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SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment Number 1)
Individual Investor Group, Inc.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title Class of Securities)
455907105
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(CUSIP Number)
Wise Partners, L.P.
c/o Peter M. Ziemba
Graubard Mollen & Miller
600 Third Avenue, 31st Floor
New York, New York 10016
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
December 31, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 7 Pages
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SCHEDULE 13D
CUSIP No. 455907105 Page 2 of 7 Pages
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only)
Wise Partners, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)*
(a)|_|
(b)|_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*(See Instructions)
BK - Bank Funds
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
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| 7 SOLE VOTING POWER
|
| 1,781,133
NUMBER OF |-----------------------------------------------------------
SHARES | 8 SHARED VOTING POWER
BENEFICIALLY |
OWNED BY |
EACH |-----------------------------------------------------------
REPORTING | 9 SOLE DISPOSITIVE POWER
PERSON |
WITH | 1,781,133
|-----------------------------------------------------------
| 10 SHARED DISPOSITIVE POWER
|
|
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,781,133
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.97%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 2 of 7 Pages
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Item 1. Securities and Issuer
The class of equity securities to which this statement relates is the
Common Stock, $.01 par value, of Individual Investor Group, Inc. ("Company"), a
Delaware corporation, whose principal executive offices are located at 1633
Broadway, 38th Floor, New York, New York 10019.
Item 2. Identity and Background
This Amendment No. 1 is filed on behalf of Wise Partners, L.P., a limited
partnership organized and existing under the laws of the State of Delaware
("Partnership"). The Partnership's business address is c/o Mr. Jonathan L.
Steinberg, 1633 Broadway, 38th Floor, New York, New York 10019. The Partnership
is in the business of making investments in privately and publicly held
companies for investment purposes.
Mr. Jonathan L. Steinberg is the general partner of the Partnership. Mr.
Jonathan L. Steinberg's business address is 1633 Broadway, 38th Floor, New York,
New York 10019. Mr. Jonathan L. Steinberg's principal occupation is that of the
Chief Executive Officer and Chairman of the Board of the Company. The Company is
a Delaware corporation engaged in the financial information business, including
the publication of Individual Investor, Special Situations Report and Ticker,
and providing information through www.iionline.com. Mr. Jonathan L. Steinberg is
a citizen of the United States.
Neither the Partnership nor Mr. Jonathan L. Steinberg have been convicted
in any criminal proceeding (excluding traffic violations or similar
misdemeanors) during the last five years.
Neither the Partnership nor Mr. Jonathan L. Steinberg have been a party to
any civil proceeding of a judicial or administrative body of competent
jurisdiction resulting in any judgment, decree or final order enjoining it from
engaging in future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws during the last five years.
Item 3. Source and Amount of Funds or Other Consideration
The Partnership acquired 31,496 shares of Common Stock on June 30, 1997,
489,795 shares of Common Stock on December 31, 1997 and 1,259,842 shares of
Common Stock on June 26, 1998, directly from the Company, in transactions exempt
from the registration requirements of the Securities Act of 1933, as amended,
pursuant to Section 4(2). The price per share paid on June 30, 1997, was $7.93,
on December 31, 1997, was $6.125, and June 26, 1998, was $3.97, the closing ask
price of the Common Stock as reported by the Nasdaq Stock Market on the day
preceding such dates. The funds used to acquire the Common Stock was the bank
funding described in Item 6.
Page 3 of 7 Pages
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Item 4. Purpose of Transactions
The Partnership acquired record ownership of the 1,781,133 shares of Common
Stock as an investment. Mr. Jonathan L. Steinberg, the General Partner of the
Partnership, is also the Chief Executive Officer and a Director of the Company.
Although Mr. Jonathan L. Steinberg in his capacity as the Chief Executive
Officer of and a Director of the Company, may be involved in the consideration
of various proposals considered by the Board of Directors of the Company, the
Partnership has no present plans which relate to or would result in: an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries; a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries; any change in the current board of directors or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board of directors of the
Company; any material change in the present capitalization or dividend policy of
the Company; any other material change in the Company's business or corporate
structure; changes in the Company's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person; causing a class of securities of the
Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; causing a class of equity securities of the
Company becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities and Exchange Act of 1934; or any action similar to
the above.
Except to the extent that Mr. Jonathan L. Steinberg, the Chief Executive
Officer and a Director of the Company, may be involved in the consideration of
various proposals considered by the Board of Directors of the Company, he has no
present plans which relate to or would result in: an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Company or any of its subsidiaries; a sale or transfer of a material amount of
assets of the Company or any of its subsidiaries; any change in the current
board of directors or management of the Company, including any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on the board of directors of the Company; any material change in the
present capitalization or dividend policy of the Company; any other material
change in the Company's business or corporate structure; changes in the
Company's charter, by-laws or instruments corresponding thereto or other actions
which may impede the acquisition of control of the Company by any person;
causing a class of securities of the Company to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association; causing a
class of equity securities of the Company becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities and Exchange Act of
1934; or any action similar to the above.
Page 4 of 7 Pages
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Item 5. Interest in Securities of the Issuer
The Partnership is the record owner of 1,781,133 shares of Common Stock
This represents a beneficial ownership equal to 20.97% of the outstanding Common
Stock of the Company. Mr. Jonathan L. Steinberg, as the general partner of the
Partnership, has sole power to vote and dispose of the above shares of Common
Stock. Mr. Saul P. Steinberg, the father of Mr. Jonathan L. Steinberg, is a
limited partner of the Partnership, and because of his equity interest in the
Partnership as a limited partner, he is the only other person known to have the
right to receive dividends or proceeds from the sale of the 1,781,133 shares of
Common Stock owned of record by the Partnership.
Mr. Jonathan L. Steinberg, the General Partner of the Partnership,
beneficially owns 3,169,476 shares of Common Stock which represents 24.8% of the
outstanding Common Stock of the Company. Of the 3,169,476 shares of Common
Stock, 900,010 shares of Common Stock are owned of record by Mr. Jonathan L.
Steinberg, 1,781,133 shares of Common Stock are owned of record by the
Partnership and are beneficially owned by Mr. Jonathan L. Steinberg and 488,333
shares of Common Stock are subject to options currently exercisable by Mr.
Jonathan L. Steinberg.
Item 6. Contracts, Agreements, Understandings or Relationship with Respect to
Securities of Issuer
Item 6 is amended to add the following:
On June 26, 1998, the Partnership entered into a Loan Agreement ("1998
Loan") and Promissory Note ("1998 Note") with NationsBank, N.A. ("NationsBank").
The 1998 Loan permits the Partnership to borrow, from time to time, up to an
aggregate of $17,500,000. Interest is payable on the unpaid principal of the
1998 Note, monthly, in arrears at rate based on LIBOR, and the principal is
payable at maturity on June 26, 1999. As partial security for the 1998 Note, Mr.
Saul P. Steinberg pledged an aggregate of 500,000 shares of Common Stock of the
Company and 1,650,000 shares of common stock, par value $0.01 per share, of
Reliance Group Holdings, Inc. owned of record by him pursuant to a Pledge
Agreement with NationsBank dated June 26, 1998 ("1998 Pledge Agreement"). In the
event of a default under the 1998 Note and 1998 Loan, pursuant to the 1998
Pledge Agreement, NationsBank may exercise all the voting rights and foreclose
upon and publicly or privately sell the shares of Common Stock of the Company
pledged by Mr. Saul P. Steinberg. None of the shares of Common Stock of the
Company owned of record by the Partnership are pledged to NationsBank. In
addition to the pledge by Mr. Saul P. Steinberg, Mr. Jonathan L. Steinberg and
Mr. Saul P. Steinberg each entered into Guaranty Agreements dated June 26, 1998
with NationsBank in respect of the 1998 Loan and the 1998 Note.
Item 7. Materials to be Filed as Exhibits
(10.1) Stock Purchase Agreement, dated June 30, 1997, between the Company
and Wise Partners, L.P. (Incorporated by reference from Exhibit 10.3
Page 5 of 7 Pages
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of the Quarterly Report on Form 10-QSB for the period ended June 30,
1997 of the Company.)*
(10.2) Stock Purchase Agreement, dated December 30, 1997, between the
Company and Wise Partners, L.P. (Incorporated by reference from
Exhibit 10.6 of Amendment No.6 to the Schedule 13D filed by Jonathan
L. Steinberg on January 13, 1998).*
(10.3) Stock Purchase Agreement, dated June 26, 1998, between the Company
and Wise Partners, L.P.+
(10.4) Loan Agreement dated June 26, 1998, between Wise Partners, L.P. and
NationsBank, N.A.+
(10.5) Promissory Note dated June 26, 1998, between Wise Partners, L.P. and
NationsBank, N.A.+
(10.6) Pledge Agreement dated June 26, 1998, between Mr. Saul P. Steinberg
and NationsBank, N.A.+
(10.7) Guaranty Agreement dated June 26, 1998, between Mr. Jonathan L.
Steinberg and NationsBank, N.A.+
(10.8) Guaranty Agreement dated June 26, 1998 between Mr. Saul P. Steinberg
and NationsBank, N.A.+
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* Previously filed.
+ Filed herewith.
Page 6 of 7 Pages
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 6, 1998
WISE PARTNERS, L.P.
BY: /S/ Jonathan L. Steinberg
--------------------------------------
Jonathan L. Steinberg, General Partner
Page 7 of 7 Pages
<PAGE>
This STOCK PURCHASE AGREEMENT, dated as of June 26, 1998 (the "Agreement"),
is between INDIVIDUAL INVESTOR GROUP, INC., a Delaware corporation (the
"Company"), and WISE PARTNERS, L.P., a Limited Partnership organized and
existing under the laws of the State of Delaware (the "Buyer").
1. PURCHASE AND SALE. Subject to the terms and conditions herein set forth,
the Company hereby sells and delivers to Buyer and Buyer hereby purchases from
the Company, for an aggregate purchase price of Five Million Dollars
($5,000,000), an aggregate of one million two hundred fifty nine thousand eight
hundred forty two (1,259,842) shares (the "Shares") of the Company's common
stock, $.01 par value per share (the "Common Stock"). The Company will deliver
to Buyer, within Thirty (30) days of the effective date of this Agreement, stock
certificates representing the Shares indicating the Buyer as the sole owner of
the Shares. The Buyer hereby makes payment to the Company, by delivery of a bank
check or certified check payable to the order of the Company or by wire transfer
to an account designated by the Company, in the amount of Five Million Dollars
($5,000,000).
2. REPRESENTATIONS AND COVENANTS OF THE COMPANY. The Company hereby
represents and warrants to and covenants with Buyer as follows:
2.1 Organization. The Company is duly organized, validly existing and
in good standing in the State of Delaware.
2.2 Authority; Execution and Delivery, Etc. The execution, delivery,
and performance of this Agreement has been duly authorized by the Company's
Board of Directors and no other corporate proceedings on the part of the
Company or its stockholders are required. This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid, and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights in general or general principles of equity. The Shares
have been duly authorized and are legally and validly issued, fully paid
and non-assessable. The Company hereby conveys marketable title to the
Shares to the Buyer, free and clear of all liens and encumbrances.
3. REPRESENTATIONS OF BUYER. Buyer hereby represents and warrants to the
Company as follows:
(a) Buyer is a Limited Partnership organized and existing in good
standing under the laws of the State of Delaware and Jonathan Steinberg, an
individual residing in the State of New York, is the sole General Partner
of Buyer.
(b) Buyer is aware that its investment involves a substantial degree
of risk, including, but not limited to the following: (i) the Company has
had substantial operating losses for the fiscal years ended December 31,
1996 and December 31, 1997, and expects to continue to incur losses in the
future; (ii) the Company has experienced and will continue to experience
substantial fluctuations in its operating income (loss) from quarter to
quarter and year to year; (iii) the Company may need additional financing
in the future to fund operating losses; (iv) management and the existing
principal stockholders of the Company beneficially own a substantial
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amount of the outstanding voting stock of the Company and accordingly are
in a position to substantially influence the election of all directors of
the Company and the vote on matters requiring stockholder approval; (v) the
Company's success will to a significant extent rely upon the continued
services and abilities of Jonathan Steinberg, who is the Chairman and Chief
Executive Officer of the Company. Buyer acknowledges and is aware that
there is no assurance as to the future performance of the Company.
(c) Buyer is purchasing the Shares for his own account for investment
and not with a view to or in connection with a distribution of the Shares,
nor with any present intention of selling or otherwise disposing of all or
any part of the Shares, except as contemplated in Section 5.1 below.
Subject to Section 5.1 below, Buyer agrees that Buyer must bear the
economic risk of its investment because, among other reasons, the Shares
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under the securities laws of any state and,
therefore, cannot be resold, pledged, assigned, or otherwise disposed of
until they are registered under the Securities Act and under applicable
securities laws of certain states or an exemption from such registration is
available. Promptly upon Buyer's request, after the expiration of the
two-year holding period provided for in the SEC's Rule 144(k), provided
that Buyer is not then and for three months prior thereto has not been, an
affiliate of the Company within the meaning of the SEC's Rule 144(a), the
Company will exchange the Buyer's stock certificate (legended as aforesaid)
for a new certificate with no restrictive legends thereon, suitable for
transfer in the public securities markets, subject to the Buyer's providing
the Company with such usual and customary representations in connection
therewith as the Company may reasonably request.
(d) Buyer has the financial ability to bear the economic risk of its
investment in the Company (including its complete loss), has adequate means
for providing for its current needs and personal contingencies and has no
need for liquidity with respect to its investment in the Company.
(e) Buyer has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the Company and Buyer has obtained, in its judgment,
sufficient information from the Company to evaluate the merits and risks of
an investment in the Company. Buyer has had full opportunity to ask
questions and receive satisfactory answers concerning all matters
pertaining to its investment and all such questions have been answered to
its full satisfaction. Buyer has been provided an opportunity to obtain any
additional information concerning the Company and all other information to
the extent the Company possesses such information or can acquire it without
unreasonable effort or expense. Buyer has received no representation or
warranty from the Company with respect to its investment in the Company,
and has relied solely upon its own investigation in making a decision to
invest in the Company.
(f) Buyer is an "accredited investor" as defined in Section 2(15) of
the Securities Act and in Rule 501 promulgated thereunder.
(g) This Agreement has been duly executed and delivered by Buyer and
constitutes the legal, valid, and binding obligation of the Buyer
enforceable against the Buyer in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, or similar
laws affecting the enforcement of creditors' rights in general or general
principles of equity.
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4. RESTRICTIONS ON TRANSFER.
4.1 Restrictions on Transfer. Buyer agrees that it will not sell, transfer,
or otherwise dispose of any of the Shares, except pursuant to an effective
registration statement under the Securities Act or an exemption from the
registration requirements of the Securities Act and the Company has received an
opinion of counsel satisfactory to the Company that such exemption is available.
4.2 Legend. Each certificate for the Shares shall bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY BE SOLD OR OTHERWISE TRANSFERRED
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE AND THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH EXEMPTION IS AVAILABLE."
5. REGISTRATION RIGHTS.
5.1 Piggyback Registration. From the date of this agreement until the
second anniversary thereof, if the Company proposes to file a registration
statement under the Securities Act with respect to an offering for its own
account of any class of security (other than a registration statement on Form
S-4 or S-8 or successor forms thereto or filed in connection with an exchange
offer or business combination or an offering of securities solely to the
Company's existing stockholders), then the Company shall in each case give
written notice of such proposed filing to the Buyer at least thirty days before
the anticipated filing date, and such notice shall offer the Buyer the
opportunity to register such number of shares of Common Stock of the Company as
the Buyer may request. Upon the written request of the Buyer made within twenty
days of receipt of such notice, the Company shall use its best efforts to cause
the managing underwriter or underwriters of a proposed underwritten offering to
permit the Buyer to include such shares in such offering on the same terms and
conditions as any shares of Common Stock of the Company included therein.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
such offering delivers a written opinion to the Buyer that the total number of
shares which it, the Company and any other persons or entities intend to include
in such offering may adversely affect the success or offering price of such
offering, then the number of shares to be offered for the account of the Buyer
shall be reduced pro rata to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended by such
managing underwriter (or, if applicable, excluding such shares entirely),
provided that if shares are being offered for the account of other persons or
entities as well as the Company, such reduction shall not represent a greater
fraction of the number of shares intended to be offered by the Buyer than the
fraction of similar reductions imposed on such other persons or entities other
than the Company over the amount of securities they intended to offer. In the
event that the registration proposed by the Company is an underwritten primary
offering of its securities and the Buyer does not sell its securities to the
underwriter of the Company's securities in connection with such offering, the
Buyer shall, to the extent permitted by applicable law or regulation, refrain
from selling any of its securities during the period of distribution of the
Company's securities by such underwriter in the primary offering and the period
in which the underwriter participates in the aftermarket and for such additional
period requested by the underwriter, provided, however, that the Buyer shall, in
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<PAGE>
any event, be entitled to sell its securities in connection with such
registration statement commencing on the 90th day after the effective date of
such registration statement.
5.2 Blue Sky. In connection with the registration of its securities
pursuant to Section 5.1, the Company shall use all reasonable efforts to
register and qualify its securities covered by such registration statement under
such securities or Blue Sky laws of such jurisdictions within the United States
as the Buyer shall reasonably request and do any and all such other acts and
things as may be reasonably necessary or advisable to enable the Buyer to
consummate the disposition in such jurisdictions of the securities held by the
Buyer; provided that the Company shall not be required to consent to general
service of process, to qualify, to do business or subject itself to tax
liability in any jurisdiction in which it has not, as of the effective date of
such registration, qualified to do business.
5.3 Expenses. All expenses in connection with registrations of the Shares
shall be borne by the Company except for underwriting discounts and commissions,
applicable transfer taxes, expenses associated with blue sky registrations
requested by Buyer pursuant to Section 5.2, and expenses of counsel to the
Buyer, which shall be borne by the Buyer.
5.4 Indemnification.
(a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Buyer, its General Partner, limited
partners, and its affiliates and each of their officers, directors,
trustees, agents and employees and each person, if any, who controls the
Buyer ("Controlling Person") within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act against any and all
loss, liability, claim, damage and expense whatsoever (including but not
limited to any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever) to which it may become subject under
the Securities Act, the Securities Exchange Act of 1934, as amended
("Exchange Act") or any other statute or at common law or otherwise,
arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any registration statement (a
"Registration Statement") in which the Buyer's securities shall be included
or the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company with respect
to the Buyer by the Buyer expressly for use in the Registration Statement.
The Company agrees promptly to notify the Buyer of the commencement of any
litigation or proceedings against the Company or any of its officers,
directors or controlling persons in connection with the issue and sale of
the Shares in connection with the Registration Statement.
(b) If any action is brought against the Buyer in respect of which
indemnity may be sought against the Company pursuant to Section 5, Buyer
shall promptly notify the Company in writing of the institution of such
action and the Company shall assume the defense of such action, including
the employment and fees of counsel (subject to the approval of Buyer) and
payment of actual expenses. Buyer shall have the right to employ its own
counsel in any such case, but the fees and expenses of such counsel shall
be at the expense of Buyer unless (i) the employment of such counsel shall
have been authorized in writing by the Company in connection with the
defense of such action, or (ii) the Company shall not have employed counsel
to have charge of the defense of such action, or (iii) the Buyer shall have
reasonably concluded that there may be defenses available to it which are
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different from or additional to those available to the Company (in which
case the Company shall not have the right to direct the defense of such
action on behalf of the Buyer), in any of which events the fees and
expenses of not more than one additional firm of attorneys selected by
Buyer and/or controlling person shall be borne by the Company.
Notwithstanding anything to the contrary contained herein, if Buyer shall
assume the defense of such action as provided above, the Company shall have
the right to approve the terms of any settlement of such action which
approval shall not be unreasonably withheld.
(c) Buyer agrees to indemnify and hold harmless each of the Company,
its directors, officers and employees and any underwriter (as defined in
the Securities Act) and each Controlling Person of the Company, against any
and all loss, liability, claim, damage and expense described in the
foregoing indemnity from the Company to Buyer, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions
directly relating to Buyer in the Registration Statement, and in strict
conformity with, written information furnished to the Company by Buyer
expressly for use in the Registration Statement. In case any action shall
be brought against the Company or any other person so indemnified based on
the Registration Statement, and in respect of which indemnity may be sought
against Buyer, Buyer shall have the rights and duties given to the Company,
and the Company and each other person so indemnified shall have the rights
and duties given to Buyer by the provisions of paragraph (b) above.
5.5 Contribution.
(a) In order to provide for just and equitable contribution under the
Securities Act in any case in which (i) any person entitled to
indemnification under this Section 5 makes claim for indemnification
pursuant hereto but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact
that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Securities Act, the Exchange Act, or otherwise may
be required on the part of any such person in circumstances for which
indemnification is provided under this Section 5, then, and in each such
case, the Company and Buyer shall contribute, in proportion to their
relative fault, to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by
the Company and Buyer, as incurred; provided, that, no person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(b) Within fifteen days after receipt by any party to this Agreement
(or its representative) of notice of the commencement of any action, suit
or proceeding, such party will, if a claim for contribution in respect
thereof is to be made against another party (the "contributing party"),
notify the contributing party of the commencement thereof, but the omission
to so notify the contributing party will not relieve it from any liability
which it may have to any other party other than for contribution hereunder.
In case any such action, suit or proceeding is brought against any party,
and such party notifies a contributing party or its representative of the
commencement thereof within the aforesaid fifteen days, the contributing
party will be entitled to participate therein with the notifying party and
any other contributing party similarly notified. Any such contributing
party shall not be liable to any party seeking contribution on account of
any settlement of any claim, action or proceeding effected by such party
seeking contribution on account of any settlement of any Claim, action or
proceeding effected by such party seeking contribution without the written
consent of such contributing party. The contribution provisions contained
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in this Section 5 are intended to supersede, to the extent permitted by
law, any right to contribution under the Securities Act, the Exchange Act
or otherwise available.
6. MISCELLANEOUS.
6.1 Expenses. Each party shall be liable for its own expenses in connection
with the transactions contemplated by this Agreement.
6.2 Amendments. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement is sought.
6.3 Successors and Assigns. All covenants and agreements in this Agreement
contained by or on behalf of either of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the Company and of
Buyer, whether so expressed or not.
6.4 Notices, Etc. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered in person or mailed by
certified or registered mail first-class, postage prepaid:
If to the Company: with a copy to:
Individual Investor Group, Inc. Individual Investor Group, Inc.
1633 Broadway, 38th Floor 1633 Broadway, 38th Floor
New York, New York 10019 New York, New York 10019
Attention: Mr. Jonathan L. Steinberg Attn: Hank Clark
If to the Buyer:
Wise Partners, L.P.
c/o Jonathan Steinberg
Individual Investor Group, Inc.
1633 Broadway, 38th Floor
New York, New York 10019
Any such notice, request, demand or other communication hereunder shall be
deemed to have been duly given or made and to have become effective (i) if
delivered by hand, at the time of receipt thereof and (ii) if sent by registered
or certified first-class mail, postage prepaid, five business days thereafter.
Any party may, by written notice to the other, change the address to which
notices to such party are to be delivered or mailed.
6.5 Governing Law. This Agreement is being delivered and is intended to be
performed in the State of New York and shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
such State.
6
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
COMPANY: BUYER:
INDIVIDUAL INVESTOR GROUP, INC. WISE PARTNERS, L.P.
By:_____________________________ BY:__________________________
Hank Clark Jonathan Steinberg
Vice President -- Finance General Partner
7
<PAGE>
NATIONSBANK, N.A.
LOAN AGREEMENT
- ------------------------
This Loan Agreement (the "Agreement"), dated as of June 26, 1998, by and
between NationsBank, N.A., a national banking association (the "Bank"), and the
Borrower described below.
In consideration of the Loans described below and the mutual covenants and
agreements contained herein, and intending to be legally bound hereby, the Bank
and the Borrower agree as follows:
I. DEFINITIONS AND REFERENCE TERMS. In addition to any other terms defined
herein, the following terms shall have the meaning set forth with respect
thereto:
A. Adjusted LIBOR. Adjusted LIBOR means, with respect to any Interest
Period, (i) the rate of interest per annum (rounded upward, if necessary,
to the next higher 1/16th of one percent) determined by the Bank, in
accordance with its customary general practice from time to time, to be the
rate equal to the London Interbank Offered Rate (expressed as a percentage)
for dollar deposits as would be quoted by the Bank for 11:00 a.m. London
time, or as soon thereafter as practicable, on the second Business Day
immediately preceding the first day of such Interest Period, for a term
comparable to such Interest Period and (ii) as adjusted from time to time
in the Bank's sole discretion for then applicable reserve requirements,
deposit insurance assessment rates and other regulatory costs.
B. Advance Rate. Advance Rate means, at any date, (i) in the case of
the Reliance Collateral, sixty percent (60%), (ii) in the case of the INI
Collateral during such times, if any, that the Price Requirement is
satisfied, thirty-five percent (35%) and (iii) in the case of the INI
Collateral during such times, if any, that the Price Requirement is not
satisfied, zero percent (0%).
C. Affiliate. Affiliate means, as to any entity, any other entity
that, directly or indirectly, controls, is controlled by or is under common
control with such entity, or is an officer or director of such entity. The
term "control" (including the terms "controlled by" or "under common
control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such
entity, whether through ownership of voting securities, by contract or
otherwise.
D. Applicable Margin. Applicable Margin means 2.00%.
E. Borrower. Borrower means Wise Partners, L.P., a Delaware limited
partnership.
<PAGE>
2
F. Borrower's Address: Borrower's Address means c/o Jonathan L.
Steinberg, 1633 Broadway, 38th Floor, New York, New York 10019.
G. Business Day. Business Day means any day other than a Saturday,
Sunday or other day on which commercial banks in New York City, New York,
or in Charlotte, North Carolina, are authorized or required by law to
close; provided that in the case of Loans to be made and/or maintained at a
rate of interest based upon the Adjusted LIBOR Rate, such day is also a day
on which dealings between banks are carried on in U.S. dollar deposits in
the London interbank market.
H. Closing Date. Closing Date means the date on which the initial Loan
is made hereunder after all of the conditions precedent set forth in
Article III have been satisfied.
I. Collateral. Collateral means, collectively, (i) the Reliance
Collateral, (ii) the INI Collateral and (iii) all other property described
as collateral security for the Obligations in the Pledge Agreement.
J. Commitment. Commitment means the commitment of the Bank to make
Loans pursuant to Section II A. (but subject to the limitation contained in
the second sentence thereof) in an aggregate principal amount not to exceed
$17,500,000, as such commitment may be reduced or terminated in accordance
with the provisions of this Agreement.
K. Event of Default. Event of Default has the meaning specified in the
Note.
L. Governmental Authority. Governmental Authority means any nation or
government, any federal, state, city, town, municipality, county, local or
other political subdivision thereof or thereto and any department,
commission, board, bureau, instrumentality, agency or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
M. Guarantors. Guarantors mean Jonathan L. Steinberg and Saul P.
Steinberg.
N. Guaranties. Guaranties mean the Guaranties of the Guarantors in the
form of Exhibit B-1 and Exhibit B-2 hereto, as such Guaranties may be
modified or amended from time to time.
O. Indebtedness. Indebtedness means, with respect to any person, (i)
all indebtedness or other obligations of such person for borrowed money or
for the deferred purchase price of property or services, (ii) all
<PAGE>
3
obligations of such person under direct or indirect guaranties in respect
of, and contingent or other obligations of such person to purchase or
otherwise acquire or otherwise assure a creditor against loss in respect
of, indebtedness or other obligations of any other person for borrowed
money or for the deferred purchase price of property or services, (iii) all
indebtedness or other obligations of any other person for borrowed money or
for the deferred purchase price of property or services secured by (or for
which the holder of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any lien, security interest or other charge or
encumbrance upon or in property owned by such person, (iv) all obligations
of such person to make reimbursement or payment in respect of letters of
credit and bankers' acceptances, and (v) the net liabilities of such person
under all interest rate swap, interest rate collar, interest rate cap,
interest rate floor, forward rate agreements, commodity swaps or other
agreements or arrangements designed to protect against fluctuations in
interest rates or currency, commodity or equity values, each calculated in
the sole discretion of the Bank.
P. INI. INI means Individual Investor Group, Inc., a Delaware
corporation.
Q. INI Collateral. INI Collateral means the shares of common stock of
INI described in Section 2 of the Pledge Agreement.
R. Interest Period. Interest Period means each thirty (30), sixty (60)
or ninety (90) day period during which interest on each Loan shall be
calculated by reference to Adjusted LIBOR, determined as of the second
Business Day before the commencement of that Interest Period; provided,
however, that:
(i) each Interest Period shall commence on the first day of a
month and end on the first day in the relevant calendar month
thereafter;
(ii) each subsequent Interest Period for a Loan shall commence on
the last day of the immediately preceding Interest Period and end on
the first day in the relevant calendar month thereafter; and
(iii) any Interest Period which would otherwise extend beyond the
Termination Date shall end on the Termination Date.
S. Loan Document. Loan Document means any of this Agreement, the Note,
the Guaranties, the Pledge Agreement and all other instruments, agreements
and other documents executed and delivered pursuant hereto or thereto.
<PAGE>
4
T. Loans. Loans mean the loans made by the Bank to the Borrower
pursuant to Section II A.
U. Margin Maintenance Limit. The Margin Maintenance Limit means, at
any date, the sum of (i) the product of (A) the Trading Collateral Value of
all the Reliance Collateral and (B) the applicable Margin Rate of the
Reliance Collateral and (ii) the product of (A) the Trading Collateral
Value of all the INI Collateral and (B) the applicable Margin Rate of the
INI Collateral.
V. Margin Rate. Margin Rate means, at any date, (i) in the case of the
Reliance Collateral, seventy percent (70%), (ii) in the case of the INI
Collateral during such times, if any, that the Price Requirement is
satisfied, forty-five percent (45%) and (iii) in the case of the INI
Collateral during such times, if any, that the Price Requirement is not
satisfied, zero percent (0%).
W. Note. Note means the promissory note of the Borrower, in the form
of Exhibit A hereto, as such promissory note may be modified or extended
from time to time in accordance with the terms of the Loan Documents, and
any promissory note or notes issued in exchange or replacement thereof.
X. Obligations. Obligations means (i) the obligations of the Borrower
to pay, as and when due and payable (by mandatory prepayment, by scheduled
maturity or otherwise), all amounts from time to time owing by it pursuant
to any Loan Document, whether for principal, interest, fees or otherwise
and (ii) the obligations of the Borrower to perform or observe all of
Borrower's other obligations from time to time existing under any Loan
Document.
Y. Original Advance Limit. Original Advance Limit means, at any date,
the sum of (i) the product of (A) the Trading Collateral Value of all the
Reliance Collateral and (B) the applicable Advance Rate of the Reliance
Collateral and (ii) the product of (but in no event exceeding $2,000,000)
(A) the Trading Collateral Value of all the INI Collateral and (B) the then
applicable Advance Rate of the INI Collateral.
Z. Pledge Agreement. Pledge Agreement means the Pledge Agreement of
Saul P. Steinberg in the form of Exhibit C hereto, as such Pledge Agreement
may be modified or amended from time to time.
AA. Price Requirement. Price Requirement means, at any date, that the
last reported bid price or sale price for shares of INI Collateral on the
immediately preceding Business Day on the trading exchange or stock market
on which the INI Collateral is then traded, as reported by The Wall Street
Journal, is not less than $3.00 per share.
<PAGE>
5
BB. Prime Rate. Prime Rate means the fluctuating rate of interest
established by the Bank from time to time, at its discretion, as its prime
rate of interest whether or not such rate shall be otherwise published. The
Prime Rate is established by the Bank as an index and may not at any time
be the best or lowest rate charged by the Bank on any loan. With respect to
any Loan bearing interest at the Prime Rate, the floating interest rate
shall be adjusted automatically with respect to each such Loan as and when
the Prime Rate shall change.
CC. Reliance. Reliance means Reliance Group Holdings, Inc., a Delaware
corporation.
DD. Reliance Collateral. Reliance Collateral means the shares of
common stock of Reliance described in Section 2 of the Pledge Agreement.
EE. Trading Collateral Value. Trading Collateral Value means, at any
date, with respect to the Reliance Collateral, the product of (i) the per
share price of the Reliance Collateral at the close of trading on the
immediately preceding Business Day on the trading exchange or stock market
for the Reliance Collateral, as reported by The Wall Street Journal, and
(ii) the number of shares of Reliance Collateral and, with respect to the
INI Collateral, the product of (x) the per share price of the INI
Collateral at the close of trading on the immediately preceding Business
Day on the trading exchange or stock market for the INI Collateral, as
reported by The Wall Street Journal, and (y) the number of shares of INI
Collateral.
FF. Signing Date. Signing Date means the date that this Agreement is
executed and delivered by the Borrower, which date may be the same as the
Closing Date.
GG. Termination Date. Termination Date means the earlier of (i) the
first anniversary of the Closing Date and (ii) the date on which the Bank
terminates the Commitment following an Event of Default.
All accounting terms not specifically defined or specified herein shall have the
meanings attributed to such terms under U.S. generally accepted accounting
principles ("GAAP"), as in effect from time to time, consistently applied.
II. LOANS.
A. Making the Loans. The Bank hereby agrees, on the terms and
conditions hereinafter set forth, to make Loans to the Borrower from the
Closing Date until the Termination Date in an aggregate principal amount at
any one time outstanding not to exceed the amount of the Commitment at that
time. The Bank shall have no obligation to make a Loan to the extent that
the sum of the aggregate principal amount of the outstanding Loans plus the
principal amount of such requested Loan would exceed an amount equal to the
<PAGE>
6
Original Advance Limit. Except as provided in Section II.C., each Loan
shall be in an amount equal to $100,000 or an integral multiple of $100,000
in excess thereof, and shall be made on at least two (2) Business Days'
prior written notice. Except as provided in Section II.C., each request for
a Loan (a "Notice of Borrowing") shall be made by telephonic or written
communication by the Borrower. The Notice of Borrowing shall specify the
proposed amount of such Loan, the Interest Period applicable thereto and
the Business Day on which such Loan shall be made. On the Business Day
specified in the Notice of Borrowing and upon fulfillment of the applicable
terms and conditions set forth in Article III hereof, the Bank will make
the proceeds of such Loan available to the Borrower by crediting a demand
deposit account maintained at the Bank in the name of the Borrower, not
later than 1:00 P.M. (Eastern time) on such date. Within the limits of the
Commitment and subject to the second sentence of this Section II A., the
Borrower may borrow, prepay and reborrow pursuant to this Article II until
the Termination Date. Notwithstanding any other provision of this
Agreement, the Commitment shall expire on, and the Bank shall have no
obligation to extend credit to the Borrower or make any Loan on or after,
the Termination Date.
B. Interest Rate. The outstanding principal balance of each Loan will
bear interest at a rate per annum equal at all times during each Interest
Period to the sum of (i) Adjusted LIBOR for such Interest Period, plus (ii)
the Applicable Margin. Notwithstanding the foregoing, after the occurrence
and during the continuance of an Event of Default, the principal of and
interest on each Loan and any other amounts owing hereunder or under the
other Loan Documents shall bear interest at a rate per annum equal to the
Prime Rate plus 4%.
C. Repayment. The Borrower will pay all accrued interest on the Loans
on the last Business Day of each Interest Period. In the event any interest
is not so paid, the Borrower authorizes the Bank, without notice to the
Borrower, to make a Loan (subject to the second sentence of Section II.A.
and upon fulfillment of the applicable terms and conditions set forth in
Article III hereof) on the last Business Day of each Interest Period and
apply the proceeds thereof to the payment of all interest accrued on the
Loans during such Interest Period. The Interest Period for each such Loan
shall be thirty (30) days. It is understood and agreed that,
notwithstanding anything to the contrary contained in any Loan Document, no
Event of Default shall be deemed to have occurred or to exist solely as a
result of the failure of any interest payment to be paid in full when due,
if at any time during such failure the Bank could have made a Loan pursuant
to this Section II.C. but did not do so. The Borrower will repay all unpaid
principal amounts of the Loans and all accrued and unpaid interest thereon
in full on the Termination Date.
D. Optional Prepayment. Subject to the provisions of Section II L.,
the Borrower may prepay any Loan in whole at any time or in part from time
to time, without penalty or premium, each such prepayment to be accompanied
by the payment of accrued interest to the date of such prepayment on the
amount prepaid; provided, however, that (i) each partial prepayment shall
<PAGE>
7
be in a principal amount equal to $100,000 or an integral multiple thereof
and (ii) the Borrower shall give the Bank written notice at least one (1)
Business Day prior to the date of the prepayment of a Loan. Each notice of
prepayment shall specify the date and the amount of the prepayment. Any
amount of principal of a Loan prepaid may be reborrowed in accordance with
Section II A.
E. Mandatory Prepayment.
1. If at any time the Bank, upon the advice of legal counsel,
determines that the transactions contemplated by this Agreement or any
of the other Loan Documents violate any provision of Regulations T, U
or X of the Federal Reserve Board, the Borrower will, upon five (5)
Business Days' written notice from the Bank, prepay the Loans by an
amount sufficient such that, after such prepayment, the transactions
contemplated by the Loan Documents will not violate any provision of
Regulations T, U or X of the Federal Reserve Board.
2. If at any time the Bank determines that the aggregate
principal amount of the outstanding Loans equals or exceeds an amount
equal to the Margin Maintenance Limit, the Borrower will, upon five
(5) Business Days' written notice from the Bank, prepay the Loans by
an amount such that, after such prepayment, the aggregate principal
amount of the outstanding Loans does not exceed an amount equal to the
Original Advance Limit.
F. Evidence of Credit Extensions. The Loans shall be evidenced by the
Note. The Bank shall record advances and principal payments thereof on the
grid attached thereto or, at its option, in its records, and the Bank's
record thereof shall be conclusive absent demonstrable error.
Notwithstanding the foregoing, the failure to make or an error in making a
notation with respect to any Loan or any payment shall not limit or
otherwise affect the Obligations of the Borrower hereunder or under the
Note.
G. Payment. Payment of principal, interest and any other sums due
under this Agreement or under the Note shall be made without set-off or
counterclaim in United States dollars and in immediately available funds on
the day such payment is due not later than 12:00 noon New York time. All
sums received after such time shall be deemed received on the next Business
Day, and principal payments or sums (other than interest) due hereunder
shall bear interest for an additional day or days, as applicable. All
payments shall be made to the Bank in accordance with the Bank's written
instructions.
H. Computations of Interest; Business Day.
1. All computations of interest under this Agreement and the Note
shall be made on the basis of a year of three hundred and sixty (360)
days and actual days elapsed. Interest shall accrue on each Loan
<PAGE>
8
outstanding from and including the date such Loan is made by the Bank
to but excluding the date on which such Loan is repaid.
2. Payment of all amounts due hereunder shall be made on a
Business Day. Any payment due on a day that is not a Business Day
shall be made on the next Business Day unless the next Business Day
would fall in the next calendar month, in which case such payment
shall be made on the Business Day immediately preceding the due date.
I. Increased Costs, Etc.
1. If, after the date of this Agreement, due to either (i) the
introduction of or any change in or in the interpretation of any law
or regulation or (ii) the compliance with any guideline or request
from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any (x) change in the basis
of taxation of payments to the Bank of the principal of or interest on
any Loan (excluding changes in the rate of tax payable on the Bank's
overall income and bank franchise taxes) or (y) imposition or change
in any reserve or similar requirement, and the result of any of the
foregoing is an increase in the cost to the Bank of agreeing to make
or making, funding or maintaining any Loan, then the Borrower shall
from time to time, upon demand by the Bank, pay to the Bank an
additional amount sufficient to compensate the Bank for such increased
cost. A certificate as to the amount of such increased cost, submitted
to the Borrower by the Bank, shall be conclusive and binding for all
purposes, absent demonstrable error.
2. If the Bank determines that compliance with any law or
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law)
affects or would affect the amount of capital required or expected to
be maintained by the Bank or any corporation controlling the Bank and
that the amount of such capital is increased by or based upon the
existence of any Loan or the Commitment, then the Borrower shall, upon
demand by the Bank, pay to the Bank an additional amount sufficient to
compensate the Bank or such corporation in the light of such
circumstances, to the extent that the Bank reasonably determines such
increase in capital to be allocable to the existence of such Loans or
the Commitment. A certificate as to such amounts, submitted to the
Borrower by the Bank, shall be conclusive and binding for all
purposes, absent demonstrable error.
3. Prior to making any demand for compensation under this Section
I, (i) the Bank will use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to file any
certificate or document requested by the Borrower or to change the
jurisdiction of its lending office if the making of such a filing or
change would avoid the need for, or reduce the amount of, any such
additional amounts that may thereafter accrue and would not, in the
judgment of the Bank, be otherwise disadvantageous to the Bank, and
<PAGE>
9
(ii) the Bank will permit the Borrower to prepay all or any part of
the affected Loans, together with interest to the date of payment,
provided that the Borrower shall not be obligated to compensate the
Bank for increased costs or reduced return incurred prior to the
Borrower receiving notice thereof.
J. Illegality. If, after the date of this Agreement, the adoption of
any applicable law, rule or regulation, or any change in an existing law,
rule or regulation, or any change in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance by the Bank with any request or
directive (whether or not having the force of law) of any such Governmental
Authority, makes it unlawful or impossible for the Bank to make, maintain
or fund any Loan at an interest rate based on Adjusted LIBOR, the Bank
shall forthwith give notice thereof to the Borrower, whereupon the
obligation of the Bank to make Loans at a rate based on Adjusted LIBOR
shall be suspended until the Bank notifies the Borrower that the
circumstances giving rise to such suspension no longer exist. The Bank will
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to file any certificate or document requested by
the Borrower if the making of such a filing would avoid the need for, or
reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank. If the Bank makes a reasoned determination
that it may not lawfully continue to maintain and fund any Loan at a rate
based on Adjusted LIBOR and so specifies in such notice, then effective on
the date specified in such notice, each affected Loan shall bear interest
at the Prime Rate.
K. Unavailability. If the Bank determines that for any reason adequate
and reasonable means do not exist for ascertaining Adjusted LIBOR for any
Interest Period, the Bank will forthwith give notice of such determination
to the Borrower. Commencing at the end of each Interest Period then in
effect, the respective Loans shall bear interest at the Prime Rate (rather
than at a rate based on Adjusted LIBOR) until the Bank revokes such notice
in writing.
L. Funding Losses. The Borrower agrees to reimburse the Bank and to
hold the Bank harmless from any loss or expense which the Bank may sustain
or incur as a consequence of:
(a) the failure of the Borrower to make any payment or required
prepayment of principal of any Loan with an Interest Period in excess
of 30 days (including payments made after any acceleration thereof);
(b) the failure of the Borrower to make any prepayment permitted
hereunder after giving notice thereof with respect to a Loan with an
Interest Period in excess of thirty (30) days;
<PAGE>
10
(c) the repayment of a Loan bearing interest at a rate based on
Adjusted LIBOR on a day which is not the last day of an Interest
Period in excess of thirty (30) days (whether at maturity, due to
acceleration or otherwise); or
(d) the failure for any reason (other than a wrongful default by
the Bank) of a Borrower to borrow any Loan with an Interest Period in
excess of thirty (30) days after notice has been given to the Bank in
accordance with Section II A. hereof (whether or not such notice is
withdrawn);
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain the Loans hereunder at a rate based on
Adjusted LIBOR for an Interest Period in excess of thirty (30) days or from fees
payable to terminate the deposits from which such funds were obtained. Solely
for purposes of calculating amounts payable by the Borrower to the Bank under
this section, each Loan bearing interest at a rate based on Adjusted LIBOR for
an Interest Period in excess of thirty (30) days (and each related reserve,
special deposit or similar requirement) shall be conclusively deemed to have
been funded by a matching deposit in dollars in the interbank eurodollar market
for a comparable amount and for the respective Interest Period, whether or not
such Loan was in fact so funded.
III. CONDITIONS PRECEDENT.
A. Conditions to Initial Loan. The obligation of the Bank to make the
initial Loan is subject to the condition precedent that the Bank shall have
received on or prior to the Closing Date the following, each duly executed
and in form and substance satisfactory to the Bank and its counsel and,
unless indicated otherwise, dated the Closing Date:
1. Agreement. This Agreement, duly executed by the Borrower and
dated as of the Closing Date.
2. Note. The Note, duly executed by the Borrower and dated as of
the Closing Date.
3. Pledge Agreement. The Pledge Agreement, duly executed by Saul
P. Steinberg and dated as of the Closing Date.
4. Stock Certificates, Etc. (i) Original certificates
representing the Reliance Collateral and the INI Collateral together
with an undated stock power for each such certificate, duly executed
in blank by the relevant Guarantor, with signature medallion
guaranteed (or, if the Reliance Collateral or the INI Collateral is
uncertificated, confirmation and evidence that appropriate book
entries have been made in the relevant books and records of a
<PAGE>
11
securities intermediary under applicable law) and (ii) a copy of any
registration statement, registration rights agreement, shareholders'
agreement or other agreement, instrument or document affecting the
Reliance Collateral or the INI Collateral.
5. Fees Payable at Closing. The Borrower shall have paid to Paul,
Weiss, Rifkind, Wharton & Garrison, counsel to the Bank, its
reasonable fees, disbursements and other charges in connection with
the preparation, negotiation, execution and delivery of the Loan
Documents.
6. Opinion of Counsel. An opinion, dated the Closing Date, of
counsel to the Borrower and the Guarantors, in the form of Exhibit D
hereto.
7. Form FR U-1. A Federal Reserve Form FR U-1 the statements made
in which shall be such, in the opinion of the Bank, to permit the
transactions contemplated hereby to be performed in accordance with
Regulation U of the Federal Reserve Board, dated the Closing Date and
executed by the Borrower.
8. Partnership Agreement. A copy of the partnership agreement of
the Borrower, certified as true and complete by the Borrower.
9. Guaranties. The Guaranties, duly executed by the Guarantors
and dated as of the Closing Date.
10. Other Documents. All other promissory notes, loan agreements,
security agreements, financing statements, assignments, guaranties,
corporate resolutions and other documents and instruments that are, in
the reasonable opinion of the Bank, necessary in connection with the
Loans.
11. Other Information. Such other financial or other information
as the Bank may reasonably require.
B. Conditions to All Loans. The obligation of the Bank to make any
Loan is subject to the conditions precedent that:
1. The following statements shall be true, and the acceptance of
the proceeds of such Loan by the Borrower shall be deemed to be a
representation and warranty of the Borrower on the date of such Loan
that, (i) the representations and warranties contained in Article IV
of this Agreement and in each other Loan Document and certificate or
other writing delivered by or on behalf of the Borrower or either
Guarantor to the Bank pursuant hereto or thereto on or prior to the
date of such Loan are true and correct in all material respects on and
as of such date as though made on and as of such date; (ii) no Event
of Default has occurred and is continuing or would result from the
making of such Loan to be made on such date;
<PAGE>
12
and (iii) no material adverse change in the financial condition,
properties or prospects of the Borrower or either Guarantor shall have
occurred and be continuing on the date of each request for a Loan; and
2. The Bank shall have received a Notice of Borrowing in
accordance with Section II A. with respect to such Loan.
IV. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Bank as follows:
A. Authority and Compliance. The Borrower is a limited partnership
duly organized and validly existing under the laws of the State of
Delaware. The sole general partner of the Borrower is Jonathan L.
Steinberg. The Borrower has full power and authority to execute and deliver
the Loan Documents to which it is a party and to incur and perform the
obligations provided for herein and therein. No consent or approval of any
Governmental Authority or other third party is or will be required as a
condition to the enforceability of any Loan Document, and the Borrower is
and will be in compliance in all material respects with all laws and
regulatory requirements to which the Borrower is subject.
B. Binding Agreement. This Agreement and the other Loan Documents
executed and delivered by the Borrower and to be executed and delivered by
the Borrower to the Bank are or shall be (on the date of their execution
and thereafter) duly executed and delivered by the Borrower and are and
shall be (on the date of their execution and thereafter) enforceable
against the Borrower in accordance with their terms except as
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights generally
or by general equitable principles (whether in a suit, at law or in
equity).
C. Litigation. There is no litigation or proceeding involving the
Borrower pending or, to the knowledge of the Borrower, threatened before
any court, tribunal or Governmental Authority, which may in any way
materially adversely affect the financial condition, operations or
prospects of the Borrower, except as disclosed to the Bank in writing and
acknowledged by the Bank prior to the date of this Agreement.
D. No Conflicting Laws or Agreements. There is no law, rule,
regulation (including, without limitation, Regulations T, U or X of the
Federal Reserve Board) or order pertaining to the Borrower and no provision
of any agreement, mortgage or contract binding on the Borrower or affecting
the Borrower's property, which would conflict with, be breached by, be in
default or in any way prevent, the execution, delivery or carrying out of
the terms of this Agreement and the other Loan Documents.
<PAGE>
13
E. Ownership of Assets. The Borrower has good and marketable title to
all its assets, free and clear of all liens and encumbrances, except liens
granted to the Bank.
F. Taxes. All material taxes and assessments due and payable by the
Borrower have been paid or are being contested in good faith by appropriate
proceedings and the Borrower has filed all tax returns which it is required
to file.
G. Financial Statements. The financial statements of the Borrower,
dated March 12, 1998, which have been delivered to the Bank fairly present
the Borrower's financial condition as of the date thereof. The Borrower has
not failed to disclose to the Bank any information that could materially
affect its properties, prospects or business or financial condition. There
has occurred no material adverse change in the financial condition of the
Borrower since the date of such financial statements.
H. Accuracy of Information. All information furnished by the Borrower
to the Bank in connection with this Agreement and the other Loan Documents
is and will be accurate and complete in all material respects on the date
as of which such information is delivered to the Bank and is not and will
not be incomplete by the omission of any material fact necessary to make
such information not misleading.
I. Event of Default. No Event of Default has occurred and is
continuing.
J. Use of Proceeds. The proceeds of the Loans will not be used in any
manner that would violate any law, rule, regulation or order of any
Governmental Authority, including without limitation, Regulations T, U and
X of the Federal Reserve Board.
K. Continuation of Representations and Warranties. All representations
and warranties made under this Agreement shall be deemed to be made at and
as of the date hereof and at and as of the date of the making of any Loan.
V. AFFIRMATIVE COVENANTS. Until full payment and performance of all
Obligations of the Borrower under the Loan Documents and the termination of the
Commitment, the Borrower will (and without limiting any requirement contained in
any other Loan Document):
A. Financial Statements and Other Information. Maintain a system of
accounting reasonably satisfactory to the Bank and in accordance with GAAP
consistently applied throughout the periods involved, permit the Bank's
<PAGE>
14
officers or authorized representatives to visit and inspect the Borrower's
books of account and other records upon reasonable notice and at such
reasonable times during normal business hours and as often as the Bank may
reasonably desire. Unless written notice of another location is given to
the Bank, the Borrower's books and records will be located at the
Borrower's Address. All financial statements called for below shall be
prepared in form and content reasonably acceptable to the Bank. The
Borrower will:
1. Annually, within ninety (90) days following the end of the
Borrower's fiscal year, submit to the Bank financial statements for
such fiscal year prepared in accordance with GAAP consistently
applied, including a balance sheet, statement of cash flow, statement
of contingent liabilities, partners' capital and financial notes as
appropriate, certified by a firm of certified public accountants; and
2. Furnish to the Bank promptly such additional information,
reports and statements respecting the financial condition of the
Borrower, from time to time, as the Bank may reasonably request.
B. Adverse Conditions or Events. Promptly advise the Bank in writing
of (i) any condition, event or act which comes to the attention of the
Borrower that might materially adversely affect the Borrower's financial
condition, prospects or operations or the Bank's rights under the Loan
Documents, (ii) any litigation filed by or against the Borrower with
respect to an amount in excess of $100,000 and (iii) any event that has
occurred that would constitute an Event of Default.
C. Taxes and Other Obligations. Pay all taxes, assessments and other
obligations, including, but not limited to taxes, costs or other expenses
arising out of the transactions contemplated by the Loan Documents, as the
same become due and payable, except to the extent the same are being
contested in good faith by appropriate proceedings in a diligent manner.
VI. NEGATIVE COVENANTS. Until full payment and performance of all
Obligations of the Borrower under the Loan Documents and the termination of the
Commitment, the Borrower will not (and without limiting any requirement
contained in any other Loan Document):
A. Borrowings. Create, incur, assume or become liable in any manner
for any Indebtedness in an amount exceeding $500,000 at any time, other
than Indebtedness to the Bank or Indebtedness outstanding on the Signing
Date and disclosed in writing to the Bank prior to the Signing Date.
VII. REMEDIES UPON DEFAULT. If an Event of Default shall occur, the Bank
may exercise all rights, powers and remedies available to it under each of the
<PAGE>
15
Loan Documents, as well as all rights and remedies available at law or in
equity.
VIII. NOTICES. All notices, requests or demands which any party is required
or may desire to give to any other party under any provision of any Loan
Document must be in writing delivered to the other party at the following
address:
Borrower:
Borrower's Address
Attention: Jonathan Steinberg
with a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016-2097
Attention: Peter M. Ziemba, Esq.
Fax No.: (212) 818-8881
and
Reliance Group Holdings, Inc.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Saul P. Steinberg
and
Attention: General Counsel
Fax No.: (212) 909-1864
Bank:
NationsBank, N.A.
Credit Services Center, 6th Floor
101 South Tryon Street
Charlotte, North Carolina 28255
Attention: Tom Fruge
Fax No.: (704) 388-0040
<PAGE>
16
with a copy to:
NationsBank, N.A.
Private Client Group
767 Fifth Avenue, 6th Floor
New York, New York 10153
Attention: Mary A. Pan
Fax No.: (212) 407-5461
and
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Neale M. Albert, Esq.
Fax No.: (212) 757-3990
or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:
A. If sent by mail, upon the earlier of (x) the date of receipt or (y)
five (5) days after deposit in the mail, certified and postage prepaid.
B. If sent by any other means, upon delivery.
IX. COSTS, EXPENSES AND ATTORNEYS' FEES. The Borrower shall pay to the
Bank, within 15 days of presentation by the Bank to the Borrower of an itemized
statement, the full amount of (a) all reasonable costs and expenses, including,
without limitation, reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of the Bank's in-house counsel if permitted by
applicable law), incurred by the Bank in connection with negotiation and
preparation of this Agreement and each of the Loan Documents and that may be
necessary to obtain, create, preserve, perfect defend, enforce and foreclose
upon the security interest of the Bank in the Collateral, whether or not any
Loan actually closes, and (b) all other reasonable costs and attorneys' fees
incurred by the Bank for which the Borrower is obligated to reimburse the Bank
in accordance with the terms of the Loan Documents.
X. MISCELLANEOUS. The Borrower and the Bank further covenant and agree as
follows, without limiting any requirement of any other Loan Document:
A. Cumulative Rights and No Waiver. Each and every right granted to
the Bank under any Loan Document, or allowed it by law or equity shall
<PAGE>
17
be cumulative of each other right and may be exercised in addition to any
and all other rights of the Bank, and no delay in exercising any right
shall operate as a waiver thereof, nor shall any single or partial exercise
by the Bank of any right preclude any other future exercise thereof or the
exercise of any other right. No notice to or demand on the Borrower in any
case shall, of itself, entitle the Borrower to any other or future notice
or demand in similar or other circumstances.
B. Applicable Law. This Agreement and the rights and obligations of
the parties hereunder shall be governed by and interpreted in accordance
with the laws of the State of New York and applicable United States federal
law.
C. Amendment. No modification, consent, amendment or waiver of any
provision of this Agreement or the Note, nor consent to any departure by
the Borrower therefrom, shall be effective unless (i) five (5) days prior
notice thereof has been provided to Saul P. Steinberg and the General
Counsel of Reliance Group Holdings, Inc. at the address of Reliance Group
Holdings, Inc. specified in Article VIII and (ii) the same shall be in
writing and signed by an officer that is at least a vice president of the
Bank, and then shall be effective only in the specified instance and for
the purpose for which given. This Agreement is binding upon the Borrower
and the Bank, their respective successors and assigns, and inures to the
benefit of the Bank, its successors and assigns; however, no assignment or
other transfer (except, in the case of the Bank, any assignment or other
transfer occurring by operation of law or upon any merger, consolidation or
reorganization of the Bank) of either party's rights or obligations
hereunder shall be made or be effective without the prior written consent
of the other party, nor shall it relieve either party of any of their
respective obligations hereunder. There is no third party beneficiary of
this Loan Agreement.
D. Documents. All documents, certificates and other items required
under this Agreement to be executed and/or delivered to the Bank shall be
in form and content reasonably satisfactory to the Bank and its counsel.
E. Partial Invalidity. The unenforceability or invalidity of any
provision of this Agreement shall not affect the enforceability or validity
of any other provision herein and the invalidity or unenforceability of any
provision of any Loan Document to any person or circumstance shall not
affect the enforceability or validity of such provision as it may apply to
other persons or circumstances.
F. Indemnification. The Borrower shall indemnify, defend and hold the
Bank, its Affiliates and their respective successors and assigns harmless
from and against any and all claims, demands, suits, losses, damages,
assessments, fines, penalties, reasonable costs or other expenses
(including reasonable attorneys' fees and court costs) arising from or in
any way related to any of the transactions contemplated hereby and the Loan
Documents, except for those arising from the Bank's gross negligence or
<PAGE>
18
willful misconduct. The Borrower's obligations under this paragraph shall
survive the repayment of the Loans and any foreclosure upon any Collateral
under the Pledge Agreement.
G. Survivability. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the
making of the Loans and shall continue in full force and effect so long as
any Obligation is outstanding.
XI. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED INSTRUMENTS,
AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED
TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING
A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN NEW YORK
COUNTY AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION,
THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION
HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION;
FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED
TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
AGREEMENT; OR (II) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT
BY 12 U.S.C. ss. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III)
<PAGE>
19
LIMIT THE RIGHT OF THE BANK (A) TO FORECLOSE AGAINST ANY REAL OR PERSONAL
PROPERTY COLLATERAL, OR (B) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY
REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION
OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE FORECLOSURE UPON
SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE,
DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT
TO THIS AGREEMENT. THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR
FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL NOT CONSTITUTE A
WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH
ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES.
XII. NO ORAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives as of the date first
above written.
BORROWER: BANK:
WISE PARTNERS, L.P. NATIONSBANK, N.A.
By:____________________________ By:_________________________________
Name: Jonathan L. Steinberg Name: Mary A. Pan
Title: General Partner Title: Senior Vice President
<PAGE>
Promissory Note
Date: June 26, 1998 Amount: $17,500,000.00
Between and
=============================================================================
Bank: Borrower:
NationsBank, N.A. Wise Partners, L.P.
101 South Tryon Street c/o Jonathan L. Steinberg
Charlotte, North Carolina 28255 1633 Broadway, 38th Floor
New York, New York 10019
=============================================================================
FOR VALUE RECEIVED, the undersigned, Wise Partners, L.P., a Delaware limited
partnership (the "Borrower"), unconditionally promises to pay to the order of
Bank, its successors and assigns, without setoff, at its offices indicated at
the beginning of this Note, or at such other place as may be designated in
writing by Bank, the principal amount of Seventeen Million Five Hundred Thousand
Dollars ($17,500,000.00), or, if less, the aggregate principal amount of the
outstanding Loans (as defined in the Loan Agreement hereinafter referred to)
made by Bank to Borrower pursuant to the Loan Agreement, together with interest
on the outstanding principal balance hereunder, at an annual interest rate, and
in accordance with the payment schedule, indicated below. Capitalized terms used
herein without definition are used herein as defined in the Loan Agreement,
dated as of the date hereof (the "Loan Agreement"), between Bank and Borrower.
RATE
The rate at which interest shall accrue hereunder (the "Rate") shall be equal to
the sum of (i) Adjusted LIBOR for the applicable Interest Period plus (ii) the
Applicable Margin. Notwithstanding the foregoing, after the occurrence and
during the continuance of an Event of Default, the principal of and interest on
each Loan and any other amounts owing hereunder or under the other Loan
Documents shall bear interest at a rate per annum equal to the Prime Rate plus
4% (the "Default Rate").
Notwithstanding any provision of this Note, Bank does not intend to charge and
Borrower shall not be required to pay any amount of interest or other charges in
excess of the maximum permitted by the applicable law of the State of New York;
or, if any higher rate ceiling is lawful, such higher rate ceiling. Any payment
in excess of such maximum shall be refunded to Borrower or credited against
principal, at the option of Bank.
ACCRUAL METHOD
Unless otherwise indicated, interest at the Rate set forth above will be
calculated based on a year of 360 days for the actual number of days for which
any principal is outstanding hereunder.
<PAGE>
2
PAYMENT SCHEDULE
All payments received hereunder shall be applied first to the payment of any
expense or charges payable hereunder or under any other Loan Documents, then to
interest due and payable, with the balance applied to principal, or in such
other order as Bank shall determine at its option.
Subject to Section II.C. of the Loan Agreement in effect as of the Closing Date,
interest accrued on all amounts outstanding hereunder shall be paid on the last
Business Day of each Interest Period. All unpaid principal and all accrued and
unpaid interest thereon shall be paid in full on the Termination Date.
Borrower represents to Bank that the proceeds of the Loans are to be used for
business and commercial purposes and such other purposes as may be approved by
Bank. Borrower acknowledges having read and understood, and agrees to be bound
by, all terms and conditions of this Note, including the Additional Terms and
Conditions set forth below.
FINAL AGREEMENT
THIS WRITTEN PROMISSORY NOTE AND THE LOAN DOCUMENTS CONSTITUTE THE ENTIRE AND
FINAL AGREEMENT BETWEEN THE PARTIES, AND SUPERSEDE ALL PRIOR WRITTEN AGREEMENTS
AND ALL PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
REGARDING ALL ISSUES ADDRESSED IN THOSE LOAN DOCUMENTS.
Borrower:
WISE PARTNERS, L.P.
By:_________________________________
Name: Jonathan L. Steinberg
Title: General Partner
<PAGE>
3
ADDITIONAL TERMS AND CONDITIONS
1. Waivers, Consents and Covenants. Borrower and each Guarantor (individually an
"Obligor" and collectively "Obligors") and each of them jointly and severally:
(a) waive presentment, demand, protest, notice of demand, notice of intent to
accelerate, notice of acceleration of maturity, notice of protest, notice of
nonpayment, notice of dishonor, and any other notice (except to the extent
provided in Section 4 or Section 5 hereof, Section 7.A. (ii) or Section 8.D. of
the Pledge Agreement or Section 2(b), Section 12 or Section 13 of each Guaranty
or any other notice required under any Loan Document which may not be waived
under applicable law) required to be given under law to any Obligor in
connection with the delivery, acceptance, performance, default or enforcement of
this Note; (b) consent to all delays of this Note or the Loan Documents, or
(subject to the provisions of Section X.C. of the Loan Agreement) extensions,
renewals or waivers of any term hereof or of the Loan Documents, or release or
discharge by Bank of any of the Obligors or release, substitution or exchange of
any security for the payment hereof, or the failure to act on the part of Bank,
or any indulgence shown by Bank from time to time and in one or more instances
(without notice to or further assent from any of the Obligors) and agree that no
such action, failure to act or failure to exercise any right or remedy by Bank
shall in any way affect or impair the obligations of any Obligor or be construed
as a waiver by Bank of, or otherwise affect, any of Bank's rights under this
Note or under any of the Loan Documents; and (c) agree to pay, within 15 days of
presentation by Bank to each Obligor of an itemized statement, all reasonable
costs and expenses of collection of this Note or of any Loan Document and/or the
enforcement of Bank's rights with respect to, or the administration,
supervision, preservation, protection of, or realization upon, any Collateral
securing payment hereof, including, without limitation, reasonable attorney's
fees, including reasonable fees related to any suit, mediation or arbitration
proceeding, out of court payment agreement, trial, appeal, bankruptcy proceeding
or other proceeding.
2. Prepayments. Subject to the provisions of the Loan Agreement, prepayments of
any amounts outstanding hereunder may be made, in whole or in part, at any time.
3. Delinquency Charges. To the extent permitted by applicable law, Bank may
impose a delinquency charge on any payment hereunder that is past due for more
than thirty (30) days in an amount not to exceed four percent (4%) of such past
due payment.
4. Events of Default. The following events are events of default (each an "Event
of Default"): (a) the failure of any Obligor to pay the principal amount hereof
when such payment is due under this Note or the failure of any Obligor to
perform any other payment obligation under this Note or any other Loan Document
within five (5) days of the date the same is due; (b) the failure of any Obligor
to observe or perform any covenant or agreement contained in any Loan Document
on the date such observance or performance is required and, in the case of any
such covenant or agreement, other than those specified in Section II.E. or
Section VI.A. of the Loan Agreement, five days shall have elapsed following the
Bank's notice to such Obligor of such failure; (c) the failure of the Borrower
to pay or perform any other Indebtedness in an amount in excess of $1,000,000 or
the failure of Saul P. Steinberg to pay or perform any other Indebtedness in an
amount in excess of $5,000,000 and, at any time during the period when such
failure of Saul P. Steinberg continues, the outstanding Loans equals or exceeds
an amount equal to the Margin Maintenance Limit; (d) a period of thirty (30)
days shall have elapsed following the death of any Obligor; (e) the commencement
of a proceeding against the Borrower for dissolution or liquidation which is not
dismissed within sixty (60) days, the voluntary or involuntary termination or
dissolution of the Borrower or the merger or consolidation of the Borrower with
or into another entity; (f) the insolvency of, the business failure of, the
appointment of a custodian, trustee, liquidator or receiver for or for any of
the property of, the Borrower, or the assignment for the benefit of creditors
by, or the filing of a petition under bankruptcy, insolvency or debtor's relief
law or the filing of a petition for any adjustment of Indebtedness, composition
or extension by or against any Obligor and the same is not dismissed within
<PAGE>
4
sixty (60) days; (g) the determination by Bank that any representation or
warranty made to Bank by any Obligor in this Note or any other Loan Document or
otherwise is or was, when made, untrue in any material respect or materially
misleading; (h) the entry of a final judgment against the Borrower with respect
to an amount in excess of $1,000,000 which is not fully satisfied or discharged
within sixty (60) days, or the entry of a final judgment against Saul P.
Steinberg with respect to an amount in excess of $5,000,000 which is not fully
satisfied or discharged within sixty (60) days and, at any time during the
period when such judgment against Saul P. Steinberg remains not fully satisfied
or discharged, the outstanding Loans equals or exceeds the Margin Maintenance
Limit; or (i) the determination by Bank that a material adverse change has
occurred in the financial condition of any Obligor.
5. Remedies upon Default. Upon the occurrence of an Event of Default, Bank may,
by notice to Borrower, declare this Note, all interest thereon and all other
amounts payable under this Note or any Loan Document to be forthwith due and
payable, whereupon this Note, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
Borrower; and any obligation of Bank to permit further borrowings under this
Note shall immediately cease and terminate. Notwithstanding the foregoing
sentence, upon the occurrence of an Event of Default arising under Section 4(e)
or Section 4(f) above as a result of the commencement of a proceeding under the
United States Federal Bankruptcy Code with respect to any Obligor, this Note and
all interest and all other amounts owing to Bank under the Loan Documents shall
automatically become and be due and payable, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by the
Obligor. The provisions hereunder for a Default Rate shall not be deemed to
extend the time for any payment hereunder or to constitute a "grace period"
giving the Obligors a right to cure any default. At Bank's option, if permitted
by applicable law, any accrued and unpaid interest, fees or charges may, for
purposes of computing and accruing interest on a daily basis after the due date
of this Note or any installment thereof, be deemed to be a part of the principal
balance, and interest shall accrue on a daily compounded basis after such date
at the rate provided in this Note until the entire outstanding balance of
principal and interest is paid in full. Upon the occurrence and during the
continuance of an Event of Default, Bank is hereby authorized, upon notice to
Borrower and after demanding payment from Guarantors pursuant to the terms of
the Guaranties, to charge any deposit accounts of any Obligor, as well as any
money, instruments, securities, documents, chattel paper, credits, claims,
demands, income and any other property, rights and interests of any Obligor
which at any time shall come into the possession or custody or under the control
of Bank or any of its agents, Affiliates or correspondents, to satisfy any and
all obligations then due hereunder. Additionally, Bank shall have all rights and
remedies available under each of the Loan Documents, as well as all rights and
remedies available at law or in equity.
6. Non-waiver. Bank's failure, at any time, to exercise any of its options or
any other rights hereunder shall not constitute a waiver thereof, nor shall it
be a bar to the exercise of any of its options or rights at a later date. All
rights and remedies of Bank shall be cumulative and may be pursued singly,
successively or together, at the option of Bank. The acceptance by Bank of any
partial payment shall not constitute a waiver of any default or of any of Bank's
rights under this Note. No waiver of any of its rights hereunder, and no
modification or amendment of this Note, shall be deemed to be made by Bank
unless the same shall be in writing, duly signed on behalf of Bank; and each
such waiver shall apply only with respect to the specific instance involved, and
shall in no way impair the rights of Bank or the obligations of Obligor to Bank
in any other respect at any other time.
7. Applicable Law, Venue and Jurisdiction. This Note and the rights and
obligations of Borrower and Bank shall be governed by and interpreted in
accordance with the laws of the State of New York. In any litigation in
connection with or to enforce this Note or any endorsement of this Note or any
Loan Document, Obligors, and each of them, irrevocably consent to and confer
personal jurisdiction on the courts of the State of New York or the United
States located within the State of New York and expressly waive any objections
as to venue in any such courts.
<PAGE>
5
8. Partial Invalidity. The unenforceability or invalidity of any provision of
this Note shall not affect the enforceability or validity of any other provision
herein and the invalidity or unenforceability of any provision of this Note or
of the Loan Documents to any person or circumstance shall not affect the
enforceability or validity of such provision as it may apply to other persons or
circumstances.
9. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
RELATING TO THIS INSTRUMENT, AGREEMENT, DOCUMENT OR ANY RELATED INSTRUMENTS,
AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED
TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY
BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL
ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY
COURT HAVING JURISDICTION OVER SUCH ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN NEW YORK COUNTY
AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE
COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR
SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF
SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12
U.S.C. ss. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF THE BANK HERETO (A) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (B) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER. THE BANK MAY EXERCISE FORECLOSURE UPON SUCH PROPERTY, OR OBTAIN
SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF
ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS INSTRUMENT, AGREEMENT OR
DOCUMENT. THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
PROVISIONAL OR ANCILLARY REMEDIES SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT OF
ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF
THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
10. Binding Effect. This Note shall be binding upon the Bank, the Borrower and
Obligors and their respective heirs, representatives, estates, successors and
<PAGE>
6
assigns and shall inure to the benefit of Bank and its successors and assigns,
provided, however, that no obligations of Borrower or any Obligor hereunder can
be assigned without prior written consent of Bank and no rights or obligations
of Bank hereunder can be assigned (except by operation of law or upon any
merger, consolidation or reorganization of the Bank) without prior written
consent of Obligors.
11. Controlling Document. To the extent that this Note conflicts with or is in
any way incompatible with the provisions of any other Loan Document, this Note
shall control over such other document unless this Note does not address an
issue, in which case the terms of any Loan Document addressing such issue shall
govern.
<PAGE>
7
SCHEDULE OF LOANS AND PAYMENTS
This Note evidences the Loans made under the within-described
Loan Agreement to the Borrower, on the date and in the principal amount set
forth below, subject to the payments and prepayments of principal set forth
below:
Principal Unpaid
Date Amount of Interest Amount Principal Notation
Made Loan Rate Paid or Prepaid Amount Made by
- -------------------------------------------------------------------------------
<PAGE>
June 26, 1998
Pledge Agreement
Between and
===============================================================================
BANK/SECURED PARTY: PLEDGOR/DEBTOR:
NationsBank, N.A. Saul P. Steinberg
101 South Tryon Street Park Avenue Plaza
NationsBank Plaza 55 East 52nd Street
Charlotte, North Carolina 28255 New York, New York 10055
===============================================================================
I. Security Interest. For good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Pledgor hereby assigns and grants to
the Bank a security interest and lien in the Collateral (as hereinafter defined)
to secure the payment and the performance of the Obligations (as hereinafter
defined).
II. Collateral. The pledge and security interest described above are granted in
respect of the following collateral (the "Collateral"):
A. Description of Collateral. All of Pledgor's right, title and interest in
and to (i) 1,650,000 shares of common stock, par value $0.01 per share, of
Reliance Group Holdings, Inc., a Delaware corporation ("Reliance"), and (ii)
500,000 shares of common stock, par value $0.10 per share, of Individual
Investor Group, Inc., a Delaware corporation ("INI") (all of the foregoing
shares, and all shares referred to in Section 2.B., are referred to collectively
herein as the "Assets"), including, without limitation, all other property from
time to time received, receivable or otherwise distributed in exchange for any
or all of the Pledgor's interest in any Asset.
B. Proceeds. All substitutes and replacements for and proceeds of the
Assets. Any securities received by Pledgor which shall constitute substitutes
and replacements for, or proceeds of, the Assets, shall, if delivered to
Pledgor, be held in trust by Pledgor for the Bank and shall be delivered
promptly to the Bank.
III. Obligations.
A. Description of Obligations. The following obligations (collectively, the
"Obligations") are secured by this Agreement:
(i) All obligations of the Borrower to pay, as and when due and
payable (by mandatory prepayment, by scheduled maturity or upon the
occurrence of any Event of Default), all amounts from time to time owing by
the Borrower pursuant to the Loan Agreement, dated as of the date hereof
(the "Loan Agreement"), between the Borrower and the Bank (as such Loan
Agreement is in effect on the Closing Date or as modified or amended with
the consent of Pledgor) or any other Loan Document as in effect on the
<PAGE>
2
Closing Date (as modified or amended with the consent of the Pledgor)
whether for principal, interest, fees or otherwise and any and all renewals
and extensions thereof effected in accordance with the terms of the Loan
Documents; and
(ii) All reasonable costs and expenses incurred by the Bank,
including, without limitation, reasonable attorney's fees, to obtain,
preserve, perfect and enforce this Agreement and maintain, preserve,
collect and realize upon the Collateral.
In the event that any amount paid to the Bank with respect to any Obligation is
subsequently recovered from the Bank in or as a result of any bankruptcy,
insolvency or fraudulent conveyance proceeding involving an obligor of any
Obligation, other than Pledgor, Pledgor shall be liable to the Bank for the
amounts so recovered, regardless of whether the Collateral has been released or
the security interest therein terminated.
IV. Pledgor's Warranties. Pledgor hereby represents and warrants to the Bank as
follows (for purposes of the representations and warranties contained in
Sections 4.B(ii) and 4.D, it is assumed that the obligations of the Borrower and
Pledgor to Republic National Bank of New York in connection with a credit
facility of the Borrower is being satisfied in full on the Closing Date):
A. Ownership. Pledgor is the sole record and beneficial owner of the
Collateral, free and clear of any setoff, claim, restriction, pledge, lien,
security interest, encumbrance or other charge of any type, except for the
security interest created hereunder.
B. No Conflict. Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, nor the fulfillment
of, nor the compliance with, the terms, conditions or provisions hereof, will
conflict with, result in a breach of, or constitute a default under (i) any
relevant statute, law, ordinance, rule or regulation applicable to Pledgor or
the Collateral or (ii) any indenture, agreement or other instrument, or any
judgment, order or decree, to which Pledgor is a party or by which any of his
assets including, without limitation, the Collateral, may be bound, which
conflict, breach or default would have a material and adverse effect on
Pledgor's ability to perform its obligations under the Loan Documents or the
rights and remedies of the Bank under the Loan Documents. There is no
litigation, claim or judicial, administrative or governmental proceeding of
which Pledgor has been notified or, to the knowledge of Pledgor, threatened with
respect to the Collateral, nor is there any basis for any such litigation, claim
or proceeding.
C. Security Interest. The pledge of the Collateral pursuant to this
Agreement, together with the delivery to the Bank of certificates with respect
to certificated Assets and stock powers in blank with respect to the Assets,
creates a valid and perfected first priority security interest in the
Collateral, securing the payment of the Obligations.
<PAGE>
3
D. Financing Statements. No financing statement or similar instrument
covering the Collateral is on file in any public office, and no security
interest, other than the one herein created, has attached or been perfected in
the Collateral or any part thereof.
E. The Issuers. Pledgor has no knowledge of any insolvency or bankruptcy
proceeding of any type instituted by or with respect to Reliance or INI.
V. Pledgor's Covenants. Until full payment and performance of all of the
Obligations and termination of the Commitment, unless the Bank otherwise
consents in writing:
A. Rights to Collateral. Pledgor shall defend the Collateral against all
claims and demands of all persons at any time claiming any interest therein
adverse to the Bank. Pledgor shall keep the Collateral free from all claims,
restrictions, encumbrances, security interests, pledges, liens, demands or
charges of any type, except the security interest hereby created. Pledgor shall
not lease, lend, assign, or otherwise hypothecate, pledge or encumber the
Collateral or any interest therein.
B. Sale of Shares. In the event Reliance or INI defaults in its reporting
obligations under paragraph (c) of Rule 144 promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended ("Rule 144"),
Bank may require Pledgor to substitute new collateral satisfactory to the Bank
for the Assets so affected. Pledgor shall not sell, assign or otherwise dispose
of or transfer the Collateral or any part thereof, without the prior written
consent of the Bank. Pledgor will cooperate fully with the Bank with respect to
any sale by the Bank of any of the Collateral after the occurrence and during
the continuance of an Event of Default.
C. Bank's Costs. Whether the Collateral is or is not in the Bank's
possession, and without any obligation to do so and without waiving Borrower's
default for failure to make any payment, the Bank at its option may pay any
reasonable costs and expenses of obtaining, creating, preserving, perfecting,
defending and enforcing the security interest created by this Agreement and
discharging encumbrances on the Collateral, and such payments shall be a part of
the Obligations and bear interest at the rate set out in the documents
evidencing the Obligations.
D. Information and Inspection. Pledgor shall (i) promptly furnish to the
Bank information with respect to the Collateral reasonably requested by the
Bank; (ii) allow the Bank or its representatives to inspect and copy, or furnish
to the Bank or its representatives with copies of, all records relating to the
Collateral and the Obligations that are within Pledgor's possession or personal
control (control shall not include control Pledgor may have as a result of being
an officer or director of any issuer of securities comprising the Collateral);
and (iii) promptly furnish the Bank or its representatives with other
information reasonably requested by the Bank with respect to the Collateral.
<PAGE>
4
E. Additional Documents. Pledgor shall sign and deliver any instruments
furnished by the Bank, including, without limitation, financing statements and
continuation statements, which are necessary or reasonably desirable in the
judgment of the Bank to obtain, create, maintain and perfect the security
interest hereunder and to enable the Bank to comply with any federal or state
law in order to obtain, create or perfect the Bank's interest in the Collateral
or to obtain proceeds of the Collateral.
F. Notice of Changes. Pledgor shall notify the Bank immediately of (i) a
change in Pledgor's residence and (ii) a material change in any matter warranted
or represented by Pledgor in this Agreement.
G. Possession of Collateral. Pledgor shall deliver or cause to be delivered
to the Bank certificates or other evidence of the Assets within ten days
following the execution and delivery hereof.
H. Power of Attorney. Upon the occurrence and during the continuation of an
Event of Default, Pledgor appoints the Bank and any officer thereof as Pledgor's
attorney-in-fact with full power in Pledgor's name and on Pledgor's behalf to do
every act which Pledgor is obligated to do or may be required to do hereunder;
however, nothing in this paragraph shall be construed to obligate the Bank to
take any action hereunder nor shall the Bank be liable to Pledgor for failure to
take any action hereunder. This appointment shall be deemed a power coupled with
an interest and shall not be terminable as long as the Obligations are
outstanding and shall not terminate on the incompetence or disability of
Pledgor. Without limiting the generality of the foregoing, upon the occurrence
and during the continuation of an Event of Default, the Bank shall have the
right and power to receive, endorse and collect all checks and other orders for
the payment of money made payable to Pledgor representing any dividend, interest
payment or other distribution payable in respect of the Collateral or any part
thereof.
I. Other Parties and Other Collateral. No renewal or extensions of or any
other indulgence with respect to the Obligations or any part thereof, no
modification of any Loan Documents, no release of any security, no release of
any person (including any maker, indorser, guarantor or surety) liable on the
Obligations, no delay in enforcement of payment, and no delay or omission or
lack of diligence or care in exercising any right or power with respect to the
Obligations or any security therefor or guaranty thereof or under this Agreement
shall in any manner impair or affect the rights of the Bank under any law,
hereunder, or under any other Loan Document. The Bank shall not be required to
file suit or assert a claim for personal judgment against any person for any
part of the Obligations or seek to realize upon any other security for the
Obligations, before foreclosing or otherwise realizing upon the Collateral.
<PAGE>
5
J. Waivers by Pledgor. Pledgor hereby waives (i) notice of the creation and
existence of, the Obligations; (ii) subject to the provisions of Section 8.D. of
this Agreement, notice of the extension or renewal of, and of any indulgence
with respect to, the Obligations; and (iii) subject to the provisions of Section
2(b) of the Guaranty of Pledgor, presentment, demand, notice of dishonor, and
protest. Subject to the provisions of Section 2(b) of the Guaranty of Pledgor,
Pledgor waives any right to require that any action be brought against any other
person or to require that resort be had to any other security or to any balance
of any deposit account. Pledgor further waives any right of subrogation or to
enforce any right of action against any other obligor on any Obligation or other
pledgor to the Bank of collateral for the Obligations until the Obligations are
paid in full.
VI. Rights and Powers of the Bank. Upon the occurrence and during the
continuance of any Event of Default, the Bank shall have the power to receive
dividends, interest, premium and other payments with respect to the Assets and
to vote the Collateral or dispose of the Collateral in accordance with the terms
of the Loan Documents. Before or after an Event of Default, the Bank, without
liability to Pledgor, may: (a) release any Collateral in its possession to
Pledgor, temporarily or otherwise; (b) require additional collateral in
accordance with the terms of the Loan Documents; (c) reject as unsatisfactory
any property hereafter offered by Pledgor as additional collateral; and (d)
exercise all other rights which an owner of such Collateral may exercise, except
the right to receive dividends and other payments with respect to the Assets or
to vote or dispose of the Assets before an Event of Default shall have occurred.
The Bank shall not be liable for failure to collect any account or instruments,
or for any act or omission on the part of the Bank, its officers, agents or
employees, except for its or their own willful misconduct or gross negligence.
The foregoing rights and powers of the Bank will be in addition to, and not a
limitation upon, any rights and powers of the Bank given by law, elsewhere in
this Agreement, or otherwise.
VII. Default.
A. Event of Default; Rights and Remedies. If any Event of Default shall
occur, then, in each and every such case, the Bank may, without (except for any
notice required under Section X.C. of the Loan Agreement, Section 7.A.(ii) or
Section 8.D. of this Agreement, Section 2(b), Section 12 or Section 13 of the
Guaranty of Pledgor or any other notice required under this Agreement or any
other Loan Document which may not be waived under any applicable law) (a)
presentment, demand, or protest, (b) notice of default, dishonor, demand,
non-payment, or protest, (c) notice of intent to accelerate all or any part of
the Obligations, (d) notice of acceleration of all or any part of the
Obligations, or (e) notice of any other kind, all of which Pledgor hereby
expressly waives, at any time thereafter exercise and/or enforce any of the
following rights and remedies, at the Bank's option:
(i) Direct Delivery of Dividends and Other Distributions. All
dividends, interest, premium and other payments with respect to the Assets
of whatever kind or nature thereafter paid with respect to the Assets shall
be paid directly to the Bank, and Pledgor shall execute and deliver to the
Bank any and all documents necessary to effectuate the foregoing.
<PAGE>
6
(ii) Liquidation of Collateral. Upon five (5) days prior notice to
Pledgor, sell, or instruct any agent to sell, all or any part of the
Collateral, and direct such agent to deliver all proceeds thereof to the
Bank, and apply all proceeds to the payment of any or all of the
Obligations in such order and manner as the Bank shall, in its discretion,
choose.
(iii) Acceleration. Declare the Obligations immediately due and
payable and terminate the Commitment.
(iv) Uniform Commercial Code. Exercise all of the rights, powers and
remedies specified in the Loan Documents or of a secured creditor under the
Uniform Commercial Code then in effect in New York State ("UCC").
Pledgor specifically understands and agrees that any sale or redemption by the
Bank of all or part of the Collateral pursuant to the terms of this Agreement
may be effected by the Bank at times and in manners which could result in the
proceeds of such sale or redemption being significantly and materially less than
might have been received if such sale or redemption had occurred at different
times or in different manners, and Pledgor hereby releases the Bank and its
officers and representatives from and against any and all obligations and
liabilities arising out of or related to the timing or manner of any such sale
or redemption. Bank agrees that any sale of Collateral shall be made in a
commercially reasonable manner and Pledgor acknowledges and agrees that the sale
of the Collateral through any nationally recognized broker-dealer, investment
banker or any other method common in the securities industry shall be deemed a
commercially reasonable sale.
VIII. General.
A. Parties Bound. The Bank's rights and obligations hereunder shall (i) not
be assigned (except by operation of law or upon any merger, consolidation or
reorganization of the Bank) without the consent of Pledgor and (ii) inure to the
benefit of the Bank and its successors and permitted assigns. All
representations, warranties and agreements of Pledgor shall be binding upon the
successors and permitted assigns of Pledgor.
B. Waiver. No delay of the Bank in exercising any power or right shall
operate as a waiver thereof; nor shall any single or partial exercise of any
power or right preclude other or further exercise thereof or the exercise of any
other power or right. No waiver by the Bank of any right hereunder or of any
default by Pledgor shall be binding upon the Bank unless in writing, and no
failure by the Bank to exercise any power or right hereunder or waiver of any
default by Pledgor shall operate as a waiver of any other or further exercise of
such right or power or of any further default. Each right, power and remedy of
<PAGE>
7
the Bank as provided for herein or in any of the Loan Documents, or which shall
now or hereafter exist at law or in equity or by statute or otherwise, shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Bank of any
one or more of such rights, powers or remedies shall not preclude the
simultaneous or later exercise by the Bank of any or all other such rights,
powers or remedies.
C. Pledge Agreement Continuing. This Agreement shall constitute a
continuing agreement, applying to all Loans made at any time pursuant to the
Loan Documents and all Obligations now existing or hereafter created pursuant to
the terms of the Loan Documents. Provisions in this Agreement, unless by their
terms exclusive, shall be in addition to other agreements between the parties.
D. Notice. Notice shall be delivered personally or sent certified mail
postage prepaid to the address of Pledgor given above, or to such other address
as any party may designate by written notice to the other party. Each notice,
request and demand shall be deemed given or made, if sent by mail, upon the
earlier of the date of receipt or five (5) days after deposit in the mail,
certified and postage prepaid, or if delivered personally, upon delivery.
Notices with respect to extensions or renewals of, and of any indulgence with
respect to, the Obligations shall be effective two Business Days after notice of
such has been given or made to Pledgor in accordance with this Section.
E. Modifications. No provision hereof shall be modified or limited except
by a written agreement expressly referring hereto and to the provisions so
modified or limited, which shall be signed by Pledgor and the Bank. The
provisions of this Agreement shall not be modified or limited by course of
conduct or usage of trade.
F. Partial Invalidity. The unenforceability or invalidity of any provision
of this Agreement shall not affect the enforceability or validity of any other
provision herein, and the invalidity or unenforceability of any provision of any
Loan Document to any person or circumstance shall not affect the enforceability
or validity of such provision as it may apply to other persons or circumstances.
G. Applicable Law and Venue. This Agreement has been executed and delivered
in the State of New York and shall be governed by the laws of that State.
Wherever possible each provision of this Agreement shall be interpreted in such
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 to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Agreement.
H. [Intentionally omitted]
<PAGE>
8
I. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED INSTRUMENTS,
AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED
TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING
A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
(i) SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN NEW YORK
COUNTY AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION,
THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION
HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION;
FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED
TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
(ii) RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION
SHALL BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
INSTRUMENT, AGREEMENT, OR DOCUMENT; OR (II) BE A WAIVER BY THE BANK OF THE
PROTECTION AFFORDED TO IT BY 12 U.S.C. ss. 91 OR ANY SUBSTANTIALLY
EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE BANK HERETO (A) TO
FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (B) TO
<PAGE>
9
OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT
LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A
RECEIVER. THE BANK MAY EXERCISE FORECLOSE UPON SUCH PROPERTY, OR OBTAIN
SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY
OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. THE
INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL OR
ANCILLARY REMEDIES SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
J. Controlling Document. To the extent that this Agreement conflicts with
or is in any way incompatible with any provision of any other Loan Document, any
promissory note shall control over any other document, and issues not addressed
in such promissory note shall be governed by the terms of the Loan Document that
most specifically covers such issues. Capitalized terms used herein without
definition have the meaning ascribed to those terms in the Loan Agreement.
K. NOTICE OF FINAL AGREEMENT. This written Agreement and any other related
Loan Documents constitute the final agreement between the parties, and supersede
all prior written agreements and all prior, contemporaneous or subsequent oral
agreements of the parties regarding all issues addressed in the Loan Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed by their duly authorized representatives as of the date first
above written.
BANK/SECURED PARTY: PLEDGOR/DEBTOR:
NATIONSBANK, N.A.
By:_________________________________ __________________________
Mary A. Pan Name: Saul P. Steinberg
Senior Vice President
<PAGE>
Date: June 26, 1998
Guaranty
Between and
==============================================================================
BANK: GUARANTOR:
NationsBank, N.A. Jonathan L. Steinberg
101 South Tryon Street 1633 Broadway, 38th Floor
Charlotte, North Carolina 28255 New York, New York 10019
===============================================================================
"BORROWER": Wise Partners, L.P., a Delaware limited partnership
I. Guaranty. FOR VALUE RECEIVED, and to induce NationsBank, N.A., a
national banking association (the "Bank"), to make the loans or advances
contemplated by the Loan Agreement (as hereinafter defined), the undersigned,
Jonathan L. Steinberg ("Guarantor"), hereby irrevocably and unconditionally
guarantees to the Bank the full and prompt payment when due, whether by
acceleration or otherwise, of any and all the obligations of the Borrower to
pay, as and when due and payable (by mandatory prepayment, by scheduled maturity
or upon the occurrence of any Event of Default), all amounts from time to time
owing by the Borrower pursuant to any Loan Documents as in effect on the Closing
Date (or modified or amended with the consent of the Guarantor), whether for
principal, interest, fees or otherwise (collectively, the "Obligations"). This
Guaranty is intended to provide a continuing guarantee of the payment of the
Obligations without limitation as to amounts guaranteed hereunder. Capitalized
terms used herein without definition shall have the meanings ascribed thereto in
the Loan Agreement, dated as of the date hereof (the "Loan Agreement"), between
the Borrower and the Bank.
II. Nature of Obligations. (a) The undertakings of Guarantor hereunder are
independent of the Obligations and, subject to the provisions of Section 2(b), a
separate action or actions for payment, damages or performance may be brought or
prosecuted against Guarantor, regardless of whether (i) an action is brought
against Borrower or Saul P. Steinberg or to realize upon any security for the
Obligations or, (ii) Borrower is joined in any such action or actions. The
obligations of Guarantor hereunder are joint and several with the obligations of
Saul P. Steinberg under the Guaranty, dated the date hereof, of Saul P.
Steinberg to the Bank. Guarantor shall not be entitled to assert as a defense to
the enforceability of this Guaranty any defense of Borrower with respect to any
Obligations.
<PAGE>
2
(b) Notwithstanding anything to the contrary contained herein or in
any other Loan Document, it is understood and agreed that the Bank shall
make demand for payment of any Obligation that is due and payable pursuant
to the terms of the Loan Documents (whether on the due date thereof, at
maturity or upon acceleration) first on the Borrower (with a copy of such
notice of demand provided to Guarantor) and shall not make demand on
Guarantor for payment of any such Obligation until five days have elapsed
since the date of such demand by the Bank on the Borrower.
III. Paragraph Headings, Governing Law and Binding Effect. The paragraph
headings in this Guaranty are for convenience only and that they will not limit
any of the provisions of this Guaranty. This Guaranty shall be governed by and
construed in accordance with the laws of the State of New York and applicable
United States federal law. This Guaranty shall be deemed to have been made in
the State of New York at the Bank's New York address indicated in Section VIII
of the Loan Agreement, and may be enforced in the courts of the State of New
York, or the United States courts located within the State of New York, and is
performable in the State of New York. This Guaranty is binding upon Guarantor
and his heirs, representatives, estate, successors and assigns, and the Bank and
its successors and assigns, and shall inure to the benefit of the Bank, its
successors, endorsees or assigns.
IV. Waiver by Guarantor. Guarantor waives notice of acceptance of this
Guaranty, notice of any Obligations, presentment, demand for payment, protest,
notice of dishonor or nonpayment of any Obligations, notice of intent to
accelerate, notice of acceleration, and notice of any suit or the taking of
other action by the Bank against Borrower, Guarantor or any other person, any
applicable statute of limitations and any other notice to any party liable on
any Loan Document (including Guarantor), except as is specifically provided in
Section 12 and Section 13 hereof.
Subject to the provisions of Section 2(b) hereof, Guarantor also waives the
benefits of any provision of law requiring that the Bank exhaust any right or
remedy, or take any action, against the Borrower, any other guarantor or any
other person or property prior to or simultaneously with proceeding against
Guarantor hereunder.
The Bank may at any time and from time to time (whether before or after
revocation or termination of this Guaranty) without notice to Guarantor (except
as required by Section 1, Section 2(b), Section 12 or Section 13 hereof or any
other notice required under any Loan Document which may not be waived under
applicable law), without incurring responsibility to Guarantor, without
impairing, releasing or otherwise affecting the obligations of Guarantor, in
whole or in part, and without the endorsement or execution by Guarantor of any
additional consent, waiver or guaranty: (a) change the manner, place or terms of
payment, or change or extend the time of or renew, or change any interest rate
<PAGE>
3
or alter any Obligation or installment thereof, or any security therefor; (b)
sell, exchange, release, surrender, realize upon or otherwise deal with in any
manner and in any order any Collateral and offset against any Collateral or
other property as provided in the Loan Documents; (c) exercise or refrain from
exercising any rights against Borrower or others or act or refrain from acting
in any other manner; (d) settle or compromise any Obligation or any security
therefor and subordinate the payment of all or any part thereof to the payment
of any Obligation of any other parties primarily or secondarily liable on any of
the Obligations; (e) release or compromise any liability of Guarantor hereunder
or any liability or obligation of any other parties primarily or secondarily
liable on any of the Obligations; or (f) apply any sums from any sources to any
Obligation without regard to any Obligations remaining unpaid.
V. Subordination. Guarantor agrees that it will not demand, take or receive
from Borrower, by set-off or in any other manner, payment of any debt, now and
at any time or times hereafter owing by Borrower to Guarantor unless and until
all the Obligations shall have been fully paid and the Obligations fully
performed, and any security interest, liens or encumbrances which Guarantor now
has and from time to time hereafter may have upon any of the assets of Borrower
shall be made subordinate, junior and inferior and postponed in priority,
operation and effect to any security interest of the Bank in such assets.
VI. Waivers by the Bank. No delay on the part of the Bank in exercising any
of its options, powers or rights, and no partial or single exercise thereof,
shall constitute a waiver thereof. No waiver of any of its rights hereunder, and
no modification or amendment of this Guaranty, shall be deemed to be made by the
Bank unless the same shall be in writing, duly signed on behalf of the Bank; and
each such waiver, if any, shall apply only with respect to the specific instance
involved, and shall in no way impair the rights of the Bank or the obligations
of Guarantor to the Bank in any other respect at any other time.
VII. Partial Invalidity and/or Enforceability of Guaranty. The
unenforceability or invalidity of any provision of this Guaranty shall not
affect the enforceability or validity of any other provision herein and the
invalidity or unenforceability of any provision of any Loan Document as it may
apply to any person or circumstance shall not affect the enforceability or
validity of such provision as it may apply to other persons or circumstances.
In the event the Bank is required to relinquish or return any payments, any
Collateral or the proceeds thereof, in whole or in part, which had been
previously applied to or retained for application against any Obligation, by
reason of a proceeding arising under any applicable bankruptcy or insolvency
law, or for any other reason, this Guaranty shall automatically continue to be
effective notwithstanding any previous cancellation or release effected by the
Bank.
<PAGE>
4
VIII. Change of Status. Guarantor hereby agrees that this Guaranty shall
remain the binding, legal and enforceable obligation of Guarantor, irrespective
of any change in name by Guarantor or Borrower or change in type of entity of
Borrower.
IX. Financial and Other Information. For any year in which any Obligations
remain outstanding, Guarantor will furnish the Bank with his annual financial
statements in form satisfactory to the Bank within ninety (90) days after the
end of the calendar year, which financial statements shall consist of a balance
sheet for the previous twelve months. Guarantor will furnish to the Bank within
fifteen (15) days of filing, all tax returns filed by Guarantor. Guarantor will
also furnish to the Bank financial information regarding Guarantor reasonably
requested in writing by the Bank within thirty (30) days of the date of the
request. Guarantor has made an independent investigation of the financial
condition and affairs of Borrower prior to entering into this Guaranty, and
Guarantor will continue to make such investigation, and in entering into this
Guaranty, Guarantor has not relied upon any representation of the Bank as to the
financial condition, operation or creditworthiness of Borrower. Guarantor
further agrees that the Bank shall have no duty or responsibility now or
hereafter to make any investigation or appraisal of Borrower on behalf of
Guarantor or to provide Guarantor with any credit or other information which may
come to its attention now or hereafter.
X. Guarantor Representations and Warranties. 1. The financial statements of
Guarantor, dated March 12, 1998, which have been delivered to the Bank fairly
present Guarantor's financial condition as of the date thereof. Guarantor has
not failed to disclose to the Bank any information that could materially affect
Guarantor's properties, prospects or financial condition. There has occurred no
material adverse change in the financial condition of Guarantor since the date
of such financial statements.
2. This Guaranty and each of the other Loan Documents to which
Guarantor is a party have been duly executed and delivered by Guarantor and
constitute the legal, valid and binding obligations of Guarantor and are
enforceable against Guarantor in accordance with their terms; Guarantor has
full capacity and power to execute and deliver this Guaranty and such other
Loan Documents; and the execution and delivery by Guarantor of this
Guaranty and such other Loan Documents and the performance by Guarantor of
Guarantor's obligations hereunder and thereunder, do not violate, or
conflict with, any agreement, instrument, note, judgment, order or decree
binding on Guarantor or under any law, rule or regulation applicable to
Guarantor, which violation or conflict would have a material and adverse
effect on Guarantor's ability to perform its obligations under the Loan
Documents or the rights and remedies of the Bank under the Loan Documents.
XI. Notices. Notices provided hereunder shall be delivered personally or
sent certified mail, postage prepaid, to Guarantor (at Guarantor's address
<PAGE>
5
indicated at the beginning of this Guaranty) or the Bank (at its address
indicated in Section VIII of the Loan Agreement), or to such other address as
any party may designate by written notice to the other party. Each notice,
request and demand shall be deemed given or made, if sent by mail, upon the
earlier of the date of receipt or five (5) days after deposit in the U.S. Mail,
certified and postage prepaid, or if delivered personally, upon delivery.
XII. Guarantor Duties. Subject to the provisions of Section 2(b) hereof,
Guarantor shall upon notice or demand by the Bank promptly and with due
diligence, pay all and satisfy all Obligations for the benefit of the Bank in
the event of the occurrence of any Event of Default.
XIII. Remedies. Subject to the provisions of Section 2(b) hereof, upon the
failure of Guarantor to fulfill its duty to pay and satisfy all Obligations as
required hereunder, the Bank shall have available all of the remedies of a
creditor of Guarantor under all applicable law, and without limiting the
generality of the foregoing, the Bank may, at its option and without further
notice or demand declare any Obligation to be immediately due and payable.
XIV. Attorney Fees, Cost and Expenses. Guarantor shall pay all reasonable
costs of collection and reasonable attorney's fees, including reasonable
attorney's fees in connection with any suit, mediation or arbitration
proceeding, out of court payment agreement, trial, appeal, bankruptcy
proceedings or otherwise, incurred or paid by the Bank in enforcing the payment
of any Obligation.
XV. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED INSTRUMENTS,
AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED
TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING
A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
<PAGE>
6
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN NEW YORK
COUNTY AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION,
THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION
HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION;
FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED
TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
AGREEMENT OR (II) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT
BY 12 U.S.C. ss. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III)
LIMIT THE RIGHT OF THE BANK HERETO (A) TO FORECLOSE AGAINST ANY REAL OR
PERSONAL PROPERTY COLLATERAL, OR (B) TO OBTAIN FROM A COURT PROVISIONAL OR
ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE
FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY
REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING
BROUGHT PURSUANT TO THIS AGREEMENT. THE INSTITUTION OR MAINTENANCE OF AN
ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL NOT
CONSTITUTE A WAIVER OF THE RIGHTS OF ANY PARTY, INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
XVI. Controlling Document. To the extent that this Guaranty conflicts with
or is in any way incompatible with any provision of any other Loan Document, the
terms of the Note shall govern over any issue addressed therein, and issues not
addressed in the Note shall be governed by the terms of the Loan Document that
most specifically addresses such issues.
XVII. Notice of Final Agreement. THIS WRITTEN GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
<PAGE>
7
CONTEMPORANEOUS, OR SUBSEQUENTIAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be executed
on the 26th day of June, 1998.
Guarantor:
______________________________
Name: Jonathan L. Steinberg
<PAGE>
Date: June 26, 1998
Guaranty
Between and
===============================================================================
BANK: GUARANTOR:
NationsBank, N.A. Saul P. Steinberg
101 South Tryon Street Park Avenue Plaza
Charlotte, North Carolina 28255 55 East 52nd Street
New York, New York 10055
===============================================================================
"BORROWER": Wise Partners, L.P., a Delaware limited partnership
I. Guaranty. FOR VALUE RECEIVED, and to induce NationsBank, N.A., a
national banking association (the "Bank"), to make the loans or advances
contemplated by the Loan Agreement (as hereinafter defined), the undersigned,
Saul P. Steinberg ("Guarantor"), hereby irrevocably and unconditionally
guarantees to the Bank the full and prompt payment when due, whether by
acceleration or otherwise, of any and all the obligations of the Borrower to
pay, as and when due and payable (by mandatory prepayment, by scheduled maturity
or upon the occurrence of any Event of Default), all amounts from time to time
owing by the Borrower pursuant to any Loan Document as in effect on the Closing
Date (or modified or amended with the consent of the Guarantor), whether for
principal, interest, fees or otherwise (collectively, the "Obligations"). This
Guaranty is intended to provide a continuing guarantee of the payment of the
Obligations without limitation as to amounts guaranteed hereunder. Capitalized
terms used herein without definition shall have the meanings ascribed thereto in
the Loan Agreement, dated as of the date hereof (the "Loan Agreement"), between
the Borrower and the Bank.
II. Nature of Obligations. (a) The undertakings of Guarantor hereunder are
independent of the Obligations and, subject to the provisions of Section 2(b), a
separate action or actions for payment, damages or performance may be brought or
prosecuted against Guarantor, regardless of whether (i) an action is brought
against Borrower or Jonathan L. Steinberg or to realize upon any security for
the Obligations or, (ii) Borrower is joined in any such action or actions. The
obligations of Guarantor hereunder are joint and several with the obligations of
Jonathan L. Steinberg under the Guaranty, dated the date hereof, of Jonathan L.
Steinberg to the Bank. Guarantor shall not be entitled to assert as a defense to
the enforceability of this Guaranty any defense of Borrower with respect to any
Obligations.
<PAGE>
2
(b) Notwithstanding anything to the contrary contained herein or in
any other Loan Document, it is understood and agreed that the Bank shall
make demand for payment of any Obligation that is due and payable pursuant
to the terms of the Loan Documents (whether on the due date thereof, at
maturity or upon acceleration) first on the Borrower (with a copy of such
notice of demand provided to Guarantor) and shall not make demand on
Guarantor for payment of any such Obligation until five days have elapsed
since the date of such demand by the Bank on the Borrower nor shall the
Bank sell, resell, assign, transfer or deliver the Collateral of Guarantor
except in accordance with the notice and other provisions of Section 13(b)
hereof.
III. Paragraph Headings, Governing Law and Binding Effect. The paragraph
headings in this Guaranty are for convenience only and that they will not limit
any of the provisions of this Guaranty. This Guaranty shall be governed by and
construed in accordance with the laws of the State of New York and applicable
United States federal law. This Guaranty shall be deemed to have been made in
the State of New York at the Bank's New York address indicated in Section VIII
of the Loan Agreement, and may be enforced in the courts of the State of New
York, or the United States courts located within the State of New York, and is
performable in the State of New York. This Guaranty is binding upon Guarantor
and his heirs, representatives, estate, successors and assigns, and the Bank and
its successors and assigns, and shall inure to the benefit of the Bank, its
successors, endorsees or assigns.
IV. Waiver by Guarantor. Guarantor waives notice of acceptance of this
Guaranty, notice of any Obligations, presentment, demand for payment, protest,
notice of dishonor or nonpayment of any Obligations, notice of intent to
accelerate, notice of acceleration, and notice of any suit or the taking of
other action by the Bank against Borrower, Guarantor or any other person, any
applicable statute of limitations and any other notice to any party liable on
any Loan Document (including Guarantor), except as is specifically provided in
Section 12 and Section 13 hereof.
Subject to the provisions of Section 2(b) hereof, Guarantor also waives the
benefits of any provision of law requiring that the Bank exhaust any right or
remedy, or take any action, against the Borrower, any other guarantor or any
other person or property prior to or simultaneously with proceeding against
Guarantor hereunder.
The Bank may at any time and from time to time (whether before or after
revocation or termination of this Guaranty) without notice to Guarantor (except
as required by Section 1, Section 2(b), Section 12 or Section 13 hereof, Section
X.C. of the Loan Agreement, Section 7.A.(ii) or Section 8.D. of the Pledge
Agreement or any other notice required under any Loan Document which may not be
waived under applicable law), without incurring responsibility to Guarantor,
without impairing, releasing or otherwise affecting the obligations of
<PAGE>
3
Guarantor, in whole or in part, and without the endorsement or execution by
Guarantor of any additional consent, waiver or guaranty: (a) change the manner,
place or terms of payment, or change or extend the time of or renew, or change
any interest rate or alter any Obligation or installment thereof, or any
security therefor; (b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any Collateral and offset
against any Collateral or other property as provided in the Loan Documents; (c)
exercise or refrain from exercising any rights against Borrower or others or act
or refrain from acting in any other manner; (d) settle or compromise any
Obligation or any security therefor and subordinate the payment of all or any
part thereof to the payment of any Obligation of any other parties primarily or
secondarily liable on any of the Obligations; (e) release or compromise any
liability of Guarantor hereunder or any liability or obligation of any other
parties primarily or secondarily liable on any of the Obligations; or (f) apply
any sums from any sources to any Obligation without regard to any Obligations
remaining unpaid.
V. Subordination. Guarantor agrees that it will not demand, take or receive
from Borrower, by set-off or in any other manner, payment of any debt, now and
at any time or times hereafter owing by Borrower to Guarantor unless and until
all the Obligations shall have been fully paid and the Obligations fully
performed, and any security interest, liens or encumbrances which Guarantor now
has and from time to time hereafter may have upon any of the assets of Borrower
shall be made subordinate, junior and inferior and postponed in priority,
operation and effect to any security interest of the Bank in such assets.
VI. Waivers by the Bank. No delay on the part of the Bank in exercising any
of its options, powers or rights, and no partial or single exercise thereof,
shall constitute a waiver thereof. No waiver of any of its rights hereunder, and
no modification or amendment of this Guaranty, shall be deemed to be made by the
Bank unless the same shall be in writing, duly signed on behalf of the Bank; and
each such waiver, if any, shall apply only with respect to the specific instance
involved, and shall in no way impair the rights of the Bank or the obligations
of Guarantor to the Bank in any other respect at any other time.
VII. Partial Invalidity and/or Enforceability of Guaranty. The
unenforceability or invalidity of any provision of this Guaranty shall not
affect the enforceability or validity of any other provision herein and the
invalidity or unenforceability of any provision of any Loan Document as it may
apply to any person or circumstance shall not affect the enforceability or
validity of such provision as it may apply to other persons or circumstances.
In the event the Bank is required to relinquish or return any payments, any
Collateral or the proceeds thereof, in whole or in part, which had been
previously applied to or retained for application against any Obligation, by
reason of a proceeding arising under any applicable bankruptcy or insolvency
<PAGE>
4
law, or for any other reason, this Guaranty shall automatically continue to be
effective notwithstanding any previous cancellation or release effected by the
Bank.
VIII. Change of Status. Guarantor hereby agrees that this Guaranty shall
remain the binding, legal and enforceable obligation of Guarantor, irrespective
of any change in name by Guarantor or Borrower or change in type of entity of
Borrower.
IX. Financial and Other Information. For any year in which any Obligations
remain outstanding, Guarantor will furnish the Bank with his annual financial
statements in form satisfactory to the Bank within ninety (90) days after the
end of the calendar year, which financial statements shall consist of a balance
sheet for the previous twelve months. Guarantor will also furnish to the Bank
financial information regarding Guarantor reasonably requested in writing by the
Bank within thirty (30) days of the date of the request. Guarantor has made an
independent investigation of the financial condition and affairs of Borrower
prior to entering into this Guaranty, and Guarantor will continue to make such
investigation, and in entering into this Guaranty, Guarantor has not relied upon
any representation of the Bank as to the financial condition, operation or
creditworthiness of Borrower. Guarantor further agrees that the Bank shall have
no duty or responsibility now or hereafter to make any investigation or
appraisal of Borrower on behalf of Guarantor or to provide Guarantor with any
credit or other information which may come to its attention now or hereafter.
X. Guarantor Representations and Warranties. 1. The financial statements of
Guarantor, dated February 28, 1998, which have been delivered to the Bank fairly
present Guarantor's financial condition as of the date thereof. Guarantor has
not failed to disclose to the Bank any information that could materially affect
Guarantor's properties, prospects or financial condition. There has occurred no
material adverse change in the financial condition of Guarantor since the date
of such financial statements.
2. This Guaranty and each of the other Loan Documents to which
Guarantor is a party have been duly executed and delivered by Guarantor and
constitute the legal, valid and binding obligations of Guarantor and are
enforceable against Guarantor in accordance with their terms; Guarantor has
full capacity and power to execute and deliver this Guaranty and such other
Loan Documents; and the execution and delivery by Guarantor of this
Guaranty and such other Loan Documents and the performance by Guarantor of
Guarantor's obligations hereunder and thereunder, do not violate, or
conflict with, any agreement, instrument, note, judgment, order or decree
binding on Guarantor or under any law, rule or regulation applicable to
Guarantor, which violation or conflict would have a material and adverse
effect on Guarantor's ability to perform its obligations under the Loan
Documents or the rights and remedies of the Bank under the Loan Documents.
<PAGE>
5
XI. Notices. Notices provided hereunder shall be delivered personally or
sent certified mail, postage prepaid, to Guarantor (at Guarantor's address
indicated at the beginning of this Guaranty) or the Bank (at its address
indicated in Section VIII of the Loan Agreement), or to such other address as
any party may designate by written notice to the other party. Each notice,
request and demand shall be deemed given or made, if sent by mail, upon the
earlier of the date of receipt or five (5) days after deposit in the U.S. Mail,
certified and postage prepaid, or if delivered personally, upon delivery.
XII. Guarantor Duties. Subject to the provisions of Section 2(b) hereof,
Guarantor shall upon notice or demand by the Bank promptly and with due
diligence, pay all and satisfy all Obligations for the benefit of the Bank in
the event of the occurrence of any Event of Default.
XIII. Remedies. Subject to the provisions of Section 2(b) hereof, upon the
failure of Guarantor to fulfill its duty to pay and satisfy all Obligations as
required hereunder, the Bank shall have available all of the remedies of a
creditor of Guarantor and of a secured party under all applicable law, and
without limiting the generality of the foregoing, the Bank may, at its option
and without further notice or demand: (a) declare any Obligation to be
immediately due and payable, at which point such Obligation shall become
immediately due and payable; and (b) take possession of the Collateral pledged
by Guarantor, and, upon five days' prior notice to Guarantor, sell, resell,
assign, transfer and deliver all or any part of the Collateral of Guarantor at
any public or private sale or otherwise dispose of any or all of the Collateral
in its then condition, for cash or on credit or for future delivery, and in
connection therewith the Bank may impose reasonable conditions upon any such
sale, and the Bank, unless prohibited by law the provisions of which cannot be
waived, may purchase all or any part of the Collateral to be sold, free from and
discharged of all trusts, claims, rights or redemption and equities of Borrower,
Guarantor or any other person whatsoever. The Bank agrees that any sale of
Collateral shall be made in a commercially reasonable manner and Guarantor
acknowledges and agrees that the sale of the Collateral through any nationally
recognized broker-dealer, investment banker or any other method common in the
securities industry shall be deemed a commercially reasonable sale.
XIV. Attorney Fees, Cost and Expenses. Guarantor shall pay all reasonable
costs of collection and reasonable attorney's fees, including reasonable
attorney's fees in connection with any suit, mediation or arbitration
proceeding, out of court payment agreement, trial, appeal, bankruptcy
proceedings or otherwise, incurred or paid by the Bank in enforcing the payment
of any Obligation.
XV. Preservation of Property. The Bank shall not be bound to take any steps
necessary to preserve any rights in Collateral pledged to the Bank to secure the
Obligations against prior parties who may be liable in connection therewith, and
Guarantor hereby agrees to take any such steps. The Bank, nevertheless, at any
<PAGE>
6
time may (a) take any action it deems appropriate for the care or preservation
of such property or of any rights of Borrower and/or Guarantor or the Bank
therein; (b) demand, sue for, collect or receive any money or property at any
time due, payable or receivable on account of or in exchange for any Collateral
pledged to the Bank to secure the Obligations; (c) compromise and settle with
any person liable on such Collateral; or (d) upon notice to Guarantor, extend
the time of payment under the Loan Documents as to any party liable on the Loan
Documents, all without incurring responsibility to, and without affecting any of
the obligations of Guarantor hereunder.
XVI. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED INSTRUMENTS,
AGREEMENTS OR DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED
TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL
ARBITRATION ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF
PRACTICE AND PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF
J.A.M.S./ENDISPUTE OR ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL
RULES" SET FORTH BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES
SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING
A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN NEW YORK
COUNTY AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION,
THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION
HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION;
FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED
TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE
STATUTES OF LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS
<PAGE>
7
AGREEMENT OR (II) BE A WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT
BY 12 U.S.C. ss. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III)
LIMIT THE RIGHT OF THE BANK HERETO (A) TO FORECLOSE AGAINST ANY REAL OR
PERSONAL PROPERTY COLLATERAL, OR (B) TO OBTAIN FROM A COURT PROVISIONAL OR
ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF
POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK MAY EXERCISE
FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY
REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING
BROUGHT PURSUANT TO THIS AGREEMENT. THE INSTITUTION OR MAINTENANCE OF AN
ACTION FOR FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL NOT
CONSTITUTE A WAIVER OF THE RIGHTS OF ANY PARTY, INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM
OCCASIONING RESORT TO SUCH REMEDIES.
XVII. Controlling Document. To the extent that this Guaranty conflicts with
or is in any way incompatible with any provision of any other Loan Document, the
terms of the Note shall govern over any issue addressed therein, and issues not
addressed in the Note shall be governed by the terms of the Loan Document that
most specifically addresses such issues.
XVIII. Notice of Final Agreement. THIS WRITTEN GUARANTY REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENTIAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be executed
on the 26th day of June, 1998.
Guarantor:
____________________________
Name: Saul P. Steinberg
