Exhibit 4.7
NOVEMBER 21, 2008
Banks.com, Inc. (formerly known as
InterSearch Group, Inc.)
222 Kearny Street
San Francisco, California 94108
Attention: Chief Financial Officer
Re: Waiver of Financial Covenant
Defaults
Ladies and Gentlemen:
Reference is made to the Investment
Agreement, dated as of July 21, 2006, as amended (the “
Investment Agreement ”), among Banks.com, Inc.
(formerly known as InterSearch Group, Inc. and referred to as the
“ Company ”), CapitalSouth Partners Fund I
Limited Partnership (“ CapitalSouth I ”),
CapitalSouth Partners Fund II Limited Partnership (“
CapitalSouth II ”) and Harbert Mezzanine Partners II
SBIC, L.P. (“ Harbert ” and together with
CapitalSouth I and CapitalSouth II, collectively, the “
Lenders ”). Capitalized terms used herein without
definition shall have the meanings given to them in the Investment
Agreement.
The Company has advised the Lenders
that Events of Default have occurred and are continuing under
Sections 7.1 and 7.2 of the Investment Agreement (collectively, the
“ Specified Events of Default ”).
The Lenders hereby waive the
Specified Events of Default for the end of the fiscal quarter ended
September 30, 2008 and for the end of the fiscal quarter
ending December 31, 2008 and for the end of the fiscal quarter
ending March 31, 2009 (the testing periods ending on such
dates being referred to as the “ Specified Periods
”). In addition, the Lenders hereby waive any default
interest that may be charged during the Specified
Periods).
It is understood (and by executing
this letter in the space indicated below, the Company acknowledges)
that the foregoing waiver (a) relates only to the fiscal
quarters ending on or before December 31 2009 and
March 31, 2009 and shall expire as of April 1, 2009 and
shall not apply to any breach of Section 7.1 or 7.2 as of the
end of the fiscal quarter ending June 30, 2009 or any fiscal
quarter thereafter; and (b) shall not be deemed to relate to
any breach of any other covenant, warranty or other undertaking of
the Company under the Investment Agreement (including without
limitation any undertakings of the Company under Article II thereof
or any other covenants contained in Articles VI or VIII thereof)
other than the Specified Events of Default for the Specified
Periods or any undertaking under this letter agreement. The Company
further acknowledges that, except as expressly provided above, each
and every term and condition of the Investment Agreement and of
each Investment Document remains unchanged and in full force and
effect. Accordingly, any breach of any covenant, warranty or
undertaking of the Company under the Investment Agreement (other
than in respect of the Specified Events of Default for the
Specified Periods) shall constitute an Event of Default entitling
the Lenders to exercise any and all remedies under the Investment
Documents, subject to the terms thereof.
The foregoing waiver is subject to
the following conditions subsequent:
1. The Company shall not affect a
borrowing from the Senior Lender under the Senior Loan Agreement
without the prior written consent of the Lenders.
2. On or before December 31,
2008, the Company shall have entered into an amendment of the
Investment Agreement as well as a Tax Assignment Agreement (in form
and substance satisfactory to the Lenders in their sole discretion)
that: (a) changes the Maturity Date there under to
June 30, 2010, (b) requires that the Company prepay the
principal of the Obligations with 100% of the proceeds of any
Federal or state tax refund (to the extend such state refund
exceeds five thousand dollars ($5,000.00) received by the Company,
and (c) requires the continued timely payment of all scheduled
principal and interest due from the Company to the Lenders as
currently scheduled.
3. On or before December 1,
2008, the Company shall deliver to the Lenders all documents
required under Section 6.8 of the Investment Agreement in
respect of the Company’s new Subsidiary, MyStockFund
Securities, Inc.
4. On or before March 31, 2009,
on a commercially reasonable best efforts basis, the Company shall
sell its domain name—“look.com” for a minimum net
amount of $500,000.00; 100% of the net amount received by the
Company from such sale shall be remitted to the Lenders as a
prepayment of the principal of the Obligations within three
(3) days after receipt by the Company.
5. On or before December 1,,
2008, the Company shall prepay the principal of the Obligations
with 100% of the proceeds received by the Company from the sale of
the domain name – “Summercamps.com.”
6. On or before December 31,
2008, (a) Mr. O’Donnell shall invest a minimum of
$300,000.00 in the Company (such investment to be in form and
substance satisfactory to Lenders in their sole discretion), and
(b) the Company shall on a commercially reasonable basis,
target an additional capital raise in the amount of $200,000.00
(such additional targeted investment to be in form and substance
satisfactory to Lenders in their sole discretion).
Contemporaneously with the above referenced investments, the
Company agrees to pay all of the Lenders’ legal fees and
expenses associated with the transaction.
7. On or before December 31,
2008, the Company shall have entered into a definitive engagement
(in form and substance satisfactory to the Lenders) with an
investment bank or investment banker that is acceptable to the
Lenders, for the purpose of proactively presenting the Company for
a timely capital raise and/or merger and/or sale of all or part of
the Company; Company agrees that the Lenders will have full and
complete access to the bankers regarding the status of all
strategic and capital efforts undertaken on behalf of the
Company.
8. Contemporaneously with the
execution of this waiver, Company agrees to wire funds to the
Lenders’ counsel (Robinson Bradshaw & Hinson) for
all legal fees incurred by the Lenders to date.
9. For purposes of calculating the
Financial Covenants under Sections 7.1 and 7.2 of the Investment
Agreement, Lenders agree that the definition of EBITDA shall
exclude any non-cash write-down of goodwill; amendments to the
Investment Agreement reflecting this change will be provided prior
to December 31, 2008 and any fees or expenses incurred by the
Lenders (including legal fees and expenses) in connection therewith
shall be paid by the Company.
10. On or before December 1,
2008, the Company will provide the Lenders with copies of
Mr. O’Donnell’s American Express Credit Card bills
for the months of June, July, August, September and October 2008,
with accompanying detailed explanations regarding charges incurred
on such account on behalf of the Company.
11. Company agrees that it will
provide Lenders with unfettered access to the Company’s
accounting firm and shall instruct such accounting firm or firms to
provide all requested information to the Lenders regarding all
Federal and state income tax refunds referenced in paragraph 2
above.
The Company acknowledges that any
failure of the Company to satisfy any of the foregoing conditions
subsequent shall constitute an Event of Default, and shall entitle
the Lenders to exercise any and all of their remedies under the
Investment Documents, subject to the terms thereof.
As an inducement to obtain the
waiver provided for herein, the Company represents and warrants to
the Lenders that, after giving effect to the consent and waiver
provided for herein, (i) each of the representations and
warranties of the Borrower contained in the Investment Agreement
and in the other Investment Documents is true and correct on and as
of the date hereof with the same effect as if made on and as of the
date hereof (except to the extent any such representation or
warranty is expressly stated to have been made as of a specific
date, in which case such representation or warranty is true and
correct as of such date), and (ii) no Default or Event of
Default has occurred and is continuing.
This letter supersedes those certain
letters from the Lenders to the Company dated as of July 18,
2008 and September 17, 2008 with respect to the Specified
Events of Default.
This letter may be executed in any
number of counterparts and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be
an original, but all of which shall together constitute one and the
same instrument.
If you are in agreement with the
terms of this letter, please indicate your acceptance by signing
below.
