EXECUTION COPY
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GUARANTY
Dated as of August 31, 1999
from
U-C HOLDINGS, L.L.C.,
as Guarantor,
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in favor of
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent
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and
THE LENDERS PARTY TO THE CREDIT AGREEMENT
REFERRED TO HEREIN
TABLE OF CONTENTS
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Page
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SECTION 1. Definitions..................................................... 1
SECTION 2. Guaranty........................................................ 1
SECTION 3. Guaranty Absolute............................................... 2
SECTION 4. Reinstatement................................................... 3
SECTION 5. Waivers......................................................... 4
SECTION 6. Payments........................................................ 4
SECTION 7. Representations and Warranties.................................. 4
SECTION 8. Affirmative Covenants........................................... 6
SECTION 9. Amendments, Etc................................................. 7
SECTION 10. Notices, Etc.................................................... 8
SECTION 11. No Waiver; Remedies............................................. 8
SECTION 12. Right of Set-off................................................ 8
SECTION 13. Continuing Guaranty; Assignments Under the Credit Agreement..... 8
SECTION 14. Governing Law................................................... 9
GUARANTY
GUARANTY dated as of August 31, 1999 made by U-C HOLDINGS, L.L.C., a
Delaware limited liability company (the "Guarantor"), in favor of the lenders
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(the "Lenders") party to the Credit Agreement (as hereinafter defined) and
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CANADIAN IMPERIAL BANK OF COMMERCE, as agent (together with any successor agent
appointed pursuant to Article 8 of the Credit Agreement (as defined below), the
"Agent") for the Lenders.
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PRELIMINARY STATEMENT. The Lenders and the Agent have entered into a
Credit Agreement dated as of August 31, 1999 (such Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") with Armed Force Communications, Inc., a New York
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corporation doing business as Market Place Media and, immediately after the AF
Acquisition, a direct, wholly owned subsidiary of CTN (the "Borrower"). It is a
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condition precedent to the making of Loans by the Lenders under the Credit
Agreement that the Guarantor, as owner of greater than 75% of the outstanding
shares of Capital Stock of CTN, shall have executed and delivered this Guaranty.
NOW, THEREFORE and in consideration of the premises and other
consideration, the receipt and sufficiency of which are hereby acknowledged in
order to induce the Lenders to make Loans under the Credit Agreement, the
Guarantor, intending to be legally bound, hereby agrees as follows:
SECTION 1. Definitions. As used in this Guaranty, terms defined in
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the Credit Agreement and not otherwise defined herein shall have the meanings
set forth in the Credit Agreement) and the following terms shall have the
following meanings:
"Effective Leverage Ratio" shall mean, as of any date of determination, the
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ratio of (a) the excess of (i) Funded Debt over (ii) $5,000,000, divided by (b)
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Operating Cash Flow, for the four fiscal quarters then most recently ended.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
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business, operations, property, condition (financial or otherwise) or prospects
of the Borrower or any Corporate Guarantor, (b) the ability of the Guarantor to
perform its obligations under any Loan Document to which it is a party or (c)
the validity or enforceability of this Guarantee or any other Loan Document, the
Liens created hereunder or thereunder or the rights or remedies of the Agent or
the Lenders hereunder or thereunder.
SECTION 2. Guaranty. The Guarantor hereby unconditionally guarantees
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the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations of the Borrower now or hereafter existing under
the Loan Documents, whether for principal, interest, fees, expenses or otherwise
(such Obligations being the "Guaranteed Obligations"), and agrees to pay any and
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all expenses (including, without limitation, counsel fees
and expenses) incurred by the Agent or the Lenders in enforcing any rights under
this Guaranty; provided that
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(a) the Guaranteed Obligations and the liability of the Guarantor
hereunder, together with that of the other Corporate Guarantors under
their respective Corporate Guarantees, shall not exceed in the
aggregate $6,000,000, as such amount may be further reduced pursuant
to Section 13;
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(b) the Agent shall not seek payment under this Guaranty other than
(i) upon the occurrence and during the continuance of an Event of
Default described in Section 7.1(a) or Section 7.1(g) of the
Credit Agreement; or
(ii) at any time upon the Agent's or the Lender's acceleration of
payment obligations under the Credit Agreement or commencement of
the exercise of remedies by the Agent on behalf of the Lenders in
respect of any Event of Default.
(c) the Guarantor shall be liable hereunder only to the extent that WSP
shall make a direct or indirect equity investment in the Guarantor
after the date hereof; provided that nothing contained herein shall
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require the Agent or any Lender to inquire as to the source of any
payment hereunder and the Guarantor and any party claiming through or
on behalf of the Guarantor shall have no right to assert any claim as
to the source of any payment.
SECTION 3. Guaranty Absolute. The Guarantor guarantees that the
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Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents and Section 2 of this Guaranty, regardless of any law, regulation
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or order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Agent or the Lenders with respect thereto. The
Obligations of the Guarantor under this Guaranty are independent of the
Guaranteed Obligations, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Borrower or whether the Borrower is
joined in any such action or actions. The liability of the Guarantor under this
Guaranty shall be absolute and unconditional irrespective of, and the Guarantor
hereby irrevocably waives any defenses it may now or hereafter have in any way
relating to, any and all of the following:
(i) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Guaranteed Obligations, or any other amendment or
waiver of or any consent to departure from any Loan Document, including, without
limitation, any increase in the
Guaranteed Obligations resulting from the extension of additional credit to the
Borrower or otherwise;
(iii) any taking, exchange, release or nonperfection of any Collateral, or
any taking, release, amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Guaranteed Obligations;
(iv) any manner of application of Collateral, or proceeds thereof, to all
or any of the Guaranteed Obligations, or any manner of sale or other disposition
of any Collateral for all or any of the Guaranteed Obligations or any other
assets of the Borrower;
(v) any change, restructuring or termination of the corporate structure
or existence of the Borrower; or
(vi) any other circumstance (including, without limitation, any statute of
limitations or any existence of or reliance on any representation by the Agent
or any Lender) that might otherwise constitute a defense available to, or a
discharge of, the Borrower or a guarantor, other than payment in full in cash of
the Guaranteed Obligations.
SECTION 4. Reinstatement. The Guarantor agrees that this Guaranty
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(including, without limitation, Section 2 of this Guaranty) shall continue to be
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effective or be reinstated, as the case may be, if at any time, all or any
portion of any payment (whether in respect of principal, interest, fees, costs,
expenses or other amounts payable under this Guaranty, any Note or any other
Loan Document), is rescinded or must otherwise be restored by the Agent, any
Lender or the holder of any Note upon the bankruptcy or reorganization of the
Borrower or otherwise. For so long as any of the Obligations of the Borrower
shall remain outstanding or any Commitments shall remain in effect:
(a) all rights of the Guarantor against the Borrower, whether arising
as a result of rights of subrogation or otherwise, shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full of all the Obligations to the Agent, the Lenders and other holders of
Notes, and, in the event the Guarantor receives any payment prior to such
indefeasible payment in full, the Guarantor shall receive such payment in trust
for, and shall immediately turn over all amounts to, the Agent for application
to the payment of such Obligations;
(b) the Guarantor shall refrain from taking any action or commencing
any proceeding against the Borrower (or its successors or assigns, whether in
connection with a bankruptcy proceeding or otherwise) to recover any amounts in
respect of payments made under this Guaranty to the Agent, any Lender or any
holder of any Note; and
(c) the Guarantor hereby waives any claim, right or remedy which the
Guarantor may now have or may hereafter acquire against the Borrower that arises
hereunder and/or from the performance by the Guarantor hereunder including,
without limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification or participation in any claim, right
or remedy of the Lenders or the Agent against the Borrower or any security which
the Lenders or the Agent now have or hereafter acquire, whether or not such
claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise.
SECTION 5. Waivers. (a) The Guarantor hereby waives promptness,
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diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement that the Agent or
any Lender protect, secure, perfect or insure any Lien or any property subject
thereto or exhaust any right or take any action against the Borrower, any other
Corporate Guarantor or any other Person or any Collateral.
(b) Each of the Guarantor and the Agent, on behalf of itself and the
Lenders, hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to any of the Loan Documents or any of the
transactions contemplated thereby, or the actions of the Agent or any Lender in
the negotiation, administration, performance or enforcement thereof.
(c) The Guarantor hereby irrevocably waives any duty on the part of the
Agent or any Lender to disclose to the Guarantor any matter, fact or thing
relating to the business, operation or condition of the Borrower and its assets
now or hereafter known by the Agent or any Lender.
SECTION 6. Payments. Any and all payments made by the Guarantor
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hereunder shall be made without setoff or counterclaim.
SECTION 7. Representations and Warranties. The Guarantor hereby
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represents and warrants as follows:
(a) The Guarantor (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except to the extent that the failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect
and (d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.
(b) The Guarantor has the power and authority, and the legal right, to
make, deliver and perform this Guaranty and each of the other Loan Documents to
which it is a party and to
authorize the execution, delivery and performance of this Guaranty and each of
the other Loan Documents to which it is a party. Except as set forth on Schedule
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7(b), no consent or authorization of, filing with, notice to or other act by or
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in respect of, any Governmental Authority or any other Person is required in
connection with the execution, delivery, performance, validity or enforceability
of this Guaranty, the other Loan Documents and the AF Acquisition Documents to
which the Guarantor, the Borrower or any other Loan Party is a party, except to
the extent that failure to obtain or perform such consent, authorization, notice
or other act individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect. This Guaranty has been, and each other Loan
Document to which the Guarantor, the Borrower or any other Loan Party is a party
will be, duly executed and delivered on behalf of the Guarantor, the Borrower or
such other Loan Party. This Guaranty constitutes, and each other Loan Document
to which the Guarantor is a party when executed and delivered will constitute, a
legal, valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
(c) The execution, delivery and performance of this Guaranty and each of
the other Loan Documents to which the Guarantor is a party, will not violate any
Requirement of Law or Contractual Obligation of the Guarantor, will not
accelerate or result in the acceleration of any payment obligations of the
Guarantor and will not result in, or require, the creation or imposition of any
Lien on any of the properties or revenues of the Guarantor pursuant to any such
Requirement of Law or Contractual Obligation other than as contemplated by the
Security Documents, except to the extent that such violation or Lien
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
(d) The Guarantor has, independently and without reliance upon the Lender
or the Agent and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Guaranty.
(e) The Guarantor is not in default under, or with respect to, any of its
Contractual Obligations in any respect which could reasonably be expected to
have a Material Adverse Effect.
(f) The Guarantor is not a "holding company", a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended. The
Guarantor is not an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. The Guarantor is not subject to regulation under any Federal or
state statute, regulation, decree or order which limits its ability to incur
Indebtedness or conditions such ability upon any act, approval or consent of any
Governmental Authority (including, without limitation, the Small Business
Investment Company Act of 1958, as amended).
(g) After giving effect to the AF Acquisition and to the borrowings under
the Credit Agreement to be made on the Closing Date or such other date as Loans
requested thereunder are made, the Guarantor is Solvent.
(h) The Guarantor has not prepared, as of the date hereof, any financial
statements.
(i) All information, reports and other papers and data (other than
projections) with respect to the Guarantor, CTN or the Borrower (in each case,
prior to and after giving effect to the AF Acquisition), taken as a whole,
furnished to the Lenders by the Guarantor, CTN or the Borrower, or on behalf of
the Guarantor, CTN or the Borrower, were, at the time furnished, complete and
correct in all material respects, or have been subsequently supplemented by
other information, reports or other papers or data, to the extent necessary to
give the Lenders a true and accurate knowledge of the subject matter in all
material respects. All projections with respect to the Guarantor, CTN or the
Borrower, furnished by the Guarantor, CTN or the Borrower, were prepared and
presented in good faith by the Guarantor, CTN and the Borrower based upon facts
and assumptions that the Guarantor, CTN and the Borrower believe to be
reasonable in light of current and foreseeable conditions. No document furnished
or statement made in writing to the Lenders by or on behalf of the Guarantor,
CTN or the Borrower in connection with the negotiation, preparation or execution
of this Guaranty contains any untrue statement of a material fact, or omits to
state any such material fact necessary in order to make the statements contained
therein not misleading, in either case which has not been corrected,
supplemented or remedied by subsequent documents furnished or statements made in
writing to the Lenders. There is no fact known to the Guarantor, CTN or the
Borrower which has, or could reasonably be expected to have, a Material Adverse
Effect.
(j) The Guarantor has filed or caused to be filed all Federal, state,
local and foreign income tax returns and all other material tax returns
(including information returns) which are required to be filed and has paid all
taxes shown to be due and payable on said returns or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than
any tax, fee or other charge the amount or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of the
Guarantor; and no tax Lien has been filed (except for any such Lien permitted
under Section 6.3(a) of the Credit Agreement), and, no claim has been or is
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being asserted against the Guarantor in writing or, to the knowledge of the
taxpayer, otherwise, with respect to any such tax, fee or other charge.
SECTION 8. Affirmative Covenants. The Guarantor covenants and agrees
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that, subject to Section 13, so long as any part of the Guaranteed Obligations
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shall remain unpaid or any Lender shall have any Commitment under the Credit
Agreement, the Guarantor will:
(a) Financial Statements. Promptly upon the production of financial
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statements of the Guarantor, solely to the extent actually produced, notify the
Agent of such production, and thereafter furnish to each Lender:
(i) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Guarantor and solely to the extent actually
produced, a copy of the balance sheet of the Guarantor as at the end of
such year and the related statements of income, stockholders equity and
cash flows for such year, setting forth in each case in comparative form
the figures as of the end of and for the previous year, reported on without
a "going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by PricewaterhouseCoopers LLP or
other independent certified public accountants of nationally recognized
standing, together with a consolidating balance sheet and consolidating
statements of income and cash flows of the Guarantor, reviewed by
PricewaterhouseCoopers LLP or such other independent certified public
accountants;
(ii) as soon as available, but in any event not later than 45 days
after the end of each quarterly period of the Guarantor and solely to the
extent actually produced, the unaudited balance sheet of the Guarantor as
at the end of such quarter and the related unaudited statements of income
and cash flows of the Guarantor for such quarter and the portion of the
fiscal year through the end of such quarter and setting forth in each case
in comparative form the figures from the budget for such fiscal year, also
furnished to the Lenders (solely to the extent actually produced), and the
actual figures for the corresponding date or period in the previous year,
certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments); and
(iii) as soon as available, but in any event not later than 30 days
after the end of each calendar month of the Guarantor and solely to the
extent actually produced, the regularly prepared unaudited income
statements of the Guarantor as at the end of such month and the portion of
the fiscal year through the end of such month, setting forth in each case
in comparative form the figures for the comparable period from the budget
for such fiscal year, also furnished to the Lenders (solely to the extent
actually produced), and the actual figures for the corresponding date or
period in the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein and except as to the unaudited statements subject to year-
end adjustments and the absence of footnotes).
SECTION 9. Amendments, Etc. No amendment or waiver of any provision
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of this Guaranty, and no consent to any departure by the Guarantor herefrom,
shall in any event be
effective unless the same shall be in writing and signed by the Guarantor, the
Agent and the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 10. Notices, Etc. All notices, requests and demands to or
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upon the Guarantor or the Agent or any Lender to be effective shall be in
writing or by telegraph or telex and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or, in the case of mail, three days after deposit in the postal system, first
class postage prepaid, or, in the case of telegraphic notice, when sent,
answerback received, addressed to a party at the address provided for such party
on Schedule I or set forth under its signature below, as the case may be.
SECTION 11. No Waiver; Remedies. No failure on the part of the Agent
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or any Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof or consent thereto; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 12. Right of Set-off. In the event that any amounts are owed
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under this Guarantee, each Lender is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set-off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Guarantor against any and all the obligations of
the Guarantor now or hereafter existing under this Guaranty, whether or not such
Lender shall have made any demand under this Guaranty and although such
obligations may be unmatured. Each Lender agrees promptly to notify the
Guarantor after any such set-off and application made by such Lender; provided
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that the failure to give such notice shall not affect the validity of such set-
off and application. The rights of each Lender under this Section 12 are in
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addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender may have.
SECTION 13. Continuing Guaranty; Assignments Under the Credit
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Agreement. (a) Subject to Sections 13(b) and 13(c), this Guaranty is a
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continuing guaranty and shall (i) remain in full force and effect until the
later of (x) the payment in full in cash of the Guaranteed Obligations and all
other amounts payable under this Guaranty and (y) the Revolving Credit
Commitment Termination Date, (ii) be binding upon the Guarantor, its successors
and assigns and (iii) inure to the benefit of, and be enforceable by, the Agent,
the Lenders and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Lender may assign or
otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment or Commitments, the payments owing to it and the Note or Notes held
by it) to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to such Lender, herein or
otherwise, in each case as provided in Article 9 of the Credit Agreement.
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(b) The Guarantor's liability hereunder and the amount referred to in
Section 2(a) shall be reduced (i) to $5,000,000 in the aggregate upon the
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Borrower's demonstration to the reasonable satisfaction of the Agent that the
Effective Leverage Ratio is less than 3.00 to 1.00 (computed as of the most
recently completed fiscal quarter); and (ii) from time to time by an amount
equal to the amount of any direct or indirect equity contribution(s) to the
Borrower made from time to time by WSP, the Guarantor or CTN; provided that the
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Guarantor's liability hereunder and the amount referred to in Section 2(a)
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shall be reduced solely to the extent to which such equity contribution(s)
shall have been used to make optional prepayments of principal of the Loans,
and which prepayments shall be applied, at the election of the Borrower, to any
scheduled installments of principal of the Term Loans or to the Revolving
Credit Loans (with a concommitant reduction in the Revolving Credit
Commitments).
(c) This Guarantee shall terminate, and none of the Guarantor, the Agent
or the Lenders shall have any further rights or obligations hereunder, upon the
Borrower's demonstration to the reasonable satisfaction of the Agent that the
Leverage Ratio is less than 3.25 to 1.00 (computed as of the most recently
completed fiscal quarter).
SECTION 14. Governing Law. This Guaranty shall be governed by, and
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construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
U-C HOLDINGS, L.L.C.
By: XXXXXX XXXXX & PARTNERS, L.P., its
Managing Member
By: XXXXXX XXXXX & PARTNERS, L.L.C., its
General Partner
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: Managing Director
Address for notice:
U-C Holdings, L.L.C.
c/o Kirkland & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
Telecopy: 000-000-0000
