1
EXHIBIT 10.01
--------------------------------------------------------------------------------
LOAN AGREEMENT
BY AND BETWEEN
XXXXXX COMMUNICATIONS CORP.
AND
XXXXXX MEDIA CORPORATION OF FLORIDA
FOR
TELEVISION STATION WHBI-TV,
LAKE WORTH, FLORIDA
MARCH 23, 1995
--------------------------------------------------------------------------------
2
TABLE OF CONTENTS
Page
----
ARTICLE 1. AMOUNT AND TERMS OF THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01 The Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 The Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.03 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.04 Repayment of the Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.05 Use of Proceeds and Advancement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.06 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.07 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.08 Payment on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.01 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.01 Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.02 Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.03 Leasehold Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.04 Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.01 Conditions Precedent to Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.02 Conditions Precedent to Final Installment . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.03 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.01 Representations and Warranties of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Existence and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Authorizations, Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(f) No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
- i -
3
Page
----
(g) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(h) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(i) Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(j) Material Misstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 6. COVENANTS OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.01 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Preservation of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(e) Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Operations in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) Perfection of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(h) FCC Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(i) Loan And Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.02 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Transfer or Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Change of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(g) Remove Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(h) Distributions or Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(i) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(j) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(k) Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(l) Employee Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(m) Cancellation of Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(n) Write-Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(o) Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(p) Television Affiliation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(q) Loan And Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.03 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Default Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
- ii -
4
Page
----
(c) Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.02 Effect of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.01 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.02 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.03 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.04 Address for Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.05 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.06 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.07 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.08 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.09 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.10 Rights Affected by Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.11 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.12 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.13 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.14 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.15 Non-Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
- iii -
5
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of March 23, 1995, is by and between
XXXXXX COMMUNICATIONS CORP., a Delaware corporation having its principal
offices at 00000 X.X. Xxxxxxx 00 Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000 (the
"Lender"), and XXXXXX MEDIA CORPORATION OF FLORIDA, a Delaware corporation
having its principal offices at 000 X. Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000
(the "Borrower").
W I T N E S S E T H:
WHEREAS, WPB Communications, Inc. is a stockholder in Hispanic
Broadcasting, Inc., the permittee of Television Station WHBI-TV, Lake Worth,
Florida (the "Station") and holds an option to purchase control of Hispanic
Broadcasting, Inc.;
WHEREAS, the Borrower wishes to help WPB Communications, Inc. finance
the construction of the Station and exercise an option Borrower holds to
purchase the Station from WPB Communications, Inc.; and
WHEREAS, the Borrower desires to borrow funds from the Lender to
finance the purchase and operation of the Station.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, the Lender and the Borrower agree as follows:
ARTICLE 1. AMOUNT AND TERMS OF THE LOANS
SECTION 1.01 THE LOAN. The Lender agrees, upon the terms and
conditions hereinafter set forth, to make a loan or loans to the Borrower in an
aggregate principal amount not to exceed at any one time outstanding Seven
Million Dollars ($7,000,000.00) plus such additional amounts that are
reasonably requested by Borrower for the purposes set forth in Section 1.05 and
are approved by Lender in its sole discretion (the "Loan").
SECTION 1.02 THE PROMISSORY NOTE. The outstanding principal amount
of the Loan shall be evidenced by and subject to the terms of a promissory
note, dated of even date herewith, substantially in the form set forth as
Exhibit 1 hereto (the "Note") payable to the order of the Lender and
representing the obligation of the Borrower to pay the Lender the amount of the
Loan, with interest thereon, as prescribed in Section 1.04. The Lender is
authorized to endorse the date and amount of the Loan and each repayment of
principal and/or interest with respect thereto on the Schedule A annexed to and
constituting a part of the Note.
SECTION 1.03 INTEREST. The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum at all times equal to one-half
percent (1/2%) above the rate charged Lender by its senior lenders as adjusted
from time to time. Interest shall be calculated on the basis of a year of
three hundred sixty (360) days and actual number of days elapsed during the
6
period for which such interest is payable. Interest shall begin to accrue on
the outstanding principal amount of the Loan on the date of disbursement of all
or a portion of the Final Installment (as defined below) pursuant to Section
1.05(b) (the "Final Installment Date"). The first payment of interest to the
Lender shall be due Ninety (90) days after the acquisition of the Station by
the Borrower pursuant to Federal Communications Commission ("FCC") authority at
which time all interest accrued from the Final Installment Date shall become
due and payable; thereafter, accrued interest shall be paid monthly, on the
same date as the principal payments are due pursuant to Section 1.04 hereof.
If any installment of principal or interest is not paid when due, that
installment shall bear interest at a rate per annum equal to the lower of the
highest rate permitted by law or eighteen percent (18%) from the due date
thereof until paid in full.
SECTION 1.04 REPAYMENT OF THE LOAN. In the event that any portion of
the Loan is used by the Borrower to fund an escrow deposit or similar payment
toward the purchase of the Station (the "Deposit"), and such deposit is
returned to the Borrower, the amount of such deposit shall be immediately
repaid to Lender together with all interest earned on such deposit and paid to
the Borrower. One Hundred Twenty (120) days after the acquisition of the
Station by the Borrower pursuant to FCC authority, the Borrower shall begin
repayment to the Lender of the Loan by making consecutive, equal monthly
payments of principal and interest on the basis of an eighty-four (84) month
amortization schedule.
SECTION 1.05 USE OF PROCEEDS AND ADVANCEMENT OF FUNDS.
(a) The proceeds of the Loan are to be used by the Borrower
exclusively for financing the construction and purchase of the Station and for
working capital and operating expenses relating to the Station.
(b) The Lender shall loan to the Borrower the funds required
to acquire the Station, less the Deposit (the "Final Installment"), as required
by the terms of the Loan And Option Agreement entered into by Borrower with WPB
Communications, Inc. ("Loan And Option Agreement") as of March 23, 1995.
SECTION 1.06 INFORMATION. The Borrower agrees to furnish to the
Lender such information as the Lender may reasonably request in connection with
the Loan or the Station.
SECTION 1.07 PREPAYMENT. The Borrower may prepay the Note in whole
at any time, or from time to time in part, with accrued interest to the date of
prepayment on the amount prepaid, without penalty, provided that each payment,
other than for the full amount of the outstanding balance, shall be in the
amount of Ten Thousand Dollars ($10,000.00) or an integral multiple thereof.
Each partial prepayment on the Note shall be applied first to accrued interest
and then to the payment of principal in the inverse order of maturity.
SECTION 1.08 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to
be made hereunder or under the Note shall become due on a Saturday, Sunday or
public holiday, such
7
payment may be made on the next succeeding business day, and such extension of
time in such case shall be included in the computation of interest hereunder
and under the Note.
ARTICLE 2. CLOSING
SECTION 2.01 CLOSING DATE. Closing of this transaction shall occur
on a date agreed upon by the parties hereto (the "Closing Date").
ARTICLE 3. SECURITY
SECTION 3.01 SECURITY INTEREST. As security for the Loan, the
Borrower shall execute and deliver to the Lender, on or before the Closing
Date, a security agreement in the form of Exhibit 2 hereto (the "Security
Agreement").
SECTION 3.02 PLEDGE AGREEMENT. As further security for the Loan, on
or before the Closing Date, the Borrower shall deliver to the Lender a pledge
agreement in the form of Exhibit 3, duly executed by Xxxx Xxxxxx (the
"Shareholder"), the sole shareholder of the Borrower (the "Pledge Agreement").
SECTION 3.03 LEASEHOLD MORTGAGES. At such time as the Borrower
enters into any lease, it shall execute with respect to such lease a leasehold
mortgage in form and substance satisfactory to Lender (the "Leasehold
Mortgage"), granting the Lender a lien on its leasehold interest under such
lease. In particular, and without limiting the generality of the foregoing,
the Borrower shall execute a Leasehold Mortgage with respect to each lease, if
any, that it assumes as part of the acquisition of the Station. If requested
by the Lender, the Borrower shall also deliver to the Lender with respect to
any lease to which the Borrower becomes a party (i) evidence of the filing of a
memorandum of lease in form and substance satisfactory to Lender, (ii) an
executed estoppel certificate in form and substance satisfactory to Lender,
(iii) an executed landlord's consent and waiver in form and substance
satisfactory to Lender, and (iv) an ALTA mortgagee's policy of title insurance
in customary form with respect to such lease.
SECTION 3.04 MORTGAGES. As such time as the Borrower acquires any
parcel of real estate, the Borrower shall execute a first mortgage or deed of
trust in favor of the Lender on such parcel, in form and substance satisfactory
to the Lender. If requested by the Lender, the Borrower shall also deliver to
the Lender an ALTA mortgagee's policy of title insurance in customary form with
respect to such parcel.
ARTICLE 4. CONDITIONS OF LENDING
SECTION 4.01 CONDITIONS PRECEDENT TO LOAN. The obligation of the
Lender to disburse from time to time any portion of the Loan hereunder is
subject to the condition precedent that the Lender shall have received all of
the following, on or before the Closing Date, in form and substance
satisfactory to the Lender:
- 3 -
8
(a) The Note, duly executed and delivered by the Borrower;
(b) The Security Agreement, together with appropriate UCC-1
forms, duly executed and delivered by the Borrower;
(c) The Pledge Agreement, duly executed and delivered by the
Shareholder together with stock certificates and blank stock powers;
(d) A certified copy of the resolutions of the Board of
Directors of Borrower evidencing approval of the execution, delivery and
performance of this Agreement, the Note and the Security Agreement and other
matters contemplated hereby;
(e) A Certificate of Good Standing for the Borrower;
(f) Copies of all station documents, including, without
limitation, the Loan And Option Agreement (the "Agreement"), entered into with
WPB Communications, Inc.; and
(g) Such other agreements, certificates, opinions of counsel
and documents that the Lender may reasonably require.
SECTION 4.02 CONDITIONS PRECEDENT TO FINAL INSTALLMENT. The
obligation of the Lender to advance the Final Installment to the Borrower is
subject to the condition precedent that the Lender shall have received each of
the following, on or before the Final Installment Date, in form and substance
satisfactory to the Lender:
(a) Leasehold Mortgages, to the extent required by Section
3.03;
(b) A Certificate of Good Standing for the Borrower in the
State of Florida as of a recent date prior to the Final Installment Date;
(c) Copies of the certificates evidencing the insurance
required to be maintained by the Borrower pursuant to Section 6.01(e);
(d) Any memorandum of lease, to the extent required by
Section 3.03;
(e) Executed estoppel certificates, to the extent required by
Section 3.03;
(f) Executed landlord's consents and waivers, to the extent
required by Section 3.03;
(g) Evidence, in form and substance acceptable to Lender,
that Borrower has been approved by the FCC to acquire the Station and that the
FCC approval is a final, non-appealable order;
- 4 -
9
(h) A copy of the Agreement and each other contract,
certificate and other document executed by the Borrower and WPB Communications,
Inc. in connection with the Borrower's acquisition of the Station; and
(i) Such other agreements, certificates, opinions of counsel
and documents that the Lender may reasonably require.
SECTION 4.03 COMPLIANCE. All of the representations and warranties
of the Borrower in this Agreement shall be true and accurate in all material
respects on and as of the Closing Date and the date of any subsequent
disbursement of any portion of the Loan, as if made on and as of such date and
time. The Borrower shall be in compliance with all of the applicable terms and
provisions of this Agreement and no Event of Default or any event which with
the lapse of any applicable grace period or the giving of notice or both would
constitute an Event of Default shall have occurred and be continuing. The
Borrower shall have performed all obligations and taken all actions to be
performed or taken by it hereunder on or prior to such date. On the Closing
Date, the Borrower shall deliver to the Lender a certificate, dated as of such
date and signed by an executive officer of the Borrower, certifying compliance
with the conditions of this Section 4.03. Each disbursement of all or a
portion of the Loan to the Borrower shall in and of itself, constitute a
representation and warranty that the Borrower as of the date of such Loan, is
in compliance with this Section and if the Borrower is not in compliance with
this Section, the Lender shall not be required to disburse such Loan to the
Borrower.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
SECTION 5.01 REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to
induce the Lender to enter into this Agreement and make the Loan, Borrower
represents and warrants as follows:
(a) Existence and Standing. Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is qualified to do business and in good standing under the laws
of the State of Florida, and has all requisite power and authority, corporate
or otherwise, to conduct its business, to own its properties and to execute and
deliver, and to perform all of its obligations under this Agreement, the Note,
any Leasehold Mortgage, the Security Agreement and all other documents that
have been or will be executed and delivered by the Borrower pursuant to this
Agreement.
(b) Authorizations, Compliance with Laws. The execution,
delivery and performance by the Borrower of this Agreement, the Note, any
Leasehold Mortgage, the Security Agreement and all other documents required to
be executed and delivered by the Borrower pursuant to this Agreement have been
duly authorized by all necessary corporate action and do not and will not (i)
violate (A) any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower or (B) any provision of the charter or by-laws of
the Borrower; or (ii) result in a breach
- 5 -
10
of or constitute a default under any agreement or instrument to which the
Borrower is a party or by which its properties may be affected; or (iii) result
in the creation of a lien, charge or encumbrance of any nature upon the
Borrower's properties or assets other than as contemplated by this Agreement.
(c) No Consent. No authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department or agency, except for filing with the FCC, is or will be necessary
to the valid execution, delivery and performance by the Borrower of this
Agreement, the Note, any Leasehold Mortgage, the Security Agreement or any
other document required to be executed and delivered by the Borrower pursuant
to this Agreement.
(d) Binding Obligations. This Agreement, the Note, any
Leasehold Mortgage, the Security Agreement and all other documents required to
be executed and delivered by the Borrower pursuant to this Agreement have been
or will be executed and delivered by duly authorized officers of the Borrower
and constitute or will constitute, legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms.
(e) Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or its properties before any court or governmental department or
agency which materially adversely affects the transactions contemplated by this
Agreement or which would have a material adverse effect on the business,
properties, operation or condition of the Borrower.
(f) No Default. The Borrower is not in default in the
performance, observance or fulfillment of any of the obligations or conditions
contained in any material agreement or instrument to which it is a party, nor
with respect to any order, judgment, writ, injunction or decree of any court,
governmental authority or arbitration board.
(g) Compliance with Laws. To its best knowledge, Borrower is
in compliance with all applicable federal, state and local laws. The Borrower
has obtained all necessary licenses and permits required for the conduct of its
business and operations or such licenses and permits have been applied for and
are now being diligently pursued.
(h) Taxes. The Borrower has filed all tax returns and
reports (federal, state and local) required to be filed by it, and has paid all
taxes shown thereon, including interest and penalties, and all assessments
received by it (except to the extent that the same are being contested in good
faith by appropriate proceedings diligently prosecuted and as to which adequate
reserves have been set aside on the books of the Borrower in conformity with
generally accepted accounting principles).
(i) Title to Properties. The Borrower has good and
marketable title to all of its property and assets and valid and enforceable
leasehold interests in the property which it holds
- 6 -
11
under lease. All such property, assets and leasehold interests being free and
clear of any and all mortgages, deeds of trust, assignments, liens, security
interests, charges or encumbrances of any nature whatsoever, except for those
created hereby. No mortgages, deeds of trust, financing statements or other
evidences of security interests covering all or any of the aforesaid property
are on file among the records of any public office, except those evidencing a
security interest in favor of the Lender.
(j) Material Misstatement. No statement made herein or
information, exhibit or report furnished by the Borrower to the Lender in
connection with this Agreement or its negotiation, contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the foregoing not misleading.
ARTICLE 6. COVENANTS OF THE BORROWER
SECTION 6.01 AFFIRMATIVE COVENANTS. So long as the Note shall remain
unpaid, the Borrower hereby covenants and agrees that it will, unless the
Lender shall otherwise consent in writing:
(a) Payment of Obligations. Pay punctually and discharge
when due: (i) all indebtedness heretofore or hereafter incurred; (ii) all
taxes, assessments and governmental charges or levies imposed upon it or its
income or profits, or upon any properties belonging to it; (iii) claims or
demands of materialmen, mechanics, carriers, warehousemen, landlords and other
like persons which, if unpaid might become a lien or charge upon the property
of the Borrower; provided that this covenant shall not require the payment of
any of the matters set forth in (i), (ii) and (iii) above if the same shall be
contested in good faith and by proper proceedings diligently pursued and as to
which adequate reserves have been set aside on the books of the Borrower in
accordance with generally accepted accounting principles.
(b) Preservation of Existence. Preserve and maintain its
respective corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation.
(c) Maintenance of Properties. Maintain and preserve all of
its properties necessary or useful in the proper conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(d) Compliance with Laws. Comply in all material respects
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority.
(e) Maintenance of Insurance. Maintain with responsible and
reputable insurance companies policies on all of its properties and covering
such risks, including public liability and workers' compensation, in such
amounts as are usually carried by companies engaged in similar businesses and
owning similar properties as the Borrower, and promptly upon execution thereof
provide to the Lender copies of all such policies and any riders or amendments
thereto. The
- 7 -
12
policies of insurance required hereunder shall name the Lender as an additional
loss payee or additional insured, as applicable, and shall provide that the
Lender shall receive at least thirty (30) days' written notice prior to the
cancellation, termination or alteration of any such policy.
(f) Operations in Ordinary Course. Continue to operate its
business in the ordinary course.
(g) Perfection of Liens. Do all things requested by the
Lender to preserve and perfect the liens and security interests of the Lender
arising pursuant to the Security Agreement, the Pledge Agreement, any Leasehold
Mortgage or any other agreement required hereunder as first liens and security
interests.
(h) FCC Approval. If counsel to the Lender reasonably
determines that the consent of the FCC is required in connection with the
execution, delivery and performance of this Agreement, the Pledge Agreement,
the Security Agreement or any other document delivered to the Lender in
connection herewith or therewith or as a result of any action which may be
taken pursuant hereto or thereto, then the Borrower, at its sole cost and
expense, agrees to use its best efforts to secure such consent and to cooperate
with the Lender in any action commenced by the Lender to secure such consent.
(i) Loan And Option Agreement. Borrower shall execute and
deliver the Loan And Option Agreement and comply with its obligations
thereunder.
SECTION 6.02 NEGATIVE COVENANTS. So long as the Note shall remain
unpaid and the Agreement shall not have been terminated, the Borrower hereby
covenants that it will not, without the Lender's prior written approval:
(a) Indebtedness. Create or incur, assume or suffer to exist
any indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, except for:
(i) indebtedness evidenced by the Note; and (ii) indebtedness (other than for
borrowed money) incurred in the ordinary course of business not to exceed Fifty
Thousand Dollars ($50,000.00) in the aggregate at any one time.
(b) Liens. Create, assume or suffer to exist, directly or
indirectly, any security interest, mortgage, deed of trust, pledge, lien,
charge or other encumbrance, of any nature whatsoever upon any of its
properties or assets, now owned or hereafter as acquired, excluding, however,
from the operation of this covenant:
(i) any security interest or lien created
pursuant to this Agreement;
(ii) liens for taxes or assessments either not
delinquent or the validity of which are being contested in good faith by
appropriate legal or administrative proceedings and
- 8 -
13
as to which adequate reserves shall have been set aside on its books, in
conformity with generally accepted accounting principles;
(iii) materialmen's, mechanics', carriers',
workmen's, repairmen's, warehousemen's or other like liens arising in the
ordinary course of business and either not yet due and payable or being
contested in good faith by appropriate legal proceedings and as to which
adequate reserves shall have been set aside on its books, in conformity with
generally accepted accounting principles;
(iv) deposits or pledges to secure payment of
workers' compensation, unemployment insurance or other social security benefits
or obligations; or
(v) any judgment lien, unless the judgment it
secures shall not, within thirty (30) days after the entry thereof, have been
discharged, vacated, reversed, or execution thereof stayed pending appeal, or
shall not have been discharged, vacated or reversed within thirty (30) days
after the expiration of any such stay.
(c) Disposition of Assets. Sell, transfer, lease or
otherwise dispose of all or any material part of its assets other than in the
ordinary course of business and in exchange for collateral of like value in
which the Lender shall have a security interest.
(d) Merger. Enter into any consolidation or merger with, or
into any acquisition of all or substantially all of the properties or assets of
any person or entity.
(e) Transfer or Issuance of Shares. Permit the issuance or
transfer of any shares of the capital stock of the Borrower, or any options,
warrants, convertible securities or other rights to purchase the Borrower's
stock. The preceding sentence shall not apply to (i) transfers to the Lender;
(ii) transfers resulting from the death of the Shareholder; and (iii) transfers
effected by the Shareholder with the prior written consent of the Lender (which
shall not be unreasonably withheld), solely for estate planning purposes of the
Shareholder.
(f) Change of Business. Change, in any material respect, the
nature or character of its business as intended, or engage in any activity not
reasonably related to such business.
(g) Remove Assets. Remove any of the assets procured with
the proceeds of the borrowings provided for herein, or any replacements for
such assets, to a jurisdiction in which no financing statement on Form UCC-1
has been filed by the Lender with respect to such assets.
(h) Distributions or Dividends. Declare or make, directly or
indirectly, any payment or distribution, or incur any liability for the
purchase, acquisition, redemption or retirement of any capital stock of the
Borrower or as a dividend, return of capital or other payment or distribution
of any kind to a shareholder of the Borrower or any affiliate of the Borrower
(other than any stock dividend or stock split or similar distribution payable
only in
- 9 -
14
capital stock of the Borrower) in respect of the Borrower's capital stock,
except that the Borrower may declare one annual dividend per year on all
classes of its capital stock with the prior written consent of the Lender.
Notwithstanding the foregoing, Borrower shall be permitted to distribute to a
shareholder of Borrower, any payments as received by Borrower pursuant to
Attachment I of the Time Brokerage Agreement between Borrower and Lender for
the operation of the Station.
(i) Transactions with Affiliates. Enter into any transaction
or agreement with any affiliate of the Borrower.
(j) Contracts. Enter into any contract or commitment
relating to its stock or assets except for contracts involving aggregate
payments of less than Five Thousand Dollars ($5,000.00) and contracts which can
be terminated without penalty on thirty (30) days' notice or less, or amend or
terminate any material contract (or waive any substantial right thereunder), or
incur any obligation (including obligations relating to the borrowing of money
or guarantee of indebtedness).
(k) Adverse Change. Suffer any material adverse change in
the assets, properties or condition (financial or otherwise) of the Borrower or
the Station, or any damage, destruction or loss affecting any assets used or
useful in the conduct of the business of the Borrower that is not promptly
repaired or replaced in accordance with 6.01(c).
(l) Employee Compensation. Suffer any material increase in
excess of the reasonable range in the broadcast industry in the same or similar
markets in compensation payable or to become payable to any employees, or any
bonus payment made or promised to any employee, or any material change in
personnel policies, insurance benefits or other compensation arrangements
affecting any employees, provided that nothing in this clause shall be
construed to limit or restrict the commission compensation of employees who may
be selling brokered time for the Borrower.
(m) Cancellation of Debts. Cancel any debts owed or claims
held by the Borrower.
(n) Write-Down. Suffer any significant write-down of the
value of any assets without the prior written consent of the Lender except and
as required by generally accepted accounting principles as required to present
accurate financial information on the Borrower.
(o) Rights. Transfer or grant any right under, or enter into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, service xxxx, trade name, franchise, or similar right, or
modify any existing right relating to the Borrower.
(p) Television Affiliation Agreement. In the event Borrower
acquires the Station, terminate, amend or waive any provision of the Television
Affiliation Agreement, if any, to which the Station is a party.
- 10 -
15
(q) Loan And Option Agreement. In the event the Borrower
enters into the Loan And Option Agreement, terminate, materially amend, commit
any material breach or default under or waive any term of the Loan And Option
Agreement.
SECTION 6.03 REPORTING REQUIREMENTS. So long as the Note shall
remain unpaid and the Agreement shall not have been terminated, the Borrower
shall, unless the Lender shall otherwise consent in writing, furnish to the
Lender:
(a) Default Certificate. As soon as possible and in any event
within five (5) business days after the occurrence of each Event of Default (as
defined in Section 7.01) of which the Borrower has knowledge, the statement of
the President of the Borrower setting forth details of such Event of Default
and the action which the Borrower proposes to take with respect thereto.
(b) Financial Statements. Beginning with the making of the
Final Installment, quarterly financial statements within thirty (30) days after
the end of each fiscal quarter; within ninety (90) days after the end of each
fiscal year of the Borrower, a copy of the reviewed financial statements for
such year for the Borrower, including therein a balance sheet of the Borrower
as of the end of such fiscal year, statements of income and expense of the
Borrower for such fiscal year, and a statement of cash flow of the Borrower for
such fiscal year, in each case prepared by an independent public accountant of
recognized standing acceptable to the Lender. Lender shall accept a review of
the Borrower's financial records.
(c) Notice of Litigation. Promptly give written notice of
all actions, suits and proceedings before any court or governmental agency,
domestic or foreign, which may be commenced or threatened against the Borrower
in which the claim involved is Five Thousand Dollars ($5,000.00) or more and of
any other matter of the type described in Section 5.01(e).
(d) Budget. An annual budget to the Lender within thirty
(30) days of the beginning of each fiscal year of the Borrower. Such budget
shall be satisfactory in form to the Lender.
(e) Other Information. Such other information respecting the
business, properties, operations or the condition, financial or otherwise, of
the Borrower as the Lender may from time to time reasonably request.
ARTICLE 7. EVENTS OF DEFAULT
SECTION 7.01 EVENTS OF DEFAULT. Under this Agreement, an Event of
Default shall be any of the following:
(a) The Borrower shall fail to pay any installment of
principal or interest on the Note, or any other obligation to the Lender when
due whether at the due date thereof or by
- 11 -
16
acceleration or otherwise, and such default shall remain unremedied for a
period of ten (10) days after notice thereof shall have been given to the
Borrower; or
(b) The security interest or lien of the Lender in any
material portion of the collateral covered by the Security Agreement, Pledge
Agreement or any Leasehold Mortgage shall at any time not constitute a legal,
valid and enforceable security interest or lien; or
(c) Any representation or warranty made by the Borrower (or
any of its officers) herein, in the Security Agreement or in any certificate,
agreement, instrument or statement contemplated by or made or delivered
pursuant to or in connection with this Agreement, the Note, any Leasehold
Mortgage or the Security Agreement, or by the Shareholder in the Pledge
Agreement shall prove to have been incorrect in any material respect when made;
or
(d) The Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement, the Note, the Security
Agreement, any Leasehold Mortgage or any Television Affiliation Agreement
relating to the Station (the "Television Affiliation Agreement"), or the
Shareholder shall fail to perform or observe any term, covenant or agreement
contained in the Pledge Agreement, and any such failure remains unremedied for
thirty (30) days after written notice thereof shall have been given to the
Borrower by the Lender; or
(e) The Borrower shall fail to pay any indebtedness for
borrowed money owing by the Borrower or any interest or premium thereon, when
due, whether such indebtedness shall become due by scheduled maturity, by
required prepayment, by acceleration, by demand or otherwise, or the Borrower
shall fail to perform any term, covenant or agreement under any agreement or
instrument evidencing or securing or relating to any such indebtedness owing by
the Borrower if the effect of such failure is to accelerate, or to permit the
holder of such indebtedness to accelerate the maturity of such indebtedness; or
(f) The Borrower shall expend the proceeds of the Loan for
any purpose other than the purchase of the Station and the operation of the
Station's business without the prior written consent of the Lender, which may
be withheld in the Lender's sole discretion; or
(g) The Borrower shall (i) fail to pay its debts as they
mature in the ordinary course of business; (ii) file a petition commencing a
voluntary case concerning it under any Chapter of Title 11 of the United States
Code entitled "Bankruptcy"; or (iii) the Borrower shall apply for or consent to
the appointment of any receiver, trustee, custodian or similar officer for it
or for all or any substantial part of its property; or (iv) such receiver,
trustee, custodian or similar officer shall be appointed without the
application or consent of the Borrower and such appointment shall continue
undischarged for a period of ninety (90) days; or (v) an involuntary case is
commenced against the Borrower under any Chapter of the aforementioned Title 11
and an order for relief under such Title 11 is entered or the petition
commencing the case is controverted but is not dismissed within ninety (90)
days after the commencement of the case; or
- 12 -
17
(vi) the Borrower shall institute (by petition, application, answer, consent or
otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding relating
to it under the laws of any jurisdiction; or (vii) any such proceeding shall be
instituted against the Borrower and shall remain undismissed for a period of
ninety (90) days; or (viii) the Borrower shall take any action for the purpose
of effectuating the foregoing; or
(h) Any court, government, or government agency shall
condemn, seize or otherwise appropriate or take custody or control of all or a
substantial portion of the property or assets of the Borrower; or
(i) There shall be an irrevocable and unappealable denial or
revocation of the broadcast license for the Station.
SECTION 7.02 EFFECT OF EVENT OF DEFAULT. Should any Event of Default
occur, the Lender may at its option by written notice to the Borrower declare
the entire unpaid principal amount of the Note, together with all unpaid
interest and all other amounts payable under this Agreement and every other
obligation of the Borrower to the Lender, immediately due and payable,
whereupon the Note and all such obligations shall become and be forthwith due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower, anything contained
herein or in the Note or in such other note or evidence of indebtedness to the
contrary notwithstanding; provided, however, that in case of an Event of
Default under Section 7.01(g), all the obligations of the Borrower under this
Agreement and the Note shall become immediately due and payable as of the date
of any such Event of Default regardless of the cause of such Event of Default
and without any notice to the Borrower required from the Lender. The Lender
shall have, in addition to all other rights and remedies allowed by law, the
rights and remedies of a secured party under the Uniform Commercial Code as in
effect in the State of Florida and, without limiting the generality of the
foregoing, the rights and remedies provided for in the Security Agreement,
Pledge Agreements, and any Leasehold Mortgage, which provisions are hereby
incorporated by reference.
ARTICLE 8. MISCELLANEOUS
SECTION 8.01 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on
the part of the Lender in exercising any right, power or remedy hereunder shall
operate as a waiver, nor shall any single or partial exercise of any such
right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 8.02 AMENDMENTS. No amendment, modification, termination or
waiver of any provision of this Agreement, the Note, the Security Agreement or
any Leasehold Mortgage, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless in writing, signed by the Lender and
then only in the specific instance and for the specific purpose
- 13 -
18
for which given. No notice to or demand on the Borrower in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances.
SECTION 8.03 CONFLICTS. In the event of any conflict or
inconsistency between any provision of this Agreement and a provision of the
Note, the Security Agreement or any Leasehold Mortgage, the provisions of this
Agreement shall control.
SECTION 8.04 ADDRESS FOR NOTICES. All notices and other
communications under this Agreement shall be in writing and shall be served by
personal service or by mailing a copy thereof by registered or certified mail,
return receipt requested, to the applicable party at the addresses indicated
below:
If to the Borrower:
Xx. Xxxx Xxxxxx
Xxxxxx Media Corporation of Florida
000 X. Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
with a copy (which shall not constitute notice) to:
Xxxx X. Xxxxxxxx, Esq.
Xxxxx, Xxxxxxxx & Tannenwald
0000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
If to the Lender:
Xx. Xxxxxx X. Xxxxxx
Xxxxxx Communications Corp.
00000 X.X. Xxxxxxx 00 Xxxxx
Xxxxxxxxxx, XX 00000
with a copy (which shall not constitute notice) to:
Xxxxxxx X. Xxxxxxxx, Esq.
General Counsel
Xxxxxx Communications Corp.
00000 X.X. Xxxxxxx 00 Xxxxx
Xxxxxxxxxx, XX 00000
- 14 -
19
or at such other address as may be designated by either party in a written
notice to the other complying as to delivery with the terms of this Section.
All such notices and other communications shall be effective when deposited in
the mails.
SECTION 8.05 EXPENSES. The Borrower agrees to pay on demand all
costs and expenses incurred by the Lender directly in the enforcement of this
Agreement, the Note, the Security Agreement, any Leasehold Mortgage, the Pledge
Agreement and other instruments and documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of any attorney
to whom the Note is referred for collection (whether or not litigation is
commenced) or for representation in proceedings under any bankruptcy or
insolvency law. In addition, the Borrower shall pay any and all taxes and fees
payable or determined to be payable in connection with the execution, delivery
and recordation of any instruments and documents to be delivered hereunder.
SECTION 8.06 BINDING EFFECT; ASSIGNMENT. This Agreement shall become
effective when executed and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Lender and their respective successors and
assigns, except that the Borrower shall not have the right to assign any rights
or obligations hereunder without the prior written consent of the Lender.
SECTION 8.07 GOVERNING LAW. This Agreement, the Note, the Security
Agreement and related documents shall be governed by, and construed in
accordance with, the laws of the State of Florida with the exception of its
conflicts of laws provisions; provided that the effect of any recordation shall
be determined by the State thereof. The parties agree to the exclusive
jurisdiction and venue of the state and federal district courts for the
district including Palm Beach, Florida.
SECTION 8.08 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement, the Note, the Security Agreement, or any Leasehold Mortgage that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions or affecting the validity or
enforceability of any provisions in any other jurisdiction.
SECTION 8.09 HEADINGS. Article and Section headings in this
Agreement are including for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 8.10 RIGHTS AFFECTED BY EXTENSIONS. The rights of the Lender
and its assigns shall not be impaired by any indulgence, release, renewal,
extension or modification which the Lender may grant with respect to the
indebtedness or any part thereof, or with respect to the collateral or with
respect to any endorser, guarantor, or surety without notice or consent of the
Borrower or any endorser, guarantee, or surety.
- 15 -
20
SECTION 8.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Agreement and the Note and the making of the Loan
hereunder and continue in full force and effect, as of the respective dates as
of which they were made, until all of the obligations of the Borrower to the
Lender hereunder have been paid in full.
SECTION 8.12 ATTORNEYS' FEES. If any litigation arises between the
parties in connection with the transactions contemplated by this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees in
addition to all other damages and remedies.
SECTION 8.13 FURTHER ASSURANCES. From time to time, the Borrower
shall execute and deliver to the Lender such additional documents as the Lender
may reasonably require to carry out the purposes of this Agreement or any of
the documents entered into in connection herewith, or to preserve and protect
the rights of the Lender hereunder or thereunder.
SECTION 8.14 INDEMNIFICATION. The Borrower hereby indemnifies and
holds harmless the Lender and its directors, officers, shareholders, employees,
agents, counsel, subsidiaries and affiliates (the "Indemnified Persons") from
and against any and all losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against any
Indemnified Person in any way relating to or arising out of this Agreement, the
documents entered into in connection herewith, or any of them or any of the
transactions contemplated hereby or thereby; provided, however, that the
Borrower shall not be liable to any Indemnified Person, if there is a judicial
determination that such losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulted solely or
in part from the gross negligence or willful misconduct of such Indemnified
Person.
SECTION 8.15 NON-RECOURSE. Notwithstanding anything to the contrary
herein, in any action or proceeding commenced with reference to this Loan
Agreement, no judgment shall be sought or obtained against Xxxx Xxxxxx
personally or enforced against any of his separate assets, other than his
shareholder interests in Borrower, and such liability under this Loan Agreement
shall be limited to his shareholder interests in Borrower. In any legal action
or suit in equity which the Lender may undertake to enforce its rights and
remedies under the Loan Agreement, any judgment may be satisfied by recourse
only to Xxxx Xxxxxx'x shareholder interests therein and not by recourse to Xxxx
Xxxxxx personally or by execution on any of his separate and/or joint assets,
other than his shareholder interests in Borrower.
- 16 -
21
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers, as of
the date first above written.
WITNESS: XXXXXX MEDIA CORPORATION OF
FLORIDA
By:
------------------------------ ----------------------------------
Name:
Title:
WITNESS: XXXXXX COMMUNICATIONS CORP.
By:
------------------------------ ----------------------------------
Name:
Title:
