GENERAL SECURITY AND PLEDGE AGREEMENT
(OPCO Subsidiaries)
This General Security and Pledge Agreement ("Agreement") dated October 25,
1999 is by and among ▇▇▇▇▇ Radio, Inc. ("BRI"), Reading Radio, Inc., Tri-State
Broadcasting, Inc., Northern Colorado Holdings, LLC, NCH II, LLC ("NCH II"), NCR
III, LLC, Northern Colorado Radio, Inc., Northland Holdings, LLC ("NH"),
Northland Broadcasting, LLC, ▇▇ ▇▇, Inc., Upper Michigan Holdings, LLC ("UMH"),
Upper Michigan Newspapers, LLC, Advertisers P.S. LLC, Central Printing Service,
LLC, Huron Holdings, LLC ("HH"), Huron Newspapers, LLC, Huron P.S. LLC, St.
John's Newspapers, Inc., Central Michigan Distribution Co., LP, ▇▇▇▇▇
Newspapers, Inc. ("BNI"), CMN Holding, Inc. ("CMNH"), Central Michigan
Newspapers, Inc. ("CMNI"), Graph Ads Printing, Inc., Gladwin Newspapers, Inc.,
Cadillac Newspapers, Inc., Midland Buyer's Guide, Inc., CMN Associated
Publications, Inc. and Central Michigan Distribution Co., Inc. ("CMDC"), each a
Virginia corporation or limited liability company (each individually a
"Guarantor" and collectively the "Guarantors") (BRI, NCH II, NH, UMH, HH, BNI,
CMNH, CMNI and CMDC each individually, a "Pledgor" and collectively, the
"Pledgors") in favor of Foothill Capital Corporation, a California corporation
("Foothill"). Capitalized terms used and not otherwise defined herein shall have
the meanings assigned to them in the Loan Agreement (described below).
W I T N E S S E T H
WHEREAS, Foothill has entered or is about to enter into a Loan and Security
Agreement (the "Loan Agreement") with BMC Holdings, LLC ("Borrower") and the
Loan Agreement Guarantors pursuant to which Foothill may make loans and provide
other financial accommodations to Borrower; and
WHEREAS, Guarantors are affiliates of Borrower and as such will derive
direct and indirect economic benefits from the making of the loans and other
financial accommodations which may be provided to Borrower;
WHEREAS, Guarantors have executed and delivered or are about to execute and
deliver to Foothill a guarantee (the "OPCO Guarantee") in favor of Foothill,
pursuant to which Guarantors absolutely and unconditionally jointly and
severally guarantee to Foothill the payment and performance of all now existing
and hereafter arising obligations, liabilities and indebtedness of Borrower to
Foothill, whether pursuant to the Loan Agreement, the guarantee of the NCR Loan
or otherwise;
WHEREAS, Foothill has required as a condition precedent to the extension of
credit to the Borrower, that the Guarantors enter into this Agreement to secure
their respective obligations under the OPCO Guarantee; and
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code shall have the meanings given therein unless otherwise
defined in this Agreement. All references to the plural herein shall also mean
the singular and to the singular shall also mean the plural unless the context
otherwise requires. All references to Guarantor, Pledgor, Borrower and Foothill
pursuant to the definitions set forth in the recitals hereto, or to any other
person herein, shall include their respective successors and assigns. The words
"hereof," "herein," "hereunder," "this Agreement" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not any
particular provision of this Agreement and as this Agreement now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced. The word "including" when used in this Agreement shall mean
"including, without limitation." An Event of Default shall exist or continue or
be continuing until such Event of Default is waived or is cured in a manner
satisfactory to Foothill, if such Event of Default is capable of being cured as
determined by Foothill. "US Dollars" and the sign "$" mean lawful money of the
United States of America. Any accounting term used herein unless otherwise
defined in this Agreement shall have the meanings customarily given to such term
in accordance with GAAP. For purposes of this Agreement, the following terms
shall have the respective meanings given to them below:
1.1 "Accounts" means, with respect to any Guarantor, all currently existing
and hereafter arising accounts, contract rights, and all other forms of
obligations owing to such Guarantor arising out of the sale or lease of goods,
franchise rights or franchise territories or the rendition of services by such
Guarantor, irrespective of whether earned by performance, and any and all credit
insurance, guaranties, or security therefor.
1.2 "Books" means all of any Guarantor's books and records including:
ledgers; records indicating, summarizing, or evidencing such Guarantor's
properties or assets (including the Collateral) or liabilities; all information
relating to such Guarantor's business operations or financial condition; and all
computer programs, disk or tape files, printouts, runs, or other computer
prepared information.
1.3 "Collateral" means, with respect to any Guarantor, all of such
Guarantor's right, title, and interest in and to each of the following:
(a) the Accounts,
(b) the Books,
(c) the Equipment,
(d) the General Intangibles,
(e) the Inventory,
(f) the Negotiable Collateral,
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(g) the Real Property Collateral,
(h) all other property pledged herein and pursuant to the other Loan
Documents,
(i) any money, or other assets of such Guarantor that now or hereafter come
into the possession, custody, or control of Foothill or any Lender, and
(j) the proceeds and products, whether tangible or intangible, of any of
the foregoing, including proceeds of insurance covering any or all of the
Collateral, and any and all Accounts, the Books, Equipment, General Intangibles,
Inventory, Negotiable Collateral, Real Property, money, deposit accounts, or
other tangible or intangible property resulting from the sale, exchange,
collection, or other disposition of any of the foregoing, or any portion thereof
or interest therein, and the proceeds thereof.
1.4 "Equipment" means, with respect to any Guarantor, all of such
Guarantor's present and hereafter acquired machinery, machine tools, motors,
equipment, furniture, furnishings, fixtures, vehicles (including motor vehicles
and trailers), tools, parts, goods (other than consumer goods, farm products, or
Inventory), wherever located, including, (a) any interest of such Guarantor in
any of the foregoing, and (b) all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing.
1.5 "Event of Default" shall have the meaning set forth in Section 10.1
hereof.
1.6 "General Intangibles" means, with respect to any Guarantor, all of such
Guarantor's present and future general intangibles and other personal property
(including contract rights, rights arising under common law, statutes, or
regulations, choses or things in action, goodwill, Permits, patents, trade
names, trademarks, servicemarks, copyrights, blueprints, drawings, purchase
orders, customer lists, monies due or recoverable from pension funds, route
lists, rights to payment and other rights under any royalty or licensing
agreements, infringement claims, computer programs, information contained on
computer disks or tapes, literature, reports, catalogs, deposit accounts,
insurance premium rebates, tax refunds, and tax refund claims), other than
goods, Accounts, and Negotiable Collateral.
1.7 "Governmental Authority" means any nation or government, any state,
province, or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
1.8 "Inventory" means, with respect to any Guarantor, all present and
future inventory in which such Guarantor has any interest, including goods held
for sale or lease or to be furnished under a contract of service and all of such
Guarantor's present and future raw materials, work in process, finished goods,
and packing and shipping materials, wherever located.
1.9 "Investment Property" means "investment property" as that term is
defined in Section 9-115 of the UCC.
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1.10 "Issuers" shall have the meaning set forth in Section 3.1 of this
Agreement.
1.11 "Legal Requirements" means all applicable international, foreign,
federal, state, provincial and local laws, judgments, decrees, orders, statutes,
ordinances, rules, regulations, or Permits.
1.12 "Lien" means any interest in property securing an obligation owed to,
or a claim by, any Person other than the owner of the property, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting Real
Property.
1.13 "LLCs and Partnerships" shall have the meaning set forth in Section
3.1 of this Agreement.
1.14 "Negotiable Collateral" means all of a Person's present and future
letters of credit, notes, drafts, instruments, Investment Property, Stock,
documents, personal property leases (wherein such Person is the lessor), chattel
paper, and the Books relating to any of the foregoing.
1.15 "Obligations" shall mean, with respect to each Guarantor and each
Pledgor, its Guaranteed Obligations, as defined in the OPCO Guarantee.
1.16 "Obligor" shall mean any other guarantor, endorser, acceptor, surety
or other person liable on or with respect to any Obligations or who is the owner
of any property which is security for the Obligations, other than a Guarantor.
1.17 "Permits" of a Person shall mean all rights, franchises, permits,
authorities, licenses, certificates of approval or authorizations, including
licenses and other authorizations issuable by a Governmental Authority, which
pursuant to applicable Legal Requirements are necessary to permit such Person
lawfully to conduct and operate its business as currently conducted and to own
and use its assets.
1.18 "Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
1.19 "Pledged Collateral" shall have the meaning set forth in Section 3.1
of this Agreement.
1.20 "Pledged Interests" shall have the meaning set forth in Section 3.1 of
this Agreement.
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1.21 "Pledged Shares" shall have the meaning set forth in Section 3.1 of
this Agreement.
1.22 "Real Property" means any estates or interests in real property
hereafter acquired by any Guarantor.
1.23 "Real Property Collateral" means any Real Property hereafter acquired
by a Guarantor.
1.24 "Securities Act" means the Securities Act of 1933 as amended from time
to time.
1.25 "Stock" means all shares, options, warrants, membership interests,
partnership interests, participations, or other equivalents (regardless of how
designated) of or in a corporation, limited liability company, partnership or
equivalent entity, whether voting or nonvoting, including common stock,
preferred stock, or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the SEC under the
Exchange Act).
1.26 "UCC" and "Uniform Commercial Code" shall mean Uniform Commercial Code
in effect in Illinois.
SECTION 2. GRANT OF SECURITY INTEREST
2.1 Grant of Security Interest. In order to secure prompt repayment of any
and all of its Obligations and in order to secure prompt performance by each
Guarantor of each of its covenants and duties under the Loan Documents to which
it is a party, each Guarantor hereby grants to Foothill continuing Liens on all
right, title, and interest of such Guarantor in and to all currently existing
and hereafter acquired or arising Collateral other than the Real Property
Collateral ("Foothill's Liens"); provided, that if any License by its terms or
by operation of law would become void, voidable, terminable or revocable if
mortgaged, pledged or assigned hereunder or if a security interest therein was
granted hereunder, then such License is expressly excepted and excluded from
Foothill's Liens and from the terms of this Agreement to the extent necessary so
as to avoid such voidness, avoidability, terminability or revocability.
Foothill's Liens in and to the Collateral shall attach to all Collateral without
further act on the part of Foothill or any Person. Except as otherwise provided
in the Loan Agreement, Guarantors are not to dispose of any item or portion of
the Collateral.
2.2 Each Guarantor represents that it has granted mortgages to Foothill
with respect to all real property owned or leased by such Guarantor and listed
on Schedule R-1 to the Loan Agreement. Except as otherwise provided in the Loan
Agreement, each Guarantor agrees that if it ever acquires any Real Property
Collateral it will grant a mortgage to Foothill with respect to such Real
Property Collateral. Guarantors agree that the legal descriptions on any such
mortgages will be complete, accurate and sufficient to transfer the entire
interest of such Guarantor in such Real Property Collateral.
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SECTION 3. PLEDGE OF STOCK AND MEMBERSHIP INTERESTS
3.1 Pledge. In order to secure prompt repayment of any and all of its
Obligations and in order to secure prompt performance by each Pledgor of each of
its covenants and duties under the Loan Documents to which it is a party, each
Pledgor hereby pledges to Foothill, and grants to Foothill, a security interest
in the following collateral (the "Pledged Collateral"):
(a) the shares of stock (the "Pledged Shares") described in Schedule A
hereto next to such Pledgor's name and issued by the corporations listed on
Schedule A (the "Issuers") and the certificates representing the Pledged Shares,
and all dividends, cash, instruments, chattel paper and other rights, property
or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for such Pledged Shares;
(b) all additional shares of stock of the Issuers or any of their
respective Wholly-Owned Subsidiaries, at any time acquired by such Pledgor in
any manner, and the certificates representing such additional shares (any such
additional shares shall constitute part of the Pledged Shares), and all
dividends, cash, instruments, chattel paper, and any other rights, property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for such shares;
(c) all membership interests and all partnership interests (the "Pledged
Interests") described in Schedule B hereto next to such Pledgor's name with
respect to the entities listed on Schedule B (the "LLCs and Partnerships"), and
all cash, securities, distributions, rights and other property at any time and
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such Pledged Interests;
(d) all additional membership interests and all additional partnership
interests in any limited liability companies or partnerships that are
Wholly-Owned Subsidiaries at any time and from time to time acquired by such
Pledgor in any manner, and all cash, securities, distributions, rights and other
property at any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such membership and
partnership interests;
(e) all voting rights of such Pledgor with respect to the Pledged Interests
as set forth in the applicable operating agreement;
(f) all other claims of any kind or nature, and any instruments,
certificates, chattel paper or other writings evidencing such claims, whether in
contract or tort and whether arising by operation of law, consensual agreement
or otherwise, at any time acquired by such Pledgor against the Issuers or any of
their respective Subsidiaries or the LLCs and Partnerships;
(g) all Negotiable Collateral and any hereafter acquired Negotiable
Collateral; and
(h) all Accommodation Collateral as described on Schedule A-1 hereto.
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SECTION 4. COLLATERAL COVENANTS
4.1 Intangible Assets Covenants.
(a) Foothill shall have the right at any time or times, in Foothill's name
or in the name of a nominee of Foothill, to verify the validity, amount or any
other matter relating to any Account or other Collateral, by mail, telephone,
facsimile transmission or otherwise.
(b) Each Guarantor shall deliver or cause to be delivered to Foothill, with
appropriate endorsement and assignment, with full recourse to such Guarantor,
all Negotiable Collateral which such Guarantor now owns or may at any time
acquire immediately upon such Guarantor's receipt thereof, except as Foothill
may otherwise agree.
(c) Foothill may, at any time or times that an Event of Default exists or
has occurred and is continuing, (i) notify any or all account debtors that the
Accounts have been assigned to Foothill and that Foothill has a security
interest therein and Foothill may direct any or all accounts debtors to make
payment of Accounts directly to Foothill, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and Foothill shall not be liable for its failure to collect or enforce
the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Foothill may deem necessary
or desirable for the protection of its interests. At any time that an Event of
Default exists or has occurred and is continuing, at Foothill's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Foothill and are payable
directly and only to Foothill and each applicable Guarantor shall deliver to
Foothill such originals of documents evidencing the sale and delivery of goods
or the performance of services giving rise to any Accounts as Foothill may
require.
4.2 Inventory Covenants. With respect to any Inventory: (a) each Guarantor
shall conduct a physical count of the Inventory at least once each year, but at
any time or times as Foothill may request on or after an Event of Default, and
promptly following such physical inventory shall supply Foothill with a report
in the form and with such specificity as may be reasonably satisfactory to
Foothill concerning such physical count; (b) no Guarantor shall remove any
Inventory from the locations set forth or permitted herein, without the prior
written consent of Foothill, except for sales or use of Inventory in the
ordinary course of such Guarantor's business and except to move Inventory
directly from one location set forth or permitted herein to another such
location; (c) each Guarantor shall produce, use, store and maintain the
Inventory, with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with applicable laws
(including the requirements of the Federal Fair Labor Standards Act of 1938, as
amended and all rules, regulations and orders related thereto); (d) each
Guarantor assumes all responsibility and liability arising from or relating to
the production, use, sale or other disposition of the Inventory; (e) no
Guarantor shall sell Inventory to any customer on approval, or any other basis
which entitles the customer to return or may obligate such
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Guarantor to repurchase such Inventory; (f) each Guarantor shall keep the
Inventory in good condition; and (g) no Guarantor shall, without prior written
notice to Foothill, acquire or accept any Inventory on consignment or approval.
4.3 Equipment Covenants. With respect to the Equipment: (a) upon Foothill's
request, each Guarantor shall, at its expense, at any time or times as Foothill
may request on or after and during the continuation of an Event of Default,
deliver or cause to be delivered to Foothill written reports or appraisals as to
the Equipment in form, scope and methodology acceptable to Foothill and by
appraiser acceptable to Foothill; (b) each Guarantor shall keep the Equipment in
good order, repair, running and marketable condition (ordinary wear and tear
excepted); (c) each Guarantor shall use the Equipment with all reasonable care
and caution and in accordance with applicable standards of any applicable
insurance policy and in conformity with all applicable laws; (d) the Equipment
is and shall be used in each Guarantor's business and not for personal, family,
household or farming use; (e) each Guarantor shall not remove Equipment from the
locations set forth or permitted herein, except to the extent necessary to have
such Equipment repaired or maintained in the ordinary course of the business of
such Guarantor or to move Equipment directly from one location set forth or
permitted herein to another such location and except for the movement of motor
vehicles used by or for the benefit of such Guarantor in the ordinary course of
business; (f) the Equipment is now and shall remain personal property and each
Guarantor shall not permit any of the Equipment to be or become a part of or
affixed to real property; and (g) each Guarantor assumes all responsibility and
liability arising from the use of the Equipment.
4.4 Maintenance of Property. Each Guarantor agrees to keep all property
useful and necessary to its business in good working order and condition
(ordinary wear and tear excepted) in accordance with past operating practices
and not to commit or suffer any waste with respect to any of its properties.
4.5 Power of Attorney. Each Guarantor hereby irrevocably designates and
appoints Foothill (and all persons designated by Foothill) as such Guarantor's
true and lawful attorney-in-fact, and authorizes Foothill, in such Guarantor's
or Foothill's name, to, at any time an Event of Default, or an event which with
notice or passage of time or both would constitute an Event of Default, exists
or has occurred and is continuing, or Foothill in good faith believes that an
Event of Default has occurred and is continuing (i) demand payment on Accounts
or other proceeds of Inventory or other Collateral, (ii) enforce payment of
Accounts by legal proceedings or otherwise, (iii) exercise all of such
Guarantor's rights and remedies to collect any Account or other Collateral, (iv)
sell or assign any Account upon such terms, for such amount and at such time or
times as Foothill deems advisable, (v) settle, adjust, compromise, extend or
renew an Account, (vi) discharge and release any Account, (vii) prepare, file
and sign such Guarantor's name on any proof of claim in bankruptcy or other
similar document against an account debtor, (viii) notify the post office
authorities to change the address for delivery of such Guarantor's mail to an
address designated by Foothill, and open and dispose of all mail addressed to
such Guarantor, and (ix) do all acts and things which are necessary, in
Foothill's determination, to fulfill such Guarantor's obligations under this
Agreement and the other Loan Documents (x) take control in any manner of any
item of payment or proceeds thereof, (xi) have access to any lockbox or postal
box into which such Guarantor's mail is deposited, (xii) endorse such
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Guarantor's name upon any items of payment or proceeds thereof and deposit the
same in Foothill's account for application to the Obligations, (xiii) endorse
such Guarantor's name upon any chattel paper, document, instrument, invoice, or
similar document or agreement relating to any Account or any goods pertaining
thereto or any other Collateral, (xiv) sign such Guarantor's name on any
verification of Accounts and notices thereof to account debtors and (xv) execute
in such Guarantor's name and file any UCC financing statements or amendments
thereto. Each Guarantor hereby releases Foothill and its officers, employees and
designees from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except
as a result of Foothill's own gross negligence or willful misconduct as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Each Pledgor hereby irrevocably designates and appoints Foothill
(and all persons designated by Foothill) as such Pledgor's true and lawful
attorney-in-fact effective upon the occurrence of an Event of Default, with full
authority in the place and stead of such Pledgor and in the name of such Pledgor
or otherwise, from time to time in Foothill's discretion to take any action and
to execute any instrument which Foothill may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to such Pledgor
representing any dividend or other distribution in respect of the Pledged
Collateral or any part thereof. Foothill agrees to promptly advise Guarantors of
any actions taken by Foothill utilizing the power of attorney granted hereby.
4.6 Right to Cure. Foothill may, at its option, (a) cure any default by a
Guarantor under any agreement with a third party or pay or bond on appeal any
judgment entered against such Guarantor, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in Foothill's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Foothill with respect
thereto. Such Guarantor shall have a three (3) Business Day grace period within
which to repay Foothill for any amounts so expended, after which Foothill may
add any such amounts to the Obligations and charge such Guarantor's account
therefor, such amounts to be repayable by such Guarantor on demand. Foothill
shall be under no obligation to effect such cure, payment or bonding and shall
not, by doing so, be deemed to have assumed any obligation or liability of such
Guarantor. Any payment made or other action taken by Foothill under this Section
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed accordingly.
4.7 Access to Premises. From time to time as requested by Foothill, at the
cost and expense of the applicable Guarantor, (a) Foothill or its designee shall
have complete access to all of such Guarantor's premises during normal business
hours and after notice to such Guarantor, or at any time and without notice to
such Guarantor if an Event of Default exists or has occurred and is continuing,
for the purposes of inspecting, verifying and auditing the Collateral and all of
such Guarantor's books and records, including the Records, and (b) such
Guarantor shall promptly furnish to Foothill such copies of such books and
records or extracts therefrom as Foothill may request, and (c) use during normal
business hours such of such Guarantor's personnel, supplies and premises as may
be reasonably necessary for the foregoing and if an Event of Default exists or
has occurred and is continuing for the collection of Accounts and realization of
other Collateral.
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4.8 Delivery of Pledged Collateral. Except as otherwise provided in Section
4.2 of the Loan Agreement, all certificates or instruments representing or
evidencing the Pledged Collateral shall be delivered to and held by or on behalf
of Foothill pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Foothill.
Foothill shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF GUARANTORS
Each Guarantor hereby represents and warrants to Foothill the following
(which shall survive the execution and delivery of this Agreement):
5.1 Corporate Existence, Power and Authority; Subsidiaries. Such Guarantor
is a corporation duly organized, or a limited liability company or limited
partnership duly formed, and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation, limited liability
company or limited partnership and in good standing in all states or other
jurisdictions where the nature and extent of the business transacted by it or
the ownership of assets makes such qualification necessary, except for those
jurisdictions in which the failure to so qualify would not have a material
adverse effect on such Guarantor's financial condition, results of operation or
business or the rights of Foothill in or to any of the Collateral. The
execution, delivery and performance of this Agreement, the other Loan Documents
to which such Guarantor is a party, and the transactions contemplated hereunder
and thereunder are all within such Guarantor's corporate, limited liability
company or limited partnership powers, have been duly authorized and are not in
contravention of law or the terms of such Guarantor's certificate of
incorporation or formation, by-laws or operating agreement, or other
organizational documentation, or any indenture, agreement or undertaking to
which such Guarantor is a party or by which such Guarantor or its property are
bound. This Agreement and the other Loan Documents to which such Guarantor is a
party, constitute legal, valid and binding obligations of such Guarantor and are
enforceable in accordance with their respective terms. Such Guarantor does not
have any Wholly-Owned Subsidiaries or any directly owned Unrestricted
Subsidiaries except as set forth on Schedules A, A-1 and B hereto.
5.2 Limited Business Activities; Financial Statements; No Material Adverse
Change. Such Guarantor does not and has not during the past three (3) year
period conducted any active trade or business other than a Permitted Business.
All unaudited financial statements relating to such Guarantor which have been or
may hereafter be delivered by such Guarantor to Foothill have been prepared in
accordance with GAAP and fairly present the financial condition and the results
of operations of such Guarantor as at the dates and for the periods set forth
therein. There has been no material adverse change in the assets, liabilities,
properties and condition, financial or otherwise, of such Guarantor since the
date of the most recent unaudited financial statements furnished by such
Guarantor to Foothill prior to the date hereof.
5.3 Chief Executive Office; Collateral Locations. The chief executive
office of such Guarantor and such Guarantor's Records concerning Accounts are
located only at the address set forth on Schedule 5.7 to the Loan Agreement for
such Guarantor and its only other places
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of business and the only other locations of Collateral, if any, are as set forth
on Schedule 6.12 to the Loan Agreement, subject to the right of such Guarantor
to establish new locations in accordance with Section 7.2 below. Schedules 5.3
and R-1 to the Loan Agreement correctly identifies any of such locations which
are not owned by such Guarantor and sets forth the owners and/or operators
thereof, and to the best of such Guarantor's knowledge, the holders of any
mortgages on such locations.
5.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Foothill under this Agreement constitute valid and perfected
first priority liens and security interests in and upon the Collateral subject
only to the Permitted Liens. Such Guarantor has good and marketable title to all
of its properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except those granted to Foothill
and Permitted Liens.
5.5 Tax Returns. Such Guarantor has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to be
filed by it. All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Such Guarantor has paid or
caused to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Guarantor and with respect to which adequate reserves have
been set aside on its books. Adequate provision has been made for the payment of
all accrued and unpaid Federal, State, municipal, county, local, foreign and
other taxes whether or not yet due and payable and whether or not disputed.
5.6 Litigation. Except as set forth on Schedule 5.10 to the Loan Agreement,
there is no present investigation by any governmental agency pending, or to the
best of such Guarantor's knowledge threatened, against or affecting such
Guarantor, its assets or business and there is no action, suit, proceeding or
claim by any Person pending, or to the best of such Guarantor's knowledge
threatened, against such Guarantor or its assets or goodwill, or against or
affecting any transactions contemplated by this Agreement, which if adversely
determined against such Guarantor would result in any material adverse change in
the assets, business or prospects of such Guarantor or which would impair the
ability of such Guarantor to perform its obligations hereunder or under any of
the other Loan Documents to which it is a party or of Foothill to enforce the
Obligations or realize upon any Collateral.
5.7 Compliance with Other Agreements and Applicable Laws. Such Guarantor is
not in default in any material respect under, or in violation in any material
respect of any of the terms of, any agreement, contract, instrument, lease or
other commitment to which it is a party or by which it or any of its assets are
bound and to such Guarantor's knowledge, such Guarantor is in compliance in all
material respects with all applicable provisions of laws, rules, regulations,
licenses, permits, approvals and orders of any foreign, Federal, State or local
governmental authority.
5.8 Bank Accounts. Guarantors have previously provided to Foothill a list
of all of the deposit accounts, investment accounts or other accounts in the
name of or used by such Guarantor maintained at any bank or other financial
institution.
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5.9 Intellectual Property. No Guarantor owns any Intellectual Property.
Each Guarantor agrees to promptly notify Foothill upon obtaining rights in any
Intellectual Property and to comply with the provisions of the Loan Agreement
with respect thereto.
5.10 Accuracy and Completeness of Information. All information furnished by
or on behalf of such Guarantor in writing to Foothill in connection with this
Agreement or any of the other Loan Documents or any transaction contemplated
hereby or thereby is true and correct in all material respects on the date as of
which such information is dated or certified and does not omit any material fact
necessary in order to make such information not misleading. No event or
circumstance has occurred which has had or could reasonably be expected to have
a material adverse affect on the business, assets or prospects of such
Guarantor, which has not been fully and accurately disclosed to Foothill in
writing.
5.11 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement shall survive the execution and delivery of this
Agreement and shall be deemed to have been made again to Foothill on the date of
each additional borrowing or other credit accommodation under the Loan Agreement
and shall be conclusively presumed to have been relied on by Foothill regardless
of any investigation made or information possessed by Foothill. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which such Guarantor shall
now or hereafter give, or cause to be given, to Foothill.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF PLEDGORS
Each Pledgor represents and warrants as follows:
6.1 As of the Closing Date, Schedule A hereto truly and accurately sets
forth the number of the issued and outstanding shares owned by each Pledgor of
the capital stock of each of the Issuers and Schedule B hereto truly and
accurately sets forth the percentage of the membership interests or partnership
interests held by each Pledgor in each of the LLCs and Partnerships. The Pledged
Shares constitute 100 percent of the issued and outstanding shares of stock of
the Issuers and there are no outstanding warrants, options, subscriptions or
other contractual arrangements for the purchase of any other shares of stock or
any securities convertible into shares of stock of any Issuer. The Pledged
Interests together with the Pledged Interests (as defined in the Manager
Subsidiaries General Security and Pledge Agreement) constitute 100% of the
membership interests and partnership interests of the LLCs and Partnerships.
6.2 The delivery of the Pledged Shares to Foothill pursuant to this
Agreement and the filing of the financing statement(s), which have been
delivered to Foothill prior to the date hereof, in the offices shown thereon,
create a valid and perfected first priority security interest in the Pledged
Collateral (other than cash not in the possession of Foothill), securing the
payment of such Pledgor's Obligations.
6.3 Except for consents, approvals and authorizations received on or before
the date hereof and as described under Section 8.3 hereof, no consent of any
other party (including,
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without limitation, any stockholder or creditor of any Pledgor) and no approval
by a Governmental Authority is required either (i) for the pledge by each
Pledgor of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by each Pledgor or (ii) for
the exercise by Foothill of the voting or other rights provided for in this
Agreement or the remedies in respect of the Pledged Collateral pursuant to this
Agreement (except as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally).
6.4 None of the Pledged Shares constitutes margin stock, as defined in
Regulation U of the Board of Governors of the Federal Reserve System.
6.5 No Pledgor owns any share of capital stock of any Wholly-Owned
Subsidiary or any directly-owned Unrestricted Subsidiary other than the Issuers
and the Unrestricted Subsidiaries described on Schedule A-1 or has a membership
interest or partnership interest in any Wholly-Owned Subsidiary or any
directly-owned Unrestricted Subsidiary other than the LLCs and Partnerships and
the Unrestricted Subsidiaries described on Schedule A-1.
6.6 Each Pledgor is and will be the sole beneficial owner of its Pledged
Collateral, free and clear of any adverse claim and any Lien other than
Permitted Liens and the Liens in favor of Foothill under this Agreement and
other Loan Documents.
6.7 Each Pledgor has full power and authority and legal right to grant the
security interest in its Pledged Shares and Pledged Interests as provided in
this Agreement.
6.8 Pledged Shares of each Issuer forming part of the Pledged Collateral
are and will continue to be validly issued, fully paid and non-assessable.
SECTION 7. AFFIRMATIVE AND NEGATIVE COVENANTS
7.1 Maintenance of Limited Business Activities and Corporate Existence.
Each Guarantor shall at all times (a) continue to limit its business activities
to Permitted Businesses, (b) notify Foothill in writing within three (3) days of
such Guarantor's having in any way acquired any ownership interest in any
material new asset or become liable for any material new obligation (other than
non-contractual obligations where such Guarantor is jointly and severally liable
with Borrower), and (c) preserve, renew and keep in full force and effect its
corporate, limited liability company or limited partnership existence and rights
and franchises with respect thereto and maintain in full force and effect all
permits, licenses, trademarks, tradenames, approvals, authorizations, leases and
contracts necessary to carry on the business as presently or proposed to be
conducted. Each Guarantor shall give Foothill fifteen (15) days prior written
notice of any proposed change in its name, which notice shall set forth the new
name and such Guarantor shall deliver to Foothill a copy of the amendment to the
Certificate or Articles of Incorporation or Formation of such Guarantor
providing for the name change certified by the Secretary of State of the
jurisdiction of incorporation of formation of such Guarantor as soon as it is
available.
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7.2 Loan Agreement. Each Guarantor acknowledges and agrees that it will
comply with all covenants, agreements and obligations applicable to such
Guarantor which are stated in the Loan Agreement.
7.3 Costs and Expenses. Each Guarantor shall pay to Foothill on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of, with respect to such
Person, the Obligations, Foothill's rights in the Collateral, the Pledged
Collateral, this Agreement, the other Loan Documents and all other documents
related hereto or thereto, including any amendments, supplements or consents
which may hereafter be contemplated (whether or not executed) or entered into in
respect hereof and thereof, including: (a) all costs and expenses of filing or
recording (including Uniform Commercial Code financing statement filing taxes
and fees, documentary taxes, intangibles taxes and mortgage recording taxes and
fees, if applicable); (b) insurance premiums, appraisal fees and search fees;
(c) costs and expenses of preserving and protecting the Collateral or the
Pledged Collateral; (d) costs and expenses paid or incurred in connection with
obtaining payment of the Obligations, enforcing the security interests and liens
of Foothill, selling or otherwise realizing upon the Collateral or the Pledged
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Loan Documents or defending any claims made or threatened against Foothill
arising out of the transactions contemplated hereby and thereby (including
preparations for and consultations concerning any such matters); and (e) the
fees and disbursements of counsel (including legal assistants) to Foothill in
connection with any of the foregoing.
7.4 Further Assurances. At the request of Foothill at any time and from
time to time, each Guarantor shall, at its expense, at any time or times duly
execute and deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such further
acts as may be necessary or proper to evidence, perfect, maintain and enforce
the security interests and the priority thereof in the Collateral and the
Pledged Collateral and to otherwise effectuate the provisions or purposes of
this Agreement or any of the other Loan Documents. Where permitted by law, each
Guarantor hereby authorizes Foothill to execute and file one or more UCC
financing statements signed only by Foothill.
7.5 Transfers and Other Liens. Each Pledgor agrees that it will not, except
as permitted by the Loan Documents, (i) sell or otherwise dispose of, or grant
any option with respect to, any of the Pledged Collateral, (ii) create or permit
to exist any Lien upon or with respect to any of the Pledged Collateral except
pursuant to this Agreement, or (iii) enter into any other contractual
obligations which may restrict or inhibit Foothill's rights or ability to sell
or otherwise dispose of the Pledged Collateral or any part thereof after the
occurrence and during the continuance of an Event of Default.
7.6 Additional Shares. Each Pledgor agrees that it will (i) cause the
Issuers not to issue any stock or other securities (including any warrants,
options, subscriptions or other contractual arrangements for the purchase of
stock or securities convertible into stock) in addition to or in substitution
for the Pledged Shares except to such Pledgor to the extent expressly permitted
by the Loan Agreement, (ii) cause the LLCs and Partnerships not to create any
membership interests or partnership interests in addition to or in substitution
for the Pledged
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Interests, except to the extent such interests will be held by such Pledgor to
the extent expressly permitted by the Loan Agreement, and (iii) deliver
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all writings evidencing any additional Pledged Shares or Pledged
Interests. Each Pledgor hereby authorizes Foothill to modify this Agreement by
unilaterally amending Schedule A or Schedule B to include such shares of stock
or other securities or interests.
SECTION 8. VOTING RIGHTS; DIVIDENDS
8.1 So long as no Event of Default shall have occurred:
(a) Each Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the Loan
Agreement; provided, however, that each Pledgor shall not exercise or refrain
from exercising any such right if such action or inaction would result in an
Event of Default under the Loan Agreement.
(b) Foothill shall execute and deliver (or cause to be executed and
delivered) to each Pledgor all such proxies and other instruments as such
Pledgor may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to paragraph (a) above.
8.2 Subject to Sections 8.3 and 10.3 hereof, upon the occurrence and during
the continuation of an Event of Default:
(a) All rights of each Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to Section
8.1(a) shall cease upon notice to such Pledgor by Foothill of such Event of
Default, and all such rights shall, upon notice by Foothill to the Pledgor,
become vested in Foothill who shall thereupon have the sole right to exercise
such voting and other consensual rights.
(b) All cash dividends and other cash distributions paid or payable with
respect to any of the Pledged Collateral and any and all instruments and other
property (other than cash or checks) received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral, shall be,
and shall be forthwith delivered to Foothill to hold as Pledged Collateral and
shall, if received by a Pledgor, be received in trust for the benefit of
Foothill, be segregated from the other property or funds of such Pledgor, and be
forthwith delivered to Foothill as Pledged Collateral in the same form as so
received (with any necessary endorsement).
8.3 Notwithstanding anything herein to the contrary, to the extent that the
prior consent of the FCC shall be required under then-applicable law, Foothill
agrees not to exercise the rights granted hereunder to foreclose or otherwise
dispose of the Pledged Shares or Pledged Interests unless and until the FCC
shall have granted its prior consent with respect thereto. So long as no Event
of Default shall have occurred and be continuing, the certificates representing
such Pledged Shares or Pledged Interests shall remain in the name of the
pledgors thereof and
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such pledgors shall have and exercise all rights of ownership, including the
right to vote such Pledged Shares or Pledged Interests. Upon the occurrence and
during the continuance of an Event of Default and following notice being given
pursuant to 8.2(a) hereof, in addition to the other remedies provided for in
this Agreement, Foothill or its nominee shall be entitled, subject to the prior
approval of the FCC to the extent required, to transfer to or register the
Pledged Shares or Pledged Interests in the name of Foothill or its nominee, and
to vote and exercise all of the power of an owner with respect to such Pledged
Shares or Pledged Interests.
SECTION 9. FOOTHILL'S DUTIES; REASONABLE CARE
9.1 Foothill's Duties; Reasonable Care. The powers conferred on Foothill
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty on it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for monies actually
received by it hereunder, Foothill shall have no duty as to any Collateral.
Foothill shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment that is not materially less protective to that which Foothill accords
its own property, it being expressly agreed that Foothill shall not have
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not Foothill has or is deemed to have knowledge of such
matters, or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Collateral, but Foothill may do so at its option and
all expenses incurred in connection therewith shall be payable by and for the
sole account of the applicable Guarantor.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The failure of any Guarantor promptly to perform
any of its duties or agreements hereunder or under its guarantee or the
occurrence or existence and continuation of any Event of Default under the Loan
Agreement shall be referred to herein individually as an "Event of Default," and
collectively as "Events of Default."
10.2 Remedies and Subordination of Subrogation and other Rights. Subject to
Section 10.3 hereof,
(a) At any time an Event of Default exists or has occurred and is
continuing, Foothill shall have all rights and remedies provided in this
Agreement, the other Loan Documents, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by any Guarantor or any Obligor, except as such notice or consent
is expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Foothill hereunder, under any of the other Loan
Documents, the Uniform Commercial Code or other applicable law, are cumulative,
not exclusive and enforceable, in Foothill's discretion, alternatively,
successively, or concurrently on any one or more occasions, and shall include,
without limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by a Guarantor of this Agreement or any
of the other Loan Documents. Foothill may, at any time or times, proceed
16
directly against any Guarantor or any Obligor to collect the Obligations without
prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default exists
or has occurred and is continuing, Foothill may, in its discretion and without
limitation, (i) accelerate the payment of all Obligations and demand immediate
payment thereof to Foothill (provided, that, upon the occurrence of any Event of
Default described in Sections 8.5 and 8.6 of the Loan Agreement, all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of such
Collateral or complete processing, manufacturing and repair of all or any
portion of such Collateral, (iii) require each Guarantor, at such Guarantor's
expense, to assemble and make available to Foothill any part or all of such
Collateral at any place and time designated by Foothill, (iv) collect,
foreclose, receive, appropriate, setoff and realize upon any and all Collateral,
(v) remove any or all of such Collateral from any premises on or in which the
same may be located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, (vi) sell, lease, transfer,
assign, deliver or otherwise dispose of any and all Collateral (including
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Foothill or elsewhere) at such prices
or terms as Foothill may deem reasonable, for cash, upon credit or for future
delivery, with Foothill having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of any Guarantor, which right or equity of
redemption is hereby expressly waived and released by each Guarantor. Each
Guarantor acknowledges and agrees that any such private sale may result in
prices and other terms less favorable to the seller than if such sale were a
public sale. If any of the Collateral is sold or leased by Foothill upon credit
terms or for future delivery, the Obligations shall not be reduced as a result
thereof until payment therefor is finally collected by Foothill. If notice of
disposition of Collateral is required by law, ten (10) days prior notice by
Foothill to the appropriate Guarantor designating the time and place of any
public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and each Guarantor waives any other notice. Foothill shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Foothill may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. In
the event Foothill institutes an action to recover any Collateral or seeks
recovery of any Collateral by way of prejudgment remedy, each Guarantor waives
the posting of any bond which might otherwise be required.
(c) At any time an Event of Default exists or has occurred and is
continuing, Foothill may apply any cash held by Foothill as Pledged Collateral
and the cash proceeds of Collateral actually received by Foothill from any sale,
lease, foreclosure or other disposition of or realization upon the Collateral to
payment of the Obligations, in whole or in part and in such order as Foothill
may elect, whether or not then due, and in the event that any Guarantor shall at
any time have any right of contribution against any Borrower or any other right
to receive a payment that is owed to such Guarantor by such Borrower or any
other Obligor, such rights are hereby subordinated in right of payment to the
indefeasible payment in full to Foothill of all
17
obligations or indebtedness owing to Foothill under the Loan Agreement and all
such amounts and any security and guarantees therefor are hereby assigned to
Foothill as additional security for the Obligations. Each Guarantor shall remain
liable to Foothill for the payment of any deficiency with interest at the
highest rate provided for in the Loan Agreement and all costs and expenses of
collection or enforcement, including attorneys' fees and legal expenses. Any
surplus of such cash or cash proceeds held by Foothill and remaining after
payment in full of all the Obligations shall be paid over to the appropriate
Guarantor or to whomsoever may be lawfully entitled to receive such surplus or
as a court of competent jurisdiction may direct.
10.3 Notwithstanding the foregoing or anything to the contrary contained in
this Agreement, Foothill agrees not to exercise any rights or remedies with
respect to the Accommodation Collateral until the date which is six (6) months
after the date on which an Event of Default has occurred (provided that on such
six (6) month date such Event of Default is continuing and has not otherwise
been waived or cured to the satisfaction of Foothill).
SECTION 11. REGISTRATION RIGHTS AND OTHER SALE PROCEDURES
11.1 If Foothill shall determine to exercise its right to sell all or any
of the Pledged Collateral pursuant to Section 10, each Pledgor agrees that, upon
request of Foothill, such Pledgor will, at its own expense:
(a) execute and deliver, and cause each issuer of the Pledged Collateral
contemplated to be sold and the directors and officers thereof to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts and things, as may be necessary or, in the opinion of Foothill,
advisable to register such Pledged Collateral under the provisions of the
Securities Act, and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of Foothill, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Pledged Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary Governmental Approvals
for the sale of the Pledged Collateral, as requested by Foothill;
(c) cause the issuers of the Pledged Collateral to make available to their
respective security holders, as soon as practicable, an earnings statement which
will satisfy the provisions of Section 11(a) of the Securities Act and
applicable regulations thereunder; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law.
11.2 Each Pledgor further acknowledges the impossibility of ascertaining
the amount of damages which would be suffered by Foothill by reason of the
failure by such Pledgor to
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perform any of the covenants contained in this Section and, consequently, agrees
that, if such Pledgor shall fail to perform any of such covenants, it shall pay,
as liquidated damages and not as a penalty, an amount equal to the value of the
Pledged Collateral (assuming it were sold pursuant to the request hereunder) on
the date Foothill shall demand compliance with this Section.
11.3 Notwithstanding the foregoing, each Pledgor recognizes that Foothill
may be unable to effect a public sale of all or part of the Pledged Collateral
and may be compelled to resort to one or more private sales to a restricted
group of purchasers who will be obligated to agree, among other things, to
acquire such Pledged Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges
that any such private sales may be at places and on terms less favorable to the
seller than if sold at public sales and agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner, and that Foothill
has no obligation to delay sale of any such Pledged Collateral for the period of
time necessary to permit the issuers of such Pledged Collateral to register such
Pledged Collateral for public sale under the Securities Act. Each Pledgor
further acknowledges that Foothill shall be under no obligation to delay a sale
of any of the Pledged Shares for the period of time necessary to permit the
issuing corporation of such securities to register such securities for public
sale under the Securities Act, or under applicable state or provincial
securities laws, even if the issuing corporation would agree to do so.
11.4 If Foothill shall determine to exercise its right to sell all or any
of the Pledged Collateral through a private sale, each Pledgor agrees that, upon
request of Foothill, such Pledgor will, and shall cause the Issuer of its
Pledged Shares to, at such Pledgor's and Issuer's own expense:
(a) hire an investment banker, selected by Foothill in Foothill's sole
discretion, and any other Persons as Foothill or such investment banker shall
designate;
(b) cooperate fully with Foothill and such investment banker to prepare all
books, records, financial statements and all other documents and information as
shall be required by Foothill and such investment banker (collectively, the "Due
Diligence Materials");
(c) maintain the Due Diligence Materials at any reasonable location
designated by Foothill and such investment banker for disclosure to third
parties;
(d) provide any prospective acquiror (and persons designated by such
acquiror) with complete and unrestricted access to all Due Diligence Materials;
(e) provide Foothill, such investment banker, any potential acquiror, and
their respective designees with reasonable access to any of such Issuer's
officers, directors, employees or other Persons associated with such Issuer in
connection with any matters deemed relevant by Foothill, such investment banker,
such potential acquiror or their respective designees; and
(f) cooperate fully with all reasonable requests by Foothill and such
investment banker to assist in Foothill's exercise of its right to sell the
Pledged Shares.
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Each Pledgor acknowledges and understands that any such lack of cooperation may
affect Foothill's ability to obtain the best price for such Pledgor's Pledged
Shares. Each Pledgor further acknowledges and understands that Foothill has no
duty to obtain the best price for such Pledged Shares.
SECTION 12. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
12.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement and the
other Loan Documents and any dispute arising out of the relationship between the
parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of Illinois (without giving effect to
principles of conflicts of law).
(b) Each Guarantor irrevocably consents and submits to the non-exclusive
jurisdiction of the courts of the State of Illinois and the United States
District Court for the Northern District of Illinois and waives any objection
based on venue or forum non conveniens with respect to any action instituted
therein arising under this Agreement or any of the other Loan Documents or in
any way connected or related or incidental to the dealings of such Guarantor and
Foothill in respect of this Agreement or the other Loan Documents or the
transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and whether in contract, tort, equity or otherwise, and
agrees that any dispute with respect to any such matters shall be heard only in
the courts described above (except that Foothill shall have the right to bring
any action or proceeding against any Guarantor or its property in the courts of
any other jurisdiction which Foothill deems necessary or appropriate in order to
realize on the Collateral or the Pledged Collateral or to otherwise enforce its
rights against such Guarantor or its property).
(c) Each Guarantor hereby waives personal service of any and all process
upon it and consents that all such service of process may be made by certified
mail (return receipt requested) directed to its address set forth on the
signature pages hereof and service so made shall be deemed to be completed five
(5) days after the same shall have been so deposited in the U.S. mails, or, at
Foothill's option, by service upon such Guarantor in any other manner provided
under the rules of any such courts. Within thirty (30) days after such service,
such Guarantor shall appear in answer to such process, failing which such
Guarantor shall be deemed in default and judgment may be entered by Foothill
against such Guarantor for the amount of the claim and other relief requested.
(d) EACH GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF SUCH GUARANTOR AND FOOTHILL IN RESPECT OF THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE. EACH GUARANTOR
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HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT SUCH GUARANTOR OR
FOOTHILL MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH GUARANTOR AND FOOTHILL TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Foothill shall not have any liability to any Guarantor (whether in
tort, contract, equity or otherwise) for losses suffered by such Guarantor in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Foothill that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Foothill shall be entitled to the benefit of
the rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement and the
other Loan Documents.
(f) Each Guarantor hereby expressly waives all rights of notice and hearing
of any kind prior to the exercise of rights by Foothill from and after the
occurrence and during the continuation of an Event of Default to repossess the
Collateral with judicial process or to replevy, attach or levy upon the
Collateral or other security for the Obligations. Each Guarantor waives the
posting of any bond otherwise required of Foothill in connection with any
judicial process or proceeding to obtain possession of, replevy, attach or levy
upon the Collateral or other security for the Obligations, to enforce any
judgment or other court order entered in favor of Foothill, or to enforce by
specific performance, temporary restraining order, preliminary or permanent
injunction, the Loan Agreement or any other Loan Document.
12.2 Waiver of Notices. Each Guarantor hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations, the Collateral, or the Pledged Collateral, and any and all
other demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral, or the Pledged Collateral and this Agreement,
except such as are expressly provided for herein. No notice to or demand on any
Guarantor which Foothill may elect to give shall entitle such Guarantor to any
other or further notice or demand in the same, similar or other circumstances.
12.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Foothill, and as to amendments, as also signed by an authorized officer of each
Guarantor. Foothill shall not, by any act, delay, omission or otherwise be
deemed to have expressly or impliedly waived any of its rights, powers and/or
remedies unless such waiver shall be in writing and signed by an authorized
officer of Foothill. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Foothill of any right, power and/or
remedy on any one occasion shall not be construed as a bar to or waiver of any
such right, power and/or remedy which Foothill would otherwise have on any
future occasion, whether similar in kind or otherwise.
21
12.4 Waiver of Counterclaims. Each Guarantor waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral, the Pledged Collateral or any matter
arising therefrom or relating hereto or thereto.
12.5 Indemnification. Each Guarantor shall indemnify and hold Foothill, and
its directors, Foothills, employees and counsel, harmless from and against any
and all losses, claims, damages, liabilities, costs or expenses imposed on,
incurred by or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Loan Documents, or any undertaking
or proceeding related to any of the transactions contemplated hereby or any act,
omission, event or transaction related or attendant thereto, including amounts
paid in settlement, court costs, and the fees and expenses of counsel. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section may be unenforceable because it violates any law or public policy,
each Guarantor shall pay the maximum portion which it is permitted to pay under
applicable law to Foothill in satisfaction of indemnified matters under this
Section. The foregoing indemnity shall survive the payment of the Obligations,
the termination of this Agreement and the termination or non-renewal of the Loan
Agreement.
SECTION 13. MISCELLANEOUS
13.1 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Foothill at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Business Finance Division
Manager, and to each Guarantor and each Pledgor at the notice address of
Borrower set forth in the Loan Agreement, or to such other address as such party
may designate by written notice to the other in accordance with this provision,
and (b) deemed to have been given or made: if delivered in person, immediately
upon delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next business day, one (1)
business day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing.
13.2 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.3 Successors. This Agreement, the other Loan Documents and any other
document referred to herein or therein shall be binding upon each Guarantor and
its successors and assigns and inure to the benefit of and be enforceable by
Foothill and its successors and assigns, except that such Guarantor may not
assign its rights under this Agreement, the other Loan Documents and any other
document referred to herein or therein without the prior written consent of
Foothill.
22
13.4 Entire Agreement. This Agreement, the other Loan Documents, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
[Signature Page Follows]
23
IN WITNESS WHEREOF, each Guarantor and each Pledgor has caused these
presents to be duly executed as of the day and year first above written.
▇▇▇▇▇ RADIO, INC.
By:_________________________________________
a duly authorized officer
READING RADIO, INC.
By:_________________________________________
a duly authorized officer
TRI-STATE BROADCASTING, INC.
By:_________________________________________
a duly authorized officer
NORTHERN COLORADO HOLDINGS, LLC
By: Northern Colorado Holdings Management,
Inc., its manager
By:_________________________________________
a duly authorized officer
NCH II, LLC
By: NCR II, Inc., its manager
By:_________________________________________
a duly authorized officer
S-1
NCR III, LLC
By: NCR II, Inc., its manager
By:_________________________________________
a duly authorized officer
NORTHERN COLORADO RADIO, INC.
By:_________________________________________
a duly authorized officer
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
▇▇ ▇▇, Inc.
By:_________________________________________
a duly authorized officer
S-2
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
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.
By:_________________________________________
a duly authorized officer
HURON HOLDINGS, LLC
By: Huron Holdings Management, Inc., its
manager
By:_________________________________________
a duly authorized officer
S-3
HURON NEWSPAPERS, LLC
By: Huron Newspapers Management, Inc., its
manager
By:_________________________________________
a duly authorized officer
HURON P.S. LLC
By: Huron P.S. Management, Inc., its manager
By:_________________________________________
a duly authorized officer
ST. ▇▇▇▇▇ 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
▇▇▇▇▇ NEWSPAPERS, INC.
By:_________________________________________
a duly authorized officer
S-4
CMN HOLDING, INC.
By:_________________________________________
a duly authorized officer
CENTRAL MICHIGAN NEWSPAPERS, INC.
By:_________________________________________
a duly authorized officer
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
S-5
CMN ASSOCIATED PUBLICATIONS, INC.
By:_________________________________________
a duly authorized officer
CENTRAL MICHIGAN DISTRIBUTION CO., INC.
By:_________________________________________
a duly authorized officer
S-6
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the General
Security and Pledge Agreement dated as of October 25, 1999 (the "Agreement"),
made by the "Guarantors" named therein for the benefit of Foothill Capital
Corporation, as Foothill for lenders ("Foothill"). The undersigned agrees for
the benefit of Foothill as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The terms of Sections 8, 10.2 and 11 of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of the
undersigned pursuant to Sections 8, 10.2 and 11 of the Agreement.
GRAND TRAVERSE NEWSPAPERS, LLC
By: Grand Traverse Newspapers Management,
Inc., its manager
By:_________________________________________
a duly authorized officer
NMG HOLDINGS, LLC
By: NMG Holdings Management, Inc., its
manager
By:_________________________________________
a duly authorized officer
NB III HOLDINGS, LLC
By: NB III Management, Inc., its manager
By:_________________________________________
a duly authorized officer
NCR III, LLC
By: NCR II, Inc., its manager
By:_________________________________________
a duly authorized officer
NORTHLAND BROADCASTING, LLC
By: Northland Broadcasting 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
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 NEWSPAPERS, LLC
By: Huron Newspapers Management, Inc., its
manager
By:_________________________________________
a duly authorized officer
HURON P.S. LLC
By: Huron P.S. Management, Inc., its manager
By:_________________________________________
a duly authorized officer
CENTRAL MICHIGAN DISTRIBUTION CO., LP
By: Central Michigan Distribution Co., Inc.,
its manager
By:_________________________________________
a duly authorized officer
GRAND TRAVERSE NEWSPAPERS MANAGEMENT, INC.
By:_________________________________________
a duly authorized officer
NMG HOLDINGS MANAGEMENT, INC.
By:_________________________________________
a duly authorized officer
NB III HOLDINGS MANAGEMENT, INC.
By:_________________________________________
a duly authorized officer
READING RADIO, INC.
By:_________________________________________
a duly authorized officer
CMN HOLDING, INC.
By:_________________________________________
a duly authorized officer
CENTRAL MICHIGAN NEWSPAPERS, INC.
By:_________________________________________
a duly authorized officer
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
SCHEDULE A-1
[Attach from Loan Agreement]
