STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of October 19, 1999, by and
among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇, individuals (collectively "Purchaser") and ▇▇▇▇/USA INC., a
Delaware corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller is the owner of 110,000 shares of the Common Stock,
$1.00 par value per share, of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC., a Texas corporation (the
"Company") being 100% of the issued and outstanding shares of such capital stock
of the Company, and Seller desires to sell all of such shares (the "Shares") to
Purchaser, and Purchaser desires to purchase the Shares, all upon the terms and
conditions set forth herein; and
WHEREAS, Seller acquired the Shares from Purchaser and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ ("Original Shareholders") pursuant to that certain Stock Purchase
Agreement (the "1997 Purchase Agreement") between Seller, as buyer, and Original
Shareholders, as sellers, executed on December 17, 1997 but effective as of
December 31, 1997 (the "1997 ▇▇▇▇ Acquisition"), and since such date, the
Company has been a wholly-owned subsidiary of Seller, however, its day-to-day
operations have been conducted and managed by Purchaser; and
WHEREAS, for various financial reasons, it has become necessary that
Seller file for protection from its creditors under Chapter 11 of the United
States Bankruptcy Code (the "Code") pursuant to a petition filed on even date
herewith in the United States Bankruptcy Court for the Southern District of New
York (the "Bankruptcy Proceeding"); and
WHEREAS, the parties have determined that it is in the best interests
of each of the Seller, the Purchaser and the Company that the Purchaser
reacquire the Shares and take ownership of the Company once again, and the
Seller will file an application with the court overseeing the Bankruptcy
Proceeding (the "Bankruptcy Court") for an order (the "Sale Order") authorizing
the sale of the Shares to occur pursuant to the terms of this Agreement under
Section 363 of the Code, subject to any higher or better offer that may be made
for the Shares; and
WHEREAS, this Agreement sets forth the terms and conditions to which
the parties have agreed and further contemplates the execution and delivery of
certain collateral agreements and the consummation of certain related
transactions hereinafter described;
NOW, THEREFORE, in consideration of the mutual promises and covenants
of the parties, and subject to the terms and conditions set forth herein, the
parties agree as follows:
1. SALE AND PURCHASE OF THE SHARES. Subject to the approval of the
Sale Order by the Bankruptcy Court, upon satisfaction or waiver of the
conditions set forth in Section 6 below, Seller agrees to sell, assign and
convey all of the Shares to Purchaser on the Closing Date (as hereinafter
defined), free and clear of all security interests, pledges, liens, charges and
encumbrances (except those which are expressly consented to and assumed by
Purchaser and/or the Company, including without limitation, the first priority
lien of Green Tree Financial Servicing Corporation, as agent ("Green Tree") for
itself and the Lenders under and as defined in the Loan and Security Agreement,
as defined below, and the second priority lien in favor of the Seller granted
herein), and, subject to the provisions of Section 8(b) hereof, upon payment of
the amounts set forth in Paragraph (C) of EXHIBIT "B" hereto, to transfer and
deliver to Purchaser the certificates evidencing such Shares, duly endorsed in
blank or accompanied by stock powers duly executed in blank in the form attached
as EXHIBIT "A" hereto. Purchaser agrees, subject to the satisfaction or waiver
of the conditions to its obligations set forth in Section 5 below, to purchase
and accept the Shares for the consideration set forth in Section 2 hereof.
2. PURCHASE PRICE AND PAYMENT. The total purchase price (the "Purchase
Price") for the Shares shall be $18,775,000 and shall be paid in the manner set
forth on EXHIBIT "B" attached hereto and incorporated herein by reference for
all purposes. Seller hereby agrees to execute and deliver from time to time at
the request of Purchaser and without further consideration, such additional
instruments of conveyance and transfer and to take such other action as
Purchaser may reasonably require more effectively to convey, assign, transfer
and deliver the Shares to Purchaser.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to and agrees with Purchaser that:
(a) ORGANIZATION AND STANDING OF THE COMPANY. The Company is a
corporation validly existing and in good standing under the laws of
the State of Texas. The Company has full corporate power and authority
to conduct its business as it is now being conducted and is not
qualified to do business as a foreign corporation in any other
jurisdiction. Attached hereto as SCHEDULE 3(A) are true, correct and
complete copies of the Company's Articles of Incorporation (duly
certified by the Secretary of State of the State of Texas) and By-Laws
(certified by the Secretary of the Company) as in effect on the date
of this Agreement (the "Signing Date"). Since December 31, 1997, there
have been no amendments to the organizational documents of the Company
except as set forth on Schedule 3(a).
(b) SUBSIDIARIES. The Company has no subsidiaries. Further, the
Company does not (i) own, directly or indirectly, any of the
outstanding capital stock or securities convertible into capital stock
of any other corporation, or (ii) own, directly or indirectly, any
participating interest in any partnership, joint venture or other
business enterprise.
(c) CAPITAL STOCK. The authorized capital stock of the Company
consists of 1,000,000 shares of Stock, $1.00 par value per share, of
which, on the Signing Date, 110,000 shares are validly issued and
outstanding, fully paid and nonassessable, one hundred (100%) percent
of which are owned by Seller. The Company has no treasury shares,
outstanding subscriptions, options or other agreements or commitments
obligating it to issue shares of capital stock. Between the Signing
Date and the Closing Date, Seller will not, and will not permit the
Company to issue or enter into any subscriptions, options, agreements
or other commitments in respect of the issuance, transfer, sale,
repurchase or encumbrance of any shares of capital stock.
(d) FINANCIAL STATEMENTS. The parties hereto recognize that the
Company, under the direction of the Purchaser, prepares the unaudited
financial statements of the Company and has prepared the unaudited
balance sheet of the Company as of August 31, 1999 (the "8/31/99
Balance Sheet") and the related unaudited statement of income for the
eight (8) month period then ended (the 8/31/99 Balance Sheet and the
related statement of income being herein referred to as the "8/31/99
Financial Statements" copies of which are attached as EXHIBIT "C". The
Purchaser acknowledges that the 8/31/99 Financial Statements include
the results of operations of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Group, Inc., a Texas
corporation ("▇▇▇▇▇▇ ▇▇▇▇▇▇") which was merged with and into the
Company effective July 26, 1999. Seller has reviewed the 8/31/99
Financial Statements. Seller represents and warrants to the Purchaser
that, to Seller's knowledge, the Company has no fixed, liquidated or
non-contingent liabilities except as (i) set forth in the 8/31/99
Financial Statements, (ii) incurred by the Company in the ordinary
course of business since August 31, 1999 (including without
limitation, the Green Tree Debt, as defined below), (iii) set forth in
SCHEDULE 3(D) hereof, and (iv) such other liabilities which are not
included in subsections (i) through (iii), but of which Purchaser has
knowledge on the Signing Date.
(e) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in any
schedule delivered to Purchaser pursuant to this Section 3 or except
as contemplated by this Agreement, since December 31, 1997, Seller has
not, on Seller's own action, and without the knowledge of Purchaser:
(i) caused the Company to issue, deliver or agree to issue or
deliver any stock, bonds or other corporate securities (whether
authorized and unissued or held in the treasury) or granted or
agreed to grant any options, warrants or other rights calling for
the issuance thereof;
(ii) caused the Company to borrow or agree to borrow any funds or
incur, or become subject to, any obligation or liability
(absolute or contingent) except for the indebtedness incurred
pursuant to that certain Loan and Security Agreement (the "Loan
and Security Agreement"), dated as of June 17, 1999, by and among
ZYX Inc. (formerly ▇▇▇▇/USA West Inc.), ▇▇▇▇/USA Chicago Inc.,
▇▇▇▇/USA New York Inc., the Company, and Year 2K Communications,
Inc., as Borrowers, the Lenders named therein, as Lenders; and
Green Tree, as Agent and Lender (such indebtedness being herein
referred to as the "Green Tree Debt"), and those specific
liabilities and obligations set forth on the 8/31/99 Financial
Statements;
(iii) caused the Company to pay any obligation or liability
(absolute or contingent) except in the ordinary course of
business in customary amounts;
(iv) caused the Company to pay any obligation or liability
(absolute or contingent) other than current liabilities reflected
in or shown on the Company's 8/31/99 Financial Statements and
obligations or liabilities incurred since the date thereof and
permitted to be so incurred by the foregoing clause (ii) of this
Section (e);
(v) caused the Company to declare or make, or agree to declare or
make, any payment of dividends or distribution of any assets of
any kind whatsoever to Seller (except for payments to Seller
pursuant to that certain Management Services Agreement dated as
of December 31, 1997 (the "Management Services Agreement") by and
between the Seller and the Company), or purchased or redeemed any
shares of its capital stock;
(vi) caused the Company to sell or transfer, or agree to sell or
transfer, any of its assets, properties or rights (except in the
ordinary course of business) or canceled or agreed to cancel, any
debts or claims;
(vii) caused the Company to enter or agree to enter into any
agreement or arrangement granting any preferential rights to
purchase substantially all of the assets, properties or rights of
the Company (including management and control thereof), or
requiring the consent of any party to the transfer and assignment
of such assets, properties or rights (or changes in management or
control thereof), or providing for the merger or consolidation of
the Company with or into another corporation;
(viii) caused the Company to make or permit any amendment or
termination of any contract, agreement or license to which it is
a party;
(ix) except as attached as part of SCHEDULE 3(E) hereto, caused
the Company to make any accrual or arrangement for a payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee;
(x) except as attached as part of SCHEDULE 3 hereto, caused the
Company to increase the rate of compensation payable or to become
payable by it to any of its officers or key employees compensated
at a rate in excess of $10,000.00 per annum; or make any increase
in any profit sharing, bonus, incentive, deferred compensation,
insurance, pension, retirement or other employee benefit plan,
payment or arrangement made to, for or with any such officers or
key employees;
(xi) except for the acquisition by the Company of ▇▇▇▇▇▇ ▇▇▇▇▇▇
Group, Inc. ("▇▇▇▇▇▇ ▇▇▇▇▇▇") (the "▇▇▇▇▇▇ ▇▇▇▇▇▇ Acquisition")
effective on July 22, 1999, caused the Company to make any
capital expenditures or commitments therefor aggregating more
than $10,000.00 or committed to purchase or acquire entities or
assets, or any other items in excess of its normal, ordinary and
usual requirements or at excessive prices, all computed based on
historical practices of the Company; or
(xii) suffered any damage, destruction or loss, whether or not
covered by insurance, which materially and adversely affects its
assets or business.
Between the Signing Date and the Closing Date, Seller shall not permit
the Company to do any of the things listed in clauses (i) through (xi)
of this Section (e) without the prior written consent of Purchaser.
(f) TAX MATTERS. All material United States, state, county and local
and other taxes, including without limitation, material income taxes,
payroll taxes, corporate franchise taxes, sales, excise and use taxes
and ad valorem taxes, due and payable by the Company for the periods
ended prior to the Signing Date, have been paid and there is no
further liability (whether or not disclosed on its returns) for any
such taxes relating to such periods, and no interest or penalties have
accrued or are accruing with respect thereto. The Company has timely
filed in materially correct form all material tax returns and reports
required to be filed by it on or before the date of this Agreement
with all such taxing authorities. The current liability for Federal,
state and local taxes reflected on the Company's Financial Statements,
if any, represents at the date thereof, reasonable and materially
adequate provision for the payment of all accrued and unpaid current
Federal, state and local taxes of the Company. No assessments of
deficiencies have been made against the Company, and no extensions of
time are in effect for the filing of any returns or the assessment of
deficiencies. No examinations by the IRS of the Federal income tax
returns of the Company for any taxable year are presently pending.
Seller has delivered to Purchaser true and complete copies of all of
the Company's Federal and state Income Tax Returns and payroll tax
returns of the Company filed for each of its fiscal years 1997 through
1999.
(g) CONTRACTS AND OTHER AGREEMENTS. Since the date of the 1997 ▇▇▇▇
Acquisition, except for the Management Services Agreement, the Green
Tree Debt and the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Acquisition, Seller has not, without
Purchaser's knowledge, caused the Company to enter into any mortgages,
liens, licenses, leases, agreements, or other executory contracts,
undertakings, commitments and agreements to which or by which the
Company is bound, whether written or oral, (x) in the ordinary course
of business involving the payment by or to the Company of more than
$10,000.00 in the aggregate with respect to any such contract,
undertaking, commitment or agreement, (y) other than in the ordinary
course of business, or (z) with any of Seller's Affiliates (the
"Contracts"). For the purposes of this Agreement, the term "Seller's
Affiliates" shall include all "affiliates" of Seller as such terms are
defined in the rules and regulations promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
(h) TITLE TO PROPERTIES AND RELATED MATTERS. Seller has not, and has
not caused the Company to, without Purchaser's knowledge, take any
action which would cause the assets reflected in the 8/31/99 Financial
Statements to be subject to any security interests, mortgages, liens,
claims, defects and encumbrances except (i) liens, charges and
encumbrances in favor of Green Tree pursuant to the Loan and Security
Agreement and the other Loan Documents, as defined therein, and (ii)
Permitted Liens (as such term is defined in the Loan and Security
Agreement). The Seller has not caused the Company to convey any of its
assets or properties since the 1997 ▇▇▇▇ Acquisition without the
knowledge of Purchaser, other than in the ordinary course of business.
Seller has not, without Purchaser's knowledge, caused the Company to
take any action to alter the rights of the Company to occupy the
Company's leasehold estate at ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(the "Old Katy Premises") since the 1997 ▇▇▇▇ Acquisition. To Seller's
knowledge, the rights of the Company to occupy the Old Katy Premises
continue to exist by virtue of a lease arrangement between the owner
of such property and the Company (entered into by the Company prior to
the 1997 ▇▇▇▇ Acquisition) and no other person or entity has any
interest in such lease arrangement.
(i) LITIGATION AND PROCEEDINGS. Except for those matters described in
SCHEDULE 3(I), Seller has no knowledge of any actions, suits or
proceedings pending or threatened against or affecting the Company, at
law or in equity, or before or by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, which involve the
possibility of any judgment or liability not fully covered by casualty
or liability insurance; and to Seller's knowledge, the Company is not
in default with respect to any judgment, order, writ, injunction,
decree, award, or, to the best of Seller's knowledge and belief, in
default with respect to any rule or regulation of an court, arbitrator
or governmental department, commission, board, bureau, agency or
instrumentality.
(j) GUARANTEES, ETC. Seller has not caused the Company, without
Purchaser's knowledge, to have given any guarantee, indemnity,
warranty or bond, or to incur any other similar obligation or create
any security for or in respect of liabilities, actual or contingent,
of any other person, other than the cross-guaranty provisions in the
Loan and Security Agreement.
(k) OFFICERS, DIRECTORS AND EMPLOYEES. Attached hereto as SCHEDULE
3(K) is a list of all officers and directors of the Company. Seller
has not, without Purchaser's knowledge, caused the Company to enter
into any employment arrangement or agreement with any person other
than those persons on the Company's last payroll dated September 30,
1999. The Seller has not caused the Company to, without Purchaser's
knowledge, owe to any officer, director, shareholder or employee of
the Company any amounts other than as reflected in the 8/31/99
Financial Statements or pursuant to the agreements referenced in any
schedules hereto.
(l) ABSENCE OF ADVERSE AGREEMENTS. Seller has not, without Purchaser's
knowledge, caused the Company to become a party to any instrument or
agreement or subject to any charter or other corporate restriction or
any judgment, order, writ, injunction, decree, award, rule or
regulation which materially and adversely affects the business,
properties, assets or condition, financial or otherwise, of the
Company.
(m) NO DEFAULTS. Except for defaults under the Loan and Security
Agreement, the Seller has not, without Purchaser's knowledge, caused
the Company to be in default under, nor has the Seller, without
Purchaser's knowledge, caused any event to occur which with notice or
lapse of time or both, could result in a waiver (except caused by the
statute of limitations) of any material right or default under, any
outstanding indenture, mortgage, lease, contract or agreement to which
the Company is a party or by which the Company or its assets may be
bound, or under any provision of the Company's Articles of
Incorporation or By-Laws (or comparable instruments).
(n) BANKS, SIGNATORIES. Seller has not established, without
Purchaser's knowledge, with any banks or other financial institutions
accounts or relationships in the Company's name which accounts are not
used by the Company in the ordinary course of business.
(o) NO CONFLICTS. Subject to the Bankruptcy Proceeding, the execution
and performance of this Agreement and the transactions contemplated
hereby will not violate any provision of or result in a breach of or
constitute a default under the Articles of Incorporation or By-Laws of
the Company, or under any order, writ, injunction or decree of any
court, governmental agency or arbitration tribunal, or under any
contract, agreement or instrument to which the Company is a party or
by which its properties may be bound, or any law, statute or
regulation.
(p) BOOKS AND RECORDS. The corporate books and records of the Company
are in all material respects complete and correct and have been
maintained by Seller in accordance with good business practice since
the 1997 ▇▇▇▇ Acquisition and reflect a true record of all meetings or
proceedings of the Board of Directors and shareholders of the Company
conducted since December 31, 1997.
(q) BROKERS. Neither the Company nor Seller are a party to or in any
way obligated under a contract or other agreement, and there are no
outstanding claims against any of them, for the payment of any
broker's or finder's fees in connection with the origin, negotiation,
execution or performance of this Agreement.
(r) TITLE TO SHARES AND AUTHORITY. Subject to the entry of the Sale
Order, Seller has full right, power and authority and due
authorization to sell and transfer the Shares hereunder, and upon the
delivery of and payment for such Shares, the Seller will transfer to
Purchaser valid title thereto, free and clear of any security
interests, pledges, liens or similar encumbrances, except for the
security interests granted to Green Tree pursuant to the transactions
contemplated by the Loan and Security Agreement and the Pledge
Agreement (as defined below), and to the Seller hereunder. Subject to
the entry of the Sale Order, this Agreement constitutes the valid and
legally binding obligation of Seller, enforceable in accordance with
its terms.
(s) DISCLOSURE. Neither this Agreement, the schedules attached hereto,
nor any other document furnished by the Seller to Purchaser, taken as
a whole, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained
herein and therein not misleading.
(t) INSPECTIONS. Between the Signing Date and the date of Closing,
Seller shall afford Purchaser and its agents the opportunity to make
full and complete inspection of (i) the Company's books and records
(including without limitation, the Financial Statements and the
Company's tax returns, accounts receivable, accounts payable, etc.),
(ii) the Company's assets (including without limitation, the tangible
and intangible personal property); and (iii) Seller's books and
records as they pertain to the Company.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Purchaser
represents and warrants to Seller that:
(a) NO VIOLATION. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any provision of any agreement or other
obligation to which the Purchaser is a party or by which the Purchaser
is bound or to which their assets are subject, or (ii) violate or
result in a breach of, constitute a default under, any judgment,
order, decree, rule or regulation of any court or governmental agency
to which Purchaser is subject.
(b) ENFORCEABILITY. This Agreement constitutes the valid and legally
binding obligation of Purchaser, enforceable in accordance with its
terms.
(c) BROKERS. Purchaser is not a party to or in any way obligated under
a contract or other agreement, and there are no outstanding claims
against it, for the payment of any broker's or finder's fees in
connection with the origin, negotiation, execution or performance of
this Agreement.
(d) KNOWLEDGE. Purchaser has no knowledge of any facts or
circumstances which would, if true, cause any of the representations
or warranties made by Seller in Section 3 hereof to be false or
inaccurate as of the date so made.
5. ADDITIONAL COVENANTS AND AGREEMENTS OF SELLER.
(a) RESIGNATIONS. At the Closing, Seller agrees to deliver to
Purchaser the resignations of all of the current officers and
directors of the Company who are not named as a Purchaser hereunder
(including without limitation, ▇▇▇▇▇▇▇▇ Veru and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇),
as well as the resignation of any employee of the Company the
Purchaser may require.
(b) DELIVERY OF STOCK CERTIFICATES AND OTHER MATERIALS. Purchaser
hereby acknowledges that Green Tree currently maintains possession of
a certificate evidencing the Shares pursuant to a Pledge Agreement
(the "Pledge Agreement") dated as of June 17, 1999, by and between the
Seller and Green Tree, as agent, for its benefit and the benefit of
the Lenders under the Loan and Security Agreement accompanied by a
stock power executed in blank (the "Blank Stock Power"). At the
Closing, Seller shall deliver to (i) Green Tree executed stock powers
in the forms of EXHIBIT "A" hereto (the "Seller Stock Powers") in
exchange for the Blank Stock power, and (ii) Purchaser all minute
books, stock certificate books, corporate seals and other corporate
books, records, data and papers of the Company. Purchaser agrees and
acknowledges that Green Tree will continue to maintain possession of
the certificate evidencing the Shares and the Seller Stock Powers and
the Purchaser agrees to deliver to Green Tree stock powers executed in
blank (the "Purchaser Stock Powers") sufficient to allow (i) Green
Tree to maintain its first perfected security interest in the Shares,
and (ii) Seller to obtain a second priority security interest in the
Shares.
(c) COVENANT AGAINST COMPETITION. Seller agrees that from and after
the Closing Date, it will not, directly or indirectly including
through any subsidiary, parent or affiliated corporation, for a period
of one (1) year, but not to exceed the maximum period allowed by law,
(1) solicit or accept (either on his own account or as the agent of
another person) the business of any person in connection with public
relations, marketing or advertising who has been a client of the
Company for such services during the period of twenty-four (24) months
prior to the Closing Date; (2) induce, solicit or endeavor to entice
any person to leave the service or employment of the Company; or (3)
use the trade names "▇▇▇▇▇▇▇ ▇▇▇▇▇," "FK&P," "▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Partners," "▇▇▇▇▇▇▇ ▇▇▇▇▇ Public Relations," "▇▇▇▇▇▇▇ ▇▇▇▇▇ Direct,"
"▇▇▇▇▇▇▇ ▇▇▇▇▇ Yellow Pages," and "Southwest Information Resources"
(or any name intended or likely to be confused with any of such trade
names). Seller hereby acknowledges that the foregoing restrictions are
reasonable in scope and necessary for the protection of the goodwill
of the Company and that a breach of this covenant would cause
Purchaser and the Company substantial damage impossible of precise
determination. Accordingly, in addition to such other rights and
remedies as may be available to Purchaser and the Company in the event
of any breach, actual or threatened, of the foregoing provisions of
this Section 5(c), Purchaser and the Company (or any successor or
successors thereof), shall be entitled to enjoin such breach, actual
or threatened. Seller further agrees that should any portion of the
foregoing covenant be unenforceable because of the scope thereof or
the period covered thereby or otherwise, the covenant shall be deemed
to be reduced and limited to enable it to be enforced to the extent
permissible under the laws and public policies in the jurisdiction in
which enforcement is sought.
(d) CONSENTS. Seller (and to the extent required the Company) shall
obtain all approvals and consents which must be obtained in order to
effectuate the transaction contemplated hereby and to satisfy the
terms and conditions of this Agreement.
(e) SECTION 338(H)(10) ELECTION. Seller agrees to cooperate with
Purchaser, after Closing, in the preparation and filing of a Section
338(H)(10) election with the Internal Revenue Service in connection
with the transaction contemplated by this Agreement, subject to
Seller's determination that such an election does not adversely affect
Seller.
6. ADDITIONAL COVENANTS AND AGREEMENTS OF PURCHASER.
(a) CASH INFUSION INTO COMPANY. Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ shall
individually infuse the sum of $2,000,000 into the Company
contemporaneous with the Closing of the transactions evidenced by this
Agreement, which infusion shall be either in the form of equity or a
loan to the Company (at the sole discretion of Messrs. ▇▇▇▇▇▇▇ and
▇▇▇▇▇) (subordinated to the Green Tree Debt pursuant to a
subordination agreement acceptable to Green Tree and subordinated to
Purchaser's obligation to the Seller hereunder pursuant to a
subordination agreement reasonably acceptable to Seller), which sum
shall be used solely to satisfy current liabilities of the Company
(excluding the Green Tree Debt and the Purchaser's obligation to the
Seller hereunder). Messrs. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ further agree to infuse
up to $3,000,000 in additional funds into the Company, on an as-needed
basis in their business judgment, after the Closing, also to be used
solely to satisfy current liabilities of the Company (excluding the
Green Tree Debt and the Purchaser's obligation to Seller hereunder).
(b) PAYMENT. Purchaser and the Company jointly agree to pay on or
before the Revolving Loan Maturity Date (as defined in EXHIBIT "D"
hereof) the aggregate sum of $9,000,000 (together with interest, fees,
penalties, expenses or similar charges, accruing thereon after the
Signing Date) to Green Tree and/or Seller, as applicable, in
accordance with Section (C) of EXHIBIT "B" hereto.
(c) JUNIOR LIEN ON SHARES. Purchaser hereby pledges, assigns,
transfers and grants to Seller a second priority security interest in
the Shares and all assets of the Company to secure Purchaser's
obligations to Seller hereunder, junior in right only to the first
lien on the Shares and assets of the Company created by the Pledge
Agreement and the Loan and Security Agreement and the pledge agreement
to be executed by Purchasers in favor of Green Tree and the Lenders.
Purchaser agrees that upon the payment in full of Purchaser's
obligations to Green Tree and the Lenders in accordance with the Green
Tree Forbearance Agreement (as defined below), possession of the
certificates evidencing the Shares, the Blank Stock Powers, the Seller
Stock Powers and the Purchaser Stock Powers shall be delivered by
Green Tree to Seller until such time as Purchaser has paid the entire
Purchase Price in full, whereupon such lien of Seller shall be void
and of no further force or effect, and possession of the certificates
evidencing the Shares, the Blank Stock Powers, the Seller Stock Powers
and the Purchaser Stock Powers shall be delivered by Seller to
Purchaser.
7. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate the transactions contemplated hereby shall be subject to
the satisfaction, on or before the Closing Date, of all of the following
conditions unless expressly waived in writing by Purchaser:
(a) REPRESENTATIONS AND COVENANTS. All representations and warranties
of Seller contained in this Agreement shall be true in all material
respects on and as of the Closing Date as if such representations and
warranties were made on and as of such date (except to the extent any
such representation or warranty is made as of a specified date), and
Seller shall have performed all agreements and covenants to be
performed by them on or prior to the Closing Date, and Purchaser shall
have received a certificate dated the Closing Date, signed by Seller,
to the effect that such is the case.
(b) OPINION OF COUNSEL. Purchaser shall have received the opinion of
Stroock & Stroock & ▇▇▇▇▇ LLP, counsel for Seller and the Company,
dated the Closing Date, in a form and containing such opinions as may
be reasonably satisfactory to Purchaser and Purchaser's counsel in
their reasonable discretion.
(c) OTHER LEGAL MATTERS. The Sale Order shall be reasonably acceptable
to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Pulman, P.C., counsel for Purchaser.
(d) NO DAMAGE OR DESTRUCTION; NO MATERIAL DECLINE IN COMPANY REVENUES.
Prior to the Closing Date, there shall not have occurred: (1) any
casualty to any facility, property or equipment owned or used by the
Company as a result of which either (i) the monetary amount of damage
or destruction aggregates five (5%) percent or more of the aggregate
book value shown on the books of account of the entire facilities,
properties and equipment of the Company, or (ii) the total monetary
amount of damage or destruction is less than five (5%) percent of the
aggregate book value shown on the books of account of the entire
facilities, properties and equipment of the Company, but more than
$50,000, and such loss shall not be substantially covered by valid,
existing insurance underwritten by responsible insurers, or (2) any
material decline in the value of the Company from that existing on the
Signing Date (it being agreed that the term "material decline" as used
above means a decline either in the annualized gross income of the
Company by $3,000,000 and/or a loss of Company clients which in the
aggregate account for $3,000,000 or more in annual gross income).
(e) ABSENCE OF LITIGATION. Except for the Bankruptcy Proceeding, no
material litigation, governmental action, insolvency, receivership or
other proceeding shall have been threatened, asserted or commenced
with respect to the transaction contemplated herein (the word
"material" herein being defined as being in excess of $25,000 in
controversy).
(f) CONSENTS. Seller (and the Company, if necessary) shall have
obtained all approvals and consents which must be obtained in order to
effectuate the transaction contemplated hereby and to satisfy the
terms and conditions of this Agreement, including without limitation,
(1) the entry of the Sale Order, and (2) the consent of Green Tree and
the Lenders to the transactions evidenced by this Agreement and the
execution and effectiveness, contemporaneous with the Closing, by
Green Tree and the Lenders (as defined in the Loan and Security
Agreement) of a Forbearance and Amendment Agreement substantially in
the form attached hereto as EXHIBIT "D" (the "Green Tree Forbearance
Agreement").
(g) RELEASE UNDER MANAGEMENT SERVICES AGREEMENT. Purchaser shall have
received, in reasonably satisfactory form and substance, the release
of the Company from its obligations to Seller under the Management
Services Agreement.
8. CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of Seller to
consummate the transaction contemplated hereby shall be subject to the
satisfaction, on or before the Closing Date, of all of the following conditions
unless expressly waived in writing by Seller:
(a) REPRESENTATIONS AND COVENANTS. All representations and warranties
of Purchaser contained in this Agreement shall be true in all material
respects on and as of the Closing Date as if such representations and
warranties were made on and as of such date (except to the extent any
such representation or warranty is made as of a specified date), and
Purchaser shall have performed all agreements and covenants to be
performed by them on or prior to the Closing Date, and Seller shall
have received a certificate dated the Closing Date, signed by
Purchaser, to the effect that such is the case.
(b) CONSENTS. Seller (and the Company, if necessary) shall have
obtained all approvals and consents which must be obtained in order to
effectuate the transaction contemplated hereby and to satisfy the
terms and conditions of this Agreement, including without limitation,
(1) the entry of the Sale Order, and (2) the consent of Green Tree and
the Lenders to the transactions evidenced by this Agreement and the
execution and effectiveness, contemporaneous with the Closing, by
Green Tree and the Lenders (as defined in the Loan and Security
Agreement) of the Green Tree Forbearance Agreement.
(c) ▇▇▇▇▇▇ ▇▇▇▇▇▇ GUARANTY RELEASE. Purchaser shall have obtained the
agreement of the former shareholders of ▇▇▇▇▇▇ ▇▇▇▇▇▇ to their release
of Seller from its guaranty of the earn out portion of the purchase
price which the Company is primarily obligated to pay.
(d) RELEASE OF INTERCOMPANY DEBT. Seller shall have received, in
reasonably satisfactory form and substance, the release of the Seller
from the Company of all indebtedness owing from the Seller to the
Company, as detailed in Section (A) of EXHIBIT "B" hereto.
(e) RELEASE BY ORIGINAL SHAREHOLDERS. Seller shall have received
evidence reasonably satisfactory in form and substance of the release
of Seller from (i) its guaranty of the obligations of the Company
pursuant to the Company's Employment Agreements with each of Messrs.
▇▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇, and (ii) its obligations to make further
payments of Purchase Price to the Original Shareholders pursuant to
the 1997 Purchase Agreement.
(f) RETURN OF WARRANTS. Each of the Original Shareholders shall return
to the Seller any and all warrants to purchase common stock of the
Seller which were originally issued to such Original Shareholder in
connection with the 1997 ▇▇▇▇ Acquisition.
(g) SECURITY INTEREST. Purchaser shall have granted to Seller such
security interests in the Shares and the assets of the Company as are
described in Section 6(c) hereof pursuant to a pledge agreement
reasonably acceptable to Seller and Purchaser.
9. THE CLOSING AND THE CLOSING DATE. The execution and delivery of
this Agreement and the instruments, certificates and other documents required
hereunder (the "Closing") shall take place at the offices of Seller at ▇▇ ▇.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ within three (3) business days of the date on
which the Sale Order is entered, or at such other time and day or other location
as may be mutually agreed by Purchaser and Seller. The date and time of such
execution and delivery is herein called the "Closing Date". On the Closing Date,
certificates representing the Shares shall remain in Green Tree's possession
(although actual title thereto shall pass to the Purchaser), and the minute
books, stock certificate books, corporate seals and other corporate books,
records, data and papers of the Company shall be delivered by Seller to
Purchaser against delivery of the Purchase Price pursuant to Section 2 hereof.
10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) NATURE OF STATEMENTS. All statements contained in any schedule or
any certificate or other instrument delivered by or on behalf of
Seller pursuant to this Agreement or in connection with the
transactions contemplated hereby shall be deemed representations and
warranties made by Seller.
(b) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, covenants, agreements and undertakings contained herein or
in any schedule, certificate or other document shall remain operative
and in full force and effect, and shall survive the Closing Date and
the delivery of all consideration and documents pursuant to this
Agreement, and shall continue in effect for a period of eighteen (18)
months after the Closing Date and, as to representations made by
Seller concerning or affecting any tax liability of the Company, until
a date which is six (6) months after the statute of limitations has
run against the Federal, state and local government; provided,
however, that any such representation, warranty, covenant, agreement
or undertaking as to which a bona fide claim shall have been asserted
during such survival period shall continue in effect until such time
as such claim shall have been resolved in accordance with the terms of
this Agreement. Notwithstanding anything to the contrary in this
Agreement, any claim for breach of any representations, warranties,
covenants, agreements and undertakings contained herein or in any
schedule, certificate or other document required to be delivered
hereby or any other claim in respect of the transactions contemplated
herein may not be setoff or otherwise offset against the Green Tree
Debt or the Company's liability therefor.
11. INDEMNIFICATION BY SELLER AND RELATED MATTERS.
(a) INDEMNIFICATION BY SELLER. Seller agrees to defend, indemnify and
hold harmless Purchaser and the Company, and their respective
successors and assigns, from, against and in respect of any and all
loss or damage resulting from:
(i) the material breach by Seller of any of the warranties,
representations, covenants, agreements or undertakings contained
herein;
(ii) any indebtedness, liability and/or obligation of the Seller
or any of its non-Company subsidiary or affiliated entities,
including any Green Tree Debt in excess of the amount specified
in Section (C) of EXHIBIT "B" hereto;
(iii) any pending or threatened litigation against Seller which
relates to the time period prior to the Closing Date which is not
disclosed on the schedules attached hereto, including any pending
or threatened litigation against the Company arising out of
claims by any person or entity who is a current or former client
of Seller or its non-Company subsidiaries or affiliates against
the Company for repayment of monies paid by such client to Seller
or its non-Company subsidiaries or affiliates for the purchase of
media but which were never paid by Seller or the non-Company
subsidiaries or affiliates to the media vendors entitled thereto,
including without limitation, any claim by ▇▇▇▇▇▇ ▇▇▇▇▇, Ltd. and
Valvoline; and any other liability whatsoever for any liability
of Seller, any Other Borrower (as defined in EXHIBIT "B" hereto),
any non-Company subsidiary or affiliate of Seller; and
(iv) any liability arising out of any and all actions, suits,
proceedings, claims, demands, judgments, costs and expenses
(including reasonable legal and accounting fees) incident to any
of the foregoing (collectively, the "Losses").
(b) PROCEDURE FOR MAKING CLAIMS. Subject to Seller's rights, duties
and obligations as a debtor-in-possession in the Bankruptcy
Proceeding, if and whenever Purchaser desires to claim indemnification
by Seller pursuant to the provisions of this Section 11, Purchaser
shall promptly deliver to Seller a certificate signed by Purchaser
(the "Notice of Claim") (i) stating that Purchaser or the Company,
their successors and assigns, has paid or properly accrued losses,
damages or expenses in an aggregate stated amount to which Purchaser
is entitled to indemnification pursuant to this Section 11, provided,
however, such notice shall be given prior to the payment of an
indemnity item if reasonable in light of the circumstances causing, or
threatening to cause, a loss, and (ii) specifying the individual items
of loss, damage or expense included in the amount so stated, the date
each such item was paid or properly accrued and the nature of the
misrepresentation, breach of warranty or claim to which such item is
related, provided, however, failure to notify Seller shall relieve
Seller from liability only if they are prejudiced thereby. Seller
shall have the right to defend any claim by a third party at the
expense of Seller. Purchaser and the Company, as the case may be,
shall provide to Seller prompt and complete disclosure of all
pertinent information in the possession of or available to Purchaser
or the Company and shall extend full and timely assistance in the
cooperation in the investigation of the defense of the claim, suit or
action, with respect to which such indemnification is claimed. Seller,
in the defense of any such suit, action or proceeding, shall not
consent to the entry of any judgment or decree except with the written
consent of Purchaser and the Company, nor enter into any settlement
(except the written consent of Purchaser and the Company) which does
not include as an unconditional term thereof the giving by the
claimant or plaintiff to Purchaser and the Company of a release from
every liability in respect of such claim, suit, action or proceeding.
In any defense of any claim by a third party, Purchaser and the
Company shall have the right (but shall not be obligated) to
participate in such defense through counsel of its own selection and
at its own expense.
12. INDEMNIFICATION BY PURCHASER AND RELATED MATTERS.
(a) INDEMNIFICATION BY PURCHASER. Purchaser agrees to defend,
indemnify and hold harmless Seller, and its successors and assigns,
from, against and in respect of any and all loss or damage resulting
from:
(i) the material breach by Purchaser of any of the warranties,
representations, covenants, agreements or undertakings contained
herein; and
(ii) any liabilities of the Company arising after the
consummation of the transactions contemplated by this Agreement;
and
(iii) any liability arising out of any and all actions, suits,
proceedings, claims, demands, judgments, costs and expenses
(including reasonable legal and accounting fees) incident to any
of the foregoing (collectively, the "Losses").
(b) PROCEDURE FOR MAKING CLAIMS. If and whenever Seller desires to
claim indemnification by Purchaser pursuant to the provisions of this
Section 12, Seller shall promptly deliver to Purchaser a certificate
signed by Seller (the "Notice of Claim") (i) stating that Seller, its
successors and assigns, has paid or properly accrued losses, damages
or expenses in an aggregate stated amount to which Seller is entitled
to indemnification pursuant to this Section 12, provided, however,
such notice shall be given prior to the payment of an indemnity item
if reasonable in light of the circumstances causing, or threatening to
cause, a loss, and (ii) specifying the individual items of loss,
damage or expense included in the amount so stated, the date each such
item was paid or properly accrued and the nature of the
misrepresentation, breach of warranty or claim to which such item is
related, provided, however, failure to notify Purchaser shall relieve
Purchaser from liability only if it is prejudiced thereby. Purchaser
shall have the right to defend any claim by a third party at the
expense of Purchaser. Seller shall provide to Purchaser prompt and
complete disclosure of all pertinent information in the possession of
or available to Seller and shall extend full and timely assistance in
the cooperation in the investigation of the defense of the claim, suit
or action, with respect to which such indemnification is claimed.
Purchaser, in the defense of any such suit, action or proceeding,
shall not consent to the entry of any judgment or decree except with
the written consent of Seller nor enter into any settlement (except
the written consent of Seller) which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
Seller of a release from every liability in respect of such claim,
suit, action or proceeding. In any defense of any claim by a third
party, Seller shall have the right (but shall not be obligated) to
participate in such defense through counsel of its own selection and
at its own expense. Each Purchaser's indemnity obligation hereunder
shall not be joint and several, but rather be limited solely to each
Purchaser's respective ownership interest in the Company as of the
Closing Date.
13. EXPENSES. Seller and Purchaser shall pay their or its own expenses
(including without limitation counsel and accounting fees and expenses) incident
to the preparation and carrying out of this Agreement and the consummation of
the transactions contemplated hereby.
14. NOTICES. All notices, demands and requests which may be given or
which are required to be given by either party to the other, and any exercise of
a right of termination provided by this Agreement, shall be in writing and shall
be deemed effective when either: (i) personally delivered to the intended
recipient; (ii) sent by certified or registered mail, return receipt requested,
addressed to the intended recipient at the address specified below; (iii)
delivered in person to the address set forth below for the party to which the
notice was given; (iv) deposited into the custody of a nationally recognized
overnight delivery service such as Federal Express Corporation, ▇▇▇▇▇ or
Purolator, addressed to such party at the address specified below; or (v) sent
by facsimile, telegram or telex, provided that receipt for such facsimile,
telegram or telex is verified by the sender and followed by a notice sent in
accordance with one of the other provisions set forth above. Notices shall be
effective on the date of delivery or receipt, or, if delivery is not accepted,
on the earlier of the date that delivery is refused or three (3) days after the
date the notice is mailed. For purposes of this Paragraph, the addresses of the
parties for all notices are as follows (unless changes by similar notice in
writing are given by the particular person whose address is to be changed):
(a) if to Seller, to ▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇), with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Stroock &
Stroock & ▇▇▇▇▇, LLP., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, and with a
copy to ▇▇ ▇▇▇▇▇, Esq., Togut, ▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, and with a copy to Green Tree's counsel, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, Esq., ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
(b) or if to Purchaser, to the attention of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, with a copy to: ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Pulman, P.C., ▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and with a copy to Green
Tree's counsel, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Any party hereto may designate a different address by written notice given to
the other parties.
15. SATISFACTION OF CONDITIONS; TERMINATION.
(a) BEST EFFORTS TO SATISFY CONDITIONS. Seller and Purchaser agree to
use their mutual reasonable best efforts to bring about the
satisfaction of the conditions specified in Sections 7 and 8 hereof.
(b) TERMINATION. This Agreement may be terminated by Purchaser, if a
material default shall be made by Seller in the observance or in the
due and timely performance by Seller of any of the covenants of Seller
herein contained, or if there shall have been a material breach by
Seller of any of the warranties and representations of Seller herein
contained, or if the conditions of this Agreement to be complied with
or performed at or before the Closing shall not have been complied
with or performed at the time required for such compliance or
performance and such non-compliance or non-performance shall not have
been waived by Purchaser. In the event of termination by Purchaser as
provided above, written notice shall forthwith be given to the other
party. Further, with respect to the Bankruptcy Proceeding, in the
event the Sale Order is not issued by November 15, 1999, Seller and
Purchaser shall each have the right to terminate this Agreement by
written notice to the other party. In the event the Bankruptcy Court
refuses to approve the transaction contemplated by this Agreement,
this Agreement shall automatically terminate on the date the
Bankruptcy Court announces its refusal to grant such approval.
16. MISCELLANEOUS.
(a) DEFINITION OF KNOWLEDGE. Unless otherwise specified herein, the
"knowledge" of any party means the actual knowledge of such party and,
if such party is a corporation, the actual knowledge of any executive
officer of such corporation.
(b) ASSIGNMENT. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties, provided,
however, Purchaser shall have the right at any time prior to Closing
to assign this Agreement to a corporation wholly-owned by Purchaser
without releasing Purchaser from Purchaser's obligations hereunder.
Subject to the foregoing, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns.
(c) SECTION AND PARAGRAPH HEADINGS. The Section and Paragraph headings
of this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
(d) AMENDMENT. This Agreement may be amended only by an instrument in
writing executed by the parties hereto, and with the written consent
of Green Tree.
(e) ENTIRE AGREEMENT. This Agreement and the exhibits, schedules,
certificates and documents referred to herein constitute the entire
agreement of the parties, and supersede all understandings with
respect to the subject matter hereof.
(f) PUBLIC ANNOUNCEMENTS. No publication and/or press release of any
nature shall be issued pertaining to this Agreement or the transaction
contemplated hereby without the prior written approval of Purchaser,
except as may be required by law and/or deemed reasonably necessary by
Seller in satisfying its duties and obligations as a
debtor-in-possession under the Code.
(g) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS NOTWITHSTANDING
CONFLICTS OF LAW OR CHOICE OF LAW CONSIDERATIONS, AND VENUE FOR ANY
DISPUTE ARISING HEREUNDER PRIOR TO THE COMPLETION AND CLOSURE OF THE
BANKRUPTCY PROCEEDING SHALL BE SUBJECT TO THE CONTINUING JURISDICTION
OF THE BANKRUPTCY COURT IN THE BANKRUPTCY PROCEEDING, AND THE PARTIES
HERETO IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE BANKRUPTCY COURT
IN THE BANKRUPTCY PROCEEDING; CONVERSELY, VENUE FOR ANY DISPUTE
ARISING HEREUNDER AFTER THE COMPLETION AND CLOSURE OF THE BANKRUPTCY
PROCEEDING SHALL BE IN ▇▇▇▇▇▇ COUNTY, TEXAS, AND THE PARTIES HERETO
IRREVOCABLY SUBMIT TO SUCH JURISDICTION OF THE COURTS OF THE STATE OF
TEXAS.
(i) TIME. Time is of the essence in the closing of the transactions
contemplated by this Agreement.
(j) GREEN TREE'S RIGHTS; THIRD-PARTY BENEFICIARY. The parties agree
and acknowledge that the rights, benefits and remedies of Seller under
the Agreement or any agreement, instrument or document executed in
connection herewith constitutes proceeds of the Pledged Collateral (as
defined in the Pledge Agreement) and therefore are subject to the
first priority lien of Green Tree for the benefit of itself as agent
and for the benefit of the Lenders. In addition, the parties hereto
acknowledge and agree that Green Tree, as Agent (for the benefit of
itself and for the benefit of the Lenders ) under the Loan and
Security Agreement, is an intended third-party beneficiary of the
provisions of this Agreement relating to Green Tree and shall be
entitled to enforce the rights and remedies of Seller under this
Agreement or any agreement, instrument or document executed in
connection therewith as if a signatory hereto.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the date and year first above written.
(SIGNATURES OF SELLER AND PURCHASER APPEAR ON THE FOLLOWING 2 PAGES)
SELLER:
▇▇▇▇/USA INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
Title: EVP/CFO
-----------------------
PURCHASER:
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇
EXHIBITS AND SCHEDULES
EXHIBITS
A form of Stock Powers
B Itemization of Purchase Price
C 8/31/99 Financial Statements [OMITTED]
D Forbearance and Amendment Agreement
SCHEDULES DESCRIPTION
3(a) Company corporate organizational documents
3(d) Fixed, Liquidated or Non-contingent Liabilities
3(e) Contracts entered into by the Company through Seller's action
3(i) Litigation and Proceedings
3(k) Officers, Directors and Employees
EXHIBIT "A"
[FORM OF STOCK POWERS]
[SEE ATTACHED]
STOCK POWER
FOR VALUE RECEIVED, ▇▇▇▇/USA INC., A DELAWARE CORPORATION hereby
sells, assigns and transfers unto ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ FORTY-EIGHT THOUSAND NINE
HUNDRED SEVENTY-TWO (48,972) shares of the Common Stock, $1.00 par value per
share, of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC., a Texas corporation, standing in its name on
the books of said corporation represented by Certificate No. ______ herewith,
and does hereby irrevocably constitute and appoint ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ its
attorney to transfer the said stock on the Books of the within named Company
with full power of substitution in the premises.
Executed effective for all purposes as of ___________________, 1999.
▇▇▇▇/USA INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
WITNESS:
----------------------------
STOCK POWER
FOR VALUE RECEIVED, ▇▇▇▇/USA INC., A DELAWARE CORPORATION hereby
sells, assigns and transfers unto ▇▇▇▇▇ ▇▇▇▇▇▇ FIVE HUNDRED THREE (503) shares
of the Common Stock, $1.00 par value per share, of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC., a
Texas corporation, standing in its name on the books of said corporation
represented by Certificate No. ______ herewith, and does hereby irrevocably
constitute and appoint ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ its attorney to transfer the said
stock on the Books of the within named Company with full power of substitution
in the premises.
Executed effective for all purposes as of __________________, 1999.
▇▇▇▇/USA INC.
By:
-----------------------------
Name:
----------------------------
Title:
---------------------------
WITNESS:
------------------------------
STOCK POWER
FOR VALUE RECEIVED, ▇▇▇▇/USA INC., A DELAWARE CORPORATION hereby
sells, assigns and transfers unto ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ELEVEN THOUSAND FIFTY
(11,050) shares of the Common Stock, $1.00 par value per share, of ▇▇▇▇▇▇▇ &
▇▇▇▇▇, INC., a Texas corporation, standing in its name on the books of said
corporation represented by Certificate No. ______ herewith, and does hereby
irrevocably constitute and appoint ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ its attorney to transfer
the said stock on the Books of the within named Company with full power of
substitution in the premises.
Executed effective for all purposes as of _____________________, 1999.
▇▇▇▇/USA INC.
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
WITNESS:
------------------------
STOCK POWER
FOR VALUE RECEIVED, ▇▇▇▇/USA INC., A DELAWARE CORPORATION hereby
sells, assigns and transfers unto ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, FIVE HUNDRED THREE (503)
shares of the Common Stock, $1.00 par value per share, of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.,
a Texas corporation, standing in its name on the books of said corporation
represented by Certificate No. ______ herewith, and does hereby irrevocably
constitute and appoint ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ its attorney to transfer the said
stock on the Books of the within named Company with full power of substitution
in the premises.
Executed effective for all purposes as of ____________________, 1999.
▇▇▇▇/USA INC.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
WITNESS:
---------------------
STOCK POWER
FOR VALUE RECEIVED, ▇▇▇▇/USA INC., A DELAWARE CORPORATION hereby
sells, assigns and transfers unto ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, FORTY-EIGHT THOUSAND NINE
HUNDRED SEVENTY-TWO (48,972) shares of the Common Stock, $1.00 par value per
share, of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC., a Texas corporation, standing in its name on
the books of said corporation represented by Certificate No. ______ herewith,
and does hereby irrevocably constitute and appoint ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ its
attorney to transfer the said stock on the Books of the within named Company
with full power of substitution in the premises.
Executed effective for all purposes as of ________________ , 1999.
▇▇▇▇/USA INC.
By:
--------------------------
Name:
------------------------
Title:
------------------------
WITNESS:
---------------------
EXHIBIT "B"
ITEMIZATION OF PURCHASE PRICE
(A) the release of Seller from its repayment obligation
arising out of the net intercompany balance owing by
Seller to the Company on the Closing Date, which as of
August 31, 1999 is approximately the following sum:
$ 5,400,000
(B) the release of Seller by Original Shareholders of the
remaining balance of the Purchase Price under Section
2.3 of 1997 Purchase Agreement (it being understood and
agreed that the Company shall assume the payment
obligation of Seller for such remaining balance of the
Purchase Price under Section 2.3 of the 1997 Purchase
Agreement pursuant to an assumption agreement executed
by the Company at the Closing); and
$ 4,375,000
(C) the Company's obligation to pay to Green Tree and the
Lenders pursuant to the terms of the Green Tree
Forbearance Agreement (the date of such payment being
herein referred to as the "Settlement Date"):
(i) up to $9,000,000 of the total Obligations (as such
term is defined in the Loan and Security
Agreement) outstanding on the Signing Date (all
such amounts being herein referred to as the "FKP
Obligations"); PLUS
(ii) any interest, fees, penalties, expenses or similar
charges which may accrue on the FKP Obligations
after the Signing Date (the "FKP Additional
Amounts").
Provided however, it is further agreed that:
(I) if, on the Signing Date, the FKP Obligations are
less than $9,000,000, then the difference between
$9,000,000 and the FKP Obligations shall be paid
to Seller in cash by the Company and Purchaser
(each such Purchaser being liable only for his
respective prorata portion of such difference
based on their respective ownership interest in
the Company as of the Closing Date), such payment
to be made contemporaneously with the payment of
the FKP Obligations to Green Tree on the
Settlement Date; and
(II) in the event that any of the FKP Obligations or
the FKP Additional Amounts shall be paid by any of
Seller (as guarantor under the Guaranty Agreement
dated as of June 17, 1999 by and between the
Seller and Green Tree, as Agent and Lender), ZYX
Inc. (formerly ▇▇▇▇/USA West Inc.), ▇▇▇▇/USA
Chicago Inc., ▇▇▇▇/USA New York Inc. or Year 2K
Communications, Inc. (such entities being
collectively referred to herein as the "Other
Borrowers") between the Signing Date and the
Settlement Date, all such amounts shall be paid to
Seller by the Company and Purchaser (each such
Purchaser being liable only for his respective
prorata portion of such difference based on his
respective ownership interest in the Company as of
the Closing Date) in cash contemporaneously with
such payment to Green Tree on the Settlement Date;
PROVIDED HOWEVER,
(III) in the event that the Obligations (as defined in
the Loan and Security Agreement) paid by the
Company on the Settlement Date include any
indebtedness of Seller and/or the Other Borrowers
(including any interest, fees, costs and expenses
incurred by Green Tree and the other Lenders with
respect thereto) arising from any advances made by
Lenders after the Signing Date to Seller or any
Other Borrower ("Post-Signing Seller/Other
Borrower Advances"), then Purchaser and the
Company shall be entitled to offset against any
sum due to Seller pursuant to subparts (I) and
(II) above, the sum of such Post-Signing
Seller/Other Borrower Advances together with all
interest, fees, costs and expenses incurred by
Green Tree (and other Lenders) in connection with
any such Post-Signing Seller/Other Borrower
Advances; and Seller agrees to indemnify Purchaser
and Company for any excess of the Post-Signing
Seller/Other Borrower Advances paid by the Company
or any Purchaser over any sums due Seller pursuant
to subparts (I) and (II) above;
(IV) in the event that any of the FKP Obligations or
the FKP Additional Amounts shall be paid by the
Company (whether through the collection and
application of Company accounts receivables by
Lenders or otherwise) between the Signing Date and
the Settlement Date, all such amounts so paid on
the Company's behalf shall be deemed prepayments
by the Company of the FKP Obligations and the FKP
Additional Amounts and shall not increase the sum,
if any, which may be due Seller pursuant to the
provisions of subparts (I) and (II) above;
(V) any additional indebtedness arising from advances
made by Lenders after the Signing Date to the
Company ("Additional Company Indebtedness") shall
be the sole responsibility of the Company, and
further, the Company and Purchaser agree to
indemnify Seller and the Other Borrowers for all
Additional Company Indebtedness pursuant to the
terms of Section 12 hereof.
Notwithstanding the foregoing, in the event any sum
becomes due to Seller pursuant to subparts (I) and (II)
above (and after offsetting the sum calculated under
the terms of subpart III above), Purchaser shall pay to
Seller the first $1,000,000 of such amount; of any
excess over $1,000,000, Purchaser shall retain one-half
(1/2) of such excess, up to $600,000, in order to
offset the Company's continuing payment obligations
arising out of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Acquisition; the
remaining one-half of such excess amount and any
additional excess amount shall be paid to Seller.
$ 9,000,000
TOTAL PURCHASE PRICE $18,775,000
EXHIBIT "B" - Page 2 of 2
EXHIBIT "C"
[8-31-99 FINANCIAL STATEMENTS]
[OMITTED]
EXHIBIT "D"
[FORBEARANCE AND AMENDMENT AGREEMENT]
(SEE ATTACHED)
FORBEARANCE AND AMENDMENT AGREEMENT
This Forbearance and Amendment Agreement (this "Agreement") is entered
into as of the _ day of October, 1999, by and among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇ ▇▇▇▇▇▇ (the foregoing
individuals, the "FKP Buyers"), ZYX INC. (formerly ▇▇▇▇/USA WEST INC.), a
Delaware corporation ("West"), ▇▇▇▇/USA CHICAGO INC., a Delaware corporation
("Chicago"), ▇▇▇▇/USA NEW YORK INC., a Delaware corporation ("New York"),
▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc., a Texas corporation ("FKP"), YEAR 2K COMMUNICATIONS,
INC., a Delaware corporation ("Y2K7) (West, Chicago, New York, FKP and Y2K are
collectively referred to herein as the "Borrowers" and individually as a
"Borrower"), ▇▇▇▇/USA INC., as debtor and debtor-inpossession ("Parent"), GREEN
TREE FINANCIAL SERVICING CORPORATION, a Delaware corporation (in its individual
capacity, "GTFSC"), for itself, as Lender, as Swingline Lender and as Agent for
Lenders, and the other Lenders signatory hereto.
RECITALS
WHEREAS, Borrowers, the Agent and the Lenders are parties to that
certain Loan and Security Agreement dated as of June 17, 1999 (as the same has
been or may hereafter be amended, restated, supplemented, extended or otherwise
modified, the "Loan Agreement");
WHEREAS, certain Specified Defaults (as defined below) have occurred
and are continuing or are expected to occur under the Loan Agreement;
WHEREAS, the Parent and the FKP Buyers have entered into a Stock
Purchase Agreement dated as of October __, 1999 (the "Stock Purchase
Agreement"), pursuant to which (i) the Parent has agreed to sell all of the
capital stock of FKP to the FKP Buyers subject to the first priority lien of
Agent (for itself and for the Lenders) and a second priority lien in favor of
Parent, and (ii) the FKP Buyers have agreed to make an equity contribution to
FKP of $2,000,000 at the closing of the Stock Purchase Agreement and up to an
additional $3,000,000 subject to certain terms and conditions;
WHEREAS, to effectuate the transactions contemplated by the Stock
Purchase Agreement, on October _, 1999 (the "Petition Date"), the Parent filed a
voluntary petition for relief under the federal Bankruptcy Code, 11 U.S.C. ss.
101 ET SEQ. (the "Bankruptcy Code") in the Southern District of New York (such
bankruptcy case, the "Bankruptcy Case").
WHEREAS, the Lenders have consented to the limited use of cash
collateral by the Parent in the Bankruptcy Case pursuant to [reference the Cash
Collateral Order (the "Cash Collateral Order")], and all obligations and
liabilities of the Parent under the Cash Collateral Order constitute part of the
Obligations for which the Borrowers are jointly and severally liable and which
are secured by all of the Collateral, and the Stock of FKP and the other
Borrowers;
WHEREAS, the parties to the Stock Purchase Agreement are not willing
to consummate the transactions contemplated by the Stock Purchase Agreement
unless the Agent and the Lenders agree, subject to the terms and conditions of
this Agreement, to continue to make Loans to FKP and to forbear from exercising
certain rights and remedies against FKP or the Stock of FKP, notwithstanding the
Specified Defaults, for a limited period of time;
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the consummation of the transactions contemplated by the Stock
Purchase Agreement, and the consummation of the transactions contemplated by the
Stock Purchase Agreement is a condition precedent to the execution and delivery
of this Agreement; and
WHEREAS, concurrently herewith, the Parent and the FKP Buyers have
consummated the sale of the Stock of FKP to the FKP Buyers and the FKP Buyers
have made an equity contribution and/or subordinated loan to FKP in the amount
of $2,000,000 and have executed and delivered a Capital Call Agreement (as
defined below) obligating the FKP Buyers to make additional equity contributions
and/or subordinated loans up to $3,000,000 in cash under certain circumstances.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
1.1 As used herein, the following terms shall have the meanings set
forth below:
"Forbearance Default" means (a) the occurrence of any Default or Event
of Default (other than the Specified Defaults) (i) relating in any respect to
FKP, its business or its assets or (ii) caused to any material degree by FKP or
any of its officers, directors, shareholders, employees, agents or other
representatives; (b) failure of FKP or, to the extent FKP aids and abets,
assists, cooperates or otherwise contributes to such failure, the failure of
Parent or any Non-FKP Borrower, to timely comply with any term, condition or
covenant set forth in this Agreement or the Stock Purchase Agreement; (c) any
occurrence having a Material Adverse Effect with respect to FKP (other than the
Specified Defaults) during the Forbearance Period; (d) if any representation
made by FKP, or, to the extent FKP knew as of the Effective Date that such
representation was materially false, any representation made by Parent or any
Non-FKP Borrower under or in connection with this Agreement shall prove to be
materially false as of the date when made; (e) if FKP or any other person or
entity claiming by or through FKP commences, joins in, assists, cooperates or
participates as an adverse party or adverse witness in any suit or other
proceeding against the Agent or any Lender with respect to the Obligations or
the Collateral securing same; or (f) the failure of FKP Buyers or any of the
parties thereto (other than the Agent) to timely comply with any term, condition
or covenant set forth in the Capital Call Agreement (as defined below), the FKP
Stock Pledge Agreement (as defined below), the Investment Securities Pledge
Agreement (as defined below) or the Control Agreement (as defined below) (the
foregoing three agreements, collectively, the "FKP Buyer Agreements").
"Forbearance Period" means the period of time from the Effective Date
until the earlier to occur of (a) the Revolving Loan Maturity Date and (b) any
Forbearance Default.
"Specified Defaults" means (a) those Defaults and Events of Default
(i) which have occurred and are continuing as of the Effective Date and (ii) the
existence of which the Agent is aware as of the Effective Date, and (b) any and
all Defaults and Events of Default which may arise during the Forbearance Period
solely as a result of any Borrower's failure to perform, keep or observe any of
the covenants contained in subsections 7.11, 7.12, 7.13 or 8.8 of the Loan
Agreement.
"Termination Event" shall mean any of (a) the Maturity Date and (b)
the occurrence of any Forbearance Default.
1.2 Unless otherwise specified herein, all capitalized terms used in
this Agreement shall have the respective meanings ascribed to them in the Loan
Agreement, as amended by this Forbearance Agreement. Additionally, the following
terms shall have the meanings defined for such terms in the Sections or
documents set forth below:
TERM SECTION
Agreement Preamble
Bankruptcy Case Recitals
Bankruptcy Code Recitals
Borrowers Preamble
Borrower/Lender Documents 11.2
Borrower Representative 5.1
Capital Call Agreement 6.1
Cash Collateral Order Recitals
Chicago Preamble
Claims 7
Control Agreement 6.1
Effective Date 5.1
Enforcement Actions 3.1
Final FKP Purchase Agreement 5.1
FKP Preamble
FKP Borrowing Base 5.1
FKP Buyer Agreements 1.1
FKP Buyers Preamble, 5.1
FKP Loan Obligations 5.1
FKP Maximum 5.1
FKP Stock Pledge Agreement 6.1
Forbear 3.1
Forbearance and Amendment Agreement 5.1
Forbearance Default 1.1
Forbearance Period Preamble
GTFSC 6.1
Investment Securities Pledge Agreement 7
Lender Releasees Recitals
Loan Agreement Preamble
New York 5.1
Non-FKP Borrowers 5.1
Non-FKP Obligations Preamble
Parent Recitals
Petition Date 5.1
Revolving Loan Maturity Date 1.1
Specified Defaults Recitals
Stock Purchase Agreement 1.1
Termination Event 5.1
Third Party Buyer Preamble
West Preamble
Y2K
2. CONFIRMATION OF OBLIGATIONS AND EXISTING EVENTS OF DEFAULT.
2.1 Each of the Borrowers, the Parent and the FKP Buyers acknowledges
and agrees that as of _______, 1999, the aggregate amount of the principal
balance of the outstanding Obligations under the Loan Agreement included at
least the following amounts:
Revolving Loan $_____________
Swingline Loan $_____________
Lender Guaranties $_____________
Total Outstanding Obligations $_____________
The foregoing amounts include any Loans or other extensions of credit made
to any Borrower or Parent on or after the Petition Date. The foregoing
amounts do not include all of the interest and fees and expenses to which Agent
and Lenders are entitled. The Obligations listed above are outstanding, and
Borrowers, the Parent and the FKP Buyers acknowledge and agree that they have no
right of offset, defense, or counterclaim with respect to such Obligations.
2.2 Each of the Borrowers, the Parent and the FKP Buyers acknowledges
and agrees that the Specified Defaults have occurred and are continuing as of
the Effective Date and/or are expected to occur and continue through the
Forbearance Period.
2.3 Each of the Borrowers, the Parent and the FKP Buyers acknowledges
and agrees that subject to any applicable provisions of the Bankruptcy Code, the
Specified Defaults permit Agent (or, where applicable, the Required Lenders) to
exercise any rights and remedies set forth in the Financing Agreements,
including but not limited to the rights and remedies set forth in Section 9 of
the Loan Agreement.
3. FORBEARANCE PERIOD.
3.1 Except as otherwise specifically provided herein, during the
Forbearance Period, the Agent and the Lenders shall forbear from exercising any
default-related remedies against FKP or the Stock of FKP (such default-related
remedies, "Enforcement Actions" and such agreements to forbear are collectively
referred to herein as the agreement to "Forbear"); PROVIDE, however, (1) FKP
and the FKP Buyers shall comply during the Forbearance Period with all
limitations, restrictions or prohibitions that would otherwise be effective or
applicable under any of the Financing Agreements and the FKP Buyer Agreements
during the continuance of any Defaults or Events of Default, (ii) nothing herein
shall restrict, impair or otherwise affect Agent's or any other Lender's or the
Swingline Lender's rights and remedies under the Subordination Agreement or
other agreements containing subordination provisions in favor of Agent or any
other Lender or the Swingline Lender (including, without limitation, any rights
or remedies available to Agent or any other Lender or the Swingline Lender as a
result of the occurrence or continuation of any Specified Default) or amend or
modify any provision thereof, and (iii) nothing herein shall limit, restrict or
otherwise impair or affect any rights or remedies of any of Agent, Lenders and
Swingline Lender against any Non-FKP Borrower or Parent or any obligations or
liabilities of any Non-FKP Borrower or Parent thereunder. Upon a Termination
Event, Agent, each Lender's and the Swingline Lender's agreement hereunder to
Forbear during the Forbearance Period shall immediately terminate, without the
requirement of any demand, presentment, protest or notice of any kind, all of
which each of the Borrowers, the Parent and the FKP Buyers waives. All rights
and remedies of Agent, Lenders and the Swingline Lender in connection with the
Specified Defaults are hereby reserved and, except as otherwise expressly
provided in this Section 3. 1, may be exercised at any time (including during
the Forbearance Period).
3.2 Each of the Borrowers, the Parent and the FKP Buyers acknowledges
and agrees that no action taken by the Agent or any Lender prior to the date
hereof, and nothing in this Agreement, shall: (x) create any obligation to (A)
make any further Loans or issue any Lender Guaranties, except as set forth
herein with respect to FKP, or (B) forbear from taking any or all Enforcement
Actions after a Termination Event, (y) except as set forth in Section 5 hereof,
constitute a waiver or modification of any term or condition of the Financing
Agreements, or (z) constitute a waiver of any Default or Event of Default, any
unsatisfied condition precedent or, except for the agreement to Forbear,
otherwise prejudice any rights or remedies which the Agent and Lenders now have
or may have in the future, including, without limitation, all rights and
remedies in connection with the Specified Defaults. Nothing contained herein
shall in any way be deemed to limit or prevent the Agent or the Required
Lenders, upon the occurrence of a Termination Event, from taking any or all
Enforcement Actions, in each case without notice or demand and at the option of
Agent (in its discretion or upon demand by the Required Lenders). Without
limiting the generality of the foregoing, subject only to Agent and each
Lender's agreement to continue to Forbear during the Forbearance Period, Agent
and Lenders expressly reserve all rights and remedies which Agent and Lenders
now have or may have in the future, including, without limitation, all rights
and remedies in connection with the Specified Defaults.
3.3 Any agreement by Agent and Lenders to extend the Forbearance
Period must set forth in writing and signed by an officer of each such party.
Each of the Borrowers, the Parent and the FKP Buyers acknowledges that neither
Agent nor any Lender has made any assurances to any or all of the Borrowers, the
Parent and the FKP Buyers concerning the likelihood of an extension of the
Forbearance Period.
3.4 Each of the Borrowers, the Parent and the FKP Buyers acknowledges
and agrees that any Revolving Loans, Swingline Loans or Lender Guaranties which
the Agent, Lenders and the Swingline Lender make on or after the date hereof has
been made by Agent, Lenders and the Swingline Lender in reliance upon, and as
consideration for, among other things, the general releases contained in Section
7 hereof and the other covenants and agreements of Borrowers, the Parent and the
FKP Buyers hereunder.
3.5 Each of the Parent and the Borrowers reaffirms its obligation
under the Loan Agreement and the other Financing Agreements and applicable law
to remit immediately to Agent for application to the Obligations all proceeds of
Collateral and the Pledged Collateral (as defined in the Parent Pledge
Agreement). All payments by FKP to Agent, and all Collateral proceeds owned and
remitted by FKP to Agent, shall be applied by Agent to the FKP Loan Obligations.
4. LIBOR RATE LOANS.
Each of the Borrowers, the Parent and the FKP Buyers acknowledges and
agrees that as a result of the occurrence and continuation of the Specified
Defaults, Borrowers are not and have not been entitled at any time from and
after the occurrence thereof (including at any time during the Forbearance
Period) to elect to have any Loans or other Obligations made, converted to or
continued as LIBOR Rate Loans.
5. AMENDMENTS TO LOAN AGREEMENT.
5.1 Section 1.1 of the Loan Agreement is hereby amended to add the
following definitions, or to the extent such definitions currently exist in
Section 1.1, to amend and restate same, in alphabetical order:
"'Borrower Representative' means, with respect to the Non-FKP
Borrowers, Parent, and, with respect to FKP, FKP."
"'Effective Date' means the date on which all of the conditions
precedent to the effectiveness of the Forbearance and Amendment Agreement
set forth in Section 9 thereof shall have been met to the satisfaction of
Agent and Lenders."
"'Final FKP PURCHASE Agreement' means any fully executed definitive
purchase agreement between the FKP Buyers, as sellers, and any third party
reasonably acceptable to Agent and Lenders, as buyer ("Third Party Buyer"),
which (a) provides for the sale of all of the Stock of FKP to the Third
Party Buyer, (b) is in form and substance satisfactory to Agent and
Lenders, (c) contains no financial, due diligence or board of approval
contingencies, (d) provides for a purchase price sufficient to repay all of
the Obligations in cash and (e) provides for such Stock sale to close
within thirty days after the date of such agreement."
"' FKP Borrowing Base' means, as of any date of determination, an
amount equal to (a) the sum of (i) eighty-five percent (85%) of the face
amount (less maximum discounts, credits and allowances which may have been
taken by or granted to Account Debtors in connection therewith) then
outstanding of existing Eligible Accounts of FKP PLUS (ii) $____, LESS (b)
the aggregate amount of all payments and Collateral proceeds (not
constituting Collateral or proceeds thereof owned by FKP) remitted by any
Non-FKP Borrowers or Parent on or after the Effective Date to Agent for
application to the Obligations."
"'FKP Buyers' means, collectively, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇."
"'FKP Loan Obligations' means as of any date of determination, the
lesser of (a) the Obligations as of such date of determination and (b)(i)
the sum of (x) all of the Obligations outstanding as of the Effective Date,
plus (y) all extensions of credit made by Agent and Lenders on or after the
Effective Date to Parent or any Non-FKP Borrower, including all fees, costs
and expenses incurred by the Agent and Lenders in connection with such
extensions of credit (provided that the sum of the amounts specified in
clauses (b)(i)(x) and (b)(i)(y) shall in no event exceed $9,000,000), PLUS
(ii) the aggregate amount of all new Loans or other extensions of credit
offered it (including the issuance of Lender Guaranties) made to FKP after
the Effective Date, PLUS (iii) all fees, costs and expenses chargeable
under the Loan Agreement, and incurred by Agent or the Lenders after the
Effective Date, less (iv) all payments made by FKP toward the Obligations
after the Effective Date plus (v) interest on the net amount calculated
pursuant to the foregoing clauses (b)(i), (ii), (iii) and (iv) at the
applicable interest rate set forth in the Loan Agreement.
"'FKP Maximum' means, as of any date of determination, (a) $8,750,000,
LESS (b) the aggregate amount of all payments and Collateral proceeds (not
constituting Collateral or proceeds thereof owned by FKP) remitted by any
Non-FKP Borrowers on or after the Effective Date to Agent for application
to the Obligations."
"'Forbearance and Amendment Agreement' means that certain Forbearance
and Amendment Agreement dated as of ____________, 1999 by and among the FKP
Buyers, the Parent, the Borrowers, the Agent and the Lenders."
"'Non-FKP Borrowers' means, collectively, West, Chicago, New York and
Y2K."
"'Non-FKP Obligations' means all Obligations other than the FKP Loan
Obligations.
"'Revolving Loan Maturity Date' means (a) December 31, 1999 or, (b) if
a copy of the Final FKP Purchase Agreement is delivered to Agent on or
prior to December 31, 1999, then the earlier to occur of (i) January 31,
2000, or (ii) the date on which the Final FKP Purchase Agreement is
terminated or consummated, in each case as extended with the written
consent of the Lenders; PROVIDED that each of the foregoing dates in
clauses (a) and (b) may be extended up to thirty (30) days with the prior
written consent of Required Lenders in their sole discretion and may
further be extended beyond such thirty days with the prior written consent
of Parent, FKP and Required Lenders."
5.2 The Loan Agreement is hereby amended to confirm that any
obligation of Agent, Lenders and the Swingline Lender to make any Loans to any
Non-FKP Borrowers or to issue any Lender Guaranties to any Borrowers has been
suspended; PROVIDE, however, that (a) subject to the terms and conditions of
the Loan Agreement and the other Financing Agreements, the Swingline Lender
shall continue to make Swingline Advances to FKP and the Revolving Lenders shall
continue to make Revolving Loans to FKP to the extent that and so long as the
sum of the requested Loan plus the amount of Obligations then outstanding does
not exceed the lesser of (i) the FKP Borrowing Base and (ii) the FKP Maximum,
and (b) if Agent, the Lenders and the Swingline Lender elect in their sole
discretion to make Revolving Loans or Swingline Loans or issue any Lender
Guaranties to any Borrowers, such Revolving Loans, Swingline Loans and Lender
Guaranties shall be governed by the terms of the Financing Agreements (as
amended by this Agreement) and shall be secured by the Collateral and the
Pledged Collateral (as defined in the Parent Pledge Agreement and the FKP Stock
Pledge Agreement), and the Agent, Lenders and Swingline Lender shall be entitled
to all rights, benefits and liens under the Financing Agreements with regard to
such Revolving Loans, Swingline Loans and Lender Guaranties.
5.3 Upon payment in full in cash of the FKP Loan Obligations on or
before the Revolving Loan Maturity Date, Agent and Lenders shall release FKP
from any liability for any Non-FKP Obligations and shall release all liens held
by Agent (on behalf of itself as Agent and the Lenders) against property of FKP
and the Stock of FKP (without releasing the Non-FKP Borrowers or liens on the
property of the Non-FKP Borrowers).
5.4 The following sentence shall be added to the end of the existing
subsection I the Loan Agreement:
"Without limiting the generality of the foregoing, all of Non-FKP
Borrowers shall be jointly and severally liable for all of the Obligations,
including all FKP Loan Obligations."
5.5 Sections 5.1 through 5.4 hereof shall be deemed effective when all
of the conditions precedent set forth in Section 9 hereof are satisfied. Except
for the agreement to Forbear, the provisions of this Agreement shall survive any
Termination Event.
6. STOCK PURCHASE AGREEMENT.
6.1 Agent, Lenders and the Swingline Lender hereby consent to the
Stock Purchase Agreement and the transactions contemplated thereby, and waive
any Default or Event of Default which arose solely by virtue of the execution of
the Stock Purchase Agreement; provided that (a) the transactions contemplated by
the Stock Purchase Agreement are consummated concurrently with the execution and
delivery of this Agreement and (b) the FKP Buyers execute and deliver to the
Agent (i) (A) a pledge agreement substantially similar to the Parent Pledge
Agreement and otherwise in form and substance satisfactory to Agent (the "FKP
Stock Pledge Agreement"), (B) undated stock powers for all of the Stock of FKP
to Agent and (C) UCC-Is covering the pledged Stock and related collateral, (ii)
a capital call agreement, in form and substance satisfactory to Agent ("Capital
Call Agreement") obligating the FKP Buyers to make in cash equity contributions
and/or subordinated loans (subordinated to the Obligations pursuant to a
subordination agreement in form and substance satisfactory to Agent) aggregating
up to $3,000,000 under certain circumstances (which equity
contributions/subordinated loans shall be (in addition to the $2,000,000 to be
advanced as an equity contribution and/or subordinated loan at the closing of
the Stock Purchase Agreement) and shall be made from time to time in an amount
equal to the greater of $1,000,000, or the amount necessary (A) to maintain the
unused borrowing availability of FKP as provided in Section 5.2 hereof at a
level no less than $250,000, (B) to pay any media-related accounts payable of
FKP (including, without limitation, contractors involved in the production of
any advertisements or promotions and accounts payable to the media outlets in
which advertisements or promotions appear) to be paid on or before any deadline
imposed by state law, and (C) to pay any accounts payable that has been
outstanding for more than ninety (90) days since the applicable invoice date to
the extent such accounts payable exceed $50,000 of all accounts payable of FKP,
(iii) a pledge agreement, in form and substance satisfactory to Agent, (the
"Investment Securities Pledge Agreement") pledging to the Agent, for the benefit
of itself and the Lenders, as security for the Obligations, investment
securities with a market value of at least $3,000,000 (which securities may be
used to fund the capital contributions required under the Capital Call Agreement
and which Investment Securities Pledge Agreement shall terminate upon the FKP
Buyers' performance of their obligations under the Capital Call Agreement), and
(iv) a Control Agreement, in form and substance satisfactory to Agent ("Control
Agreement") and executed by the financial intermediaries which maintain the
accounts containing the investment securities covered by the Investment
Securities Pledge Agreement.
6.2 Any portion of the purchase price or other amounts payable to
Parent under the Stock Purchase Agreement or any agreement, instrument or
document executed in connection therewith shall be promptly remitted to Agent
for application to any outstanding Obligations or as cash collateral for any
contingent Obligations.
6.3 Each of the FKP Buyers hereby agrees and acknowledges that (a) the
Stock of FKP which he is purchasing is subject to a valid, enforceable,
perfected first priority Lien granted to Agent (for itself and the Lenders) by
Parent pursuant to the Parent Pledge Agreement and by the FKP Buyers pursuant to
the FKP Stock Pledge Agreement as security for the Obligations outstanding from
time to time and (b) the Obligations shall continue to be secured by valid,
enforceable, perfected first priority liens (subject to Permitted Liens) on all
of the assets of FKP and the Non-FKP Borrowers.
6.4 FKP hereby agrees, and each of the FKP Buyers hereby agrees to use
commercially reasonable efforts to cause FKP, to pay in full in cash all FKP
Loan Obligations on or before the Termination Date.
6.5 Each of the parties hereby agrees that nothing in the Stock
Purchase Agreement shall be deemed to amend, waive or otherwise modify any
provisions of the Loan Agreement or the other Financing Agreements (it being
understood and agreed that this Agreement includes all of the amendments and
waivers to which Agent and the Lenders are agreeing in connection with the Stock
Purchase Agreement and the transactions contemplated thereby).
7. GENERAL RELEASE.
In consideration of, among other things, the forbearance and amendment
provided for herein, and any other financial accommodations which Agent and
Lenders elect to extend to Borrowers and/or the Parent, each of the Borrowers
forever waives, releases and discharges any and all claims (including, without
limitation, cross-claims, counterclaims, rights of setoff and recoupment),
causes of action, demands, suits, costs, expenses and damages that it now has or
hereafter may have, of whatsoever nature and kind, whether known or unknown,
whether now existing or hereafter arising, whether arising at law or in equity
(collectively, "Claims"), against any Agent, any Lender and any Swingline Lender
(in their respective capacities as such or in any other capacity) and any of
their respective subsidiaries and affiliates, and each of their respective
successors, assigns, officers, directors, employees, agents, attorneys and other
representatives (collectively, the "Lender Releasees"), based in whole or in
part on facts, whether or not known, existing on or prior to the date of this
Agreement. The receipt by any Non-FKP Borrower or the Parent of any Loans or
other financial accommodations made by Agent, Lenders and any Swingline Lender
after the date hereof shall constitute a ratification, adoption and confirmation
by the Non-FKP Borrowers of the foregoing general release of all Claims of any
Non-FKP Borrower against any Lender Releasee which are based in whole or in part
on facts, whether or not now known or unknown, existing on or prior to the date
of receipt of any such Loans or other financial accommodations. The receipt by
FKP of any Loans or other financial accommodations made by Agent, Lenders and
any Swingline Lender after the date hereof shall constitute a ratification,
adoption and confirmation by FKP that the foregoing general release of all
Claims of FKP against any Lender Releasee which are based in whole or in part on
facts, whether or not known or unknown, existing on or prior to the date of
receipt of any such Loans or other financial accommodations. The provisions of
this Section shall survive the termination of the Loan Agreement and payment in
full of the Obligations.
8. REPRESENTATIONS AND WARRANTIES.
Each Borrower and the Parent represents and warrants to Age Lender as
of the date hereof that:
8.1 there are no other Defaults or Events of Default under the Loan
Agreement other Financing Agreements except for the Specified Defaults;
8.2 each Borrower and the Parent has full power, authority and legal
right to enter into this Agreement, and this Agreement has been duly authorized
by each of the Borrowers' and the Parent' Boards of Directors;
8.3 this Agreement, the Loan Agreement, and the other Financing
Agreements constitute the legal, valid and binding obligations of the Borrowers
and the Parent and are enforceable against the Borrowers and the Parent in
accordance with their respective terms;
8.4 Agent's and Lenders' security interests in the Collateral and the
Agent's Lien (as defined in the Parent Pledge Agreement) on the Pledged
Collateral (as defined in the Parent Pledge Agreement), continue to be valid,
binding and enforceable first priority liens which secure the Obligations. No
tax or judgment liens are currently of record against any Borrower or the
Parent; and
8.5 except for matters constituting the Specified Defaults, each of
the representations, warranties, covenants and agreements of the Borrowers and
the Parent set forth in the Loan Agreement is reaffirmed with the same force and
effect as if each were separately stated herein and made as of the date hereof.
9. CONDITIONS PRECEDENT. As conditions precedent to the effectiveness and
validity of the provisions of this Agreement, all of the following
conditions must be satisfied concurrently with or prior to the closing of the
Stock Purchase Agreement:
9.1 Each of the Borrowers, the Parent and the FKP Buyers will have
executed and delivered to Agent copies of this Agreement;
9.2 Any Borrower which is not a debtor in a bankruptcy case will have
delivered to Agent valid resolutions of the Board of Directors of such Borrower
authorizing the execution and delivery of this Agreement;
9.3 The bankruptcy court having jurisdiction over the Bankruptcy Case
of the Parent and any bankruptcy case of any Borrower will have entered an
order, in form and substance satisfactory to Agent, approving the Parent's and
any such Borrower's execution and delivery of, and performance under, this
Agreement, the Stock Purchase Agreement and all related agreements.
9.4 The Borrowers, the Parent and the FKP Buyers will have delivered
to A fully executed copy of the Stock Purchase Agreement;
9.5 All representations and warranties of Borrowers and the Parent
contained shall be true and correct;
9.6 Lenders and the Swingline Lender will have executed and delivered
to Agent of this Agreement;
9.7 The FKP Buyers will have (a) made a cash equity contribution
and/or subordinated loan of $2,000,000 to FKP (and to the extent such payment is
in the form of a subordinated loan, executed and delivered a subordination
agreement in favor of Agent and Lenders in form and substance satisfactory to
Agent) and (b) executed and delivered to Agent the FKP Stock Pledge Agreement
(together with stock powers executed in blank and UCC-I financing statements),
the Capital Call Agreement, the Investment Securities Pledge Agreement and the
Control Agreement, fully executed by all parties thereto other than the Agent
and the Lenders.
9.8 The documentation under which the Parent is granted junior liens
on the Stock and assets of FKP shall contain subordination provisions
satisfactory to Agent and shall otherwise be in form and substance satisfactory
to Agent.
10. COVENANTS.
10.1 Parent agrees to cause each of the Non-FKP Borrowers to retain a
professional with the requisite expertise and reasonably acceptable to Agent and
Lenders to supervise and otherwise assist the Non-FKP Borrowers in billing any
unbilled Accounts and in collecting (through enforcement action, if necessary)
any and all outstanding Accounts of the Non-FKP Borrowers.
10.2 On the first Business Day of each week until the FKP Loan
Obligations are paid in full in cash, FKP shall deliver to Agent a report (in
form and substance satisfactory to Agent) setting forth for the immediately
preceding Friday (a) the FKP Borrowing Base, (b) an aging of the accounts
payable of FKP (broken down by media-related and non-media-related accounts
payable), (c) (i) the aggregate amount (expressed in dollars and as a percentage
of all outstanding media-related or non-media-related accounts payable, as
applicable) of accounts payable (broken down by media-related and
non-media-related accounts payable) which have been outstanding for more than 90
days from the applicable invoice date, and (d) a separate aging of the
media-related accounts payable the payment of which is governed by statute, with
a separate listing of all such accounts payable which have been outstanding for
more than 30 days from the applicable invoice date.
10.3 On the first Business Day of each week, FKP shall provide the
Agent with a report setting forth its cash flow forecast (in form and substance
satisfactory to Agent) for the immediately following thirty (30) day period or
such other period as requested by Agent.
10.4 FKP (a) shall pay each account payable required by statute to be
paid within a certain time period to be paid within such time period and (b)
shall not permit at any time the aggregate amount of accounts payable
outstanding for more than 90 days after the applicable invoice date to exceed
$50,000 of all outstanding accounts payable.
11. GENERAL PROVISION.
11.1 ACCURACY OF RECITALS. The recitals to this Agreement are true and
correct.
11.2 INTEGRATION. This Agreement, the Financing Agreements, and the
other written agreements, instruments and documents entered into in connection
therewith (collectively, the "Borrower/Lender Documents") set forth in full the
terms of agreement between the parties and are intended as the full, complete
and exclusive contract governing the relationship between the parties,
superseding all other discussions, promises, representations, warranties,
agreements and understandings between the parties with respect thereto.
11.3 AMENDMENT. The Loan Agreement, as amended by Section 5 hereof,
may only be amended or modified in accordance with the terms of Section 13 of
the Loan Agreement. No term of this Agreement, other than the terms of Section 5
hereof as set forth in the preceding sentence, may be modified or amended except
in a writing signed by the party against whom enforcement of the modification or
amendment is sought.
11.4 No WAIVER. Agent's or any Lender's failure, at any time or times,
to require strict performance by any of the parties hereto of any provision of
this Agreement and any of the other Financing Agreements shall not waive, affect
or diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11. 3 hereof, none of the
undertakings, agreements, warranties, covenants and representations of any of
the parties hereto contained in this Agreement and no Default or Event of
Default by any of the parties hereto shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders, and directed to Borrowers specifying
such suspension or waiver. Except as expressly provided to the contrary in this
Agreement, all the terms, conditions and provisions of the Borrower/Lender
Documents shall continue in full force and effect.
11.5 APPLICABLE LAW; SEVERABILITY. This Agreement has been submitted
to the Agent and GTFSC at its office in Illinois, and this Agreement shall not
be binding upon the Agent or any Lender or effective until accepted by the Agent
and each Lender and shall be construed in all respects in ACCORDANCE WITH, and
governed by, all of the provisions of the Code and by the other internal laws
(as opposed to conflicts of law provisions) of the State of Illinois, except for
the perfection and enforcement of Liens in other jurisdictions which shall be
governed by the laws of those jurisdictions. Whenever possible, each provision
of this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
11.6 SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND. EACH OF THE
PARTIES HERETO SUBMIT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE COUNTY OF ▇▇▇▇, STATE OF ILLINOIS, AND IRREVOCABLY AGREE THAT ALL
ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT MAY BE LITIGATED IN SUCH
COURTS, AND EACH OF THE PARTIES HERETO WAIVES ANY OBJECTION WHICH IT OR HE MAY
HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
PROCEEDING IN ANY SUCH COURT AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT OR HIM, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
MAIL OR MESSENGER DIRECTED TO IT OR HIM AT THE ADDRESS SET FORTH IN SUBSECTION
10.12 OF THE LOAN AGREEMENT OR THE FKP STOCK PLEDGE AGREEMENT, AS APPLICABLE,
AND THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF
ACTUAL RECEIPT OR FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO SUCH
PERSON'S ADDRESS. THE BORROWERS, THE PARENT AND THE FKP BUYERS DESIGNATE AND
APPOINT CT CORPORATION SYSTEM, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
AND SUCH OTHER PERSON AS MAY HEREAFTER BE SELECTED BY THE BORROWERS, THE PARENT
AND THE FKP BUYERS WHICH IRREVOCABLY AGREES IN WRITING TO SO SERVE AS THEIR
AGENT TO RECEIVE ON THEIR BEHALF SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING
IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE BORROWERS, THE
PARENT AND THE FKP BUYERS TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE
BORROWERS, THE PARENT AND THE FKP BUYERS AT THE ADDRESS PROVIDED IN SUBSECTION
10.12 OF THE LOAN AGREEMENT OR THE FKP STOCK PLEDGE AGREEMENT, AS APPLICABLE,
EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL
SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICES OF PROCESS. IF ANY AGENT
APPOINTED BY THE BORROWERS, THE PARENT AND THE FKP BUYERS REFUSES TO ACCEPT
SERVICE, THE BORROWERS, THE PARENT AND THE FKP BUYERS HEREBY AGREE THAT SERVICE
UPON IT OR HIM BY MAIL OR OTHERWISE IN ACCORDANCE WITH SUBSECTION 10.12 OF THE
LOAN AGREEMENT OR THE FKP STOCK PLEDGE AGREEMENT, AS APPLICABLE, SHALL
CONSTITUTE SUFFICIENT NOTICE. EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT THE
TIME AND EXPENSE REQUIRED FOR TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED
FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY
JURY, AND WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT
FOR THIS WAIVER, BE REQUIRED OF THE AGENT OR ANY LENDER. NOTHING CONTAINED IN
THIS SECTION SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR
ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWERS, THE PARENT,
THE FKP BUYERS OR THEIR RESPECTIVE PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION TO THE EXTENT NECESSARY TO ENFORCE ITS LIENS AGAINST PROPERTY
LOCATED IN SUCH JURISDICTIONS. THE BORROWERS, THE PARENT AND THE FKP BUYERS
WAIVE ANY RIGHT THEY MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO
ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. NOTHING HEREIN SHALL LIMIT THE
JURISDICTION OF THE BANKRUPTCY COURT.
11.7 PAYMENT OF EXPENSES. Borrowers acknowledge and reaffirm their
joint and several obligation under subsection 2.11 of the Loan Agreement to,
among other things, pay all costs and fees in conjunction with the negotiations,
preparation and enforcement of this Agreement.
11.8 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.9 TIME OF ESSENCE. Time is of the essence in the payment and
performance of each of the obligations of the Borrowers and the Parent and with
respect to all conditions to be satisfied by the Borrowers and the Parent.
11. 10 ADVICE OF COUNSEL. Each of the parties represents to each other
party hereto that it has discussed this Agreement with its counsel.
11. 11 NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
11. 12 FURTHER ASSURANCES. Each of the Borrowers, the Parent and the
FKP Buyers agrees to take all further actions and execute all further
documents as Agent may from time to time reasonably request to carry out the
transactions contemplated by this Agreement.
11. 13 NOTICES. ALL notices, requests and demands to or upon the
respective parties hereto shall be given in accordance with subsection 10. 12 of
the Loan Agreement or the FKP Stock Pledge Agreement, as applicable.
11. 14 ACCEPTANCE OF FACSIMILE SIGNATURES. The parties agree that this
Agreement will be considered signed when the signature of a party is delivered
by facsimile transmission. Such facsimile signature shall be treated in all
respects as having the same effect as an original signature.
11. 15 SECTION TITLES. The Section titles contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
11. 16 SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
shall inure to the benefit of all Borrowers, Parent, FKP Buyers, Agent, Lenders,
Swingline Lenders and their respective successors and assigns (including, in the
case of any Borrower or the Parent, a debtor-in-possession or Chapter 7 or
Chapter 11 Trustee on behalf of such Borrower or the Parent), except as
otherwise provided herein. No Borrower or the Parent may assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder without the prior express written consent of Agent and Lenders. Any
such purported assignment, transfer, hypothecation or other conveyance by
Borrower or the Parent without the prior express written consent of Agent and
Lenders shall be void. The terms and provisions of this Agreement are for the
purpose of defining the relative rights and obligations of each of the
Borrowers, the Parent, the FKP Buyers, the Agent and Lenders with respect to the
transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement.
11.17 REFERENCE TO AND EFFECT UPON THE LOAN AGREEMENT.
(a) Except as specifically amended above, the Loan Agreement and the
other Financing Agreements shall remain in full force and effect as to each of
the parties thereto (including, without limitation, FKP) and are hereby ratified
and confirmed.
(b) The execution, delivery and effectiveness of this Agreement shall
not operate as a waiver of any right, power or remedy of Agent or any Lender
under the Loan Agreement or any Loan Document, nor constitute a waiver of any
provision of the Loan Agreement or any Loan Document, except as specifically set
forth herein. Upon the effectiveness of this Agreement, (i) each reference in
the Loan Agreement to "this Agreement", "hereunder", "hereof', "herein" or words
of similar import shall mean and be a reference to the Loan Agreement as amended
hereby, and (ii) each reference in the Loan Agreement or any Financing Agreement
to the "Financing Agreements" or words of similar import shall include this
Agreement and the FKP Buyer Agreements.
11.18 ACKNOWLEDGMENTS REGARDING GUARANTEES. Parent agrees and
reaffirms that (i) its guaranty as set forth in the Parent Guaranty remains in
full force and effect, (ii) it continues to be liable as a primary obligor for
the prompt payment and performance of all the Obligations (including, without
limitation, all Loans and other Obligations incurred by FKP on or after the
Effective Date), (iii) the Obligations and the Parent's obligations and
liabilities under the Parent Guaranty continue to be secured by the first
priority lien of Agent (for itself and the Lenders) on the Pledged Collateral
(as defined in the Parent Pledge Agreement), and (iv) there is no defense,
counterclaim or other right of setoff or offset of any kind, nature or
description to any of the obligations and liabilities arising under such Parent
Guaranty. Each Borrower hereby reaffirms that (i) the cross-guaranty of such
Borrower set forth in Section 15 of the Loan Agreement (as amended by Section 5
of this Agreement) remains in full force and effect, (ii) it continues to be
liable as a primary obligor for all Obligations, including those arising from
extensions of credit to other Borrowers (including, without limitation, all
Loans and other Obligations incurred by FKP on or after the Effective Date),
(iii) its obligations under the cross-guaranty continues to be secured by the
first priority liens of Agent (for itself and the Lenders) in, among other
things, all Collateral owned by such Borrower, and (iv) there is no defense,
counterclaim or other right of setoff or offset of any kind, nature or
description to obligations arising under such cross-guaranty.
[SIGNATURE PAGES FOLLOW]
DRAFT ONLY
10/19/99
IN WITNESS WHEREOF, each of the parties have caused this Agreement to
be executed and delivered by its duly authorized officer as of the date first
above written.
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▇▇▇▇▇ ▇▇▇▇▇▇
ZYX INC. (formerly ▇▇▇▇/USA WEST INC.)
By:
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Name:
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Title:
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▇▇▇▇/USA CHICAGO INC.
By:
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Name:
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Title:
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[Signature Page to Forbearance and Amendment Agreement]
▇▇▇▇/USA NEW YORK INC.
By:
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Name:
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Title:
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▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
By:
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Name:
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Title:
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YEAR 2K COMMUNICATIONS, INC.
By:
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Name:
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Title:
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▇▇▇▇/USA INC.
By:
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Name:
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Title:
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GREEN TREE FINANCIAL SERVICING
CORPORATION, as Agent, Lender and
Swingline Lender
By:
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Name:
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Title:
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[Signature Page to Forbearance and Amendment Agreement]
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:
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Name:
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Title:
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[Signature Page to Forbearance and Amendment Agreement]
SCHEDULE 3(a)
CHANGES TO COMPANY'S ORGANIZATIONAL DOCUMENTS
On June 16, 1999 the Company merged two of its wholly-owned subsidiaries,
▇▇▇▇▇▇▇ & ▇▇▇▇▇ Yellow Pages, Inc. and Southwest Information Resources, Inc.,
with and into the Company.
On July 26, 1999 the Company merged its newly-acquired wholly-owned subsidiary,
▇▇▇▇▇▇ ▇▇▇▇▇▇ Group, Inc., with and into the Company.
SCHEDULE 3(d)
FIXED, LIQUIDATED OR NON-CONTINGENT LIABILITIES
Section 2.3 of the ▇▇▇▇▇▇ Speler Agreement (defined below) provides for certain
earn-out payments to be made by the Company to the former shareholders of
▇▇▇▇▇▇ ▇▇▇▇▇▇ Group, Inc. on each of March 1, 2000, 2001 and 2002.
SCHEDULE 3(e)
CONTRACTS ENTERED INTO BY THE COMPANY
THROUGH SELLER'S ACTION
1997 ▇▇▇▇ ACQUISITION CONTRACTS
Employment Agreement dated as of December 31, 1997 between ▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
(the "Company") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
Employment Agreement dated as of December 31, 1997 between the Company and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
Employment Agreement dated as of December 31, 1997 between the Company and
▇▇▇▇▇▇ ▇▇▇▇▇▇.
Noncompetition/Nonsolicitation Agreement dated as of December 31, 1997 between
the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
Noncompetition/Nonsolicitation Agreement dated as of December 31, 1997 between
the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
Noncompetition/Nonsolicitation Agreement dated as of December 31, 1997 between
the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
Management Services Agreement dated as of December 31, 1997 between the Company
and ▇▇▇▇/USA Inc. (the "Parent").
GREEN TREE CREDIT AGREEMENT
Loan and Security Agreement dated as of June 17, 1999 by and among ZYX Inc.
(formerly ▇▇▇▇/USA West Inc.), ▇▇▇▇/USA Chicago Inc., ▇▇▇▇/USA New York Inc.,
the Company and Year 2K Communications, Inc., as Borrowers (the "Borrowers"),
the Lenders named therein, as Lenders, and Green Tree Financial Servicing
Corporation ("Green Tree"), as Agent and Lender.
Revolving Loan Note dated June 17, 1999 between the Borrowers and Green Tree in
original principal amount of $15,000,000.
Revolving Loan Note dated June 17, 1999 between the Borrowers and General
Electric Capital Corporation in original principal amount of $15,000,000.
Swingline Note Note dated June 17, 1999 between the Borrowers and Green Tree in
original principal amount of $2,000,000.
Blocked Account Agreement dated as of June 17, 1999 by and among The Chase
Manhattan Bank ("Chase"), the Company and Green Tree.*
Lockbox Service Agreement dated as of June 17, 1999 by and among Chase, the
Company and Green Tree.*
Payoff and Release Letter dated as of June 17, 1999 by and among each of the
Borrowers and Fleet Business Credit Corporation, as successor to Sanwa
Business Credit Corporation ("Fleet").
Release of Blocked Accounts dated as of June 17, 1999 by and among each of the
the Borrowers, Chase and Fleet.
Power of Attorney dated as of June 17, 1999 by and among each of the Borrowers
and Green Tree.
In connection with the Loan and Security Agreement, the Company appointed CT
Corporation System as agent for service of process in Chicago, Illinois.
▇▇▇▇▇▇ ▇▇▇▇▇▇ ACQUISITION
Stock Purchase Agreement dated as of July 22, 1999 by and among the shareholders
of ▇▇▇▇▇▇ ▇▇▇▇▇▇ Group, Inc. ("TS") and the Company (the "▇▇▇▇▇▇ ▇▇▇▇▇▇
Agreement").
Employment Agreement dated as of July 22, 1999 by and between the Company and
▇▇▇▇▇ ▇▇▇▇▇▇.
Employment Agreement dated as of July 22, 1999 by and between the Company and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
Employment Agreement dated as of July 22, 1999 by and between the Company and
▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
Noncompetition/Nonsolicitation Agreement dated as of July 22, 1999 by and
between the Company and ▇▇▇▇▇ ▇▇▇▇▇▇.
Noncompetition/Nonsolicitation Agreement dated as of July 22, 1999 by and
between the Company and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
Noncompetition/Nonsolicitation Agreement dated as of July 22, 1999 by and
between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
-----------------------
* Identical agreement was entered into on behalf of each of ▇▇▇▇▇▇▇ & ▇▇▇▇▇
Yellow Pages, Inc. and Southwest Information Resources, Inc., both former
subsidiaries of the Company.
Noncompetition/Nonsolicitation Agreement dated as of July 22, 1999 by and
between the Company and ▇▇▇▇▇ ▇▇▇▇▇▇. ▇▇. ▇▇▇▇▇▇ receives $2,500 per month
compensation for three years from the date of the agreement for entering into
this agreement.
Side letter dated as of July 22, 1999 between the Company and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
Side letter dated as of July 22, 1999 between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
OTHER
On June 16, 1999 the Company merged two of its wholly-owned subsidiaries,
▇▇▇▇▇▇▇ & ▇▇▇▇▇ Yellow Pages, Inc. and Southwest Information Resources, Inc.,
with and into the Company.
On July 26, 1999 the Company merged its newly-acquired wholly-owned subsidiary,
▇▇▇▇▇▇ ▇▇▇▇▇▇ Group, Inc., with and into the Company.
SCHEDULE 3(i)
LITIGATION AND PROCEEDINGS
1. NATIONAL CLAIMS SERVICE, INC. VS. SYNAPS CORPORATION AND ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇ VS. ▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC. AND SOUTHWEST RESOURCES, INC., CIVIL
ACTION NO. CIV-S-96 1732, UNITED STATES DISTRICT COURT IN AND FOR THE EASTERN
DISTRICT OF CALIFORNIA. This case was settled at mediation on 10-13-99, although
settlement documentation is pending execution at this time.
2. KNIGHT VENDING, INC. ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ & PARTNERS AND TOTAL VENDING
MANAGEMENT, INC.: CAUSE NO. 701,732, IN THE COUNTY CIVIL COURT OF LAW NUMBER
THREE (3) OF ▇▇▇▇▇▇ COUNTY, TEXAS.
3. ▇▇▇▇▇▇▇ & ▇▇▇▇▇ PUBLIC RELATIONS, INC. AND SOUTHWEST INFORMATION RESOURCES,
INC. D/B/A ▇▇▇▇▇▇▇ ▇▇▇▇▇ DIRECT VS. TELEBUILD, L.C: NO. 98-12682, IN THE ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇. A judgment for $200,000 has
been entered in favor of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, et al.
SCHEDULE 3(k)
OFFICERS AND DIRECTORS
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Co-Chief Executive Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Co-Chief Executive Officer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Secretary and Executive Vice President
▇▇▇▇▇▇▇▇ ▇. Veru Chairman of the Board of Directors