GUARANTEE INDUCEMENT AND OFFSET AGREEMENT
THIS GUARANTEE INDUCEMENT AND OFFSET AGREEMENT, dated as of October 25,
1999 (the "Agreement") is entered into between BMC HOLDINGS, LLC, a Virginia
limited liability company ("Borrower"), the other Loan Parties identified in the
Loan Agreement (identified below) and FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"). Capitalized terms used and not otherwise defined
herein shall have the meanings assigned to them in such Loan Agreement.
RECITALS
WHEREAS, Foothill has entered into or is about to enter into a Loan and
Security Agreement (the "Loan Agreement") with Borrower and certain of the other
Loan Parties pursuant to which Foothill may make loans and provide other
financial accommodation to Borrower;
WHEREAS, the proceeds of the loans made by Foothill to Borrower will be
used by Borrower to provide loans ("Initial Loans") to certain of the OPCO
Subsidiaries, as more particularly described in the Loan Agreement;
WHEREAS, the Borrower will use the interest earned from and the principal
received upon the repayment of the Initial Loans to make various other loans and
provide other financial accommodations to other OPCO Subsidiaries;
WHEREAS, each of the Manager Subsidiaries owns an interest in one or more
of the OPCO Subsidiaries and may from time to time receive financial benefit
from the financial success of the OPCO Subsidiaries in which it maintains an
interest and may, from time to time, receive financial support from Borrower;
WHEREAS, Foothill has required, among other things, that the loan facility
provided for in the Loan Agreement be secured by a pledge of certain
intercompany notes owing to Borrower by the OPCO Subsidiaries and described more
particularly on Schedule A hereto (the "Intercompany Notes") and certain term
notes owing to Borrower by certain OPCO Subsidiaries reflecting loans of
proceeds under the Loan Agreement to such OPCO Subsidiaries and described more
particularly on Schedule A hereto (the "Term Notes") and guaranteed by the OPCO
Subsidiaries and the Manager Subsidiaries as provided in the Loan Agreement;
WHEREAS, the Borrower has also granted to Foothill a security interest in
any and all of Borrower's assets, including all future loans and other financial
accommodations provided by Borrower to any of the Loan Parties;
WHEREAS Foothill has required, as a condition to extending financing to
Borrower, that each of the OPCO Subsidiaries and Manager Subsidiaries issue
their guarantees (the "Guarantees") of the Obligations of the Borrower and
secure the Guarantees pursuant to those certain General Security and Pledge
Agreements (the "Security Agreements") dated as of the date hereof and the Board
of Directors of each of the OPCO Subsidiaries and Manager Subsidiaries has
required as a condition to authorizing the Guarantees and Security Agreements
that the Borrower agree to provide security and compensation to each such party
as provided herein in the event that the Borrower does not repay the Obligations
and Foothill calls upon such party for payment on the Guarantees or from the
collateral in which it has granted a security interest; and
WHEREAS each such Board of Directors has evaluated all of the circumstances
surrounding the execution of the Guarantees and Security Agreements and
determined that the OPCO Subsidiary or Manager Subsidiary will receive the "fair
equivalent value" (as used in Section 548 of the Bankruptcy Code) of the amount
of its Guarantee pursuant to the compensation and security and offset
arrangements contemplated hereby.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and covenants hereinafter
contained, and to induce Foothill to provide the loans and other financial
accommodations to Borrower under the Loan Agreement, the parties agree as
follows:
1. Offset. Borrower hereby agrees that any payment made by an OPCO
Subsidiary or a Manager Subsidiary pursuant to the Guarantees shall be deemed to
be a payment made at the request of Borrower to Foothill and shall be credited
to the payment of the Intercompany Note payable by such OPCO Subsidiary or
Manager Subsidiary or to a Term Note any other indebtedness owing by such OPCO
Subsidiary or Manager Subsidiary to Borrower, thereby automatically reducing the
amount owing to Borrower by the amount of such payment.
2. Amounts in Excess of Offset. In the event that Foothill should at any
time obtain payment from any OPCO Subsidiary or Manager Subsidiary in excess of
the amount of the offset which occurs pursuant to Section 1 above, the amount of
such OPCO Subsidiary's or Manager Subsidiary's claim against the Borrower by
virtue of such payment may be offset against any and all amounts that such OPCO
Subsidiary or Manager Subsidiary may thereafter be entitled to receive, for any
reason, from Borrower.
3. Miscellaneous. The provisions of the Loan Agreement applicable to all
Loan Documents shall apply to this Agreement.
[Signature Page Follows]
2
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
BMC HOLDINGS, LLC
By: Xxxxx Media Company, LLC, its manager
By: Xxxxx Media Managment, Inc., its manager
By: ____________________________________
a duly authorized officer
FOOTHILL CAPITAL CORPORATION
By: ____________________________________
Name: _________________________________
Title: __________________________________
Xxxxx Radio, Inc.
By: ____________________________________
a duly authorized officer
Reading Radio, Inc.
By: ____________________________________
a duly authorized officer
Tri-State Broadcasting, Inc.
By: ____________________________________
a duly authorized officer
S-1
[Signature Page to Guarantee Inducement and Offset Agreement]
Northern Colorado Holdings, LLC
By: Northern Colorado Holdings Management, Inc.,
its manager
By: ____________________________________
a duly authorized officer
NCR II, INC.
By: ____________________________________
a duly authorized officer
NCH II, LLC
By: NCR II, Inc., its manager
By: ____________________________________
a duly authorized officer
NCR III, LLC
By: NCR II, Inc., its manager
By: ____________________________________
a duly authorized officer
Northern Colorado Radio, Inc.
By: ____________________________________
a duly authorized officer
S-2
Northland Holdings, LLC
By: Northland Holdings Management, Inc., its manager
By: ____________________________________
a duly authorized officer
Northland Broadcasting, LLC
By: Northland Broadcasting Management, Inc.,
its manager
By: ____________________________________
a duly authorized officer
XX XX, Inc.
By: ____________________________________
a duly authorized officer
Upper Michigan Holdings, LLC
By: Upper Michigan Holdings Management, Inc.,
its manager
By: ____________________________________
a duly authorized officer
Upper Michigan Newspapers, LLC
By: Upper Michigan Newspapers Management, Inc.,
its manager
By: ____________________________________
a duly authorized officer
S-3
Advertisers P.S., LLC
By: Advertisers P.S. Management, Inc., its manager
By: ____________________________________
a duly authorized officer
Central Printing Service, LLC
By: Central Printing Service Management, Inc.,
its manager
By: ____________________________________
a duly authorized officer
Huron Holdings, LLC
By: Huron Holdings Management, Inc., its manager
By: ____________________________________
a duly authorized officer
Huron Newspapers, LLC
By: Huron Newspapers Management, Inc., its manager
By: ____________________________________
a duly authorized officer
S-4
Huron P.S. LLC
By: Huron P.S. Management, Inc., its manager
By: ____________________________________
a duly authorized officer
St. Xxxxx Newspapers, Inc.
By: ____________________________________
a duly authorized officer
Central Michigan Distribution Co., LP
By: Central Michigan Distribution Co., Inc.,
its general partner
By: ____________________________________
a duly authorized officer
Xxxxx Newspapers, Inc.
By: ____________________________________
a duly authorized officer
CMN Holding, Inc.
By: ____________________________________
a duly authorized officer
Central Michigan Newspapers, Inc.
By: ____________________________________
a duly authorized officer
S-5
Graph Ads Printing, Inc.
By: ____________________________________
a duly authorized officer
Gladwin Newspapers, Inc.
By: ____________________________________
a duly authorized officer
Cadillac Newspapers, Inc.
By: ____________________________________
a duly authorized officer
Midland Buyer's Guide, Inc.
By: ____________________________________
a duly authorized officer
CMN Associated Publications, Inc.
By: ____________________________________
a duly authorized officer
Central Michigan Distribution Co., Inc.
By: ____________________________________
a duly authorized officer
S-6
SCHEDULE A
INTERCOMPANY NOTES
[To be provided by Borrower]
SCHEDULE B
TERM NOTES
[To be provided by Borrower]
