1
Exhibit 10(y)
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "AGREEMENT") is dated as of
November 14, 1997 and entered into by and between REGENT COMMUNICATIONS, INC., a
Delaware corporation ("PLEDGOR"), and BANK OF MONTREAL, CHICAGO BRANCH, as agent
for and representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement referred to
below.
PRELIMINARY STATEMENTS
A. Secured Party, General Electric Capital Corporation, as
Documentation Agent ("DOCUMENTATION AGENT"), and Lenders have entered into a
Credit Agreement dated as of November 14, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Pledgor pursuant to
which Lenders have made certain commitments, subject to the terms and conditions
set forth in the Credit Agreement, to extend certain credit facilities to
Pledgor.
B. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and issue Letters of Credit under the Credit Agreement and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledgor hereby agrees with Secured Party as follows:
SECTION 1. CERTAIN DEFINITIONS.
The following terms used in this Agreement shall have the following
meanings:
"COLLATERAL" means (i) the Collateral Account, (ii) all
amounts on deposit from time to time in the Collateral Account, (iii)
all interest, cash, instruments, securities and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Collateral, and (iv) to the
extent not covered by clauses (i) through (iii) above, all proceeds of
any or all of the foregoing Collateral.
"COLLATERAL ACCOUNT" means the restricted deposit account
established and
1
2
maintained by Secured Party pursuant to Section 2(a).
"SECURED OBLIGATIONS" means all obligations and liabilities of
every nature of Pledgor now or hereafter existing under or arising out
of or in connection with the Credit Agreement and the other Loan
Documents and all extensions or renewals thereof, whether for
principal, interest (including interest that, but for the filing of a
petition in bankruptcy with respect to Pledgor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or
not from time to time decreased or extinguished and later increased,
created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such
payment is avoided or recovered directly or indirectly from Secured
Party or any Lender as a preference, fraudulent transfer or otherwise,
and all obligations of every nature of Pledgor now or hereafter
existing under this Agreement.
SECTION 2. ESTABLISHMENT AND OPERATION OF COLLATERAL ACCOUNT.
(a) Secured Party is hereby authorized to establish and maintain at its
office at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, as a blocked
account in the name of Secured Party and under the sole dominion and control of
Secured Party, a restricted deposit account designated as "Bank Of Montreal as
Agent for Regent Communications, Inc. Collateral Account".
(b) The Collateral Account shall be operated in accordance with the
terms of this Agreement.
(c) All amounts at any time held in the Collateral Account shall be
beneficially owned by Pledgor but shall be held in the name of Secured Party
hereunder, for the benefit of Lenders, as collateral security for the Secured
Obligations upon the terms and conditions set forth herein. Pledgor shall have
no right to withdraw, transfer or, except as expressly set forth herein,
otherwise receive any funds deposited into the Collateral Account.
(d) Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
SECTION 3. DEPOSITS OF CASH COLLATERAL.
(a) All deposits of funds in the Collateral Account shall be made by
wire transfer (or, if applicable, by intra-bank transfer from another account of
Pledgor) of immediately available funds, in each case addressed as follows:
2
3
Account Name: Xxxxxx Trust & Savings Bank for Credit to Bank of
Montreal
Account No.: 0000000
ABA No.: 000000000
Reference: Regent
Attention: GDS
Pledgor shall, promptly after initiating a transfer of funds to the Collateral
Account, give notice to Secured Party by telefacsimile of the date, amount and
method of delivery of such deposit.
(b) If an Event of Default has occurred and is continuing and, in
accordance with Section 8 of the Credit Agreement, Pledgor is required to pay to
Secured Party an amount (the "AGGREGATE AVAILABLE AMOUNT") equal to the maximum
amount that may at any time be drawn under all Letters of Credit then
outstanding under the Credit Agreement, Pledgor shall deliver funds in such an
amount for deposit in the Collateral Account in accordance with Section 3(a). If
for any reason the aggregate amount delivered by Pledgor for deposit in the
Collateral Account as aforesaid is less than the Aggregate Available Amount, the
aggregate amount so delivered by Pledgor shall be apportioned among all
outstanding Letters of Credit for purposes of this Section 3(b) in accordance
with the ratio of the maximum amount available for drawing under each such
Letter of Credit (as to such Letter of Credit, the "MAXIMUM AVAILABLE AMOUNT")
to the Aggregate Available Amount. Upon any drawing under any outstanding Letter
of Credit in respect of which Pledgor has deposited in the Collateral Account
any amounts described above, Secured Party shall apply such amounts to reimburse
the Issuing Lender for the amount of such drawing. In the event of cancellation
or expiration of any Letter of Credit in respect of which Pledgor has deposited
in the Collateral Account any amounts described above, or in the event of any
reduction in the Maximum Available Amount under such Letter of Credit, Secured
Party shall apply the amount then on deposit in the Collateral Account in
respect of such Letter of Credit (LESS, in the case of such a reduction, the
Maximum Available Amount under such Letter of Credit immediately after such
reduction) FIRST, to the payment of any amounts payable to Secured Party
pursuant to Section 13, SECOND, to the extent of any excess, to the cash
collateralization pursuant to the terms of this Agreement of any outstanding
Letters of Credit in respect of which Pledgor has failed to pay all or a portion
of the amounts described above (such cash collateralization to be apportioned
among all such Letters of Credit in the manner described above), THIRD, to the
extent of any further excess, to the payment of any other outstanding Secured
Obligations in such order as Secured Party shall elect, and FOURTH, to the
extent of any further excess, to the payment to whomsoever shall be lawfully
entitled to receive such funds.
3
4
SECTION 4. PLEDGE OF SECURITY FOR SECURED OBLIGATIONS.
Pledgor hereby pledges and assigns to Secured Party, and hereby grants
to Secured Party a security interest in, all of Pledgor's right, title and
interest in and to the Collateral as collateral security for the prompt payment
or performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
ss.362(a)), of all Secured Obligations.
SECTION 5. NO INVESTMENT OF AMOUNTS IN THE COLLATERAL ACCOUNT; INTEREST ON
AMOUNTS IN THE COLLATERAL ACCOUNT.
(a) Cash held by Secured Party in the Collateral Account shall not be
invested by Secured Party but instead shall be maintained as a cash deposit in
the Collateral Account pending application thereof as elsewhere provided in this
Agreement.
(b) To the extent permitted under Regulation Q of the Board of
Governors of the Federal Reserve System, any cash held in the Collateral Account
shall bear interest at the standard rate paid by Secured Party to its customers
for deposits of like amounts and terms.
(c) Subject to Secured Party's rights under Section 12, any interest
earned on deposits of cash in the Collateral Account in accordance with Section
5(b) shall be deposited directly in, and held in the Collateral Account.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants as
follows:
(a) OWNERSHIP OF COLLATERAL. Pledgor is (or at the time of transfer
thereof to Secured Party will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Secured Party, free and
clear of any Lien except for the security interest created by this Agreement.
(b) GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the perfection of or the exercise by Secured
Party of its rights and remedies hereunder (except as may have been taken by or
at the direction of Pledgor).
(c) PERFECTION. The pledge and assignment of the Collateral pursuant to
this Agreement creates a valid and perfected first priority security interest in
the Collateral, securing the payment of the Secured Obligations.
4
5
(d) OTHER INFORMATION. All information heretofore, herein or hereafter
supplied to Secured Party by or on behalf of Pledgor with respect to the
Collateral is accurate and complete in all respects.
SECTION 7. FURTHER ASSURANCES.
Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Secured
Party may request, in order to perfect and protect any security interest granted
or purported to be granted hereby or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, Pledgor will: (a) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Secured
Party may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby and (b) at Secured Party's request,
appear in and defend any action or proceeding that may affect Pledgor's
beneficial title to or Secured Party's security interest in all or any part of
the Collateral.
SECTION 8. TRANSFERS AND OTHER LIENS.
Pledgor agrees that it will not (a) sell, assign (by operation of law
or otherwise) or otherwise dispose of any of the Collateral or (b) create or
suffer to exist any Lien upon or with respect to any of the Collateral, except
for the security interest under this Agreement.
SECTION 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Pledgor hereby irrevocably appoints Secured Party as Pledgor's
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor, Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any instrument that Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including to file one or more financing or continuation statements,
or amendments thereto, relative to all or any part of the Collateral without the
signature of Pledgor.
SECTION 10. SECURED PARTY MAY PERFORM.
If Pledgor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Pledgor under Section 13.
5
6
SECTION 11. STANDARD OF CARE.
The powers conferred on Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the exercise of reasonable care in the custody of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, Secured Party shall have no duty as to any Collateral, it being
understood that Secured Party shall have no responsibility for (a) taking any
necessary steps (other than steps taken in accordance with the standard of care
set forth above to maintain possession of the Collateral) to preserve rights
against any parties with respect to any Collateral or (b) taking any necessary
steps to collect or realize upon the Secured Obligations or any guarantee
therefor, or any part thereof, or any of the Collateral. Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property of like
kind.
SECTION 12. REMEDIES.
Subject to the provisions of Section 3(b), Secured Party may exercise
in respect of the Collateral, in addition to all other rights and remedies
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "CODE") (whether or not the Code applies to the affected
Collateral).
SECTION 13. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Secured Party and each Lender from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Secured Party's or
such Lender's gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by Pledgor to
perform or observe any of the provisions hereof.
6
7
SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the Closing Date,
(b) be binding upon Pledgor, its successors and assigns, and (c) inure, together
with the rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the Closing Date, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
Pledgor; PROVIDED that no Event of Default or Potential Event of Default has
occurred and is continuing. Upon any such termination Secured Party shall, at
Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination and Pledgor shall be
entitled to the return, upon its request and at its expense, against receipt and
without recourse to Secured Party, of such of the Collateral as shall not have
been otherwise applied pursuant to the terms hereof.
SECTION 15. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured Party hereunder
by Lenders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including
the release or substitution of Collateral), solely in accordance with this
Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under
this Agreement shall promptly (i) transfer to such successor Secured Party all
sums held by Secured Party hereunder (which shall be deposited in a new
Collateral Account established and maintained by such successor Secured Party),
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Secured Party
under this Agreement, and (ii) execute and deliver to such successor Secured
Party such amendments to financing statements, and take such other actions, as
may be necessary or appropriate in connection with the assignment to such
successor Secured Party of
7
8
the security interests created hereunder, whereupon such retiring or removed
Secured Party shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation or removal
hereunder as Secured Party, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was Secured Party hereunder.
SECTION 16. AMENDMENTS; ETC.
No amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by Pledgor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Pledgor. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
SECTION 17. NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed. For the purposes hereof, the address of each party
hereto shall be as provided in subsection 10.8 of the Credit Agreement.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 19. SEVERABILITY.
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
8
9
SECTION 20. HEADINGS.
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 21. GOVERNING LAW; TERMS.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Pledgor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail, return
receipt requested, to Pledgor at its address provided in Section 17, such
service being hereby acknowledged by Pledgor to be sufficient for personal
jurisdiction in any action against Pledgor in any such court and to be otherwise
effective and binding service in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Secured Party to bring proceedings against Pledgor in the courts of any
other jurisdiction.
9
10
SECTION 23. WAIVER OF JURY TRIAL.
PLEDGOR AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this transaction, including contract claims, tort claims,
breach of duty claims, and all other common law and statutory claims. Pledgor
and Secured Party each acknowledge that this waiver is a material inducement for
Pledgor and Secured Party to enter into a business relationship, that Pledgor
and Secured Party have already relied on this waiver in entering into this
Agreement and that each will continue to rely on this waiver in their related
future dealings. Pledgor and Secured Party further warrant and represent that
each has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 23 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may
be filed as a written consent to a trial by the court.
SECTION 24. COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
10
11
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
REGENT COMMUNICATIONS, INC.
By:
------------------------------
Name:
Title:
S-1
12
BANK OF MONTREAL, CHICAGO BRANCH,
as Secured Party
By:
------------------------------
Name:
Title:
S-2
