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LOAN AND SECURITY AGREEMENT
by and among
BMC HOLDINGS, LLC,
as Borrower,
and
BRILL MEDIA COMPANY, LLC,
BRILL MEDIA MANAGEMENT, INC., and
BMC HOLDINGS, INC.
as Loan Agreement Guarantors,
and
FOOTHILL CAPITAL CORPORATION,
as Lender
Dated as of October 25, 1999
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TABLE OF CONTENTS
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1. DEFINITIONS AND CONSTRUCTION................................................................................1
1.1 Definitions...........................................................................................1
1.2 Accounting Terms.....................................................................................25
1.3 Code.................................................................................................25
1.4 Construction.........................................................................................25
1.5 Schedules, Exhibits, and Annexes.....................................................................26
2. LOAN AND TERMS OF PAYMENT..................................................................................26
2.1 Revolving Facility...................................................................................26
2.2 Term Loan Facility...................................................................................26
2.3 Payments.............................................................................................26
2.4 Overadvances.........................................................................................27
2.5 Interest: Rates, Payments, and Calculations.........................................................28
2.6 [Intentionally Deleted]..............................................................................29
2.7 Designated Account...................................................................................29
2.8 Maintenance of Loan Account; Statements of Obligations...............................................29
2.9 Fees.................................................................................................30
3. CONDITIONS; TERM OF AGREEMENT..............................................................................30
3.1 Conditions Precedent to the Initial Advance and Term Loan............................................30
3.2 Conditions Precedent to all Loans....................................................................31
3.3 Condition Subsequent.................................................................................32
3.4 Term; Automatic Renewal..............................................................................32
3.5 Effect of Termination................................................................................33
3.6 Early Termination by Borrower........................................................................33
3.7 Termination Upon Event of Default....................................................................33
4. CREATION OF SECURITY INTEREST..............................................................................34
4.1 Grant of Security Interest...........................................................................34
4.2 Negotiable Collateral................................................................................34
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral...............................34
4.4 Delivery of Additional Documentation Required........................................................35
4.5 Power of Attorney....................................................................................35
4.6 Right to Inspect.....................................................................................36
4.7 Control Agreements...................................................................................36
5. REPRESENTATIONS AND WARRANTIES.............................................................................36
5.1 No Encumbrances......................................................................................37
5.2 Intercompany Loan Agreement..........................................................................37
5.3 Real Property Collateral.............................................................................37
5.4 Equipment............................................................................................37
5.5 Location of Inventory and Equipment..................................................................37
5.6 Intercompany Loan Records............................................................................37
5.7 Location of Chief Executive Office; FEIN.............................................................37
5.8 Due Organization and Qualification; Subsidiaries.....................................................38
5.9 Due Authorization; No Conflict.......................................................................38
5.10 Litigation...........................................................................................39
5.11 No Material Adverse Change...........................................................................40
5.12 No Fraudulent Transfer...............................................................................40
5.13 Employee Benefits....................................................................................40
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5.14 Environmental Condition..............................................................................40
5.15 Brokerage Fees.......................................................................................41
5.16 Permits and other Intellectual Property..............................................................41
5.17 Leases...............................................................................................41
5.18 FCC Compliance; Licenses.............................................................................41
5.19 Transactions with Affiliates.........................................................................42
5.20 Year 2000 Compliance.................................................................................42
6. AFFIRMATIVE COVENANTS......................................................................................43
6.1 Accounting System....................................................................................43
6.2 Collateral Reporting.................................................................................43
6.3 Financial Statements, Reports, Certificates..........................................................43
6.4 Tax Returns..........................................................................................44
6.5 Guarantor Reports....................................................................................45
6.6 Corporate Existence..................................................................................45
6.7 Application of Payments on Secured Term Notes........................................................45
6.8 Maintenance of Equipment.............................................................................45
6.9 Taxes................................................................................................45
6.10 Insurance............................................................................................46
6.11 No Setoffs or Counterclaims..........................................................................47
6.12 Location of Inventory and Equipment..................................................................47
6.13 Compliance with Laws.................................................................................47
6.14 Employee Benefits....................................................................................48
6.15 Leases...............................................................................................48
6.16 Broker Commissions...................................................................................49
6.17 [Intentionally Deleted]..............................................................................49
6.18 Intellectual Property................................................................................49
6.19 Regulatory Consents..................................................................................49
7. NEGATIVE COVENANTS.........................................................................................50
7.1 Indebtedness.........................................................................................50
7.2 Liens................................................................................................53
7.3 Asset Dispositions; Restrictions on Fundamental Changes..............................................53
7.4 [Intentionally Deleted]..............................................................................55
7.5 [Intentionally Deleted]..............................................................................55
7.6 Guarantee............................................................................................55
7.7 Nature of Business...................................................................................55
7.8 Restricted Payments..................................................................................55
7.9 Change of Control....................................................................................56
7.10 Amendments...........................................................................................56
7.11 [Intentionally Deleted]..............................................................................57
7.12 Accounting Methods...................................................................................57
7.13 [Intentionally Deleted]..............................................................................57
7.14 Transactions with Affiliates.........................................................................57
7.15 Suspension...........................................................................................57
7.16 [Intentionally Deleted]..............................................................................57
7.17 Use of Proceeds......................................................................................57
7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees...................58
7.19 No Prohibited Transactions Under ERISA...............................................................58
7.20 Financial Covenant...................................................................................59
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8. EVENTS OF DEFAULT..........................................................................................59
9. Foothill's RIGHTS AND REMEDIES.............................................................................61
9.1 Rights and Remedies..................................................................................61
9.2 Remedies Cumulative..................................................................................63
9.3 Accommodation Collateral.............................................................................64
10. TAXES AND EXPENSES.........................................................................................64
11. WAIVERS; INDEMNIFICATION...................................................................................64
11.1 Demand; Protest; etc.................................................................................64
11.2 Foothill's Liability for Collateral..................................................................64
11.3 Indemnification......................................................................................65
12. NOTICES....................................................................................................65
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.................................................................66
14. DESTRUCTION OF DOCUMENTS...................................................................................67
15. Successors.................................................................................................67
16. No Waivers; Cumulative Remedies............................................................................68
17. GENERAL PROVISIONS.........................................................................................68
17.1 Effectiveness........................................................................................68
17.2 Section Headings.....................................................................................68
17.3 Interpretation.......................................................................................68
17.4 Severability of Provisions...........................................................................68
17.5 Amendments in Writing................................................................................68
17.6 Counterparts; Telefacsimile Execution................................................................69
17.7 Revival and Reinstatement of Obligations.............................................................69
17.8 Integration..........................................................................................69
18. CROSS-GUARANTY.............................................................................................69
18.1 Cross-Guaranty.......................................................................................69
18.2 Waivers by Borrower and Loan Agreement Guarantors....................................................70
18.3 Benefit of Guaranty..................................................................................70
18.4 Subordination of Subrogation, Etc....................................................................70
18.5 Election of Remedies.................................................................................71
18.6 Limitation...........................................................................................71
18.7 Contribution with Respect to Guaranty................................................................72
18.8 Liability Cumulative.................................................................................72
18.9 Subordination........................................................................................73
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SCHEDULES, EXHIBITS and ANNEXES
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Schedule A-1 Accommodation Collateral
Schedule E-1 Excluded Collateral
Schedule N-1 Newspaper Operations Collateral
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule R-2 Radio Station Collateral
Schedule 3.1 Closing Agenda
Schedule 5.2 Intercompany Notes; Intercompany Loan Agreement Advances
Schedule 5.3 Office Space Leases
Schedule 5.7 FEIN; Location of Chief Executive Office
Schedule 5.8 Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Conditions
Schedule 5.17 Leases; Capital Leases
Schedule 6.12 Location of Inventory and Equipment
Schedule 7.1 Permitted Other Indebtedness
Exhibit A Intercompany Loan Agreement
Exhibit B Form of Compliance Certificate
Annex 2.1(a) Advance Rates
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of
October 25, 1999, among FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"), with a place of business located at 11111 Santa Monica Boulevard,
Suite 1500, Los Angeles, California 90025-3333, BMC HOLDINGS, LLC, a Virginia
limited liability company ("Borrower"), with an address at c/o Brill Media
Company, L.P., 420 N.W. Fifth Street, Suite 3-B, Evansville, Indiana 47708,
BRILL MEDIA COMPANY, LLC, a Virginia limited liability company ("Parent"), with
an address at c/o Brill Media Company, L.P., 420 N.W. Fifth Street, Suite 3-B,
Evansville, Indiana 47708, BRILL MEDIA MANAGEMENT, INC., a Virginia corporation
("BMM"), with an address at c/o Brill Media Company, L.P., 420 N.W. Fifth
Street, Suite 3-B, Evansville, Indiana 47708, and BMC HOLDINGS, INC., a Virginia
corporation with an address at c/o Brill Media Company, L.P., 420 N.W. Fifth
Street, Suite 3-B, Evansville, Indiana 47708 ("Holdings Inc.", and together with
Parent and BMM, each a "Loan Agreement Guarantor" and collectively, the "Loan
Agreement Guarantors").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have
the following definitions:
"Accommodation Collateral" means all of the Collateral set forth on
Schedule A-1.
"Account Debtor" means any Person who is or who may become obligated under,
with respect to, or on account of, an Account.
"Accounts" means, with respect to any Person, all currently existing and
hereafter arising accounts, contract rights, and all other forms of obligations
owing to such Person arising out of the sale or lease of goods or the rendition
of services by such Person, irrespective of whether earned by performance, and
any and all credit insurance, guaranties, or security therefor.
"Administrative Management Agreements" means any management agreements
between any Loan Party and BMCLP, pursuant to which BMCLP provides management
services to such Loan Party.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who directly
or indirectly controls, is controlled by, is under common control with or is a
director or officer of such Person. For purposes of this definition, "control"
means the possession, directly or indirectly, of the power to vote five percent
(5%) or more of the securities having ordinary voting power for the election of
directors or the direct or indirect power to direct the management and policies
of a Person.
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"Agreement" has the meaning set forth in the preamble hereto.
"Asset Acquisition" means (i) an investment by any Loan Party in any other
Person pursuant to which such Person shall become a Restricted Subsidiary and a
Loan Party or shall be merged into or consolidated with such Loan Party or (ii)
an acquisition by any Loan Party of the property and assets of any Person other
than another Loan Party that constitute substantially all of a division or line
of business of such Person.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or a series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of Stock of (or any other equity
interests in) a Loan Party (other than directors' qualifying shares) or of any
other property or other assets (each referred to for the purposes of this
definition as a "disposition") by any Loan Party (including any disposition by
means of a merger, consolidation or similar transaction) other than (i) a
disposition by a Loan Party to any other Loan Party, the proceeds of which, when
taken collectively with the net proceeds of any other dispositions under this
clause (i) made by all other Loan Parties that were consummated since the
beginning of the calendar year in which such disposition was consummated, do not
exceed $100,000 in the aggregate; (ii) a disposition of Inventory in the
ordinary course of business; (iii) a disposition of obsolete or worn out
Equipment or Equipment that is no longer useful in the conduct of the business
of such Loan Party and that is disposed of in each case in the ordinary course
of business; (iv)(A) with respect to any Loan Party, dispositions of property
for net proceeds which, when taken collectively with the net proceeds of any
other such dispositions made by such Loan Party under this clause (iv)(A) that
were consummated since the beginning of the calendar year in which such
disposition was consummated, do not exceed $100,000, and (B) with respect to all
Loan Parties in the aggregate, dispositions of property for net proceeds which,
when taken collectively with the net proceeds of any other such dispositions
under this clause (iv)(B) by all such Loan Parties that were consummated since
the beginning of the calendar year in which such disposition was consummated, do
not exceed $1.0 million; and (v) transactions permitted under Section 7.3(b).
Notwithstanding anything to the contrary contained above, a Restricted Payment
made in compliance with Section 7.8 shall not constitute an Asset Disposition
except for purposes of determination of the Consolidated Leverage Ratio.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Senior Notes, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Authorized Person" means any officer or other employee of Borrower.
"Availability" means the amount represented by the difference derived when
(a) the sum of the principal amount of (i) Advances and (ii) the Term Loan
(including any amounts that Foothill may have paid for the account of Borrower
pursuant to any of the Loan Documents and that have not been reimbursed by
Borrower) is subtracted from (b) the amount that Borrower is entitled to borrow
under Section 2.1 hereof.
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"Average Unused Portion of Maximum Revolving Amount" means, as of any date
of determination, (a) the Maximum Revolving Amount, less the average Daily
Balance of the Revolving Loan which was outstanding during the immediately
preceding month.
"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C.ss. 101
et seq.), as amended, and any successor statute.
"Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35)
of ERISA) for which Borrower, any Subsidiary of Borrower, or any ERISA Affiliate
has been an "employer" (as defined in Section 3(5) of ERISA) within the past six
years.
"BMCLP" means Brill Media Company, L.P., a Virginia limited partnership,
and its successors.
"Board of Directors" means (i), as to Parent (A) so long as Parent or any
successor to Parent is a limited liability company or a partnership, the board
of directors of BMM, which is the manager of Parent, and (B) at any other time,
the board of directors of Parent; (ii) as to Holdings Inc., the board of
directors of Holdings Inc.; (iii) as to BMM, the board of directors of BMM; and
(iv) as to Borrower, (A) so long as Borrower or any successor to Borrower is a
limited liability company or a partnership, the board of directors of Parent,
which is the manager of Borrower, and (B) at any other time, the board of
directors of Borrower;
"Books" means all of any Loan Party's books and records including: ledgers;
records indicating, summarizing, or evidencing such Loan Party's properties or
assets (including the Collateral) or liabilities; all information relating to
such Loan Party's business operations or financial condition; and all computer
programs, disk or tape files, printouts, runs, or other computer prepared
information.
"Borrower" has the meaning set forth in the preamble to this Agreement.
"Borrowing Base" has the meaning set forth in Section 2.1(a).
"Borrowing Base EBITDA" means, with respect to Borrower and the Loan
Agreement Guarantors (excluding the Unrestricted Subsidiaries and the Missouri
Entities) for any period, the net income of such Person for such period, plus,
to the extent deducted in computing such net income, without duplication, the
sum of (i) interest expense, (ii) income tax expense, (iii) depreciation and
amortization expense, (iv) extraordinary or nonrecurring losses, and (v) other
noncash items reducing net income, minus, to the extent added in computing such
net income, without duplication, (x) interest income, (y) extraordinary or
nonrecurring gains, and (z) other noncash items increasing net income, in each
case determined, where applicable, in accordance with GAAP.
"Business Day" means any day that is not a Saturday, Sunday, or other day
on which national banks are authorized or required to close.
"Capital Lease" means any lease which may be capitalized in accordance with
GAAP.
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"Cash Equivalents" means (i) United States dollars; (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof; (iii) certificates of deposit, time
deposits and eurodollar time deposits with maturities of one year or less from
the date of acquisition, bankers' acceptances with maturities not exceeding one
year and overnight bank deposits, in each case with any commercial bank having
capital and surplus in excess of $500 million; (iv) repurchase obligations for
underlying securities of the types described in clauses (ii) and (iii) entered
into with any financial institution meeting the qualifications described in
clause (iii) above; (v) commercial paper rated A-1 or the equivalent thereof by
Moody's or S&P and in each case maturing within one year after the date of
acquisition, (vi) investment funds investing 95% of their assets in securities
of the types described in clauses (i)-(v) above; (vii) readily marketable direct
obligations issued by any state of the United States of American or any
political subdivision thereof having one of the two highest rating categories
obtainable from Moody's or S&P and (viii) Indenture Indebtedness or Preferred
Stock issued by Persons with a rating of "A" or higher from S&P or "A2" or
higher from Moody's.
"Change of Control" means (i) a majority of the Board of Directors of
Borrower or any Loan Agreement Guarantor or of any direct or indirect holding
company thereof shall consist of Persons who are not Continuing Directors of
such Person; or (ii) the acquisition by any Person or Group (other than Alan R.
Brill or any Related Brill Party) of the power, directly or indirectly, to vote
or direct the voting of securities having more than thirty-five percent (35%) of
the ordinary voting power for the election of directors of Borrower or any Loan
Agreement Guarantor, or any direct or indirect holding company thereof;
provided, however, that no Change of Control shall be deemed to occur pursuant
to this clause (ii) so long as Alan R. Brill and the Related Brill Parties
collectively own an amount of securities representing the power, directly or
indirectly, to vote or direct the voting of securities having more than fifty
percent (50%) of the ordinary voting power for the election of directors of
Borrower or such Loan Agreement Guarantor or of any direct or indirect holding
company thereof.
"Closing Date" the date of the first to occur of the making of the initial
Advance or the funding of the Term Loan.
"Code" means the Illinois Uniform Commercial Code.
"Collateral" means, with respect to any Loan Party, all of such Loan
Party's right, title, and interest in and to each of the following (other than
the Excluded Collateral):
(a) the Accounts,
(b) the Books,
(c) the Equipment,
(d) the General Intangibles,
(e) the Inventory,
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(f) the Negotiable Collateral,
(g) the Real Property Collateral,
(h) any other property pledged pursuant to the Loan Documents;
(i) any money, or other assets of such Loan Party that now or hereafter
come into the possession, custody, or control of Foothill, and
(j) the proceeds and products, whether tangible or intangible, of any of
the foregoing, including proceeds of insurance covering any or all of the
Collateral, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Negotiable Collateral, Real Property, money, deposit accounts, or
other tangible or intangible property resulting from the sale, exchange,
collection, or other disposition of any of the foregoing, or any portion thereof
or interest therein, and the proceeds thereof. The Collateral shall include
Licenses and Permits issued by the FCC only to the extent that it is lawful or
permissible to grant a security interest in such Licenses or Permits.
"Collateral Access Agreement" means a landlord waiver or consent, mortgagee
waiver or consent, bailee letter, or a similar acknowledgment agreement of any
warehouseman, processor, lessor, consignee, or other Person in possession of,
having a Lien upon, or having rights or interests in the Equipment or Inventory,
in each case, in form and substance satisfactory to Foothill.
"Collections" means all cash, checks, notes, instruments, and other items
of payment (including, insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds).
"Communications Act" means the Communications Act of 1934 and any successor
Federal statute and the rules and regulations and published policies of the FCC
thereunder, all as amended and as the same may be in effect from time to time.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit B and delivered by the chief executive officer of Borrower to Foothill.
"Consolidated EBITDA" means, for any period, (a) an amount equal to
Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income: (i) the provision for
taxes for such period based on income or profits and any provision for taxes
utilized in computing net loss; (ii) Consolidated Interest Expense; (iii)
depreciation expense; (iv) amortization expense (including amortization of debt
issuance costs); (v) all other non-cash items reducing Consolidated Net Income
for such period (excluding any non-cash item to the extent it represents an
accrual of or reserve for cash disbursements for any subsequent period prior to
the full and indefeasible payment of the Obligations or amortization of a
pre-paid cash expense that was paid in a prior period); minus (b) all non-cash
items increasing Consolidated Net Income for such period, in each case on a
consolidated basis for the Loan Parties for such period determined in accordance
with GAAP; provided, however, that for purposes of calculating Consolidated
EBITDA during any fiscal quarter, cash income from a particular Investment
(other than a Managed Affiliate Note) of such
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Person shall be included only (x) if cash income has been received by such
Person with respect to such Investment during each of the previous four fiscal
quarters, or (y) if the cash income derived from such Investment is attributable
to Temporary Cash Investments.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Loan Parties as determined on a consolidated basis in accordance
with GAAP, plus, to the extent not included in such interest expense, (i)
interest expense attributable to obligations under Capital Leases, (ii)
capitalized interest; (iii) non-cash interest expense; (iv) commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing; (v) interest actually paid by any Loan Party
under any guarantee of Indenture Indebtedness or other obligation of any other
Person; (vi) net payments (whether positive or negative) pursuant to Interest
Rate Agreements; (vii) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than any Loan Party) in
connection with Indenture Indebtedness Incurred by such plan or trust and (viii)
cash and Disqualified Stock dividends in respect of all Preferred Stock of any
Loan Party held by any Person other than a Loan Party and less (a) to the extent
included in such interest expense, the amortization of capitalized debt issuance
costs and (b) interest income. Notwithstanding the foregoing, the Consolidated
Interest Expense with respect to any Restricted Subsidiary of Borrower or any
Loan Agreement Guarantor that was not a Wholly-Owned Subsidiary shall be
included only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income.
"Consolidated Leverage Ratio" means, on any Transaction Date, the ratio of
(i) the aggregate amount of Indenture Indebtedness of the Loan Parties on a
consolidated basis outstanding on such Transaction Date less the cash and Cash
Equivalents held by the Loan Parties on a consolidated basis on such Transaction
Date to (ii) the amount of Media Cashflow for the then most recent four fiscal
quarters for which financial statements of Borrower and the Loan Agreement
Guarantors have been filed with the SEC (such four fiscal quarter period being
the "Four Quarter Period"); provided, however, that in making the foregoing
calculation, (A) pro forma effect shall be given to any Indenture Indebtedness
to be Incurred or repaid on the Transaction Date; (B) pro forma effect shall be
given to Asset Dispositions and Asset Acquisitions (including giving pro forma
effect to the application of proceeds of any Asset Disposition) that occur from
the beginning of the Four Quarter Period through and including the Transaction
Date (the "Reference Period"), as if they had occurred and such proceeds had
been applied on the first day of such Reference Period; and (C) pro forma effect
shall be given to asset dispositions and asset acquisitions (including giving
pro forma effect to the application of proceeds of any asset disposition) that
have been made by any Person that has become a Loan Party or has been merged
with or into a Loan Party during such Reference Period and that would have
constituted Asset Dispositions or Asset Acquisitions had such transactions
occurred when such Person was a Loan Party as if such asset disposition or asset
acquisition were Asset Dispositions or Asset Acquisitions that occurred on the
first day of such Reference Period; provided, further, that to the extent that
clause (B) or (C) of this sentence requires that pro forma effect be given to an
Asset Acquisition or Asset Disposition, such pro forma calculation shall be
based upon the four full fiscal quarters immediately preceding the Transaction
Date of the
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Person, or division or line of business of the Person, that is acquired or
disposed of for which financial information is available.
"Consolidated Net Income" means, for any period, the consolidated net
income (loss) of the Loan Parties determined in accordance with GAAP; provided,
however, that there shall not be included in such Consolidated Net Income: (i)
any net income (loss) of any Person acquired by any Loan Party in a pooling of
interests transaction for any period prior to the date of such acquisition, (ii)
any net income of any Loan Party if such Loan Party is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions by such Loan Party, directly or indirectly, to another Loan Party
(other than restrictions that are created or exist in compliance with Section
4.08 of the Indenture or the provisions of this Agreement); (iii) any gain or
loss realized upon the sale or other disposition of any assets of any Loan Party
(including pursuant to a Sale/ Leaseback Transaction) which are not sold or
otherwise disposed of in the ordinary course of business and any gain or loss
realized upon the sale or other disposition of any Stock of any Person; (iv) any
extraordinary gain or loss; (v) the cumulative effect of a change in accounting
principles; (vi) any non-cash expenses attributable to grants or exercises of
employee stock options. Notwithstanding the foregoing, for the purpose of
Section 7.8 only, there shall be added to Consolidated Net Income the amount of
any accruals under the Performance Compensation Agreements to the extent
deducted in determining such Consolidated Net Income.
"Consolidated Net Worth" means the total of all amounts shown on the
balance sheets of the Borrower and the Loan Parties, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of Borrower ending prior to taking any action for the purpose of
which the determination is being made and for which financial statements are
available (but in no event ending more than 135 days prior to the taking of such
action), as (i) the par or stated value of all outstanding Stock of a Loan Party
plus (ii) paid in capital or capital surplus relating to such Stock plus (iii)
any retained earnings or earned surplus less (A) any accumulated deficit and (B)
any amounts attributable to Disqualified Stock.
"Consolidated Senior Leverage Ratio" means, on any Transaction Date, the
Consolidated Leverage Ratio on such Transaction Date; provided, however, that
the reference to "Indenture Indebtedness" in clause (i) of the definition of
Consolidated Leverage Ratio shall be deemed to be a reference to "Senior
Indebtedness".
"Consolidated Unrestricted Subsidiary Advance Leverage Ratio" means, on any
Transaction Date, the Consolidated Leverage Ratio on such Transaction Date;
provided, however, that clause (i) of the definition of Consolidated Leverage
Ratio shall be deemed to be a reference to "Unrestricted Subsidiary Advances".
"Continuing Director" of any Person means, as of the date of determination,
any Person who (i) was a member of the Board of Directors of such Person on the
date of this Agreement or (ii) was nominated for election or elected to the
Board of Directors of such Person
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with the affirmative vote of a majority of the Continuing Directors of such
Person who were members of such Board of Directors at the time of such
nomination or election.
"Control Agreement" means a control agreement, in form and substance
reasonably satisfactory to Foothill, between any Loan Party, Foothill, and the
applicable securities intermediary with respect to the applicable Securities
Account and related Investment Property, or the applicable financial institution
with respect to the applicable Depositary Account, as the case may be.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or beneficiary.
"Daily Balance" means the amount of an Obligation owed at the end of a
given day.
"Depositary Account" means a depositary account established pursuant to a
Control Agreement.
"Default" means an event, condition, or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.
"Designated Account" means account number 401-29172-3 of Borrower
maintained with Borrower's Designated Account Bank, or such other deposit
account of Borrower (located within the United States) which has been designated
from time to time in writing by Borrower to Foothill.
"Designated Account Bank" means Old National Bank, whose office is located
at 420 Main Street, Evansville, Indiana 47708, and whose ABA number is
086300012.
"Disbursement Letter" means an instructional letter executed and delivered
by Borrower to Foothill regarding the extensions of credit to be made on the
Closing Date, the form and substance of which shall be satisfactory to Foothill.
"Disqualified Stock" means any Stock which, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event (other than an event which would constitute a
Change of Control), (i) matures (excluding any maturity as the result of an
optional redemption by the issuer thereof) or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
option of the holder thereof, in whole or in part, on or prior to the final
stated maturity of the Senior Notes or of the Obligations, or (ii) is
convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (a) debt securities or (b) any Stock referred to in clause (i)
above, in each case at any time prior to the final stated maturity of the Senior
Notes or of the Obligations.
"Dollars or $" means United States dollars.
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"Early Termination Premium" has the meaning set forth in Section 3.6.
"Equipment" means, with respect to any Person, all of such Person's present
and hereafter acquired machinery, machine tools, motors, equipment, furniture,
furnishings, fixtures, vehicles (including motor vehicles and trailers), tools,
parts, goods (other than consumer goods, farm products, or Inventory), wherever
located, including, (a) any interest of such Person in any of the foregoing, and
(b) all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, 29
U.S.C.ss.ss.1000 et seq., amendments thereto, successor statutes, and
regulations or guidance promulgated thereunder.
"ERISA Affiliate" means (a) any corporation subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any party subject to ERISA that is a party to an arrangement
with Borrower and whose employees are aggregated with the employees of Borrower
under IRC Section 414(o).
"ERISA Event" means: (a) a Reportable Event with respect to any Benefit
Plan or Multiemployer Plan, (b) the withdrawal of Borrower, any of its
Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in which
it was a "substantial employer" (as defined in Section 4001(a)(2) of ERISA), (c)
the providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA), (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan, (e)
any event or condition (i) that provides a basis under Section 4042(a)(1), (2),
or (3) of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan or Multiemployer Plan, or (ii) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of
ERISA, of Borrower, any of its Subsidiaries or ERISA Affiliates from a
Multiemployer Plan, or (g) providing any security to any Plan under Section
401(a)(29) of the IRC by Borrower or its Subsidiaries or any of their ERISA
Affiliates.
"Event of Default" has the meaning set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any successor statute thereto.
"Excluded Collateral" means all of the Collateral set forth on Schedule
E-1.
"FCC" means the Federal Communications Commission, or any other successor
agency of the Federal government administering the Communications Act.
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"FEIN" means Federal Employer Identification Number.
"Foothill" has the meaning set forth in the preamble to this Agreement.
"Foothill Expenses" means all: costs or expenses (including taxes, and
insurance premiums) required to be paid by any Loan Party under any of the Loan
Documents that are paid or incurred by Foothill; fees or charges paid or
incurred by Foothill in connection with Foothill's transactions with any Loan
Party, including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal and/or valuations (including periodic
Personal Property Collateral or Real Property Collateral appraisals and or
valuations), real estate surveys, real estate title policies and endorsements,
and environmental audits; costs and expenses incurred by Foothill in the
disbursement of funds to Borrower (by wire transfer or otherwise); charges paid
or incurred by Foothill resulting from the dishonor of checks; costs and
expenses paid or incurred by Foothill to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Personal Property Collateral or the Real Property
Collateral, or any portion thereof, irrespective of whether a sale is
consummated; costs and expenses paid or incurred by Foothill in examining the
Books; costs and expenses of third party claims or any other suit paid or
incurred by Foothill in enforcing or defending the Loan Documents or in
connection with the transactions contemplated by the Loan Documents or
Foothill's relationship with any Loan Party or any guarantor; and Foothill's
reasonable attorneys fees and expenses incurred in advising, structuring,
drafting, reviewing, administering, amending, terminating, enforcing (including
attorneys fees and expenses incurred in connection with a "workout," a
"restructuring," or an Insolvency Proceeding concerning any Loan Party or any
guarantor of the Obligations), defending, or concerning the Loan Documents,
irrespective of whether suit is brought.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"General Intangibles" means, with respect to any Person, all of such
Person's present and future general intangibles and other personal property
(including contract rights, rights arising under common law, statutes, or
regulations, choses or things in action, goodwill, Permits, Licenses, patents,
trade names, trademarks, servicemarks, copyrights, blueprints, drawings,
purchase orders, customer lists, monies due or recoverable from pension funds,
route lists, rights to payment and other rights under any royalty or licensing
agreements, infringement claims, computer programs, information contained on
computer disks or tapes, literature, reports, catalogs, deposit accounts,
insurance premium rebates, tax refunds, and tax refund claims), other than
goods, Accounts, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational or governing
documents of such Person.
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"Governmental Authority" means any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
Stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means (a) substances that are defined or listed in,
or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Incur" means issue, assume, guarantee, incur or otherwise become liable
for; provided, however, that any Indenture Indebtedness, Indebtedness, or Stock
of a Person existing at the time such Person becomes a Loan Party (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Person at the time it becomes a Loan Party.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication) (a) all obligations of such Person for
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations of such Person in respect of letters of credit, bankers acceptances,
interest rate swaps, or other financial products, (c) all obligations of such
Person under capital leases, (d) all obligations or liabilities of others
secured by a Lien on any property or asset of such Person, irrespective of
whether such obligation or liability is assumed, and (e) any obligation of such
Person guaranteeing or intended to guarantee (whether guaranteed, endorsed,
co-made, discounted, or sold with recourse to such Person) any indebtedness,
lease, dividend, letter of credit, or other obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Indenture" means that certain Indenture dated as of December 30, 1997, by
and among BMM and Parent, as Issuers, the Subsidiary Guarantors named therein,
and United States Trust Company of New York, as Trustee, as amended from time to
time with the prior written consent of Foothill.
"Indenture Indebtedness" means, with respect to any Person on any date of
determination (without duplication) (i) the principal of and premium (if any) in
respect of indebtedness of such Person for borrowed money, (ii) the principal of
and premium (if any) in
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respect of obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person in respect of
letters of credit or other similar instruments (including reimbursement
obligations with respect thereto) (other than obligations with respect to
letters of credit securing obligations (other than obligations described in
clauses (i), (ii) and (v)) entered into in the ordinary course of business of
such Person to the extent that such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no later than the third
Business Day following receipt by such Person of a demand for reimbursement
following payment on the letter of credit), (iv) all obligations of such Person
to pay the deferred and unpaid purchase price of property or services (except
(x) trade payables and accrued expenses (including accrued management fees under
the Administrative Management Agreements) incurred in the ordinary course of
business and (y) contingent or "earnout" payment obligations in respect of any
Permitted Business acquired by any Borrower, any Loan Agreement Guarantor, or
any Restricted Subsidiary), which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, (v) all Capitalized Lease
Obligations and all Attributable Indebtedness of such Person, (vi) all Indenture
Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indenture Indebtedness is assumed by such Person, (vii) all
Indenture Indebtedness of other Persons to the extent guaranteed by such Person,
(viii) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of Disqualified Stock or, with respect
to any Restricted Subsidiary of Borrower or any Loan Agreement Guarantor, any
Preferred Stock of such Restricted Subsidiary to the extent such obligation
arises on or before the final stated maturity of the Senior Notes (but
excluding, in each case, accrued dividends) with the amount of Indenture
Indebtedness represented by such Disqualified Stock or Preferred Stock, as the
case may be, being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price; provided,
however, that for purposes hereof the "maximum fixed repurchase price" of any
Disqualified Stock or Preferred Stock, as the case may be, which does not have a
fixed repurchase price shall be calculated in accordance with the terms of such
Disqualified Stock or Preferred Stock, as the case may be, as if such
Disqualified Stock or Preferred Stock, as the case may be, were purchased on any
date on which Indenture Indebtedness shall be required to be determined pursuant
to the Indenture, and if such price is based on the fair market value of such
Disqualified Stock or Preferred Stock, as the case may be, such fair market
value shall be determined in good faith by the Board of Directors of Borrower
and (ix) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements. Unless specifically set
forth above, the amount of Indenture Indebtedness of any Person at any date
shall be the outstanding principal amount of all unconditional obligations as
described above, as such amount would be reflected on a balance sheet prepared
in accordance with GAAP, and the maximum liability of such Person, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations described above at such date. Notwithstanding the foregoing,
Indenture Indebtedness shall not include any accrued obligations under
Performance Compensation Agreements.
"Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other bankruptcy
or insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions,
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extensions generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
"Intangible Assets" means, with respect to any Person, that portion of the
book value of all of such Person's assets that would be treated as intangibles
under GAAP.
"Intellectual Property" has the meaning ascribed thereto in Section 5.16.
"Intercompany Loan Agreement" means that certain Revolving Credit Agreement
dated as of December 30, 1997 by and among Borrower and the Subsidiary
Guarantors, as amended as of the date hereof and as further amended from time to
time with the prior written consent of Foothill (other than amendments to add
additional parties which are Restricted Subsidiaries, which amendments shall not
require Foothill's prior written consent), a copy of which is attached hereto as
Exhibit A.
"Intercompany Notes" means the notes set forth on Schedule 5.2, and any
amendments, modifications, supplements, or replacements thereof.
"Interest Rate Agreement" means, with respect to any Person, any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is a party or beneficiary.
"Inventory" means, with respect to any Person, all present and future
inventory in which such Person has any interest, including goods held for sale
or lease or to be furnished under a contract of service and all of such Person's
present and future raw materials, work in process, finished goods, and packing
and shipping materials, wherever located.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts payable on the balance sheet of such Person) or other
extension of credit (including by way of guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Stock, Indebtedness
or similar instruments issued by such Person.
"Investment Property" means "investment property" as that term is defined
in Section 9-115 of the Code.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"Lease" means any lease or other agreement, no matter how styled or
structured, under which any Loan Party is entitled to the use or occupancy of
any space.
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"Legal Requirements" means all applicable international, foreign, federal,
state, and local laws, judgments, decrees, orders, statutes, ordinances, rules,
regulations, or Permits.
"License" means any license, authorization or permit issued by the FCC or
any other Governmental Authority in connection with the operation of a System.
"Lien" means any interest in property securing an obligation owed to, or a
claim by, any Person other than the owner of the property, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and whether such interest shall be contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances, including the lien or security interest
arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, adverse claim or charge,
conditional sale or trust receipt, or from a lease, consignment, or bailment for
security purposes and also including reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Agreement Guarantor" or "Loan Agreement Guarantors" has the meaning
set forth in the preamble to this Agreement.
"Loan Documents" means this Agreement, the Disbursement Letter, any note or
notes executed by any Loan Party and assigned to or payable to Foothill, each
item listed on Schedule 3.1 hereto, and any other agreement entered into, now or
in the future, in connection with this Agreement.
"Loan Parties" means Borrower, each Loan Agreement Guarantor and each
Subsidiary Guarantor.
"Loans" means the Revolving Loan and the Term Loan.
"Managed Affiliate" means a Person at least 90% of the Stock of which is
owned, directly or indirectly, by Alan R. Brill; provided, however, that (i)
such Person is engaged solely in a Permitted Business; (ii) such Person is a
party to a Managed Affiliate Management Agreement; and (iii) except in the case
of TSB III, LLC, and TSB IV, LLC, the business of such Person is acquired by
Alan R. Brill, directly or indirectly, after December 30, 1997.
"Managed Affiliate Management Agreement" means any agreement between a Loan
Party, on the one hand, and a Managed Affiliate, on the other hand, providing
for the payment by such Managed Affiliate to one or more Loan Parties of a cash
management fee payable at least semi annually equal to a specific percentage of
the excess cash flow of such Managed Affiliate as defined in such agreement.
"Managed Affiliate Note" means any promissory notes of a Managed Affiliate,
issued to a Loan Party, each of which promissory notes shall (i) have been
pledged to Foothill pursuant to the Loan Documents and subject to a first
priority Lien in favor of Foothill; (ii)
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mature on a day no later than the third anniversary of the date of issuance
thereof; (iii) become immediately due and payable upon (w) the default by such
Managed Affiliate under the Managed Affiliate Management Agreement to which it
is a party or (x) the issuer thereunder ceasing to constitute a Managed
Affiliate or (y) the acceleration of the Senior Notes or the Obligations or (z)
the bankruptcy, insolvency or reorganization of a Loan Party and (iv) bear
interest payable in cash no less often than semi-annually at a rate per annum no
less than the rate of interest payable on the Senior Notes. Each Managed
Affiliate Note shall provide that the payment of any management fee by the
relevant Manager Affiliate pursuant to any management agreement (other than a
Managed Affiliate Management Agreement) with an Affiliate of a Loan Party or
such Managed Affiliate, shall be subordinated to the obligations of the relevant
Managed Affiliate under such Managed Affiliate Note to the same extent as the
obligations of the Loan Parties under the Administrative Management Agreements
are subordinated to the obligations of such Persons under the Senior Notes and
the Obligations.
"Manager Subsidiaries" means those Subsidiaries of Borrower which manage,
or merely hold ownership interests in, OPCO Subsidiaries, and which are listed
as such on Schedule 5.8.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of the Loan Parties collectively, (b) the
material impairment of the ability of the Loan Parties collectively to perform
their obligations under the Loan Documents or of Foothill to enforce the
Obligations or realize upon the Collateral, (c) a material adverse effect on the
value of the Collateral taken as a whole or the amount that Foothill would be
likely to receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral, or (d) a material impairment
of the priority of Foothill's Liens with respect to the Collateral; provided,
however, that in no event shall a decision by the FCC to authorize low power FM
stations constitute a Material Adverse Change.
"Maximum Revolving Amount" means $1,000,000.
"Media Cashflow" for any period means for any Person an amount equal to
Consolidated EBITDA for such period plus interest income received in respect of
the Managed Affiliate Notes during such period and the following to the extent
deducted in calculating such Consolidated EBITDA less (i) management fees
charged by BMCLP under the Administrative Management Agreements; (ii) expenses
accruing under Performance Compensation Agreements; (iii) consulting fees
payable in connection with acquisitions; and (iv) fees paid under time brokerage
agreements.
"Member" means any Person who holds a membership interest in Borrower.
"Missouri Entities" means CMB II, Inc. and Central Missouri Broadcasting,
Inc.
"Mortgage" means a mortgage, deed of trust, leasehold mortgage, collateral
assignment, or similar instrument granting Foothill a Lien on real property of
any Loan Party.
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"Multiemployer Plan" means a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) to which Borrower, any of its Subsidiaries, or any ERISA
Affiliate has contributed, or was obligated to contribute, within the past six
years.
"NCR Loan" means a term loan from Foothill to NCR III, LLC and NCR II, Inc.
in the maximum principal amount of One Million Three Hundred Fifty Thousand
Dollars ($1,350,000).
"Negotiable Collateral" means all of a Person's present and future letters
of credit, notes, drafts, instruments, Investment Property, Stock, documents,
personal property leases (wherein such Person is the lessor), chattel paper, and
the Books relating to any of the foregoing.
"Newspaper Operations Collateral" means all of the Collateral identified on
Schedule N-1 and any Newspaper Operations Collateral hereafter acquired by any
Loan Party.
"Newspaper Operations Collateral Base Amount" means $53,000,000, which
amount has been determined by Foothill based on its assessment of the Newspaper
Operations Collateral, as adjusted from time to time in accordance with the
provisions of Section 2.1(a).
"Non-Recourse Debt" means Indenture Indebtedness (i) as to which no Loan
Party (a) provides any guarantee or credit support of any kind (including any
undertaking, guarantee, indemnity, agreement or instrument that would constitute
Indenture Indebtedness) or (b) is directly or indirectly liable (as a guarantor,
general partner or otherwise) and (ii) no default with respect to which
(including any rights that the holders thereof may have to take enforcement
action against a Loan Party) would permit (upon notice, lapse of time or both)
any holder of any other Indenture Indebtedness of any Loan Party to declare a
default under such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
"Obligations" means all loans, the Term Loan, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), premiums (including Early Termination Premiums),
liabilities (including all amounts charged to Borrower's Loan Account pursuant
hereto), obligations, fees, charges, costs, or Foothill Expenses (including any
fees or expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties owing by any Loan
Party to Foothill of any kind and description (whether pursuant to or evidenced
by the Loan Documents or pursuant to any other agreement between Foothill and
any Loan Party, and irrespective of whether for the payment of money), whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, and including any debt, liability, or obligation owing
from any Loan Party to others that Foothill may have obtained by assignment or
otherwise, and further including all interest not paid when due and all Foothill
Expenses that any Loan Party is required to pay or reimburse by the Loan
Documents, by law, or otherwise.
"OPCO Subsidiaries" means those Subsidiaries of Borrower which own
operating assets and which are listed as such on Schedule 5.8.
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"Overadvance" has the meaning set forth in Section 2.5.
"Participant" means any Person to which Foothill has sold a participation
interest in its rights under the Loan Documents.
"PBGC" means the Pension Benefit Guaranty Corporation as defined in Title
IV of ERISA, or any successor thereto.
"Performance Compensation Agreement" means any agreements between a Loan
Party and any executive officer of such Loan Party pursuant to which such Loan
Party provides deferred compensation to such officer by crediting amounts (as
determined under a formula set forth in such agreement) to an identified account
for the benefit of such executive officer. Performance Compensation Agreements
entered into after the date of this Agreement shall provide that no payment
shall be required to be made by any Loan Party thereunder if such payment is not
permitted under this Agreement or the Indenture and that the Loan Parties'
obligations to make payments thereunder shall be subordinated to the obligations
of the Loan Parties under the Senior Notes and to the Obligations.
"Permits" of a Person shall mean all rights, franchises, permits,
authorities, licenses, certificates of approval or authorizations, including
licenses and other authorizations issuable by a Governmental Authority, which
pursuant to applicable Legal Requirements are necessary to permit such Person
lawfully to conduct and operate its business as currently conducted and to own
and use its assets.
"Permitted Business" means any business which is the same as or related,
ancillary or complementary to, the radio, newspaper, and direct mail advertising
businesses of the Loan Parties on the date of this Agreement, as reasonably
determined by the Board of Directors of Borrower.
"Permitted Capital Expenditure" means, with respect to any Person, any
expenditure which (i) may be capitalized in accordance with GAAP and (ii) either
(A) is made to purchase equipment leased pursuant to a Capital Lease permitted
under clause (xv) of the definition of "Permitted Investment" or (B) the direct
benefit of which is realized by the Person making such expenditure.
"Permitted Discretion" means Foothill's good faith judgment based upon any
factor which it believes in good faith (i) will or could adversely affect the
value of the Collateral or the enforceability or priority of Foothill's Liens
thereon (including, without limitation, the granting of a Lien in accordance
with subsection (l) of the definition of "Permitted Liens"), or the amount which
Foothill would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of such Collateral; (ii)
suggests that any Collateral report or financial information delivered to
Foothill by any Person on behalf of any Loan Party is incomplete, inaccurate or
misleading in any material respect; (iii) materially increases the likelihood of
a bankruptcy, reorganization or other insolvency proceeding involving any Loan
Party or any of the Collateral; or (iv) creates or reasonably could be expected
to create a Default or an Event of Default. In exercising such judgment,
Foothill may consider such factors
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already considered in arriving at the Radio Station Collateral Base Amount and
the Newspaper Operations Base Amount as well the financial and business climate
of the various industries of the Loan Parties and general macroeconomic
conditions and any other factors that change the credit risk of lending to
Borrower on the security of the Radio Station Collateral and the Newspaper
Operations Collateral. The burden of establishing lack of good faith shall be on
Borrower.
"Permitted Investment" means an Investment by a Loan Party in (i) a
Wholly-Owned Subsidiary of such Loan Party; provided, however, that the primary
business of such Wholly-Owned Subsidiary is a Permitted Business; (ii) another
Person if as a result of such Investment, such other Person becomes a
Wholly-Owned Subsidiary of such Loan Party or is merged or consolidated with or
into, or transfers or conveys all or substantially all of its assets to, such
Loan Party or a Wholly-Owned Subsidiary thereof; provided, however, that in each
case such Person's primary business is a Permitted Business, and provided that
such Person shall execute and deliver an amendment to the Loan Documents to
become a Subsidiary Guarantor of the Obligations, and shall execute such
financing statements and other documents and take such other actions as Foothill
shall reasonably require in order to cause such Person's assets to be subject to
Foothill's Lien; (iii) [intentionally deleted]; (iv) another Loan Party that is
not a Subsidiary of such Loan Party; provided, however, that with respect to any
Loan Party, (A) the aggregate of all amounts outstanding at any one time owing
to such Loan Party from all other non-Borrower Loan Parties shall not exceed
$1.0 million and (B) the aggregate of all amounts owed by such Loan Party at any
one time to all other non-Borrower Loan Parties shall not exceed $1.0 million;
(v) Temporary Cash Investments; (vi) receivables owing to such Loan Party,
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (vii) payroll, travel
and similar advances to cover matters that are expected at the time of such
advances ultimately to be treated as expenses for accounting purposes and that
are made in the ordinary course of business; (viii) loans and advances made to
employees made in the ordinary course of business consistent with past practices
of such Loan Party in an aggregate amount outstanding at any one time not to
exceed $250,000 to any one employee or $1.0 million in the aggregate; (ix)
stock, obligations or securities received in settlement of debts created in the
ordinary course of business and owing to such Loan Party or in satisfaction of
judgments or claims; (x) a Person engaged in a Permitted Business or a loan or
advance by such Loan Party the proceeds of which are used solely to make an
investment in a Person engaged in a Permitted Business or a guarantee by such
Loan Party of Indebtedness of any Person engaged in a Permitted Business or a
guarantee by such Loan Party of any Person in which such Investment has been
made; provided, however, that the documentation evidencing any Permitted
Investments made pursuant to this clause (x) shall be assigned, pledged, or
otherwise made subject to a security interest and first priority Lien in favor
of Foothill pursuant to documents in form and substance reasonably satisfactory
to Foothill and provided, further, that no Permitted Investments may be made
pursuant to this clause (x) to the extent that the amount thereof would, when
taken together with all other Permitted Investments made pursuant to this clause
(x), exceed $5.0 million in the aggregate (plus, to the extent not previously
reinvested, any return of capital realized on Permitted Investments made
pursuant to this clause (x), or any release or other cancellation of any
guarantee constituting such Permitted Investment); (xi) Persons to the extent
such Investment is received by such Loan Party as consideration for asset
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dispositions effected in compliance with Section 7.3(a); (xii) prepayments and
other credits to suppliers made in the ordinary course of business consistent
with the past practices of such Loan Party; (xiii) the Managed Affiliate Notes;
provided, however, that (A) the aggregate principal amount thereof (including
any Managed Affiliate Notes outstanding on the date of this Agreement) does not
exceed $20 million at any time outstanding, and (B) all such Managed Affiliates
Notes are assigned, pledged, or otherwise made subject to a security interest
and first priority Lien in favor of Foothill pursuant to documents in form and
substance reasonably satisfactory to Foothill; (xiv) loans to Unrestricted
Subsidiaries; provided, however, that (A) no Default or Event of Default shall
have occurred and be continuing at the time of the Incurrence thereof by the
relevant Unrestricted Subsidiary or would occur as a consequence thereof and the
Consolidated Unrestricted Subsidiary Advance Leverage Ratio would not be greater
than 2.00 to 1.00, (B) such advances are senior to all other Indebtedness of the
relevant Unrestricted Subsidiary other than Capitalized Lease Obligations,
mortgage financing or purchase money obligations outstanding on the date on
which such Unrestricted Subsidiary was acquired, directly or indirectly, by
Borrower or a Loan Agreement Guarantor or the date such Subsidiary was
designated an Unrestricted Subsidiary (other than Indebtedness Incurred in
anticipation of, or to provide all or any portion of the funds or credit support
utilized to consummate the transaction or series of related transactions
pursuant to which such Unrestricted Subsidiary became a Subsidiary or was
otherwise acquired by such Borrower or Loan Agreement Guarantor or was
designated as an Unrestricted Subsidiary), (C) such Unrestricted Subsidiary is
engaged primarily in a Permitted Business, and (D) such loans shall be assigned,
pledged or otherwise made subject to a security interest and first priority Lien
in favor of Foothill pursuant to documents in form and substance reasonably
satisfactory to Foothill; (xv) Investments in connection with pledges, deposits,
payments or performance bonds made or given in the ordinary course of business
in connection with or to secure statutory, regulatory or similar obligations,
including obligations under health, safety or environmental obligations; (xvi)
Capital Leases between Loan Parties; provided, however, that the aggregate
amount of such Capital Leases for all Loan Parties at any one time shall not
exceed $2.0 million; and (xvii) Permitted Capital Expenditures.
"Permitted Liens" means (a) Liens held by Foothill, (b) Liens set forth on
Schedule P-1, (c) pledges or deposits by a Loan Party under workmen's
compensation laws, unemployment insurance laws, other types of social security
benefits or similar legislation, or good faith deposits in connection with bids,
tenders or contracts (other than for the payment of Indebtedness) or leases to
which a Loan Party is a party, or deposits to secure public or statutory
obligations or deposits of cash or United States government bonds to secure
surety or appeal bonds to which any Loan Party is a party, or deposits as
security for contested taxes or import duties or for the payment of rent, in
each case which are the subject of a Permitted Protest and which are incurred by
any Loan Party in the ordinary course of business consistent with past practice,
(d) Liens imposed by law, such as carriers', warehousemen's and mechanic's
Liens, in each case for sums for sums not yet due from any Loan Party or the
subject of a Permitted Protest, as the case may be, or other Liens arising out
of judgments or awards against any Loan Party, in each case the subject of a
Permitted Protest; (e) Liens for property taxes or other taxes, assessments or
governmental charges of any Loan Party not yet due or payable or subject to
penalties for nonpayment or which are the subject of a Permitted Protest; (f)
Liens in favor of issuers of performance bonds and surety bonds issued pursuant
to clause (b)(viii) of Section 7.1;
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(g) survey exceptions, encumbrances, easements or reservations of, or rights of
others for, licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real property of any Loan Party incidental to the ordinary course
of conduct of the business of such Loan Party or as to the ownership of
properties of such Loan Party which, in either case, were not incurred in
connection with Indebtedness and which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business of such Loan Party; (h) after the date of this
Agreement, Liens on property, assets or Stock of any Loan Party at the time such
Loan Party became a Subsidiary of Borrower or any Loan Agreement Guarantor;
provided, however, that (i) any such Liens are either subordinate to the Liens
in favor of Foothill or subject to an intercreditor and subordination agreement
in form and substance reasonably acceptable to Foothill, (ii) if any such Lien
has been Incurred in anticipation of such transaction, such property, assets or
Stock subject to such Lien will have a fair market value at the date of the
acquisition thereof not in excess of the lesser of (A) the aggregate purchase
price paid or owed by Borrower or the applicable Loan Agreement Guarantor in
connection with the acquisition of such Loan Party and (B) the fair market value
of all property and assets of such Loan Party and (iii) any such Lien will not
extend to any other assets owned by such Loan Party; (i) Liens on property or
assets at the time any Loan Party acquired such assets, including any
acquisition by means of a merger or consolidation with or into such Loan Party;
provided, however, that (i) any such Liens are either subordinate to the Liens
in favor of Foothill or subject to an intercreditor and subordination agreement
in form and substance reasonably acceptable to Foothill, (ii) if any such Lien
is Incurred in anticipation of such transaction, such property or assets subject
to such Lien will have a fair market value at the date of the acquisition
thereof not in excess of the lesser of (A) the aggregate purchase price paid or
owed by such Loan Party in connection with the acquisition thereof and of any
other property and assets acquired simultaneously therewith and (B) the fair
market value of all such property and assets acquired by such Loan Party and
(iii) any such Lien will not extend to any other property or assets owned by
such Loan Party; (j) Liens securing obligations under the Intercompany Loan
Agreement; (k) Liens securing Indebtedness permitted to be secured pursuant to
the proviso to clause (ii) of paragraph (a) of Section 7.1; provided, however,
that any such Liens are either subordinate to the Liens in favor of Foothill or
subject to an intercreditor and subordination agreement in form and substance
reasonably acceptable to Foothill; and (l) Liens securing Indebtedness Incurred
under the $5.0 million basket set forth in Section 7.1(b)(xii), which Liens do
not otherwise fall within subsections (h) or (i) of this definition; provided,
however, that any such Liens shall be subject to the reporting requirements set
forth in Section 6.2, and provided further, that, on the basis of such
reporting, Foothill may adjust the Borrowing Base in accordance with the proviso
set forth in Section 2.1(a).
"Permitted Protest" means the right of any Loan Party to protest any Lien
other than any such Lien that secures the Obligations, tax (other than payroll
taxes or taxes that are the subject of a United States federal tax lien), or
rental payment, provided that (a) a reserve with respect to such obligation is
established on the books of such Loan Party in an amount that is reasonably
satisfactory to Foothill, (b) any such protest is instituted and diligently
prosecuted by such Loan Party in good faith, and (c) Foothill is satisfied that,
while any such protest is pending,
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there will be no impairment of the enforceability, validity, or priority of any
of Foothill's Liens in and to the Collateral.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than the Real
Property Collateral.
"Plan" means any employee benefit plan, program, or arrangement maintained
or contributed to by any Loan Party or with respect to which such Loan Party may
incur liability.
"Preferred Stock", as applied to the Stock of any corporation, means Stock
of any class or classes (however designated) which is preferred as to the
payment of dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such corporation, over shares of Stock
of any other class of such corporation.
"Radio Station Collateral" means all of the Collateral identified on
Schedule R-2 and any Radio Station Collateral hereafter acquired by any Loan
Party.
"Radio Station Collateral Base Amount" means $22,600,000, which amount has
been determined by Foothill based on its assessment of the Radio Station
Collateral, as adjusted from time to time in accordance with the provisions of
Section 2.1(a).
"Real Property" means any estates or interests in real property now or
hereafter acquired by any Loan Party.
"Real Property Collateral" means the parcel or parcels of real property and
the related improvements thereto identified on Schedule R-1 and any Real
Property hereafter acquired by any Loan Party.
"Reference Rate" means the variable rate of interest, per annum, most
recently announced by Wells Fargo Bank, N.A., or any successor thereto, as its
"prime rate," irrespective of whether such announced rate is the best rate
available from such financial institution.
"Related Brill Party" means (i) the spouse or immediate family member of
Alan R. Brill or (ii) any trust, corporation, partnership or other entity, the
beneficiaries, shareholders, partners, members, owners or Persons beneficially
holding an eighty percent (80%) or more controlling interest of which consist of
Alan R. Brill and/or such other Persons referred to in clause (i).
"Renewal Date" has the meaning set forth in Section 3.4.
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"Reportable Event" means any of the events described in Section 4043(c) of
ERISA or the regulations thereunder other than a Reportable Event as to which
the provision of thirty (30) days notice to the PBGC is waived under applicable
regulations.
"Restricted Subsidiary" means any Subsidiary of Borrower or any Loan
Agreement Guarantor other than an Unrestricted Subsidiary.
"Retiree Health Plan" means an "employee welfare benefit plan" within the
meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.
"Revolving Loan" means, as the context may require, at any time, the sum of
the aggregate amount of Advances outstanding.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby a Loan Party transfers such property to a
Person and such Loan Party or another Loan Party leases it from such Person.
"SEC" means the United States Securities and Exchange Commission and any
successor Federal agency having similar powers.
"Secured Note" has the meaning set forth in Section 4.2.
"Securities Account" means a "securities account" as that term is defined
in Section 8-501 of the Code.
"Senior Indebtedness" means all Indebtedness of the Loan Parties other than
Subordinated Obligations.
"Senior Notes" means the $105,000,000 of 12% Series B Senior Notes due 2007
issued pursuant to the Indenture.
"Senior Note Guarantees" means the guarantee of the Senior Notes pursuant
to the Indenture by the subsidiary guarantors named therein.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the properties and assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. In computing the
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amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that reasonably can
be expected to become an actual or matured liability.
"Stock" means all shares, options, warrants, membership interests,
partnership interests, participations, or other equivalents (regardless of how
designated) of or in a corporation, limited liability company, partnership or
equivalent entity, whether voting or nonvoting, including common stock,
preferred stock, or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the SEC under the
Exchange Act).
"Subordinated Obligation" means any Indebtedness of a Loan Party (whether
outstanding on the date of this Agreement or thereafter Incurred) which is
subordinate or junior in right of payment to the Senior Notes and the
Obligations pursuant to a written agreement.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors (or appoint
other comparable managers) of such corporation, partnership, limited liability
company, or other entity.
"Subsidiary Guarantors" means the OPCO Subsidiaries and the Manager
Subsidiaries.
"System" means, as to any Person, assets constituting a radio
communications system authorized under the rules for radio communications
services (including any license and the network, marketing, distribution, sales,
customer interface and operations functions related thereto) owned or operated
by such Person.
"Tax Allowance Amount" means, with respect to any Member, for any calendar
quarter, (i) forty percent (40%) of the excess of (i) the estimated taxable
income allocable to such Member arising from its ownership interest in Borrower
for the fiscal year through such calendar quarter over (b) any losses of
Borrower for prior fiscal years and such fiscal year that are allocable to such
Member that were not previously utilized in the calculation of the Tax Allowance
Amounts for any period minus (ii) prior distributions of Tax Allowance Amounts
for such fiscal year, all as determined by Borrower's accountants in good faith.
The amount so determined by such accountants shall be the Tax Allowance Amount
for such period and shall be final and binding on all Members.
"Temporary Cash Investments" means any of the following: (i) any Investment
in direct obligations of the United States of American or any agency thereof or
obligations guaranteed by the United States of America or any agency thereof;
(ii) Investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 365 days as of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America having capital surplus and undivided profits
aggregating in excess of
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$250 million (or the foreign currency equivalent thereof) and whose long-term
debt, or whose parent holding company's long-term debt, is rated "A" (or such
similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 435 under the Securities
Act), (iii) repurchase obligations with a term of not more than thirty (30) days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above; (iv)
Investments in commercial paper, maturing not more than 365 days after the date
of acquisition, issued by a corporation (other than an Affiliate of any Loan
Party) organized and in existence under the laws of the United States of America
or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of "P-1" (or higher)
according to Moody's or "A-1" (or higher) according to S&P; (v) Investments in
securities with maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or "A" by Moody's and (vi) Investments in mutual
funds whose investment guidelines restrict such funds' investments to those
satisfying the provisions of clauses (i) through (v) above.
"Term Loan" has the meaning set forth in Section 2.2.
"Transaction Date" means, with respect to the Incurrence of any Indenture
Indebtedness by any Loan Party, the date such Indenture Indebtedness is to be
Incurred.
"Unrestricted Subsidiary" means (i) any Subsidiary of Borrower or any Loan
Agreement Guarantor that at the time of determination shall be designated an
Unrestricted Subsidiary by the Board of Directors of such Person in the manner
provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board
of Directors of Borrower or a Loan Agreement Guarantor may designate any
Subsidiary of such Person (including any newly acquired or newly formed
Subsidiary of such Person) to be an Unrestricted Subsidiary unless such
Subsidiary or any of its Subsidiaries owns any Stock or Indenture Indebtedness
of, or owns or holds any Lien on any property of, Borrower or any Loan Agreement
Guarantor or any Loan Party that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that each Subsidiary to be so designated and each
of its Subsidiaries has not at the time of such designation, and does not
thereafter create, Incur, issue, assume, guarantee or otherwise become liable
with respect to any Indenture Indebtedness other than Non-Recourse Debt and
either (A) the Subsidiary to be so designated has total consolidated assets of
$10,000 or less or (B) if such Subsidiary has consolidated assets greater than
$10,000, then such designation would be permitted under Section 4.07 of the
Indenture. The Board of Directors of Borrower or any Loan Agreement Guarantor
may designate any Unrestricted Subsidiary to be a Restricted Subsidiary subject
to the limitations contained in Section 4.17 of the Indenture.
"Unrestricted Subsidiary Advance" means loans made by Loan Parties to
Unrestricted Subsidiaries.
"Voidable Transfer" has the meaning set forth in Section 15.8.
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"Wholly-Owned Subsidiary" means a Restricted Subsidiary of Borrower or a
Loan Agreement Guarantor, at least 95% of the Stock of which (other than
directors' qualifying shares) is owned by such Person or another Wholly-Owned
Subsidiary of such Person.
"Y2K Compliant" means, with respect to any Loan Party, that all of such
Loan Party's computer based systems, embedded microchips and other processing
capabilities effectively recognize and process dates after December 31, 1999 in
all material respects.
1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the terms "Borrower" or "Loan Agreement Guarantors" are used in respect of a
financial covenant or a related definition, it shall be understood to mean
Borrower and the Loan Agreement Guarantors on a consolidated basis unless the
context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or any other Loan Documents, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. An Event of Default shall
"continue" or be "continuing" until such Event of Default has been waived in
writing by Foothill. Section, subsection, clause, schedule, and exhibit
references herein are to this Agreement unless otherwise specified. Any
reference in this Agreement or in the Loan Documents to this Agreement or any of
the Loan Documents shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable.
1.5 Schedules, Exhibits, and Annexes. All of the schedules, exhibits and
annexes attached to this Agreement shall be deemed incorporated herein by
reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolving Facility.
(a) Subject to the terms and conditions of this Agreement, Foothill agrees
to make advances ("Advances") to Borrower of the Revolving Loan in an amount at
any one time outstanding not to exceed an amount equal to the lesser of (A) the
Maximum Revolving Amount or (B) the Borrowing Base minus the Term Loan. For
purposes of this Agreement, "Borrowing Base", as of any date of determination,
shall mean the lesser of (x) the applicable percentage as of the date of such
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determination (as set forth on Annex 2.1(a) hereto) multiplied by the Radio
Station Collateral Base Amount plus the applicable percentage as of the date of
such determination (as set forth on Annex 2.1(a) hereto) multiplied by the
Newspaper Operations Collateral Base Amount and (y) two times trailing twelve
month Borrowing Base EBITDA; provided, however, that Foothill may adjust the
applicable percentages set forth on Annex 2.1(a) hereto from time to time in its
Permitted Discretion.
(b) Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.
(c) Foothill shall have no obligation to make Advances hereunder to the
extent they would cause the outstanding Obligations (other than under the Term
Loan) to exceed the Maximum Revolving Amount.
2.2 Term Loan Facility.
Subject to the terms and conditions of this Agreement, Foothill agrees to
make a term loan to Borrower on the Closing Date in the original principal
amount equal to the lesser of (i) Fourteen Million Dollars ($14,000,000) or (ii)
the Borrowing Base (the "Term Loan").
2.3 Payments.
(a) Payments by Borrower.
(i) All payments to be made by Borrower shall be made without set-off,
recoupment, deduction, or counterclaim, except as otherwise required by law.
Except as otherwise expressly provided herein, all payments by Borrower shall be
made to Foothill at Foothill's address set forth in Section 12 and shall be made
in immediately available funds, no later than 11:00 a.m. (California time) on
the date specified herein. Any payment received by Foothill later than 11:00
a.m. (California time), at the option of Foothill, shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue until such following Business Day.
(ii) Whenever any payment is due on a day other than a Business Day, such
payment shall be made on the following Business Day, and such extension of time
shall in such case be included in the computation of interest or fees, as the
case may be.
(b) Application and Reversal of Payments. All payments from Borrower not
relating to principal or interest of specific Advances or a specific Term Loan
or not constituting payment of specific fees, and all proceeds of its Collateral
received shall be applied, first, to pay any fees, or expense reimbursements
then due to Foothill from Borrower; second, to pay interest due Foothill in
respect of the Term Loan; third, to pay interest due Foothill in respect of all
Advances; fourth, to pay principal of the Term Loan made by Foothill; and fifth,
to pay principal of the Advances made by Foothill; provided, that if no Event of
Default exists and no Obligations are outstanding, Foothill shall return such
remaining proceeds to Borrower.
(c) Taxes. Any and all payments by Borrower hereunder or under the other
Loan Documents shall be made, in accordance with this Section 2.3(c), free and
clear of and
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without deduction for any and all present or future income or other taxes,
levies imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority ("Taxes"), excluding taxes imposed on or measured by the net income or
capital of Foothill by the jurisdictions under the laws of which it is organized
or is resident or carries on business through a permanent establishment located
therein or any political subdivisions thereof. If Borrower shall be required by
law to deduct any non-excluded Taxes from or in respect of any sum payable
hereunder or under any other Loan Document, (i) the sum payable shall be
increased as much as shall be necessary so that after making all required
withholdings and deductions (including withholdings and deductions applicable to
additional sums payable under this Section 2.3(c), Foothill receives an amount
equal to the sum it would have received had no such withholdings or deductions
been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall
pay the full amount deducted to the relevant taxing or other authority in
accordance with applicable law. Any refunds or overpayments of such taxes
received by or credited to Foothill shall be applied pursuant to Section 2.3(b).
Within thirty (30) days after the date of any payment of Taxes, Borrower shall
furnish to Foothill the original or a certified copy of a receipt evidencing
payment thereof.
2.4 Overadvances. If, at any time or for any reason, the amount of the
Obligations owed by Borrower to Foothill pursuant to Sections 2.1 and 2.2 is
greater than either the Dollar or percentage limitations set forth in Sections
2.1 or 2.2 (an "Overadvance"), (i) in the case of an Overadvance caused by an
interest charge, a Foothill Expense or fees or charges provided for in Section
2.9, Borrower shall have a three (3) Business Day grace period within which to
pay to Foothill, in cash, the amount of such excess, after which time such
amount shall be charged by Foothill to Borrower's Loan Account and added to the
Obligations in accordance with the priority set forth in Section 2.3(b); and
(ii) in all other cases, Borrower immediately shall pay to Foothill, in cash,
the amount of such excess, which amount shall be used to reduce the Obligations
in accordance with the priority set forth in Section 2.3(b).
2.5 Interest: Rates, Payments, and Calculations.
(a) Interest Rate. Except as provided in clause (c) below, all Obligations
shall bear interest at a per annum rate of one percent (1%) above the Reference
Rate.
(b) [Intentionally Deleted].
(c) Default Rate. Upon the occurrence and during the continuation of an
Event of Default, (i) all Obligations shall bear interest at a per annum rate
equal to three percent (3%) above the then applicable interest in effect under
Section 2.5(a).
(d) Minimum Interest. In no event shall the rate of interest chargeable
hereunder for any day be less than eight percent (8%) per annum. To the extent
that interest accrued hereunder at the rate set forth herein would be less than
the foregoing minimum daily rate, the interest rate chargeable hereunder for
such day automatically shall be deemed increased to the minimum rate. To the
extent that interest accrued hereunder at the rate set forth herein (including
the minimum interest rate) would yield less than the foregoing minimum amount,
the interest rate chargeable hereunder for the period in question automatically
shall be deemed
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increased to that rate that would result in the minimum amount of interest being
accrued and payable hereunder.
(e) Payments. Interest payable hereunder shall be due and payable, in
arrears, on the first day of each month during the term hereof. Borrower hereby
authorizes Foothill, at its option, without prior notice to Borrower, to charge
such interest, all Foothill Expenses (as and when incurred), the fees and
charges provided for in Section 2.9 (as and when accrued or incurred), and all
other payments due under any Loan Document to Borrower's Loan Account, which
amounts thereafter shall accrue interest at the rate then applicable to Loans
made hereunder; provided, however, that the parties acknowledge and agree that
for ease of administration and compliance with Indenture, interest, Foothill
Expenses and the fees and charges provided for in Section 2.9 shall be applied
to the Obligations but in no event shall be added to or considered principal
owing on the Term Loan or any Advance prior to the expiration of the three (3)
Business Day grace period set forth in Section 2.4. Any interest not paid when
due shall be compounded and shall thereafter accrue interest at the rate then
applicable to Loans made hereunder.
(f) Computation. The Reference Rate as of the date of this Agreement is
8.25% per annum. In the event the Reference Rate is changed from time to time
hereafter, the rate of interest provided for in Section 2.5(a) and Section
2.5(c)(i) automatically and immediately shall be increased or decreased by an
amount equal to such change in the Reference Rate. All interest and fees
chargeable under the Loan Documents shall be computed on the basis of a 360 day
year for the actual number of days elapsed.
(g) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rates payable under this Agreement, plus any other amounts paid in
connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrower and Foothill in executing and delivering this Agreement,
intend legally to agree upon the rate or rates of interest and manner of payment
stated within it; provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law, then, ipso facto as of the
date of this Agreement, Borrower is and shall be liable only for the payment of
such maximum as allowed by law, and payment received from Borrower in excess of
such legal maximum, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.
2.6 [Intentionally Deleted].
2.7 Designated Account. Foothill is authorized to make Loans under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.5(e). Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
any Loan requested by Borrower and made by Foothill hereunder. Unless otherwise
agreed by Foothill any Loan requested by Borrower and made hereunder shall be
made to Borrower's Designated Account.
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2.8 Maintenance of Loan Account; Statements of Obligations. Foothill shall
maintain an account on its books in the name of Borrower (the "Loan Account") on
which Borrower will be charged with all Loans made by Foothill to Borrower or
for Borrower's account, including accrued interest, Foothill Expenses, and any
other payment Obligations. In accordance with Section 2.7, each Loan Account
will be credited with all payments received by Foothill from Borrower or for
Borrower's account. Foothill shall render statements regarding the Loan Account
to Borrower, including principal, interest, fees, and including an itemization
of all charges and expenses constituting Foothill Expenses owing, and such
statements shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrower and Foothill unless, within thirty
(30) days after receipt thereof by Borrower, Borrower shall deliver to Foothill
written objection thereto describing the error or errors contained in any such
statements.
2.9 Fees. Borrower agrees to pay to Foothill the following fees:
(a) Closing Fee. On the Closing Date, a closing fee of $150,000.
(b) Unused Line Fee. On the first day of each month during the term of this
Agreement, an unused line fee in an amount equal to three-eighths of one percent
(0.375%) per annum times the Average Unused Portion of the Maximum Revolving
Amount.
(c) Facility Fee. A facility fee of $225,000 payable in three equal
installments of $75,000, with an installment to be due and payable on each of
the first three anniversaries of the Closing Date. Each installment of such
facility fee shall be fully earned as of the applicable anniversary of the
Closing Date and no installment of such fee paid shall be refunded to Borrower
under any circumstances.
(d) Servicing Fee. On the first day of each month during the term of this
Agreement, and thereafter so long as any Obligations are outstanding, a monthly
servicing fee in an amount equal to $3,000 per month in arrears; provided that,
if Borrower implements Foothill's automated collateral reporting system, such
monthly line fee shall be reduced to $2,500 per month (plus a one time set-up
fee of $3,000 plus any out-of-pocket expenses incurred to set-up such system,
payable on the date of implementation).
(e) Financial Examination, Documentation, and Collateral Review Fees.
Foothill's customary fee of $750 per day per examiner, plus out-of-pocket
expenses for each financial analysis and examination (i.e., audits) of any Loan
Party performed by personnel employed by Foothill; Foothill's customary
collateral review fee of $1,500 per day per person, plus Foothill's
out-of-pocket expenses for each collateral review performed by personnel
employed by Foothill; and the actual charges paid or incurred by Foothill if it
elects to employ the services of one or more third Persons to perform such
financial analyses and examinations (i.e., audits) of Borrower or to obtain a
review of the Collateral in accordance with the provisions of this Agreement;
and, on each anniversary of the Closing Date, Foothill's customary fee of $1,000
per year for its loan documentation review.
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3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Advance and Term Loan. The
obligation of Foothill to make the initial Advance and the Term Loan is subject
to the fulfillment, to the satisfaction of Foothill and its counsel, of each of
the following conditions on or before the Closing Date:
(a) the Closing Date shall occur simultaneously with the closing of the NCR
Loan and on or before October 27, 1999;
(b) Foothill shall have received all financing statements required by
Foothill, duly executed by each Loan Party, as applicable, and Foothill shall
have received searches reflecting the filing of all such financing statements;
(c) Foothill shall have received each of the documents and items listed on
Schedule 3.1 (which is incorporated herein and made a part of this Agreement),
in form and substance satisfactory to Foothill, duly executed and in full force
and effect, as applicable;
(d) [Intentionally Deleted];
(e) No Material Adverse Change shall have occurred since May 31, 1999;
(f) Foothill shall have reviewed and found satisfactory each Loan Party's
financial and collateral reporting systems and Borrower shall have submitted a
plan, satisfactory to Foothill, demonstrating that each Loan Party will be fully
Y2K Compliant;
(g) As of the Closing Date, the aggregate of Borrower's unrestricted cash
and Availability shall be at least $10,000,000;
(h) Foothill shall have (i) determined the Newspaper Operations Collateral
Base Amount and Radio Station Collateral Base Amount, in each case satisfactory
to Foothill, and (ii) received mortgagee title insurance policies (or marked
commitments to issue the same) for the Real Property Collateral issued by a
title insurance company satisfactory to Foothill (each a "Mortgage Policy" and,
collectively, the "Mortgage Policies") in amounts satisfactory to Foothill
assuring Foothill that the Mortgages on such Real Property Collateral are valid
and enforceable mortgage Liens on such Real Property Collateral free and clear
of all defects and encumbrances except Permitted Liens, and the Mortgage
Policies shall otherwise be in form and substance reasonably satisfactory to
Foothill;
(i) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Foothill and its
counsel.
3.2 Conditions Precedent to all Loans. The following shall be conditions
precedent to all Loans made hereunder:
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(a) the representations and warranties contained in this Agreement and the
other Loan Documents shall be true and correct in all respects on and as of the
date of such extension of credit, as though made on and as of such date (except
to the extent that such representations and warranties relate solely to an
earlier date);
(b) no Default or Event of Default shall have occurred and be continuing on
the date of such extension of credit, nor shall either result from the making
thereof; and
(c) no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the extending of such credit shall have
been issued and remain in force by any Governmental Authority against any Loan
Party, Foothill or any of their respective Affiliates.
3.3 Condition Subsequent. As a condition subsequent to the Loans made
hereunder on the Closing Date, Borrower shall perform or cause to be performed
the following (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):
(a) within thirty (30) days of the Closing Date, deliver to Foothill the
certified copies of the policies of insurance as are required by Section 6.10,
the form and substance of which shall be satisfactory to Foothill and its
counsel;
(b) in the event that the Missouri Entities or substantially all of their
assets are not sold by July 30, 2000, cause the Missouri Entities to execute and
deliver a guarantee in favor of Foothill substantially in the form of the
guarantee delivered on the Closing Date from the Subsidiary Guarantors, and
cause the assets of the Missouri Entities to be pledged to and subject to a Lien
in favor of Foothill pursuant to documents in form and substance satisfactory to
Foothill (provided, however, that Foothill agrees to cause any such Liens to be
released upon the sale of such assets in accordance with the terms of Section
7.3(a)(iv); and
(c) within thirty (30) days of the Closing Date, cause the federal tax lien
filed against Brill Radio, Inc. in Virginia to be removed, and upon such
removal, promptly provide Foothill with evidence thereof.
3.4 Term; Automatic Renewal.
(a) This Agreement shall become effective upon the execution and delivery
hereof by Borrower, the Loan Agreement Guarantors and Foothill and shall
continue in full force and effect for a term ending on the date (the "Renewal
Date") that is five (5) years from the Closing Date and automatically shall be
renewed for successive one (1) year periods thereafter, unless sooner terminated
pursuant to the terms hereof.
(b) Either party may terminate this Agreement effective on the Renewal Date
or on any anniversary of the Renewal Date by giving the other party at least
ninety (90) days prior written notice. The foregoing notwithstanding, Foothill
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default. Upon the maturity date of the Loans or the
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earlier termination of this Agreement pursuant to the terms hereof, the parties
acknowledge and agree that the NCR Loan immediately shall become due and
payable.
3.5 Effect of Termination.
(a) On the date of termination of this Agreement, all Obligations
(including the Term Loan) immediately shall become due and payable without
notice or demand. No termination of this Agreement, however, shall relieve or
discharge any Loan Party of such Loan Party's duties, Obligations, or covenants
hereunder or under the other Loan Documents, and Foothill's continuing security
interests in the Collateral shall remain in effect until all Obligations have
been fully and finally discharged and Foothill's obligations to provide
additional credit hereunder have been terminated.
(b) If Borrower has sent a notice of termination pursuant to the provisions
of Section 3.4, but fails to pay the Obligations in full on the date set forth
in said notice, then Foothill may, but shall not be required to, renew this
Agreement for an additional term of one (1) year.
3.6 Early Termination by Borrower. The provisions of Section 3.4 that allow
termination of this Agreement by Borrower only on the Renewal Date and certain
anniversaries thereof notwithstanding, Borrower has the option, at any time upon
ten (10) Business Days prior written notice to Foothill, to terminate this
Agreement by paying Foothill, in cash, the Obligations in full, together with a
premium (the "Early Termination Premium") equal to (a) Seven Hundred Fifty
Thousand Dollars ($750,000) if the effective date of termination of this
Agreement is on or prior to the first anniversary of the Closing Date, (b) Six
Hundred Thousand Dollars ($600,000) if the effective date of such termination is
on or prior to the second anniversary of the Closing Date (c) Four Hundred Fifty
Thousand Dollars ($450,000) if the effective date of termination of this
Agreement is on or prior to the third anniversary of the Closing Date; (d) Three
Hundred Thousand Dollars ($300,000) if the effective date of termination of this
Agreement is on or prior to the fourth anniversary of the Closing Date; and (e)
One Hundred Fifty Thousand Dollars ($150,000) if the effective date of
termination of this Agreement is prior to (but not on) the fifth anniversary of
the Closing Date.
3.7 Termination Upon Event of Default. If Foothill terminates this
Agreement upon the occurrence of an Event of Default, in view of the
impracticability and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Foothill's
lost profits as a result thereof, Borrower shall pay to Foothill upon the
effective date of such termination, a premium in an amount equal to the Early
Termination Premium. The Early Termination Premium shall be presumed to be the
amount of damages sustained by Foothill as the result of the early termination
and Borrower agrees that it is reasonable under the circumstances currently
existing. The Early Termination Premium provided for in this Section 3.7 shall
be deemed included in the Obligations.
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4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each of Borrower and each Loan Agreement
Guarantor hereby grants to Foothill continuing Liens on all right, title, and
interest of such Person in and to all currently existing and hereafter acquired
or arising Personal Property Collateral in order to secure prompt repayment of
any and all Obligations and in order to secure prompt performance by such Person
of each of its covenants and duties under the Loan Documents. Foothill's Liens
in and to the Personal Property Collateral shall attach to all Personal Property
Collateral without further act on the part of Foothill or any Person. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Asset Dispositions permitted pursuant to Section
7.3(a), no Loan Party has authority, express or implied, to dispose of any item
or portion of the Personal Property Collateral or the Real Property Collateral.
4.2 Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by a personal property lease, chattel paper or any other
item described in the definition of "Negotiable Collateral", the applicable Loan
Party promptly shall cause any such Collateral to bear a legend indicating that
such Collateral is subject to a Lien in favor of Foothill. Notwithstanding the
foregoing, on the Closing Date and as and when created thereafter, the Loan
Parties shall endorse and deliver physical possession to Foothill the Stock
pledged to Foothill pursuant to the Loan Documents, the Intercompany Notes, the
Managed Affiliate Notes, and any other note evidencing an Unrestricted
Subsidiary Advance the amount of which exceeds $1.0 million (provided that the
aggregate of all such undelivered notes owing from Unrestricted Subsidiaries
shall not exceed $5.0 million in the aggregate) unless any such Intercompany
Note, Managed Affiliate Note, or other note is secured (a "Secured Note"), in
which case the applicable Loan Party shall cause such Secured Note to bear a
legend indicating that such Secured Note is subject to a Lien in favor of
Foothill. Any such Secured Note shall be subject to the reporting requirements
set forth in Section 6.2.
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral.
With respect to any Loan Party, at any time after the occurrence and during the
continuance of an Event of Default (and in the case of any Account Debtor of
such Loan Party which Account Debtor is also Loan Party, at any time), Foothill
or Foothill's designee may (a) notify customers or Account Debtors that the
Accounts, General Intangibles, or Negotiable Collateral of such Loan Party have
been assigned to Foothill or that Foothill has a security interest therein and
(b) collect the Accounts, General Intangibles, and Negotiable Collateral of such
Loan Party directly and charge the collection costs and expenses to the Loan
Account. At all times, Borrower and each Loan Agreement Guarantor agrees, and
agrees to cause each Loan Party, to hold in trust for Foothill, as Foothill's
trustee, any Collections that it receives with respect to the secured term notes
described in Section 6.7, and immediately will deliver said Collections to
Foothill in their original form as received by such Loan Party. With respect to
all other Collections, upon the occurrence and during the continuance of an
Event of Default, Borrower and each Loan Agreement Guarantor agrees, and agrees
to cause each Loan Party, to hold in trust for Foothill, as Foothill's trustee,
any Collections that it receives and immediately will deliver said Collections
to Foothill in their original form as received by such Loan Party.
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4.4 Delivery of Additional Documentation Required. At any time upon the
request of Foothill, Borrower and each Loan Agreement Guarantor shall, and agree
to cause each Loan Party to, execute and deliver to Foothill all financing
statements, collateral assignments, continuation financing statements, fixture
filings, security agreements, pledges, assignments, mortgages, leasehold
mortgages, deeds of trust, leasehold deeds of trust, endorsements of
certificates of title, applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other documents that
Foothill reasonably may request, in form satisfactory to Foothill, to perfect
and continue perfected Foothill's Liens on the Collateral (whether now owned or
hereafter arising or acquired), and in order to consummate fully all of the
transactions contemplated hereby and under the other the Loan Documents.
4.5 Power of Attorney. Each of Borrower and each Loan Agreement Guarantor
hereby irrevocably makes, constitutes, and appoints Foothill (and any of
Foothill's officers, employees, or agents designated by Foothill) as such
Person's true and lawful attorney, with power to (a) if such Person refuses to,
or fails timely to execute and deliver any of the documents described in Section
4.4, sign the name of such Person on any of the documents described in Section
4.4, (b) at any time that an Event of Default has occurred and is continuing or
Foothill in good faith believes that an Event of Default has occurred and is
continuing, sign such Person's name on any invoice or bill of lading relating to
any Account, drafts against Account Debtors, schedules and assignments of
Accounts, verifications of Accounts, and notices to Account Debtors, (c) send
requests for verification of Accounts, (d) endorse such Person's name on any
Collection item that may come into Foothill's possession, (e) at any time that
an Event of Default has occurred and is continuing or Foothill in good faith
believes that an Event of Default has occurred and is continuing, notify the
post office authorities to change the address for delivery of such Person's mail
to an address designated by Foothill, to receive and open all mail addressed to
such Person, and to retain all mail relating to the Collateral and forward all
other mail to such Person, (f) at any time that an Event of Default has occurred
and is continuing or Foothill in good faith believes that an Event of Default
has occurred and is continuing, make, settle, and adjust all claims under such
Person's policies of insurance and make all determinations and decisions with
respect to such policies of insurance, and (g) at any time that an Event of
Default has occurred and is continuing or Foothill in good faith believes that
an Event of Default has occurred and is continuing (or, in the case of any
Account Debtor which is also a Loan Party, at any time), settle and adjust
disputes and claims respecting the Accounts directly with Account Debtors, for
amounts and upon terms that Foothill determines to be reasonable, and Foothill
may cause to be executed and delivered any documents and releases that Foothill
determines to be necessary. The appointment of Foothill as such Person's
attorney, and each and every one of Foothill's rights and powers, being coupled
with an interest, is irrevocable until all of the Obligations have been fully
and finally repaid and performed and Foothill's obligations to extend credit
hereunder are terminated. Foothill agrees to promptly advise Borrower of any
actions taken by Foothill utilizing the power of attorney granted hereby.
4.6 Right to Inspect. Foothill (through any of its officers, employees, or
agents) shall have the right, from time to time hereafter to inspect the Books
and to check, test, and appraise the Collateral in order to verify any Loan
Party's financial condition or the amount, quality, value, condition of, or any
other matter relating to, the Collateral.
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4.7 Control Agreements.
(a) Borrower and each Loan Agreement Guarantor agree that it will, and that
it will cause each Loan Party to, cause all cash proceeds of any Asset
Disposition held in anticipation of reinvestment to be deposited in a Depositary
Account subject to a Control Agreement and invested in Temporary Cash
Investments, which cash proceeds shall remain in such Depositary Account until
Foothill shall consent to the release thereof in accordance with Section
7.3(a)(iii)(B).
(b) Upon the occurrence and during the continuance of an Event of Default,
each of Borrower and each Loan Agreement Guarantor agrees that it will not, and
that it will cause each Loan Party not to, transfer assets out of any Securities
Account or Depositary Account and, if to another securities intermediary or
financial institution, as applicable, unless such Person, Foothill, and the
substitute securities intermediary or financial institution, as applicable, have
entered into a Control Agreement. So long as no Event of Default has occurred
and is continuing or would result therefrom, such Loan Party may use such assets
to the extent permitted by this Agreement. No arrangement contemplated hereby or
by any Control Agreement in respect of any Depositary Accounts, Securities
Accounts or other investment property shall be modified by any Loan Party
without the prior written consent of Foothill. Upon the occurrence and during
the continuance of a Default or Event of Default, Foothill may notify any
financial institution or securities intermediary, as applicable, to liquidate or
transfer the applicable Depositary Account or Securities Account or any related
investment property maintained or held thereby and remit the proceeds thereof to
an account designated by Foothill.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Foothill to enter into this Agreement, each of Borrower
and each Loan Agreement Guarantor, on its own behalf and on behalf of each Loan
Party, makes the following representations and warranties to Foothill which
shall be true, correct, and complete in all respects as of the date hereof, and
shall be true, correct, and complete in all respects as of the Closing Date, and
at and as of the date of the making of each Advance made thereafter, as though
made on and as of the date of the making of such Advance (except to the extent
that such representations and warranties relate solely to an earlier date) and
such representations and warranties shall survive the execution and delivery of
this Agreement:
5.1 No Encumbrances. Each Loan Party has good and indefeasible title to its
Collateral, free and clear of Liens except for Permitted Liens (and in the case
of Brill Radio, Inc., except for the federal tax lien filed against it in
Virginia, as disclosed to Foothill prior to the Closing Date).
5.2 Intercompany Loan Agreement. A true, correct and complete copy of the
Intercompany Loan Agreement and all exhibits, supplements, addenda and
amendments or other modifications thereto is attached hereto as Exhibit B. The
Intercompany Loan Agreement and the Intercompany Notes are in full force and
effect and are the valid, binding and enforceable obligation of the Persons
party thereto. Schedule 5.2 sets forth as of the date hereof the amount
outstanding of all advances to any Subsidiary Guarantor, and in each case
indicating (i) the final
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maturity date with respect thereto and (ii) the use or purpose therefor, if not
for general corporate business purposes.
5.3 Real Property Collateral. With respect to each Loan Party granting a
Lien on Real Property Collateral in favor of Foothill, the legal description
attached to each Mortgage encumbering such Real Property Collateral with a Lien
in favor of Foothill accurately describes all Real Property of such Loan Party
in that jurisdiction except for the office space leases described on Schedule
5.3, and is the same as the legal description used to encumber such Loan Party's
Real Property in connection with prior financings.
5.4 Equipment. All of the Equipment is used or held for use in each Loan
Party's business and is fit for such purposes.
5.5 Location of Inventory and Equipment. The Inventory and Equipment are
not stored with a bailee, warehouseman, or similar party (without Foothill's
prior written consent) and are located only at the locations identified on
Schedule 6.12 or otherwise permitted by Section 6.12.
5.6 Intercompany Loan Records. Each Loan Party keeps correct and accurate
records concerning the transactions made pursuant to the Intercompany Loan
Agreement.
5.7 Location of Chief Executive Office; FEIN. The chief executive office of
Borrower and each Loan Agreement Guarantor is located at the address indicated
in the preamble to this Agreement. The chief executive office of each other Loan
Party and each Loan Party's FEIN is listed on Schedule 5.7.
5.8 Due Organization and Qualification; Subsidiaries.
(a) Each Loan Party is duly organized and existing and in good standing
under the laws of the jurisdiction of its incorporation, organization or
formation, as applicable, and is qualified and licensed to do business in, and
in good standing in, any jurisdiction where the failure to be so licensed or
qualified could reasonably be expected to constitute a Material Adverse Change.
(b) Set forth on Schedule 5.8 is a complete and accurate list of each of
Borrower's and each Loan Agreement Guarantor's Wholly-Owned Subsidiaries,
showing: (i) the number of shares of each class of common and preferred Stock
authorized for each of such Wholly-Owned Subsidiaries; and (ii) the number and
the percentage of the outstanding shares of each such class owned directly or
indirectly by Borrower or such Loan Agreement Guarantor, as applicable. All of
the outstanding capital Stock of each such Wholly-Owned Subsidiary has been
validly issued and is fully paid and non-assessable. Each of the Subsidiary
Guarantors is a Restricted Subsidiary. Each Loan Party is incorporated,
organized or formed, as applicable, in the State of Virginia.
(c) Except as set forth on Schedule 5.8, or Schedule A-1, no capital Stock
(or any securities, instruments, warrants, options, purchase rights, conversion
or exchange rights, calls, commitments or claims of any character convertible
into or exercisable for capital Stock) of
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any Wholly-Owned Subsidiary or any directly owned Unrestricted Subsidiary of
Borrower or any Loan Agreement Guarantor is subject to the issuance of any
security, instrument, warrant, option, purchase right, conversion or exchange
right, call, commitment or claim of any right, title, or interest therein or
thereto.
(d) As of the Closing Date, other than the Missouri Entities, Borrower, and
BMC Holdings, Inc., all of the Subsidiary Guarantors taken together constitute
all of the Restricted Subsidiaries under the Indenture.
5.9 Due Authorization; No Conflict.
(a) The execution, delivery, and performance by each Loan Party of this
Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary corporate, limited liability or partnership action,
as applicable. Borrower and each Loan Agreement Guarantor have the authority to
make the representations, warranties and covenants made by it in this Agreement
on behalf the Loan Parties.
(b) The execution, delivery, and performance by each Loan Party of this
Agreement and the Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation (including
Regulations T, U, and X of the Federal Reserve Board) applicable to such Loan
Party, the Governing Documents of such Loan Party, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Loan Party,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation or
material lease of such Loan Party, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
such Loan Party, other than Permitted Liens, or (iv) require any approval of
stockholders or any approval or consent of any Person under any material
contractual obligation of such Loan Party.
(c) Other than the filing of appropriate financing statements, fixture
filings and Mortgages, the execution, delivery, and performance by each Loan
Party of this Agreement and the Loan Documents to which such Loan Party is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any federal, state, foreign, or
other Governmental Authority or other Person.
(d) This Agreement and the Loan Documents to which each Loan Party is a
party, and all other documents contemplated hereby and thereby, when executed
and delivered by such Loan Party will be the legally valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with their respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally.
(e) The Liens granted by each Loan Party to Foothill in and to its
properties and assets pursuant to this Agreement and the other Loan Documents
are validly created, perfected, and first priority Liens, subject only to
Permitted Liens.
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5.10 Litigation. There are no actions or proceedings pending by or against
any Loan Party before any court or administrative agency and no Loan Party has
knowledge or belief of any pending or threatened litigation, governmental
investigations, or claims, complaints, actions, or prosecutions involving any
Loan Party or any guarantor of the Obligations, except for: (a) ongoing
collection matters in which any Loan Party is the plaintiff; (b) matters
disclosed on Schedule 5.10; and (c) matters arising after the date hereof that,
if decided adversely to any Loan Party, would not result in a Material Adverse
Change.
5.11 No Material Adverse Change. All financial statements relating to any
Loan Party or any guarantor of the Obligations that have been delivered by
Borrower to Foothill have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, for the lack of footnotes and being
subject to year-end audit adjustments) and fairly present such Loan Party's (or
such guarantor's, as applicable) financial condition as of the date thereof and
such Loan Party's results of operations for the period then ended. There has not
been a Material Adverse Change with respect to such Loan Party (or such
guarantor, as applicable) since the date of the latest financial statements
submitted to Foothill on or before the Closing Date.
5.12 No Fraudulent Transfer.
(a) Each Loan Party is, and Borrower and its Subsidiaries on a consolidated
basis, and each Loan Agreement Guarantor and its Subsidiaries on a consolidated
basis, are, and immediately following the making of each Loan made on the
Closing Date and after giving effect to the application of the proceeds of such
Loans, will be, Solvent. The Guaranty Inducement and Offset Agreement among
Borrower and the Subsidiary Guarantors provides, by virtue of the rights granted
therein, each Loan Party with a fair equivalent value in exchange for such Loan
Party's guarantee of the Obligations.
(b) No transfer of property is being made by any Loan Party and no
obligation is being incurred by any Loan Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of any
Loan Party.
5.13 Employee Benefits. None of Borrower, any of its Subsidiaries, or any
of their ERISA Affiliates maintains or contributes to any Benefit Plan. No ERISA
Event has occurred nor has any other event occurred that may result in an ERISA
Event that could reasonably be expected to result in a Material Adverse Change.
None of Borrower or its Subsidiaries, any ERISA Affiliate, or any fiduciary of
any Plan is subject to any material direct or indirect liability with respect to
any Plan under any applicable law, treaty, rule, regulation, or agreement. None
of Borrower or its Subsidiaries or any ERISA Affiliate is required to provide
security to any Plan under Section 401(a)(29) of the IRC.
5.14 Environmental Condition. Except as disclosed on Schedule 5.14: (a)
none of any Loan Party's properties or assets has ever been used by such Loan
Party or, to the best of such Loan Party's knowledge, by previous owners or
operators in the disposal of, or to produce, store, handle, treat, release, or
transport, any Hazardous Materials; (b) none of any Loan Party's properties or
assets has ever been designated or identified in any manner pursuant to any
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environmental protection statute as a Hazardous Materials disposal site, or a
candidate for closure pursuant to any environmental protection statute; (c) no
Lien arising under any environmental protection statute has attached to any
revenues or to any real or personal property owned or operated by any Loan
Party; and (d) no Loan Party has received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other Governmental
Authority concerning any action or omission by such Loan Party resulting in the
releasing or disposing of Hazardous Materials into the environment.
5.15 Brokerage Fees. Except for fees payable to Standard Capital not to
exceed $327,000, no brokerage commission or finders fee has or shall be incurred
or payable in connection with or as a result of Borrower obtaining financing
from Foothill under this Agreement, and no Loan Party has utilized the services
of any broker or finder in connection with Borrower's obtaining financing from
Foothill under this Agreement.
5.16 Permits and other Intellectual Property. Each Loan Party owns or
possesses adequate licenses or other rights to use all Permits, patents, patent
applications, trademarks, trademark applications, service marks, service mark
applications, trade names, copyrights, trade secrets and know-how (collectively,
the "Intellectual Property") that are necessary for the operation of its
business as currently conducted. No Loan Party owns any federally registered
Intellectual Property. Other than as set forth on Schedule 5.10, no claim is
pending or threatened to the effect that any Loan Party infringes upon, or
conflicts with, the asserted rights of any other Person under any Intellectual
Property, and to the best of any Loan Party's knowledge there is no basis for
any such claim (whether pending or threatened). No claim is pending or
threatened to the effect that any such Intellectual Property owned or licensed
by any Loan Party, or in which any Loan Party otherwise has the right to use is
invalid or unenforceable by such Loan Party, and to the best of any Loan Party's
knowledge there is not basis for any such claim (whether or not pending or
threatened).
5.17 Leases. (a) Schedule 5.17 is a schedule of all presently effective
Leases and Capital Leases with respect to each Loan Party. Each of such Leases
and Capital Leases is in full force and effect. No party to any such Lease or
Capital Lease to which any Loan Party is a party as of the date of this
Agreement is in default or violation of any such Lease or Capital Lease and such
Loan Party has not received any notice or threat of cancellation of any such
Lease or Capital Lease. Each Loan Party has made all payments due under its
Leases and/or Capital Leases listed on Schedule 5.17. Each Loan Party hereby
authorizes Foothill at any time and from time to time to contact any of such
Loan Party's lessors/landlords in order to confirm such Loan Party's continued
compliance with the terms and conditions of the Lease(s) and/or Capital
Leases(s) between such Loan Party and that lessor/landlord and to discuss such
issues concerning such Loan Party's occupancy thereunder as Foothill may
determine.
5.18 FCC Compliance; Licenses.
(a) The Licenses have been duly issued and are in full force and effect.
The Licenses are held by the OPCO Subsidiaries as set forth on Schedule R-2
hereto.
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(b) The Licenses constitute all of the licenses, permits and authorizations
required by the FCC in order to operate the Radio Station Collateral as it is
currently being operated.
(c) Each Loan Party which holds a License, and the operation of the Radio
Station Collateral, is in compliance in all material respects with the
Communications Act and the terms of the applicable License.
(d) There is no notice of apparent liability, violation, forfeiture, or
other order issued by or pending before the FCC, or of any other proceedings of
or before the FCC. Except as set forth on Schedule 5.10, no Loan Party has
knowledge of any complaint or investigation currently pending or threatened by
or before the FCC.
(e) No event has occurred which (i) results in, or after notice or lapse of
time or both would result in, revocation, suspension, adverse modification,
non-renewal, impairment, restriction or termination of, or other forfeiture with
respect to, any License in any respect, or which otherwise could reasonably be
expected to result in a Material Adverse Change or (ii) affects or could
reasonably be expected in the future to affect any of the material rights of any
Loan Party under any License in any respect, or which otherwise could reasonably
be expected to result in a Material Adverse Change.
(f) Each Loan Party has duly filed in a timely manner all material filings,
reports, applications, documents, instruments and information required to be
filed by it under the Communications Act, and all such filings were when made
true, correct and complete in all material respects.
(g) No Loan Party has any reason to believe that any License will not be
renewed in the ordinary course, except where the failure of any such Licenses to
be renewed, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Change.
5.19 Transactions with Affiliates.
With respect to each Loan Party, all transactions with Affiliates of such
Loan Party permitted by this Agreement, except restricted payments permitted
under Section 7.8(a) hereof, are or will be in the ordinary course of such Loan
Party's business, upon fair and reasonable terms, fully disclosed to Foothill,
and no less favorable to such Loan Party than would be obtained in an arm's
length transaction with a non-Affiliate.
5.20 Year 2000 Compliance.
Each Loan Party is Y2K Compliant.
6. AFFIRMATIVE COVENANTS.
Each of Borrower and each Loan Agreement Guarantor covenants and agrees, on
its own behalf and on behalf of each Loan Party, that so long as any credit
hereunder shall be
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available and until full and final payment of the Obligations, and unless
Foothill shall otherwise consent in writing, such Person shall do all of the
following:
6.1 Accounting System. Maintain a standard and modern system of accounting
that enables such Loan Party to produce financial statements in accordance with
GAAP, and maintain records pertaining to its Collateral that contain information
as from time to time may be requested by Foothill.
6.2 Collateral Reporting. On a quarterly basis, and in any event, by no
later than the 45th day following a fiscal quarter end, provide Foothill with
the following documents in form satisfactory to Foothill: (a) a detailed
calculation of the Borrowing Base, together with a reconciliation to the
detailed calculation of its Borrowing Base previously provided to Foothill, (b)
a statement setting forth current Intercompany Loan balances, (c) a statement of
Secured Notes, setting forth (i) the principal amount of each Secured Note, (ii)
the date of such Secured Note and the security agreement related thereto, (iii)
the obligor thereunder, and (iv) the location where such Secured Note is kept,
(d) a statement setting forth Liens granted pursuant to subsection (l) of the
definition of "Permitted Liens", (e) a statement setting forth the amount and
location of cash proceeds of any Asset Disposition held in a Depositary Account
pursuant to the requirements of Section 4.7(a), if any, and (f) such other
reports as to its Collateral or the financial condition of Borrower and the
other Loan Parties as Foothill may reasonably request from time to time.
6.3 Financial Statements, Reports, Certificates. Deliver to Foothill: (a)
as soon as available, but in any event within forty-five (45) days after the end
of each fiscal quarter during each fiscal year of Borrower, a company prepared
consolidated balance sheet, consolidated income statement, and consolidated
statement of cash flow covering operations during such period, in each case with
respect to Borrower and the Loan Agreement Guarantors on a consolidated basis;
and (b) as soon as available, but in any event within ninety (90) days after the
end of each fiscal year of Borrower, consolidated financial statements for each
such fiscal year, audited by independent certified public accountants reasonably
acceptable to Foothill and certified, without any qualifications, by such
accountants to have been prepared in accordance with GAAP, together with a
certificate of such accountants addressed to Foothill stating that such
accountants do not have knowledge of the existence of any Default or Event of
Default under Section 7.20. Such audited financial statements shall include a
balance sheet, profit and loss statement, and statement of cash flow and, if
prepared, such accountants' letter to management. In addition to the financial
statements referred to above, Borrower agrees to deliver to Foothill as soon as
available, but in any event within forty-five (45) days after the end of each
fiscal quarter during each fiscal year of Borrower, unaudited financial
statements prepared on a consolidating basis as to present the Loan Parties as a
group by geographic market, and to present the Unrestricted Subsidiaries and the
Missouri Entities combined.
Together with the above, Borrower and each Loan Agreement Guarantor also
shall deliver to Foothill its Form 10-Q Quarterly Reports, Form 10-K Annual
Reports, and Form 8-K Current Reports, and any other filings made by such Person
with the SEC, if any, within five (5) days after the same are filed, or any
other information that is provided by such Person to the
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holders of the Senior Notes, and any other report reasonably requested by
Foothill relating to the financial condition of such Person.
Each fiscal quarter, together with the financial statements provided
pursuant to Section 6.3(a), Borrower shall deliver to Foothill a certificate
signed by its chief executive officer to the effect that: (i) all financial
statements delivered or caused to be delivered to Foothill hereunder have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and in the case of interim unaudited
financial statements, also being subject to year-end audit adjustments) and
fairly present the financial condition of such Persons, (ii) the representations
and warranties of the Loan Parties contained in this Agreement and the other
Loan Documents are true and correct in all material respects on and as of the
date of such certificate, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an earlier
date), (iii) for each fiscal quarter that also is the date on which a financial
covenant in Section 7.20 is to be tested, a Compliance Certificate demonstrating
in reasonable detail compliance at the end of such period with the applicable
financial covenants contained in Section 7.20 and certain tax related matters
described therein, and (iv) on the date of delivery of such certificate to
Foothill there does not exist any condition or event that constitutes a Default
or Event of Default (or, in the case of clauses (i), (ii), or (iii), to the
extent of any non-compliance, describing such non-compliance as to which he or
she may have knowledge and what action such Loan Party has taken, is taking, or
proposes to take with respect thereto).
Upon Foothill's written request, each Loan Party shall have issued written
instructions to its independent certified public accountants authorizing them to
communicate with Foothill and to release to Foothill whatever financial
information concerning such Person that Foothill may reasonably request. Each
Loan Party hereby irrevocably authorizes and directs all auditors, accountants,
or other third parties to deliver to Foothill, at Borrower's expense, copies of
such Person's financial statements, papers related thereto, and other accounting
records of any nature in their possession, and to disclose to Foothill any
information they may have regarding such Person's business affairs and financial
conditions.
6.4 Tax Returns. Allow Foothill to inspect at Borrower's chief executive
office copies of each Loan Party's future federal income tax returns, and any
amendments thereto, within thirty (30) days of the filing thereof with the
Internal Revenue Service, and cause copies to be made of any such materials as
Foothill may reasonably request for purposes of Foothill's further inspection
and study.
6.5 Guarantor Reports. Upon Foothill's written request, cause any guarantor
of any of the Obligations to deliver its unaudited annual financial statements
at the time when Borrower and the Loan Parties provide their audited financial
statements to Foothill.
6.6 Corporate Existence. Subject to Section 7.3(b), each Loan Party shall
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate, partnership, limited liability company or other
existence in accordance with its organizational documents (as the same may be
amended from time to time with the prior written consent of Foothill, not to be
unreasonably withheld or delayed), Licenses and franchises. In order to
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maintain perfection and priority of the Liens in favor of Foothill, no Loan
Party shall change such Loan Party's name, FEIN, corporate structure (within the
meaning of Section 9402(7) of the Code), or identity, or add any new fictitious
name, without providing Foothill with fifteen (15) days prior written notice of
such change and executing and delivering all financing statements and other
documents and taking all such actions as may reasonably be required by Foothill.
6.7 Application of Payments on Secured Term Notes.
Borrower agrees that any and all payments (i) by Reading Radio, Inc. to
Borrower under the secured term note dated as of the Closing Date executed by
Reading Radio, Inc. in favor of Borrower in the original principal amount of
$6.0 million or (b) by Central Michigan Newspapers, Inc. to Borrower under the
secured term note dated as of the Closing Date executed by Central Michigan
Newspapers, Inc. in favor of Borrower in the original principal amount of $9.0
million shall be applied to reduce the Obligations in accordance with the
priority set forth in Section 2.3(b).
6.8 Maintenance of Equipment. Maintain the Equipment in good operating
condition and repair (ordinary wear and tear excepted), and make all necessary
replacements thereto so that the value and operating efficiency thereof shall at
all times be maintained and preserved. Other than those items of Equipment that
constitute fixtures on the Closing Date, such Loan Party shall not permit any
item of Equipment to become a fixture to real estate or an accession to other
property, and such Equipment shall at all times remain personal property.
6.9 Taxes.
(a) Cause all assessments and taxes, whether real, personal, or otherwise,
due or payable by, or imposed, levied, or assessed against such Loan Party or
any of its property or assets to be paid in full, before delinquency or before
the expiration of any extension period, except to the extent that the validity
of such assessment or tax shall be the subject of a Permitted Protest.
(b) Make due and timely payment or deposit of all such federal, state and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Foothill the Compliance Certificate which, among other
things, shall attest to the payment thereof or deposit with respect thereto.
(c) Make timely payment or deposit of all tax payments and withholding
taxes required of it by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, provincial and federal
income taxes, and will, upon request, furnish Foothill with evidence reasonably
satisfactory to Foothill indicating that such Loan Party has made such payments
or deposits.
6.10 Insurance.
(a) At its expense, keep the Personal Property Collateral insured against
loss or damage by fire, theft, explosion, sprinklers, and all other hazards and
risks, and in such amounts, as are ordinarily insured against by other owners in
similar businesses. Each Loan
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Party also shall maintain extra expense coverage, public liability, product
liability, and property damage insurance relating to such Loan Party's ownership
and use of the Personal Property Collateral, as well as insurance against
larceny, embezzlement, and criminal misappropriation.
(b) At its expense, obtain and maintain (i) insurance of the type necessary
to insure the Collateral, for the full replacement cost thereof, against any
loss by fire, lightning, windstorm, hail, explosion, aircraft, smoke damage,
vehicle damage, and other risks from time to time included under "extended
coverage" policies, in such amounts as Foothill may reasonably require, but in
any event in amounts sufficient to prevent Borrower or the applicable Loan Party
from becoming a co-insurer under such policies, (ii) combined single limit
bodily injury and property damages insurance against any loss, liability, or
damages on, about, or relating to each parcel of Real Property Collateral, in
coverages and amounts reasonable and customary for companies in like industries;
and (iii) insurance for such other risks as Foothill may reasonably require.
Replacement costs, at Foothill's option, may be redetermined by an insurance
appraiser, satisfactory to Foothill, not more frequently than once every 12
months at Borrower's cost.
(c) All such policies of insurance shall be in such form, with such
companies, and in such amounts as may be reasonably satisfactory to Foothill.
All insurance required herein shall be written by companies which are authorized
to do insurance business in the State in which the applicable Loan Party does
business. All hazard insurance and such other insurance as Foothill shall
specify, shall contain a Form 438BFU (NS) mortgagee endorsement, or an
equivalent endorsement satisfactory to Foothill, showing Foothill as its
interests may appear, and shall contain a waiver of warranties. Every policy of
insurance referred to in this Section 6.10 shall contain an agreement by the
insurer that it will not cancel such policy except after 30 days (or in the case
of nonpayment of a premium, 10 days) prior written notice to Foothill and that
any loss payable thereunder shall be payable notwithstanding any act or
negligence of such Loan Party or Foothill which might, absent such agreement,
result in a forfeiture of all or a part of such insurance payment and
notwithstanding (i) occupancy or use of the Real Property Collateral for
purposes more hazardous than permitted by the terms of such policy, (ii) any
foreclosure or other action or proceeding taken by Foothill pursuant to the
Mortgages upon the happening of an Event of Default, or (iii) any change in
title or ownership of the Real Property Collateral. Borrower shall deliver to
Foothill certified certificates of such policies of insurance and evidence of
the payment of all premiums therefor.
(d) Certificates satisfactory to Foothill evidencing such insurance shall
be delivered to Foothill at least fifteen (15) days prior to the expiration of
the existing or preceding policies. Borrower shall give Foothill prompt notice
of any loss exceeding $100,000 covered by such insurance, and Foothill shall
have the right on behalf of Borrower to adjust any such loss. Foothill shall
have the exclusive right to adjust all such losses payable under any such
insurance policies without any liability to Borrower whatsoever in respect of
such adjustments. Any monies received as payment for any such loss under any
insurance policy including the insurance policies mentioned above in amounts
greater than $100,000 per occurrence shall be paid over to a Depositary Account
and disbursed to Borrower under stage payment terms satisfactory to Foothill for
application to the cost of repairs, replacements, or restorations. All repairs,
replacements, or restorations shall be effected with reasonable promptness and
shall be of a value at least equal to the value of the items or property
destroyed prior to such damage or destruction.
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Upon the occurrence of an Event of Default, Foothill shall have the right to
apply all prepaid premiums to the payment of the Obligations in such order or
form as Foothill shall determine.
(e) No Loan Party shall take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 6.10, unless Foothill included thereon as named insured with the loss
payable to Foothill under a standard 438BFU (NS) Mortgagee endorsement, or its
local equivalent. Each Loan Party immediately shall notify Foothill whenever
such separate insurance is taken out, specifying the insurer thereunder and full
particulars as to the policies evidencing the same, and certificates of such
policies immediately shall be provided to Foothill.
6.11 No Setoffs or Counterclaims. Make payments hereunder and under the
other Loan Documents by or on behalf of such Loan Party without setoff or
counterclaim and free and clear of, and without deduction or withholding for or
on account of, any federal, state, provincial or local taxes.
6.12 Location of Inventory and Equipment. Keep the Inventory and Equipment
only at the locations identified on Schedule 6.12; provided, however, that
Borrower may amend Schedule 6.12 by written notice to Foothill prior to the date
on which the Inventory or Equipment is moved to such new location, so long as
such new location is within the continental United States or Canada, and so long
as, at the time of such written notification, Borrower or the applicable Loan
Agreement Guarantor provides (or causes the applicable Loan Party to provide)
any financing statements or fixture filings necessary or advisable to perfect
and continue perfected Foothill's Liens on such assets and also provides to
Foothill a Collateral Access Agreement.
6.13 Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and could not reasonably be expected to
result in a Material Adverse Change.
6.14 Employee Benefits.
(a) Cause to be delivered to Foothill: (i) promptly, and in any event
within ten (10) Business Days after Borrower or any of its Subsidiaries knows or
has reason to know that an ERISA Event has occurred that could reasonably be
expected to result in a Material Adverse Change, a written statement of the
chief financial officer of Borrower describing such ERISA Event and any action
that is being taking with respect thereto by Borrower, any such Subsidiary or
ERISA Affiliate, and any action taken or threatened by the IRS, Department of
Labor, or PBGC. Borrower or any such Subsidiary, as applicable, shall be deemed
to know all facts known by the administrator of any Benefit Plan of which it is
the plan sponsor, (ii) promptly, and in any event within three (3) Business Days
after the filing thereof with the IRS, a copy of each funding waiver request
filed with respect to any Benefit Plan and all communications received by
Borrower, any of its Subsidiaries or, to the knowledge of Borrower, any ERISA
Affiliate with respect to such request, and (iii) promptly, and in any event
within three (3) Business Days after
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receipt by Borrower, any of its Subsidiaries or, to the knowledge of Borrower,
any ERISA Affiliate, of the PBGC's intention to terminate a Benefit Plan or to
have a trustee appointed to administer a Benefit Plan, copies of each such
notice.
(b) Cause to be delivered to Foothill, upon Foothill's request, each of the
following: (i) a copy of each Plan (or, where any such plan is not in writing,
complete description thereof) (and if applicable, related trust agreements or
other funding instruments) and all amendments thereto, all written
interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of Borrower or its Subsidiaries;
(ii) the most recent determination letter issued by the IRS with respect to each
Benefit Plan; (iii) for the three most recent plan years, annual reports on Form
5500 Series required to be filed with any governmental agency for each Benefit
Plan; (iv) all actuarial reports prepared for the last three (3) plan years for
each Benefit Plan; (v) a listing of all Multiemployer Plans, with the aggregate
amount of the most recent annual contributions required to be made by Borrower
or any ERISA Affiliate to each such plan and copies of the collective bargaining
agreements requiring such contributions; (vi) any information that has been
provided to Borrower or any ERISA Affiliate regarding withdrawal liability under
any Multiemployer Plan; and (vii) the aggregate amount of the most recent annual
payments made to former employees of Borrower or its Subsidiaries under any
Retiree Health Plan.
6.15 Leases. Pay when due all rents and other amounts payable under any
Leases or Capital Leases to which any Loan Party is a party or by which such
Loan Party's properties and assets are bound, unless such payments are the
subject of a Permitted Protest. To the extent that any Loan Party fails timely
to make payment of such rents and other amounts payable when due thereunder,
Foothill shall be entitled, in its discretion, to reserve an amount equal to
such unpaid amounts against such Borrowing Base.
6.16 Broker Commissions. Pay the brokerage fees described in Section 5.15.
6.17 [Intentionally Deleted] .
6.18 Intellectual Property. Promptly notify Foothill upon the acquisition
of any rights to Intellectual Property and execute and deliver all security
agreements and other documents that Foothill reasonably may request, in form
satisfactory to Foothill, to perfect Foothill's Liens on such Intellectual
Property.
6.19 Regulatory Consents.
Notwithstanding any other provision of this Agreement:
(a) To the extent the exercise of any of Foothill's remedies hereunder or
under any Loan Document would constitute an assignment or transfer of control of
any License that, under then-applicable law, would require the prior consent of,
or notification to, the FCC, Foothill shall not exercise such remedy until the
FCC shall have granted its consent or prior notice shall have been given, as the
case may be. To the extent that the prior consent of the FCC shall be required
under then-applicable law, Foothill agrees not to exercise the rights granted
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hereunder and under the other Loan Documents to foreclose or otherwise dispose
of the Stock unless and until the FCC shall have granted its prior consent with
respect thereto. So long as no Event of Default shall have occurred and be
continuing, the certificates representing such Stock shall remain in the name of
the pledgors thereof and such pledgors shall have and exercise all rights of
ownership, including the right to vote such Stock. Upon the occurrence and after
the continuance of an Event of Default, in addition to the other remedies
provided for in this Agreement and the other Loan Documents, Foothill or its
nominee shall be entitled, subject to the prior approval of the FCC to the
extent required, to transfer to or register the Stock in the name of Foothill or
its nominee, and to vote and exercise all of the power of an owner with respect
to such Stock.
(b) Each Loan Party covenants that, in the event that the consent of, or
notification to, the FCC is required, it shall cooperate fully in causing to be
filed all such applications and notices in order to obtain such consent or give
such notice, and to take any other such actions as Foothill may reasonably
request, including without limitation preparing and executing the transferor's
or assignor's portion of any transfer of control or assignment application with
the FCC.
(c) Without prejudice to Section 6.19(b), if an Event of Default shall have
occurred and be continuing, each Loan Party shall take any lawful action which
Foothill may request in order to transfer and assign to Foothill, or to such one
or more third parties as Foothill may designate, or to a combination of the
foregoing, each License or Permit held or controlled by such Loan Party.
Foothill is hereby empowered, to the extent permitted by applicable law, to
request the appointment of a receiver from any court of competent jurisdiction
and each Loan Party hereby irrevocably consents to, and agrees not to contest,
appointment of such receiver. Such receiver may be instructed by Foothill to
seek from the FCC an involuntary transfer of control of each such License or
Permit for the purpose of seeking a bona fide purchaser to whom control will
ultimately be transferred. Each Loan Party hereby agrees to authorize such
involuntary transfer of control upon the request of the receiver so appointed
and, if such Loan Party shall refuse to authorize the application for a
transfer, its approval may be required by the court.
(d) Each Loan Party acknowledges that the assignment or transfer of each
License and Permit is integral to Foothill's realization of the value of the
Collateral, that there is no adequate remedy at law for failure by any such Loan
Party to comply with the provisions of this Section 6.19, and that such failure
would not be adequately compensable in damages, and therefore agrees, without
limiting the right of Foothill to seek and obtain specific performance of the
other obligations of such Loan Party contained in this Agreement and in the
other Loan Documents, that the agreements contained in this Section 6.19 may be
specifically enforced.
7. NEGATIVE COVENANTS.
Each of Borrower and each Loan Agreement Guarantor covenants and agrees, on
its own behalf and on behalf of each Loan Party, that so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, such Person will not do any of the following without Foothill's
prior written consent:
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7.1 Indebtedness.
(a) Incur any Indebtedness; provided, however, that: (i) the Loan Parties
may Incur Indenture Indebtedness which is expressly subordinated to Obligations
if no Default or Event of Default shall have occurred and be continuing at the
time of such Incurrence or would occur as a consequence of such Incurrence and
the Consolidated Leverage Ratio would not be greater than 7.00 to 1.00 and (ii)
the Loan Parties may Incur unsecured Indenture Indebtedness ranking on parity
with the Senior Notes if no Default or Event of Default shall have occurred and
be continuing at the time of such Incurrence or would occur as a consequence of
such Incurrence and the Consolidated Senior Leverage Ratio would not be greater
than 6.50 to 1.00; provided, however, that as provided in the definition of
Permitted Liens, Indenture Indebtedness Incurred pursuant to this clause (ii)
may be secured by a Lien if at the time of such Incurrence the Consolidated
Senior Secured Leverage Ratio would not be greater than 3.00 to 1.00, and
provided that any such Lien Incurred is either subordinate to the Obligations or
subject to an intercreditor and subordination agreement in form and substance
reasonably acceptable to Foothill;
(b) Notwithstanding the foregoing paragraph (a), the Loan Parties may Incur
the following Indebtedness:
(i) Indebtedness evidenced by this Agreement and the other Loan Documents;
(ii) Indebtedness of a Loan Party owing to and held by any other Loan Party
with respect to which Foothill has a first priority Lien;
(iii) Indebtedness represented by the Senior Notes;
(iv) Indebtedness set forth on Schedule 7.1;
(v) the NCR Loan; and
(vi) refinancings, renewals, or extensions of Indebtedness permitted under
clauses (ii), (iv), and (vii)-(xi) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (A) the terms
and conditions of such refinancings, renewals, or extensions do not materially
impair the prospects of repayment of the Obligations by such Loan Party, (B) the
net cash proceeds of such refinancings, renewals, or extensions do not result in
an increase in the aggregate original principal amount of the Indebtedness so
refinanced, renewed, or extended, (C) such refinancings, renewals, refundings,
or extensions do not result in a shortening of the average weighted maturity of
the Indebtedness so refinanced, renewed, or extended, and (D) to the extent that
Indebtedness that is refinanced was subordinated in right of payment to the
Obligations, then the subordination terms and conditions of the refinancing
Indebtedness must be at least as favorable to Foothill as those applicable to
the refinanced Indebtedness;
(vii) Indebtedness of a Loan Party Incurred and outstanding on the date on
which such Loan Party was acquired, directly or indirectly, by another Loan
Party (other than
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Indebtedness Incurred in anticipation of, or to provide all or any portion of
the funds or credit support utilized to consummate the transaction or series of
related transactions pursuant to which such Loan Party became a Subsidiary or
was otherwise acquired by another Loan Party); provided, however, that (A)
Indebtedness Incurred pursuant to this clause (vii) may be secured by Liens only
to the extent that such Liens are either subordinate to the Obligations or
subject to an intercreditor and subordination agreement in form and substance
reasonably acceptable to Foothill; and (B) at the time such Loan Party is
acquired by another Loan Party, such other Loan Party would have been able to
Incur $1.00 of additional Indebtedness pursuant to clause (ii) of paragraph (a)
above after giving effect to the Incurrence of such Indebtedness pursuant to
this clause (vii);
(viii) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided by the Loan Parties to their
customers in the ordinary course of their business; (B) in respect of
performance bonds or similar obligations of the Loan Parties for or in
connection with pledges, deposits or payments made or given in the ordinary
course of business in connection with or to secure statutory, regulatory or
similar obligations, including obligations under health, safety or environmental
obligations, and (C) arising from unsecured guarantees to suppliers, lessors,
licensees, contractors, franchises or customers of obligations (other than
Indebtedness) incurred in the ordinary course of business;
(ix) Unsecured Indebtedness under Currency Agreements and Interest Rate
Agreements; provided, however, that such Currency Agreements and Interest Rate
Agreements are entered into for bona fide hedging purposes of a Loan Party (as
determined in good faith by the Board of Directors of Borrower) and correspond
in terms of notional amount, duration, currencies and interest rates, as
applicable, to Indebtedness of such Loan Party Incurred without violation of
this Agreement or the Indenture or to business transactions of the Loan Parties
on customary terms entered into in the ordinary course of business;
(x) Indebtedness consisting of unsecured guarantees by a Loan Agreement
Guarantor so long as such Loan Agreement Guarantor could have Incurred such
Indebtedness directly without violation of this Agreement or the Indenture;
(xi) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument issued by a Loan Party drawn
against insufficient funds in the ordinary course of business; provided,
however, that such Indebtedness is extinguished within two (2) business days of
its Incurrence; and
(xii) Indebtedness (other than the Indebtedness described in clauses
(i)-(xi) in a principal amount which, when taken together with the principal
amount of all other Indebtedness Incurred pursuant to this clause (xii) and then
outstanding, will not exceed $5.0 million (it being understood that any
Indebtedness Incurred under this clause (xii) shall cease to be deemed Incurred
or outstanding for purposes of this clause (xii) (but shall be deemed to be
Incurred for purposes of paragraph (a) of this Section 7.1) from and after the
first date on which a Loan Party could have Incurred such Indebtedness under the
foregoing paragraph (a) of this Section 7.1 without reliance upon this clause
(xii)).
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(xiii) Notwithstanding the foregoing, no Loan Party shall incur any
Indenture Indebtedness under clause (i) of paragraph (a) of this Section 7.1 if
such Indenture Indebtedness is sold pursuant to Rule 144A of the Securities Act
or a public offering registered under the Securities Act.
(xiv) For purposes of determining any particular amount of Indebtedness
under this Section 7.1, guarantees, Liens or obligations with respect to letters
of credit supporting Indebtedness otherwise included in the determination of
such particular amount shall not be included. For purposes of determining
compliance with this Section 7.1, in the event that an item of Indebtedness
meets the criteria of one or more than one of the types of Indebtedness
described in the above clauses, the Loan Parties, in their sole discretion,
shall classify such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of such clauses.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its property or assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced under
Section 7.1(b)(vi) and so long as the replacement Liens only encumber those
assets or property (or replacements thereof) that secured the original
Indebtedness.
7.3 Asset Dispositions; Restrictions on Fundamental Changes.
(a) No Loan Party shall make any Asset Disposition unless:
(i) Borrower, a Loan Agreement Guarantor or such Loan Party receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by Borrower's Board of Directors
(including as the value of all noncash consideration), of the shares and assets
subject to such Asset Disposition);
(ii) at least 80% of the consideration thereof received by Borrower, a Loan
Agreement Guarantor or such Loan Party is in the form of cash or Cash
Equivalents other than in the case where a Loan Party is exchanging all or
substantially all of the assets of one or more broadcast stations operated by a
Loan Party (including by way of the transfer of Stock), for all or substantially
all of the assets (including by way of the transfer of Stock) constituting one
or more broadcast stations operated by another Person (an "Asset Swap");
provided, however, that at least 80% of the consideration, if any received by
the Loan Parties in such Asset Swap, other than the stock and assets of
broadcast station(s), is in the form of cash or Cash Equivalents, and provided
further, that such Loan Party shall have obtained Foothill's prior written
consent to such Asset Swap;
(iii) the proceeds of such Asset Disposition are distributed in accordance
with the following procedures:
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(A) Whenever (and to the extent that) such proceeds would otherwise be
required to be applied to the Senior Notes in accordance with the terms of the
Indenture, at the election of Foothill, 100% of the cash proceeds of such Asset
Disposition shall be applied to prepay the Term Loan Obligations in accordance
with the priority set forth in Section 2.3(b), in which case an Early
Termination Premium shall be due and payable to Foothill equal to a prorata
percentage of the Early Termination Premium that would otherwise be applicable
at such date to the then outstanding balance of the Obligations pursuant to the
terms of Section 3.6; and
(B) If (and to the extent that) such proceeds would not otherwise be
required to be applied to the Senior Notes in accordance with the terms of the
Indenture, or if such proceeds were to be held for reinvestment in "Additional
Assets" pursuant to Section 4.10(a)(iii) of the Indenture for a period of up to
365 days, such proceeds shall be deposited in a Depository Account subject to a
Control Agreement in accordance with the provisions of Section 4.7(a) and
invested in Temporary Cash Investments until (w) in the case of proceeds
(including investment earnings with respect thereto) received from an Asset
Disposition of assets that now or hereafter are owned by Reading Radio, Inc. or
Central Michigan Newspapers, Inc. or any now owned or hereafter acquired
Subsidiaries thereof or any successors to any of the foregoing (collectively,
"Ear-marked Proceeds"), Foothill, in its sole discretion, consents to the
release of such Ear-marked Proceeds from such Depository Account, (x) in the
case of any proceeds other than Ear-marked Proceeds which were being held for
reinvestment in "Additional Assets" pursuant to Section 4.10(a)(iii) of the
Indenture, one Business Day after delivery to Foothill of a written notice of
intent to withdraw such proceeds to make an acquisition of such an Additional
Asset, (y) in the case of any proceeds other than Ear-marked Proceeds which were
not being held subject to a requirement for reinvestment in "Additional Assets"
pursuant to Section 4.10(a)(iii) of the Indenture, one Business Day after
delivery to Foothill of a written notice of intent to withdraw such proceeds to
make a Permitted Investment, or (z) to the extent that any such proceeds
(including Ear-marked Proceeds) are subject to the 365-day reinvestment
requirement of Section 4.10(a)(iii) of the Indenture, 350 days have elapsed from
the date of receipt of such proceeds without such proceeds being reinvested
(whereupon such proceeds shall be applied in accordance with Section
7.3(a)(iii)(A) above); and
(C) Whenever proceeds (including Ear-marked Proceeds) are released from the
Depository Account in accordance with the procedures set forth in Section
7.3(a)(iii)(B) above, Borrower shall co-operate with Foothill to assure both
that any documentation required pursuant to the definition of Permitted
Investments is provided to Foothill contemporaneously with the release of such
funds and that any such Permitted Investments made pursuant to sub-sections (ii)
or (x) of the definition of Permitted Investments are structured in a manner
that will provide Foothill with legal rights and protections which are
substantially equivalent (after giving effect to differences in the nature of
the respective assets or businesses involved) to those which Foothill holds with
respect to the assets of similar assets or businesses owned by the Loan Parties
on the date hereof; and
(iv) Foothill shall have revised the Newspaper Operations Collateral Base
Amount and/or the Radio Station Collateral Base Amount, as applicable, in its
Permitted
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Discretion, to give effect to such Asset Disposition, the results of which shall
be satisfactory to Foothill; provided, however, that notwithstanding anything to
the contrary in this Section 7.3(a) or otherwise in this Agreement, the Loan
Parties may dispose of the assets of the Missouri Entities if one of the
following two conditions has occurred (i) if an Event of Default has occurred
and is then continuing, Borrower shall apply the proceeds of such disposition to
prepay the Obligations or (ii) if condition (i) is not applicable, the Borrower
or the relevant Loan Parties may retain the proceeds of such disposition for use
as otherwise permitted in accordance with the terms of this Agreement.
(b) No Loan Party shall consolidate or merge with or into, or convey,
transfer or lease all or substantially all of its assets to any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor Company")
shall be a corporation, partnership, trust or limited liability company
organized and existing under the laws of the United States of America, any state
thereof or the District of Columbia and the Successor Company shall expressly
assume, by whatever documents or other actions as Foothill shall reasonably
require, all of the obligations of such Loan Party under this Agreement and the
other Loan Documents, and shall execute and deliver such documents and take such
actions as Foothill may reasonably require to assure Foothill of the continuing
validity and priority and perfection of Foothill's Liens on all assets of the
Successor Company and any and all future assets acquired by such Successor
Company;
(ii) immediately after giving effect to such transaction (and treating any
Indebtedness that becomes an obligation of the Successor Company or any
Subsidiary of the Successor Company as a result of such transaction as having
been Incurred by the Successor Company or such Loan Party at the time of such
transaction), no Default or Event of Default shall have occurred and be
continuing;
(iii) immediately after giving effect to such transaction, the Successor
Company (A) shall have a Consolidated Net Worth equal or greater to the
Consolidated Net Worth of the applicable Loan Party immediately prior to such
transaction and (B) shall be Solvent;
7.4 [Intentionally Deleted].
7.5 [Intentionally Deleted].
7.6 Guarantee. Except as otherwise permitted by this Agreement, guarantee
or otherwise become in any way liable with respect to the obligations of any
third Person, except by endorsement of instruments or items of payment for
deposit to the account of such Borrower or which are transmitted or turned over
to Foothill.
7.7 Nature of Business. Engage substantially in any business other than a
Permitted Business.
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7.8 Restricted Payments.
(a) (i) declare or pay any dividend or make any distribution on or in
respect of its Stock (including any payment in connection with any merger or
consolidation involving a Loan Party) except (A) dividends or distributions
payable in its Stock (other than Disqualified Stock) and (B) dividends or
distributions payable to a Loan Party which holds any equity interest in the
paying Loan Party; (ii) purchase, redeem, retire or otherwise acquire for value
any Stock of Borrower or any Loan Agreement Guarantor held by Persons other than
a Wholly-Owned Subsidiary thereof or any Stock of a Loan Party held by any
Affiliate of such Loan Party, other than a Wholly-Owned Subsidiary (in either
case, other than in exchange for its Stock (other than Disqualified Stock));
(iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment, the Senior Notes (except as required by Sections 4.10 or 4.14 of
the Indenture) or any Subordinated Obligations, except as required by the
Indenture; (iv) make any Investment (other than a Permitted Investment); (v)
make any payment under any Performance Compensation Agreement; and (vi) make any
payment to Alan R. Brill (including under a Performance Compensation Agreement
or in his capacity as an employee of any Loan Party) except for reimbursement
for advances or other out-of-pocket costs and expenses incurred in the ordinary
course of business.
(b) The provisions of paragraph (a) of this Section 7.8 shall not prohibit:
(i) for so long as Borrower is not treated for tax purposes as a
corporation or an association taxable as a corporation or other entity that is
subject to any entity level tax for income tax purposes, distributions to each
Member, as soon as practicable after the end of each calendar quarter, of an
amount reasonably determined to be necessary to permit such Member to pay any
federal, state or local income taxes imposed on such Member's allocable share of
income from Borrower; provided, however, that in no event shall any distribution
to a Member exceed the Tax Allowance Amount for such Member in respect of such
quarter and Borrower shall cause its accountants to deliver to Foothill a
certificate setting forth the determination of each Member's Tax Allowance
Amount within sixty (60) days of the end of each fiscal year;
(ii) payments under the Performance Compensation Agreements (other than any
Performance Compensation Agreement with Alan R. Brill) not exceeding in the
aggregate $500,000 in any fiscal year.
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.10 Amendments. Without the prior written consent of Foothill, not to be
unreasonably withheld or delayed, directly or indirectly amend, modify, alter,
increase, or change any of the material terms or conditions of (i) the
Indenture, or (ii) any agreement, instrument, document, indenture, or other
writing evidencing or concerning any Indebtedness owing to any Loan Party;
provided, however, the foregoing shall not prevent Borrower from amending or
otherwise modifying the Accommodation Collateral so long as any such amendment
or other modification does not violate the terms of the Indenture and no Event
of Default has occurred
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and is continuing under this Agreement. So long as no Event of Default shall
have occurred and be continuing and so long as any such amendment or other
modification does not violate the terms of the Indenture, the Loan Parties may
or may allow the operating agreements of the Unrestricted Subsidiaries to be
amended or modified without Foothill's prior written consent. In the case of any
amendment, modification, alteration, increase or change to any document
described in this Section 7.10, Borrower shall promptly provide Foothill with
copies of the documents evidencing any such amendment, modification, alteration,
increase or change.
7.11 [Intentionally Deleted].
7.12 Accounting Methods. Materially modify or change its method of
accounting without providing Foothill with prior written notice of the same.
Enter into any agreement with any third party accounting firm or service bureau
for the preparation or storage of any Loan Party's accounting records without
providing Foothill with prior written notice of the same. Each Loan Party waives
the right to assert a confidential relationship, if any, it may have with any
accounting firm or service bureau in connection with any information requested
by Foothill pursuant to or in accordance with this Agreement, and agrees that
Foothill may contact directly any such accounting firm or service bureau in
order to obtain such information.
7.13 [Intentionally Deleted].
7.14 Transactions with Affiliates. Except as permitted by Section 7.8(a),
directly or indirectly enter into or permit to exist any material transaction
with any Affiliate of such Loan Party except for transactions that are in the
ordinary course of such Loan Party's business, upon fair and reasonable terms,
that are fully disclosed to Foothill, and that are no less favorable to such
Loan Party than would be obtained in an arm's length transaction with a
non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial portion of its
business.
7.16 [Intentionally Deleted].
7.17 Use of Proceeds. Use the proceeds of the Loans made hereunder for any
purpose other than (a) on the Closing Date, (i) to disburse the proceeds of the
Term Loan to Reading Radio, Inc. and Central Michigan Newspapers, Inc., (ii) to
pay transactional fees, costs, and expenses incurred in connection with this
Agreement and (b) thereafter, consistent with the terms and conditions hereof,
for its lawful and permitted corporate purposes.
7.18 Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees. Relocate its chief executive office to a new location without
providing thirty (30) days prior written notification thereof to Foothill and so
long as, at the time of such written notification, such Loan Party provides any
financing statements or fixture filings necessary to perfect and continue
perfected Foothill's Liens and also provides to Foothill a Collateral Access
Agreement with respect to such new location. No Inventory and Equipment of any
Loan Party shall at any time now or hereafter be stored with a bailee,
warehouseman, or similar party without Foothill's prior written consent, which
consent shall not be unreasonably withheld or delayed.
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7.19 No Prohibited Transactions Under ERISA. Directly or indirectly:
(a) engage, or permit any Subsidiary of Borrower to engage, in any
prohibited transaction which is reasonably likely to result in a civil penalty
or excise tax described in Sections 406 of ERISA or 4975 of the IRC for which a
statutory or class exemption is not available or a private exemption has not
been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit Plan any accumulated
funding deficiency (as defined in Sections 302 of ERISA and 412 of the IRC),
whether or not waived;
(c) fail, or permit any Subsidiary of Borrower to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Benefit Plan;
(d) terminate, or permit any Subsidiary of Borrower to terminate, any
Benefit Plan where such event would result in any liability of Borrower, any of
its Subsidiaries or any ERISA Affiliate under Title IV of ERISA;
(e) fail, or permit any Subsidiary of Borrower to fail, to make any
required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any Subsidiary of Borrower to fail, to pay any required
installment or any other payment required under Section 412 of the IRC on or
before the due date for such installment or other payment;
(g) amend, or permit any Subsidiary of Borrower to amend, a Plan resulting
in an increase in current liability for the plan year such that either of
Borrower, any Subsidiary of Borrower or any ERISA Affiliate is required to
provide security to such Plan under Section 401(a)(29) of the IRC; or
(h) withdraw, or permit any Subsidiary of Borrower to withdraw, from any
Multiemployer Plan where such withdrawal is reasonably likely to result in any
liability of any such entity under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of Borrower, any of its
Subsidiaries or any ERISA Affiliate in excess of $100,000.
7.20 Financial Covenant. Fail to maintain:
(a) (i) as of the end of each fiscal quarter during the period commencing
on the Closing Date and ending November 30, 2001, trailing twelve month
Borrowing Base EBITDA of at least $7,500,000; and (ii) as of the end of each
fiscal quarter during the period beginning with February 28, 2002 and each
fiscal quarter thereafter, trailing twelve month Borrowing Base EBITDA of at
least $8,500,000.
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8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay when due and payable or when declared due and
payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Foothill,
reimbursement of Foothill Expenses, or other amounts constituting Obligations);
8.2 (i) If any Loan Party fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Section 6.2
(Collateral Reporting), Section 6.4 (Tax Returns), the portion of Section 6.9
(Taxes) as pertains to state franchise taxes, Section 6.12 (Location of
Inventory and Equipment), Section 6.13 (Compliance with Laws), Section 6.14
(Employee Benefits), or Section 6.15 (Leases) of this Agreement and such failure
continues for a period of five (5) Business Days; (ii) if any Loan Party fails
to perform, keep, or observe any term, provision, condition, covenant, or
agreement contained in Section 6.1 (Accounting System), Section 6.8 (Maintenance
of Equipment), or Section 6.17 (Year 2000 Covenant) of this Agreement and such
failure continues for a period of fifteen (15) business days; or (iii) if any
Loan Party fails to perform, keep, or observe any term, provision, condition,
covenant, or agreement contained in this Agreement or in any of the Loan
Documents, or in any other present or future agreement between such Loan Party
and Foothill (giving effect to any grace periods, cure periods, or required
notices, if any, expressly provided for in such Loan Documents or agreements),
in each case, other than any such term, provision, condition, covenant, or
agreement that is the subject of another provision of this Section 8, in which
event such other provision of this Section 8 shall govern; provided that, during
any period of time that any such failure of any Loan Party referred to in this
paragraph exists, even if such failure is not yet an Event of Default by virtue
of the existence of a grace or cure period or the pre-condition of giving a
notice, Foothill shall be relieved of its obligation to extend credit hereunder;
8.3 If there is a Material Adverse Change; provided that, during any period
of time that any such Material Adverse Change exists, Foothill shall be relieved
of its obligation to extend credit hereunder.
8.4 If any material portion of any Loan Party's properties or assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any third Person and not released from such lien or
attachment within ten (10) days;
8.5 If an Insolvency Proceeding is commenced by any Loan Party;
8.6 If an Insolvency Proceeding is commenced against any Loan Party and any
of the following events occur: (a) such Loan Party consents to the institution
of the Insolvency Proceeding against it; (b) the petition commencing the
Insolvency Proceeding is not timely controverted; (c) the petition commencing
the Insolvency Proceeding is not dismissed within sixty (60) calendar days of
the date of the filing thereof; provided, however, that, during the
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pendency of such period, Foothill shall be relieved of its obligation to extend
credit hereunder; (d) an interim trustee is appointed to take possession of all
or a substantial portion of the properties or assets of, or to operate all or
any substantial portion of the business of, such Loan Party; or (e) an order for
relief shall have been issued or entered therein;
8.7 If any Loan Party is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs; provided, however, that Foothill may, in its reasonable discretion,
evaluate the impact of any such action upon all Loan Parties taken as a whole;
8.8 If a notice of Lien, levy, or assessment in excess of $25,000 is filed
of record with respect to any Loan Party's properties or assets by the United
States federal government or any department, agency, or instrumentality thereof,
or if any taxes or debts owing at any time hereafter to any one or more of such
entities becomes a Lien, whether choate or otherwise, upon any of any Loan
Party's properties or assets;
8.9 (i) If a notice of Lien, levy, or assessment with respect to any taxes
or debts owing is filed of record with respect to any of any Loan Party's
properties or assets by any state, county, municipal or other non-federal
governmental agency, and the Lien, levy or assessment is not (A) fully released,
discharged or bonded against before the earlier of thirty (30) days of the date
that it first arises or five (5) days of the date which such property or asset
is subject to being forfeited, or (B) the subject of a Permitted Protest; or
(ii) if any taxes or debts owing at any time hereunder to any one or more of any
state, county, municipal or other non-federal governmental agency becomes a
Lien, whether choate or otherwise, upon any of any Loan Party's properties or
assets and the Lien is not (A) fully released, discharged or bonded against
before the due date of such tax or debt or five (5) days of the date when such
property or asset is subject to being forfeited or (B) the subject of a
Permitted Protest;
8.10 If a judgment or other claim, in excess of $250,000 individually or in
the aggregate for all such judgments or other claims, becomes a Lien or
encumbrance upon any material portion of any Loan Party's properties or assets;
8.11 If there is a material default in any material agreement to which any
Loan Party is a party with one or more third Persons and such default (a) occurs
at the final maturity of the obligations thereunder, or (b) results in a right
by such third Person(s), irrespective of whether exercised, to accelerate the
maturity of such Loan Party's obligations thereunder, to terminate such
agreement, or to refuse to renew such agreement pursuant to an automatic renewal
right therein;
8.12 If any Loan Party makes any payment on account of Indebtedness in
contravention of the terms of the Indenture or on account of Indebtedness that
has been contractually subordinated in right of payment to the payment of the
Obligations in accordance with the terms of this Agreement, except to the extent
such payment is permitted by the terms of the subordination provisions
applicable to such Indebtedness;
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8.13 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report made to Foothill
by any Loan Party or any officer, employee, agent, or director of such Loan
Party, or if any such warranty or representation is withdrawn;
8.14 If the obligation of any guarantor under its guaranty or other third
Person under any Loan Document is limited or terminated by operation of law or
by the guarantor or other third Person thereunder, or any such guarantor or
other third Person becomes the subject of an Insolvency Proceeding; or
8.15 If there is an "Event of Default" under and as defined in the
Indenture.
9. Foothill's RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the continuation,
of an Event of Default, Foothill may, at its election, without notice of its
election and without demand, do any one or more of the following, all of which
are authorized by Borrower and each Loan Agreement Guarantor on its own behalf
and on behalf of each Loan Party:
(a) Declare all Obligations, whether evidenced by this Agreement, by any of
the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrower and Foothill;
(c) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of Foothill, but without affecting Foothill's
rights and security interests in the Personal Property Collateral or the Real
Property Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which Foothill considers advisable, and in such cases,
Foothill will credit the Loan Account with only the net amounts received by
Foothill in payment of such disputed Accounts after deducting all applicable
Foothill Expenses incurred or expended in connection therewith;
(e) Without notice to or demand upon any Loan Party or any guarantor, make
such payments and do such acts as Foothill considers necessary or reasonable to
protect its security interests in the Collateral. Each Loan Party agrees to
assemble the Personal Property Collateral if Foothill so requires, and to make
the Personal Property Collateral available to Foothill as Foothill may
designate. Each Loan Party authorizes Foothill to enter the premises where the
Personal Property Collateral is located, to take and maintain possession of the
Personal Property Collateral, or any part of it, and to pay, purchase, contest,
or compromise any encumbrance, charge, or Lien that in Foothill's determination
appears to conflict with Foothill's Liens and to pay all expenses incurred in
connection therewith. With respect to any of any Loan Party's owned or leased
premises, such Loan Party hereby grants Foothill a license to enter into
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possession of such premises and to occupy the same, without charge, for up to
one hundred twenty (120) days in order to exercise any of Foothill's rights or
remedies provided herein, at law, in equity, or otherwise;
(f) Without notice to any Loan Party (such notice being expressly waived),
and without constituting a retention of any collateral in satisfaction of an
obligation (within the meaning of Section 9505 of the Code), set off and apply
to the Obligations any and all (i) balances and deposits of any Loan Party held
by Foothill, or (ii) indebtedness at any time owing to or for the credit or the
account of any Loan Party held by Foothill;
(g) Hold, as cash collateral, any and all balances and deposits of any Loan
Party held by Foothill to secure the full and final repayment of all of the
Obligations;
(h) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell (in the manner provided for herein) the
Personal Property Collateral. Each of Borrower and each Loan Agreement Guarantor
hereby grants to Foothill a license or other right to use, without charge, such
Person's labels, patents, copyrights, rights of use of any name, trade secrets,
trade names, trademarks, service marks, and advertising matter, or any property
of a similar nature, as it pertains to the Personal Property Collateral, in
completing production of, advertising for sale, and selling any Personal
Property Collateral and such Person's rights under all licenses and all
franchise agreements shall inure to Foothill's benefit;
(i) Sell the Personal Property Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including any Loan Party's premises)
as Foothill determines is commercially reasonable. It is not necessary that the
Personal Property Collateral be present at any such sale;
(j) Foothill shall give notice of the disposition of the Personal Property
Collateral of any Loan Party as follows:
(i) Foothill shall give such Loan Party and each holder of a security
interest in the Personal Property Collateral of such Loan Party who has filed
with Foothill a written request for notice, a notice in writing of the time and
place of public sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of such Personal Property
Collateral, then the time on or after which the private sale or other
disposition is to be made;
(ii) The notice shall be personally delivered or mailed, postage prepaid,
to such Loan Party as provided in Section 12, at least five (5) days before the
date fixed for the sale, or at least five (5) days before the date on or after
which the private sale or other disposition is to be made; no notice needs to be
given prior to the disposition of any portion of such Personal Property
Collateral that is perishable or threatens to decline speedily in value or that
is of a type customarily sold on a recognized market. Notice to Persons other
than such Loan Party claiming an interest in such Personal Property Collateral
shall be sent to such addresses as they have furnished to Foothill;
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(iii) If the sale is to be a public sale, Foothill also shall give notice
of the time and place by publishing a notice one time at least five (5) days
before the date of the sale in a newspaper of general circulation in the county
in which the sale is to be held;
(k) Foothill may credit bid and purchase at any public sale;
(l) Foothill shall have all other rights and remedies available to it at
law or in equity pursuant to any other Loan Documents; and
(m) Any deficiency that exists after disposition of such Personal Property
Collateral as provided above will be paid immediately by Borrower. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Foothill to Borrower.
9.2 Remedies Cumulative. The rights and remedies of Foothill under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Foothill shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity, as applicable. No
exercise by Foothill of one right or remedy shall be deemed an election, and no
waiver by Foothill of any Event of Default shall be deemed a continuing waiver.
No delay by Foothill shall constitute a waiver, election, or acquiescence by it.
9.3 Accommodation Collateral
Notwithstanding the foregoing provisions of this Article 9 or anything to
the contrary contained in this Agreement or any other Loan Document, Foothill
agrees not to exercise any rights or remedies with respect to the Accommodation
Collateral until the date which is six (6) months after the date on which an
Event of Default has occurred (provided that on such six (6) month date such
Event of Default is continuing and has not otherwise been waived or cured to the
satisfaction of Foothill).
10. TAXES AND EXPENSES.
If any Loan Party fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent that Foothill
determines that such failure by such Loan Party could result in a Material
Adverse Change, in its discretion and without prior notice to such Loan Party,
Foothill may do any or all of the following: (a) make payment of the same or any
part thereof; (b) set up such reserves in the Loan Account as Foothill deems
necessary to protect Foothill from the exposure created by such failure; or (c)
obtain and maintain insurance policies of the type described in Section 6.10,
and take any action with respect to such policies as Foothill deems prudent. Any
such amounts paid by Foothill shall constitute Foothill Expenses. Any such
payments made by Foothill shall not constitute an agreement by Foothill to make
similar payments in the future or a waiver by Foothill of any Event of Default
under this Agreement. Foothill need not inquire as to, or contest the validity
of, any such expense, tax, or Lien and the receipt of the usual official notice
for the payment thereof shall be conclusive evidence that the same was validly
due and owing.
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11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Loan Party waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of accounts, documents, instruments, chattel paper, and guarantees at any time
held by Foothill on which any Loan Party may in any way be liable.
11.2 Foothill's Liability for Collateral. Each Loan Party hereby agrees
that: (a) so long as Foothill complies with its obligations, if any, under
Section 9207 of the Code Foothill shall not in any way or manner be liable or
responsible for: (i) the safekeeping of such Loan Party's Collateral; (ii) any
loss or damage thereto occurring or arising in any manner or fashion from any
cause; (iii) any diminution in the value thereof; or (iv) any act or default of
any carrier, warehouseman, bailee, forwarding agency, or other Person; and (b)
all risk of loss, damage, or destruction of such Collateral shall be borne by
Borrower.
11.3 Indemnification. Borrower agrees to pay, indemnify, defend, and hold
Foothill, each Participant, and each of their respective officers, directors,
employees, counsel, agents, and attorneys-in-fact (each, an "Indemnified
Person") harmless (to the fullest extent permitted by law) from and against any
and all claims, demands, suits, actions, investigations, proceedings, and
damages, and all reasonable attorneys fees and disbursements and other costs and
expenses actually incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them in connection with or as a
result of or related to the execution, delivery, enforcement, performance, and
administration of this Agreement and any other Loan Documents or the
transactions contemplated herein, and with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event
or circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities"). Borrower shall have no obligation to any
Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the other Obligations.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by any
party relating to this Agreement or any other Loan Document shall be in writing
and (except for financial statements and other informational documents which may
be sent by first-class mail, postage prepaid) shall be personally delivered or
sent by registered or certified mail (postage prepaid, return receipt
requested), overnight courier, or telefacsimile to the relevant party at its
address set forth below:
If to any Borrower: c/o Brill Media Company, L.P.
BMC Holdings, LLC
420 N.W. Fifth Street, Suite 3-B
Evansville, Indiana 47708
Attn: Alan R. Brill
Fax No.: 812/428-4021
Phone No.: 812/423-6200
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with copies to: Thompson & McMullan, P.C.
100 Shockoe Slip
Richmond, Virginia 23219
Attn: Charles W. Laughlin, Esq.
Fax No.: 804/780-1813
Phone No.: 804-649-7545
If to Foothill: FOOTHILL CAPITAL CORPORATION
11111 Santa Monica Boulevard
Suite 1500
Los Angeles, California 90025-3333
Attn: Business Finance Division Manager
Fax No.: 617/722-9493
Phone No.: 617/624-4400
with copies to: LATHAM & WATKINS
5800 Sears Tower
Chicago, Illinois 60606
Attn: Donald Schwartz, Esq.
Fax No.: 312/993-9767
Phone No.: 312/876-7700
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to all
other parties. All notices or demands sent in accordance with this Section 12,
other than notices by Foothill in connection with Sections 9504 or 9505 of the
Code, as applicable shall be deemed received on the earlier of the date of
actual receipt or three (3) days after the deposit thereof in the mail. Borrower
and each Loan Agreement Guarantor acknowledges and agrees that notices sent by
Foothill in connection with Sections 9504 or 9505 of the Code shall be deemed
sent when deposited in the mail or personally delivered, or, where permitted by
law, transmitted telefacsimile or other similar method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN
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ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION
WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED
ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF COOK, STATE OF
ILLINOIS, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT FOOTHILL'S OPTION, IN THE COURTS
OF ANY JURISDICTION WHERE FOOTHILL ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF BORROWER, EACH LOAN AGREEMENT
GUARANTOR AND FOOTHILL WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13.
EACH OF BORROWER, EACH LOAN AGREEMENT GUARANTOR AND FOOTHILL HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH OF BORROWER, EACH
LOAN AGREEMENT GUARANTOR AND FOOTHILL REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. DESTRUCTION OF DOCUMENTS.
All documents, schedules, invoices, agings, or other papers delivered to
Foothill may be destroyed or otherwise disposed of by Foothill four (4) months
after they are delivered to or received by Foothill, unless Borrower requests,
in writing, the return of said documents, schedules, or other papers and makes
arrangements, at Borrower's expense, for their return.
15. SUCCESSORS. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that none of Borrower or any Loan Agreement Guarantor may assign this Agreement
or any rights or duties hereunder without Foothill's prior written consent and
any prohibited assignment shall be absolutely void ab initio.
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No consent to assignment by Foothill shall release Borrower from its
Obligations. Foothill may assign this Agreement and its rights and duties
hereunder and no consent or approval by any Loan Party is required in connection
with any such assignment. Foothill reserves the right to sell, assign, transfer,
negotiate, or grant participations in all or any part of, or any interest in
Foothill's rights and benefits hereunder. In connection with any such assignment
or participation, Foothill may disclose all documents and information which
Foothill now or hereafter may have relating to any Loan Party or any Loan
Party's business. To the extent that Foothill assigns its rights and obligations
hereunder to a third Person, Foothill thereafter shall be released from such
assigned obligations to Borrower and such assignment shall effect a novation
between Borrower and such third Person.
16. NO WAIVERS; CUMULATIVE REMEDIES. No failure by Foothill to exercise any
right, remedy, or option under this Agreement, any other Loan Document, or any
present or future supplement hereto or thereto, or in any other agreement
between or among any Loan Party and Foothill, or delay by Foothill in exercising
the same, will operate as a waiver thereof. No waiver by Foothill will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by Foothill on any occasion shall affect or diminish
Foothill's rights thereafter to require strict performance by Borrower or any
Loan Agreement Guarantor of any provision of this Agreement. Foothill's rights
under this Agreement and the other Loan Documents will be cumulative and not
exclusive of any other right or remedy which Foothill may have.
17. GENERAL PROVISIONS.
17.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed by Foothill, Borrower and each Loan Agreement Guarantor whose
signature is provided for on the signature pages hereof.
17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Foothill, Borrower or
any Loan Agreement Guarantor, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by all parties and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of all parties
hereto.
17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 Amendments in Writing. This Agreement can only be amended by a writing
signed by Foothill, Borrower and each Loan Agreement Guarantor.
17.6 Counterparts; Telefacsimile Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when
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executed and delivered, shall be deemed to be an original, and all of which,
when taken together, shall constitute but one and the same Agreement. Delivery
of an executed counterpart of this Agreement by telefacsimile shall be equally
as effective as delivery of an original executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by telefacsimile
also shall deliver an original executed counterpart of this Agreement but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement. The forgoing
shall apply to each other Loan Document mutatis mutandis.
17.7 Revival and Reinstatement of Obligations. If the Incurrence or payment
of the Obligations by any Loan Party or any guarantor of the Obligations or the
transfer by any or all such parties to Foothill of any property of any or all
such parties should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, and other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if Foothill is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Foothill is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of
Foothill related thereto, the liability of such Loan Party or such guarantor
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
17.8 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
18. CROSS-GUARANTY
18.1 Cross-Guaranty. Each of Borrower and each Loan Agreement Guarantor
hereby agrees that it is jointly and severally liable for, and hereby absolutely
and unconditionally guarantees to Foothill and its successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to
Foothill by each other party hereto. Each of Borrower and each Loan Agreement
Guarantor agrees that its guaranty obligation hereunder is a continuing guaranty
of payment and performance and not of collection, that its obligations under
this Section 18 shall not be discharged until payment and performance, in full,
of the Obligations has occurred, and that its obligations under this Section 18
shall be absolute and unconditional, irrespective of, and unaffected by, (a) the
genuineness, validity, regularity , enforceability or any future amendment of,
or change in, this Agreement, any other loan Document or any other agreement,
document or instrument to which any of Borrower or any Loan Agreement Guarantor
is or may become a party; (b) the absence of any action to enforce this
Agreement (including this Section 18) or any other Loan Document or the waiver
or consent by Foothill with respect to any of the provisions thereof; (c) the
existence, value or condition of, or failure to perfect Foothill's Lien against,
any security for the Obligations or any action, or the absence of any action, by
Foothill in respect thereof (including the release of any such security); (d)
the commencement of an Insolvency
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Proceeding of any of Borrower or any Loan Agreement Guarantor; or (e) any other
action or circumstances which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor. Each of Borrower and each Loan
Agreement Guarantor shall be regarded, and shall be in the same position, as
principal debtor with respect to the Obligations guaranteed hereunder.
18.2 Waivers by Borrower and Loan Agreement Guarantors. Each of Borrower
and each Loan Agreement Guarantor expressly waives all rights it may have now or
in the future under any statute, or at common law, or at law or in equity, or
otherwise, to compel Foothill to marshall assets or to proceed in respect of the
Obligations guaranteed hereunder against any of them, any other party or against
any security for the payment and performance of the Obligations before
proceeding against, or as a condition to proceeding against, such Person. It is
agreed among each of Borrower, each Loan Agreement Guarantor and Foothill that
the foregoing waivers are of the essence of the transaction contemplated by this
Agreement and the other Loan Documents and that, but for the provisions of this
Section 18 and such waivers, Foothill would decline to enter into this
Agreement.
18.3 Benefit of Guaranty. Each of Borrower and each Loan Agreement
Guarantor agrees that the provisions of this Section 18 are for the benefit of
Foothill and its successors, transferees, endorsees and assigns, and nothing
herein contained shall impair, as between any other Loan Party and Foothill, the
obligations of such other Loan Party under the Loan Documents.
18.4 Subordination of Subrogation, Etc. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 18.7 each of Borrower and each Loan Agreement Guarantor hereby
expressly and irrevocably subordinates to payment of the Obligations any and all
rights at law or in equity to subrogation, reimbursement, exoneration,
contribution, indemnification or set off and any and all defenses available to a
surety, guarantor or accommodation co-obligor until the Obligations are
indefeasibly paid in full in cash. Each of Borrower and each Loan Agreement
Guarantor acknowledges and agrees that this subordination is intended to benefit
Foothill and shall not limit or otherwise affect such Person's liability
hereunder or the enforceability of this Section 18, and that Foothill and its
successors and assigns are intended third party beneficiaries of the waivers and
agreements set forth in this Section 18.4.
18.5 Election of Remedies. If Foothill may, under applicable law, proceed
to realize its benefits under any of the Loan Documents giving Foothill a Lien
upon any Collateral, whether owned by any Loan Party or by any other Person,
either by judicial foreclosure or by non-judicial sale or enforcement, Foothill
may, at its sole option, determine which of its remedies or rights it may pursue
without affecting any of its rights and remedies under this Section 18. If, in
the exercise of any of its rights and remedies, Foothill shall forfeit any of
its rights or remedies, including its right to enter a deficiency judgment
against any Loan Party or any other Person, whether because of any applicable
laws pertaining to "election of remedies" or the like, each of Borrower and each
Loan Agreement Guarantor hereby consents to such action by Foothill and waives
any claim based upon such action, even if such action by Foothill shall result
in a full or partial loss of any rights of subrogation which each such Person
might otherwise have had but for
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such action by Foothill. Any election of remedies which results in the denial or
impairment of the rights of Foothill to seek a deficiency judgment against any
Loan Party shall not impair Borrower's obligation to pay the full amount of the
Obligations. In the event Foothill shall bid at any foreclosure or trustee's
sale or at any private sale permitted by law or the Loan Documents, Foothill may
bid all or less than the amount of the Obligations and the amount of such bid
need not be paid by Foothill but shall be credited against the Obligations. The
amount of the successful bid at any such sale, whether Foothill or any other
party is the successful bidder, shall be conclusively deemed to be the fair
market value of the Collateral and the difference between such bid amount and
the remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this Section 18, notwithstanding that
any present or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which Foothill might otherwise be
entitled but for such bidding at any such sale.
18.6 Limitation. Notwithstanding any provision herein contained to the
contrary, each of Borrower's and each Loan Agreement Guarantor's liability under
this Section 18 (which liability is in any event in addition to amounts for
which such Person is primarily liable under this Agreement) shall be limited to
an amount not to exceed as of any date of determination the greater of:
(a) the net amount of all Loans made to Borrower under this Agreement and
then reloaned or otherwise transferred to, or for the benefit of, Borrower or
such Loan Agreement Guarantor; and
(b) the amount which could be claimed by Foothill from such Person under
this Section 18 without rendering such claim voidable or avoidable under Section
548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law after taking into account, among other things, such Person's right of
contribution and indemnification from each other Loan Agreement Guarantor or
from Borrower, as applicable, under Section 18.7.
18.7 Contribution with Respect to Guaranty.
(a) To the extent that any Loan Agreement Guarantor shall make a payment
under this Section 18 of all or any of the Obligations (other than Loans made to
Borrower for which it is primarily liable) (a "Guarantor Payment") which taking
into account all other Guarantor Payments then previously or concurrently made
by any other Loan Agreement Guarantor, exceeds the amount which such Loan
Agreement Guarantor would otherwise have paid if each Loan Agreement Guarantor
had paid the aggregate obligations satisfied by such Guarantor Payment in the
same proportion that such Loan Agreement Guarantor's "Allocable Amount" (as
defined below) (as determined immediately prior to such Guarantor Payment) bore
to the aggregate Allocable Amounts of each of the Loan Agreement Guarantors as
determined immediately prior to the making of such Guarantor Payment, then,
following indefeasible payment in full in cash of the Obligations and
termination of the Agreement, such Loan Agreement Guarantor shall be entitled to
receive contribution and indemnification payments from, and be reimbursed by,
each other Loan Agreement Guarantor for the amount of such
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excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of any Loan
Agreement Guarantor shall be equal to the maximum amount of the claim which
could then be recovered from such Loan Agreement Guarantor under this Section 18
without rendering such claim voidable or avoidable under Section 548 of Chapter
11 of the Bankruptcy code or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common
law.
(c) This Section 18.7 is intended only to define the relative rights of the
Loan Agreement Guarantors and nothing set forth in this Section 18.7 is intended
to or shall impair the obligations of Borrower and the Loan Agreement
Guarantors, jointly and severally, to pay any amounts as and when the same shall
become due and payable in accordance with the terms of this Agreement, including
Section 18.1. Nothing contained in this Section 18.7 shall limit the liability
of Borrower to pay the Loans and accrued interest, fees and expenses with
respect thereto for which Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of contribution and the
indemnification hereunder shall constitute assets of the Person to which such
contribution and indemnification is owing.
(e) The rights of the indemnifying Person against the other Persons under
this Section 18.7 shall be exercisable upon the full and indefeasible payment of
the Obligations and the termination of this Agreement.
18.8 Liability Cumulative. The liability of Borrower and the Loan Agreement
Guarantors under this Section 18 is in addition to and shall be cumulative with
all liabilities of Borrower and each Loan Agreement Guarantor to Foothill under
this Agreement and the other Loan Documents to which such Person is a party or
in respect of any Obligations or obligation of the other Loan Parties, without
any limitation as to amount, unless the instrument or agreement provides to the
contrary.
18.9 Subordination.
(a) Each Loan Party (each, a "Payee Credit Party") hereby subordinates any
and all indebtedness and/or obligations of any other Loan Party (each, an "Other
Credit Party") now or hereafter owing to such Payee Credit Party (an
"intercompany obligation") to the full and prompt payment and performance of all
of the Obligations. Following the occurrence and during the continuation of any
Event of Default, any payments on such intercompany obligations to any such
Payee Credit Party, if Foothill so requests, shall be collected, enforced and
received by such Payee Credit Party for the benefit of Foothill and shall be
paid over to Foothill on account of the Obligations, but without reducing or
affecting in any manner the liability of such Payee Credit Party under the other
provisions of this Section 18. Foothill is authorized and empowered, but not
obligated, in its discretion following the occurrence and during the
continuation of any Event of Default, (a) in the name of any such Payee Credit
Party, to collect and enforce, and to submit
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claims in respect of, any intercompany obligations of any Other Credit Party to
such Payee Credit Party and to apply any amounts received thereon to the
Obligations, and (b) to require each such Payee Credit Party (i) to collect and
enforce, and to submit claims in respect of, any intercompany obligations of any
other Credit Party to such Payee Credit Party, and (ii) to pay any amounts
received on such intercompany obligations to Foothill for application to the
Obligations.
(b) Without limiting any of the provisions set forth in subsection (a)
above, upon any distribution of assets of any Other Credit Party in any
Insolvency Proceeding:
(i) Foothill shall first be entitled to receive payment in full in cash of
the Obligations before any Payee Credit Party is entitled to receive any payment
on account of the intercompany obligations owing to such Payee Credit Party.
(ii) Any payment or distribution of assets of any Other Credit Party of any
kind or character, whether in cash, property or securities, to which any Payee
Credit Party would be entitled except for the provisions of this Section 18.9,
shall be paid by the liquidating trustee or other Person making such payment or
distribution directly to Foothill to the extent necessary to make payment in
full of all Obligations remaining unpaid after giving effect to any concurrent
payment or distribution or provisions therefor to Foothill.
(iii) In the event that notwithstanding the foregoing provisions of this
Section 18.9, any payment or distribution of assets of any Other Credit Party of
any kind or character, whether in cash, property or securities, shall be
received by any Payee Credit Party on account of any intercompany obligations
owing to such Payee Credit Party before all Obligations are paid in full, such
payment or distribution shall be received and held for the benefit of and shall
be paid over to Foothill for application to the payment of the Obligations until
all of the Obligations shall have been paid in full, after giving effect to any
concurrent payment or distribution or provision therefore to Foothill.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed.
BMC HOLDINGS, LLC
By: Brill Media Company, LLC, its manager
By: Brill Media Management, Inc. its manager
By:
-----------------------------------------
a duly authorized officer
BRILL MEDIA COMPANY, LLC
By: Brill Media Management, Inc. its manager
By:
-----------------------------------------
Title:
--------------------------------------
BRILL MEDIA MANAGEMENT, INC.
By:
-----------------------------------------
a duly authorized officer
BMC HOLDINGS, INC.
By:
-----------------------------------------
a duly authorized officer
FOOTHILL CAPITAL CORPORATION,
as Lender
By:
-----------------------------------------
Title:
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