or writing to
Lender that is untrue in any material respect on the date as of which
the facts set forth therein are stated or certified;
(c) Failure of Borrower or any member or affiliate of Borrower to
perform any of its obligations, covenants or agreements under this
Agreement, the Notes or any of the other Loan Documents;
(d) Borrower (i) shall generally not pay or shall be unable to
pay its debts as such debts become due; or (ii) shall make an
assignment for the benefit of creditors or petition or
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apply to any tribunal for the appointment of a custodian, receiver or
trustee for it or a substantial part of its assets; or (iii) shall
commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect; or
(iv) shall have had any such petition or application filed or any such
proceeding commenced against it in which an order for relief is
entered or an adjudication or appointment is made; or (v) shall
indicate, by any act or intentional and purposeful omission, its
consent to, approval of or acquiescence in any such petition,
application, proceeding or order for relief or the appointment of a
custodian, receiver or trustee for it or a substantial part of its
assets; or (vi) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of sixty (60) days
or more;
(e) Borrower shall be liquidated, dissolved, partitioned or
terminated, or the charter thereof shall expire or be revoked;
(f) A default or event of default shall occur under any of the
other Loan Documents and, if subject to a cure right, such default or
event of default shall not be cured within the applicable cure period;
(g) Borrower shall default in the timely payment of any
obligation now or hereafter owed to Lender in connection with any
other indebtedness of Borrower now or hereafter owed to Lender; or
(h) Borrower shall have defaulted and continue to be in default
in the timely payment or performance of any other indebtedness or
obligation, which in the aggregate exceeds Twenty-Five Thousand and
No/100ths Dollars ($25,000.00) or materially adversely affects
Borrower's financial condition, except for indebtedness being
contested by Borrower in good faith.
With respect to any Event of Default described above that is capable of
being cured and that does not already provide its own cure procedure (a "Curable
Default"), the occurrence of such Curable Default shall not constitute an Event
of Default hereunder if such Curable Default is fully cured and/or corrected
within thirty (30) days (ten (10) days, if such Curable Default may be cured by
payment of a sum of money) after notice thereof to Borrower given in accordance
with the provisions hereof; provided, however, that this provision shall not
require notice to Borrower and an opportunity to cure any Curable Default of
which the President, Chief Executive Officer, Chairman or Chief Financial
Officer of Borrower has had an actual awareness (both of the facts and that the
facts constitute an Event of Default hereunder) for the requisite number of days
set forth.
5.2 Acceleration of Maturity; Remedies. Upon the occurrence of any
Event of Default described in subsection 5.1(d), the indebtedness evidenced by
the Notes as well as any and all other indebtedness of Borrower to Lender shall
be immediately due and payable in full; and upon the occurrence of any other
Event of Default described above, Lender at any time thereafter during the
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continuance of the Event of Default may at its option accelerate the maturity of
the indebtedness evidenced by the Notes as well as any and all other
indebtedness of Borrower to Lender; all without notice of any kind. Upon the
occurrence of any such Event of Default and the acceleration of the maturity of
the indebtedness evidenced by the Notes:
(a) Lender shall be immediately entitled to exercise any and all
rights and remedies possessed by Lender pursuant to the terms of the
Notes and all of the other Loan Documents; and
(b) Lender shall have any and all other rights and remedies that
Lender may now or hereafter possess at law, in equity or by statute.
5.3 Remedies Cumulative; No Waiver. No right, power or remedy conferred
upon or reserved to Lender by this Agreement or any of the other Loan Documents
is intended to be exclusive of any other right, power or remedy, but each and
every such right, power and remedy shall be cumulative and concurrent and shall
be in addition to any other right, power and remedy given hereunder, under any
of the other Loan Documents or now or hereafter existing at law, in equity or by
statute. No delay or omission by Lender to exercise any right, power or remedy
accruing upon the occurrence of any Event of Default shall exhaust or impair any
such right, power or remedy or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein, and every right, power and remedy
given by this Agreement and the other Loan Documents to Lender may be exercised
from time to time and as often as may be deemed expedient by Lender.
5.4 Proceeds of Remedies. Any or all proceeds resulting from the
exercise of any or all of the foregoing remedies shall be applied as set forth
in the Loan Document(s) providing the remedy or remedies exercised; if none is
specified, or if the remedy is provided by this Agreement, then as follows:
First, to the costs and expenses, including without limitation
reasonable attorney's fees, incurred by Lender in connection with the
exercise of its remedies;
Second, to the expenses of curing the default that has occurred,
in the event that Lender elects, in its sole discretion, to cure the
default that has occurred;
Third, to the payment of the obligations of Borrower under the
Loan Documents (the "Obligations"), including but not limited to the
payment of the principal of and interest on the indebtedness evidenced
by the Notes, in such order of priority as Lender shall determine in
its sole discretion; and
Fourth, the remainder, if any, to Borrower or to any other person
lawfully thereunto entitled.
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ARTICLE 6
MISCELLANEOUS
6.1 Performance By Lender. If Borrower shall default in the payment,
performance or observance of any covenant, term or condition of this Agreement,
which default is not cured within the applicable cure period, then Lender may,
at its option, pay, perform or observe the same, and all payments made or costs
or expenses incurred by Lender in connection therewith (including but not
limited to reasonable attorney's fees), with interest thereon at the highest
default rate provided in the Notes (if none, then at the maximum rate from time
to time allowed by applicable law), shall be immediately repaid to Lender by
Borrower and shall constitute a part of the Obligations. Lender shall be the
sole judge of the necessity for any such actions and of the amounts to be paid.
6.2 Successors and Assigns Included in Parties. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Borrower or by or on behalf of Lender shall bind and inure to
the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
6.3 Costs and Expenses. Borrower agrees to pay at closing that amount
of all reasonable costs and expenses normally incurred by Lender in connection
with the making of new loans in the ordinary course of business, including but
not limited to filing fees, recording taxes and reasonable attorneys' fees up to
the aggregate of $10,000.00, promptly upon demand of Lender. Borrower agrees to
further pay for expenses of Lender in accordance with Section 2.2(b) of the Xxxx
of Sale and Agreement. Borrower further agrees to pay all premiums for insurance
required to be maintained by Borrower pursuant to the terms of the Loan
Documents and all of the out-of-pocket costs and expenses incurred by Lender in
connection with the collection of the Loans, amendment to the Loan Documents, or
prepayment of the Loans, including but not limited to reasonable attorneys'
fees, promptly upon demand of Lender.
6.4 Assignment. The Notes, this Agreement and the other Loan Documents
may be endorsed, assigned and/or transferred in whole or in part by Lender, and
any such holder and/or assignee of the same shall succeed to and be possessed of
the rights and powers of Lender under all of the same to the extent transferred
and assigned. Lender may grant participations in all or any portion of its
interest in the indebtedness evidenced by the Notes to any affiliate of Lender,
and in such event Borrower shall continue to make payments due under the Loan
Documents to Lender and Lender shall have the sole responsibility of allocating
and forwarding such payments in the appropriate manner and amounts. Borrower
shall not assign any of its rights nor delegate any of its duties hereunder or
under any of the other Loan Documents without the prior express written consent
of Lender.
6.5 Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Borrower hereunder and under all
of the other Loan Documents.
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6.6 Severability. If any provision(s) of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
6.7 Interest and Loan Charges Not to Exceed Maximum Allowed by Law.
Anything in this Agreement, the Notes or any of the other Loan Documents to the
contrary notwithstanding, in no event whatsoever, whether by reason of
advancement of proceeds of the Loans, acceleration of the maturity of the unpaid
balance of the Loans or otherwise, shall the interest and loan charges agreed to
be paid to Lender for the use of the money advanced or to be advanced hereunder
exceed the maximum amounts collectible under applicable laws in effect from time
to time. It is understood and agreed by the parties that, if for any reason
whatsoever the interest or loan charges paid or contracted to be paid by
Borrower in respect of the indebtedness evidenced by the Notes shall exceed the
maximum amounts collectible under applicable laws in effect from time to time,
then ipso facto, the obligation to pay such interest and/or loan charges shall
be reduced to the maximum amounts collectible under applicable laws in effect
from time to time, and any amounts collected by Lender that exceed such maximum
amounts shall be applied to the reduction of the principal balance of the
indebtedness evidenced by the Notes and/or refunded to Borrower so that at no
time shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced by the Notes exceed the maximum amounts permitted from
time to time by applicable law.
6.8 Article and Section Headings; Defined Terms. Numbered and titled
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limiting any of the provisions of this
Agreement.
6.9 Notices. Any and all notices, elections or demands permitted or
required to be made under this Agreement shall be in writing, signed by the
party giving such notice, election or demand and shall be delivered personally,
telecopied, telexed, or sent by certified mail or overnight via nationally
recognized courier service (such as Federal Express), to the other party at the
address set forth below, or at such other address as may be supplied in writing
and of which receipt has been acknowledged in writing. The date of personal
delivery, telecopy or telex or two (2) business days after the date of mailing
(or the next business day after delivery to such courier service), as the case
may be, shall be the date of such notice, election or demand. For the purposes
of this Agreement:
The Address of Lender is: Sirrom Investments, Inc.
Xxxxx 000
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
Telecopy No.: 615/726-1208
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with a copy to: Boult, Cummings, Xxxxxxx & Xxxxx PLC
Suite 1600
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx III
Telecopy No.: 615/252-6359
The Address of Borrower is: Campus Voice, L.L.C.
c/o Network Event Theater, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Don Leeds
Telecopy No. 212/779-3241
with a copy to: Proskauer Xxxx Xxxxx & Xxxxxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: 212/969-2900
6.10 Entire Agreement. This Agreement and the other written agreements
between Borrower and Lender represent the entire agreement between the parties
concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein; provided, if there is a conflict between this
Agreement and any other document executed contemporaneously herewith with
respect to the Obligations, the provision of this Agreement shall control. The
execution and delivery of this Agreement and the other Loan Documents by the
Borrower were not based upon any fact or material provided by Lender, nor was
the Borrower induced or influenced to enter into this Agreement or the other
Loan Documents by any representation, statement, analysis or promise by Lender.
6.11 Governing Law and Amendments. This Agreement and all of the Loan
Documents shall be construed and enforced under the laws of the State of
Tennessee applicable to contracts to be wholly performed in such State. No
amendment or modification hereof shall be effective except in a writing executed
by each of the parties hereto.
6.12 Survival of Representations and Warranties. All representations
and warranties contained herein or in any of the Loan Documents or made by or
furnished on behalf of the Borrower in connection herewith or in any Loan
Documents shall survive the execution and delivery of this Agreement and all
other Loan Documents.
6.13 No Reliance on Lender's Analysis. Borrower acknowledges and
represents that, in connection with the execution and delivery of the Xxxx of
Sale and Agreement, this Agreement and the other Loan Documents, Borrower has
not relied upon any financial projection, budget,
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assessment or other analysis by Lender or upon any representation by Lender as
to the risks, benefits or prospects of Borrower's business activities or present
or future capital needs incidental thereto, all such considerations having been
examined fully and independently by Borrower through its own diligence. Borrower
further acknowledges that Lender has made no agreement whatsoever regarding its
future conduct with respect to the Loans or Borrower's activities except as
expressly set forth in this Agreement and the other Loan Documents.
6.14 Jurisdiction and Venue. Borrower hereby consents to the
jurisdiction of the courts of the State of Tennessee and the United States
District Court for the Middle District of Tennessee, as well as to the
jurisdiction of all courts from which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising out of any of
its obligations arising under this Agreement or any other Loan Documents or with
respect to the transactions contemplated hereby, and further agrees to the
exclusive venue of such Tennessee courts and expressly waives any and all
objections it may have as to venue in any of such courts.
6.15 Waiver of Trial by Jury. LENDER AND BORROWER HEREBY WAIVE TRIAL BY
JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT
OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS
AGREEMENT OR THE LOAN DOCUMENTS.
6.16 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
6.17 Construction and Interpretation. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction that a document is to be more strictly construed against
the party that itself or through its agent prepared the same, it being agreed
that the Borrower, Lender and their respective agents have participated in the
preparation hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
LENDER:
SIRROM INVESTMENTS, INC.,
a Tennessee corporation
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Title: VP
-------------------------------
BORROWER:
CAMPUS VOICE, L.L.C.,
a Delaware limited liability corporation
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Title: Secretary
-------------------------------
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Index of Schedules and Attachments
Exhibit A - Form of Notes
Exhibit B - Form of Opinion of Borrower's Counsel
Exhibit C - Form of Xxxx of Sale and Agreement
Exhibit D - Form of Security Agreement and UCC-1
Exhibit E - Form of Economic Impact Assessment
Exhibit F - Form of Trademark and Patent Security Agreement
Schedule 2.1(f) - Trademarks and Patents
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Schedule 2. 1 (f)
Trademarks
Xxxx Style Class Basis Application No.
---- ----- ----- ----- ---------------
1. CAMPUS VOICE Block (16) USE (75/083197)
2. CAMPUS VOICE Design (16) USE (75/083134)
3. CAMPUS VOICE Design (41) USE (75/083196)
4. CAMPUS VOICE LIFESTYLE Block (16) ITU (75/083003)
5. CAMPUS VOICE LIFESTYLE Design (16) ITU (75/083002)
6. CAMPUS VOICE REC/SPORTS Block (16) ITU (75/083000)
7. CAMPUS VOICE REC/SPORTS Design (16) ITU (75/083001)
8. CAMPUS VOICE RADIO Block (38) ITU (75/082927)
9. CAMPUS VOICE RADIO Design (38) ITU (75/083004)
10. CAMPUS VOICE TELEVISION Block (38) ITU (75/082998)
11. CAMPUS VOICE TELEVISION Design (38) ITU (75/082928)
12. CAMPUS VOICE NEWS Block (41) ITU (75/082929)
13. CAMPUS VOICE NEWS Design (41) ITU (75/083142)
22
