Exhibit 10.6
[Coolsavings letterhead]
July 27, 2001
Xxxxxxx X. Xxxxx
Vice President
American National Bank
and Trust Company of Chicago
000 Xxxxx XxXxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Re: Forbearance and Reaffirmation Agreement dated June 15, 2001
(the "Forbearance Agreement")
Xxxxxxxxxxx.xxx Inc. ("Company")
American National Bank And Trust Company Of Chicago ("Bank")
Landmark Communications, Inc. ("Landmark")
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Dear Xxxx:
In furtherance of the Company's execution of definitive agreements with
Landmark to infuse loans (the "Landmark Loan Infusion") and/or equity (the
"Landmark Equity Infusion") (collectively, the "Landmark Infusion"), I write to
(1) advise you of a structuring issue (and obtain your consent thereto), (2)
confirm our understanding with respect to the "Collateral Base Certificate" as
that quoted term is defined in the Forbearance Agreement/1/, (3) confirm how
transactional fees and expenses of Landmark should be treated for purposes of
the Forbearance Agreement, and (4) confirm our understanding on the forgiveness
of certain promissory notes payable to the benefit of the Company from certain
current and former directors of the Company.
(1) Structuring Matter: Because the Company needs to obtain shareholder
approval of the Landmark Infusion, our board approved the submission to the
shareholders of a proposal to form a Delaware subsidiary ("Newco") into which
the Company would merge immediately prior to the Landmark Equity Infusion (the
"Merger"). Our board believes being a Delaware corporation will have many
benefits. The consequence of the Merger is really just a de facto
re-incorporation in Delaware. Because such a Merger requires the Bank's consent,
I ask that you please countersign this letter to acknowledge the Bank's consent
to the Merger, provided, however, we recognize that the validity and
enforceability of your consent is expressly conditioned upon and will not become
effective or remain effective unless and until all of those terms and conditions
set forth below in paragraphs (a-f) above your signature have been fully and
completely performed and/or satisfied.
____________________
/1/ All capitalized terms not defined herein shall have the meaning set forth
in the Forbearance Agreement.
Xxxxxxx X. Xxxxx
August 9, 2001
Page 2
(2) Collateral Base Certificate Matter: Recently, you indicated that the
Collateral Base Certificate reporting period could be changed from a bi-weekly
basis to a monthly basis as described below. In conformity therewith, your
countersignature below will confirm the following amendment and restatement of
paragraph 2(b) of the Forbearance Agreement:
"(b) Reports - Simultaneous with the execution of this Agreement and
throughout the Forbearance Period, the Company shall provide the Bank with:
(i) a monthly report of all sales and collections; (ii) monthly cash flow
projections; (iii) a certificate signed by a duly authorized representative
of the Company, on a monthly basis, which shall be delivered on or before
the fifteenth day following the end of each calendar month (the due date of
said certificate shall be referred to herein as the "Certificate Due Date"
and the last day of each preceding calendar month to which said certificate
relates shall be referred to herein as the "Month End Date" (by way of
example, if the calendar month is July, 2001, then the applicable
Certificate Due Date shall be August 15, 2001 and the Month End Date shall
mean July 31, 2001)) setting forth: (A) the amount of all cash balances in
accounts held at the Bank as of the Month End Date; plus (B) an amount
equal to eighty percent (80%) of all "Eligible Accounts" as of the Month
End Date, as that quoted term is defined in Section 4.1 of the Loan
Agreement, the terms of which are expressly incorporated herein by
reference (collectively, the "Collateral Base Certificate"), provided
however, (I) the provisions of paragraph 4.1 with respect to the Bank's
right to reduce the percentage of unpaid invoice amounts to total invoice
amounts shall not apply during the Forbearance Period and (II) for purposes
of the definition of "Eligible Accounts" herein and the accompanying
calculation of the "Collateral Base Assets" as hereinafter defined,
subsection 4.1(d) of the Loan Agreement is hereby amended and restated to
read as follows:
"(d) it is evidenced by an invoice rendered to such "Obligor" (as
that quoted term is defined in the Loan Agreement) prior to the
Certificate Due Date for goods sold or leased (such goods having
been shipped or delivered to the Obligor thereof), or from
services rendered, to the Obligor on or prior to the Month End
Date, and it is not evidenced by any instrument or chattel
paper;"
((A) and (B) are hereinafter collectively referred to as the "Collateral
Base Assets"); and (iv) a monthly line-item budget, setting forth the
anticipated expenditures during the Forbearance Period. (The Collateral
Base Certificate which the Company delivered to the Bank on or about June
12, 2001, shall hereinafter be referred to as the "Initial Collateral Base
Certificate")."
Xxxxxxx X. Xxxxx
August 9, 2001
Page 3
(3) Fees and Expenses Matter: Subparagraphs 4(j) & (p) of the Forbearance
Agreement require that we receive a minimum amount as part of the Landmark
Infusion. That amount allows us to pay up to $2,000,000 in costs and expenses
relating to the Landmark Infusion, which is defined under the Forbearance
Agreement as the "Net Cost Maximum". We are trying to keep our costs and
expenses down, and Xxxxxxxx has placed a condition on us that we keep our fees
and expenses under the Net Cost Maximum; however, we are also required to pay
Landmark's fees and expenses in connection with the Landmark Infusion (the
"Landmark Fees"). To permit "head room" in connection with the Net Cost Maximum,
Landmark has agreed that if the Net Cost Maximum would be exceeded, then the
Landmark Fees, to the extent such fees would cause an overage in the Net Cost
Maximum, would not be paid to Landmark, but rather, would accrue interest at 8%
like the rest of Landmark's Loan Infusion and not be due until the irrevocable
payment in full of the entire Company Obligations. Because this ensures the
desired net proceeds from the Landmark Infusion will go into the Company (and is
consistent the Intercreditor (Subordination) Agreement between Landmark and the
Bank dated effective as of June 15, 2001 (the "Subordination Agreement")), I ask
that you please countersign this letter to confirm that any Landmark Fees which
are accrued and not paid pursuant to the terms of the foregoing sentence will
not count against the Net Cost Maximum provided, however, we agree that your
consent hereto shall be expressly conditioned, and only effective, upon your
receipt of a written confirmation from Landmark within five (5) days of the date
hereof that any such Landmark Fees treated pursuant to the terms of the
foregoing sentence shall constitute "Landmark Indebtedness" (as that term is
defined in the Subordination Agreement) and shall be subordinate to the Company
Obligations in accordance with, and otherwise subject to, the terms and
conditions of the Subordination Agreement, and to the terms of payment above set
forth.
(4) Forgiveness of Certain Promissory Notes: As we have discussed, the
Company intends to currently forgive all amounts owed, both principal and
accrued interest, with respect to certain promissory notes executed by current
and former directors of the Company, which are set forth on the attached
Schedule A (the "Promissory Notes"). By your countersignature below, the Bank is
consenting to the Company forgiving all indebtedness, both principal and accrued
interest, on the Promissory Notes.
Finally, by your signature below you agree with the Company that: (a) the
Forbearance Agreement, as expressly modified herein, shall remain in full force
and effect in accordance with its terms and is hereby ratified and confirmed by
the Company in all respects and (b) this letter agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
If you have any questions, please feel free to call.
Xxxxxxx X. Xxxxx
August 9, 2001
Page 4
Very truly yours,
xxxxxxxxxxx.xxx inc.
________________________________
[Xxxxx Xxxxxx], Chief Executive Officer
cc: Xxx X. Xxxxxxxx, III, Esquire
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO HEREBY CONSENTS AS STATED
ABOVE, SUBJECT TO THE CONDITIONS ABOVE SET FORTH, AND PROVIDED FURTHER THAT THE
BANK'S CONSENT TO THE MERGER AS ABOVE DESCRIBED IS EXPRESSLY CONDITIONED UPON
AND WILL NOT BECOME EFFECTIVE OR REMAIN EFFECTIVE UNLESS AND UNTIL THE
OBLIGATIONS SET FORTH BELOW IN SUBPARAGRAPHS (a-f) ARE FULLY AND COMPLETELY
SATISFIED AND/OR PERFORMED:
a. Following the formation of Newco, the Company shall provide the Bank with
at least twenty-one (21) days prior written notice (with notice given in
accordance with paragraph 20 of the Forbearance Agreement) of the actual
effective date of the Merger (the "Merger Date"), which notice shall
include: (i) a copy of all documentation (executed or unexecuted) that will
be necessary to effectuate the Merger; (ii) a certified copy of the Newco
incorporation documents from the Delaware Secretary of State evidencing its
formation, its legal name, and the type of its organization (i.e.,
corporation, LLC, etc.); and (iii) a reference to all documents, statutes,
or other laws under which the Company believes will allow for, and govern,
the effectiveness of the Merger (collectively, the "Merger Information").
b. The Bank shall be given adequate opportunity to determine to its complete
satisfaction (or its reasonable satisfaction, if the Company gives the Bank
an attorney opinion letter written in favor of the Bank from a nationally
recognized law firm satisfactory to the Bank that is in a form and
substance satisfactory to the Bank opining, inter alia), based upon the
Merger Information, that the Merger will effectively bind Newco as of the
Merger Date without further act, deed, or notice, to the same terms,
conditions, and obligations of the Company under the Forbearance Agreement,
the Loan Documents, and this letter agreement (collectively, the "Bank
Documents"), including, without limitation, that: (i) Newco is obligated to
the Bank for the Company Obligations; (ii) Newco owns the Bank Collateral
and the Additional Bank Collateral (collectively, the "Collateral"); (iii)
Newco
Xxxxxxx X. Xxxxx
August 9, 2001
Page 5
will be subject to and bound under the Bank Documents; and (iv) the
perfected and enforceable first lien and security interest of the Bank in
and to the Collateral shall continue in the Collateral after the Merger by
operation of law, including pursuant to 810 ILCS 5/9-203(d) (effective as
of 7/1/01). In the event that the Bank does not conclude that the foregoing
conditions are fully satisfied, then the Bank may send written notice of
same to the Company at least five (5) days prior to the Merger Date (with
notice given in accordance with paragraph 20 of the Forbearance Agreement),
in which case the Bank shall be deemed to have not consented to the Merger.
c. On the Merger Date, Newco shall execute and deliver an agreement in favor
of the Bank reaffirming that it is and remains bound by the Company's
obligations which exist under the terms and conditions of the Bank
Documents and the validity and enforceability thereof (the "Newco
Reaffirmation Agreement"), which Newco Reaffirmation Agreement shall be in
a form and substance that is satisfactory to the Bank, in its sole and
absolute discretion, and shall include, without limitation, the following
representations of Newco: (i) that Newco affirms that it is and remains
bound by all of the same terms, conditions and obligations of the Company
which arise from and/or are set forth in the Bank Documents; (ii) that as a
result of the Merger (A) the Company has merged into and is now known as
Newco, (B) Newco is the owner of all assets of the Company including,
without limitation, the Collateral, and (C) Newco is and remains liable for
all obligations of the Company, including, without limitation, the Company
Obligations; and (iii) that Newco restates and reaffirms the Bank
Documents, the Company Obligations, and the Bank's valid, perfected and
enforceable first liens and security interests in and to the Collateral.
d. Prior to the Merger Date, Landmark shall execute and deliver an agreement
in favor of the Bank reaffirming and restating the terms and conditions of
the Subordination Agreement and the validity and enforceability thereof
(the "Landmark Reaffirmation Agreement"), which Landmark Reaffirmation
Agreement shall be in a form and substance that is satisfactory to the
Bank, in its reasonable discretion, and shall include, without limitation,
the following covenants and acknowledgements of Landmark: (i) Landmark
shall reaffirm and ratify the terms and conditions of the Subordination
Agreement; (ii) Landmark shall confirm that (A) the Landmark Indebtedness
will be owed by Newco after the Merger and (B) the "Landmark Collateral"
(as that term is defined in the Subordination Agreement) will relate to
those assets that Newco may own and/or in which it may grant a security
interest in after the Merger; and (iii) Landmark shall confirm that the
Landmark Indebtedness and the Landmark Collateral shall be subordinate in
all respects to the Company Obligations and the Bank's security interests
in the Collateral after the Merger in accordance with the terms and
conditions of the Subordination Agreement. Newco and
Xxxxxxx X. Xxxxx
August 9, 2001
Page 6
the Company shall also sign the Landmark Reaffirmation Agreement accepting
and consenting to the terms of said agreement and agreeing to be bound by
all of the provisions thereof and to recognizing all priorities and rights
granted thereby to the Bank.
e. The Company and Newco shall take such further action and execute such
additional documents as the Bank may now or hereafter reasonably require
(including, without limitation, executing UCC financing statements and all
necessary intellectual property filings and/or authorizing the Bank to file
same with the appropriate recording office(s) in order to perfect and/or to
maintain the perfection of its security interests in and to the Collateral)
to effectuate the terms and conditions set forth above and to ensure that
the Bank's rights under the Bank Documents are not altered or diminished in
any way as a result of the Merger, and that they are absolutely and
unconditionally bound by the terms thereof.
f. The Company agrees to pay within ten (10) days after demand all reasonable
attorneys' fees, costs, and expenses incurred by the Bank in connection
with the negotiation and documentation of this letter agreement, the
agreements described above, and the actions necessary to accomplish the
conditions set forth above in subparagraphs (a) through (e), and all other
reasonable, out-of-pocket expenses, charges, costs and fees necessitated by
or otherwise relating thereto (collectively, the "Costs"), all of which
Costs shall be considered to be part of the Company Obligations. Landmark
shall within five (5) days of the date hereof send to the Bank its written
affirmation to the addition of the Costs to the Company Obligations.
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By:_____________________________
Name:_________________________
Title:________________________
Dated:________________________
