SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) DECEMBER 31, 1999
LOIS/USA INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-83894-NY 13-3441962
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) ID Number)
40 WEST 57TH STREET, NEW YORK, NY 10019
(Address of principal executive offices) Zip Code)
Registrant's Telephone Number, including area code: (212) 373-4700
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 31, 1999, Lois/USA Inc. (the "Company") sold all of the
issued and outstanding capital stock of Fogarty & Klein, Inc. ("F&K"), the
Company's wholly owned subsidiary, to five of the former shareholders (the
"Fogarty Group") of F&K. No cash consideration was received at closing. The cash
consideration to be received in the future is described below.
On October 20, 1999, Lois/USA Inc. (the "Company") filed a voluntary
petition in the United States Bankruptcy Court, Southern District of New York
(the "Bankruptcy Court"), under Chapter 11 of the United States Bankruptcy Code.
The Company is debtor in possession.
On December 14, 1999, the Bankruptcy Court approved the Stock Purchase
Agreement among the Company and the Fogarty Group (the "Sale Agreement"),
subject to certain amendments to the Sale Agreement. The purchase price to be
paid by the Fogarty Group under the Sale Agreement is approximately $18.775
million, comprised of (i) the release of $5.4 million net intercompany debt
owing by the Company to F&K; (ii) the release of the Company by the Fogarty
Group and the remaining former shareholder of F&K of the remaining installments
of the purchase price required to be paid by the Company in connection with its
acquisition of F&K in December 1997; and (iii) the obligation of F&K and the
Fogarty Group to pay up to $9 million of the joint and several indebtedness
outstanding under the Loan and Security Agreement (the "Loan and Security
Agreement") by and among the Company's subsidiaries, Green Tree Financial
Servicing Corporation ("Green Tree"), as Lender and Agent to the Lenders and
General Electric Capital Corporation, as Lender on or before February 29, 2000
(subject to extension) (the "Settlement Date"). Under the Sale Agreement, the
Company is entitled to receive on the Settlement Date the difference between $9
million and the actual amount of such indebtedness outstanding on October 19,
1999 (subject to a partial retention of such proceeds by F&K and subject to
certain other adjustments). Subject to such other adjustments, the amount
payable to the Company under such formula as of October 19, 1999 was $
1,236,622.
The amendment to the Sale Agreement provides that (i) if the Fogarty
Group sells the assets or stock of F&K on or before June 30, 2001 then the
Fogarty Group will pay to the Company 50% of the proceeds of such resale in
excess of the sum of $13.375 million plus any debt and/or equity loaned and/or
contributed by the Fogarty Group to F&K after closing and (ii) F&K will have to
make additional payments to the Company if its revenues exceed $18 million in
2000 or $9.5 million for the first six months of 2001. In no event will the
Fogarty Group be required to pay more than the greater of (i) or (ii).
The Loan and Security Agreement is secured by substantially all of the
assets of the Company, including the stock and assets of its subsidiaries, and
is guaranteed by the Company. The sale of F&K to the Fogarty Group is subject to
the existing liens held by Green Tree and a subordinate lien which was granted
to the Company pursuant to the Sale Agreement to secure the payment of the
purchase price to the Company under the Sale Agreement.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS.
1. Amendment dated as of December 31, 1999 to that certain Stock Purchase
Agreement dated as of October 19, 1999, by and among William H. Fogarty, Richard
E. Klein, Thomas F. Monroe, Roger Beckstead and Larry Kelley, as Purchasers, and
Lois/USA Inc., as Seller.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LOIS/USA INC.
By: /s/ Robert K. Stewart
-------------------------
Name: Robert K. Stewart
Title: Chief Financial Officer
Dated: December 31, 1999
Exhibit 1
AMENDMENT
TO
STOCK PURCHASE AGREEMENT
THIS AMENDMENT to that certain STOCK PURCHASE AGREEMENT (the "Stock
Purchase Agreement"), dated as of October 19, 1999, is by and between WILLIAM H.
FOGARTY, RICHARD E. KLEIN, THOMAS F. MONROE, ROGER BECKSTEAD and LARRY KELLEY,
individuals (collectively, "Purchaser"), and LOIS/USA INC., a Delaware
corporation ("Seller").
WITNESSETH
WHEREAS, the Purchaser and the Seller entered into the Stock Purchase
Agreement;
WHEREAS, on December 1, 1999 the United States Bankruptcy Court for
the Southern District of New York (the "Bankruptcy Court") approved the sale by
the Seller to the Purchaser of all the issued and outstanding common stock, par
value $1.00 per share (the "Shares"), of Fogarty & Klein, Inc., a Texas
corporation ("F&K"), subject to certain amendments to the terms and conditions
of such sale and the entry by the Bankruptcy Court of an order (the "Sale
Order") authorizing the sale of the Shares in accordance with the Stock Purchase
Agreement, as amended hereby; and
WHEREAS, Purchaser and Seller wish to amend the Stock Purchase
Agreement in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
Purchaser and Seller hereby agree as follows:
ARTICLE I
AMENDMENTS TO THE STOCK PURCHASE AGREEMENT
Section 1.1. AMENDMENT TO SECTION 6 OF THE STOCK PURCHASE AGREEMENT.
(a) Section 6(a) of the Stock Purchase Agreement is hereby amended by adding the
phrase "(subordinated to the Green Tree Debt pursuant to a subordination
agreement acceptable to Green Tree and subordinated to Purchaser's obligation to
the Seller hereunder pursuant to a subordination agreement acceptable to
Seller)" after the words "after the Closing" in the eleventh line thereof.
(b) Section 6(b) of the Stock Purchase Agreement is hereby amended by
adding the phrase ", but in no event later than February 29, 2000, subject to
extension by agreement of Purchaser, Seller, the Official Committee of the
Unsecured Creditors of Seller and the Required Lenders under the Loan and
Security Agreement" after the words "Revolving Loan Maturity Date (as defined in
EXHIBIT "D" hereof)" in the second line thereof.
(c) The Stock Purchase Agreement is hereby amended by adding the
following after subsection (c) of Section 6 thereof:
(d) RESALE BY PURCHASER. If (i) Purchaser enters into a binding
agreement to sell or otherwise transfer the stock and/or assets of the
Company on or before June 30, 2001 in an arms-length transaction to a
party unaffiliated with either Purchaser or the Company (a "Resale")
and (ii) such Resale is consummated, then Purchaser shall pay to
Seller as additional Purchase Price 50% of the proceeds of the Resale,
if any, in excess of the sum of (x) $9 million, (y) $4.375 million and
(z) any debt and/or equity loaned and/or contributed by Purchaser to
the Company on or after the Closing Date pursuant to subparagraph (a)
above.
(e) CONTINGENT EXCESS REVENUE PAYMENTS. Notwithstanding anything to
the contrary in this Agreement, Purchaser shall cause the Company to
make the additional payments of Purchase Price set forth below if the
Company exceeds certain Revenue levels. For purposes of the Section
6(e), the term "Revenues" includes media commissions, fees, hourly
billings, production mark-ups and other income of the Company (less
amounts billed to clients which have not been collected within 90 days
of the billing date), but shall exclude any pass-through media and
production payments made by the Company's clients to the Company as
agent on their behalf, all as determined in accordance with generally
accepted accounting principles for the advertising industry.
(i) CALENDAR YEAR 2000. If the Company's Revenues for calendar
year 2000 exceed $18 million, the Purchasers agree to cause the
Company to pay to Seller (A) 20% of the first $1 million of
revenues exceeding $18 million and (B) 40% of any Revenues
exceeding $19 million. Payments, if any, due Seller under this
subsection shall be paid by the Company as follows: (X) one third
of such amount on or before March 31, 2001, (Y) one third of such
amount on or before March 31, 2002 and (z) one third of such
amount on or before March 31, 2003.
(ii) SIX MONTHS BEGINNING JANUARY 1, 2001 AND ENDING JUNE 30,
2001. If the Company's Revenues for six month period commencing
January 1, 2001 and ending June 30, 2001 exceed $9.5 million, the
Purchasers agree to cause the Company to pay to Seller (A) 20% of
the first $1 million of revenues exceeding $9.5 million and (B)
40% of any Revenues exceeding $10.5 million. Payments, if any,
due Seller under this subsection shall be paid by the Company as
follows: (X) one third of such amount on or before September 30,
2001, (Y) one third of such amount on or before September 30,
2002 and (z) one third of such amount on or before September 30,
2003.
(iii) INTEREST UPON PAYMENT DEFAULT. None of the payments, if
any, due to Seller by the Company under subsection (i) or (ii) of
this Section 6(e) shall bear interest if paid when due. However,
past due payments, if any, shall bear and accrue interest at the
rate of 8% per annum from the due dates specified above through
and including the actual date of payment.
(f) OFFSET RIGHTS BY PURCHASER IN THE EVENT OF RESALE. Notwithstanding
the foregoing, in the event of a Resale, Purchaser's obligation to
cause the Company to make further additional payments of Purchase
Price provided for in subsection (e) above shall terminate with
respect to periods occurring after the consummation of the Resale but
any existing obligation to make additional payments of Purchase Price
shall remain in full effect and shall be accelerated to the date of
the consummation of the Resale (such amounts being herein referred to
as "Accelerated Excess Revenue Payments"). Upon the consummation of a
Resale, Seller shall be entitled to receive the greater of (i) the
amount calculated in accordance with subsection (d) above (offset by
any amounts previously paid pursuant to subsection (e)) and (ii) any
Accelerated Excess Revenue Payments.
Section 1.2. AMENDMENT TO SECTION 16(H) OF THE STOCK PURCHASE
AGREEMENT. Section 16(h) of the Stock Purchase Agreement is hereby amended by
replacing the word "Texas" with the words "New York" in the second, eleventh and
thirteenth lines thereof and replacing the words "Harris County" with the words
"New York County" in the eleventh line thereof.
Section 1.3. AMENDMENT TO EXHIBIT "B" TO THE STOCK PURCHASE AGREEMENT.
Exhibit "B" to the Stock Purchase Agreement is hereby amended by adding the
following paragraph before the calculation of the total purchase price:
Notwithstanding the foregoing, the Purchaser agrees to pay Seller the
sum of $1 million (the "Guaranteed Payment") on the Settlement Date
without offset of any kind, but in no event later than March 31, 2000;
PROVIDED, HOWEVER, that the Guaranteed Payment, when actually received
by Seller, shall be offset against any other amounts which may
otherwise be due Seller from Purchaser under the Agreement, including,
without limitation, amounts payable under Section (C) of this Exhibit
"B".
Section 1.4. AMENDMENT TO EXHIBIT "D" TO THE STOCK PURCHASE AGREEMENT.
Exhibit "D" to the Stock Purchase Agreement is hereby amended by deleting such
exhibit in its entirety and by substituting therefor EXHIBIT "D" attached
hereto.
ARTICLE II
THE CLOSING
Section 2.1. THE CLOSING. The parties hereto agree that the Closing
shall take place at the offices of Stroock & Stroock & Lavan LLP, 180 Maiden
lane, New York, New York 10038 on December 31, 1999.
Section 2.2. ACCEPTANCE OF FACSIMILE SIGNATURES. The parties agree
that any instrument, document, certificate or agreement required to be delivered
as a condition to the Closing will be considered signed when the signature of a
party is delivered by facsimile transmission. Such facsimile transmission shall
be treated in all respects as having the same effect as an original signature.
Section 2.3. WAIVER OF SECTION 7(B) OF THE STOCK PURCHASE AGREEMENT.
The Purchaser hereby expressly waives the satisfaction by the Seller of the
obligation contained in Section 7(b) of the Stock Purchase Agreement in
connection with the Closing.
ARTICLE III
MISCELLANEOUS
Section 3.1. RATIFICATION. Except as expressly amended hereby, all of
the provisions of the Stock Purchase Agreement shall remain unamended and in
full force and effect to the same extent as if fully set forth herein. Nothing
contained herein shall affect the terms of the last paragraph of EXHIBIT "B" to
the Stock Purchase Agreement.
Section 3.2. SEPARATE COUNTERPARTS. This Amendment may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall constitute but
one and the same instrument.
Section 3.3. ACCEPTANCE OF FACSIMILE SIGNATURES. The parties agree
that this Amendment will be considered signed when the signature of a party is
delivered by facsimile transmission. Such facsimile transmission shall be
treated in all respects as having the same effect as an original signature.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the 31st day of December, 1999.
SELLER:
LOIS/USA INC.
By: /s/ ROBERT K. STEWART
-----------------------------
Name: Robert K. Stewart
Title: Chief Financial Officer
PURCHASER:
/s/ WILLIAM H. FOGARTY
-------------------------------
William H. Fogarty
/s/ RICHARD E. KLEIN
-------------------------------
Richard E. Klein
/s/ THOMAS F. MONROE
-------------------------------
Thomas F. Monroe
/s/ ROGER BECKSTEAD
-------------------------------
Roger Beckstead
/s/ LARRY KELLEY
-------------------------------
Larry Kelley
<PAGE>
Exhibit D
FORBEARANCE AND AMENDMENT AGREEMENT
This Forbearance and Amendment Agreement (this "Agreement") is entered
into as of the 31st day of December, 1999, by and among WILLIAM H. FOGARTY
("Fogarty"), RICHARD E. KLEIN ("Klein," and, together with Fogarty, the
"Contributing FKP Buyers"), ROGER BECKSTEAD, THOMAS F. MONROE, and LARRY KELLEY
(the Contributing FKP Buyers, together with the other foregoing individuals, the
"FKP Buyers"), ZYX INC. (formerly LOIS/USA WEST INC.), a Delaware corporation
("West"), LOIS/USA CHICAGO INC., a Delaware corporation ("Chicago"), LOIS/USA
NEW YORK INC., a Delaware corporation ("New York"), Fogarty & Klein, Inc., a
Texas corporation ("FKP"), YEAR 2K COMMUNICATIONS, INC., a Delaware corporation
("Y2K") (West, Chicago, New York, FKP and Y2K are collectively referred to
herein as the "Borrowers" and individually as a "Borrower"), LOIS/USA INC., as
debtor and debtor-in-possession ("Parent"), CONSECO FINANCE SERVICING CORP.,
f/k/a Green Tree Financial Servicing Corporation, a Delaware corporation (in its
individual capacity, "Conseco"), for itself, as Lender, as Swingline Lender and
as Agent for Lenders, and the other Lenders signatory hereto.
RECITALS
WHEREAS, Borrowers, the Agent and the Lenders are parties to that
certain Loan and Security Agreement dated as of June 17, 1999 (as the same has
been or may hereafter be amended, restated, supplemented, extended or otherwise
modified, the "Loan Agreement");
WHEREAS, certain Specified Defaults (as defined below) have occurred
and are continuing or are expected to occur under the Loan Agreement;
WHEREAS, the Parent and the FKP Buyers have entered into a Stock
Purchase Agreement dated as of October 19, 1999 (as amended, the "Stock Purchase
Agreement"), pursuant to which (i) the Parent has agreed to sell all of the
capital stock of FKP to the FKP Buyers subject to the first priority lien of
Agent (for itself and for the Lenders) and a second priority lien in favor of
Parent, and (ii) the Contributing FKP Buyers have agreed to make an equity
contribution to FKP of $2,000,000 at the closing of the Stock Purchase Agreement
and up to an additional $3,000,000 subject to certain terms and conditions;
WHEREAS, in order to, among other things, effectuate the transactions
contemplated by the Stock Purchase Agreement, the Parent, on October 20, 1999
(the "Initial Petition Date"), and Chicago and New York (the Parent, Chicago and
New York are collectively referred to herein as the "Debtors"), on October
26,1999, filed voluntary petitions for relief under the federal Bankruptcy Code,
11 U.S.C. ss. 101 ET SEq. (the "Bankruptcy Code") in the Southern District of
New York (such bankruptcy cases, the "Bankruptcy Cases").
WHEREAS, the Lenders have consented to the limited use of cash
collateral by the Parent in the Bankruptcy Case pursuant to the Stipulation And
Agreed Order (1) Authorizing Debtors' Use Of Cash Collateral, (2) Authorizing
Debtors To Incur Post-Petition Secured Indebtedness And To Cross Guaranty Same,
(3) Granting Security Interests And Priority Pursuant To 11 U.S.C. ss. 364(C)
And (4) Modifying Automatic Stay (the "Cash Collateral Order"), and all
obligations and liabilities of the Parent under the Cash Collateral Order
constitute part of the Obligations for which the Borrowers are jointly and
severally liable and which are secured by all of the Collateral, and the Stock
of FKP and the other Borrowers;
WHEREAS, the parties to the Stock Purchase Agreement are not willing
to consummate the transactions contemplated by the Stock Purchase Agreement
unless the Agent and the Lenders agree, subject to the terms and conditions of
this Agreement, to continue to make Loans to FKP and to forbear from exercising
certain rights and remedies against FKP or the Stock of FKP, notwithstanding the
Specified Defaults, for a limited period of time;
WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the consummation of the transactions contemplated by the Stock
Purchase Agreement, and the consummation of the transactions contemplated by the
Stock Purchase Agreement is a condition precedent to the execution and delivery
of this Agreement; and
WHEREAS, concurrently herewith, the Parent and the FKP Buyers have
consummated the sale of the Stock of FKP to the FKP Buyers and the Contributing
FKP Buyers have made an equity contribution and/or subordinated loan to FKP in
the amount of $2,000,000 and have executed and delivered a Capital Call
Agreement (as defined below) obligating the Contributing FKP Buyers to make
additional equity contributions and/or subordinated loans up to $3,000,000 in
cash under certain circumstances.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
1.1 As used herein, the following terms shall have the meanings set
forth below:
"Forbearance Default" means (a) the occurrence of any Default or Event
of Default (other than the Specified Defaults) (i) relating in any respect to
FKP, its business or its assets or (ii) caused to any material degree by FKP or
any of its officers, directors, shareholders, employees, agents or other
representatives; (b) failure of FKP or, to the extent FKP aids and abets,
assists, cooperates or otherwise contributes to such failure, the failure of
Parent or any Non-FKP Borrower, to timely comply with any term, condition or
covenant set forth in this Agreement or the Stock Purchase Agreement; (c) any
occurrence having a Material Adverse Effect with respect to FKP (other than the
Specified Defaults) during the Forbearance Period; (d) if any representation
made by FKP, or, to the extent FKP knew as of the Effective Date that such
representation was materially false, any representation made by Parent or any
Non-FKP Borrower under or in connection with this Agreement shall prove to be
materially false as of the date when made; (e) if FKP or any other person or
entity claiming by or through FKP commences, joins in, assists, cooperates or
participates as an adverse party or adverse witness in any suit or other
proceeding against the Agent or any Lender with respect to the Obligations or
the Collateral securing same; or (f) the failure of any of the parties thereto
(other than the Agent), including but not limited to the FKP Buyers and the
Contributing FKP Buyers, as applicable, to timely comply with any term,
condition or covenant set forth in the Capital Call Agreement (as defined
below), the FKP Stock Pledge Agreement (as defined below), or the Control
Agreements (as defined below) (the foregoing three agreements, collectively, the
"FKP Buyer Agreements").
"Forbearance Period" means the period of time from the Effective Date
until the earlier to occur of (a) the Revolving Loan Maturity Date and (b) any
Forbearance Default.
"Specified Defaults" means (a) those Defaults and Events of Default
(i) which have occurred and are continuing as of the Effective Date and (ii) the
existence of which the Agent is aware as of the Effective Date, and (b) any and
all Defaults and Events of Default which may arise during the Forbearance Period
solely as a result of any Borrower's failure to perform, keep or observe any of
the covenants contained in subsections 7.11, 7.12, 7.13 or 8.8 of the Loan
Agreement.
"Termination Event" shall mean any of (a) the Maturity Date and (b)
the occurrence of any Forbearance Default.
1.2 Unless otherwise specified herein, all capitalized terms used in
this Agreement shall have the respective meanings ascribed to them in the Loan
Agreement, as amended by this Forbearance Agreement. Additionally, the following
terms shall have the meanings defined for such terms in the Sections or
documents set forth below:
TERM SECTION
Accounts 5.1
Agreement Preamble
Bankruptcy Cases Recitals
Bankruptcy Code Recitals
Borrowers Preamble
Borrower/Lender Documents 11.2
Borrower Representative 5.1
Capital Call Agreement 6.1
Cash Collateral Order Recitals
Chicago Preamble
Claims 7
Conseco Preamble
Contributing FKP Buyers Preamble
Control Agreement 6.1
Effective Date 5.1
Enforcement Actions 3.1
Final FKP Purchase Agreement 5.1
FKP Preamble
FKP Borrowing Base 5.1
FKP Buyer Agreements 1.1
FKP Buyers Preamble, 5.1
FKP Loan Obligations 5.1
FKP Maximum 5.1
FKP Stock Pledge Agreement 6.1
Fogarty Preamble
Forbear 3.1
Forbearance and Amendment Agreement 5.1
Forbearance Default 1.1
Forbearance Period 1.1
Klein Preamble
Initial Petition Date Recitals
Lender Releasees 7
Loan Agreement Recitals
Lottery Commission Account 5.1
Metro Account 5.1
New York Preamble
Non-FKP Borrowers 5.1
Non-FKP Obligations 5.1
Parent Preamble
Revolving Loan Maturity Date 5.1
Specified Defaults 1.1
Stock Purchase Agreement Recitals
Termination Event 1.1
Third Party Buyer 5.1
West Preamble
Y2K Preamble
2. CONFIRMATION OF OBLIGATIONS AND EXISTING EVENTS OF DEFAULT.
2.1 Each of the Borrowers, the Parent and the FKP Buyers acknowledges
and agrees that as of December 31, 1999, the aggregate amount of the principal
balance of the outstanding Obligations under the Loan Agreement included at
least the following amounts:
Total Outstanding Loans $4,364,090.42
The foregoing amounts include any Loans or other extensions of credit made to
any Borrower or Parent on or after the Initial Petition Date. The foregoing
amounts do not include all of the interest and fees and expenses to which Agent
and Lenders are entitled. The Obligations listed above are outstanding, and
Borrowers, the Parent and the FKP Buyers acknowledge and agree that they have no
right of offset, defense, or counterclaim with respect to such Obligations.
2.2 Each of the Borrowers, the Parent and the FKP Buyers acknowledges
and agrees that the Specified Defaults have occurred and are continuing as of
the Effective Date and/or are expected to occur and continue through the
Forbearance Period.
2.3 Each of the Borrowers, the Parent and the FKP Buyers acknowledges
and agrees that subject to any applicable provisions of the Bankruptcy Code, the
Specified Defaults permit Agent (or, where applicable, the Required Lenders) to
exercise any rights and remedies set forth in the Financing Agreements,
including but not limited to the rights and remedies set forth in Section 9 of
the Loan Agreement.
3. FORBEARANCE PERIOD.
3.1 Except as otherwise specifically provided herein, during the
Forbearance Period, the Agent and the Lenders shall forbear from exercising any
default-related remedies against FKP or the Stock of FKP (such default-related
remedies, "Enforcement Actions" and such agreements to forbear are collectively
referred to herein as the agreement to "Forbear"); PROVIDED, HOWEVER, (i) FKP
and the FKP Buyers shall comply during the Forbearance Period with all
limitations, restrictions or prohibitions that would otherwise be effective or
applicable under any of the Financing Agreements and the FKP Buyer Agreements
during the continuance of any Defaults or Events of Default, (ii) nothing herein
shall restrict, impair or otherwise affect Agent's or any other Lender's or the
Swingline Lender's rights and remedies under the Subordination Agreement or
other agreements containing subordination provisions in favor of Agent or any
other Lender or the Swingline Lender (including, without limitation, any rights
or remedies available to Agent or any other Lender or the Swingline Lender as a
result of the occurrence or continuation of any Specified Default) or amend or
modify any provision thereof, and (iii) nothing herein shall limit, restrict or
otherwise impair or affect any rights or remedies of any of Agent, Lenders and
Swingline Lender against any Non-FKP Borrower or Parent or any obligations or
liabilities of any Non-FKP Borrower or Parent thereunder. Upon a Termination
Event, Agent, each Lender's and the Swingline Lender's agreement hereunder to
Forbear during the Forbearance Period shall immediately terminate, without the
requirement of any demand, presentment, protest or notice of any kind, all of
which each of the Borrowers, the Parent and the FKP Buyers waives. All rights
and remedies of Agent, Lenders and the Swingline Lender in connection with the
Specified Defaults are hereby reserved and, except as otherwise expressly
provided in this Section 3.1, may be exercised at any time (including during the
Forbearance Period).
3.2 Each of the Borrowers, the Parent and the FKP Buyers acknowledges
and agrees that no action taken by the Agent or any Lender prior to the date
hereof, and nothing in this Agreement, shall: (x) create any obligation to (A)
make any further Loans or issue any Lender Guaranties, except as set forth
herein with respect to FKP, or (B) forbear from taking any or all Enforcement
Actions after a Termination Event, (y) except as set forth in Section 5 hereof,
constitute a waiver or modification of any term or condition of the Financing
Agreements, or (z) constitute a waiver of any Default or Event of Default, any
unsatisfied condition precedent or, except for the agreement to Forbear,
otherwise prejudice any rights or remedies which the Agent and Lenders now have
or may have in the future, including, without limitation, all rights and
remedies in connection with the Specified Defaults. Nothing contained herein
shall in any way be deemed to limit or prevent the Agent or the Required
Lenders, upon the occurrence of a Termination Event, from taking any or all
Enforcement Actions, in each case without notice or demand and at the option of
Agent (in its discretion or upon demand by the Required Lenders). Without
limiting the generality of the foregoing, subject only to Agent and each
Lender's agreement to continue to Forbear during the Forbearance Period, Agent
and Lenders expressly reserve all rights and remedies which Agent and Lenders
now have or may have in the future, including, without limitation, all rights
and remedies in connection with the Specified Defaults.
3.3 Any agreement by Agent and Lenders to extend the Forbearance
Period must be set forth in writing and signed by an officer of each such party.
Each of the Borrowers, the Parent and the FKP Buyers acknowledges that neither
Agent nor any Lender has made any assurances to any or all of the Borrowers, the
Parent and the FKP Buyers concerning the likelihood of an extension of the
Forbearance Period.
3.4 Each of the Borrowers, the Parent and the FKP Buyers acknowledges
and agrees that any Revolving Loans, Swingline Loans or Lender Guaranties which
the Agent, Lenders and the Swingline Lender make on or after the date hereof has
been made by Agent, Lenders and the Swingline Lender in reliance upon, and as
consideration for, among other things, the general releases contained in Section
7 hereof and the other covenants and agreements of Borrowers, the Parent and the
FKP Buyers hereunder.
3.5 Each of the Parent and the Borrowers reaffirms its obligation
under the Loan Agreement and the other Financing Agreements and applicable law
to remit immediately to Agent for application to the Obligations all proceeds of
Collateral and the Pledged Collateral (as defined in the Parent Pledge
Agreement). All payments by FKP to Agent, and all Collateral proceeds owned and
remitted by FKP to Agent, shall be applied by Agent to the FKP Loan Obligations.
4. LIBOR RATE LOANS.
Each of the Borrowers, the Parent and the FKP Buyers acknowledges and
agrees that as a result of the occurrence and continuation of the Specified
Defaults, Borrowers are not and have not been entitled at any time from and
after the occurrence thereof (including at any time during the Forbearance
Period) to elect to have any Loans or other Obligations made, converted to or
continued as LIBOR Rate Loans.
5. AMENDMENTS TO LOAN AGREEMENT.
5.1 Section 1.1 of the Loan Agreement is hereby amended to add the
following definitions, or to the extent such definitions currently exist in
Section 1.1, to amend and restate same, in alphabetical order:
"'Accounts' shall mean all presently existing and hereafter
arising or acquired accounts, accounts receivable, margin accounts,
futures positions, book debts, contracts, notes, drafts, acceptances
and other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now or hereafter
owned or held by or payable to any Borrower relating in any way to
Inventory or arising from the sale of Inventory, the rendering of
services or the production of any form of advertising, marketing and
promotional materials or the procurement of television and radio
on-air time by any Borrower or howsoever otherwise arising, including
the right to payment of any interest or finance charges with respect
thereto, together with all merchandise represented by any of the
Accounts; all such merchandise that may be reclaimed or repossessed or
returned to any Borrower; all of any Borrower's rights as an unpaid
vendor, including, without limitation, stoppage in transit,
reclamation, rescission, replevin, and sequestration; all pledged
assets and all letters of credit, guaranty claims, Liens held by or
granted to any Borrower to secure payment of any Accounts; all
proceeds and products of all of the foregoing described properties and
interests in properties; and all proceeds of insurance with respect
thereto, including, without limitation, the proceeds of any applicable
casualty or credit insurance or fidelity bond, whether payable in cash
or in kind; and all customer lists, ledgers, books of account,
records, computer programs, computer disks or tape files (including,
without limitation, all microfilm), computer printouts, computer runs,
and other computer prepared information relating to any of the
foregoing; PROVIDED, HOWEVER, that the foregoing definition of
Accounts shall (a) exclude the Lottery Commission Account and the
Metro Account and (b) include all proceeds and products of the Lottery
Commission Account and the Metro Account."
"'Borrower Representative' means, with respect to the
Non-FKP Borrowers, Parent, and, with respect to FKP, FKP."
"'Effective Date' means the date on which all of the
conditions precedent to the effectiveness of the Forbearance and
Amendment Agreement set forth in Section 9 thereof shall have been met
to the satisfaction of Agent and Lenders."
"'Final FKP Purchase Agreement' means any fully executed
definitive purchase agreement between the FKP Buyers, as sellers, and
any third party reasonably acceptable to Agent and Lenders, as buyer
("Third Party Buyer"), which (a) provides for the sale of all of the
Stock of FKP to the Third Party Buyer, (b) is in form and substance
satisfactory to Agent and Lenders, (c) contains no financial, due
diligence or board of approval contingencies, (d) provides for a
purchase price sufficient to repay all of the Obligations in cash and
(e) provides for such Stock sale to close within thirty days after the
date of such agreement."
"'FKP Borrowing Base' means, as of any date of
determination, an amount equal to the sum of (a) eighty-five percent
(85%) of the face amount (less maximum discounts, credits and
allowances which may have been taken by or granted to Account Debtors
in connection therewith) then outstanding of existing Eligible
Accounts of FKP LESS (b) $250,000, LESS (c) the aggregate amount of
all payments and Collateral proceeds (not constituting Collateral or
proceeds thereof owned by FKP) remitted by any Non-FKP Borrowers or
Parent on or after the Effective Date to Agent for application to the
Obligations PLUS (d) the aggregate amount of all new Loans or other
extensions of credit made after the Effective Date to any or all of
the Parent and the Non-FKP Borrowers."
"'FKP Buyers' means, collectively, William H. Fogarty,
Richard E. Klein, Roger Beckstead, Thomas F. Monroe and Larry Kelley."
"'FKP Loan Obligations' means as of any date of
determination, the lesser of (a) the Obligations as of such date of
determinationand (b)(i) the sum of (x) all of the Obligations
outstanding as of the Effective Date, plus (y) all extensions of
credit made by Agent and Lenders on or after the Effective Date to
Parent or any Non-FKP Borrower, including all fees, costs and expenses
incurred by the Agent and Lenders in connection with such extensions
of credit (provided that the sum of the amounts specified in clauses
(b)(i)(x) and (b)(i)(y) shall in no event exceed $9,000,000), PLUS
(ii) the aggregate amount of all new Loans or other extensions of
credit (including the issuance of Lender Guaranties) made by Agent and
Lenders to FKP after the Effective Date, PLUS (iii) all fees, costs
and expenses chargeable under the Loan Agreement, and incurred by
Agent or the Lenders after the Effective Date, LESS (iv) all payments
made by FKP toward the Obligations after the Effective Date plus (v)
interest on the net amount calculated pursuant to the foregoing
clauses (b)(i), (ii), (iii) and (iv) at the applicable interest rate
set forth in the Loan Agreement.
"'FKP Maximum' means, as of any date of determination, (a)
$8,750,000, LESS (b) the aggregate amount of all payments and
Collateral proceeds (not constituting Collateral or proceeds thereof
owned by FKP) remitted by any Non-FKP Borrowers or Parent on or after
the Effective Date to Agent for application to the Obligations, PLUS
(c) the aggregate amount of all new Loans or other extensions of
credit made after the Effective Date to any or all of the Parent and
the Non-FKP Borrowers."
"'Forbearance and Amendment Agreement' means that certain
Forbearance and Amendment Agreement dated as of December 31, 1999 by
and among the FKP Buyers, the Parent, the Borrowers, the Agent and the
Lenders."
"'Lottery Commission Account' means that certain account
receivable arising out of the certain Contract for Advertising
Services between the Texas Lottery Commission and FKP dated on or
about July 14, 1999."
"'Metro Account' means that certain account receivable
arising out of the certain Contract No. CT between The Metropolitan
Transit Authority of Harris County, Texas and Fogarty Klein &
Partners, 7155 Old Katy Road, Suite 100, Houston, Texas 77024 for
Advertising and Marketing Services dated on or about November 15,
1996."
"'Non-FKP Borrowers' means, collectively, West, Chicago, New
York and Y2K."
"'Non-FKP Obligations' means all Obligations other than the
FKP Loan Obligations.
"'Revolving Loan Maturity Date' means February 29, 2000, as
extended with the prior written consent of Parent, FKP, Required
Lenders and the Official Committee of Unsecured Creditors in the
Bankruptcy Cases."
5.2 The Loan Agreement is hereby amended to confirm that any
obligation of Agent, Lenders and the Swingline Lender to make any Loans to any
Non-FKP Borrowers or to issue any Lender Guaranties to any Borrowers has been
suspended; PROVIDED, HOWEVER, that (a) subject to the terms and conditions of
the Loan Agreement and the other Financing Agreements, the Swingline Lender
shall continue to make Swingline Advances to FKP and the Revolving Lenders shall
continue to make Revolving Loans to FKP to the extent that and so long as the
sum of the requested Loan plus the amount of Obligations then outstanding does
not exceed the lesser of (i) the FKP Borrowing Base and (ii) the FKP Maximum,
and (b) if Agent, the Lenders and the Swingline Lender elect in their sole
discretion to make Revolving Loans or Swingline Loans or issue any Lender
Guaranties to any Borrowers, such Revolving Loans, Swingline Loans and Lender
Guaranties shall be governed by the terms of the Financing Agreements (as
amended by this Agreement) and shall be secured by the Collateral and the
Pledged Collateral (as defined in the Parent Pledge Agreement and the FKP Stock
Pledge Agreement), and the Agent, Lenders and Swingline Lender shall be entitled
to all rights, benefits and liens under the Financing Agreements with regard to
such Revolving Loans, Swingline Loans and Lender Guaranties.
5.3 Upon payment in full in cash of the FKP Loan Obligations on or
before the Revolving Loan Maturity Date, Agent and Lenders shall release FKP
from any liability for any Non-FKP Obligations and shall release all liens held
by Agent (on behalf of itself as Agent and the Lenders) against property of FKP
and the Stock of FKP (without releasing the Non-FKP Borrowers or liens on the
property of the Non-FKP Borrowers). Agent and Lenders agree that no further
notice of FKP's intention to pay the FKP Loan Obligations on or before the
Revolving Loan Maturity Date shall be required (relative to the notice
requirement set forth in Section 2.8 of the Loan Agreement).
5.4 The following sentence shall be added to the end of the existing
subsection 15.1 of the Loan Agreement:
"Without limiting the generality of the foregoing, and
subject to the limitations of Section 11.18(b) of the Forbearance and
Amendment Agreement, all of the Non-FKP Borrowers shall be jointly and
severally liable for all of the Obligations, including all FKP Loan
Obligations."
5.5 Sections 5.1 through 5.4 hereof shall be deemed effective when all
of the conditions precedent set forth in Section 9 hereof are satisfied. Except
for the agreement to Forbear, the provisions of this Agreement shall survive any
Termination Event.
6. STOCK PURCHASE AGREEMENT.
6.1 Agent, Lenders and the Swingline Lender hereby consent to the
Stock Purchase Agreement and the transactions contemplated thereby, and waive
any Default or Event of Default which arose solely by virtue of the execution of
the Stock Purchase Agreement; provided that (a) the transactions contemplated by
the Stock Purchase Agreement are consummated concurrently with the execution and
delivery of this Agreement, (b) the FKP Buyers execute and deliver to the Agent
(i) a pledge agreement substantially similar to the Parent Pledge Agreement and
otherwise in form and substance satisfactory to Agent (the "FKP Stock Pledge
Agreement"), (ii) undated stock powers for all of the Stock of FKP to Agent and
(iii) UCC-1s covering the pledged Stock and related collateral, and (c) the
Contributing FKP Buyers execute and deliver to the Agent (i) a capital call
agreement, in form and substance satisfactory to Agent ("Capital Call
Agreement") obligating the Contributing FKP Buyers to make in cash equity
contributions and/or subordinated loans (subordinated to the Obligations
pursuant to a subordination agreement in form and substance satisfactory to
Agent) aggregating up to $3,000,000 under certain circumstances (which equity
contributions/subordinated loans shall be (in addition to the $2,000,000 to be
advanced as an equity contribution and/or subordinated loan at the closing of
the Stock Purchase Agreement) and shall be made from time to time in an amount
equal to the greater of $1,000,000, or the amount necessary (A) to maintain the
unused borrowing availability of FKP as provided in Section 5.2 hereof at a
level no less than $250,000, (B) to pay any media-related accounts payable of
FKP (including, without limitation, contractors involved in the production of
any advertisements or promotions and accounts payable to the media outlets in
which advertisements or promotions appear) to be paid on or before any deadline
imposed by state law, and (C) to pay any accounts payable that has been
outstanding for more than ninety (90) days since the applicable invoice date to
the extent such accounts payable exceed $50,000 of all accounts payable of FKP,
which Capital Call Agreement shall terminate upon the payment in full in cash of
all of the FKP Loan Obligations; PROVIDED, HOWEVER, that any breach of the
payment obligations of the Contributing FKP Buyers that arises prior to such
termination shall survive such termination, until such time as any amounts that
may be owed by the Contributing FKP Buyers to Parent have been paid in full,
(ii) one or more Control Agreements, in form and substance satisfactory to Agent
(each a "Control Agreement" and collectively the "Control Agreements") pledging
to the Agent, for the benefit of itself and the Lenders, as security for the
Obligations, investment securities with a market value of at least $3,000,000
(which securities may be used to fund the capital contributions required under
the Capital Call Agreement and which Control Agreements shall terminate upon the
Contributing FKP Buyers' performance of their obligations under the Capital Call
Agreement), and executed by the financial intermediaries which maintain the
accounts containing the investment securities covered by the Control Agreements.
6.2 Any portion of the purchase price or other amounts payable to
Parent under the Stock Purchase Agreement or any agreement, instrument or
document executed in connection therewith shall be promptly remitted to Agent
for application to any outstanding Obligations or as cash collateral for any
contingent Obligations.
6.3 Each of the FKP Buyers hereby agrees and acknowledges that (a) the
Stock of FKP which he is purchasing is subject to a valid, enforceable,
perfected first priority Lien granted to Agent (for itself and the Lenders) by
Parent pursuant to the Parent Pledge Agreement and by the FKP Buyers pursuant to
the FKP Stock Pledge Agreement as security for the Obligations outstanding from
time to time and (b) the Obligations shall continue to be secured by valid,
enforceable, perfected first priority liens (subject to Permitted Liens) on all
of the assets of FKP and the Non-FKP Borrowers.
6.4 FKP hereby agrees, and each of the FKP Buyers hereby agrees to use
commercially reasonable efforts to cause FKP, to pay in full in cash all FKP
Loan Obligations on or before the Termination Date.
6.5 Each of the parties hereby agrees that nothing in the Stock
Purchase Agreement shall be deemed to amend, waive or otherwise modify any
provisions of the Loan Agreement or the other Financing Agreements (it being
understood and agreed that this Agreement includes all of the amendments and
waivers to which Agent and the Lenders are agreeing in connection with the Stock
Purchase Agreement and the transactions contemplated thereby).
7. GENERAL RELEASE.
In consideration of, among other things, the forbearance and amendment provided
for herein, and any other financial accommodations which Agent and Lenders elect
to extend to Borrowers and/or the Parent, FKP forever waives, releases and
discharges any and all claims (including, without limitation, cross-claims,
counterclaims, rights of setoff and recoupment), causes of action, demands,
suits, costs, expenses and damages that it now has or hereafter may have, of
whatsoever nature and kind, whether known or unknown, whether now existing or
hereafter arising, whether arising at law or in equity (collectively, "Claims"),
against any Agent, any Lender and any Swingline Lender (in their respective
capacities as such or in any other capacity) and any of their respective
subsidiaries and affiliates, and each of their respective successors, assigns,
officers, directors, employees, agents, attorneys and other representatives
(collectively, the "Lender Releasees"), based in whole or in part on facts,
whether or not known, existing on or prior to the date of this Agreement. The
receipt by FKP of any Loans or other financial accommodations made by Agent,
Lenders and any Swingline Lender after the date hereof shall constitute a
ratification, adoption and confirmation by FKP that the foregoing general
release of all Claims of FKP against any Lender Releasee which are based in
whole or in part on facts, whether or not known or unknown, existing on or prior
to the date of receipt of any such Loans or other financial accommodations. The
provisions of this Section shall survive the termination of the Loan Agreement
and payment in full of the Obligations.
8. REPRESENTATIONS AND WARRANTIES.
Each Borrower and the Parent represents and warrants to Agent and to
each Lender as of the date hereof that:
8.1 there are no other Defaults or Events of Default under the Loan
Agreement and other Financing Agreements except for the Specified Defaults;
8.2 each Borrower and the Parent has full power, authority and legal
right to enter into this Agreement, and this Agreement has been duly authorized
by each of the Borrowers' and the Parent' Boards of Directors;
8.3 this Agreement, the Loan Agreement, and the other Financing
Agreements constitute the legal, valid and binding obligations of the Borrowers
and the Parent and are enforceable against the Borrowers and the Parent in
accordance with their respective terms;
8.4 Agent's and Lenders' security interests in the Collateral and the
Agent's Lien (as defined in the Parent Pledge Agreement) on the Pledged
Collateral (as defined in the Parent Pledge Agreement), continue to be valid,
binding and enforceable first priority liens which secure the Obligations. No
tax or judgment liens are currently of record against any Borrower or the
Parent; and
8.5 except for matters constituting the Specified Defaults, each of
the representations, warranties, covenants and agreements of the Borrowers and
the Parent set forth in the Loan Agreement is reaffirmed with the same force and
effect as if each were separately stated herein and made as of the date hereof.
9. CONDITIONS PRECEDENT. As conditions precedent to the effectiveness and
validity of the provisions of this Agreement, all of the following conditions
must be satisfied concurrently with or prior to the closing of the Stock
Purchase Agreement:
9.1 Each of the Borrowers, the Parent and the FKP Buyers will have
executed and delivered to Agent copies of this Agreement;
9.2 Any Borrower which is not a debtor in a bankruptcy case will have
delivered to Agent valid resolutions of the Board of Directors of such Borrower
authorizing the execution and delivery of this Agreement;
9.3 The bankruptcy court having jurisdiction over the Bankruptcy Case
of the Parent and any bankruptcy case of any Borrower will have entered an
order, in form and substance satisfactory to Agent, approving the Parent's and
any such Borrower's execution and delivery of, and performance under, this
Agreement, the Stock Purchase Agreement and all related agreements.
9.4 The Borrowers, the Parent and the FKP Buyers will have delivered
to Agent a fully executed copy of the Stock Purchase Agreement;
9.5 All representations and warranties of Borrowers and the Parent
contained herein shall be true and correct;
9.6 Agent, Lenders and the Swingline Lender will have executed and
delivered to Agent copies of this Agreement;
9.7 The Contributing FKP Buyers will have made a cash equity
contribution and/or subordinated loan of $2,000,000 to FKP (and to the extent
such payment is in the form of a subordinated loan, executed and delivered a
subordination agreement in favor of Agent and Lenders in form and substance
satisfactory to Agent), and the FKP Buyers will have executed and delivered to
Agent the FKP Stock Pledge Agreement (together with stock powers executed in
blank and UCC-1 financing statements), the Capital Call Agreement and the
Control Agreement, fully executed by all parties thereto other than the Agent
and the Lenders.
9.8 The documentation under which the Parent is granted junior liens
on the Stock and assets of FKP shall contain subordination provisions
satisfactory to Agent and shall otherwise be in form and substance satisfactory
to Agent.
10. COVENANTS.
10.1 [Intentionally Omitted]
10.2 On the first Business Day of each week until the FKP Loan
Obligations are paid in full in cash, FKP shall deliver to Agent a report (in
form and substance satisfactory to Agent) setting forth for the immediately
preceding Friday (a) the FKP Borrowing Base, (b) an aging of the accounts
payable of FKP (broken down by media-related and non-media-related accounts
payable), (c) (i) the aggregate amount (expressed in dollars and as a percentage
of all outstanding media-related or non-media-related accounts payable, as
applicable) of accounts payable (broken down by media-related and
non-media-related accounts payable) which have been outstanding for more than 90
days from the applicable invoice date, (d) a separate aging of the media-related
accounts payable the payment of which is governed by statute, with a separate
listing of all such accounts payable which have been outstanding for more than
30 days from the applicable invoice date, and (e) any other information
reasonably requested by Agent from time to time relating to any accounts payable
or other liabilities of FKP or to any Collateral owned by FKP.
10.3 On the first Business Day of each week, FKP shall provide the
Agent with a report setting forth its cash flow forecast (in form and substance
satisfactory to Agent) for the immediately following thirty (30) day period or
such other period as requested by Agent.
10.4 FKP (a) shall pay each account payable required by statute to be
paid within a certain time period to be paid within such time period and (b)
shall not permit at any time the aggregate amount of accounts payable
outstanding for more than 90 days after the applicable invoice date to exceed
$50,000 of all outstanding accounts payable.
11. GENERAL PROVISIONS.
11.1 ACCURACY OF RECITALS. The recitals to this Agreement are true and
correct.
11.2 INTEGRATION. This Agreement, the Financing Agreements, and the
other written agreements, instruments and documents entered into in connection
therewith (collectively, the "Borrower/Lender Documents") set forth in full the
terms of agreement between the parties and are intended as the full, complete
and exclusive contract governing the relationship between the parties,
superseding all other discussions, promises, representations, warranties,
agreements and understandings between the parties with respect thereto.
11.3 AMENDMENT. The Loan Agreement, as amended by Sections 5 and 11.18
hereof, may only be amended or modified in accordance with the terms of Section
13 of the Loan Agreement. No term of this Agreement may be modified or amended
except in a writing signed by the party against whom enforcement of the
modification or amendment is sought.
11.4 NO WAIVER. Agent's or any Lender's failure, at any time or times,
to require strict performance by any of the parties hereto of any provision of
this Agreement and any of the other Financing Agreements shall not waive, affect
or diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.3 hereof, none of the
undertakings, agreements, warranties, covenants and representations of any of
the parties hereto contained in this Agreement and no Default or Event of
Default by any of the parties hereto shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders, and directed to Borrowers specifying
such suspension or waiver. Except as expressly provided to the contrary in this
Agreement, all the terms, conditions and provisions of the Borrower/Lender
Documents shall continue in full force and effect.
11.5 APPLICABLE LAW; SEVERABILITY. This Agreement has been submitted
to the Agent and Conseco at its office in Illinois, and this Agreement shall not
be binding upon the Agent or any Lender or effective until accepted by the Agent
and each Lender and shall be construed in all respects in accordance with, and
governed by, all of the provisions of the Code and by the other internal laws
(as opposed to conflicts of law provisions) of the State of Illinois, except for
the perfection and enforcement of Liens in other jurisdictions which shall be
governed by the laws of those jurisdictions. Whenever possible, each provision
of this Agreement shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
11.6 SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND. EACH OF THE
PARTIES HERETO SUBMIT TO THE JURISDICTION OF THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK, IF APPLICABLE, AND, TO THE EXTENT SUCH
BANKRUPTCY COURT HAS NO SUCH JURISDICTION, TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS, AND
IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT MAY
BE LITIGATED IN SUCH COURTS, AND EACH OF THE PARTIES HERETO WAIVES ANY OBJECTION
WHICH IT OR HE MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE
CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND EACH WAIVES PERSONAL SERVICE OF
ANY AND ALL PROCESS UPON IT OR HIM, AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT OR HIM AT THE ADDRESS SET
FORTH IN SUBSECTION 10.12 OF THE LOAN AGREEMENT OR THE FKP STOCK PLEDGE
AGREEMENT, AS APPLICABLE, AND THAT SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR FIVE (5) DAYS AFTER THE SAME
SHALL HAVE BEEN POSTED TO SUCH PERSON'S ADDRESS. THE BORROWERS, THE PARENT AND
THE FKP BUYERS DESIGNATE AND APPOINT CT CORPORATION SYSTEM, 208 SOUTH LASALLE
STREET, CHICAGO, ILLINOIS 60604 AND SUCH OTHER PERSON AS MAY HEREAFTER BE
SELECTED BY THE BORROWERS, THE PARENT AND THE FKP BUYERS WHICH IRREVOCABLY
AGREES IN WRITING TO SO SERVE AS THEIR AGENT TO RECEIVE ON THEIR BEHALF SERVICE
OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING
HEREBY ACKNOWLEDGED BY THE BORROWERS, THE PARENT AND THE FKP BUYERS TO BE
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO
SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE BORROWERS, THE PARENT AND THE
FKP BUYERS AT THE ADDRESS PROVIDED IN SUBSECTION 10.12 OF THE LOAN AGREEMENT OR
THE FKP STOCK PLEDGE AGREEMENT, AS APPLICABLE, EXCEPT THAT UNLESS OTHERWISE
PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE
VALIDITY OF SERVICES OF PROCESS. IF ANY AGENT APPOINTED BY THE BORROWERS, THE
PARENT AND THE FKP BUYERS REFUSES TO ACCEPT SERVICE, THE BORROWERS, THE PARENT
AND THE FKP BUYERS HEREBY AGREE THAT SERVICE UPON IT OR HIM BY MAIL OR OTHERWISE
IN ACCORDANCE WITH SUBSECTION 10.12 OF THE LOAN AGREEMENT OR THE FKP STOCK
PLEDGE AGREEMENT, AS APPLICABLE, SHALL CONSTITUTE SUFFICIENT NOTICE. EACH OF THE
PARTIES HERETO ACKNOWLEDGES THAT THE TIME AND EXPENSE REQUIRED FOR TRIAL BY JURY
EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY WAIVE, TO THE
EXTENT PERMITTED BY LAW, TRIAL BY JURY, AND WAIVES ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE
AGENT OR ANY LENDER. NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF
THE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWERS, THE PARENT, THE FKP BUYERS OR THEIR RESPECTIVE
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION TO THE EXTENT NECESSARY TO
ENFORCE ITS LIENS AGAINST PROPERTY LOCATED IN SUCH JURISDICTIONS. THE BORROWERS,
THE PARENT AND THE FKP BUYERS WAIVE ANY RIGHT THEY MAY HAVE TO CLAIM OR RECOVER
IN ANY LITIGATION REFERRED TO ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. NOTHING HEREIN SHALL LIMIT THE JURISDICTION OF THE BANKRUPTCY COURT.
11.7 PAYMENT OF EXPENSES. Borrowers acknowledge and reaffirm their
joint and several obligation under subsection 2.11 of the Loan Agreement to,
among other things, pay all costs and fees in conjunction with the negotiations,
preparation and enforcement of this Agreement.
11.8 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.9 TIME OF ESSENCE. Time is of the essence in the payment and
performance of each of the obligations of the Borrowers and the Parent and with
respect to all conditions to be satisfied by the Borrowers and the Parent.
11.10 ADVICE OF COUNSEL. Each of the parties represents to each other
party hereto that it has discussed this Agreement with its counsel.
11.11 NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
11.12 FURTHER ASSURANCES. Each of the Borrowers, the Parent and the
FKP Buyers agrees to take all further actions and execute all further documents
as Agent may from time to time reasonably request to carry out the transactions
contemplated by this Agreement.
11.13 NOTICES. All notices, requests and demands to or upon the
respective parties hereto shall be given in accordance with subsection 10.12 of
the Loan Agreement or the FKP Stock Pledge Agreement, as applicable.
11.14 ACCEPTANCE OF FACSIMILE SIGNATURES. The parties agree that this
Agreement will be considered signed when the signature of a party is delivered
by facsimile transmission. Such facsimile signature shall be treated in all
respects as having the same effect as an original signature.
11.15 SECTION TITLES. The Section titles contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
11.16 SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
shall inure to the benefit of all Borrowers, Parent, FKP Buyers, Agent, Lenders,
Swingline Lenders and their respective successors and assigns (including, in the
case of any Borrower or the Parent, a debtor-in-possession or Chapter 7 or
Chapter 11 Trustee on behalf of such Borrower or the Parent), except as
otherwise provided herein. No Borrower or the Parent may assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder without the prior express written consent of Agent and Lenders. Any
such purported assignment, transfer, hypothecation or other conveyance by
Borrower or the Parent without the prior express written consent of Agent and
Lenders shall be void. The terms and provisions of this Agreement are for the
purpose of defining the relative rights and obligations of each of the
Borrowers, the Parent, the FKP Buyers, the Agent and Lenders with respect to the
transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement.
11.17 REFERENCE TO AND EFFECT UPON THE LOAN AGREEMENT.
(a) Except as specifically amended above, the Loan Agreement and
the other Financing Agreements shall remain in full force and effect as to each
of the parties thereto (including, without limitation, FKP) and are hereby
ratified and confirmed.
(b) The execution, delivery and effectiveness of this Agreement
shall not operate as a waiver of any right, power or remedy of Agent or any
Lender under the Loan Agreement or any Loan Document, nor constitute a waiver of
any provision of the Loan Agreement or any Loan Document, except as specifically
set forth herein. Upon the effectiveness of this Agreement, (i) each reference
in the Loan Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of similar import shall mean and be a reference to the Loan Agreement as
amended hereby, and (ii) each reference in the Loan Agreement or any Financing
Agreement to the "Financing Agreements" or words of similar import shall include
this Agreement and the FKP Buyer Agreements.
11.18 EFFECT OF CASH COLLATERAL ORDER; CROSS GUARANTEES. The parties
hereto agree and acknowledge that all of the provisions of the Cash Collateral
Order, including but not limited to the provisions of paragraph 3 of the Cash
Collateral Order, remain in full force and effect.
11.19 PRESERVATION OF RIGHTS. Nothing in this Agreement, the Financing
Agreements, the FKP Buyer Agreements or the Stock Purchase Agreement constitutes
an admission by the Debtors or the Official Committee of Unsecured Creditors in
the Bankruptcy Cases concerning the amount of Lenders' claim against the Debtors
in the Bankruptcy Cases or the validity, enforceability or non-avoidability of
Lenders' liens against the Debtors, and nothing in any of said documents is
intended to be inconsistent with the terms of the Cash Collateral Order or the
rights of the Debtors and the Official Committee of Unsecured Creditors in the
Bankruptcy Cases to challenge the amount of Lenders' claim against the Debtors
in the Bankruptcy Cases or the validity, enforceability or non-avoidability of
Lenders' liens against the Debtors.
[SIGNATURE PAGES FOLLOW]
<PAGE>
IN WITNESS WHEREOF, each of the parties have caused this Agreement to
be executed and delivered by its duly authorized officer as of the date first
above written.
---------------------------
WILLIAM H. FOGARTY
---------------------------
RICHARD E. KLEIN
---------------------------
ROGER BECKSTEAD
---------------------------
THOMAS F. MONROE
---------------------------
LARRY KELLEY
ZYX INC. (formerly LOIS/USA WEST INC.)
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
LOIS/USA CHICAGO INC.
By:
--------------------------
Name:
--------------------------
Title:
-------------------------
[SIGNATURE PAGE TO FORBEARANCE AND AMENDMENT AGREEMENT]
LOIS/USA NEW YORK INC.
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
FOGARTY & KLEIN, INC.
By:
----------------------------
Name:
---------------------------
Title:
--------------------------
YEAR 2K COMMUNICATIONS, INC.
By:
---------------------------
Name:
---------------------------
Title:
--------------------------
LOIS/USA INC.
By:
----------------------------
Name:
---------------------------
Title:
--------------------------
CONSECO FINANCE SERVICING CORP.,
as Agent, Lender and Swingline Lender
By:
----------------------------
Name:
---------------------------
Title:
--------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:
----------------------------
Name:
---------------------------
Title:
--------------------------
[SIGNATURE PAGE TO FORBEARANCE AND AMENDMENT AGREEMENT]
