FIRST AMENDMENT TO 1996 TERM CREDIT AGREEMENT
THIS FIRST AMENDMENT TO 1996 TERM CREDIT AGREEMENT (the "First
Amendment"), dated as of July, 17, 1996, is intended to amend the terms of the
1996 Term Credit Agreement (the "Agreement") dated as of May, 3, 1996, among
DATA TRANSMISSION NETWORK CORPORATION, FIRST NATIONAL BANK OF OMAHA, FIRST
NATIONAL BANK, WAHOO, NEBRASKA, NBD BANK, NORWEST BANK NEBRASKA, N.A., FARM
CREDIT SERVICES OF THE MIDLANDS, PCA, and BROADCAST PARTNERS. The parties to
this Amendment shall include the original parties to the Agreement, THE SUMITOMO
BANK, LIMITED, a Japanese bank being represented by its office at 000 Xxxxx
Xxxxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000 and acting through its Chicago
branch ("Sumitomo"), MERCANTILE BANK OF ST. LOUIS, N.A., a national banking
association having its principal place of business at One Mercantile Center, 7th
and Xxxxxxxxxx Xxxxxxx, Xx. Xxxxx, Xxxxxxxx, 00000 and FIRST BANK, NATIONAL
ASSOCIATION (successor in interest to FirsTier Bank, National Association), a
national banking association having its principal place of business at 00xx xxx
X Xxxxxxx, Xxxxxxx, Xxxxxxxx 00000. All terms and conditions of the Agreement
shall remain in full force and effect except as expressly amended herein. All
capitalized terms herein shall have their respective meanings set forth in the
Agreement. The Agreement shall be amended as set forth below.
Section 1. "Article I: Definitions" of the Agreement shall be
amended by adding the following definitions:
Mercantile: Mercantile Bank of St. Louis, N.A., a national
banking association having its principal place of
business at One Mercantile Center, 7th and Xxxxxxxxxx
Xxxxxxx, Xx. Xxxxx, Xxxxxxxx 00000.
New York
Prime: The floating interest rate published
as the"Prime Rate" (the base rate on
corporate loans posted by at least 75% of
the nation's 30 largest banks) in the Wall
Street Journal on the first day of each
month, or if no rate is published on the
first day of any month, on the first day
thereafter when such rate is published. For
purposes of this Agreement, New York Prime
shall fluctuate on a monthly basis. Changes
to New York Prime shall be effective on the
first day of each month based on the "Prime
Rate" in effect on such day.
Release: The Federal Reserve Statistical Release.
Subsidiaries: Any corporation, business association,
partnership, joint venture, limited
liability company or other business entity
in which the Borrower, or one or
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more of its Subsidiaries, or the Borrower
and one or more of its Subsidiaries has
either (i) more than 50% of the equity
ownership thereof, or (ii) the power to
elect a majority of the directors or to
control the identification of the managing
or general partners or similar governing
persons thereof.
Sumitomo: The Sumitomo Bank, Limited, a Japanese bank
being represented by its office at 000 Xxxxx
Xxxxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx
00000 and acting through its Chicago branch.
The following definitions shall be amended to read as follows:
Banks: FNB-O, FNB-W, First Bank, Mercantile, NBD,
Norwest, Farm Credit, AgAmerica and Sumitomo
and such additional banks as may be added
hereto from time to time by mutual written
agreement of the parties.
Net Worth: The Borrower's consolidated net worth as
determined in accordance with generally
accepted accounting principles plus
subordinated debt. For purposes of this
definition, "subordinated debt" means
indebtedness of the Borrower which is
subordinate, in a manner satisfactory to the
Lenders, to the indebtedness due to the
Lenders, and the repayment of which is
forbidden during the existence of any Event
of Default hereunder; provided however, that
any such indebtedness shall not be deemed
subordinated debt to the extent of the
amount of principal payments that are due
thereon within one (1) year from the date of
determination.
Notes: Those certain promissory notes from the Bor-
rower to the Lenders dated as of May 3, 1996
and July 17, 1996, including, without
limitation, the Notes to the Banks and to
Broadcast Partners as referenced in Section
2.1 hereof, and such additional term notes
as the parties may hereafter agree to add
hereto as Notes.
Operating
Cash Flow: The Borrower's consolidated average monthly
earnings or loss before interest,
depreciation, amortization and taxes, less
current tax expense and plus or minus any
non-ordinary non-cash charges or credits to
earnings, which average shall be based on
the Borrower's actual financial results in
the two (2) full calendar months preceding
the date of determination. For purposes of
calculating Operating Cash Flow for this
Agreement, the Borrower shall not permit
deferred commission expenses to be
capitalized for any period in excess of
twelve (12) months.
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Related Loan
Agreements: The Loan Agreement dated as of October 9,
1992, between the Borrower and FNB-O,
FirsTier and FNB-W and the 1995 Restated
Loan Agreement dated as of June 29, 1995
between the Borrower and FNB-O, FirsTier,
FNB-W, NBD, Norwest, AgAmerica and Boatmen's
and any loan agreements issued in extension,
renewal, replacement, or reinstatement of
the foregoing, including the 1996 Revolving
Credit Agreement dated as of June 28, 1996
among the Borrower, FNB-O and certain other
banks named therein (the "1995 Restated Loan
Agreement").
Revolving
Credit Rate: The floating interest rate announced from
time to time by FNB-O as its "National Base
Rate." The National Base Rate is set by
FNB-O, solely in its discretion, to reflect
generally the rates charged by national
money center banks as their reference rates.
(Previously, the rate was announced by FNB-O
as its "New York Base Rate.") Rates charged
by FNB-O may be at, above or below the
National Base Rate, as determined by FNB-O
as to each respective customer.
Total
Indebtedness: All loans and other obligations of the Bor-
rower and its Subsidiaries, without
duplication, for borrowed money (including,
without limitation, the indebtedness due to
the Lenders and the holders of the Related
Bank Debt) regardless of the maturity
thereof but such term shall not include
subordinated debt of the Borrower, as such
term is defined in the definition of Net
Worth, up to $15,000,000 if such
subordinated debt is existing on May 3,
1996.
Section 2. Section 2.1 of the Agreement shall be amended to read
as follows:
2.1. Term Credit. The Banks agree to advance $44,119,900
to the Borrower for the purchase of substantially all of the
assets of Broadcast Partners. Such advances shall be made, in
one or more closings, on a pro rata basis by the Banks, based
on the following maximum advance limits for each Bank: (1) as
to FNB-O, $10,780,000; (ii) as to FNB-W, $245,000; (iii) as to
NBD, $6,223,000; (iv) as to Norwest, $4,047,000; (v) as to
Farm Credit, $10,388,000; (vi) as to Mercantile, $5,333,900;
(vii) as to Sumitomo, $5,170,000, (viii) as to First Bank,
$1,933,000. In addition, Broadcast Partners will receive a
replacement note for $4,070,100, representing a portion of the
purchase price consideration due to Broadcast Partners under
the Purchase Agreement.
It is understood and agreed by the parties that the
foregoing advances by FNB-O, FNB-W, NBD, and Farm Credit were
made at the initial closing under the Agreement on May 3,
1996. The foregoing advance by Norwest represents a new
advance of $2,225,000, which is in addition to the advance of
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$1,822,000 made at the initial closing under the Agreement on
May 3, 1996. The foregoing advances by Mercantile, Sumitomo
and First Bank represent new advances, the proceeds of which,
along with the new advance by Norwest, shall be used to
partially prepay the existing Note held by Broadcast Partners
in the original principal amount of $18,732,000. principal
amount of $18,732,000.
Section 3. The Borrower shall, upon the effective date hereof,
pay a fee of $7,330.95 to FNB-O, for distribution to the Banks making new
advances as follows: (i) $1,112.50 to Norwest; (ii) $2,666.95 to Mercantile;
(iii) $2,585.00 to Sumitomo; and (iv) $966.50 to First Bank.
Section 4. Notwithstanding Section 2.2 of the Agreement,
interest on the Notes issued to First Bank and Broadcast Partners hereunder
shall bear interest on the principal loan amount thereof at the following rates
until June 30, 1999 (whereupon the interest rate reset described in Section 2.2
of the Agreement shall be applicable):
(a) as to Broadcast Partners, the interest rate shall continue to
be 8.25% per annum; and
(b) as to First Bank, the rate shall be 8.36% per annum.
Notwithstanding Section 2.2 of the Agreement, the Notes issued to Mercantile,
NBD, Sumitomo, Norwest and FNB-W hereunder shall bear interest on the principal
loan amount thereof at a variable rate per annum equal to New York Prime minus
one-half of one percent (0.5%). After an Event of Default, such floating rate
Notes will bear interest at a rate per annum equal to three and one-half percent
(3.5%) above New York Prime.
Section 5. The following provisions of the Agreement shall be
amended as follows:
(a) Section 2.6 of the Agreement shall be amended to read as
follows:
Prepayment. Prepayments of the Notes may be made in
full or in part at any time upon 10 days prior
written notice to the Lenders; provided, however,
that unanimous consent of the Lenders shall be
required for any prepayment (other than a prepayment
to Broadcast Partners in accordance with Section 2.6A
below) which is not applied pro rata to the Lenders
in accordance with Section 8.2. Prepayment penalties
will be required as indicated below:
(a) The Borrower may prepay in full without penalty the
principal loan amounts outstanding under all Notes
which bear interest at a fixed rate in accordance
with Section 2.2 hereof, if such prepayment occurs on
June 30, 1999 and the Borrower has given the Banks at
least 30 days prior written notice of its intention
to make such prepayment.
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(b) If a prepayment of a Note which bears interest at a
fixed rate in accordance with Section 2.2 hereof
occurs other than in accordance with (a) above, the
Borrower shall pay to the respective Bank payee
thereof, at such payee's option, either: (1) the
Make-Whole Premium due in respect of such prepayment;
or (2) a prepayment fee equal to one and one-half
percent (1.50%) of the amount of such prepayment.
(c) The Borrower shall not be obligated to pay a Make-
Whole Premium or prepayment fee to Broadcast Partners
or to any Bank payee of a Note which bears interest
at a floating rate indexed to New York Prime.
(b) The sections of Articles IV, V, and VII of the Agree-
ment set forth on Attachment A hereto shall be
amended to read as set forth on Attachment A. All
other sections of such articles of the Agreement
shall remain in full force and effect.
(c) The last sentence of Section 8.1 of the Agreement
shall be deleted in its entirety and the following
shall be inserted in its place:
Notwithstanding the foregoing, unanimous approval
shall be required for: (i) any reduction or
compromise of the principal loan amount of the Notes,
the amount or rate of interest accrued or accruing
thereon or the fees due hereunder; (ii) extension of
the date of any scheduled payment; (iii) permitting
the sale of or releasing the security interest of the
Lenders in Collateral which comprises more than ten
percent (10%) of net book value of fixed assets of
the Borrower; (iv) any amendment of Sections 8.1 or
8.2 hereof. A Lender's commitment hereunder may not
be increased without the consent of such Lender, it
being understood, however, that increases in the
total facility hereunder may be made with the consent
of the holders of more than two-thirds of the
aggregate total outstanding obligations of the
Borrower to the Lenders under the Agreement, so long
as such increase does not result in the increase of
any non-consenting Lender's commitment hereunder.
(d) Add the following to the end of clause (a) of Section
8.2:
"and fees due to the Lenders and holders of the
Related Bank Debt"
Section 6. The Borrower hereby restates for the benefit of the
Lenders the representations and warranties contained in Article IV of the
Agreement, as amended by this First Amendment, and affirms that such
representations and warranties are true and correct as of the date of this First
Amendment.
Section 7. This First Amendment may be executed in several
counterparts and such counterparts together shall constitute one and the same
instrument.
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Section 8. This First Amendment shall be effective upon the
execution and delivery thereof by the parties hereto and the delivery of the
applicable Notes, dated July 17, 1996, to Sumitomo, Mercantile, First Bank,
Norwest, NBD, FNB-W and Broadcast Partners. Upon receipt of its replacement note
and accrued and unpaid interest thereof through July 17, 1996, each of FNB-O,
Farm Credit, FNB-W, NBD and Norwest agrees to surrender to the Borrower the Note
dated May 3, 1996 which the Borrower had previously delivered to such Bank. Upon
receipt of its replacement note and $14,661,900 plus accrued and unpaid
interest, Broadcast Partners agrees to surrender to the Borrower the Note dated
May 3, 1996 which the Borrower had previously delivered to Broadcast Partners.
References in the Notes to the Loan Agreement shall be deemed amended to refer
to the Loan Agreement as amended by this First Amendment. References in the
Notes to the Security Agreement shall be deemed amended to refer to the Security
Agreement as amended by the First Amendment to 1996 Restated Security Agreement
dated as of June 28, 1996.
IN WITNESS WHEREOF, the undersigned have executed this FIRST AMENDMENT
TO 1996 TERM CREDIT AGREEMENT dated as of July 17, 1996.
DATA TRANSMISSION NETWORK
CORPORATION
By
Title:
4511J
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FIRST NATIONAL BANK OF OMAHA
By
Title:
NOTICE: A credit agreement must be in writing to be enforceable under Nebraska
law. To protect you and us from any misunderstandings or disappointments, any
contract, promise, undertaking, or offer to forebear repayment of money or to
make any other financial accommodation in connection with this loan of money or
grant or extension of credit, or any amendment of, cancellation of, waiver of,
or substitution for any or all of the terms or provisions of any instrument or
document executed in connection with this loan of money or grant or extension of
credit, must be in writing to be effective.
INITIALED:
Borrower
7
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THE SUMITOMO BANK, LIMITED
By
Title:
By
Title:
NOTICE: A credit agreement must be in writing to be enforceable under Nebraska
law. To protect you and us from any misunderstandings or disappointments, any
contract, promise, undertaking, or offer to forebear repayment of money or to
make any other financial accommodation in connection with this loan of money or
grant or extension of credit, or any amendment of, cancellation of, waiver of,
or substitution for any or all of the terms or provisions of any instrument or
document executed in connection with this loan of money or grant or extension of
credit, must be in writing to be effective.
INITIALED:
Borrower
8
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FIRST NATIONAL BANK, WAHOO,
NEBRASKA
By
Title:
NOTICE: A credit agreement must be in writing to be enforceable under Nebraska
law. To protect you and us from any misunderstandings or disappointments, any
contract, promise, undertaking, or offer to forebear repayment of money or to
make any other financial accommodation in connection with this loan of money or
grant or extension of credit, or any amendment of, cancellation of, waiver of,
or substitution for any or all of the terms or provisions of any instrument or
document executed in connection with this loan of money or grant or extension of
credit, must be in writing to be effective.
INITIALED:
Borrower
9
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NBD BANK
By
Title:
NOTICE: A credit agreement must be in writing to be enforceable under Nebraska
law. To protect you and us from any misunderstandings or disappointments, any
contract, promise, undertaking, or offer to forebear repayment of money or to
make any other financial accommodation in connection with this loan of money or
grant or extension of credit, or any amendment of, cancellation of, waiver of,
or substitution for any or all of the terms or provisions of any instrument or
document executed in connection with this loan of money or grant or extension of
credit, must be in writing to be effective.
INITIALED:
Borrower
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NORWEST BANK NEBRASKA, N.A.
By
Title:
NOTICE: A credit agreement must be in writing to be enforceable under Nebraska
law. To protect you and us from any misunderstandings or disappointments, any
contract, promise, undertaking, or offer to forebear repayment of money or to
make any other financial accommodation in connection with this loan of money or
grant or extension of credit, or any amendment of, cancellation of, waiver of,
or substitution for any or all of the terms or provisions of any instrument or
document executed in connection with this loan of money or grant or extension of
credit, must be in writing to be effective.
INITIALED:
Borrower
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FARM CREDIT SERVICES OF THE
MIDLANDS, PCA
By
Title:
NOTICE: A credit agreement must be in writing to be enforceable under Nebraska
law. To protect you and us from any misunderstandings or disappointments, any
contract, promise, undertaking, or offer to forebear repayment of money or to
make any other financial accommodation in connection with this loan of money or
grant or extension of credit, or any amendment of, cancellation of, waiver of,
or substitution for any or all of the terms or provisions of any instrument or
document executed in connection with this loan of money or grant or extension of
credit, must be in writing to be effective.
INITIALED:
Borrower
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MERCANTILE BANK OF
ST. LOUIS, N.A.
By
Title:
NOTICE: A credit agreement must be in writing to be enforceable under Nebraska
law. To protect you and us from any misunderstandings or disappointments, any
contract, promise, undertaking, or offer to forebear repayment of money or to
make any other financial accommodation in connection with this loan of money or
grant or extension of credit, or any amendment of, cancellation of, waiver of,
or substitution for any or all of the terms or provisions of any instrument or
document executed in connection with this loan of money or grant or extension of
credit, must be in writing to be effective.
INITIALED:
Borrower
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FIRST BANK, NATIONAL
ASSOCIATION
By
Title:
NOTICE: A credit agreement must be in writing to be enforceable under Nebraska
law. To protect you and us from any misunderstandings or disappointments, any
contract, promise, undertaking, or offer to forebear repayment of money or to
make any other financial accommodation in connection with this loan of money or
grant or extension of credit, or any amendment of, cancellation of, waiver of,
or substitution for any or all of the terms or provisions of any instrument or
document executed in connection with this loan of money or grant or extension of
credit, must be in writing to be effective.
INITIALED:
Borrower
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BROADCAST PARTNERS
By
Title:
NOTICE: A credit agreement must be in writing to be enforceable under Nebraska
law. To protect you and us from any misunderstandings or disappointments, any
contract, promise, undertaking, or offer to forebear repayment of money or to
make any other financial accommodation in connection with this loan of money or
grant or extension of credit, or any amendment of, cancellation of, waiver of,
or substitution for any or all of the terms or provisions of any instrument or
document executed in connection with this loan of money or grant or extension of
credit, must be in writing to be effective.
INITIALED:
Borrower
4511J
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ATTACHMENT A
TO
FIRST AMENDMENT TO 1996 TERM CREDIT AGREEMENT
4.1 Corporate Existence. It and each of its Subsidiaries, if any, is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and duly qualified and in good standing in all
states where it is doing business except where the failure to be so qualified
would not have a material adverse effect on it and it has full power and
authority to own and operate its properties and to carry on its business. As of
July 12, 1996, the Borrower has no Subsidiaries.
4.2 Corporate Authority. It has full corporate power, authority and
legal right to execute, deliver and perform the Operative Documents to which it
is a party, and all other instruments and agreements contemplated hereby and
thereby, and to perform its obligations hereunder and thereunder; and such
actions have been duly authorized by all necessary corporate action, and are not
in conflict with any applicable law or regulation, or any order, judgment or
decree of any court or other governmental agency or instrumentality or its
articles of incorporation or bylaws, or with any provisions of any indenture,
contract or agreement to which it or any of its Subsidiaries is a party or by
which it or any of its Subsidiaries or any of its or their property may be
bound.
4.3 Validity of Agreements. The Borrower's Operative Documents have
been duly authorized, executed and delivered and constitute its legal, valid and
binding agreements, enforceable against the Borrower in accordance with their
respective terms (except to the extent that enforcement thereof may be limited
by any applicable bankruptcy, reorganization, moratorium or similar laws now or
hereafter in effect, or by principles of equity).
4.4 Litigation. Neither the Borrower nor any Subsidiary is a party
to any pending lawsuit or proceeding before or by any court or governmental body
or agency, which is likely to have a materially adverse effect on the Borrower's
ability to perform its obligations under its Operative Documents; nor is the
Borrower aware of any threatened lawsuit or proceeding, to which it or any
Subsidiary may become a party or of any investigation of any Court or
governmental body or agency into its affairs, which if instituted would have a
material adverse effect upon the Borrower's ability to perform its obligations
under its Operative Documents.
4.6 Defaults Under Other Documents. Neither the Borrower nor any Sub-
sidiary is in default or in violation (nor has any event occurred which, with
notice or lapse of time or both, would constitute a default or violation) under
any document or any agreement or instrument to which it may be a party or under
which it or any of its properties may be bound and the result of which would
have a material adverse effect upon the Borrower's ability to perform its
obligations under its Operative Documents.
4.7 Judgments. There are no outstanding or unpaid judgments (which
are not adequately bonded) of the Borrower or any Subsidiary which would have a
material adverse effect upon the Borrower's ability to perform its obligations
under its Operative Documents.
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4.8 Compliance with Laws. Neither the Borrower nor any Subsidiary is
in violation of any laws, regulations or judicial or governmental decrees in any
respect which could have any material adverse effect upon the validity or
enforceability of any of the terms of the Borrower's Operative Documents or
which could have a material adverse effect upon the Borrower's ability to
perform its obligations under its Operative Documents.
4.9 Taxes. All tax returns of the Borrower and its Subsidiaries for material
taxes required to be filed have been filed or extensions permitted by law have
been obtained; all taxes of the Borrower and its Subsidiaries of a material
nature and which are due and payable as reflected on such returns have been
paid, other than taxes which are due but for which only a nominal late payment
penalty is payable and for which the taxing authority is not yet entitled to
enforce its remedies for payment thereof and other than taxes being contested in
good faith and with respect to which adequate reserves have been established;
and no material amounts of taxes of the Borrower and its Subsidiaries not
reflected on such returns are payable. 4.11 Pension Benefits. Neither the
Borrower nor any Subsidiary maintains a "Plan" as defined in Section 3 of the
Employees Retirement Income Security Act of 1974 ("ERISA"), or each such entity
is in compliance with the minimum funding requirements with respect to any such
"Plan" maintained by it and it has not incurred any material liability to the
Pension Benefit Guaranty Corporation ("PBGC") or otherwise under ERISA in
connection with any such Plan.
4.13 Financial Condition. The financial condition of the Borrower an
its Subsidiaries is truly and accurately set forth in the most recent financial
statement which has been provided to the Lenders and no material adverse change
has occurred which would make such financial statement inaccurate or misleading.
5.1 Financial Reports.
(a) Within forty-five (45) days after the end of each month,
the Borrower, at its sole expense, shall furnish the Lenders a
consolidated balance sheet and statement of earnings of the Borrower
and its consolidated Subsidiaries, and such financial statements on a
consolidating basis as to the Borrower, all such financial statements
to be prepared in accordance with generally accepted accounting
principles consistently applied and certified as completed and correct,
subject to normal changes resulting from year-end audit adjustments, by
the chief financial officer of the Borrower.
(b) Within ninety (90) days after the close of the Borrower's
fiscal year, the Borrower, at its sole expense, shall furnish the
Lenders: (i) a consolidated balance sheet and statement of earnings of
the Borrower and its consolidated Subsidiaries, certified by Deloitte &
Touche, or other independent certified public accountants acceptable to
the Lenders, that such financial reports fairly present the financial
condition of the Borrower and its consolidated Subsidiaries and have
been prepared in accordance with generally accepted accounting
principles consistently applied; and (ii) a certificate from such
accountants certifying that in making the requisite audit for
certification of the Borrower's financial statements, the auditors
either (1) have obtained no knowledge, and are not
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otherwise aware of, any condition or event which constitutes an Event
of Default or which with the passage of time or the giving of notice
would constitute an Event of Default under Sections 5.3, 5.4, 5.7,
5.9(b), 5.9(d) or 5.11; or (2) have discovered such condition or event,
as specifically set forth in such certificate, which constitutes an
Event of Default or which with the passage of time or the giving of
notice would constitute an Event of Default under such Sections. The
auditors shall not be liable to the Lenders by reason of the auditors'
failure to obtain knowledge of such event or condition in the ordinary
course of their audit unless such failure is the result of negligence
or willful misconduct in the performance of the audit.
(c) Within thirty (30) days after submission to the Securities
and Exchange Commission, the Borrower shall provide to the Lenders
copies of its Forms 10K and 10Q, as submitted to the Securities and
Exchange Commission during the term of this Agreement.
(d) Within twenty (20) days after the end of each quarter,
the Borrower, at its expense, shall furnish the Lenders a certificate
of the chief financial officer of the Borrower in the form of Exhibit
C, setting forth such information (including detailed calculations)
sufficient to verify the conclusions of such officer after due inquiry
and review, that:
(i) The Borrower and each Subsidiary, either (y) is
in compliance with the requirements set forth in this Agreement or (z)
is NOT in compliance with the foregoing for reasons specifically set
forth therein; and
(ii) The chief financial officer of the Borrower has
reviewed or caused to be reviewed all of the terms of the Operative
Documents of the Borrower and that such review either (1) has NOT
disclosed the existence of any condition or event which constitutes an
event of default or any condition or event which with the passage of
time or the giving of notice would constitute an event of default under
the Operative Documents or (2) has disclosed the existence of a
condition or event which constitutes an event of default, or a
condition or event which with the passage of time or the giving of
notice would constitute an event of default, under the aforesaid
instrument or instruments and the specific condition or event is
specifically set forth.
(e) The Borrower shall provide the Lenders with such other
financial reports and statements as the Lenders may reasonably request.
5.4 Indebtedness.
(a) The Borrower shall not at any time permit the sum of the
Total Indebtedness to the Lenders and the holders of the Related Bank
Debt to exceed forty-eight (48) times Operating Cash Flow.
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(b) The Borrower shall not at any time permit consolidated
Total Indebtedness to exceed 350% of Net Worth.
(c) On the day the Borrower or a Subsidiary becomes liable
with respect to any debt and immediately after giving effect thereto
and to the concurrent retirement of any other debt, the sum of Total
Indebtedness, plus the amount of any outstanding subordinated debt of
the Borrower and its Subsidiaries, plus the contingent obligations of
the Borrower and its Subsidiaries under any guaranty of the debt of any
other person or entity (other than unsecured debt of a Subsidiary
incurred in the ordinary course of business for other than borrowed
money or to finance the purchase price of any property or business)
shall not exceed an amount equal to sixty (60) times Operating Cash
Flow at such date.
5.6 Notice of Default. The Borrower shall give to the Lenders prompt
written notification of the existence or occurrence of:
(a) any fact or event which results, or which with notice or
the passage of time, or both, would result in an Event of Default
hereunder;
(b) any proceedings instituted by or against the Borrower in
any federal, state or local court or before any governmental body or
agency, or before any arbitration board, or any such proceedings
threatened against the Borrower by any governmental agency, which is
likely to have a material adverse effect upon the Borrower's ability to
perform its obligations under its Operative Documents;
(c) any default or event of default involving the payment of
money under any agreement or instrument which is material to the
Borrower or any Subsidiary to which such entity is a party or by which
it or any of its property may be bound, and which default or event of
default would have a material adverse effect upon the Borrower's
ability to perform its obligations under its Operative Documents; and
(d) the Borrower shall give immediate notice of the commence-
ment of any proceeding under the Federal Bankruptcy Code by or against
the Borrower or any Subsidiary.
5.7 Distributions.
(a) Neither Borrower nor any Subsidiary shall declare any
dividends or make any cash distribution in respect of any shares of its
capital stock or warrants of its capital stock, without the prior
written consent of the Lenders; provided, however, that the Borrower
may declare stock dividends; provided, further, that the Borrower need
not obtain the Lenders' consent with respect to (i) dividends in any
one (1) year which are, in aggregate, less than 25% of the Borrower's
net operating profit after taxes in the previous four (4) quarters, as
reported to the Lenders pursuant to Section 5.1; or (ii) dividends or
distributions from any consolidated Subsidiary.
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(b) Neither the Borrower nor any Subsidiary other than a Sub-
sidiary which is wholly-owned by the Borrower shall purchase, redeem,
or otherwise retire any shares of its capital stock or warrants of its
capital stock if, immediately after the making of such purchase or
redemption, the Borrower or any Subsidiary will be in default of any
other covenant or provision of this Agreement (including, without
limitation, the covenants and provisions pertaining to minimum net
worth and limitations on indebtedness).
5.8 Compliance with Law and Regulations. The Borrower and each Sub-
sidiary shall comply in all material respects with all applicable
federal and state laws and regulations.
5.9 Maintenance of Property; Accounting; Corporate Form;
Taxes; Insurance.
(a) The Borrower and each Subsidiary shall maintain its pro-
perty in good condition in all material respects, ordinary wear and
tear excepted, and make all renewals, replacements, additions,
betterments and improvements thereto necessary for the efficient
operation of its business.
(b) The Borrower and each Subsidiary shall keep true books of
record and accounts in which full and correct entries shall be made of
all its business transactions, all in accordance with generally
accepted accounting principles consistently applied.
(c) The Borrower and each Subsidiary shall do or cause to be
done all things necessary to preserve and keep in full force and effect
its corporate form of existence as is necessary for the continuation of
its business in substantially the same form, except where such failure
to do so with respect to any Subsidiary would not have a material
adverse effect on the ability of the Borrower to perform its
obligations under the Operative Documents.
(d) The Borrower and each Subsidiary shall pay all taxes, as-
sessments and governmental charges or levies imposed upon it or its
property; provided, however, that the Borrower or any Subsidiary shall
not be required to pay any of the foregoing taxes which are being
diligently contested in good faith by appropriate legal proceedings and
with respect to which adequate reserves have been established.
(e) The Borrower shall maintain or cause to be maintained
liability insurance and casualty insurance upon the Collateral
(excluding equipment or inventory provided to Subscribers in the
ordinary course of business) and other tangible assets owned by it and
its Subsidiaries. The Borrower shall name FNB-O as agent for the
Lenders and the holders of the Related Bank Debt as the loss payee on
all such casualty insurance, and as an additional insured on all such
liability insurance and shall provide the Lenders with evidence of such
insurance upon request.
5.11 Guaranties. Neither the Borrower nor any Subsidiary shall guar-
anty or become responsible for the indebtedness of any other person or
entity; provided, however, that a
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Subsidiary may guaranty the obligation of the Borrower; provided further, that
the Borrower may guaranty the obligations of a Subsidiary so long as no Event of
Default (or not event or occurrence which with the passage of time or notice, or
both, would become an Event of Default) has occurred or will occur hereunder,
taking into account such guaranty and indebtedness.
5.12 Collateral. Neither the Borrower nor any Subsidiary shall incur
or permit to exist any mortgage, pledge, lien, security interest or other
encumbrance on the Collateral, except as permitted in the Security Agreement.
Subject to Section 5.4(b), the foregoing shall not be construed to prohibit the
Borrower or any Subsidiary from acquiring leased equipment in the ordinary
course of business. Without limiting the generality of the foregoing, the
Borrower covenants and agrees that it shall on request enforce for the benefit
of the Lenders and the holders of the Related Bank Debt, but at the sole expense
of the Borrower, any and all rights and remedies (including, without limitation,
rights to indemnity), that it may have with respect to the existence of any
liens, security interests or other encumbrances that may exist on the property
of the Borrower acquired from Broadcast Partners under the Purchase Agreement.
Notwithstanding anything else to the contrary herein or in the Operative
Documents, Broadcast Partners shall have no right to share in the proceeds of
any such recovery which constitutes the proceeds of any indemnity claim by the
Borrower under the Purchase Agreement.
5.14 Notice of Change in Ownership or Management. During the term of
this Agreement, the Borrower shall give the Lenders notice of the occurrence of
any of the following described events, which notice shall be given as soon as
the Borrower obtains notice or knowledge thereof:
(a) any change, directly or indirectly, in the existing con-
trolling interest in the Borrower; or
(b) any material adverse change in its management personnel.
A material adverse change in the Borrower's management personnel shall
be deemed to have occurred if any one (1) of the following has occurred
with respect to two of the four (4) individuals who are both officers
and members of the Board of Directors of the Borrower: (i) the
resignation, retirement, or voluntary or involuntary termination of
employment and/or status of such persons as officers and directors of
the Borrower; (ii) any announcement, notice of intent, resolution or
similar advance notice with respect to the matters referenced in the
foregoing clause; or (iii) the death, disability or legal incompetence
of such persons.
5.16 Subordinated Debt. Neither the Borrower nor any Subsidiary shall
incur any subordinated debt or issue any preferred stock or warrants for
preferred stock except upon the prior written consent of the Lenders. Neither
the Borrower nor any Subsidiary shall make any voluntary or optional prepayment
on any subordinated debt without the prior written consent of the Lenders.
Similarly, the Borrower shall not amend its articles of incorporation or any
other documents or agreements relating to the issuance of subordinated debt,
preferred stock or warrants for preferred stock without the prior written
consent of the Lenders. The indebtedness to Broadcast Partners under the Notes
shall not be considered subordinated debt.
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5.17 Subsidiaries. The Borrower shall give prompt written notice to
the Lenders of the Borrower's intent to acquire, or the Borrower's acquisition
of, any Subsidiary. Prior to the creation or acquisition of such Subsidiary, the
Borrower (i) shall cause a first security interest in the assets of such
Subsidiary to be perfected in favor of FNB-O, as agent for the Lenders and the
holders of the Related Bank Debt, and (ii) shall cause the Subsidiary to enter
into a security agreement, to execute and file such financing statements and to
provide opinions all in form satisfactory to the Lenders and the holders of the
Related Bank Debt, as to compliance with this section.
5.18 Amendments to Purchase Agreement. The Borrower shall not amend
the Purchase Agreement without the prior written consent of the Lenders.
7.1 Events of Default. Any of the following shall be deemed an event
of default under this Agreement (an "Event of Default"):
(a) Any payment of principal required by any of the Operative
Documents shall not be paid when due.
(b) Any payment of interest or other fees due hereunder or
under any of the Operative Documents shall not be paid within fifteen
(15) calendar days after the date on which such payment was invoiced or
due.
(c) Any representation or warranty of the Borrower under any
of the Operative Documents, or any financial reports or statements or
certificates submitted pursuant to this Agreement, shall prove to have
been false in any material respect when made.
(d) A failure of the Borrower or any Subsidiary to comply
with any requirement or restriction applicable to such entity and
contained in Sections 5.1, 5.2, 5.3, 5.4, 5.7, 5.11, 5.12, 5.13, 5.14,
5.15 or 5.16 of this Agreement.
(e) A failure of the Borrower or any Subsidiary to comply
with any requirement or restriction contained in any provision of the
Operative Documents not otherwise specified in this Article VI, which
failure remains unremedied for ten (10) days following receipt of
notice from FNB-O on behalf of the Lenders.
(f) The occurrence of a default or a breach of any of the ob-
ligations of the Borrower or any Subsidiary (other than obligations of
such Subsidiary to the Borrower) under any note, loan agreement,
preferred stock, subordinated debt instrument or agreement, or any
other agreement evidencing an obligation to repay borrowed money.
(g) The entry of a final judgment against the Borrower or any
Subsidiary for the payment of money, which is not covered by insurance,
and the expiration of thirty (30) days from the date of such entry
during which the judgment is not discharged in full or stayed.
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(h) The occurrence of any one or more of the following:
(1) The Borrower or any Subsidiary shall file a vol-
untary petition in bankruptcy or an order for relief shall be
entered in a bankruptcy case as to such entity or shall file
any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under
any present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency or other relief
for debtors; or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of such
entity or of all or any part of its property, or of any or all
of the royalties, revenues, rents, issues or profits thereof,
or shall make any general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its
debts or shall generally not pay its debts as they become due;
or
(2) A court of competent jurisdiction shall enter an
order, judgment or decree approving a petition filed against
the Borrower or any Subsidiary seeking any reorganization,
dissolution or similar relief under any present or future
federal, state or other statute, law or regulation relating to
bankruptcy, insolvency or other relief for debtors, and such
order, judgment or decree shall remain unvacated and unstayed
for an aggregate of thirty (30) days (whether or not
consecutive) from the first date of entry thereof; or any
trustee, receiver or liquidator of the Borrower or any
Subsidiary or of all or any part of its property, or of any or
all of the royalties, revenues, rents, issues or profits
thereof, shall be appointed without the consent or
acquiescence of such entity and such appointments shall remain
unvacated and unstayed for an aggregate of thirty (30) days
(whether or not consecutive); or
(3) A writ of execution or attachment or any similar
process shall be issued or levied against all or any part of
or interest in the Collateral, or any judgment involving
monetary damages shall be entered against the Borrower or any
Subsidiary which shall become a lien on the Collateral or any
portion thereof or interest therein and such execution,
attachment or similar process or judgment is not released,
bonded, satisfied, vacated or stayed within thirty (30) days
after its entry or levy.
(i) Any event of default shall occur under any Operative
Document.
(j) A change shall occur after November 8, 1993, directly or
indirectly, in the ownership or control of the Borrower;
provided, however, that changes in the ownership or control
of, or new issuances of, voting common stock which do not
exceed, cumulatively, 50% of the total issued and outstanding
shares of the Borrower as of September 30, 1993 shall not be
deemed an Event of Default under this Section 7.1(j); provided
further, that acquisitions of additional shares by members of
the existing executive management group of the Borrower shall
not be counted as changes in the ownership or control of the
Borrower under this Section 7.1(j). For purposes of computing
the total issued and outstanding shares as of September 30,
1993, warrants and options for such shares shall be included.
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(k) An Event of Default shall occur under any Related Bank
Debt or the Related Loan Agreement and the expiration of any
applicable cure period thereunder.
(l) The Borrower shall be obligated to prepay all or any por-
tion of its subordinated debt as a result of a Change of
Control.
(m) The Borrower pays, or is determined to be obligated to
pay, any indemnity to Broadcast Partners under the Purchase
Agreement in excess of $1,000,000 in the aggregate.
4511J/27
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