Exhibit 10.1
FIRST AMENDMENT TO LOAN AND
SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND
SECURITY AGREEMENT (“First Amendment”) is made as of
this 11th day of August, 2008, by and among RBS BUSINESS CAPITAL, a
division of RBS Asset Finance, Inc., a New York corporation
(“RBS”), with an office at 71 South Wacker Drive, Suite
2800, Chicago, Illinois 60606, individually as a Lender and as
Agent (“Agent”) for itself and any other financial
institution which is or becomes a party to the Loan Agreement
referred to below (each such financial institution, including RBS,
is referred to hereinafter individually as a “Lender”
and collectively as the “Lenders”), the LENDERS and
REWARDS NETWORK, INC., a Delaware corporation (“RNI”),
with its chief executive office and principal place of business at
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606 and
each domestic subsidiary of RNI signatory hereto (RNI and each such
subsidiary are sometimes hereinafter referred to individually as a
“Borrower” and collectively as
“Borrowers”).
WHEREAS, Agent, Lenders and
Borrowers and RNI entered into a certain Loan and Security
Agreement dated November 6, 2007, by and among Borrowers,
Lenders and Agent (said Loan and Security Agreement, as amended
from time to time, is hereinafter referred to as the “Loan
Agreement”); and
WHEREAS, Borrowers, Agent and
Lenders desire to amend certain provisions of the Loan Agreement
pursuant to the terms hereof.
NOW, THEREFORE, in consideration of
the premises, the mutual covenants and agreements herein contained,
and any extension of credit heretofore, now or hereafter made by
Agent and Lenders to Borrower, the parties hereto agree as
follows:
1. Definitions . All
capitalized terms used herein without definition shall have the
meanings contained in the Loan Agreement.
2. Additional and Amended
Definitions . The following definitions of
“Acquisition,” “Book Value of Eligible Dining
Credits (or Dining Credits),” “First Amendment,”
“Net Amount of Eligible Dining Credits (or Dining
Credits),” “Net Orderly Liquidation Value,”
“Permitted Acquisition,” “Retail Amount of
Eligible Dining Credits (or Dining Credits”) and “Total
Consideration” are hereby inserted into Exhibit A to
the Loan Agreement. The definitions of “Applicable
Margin,” “Borrowing Base,” “Revolving
Credit Maximum Amount” and “Total Credit
Facility” are hereby deleted from Exhibit A to the Loan
Agreement and the following are restated in their stead:
“ Acquisition –
the acquisition by a Person, in a single transaction or in a series
of related transactions, of (i) all or any substantial portion
of the Property of another Person, (ii) all or a portion of a
division or operating group of another Person, or (iii) all or
a portion of the Securities of another Person, in each case whether
or not involving a merger or consolidation with such other Person
or whether for cash, property, services, assumption of
Indebtedness, securities or otherwise.
* * *
Applicable
Margin – with respect to Prime
Rate Revolving Loans: one-half percent ( 1
/
2 %) and with respect to LIBOR
Revolving Loans: three percent (3.00%).
* * *
Book Value of Eligible Dining
Credits (or Dining Credits) – the value of Eligible Dining Credits (or
Dining Credits) as reflected on Borrowers’ books and records
in accordance with GAAP.
* * *
Borrowing Base
– as at any date of
determination thereof, an amount equal to the lesser of:
(i) the Revolving Credit Maximum
Amount; and
(ii) an amount (the
“Collateral Borrowing Base”) equal to the sum
of
(a) 85% of the net amount of
Eligible Accounts (other than Eligible Dining Credits and Eligible
RCR Loans) outstanding at such date; plus
(b) the lesser of (x) 50% of
the Net Amount of Eligible Dining Credits and (y) 85% the Net
Orderly Liquidation Value of Dining Credits outstanding at such
time.
The limitations set forth in the
immediately preceding sentence and each of the advance rates set
forth above may be adjusted downward by Agent, as Agent shall deem
necessary or appropriate in Agent’s Judgment. For purposes
hereof (including the financial covenants contained in Exhibit
8.3), (x) the net amount of Eligible Accounts at any time
shall be the face amount of such Eligible Accounts less any and all
returns, rebates, discounts (which may, at Agent’s option, be
calculated on shortest terms), credits, allowances or excise taxes
of any nature at any time issued, owing, claimed by Account
Debtors, granted, outstanding or payable in connection with such
Accounts at such time and (y) the “Net Amount of
Eligible Dining Credits (or Dining Credits)” shall be the
Book Value of such Eligible Dining Credits or Dining Credits less
any reserve established by a Borrower with respect to such Eligible
Dining Credits or Dining Credits as reflected on Borrowers’
financial statements in accordance with GAAP and Borrowers’
historical practice. Further, Borrowers acknowledge that the Net
Amount of Eligible Dining Credits shall be computed after netting
out unfunded advances owed to Dining Credit Account Debtors under
applicable Dining Contracts.
* * *
First Amendment
– that certain First Amendment
to Loan and Security Agreement dated as of August 11, 2008 by
and among Borrowers, Agent and Lenders.
* * *
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Net Amount of Eligible Dining
Credits (or Dining Credits) – as defined in the definition of
Borrowing Base.
* * *
Net Orderly Liquidation
Value – means, with
respect to Borrower’s Dining Credits, the net orderly
liquidation value of such assets determined in accordance with the
methodology used in that certain appraisal of such assets by
Blackman Kallick dated on or about July 31, 2008.
* * *
Permitted Acquisition
– an Acquisition by any
Borrower or any Subsidiary, provided that (i) the
Property acquired (or the Property of the Person acquired) in such
Acquisition is used or useful in the same line of business as
Borrowers and their Subsidiaries were engaged in on the Closing
Date or in similar or complementary businesses providing services
to the restaurant and hospitality industry, (ii) Agent shall
have received not less than thirty (30) days prior notice of
such Acquisition, which notice shall contain a summary, in
reasonable detail, of the acquisition terms and conditions,
including price, and Borrowers’ projections prepared in
connection with such Acquisition, (iii) at or prior to the
closing of such Permitted Acquisition, Agent shall be granted a
first priority perfected Lien (subject to Permitted Liens) in the
assets and capital stock or other equity interests of such
acquisition target or Subsidiary and such acquisition target or
Subsidiary shall join this Agreement and the other Loan Documents
pursuant to the terms of subsection 8.1.8; (iv) in the case of
an Acquisition of the Securities of another Person, the board of
directors (or other comparable governing body) of such other Person
shall have duly approved such Acquisition, (v) Borrower
Representative shall have delivered to Agent a pro forma compliance
certificate demonstrating that, upon giving effect to such
Acquisition on a pro forma basis, Borrowers would be in compliance
with the financial covenants set forth in Exhibit 8.3 as of the
most recent calendar month for which the Borrowers have delivered
financial statements pursuant to subsection 8.1.3(ii) and no other
Default or Event of Default exists or would be caused by such
Acquisition, (vi) the representations and warranties made by
Borrowers in each Loan Document shall be true and correct in all
material respects at and as if made as of the date of such
Acquisition (after giving effect thereto and after giving effect to
any amendments to the Exhibits to the Agreement provided by
Borrowers to Agent in connection with such Acquisition and in
accordance with Section 7.2) except to the extent such
representations and warranties expressly relate to an earlier date,
(vii) if such transaction involves the purchase of an interest
in a partnership between any Borrower (or a Subsidiary of any
Borrower) as a general partner and entities unaffiliated with such
Borrower or such Subsidiary as the other partners, such transaction
shall be effected by having such equity interest acquired by a
corporate holding company directly or indirectly wholly owned by
such Borrower newly formed for the sole purpose of effecting such
transaction, (viii) the Total Consideration paid by any
Borrower or any Subsidiary for any Acquisition (or any series of
related Acquisitions) shall not exceed
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$3,000,000, (ix) the Total
Consideration paid by Borrowers and their Subsidiaries for all
Acquisitions occurring in any consecutive twelve (12) month period
shall not exceed $5,000,000 and in the aggregate prior to the last
day of the Term shall not exceed $9,000,000, (x) the business
and assets acquired by a Borrower or any Subsidiary, or in the case
of a joint venture, formed, in such Acquisition shall be free and
clear of all Liens (other than Permitted Liens), and
(xi) (a) for each of the thirty (30) days prior to
the consummation of the Acquisition, calculated to give effect to
such Acquisition and the payment of the Total Consideration,
Availability on each such day shall equal or exceed $15,000,000,
and (b) immediately following the consummation of the
Acquisition, after giving effect to such Acquisition and the
payment of the Total Consideration, Availability shall equal or
exceed $15,000,000.
* * *
Retail Amount of Eligible Dining
Credits (or Dining Credits) – the aggregate amounts due under
outstanding Dining Contracts.
* * *
Revolving Credit Maximum
Amount –
Twenty-Five Million Dollars ($25,000,000), as such amount may be
increased from time to time pursuant to the Agreement.
* * *
Total Consideration
– means, with respect to any
Acquisition, all cash and non-cash consideration, including the
amount of Indebtedness assumed by the buyer and the amount of
Indebtedness evidenced by notes issued by the buyer to the seller,
the maximum amount payable during the Term in connection with any
deferred purchase price obligation (including any earn-out
obligation) and the value of any Securities of any Borrower or any
Subsidiary issued to the seller in connection with such
Acquisition.
* * *
Total Credit Facility
– Twenty-Five Million Dollars
($25,000,000), as such amount may be increased from time to time
pursuant to the Agreement.”
3. Total Credit Facility .
The first paragraph of Section 1 of the Loan Agreement is
hereby deleted and the following is inserted in its
stead:
“SECTION 1. CREDIT
FACILITY.
Subject to the terms and conditions
of, and in reliance upon the representations and warranties made
in, this Agreement and the other Loan Documents, Lenders agree to
make a credit facility of up to the Total Credit Facility available
upon Borrowers’ request therefor, as
follows:”
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4. Use of Proceeds .
Subsection 1.1.3 of the Loan Agreement is hereby deleted and the
following is inserted in its stead:
“1.1.3 Use of Proceeds
. The Revolving Credit Loans shall be used solely for
(i) Borrowers’ general operating capital needs in a
manner consistent with the provisions of this Agreement and all
applicable laws, (ii) to make Distributions or prepayments or
repurchases of Convertible Debentures as provided in subsections
8.2.6 and 8.2.7, (iii) to fund Permitted Acquisitions and
(iv) other purposes permitted under this
Agreement.”
5. Unused Line Fee .
Section 2.5 of the Loan Agreement is hereby deleted and the
following is inserted in its stead:
“2.5 Unused Line Fee .
Borrowers shall pay to Agent, for the ratable benefit of Lenders, a
fee (the “Unused Line Fee”) equal to 0.25% per
annum for periods prior to August 11, 2008 and 0.375% per
annum thereafter multiplied by the average daily amount by which
the Revolving Credit Maximum Amount exceeds the sum of (i) the
outstanding principal balance of the Revolving Credit Loans
plus (ii) the LC Amount. The Unused Line Fee shall be
payable monthly in arrears on the first day of each month
hereafter.”
6. Audit Fees .
Section 2.7 of the Loan Agreement is hereby deleted and the
following is inserted in its stead:
“2.7 Audit Fees .
Borrowers shall pay to Agent audit fees in accordance with
Agent’s current schedule of fees in effect from time to time
in connection with audits of the books and records and Properties
of Borrowers and their Subsidiaries and such other matters as Agent
shall deem appropriate in its reasonable credit judgment, plus all
reasonable out-of-pocket expenses incurred by Agent in connection
with such audits; provided that so long as no Event of
Default has occurred and is continuing, Borrowers shall not be
liable for such audit fees incurred in connection with more than
three (3) such audits during any fiscal year, whether such
audits are conducted by employees of Agent or by third parties
hired by Agent. Such audit fees and out-of-pocket expenses shall be
payable on the first day of the month following the date of
issuance by Agent of a request for payment thereof to Borrowers
upon demand therefor by Agent from time to time. Agent may, in its
discretion, provide for the payment of such amounts by making
appropriate Revolving Credit Loans to Borrowers and charging
Borrowers’ Loan Account therefor.”
7. Collateral Protection
Expenses; Appraisals . Section 2.10 of the Loan Agreement
is hereby deleted and the following is inserted in its
stead:
“2.10 Collateral Protection
Expenses; Appraisals . All out-of-pocket expenses incurred in
protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral, and any and all excise, property,
sales, and use taxes imposed by any state, federal, or local
authority on any of the Collateral or in respect of the sale
thereof shall be borne and paid by Borrowers. If Borrowers fail to
promptly pay any portion thereof when due, Agent may, at its
option, but shall not be required to, pay the same and
charge
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Borrowers therefor; provided
that the foregoing shall not prevent Borrowers from contesting any
such item in good faith and by appropriate proceedings, so long as
any such contest does not materially affect Agent’s Lien on
the applicable Collateral. Additionally, from time to time, Agent
may, at Borrowers’ expense, obtain
