1
EXHIBIT 10.134
================================================================================
LOAN AGREEMENT
BY AND BETWEEN
▇▇▇▇▇-▇▇▇▇▇▇▇ BROADCASTING, A
LIMITED PARTNERSHIP
AND
▇▇▇▇▇▇ COMMUNICATIONS OF
SACRAMENTO-29, INC.
FOR
TELEVISION STATION KCMY-TV
SACRAMENTO, CALIFORNIA
* * *
SEPTEMBER 6, 1996
================================================================================
2
TABLE OF CONTENTS
Page
----
ARTICLE I AMOUNT AND TERMS OF THE LOANS ............................. 2
Section 1.1 The Loan ......................................... 2
Section 1.2 The Promissory Note ............................... 2
Section 1.3 Interest ......................................... 2
Section 1.4 Principal ......................................... 3
Section 1.5 Mandatory Prepayment ............................. 3
Section 1.6 Information ....................................... 3
Section 1.7 Prepayment ....................................... 3
Section 1.8 Payments; Payment on Non-Business Days ........... 3
Section 1.9 Taxes ............................................. 3
ARTICLE II CLOSING ................................................... 4
Section 2.1 Closing ........................................... 4
ARTICLE III SECURITY ................................................... 4
Section 3.1 Security Interest ................................. 4
Section 3.2 Pledge Agreements ................................. 4
Section 3.3 Collateral Assignments ........................... 4
ARTICLE IV CONDITIONS OF LENDING ..................................... 5
Section 4.1 Conditions Precedent to Loan ..................... 5
Section 4.2 Compliance ....................................... 7
ARTICLE V REPRESENTATIONS AND WARRANTIES ............................. 7
Section 5.1 Existence and Standing ........................... 7
Section 5.2 Authorizations, Compliance with Laws ............. 7
Section 5.3 Capitalization ................................... 8
Section 5.4 No Consent ....................................... 8
Section 5.5 Binding Obligations ............................... 8
Section 5.6 Litigation ....................................... 9
Section 5.7 No Default ....................................... 9
Section 5.8 Compliance with Laws ............................. 9
Section 5.9 Taxes ............................................. 9
Section 5.10 Title to Properties ............................... 9
Section 5.11 Absence of Undisclosed Liabilities ............... 9
Section 5.12 Solvency ....................................... 10
Section 5.13 Claims ......................................... 10
Section 5.14 Material Misstatement ........................... ▇▇
-▇-
▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ OF BORROWER ................................... 10
Section 6.1 Affirmative Covenants ........................... 10
Section 6.2 Negative Covenants ............................. 12
Section 6.3 Reporting Requirements ......................... 15
ARTICLE VII EVENTS OF DEFAULT ....................................... 16
Section 7.1 Events of Default ............................... 16
Section 7.2 Effect of Event of Default ..................... 18
ARTICLE VIII MISCELLANEOUS ........................................... 19
Section 8.1 No Waiver; Cumulative Remedies ................. 19
Section 8.2 Amendments ..................................... 19
Section 8.3 Conflicts ....................................... 19
Section 8.4 Address for Notices ............................. 19
Section 8.5 Expenses ....................................... 20
Section 8.6 Binding Effect; Assignment ..................... 20
Section 8.7 Governing Law; Venue ........................... 21
Section 8.8 Severability of Provisions ..................... 21
Section 8.9 Headings ....................................... 22
Section 8.10 Rights Affected by Extensions ................... 22
Section 8.11 Survival of Representations and Warranties ...... 22
Section 8.12 FCC Compliance ................................. 22
Section 8.13 Further Assurances ............................. 22
Section 8.14 Indemnification ................................. 23
Section 8.15 Maximum Interest ............................... 23
Section 8.16 Subsidiary ..................................... 24
Section 8.17 No Joint Ventures ............................... 24
-ii-
4
LIST OF EXHIBITS
Exhibit 1 -- Promissory Note
Exhibit 2 -- Security Agreement
Exhibit 3 -- Pledge Agreements
Exhibit 4 -- Collateral Assignment
Exhibit 5 -- Acknowledgment and Consent
Exhibit 6 -- Acknowledgment and Estoppel Agreement
LIST OF SCHEDULES
Schedule 5.3 -- Partnership Interests
Schedule 5.11 -- Unsecured Creditors
Schedule 5.13 -- Claims
-iii-
5
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 6th day of September, 1996, is
by and between ▇▇▇▇▇▇ COMMUNICATIONS OF SACRAMENTO-29, INC., a Florida
corporation having its principal offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Lender"), and ▇▇▇▇▇-▇▇▇▇▇▇▇ BROADCASTING, A LIMITED
PARTNERSHIP, a California limited partnership having its principal offices at
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower owns and operates television station KCMY-TV,
Channel 29, Sacramento, California (the "Station"), pursuant to authorizations
issued by the Federal Communications Commission ("FCC");
WHEREAS, Borrower and Lender have entered into an Option Agreement
dated as of September 6, 1996 (the "Option Agreement"), pursuant to which
Lender grants to Borrower an option to require Lender to purchase substantially
all of the assets of the Station, and Borrower grants to Lender an option to
require Borrower to sell substantially all of the assets of the Station,
pursuant to the terms of an Asset Purchase Agreement to be entered into by
Lender and Borrower upon the exercise of either such option (the "Purchase
Agreement");
WHEREAS, Lender has agreed to make a loan to Borrower in the total
principal amount of Eight Million Five Hundred Thousand Dollars ($8,500,000);
WHEREAS, such loan shall be evidenced by a promissory note in the same
amount, which shall be issued by Borrower and dated as of the date hereof;
WHEREAS, ▇▇▇▇▇-▇▇▇▇▇▇▇ Broadcasting, Inc., a California corporation
and the sole general partner of Borrower ("General Partner"), and certain
limited partners of Borrower (the "Pledging Limited Partners") own in the
aggregate 50.4 percent of the partnership interests of the Borrower (the
General Partner and the Pledging Limited Partners are collectively, the
"Partners"), have agreed to grant Lender a security interest in all of their
respective partnership interests of Borrower (the "Pledged Interests") as
collateral security for the obligations of Borrower hereunder;
WHEREAS, Borrower and Lender have entered into a Time Brokerage
Agreement, dated as of the date hereof (the "Time Brokerage Agreement" and,
together with the Option
6
-2-
Agreement and Purchase Agreement, the "Transaction Documents"), pursuant to
which Lender agrees to provide programming for broadcast on the Station.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, Lender, Borrower and the Partners agree as follows:
ARTICLE I AMOUNT AND TERMS OF THE LOANS
Section 1.1 The Loan. Lender agrees, upon the terms and
conditions hereinafter set forth, to make a loan or loans to Borrower in an
aggregate principal amount not to exceed at any one time outstanding Eight
Million Five Hundred Thousand Dollars ($8,500,000) (the "Loan").
Section 1.2 The Promissory Note. The outstanding principal
amount of the Loan shall be evidenced by and subject to the terms of a
promissory note, dated of even date herewith, substantially in the form set
forth as Exhibit 1 hereto (as amended, renewed, restated, increased,
consolidated or substituted from time to time, the "Note"), payable to the
order of Lender and representing the obligation of Borrower to pay Lender the
amount of the Loan, with interest thereon, as prescribed in Section 1.4. All
references to the "Note" in this Loan Agreement, the Security Agreement, the
Partnership Pledge Agreement, the Stock Pledge Agreement, the Collateral
Assignment (each as defined in this Loan Agreement) and in such other
agreements and documents executed and delivered in connection with this Loan
Agreement shall be deemed to be references to the Note referred to in this
Section.
Section 1.3 Interest. The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum at all times equal to seven
percent. Interest shall be calculated on the basis of a year of three-hundred
and sixty (360) days and the actual number of days elapsed during the period
for which such interest is payable. Interest shall begin to accrue on the
outstanding principal amount of the Loan on the date of disbursement of all or
a portion of the Loan. The first payment of interest to Lender shall be due on
the fifth day of the first month following disbursement of all or any portion
of the Loan, at which time all accrued but unpaid interest shall become due and
payable. Thereafter, accrued interest shall be paid monthly on or before the
fifth day of each month until all principal and interest hereunder is paid in
full at the repayment or maturity of the Loan. If any installment of principal
or interest is not paid when due, that installment shall bear interest at a
rate per annum equal to the lower of the highest rate permitted by law or
fifteen percent (15%) from the date due thereof until paid in full.
7
-3-
Section 1.4 Principal. Subject to the terms of Section 1.5, the
outstanding principal balance of the Loan plus any accrued and unpaid interest
thereon shall be due and payable on the fifth anniversary of the funding of the
Loan (the "Maturity Date").
Section 1.5 Mandatory Prepayment. Notwithstanding anything in
this Agreement to the contrary, upon (a) any termination of the Option
Agreement, Purchase Agreement or Time Brokerage Agreement in accordance with
their respective terms or (b) the closing of a sale of substantially all of the
Station's assets or the partnership interests of Borrower to any party other
than Lender or any affiliate of Lender, if Borrower fails to exercise its Put
Option prior to the expiration of the Put Termination Date and Lender fails to
exercise its Call Option prior to the expiration of the Call Termination Date
(as such terms are defined in the Option Agreement), Lender shall have no
further obligation to make any Loans hereunder and the entire outstanding
principal balance and all accrued but unpaid interest thereon and all other
amounts owed by Borrower to Lender hereunder shall be due and payable within
thirty (30) days following such termination.
Section 1.6 Information. Borrower agrees to furnish to Lender
such information as Lender may reasonably request in connection with the Loan
or the Station, including, without limitation, copies of invoices or other
evidence of the expenses incurred by Borrower in connection with the operation
of the Station.
Section 1.7 Prepayment. Borrower may prepay the Note in whole at
any time, or from time to time in part, with accrued interest to the date of
prepayment on the amount prepaid, without penalty, provided that each payment,
other than that for the full amount of the outstanding balance, shall be in the
amount of Ten Thousand Dollars ($10,000) or an integral multiple thereof. Each
prepayment on the Note shall be applied to installments of principal payable on
the Note in the inverse order of maturity.
Section 1.8 Payments, Payment on Non-Business Days. Whenever any
payment to be made hereunder or under the Note shall be due on a Saturday,
Sunday or public holiday, such payment may be made on the next succeeding
business day, and such extension of time in such case shall be included in the
computation of interest hereunder and under the Note. Payments of principal,
interest or any other amounts due hereunder or under the Note shall be made by
wire transfer or by delivery of a check by overnight courier to Lender in
accordance with wire instructions provided by Lender or at Lender's address
specified in Section 8.4, as the case may be, or by such other method as may be
agreed upon by Borrower and Lender.
Section 1.9 Taxes. All sums payable by Borrower hereunder or
under the Note, whether of principal, interest, fees, expenses or otherwise,
shall be paid in full, free of any
8
-4-
deductions or withholdings for any and all present and future taxes, levies,
imposts, stamps, duties, fees, assessments, deductions, withholdings, and other
governmental charges and all liabilities with respect thereto. If Borrower is
prohibited by law from making payments hereunder or under the Note free of such
deductions or withholdings, then Borrower shall pay such additional amount as
may be necessary in order that the actual amount received by Lender after such
deduction or withholding shall equal the full amount stated to be payable
hereunder or under the Note.
ARTICLE II CLOSING
Section 2.1 Closing. The closing of the transactions
contemplated by this Agreement shall occur, subject to the satisfaction of all
of the conditions set forth in Article IV, on the date hereof (the "Closing
Date") at the offices of Dow, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇; provided, however, that Lender and
Borrower agree to use their reasonable best efforts to conduct the closing by
mail.
ARTICLE III SECURITY
Section 3.1 Security Interest. As partial security for the Loan,
Borrower shall execute and deliver to Lender, on or before the Closing Date, a
security agreement in the form of Exhibit 2 hereto (the "Security Agreement").
Section 3.2 Pledge Agreements. As further security for the Loan,
on or before the Closing Date, (a) the Partners shall execute and deliver to
Lender a pledge agreement in the form of Exhibit 3-A hereto (the "Partnership
Pledge Agreement"), pursuant to which the Partners pledge to Lender all of
their respective rights and interests in the Pledged Interests as collateral
security for the Borrower's obligations hereunder and (b) each stockholder of
the General Partner (the "Stockholders") shall execute and deliver to Lender a
pledge agreement in the form of Exhibit 3-1B hereto (the "Stock Pledge
Agreement"), pursuant to which the Stockholders pledge to Lender all of their
rights and interests in all of the issued and outstanding capital stock of
General Partner (the "Stock") as collateral security for the Borrower's
obligations hereunder.
Section 3.3 Collateral Assignments. As further security for the
Loan, on or before the Closing Date, Borrower shall execute and deliver to
Lender a Collateral Assignment of Lease in the form of Exhibit 4 hereto (the
"Collateral Assignment"), pursuant to which Borrower assigns for security to
Lender all of Borrower's right, title and interest in and to the Radio Tower
Lease Agreement dated July 1, 1990 (the "Lease"), between Borrower and Halldark
Enterprises, Inc. ("Lessor"). In the event that, following the Closing Date,
9
-5-
Borrower enters into or assumes the lessee's interest under any other lease for
the Station's transmitter site, it shall execute and deliver to Lender a
Collateral Assignment substantially in the form of Exhibit 4 with respect to
such other lease. If requested by Lender, Borrower shall also deliver to
Lender with respect to any such other lease an Acknowledgment and Estoppel
Agreement in the form of Exhibit 6 hereto executed by the landlord under such
lease.
ARTICLE IV CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to Loan. The obligation of
Lender to disburse the Loan hereunder is subject to the following conditions
precedent:
(a) The Option Agreement and Time Brokerage Agreement
shall be in full force and effect and Borrower shall have complied in all
material respects with its obligations thereunder.
(b) Lender shall have received all of the following, on
or before the Closing Date, in form and substance satisfactory to Lender:
(i) The Note, duly executed and delivered by
Borrower;
(ii) The Security Agreement, together with
appropriate UCC-1 forms, duly executed and delivered by Borrower;
(iii) The Partnership Pledge Agreement, duly
executed and delivered by the Partners;
(iv) The Acknowledgment and Consent attached
hereto as Exhibit 5, duly executed by the General Partner and each limited
partner of Borrower (the "Consent");
(v) The Stock Pledge Agreement together with
share certificates for the Stock and blank stock powers, duly executed and
delivered by the Stockholders;
(vi) Certified copies of the resolutions of the
Board of Directors of Borrower's general partner evidencing approval of the
execution, delivery and performance of this Agreement, the Note and the
Security Agreement and other matters contemplated hereby;
10
-6-
(vii) Certified copies of the resolutions of the
Board of Directors of other Partners evidencing approval of the execution,
delivery and performance of this Agreement, the Partnership Pledge Agreement
and the other matters contemplated hereby;
(viii) Certified copies of the resolutions of the
Board of Directors of the Stockholders evidencing approval of the execution,
delivery and performance of this Agreement and the Stock Pledge Agreement and
the other matters contemplated hereby;
(ix) Certificate of Good Standing for Borrower
from the State of California issued no more than ten (10) days prior to the
Closing Date;
(x) Certificates of Good Standing for the General
Partner and each other Partner that is a corporation or limited partnership
from its respective state of organization issued no more than ten (10) days
prior to the Closing Date;
(xi) Copies of UCC, judgment and tax lien searches
in each jurisdiction in which collateral covered by the Security Agreement is
located, naming Borrower and the Partners as debtors;
(xii) A pay-off letter and such termination
statements as are required to terminate all security interests held by Union
Bank in any part of the collateral covered by the Security Agreement, each duly
executed by Union Bank;
(xiii) Pay-off letters from other secured creditors
of Borrower;
(xiv) The Collateral Assignment, duly executed and
delivered by Borrower;
(xv) Copies of the certificates evidencing the
insurance required to be maintained by Borrower pursuant to Section 6.l(e); and
(xvi) Such other agreements, certificates, opinions
of counsel and documents that Lender may reasonably require.
(c) In addition to the foregoing, Borrower shall use its
reasonable best efforts to obtain an Estoppel Agreement in the form of Exhibit
6 hereto duly executed by Lessor and shall use its best efforts to obtain an
Estoppel Agreement in the form of Exhibit 6 hereto duly executed by Great
Western Broadcasting as lessor under the master lease referred to in paragraph
12 of the Lease.
11
-7-
Section 4.2 Compliance. All of the representations and
warranties of Borrower in this Loan Agreement shall be true and accurate in all
material respects on and as of the Closing Date and the date of any subsequent
disbursement of any portion of the Loan, as if made on and as of such date and
time. Borrower shall be in compliance with all of the applicable terms and
provisions of this Agreement and no Event of Default or any event which with
the lapse of any applicable grace period or the giving of notice or both would
constitute an Event of Default shall have occurred and be continuing. Borrower
shall have performed all obligations and taken all actions to be performed or
taken by it hereunder on or prior to such date. On the Closing Date, Borrower
shall deliver to Lender a certificate, dated as of such date and signed by an
executive officer of Borrower, certifying compliance with the conditions of
this Section 4.2. The disbursement of the Loan to Borrower shall, in and of
itself, constitute a representation and warranty that Borrower, as of the date
of the Loan, is in compliance with this Section and if Borrower is not in
compliance with this Section, Lender shall not be required to disburse the Loan
to Borrower.
ARTICLE V REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and make the
Loan, Borrower represents and warrants as follows:
Section 5.1 Existence and Standing. Borrower is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of California and is qualified to do business and in good
standing under the laws of any other jurisdiction in which it conducts its
business, and has all requisite power and authority, partnership or otherwise,
to conduct its business, to own its properties and to execute and deliver, and
to perform all of its obligations under this Agreement, the Note, the
Collateral Assignment, the Security Agreement, and all other documents that
have been or will be executed and delivered by Borrower pursuant to this
Agreement (the foregoing documents, together with the Partnership Pledge
Agreement and the Stock Pledge Agreement, are collectively, the "Loan
Documents") .
Section 5.2 Authorizations, Compliance with Laws. The execution,
delivery and performance by Borrower of this Agreement, the Note, the
Collateral Assignment, the Security Agreement, and all other documents required
to be executed and delivered by Borrower pursuant to this Agreement, and the
execution, delivery and performance by the Partners of the Partnership Pledge
Agreement and by the Stockholders of the Stock Pledge Agreement, have been duly
authorized by all necessary action and do not and will not (i) violate (A) any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to
Borrower, the Partners, the Stockholders or the Station or (B) any provision of
the certificate of limited
12
-8-
partnership or agreement of limited partnership of Borrower or the Articles of
Incorporation or By-laws of the Partners; or (ii) result in a breach of or
constitute a default under any agreement or instrument to which Borrower, the
Stockholders or the Partners is a party or by which their properties may be
affected; or (iii) result in the creation of a lien, charge or encumbrance of
any nature upon Borrower's properties or assets other than as contemplated by
this Agreement.
Section 5.3 Capitalization. The Partners listed on Schedule 5.3
own beneficially and of record all of the partnership interests of Borrower
specified as owned by them on such Schedule. The Stockholders own beneficially
and of record all of the capital stock of the General Partner. All of the
partnership interests of Borrower and all of the capital stock of the General
Partner have been duly and validly issued, are fully paid and nonassessable and
are free and clear of any liens, security interests or other claims or
encumbrances, except those granted to Lender pursuant to the terms of this Loan
Agreement and the other Loan Documents. Neither Borrower nor the Partners has
any commitment or obligation, either firm or conditional, to issue, deliver,
purchase or sell, under any offer, option agreement, bonus agreement, purchase
plan, incentive plan, compensation plan, warrant, conversion rights, contingent
share agreement, stockholders agreement, partnership agreement or otherwise,
any Pledged Interests or other equity securities or securities convertible into
Pledged Interests, except for any such commitment or obligation that complies
with clauses (i), (ii) or (iii) of Section 6.2(e) hereof.
Section 5.4 No Consent. Except for such filings with and
approvals of the FCC that may be required in connection with the exercise by
Lender of its rights under the Loan Documents upon an Event of Default, no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department or agency, is or will be
necessary for the valid execution, delivery and performance by Borrower of this
Agreement, the Note, the Collateral Assignment, the Security Agreement, or any
other document required to be executed and delivered by Borrower pursuant to
this Agreement, by the Partners of this Agreement or the Partnership Pledge
Agreement or by the Stockholders of this Agreement or the Stock Pledge
Agreement.
Section 5.5 Binding Obligations. This Agreement, the Note, the
Collateral Assignment, the Security Agreement, the Partnership Pledge
Agreement, the Stock Pledge Agreement and all other documents required to be
executed and delivered by Borrower, Stockholders or the Partners pursuant to
this Agreement have been executed and delivered by a duly authorized officer of
Borrower, or, in the case of the Partnership Pledge Agreement, by the Partners,
or, in the case of the Stock Pledge Agreement, by the Stockholders, and
constitute legal, valid and binding obligations of Borrower, in the case of the
Partnership
▇▇
-▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, of the Partners, or, in the case of the Stock Pledge
Agreement, by the Stockholders, enforceable in accordance with their respective
terms.
Section 5.6 Litigation. There are no actions, suits or
proceedings pending, or, to the knowledge of Borrower, threatened against or
affecting Borrower or its properties or the Partners before any court or
governmental department or agency which materially adversely affects the
transactions contemplated by this Agreement or which would have a material
adverse effect on the business, properties, prospects, operation or condition
(financial or otherwise) of the Station or Borrower.
Section 5.7 No Default. Borrower is not in default in the
performance, observance or fulfillment of any of the obligations or conditions
contained in any material agreement or instrument to which it is a party, nor
with respect to any order, judgment, writ, injunction or decree of any court,
governmental authority or arbitration board.
Section 5.8 Compliance with Laws. Borrower has complied with all
applicable federal, state and local laws. Borrower has obtained all necessary
licenses and permits required for the conduct of its business and operations or
such licenses and permits have been applied for and are now being diligently
pursued.
Section 5.9 Taxes. Borrower has filed all tax returns and
reports (federal, state and local) required to be filed by it, and has paid all
taxes shown thereon, including interest and penalties, and all assessments
received by it (except to the extent that the same are being contested in good
faith by appropriate proceedings diligently prosecuted and as to which adequate
reserves have been set aside on the books of Borrower in conformity with
generally accepted accounting principles).
Section 5.10 Title to Properties. Borrower has good and
marketable title to all of its property and assets and valid and enforceable
leasehold interests in the property which it holds under lease, all such
property, assets and leasehold interests being free and clear of any and all
mortgages, deeds of trust, assignments, liens, security interests, charges or
encumbrances of any nature whatsoever, except for those created hereby, and no
mortgages, deeds of trust, financing statements or other evidences of security
interests covering all or any of the aforesaid property are on file among the
records of any public office, except those evidencing a security interest in
favor of Lender.
Section 5.11 Absence of Undisclosed Liabilities. Except for (i)
obligations arising under the rules and regulations of the FCC, (ii)
obligations under the Loan Documents, (iii) liabilities and obligations
incurred pursuant to the terms of the Transaction Documents, (iv) unsecured
indebtedness for borrowed money not in excess of $1,000,000, a complete and
14
-10-
accurate list of each such creditor and the amount owed to each such creditor
is set forth in Schedule 5.11 hereto, and (v) liabilities incurred in the
ordinary course of business (other than for borrowed money), Borrower has on
the date hereof no material liabilities or obligations relating to the Station
or otherwise of any nature, whether accrued, absolute, contingent or otherwise.
Section 5.12 Solvency. Borrower has received, or has the right to
receive, consideration which is the reasonable equivalent value of the
obligations and liabilities that Borrower has incurred to Lender. Borrower is
not insolvent as defined in Section 101 of Title 11 of the United States Code
or any applicable state insolvency statute, nor, after giving effect to the
consummation of the transactions contemplated herein, will Borrower be rendered
insolvent by the execution and delivery of this Agreement, the Note or the
other Loan Documents to Lender. Borrower is not engaged, and, after the
application of proceeds of the Loan to redeem certain partnership interests of
Borrower and the distribution of proceeds of the Loan to certain partners of
Borrower, Borrower is not about to engage, in any business or transaction for
which the assets retained by it shall be an unreasonably small capital, taking
into consideration the obligations to Lender incurred hereunder and under the
Loan Documents. Borrower does not intend to, and Borrower does not believe
that it will, incur debts beyond its ability to pay them as they mature.
Section 5.13 Claims. Schedule 5.13 is an accurate and complete
list, in all material respects, of all debts owed to or claims held by Borrower.
Section 5.14 Material Misstatement. No statement made herein or
information, exhibit or report furnished by Borrower to Lender in connection
with this Agreement or its negotiation, contains any material misstatement of
fact or omits to state a material fact or any fact necessary to make the
foregoing not misleading.
ARTICLE VI COVENANTS OF BORROWER
Section 6.1 Affirmative Covenants. So long as the Note shall
remain unpaid, Borrower hereby covenants and agrees that it will:
(a) Payment of Obligations. So long as Lender shall have
made the payments to Borrower required by the terms of the Time Brokerage
Agreement, it being understood that any failure by Lender to make such payments
as a result of a breach by Borrower of the Time Brokerage Agreement shall not
excuse Borrower from complying with its obligations under this Section 6.1(a),
pay punctually and discharge when due: (i) the Notice of Apparent Liability for
Forfeiture in the amount of $20,000 assessed by the FCC's Mass Media Bureau
against the Borrower by letter dated March 29, 1995; (ii) all
15
-11-
indebtedness, other than the indebtedness listed on Schedule 5.11, hereafter
incurred; (iii) all taxes, assessments and governmental charges or levies
imposed upon it or its income or profits, or upon any properties belonging to
it; (iv) claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords and other like persons which, if unpaid might become a lien or charge
upon the property of Borrower; provided that this covenant shall not require
the payment of any of the matters set forth in (ii), (iii) and (iv) above if
the same shall be contested in good faith and by proper proceedings diligently
pursued and as to which adequate reserves have been set aside on the books of
Borrower in accordance with generally accepted accounting principles.
(b) Preservation of Existence. Preserve and maintain its
respective existence, rights, franchises and privileges in the jurisdiction of
its organization.
(c) Maintenance of Properties. Maintain and preserve all
of its properties necessary or useful in the proper conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(d) Compliance with Laws. Comply in all material
respects with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority.
(e) Maintenance of Insurance. Maintain with responsible
and reputable insurance companies policies on all of its properties and
covering such risks, including public liability and workers' compensation, in
such amounts as are usually carried by companies engaged in similar businesses
and owning similar properties as Borrower, and promptly upon execution thereof
provide to Lender copies of all such policies and any riders or amendments
thereto. The policies of insurance required hereunder shall name Lender as an
additional loss payee or additional insured, as applicable, and shall provide
that Lender shall receive at least thirty (30) days' written notice prior to
the cancellation, termination or alteration of any such policy.
(f) Operations in Ordinary Course. Continue to operate
its business in the ordinary course.
(g) Perfection of Liens. Do all things reasonably
requested by Lender to preserve and perfect as first liens and security
interests the liens and security interests of Lender arising pursuant to the
Security Agreement, the Partnership Pledge Agreement, the Stock Pledge
Agreement, the Collateral Assignment or any other agreement required hereunder.
16
-12-
(h) FCC Approval. If counsel to Lender reasonably
determines that the consent of the FCC is required in connection with the
performance of this Agreement, the Partnership Pledge Agreement, the Stock
Pledge Agreement, the Security Agreement, the Collateral Assignment or any
other document delivered to Lender in connection herewith or therewith or as a
result of any action which may be taken pursuant hereto or thereto, then
Borrower, at Lender's expense at any time prior to the occurrence of an Event
of Default (as defined in Article VII hereof), and at Borrower's expense at any
time after the occurrence of an Event of Default, agrees to use its best
efforts to secure such consent and to cooperate with Lender in any action
commenced by Lender to secure such consent.
(i) Agreements. Comply with its obligations under the
Transaction Documents.
(j) Information and Inspection. Borrower shall furnish
to Lender from time to time, upon request, such information as is reasonably
requested by Lender pertaining to the performance by Borrower of its
obligations hereunder or to any matter concerning the books, records,
operations, financial condition, properties, activities or business of the
Station. At all reasonable times and with reasonable notice to Borrower,
Borrower shall permit any authorized representatives designated by Lender to
visit and inspect any of the properties of Borrower and its books and records
relating to the Station, and to make copies thereof, and to discuss Borrower's
affairs, finances and accounts with the management and independent accountants
of Borrower. Nothing herein shall be deemed to permit Lender to have access to
any documents or other materials not relating to the assets of the Partnership
or the transactions contemplated hereunder.
Section 6.2 Negative Covenants. So long as the Note shall remain
unpaid and the Agreement shall not have been terminated, Borrower hereby
covenants that it will not:
(a) Indebtedness. Create or incur, assume or suffer to
exist any indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, except for:
(i) indebtedness evidenced by the Note; (ii) unsecured indebtedness (other than
for borrowed money) incurred in the ordinary course of business not to exceed
Seventy-Five Thousand Dollars ($75,000) in the aggregate at any one time; (iii)
unsecured indebtedness for borrowed money not to exceed One Million Dollars
($1,000,000) in the aggregate at any one time; (iv) obligations or liabilities
arising under the indemnification provisions of the Purchase Agreement.
(b) Liens. Create, assume or suffer to exist, directly
or indirectly, any security interest, mortgage, deed of trust, pledge, lien,
charge or other encumbrance, of any
17
-13-
nature whatsoever upon any of its properties or assets, now owned or hereafter
as acquired, excluding, however, from the operation of this covenant:
(i) any security interest or lien created
pursuant to or in connection with this Agreement or securing the Loan, the
Security Agreement, the Partnership Pledge Agreement, Stock Pledge Agreement or
the Collateral Assignment;
(ii) liens for taxes or assessments either not
delinquent or the validity of which are being contested in good faith by
appropriate legal or administrative proceedings and as to which adequate
reserves shall have been set aside on its books, in conformity with generally
accepted accounting principles;
(iii) materialmen's, mechanics', carriers',
workmen's, repairmen's, warehousemen's or other like liens arising in the
ordinary course of business and either not yet due and payable or being
contested in good faith by appropriate legal proceedings and as to which
adequate reserves shall have been set aside on its books, in conformity with
generally accepted accounting principles;
(iv) deposits or pledges to secure payment of
workers' compensation, unemployment insurance or other social security
benefits or obligations; or
(v) any judgment lien, singly or aggregated with
other judgment liens, in an amount less than Fifty Thousand Dollars ($50,000),
unless the judgment it secures shall not, within sixty (60) days after the
entry thereof, have been discharged, vacated, reversed, or execution thereof
stayed pending appeal, or shall not have been discharged, vacated or reversed
within sixty (60) days after the expiration of any such stay.
(c) Disposition of Assets. Except pursuant to the terms
of the Purchase Agreement, sell, transfer, lease or otherwise dispose of any of
its assets or properties other than sales of assets in the ordinary course of
business (which sales in the ordinary course of business shall expressly not
include any transfer or assignment of any FCC License).
(d) Merger. Enter into any consolidation or merger with,
or into any acquisition of all or substantially all of the properties or assets
of any person or entity.
(e) Transfer or Issuance of Equity. Issue any
partnership interests of Borrower or permit the transfer of any Pledged
Interests, or permit any options, warrants, convertible securities or other
rights to purchase such Pledged Interests, except that the foregoing shall not
apply to (i) any issuances or transfers to the Lender, (ii) any redemption by
the Borrower of its partnership interests prior to the occurrence of an Event
of Default, or
18
-14-
(iii) any transfers of any Pledged Interests so long as any such transfer does
not impair the security interest granted to the Lender in such Pledged
Interests and, prior to any such transfer, the transferee of the Pledged
Interests executes and delivers to Lender the Acknowledgment and Consent and
agrees to be bound by the Partnership Pledge Agreement pursuant to documents in
form and substance acceptable to Lender.
(f) Remove Assets. Remove any of the assets included in
the collateral described in the Security Agreement or any replacements for such
assets, to a jurisdiction in which no financing statement on Form UCC-1 has
been filed by Lender with respect to such assets.
(g) Distributions or Dividends. Declare or make,
directly or indirectly, any payment or distribution to any partner of Borrower,
as a dividend, return of capital or other payment or distribution of any kind
in respect of Borrower's partnership interests, that does not comply with
applicable laws, rules, regulations and orders of any governmental authority.
(h) Transactions with Affiliates. Enter into any
transaction or agreement, other,than the Transaction Documents, with any
affiliate of Borrower, except (i) Borrower shall be permitted to make loans,
advances or any other extension of credit to any affiliate of Borrower so long
as the total amount of any such loans, advances and extensions of credit by
Borrower to affiliates of Borrower and to all other parties does not exceed at
any time One Million Dollars ($1,000,000) in the aggregate, (ii) Borrower shall
be permitted to make capital contributions to the subsidiary partnership
contemplated by Section 8.15 hereof, and (iii) that Borrower shall be permitted
to enter into any other transaction or agreement with any affiliate of Borrower
so long as Borrower's monthly payment obligations, whether scheduled or by
penalty, foreclosure or acceleration, under all such transactions and
agreements in effect at any time do not exceed, in the aggregate, the
difference between the monthly Program Fee payable by Lender to Borrower under
the Time Brokerage Agreement and the monthly interest payments on the Loan
required by Section 1.3 hereof (such difference is the "Excess TBA Payment").
(i) Contracts. Enter into any contract or commitment
relating to its assets except for contracts involving monthly aggregate
payments of less than the Excess TBA Payment and contracts which can be
terminated without penalty on thirty (30) days' notice or less, or amend or
terminate any material contract (or waive any substantial right thereunder).
(j) Adverse Change. Suffer any material adverse change
resulting from any action taken by Borrower in the business, assets or
properties of the Station, including
19
-15-
any damage, destruction or loss affecting any assets used or useful in the
conduct of the business of the Station.
(k) Write-Down. Make any significant write-down of the
value of any assets without the prior written consent of Lender except and as
required by generally accepted accounting principles as required to present
accurate financial information on Borrower.
(l) Rights. Transfer or grant any right under, or enter
into any settlement regarding the breach or infringement of, any license,
patent, copyright, trademark, service ▇▇▇▇, trade name, franchise, or similar
right, or modify any existing right relating to Borrower.
(m) Agreements. Commit any material breach or default
under the Transaction Documents.
(n) Loans. Make any loans, advances or other extensions
of credit that exceed at any time One Million Dollars ($1,000,000) in the
aggregate.
Section 6.3 Reporting Requirements. So long as the Note shall
remain unpaid and the Agreement shall not have been terminated, Borrower shall,
unless Lender shall otherwise consent in writing, furnish to Lender:
(a) Default Certificate. As soon as possible and in any
event within five (5) business days after the occurrence of each Event of
Default (as defined in Section 7.1) of which Borrower has knowledge, the
statement of the President of the general partner of Borrower setting forth
details of such Event of Default and the action which Borrower proposes to take
with respect thereto.
(b) Notice of Litigation. Promptly give written notice
of all actions, suits and proceedings before any court or governmental agency,
domestic or foreign, which may be commenced or threatened against Borrower in
which the claim involved is Fifty Thousand Dollars ($50,000) or more and of any
other matter of the type described in Section 5.6.
(c) Indebtedness Certificate. On the last business day
of each calendar quarter, Borrower shall deliver to Lender a certificate signed
by the General Partner setting forth the total indebtedness of the Borrower,
whether matured or unmatured, liquidated or unliquidated, direct or contingent,
joint or several, as of the date of such certificate.
20
-16-
(d) Other Information. Such other information respecting
the business, properties, operations or the condition, financial or otherwise,
of Borrower or the Station as Lender may from time to time reasonably request.
ARTICLE VII EVENTS OF DEFAULT
Section 7.1 Events of Default. Under this Agreement, an Event of
Default shall be any of the following:
(a) Borrower shall fail to pay any installment of
principal or interest on the Note, or any other obligation to Lender in respect
of fees and expenses payable under the Loan Documents when due whether at the
due date thereof or by acceleration or otherwise, and, in the case of any
installment of interest, such default shall remain unremedied for a period of
five (5) days after written notice thereof is given by Lender to Borrower;
provided, however, that the payment defaults described in this Section 7.1(a)
shall not constitute an Event of Default if, at the time of such payment
default, Lender shall have failed to pay Borrower a Program Fee in accordance
with Attachment I of the Time Brokerage Agreement, it being understood that any
failure by Lender to make such payment as a result of a breach by Borrower of
the Time Brokerage Agreement shall not excuse Borrower from complying with its
obligations under this Section 7.1(a); or
(b) The security interest or lien of Lender in any
material portion of the collateral covered by the Security Agreement,
Partnership Pledge Agreement, Stock Pledge Agreement or the Collateral
Assignment shall at any time not constitute a legal, valid and enforceable
security interest or lien, and Borrower shall have failed to take such actions
as are reasonably requested by Lender to correct any such illegality,
invalidity or unenforceability within a reasonable period of time following
such request; or
(c) Any representation or warranty made by Borrower
herein, in the Security Agreement or the Collateral Assignment, by the Partners
in the Partnership Pledge Agreement, or by the Stockholders in the Stock Pledge
Agreement, or in any certificate, agreement, instrument or statement
contemplated by or made or delivered pursuant to or in connection with this
Agreement, the Note, the Collateral Assignment, the Security Agreement, the
Partnership Pledge Agreement, or the Stock Pledge Agreement, shall prove to
have been incorrect in any material respect when made; or
(d) Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement, the Note, the Security
Agreement, the Collateral Assignment, the Partners shall fail to perform or
observe any material term, covenant or agreement contained in the Partnership
Pledge Agreement, or Stockholders shall fail to
21
-17-
perform or observe any term, covenant or agreement contained in the Stock
Pledge Agreement, and any such failure remains unremedied for thirty (30) days
after written notice thereof shall have been given to Borrower by Lender; or
(e) Borrower or the Partners shall fail to pay any
indebtedness for borrowed money owing by Borrower or the Partners, or any
interest or premium thereon, when due, whether such indebtedness shall become
due by scheduled maturity, by required prepayment, by acceleration, by demand
or otherwise, or Borrower or the Partners shall fail to perform any term,
covenant or agreement under any agreement or instrument evidencing or securing
or relating to any such indebtedness owing by Borrower or the Partners, if the
effect of such failure is to accelerate, or to permit the holder of such
indebtedness to accelerate the maturity of such indebtedness and, in the case
of any of the foregoing, Lender reasonably determines in the exercise of its
sole discretion that the failure to pay or perform could have a material
adverse effect on (i) the value of the assets of Borrower or the Pledged
Interests, (ii) the enforceability of the Loan Documents by the Lender in
accordance with their respective terms or (iii) the exercise by the Lender of
its rights and remedies under the Loan Documents; or
(f) [Reserved]
(g) Either (i) Borrower, the Partners or the Stockholders
shall fail to pay its debts as they mature in the ordinary course of business;
or (ii) Borrower, the Partners or the Stockholders shall file a petition
commencing a voluntary case concerning it under any Chapter of Title 11 of the
United States Code entitled "Bankruptcy"; or (iii) Borrower, the Partners or
the Stockholders shall apply for or consent to the appointment of any receiver,
trustee, custodian or similar officer for it or for all or any substantial part
of its property; or (iv) such receiver, trustee, custodian or similar officer
shall be appointed without the application or consent of Borrower, the Partners
or the Stockholders and such appointment shall continue undischarged for a
period of thirty (30) days; or (v) an involuntary case is commenced against
Borrower, the Partners or the Stockholders under any Chapter of the
aforementioned Title 11 and an order for relief under such Title 11 is entered
or the petition commencing the case is controverted but is not dismissed within
thirty (30) days after the commencement of the case; or (vi) Borrower, the
Partners or the Stockholders shall institute (by petition, application, answer,
consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding relating
to it under the laws of any jurisdiction; or (vii) any such proceeding shall be
instituted against Borrower, the Partners or the Stockholders and shall remain
undismissed for a period of thirty (30) days; or (viii) Borrower, the Partners
or the Stockholders shall take any action for the purpose of effectuating the
foregoing, and, in the case of any of the foregoing events with respect to the
Stockholders or the Partners other than the General
22
-18-
Partner, Lender reasonably determines in the exercise of its sole discretion
that the occurrence of any of the foregoing events could have a material
adverse effect on (i) the value of the assets of Borrower or the Pledged
Interests, (ii) the enforceability of the Loan Documents by the Lender in
accordance with their respective terms or (iii) the exercise by the Lender of
its rights and remedies under the Loan Documents; or
(h) Any court, government, or government agency shall
condemn, seize or otherwise appropriate or take custody or control of all or a
substantial portion of the property or assets of Borrower; or
(i) Other than any license for ATV or DTV facilities,
there shall be a cancellation, denial or revocation of any material FCC License
for the Station, Borrower shall be finally denied renewal of any such FCC
License, or any such FCC License shall be renewed on terms that materially
adversely affect the economic or commercial value or usefulness thereof; or
(j) Any money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an amount in excess of
Fifty Thousand Dollars ($50,000), or (ii) in the aggregate at any time an
amount in excess of Fifty Thousand Dollars ($50,000), and in either case not
adequately covered by insurance as to which the insurance company has
acknowledged coverage, shall be entered or filed against Borrower or its assets
and shall remain undischarged, unvacated, unbonded or unstayed for a period of
60 days or in any event later than five days prior to the date of any proposed
sale thereunder; or
(k) Any material adverse effect upon or change in (a) as
a result of any action taken by Borrower, the business, assets or properties of
the Station, including any damage, destruction or loss affecting any assets
used or useful in the conduct of the business of the Station, (b) as a result
of any action taken by Borrower, liabilities or capitalization of Borrower or
on the ability of Borrower to conduct its business, (c) as a result of any
action taken by Borrower or the Partners, the ability of Borrower, the Partners
or any other party to a Loan Document (other than Lender) to perform its
obligations hereunder or under any other Loan Document to which it is a party,
(d) the validity or enforceability of this Agreement, the Note or any other
Loan Document, (e) the rights or remedies of Lender under this Agreement, the
Note or any other Loan Document or at law or in equity, or (f) as a result of
any action taken by Borrower, the value of any material collateral granted to
Lender pursuant to any Loan Document shall occur.
Section 7.2 Effect of Event of Default. Should any Event of
Default occur, Lender may at its option by written notice to Borrower declare
the entire unpaid principal amount of the Note, together with all unpaid
interest and all other amounts payable under this
23
-19-
Agreement and every other obligation of Borrower to Lender, immediately due and
payable, whereupon the Note and all such obligations shall become and be
forthwith due and payable, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by Borrower, anything
contained herein or in the Note or in such other note or evidence of
indebtedness to the contrary notwithstanding; provided, however, that in case
of an Event of Default under Section 7.1(g), all the obligations of Borrower
under this Agreement and the Note shall become immediately due and payable as
of the date of any such Event of Default regardless of the cause of such Event
of Default and without any notice to Borrower required from Lender. Lender
shall have, in addition to all other rights and remedies allowed by law, the
rights and remedies of a secured party under the Uniform Commercial Code and,
without limiting the generality of the foregoing, the rights and remedies
provided for in the Security Agreement, Partnership Pledge Agreement, the Stock
Pledge Agreement and the Collateral Assignment, which provisions are hereby
incorporated by reference.
ARTICLE VIII MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies. No failure or delay
on the part of Lender in exercising any right, power or remedy hereunder shall
operate as a waiver, nor shall any single or partial exercise of any such
right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
Section 8.2 Amendments. No amendment, modification, termination
or waiver of any provision of this Agreement, the Note, the Security Agreement,
the Partnership Pledge Agreement, the Stock Pledge Agreement or the Collateral
Assignment, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless in writing, signed by Lender and then only in the
specific instance and for the specific purpose for which given. No notice to
or demand on Borrower in any case shall entitle it to any other or further
notice or demand in similar or other circumstances.
Section 8.3 Conflicts. In the event of any conflict or
inconsistency between any provision of this Agreement and a provision of the
Note, the Security Agreement, the Partnership Pledge Agreement, the Stock
Pledge Agreement or the Collateral Assignment, the provisions of this Agreement
shall control.
Section 8.4 Address for Notices. All notices and other
communications under this Agreement shall be in writing and shall be served by
personal service or by mailing a copy thereof by registered or certified mail,
return receipt requested, to the applicable party at the addresses indicated
below:
24
-20-
If to Borrower: ▇▇▇▇▇-▇▇▇▇▇▇▇ Broadcasting, A Limited Partnership
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
If to Lender: ▇▇▇▇▇▇ Communications of Sacramento-29, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or at such other address as may be designated by either party in a written
notice to the other complying as to delivery with the terms of this Section.
All such notices and other communications shall be effective when deposited in
the mails.
Section 8.5 Expenses. In the event of a default by Borrower or
Lender hereunder which results in a lawsuit or other proceeding for any remedy
available under this Agreement or any other Loan Document, the prevailing party
shall be entitled to reimbursement from the other party of all costs and
expenses incurred by such party directly in the enforcement of this Agreement
or the other Loan Documents, including, without limitation, the reasonable fees
and expenses of any attorney to whom the Note is referred for collection
(whether or not litigation is commenced) or for representation out of court, in
trial, on appeal or in proceedings under any bankruptcy or insolvency law or
otherwise. Borrower shall pay any and all taxes and fees payable or determined
to be payable in connection with the execution, delivery or recordation of any
instruments and documents to be delivered hereunder. In addition, Borrower
agrees to pay all the costs and expenses of Borrower in connection with the
negotiation, preparation and execution of the Loan Documents and all the costs
of furnishing all opinions by counsel for Borrower, and of Borrower's
performance of and compliance with all agreements and conditions contained
herein and in the other Loan Documents on its part to be performed or complied
with including, without limitation, confirming compliance with insurance
requirements.
Section 8.6 Binding Effect; Assignment. This Agreement shall
become effective when executed and thereafter shall be binding upon and inure
to the benefit of Borrower, Lender and their respective successors and assigns,
except that Borrower shall not have the right to assign any rights or
obligations hereunder without the prior written consent of Lender. Lender
shall be permitted to assign, upon prior written notice to Borrower but without
Borrower's consent, all or any portion of Lender's rights and interests
hereunder and under each other document executed in connection with this Loan
Agreement (x) to one or more other affiliates of Lender, and, upon any such
assignment, each reference herein or in such other document to "Lender" shall
be deemed to be and include a reference to such other
25
-21-
affiliate and (y) to creditors of Lender or its affiliates as security for
indebtedness of Lender or such affiliates. For purposes of this section, the
term affiliate shall mean, as applied to any entity or individual, any other
entity or individual directly or indirectly controlling, controlled by, or
under common control with, that entity or individual. For purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and under "common control with"), as applied to
any entity or individual, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
entity or individual, whether through the ownership of voting securities,
partnership interests or otherwise by contract.
Section 8.7 Governing Law; Venue. This Agreement, the Note, the
Security Agreement, the Partnership Pledge Agreement, the Stock Pledge
Agreement and related documents shall be governed by, and construed in
accordance with, the laws of the State of Florida with the exception of its
conflicts of laws provisions; provided that the effect of any recordation shall
be determined by the State thereof. Borrower and Lender hereby irrevocably
submit to the exclusive jurisdiction and venue of the state and federal
district courts for Sacramento, California for the purposes of any action or
proceeding arising out of or relating to this Agreement or the subject matter
hereof. Borrower and Lender hereby waive and agree not to assert, by way of
motion, as a defense or otherwise, in any such action or proceeding, any claim
that (A) they are not personally subject to the jurisdiction of such courts,
(B) the action or proceeding is brought in an inconvenient forum or (C) the
venue of the action or proceeding is improper. Borrower and Lender agree that,
notwithstanding any right or privilege they may possess at any time, they and
their property are and shall be generally subject to suit on account of the
obligations they have assumed hereunder. Borrower and Lender agree that
service in person or by certified or registered U.S. mail to its address set
forth in Section 8.4, or as subsequently changed as provided therein, shall
constitute valid in personam service upon Borrower and Lender and their
successors and assigns in any action or proceeding with respect to any matter
as to which they have submitted to jurisdiction hereunder. The obligations of
Borrower and Lender under this Section shall survive any termination of this
Agreement.
Section 8.8 Severability of Provisions. Any provision of this
Agreement, the Note, the Partnership Pledge Agreement, the Stock Pledge
Agreement, the Security Agreement, or the Collateral Assignmnent that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions or affecting the validity or
enforceability of any provisions in any other jurisdiction.
26
-22-
Section 8.9 Headings. Article and Section headings in this
Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 8.10 Rights Affected by Extensions. The rights of Lender
and its assigns shall not be impaired by any indulgence, release, renewal,
extension or modification which Lender may grant with respect to the
indebtedness or any part thereof, or with respect to the collateral or with
respect to any endorser, guarantor, or surety without notice or consent of
Borrower or any endorser, guarantee, or surety.
Section 8.11 Survival of Representations and Warranties. All
representations and warranties made in this Agreement and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Agreement and the Note and the making of the Loan
hereunder and continue in full force and effect, as of the respective dates as
of which they were made, until all of the obligations of Borrower to Lender
hereunder have been paid in full.
Section 8.12 FCC Compliance. Notwithstanding anything herein or
in any of the other Loan Documents to the contrary, but without limiting or
waiving Borrower's obligations hereunder or under any of the other Loan
Documents, Lender's remedies hereunder and under the other Loan Documents are
subject to compliance with the Communications Act of 1934, as amended, and all
applicable rules, regulations and policies of the FCC, and Lender will not take
any action pursuant to this Agreement or any of the other Loan Documents that
would constitute or result in any assignment of any FCC authorization held by
Borrower or any change of control of the Station if such assignment or change
of control would require under then existing law (including the written rules
and regulations promulgated by the FCC), the prior approval of the FCC, without
first obtaining such approval of the FCC. This Agreement, the other Loan
Documents and the transactions contemplated hereby and thereby do not and will
not constitute, create, or have the effect of constituting or creating,
directly or indirectly, actual or practical ownership of Borrower by Lender or
control, affirmative or negative, direct or indirect, of Borrower by Lender,
over the programming, management or any other aspect of the operation of
Borrower, which ownership and control remain exclusively and at all times in
Borrower until such time as Lender has complied with such law, rules,
regulations and policies.
Section 8.13 Further Assurances. From time to time, Borrower
shall execute and deliver to Lender such additional documents as Lender may
reasonably require to carry out the purposes of this Agreement or any of the
documents entered into in connection herewith, or to preserve and protect the
rights of Lender hereunder or thereunder.
27
-23-
Section 8.14 Indemnification. Borrower hereby indemnifies and
holds harmless Lender and its directors, officers, shareholders, employees,
agents, counsel, subsidiaries and affiliates (the "Indemnified Persons") from
and against any and all losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against any
Indemnified Person arising from any material breach by Borrower of the
provisions hereof, including, without limitation, any of the representations
and warranties, the documents entered into in connection herewith, or any of
them or any of the transactions contemplated hereby or thereby; provided,
however, that Borrower shall not be liable to any Indemnified Person, if there
is a judicial determination that such losses, liabilities, obligations,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the gross negligence or willful misconduct of such
Indemnified Person.
Section 8.15 Maximum Interest. Lender and Borrower intend that
this Agreement and the other Loan Documents conform to all applicable usury
laws. Accordingly, no provisions of the Loan Documents shall require the
payment or permit the collection of interest in excess of the maximum rate
permitted by applicable law ("Maximum Rate"), or obligate Borrower to pay any
taxes, assessments, charges, insurance premiums or other amounts which are held
to constitute interest to the extent that such payments, when added to the
other obligations under the Loan Documents, would be held to constitute
contracting for, or the payment by Borrower of, interest at a rate greater than
the Maximum Rate. Lender and Borrower further agree that:
(i) if any excess of interest in such respect is herein
or in any such other instrument provided for, or shall be adjudicated to be so
provided for herein or in any such instrument, the provisions of this
subsection 8.15 shall govern, and neither Borrower nor its successors or
assigns shall be obligated to pay the amount of such interest to the extent it
is in excess of the Maximum Rate;
(ii) if at any time the amount of interest under any of
the Loan Documents for a calendar year exceeds the Maximum Rate had the Maximum
Rate at all times been in effect, the interest chargeable under any such Loan
Document shall be limited to the amount of interest that could have been
charged if the Maximum Rate had at all times been in effect, but any subsequent
reductions in the interest due shall not reduce the rate of interest chargeable
under any such Loan Document below the Maximum Rate until the total amount of
interest accrued under any such Loan Document equals the amount of interest
that would have accrued if the interest provided for in any such Loan Document
had at all times been in effect and collectible;
28
-24-
(iii) if the maturity of any Loan Document is accelerated
for any reason, or in the event of any prepayment by Borrower, or in any other
event, earned interest may never include more than the Maximum Rate, computed
from the date of disbursement of the funds evidenced by such Loan Document
until payment, and any interest otherwise payable under such Loan Document that
is in excess of the Maximum Rate shall be canceled automatically as of such
acceleration or such other event and (if theretofore paid) shall be credited
against principal;
(iv) if it should be held that any interest payable or
chargeable under any Loan Document is in excess of the Maximum Rate, the
interest payable or chargeable under such Loan Document shall be reduced to the
maximum amount permitted by applicable federal or state law, whichever shall
permit the higher lawful interest, as construed by courts having jurisdiction
thereof; and
(v) the spreading, prorating and amortizing of interest
over the Maturity Date of the Loan Documents shall be allowed to the fullest
extent permitted by applicable law.
Section 8.16 Subsidiary. Notwithstanding anything to the contrary
contained herein, Borrower may establish a subsidiary partnership, of which
Borrower shall be the sole limited partner, and General Partner shall be the
sole general partner, and such subsidiary partnership, and the assets,
liabilities, business and prospects thereof, shall not be subject to the terms
and conditions of this Agreement.
Section 8.17 No Joint Ventures. Neither this Agreement, any other
Loan Document nor any action taken by Lender or Borrower hereunder or
thereunder shall be deemed to create any joint venture, partnership or other
business relationship between Lender and Borrower other than the
lender-borrower relationship expressly created hereby.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
29
-25-
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be executed by their respective duly authorized officers as of the
date first above written.
▇▇▇▇▇▇ COMMUNICATIONS OF
SACRAMENTO-29, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇▇-▇▇▇▇▇▇▇ BROADCASTING, A
LIMITED PARTNERSHIP
By: ▇▇▇▇▇-▇▇▇▇▇▇▇ Broadcasting, Inc.,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
