SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 30, 2000
SHOP AT HOME, INC.
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(Exact name of registrant as specified in its charter)
Tennessee 0-25596 62-1282758
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
5388 Hickory Hollow Parkway, Antioch, Tennessee 37013
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(Address, including zip code, of principal executive office)
(615) 263-8000
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(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
On October 30, 2000, Shop At Home, Inc. (the "Company") entered into a
senior credit facility (the "New Facility") with Foothill Capital Corporation, a
California corporation, under which the Company has the right to borrow up to
$20 million. At the same time, the Company paid in full and terminated its
existing senior credit agreement with Union Bank of California. A copy of the
Loan and Security Agreement with Foothill Capital Corporation, describing the
terms and conditions of the New Facility, is attached hereto as Exhibit 10.1.
As of October 31, 2000, the Company is in compliance with the terms of
the New Facility.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SHOP AT HOME, INC.
(Registrant)
By: /s/ George J. Phillips
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George J. Phillips
Executive Vice President and General Counsel
Date: October 31, 2000
EXHIBIT INDEX
10.1 Loan and Security Agreement with Foothill Capital Corporation
<PAGE>
Exhibit 10.1
LOAN AND SECURITY AGREEMENT
by and among
SHOP AT HOME, INC.
as Borrower,
and
FOOTHILL CAPITAL CORPORATION
as Lender
Dated as of October 30, 2000
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is
entered into as of October 30, 2000, between FOOTHILL CAPITAL CORPORATION, a
California corporation ("Lender"), and SHOP AT HOME, INC., a Tennessee
corporation ("Borrower").
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:
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"Additional Documents" has the meaning set forth in Section
4.4.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, in any event: (a) any Person which owns
directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person, (b) each director (or comparable manager) of a Person shall
be deemed to be an Affiliate of such Person, and (c) each partnership or joint
venture in which a Person is a partner or joint venturer shall be deemed to be
an Affiliate of such Person; provided further, however, that the holders of the
Borrower's Series B Preferred Stock and related Warrants shall not be deemed to
be Affiliates of Borrower solely by reason of such Holders' ownership of such
Stock.
"Agreement" has the meaning set forth in the preamble hereto.
"Appraisal" means any appraisal of the Eligible Assets
performed by a qualified appraisal company selected by Lender in accordance with
Section 2.1(b) and Section 3.1.
"Assignee" has the meaning set forth in Section 14.1(a).
"Authorized Person" means any officer or other employee of
Borrower.
"Availability" means, as of any date of determination, if such
date is a Business Day, and determined at the close of business on the
immediately preceding Business Day, if such date of determination is not a
Business Day, the amount that Borrower is entitled to borrow as Advances under
Section 2.1 (after giving effect to all then outstanding Obligations and all
sublimits and reserves applicable hereunder).
"Bankruptcy Code" means the United States Bankruptcy Code, as
in effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by
Lender in accordance with its customary procedures, and utilizing such
electronic or other quotation sources as it considers appropriate (rounded
upwards, if necessary, to the next 1/000th), on the basis of the rates at which
Dollar deposits are offered to major banks in the London interbank market on or
about 11:00 a.m. (California time) 2 Business Days prior to the commencement of
the applicable Interest Period, for a term and in amounts comparable to the
Interest Period and amount of the LIBOR Rate Loan requested by Borrower in
accordance with this Agreement, which determination shall be conclusive in the
absence of manifest error.
"Base Rate" means, the rate of interest announced within Wells
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Wells Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Wells Fargo may designate.
"Base Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means 2.125 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate
of Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within
the past six years.
"Board of Directors" means the board of directors (or
comparable managers) of Borrower or any committee thereof duly authorized to act
on behalf of the board.
"Books" means Borrower's and each of its Subsidiaries' now
owned or hereafter acquired books and records (including all of its Records
indicating, summarizing, or evidencing its assets (including the Collateral) or
liabilities, all of its Records relating to its business operations or financial
condition, and all of its goods or General Intangibles related to such
information).
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Borrowing" means a borrowing hereunder of an Advance.
"Borrowing Base" has the meaning set forth in Section 2.1.
"Borrowing Base Certificate" means a certificate in the form
of Exhibit B-1.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close, except
that, if a determination of a Business Day shall relate to a LIBOR Rate Loan,
the term "Business Day" also shall exclude any day on which banks are closed for
dealings in Dollar deposits in the London interbank market.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof; (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either Standard & Poor's
Ratings Group or Moody's Investors Service, Inc.; (c) U.S. dollar denominated
(or fully hedged foreign currency) time deposits, certificates of deposit,
eurodollar time deposits or eurodollar certificates of deposit or acceptances
with a maturity of one year or less of any financial institution that is a
member of the Federal Reserve System having combined capital and surplus of not
less than $500,000,000 or any bank whose short term commercial paper rating from
Standard & Poor's Ratings Group is at least A-1 or the equivalent thereof or
from Moody's Investors Service, Inc. is at least P-1 or the equivalent thereof
(an "Approved Lender"); (d) commercial paper with a maturity of one year or less
issued by an Approved Lender that is not an Affiliate of the Borrower and is
organized under the laws of any state of the United States or the District of
Columbia and having a rating (i) from Moody's Investors Service, Inc. of at
least P-2 or (ii) from Standard & Poor's Ratings Group of at least A-2; and (e)
any shares of money market mutual or similar funds having assets in excess of
$500,000,000 which are invested in instruments of the kind described in clauses
(a), (b), (c) or (d) hereof.
"Change of Control" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 25%, or more, of the Stock of Borrower having the right to vote
for the election of members of the Board of Directors, or (b) a majority of the
members of the Board of Directors do not constitute Continuing Directors, or (c)
Borrower ceases to directly own and control 100% of the outstanding capital
Stock of SAH-Houston and SAH-Northeast.
"Closing Date" means the date of the making of the initial
Advance (or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of
Borrower for the 5 year period following the Closing Date (on a year by year
basis, and for the 8-month period following the Closing Date, on a month by
month basis), in form and substance (including as to scope and underlying
assumptions) satisfactory to Lender.
"Code" means the New York Uniform Commercial Code, as in
effect from time to time, or to the extent the governing law of another
jurisdiction will govern with respect to perfection in accordance with Section
13(a) hereof, the Uniform Commercial Code as in effect in such other
jurisdiction from time to time; provided that the Borrower acknowledges and
agrees that, with respect to any term used herein that is defined in either (i)
Article 8 or 9 of the Uniform Commercial Code as in force on the date hereof in
the applicable jurisdiction, or (ii) Article 8 or 9 of the Uniform Commercial
Code as in force at any relevant time in the applicable jurisdiction, the
meaning to be ascribed thereto with respect to any particular item of property
shall be that under the more encompassing of the two definitions.
"Collateral" means all of Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts;
(b) Books, to the extent relating to the Collateral described in clauses
(a), (c), (d), (e), (f) and (g) of this definition;
(c) General Intangibles;
(d) Inventory;
(e) the Pledged Collateral, including, without limitation, the issued and
outstanding shares of stock of SAH-Northeast and SAH-Houston and 99% of the
membership interests of Partners-SATH, L.L.C.;
(f) the cash and non-cash proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all of
the foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
Cash Equivalents, deposit or other bank accounts, Securities Accounts or other
tangible or intangible property or assets 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;
(g) at any time after the Senior Secured Notes have been paid in full or legally
defeased or after the date the Indenture no longer prohibits the creation of a
security interest in favor of Lender in such property or assets (whichever is
earlier), in addition to the foregoing Collateral, (i) Equipment, (ii)
Investment Property, (iii) Negotiable Collateral, (iv) Real Property, (v) Books,
and (vii) the proceeds and products, whether tangible or intangible, of any of
the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
Cash Equivalents, deposit or other bank accounts, Securities Accounts or other
tangible or intangible property or assets resulting from the sale, exchange,
collection, or other disposition of any of the foregoing, or any portion thereof
or interest therein, and the cash and non-cash proceeds thereof; and
(h) all of Borrower's rights under all present and future authorizations,
permits, licenses and franchises heretofore or hereafter granted to Borrower for
the ownership or operation of Specified Stations (including licenses, permits,
and other authorizations, issued by the FCC to the extent now or hereafter
permitted by law, including to the maximum extent now or hereafter permitted by
law, all rights incident or appurtenant to such licenses and permits, including,
without limitation, the right to receive all proceeds derived from or in
connection with the sale, assignment or transfer of such licenses and permits).
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
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 Lender.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrower with respect to Accounts, General
Intangibles and Inventory.
"Communications Act" means the Communications Act of 1934, as
amended.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer of Borrower to
Lender.
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Borrower on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Borrower (as such terms are used in Rule 14a-11 under
the Exchange Act) and whose initial assumption of office resulted from such
contest or the settlement thereof.
"Control Agreement" means a control agreement, in form and
substance satisfactory to Lender, executed and delivered by Borrower, Lender,
and the applicable securities intermediary with respect to a Securities Account
or bank with respect to a deposit account.
"Credit Card Assignment Agreement" means an irrevocable
assignment and agreement, substantially in the form attached hereto as Exhibit
C-2 and otherwise satisfactory to the Lender, between the Credit Card Processor,
the Lender and the Borrower, as amended or otherwise modified from time to time.
"Credit Card Processor" means Paymentech, LLC, or such other
credit card service company as is acceptable to Lender in its sole discretion.
"Daily Balance" means, with respect to each day during the
term of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by Borrower.
"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 1002868090 of
Borrower maintained with Borrower's Designated Account Bank, or such other
deposit account of Borrower (located within the United States) that has been
designated as such, in writing, by Borrower to Lender.
"Designated Account Bank" means AmSouth Bank, whose office is
located at 550 Metroplex, Nashville, Tennessee 37237-0310, and whose ABA number
is 062000019.
"Disbursement Letter" means an instructional letter executed
and delivered by Borrower to Lender regarding the extensions of credit to be
made on the Closing Date, the form and substance of which is satisfactory to
Lender.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by
Lender's counsel to Borrower, together with Borrower's completed responses to
the inquiries set forth therein, the form and substance of such responses to be
satisfactory to Lender.
"Eligible Assets" means the assets and property constituting
the Specified Stations.
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Borrower, any of its Subsidiaries or any predecessor in interest,
(b) from adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by Borrower, any of its
Subsidiaries or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy, or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, to the extent binding on
Borrower or any of its Subsidiaries, relating to the environment, employee
health and safety, or Hazardous Materials, including CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 USC ss. 1251 et seq; the Toxic Substances
Control Act, 15 USC, ss. 2601 et seq; the Clean Air Act, 42 USC ss. 7401 et
seq.; the Safe Drinking Water Act, 42 USC. ss. 3803 et seq.; the Oil Pollution
Act of 1990, 33 USC. ss. 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC. ss. 11001 et seq.; the Hazardous Material
Transportation Act, 49 USC ss. 1801 et seq.; and the Occupational Safety and
Health Act, 29 USC. ss.651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm products,
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person 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 Person 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).
"Event of Default" has the meaning set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as
in effect from time to time.
"Existing Agent" means Union Bank of California, N.A., as
administrative agent under the Existing Credit Agreement.
"Existing Credit Agreement" means the Revolving Credit
Agreement, dated as of December 15, 1999, as amended prior to the date hereof,
among the Borrower, the Existing Lenders and the Existing Agent.
"Existing Lenders" means the lenders party to the Existing
Credit Agreement on the Closing Date.
"Existing Loan Documents" means the "Loan Documents", as such
term is defined in the Existing Credit Agreement.
"FCC" means, the Federal Communications Commission or any
successor to the functions and powers thereof.
"FCC Licenses" means, with respect to any television station,
(i) all FCC licenses, permits and approvals necessary for the lawful operation
of such television station and (ii) all FCC licenses, permits and approvals
necessary to operate such television station with DTV facilities.
"FCC Rules" has the meaning set forth in Section 5.21.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrower and Lender, in form and substance satisfactory
to Lender.
"FEIN" means Federal Employer Identification Number.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section
2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, 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, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
charter, by-laws, or other organizational documents of such Person.
"Governmental Authority" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Guarantor Security Agreement" means that certain security
agreement executed and delivered by Guarantors in favor of Lender, in form and
substance satisfactory to Lender, as the same may be amended, supplemented or
otherwise modified from time to time.
"Guarantors" means the Subsidiaries named on Schedule G-1,
and, at any time after the Senior Secured Notes have been paid in full or
legally defeased or after the date the Indenture no longer prohibits the
execution and delivery by all of the Subsidiaries of Borrower of Guaranties
(whichever is earlier), all of the Subsidiaries of Borrower.
"Guaranty" means that certain general continuing guaranty
executed and delivered by Guarantors in favor of Lender, in form and substance
satisfactory to Lender, as the same may be amended, supplemented or otherwise
modified from time to time.
"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.
"Indebtedness" means (a) all obligations of Borrower and its
Subsidiaries for borrowed money, (b) all obligations of Borrower and its
Subsidiaries evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations of Borrower and its Subsidiaries in
respect of letters of credit, bankers acceptances, interest rate swaps, or other
financial products, (c) all obligations of Borrower and its Subsidiaries under
Capital Leases, (d) all obligations or liabilities of others secured by a Lien
on any asset of Borrower and any of its Subsidiaries, irrespective of whether
such obligation or liability is assumed, (e) all obligations of Borrower and its
Subsidiaries for the deferred purchase price of assets (other than trade debt
incurred in the ordinary course of Borrower's or such Subsidiary's business and
repayable in accordance with customary trade practices), and (f) any obligation
of Borrower and its Subsidiaries guaranteeing or intended to guarantee (whether
directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with
recourse to Borrower or any of its Subsidiaries) any obligation of any other
Person that would be Indebtedness under clauses (a) through (e) above.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section
11.3.
"Indenture" means the Indenture dated as of March 27, 1998,
between Borrower and the Indenture Trustee, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with this
Agreement.
"Indenture Collateral" means the collateral in which the
Indenture Trustee has been granted a first priority security interest pursuant
to the Indenture Security Agreement.
"Indenture Security Agreement" means the Security and Pledge
Agreement dated as of March 27, 1998, made by Borrower and certain of its
Subsidiaries in favor of the Indenture Trustee, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with this
Agreement.
"Indenture Trustee" means Chase Manhattan Trust Company,
National Association, as trustee under the Indenture and as successor to PNC
Bank, National Association.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, 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.
"Intercreditor Agreement" means the Intercreditor Agreement to
be executed and delivered by Borrower, Guarantors, Lender and the Indenture
Trustee with respect to the Pledged Collateral, in form and substance
satisfactory to Lender, as the same may be amended, supplemented or otherwise
modified from time to time.
"Interest Period" means, with respect to each LIBOR Rate Loan,
a period commencing on the date of the making of such LIBOR Rate Loan and ending
3 months thereafter; provided, however, that (a) if any Interest Period would
end on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day, (b)
interest shall accrue at the applicable rate based upon the LIBOR Rate from and
including the first day of each Interest Period to, but excluding, the day on
which any Interest Period expires, (c) any Interest Period that would end on a
day that is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (d) with respect
to an Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period), the Interest Period shall end on the
last Business Day of the calendar month that is 3 months after the date on which
the Interest Period began, as applicable, and (e) Borrower may not elect an
Interest Period which will end after the Maturity Date.
"Inventory" means all Borrower's now owned or hereafter
acquired right, title, and interest with respect to inventory, including goods
held for sale or lease or to be furnished under a contract of service, goods
that are leased by Borrower as lessor, goods that are furnished by Borrower
under a contract of service, and raw materials, work in process, or materials
used or consumed in Borrower's business.
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, (b) bona fide Accounts arising from the sale of
goods or rendition of services in the ordinary course of business consistent
with past practice), (c) purchases or other acquisitions for consideration of
Indebtedness or Stock, and (d) any other items that are or would be classified
as investments on a balance sheet prepared in accordance with GAAP.
"Investment Property" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"KZJL Assets" means the assets necessary, used or held for use
in the operation of Television Station KZJL, Channel 61, in Houston, Texas,
including any authorizations or applications to operate on DTV Channel 44.
"KZJL Purchase Agreement" means (i) the letter agreement dated
as of October 11, 2000, as amended from time to time in accordance with this
Agreement, between the KZJL Purchaser, as buyer, and the Borrower, as seller,
with respect to the KZJL Assets, and (ii) any Purchase Agreement which
supercedes such letter agreement, as amended from time to time in accordance
with this Agreement.
"KZJL Purchaser" means LBI Holdings II, Inc., an affiliate of
Liberman Broadcasting, Inc., and any assignee of such Person's rights under the
KZJL Purchase Agreement.
"Lender" has the meaning set forth in the preamble to this
Agreement.
"Lender's Account" means an account at a bank designated by
Lender from time to time as the account into which Borrower shall make all
payments to Lender under this Agreement and the other Loan Documents; unless and
until Lender notifies Borrower to the contrary, Lender's Account shall be that
certain deposit account bearing account number 323-266193 and maintained by
Lender with The Chase Manhattan Bank, 4 New York Plaza, 15th Floor, New York,
New York 10004, ABA #021000021.
"Lender's Liens" means the Liens granted by the Loan Parties
to Lender under this Agreement or the other Loan Documents.
"Lender Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by Borrower or any of its
Subsidiaries under any of the Loan Documents that are paid or incurred by
Lender, (b) fees or charges paid or incurred by Lender in connection with
Lender's transactions with Borrower or any of its Subsidiaries, 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 (including periodic appraisals of the Total Collateral or
business valuations to the extent of the fees and charges (and up to the amount
of any limitation) contained in this Agreement), real estate surveys, real
estate title policies and endorsements, and environmental audits, (c) costs and
expenses incurred by Lender in the disbursement of funds to Borrower (by wire
transfer or otherwise), (d) charges paid or incurred by Lender resulting from
the dishonor of checks, (e) reasonable costs and expenses paid or incurred by
Lender 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 Total Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) audit fees
and expenses of Lender related to audit examinations of the Books to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement, (g) reasonable costs and expenses of third party claims or any
other suit paid or incurred by Lender in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by the Loan
Documents or Lender's relationship with Borrower, any of its Subsidiaries or any
guarantor of the Obligations, (h) Lender's reasonable fees and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, or amending the Loan Documents, and (i) Lender's
reasonable fees and expenses (including attorneys fees) incurred in terminating,
enforcing (including attorneys fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding concerning Borrower or
any of its Subsidiaries or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Total Collateral.
"Lender-Related Person" means Lender, Lender's Affiliates,
and the officers, directors, employees, and agents of Lender.
"LIBOR Deadline" has the meaning set forth in Section
2.13(b)(i).
"LIBOR Notice" means a written notice in the form of
Exhibit L-1.
"LIBOR Rate" means, for each Interest Period for each LIBOR
Rate Loan, the rate per annum determined by Lender by dividing (a) the Base
LIBOR Rate for such Interest Period, by (b) 100% minus the Reserve Percentage.
The LIBOR Rate shall be adjusted on and as of the effective day of any change in
the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means 4.875 percentage points.
"License Subsidiaries" means, collectively, SAH-New York
License Subsidiary, SAH-Boston License Subsidiary and SAH-Houston License
Subsidiary.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, 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, 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 Documents" means this Agreement, the Credit Card
Assignment Agreement, the Control Agreements, the Disbursement Letter, the Due
Diligence Letter, the Fee Letter, the Guaranty, the Guarantor Security
Agreement, any Mortgages, the Officers' Certificate, the Stock Pledge Agreement,
the Trademark Security Agreement, the Intercreditor Agreement, any note or notes
executed by Borrower in connection with this Agreement and payable to Lender,
and any other agreement entered into, now or in the future, by Borrower, any
Subsidiary of the Borrower and Lender in connection with this Agreement.
"Loan Parties" means the Borrower and each Guarantor.
"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 either (i) the Loan
Parties, taken as a whole, or (ii) Borrower and its Subsidiaries, taken as a
whole, (b) a material impairment of any Loan Party's ability to perform its
obligations under the Loan Documents to which it is a party or of Lender's
ability to enforce the Obligations or realize upon the Total Collateral, or (c)
a material impairment of the enforceability or priority of the Lender's Liens
with respect to the Total Collateral as a result of an action or failure to act
on the part of Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $20,000,000, as such amount
may be terminated at any time pursuant to Section 3.4, Section 3.6 or Section
9.1 or reduced from time to time pursuant to Section 3.6.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Borrower in favor of Lender, in form and substance satisfactory to Lender, that
encumber any Real Property constituting Collateral after the date hereof and the
related improvements thereto.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA for which Borrower or any ERISA Affiliate has
contributed to, or has been obligated to contribute to, at any time during the
preceding six (6) years.
"Negotiable Collateral" means all of Borrower's now owned and
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Obligations" means all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), premiums, liabilities (including all amounts charged
to Borrower's Loan Account pursuant hereto), obligations, fees (including the
fees provided for in the Fee Letter), charges, costs, Lender Expenses (including
any fees or expenses that, but for the provisions of the Bankruptcy Code, would
have accrued), lease payments, guaranties, covenants, and duties of any kind and
description owing by Borrower or any Guarantor to Lender pursuant to or
evidenced by the Loan Documents 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 all interest not paid when due
and all Lender Expenses that Borrower or any Guarantor is required to pay or
reimburse by the Loan Documents, by law, or otherwise. Any reference in this
Agreement or in the Loan Documents to the Obligations shall include all
amendments, changes, extensions, modifications, renewals replacements,
substitutions, and supplements, thereto and thereof, as applicable, both prior
and subsequent to any Insolvency Proceeding.
"Officers' Certificate" means the representations and
warranties of officers form submitted by Lender to Borrower, together with
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Lender.
"Originating Lender" has the meaning set forth in Section
14.1(d).
"Overadvance" has the meaning set forth in Section 2.5.
"Participant" has the meaning set forth in Section 14.1(d).
"Pay-Off Letter" means a letter, in form and substance
satisfactory to Lender, from Existing Agent to Lender respecting the amount
necessary to repay in full all of the obligations of Borrower owing to the
Existing Lenders and to Existing Agent and obtain a release of all of the Liens
existing in favor of the Existing Lenders and Existing Agent in and to the
assets of Borrower or any of its Subsidiaries.
"Permitted Discretion" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
by Borrower or any of its Subsidiaries of Equipment that is substantially worn,
damaged, or obsolete in the ordinary course of Borrower's or any of its
Subsidiaries' business, (b) sales by Borrower and its Subsidiaries of Inventory
to buyers in the ordinary course of business, (c) the use or transfer of money
or Cash Equivalents by Borrower and its Subsidiaries in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents, (d) the
licensing by Borrower and its Subsidiaries, on a non-exclusive basis, of
patents, trademarks, copyrights, and other intellectual property rights in the
ordinary course of Borrower's and its Subsidiaries' business, (e) (i) the sale
of the WSAH Assets pursuant to the WSAH Purchase Agreement and (ii) the sale of
the KZJL Assets pursuant to the KZJL Purchase Agreement, provided that (A) the
cash portion of the purchase price under each such Purchase Agreement is not
less than $25,000,000 and (B) 100% of the cash proceeds under each such Purchase
Agreement is paid directly to the Lender Account in accordance with Section 3.6
upon the closing of the purchase transaction under such Purchase Agreement, and
(f) the sale of any assets in which the Indenture Trustee has been granted a
first priority Lien, but only to the extent that (i) such Lien constitutes a
Permitted Lien and (ii) proceeds of such disposition are used to repay the
Senior Secured Notes.
"Permitted Investments" means (a) investments in Cash
Equivalents, (b) investments in negotiable instruments for collection, (c)
investments in Guarantors, (d) investments as of the Closing Date by Borrower in
its Subsidiaries that are not Guarantors, and (e) advances made in connection
with purchases of goods or services in the ordinary course of business.
"Permitted Liens" means (a) Liens held by Lender, (b) Liens
for unpaid taxes that either (i) are not yet delinquent, or (ii) do not
constitute an Event of Default hereunder and are the subject of Permitted
Protests, (c) Liens set forth on Schedule P-1, (d) the interests of lessors
under operating leases, (e) purchase money Liens or the interests of lessors
under Capital Leases to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, (f) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of business of Borrower
or any of its Subsidiaries and not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet delinquent, or (ii) are the
subject of Permitted Protests, (g) Liens arising from deposits made in
connection with obtaining worker's compensation or other unemployment insurance,
(h) Liens or deposits to secure performance of bids, tenders, or leases incurred
in the ordinary course of business of Borrower or any of its Subsidiaries and
not in connection with the borrowing of money, (i) Liens granted as security for
surety or appeal bonds in connection with obtaining such bonds in the ordinary
course of business of Borrower or any of its Subsidiaries, (j) Liens resulting
from any judgment or award that is not an Event of Default hereunder, (k) Liens
with respect to Real Property that are exceptions to the commitments for title
insurance issued in connection with the Mortgages, as accepted by Lender, (l)
with respect to any Real Property, easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof by Borrower or any of its Subsidiaries, (m) prior to the
payment in full or the legal defeasement of the Senior Secured Notes, Liens in
favor of the Indenture Trustee for the benefit of the holders of the Senior
Secured Notes to the extent required under the Indenture and the Indenture
Security Agreement as in effect on the date hereof, and (n) prior to the funding
of the initial Advance hereunder, Liens in favor of the Existing Agent for the
benefit of the Existing Lenders.
"Permitted Protest" means the right of Borrower or any of its
Subsidiaries to protest any Lien (other than any such Lien that secures the
Obligations), taxes (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 in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by Borrower or such Subsidiary in good faith, and (c) Lender is
satisfied that, while any such protest is pending, there will be no impairment
of the enforceability, validity, or priority of any of the Lender's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date
of determination, Purchase Money Indebtedness in an aggregate principal amount
outstanding at any one time not in excess of $3,000,000.
"Person" means 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.
"Pledged Collateral" has the meaning specified for such term
in the Stock Pledge Agreement.
"Projections" means Borrower's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Purchase Agreements" means, collectively, the WSAH Purchase
Agreement and the KZJL Purchase Agreement.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Purchaser" means the WSAH Purchaser or the KZJL Purchaser, as
applicable.
"Real Property" means any estates or interests in real
property now owned or hereafter acquired by Borrower or any of its Subsidiaries
and the improvements thereto.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Required Availability" means Availability and unrestricted
cash and Cash Equivalents in an amount of not less than $5,000,000.
"Reserve Percentage" means, on any day, for Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of Lender, but so long as
Lender is not required or directed under applicable regulations to maintain such
reserves, the Reserve Percentage shall be zero.
"Revolver Usage" means, as of any date of determination, the
then extant amount of outstanding Advances.
"SAH Acquisition" means SAH Acquisition Corporation II, a
Tennessee corporation and a Subsidiary of Borrower.
"SAH-Boston License Subsidiary" means SAH-Boston License
Corp., a Tennessee corporation and a Subsidiary of Borrower.
"SAH-Houston" means SAH-Houston Corporation, a Tennessee
corporation and a Subsidiary of Borrower.
"SAH-Houston License Subsidiary" means SAH-Houston License
Corp., a Tennessee corporation and a Subsidiary of Borrower.
"SAH-New York License Subsidiary" means SAH-New York License
Corp., a Tennessee corporation and a Subsidiary of Borrower.
"SAH-Northeast" means SAH-Northeast Corporation, a Tennessee
corporation and a Subsidiary of Borrower.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as that term
is defined in the Code.
"Securities Purchase Agreement" means the Securities Purchase
Agreement dated as of June 30, 2000, among Borrower and the investors on the
Schedule of Buyers thereto, as amended or otherwise modified from time to time.
"Senior Secured Notes" means Borrower's 11% Senior Secured
Notes due 2005 in the principal amount of $75,000,000, issued pursuant to the
Indenture.
"Solvent" means, with respect to any Person on a particular
date, that such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Specified Stations" means the television stations identified
on Schedule S-1.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, 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).
"Stock Pledge Agreement" means a stock pledge agreement, in
form and substance satisfactory to Lender, executed and delivered by Borrower
and Guarantors to Lender with respect to the pledge of (i) the Stock of the
Guarantors owned by Borrower, (ii) the membership interests in Partners-SATH,
L.L.C. owned by Borrower and (iii) the Stock of any Person owned by a Guarantor,
as the same may be amended, supplemented or otherwise modified from time to
time.
"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 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.
"Taxes" has the meaning set forth in Section 16.5.
"Total Collateral" means all of the property and assets and
all interests therein and proceeds thereof now owned or hereafter acquired by
any Person upon which a Lien is granted or purported to be granted by such
Person as security for all or any part of the Obligations, including, without
limitation, the issued and outstanding shares of stock of the SAH-Boston License
Subsidiary, the SAH-Houston License Subsidiary and the SAH New York License
Subsidiary.
"Trademark Security Agreement" means a trademark security
agreement executed and delivered by Borrower, Guarantors and Lender, the form
and substance of which is satisfactory to Lender.
"Voidable Transfer" has the meaning set forth in Section 16.8.
"Wells Fargo" means Wells Fargo Bank, National Association, a
national banking association.
"WMFP Assets" means the assets used, useful or held for use in
the operation of Television Station WMFP, Channel 62, including any
authorizations and applications to operate on DTV Channel 18, in Lawrence,
Massachusetts.
"WSAH Assets" means the assets used, useful or held for use in
the operation of Television Station WSAH, Channel 43, including any
authorizations and applications to operate on DTV Channel 42, in Bridgeport,
Connecticut.
"WSAH Purchase Agreement" means (i) the letter agreement dated
as of September 20, 2000, as amended from time to time in accordance with this
Agreement, between the WSAH Purchaser, as buyer, and the Borrower, as seller,
with respect to the WSAH Assets, and (ii) any Purchase Agreement which
supercedes such letter agreement, as amended from time to time in accordance
with this Agreement.
"WSAH Purchaser" means Azteca America Stations Group, LLC and
any assignee of such Person's rights under the WSAH Purchase Agreement.
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 term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries 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 such other Loan Document, 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. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5. Schedules and Exhibits . All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1. Revolver Advances .
(a) Subject to the terms and conditions of this Agreement, and during the term
of this Agreement, Lender agrees to make advances ("Advances") to Borrower in an
amount at any one time outstanding not to exceed an amount equal to the lesser
of (i) the Maximum Revolver Amount or (ii) the Borrowing Base. For purposes of
this Agreement, "Borrowing Base," as of any date of determination, shall mean
the result of:
(x) 25% of the appraised value of the
Eligible Assets based on the then mostly recently completed Appraisal,
minus
(y) the aggregate amount of reserves,
if any, established by Lender under Section 2.1(b).
On the date hereof Borrower and Lender agree that the
Borrowing Base is equal to at least $20,000,000.
(b) Anything to the contrary in this Section 2.1 notwithstanding, Lender shall
have the right to establish reserves in such amounts, and with respect to such
matters, as Lender in its Permitted Discretion shall deem necessary or
appropriate, against the Borrowing Base, including reserves with respect to (i)
sums that Borrower is required to pay (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable under
such leases) and has failed to pay under any Section of this Agreement or any
other Loan Document, and (ii) amounts owing by Borrower to any Person to the
extent secured by a Lien on, or trust over, any of the Total Collateral (other
than any existing Permitted Lien set forth on Schedule P-1 which is specifically
identified thereon as entitled to have priority over the Lender's Liens), which
Lien or trust, in the Permitted Discretion of Lender likely would have a
priority superior to the Lender's Liens (such as Liens or trusts in favor of
landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the Total
Collateral. In addition to the foregoing, Lender shall have the right to have
the Eligible Assets reappraised by a qualified appraisal company selected by
Lender at Borrower's cost and expense, provided, that, in the absence of a
continuing Event of Default, Borrower shall not be obligated to pay for more
than one appraisal of the Eligible Assets during any six month period and not
more than two appraisals during any calendar year, provided, further, that if
any Event of Default exists, Lender shall have the right to have the Eligible
Assets reappraised by a qualified appraisal company selected by Lender as
frequently as Lender may determine, at Borrower's cost and expense .
(c) Lender shall have no obligation to make additional Advances hereunder to the
extent such additional Advances would cause the Revolver Usage to exceed the
Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and, subject to the
terms and conditions of this Agreement, reborrowed at any time during the term
of this Agreement.
2.2. Intentionally Omitted
2.3. Borrowing Procedures and Settlements .
(a) Procedure for Borrowing. Each Borrowing shall be made by a request by an
Authorized Person delivered to Lender (which notice must be received by Lender
no later than, in the case of a Base Rate Loan, 10:00 a.m. (California time) on
the requested Funding Date, and, in the case of a LIBOR Rate Loan, 11:00 a.m.
(California time) three Business Days prior to the requested Funding Date, in
each case specifying (i) the amount of such Borrowing, and (ii) the requested
Funding Date, which shall be a Business Day, and in the case of a LIBOR Rate
Loan, accompanied by a LIBOR Notice in accordance with Section 2.13. At Lender's
election, in lieu of delivering the above-described request in writing, any
Authorized Person may give Lender telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing within 24
hours of the giving of such notice.
(b) Making of Advances. If Lender has received a timely request for a Borrowing
in accordance with the provisions hereof, and subject to the satisfaction of the
applicable terms and conditions set forth herein, Lender shall make the proceeds
of such Advance available to Borrower on the applicable Funding Date by
transferring immediately available funds equal to such proceeds to Borrower's
Designated Account.
2.4. Payments .
(a) Payments by Borrower.
(i) Except as otherwise expressly provided herein, all payments by Borrower
shall be made to Lender's Account 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 Lender later than 11:00 a.m. (California time) 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.
(b) Application and Reversal of Payments.
(i) All payments shall be remitted to Lender and all such payments (other than
payments received while no Default or Event of Default has occurred and is
continuing and which relate to the payment of principal or interest of specific
Obligations or which relate to the payment of specific fees), and , at the
option of Lender, upon the occurrence and during the continuance of an Event of
Default, all proceeds of Accounts or other Total Collateral received by Lender,
shall be applied as follows:
(A) first, to pay any Lender Expenses then due to Lender under the Loan
Documents, until paid in full,
(B) second, to pay any fees then due to Lender under the Loan Documents until
paid in full,
(C) third, ratably to pay interest due in respect of the Advances until paid in
full,
(D) fourth, to pay the principal of all Advances until paid in full,
(E) fifth, to pay any other Obligations until paid in full, and
(F) sixth, to Borrower (to be wired to the Designated Account) or such other
Person entitled thereto under applicable law.
(ii) In each instance, so long as no Default or Event of Default has occurred
and is continuing, Section 2.4(b) shall not be deemed to apply to any payment by
Borrower specified by Borrower to be for the payment of specific Obligations
then due and payable (or prepayable) under any provision of this Agreement.
(iii) For purposes of the foregoing, "paid in full" means payment of all amounts
owing under the Loan Documents according to the terms thereof, including loan
fees, service fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency Proceeding), default
interest, interest on interest, and expense reimbursements, whether or not the
same would be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.
(iv) In the event of a direct conflict between the priority provisions of this
Section 2.4 and other provisions contained in any other Loan Document, it is the
intention of the parties hereto that such priority provisions in such documents
shall be read together and construed, to the fullest extent possible, to be in
concert with each other. In the event of any actual, irreconcilable conflict
that cannot be resolved as aforesaid, the terms and provisions of this Section
2.4 shall control and govern.
2.5. Overadvances . If, at any time or for any reason, the amount of Obligations
owed by Borrower to Lender pursuant to Sections 2.1 is greater than either the
Dollar or percentage limitations set forth in Sections 2.1, (an "Overadvance"),
Borrower immediately shall pay to Lender, in cash, the amount of such excess,
which amount shall be used by Lender to reduce the Obligations in accordance
with the priorities set forth in Section 2.4(b). In addition, Borrower hereby
promises to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full to Lender as and when due and payable under the
terms of this Agreement and the other Loan Documents.
2.6. Interest Rates: Rates, Payments, and Calculations .
(a) Interest Rates. Except as provided in clause (c) below, all Obligations that
have been charged to the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof as follows (i) if the relevant Obligation
is an Advance that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR
Rate plus the LIBOR Rate Margin, and (ii) otherwise, at a per annum rate equal
to the Base Rate plus the Base Rate Margin.
(b) Intentionally Omitted
(c) Default Rate. Upon the occurrence and during the continuation of an Event of
Default, all Obligations that have been charged to the Loan Account pursuant to
the terms hereof shall bear interest on the Daily Balance thereof at a per annum
rate equal to 2 percentage points above the per annum rate otherwise applicable
hereunder.
(d) Payment. Interest, and all other fees payable hereunder shall be due and
payable, in arrears, on the first day of each month at any time that Obligations
or obligation to extend credit hereunder are outstanding. Borrower hereby
authorizes Lender, from time to time without prior notice to Borrower, to charge
such interest and fees, all Lender Expenses (as and when incurred), the fees and
costs provided for in Section 2.11 (as and when accrued or incurred), and all
other payments as and when due and payable under any Loan Document to Borrower's
Loan Account, which amounts thereafter constitute Advances hereunder and shall
accrue interest at the rate then applicable to Advances hereunder. Any interest
not paid when due shall be compounded by being charged to Borrower's Loan
Account and shall thereafter constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances that are Base Rate Loans
hereunder.
(e) Computation. 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. In the event the Base Rate is changed from time to time hereafter, the
rates of interest hereunder based upon the Base Rate automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or 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 Lender, 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.
2.7. Credit Card Assignment Agreement . At all times, other than a de-minimus
amount of credit card payments which may be processed through a "private label"
credit card being issued by Borrower, all credit card payments from the Account
Debtors of Borrower and its Subsidiaries (i) shall be processed through the
Credit Card Processor and (ii) shall be subject to the Credit Card Assignment
Agreement. At no time shall (A) less than 85% of the Collections of the Borrower
and its Subsidiaries (excluding the accounts receivable of Collector's Edge of
Tennessee, Inc.) be subject to the Credit Card Assignment Agreement, and (B)
Borrower permit SAH Acquisition Corporation II, SAH Acquisition Corporation I or
Partners-SATH, L.L.C. to process any credit card payments from its account
debtors through the Credit Card Processor, or permit any other payment
constituting Indenture Collateral to be processed through the Credit Card
Processor.
2.8. Crediting Payments . The receipt of any payment item by Lender shall not be
considered a payment on account unless such payment item is a wire transfer of
immediately available federal funds made to the Lender's Account or unless and
until such payment item is honored when presented for payment. Should any
payment item not be honored when presented for payment, then Borrower shall be
deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Lender only if it is received into the
Lender's Account on a Business Day on or before 11:00 a.m. (California time). If
any payment item is received into the Lender's Account on a non-Business Day or
after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have
been received by Lender as of the opening of business on the immediately
following Business Day.
2.9. Designated Account . Lender is authorized to make the Advances 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 2.6(d). Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the proceeds of
the Advances requested by Borrower and made by Lender hereunder. Unless
otherwise agreed by Lender and Borrower, any Advance requested by Borrower and
made by Lender hereunder shall be made to the Designated Account.
2.10. Maintenance of Loan Account; Statements of Obligations . Lender shall
maintain an account on its books in the name of Borrower (the "Loan Account") on
which Borrower will be charged with all Advances made by Lender to Borrower or
for Borrower's account, and with all other payment Obligations hereunder or
under the other Loan Documents, including, accrued interest, fees and expenses,
and Lender Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Lender from Borrower or for Borrower's
account. Lender shall render statements regarding the Loan Account to Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Expenses owing, and such statements shall be
conclusively presumed to be correct and accurate and constitute an account
stated between Borrower and Lender unless, within 30 days after receipt thereof
by Borrower, Borrower shall deliver to Lender written objection thereto
describing the error or errors contained in any such statements.
2.11. Fees . Borrower shall pay to Lender the following fees and charges, which
fees and charges shall be non-refundable when paid (irrespective of whether this
Agreement is terminated thereafter):
(a) Fee Letter Fees. As and when due and payable under the terms of the
Fee Letter, Borrower shall pay to Lender the fees set forth in the Fee Letter.
(b) Audit, Appraisal, and Valuation Charges. Audit, appraisal, and valuation
fees and charges as follows (i) a fee of $750 per day, per auditor, plus
out-of-pocket expenses for each financial audit of Borrower performed by
personnel employed by Lender, (ii) a fee of $1,500 per day per appraiser, plus
out-of-pocket expenses, for each appraisal of any of the Total Collateral
performed by personnel employed by Lender, and (iii) the actual charges paid or
incurred by Lender if it elects to employ the services of one or more third
Persons to perform financial audits of Borrower, to appraise the Total
Collateral, or any portion thereof, or to assess Borrower's business valuation.
2.12. Intentionally Omitted
2.13. LIBOR Option .
(a) Interest and Interest Payment Dates. In lieu of having interest charged at
the rate based upon the Base Rate, Borrower shall have the option (the "LIBOR
Option") to have interest on all or a portion of the Advances be charged at the
LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i)
the last day of the Interest Period applicable thereto, (ii) the occurrence of
an Event of Default in consequence of which Lender has elected to accelerate the
maturity of the Obligations, (iii) termination of this Agreement pursuant to the
terms hereof, or (iv) the first day of each month that such LIBOR Rate Loan is
outstanding. On the last day of each applicable Interest Period, unless Borrower
properly has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrower no longer
shall have the option to request that Advances bear interest at the LIBOR Rate
and Lender shall have the right to convert the interest rate on all outstanding
LIBOR Rate Loans to the rate then applicable to Base Rate Loans hereunder.
(b) LIBOR Election.
(i) Borrower may, at any time and from time to time, so long as no Event of
Default has occurred and is continuing, elect to exercise the LIBOR Option by
notifying Lender prior to 11:00 a.m. (California time) at least 3 Business Days
prior to the commencement of the proposed Interest Period (the "LIBOR
Deadline"). Notice of Borrower's election of the LIBOR Option for a permitted
portion of the Advances and an Interest Period pursuant to this Section shall be
made by delivery to Lender of a LIBOR Notice received by Lender before the LIBOR
Deadline, or by telephonic notice received by Lender before the LIBOR Deadline
(to be confirmed by delivery to Lender of a LIBOR Notice received by Lender
prior to 5:00 p.m. (California time) on the same day.
(ii) Each LIBOR Notice shall be irrevocable and binding on Borrower. In
connection with each LIBOR Rate Loan, Borrower shall indemnify, defend, and hold
Lender harmless against any loss, cost, or expense incurred by Lender as a
result of (a) the payment of any principal of any LIBOR Rate Loan other than on
the last day of an Interest Period applicable thereto (including as a result of
an Event of Default), (b) the conversion of any LIBOR Rate Loan other than on
the last day of the Interest Period applicable thereto, or (c) the failure to
borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in
any LIBOR Notice delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall be deemed to equal the
amount determined by Lender to be the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount of such LIBOR Rate Loan
had such event not occurred, at the LIBOR Rate that would have been applicable
thereto, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert, or continue, for the period that would have been the Interest Period
therefor), minus (ii) the amount of interest that would accrue on such principal
amount for such period at the interest rate which Lender would be offered were
it to be offered, at the commencement of such period, Dollar deposits of a
comparable amount and period in the London interbank market. A certificate of
Lender delivered to Borrower setting forth any amount or amounts that Lender is
entitled to receive pursuant to this Section shall be conclusive absent manifest
error.
(iii) Borrower shall have not more than 5 LIBOR Rate Loans in effect at any
given time. Borrower only may exercise the LIBOR Option for LIBOR Rate Loans of
at least $1,000,000 and integral multiples of $500,000 in excess thereof.
(c) Prepayments. Borrower may prepay LIBOR Rate Loans at any time; provided,
however, that in the event that LIBOR Rate Loans are prepaid on any date that is
not the last day of the Interest Period applicable thereto, including as a
result of any prepayment through the application by Lender of proceeds of
Collections in accordance with Section 2.4(b) or for any other reason, including
early termination of the term of this Agreement or acceleration of the
Obligations pursuant to the terms hereof, Borrower shall indemnify, defend, and
hold Lender and its Participants harmless against any and all Funding Losses in
accordance with clause (b)(ii) above.
(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Lender on a prospective basis to take into
account any additional or increased costs to Lender of maintaining or obtaining
any eurodollar deposits or increased costs due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding loans bearing interest at the LIBOR Rate. In any
such event, Lender shall give Borrower notice of such a determination and
adjustment and, upon its receipt of the notice from Lender, Borrower may, by
notice to Lender (y) require Lender to furnish to Borrower a statement setting
forth the basis for adjusting such LIBOR Rate and the method for determining the
amount of such adjustment, or (z) repay the LIBOR Rate Loans with respect to
which such adjustment is made (together with any amounts due under clause
(b)(ii) above).
(ii) In the event that any change in market conditions or any law, regulation,
treaty, or directive, or any change therein or in the interpretation of
application thereof, shall at any time after the date hereof, in the reasonable
opinion of Lender, make it unlawful or impractical for Lender to fund or
maintain LIBOR Advances or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, Lender shall give notice
of such changed circumstances to Borrower and (y) in the case of any LIBOR Rate
Loans that are outstanding, the date specified in Lender's notice shall be
deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and
interest upon the LIBOR Rate Loans thereafter shall accrue interest at the rate
then applicable to Base Rate Loans, and (z) Borrower shall not be entitled to
elect the LIBOR Option until Lender determines that it would no longer be
unlawful or impractical to do so.
(e) No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, neither Lender, nor any of its Participants, is required
actually to acquire eurodollar deposits to fund or otherwise match fund any
Obligation as to which interest accrues at the LIBOR Rate. The provisions of
this Section shall apply as if Lender or its Participants had match funded any
Obligation as to which interest is accruing at the LIBOR Rate by acquiring
eurodollar deposits for each Interest Period in the amount of the LIBOR Rate
Loans.
2.14. Capital Requirements . If, after the date hereof, Lender determines that
(i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by Lender
or its parent bank holding company with any guideline, request, or directive of
any such entity regarding capital adequacy (whether or not having the force of
law), the effect of reducing the return on Lender's or such holding company's
capital as a consequence of Lender's obligations hereunder to a level below that
which Lender or such holding company could have achieved but for such adoption,
change, or compliance (taking into consideration Lender's or such holding
company's then existing policies with respect to capital adequacy and assuming
the full utilization of such entity's capital) by any amount deemed by Lender to
be material, then Lender may notify Borrower thereof. Following receipt of such
notice, Borrower agrees to pay Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by Lender of a statement in the amount and setting forth
in reasonable detail Lender's calculation thereof and the assumptions upon which
such calculation was based (which statement shall be deemed true and correct
absent manifest error). In determining such amount, Lender may use any
reasonable averaging and attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1. Conditions Precedent to the Initial Extension of Credit . The obligation of
Lender to make the initial Advance (or otherwise to extend any credit provided
for hereunder), is subject to the fulfillment, to the satisfaction of Lender, of
each of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before October 31, 2000;
(b) Lender shall have received all financing statements required by Lender, duly
executed by Borrower and each Guarantor, and Lender shall have received searches
reflecting the filing of all such financing statements;
(c) Lender shall have received each of the following documents, in form and
substance satisfactory to Lender, duly executed, and each such document shall be
in full force and effect:
(i) Counterparts to this Agreement,
(ii) the Disbursement Letter,
(iii) the Due Diligence Letter,
(iv) the Fee Letter,
(v) the Guaranty,
(vi) the Credit Card Assignment Agreement,
(vii) the Guarantor Security Agreement,
(viii) the Officers' Certificate,
(ix) the Stock Pledge Agreement, together with all certificates representing
the shares of Stock pledged thereunder, as well as Stock powers with respect
thereto endorsed in blank,
(x) the Trademark Security Agreement,
(xi) the Pay-Off Letter,
(xii) all UCC termination statements and other documentation evidencing the
termination by Existing Agent of its Liens in and to the properties and assets
of the Loan Parties, as required by Lender,
(xiii) each Control Agreement requested by the Lender, and
(xiv) the Intercreditor Agreement.
(d) Lender shall have received a certificate from the Secretary of Borrower
attesting to the resolutions of Borrower's Board of Directors authorizing its
execution, delivery, and performance of this Agreement and the other Loan
Documents to which Borrower is a party and authorizing specific officers of
Borrower to execute the same;
(e) Lender shall have received copies of Borrower's Governing Documents, as
amended, modified, or supplemented to the Closing Date, certified by the
Secretary of Borrower;
(f) Lender shall have received a certificate of status with respect to Borrower,
dated within 10 days of the Closing Date, such certificate to be issued by the
appropriate officer of the jurisdiction of organization of Borrower, which
certificate shall indicate that Borrower is in good standing in such
jurisdiction;
(g) Lender shall have received certificates of status with respect to Borrower,
each dated within 30 days of the Closing Date, such certificates to be issued by
the appropriate officer of the jurisdictions (other than the jurisdiction of
organization of Borrower) in which its failure to be duly qualified or licensed
would constitute a Material Adverse Change, which certificates shall indicate
that Borrower is in good standing in such jurisdictions;
(h) Lender shall have received a certificate from the Secretary of each
Guarantor attesting to the resolutions of such Guarantor's Board of Directors
authorizing its execution, delivery, and performance of the Loan Documents to
which such Guarantor is a party and authorizing specific officers of such
Guarantor to execute the same;
(i) Lender shall have received copies of each Guarantor's Governing Documents,
as amended, modified, or supplemented to the Closing Date, certified by the
Secretary of such Guarantor;
(j) Lender shall have received a certificate of status with respect to each
Guarantor, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Guarantor, which certificate shall indicate that such Guarantor is in good
standing in such jurisdiction;
(k) Lender shall have received certificates of status with respect to each
Guarantor, each dated within 30 days of the Closing Date, such certificates to
be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Guarantor) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;
(l) Lender shall have received a certificate of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Lender;
(m) Lender shall have received Collateral Access Agreements with respect to the
Borrower's headquarters in Antioch, Tennessee;
(n) Lender shall have received an opinion (or opinions) of Borrower's and
Guarantors' counsel in form and substance satisfactory to Lender;
(o) Lender shall have received satisfactory evidence (including a certificate of
the chief financial officer of Borrower) that all tax returns required to be
filed by Borrower have been timely filed and all taxes upon Borrower or
Guarantors or their respective properties, assets, income, and franchises
(including Real Property taxes and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a Permitted Protest;
(p) Borrower, the KZJL Purchaser and the WSAH Purchaser shall have filed
complete and grantable applications with the FCC requesting consent to the
assignment of the FCC Licenses relating to KZJL Assets and WSAH Assets to the
KZJL Purchaser and the WSAH Purchaser, respectively, and delivered a true and
correct copy of each such application to the Lender;
(q) (i) Each of the Purchase Agreements shall be in full force and effect, (ii)
no event or condition shall have occurred which would permit the applicable
Purchaser to terminate its obligations under such Purchase Agreement, and (iii)
neither Borrower nor the applicable Purchaser shall have notified the other
party that it intends to terminate or that it believes it has cause to terminate
its obligations under such Purchase Agreement;
(r) Lender shall have completed its business, legal, and collateral due
diligence;
(s) Lender shall have received completed reference checks with respect to
Borrower's senior management, the results of which are satisfactory to Lender in
its sole discretion;
(t) Lender shall have received (i) an Appraisal of the Eligible Assets, the
results of which shall be satisfactory to Lender and (ii) a field audit of the
Total Collateral performed by Arthur Andersen LLP;
(u) Lender shall have received Borrower's Closing Date Business Plan;
(v) Borrower shall pay all Lender Expenses incurred in connection with the
transactions evidenced by this Agreement;
(w) Borrower shall have Required Availability on the Closing Date;
(x) Lender shall have received copies of each of the Purchase Agreements, the
Indenture, the Indenture Security Agreement and the Existing Loan Documents,
together with a certificate of the Secretary of Borrower certifying each such
document as being a true, correct, and complete copy thereof;
(y) the Indenture Trustee shall have executed an amendment to the Indenture and
an amendment to the Indenture Security Agreement, each substantially in the form
attached hereto as Exhibit I-1 and Exhibit I-2, respectively.
(z) Borrower and Guarantors shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrower and Guarantors of this Agreement or
any other Loan Document or with the consummation of the transactions
contemplated hereby and thereby;
(aa) Lender and its counsel shall have received a satisfactory report with
respect to all material litigation in which Borrower or any of its Subsidiaries
is named as a defendant, including, without limitation, all patent litigation.
(bb) 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 Lender; and
(cc) Lender shall have received copies of such documents as it may reasonably
request evidencing the matters set forth in Section 5.21.
3.2. Conditions Subsequent to the Initial Extension of Credit . The obligation
of Lender to continue to make Advances (or otherwise extend credit hereunder) is
subject to the fulfillment, on or before the date applicable thereto, of each of
the conditions subsequent set forth below (the failure by Borrower to so perform
or cause to be performed constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to Lender certified copies of
the policies of insurance, together with the endorsements thereto, as are
required by Section 6.8, the form and substance of which shall be satisfactory
to Lender and its counsel, and
(b) within 3 days after the same is executed and delivered, a copy of (i) any
amendment to either Purchase Agreement and (ii) any Purchase Agreement which
replaces or supercedes a Purchase Agreement in effect on the Closing Date.
3.3. Conditions Precedent to all Extensions of Credit . The obligation of Lender
to make all Advances (or to extend any other credit hereunder) shall be subject
to the following conditions precedent:
(a) the representations and warranties contained in this Agreement and the other
Loan Documents shall be true and correct in all material 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,
(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 Borrower,
Lender, or any of their Affiliates.
(d) no Material Adverse Change shall have occurred since August 31, 2000, other
than the downgrade by Moody's Investors Services Inc. and Standard & Poor's
Ratings Group, on September 7, 2000, with respect to the Senior Secured Notes.
3.4. Term . This Agreement shall become effective upon the execution and
delivery hereof by Borrower and Lender and shall continue in full force and
effect for a term ending on November 2, 2001 (the "Maturity Date"). The
foregoing notwithstanding, Lender shall have the right to terminate its
obligations under this Agreement, whereupon the Maximum Revolver Amount shall be
reduced to zero, immediately and without notice upon the occurrence and during
the continuation of an Event of Default.
3.5. Effect of Termination . On the date of termination of this Agreement, all
Obligations immediately shall become due and payable without notice or demand.
No termination of this Agreement, however, shall relieve or discharge Borrower
of its duties, Obligations, or covenants hereunder and the Lender's Liens in the
Total Collateral shall remain in effect until all Obligations have been fully
and finally discharged and Lender's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have been fully and finally discharged and Lender's
obligations to provide additional credit under the Loan Documents have been
terminated irrevocably, Lender will, at Borrower's sole expense, execute and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Lender's Liens and all
notices of security interests and liens previously filed by Lender with respect
to the Obligations.
3.6. Early Termination by Borrower .
(a) Borrower has the option, at any time upon 90 days prior written notice to
Lender, to terminate this Agreement by paying to Lender, in cash, the
Obligations, in full. If Borrower has sent a notice of termination pursuant to
the provisions of this Section, then Lender's obligations to extend credit
hereunder shall terminate and Borrower shall be obligated to repay the
Obligations on the date set forth as the date of termination of this Agreement
in such notice.
(b) Anything to the contrary notwithstanding, if at any time and from time to
time Borrower or any of its Subsidiaries or Affiliates shall receive proceeds
from (i) the sale of the WSAH Assets pursuant to the WSAH Purchase Agreement,
(ii) the sale of the KZJL Assets pursuant to the KZJL Purchase Agreement, (iii)
any amounts held in escrow or any deposit with respect to the sale of the WSAH
Assets or the KZJL Assets, (iv) the sale or other disposition of any other
property or assets of a Loan Party (other than a Permitted Disposition), (v)
sale or other disposition of the Indenture Collateral, to the extent exceeding
the amount required to be paid to the Indenture Trustee, (vi) any settlement of
or payment in respect of any property or casualty insurance claim or any
condemnation proceeding relating to any property or asset of the Borrower or any
of its Subsidiaries, or (vii) a sale or other disposition consented to by the
Lender in accordance with the last sentence of Section 7.4, then Borrower shall
cause such proceeds (up to the amount of the Obligations outstanding at such
time) to be paid immediately and directly to the Lender Account for application
to the Obligations in accordance with Section 2.4(b), and if received by
Borrower, any of its Subsidiaries or Affiliates, Borrower shall immediately
prepay the Obligations outstanding by an amount equal to such proceeds. The
Maximum Revolver Amount shall be automatically and immediately reduced
permanently by the amount of such proceeds and if such proceeds are sufficient
to repay all Obligations outstanding at such time, this Agreement shall
terminate on the date of such payment and the balance of such proceeds shall be
refunded to Borrower's Designated Account. Borrower shall give Lender 10
Business Days notice prior to the closing of any such sale or the anticipated
payment of any amount referred to in this Section 3.6(b).
4. CREATION OF SECURITY INTEREST.
4.1. Grant of Security Interest . Borrower hereby grants to Lender a continuing
security interest in all of its right, title, and interest in all currently
existing and hereafter acquired or arising Collateral in order to secure prompt
repayment of any and all of the Obligations in accordance with the terms and
conditions of the Loan Documents and in order to secure prompt performance by
Borrower of each of its covenants and duties under the Loan Documents. The
Lender's Liens in and to the Collateral shall attach to all Collateral without
further act on the part of Lender or Borrower. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except for
Permitted Dispositions, Borrower has no authority, express or implied, to
dispose of any item or portion of the Collateral.
4.2. Negotiable Collateral . In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection of priority of Lender's security interest is
dependent on or enhanced by possession, Borrower, immediately upon the request
of Lender, shall endorse and deliver physical possession of such Negotiable
Collateral to Lender.
4.3. Collection of Accounts, General Intangibles, and Negotiable Collateral . At
any time after the occurrence and during the continuation of an Event of
Default, Lender or Lender's designee may (a) notify Account Debtors of Borrower
that the Accounts, chattel paper, or General Intangibles have been assigned to
Lender or that Lender has a security interest therein, or (b) collect the
Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Borrower agrees that it will
hold in trust for Lender, as Lender's trustee, any Collections that it receives
and immediately will deliver said Collections to Lender in their original form
as received by Borrower.
4.4. Delivery of Additional Documentation Required . At any time upon the
request of Lender, Borrower shall execute and deliver to Lender, and cause its
Subsidiaries to execute and deliver to Lender, any and all financing statements,
original financing statements in lieu of continuation statements, fixture
filings, security agreements, pledges, assignments, endorsements of certificates
of title, and all other documents (the "Additional Documents") that Lender may
request in its Permitted Discretion, in form and substance satisfactory to
Lender, to create and perfect and continue perfected or better perfect the
Lender's Liens in the Total Collateral (whether now owned or hereafter arising
or acquired, including, without limitation, all accounts, general intangibles
and inventory of Borrower, all stock now or hereafter issued by the SAH-Boston
License Subsidiary, the SAH-Houston License Subsidiary and the SAH-New York
License Subsidiary, all accounts, general intangibles, chattel paper, inventory,
machinery, equipment, Real Property and all other properties and assets of the
Guarantors, whether now owned or hereafter acquired, tangible or intangible,
real or personal), and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents, including any Mortgages.
To the maximum extent permitted by applicable law, Borrower authorizes Lender to
execute any such Additional Documents in Borrower's name and authorizes Lender
to file such executed Additional Documents in any appropriate filing office. In
addition, on such periodic basis as Lender shall require, Borrower shall (a)
provide Lender with a report of all new patentable, copyrightable, or
trademarkable materials acquired or generated by Borrower during the prior
period, (b) cause all patents, copyrights, and trademarks acquired or generated
by Borrower that are not already the subject of a registration with the
appropriate filing office (or an application therefor diligently prosecuted) to
be registered with such appropriate filing office in a manner sufficient to
impart constructive notice of Borrower's ownership thereof, and (c) cause to be
prepared, executed, and delivered to Lender supplemental schedules to the
applicable Loan Documents to identify such patents, copyrights, and trademarks
as being subject to the security interests created thereunder.
4.5. Power of Attorney . Borrower hereby irrevocably makes, constitutes, and
appoints Lender (and any of Lender's officers, employees, or agents designated
by Lender) as Borrower's true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower's name on any invoice or bill of lading
relating to the Collateral, drafts against Account Debtors, or notices to
Account Debtors, (c) send requests for verification of Accounts, (d) endorse
Borrower's name on any Collection item that may come into Lender's possession,
(e) at any time that an Event of Default has occurred and is continuing, make,
settle, and adjust all claims under Borrower's policies of insurance and make
all determinations and decisions with respect to such policies of insurance, and
(f) at any time that an Event of Default has occurred and is continuing, settle
and adjust disputes and claims respecting the Accounts, chattel paper, or
General Intangibles directly with Account Debtors, for amounts and upon terms
that Lender determines to be reasonable, and Lender may cause to be executed and
delivered any documents and releases that Lender determines to be necessary. The
appointment of Lender as Borrower's attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and Lender's
obligations to extend credit hereunder are terminated.
4.6. Right to Inspect . Lender and 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 Borrower's financial condition or
the amount, quality, value, condition of, or any other matter relating to, the
Collateral.
4.7. Control Agreements . Borrower agrees that it will not transfer Collateral
out of any Securities Accounts other than as permitted under Section 7.19 and,
if to another securities intermediary, unless each of Borrower, Lender, and the
substitute securities intermediary have entered into a Control Agreement. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other Investment Property shall be modified by Borrower
without the prior written consent of Lender. Upon the occurrence and during the
continuance of a Default or Event of Default, Lender may notify any securities
intermediary to liquidate the applicable Securities Account or any related
Investment Property maintained or held thereby, to the extent constituting
Collateral, and remit the proceeds thereof to the Lender's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement,
Borrower makes the following representations and warranties to Lender which
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the Closing Date, and at and as of the date of the making of each Advance (or
other extension of credit) made thereafter, as though made on and as of the date
of such Advance (or other extension of credit) (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 . Borrower has good and indefeasible title to the
Collateral and the Real Property, free and clear of Liens except for Permitted
Liens.
5.2. Intentionally Omitted .
5.3. Intentionally Omitted .
5.4. Equipment . All of the Equipment is used or held for use in Borrower'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 and are located only at the
locations identified on Schedule 5.5.
5.6. Inventory Records . Borrower keeps correct and accurate records itemizing
and describing the type, quality, and quantity of its Inventory and the book
value thereof.
5.7. Location of Chief Executive Office; FEIN . The chief executive office of
Borrower and each Guarantor is located at the address indicated in Schedule 5.7
and Borrower's and each Guarantor's FEIN is identified in Schedule 5.7.
5.8. Due Organization and Qualification; Subsidiaries .
(a) Borrower is duly organized and existing and in good standing under the laws
of the jurisdiction of its organization and qualified to do business in any
state where the failure to be so qualified reasonably could be expected to have
a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate description of the
authorized capital Stock of Borrower and the Guarantors, by class, and, as of
the Closing Date, a description of the number of shares of each such class that
are issued and outstanding, together with an organizational chart with respect
to Borrower and its Subsidiaries as of the Closing Date. Other than as described
on Schedule 5.8(b), as of the Closing Date, there are no subscriptions, options,
warrants, or calls relating to any shares of Borrower's capital Stock, including
any right of conversion or exchange under any outstanding security or other
instrument. Borrower is not subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any shares of its capital Stock or
any security convertible into or exchangeable for any of its capital Stock,
except as described on Schedule 5.8(b).
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of Borrower's
direct and indirect Subsidiaries, showing: (i) the jurisdiction of their
organization, (ii) the number of shares of each class of common and preferred
Stock authorized for each of such Subsidiaries, and (iii) the number and the
percentage of the outstanding shares of each such class owned directly or
indirectly by Borrower. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no subscriptions, options,
warrants, or calls relating to any shares of Borrower's Subsidiaries' capital
Stock, including any right of conversion or exchange under any outstanding
security or other instrument. Neither Borrower nor any of its Subsidiaries is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of Borrowers' Subsidiaries' capital Stock or any
security convertible into or exchangeable for any such capital Stock.
5.9. Due Authorization; No Conflict .
(a) The execution, delivery, and performance by Borrower of this Agreement and
the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of Borrower.
(b) The execution, delivery, and performance by Borrower 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 applicable to Borrower,
the Governing Documents of Borrower, or any order, judgment, or decree of any
court or other Governmental Authority binding on Borrower, (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 of Borrower, including,
without limitation, the Indenture, the Securities Purchase Agreement or either
of the Purchase Agreements, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
Borrower, other than Permitted Liens, or (iv) require any approval of Borrower's
equity or interest holders or any approval or consent of any Person under any
material contractual obligation of Borrower, other than the execution by the
Indenture Trustee of the Intercreditor Agreement. No "Triggering Event" (as
defined in Borrower's Governing Documents) has occurred.
(c) Other than the filing of financing statements, fixture filings, and
Mortgages, the execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which Borrower 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 Governmental Authority or other Person, other than
the execution by the Indenture Trustee of the Intercreditor Agreement.
(d) This Agreement and the other Loan Documents to which Borrower is a party,
and all other documents contemplated hereby and thereby, when executed and
delivered by Borrower will be the legally valid and binding obligations of
Borrower, enforceable against Borrower 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 Lender's Liens are validly created, perfected, and first priority Liens,
subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor of the Loan
Documents to which it is a party have been duly authorized by all necessary
action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor of 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 applicable to such Guarantor, the
Governing Documents of such Guarantor, or any order, judgment, or decree of any
court or other Governmental Authority binding on such Guarantor, (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 of such Guarantor,
(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of such Guarantor, other than Permitted
Liens, or (iv) require any approval of such Guarantor's interestholders or any
approval or consent of any Person under any material contractual obligation of
such Guarantor, other than the execution by the Indenture Trustee of the
Intercreditor Agreement.
(h) The execution, delivery, and performance by each Guarantor of the Loan
Documents to which such Guarantor 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 Governmental Authority or other Person, other than the execution by
the Indenture Trustee of the Intercreditor Agreement.
(i) The Loan Documents to which each Guarantor is a party, and all other
documents contemplated hereby and thereby, when executed and delivered by such
Guarantor will be the legally valid and binding obligations of such Guarantor,
enforceable against such Guarantor 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.
5.10. Litigation . Other than those matters disclosed on Schedule 5.10, there
are no actions, suits, or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower, or any of its Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that
reasonably could not be expected to result in a Material Adverse Change.
5.11. No Material Adverse Change . All financial statements relating to Borrower
and its Subsidiaries that have been delivered by Borrower to Lender 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 present fairly in all material respects, Borrower's and its
Subsidiaries financial condition as of the date thereof and results of
operations for the period then ended. There has not been a Material Adverse
Change with respect to either Borrower and its Subsidiaries taken as a whole or
the Loan Parties taken as a whole since the date of the latest financial
statements submitted to Lender on or before the Closing Date, except as
expressly set forth in Section 3.3(d).
5.12. Fraudulent Transfer .
(a) Borrower and each Guarantor is Solvent.
(b) No transfer of property is being made by Borrower or any Guarantor and no
obligation is being incurred by Borrower or any Guarantor 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
Borrower or any Guarantor.
5.13. Employee Benefits . None of Borrower, any of its Subsidiaries, or any of
their ERISA Affiliates (i) maintains or contributes to any Benefit Plan or
Multiemployer Plan, (ii) has maintained or contributed to any Benefit Plan or
Multiemployer Plan during the prior six years, (iii) except as required by
Section 4980B of the IRC, maintains an employee welfare benefit plan (as defined
in Section 3(1) of ERISA) which provides health or welfare benefits (through the
purchase of insurance or otherwise) for any retired or former employee of
Borrower or any of its ERISA Affiliates or coverage after a participant's
termination of employment, or (iv) has incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act ("WARN") or similar
state law, which remains unpaid or unsatisfied.
5.14. Environmental Condition . Except as set forth on Schedule 5.14, (a) to
Borrower's knowledge, none of Borrower's or its Subsidiaries assets has ever
been used by Borrower or its Subsidiaries or by previous owners or operators in
the disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law, (b) to Borrower's knowledge, none of Borrower's or its
Subsidiaries properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) neither Borrower nor its Subsidiaries has received notice
that a Lien arising under any Environmental Law has attached to any revenues or
to any Real Property owned or operated by Borrower or its Subsidiaries, and (d)
neither Borrower nor its Subsidiaries has received a summons, citation, notice,
or directive from the Environmental Protection Agency or any other federal or
state governmental agency concerning any action or omission by Borrower or its
Subsidiaries resulting in the releasing or disposing of Hazardous Materials into
the environment.
5.15. Brokerage Fees . Borrower has not utilized the services of any broker or
finder in connection with Borrower's obtaining financing from Lender under this
Agreement, other than Media USA, and no brokerage commission or finders fee is
payable by Borrower in connection herewith other than to Media USA. The fee
payable to Media USA is $200,000 and Borrower shall be solely responsible for
such fee.
5.16. Intellectual Property . Borrower and Guarantors own, or hold licenses in,
all trademarks, trade names, copyrights, patents, patent rights, and licenses
that are necessary to the conduct of their business as currently conducted.
Attached hereto as Schedule 5.16 is a true, correct, and complete listing of all
material patents, patent applications, registered trademarks, trademark
applications, and copyright registrations as to which Borrower or any Guarantor
is the owner or is an exclusive licensee.
5.17. Leases . Borrower and Guarantors enjoy peaceful and undisturbed possession
under all leases material to the business of Borrower and Guarantors and to
which Borrower or any Guarantor is a party or under which it is operating. All
of such leases are valid and subsisting and no material default by Borrower or
any Guarantor exists under any of them.
5.18. DDAs . Set forth on Schedule 5.18 are all of Borrower's and the
Guarantors' DDAs as of the Closing Date, including, with respect to each
depository (i) the name and address of such depository, and (ii) the account
numbers of the accounts maintained with such depository.
5.19. Complete Disclosure . All factual information (taken as a whole) furnished
by or on behalf of Borrower or any Guarantor in writing to Lender (including all
information contained in the Schedules hereto or in the other Loan Documents)
for purposes of or in connection with this Agreement, the other Loan Documents,
or any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Borrower
or any Guarantor in writing to Lender will be, true and accurate, in all
material respects, on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections set forth in the
Closing Date Business Plan represent, and as of the date on which any other
Projections are delivered to Lender, such additional Projections represent
Borrower's good faith best estimate of its future performance for the periods
covered thereby.
5.20. Indebtedness . Set forth on Schedule 5.20 is a true and complete list of
all Indebtedness of Borrower and its Subsidiaries outstanding immediately prior
to the Closing Date that is to remain outstanding after the Closing Date and
such Schedule accurately reflects the aggregate principal amount of such
Indebtedness. Prior to the date hereof, no Net Cash Proceeds for Asset Sales
have been applied to permanently reduce Indebtedness under any Senior Credit
Facility pursuant to the terms of Section 1016 of the Indenture (each
capitalized term in this sentence having the meaning assigned to it in the
Indenture).
5.21. FCC Matters . Borrower and each of its Subsidiaries has duly and timely
filed all filings which are required to be filed by it under the Communications
Act, and is in all respects in compliance with the Communications Act,
including, without limitation, Section 310 thereof, and the rules and
regulations of the FCC relating thereto (the "FCC Rules"). Each of Borrower,
SAH-Northeast and SAH-Houston is qualified to control, and each of SAH-New York
License Subsidiary, SAH-Boston License Subsidiary, SAH-Houston License
Subsidiary and SAH Acquisition is qualified to be, a broadcast licensee under
the Communications Act and the FCC Rules. Schedule 5.21 lists all of the FCC
Licenses and all other permits, authorizations and licenses of any Governmental
Authorities granted or assigned, or to be granted or assigned, to Borrower and
its Subsidiaries in connection with the operation of the television stations
owned by Borrower and its Subsidiaries (collectively, the "Licenses"), and such
Licenses are the only authorizations, licenses and permits necessary for or used
in the conduct of the businesses of Borrower and its Subsidiaries as of the
Closing Date. All of such Licenses are issued in the name of, or have been
validly assigned to, SAH-New York License Subsidiary, SAH-Boston License
Subsidiary, SAH-Houston License Subsidiary or SAH Acquisition, as the case may
be, and are validly issued and in full force and effect, and Borrower and its
Subsidiaries have fulfilled and performed all of their obligations with respect
thereto and have full power and authority to operate thereunder, and all
consents to the assignment of the Licenses or the transfer of control of the
television stations which are owned by Borrower and its Subsidiaries on the
Closing Date, have been approved by the FCC.
5.22. Digital Television . The FCC Licenses include construction permits and
other authorizations necessary to permit the construction of a DTV station in
each of the markets where Borrower or any of its Subsidiaries currently operate
television stations (the "Digital Facilities"). Borrower has disclosed its
construction plans and budgets for the Digital Facilities to Lender, and to
Borrower's knowledge there is no fact or circumstance that might prevent
construction and operation of the Digital Facilities in accordance with the
deadlines established by the FCC or that may cause the conversion of Borrower's
television stations to DTV operation to result in a Material Adverse Change.
5.23. Purchase Agreements . The Borrower is not in default under either Purchase
Agreement. The Borrower has no reason to believe that the FCC will not approve
the transactions contemplated by the Purchase Agreements in accordance with the
applications described in Section 3.1(p). No event has occurred which would give
either Purchaser the right to terminate its obligations under either Purchase
Agreement, it being understood that the WSAH Purchaser has failed to enter into
a definitive Purchase Agreement as required by the existing WSAH Purchase
Agreement.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower shall and shall cause each of its Subsidiaries to do all
of the following:
6.1. Accounting System . Maintain a system of accounting that enables Borrower
to produce financial statements in accordance with GAAP and maintain records
pertaining to the Collateral that contain information as from time to time
reasonably may be requested by Lender. Borrower and its Subsidiaries also shall
keep an inventory reporting system that shows all additions, sales, claims,
returns, and allowances with respect to the Inventory.
6.2. Collateral Reporting . Provide Lender with the following documents at the
following times in form satisfactory to Lender:
Montly (not later than the 10th (a) a detailed calculation of the
day of each Month) borrowing Base,
(b) a detailed "stretch pay report"
with respect to the Accounts,
(c) a summary aging, by vendor, of
Borrower's and its Subsidiaries'
accounts payable and any book
overdraft.
Quarterly (d) a report regarding Borrower's
and its Subsidiaries' accrued,
but unpaid, ad valorem taxes,
Upon request by Lender (e) copies of invoices in
connection with the Accounts
credit memos, remittance advices,
deposit slips, shipping and
delivery documents in connection
with the Accounts and, for
Inventory and Equipment acquired by
Borrower and its Subsidiaries,
purchase orders and invoices,
(f) a report regarding Borrower'
and its Subsidaries' accrued,
but unpaid, ad valorem taxes, and
(g) such other reports as to any of
the Total Collateral, any Purchase
Agreement and the transactions
contemplated thereby, or the
financial condition of Borrower or
any of its Subsidiaries, as Lender
may request.
6.3. Financial Statements, Reports, Certificates . Deliver to Lender:
(a) as soon as available, but in any event within 30 days (45 days in the case
of a month that is the end of one of the first 3 fiscal quarters in a fiscal
year) after the end of each month during each of Borrower's fiscal years,
(i) a company prepared consolidated balance sheet and income statement covering
Borrower's and its Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of Borrower to the
effect that:
(A) the financial statements delivered hereunder have been prepared in
accordance with GAAP (except for the lack of footnotes and being subject to
year-end audit adjustments) and fairly present in all material respects the
financial condition of Borrower and its Subsidiaries,
(B) the representations and warranties of Borrower 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), and
(C) there does not exist any condition or event that constitutes a Default or
Event of Default (or, to the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and what action Borrower
has taken, is taking, or proposes to take with respect thereto), and
(iii) a Compliance Certificate demonstrating, in reasonable detail, compliance
at the end of such period with the financial covenant contained in Section 7.20,
and
(b) as soon as available, but in any event within 120 days after the end of each
of Borrower's fiscal years,
(i) financial statements of Borrower and its Subsidiaries for each such fiscal
year, audited by independent certified public accountants reasonably acceptable
to Lender and certified, without any qualifications, by such accountants to have
been prepared in accordance with GAAP (such audited financial statements to
include a balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Lender stating that such
accountants do not have knowledge of the existence of any Default or Event of
Default under Section 7.20,
(c) as soon as available, but in any event within 45 days after the start of
each of Borrower's fiscal years,
(i) copies of Borrower's Projections, in form and substance (including as to
scope and underlying assumptions) satisfactory to Lender, in its sole
discretion, for the forthcoming fiscal year, month by month, certified by the
chief financial officer of Borrower as being such officer's good faith best
estimate of the financial performance of Borrower during the period covered
thereby,
(d) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current
reports,
(ii) any other filings made by Borrower with the SEC,
(iii)copies of Borrower's federal income tax returns, and any amendments
thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Borrower to its shareholders
generally,
(e) if and when filed by Borrower or any of its Subsidiaries and as requested by
Lender, satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which (i) Borrower or any of its Subsidiaries conducts business
or is required to pay any such excise tax, (ii) where Borrower's or such
Subsidiary's failure to pay any such applicable excise tax would result in a
Lien on the properties or assets of Borrower or any of its Subsidiaries, or
(iii) where Borrower's or such Subsidiary's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(f) as soon as Borrower has knowledge of any event or condition that constitutes
a Default or an Event of Default or a Material Adverse Change, notice thereof
and a statement of the curative action that Borrower proposes to take with
respect thereto,
(g) upon the request of Lender, an updated Schedule of all of Borrower's DDAs
pursuant to Section 5.18.
(h) as soon as available, but in any event within 45 days after the end of each
fiscal quarter during each of Borrower's fiscal years, a statement of cash flow
covering Borrower's and its Subsidiaries' operations during such period, and
(i) upon the request of Lender, any other report reasonably requested relating
to the financial condition of Borrower.
In addition to the financial statements referred to above,
Borrower agrees to deliver financial statements prepared on both a consolidated
and consolidating basis and agrees that no Subsidiary of Borrower will have a
fiscal year different from that of Borrower. Borrower agrees that its
independent certified public accountants are authorized to communicate with
Lender and to release to Lender whatever financial information concerning
Borrower Lender reasonably may request. Borrower 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 Lender pursuant
to or in accordance with this Agreement, and agrees that Lender may contact
directly any such accounting firm or service bureau in order to obtain such
information.
6.4. Intentionally Omitted.
6.5. Return. Cause returns and allowances, as between Borrower and its Account
Debtors, to be on the same basis and in accordance with the usual customary
practices of Borrower.
6.6. Maintenance of Properties. Maintain and preserve all of its properties
which are necessary and useful to its business in good working order and
condition, ordinary wear and tear excepted, and comply at all times with the
provisions of all leases to which it is a party as lessee so as to prevent any
loss or forfeiture thereof or thereunder, except to the extent that such losses
or forfeitures would not result in a Material Adverse Change.
6.7. Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower,
any Subsidiary of Borrower or any of the assets of Borrower or any of its
Subsidiaries 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. Borrower and its
Subsidiaries will 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, and federal
income taxes, except to the extent subject to a Permitted Protest, and will,
upon request, furnish Lender with proof satisfactory to Lender indicating that
Borrower and its Subsidiaries have made such payments or deposits. Borrower
shall deliver satisfactory evidence of payment of applicable excise taxes in
each jurisdictions in which Borrower or any of its Subsidiaries is required to
pay any such excise tax.
6.8. Insurance.
(a) At Borrower's or its Subsidiaries' expense, maintain insurance respecting
its assets wherever located, covering loss or damage by fire, theft, explosion,
and all other hazards and risks as ordinarily are insured against by other
Persons engaged in the same or similar businesses. Borrower and its Subsidiaries
also shall maintain business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Lender. Borrower shall deliver copies of all such policies to Lender with a
satisfactory lender's loss payable endorsement naming Lender as sole loss payee
or additional insured, as appropriate. Each policy of insurance or endorsement
shall contain a clause requiring the insurer to give not less than 30 days prior
written notice to Lender in the event of cancellation of the policy for any
reason whatsoever.
(b) Borrower shall give Lender prompt notice of any loss covered by such
insurance. Any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain, shall
be paid over to Lender to be applied at the option of Lender either to the
prepayment of the Obligations or shall be disbursed to Borrower or the
applicable Subsidiary of the Borrower under staged payment terms reasonably
satisfactory to Lender for application to the cost of repairs, replacements, or
restorations. Any such 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 of property destroyed prior to such damage or destruction.
(c) Neither Borrower nor any of its Subsidiaries will take out separate
insurance concurrent in form or contributing in the event of loss with that
required to be maintained under this Section 6.8, unless Lender is included
thereon as named insured with the loss payable to Lender under a lender's loss
payable endorsement or its equivalent. Borrower immediately shall notify Lender
whenever such separate insurance is taken out, specifying the insurer thereunder
and full particulars as to the policies evidencing the same, and copies of such
policies promptly shall be provided to Lender.
6.9. Location of Inventory and Equipment. Keep the Inventory and Equipment only
at the locations identified on Schedule 5.5; provided, however, that Borrower
may amend Schedule 5.5 so long as such amendment occurs by written notice to
Lender not less than 15 days prior to the date on which Inventory or Equipment
is moved to such new location, so long as such new location is within the
continental United States, and so long as, at the time of such written
notification, Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected the Lender's Liens on such assets
and also provides to Lender a Collateral Access Agreement.
6.10. 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 reasonably could not be expected to
result in a Material Adverse Change.
6.11. Leases. Pay when due all rents and other amounts payable under any leases
to which Borrower or any of Borrower's Subsidiaries is a party or by which
Borrower's or any of its Subsidiary's properties and assets are bound, unless
such payments are the subject of a Permitted Protest.
6.12. Brokerage Commissions. Pay any and all brokerage commission or finders
fees incurred in connection with or as a result of Borrower's obtaining
financing from Lender under this Agreement. Borrower agrees and acknowledges
that payment of all such brokerage commissions or finders fees shall be the sole
responsibility of Borrower, and Borrower agrees to indemnify, defend, and hold
Lender harmless from and against any claim of any broker or finder arising out
of Borrower's obtaining financing from Lender under this Agreement.
6.13. Existence. At all times preserve and keep in full force and effect
Borrower's and each of its Subsidiaries' valid existence and good standing and
any rights and franchises material to Borrower's and its Subsidiaries'
businesses.
6.14. Environmental.
(a) Comply in all material respects with, and ensure compliance in all material
respects by all tenants and subtenants, if any, with, all applicable
Environmental Laws, and obtain and comply in all material respects with and
maintain, and ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws.
(b) Conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws.
(c) At the request of the Lender, as soon as practicable, but in any event not
later than 60 days after any such request, deliver to the Lender an
environmental audit with respect to the properties of the Borrower and its
Subsidiaries specified by the Lender.
6.15. Disclosure Updates. Promptly and in no event later than 5 Business Days
after obtaining knowledge thereof, (a) notify Lender if any written information,
exhibit, or report furnished to Lender contained any untrue statement of a
material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made, and (b) correct any defect or error that may be discovered therein
or in any Loan Document or in the execution, acknowledgement, filing, or
recordation thereof.
6.16. FCC Licenses. (a) With respect to any FCC License acquired after the
Closing Date by Borrower or any Guarantor (other than a License Subsidiary),
promptly transfer such FCC License to a License Subsidiary.
(b) Provide Lender promptly upon their becoming available, and in any event
within five (5) days after the receipt of filing thereof by the Borrower, with
copies of (i) any periodic or special reports filed by the Borrower with the
FCC, if such reports indicate any Material Adverse Change or if copies thereof
are requested by the Lender, (ii) any material notices and other material
communications from the FCC which specifically relate to the Borrower or any FCC
License, and (iii) any application, amendment, pleading, filing or
correspondence with the FCC relating to the applications for consent to assign
the FCC Licenses for KZJL and WSAH to the KZJL Purchaser and the WSAH Purchaser.
6.17. Purchase Agreements. Promptly (a) furnish to Lender a copy of each
Purchase Agreement executed after the Closing Date and each written amendment or
other modification thereto, (b) furnish to Lender a copy of each notice or other
communication given by Borrower or received by Borrower in connection with any
Purchase Agreement, in each case with respect to any material matter, (c) notify
the Lender of any termination of any Purchase Agreement or any default under any
Purchase Agreement or any event which would cause the matters referred to in
Section 5.23 to be incorrect, and (d) cause each Purchase Agreement entered into
after the Closing Date to provide that (i) all payments to Borrower under such
Purchase Agreement (up to the amount of the Obligations outstanding at such
time) shall be paid to the Lender's Account, and (ii) all rights, powers and
privileges of Borrower under such Purchase Agreement (but not Borrower's
obligations thereunder) have been assigned as collateral security to Lender, to
which assignment such buyer consents.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower will not and will not permit any of its Subsidiaries to do
any of the following:
7.1. Indebtedness. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan Documents,
(b) Indebtedness evidenced by the Senior Secured Notes and the other
Indebtedness set forth on Schedule 5.20,
(c) Permitted Purchase Money Indebtedness,
(d) refinancings, renewals, or extensions of Indebtedness permitted under
clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not, in Lender's judgment,
materially impair the prospects of repayment of the Obligations by Borrower or
any of its Subsidiaries or materially impair Borrower's or such Subsidiary's
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended, (iii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are materially more burdensome or
restrictive to Borrower or any of its Subsidiaries, and (iv) if the Indebtedness
that is refinanced, renewed, or extended was subordinated in right of payment to
the Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that are
at least as favorable to Lender as those that were applicable to the refinanced,
renewed, or extended Indebtedness,
(e) Indebtedness between Borrower and any wholly-owned Guarantor if evidenced by
a promissory note that is immediately delivered to the Lender, and
(f) Guaranties permitted under Section 7.6.
7.2. Liens. Create, incur, assume, or permit to exist, directly or indirectly,
any Lien on or with respect to any of its 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, renewed, or extended under Section
7.1(d) and so long as the replacement Liens only encumber those assets that
secured the refinanced, renewed, or extended Indebtedness).
7.3. Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization, or recapitalization,
or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution).
(c) Other than Permitted Dispositions described in clauses (e) and (f) of the
definition thereof, convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
7.4. Disposal of Assets . Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of the assets of
the Borrower or any of its Subsidiaries. Notwithstanding the foregoing, Lender
agrees that it shall not unreasonably withhold or delay its consent to (i) the
sale of the WMFP Assets or (ii) the sale, liquidation or dissolution of
Collector's Edge of Tennessee, Inc., provided that (A) in the case of the
foregoing clause (i), the proceeds of such sale shall be no less than
$25,000,000, (B) 100% of the proceeds of any such sale shall be applied in
accordance with Section 3.6 and (C) such consent shall be subject to other
reasonable terms and conditions as Lender shall determine.
7.5. Change Name. Change Borrower's or any of its Subsidiaries' name, FEIN,
corporate structure, or identity, or add any new fictitious name; provided,
however, that Borrower or such Subsidiary may change its name upon at least 15
days prior written notice to Lender of such change and so long as, at the time
of such written notification, Borrower or such Subsidiary provides any financing
statements or fixture filings necessary to perfect and continue perfected the
Lender's Liens.
7.6. Guarantee. 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 Borrower or any of its
Subsidiaries or which are transmitted or turned over to Lender.
7.7. Nature of Business. (a) Make any change in the principal nature of its
business.
(b) With respect to any License Subsidiary, other than pursuant to the Loan
Documents, incur any Indebtedness or material obligation or liability or engage
in any business or activity other than owning the FCC Licenses owned or to be
owned by such License Subsidiary.
7.8. Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by Section 7.1(d), prepay,
redeem, defease, purchase, or otherwise acquire any Indebtedness of Borrower or
of any Subsidiary of the Borrower, other than (i) the Obligations in accordance
with this Agreement, and (ii) the Indebtedness evidenced by the Senior Secured
Notes but solely with the proceeds of the sale of any assets in which the
Indenture Trustee has a first priority Lien and only to the extent such Lien
constitutes a Permitted Lien.
(b) Except in connection with a refinancing permitted by Section 7.1(d),
directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under Sections 7.1(b),
including, without limitation, the Indenture.
(c) Consent to any amendment or modification of either Purchase Agreement if
such amendment or modification (i) would cause the cash portion of the purchase
price payable by the applicable Purchaser under such Purchase Agreement to be
less than $25,000,000, (ii) would prevent or delay the payment of such cash
proceeds to the Lender Account upon the closing of the purchase transaction
under such Purchase Agreement, (iii) would adversely affect any provision of
either Purchase Agreement requiring that (A) all payments to Borrower under such
Purchase Agreement shall be paid to the Lender's Account, or (B) all rights,
powers and privileges of Borrower under such Purchase Agreement (but not
Borrower's obligations thereunder) be assigned as collateral security to Lender,
to which assignment such buyer consents, or (iv) would otherwise prevent the
Obligations from being paid in full upon the closing of such purchase
transaction.
7.9. Change of Control. Cause, permit, or suffer, directly or indirectly, any
Change of Control.
7.10. Consignments. Consign any Inventory or sell any Inventory on bill and
hold, sale or return, sale on approval, or other conditional terms of sale.
7.11. Distributions. Make any distribution or declare or pay any dividends (in
cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Borrower's Stock, of any class, whether now or
hereafter outstanding (collectively, "Distributions"), other than Distributions
not exceeding $10,000 in the aggregate in any fiscal year for all such
Distributions, or with respect to Series A Preferred Stock, Distributions not
exceeding $950,000 in the aggregate in any fiscal year.
7.12. Accounting Methods. Modify or change its method of accounting (other than
as may be required to conform to GAAP) or enter into, modify, or terminate any
agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
Borrower's or any of its Subsidiaries' accounting records without said
accounting firm or service bureau agreeing to provide Lender information
regarding the Collateral or Borrower's or such Subsidiaries' financial
condition.
7.13. Investments. Directly or indirectly make or acquire any Investment or
incur any liabilities (including contingent obligations) for or in connection
with any Investment (including, without limitation, by forming, organizing or
acquiring any Subsidiary), except for Permitted Investments; provided, however,
that Borrower and its Subsidiaries shall not have Permitted Investments
described in clauses (a) of the definition thereof in excess of $250,000
outstanding at any one time unless Borrower or such Subsidiary and the
applicable securities intermediary or bank have entered into Control Agreements
governing such Permitted Investments, as Lender shall determine in its Permitted
Discretion, to perfect (and further establish) the Lender's Liens in such
Permitted Investments.
7.14. Transactions with Affiliates. Directly or indirectly enter into or permit
to exist any transaction with any Affiliate of Borrower or any of its
Subsidiaries except for transactions that are in the ordinary course of
Borrower's or such Subsidiary's business, upon fair and reasonable terms, that
are fully disclosed to Lender, and that are no less favorable to Borrower or
such Subsidiary than would be obtained in an arm's length transaction with a
non-Affiliate.
7.15. Suspension. Without the prior written consent of Lender, suspend or go
out of a substantial portion of its business.
7.16. Intentionally Omitted
7.17. Use of Proceeds. Use the proceeds of the Advances for any purpose other
than (a) on the Closing Date, (i) to repay, in full, the outstanding principal,
accrued interest, and accrued fees and expenses owing to Existing Agent and the
Existing Lenders, and (ii) to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, the other Loan Documents, and the
transactions contemplated hereby and thereby, and (b) thereafter, consistent
with the terms and conditions hereof, for its lawful and permitted purposes,
provided that in no event shall the proceeds of the Advances be (i) paid to, or
used for the benefit of, any Subsidiary of the Borrower other than a Guarantor
or (ii) used to acquire, protect or improve any assets other than Collateral.
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 15 days prior written notification thereof to Lender and so long as,
at the time of such written notification, Borrower or such Subsidiary provides
any financing statements or fixture filings necessary to perfect and continue
perfected the Lender's Liens and also provides to Lender a Collateral Access
Agreement with respect to such new location. The Inventory and, to the extent
constituting Collateral, Equipment shall not at any time now or hereafter be
stored with a bailee, warehouseman, or similar party without Lender's prior
written consent.
7.19. Securities Accounts. Establish or maintain any Securities Account unless
Lender shall have received a Control Agreement in respect of such Securities
Account. Borrower shall not transfer assets out of any Securities Account;
provided, however, that, so long as no Event of Default has occurred and is
continuing or would result therefrom, Borrower and its Subsidiaries may use such
assets (and the proceeds thereof) to the extent not prohibited by this
Agreement.
7.20. Financial Covenant. (a) Fail to maintain at all times Cash Equivalents
with a market value of at least $5,000,000 in a Securities Account subject to a
Control Agreement with the Lender.
(b) Permit more than two weeks' operating cash (consistent with historical
practice) to remain on deposit in any bank account or other account other than a
Securities Account subject to a Control Agreement with Lender.
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, all or 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
Lender, reimbursement of Lender Expenses, or other amounts constituting
Obligations);
8.2. If (a) Borrower fails to perform, keep, or observe, or
fails to cause any of its Subsidiaries to perform, keep or observe, any term,
provision, condition, covenant, or agreement contained in Section 6.1, 6.9,
6.10, 6.11 or 6.15 of this Agreement and such failure continues unremedied for
10 days, (b) Borrower fails to perform, keep or observe, or fails to cause any
of its Subsidiaries to perform, keep or observe, any term, provision, condition,
covenant, or agreement contained in Section 6.2 or 6.3 of this Agreement and
such failure continues for 5 days, provided, that, in the case of any such
failure with respect to Section 6.2, such 5-day grace period shall apply (i)
only up to three times during any 12-month period (it being understood and
agreed that after three defaults under Section 6.2 during any 12-month period,
any further default during such period shall constitute an immediate Event of
Default, without any grace period), and (ii) only in relation to Defaults
directly caused by the failure of third Persons to provide required information
or reporting, and not in relation to Defaults caused by Borrower or its
Subsidiaries, or (c) if any Loan Party fails to perform, keep, or observe any
other term, provision, condition, covenant, or agreement contained in this
Agreement or in any of the other Loan Documents;
8.3. If any material portion of Borrower's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person (other
than pursuant to a Permitted Disposition);
8.4. If an Insolvency Proceeding is commenced by Borrower
or any of its Subsidiaries;
8.5. If an Insolvency Proceeding is commenced against
Borrower, or any of its Subsidiaries, and any of the following events occur: (a)
Borrower or the Subsidiary consents to the institution of such 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 45 calendar days of the date of the filing thereof;
provided, however, that, during the pendency of such period, Lender shall be
relieved of its obligations to extend credit hereunder, (d) an interim trustee
is appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of, Borrower or any of its Subsidiaries, or (e) an order for relief
shall have been entered therein;
8.6. If Borrower or any of its Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7. If a notice of Lien, levy, or assessment is filed of
record with respect to any of Borrower's or any of its Subsidiaries' assets by
the United States, or any department, agency, or instrumentality thereof, or by
any state, county, municipal, or governmental agency, or other Governmental
Authority, 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
Borrower's or any of its Subsidiaries' assets, in each case in excess of
$100,000, and the same is not paid before such payment is delinquent or subject
to a Permitted Protest;
8.8. If a judgment or other claim in excess of $100,000
becomes a Lien or encumbrance upon any material portion of Borrower's or any of
its Subsidiaries' assets;
8.9. If there is a default by Borrower or any of its
Subsidiaries in any material agreement (including, without limitation, the
Indenture, the Senior Secured Notes and the Purchase Agreements) to which
Borrower or any of its Subsidiaries is a party and such default (a) occurs at
the final maturity of the obligations thereunder, or (b) results in a right by
the other party thereto, irrespective of whether exercised, to accelerate the
maturity of Borrower's or its Subsidiaries' obligations thereunder, to terminate
such agreement, or to refuse to renew such agreement pursuant to an automatic
renewal right therein;
8.10. If Borrower or any of its Subsidiaries makes any payment
on account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11. If any misstatement or misrepresentation exists in any
warranty, representation, statement, or Record made to Lender by Borrower, its
Subsidiaries, or any officer, employee, agent, or director of Borrower or any of
its Subsidiaries at the time made or deemed made, and Lender, in its reasonable
but sole discretion, deems such misstatement or misrepresentation to be
material;
8.12. If the obligation of any Guarantor under any Guaranty
is limited or terminated by operation of law or by any Guarantor thereunder; or
8.13. If this Agreement or any other Loan Document that
purports to create a Lien, shall, for any reason, fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in any of the Total
Collateral covered hereby or thereby; or
8.14. Any provision of any Loan Document shall at any time for
any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Borrower or any of its Subsidiaries, or a
proceeding shall be commenced by Borrower or any of its Subsidiaries, or by any
Governmental Authority having jurisdiction over Borrower or any of its
Subsidiaries, seeking to establish the invalidity or unenforceability thereof,
or Borrower or any of its Subsidiaries shall deny that Borrower or such
Subsidiary has any liability or obligation purported to be created under any
Loan Document; or
8.15. Any Loan Party shall lose, fail to keep in force, suffer
the termination or revocation or nonrenewal of, or terminate, forfeit or suffer
a material adverse amendment to, any FCC License owned by it and used in
connection with a television station, or any proceeding is commenced against a
Loan Party which is reasonably likely to result in such loss, termination,
revocation or nonrenewal; provided, however, that no Default shall be deemed to
exist under this Section 8.15 due to the nonrenewal of an FCC License if on or
prior to such expiration, such FCC License shall have been replaced by another
FCC License authorizing substantially the same operations as the expired FCC
License.
9. LENDER'S RIGHTS AND REMEDIES.
9.1. Rights and Remedies . Upon the occurrence, and during the continuation, of
an Event of Default, Lender (at its election but without notice of its election
and without demand) may do any one or more of the following, all of which are
authorized by Borrower:
(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 Lender;
(c) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of Lender, but without affecting any of the
Lender's Liens in the Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which Lender considers advisable, and in such cases,
Lender will credit Borrower's Loan Account with only the net amounts received by
Lender in payment of such disputed Accounts after deducting all Lender Expenses
incurred or expended in connection therewith;
(e) Cause Borrower to hold all returned Inventory in trust for Lender, segregate
all returned Inventory from all other assets of Borrower or in Borrower's
possession and conspicuously label said returned Inventory as the property of
Lender;
(f) Without notice to or demand upon Borrower or any Guarantor, make such
payments and do such acts as Lender considers necessary or reasonable to protect
its security interests in the Collateral. Borrower agrees to assemble the
Collateral if Lender so requires, and to make the Collateral available to Lender
at a place that Lender may designate which is reasonably convenient to both
parties. Borrower authorizes Lender to enter the premises where the Collateral
is located, to take and maintain possession of the Collateral, or any part of
it, and to pay, purchase, contest, or compromise any Lien that in Lender's
determination appears to conflict with the Lender's Liens and to pay all
expenses incurred in connection therewith and to charge Borrower's Loan Account
therefor. With respect to any of Borrower's owned or leased premises, Borrower
hereby grants Lender a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise any of Lender's rights or
remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to Borrower (such notice being expressly waived), and without
constituting a retention of any collateral in satisfaction of an obligation
(within the meaning of the Code), direct the Credit Card Processor to send to
Lender all payments, distributions and other amounts that would otherwise be
sent to Borrower, and set off and apply to the Obligations any and all (i)
balances and deposits of Borrower held by Lender, or (ii) Indebtedness at any
time owing to or for the credit or the account of Borrower held by Lender;
(h) Hold, as cash collateral, any and all balances and deposits of Borrower held
by Lender, to secure the full and final repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Collateral.
Borrower hereby grants to Lender a license or other right to use, without
charge, Borrower's labels, patents, copyrights, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to Lender's benefit;
(j) Sell the 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 Borrower's premises) as Lender determines is
commercially reasonable. It is not necessary that the Collateral be present at
any such sale;
(k) Lender shall give notice of the disposition of the Collateral as follows:
(i) Lender shall give Borrower 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 the Collateral, then the time on or after
which the private sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed, postage prepaid, to
Borrower as provided in Section 12, at least 10 days before the earliest time of
disposition set forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Collateral that is perishable or threatens to
decline speedily in value or that is of a type customarily sold on a recognized
market;
(l) Lender may credit bid and purchase at any public sale; and
(m) Lender may seek the appointment of a receiver or keeper to take possession
of all or any portion of the Collateral or to operate same and, to the maximum
extent permitted by law, may seek the appointment of such a receiver without the
requirement of prior notice or a hearing. Borrower further agrees to consent to
the appointment of a receiver (selected by Lender) by any court of competent
jurisdiction. Such receiver may be instructed to seek from the FCC consent to an
involuntary assignment or transfer of control of the FCC Licenses for the
purposes of seeking a bona fide purchaser or purchasers of the Specified
Stations. Borrower hereby agrees to authorize such involuntary transfer of
control upon the request of the receiver so appointed and, if Borrower shall
refuse to authorize the transfer, Borrower's approval may be required by the
court. The receiver shall have the power to dispose of any or all of the
Specified Stations in any manner lawful in the jurisdiction in which such
receiver's appointment is confirmed, including the power to conduct a public or
private sale of any or all of such Specified Stations; provided, however, that
the successful bidder at any such public or private sale shall not acquire any
FCC License unless and until the FCC shall first have granted its consent to
such acquisition;
(n) Lender shall have all other rights and remedies available at law or in
equity or pursuant to any other Loan Document; and
(o) Any deficiency that exists after disposition of the 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 Lender to Borrower.
9.2. Remedies Cumulative . The rights and remedies of Lender under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.
9.3. FCC Matters . Notwithstanding anything herein to the contrary, to the
extent this Agreement or any other Loan Document purports to require any Loan
Party to grant to Lender a security interest in the FCC Licenses of any Loan
Party now owned or hereafter acquired, as the case may be, Lender shall only
have a security interest in such FCC Licenses at such times and to the extent
that a security interest in such licenses is permitted under applicable law.
Notwithstanding anything to the contrary contained herein or in the other Loan
Documents, the Lender will not take any action pursuant to this Agreement or any
other Loan Document that would constitute or result in any assignment of any FCC
License or any change of control of any Loan Party without first obtaining the
prior approval of the FCC or any other Governmental Authority, if, under the
then existing law, such assignment of any FCC License or change of control would
require the prior approval of the FCC or such other Governmental Authority.
Prior to the exercise by Lender of any power, right, privilege or remedy
pursuant to this Agreement which requires any consent, approval, recording,
qualification or authorization of the FCC or any other Governmental Authority,
Borrower will execute and deliver, or will cause the execution and delivery of,
all applications, certificates, instruments and other documents and papers that
Lender reasonably determines may be required to obtain for such consent,
approval, recording, qualification or authorization. Without limiting the
generality of the foregoing, Borrower will, and will cause its Subsidiaries to,
use its good faith efforts upon the reasonable request of Lender to assist in
obtaining from the FCC or such other Governmental Authority the necessary
consents and approvals, if any, for the assignment or transfer of such
authorizations, licenses and permits to Lender or its designee upon or following
acceleration of the payment of the Advances in accordance with the provisions
hereof.
10. TAXES AND EXPENSES.
If Borrower 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, Lender, in its sole discretion
and without prior notice to Borrower, may do any or all of the following: (a)
make payment of the same or any part thereof, (b) set up such reserves in
Borrower's Loan Account as Lender deems necessary to protect Lender from the
exposure created by such failure, or (c) in the case of the failure to comply
with Section 6.8 hereof, obtain and maintain insurance policies of the type
described in Section 6.8 and take any action with respect to such policies as
Lender deems prudent. Any such amounts paid by Lender shall constitute Lender
Expenses and any such payments shall not constitute an agreement by Lender to
make similar payments in the future or a waiver by Lender of any Event of
Default under this Agreement. Lender 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.
11. WAIVERS; INDEMNIFICATION.
11.1. Demand; Protest . Borrower 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 documents,
instruments, chattel paper, and guarantees at any time held by Lender on which
Borrower may in any way be liable.
11.2. Lender's Liability for Collateral . Borrower hereby agrees that: (a) so
long as Lender complies with its obligations, if any, under the Code, Lender
shall not in any way or manner be liable or responsible for: (i) the safekeeping
of the 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 the
Collateral shall be borne by Borrower.
11.3. Indemnification . Borrower shall pay, indemnify, defend, and hold the
Lender-Related Persons, each Participant, and each of their respective officers,
directors, employees, 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 (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby, and (b) 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"). The foregoing to the
contrary notwithstanding, 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 Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which Borrower
was required to indemnify the Indemnified Person receiving such payment, the
Indemnified Person making such payment is entitled to be indemnified and
reimbursed by Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOING
INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED
LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT
ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Borrower or Lender to the other 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, electronic mail
(at such email addresses as Borrower or Lender, as applicable, may designate to
each other in accordance herewith), or telefacsimile to Borrower or Lender, as
the case may be, at its address set forth below:
If to Borrower: SHOP AT HOME, INC.
5388 Hickory Hollow Parkway
Antioch, Tennessee 37013-3128
Attn: Arthur D. Tek, Executive Vice President
and CFO
Fax No. 615-263-8911
with copies to: WYATT, TARRANT AND COMBS
2525 West End Avenue
Suite 1500
Nashville, Tennessee 37203-1423
Attn: C. Michael Norton, Esq.
Fax No. 615-256-1726
If to Lender: FOOTHILL CAPITAL CORPORATION
2450 Colorado Avenue
Suite 3000 West
Santa Monica, California 90404
Attn: Structured Finance Manager
Fax No. 310-453-7444
with copies to: Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY 10022
Attn: Lawrence S. Goldberg, Esq.
Fax No. 212-593-5955
Lender and Borrower may change the address at which they are
to receive notices hereunder, by notice in writing in the foregoing manner given
to the other party. All notices or demands sent in accordance with this Section
12, other than notices by Lender in connection with enforcement rights against
the Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Borrower acknowledges and agrees that notices sent by
Lender in connection with the exercise of enforcement rights against Collateral
under the provisions of the Code shall be deemed sent when deposited in the mail
or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN 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 NEW YORK, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND
EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION AND
EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY
THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(b) 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 NEW YORK, STATE OF NEW
YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER'S OPTION, IN THE COURTS
OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND LENDER 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(b).
(c) BORROWER AND LENDER 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. BORROWER AND LENDER 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. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1. Assignments and Participations.
(a) Lender may assign and delegate to one or more assignees (each an "Assignee")
all, or any ratable part of all, of the Obligations and the other rights and
obligations of Lender hereunder and under the other Loan Documents; provided,
however, that Borrower may continue to deal solely and directly with Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Borrower by Lender
and the Assignee, and (ii) Lender and its Assignee have delivered to Borrower an
appropriate assignment and acceptance agreement.
(b) From and after the date that Lender provides Borrower with such written
notice and executed assignment and acceptance agreement, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such assignment and
acceptance agreement, shall have the assigned and delegated rights and
obligations of Lender under the Loan Documents, and (ii) Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned and delegated by it pursuant to such assignment and
acceptance agreement, relinquish its rights (except with respect to Section 11.3
hereof) and be released from its obligations under this Agreement (and in the
case of an assignment and acceptance covering all or the remaining portion of
Lender's rights and obligations under this Agreement and the other Loan
Documents, Lender shall cease to be a party hereto and thereto), and such
assignment shall affect a novation between Borrower and the Assignee.
(c) Immediately upon Borrower's receipt of such fully executed assignment and
acceptance agreement, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the rights and duties of Lender arising
therefrom.
(d) Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a "Participant") participating interests in the
Obligations and the other rights and interests of Lender hereunder and under the
other Loan Documents; provided, however, that (i) Lender shall remain the
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations and the
other rights and interests of Lender shall not constitute a "Lender" hereunder
or under the other Loan Documents and Lender's obligations under this Agreement
shall remain unchanged, (ii) Lender shall remain solely responsible for the
performance of such obligations, (iii) Borrower and Lender shall continue to
deal solely and directly with each other in connection with Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) Lender shall
not transfer or grant any participating interest under which the Participant has
the right to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such amendment
to, or consent or waiver with respect to this Agreement or of any other Loan
Document would (A) extend the final maturity date of the Obligations hereunder
in which such Participant is participating, (B) reduce the interest rate
applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or a material portion of the Total Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through Lender, or (E) change the
amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrower hereunder shall be determined
as if Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as
Lender under this Agreement. The rights of any Participant only shall be
derivative through Lender and no Participant shall have any rights under this
Agreement or the other Loan Documents or any direct rights as to Borrower, the
Collections, the Total Collateral, or otherwise in respect of the Obligations.
No Participant shall have the right to participate directly in the making of
decisions by Lender.
(e) In connection with any such assignment or participation or proposed
assignment or participation, subject to Section 16.6 a Lender may disclose all
documents and information which it now or hereafter may have relating to
Borrower or Borrower's business.
(f) Any other provision in this Agreement notwithstanding, Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
14.2. Successors . This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without Lender's prior written consent and any prohibited assignment shall be
absolutely void ab initio. No consent to assignment by Lender shall release
Borrower from its Obligations. Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 14.1 hereof and, except as expressly required pursuant to Section 14.1
hereof, no consent or approval by Borrower is required in connection with any
such assignment.
15. AMENDMENTS; WAIVERS.
15.1. Amendments and Waivers . No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by Lenders holding a majority of the Advances and Borrower
and then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
15.2. No Waivers; Cumulative Remedies . No failure by Lender to exercise any
right, remedy, or option under this Agreement or any other Loan Document, or
delay by Lender in exercising the same, will operate as a waiver thereof. No
waiver by Lender will be effective unless it is in writing, and then only to the
extent specifically stated. No waiver by Lender on any occasion shall affect or
diminish Lender's rights thereafter to require strict performance by Borrower of
any provision of this Agreement. Lender's rights under this Agreement and the
other Loan Documents will be cumulative and not exclusive of any other right or
remedy that Lender may have.
16. GENERAL PROVISIONS.
16.1. Effectiveness . This Agreement shall be binding and deemed effective when
executed by Borrower and Lender.
16.2. 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.
16.3. Interpretation . Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against Lender or Borrower, 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 accomplish fairly the purposes and intentions
of all parties hereto.
16.4. 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.
16.5. Withholding Taxes . All payments made by Borrower hereunder or under any
note will be made without setoff, counterclaim, or other defense, except as
required by applicable law other than for Taxes (as defined below). All such
payments will be made free and clear of, and without deduction or withholding
for, any present or future taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any jurisdiction
(other than the United States) or by any political subdivision or taxing
authority thereof or therein (other than of the United States) with respect to
such payments (but excluding, any tax imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein (i) measured by or
based on the net income or net profits of Lender, or (ii) to the extent that
such tax results from a change in the circumstances of Lender, including a
change in the residence, place of organization, or principal place of business
of Lender, or a change in the branch or lending office of Lender participating
in the transactions set forth herein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imposts,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, Borrower agrees to pay the full
amount of such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this Section 16.5 after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, that Borrower shall not be required to
increase any such amounts payable to Lender if the increase in such amount
payable results from the transfer to an Assignee or from Lender's own willful
misconduct or gross negligence. Borrower will furnish to Lender as promptly as
possible after the date the payment of any Taxes is due pursuant to applicable
law certified copies of tax receipts evidencing such payment by Borrower.
16.6. Confidentiality . Lender understands that some of the information
furnished to it pursuant to this Agreement may be received by it prior to the
time that such information shall have been made public, and Lender hereby agrees
that in accordance with Lender's customary procedures it will keep all the
information received by it in connection with this Agreement confidential, to
the extent designated as such by the Borrower, except that Lender shall be
permitted to disclose information (i) to such of its officers, directors,
employees, agents, representatives, auditors, consultants, advisors, trustees,
investment advisors, lawyers and Affiliates as need to know such information in
connection with this Agreement or any other Loan Document; (ii) to a proposed
Assignee or Participant who agrees to be bound by the provisions of this Section
16.6; (iii) to the extent required by applicable law and regulations or by any
subpoena or other legal process (in any which event Lender shall promptly notify
the Borrower, unless such notice is legally prohibited); (iv) to the extent
requested by any bank regulatory authority or other Governmental Authority; (v)
to the extent such information (A) becomes publicly available other than as a
result of a breach of this Agreement, (B) becomes available to Lender on a
nonconfidential basis from a source other than the Borrower or any of its
Affiliates, which source is not known to Lender to be prohibited from
transmitting the information to Lender by any contractual or other obligation to
the Borrower or (C) was available to Lender on a nonconfidential basis prior to
its disclosure to Lender; (vi) to the extent the Borrower shall have consented
to such disclosure in writing; or (vii) in connection with the servicing of the
Obligations hereunder, in protecting or enforcing any rights and/or remedies in
connection with any Loan Document or in any proceeding in connection with any
Loan Document or any of the transactions contemplated thereby.
16.7. Counterparts; Telefacsimile Execution . This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which, when 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 foregoing shall apply to each other Loan Document mutatis
mutandis.
16.8. Revival and Reinstatement of Obligations . If the incurrence or payment of
the Obligations by Borrower or any Guarantor or the transfer to Lender of any
property 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, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if Lender 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 Lender is required or elects to repay or
restore, and as to all reasonable costs, expenses, and attorneys fees of Lender
related thereto, the liability of Borrower or such Guarantor automatically shall
be revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.
16.9. 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.
16.10. Releases . If any portion of the Total Collateral is to be sold or
otherwise disposed of pursuant to a Permitted Disposition or otherwise with the
consent of the Lender, the Lender shall release its Lien on such portion of
Total Collateral upon receipt of the proceeds of such disposition and subject to
other reasonable terms and conditions and shall execute such release instruments
and such other documents as the Borrower may reasonably request (but without
recourse or representation and at the sole cost and expense of the Borrower) to
evidence such release.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
SHOP AT HOME, INC.,
A Tennessee Corporation
By: /s/ Arthur D. Tek
Executive Vice President
And Chief Financial Officer
FOOTHILL CAPITAL CORPORATION,
A California Corporation
By: /s/ Bruce Rivers
Senior Vice President
