Exhibit 10.1(b)
INTERCOMPANY
CREDIT AGREEMENT
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This INTERCOMPANY CREDIT AGREEMENT ("Credit Agreement"), dated as of
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February, 1999, is entered into by and between:
(1) TRUE NORTH COMMUNICATIONS INC. ("Lender"); and
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(2) MODEM MEDIA . ▇▇▇▇▇ ▇▇▇▇▇, INC. ("Borrower").
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In consideration of the covenants, conditions and agreements set forth herein,
the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Advance" shall have the meaning given in Section 2.1 of the Credit
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Agreement.
1.2 "Business Day" shall mean any day on which commercial banks are not
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authorized or required to close in Chicago, Illinois.
1.3 "Credit Accommodations" shall have the meaning given in Section 2.6.
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1.4 "Credit Agreement" shall have the meaning set forth in the opening
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paragraph of this document.
1.5 "Commitment" shall mean an amount equal to $3,000,000.
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1.6 "Default" shall mean any event or circumstance not yet constituting an
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Event of Default but which, with the giving of any notice or the lapse of any
period of time or both, would become an Event of Default.
1.7 "Event of Default" shall have the meaning given to that term in
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Section 5.1.
1.8 "GAAP" shall mean generally accepted accounting principles and
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practices as promulgated by the Financial Accounting Standards Board and as in
effect in the United States from time to time, consistently applied. Unless
otherwise indicated in this Credit Agreement, all accounting terms used in this
Credit Agreement shall be construed, and all accounting and financial
computations hereunder or thereunder shall be computed, in accordance with GAAP.
1.9 "Governmental Authority" shall mean any domestic or foreign national,
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state or local government, any political subdivision thereof, any department,
agency, authority or bureau of any of
the foregoing, or any other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
1.10 "Loan Documents" shall mean and include this Credit Agreement and any
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other documents, instruments and agreements delivered to Lender in connection
with this Credit Agreement.
1.11 "Material Adverse Change" shall mean any material adverse change in
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the business, financial condition, operations, properties, performance or
prospects of the Borrower and its subsidiaries, taken as a whole.
1.12 "Obligations" shall mean and include all Advances, Reimbursement
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Obligations, debts, liabilities, and financial obligations, howsoever arising,
owed by Borrower to Lender of every kind and description (whether or not
evidenced by any note or instrument), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising pursuant to
the terms of any of the Loan Documents, including, without limitation, all third
party charges, fees and commissions, duties and taxes and all such other charges
which pertain directly or indirectly to the Credit Accommodations.
1.13 "Person" shall mean and include an individual, a partnership, a
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corporation (including a business trust), a joint stock company, a limited
liability company, an unincorporated association, a joint venture or other
entity or a Governmental Authority.
1.14 "Reimbursement Obligations" means all debts, liabilities and
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obligations of every kind and description, howsoever arising, owed by Borrower
to Lender (whether or not evidenced by any note or instrument), direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising pursuant to the terms of any Credit Accommodation, including,
without limitation, all interest, fees, charges, expenses, reasonable attorneys'
fees (and expenses) and accountants' fees (and expenses) chargeable to Borrower
or payable by Borrower hereunder or thereunder.
1.15 "Termination Date" shall mean the earliest to occur of (i) the second
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anniversary of the date of this Credit Agreement, (ii) the date the Obligations
are made due and payable pursuant to Section 5.2, and (iii) the 90th day
following receipt by Borrower of a demand for repayment pursuant to Section 2.8.
ARTICLE 2
ADVANCES AND OTHER CREDIT ACCOMMODATIONS
2.1 Advances. Subject to the terms and conditions of this Credit
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Agreement, Lender agrees to advance to Borrower from time to time and until the
earlier to occur of (i) the Termination Date or (ii) the date of receipt by
Borrower of a demand by Lender of a mandatory prepayment under the provisions of
Section 2.8 hereof, such sums as Borrower may request (the "Advances") but
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which shall not exceed, in the aggregate principal amount at any one time
outstanding, together with the amount of the Credit Accommodations at such time
outstanding, the Commitment. Advances shall be made in lawful currency of the
United States and shall be made in same day or immediately available funds. Each
Advance shall be in an amount equal to at least $25,000 or any integral multiple
of $10,000 in excess thereof and shall be made one Business Day after written
request (or telephonic request confirmed in writing). Subject to the terms and
conditions hereof, Borrower may borrow and prepay the Advances and reborrow
pursuant to this Section 2.1.
2.2 Payment upon Maturity. If not paid earlier, the outstanding principal
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balance of all Advances and Reimbursement Obligations shall be due and payable
to the Lender on the Termination Date. If on the Termination Date any Credit
Accommodations remain outstanding, in addition to paying in full all other
Obligations, Borrower shall provide to Lender cash collateral in an amount equal
to 110% of the amount of all Credit Accommodations outstanding to secure all
Reimbursement Obligations, and Borrower shall execute and deliver to Lender a
pledge agreement with respect thereto in a form satisfactory to Lender.
2.3 Interest. Interest on the outstanding principal balance under the
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Advances shall accrue at floating rates that approximate Lender's all-in cost of
borrowing, plus 2%. All computations of such interest shall be based on a year
of 360 days and actual days elapsed for each day on which any principal balance
is outstanding under the terms of the Credit Agreement.
2.4 Interest Payments. All accrued and unpaid interest shall be due on
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the first Business Day of each month. If not paid earlier, all outstanding
accrued interest hereunder shall be due and payable to the Lender on the
Termination Date.
2.5 Other Payment Terms.
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(a) Place and Manner. Borrower shall make all payments due to Lender
hereunder in lawful money of the United States and in same day or immediately
available funds.
(b) Date. Whenever any payment due hereunder shall fall due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall be included in the computation of
interest or fees, as the case may be.
(c) Default Rate. From and after the occurrence of an Event of
Default and during the continuance thereof, Borrower shall pay interest on all
Obligations not paid when due, from the due date thereof until such amounts are
paid in full, at a per annum rate equal to 2% in excess of the rate otherwise
applicable to Advances and shall pay a charge per annum with respect to the
Credit Accommodations equal to 3.75% of the amount of such Credit
Accommodations. All computations of such interest and charges shall be based on
a year of 360 days and actual days elapsed.
2.6 Other Credit Accommodations.
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(a) Terms. Subject to the terms and conditions of this Credit
Agreement, from time to time Borrower may request that Lender (i) assist
Borrower in establishing or opening letters of credit with one or more banks by
joining in the applications for the letters of credit and/or guaranteeing
payment or performance of the letters of credit and/or drafts or acceptances
thereunder or (ii) guarantee other payment obligations of Borrower
(collectively, "Credit Accommodations"). The decision to do any of the
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foregoing shall be in Lender's sole discretion and the amount, extent, terms and
conditions of any such letters of credit, drafts, acceptances or guaranties
shall be subject to the terms and conditions of this Credit Agreement and shall
be subject to change, modification and revision from time to time in Lender's
sole discretion. All obligations incurred by Lender in connection with the
Credit Accommodations shall be incurred solely as an accommodation to Borrower
and for Borrower's account. The total amount of the Credit Accommodations shall
not exceed at any time, together with the aggregate principal amount of the
Advances, the Commitment.
(b) Charges. In addition to any customary changes, fees or expenses
of any bank or other person in connection with a Credit Accommodation (all of
which shall be charged to Borrower's account and shall be payable by Borrower to
Lender immediately), Borrower shall pay to Lender a fee equal to 0.5% per annum
on the amount of such Credit Accommodations, which shall be due and payable on
the first Business Day of each month. All computations of such fees shall be
based on a year of 360 days and actual days elapsed.
(c) Reimbursement. Borrower unconditionally agrees to reimburse
Lender for any and all payments made by Lender with respect to the Credit
Accommodations and to indemnify, defend and hold Lender harmless from any and
all losses, claims and liabilities arising from any transactions or occurrences
relating to the Credit Accommodations. If Borrower does not reimburse Lender
for a payment made by Lender with respect to a Credit Accommodation on the same
Business Day as the payment is made, the reimbursable amount shall bear interest
for three Business Days at floating rates that approximate Lender's all-in cost
of borrowing, plus 0.5% per annum, and shall thereafter bear interest at a per
annum rate equal to 3% in excess of such rate. Borrower further agrees to hold
Lender harmless from any errors or omissions related to the Credit
Accommodations, whether caused by Lender or any financial institution providing
the Credit Accommodations.
(d) Lender's Authority. Borrower agrees that any action taken by
Lender in connection with Credit Accommodations in good faith shall be binding
on Borrower. Lender shall have the full right and authority to take such actions
with respect to the Credit Accommodations as it in good ▇▇▇▇▇ ▇▇▇▇▇ necessary or
desirable, including agreeing to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms and conditions of
any of the Credit Accommodations.
2.7 Borrower's Account. The Obligations of Borrower to Lender hereunder
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shall be evidenced by one or more accounts or records maintained by Lender in
the ordinary course of business. The accounts or records maintained by Lender
shall be presumptive evidence of the amount of such Obligations, and the
interest and principal payments and other charges thereon. Any failure so to
record or any error in so doing shall not, however, limit, increase or otherwise
affect the obligation
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of Borrower hereunder to pay any amount owing hereunder. Upon Lender's request,
Borrower shall execute a promissory note in favor of Lender.
2.8 Mandatory Prepayment. At any time after Lender ceases to own shares
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of capital stock of Borrower which control in excess of 50% of the stockholders'
voting power, Lender shall have the right to demand that Borrower prepay all or
any portion of the outstanding Advances and cash collateralize all or any
portion of the outstanding Credit Accommodations (as set forth in Section 2.2)
not later than the 60th day following receipt by Borrower of such a demand.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BORROWER
To induce Lender to enter into this Credit Agreement and to make Advances
and extend Credit Accommodations hereunder, Borrower represents and warrants to
Lender as follows:
3.1 Due Incorporation, Qualification, etc.. Borrower is a corporation
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duly organized, validly existing and in good standing under the laws of its
state of incorporation.
3.2 Authority. The execution, delivery and performance by Borrower of
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each Loan Document to be executed by Borrower and the consummation of the
transactions contemplated thereby (i) are within the power of Borrower and (ii)
have been duly authorized by all necessary actions on the part of Borrower.
3.3 Enforceability. Each Loan Document executed, or to be executed, by
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Borrower has been, or will be, duly executed and delivered by Borrower and
constitutes, or will constitute, a legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, except as
limited by bankruptcy, insolvency or other laws of general application relating
to or affecting the enforcement of creditors' rights generally and general
principles of equity.
ARTICLE 4
CONDITIONS TO MAKING ADVANCES OR CREDIT ACCOMMODATIONS
Lender's obligation to make the initial Advance or Credit Accommodation and
each subsequent Advance or Credit Accommodation is subject to the prior
satisfaction or waiver of all the conditions set forth in this Article 4.
4.1 Principal Loan Documents. Borrower shall have duly executed and
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delivered to Lender: (a) the Credit Agreement; and (b) such other documents,
instruments and agreements as Lender may reasonably request.
4.2 Representations and Warranties Correct. The representations and
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warranties made by Borrower in Article 3 hereof shall be true and correct as of
the date on which each Advance or Credit
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Accommodation is made and after giving effect to the making of the Advance or
Credit Accommodation. The submission by Borrower to Lender of a request for an
Advance or Credit Accommodation shall be deemed to be a certification by the
Borrower that as of the date of borrowing, the representations and warranties
made by Borrower in Article 3 hereof are true and correct.
4.3 No Event of Default or Default. No Event of Default or Default has
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occurred or is continuing.
4.4 Total Outstanding Advances and Credit Accommodations. The total
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aggregate principal amount of outstanding Advances and Credit Accommodations
does not exceed the Commitment.
4.5 No Material Adverse Change. There shall have occurred no Material
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Adverse Change since the date of this Credit Agreement.
4.6 Initial Public Offering. An initial public offering of common stock
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of Borrower shall have occurred prior to March 1, 1999.
ARTICLE 5
EVENTS OF DEFAULT
5.1 Events of Default. The occurrence of any of the following shall
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constitute an "Event of Default" under this Credit Agreement:
(a) Failure to Pay. Borrower shall fail to (i) pay the principal
amount of all outstanding Advances or cash collateralize the Credit
Accommodations on the Termination Date hereunder; (ii) pay any interest,
Obligation or other payment required under the terms of this Credit Agreement or
any other Loan Document on the date due and such failure shall continue for
three Business Days; or (iii) pay any Indebtedness (excluding Obligations) owed
by Borrower to Lender on the date due and such failure shall continue for three
Business Days; or
(b) Breaches of Covenants. Borrower shall fail to observe or perform
any other covenant, obligation, condition or agreement contained in this Credit
Agreement or any other Loan Document and (i) such failure shall continue for ten
Business Days, or (ii) if such failure is not curable within such ten Business
Day period, but is reasonably capable of cure within 30 Business Days, either
(A) such failure shall continue for 30 Business Days or (B) Borrower shall not
have commenced a cure in a manner reasonably satisfactory to Lender within the
initial ten Business Day period; or
(c) Representations and Warranties. Borrower shall furnish any
representation, warranty, certificate, or other statement (financial or
otherwise) to Lender in writing in connection with any of the Loan Documents, or
as an inducement to Lender to enter into this Credit Agreement,
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which shall be false, incorrect, incomplete or misleading in any material
respect when made or furnished by or on behalf of Borrower; or
(d) Voluntary Bankruptcy or Insolvency Proceedings. Borrower shall
(i) apply for or consent to the appointment of a receiver, trustee, liquidator
or custodian of itself or of all or a substantial part of its property, (ii) be
unable, or admit in writing its inability, to pay its debts generally as they
mature, (iii) make a general assignment for the benefit of all or any of its
creditors or enter into a composition with one or more of its creditors, (iv) be
dissolved or liquidated in full or in part, (v) become insolvent (as such term
is defined in 11 U.S.C. (S)101 (32), as amended from time to time), (vi)
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding commenced
against it, or (vii) take any action for the purpose of effecting any of the
foregoing; or
(e) Involuntary Bankruptcy or Insolvency Proceedings. There shall be
commenced proceedings for the appointment of a receiver, trustee, liquidator or
custodian of Borrower or of all or a substantial part of the property thereof,
or an involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to Borrower or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect and an
order for relief entered or such proceeding shall not be dismissed or discharged
within 60 calendar days of commencement; or
(f) Certain Actions. Subsequent to the date hereof, Borrower shall
undertake or permit to occur or exist any of the acts, events or conditions
referred to in Section 6.1 hereto.
5.2 Rights of Lender upon Default.
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(a) Acceleration. Upon the occurrence or existence of any Event of
Default described in Sections 5.1(d) and 5.1(e), automatically and without
notice or, at the option of Lender, upon the occurrence of any other Event of
Default, (i) the Commitment shall terminate and (ii) all outstanding Obligations
payable by Borrower hereunder shall become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the other Loan
Documents to the contrary notwithstanding.
(b) Cumulative Rights, etc. The rights, powers and remedies of Lender
under this Credit Agreement shall be in addition to all rights, powers and
remedies given to Lender by virtue of any applicable law, rule or regulation of
any Governmental Authority, or any agreement, all of which rights, powers, and
remedies shall be cumulative and may be exercised successively or concurrently
without impairing Lender's rights hereunder.
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ARTICLE 6
COVENANTS
6.1 Negative Covenants. Subsequent to the date hereof, without the prior
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written consent of Lender, Borrower shall not (1) create or suffer to exist any
Lien (as such term is defined in the 364-Day Credit Agreement dated as of May
29, 1998 among the Lendor, the Initial Lenders named therein and Citibank, N.A.,
and in the Five-Year Credit Agreement dated as of May 29, 1998 among the Lendor,
the Initial Lenders named therein and Citibank, N.A. (collectively the "Lendor
Credit Agreements"), other than Liens permitted by Section 5.02(a)(i), (ii),
(iii) or (iv) thereof or by Section 5.02(a)(vii) with respect to Section
5.02(a)(iii) or (iv) thereof; (2) assign any right to receive income; (3)
create, incur, assume or suffer to exist any Indebtedness (as such term is
defined in the Lender Credit Agreements other than Indebtedness permitted by
Sections 5.02(b)(i), (ii), (iii) or (iv) thereof or by Section 5.02(b) with
respect to Section 5.02(b)(ii) or (iii) thereof; (4) make any Investment in any
Person other than Investments permitted by Section 5.02(d)(i)-(vii); or (5)
undertake or permit to occur or exist any act, event or condition specified in
Sections 5.02(c), (e) or (f) of the Lender Credit Agreements.
ARTICLE 7
MISCELLANEOUS
7.1 Notices. Except as otherwise provided herein, all notices, requests,
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demands, consents, instructions or other communications to or upon Lender or
Borrower under this Agreement or the other Loan Documents shall be in writing
and telecopied, mailed or delivered to each party at its telecopier number or
address set forth below (or to such other telecopier number or address for any
party as indicated in any notice given by that party to the other party). All
such notices and communications shall be effective (a) when sent by Federal
Express or other overnight service of recognized standing, on the Business Day
following the deposit with such service; (b) when mailed by registered or
certified mail, first class postage prepaid and addressed as aforesaid through
the United States Postal Service, upon receipt; (c) when delivered by hand, upon
delivery; and (d) when telecopied, upon confirmation of receipt; provided,
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however, that any notice delivered to Lender under Article 2 shall not be
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effective until received by Lender.
LENDER: TRUE NORTH COMMUNICATIONS INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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BORROWER: MODEM MEDIA . ▇▇▇▇▇ ▇▇▇▇▇, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
7.2 Waivers; Amendments. Any term, covenant, agreement or condition of
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this Credit Agreement or any other Loan Document may be amended or waived if
such amendment or waiver is in writing and is signed by Borrower and Lender. No
failure or delay by Lender in exercising any right hereunder shall operate as a
waiver thereof or of any other right nor shall any single or partial exercise of
any such right preclude any other further exercise thereof or of any other
right. A waiver or consent given hereunder shall be effective only if in
writing and in the specific instance and for the specific purpose for which
given.
7.3 Successors and Assigns. This Credit Agreement and the other Loan
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Documents shall be binding upon and inure to the benefit of Borrower, Lender and
their respective successors and permitted assigns, except that Borrower may not
assign or transfer (and any such attempted assignment or transfer shall be void)
any of its rights or obligations under any Loan Document without the prior
written consent of Lender, which such consent shall not be unreasonably
withheld.
7.4 Set-off. In addition to any rights and remedies of Lender provided by
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law, Lender shall have the right, without prior notice to Borrower (any such
notice being expressly waived by Borrower to the extent permitted by applicable
law), upon the occurrence and during the continuance of a Default or an Event of
Default, to set-off and apply against any Indebtedness, whether matured or
unmatured, of Borrower to Lender (including, without limitation, the
Obligations), any amount owing from Lender to Borrower. The aforesaid right of
set-off may be exercised by Lender against Borrower or against any trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor of Borrower or against
anyone else claiming through or against Borrower or such trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, receiver, or
execution, judgment or attachment creditor, notwithstanding the fact that such
right of set-off shall not have been exercised by Lender prior to the occurrence
of a Default or an Event of Default. Lender agrees promptly to notify Borrower
after any such set-off and application made by Lender, provided that the failure
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to give such notice shall not affect the validity of such set-off and
application.
7.5 No Third Party Rights. Nothing expressed in or to be implied from
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this Agreement or any other Loan Document is intended to give, or shall be
construed to give, any Person, other than the parties hereto and thereto and
their permitted successors and assigns, any benefit or legal or equitable right,
remedy or claim under or by virtue of this Agreement or any other Loan Document.
7.6 Partial Invalidity. If at any time any provision of this Credit
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Agreement or any of the Loan Documents is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions of the Credit
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Agreement or such other Loan Documents, nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction, shall
in any way be affected or impaired thereby.
7.7 Governing Law. This Credit Agreement and each of the other Loan
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Documents shall be governed by and construed in accordance with the laws of the
State of Illinois without reference to conflicts of law rules.
7.8 Construction. Each of this Credit Agreement and the other Loan
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Documents is the result of negotiations among, and has been reviewed by,
Borrower, Lender and their respective counsel. Accordingly, this Credit
Agreement and the other Loan Documents shall be deemed to be the product of all
parties hereto, and no ambiguity shall be construed in favor of or against
Borrower or Lender.
7.9 Entire Agreement. This Credit Agreement and the other Loan Documents,
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taken together, constitute and contain the entire agreement of Borrower and
Lender with respect to the subject matter hereof and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
among the parties, whether written or oral, respecting the subject matter
hereof.
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IN WITNESS WHEREOF, the parties have executed this Credit Agreement as of
the date first set forth above.
BORROWER:
MODEM MEDIA . ▇▇▇▇▇ ▇▇▇▇▇, INC.
By:________________________________________
Name:
Title:
LENDER:
TRUE NORTH COMMUNICATIONS INC.
By:________________________________________
Name:
Title:
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