Exhibit 10.17
FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT (the "Agreement") is made and entered
into as of this _____ day of November, 2001, by and among TRI-STATE OUTDOOR
MEDIA GROUP, INC., a Kansas corporation ("Borrower"), on the one hand, and
ABLECO FINANCE LLC ("Lender"), a Delaware limited liability company, on the
other hand (together with Borrower, the "Parties").
RECITALS
(a) Borrower and Lender have entered into that certain Financing
Agreement, dated as of March 27, 2001 (referred to herein as the "Loan
Agreement"). Capitalized terms not otherwise defined herein shall have the
meanings given such terms in the Loan Agreement.
(b) To secure its obligations to Lender under the Loan Agreement,
Borrower has granted to Lender a security interest in all of the real and
personal property owned by Borrower (the "Collateral").
(c) Borrower acknowledges and agrees that the following Event of
Default (the "Existing Default") has occurred and currently exists under the
Loan Agreement:
i. In violation of Section 6.01(o) of the Loan Agreement,
Borrower has failed to hire, within six (6) months of
the Effective Date, a Chief Financial Officer reasonably
satisfactory to Lender.
(d) Borrower anticipates that further Events of Default will occur
(the "Anticipated Defaults" and together with the Existing Default, the
"Designated Defaults") as a result of:
i. Borrower's anticipated failure to pay interest on or
before December 15, 2001, in respect of Borrower's
Senior Notes in violation of Section 8.01(e) of the Loan
Agreement; and
ii. Borrower's anticipated failure to generate at least
$12,200,000 in EBITDA for the quarter ending September
30, 2001, and to generate at least $13,500,000 in EBITDA
for the quarter ending December 31, 2001 in violation of
Section 6.03(c) of the Loan Agreement.
ii. Borrower's anticipated failure to have a Debt to EBITDA
Ratio of 9.9 for the quarter ending September 30, 2001
and to have a Debt to EBITDA Ratio of 9.2 for the
quarter ending December 31, 2001, in violation of
Section 6.03(a) of the Loan Agreement.
(g) By reason of the Existing Defaults, Lender has the full legal
right to exercise its rights and remedies under the Loan Agreement, including
the right to repossession and sale of the Collateral, and Lender has no
obligation to make any further Advances under the Loan Agreement.
(h) Borrower has requested that Lender forbear for a period of time
from exercising its rights and remedies under the Loan Agreement and consider,
in its absolute discretion, making further Advances under the Loan Agreement
notwithstanding that Lender is under no obligation to make any such Advances.
AGREEMENT
In consideration of the Recitals and of the mutual promises and
covenants contained herein, Lender and Borrower agree as follows:
1. AGREEMENT TO FORBEAR. During the Forbearance Period, Lender will
forbear in the exercise of its rights and remedies under the Loan Agreement to
take action against Borrower or the Collateral in order to collect the
Obligations as a result of the existence of the Designated Defaults.
2. DEFINITIONS. The following terms shall have the following
meanings as used in this Agreement:
(a) FORBEARANCE PERIOD. That period of time commencing as of the
date hereof and ending on the earlier of: (i) the close of business on March 1,
2002; (ii) the date upon which a Termination Event occurs; and (iii) the date
upon which a Default hereunder occurs.
(b) TERMINATION EVENTS. Each and every one of the following
described events are herein individually called a "Termination Event", and such
events are collectively called "Termination Events":
(1) The occurrence of any other Event of Default under the
Loan Agreement other than the Designated Defaults or Borrower shall fail
to comply with any covenant or other obligation of Borrower under the Loan
Agreement, provided, that Borrower shall not be required to cure the
Designated Defaults during the Forbearance Period;
(2) The Senior Notes shall be accelerated or the holders of
the Senior Notes take any enforcement action with respect to the Senior
Notes;
(3) There is a significant adverse change in the financial
condition of Borrower from its condition as of the date of this Agreement
or in the ability of Lender to enforce any of its rights against Borrower,
or Lender deems its position as a creditor of Borrower to have changed in
any significant and adverse respect.
3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Lender as follows:
(a) RECITALS. The Recitals in this Agreement are true and correct in
all respects.
2
(b) INCORPORATION OF REPRESENTATIONS. All representations and
warranties of Borrower in the Loan Agreement are incorporated herein in full by
this reference and are true and correct as of the date hereof except for the
representation in Section 5.01(v).
(c) EXISTENCE; POWER; AUTHORIZATION. Borrower validly exists as a
Kansas corporation. The execution, delivery and performance by Borrower of this
Agreement have been duly authorized by all necessary partnership action and
Borrower has all requisite power and authority to execute this Agreement and to
perform all of its obligations hereunder. This Agreement has been duly executed
and delivered by Borrower.
(d) ENFORCEABILITY. This Agreement is the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms.
(e) NO VIOLATION. The execution, delivery and performance by
Borrower of this Agreement do not (i) require any authorization, consent or
approval by any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate any provision of any law,
rule or regulation or of any order, writ, injunction or decree presently in
effect, having applicability to Borrower, or the partnership agreement of
Borrower, (iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which Borrower is a party or by which it or its properties may be
bound or affected, or (iv) result in the creation or imposition of any lien,
security interest or encumbrance on any property of Borrower, whether now owned
or hereafter acquired, other than liens in favor of Lender.
(f) OBLIGATIONS ABSOLUTE. The obligation of Borrower to repay the
Loans, together with all interest accrued thereon, is absolute and
unconditional, and there exists no right of set off or recoupment, counterclaim
or defense of any nature whatsoever to payment of the Loan.
4. CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT. This Agreement and
Lender's agreement to forbear set forth in Section 1 above shall not be
effective unless and until each of the following conditions shall have been met
to the satisfaction of Lender and its counsel:
(a) Lender shall have received, in form and substance satisfactory
to Lender and its counsel, a duly executed copy of this Agreement together with
the Reaffirmation and Consent attached hereto as Exhibit B, duly executed by
each party thereto;
(b) Lender shall have received, in form and substance satisfactory
to Lender, a detailed operating budget for the months of November and December
of 2001, which 60 day budget shall be updated and provided to Lender on a
monthly basis during the Forbearance Period (the "Budget);
(c) Other than the Designated Defaults, no Default or Event of
Default shall exist;
3
(d) Lender shall have received such other and further documents,
instruments and certificates as Lender and its counsel shall reasonably request,
all in form and substance satisfactory to Lender and its counsel.
5. FURTHER ADVANCES.
Borrower has indicated to Lender that Borrower intends to request
that Lender make further Advances to Borrower notwithstanding the fact that
Lender has no obligation to make such Advances due to the continuance of the
Existing Default.
Lender shall continue to make Advances under the Loan Agreement
during the Forbearance Period, notwithstanding the existence of the Designated
Events of Default, but subject to all the limitations on the amount of such
Advances under the Loan Agreement and all other terms and conditions of the Loan
Agreement, including, without limitation, its right to cease making Advances
under the Loan Agreement and to declare the Obligations immediately due and
payable upon the occurrence of any Event of Default other than the Designated
Events of Default; provided however, that Lender shall have no obligation to
make any requested Advance unless Borrower's request for such Advance is
supported by a detailed statement of the intended uses of the proceeds of such
requested Advance that is consistent with the Budget delivered by Borrower to
Lender, and such request is accompanied by a reconciliation of the use of the
proceeds of all prior Advances during the Forbearance Period to such Budget
acceptable to Lender.
6. COLLATERAL.
(a) REAFFIRMATION OF PLEDGE OF COLLATERAL. Borrower hereby reaffirms
and confirms that Borrower has granted Lender a Lien upon and security interest
in, and hereby grants Lender a lien upon and security interest in, all of the
personal property of Borrower on the terms and conditions set forth in the
Security Agreement, including but not limited to all right, title and interest
of Borrower in and to the personal property listed in Exhibit A hereto, which
Exhibit is incorporated herein by reference.
(b) FURTHER ASSURANCES. At Lender's request, Borrower shall execute
UCC financing statements and other instruments, assignments or documents as are
necessary or desirable to perfect Lender's Lien upon any of the Collateral and
shall take such other action as may be required or desirable to perfect or to
continue the perfection of Lender's Lien upon the Collateral. Unless prohibited
by applicable law, Borrower hereby authorizes Lender to execute and file any
such financing statement on Borrower's behalf. At Lender's request, Borrower
shall also promptly execute or cause to be executed and shall deliver to Lender
any and all documents, instruments and agreements deemed necessary by Lender to
give effect to or carry out the terms or intent of the Loan Documents,
including, without limitation, landlord and mortgagee waivers, warehousemen and
bailee letters, dominion of accounts and bank consent agreements, third party
consents, intercreditor agreements and other agreements, in each case in form
and substances satisfactory to Lender.
4
7. DEFAULT. Each of the following shall constitute a "Default"
hereunder:
(a) the existence of any Event of Default (other than a Designated
Default) under the Loan Agreement; or
(b) Borrower shall fail to keep or perform any of the covenants or
agreements contained herein; or
(c) any representation or warranty of Borrower herein shall be
false, misleading or incorrect in any material respect.
8. EFFECT AND CONSTRUCTION OF AGREEMENT. Except as expressly
provided herein, the Loan Documents shall remain in full force and effect in
accordance with their respective terms, and this Agreement shall not be
construed to:
(a) impair the validity, perfection or priority of any lien or
security interest securing the Obligations;
(b) waive or impair any rights, powers or remedies of Lender under
the Loan Documents upon termination of the Forbearance Period, with respect to
the Designated Defaults or otherwise;
(c) constitute an election of remedies to the exclusion of any
other remedies; or
(d) constitute an agreement by Lender or require Lender to extend
the Forbearance Period, or grant additional forbearance periods, or extend the
term of the Loan Agreement or the time for payment of any of the Loans.
9. MISCELLANEOUS.
(a) FURTHER ASSURANCES. Borrower agrees to execute such other and
further documents and instruments as Lender may request to implement the
provisions of this Agreement and to perfect and protect the liens and security
interests created by the Loan Agreement.
(b) BENEFIT OF AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto, their
respective successors and assigns. No other person or entity shall be entitled
to claim any right or benefit hereunder, including, without limitation, the
status of a third-party beneficiary of this Agreement.
(c) SEVERABILITY. The provisions of this Agreement are intended to
be severable. If any provisions of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
enforceability without in any manner affecting the validity or enforceability of
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.
5
(d) COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in any number of counterparts and by different parties to this
Agreement on separate counterparts, each of which, when so executed, shall be
deemed an original, but all such counterparts shall constitute one and the same
agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
(e) NOTICES. Any notices with respect to this Agreement shall be
given in the manner provided for in the Loan Agreement.
(f) SURVIVAL. All representations, warranties, covenants,
agreements, undertakings, waivers and releases of Borrower contained herein
shall survive the termination of the Forbearance Period and payment in full of
the Term Notes of Borrower under the Loan Agreement.
(g) AMENDMENT. No amendment, modification, rescission, waiver or
release of any provision of this Agreement shall be effective unless the same
shall be in writing and signed by the parties hereto.
10. GOVERNING LAW.. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
11. CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX IN THE COUNTY OF NEW YORK
OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY HEREBY
IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
THE JURISDICTION OF THE AFORESAID COURTS. EACH LOAN PARTY FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS AND
IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS FOR NOTICES AS
SET FORTH IN SECTION 10.01 OF THE LOAN AGREEMENT, SUCH SERVICE TO BECOME
EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH LOAN PARTY HEREBY IRREVOCABLY
APPOINTS THE SECRETARY OF STATE OF THE STATE OF NEW YORK AS ITS AGENT FOR
SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE LENDER TO SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
EACH LOAN PARTY IN ANY OTHER JURISDICTION. EACH LOAN PARTY HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
6
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT EACH LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
12. WAIVER OF JURY TRIAL, ETC. EACH LOAN PARTY AND THE LENDER HEREBY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES OR OTHER LOAN DOCUMENTS,
OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT
DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR
ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREE THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH LOAN PARTY CERTIFIES THAT NO
OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF ANY ACTION,
PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH LOAN
PARTY HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
LENDER ENTERING INTO THIS AGREEMENT.
7
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered on the date first set forth above.
TRI-STATE OUTDOOR MEDIA GROUP, INC., a Kansas
corporation
By: _______________________________________
Name:
Title: President
ABLECO FINANCE LLC
a Delaware limited liability company
By: ________________________________________
Title:
EXHIBIT B
REAFFIRMATION AND CONSENT
All capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to them in that certain Forbearance Agreement,
dated as of November __, 2001, to which this reaffirmation and consent is
attached (the "Agreement"). The undersigned hereby represents and warrants to
Lender that the execution, delivery, and performance of this Reaffirmation and
Consent are within their powers, have been duly authorized by all necessary
action, and are not in contravention of any law, rule, or regulation, or any
order, judgment, decree, writ, injunction, or award of any arbitrator, court, or
governmental authority, or (in the case of a corporation) of the terms of its
charter or bylaws, or of any contract or undertaking to which any of them is a
party or by which any of their properties may be bound or affected; (b) consents
to the Agreement; (c) acknowledges and reaffirms its obligations owing to Lender
under any guaranties and any other Loan Documents to which it is a party; and
(d) agrees that each of the guaranties and other Loan Documents to which it is a
party shall remain in full force and effect. Although the undersigned has been
informed of the matters set forth herein and has acknowledged and agreed to
same, the undersigned understands that Lender has no obligation to inform it of
such matters in the future or to seek its acknowledgement or agreement to future
amendments, and nothing herein shall create such a duty.
IN WITNESS WHEREOF, each of the undersigned has executed and
delivered this Reaffirmation and Consent as of the date first written above.
SGH HOLDINGS, INC., a
Delaware corporation
By: ________________________________
Name:
Title:
EXHIBIT A
FORBEARANCE AGREEMENT
DEBTOR: TRI-STATE OUTDOOR MEDIA GROUP, INC.
SECURED
PARTY: ABLECO FINANCE LLC
All of Debtor's right, title and interest in and to the following,
whether now owned or hereafter acquired or arising and wherever located
(collectively, the "Collateral"):
a. all accounts and any and all supporting obligations in respect
thereof (collectively, "Accounts");
b. all books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or
liabilities, all of its Records relating to its business operations or
financial condition, and all of its goods or General Intangibles related to
such information) (collectively, "Books");
c. all equipment, machinery, machine tools, motors, furniture,
furnishings, fixtures, vehicles (including motor vehicles), tools, parts,
goods (other than consumer goods, farm products, or Inventory), wherever
located, including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing
(collectively, "Equipment");
d. all general intangibles (including payment intangibles, contract
rights, rights to payment, rights arising under common law, statutes, or
regulations, chooses or things in action, goodwill, patents, trade names,
trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders,
customer lists, monies due or recoverable from pension funds, route lists,
rights to payment and other rights under any royalty or licensing agreements,
infringement claims, computer programs, information contained on computer
disks or tapes, software, literature, reports, catalogs, money, deposit
accounts, insurance premium rebates, tax refunds, and tax refund claims), and
any and all supporting obligations in respect thereof, and any other personal
property other than goods, Accounts, Investment Property, and Negotiable
Collateral. (collectively, "General Intangibles");
e. all inventory, including goods held for sale or lease or to be
furnished under a contract of service, goods that are leased by Debtor as
lessor, goods that are furnished by Debtor under a contract of service, and
raw materials, work in process, or materials used or consumed in Debtor's
business (collectively, "Inventory");
f. all investment property, and any and all supporting obligations
in respect thereto (collectively, "Investment Property");
g. all letters of credit, letter of credit rights, instruments,
promissory notes, drafts, documents, and chattel paper (including electronic
chattel paper and tangible chattel
paper), and any and all supporting obligations in respect thereto
(collectively, "Negotiable Collateral");
h. all money or other assets of Debtor that now or hereafter come
into the possession, custody, or control of Secured Party or any agent or
bailee thereof; and
i. the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
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.
As used herein:
"Code" means the New York Uniform Commercial Code, as in effect from
time to time.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by Debtor and the improvements thereto.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
Any terms used herein that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein.
Unless the context hereof clearly requires otherwise, references to
the plural include the singular, references to the singular include the plural,
the term "including" is not limiting, and the term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or."
