EXECUTION COPY
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CREDIT AGREEMENT
DATED AS OF AUGUST 24, 2000
BETWEEN
SALEM COMMUNICATIONS CORPORATION,
AS THE BORROWER,
THE LENDERS IDENTIFIED IN THE CREDIT AGREEMENT,
ING (U.S.) CAPITAL LLC,
AS THE ADMINISTRATIVE AGENT FOR THE LENDERS,
THE BANK OF NEW YORK,
AS THE SYNDICATION AGENT
AND
FLEET NATIONAL BANK,
AS THE DOCUMENTATION AGENT
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience of reference only.
PAGE
ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS.................................1
Section 1.01. Certain Defined Terms...........................1
Section 1.02. Accounting Terms; GAAP.........................17
Section 1.03. Interpretation.................................17
Section 1.04. Designation of Loans and Borrowings............17
ARTICLE II THE CREDITS......................................................17
Section 2.01. Loans..........................................17
Section 2.02. Borrowing......................................18
Section 2.03. Request for Borrowing..........................18
Section 2.04. Funding of Borrowing...........................18
Section 2.05. Interest Rate Continuation.....................19
Section 2.06. Notes..........................................19
ARTICLE III PAYMENTS........................................................20
Section 3.01. Repayment of Loans.............................20
Section 3.02. Optional Prepayment of Loans...................20
Section 3.03. Mandatory Prepayments..........................20
Section 3.04. Fees...........................................22
Section 3.05. Interest.......................................22
Section 3.06. Payments Generally; Pro Rata Treatment;
Sharing of Set-offs............................23
ARTICLE IV YIELD PROTECTION, ETC............................................24
Section 4.01. Alternate Rate of Interest.....................24
Section 4.02. Increased Costs................................25
Section 4.03. Break Funding Payments.........................26
Section 4.04. Taxes..........................................26
Section 4.05. Illegality.....................................27
ARTICLE V CONDITIONS PRECEDENT..............................................27
Section 5.01. Effective Date.................................27
ARTICLE VI REPRESENTATIONS AND WARRANTIES...................................30
Section 6.01. Organization; Powers...........................30
Section 6.02. Authorization; Enforceability..................31
Section 6.03. Governmental Approvals; No Conflicts...........31
Section 6.04. Financial Condition; No Material Adverse
Change.......................................31
Section 6.05. Properties.....................................32
Section 6.06. Litigation and Environmental Matters...........32
Section 6.07. Compliance with Laws and Agreements............33
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Section 6.08. Investment and Holding Company Status..........33
Section 6.09. Taxes..........................................33
Section 6.10. ERISA..........................................33
Section 6.11. Labor Relations................................33
Section 6.12. Disclosure.....................................34
ARTICLE VII COVENANTS.......................................................34
Section 7.01. Financial Statements and Other Information.....34
Section 7.02. Notices of Material Events.....................35
Section 7.03. Existence; Conduct of Business.................36
Section 7.04. Payment of Obligations.........................36
Section 7.05. Maintenance of Properties; Insurance...........36
Section 7.06. Books and Records; Inspection Rights...........36
Section 7.07. Compliance with Laws...........................36
Section 7.08. Use of Proceeds................................37
Section 7.09. Indebtedness...................................37
Section 7.10. Liens..........................................38
Section 7.11. Fundamental Changes............................38
Section 7.12. Investments, Loans, Advances, Guarantees
and Acquisitions.............................40
Section 7.13. Hedging Agreements.............................41
Section 7.14. Restricted Payments............................41
Section 7.15. Transactions with Affiliates...................41
Section 7.16. Restrictive Agreements.........................41
Section 7.17. Financial Condition............................41
Section 7.18. Subordinated Indebtedness......................42
Section 7.19. Additional Guarantors..........................42
Section 7.20. Environmental Compliance.......................42
Section 7.21. Dispositions...................................42
ARTICLE VIII EVENTS OF DEFAULT..............................................43
Section 8.01. Events of Default..............................43
ARTICLE IX THE ADMINISTRATIVE AGENT.........................................45
Section 9.01. Appointment, Powers and Immunities.............45
Section 9.02. Resignation....................................47
Section 9.03. Nonreliance....................................47
Section 9.04. The Syndication Agent and the Documentation
Agent........................................47
ARTICLE X MISCELLANEOUS.....................................................47
Section 10.01. Notices........................................47
Section 10.02. Expenses, Indemnification, Etc.................48
Section 10.03. Waiver.........................................48
Section 10.04. Amendments, Etc................................49
Section 10.05. Successors and Assigns.........................49
Section 10.06. Assignments and Participations.................49
Section 10.07. Survival.......................................51
Section 10.08. Agreements Superseded..........................51
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Section 10.09. Severability...................................51
Section 10.10. Captions.......................................52
Section 10.11. Counterparts...................................52
Section 10.12. Treatment of Certain Information;
Confidentiality..............................52
Section 10.13. Governing Law; Submission to Jurisdiction......52
Section 10.14. Waiver of Jury Trial...........................52
ANNEX 1 - Addresses for Notices and Commitments of the Lenders
ANNEX 2 - Insurance Requirements
SCHEDULES:
6.03 - Governmental Approvals
6.06 - Disclosed Matters
6.07 - Defaults
7.09 - Indebtedness
7.10 - Liens
7.12 - Subsidiaries
7.16 - Restrictive Agreements
EXHIBIT A - Form of Note
EXHIBIT B - Form of Acceptance and Assignment
EXHIBIT C - Form of Security Agreement
EXHIBIT D - Form of Guarantee and Security Agreement
EXHIBIT E - Form of Warrant Agreement
EXHIBIT F - Form of Station License Management Agreement
EXHIBIT G-1 - Form of Opinion of Counsel to the Obligors
EXHIBIT G-2 - Form of Opinion of Special Communications Counsel to the Obligors
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This CREDIT AGREEMENT (this "AGREEMENT") dated as of August
24, 2000, is made between SALEM COMMUNICATIONS CORPORATION, a Delaware
corporation (the "COMPANY") and each of the lenders that is an initial signatory
to this Agreement or that, pursuant to Section 10.06(b), becomes a "Lender"
under this Agreement (collectively, the "LENDERS"), for which Lenders ING (U.S.)
CAPITAL LLC is acting as the administrative agent (in that capacity, the
"ADMINISTRATIVE AGENT"), The Bank of New York is acting as the syndication agent
(in that capacity, the "SYNDICATION AGENT") and Fleet National Bank is acting as
the documentation agent (in that capacity, the "DOCUMENTATION AGENT").
The parties agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS.
Section 1.01. CERTAIN DEFINED TERMS. As used in this
Agreement, the following terms shall have the respective meanings specified
below:
"ACQUISITIONCO" shall mean Salem Communications Acquisition
Corporation, a Wholly Owned direct Subsidiary of the Company.
"ADJUSTED LIBO RATE" shall mean, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO
Rate for that Interest Period multiplied by (b) the Statutory Reserve Rate.
"ADJUSTED OPERATING CASH FLOW" shall mean, for any period,
Operating Cash Flow of the Company and its Subsidiaries for that period less
Other Media Cash Flow for that period.
"ADMINISTRATIVE AGENT" shall have the meaning assigned to that
term in the introductory paragraph to this Agreement.
"AFFILIATE" shall mean, with respect to a specified Person,
another Person that, directly or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"APPLICABLE MARGIN" shall mean, with respect to each
Eurodollar Loan, the percentage per annum set forth below for the relevant
period:
PERIOD EURODOLLAR LOANS
From the Effective Date through the 5.00%
date that is 180 days after the
Effective Date
From the date that is 181 days after 5.75%
the Effective Date through the date
that is 270 days after the Effective
Date
From the date that is 271 days after 6.50%
the Effective Date through the Maturity
Date
In the event that the Base Rate is applicable to any Loan, the
Applicable Margin shall be one percent (1%) less than that set forth above.
"APPLICABLE PERCENTAGE" shall mean, with respect to any
Lender, the percentage of the total Commitments represented by that Lender's
Commitment. If the Commitments have terminated or expired, the Applicable
Percentages shall be determined based upon the Commitments most recently in
effect, giving effect to any assignments.
"ASSIGNMENT AND ACCEPTANCE" shall mean an Assignment and
Acceptance, in the form of Exhibit B or any other form (consistent with the
terms of this Agreement) approved by the Administrative Agent, entered into by a
Lender and an assignee.
"BANKRUPTCY CODE" shall mean the Federal Bankruptcy Code of
1978.
"BASE RATE" shall mean, for any day, a rate per annum equal to
the higher of (a) the Federal Funds Effective Rate for that day plus 1/2 of 1%
and (b) the Prime Rate for that day. Each interest rate that this Agreement
provides is to be based upon the Base Rate shall change upon any change in the
Base Rate, effective as of the opening of business on the day of that change in
the Base Rate.
"BASIC DOCUMENTS" shall mean, collectively, this Agreement,
the Warrant Agreement, the Warrants, the Notes, the Intercreditor Agreement, the
Station License Management Agreement and the Security Documents.
"BOARD" shall mean the Board of Governors of the Federal
Reserve System of the United States of America.
"BORROWING" shall mean Loans of the same Type, made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect.
"BORROWING REQUEST" shall mean a request by the Company for a
Borrowing in accordance with Section 2.03.
"BRIDGE ACQUISITION" shall have the meaning assigned to that
term in Section 7.08(a).
"BUSINESS DAY" shall mean (a) any day on which commercial
banks are not authorized or required to close in New York City, New York or Los
Angeles, California and
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(b) when used in connection with any Eurodollar Loan any day on which dealings
in Dollar deposits are carried out in the London interbank market.
"CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all
obligations of that Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) property to the extent that such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP.
"CASH COLLATERAL ACCOUNT" shall mean the account to be
established at the request of the Administrative Agent by the Company with, and
in the name and under the control of, the Administrative Agent, as provided in
the Security Agreement.
"CASUALTY EVENT" shall mean, with respect to any Person, any
loss of or damage to, or any condemnation or other taking of, any Property of
that Person for which it or any of its Subsidiaries receives insurance proceeds
or proceeds of a condemnation award or other compensation.
"CHANGE OF CONTROL" shall mean (a) the failure of the
Permitted Holders to own beneficially (i) at least 51% of the outstanding voting
stock of the Company or (ii) at least 35% of the economic interest of the
Company or (b) the occurrence of a "Change of Control" under and as defined in
the Indenture.
"CHANGE IN LAW" shall mean (a) the adoption of any
Governmental Rule after the Signing Date, (b) any change in any Governmental
Rule or in the interpretation or application of any Governmental Rule by any
Governmental Authority after the Signing Date or (c) compliance by any Lender
(or, for purposes of Section 4.02(b), by any lending office of that Lender or by
that Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the Signing Date.
"CODE" shall mean the Internal Revenue Code of 1986.
"COMMITMENT" shall mean with respect to each Lender, the
commitment of that Lender to make an extension of credit under this Agreement
for the Bridge Acquisition and to fund the Interest Reserve resulting in, and
expressed as an amount representing the maximum aggregate amount of, that
Lender's Credit Exposure, as that commitment may be reduced or increased from
time to time pursuant to assignments by or to that Lender pursuant to Section
10.06. The initial amount of each Lender's Commitment is set forth on Annex 1 or
in the Assignment and Acceptance pursuant to which that Lender assumed its
Commitment, as applicable. The initial aggregate amount of the Lenders'
Commitments is $100,000,000.
"COMMUNICATIONS ACT" shall mean the Federal Communications Act
of 1934.
"COMPANY" shall have the meaning assigned to that term in the
introductory paragraphs of this Agreement.
"COMPANY STOCK" shall mean the Company's Class A Common Stock
(one cent par value).
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"CONTROL" shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "CONTROLLING" and "CONTROLLED" shall have correlative meanings.
"CREDIT EXPOSURE" shall mean, with respect to any Lender at
any time, the sum of the outstanding principal amount of that Lender's Loans.
"DEBT INCURRENCE" shall mean the incurrence of any
Indebtedness by the Company or any of its Subsidiaries, other than (a)
Indebtedness under the Basic Documents and (b) Indebtedness described in Section
7.09(e).
"DEFAULT" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
"DISCLOSED MATTERS" shall mean the actions, suits and
proceedings and the environmental matters disclosed in Schedule 6.06.
"DISPOSITION" shall mean any sale, assignment, transfer or
other disposition of any Property (whether now owned or hereafter acquired) by
the Company or any of its Subsidiaries to any Person, excluding any sale,
assignment, transfer or other disposition in the ordinary course of business and
on ordinary business terms.
"DOCUMENTATION AGENT" shall have the meaning assigned to that
term in the introductory paragraph to this Agreement.
"DOLLARS" and "$" shall mean lawful money of the United States
of America.
"EFFECTIVE DATE" shall mean the date on or after the Signing
Date on which the conditions specified in Section 5.01 are satisfied (or waived
in accordance with Section 10.04).
"ENVIRONMENTAL CLAIM" shall mean, with respect to any Person,
any written or oral notice, claim, demand or other communication (a) by any
Governmental Authority for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, (b) by
any Person seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence of Hazardous
Materials or arising from alleged injury or threat of injury to human or animal
health or safety or to the environment or (c) by any Person otherwise alleging
or asserting that Person's liability for investigatory costs, cleanup costs,
governmental response costs, damages to natural resources or other Property,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Hazardous Material at
any location, whether or not owned by that Person, or (ii) circumstances forming
the basis of any violation, or alleged violation, of any Environmental Law.
"ENVIRONMENTAL LAWS" shall mean any and all present and future
Governmental Rules relating in any way to the environment, preservation or
reclamation of natural resources, the management, release or threatened release
of any Hazardous Material or to health and safety matters. The term
"Environmental Law" shall include the terms and conditions of any
4
Governmental Approval issued under any Environmental Law or with respect to any
Hazardous Material.
"ENVIRONMENTAL LIABILITY" shall mean any liability, contingent
or otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Company or any of its
Subsidiaries directly or indirectly resulting from or based upon (a) violation
of any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which actual liability has been assumed or
imposed with respect to any of the foregoing.
"EQUITY ISSUANCE" shall mean (a) any issuance or sale by the
Company or by any of its Subsidiaries after the Effective Date of (i) any
capital stock, (ii) any warrants or options exercisable in respect of capital
stock (other than the Warrants and any warrants or options issued to directors,
officers or employees of the Company or of any of its Subsidiaries and any
capital stock of the Company issued upon the exercise of the Warrants or those
warrants) or (iii) any other security or instrument representing an equity
interest (or the right to obtain any equity interest) in the issuing or selling
Person other than any such issuance or sale by any Subsidiary of the Company to
the Company or to any Wholly Owned Subsidiary of the Company or (b) the receipt
by the Company or by any of its Subsidiaries after the Effective Date of any
capital contribution received (whether or not evidenced by any equity security
issued by the recipient of that contribution) other than any capital
contribution (without derogating from any restriction on any such capital
contribution in any Loan Document) by the Company or by any Wholly Owned
Subsidiary of the Company to any Subsidiary of the Company.
"EQUITY RIGHTS" shall mean any subscriptions, options,
warrants, commitments, preemptive rights or agreements of any kind for the
issuance, sale, registration or voting of the capital stock of or other
ownership interests in any Person or any outstanding securities convertible into
that capital stock or other ownership interests.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974.
"ERISA AFFILIATE" shall mean any trade or business (whether or
not incorporated) that, together with the Company, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA EVENT" shall mean (a) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued under ERISA with
respect to a Plan (other than an event for which the 30-day notice period is
waived); (b) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (d) the incurrence by the Company or any of
its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Company or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention
5
to terminate any Plan or Plans or to appoint a trustee to administer any Plan;
(f) the incurrence by the Company or any of its ERISA Affiliates of any
liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Company or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Company or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"EVENT OF DEFAULT" shall have the meaning assigned to that
term in Section 8.01.
"EXCLUDED CASH FLOW" shall mean, at any time for any period,
Operating Cash Flow for that period allocable to all Excluded Properties at that
time.
"EXCLUDED PROPERTY" shall mean, at any date of determination,
any radio station that was acquired by the Company or any of its Subsidiaries
during the 18-month period immediately preceding that date of determination (as
mutually agreed between the Administrative Agent and the Company) the
programming format of which the Company or its Subsidiaries changed from a
non-religious format as the time of acquisition to a religious talk,
conservative talk or religious music format and that the Company designates as
an Excluded Property; PROVIDED that any such radio station has also been
designated as an "Excluded Property" under the HoldCo Credit Agreement.
"EXCLUDED TAXES" shall mean, with respect to any Lender Party
or any other recipient of any payment to be made by or on account of any
obligation of the Company under the Basic Documents, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which that recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Company is located and (c) in the case of
a Foreign Lender (other than an assignee pursuant to a request by the Company
under Section 4.05(b)), any withholding tax that is imposed on amounts payable
to that Foreign Lender at the time that Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to that
Foreign Lender's failure to comply with Section 4.04(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Company with respect to that withholding tax pursuant to
Section 4.04(a).
"FCC" shall mean the United States Federal Communications
Commission.
"FCC LICENSE" shall mean any Governmental Approval issued to
the Company or any of its Subsidiaries by the FCC pursuant to the Communications
Act.
"FCC REGULATIONS" shall mean, with respect to any Obligor, the
Communications Act, the regulations of the FCC under the Communications Act and
all other Governmental Rules applicable to that Obligor (or any Person under the
control of that Obligor) by reason of that Obligor (or any Person under the
control of that Obligor) being a licensee of an FCC License.
6
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if that
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
that day for those transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"FEES" shall mean the fees payable under Section 3.04 and
under any other provisions of any Basic Document.
"FINANCIAL OFFICER" shall mean, with respect to any Obligor,
the chief financial officer, principal accounting officer, treasurer or
controller of that Obligor.
"FOREIGN LENDER" shall mean any Lender that is organized under
the laws of a jurisdiction other than that in which the Company is located. For
purposes of this definition, the United States of America, each state of the
United States and the District of Columbia shall be deemed to constitute a
single jurisdiction.
"GAAP" shall mean generally accepted accounting principles in
the United States of America.
"GOVERNMENTAL APPROVALS" shall mean any authorization,
consent, approval, license, lease, ruling, permit, waiver, exemption, filing,
registration or notice by or with, or other action of, any Governmental
Authority.
"GOVERNMENTAL AUTHORITY" shall mean any national (United
States of America or foreign), state or local government, any political
subdivision or any governmental, quasi-governmental, judicial, public or
statutory instrumentality, authority, agency, body, central bank, or other
entity exercising executive, legislative, judicial, taxing, regulatory or
administrative power or functions of or pertaining to government.
"GOVERNMENTAL RULES" shall mean any law, rule, regulation,
ordinance, order, code, judgment, decree, directive, guideline, policy, or any
similar form of decision of, or any interpretation or administration of any of
the foregoing by, any Governmental Authority.
"GUARANTEE" shall mean, as to any Person, any obligation,
contingent or otherwise, of that Person, directly or indirectly, guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person in any manner, including any obligation of that Person (a)
to purchase or pay (or advance or supply funds for the purchase or payment of)
that Indebtedness or other obligation or to purchase (or to advance or supply
funds for the purchase of) any security for that Indebtedness or other
obligation, (b) to purchase or lease Property or services for the purpose of
assuring the owner of that Indebtedness or other obligation of payment, (c) to
maintain working capital, equity capital, liquidity or any other financial
condition of that other Person so as to enable that other Person to pay that
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support that Indebtedness or
obligation other than endorsements for collection or
7
deposit in the ordinary course of business. The terms "GUARANTEE" and
"GUARANTEED" used as verbs shall have correlative meanings.
"GUARANTEE AND SECURITY AGREEMENT" shall mean a Guarantee and
Security Agreement, in substantially the form of Exhibit D, executed by each
Subsidiary Guarantor in favor of the Administrative Agent for the benefit of
each Lender Party.
"HAZARDOUS MATERIALS" shall mean all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"HEDGING AGREEMENT" shall mean any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"HOLDCO" shall mean Salem Communications Holding Corporation,
a Wholly Owned direct Subsidiary of the Company.
"HOLDCO CREDIT AGREEMENT" shall mean the Second Amended and
Restated Credit Agreement, dated as of the Signing Date, between HoldCo, the
lenders party to that agreement, The Bank of New York, as the administrative
agent, Bank of America, N.A., as the syndication agent, Fleet National Bank, as
the documentation agent, and Union Bank of California, N.A. and The Bank of Nova
Scotia, as the co-agents.
"HOLDCO LOAN DOCUMENTS" shall mean, collectively, (a) the
HoldCo Credit Agreement, (b) the other Loan Documents (as defined in the HoldCo
Credit Agreement) and (c) all other documents executed and delivered pursuant to
the HoldCo Credit Agreement.
"INACTIVE SUBSIDIARY" shall mean, as at any date, any
Subsidiary of the Company that, as at the end of and for the then most recent
quarterly accounting period, shall have less than $50,000 in assets and less
than $50,000 in gross revenues; PROVIDED that the License Subsidiary shall not
under any circumstances be deemed to be an Inactive Subsidiary.
"INDEBTEDNESS" shall mean, for any Person, without
duplication, (a) all obligations of that Person for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations of that Person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of that Person upon which interest charges are customarily paid, (d)
all obligations of that Person under conditional sale or other title retention
agreements relating to Property acquired by that Person, (e) all obligations of
that Person in respect of the deferred purchase price of Property or services
(excluding current accounts payable incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for which the holder of
that Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on Property owned or acquired by that Person, whether or not the
Indebtedness so secured has been assumed, (g) all Guarantees by that Person of
Indebtedness of others, (h) the capitalized amount of all Capital Lease
Obligations of that Person, (i) all obligations, contingent or other, of that
Person as an account party in respect of letters of credit and letters of
guaranty and (j) all
8
obligations, contingent or other, of that Person in respect of bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which that Person is a general
partner) to the extent that such Person is liable for that Indebtedness as a
result of that Person's ownership interest in or other relationship with that
entity, except to the extent the terms of that Indebtedness provide that such
Person is not so liable.
"INDEMNIFIED TAXES" shall mean Taxes other than Excluded
Taxes.
"INDENTURE" shall mean the Indenture, dated as of September
25, 1997, between HoldCo (as successor to the Company) as Issuer, the guarantors
named in that instrument and The Bank of New York, as Trustee, relating to the
9.5% Senior Subordinated Notes in the principal amount of $150,000,000 due 2007.
"INITIAL SYNDICATION PERIOD" shall mean the period commencing
on the Effective Date and ending on the day on which the Administrative Agent
notifies the Company in writing that the initial syndication of the credit
facilities established under this Agreement has been completed.
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor
Agreement, dated as of the Signing Date, between the Administrative Agent and
The Bank of New York, in its capacity as the administrative agent under the
HoldCo Credit Agreement.
"INTEREST EXPENSE" shall mean, for any period, the sum for the
Company and its consolidated Subsidiaries (determined in accordance with GAAP)
of all interest expenses (adjusted to give effect to all Hedging Agreements and
fees and expenses paid in connection with the same), commitment fees and letter
of credit fees incurred (whether paid or capitalized) on Total Funded Debt.
"INTEREST PAYMENT DATE" shall mean (a) with respect to any
Eurodollar Loan, the last day of each Interest Period for that Loan, (b) with
respect to any Base Rate Loan, the last day of each March, June, September and
December and (c) the Maturity Date.
"INTEREST PERIOD" shall mean, with respect to any Eurodollar
Loan, the period commencing on the date the Base Rate Loans comprising the
Borrowing under Section 2.01 are converted to Eurodollar Loans under Section
2.02(b) and ending on the numerically corresponding day in the succeeding first
(during the Initial Syndication Period) or third (after the Initial Syndication
Period) calendar month and each successive period commencing on the last day of
the immediately preceding Interest Period and ending on the numerically
corresponding day in the succeeding first (during the Initial Syndication
Period) or third (after the Initial Syndication Period) calendar month, except
that (i) each Interest Period that commences on the last Business Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month and (ii) each Interest Period
that would otherwise end on a day that is not a Business Day shall end on the
next succeeding Business Day (or, in the case of an Interest Period for a
Eurodollar Loan, if that next succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day).
9
"INTEREST RESERVE" shall mean the proceeds of the Loan
deposited into the Cash Collateral Account for application in accordance with
Section 3.05(e).
"LENDER PARTY" shall mean, collectively, the Lenders in
whatever capacity (including as the Administrative Agent, the Syndication Agent
or the Documentation Agent) under any Basic Document.
"LENDERS" shall have the meaning assigned to that term in the
introductory paragraphs of this Agreement.
"LIBO RATE" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, the rate appearing on Page 3750 of the
Telerate Service (or on any successor or substitute page of the Telerate Service
providing rate quotations comparable to those currently provided, as determined
by the Administrative Agent from time to time) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of that Interest
Period, as the rate for dollar deposits with a maturity comparable to that
Interest Period. In the event that such rate is not available at that time for
any reason, then the "LIBO RATE" with respect to that Eurodollar Borrowing for
that Interest Period shall be the rate at which dollar deposits of $5,000,000
and for a maturity comparable to that Interest Period are offered by the
principal London office of ING Bank N.V. in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of that Interest Period.
"LICENSE SUBSIDIARY" shall mean a Wholly Owned Subsidiary of
AcquisitionCo that is formed to hold the FCC Licenses for the Station.
"LIEN" shall mean, with respect to any Property, (a) any lien,
mortgage, deed of trust, pledge, charge, security interest or encumbrance of any
kind in respect of that Property or any agreement to give, or notice of, any of
the foregoing, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to that asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to that securities.
"LOANS" shall mean loans made under this Agreement.
"MARGIN STOCK" shall mean "margin stock" within the meaning of
Regulations U and X.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on (a) the Property, business, operations, condition (financial or other) or
prospects of the Company and its Subsidiaries, taken as a whole, (b) the ability
of the Company to perform its obligations under any of the Basic Documents, (c)
the rights, remedies, powers and privileges of the Lender Parties under any of
the Basic Documents or (d) the timely payment of the Obligations.
"MATERIAL INDEBTEDNESS" shall mean Indebtedness (other than
under the Basic Documents) or obligations in respect of one or more Hedging
Agreements of any Obligor or any of Subsidiary of any Obligor in an aggregate
principal amount exceeding $5,000,000. For
10
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of that Obligor or any Subsidiary in respect of any Hedging
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that such Obligor or such Subsidiary would be required
to pay if that Hedging Agreement were terminated at that time.
"MATURITY DATE" shall mean the date falling on the day 364
days after the Effective Date. Notwithstanding the foregoing, if the Maturity
Date would otherwise fall on a day that is not a Business Day, it shall fall on
the preceding Business Day.
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NET AVAILABLE PROCEEDS" shall mean:
(a) in the case of any Disposition, the aggregate amount of
all cash payments, and the fair market value of any noncash consideration,
received by the Company and its Subsidiaries directly or indirectly in
connection with that Disposition; PROVIDED that (i) Net Available Proceeds shall
be net of (A) the amount of any legal, title and recording tax expenses,
commissions and other fees and expenses paid by the Company and its Subsidiaries
in connection with that Disposition and (B) any United States of America, state
and local Taxes estimated to be payable by the Company and its Subsidiaries as a
result of that Disposition (but only to the extent that those estimated Taxes
are in fact paid to the relevant Governmental Authority when due) and (ii) Net
Available Proceeds shall be net of any repayments by the Company or any of its
Subsidiaries of Indebtedness to the extent that (A) that Indebtedness is secured
by a Lien on the Property that is the subject of that Disposition and (B) the
transferee of (or holder of a Lien on) that Property requires that such
Indebtedness be repaid as a condition to the purchase of that Property;
(b) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation (excluding
business interruption payments) received by the Company and its Subsidiaries in
respect of that Casualty Event net of (i) reasonable expenses incurred by the
Company and its Subsidiaries in connection with that Casualty Event and (ii)
contractually required repayments of Indebtedness to the extent secured by a
Lien on the Property affected by that Casualty Event and any income and transfer
taxes payable by the Company or any of its Subsidiaries in respect of that
Casualty Event;
(c) in the case of any Equity Issuance, the aggregate amount
of all cash received by the Company and its Subsidiaries in respect of that
Equity Issuance net of reasonable expenses incurred by the Company and its
Subsidiaries in connection with that Equity Issuance; and
(d) in the case of any Debt Incurrence, the aggregate amount
of all cash received by the Company and its Subsidiaries in respect of that Debt
Incurrence net of (i) reasonable expenses incurred by the Company and its
Subsidiaries in connection with that Debt Incurrence and (ii) contractually
required repayments of any Indebtedness that is being refinanced with the
proceeds of that Debt Incurrence.
11
"NOTES" shall mean the Notes provided for in Section 2.06.
"OBLIGATIONS" shall mean the principal of each Lender's Loan,
interest, fees and any other amount payable by the Company under any Basic
Document.
"OBLIGOR" shall mean, collectively, the Company and the
Subsidiary Guarantors.
"OPERATING CASH FLOW" shall mean, at any time with respect to
any Person for any period: (a) revenues (exclusive of reciprocal and barter
revenues) of that Person, determined in accordance with GAAP for that period,
LESS (b) expenses (exclusive of depreciation, amortization, interest, income
tax, employee compensation payable solely in stock of the Company and reciprocal
and barter expenses, in each case to the extent included in any such expenses),
PLUS (c) non-recurring expense items and other non-cash expense items of that
Person for that period, in each case as mutually agreed upon between the Company
and the Administrative Agent, to the extent deducted in accordance with clause
(b) above, LESS (d) non-recurring or non-cash revenues or operating or
non-operating gains, LESS (e) the amount of any cash payments related to
non-cash expense items added pursuant to clause (c) above, LESS (f) in the case
of Operating Cash Flow of the Company and its Subsidiaries, Excluded Cash Flow.
Operating Cash Flow shall be adjusted on a consistent basis to reflect the
acquisition and Disposition of Property during that period as if any such
acquisition or Disposition of Property had occurred at the beginning of that
period, PROVIDED that pro-forma adjustments related to certain station
operations of such stations being acquired (as mutually agreed upon by the
Company and the Administrative Agent) shall be included in the calculation of
Operating Cash Flow. Operating Cash Flow shall exclude all gains and losses from
the Disposition of Property and all extraordinary gains and losses.
"OTHER MEDIA CASH FLOW" shall mean, at any time and for any
period, Operating Cash Flow for that period allocable to CCM Communications,
Inc. and OnePlace, Ltd. at that time.
"OTHER TAXES" shall mean any and all present or future stamp
or documentary taxes or any other excise or Property taxes, charges or similar
levies arising from any payment made under any Basic Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Basic
document.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PERMITTED ENCUMBRANCES" shall mean:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 7.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 7.04;
12
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary
course of business; and
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real Property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected Property or interfere with the ordinary
conduct of business of the Company or any Subsidiary; PROVIDED that the term
"Permitted Encumbrances" shall not include any Lien securing Indebtedness.
"PERMITTED HOLDERS" shall mean, as of any date of
determination, (a) any of Stuart W. Epperson, Nancy A. Epperson and Edward G.
Atsinger III, (b) any parent, spouse, sibling or issue of any Person described
in clause (a) above or of any such parent, spouse, sibling or issue, (c) any
trust, limited partnership or similar entity formed for the benefit of one or
more of the Persons in clauses (a) and (b) above or for the benefit of another
such entity or (d) in the event of the incompetence or death of any Person
described in clause (a) or (b) above, that Person's representatives or
beneficiaries, who at that date beneficially own or have the right to acquire,
directly or indirectly, voting stock of or economic interest in the Company.
"PERMITTED INVESTMENTS" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any of its agencies to the extent that such obligations are
backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of its acquisition;
(b) investments in commercial paper maturing within 270 days
from the date of its acquisition and having, at that date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of its
acquisition issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any state that has a
combined capital and surplus and undivided profits of not less than
$500,000,000; and
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in clause
(c) above.
"PERSON" shall mean any individual, corporation, limited
liability company, voluntary association, partnership, joint venture, company,
trust, unincorporated organization or Governmental Authority.
13
"PLAN" shall mean any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of which the
Company or any ERISA Affiliate is (or, if that plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"POST-DEFAULT RATE" shall mean, in respect of any Obligation
that is not paid when due (whether at stated maturity, upon acceleration, on any
optional or mandatory prepayment date or otherwise), a rate per annum during the
period from and including the due date to but excluding the date on which that
amount is paid in full equal to two percent (2%) PLUS (a) in the case of the
principal of any Loan, the rate otherwise applicable to that Loan from time to
time and (b) in each other case, the Base Rate as in effect from time to time
PLUS the Applicable Margin for Base Rate Loans.
"PRIME RATE" shall mean the rate of interest from time to time
announced by ING (U.S.) Capital LLC as its prime rate. That announced rate is
not necessarily the lowest rate offered by ING (U.S.) Capital LLC, and any other
extension of credit by ING (U.S.) Capital LLC may be at rates above, below or at
that announced rate.
"PROPERTY" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PURCHASE AGREEMENT" shall mean the Asset Purchase Agreement,
dated as of March 5, 2000, between the Company and the Seller.
"REGISTER" shall have the meaning specified for that term in
Section 10.04.
"RELATED PARTIES" shall mean, with respect to any specified
Person, that Person's Affiliates and the respective directors, officers,
employees, agents and advisors of that Person and that Person's Affiliates.
"REQUIRED LENDERS" shall mean, at any time, Lenders having
Credit Exposures representing at least 51% of the sum of the total Credit
Exposures at that time; PROVIDED, HOWEVER, that (i) if at any time there are
only two Lenders, the term "Required Lenders" shall mean both of those Lenders
and (ii) if at any time there are only three Lenders, the term "Required
Lenders" shall mean at least two of those Lenders whose Credit Exposures
represents at least 51% of the sum of the total Credit Exposures at that time.
"RESTRICTED PAYMENT" shall mean any dividend or other
distribution (whether in cash, securities or other Property) with respect to any
shares of any class of capital stock of the Company or any of its Subsidiaries,
or any payment (whether in cash, securities or other Property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such shares of
capital stock of the Company or any option, warrant or other right to acquire
any such shares of capital stock of the Company.
"RESTRUCTURING" shall mean a transaction or series of
transactions pursuant to which (a) all or substantially all of the assets of the
Company (other than the capital stock of
14
HoldCo and AcquisitionCo and the proceeds of the Loans) are transferred to
HoldCo, (b) the Company acquires all of the capital stock of HoldCo and
AcquisitionCo, free of any Equity Rights, (c) the Company is released from any
and all obligations under or in respect of the Indenture and HoldCo becomes
liable for all such obligations in place of the Company and (d) AcquisitionCo
acquires all of the capital stock of the License Subsidiary, free of any Equity
Rights.
"RESTRUCTURING AGREEMENTS" shall mean the agreements pursuant
to which the Restructuring is effected.
"SECURITY AGREEMENT" shall mean a Security Agreement, in
substantially the form of Exhibit C, executed by the Company in favor of the
Administrative Agent for the benefit of each Lender Party.
"SECURITY DOCUMENTS" shall mean, collectively, the Security
Agreement, the Guarantee and Security Agreement, all Uniform Commercial Code
financing statements and all other filings or recordings with any Governmental
Authority required by each Basic Document to be filed or recorded with respect
to each of the security interests in personal Property and fixtures created
pursuant to those Basic Documents.
"SELLER" shall mean, collectively, Clear Channel
Communications, Inc., AMFM, Inc. and their respective Subsidiaries party to the
Purchase Agreement.
"SIGNING DATE" shall mean the date on which the Company and
the Lenders holding the full original amount of the Commitments have executed
and delivered this Agreement.
"S&P" shall mean Standard & Poor's.
"STATION LICENSE MANAGEMENT AGREEMENT" shall mean a Station
License Management Agreement, in substantially the form of Exhibit F, executed
by AcquisitionCo and the License Subsidiary.
"STATION" shall mean KALC-FM (Denver, Colorado).
"STATUTORY RESERVE RATE" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board, to which a bank in the City of New York,
New York, with capital and surplus in excess of $1,000,000,000 is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Those reserve
percentages shall include those imposed pursuant to Regulation D. Eurodollar
Loans shall be deemed to constitute eurocurrency funding and to be subject to
that reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender under
Regulation D or any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.
15
"SUBORDINATED INDEBTEDNESS" shall mean Indebtedness that is
subordinated to the Obligations on terms, and pursuant to documentation
containing other terms (including interest, amortization, covenants and events
of default), in form and substance satisfactory to the Required Lenders.
"SUBSIDIARY" shall mean, for any Person at any date, any
corporation, limited liability company, partnership, association or other entity
(a) the accounts of which would be consolidated with those of that Person in
consolidated financial statements prepared in accordance with GAAP as of that
date, (b) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of that date, owned, controlled or held by that Person, or (c) that is, as of
that date, otherwise Controlled, by that Person or one or more of its
Subsidiaries of that Person or by that Person and one or more of its
Subsidiaries. "WHOLLY OWNED SUBSIDIARY" shall mean any such corporation,
partnership or other entity of which all of the equity securities or other
ownership interests (other than, in the case of a corporation, directors'
qualifying shares) are so owned or controlled.
"SUBSIDIARY GUARANTOR" shall mean AcquisitionCo, the License
Subsidiary and each other Subsidiary of AcquisitionCo that shall execute
security documents pursuant to Section 7.19.
"SYNDICATION AGENT" shall have the meaning assigned to that
term in the introductory paragraph to this Agreement.
"TAXES" shall mean any and all present or future taxes,
levies, imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"TOTAL FUNDED DEBT" shall mean, at any time, the aggregate
Indebtedness of the Company and its Subsidiaries on a consolidated basis at that
time.
"TOTAL LEVERAGE RATIO" shall mean, at any time, the ratio of
(a) the sum of Total Funded Debt as of the end of the fiscal quarter ended on or
immediately prior to that time MINUS cash and cash equivalents as of that fiscal
quarter end to (b) Adjusted Operating Cash Flow for the four consecutive fiscal
quarters ended on or immediately prior to that time.
"TRANSACTIONS" shall mean, as to any Obligor, the execution,
delivery and performance by that Obligor of the Basic Documents to which it is a
party, the Restructuring and, in the case of the Company, the Bridge
Acquisition, the borrowing of the Loans and the use of the proceeds of the
Loans.
"TYPE" shall mean, when used in reference to any Loan or
Borrowing, that such Loan, or the Loans comprising the Borrowing, are Base Rate
Loans or Eurodollar Loans.
"WARRANT AGREEMENT" shall mean the Warrant and Registration
Rights Agreement, in substantially the form of Exhibit E, to be executed by the
Company and the Lenders.
16
"WARRANTS" shall mean warrants for 716,096 shares of Company
Stock to be issued in accordance with the Warrant Agreement.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from that Multiemployer
Plan, as those terms are defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.02. ACCOUNTING TERMS; GAAP. Except as otherwise
expressly provided in this Agreement, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; PROVIDED that, if the Company notifies the Administrative Agent that the
Company requests an amendment to any provision of any Basic Document to
eliminate the effect of any change occurring after the Signing Date in GAAP or
in the application of GAAP on the operation of that provision (or if the
Administrative Agent notifies the Company that the Required Lenders request an
amendment to any provision of any Basic Document for that purpose), regardless
of whether any such notice is given before or after that change in GAAP or in
the application of GAAP, then that provision shall be interpreted on the basis
of GAAP as in effect and applied immediately before that change became effective
until that notice has been withdrawn or that provision has been amended.
Section 1.03. INTERPRETATION. In this Agreement, unless
otherwise indicated, the singular includes the plural and plural the singular;
words importing any gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to articles, sections (or subdivisions of
sections), exhibits, annexes or schedules are to this Agreement; references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments, extensions and other modifications to those instruments
(without, however, limiting any prohibition on any such amendments, extensions
and other modifications by the terms of any Basic Document); and references to
Persons include their respective permitted successors and assigns and, in the
case of Governmental Authorities, Persons succeeding to their respective
functions and capacities.
Section 1.04. DESIGNATION OF LOANS AND BORROWINGS. A Loan may
be designated as a Base Rate Loan or a Eurodollar Loan if it bears interest
based on the Base Rate or the Adjusted LIBO Rate, respectively. A Borrowing may
be designated on the basis of the Loans comprising that Borrowing.
ARTICLE II
THE CREDITS
Section 2.01. LOANS. Each Lender severally agrees, on the
terms and conditions of this Agreement, to make a single Loan to the Company in
Dollars, for purposes specified in Section 7.08, in an aggregate principal
amount that will not result in that Lender's Credit Exposure exceeding that
Lender's Applicable Percentage of $58,000,000. Amounts not
17
borrowed on the date those Loans are made may not afterwards be borrowed. Any
Loan repaid or prepaid may not be reborrowed.
Section 2.02. BORROWING.
(a) The Borrowing under Section 2.01 shall consist of Loans
made by the Lenders ratably in accordance with their respective Commitments. The
failure of any Lender to make the Loan required to be made by it shall not
relieve any other Lender of its obligations under this Agreement; PROVIDED that
the Commitments of the Lenders are several, and no Lender shall be responsible
for any other Lender's failure to make Loans as required.
(b) The Borrowing under Section 2.01 shall initially be made
as Base Rate Loans, which Loans shall automatically, but subject to Sections
2.05, 4.01 and 4.05, be converted to consist entirely of Eurodollar Loans on the
earlier of notice from the Administrative Agent and the third Business Day after
the date of that Borrowing. Each Lender at its option may make any Loan by
causing any of its domestic or foreign branches or Affiliates of that Lender to
make that Loan; PROVIDED that any exercise of that option shall not affect the
obligation of the Company to repay that Loan in accordance with the terms of
this Agreement.
(c) The Borrowing under Section 2.01 shall be in an amount
sufficient to fund the Interest Reserve in the amount of $7,112,425 in the Cash
Collateral Account and for the Bridge Acquisition and related transactional
expenses.
Section 2.03. REQUEST FOR BORROWING. To request the Borrowing
under Section 2.01, the Company will notify the Administrative Agent of that
request by telephone not later than 11:00 a.m., New York City time, two Business
Days before the date of the proposed Borrowing. The telephonic Borrowing Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Company. The telephonic
and written Borrowing Request shall specify the following information in
compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of the Borrowing, which shall be a Business Day;
and
(iii) in the case of the portion of the Borrowing requested
for the Bridge Acquisition, the location and number of the Company's account to
which funds are to be disbursed, which shall comply with the requirements of
Section 2.04.
Promptly following receipt of the Borrowing Request in accordance with this
Section 2.03, the Administrative Agent will advise each Lender of the details
of, and of the amount of that Lender's Loan to be made as part of, the requested
Borrowing.
Section 2.04. FUNDING OF BORROWING.
(a) Each Lender will make the Loan to be made by it on the
proposed date for that Loan by wire transfer of immediately available funds by
12:00 noon, New York City time, to the
18
account of the Administrative Agent designated by it for that purpose by notice
to the Lenders. In the case of the portion of the Borrowing requested for the
Bridge Acquisition, the Administrative Agent will make those Loans available to
the Company by promptly crediting the amounts so received, in like funds, as
specified by the Company in the Borrowing Request. In the case of the portion of
the Borrowing requested for the funding of the Interest Reserve in the Cash
Collateral Account, the Administrative Agent will use those Loans to fund the
Interest Reserve in the Cash Collateral Account.
(b) Unless the Administrative Agent has received notice from a
Lender prior to the proposed date of the Borrowing that such Lender will not
make available to the Administrative Agent that Lender's share of that
Borrowing, the Administrative Agent may assume that such Lender has made its
share available on that date in accordance with Section 2.04(a) and may, in
reliance upon that assumption, make available to the Company a corresponding
amount. In that event, if a Lender has not in fact made its share of the
Borrowing available to the Administrative Agent, then the applicable Lender and
the Company severally agree to pay to the Administrative Agent forthwith on
demand that corresponding amount with interest on that amount for each day from
and including the date that amount is made available to the Company to but
excluding the date of payment to the Administrative Agent at (i) in the case of
that Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation or (ii) in the case of the Company, the interest rate
applicable to Base Rate Loans. If the non-funding Lender pays that amount to the
Administrative Agent, then that amount shall constitute that Lender's Loan
included in that Borrowing.
Section 2.05. INTEREST RATE CONTINUATION.
(a) Subject to Section 2.05(b), 2.05(c), 4.01 and 4.05, each
Loan converted under Section 2.02(b) as a Eurodollar Loan will automatically be
continued as a Eurodollar Loan for each succeeding Interest Period.
(b) Notwithstanding Section 2.05(a), no Eurodollar Loan may be
continued as a Eurodollar Loan if the Interest Period for that Loan would extend
beyond the Maturity Date and, in that case, that Loan will be converted to a
Base Rate Loan as of the end of the then applicable Interest Period.
(c) Notwithstanding any contrary provision of this Agreement,
if a Default has occurred and is continuing, then, so long as a Default (unless
the Administrative Agent, with the consent of the Required Lenders, otherwise
notifies the Company) is continuing (i) no outstanding Borrowing may be
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to a Base Rate Borrowing at the end of the then
applicable Interest Period.
Section 2.06. NOTES.
(a) LOANS. The Loan made by each Lender shall be evidenced by
a single Note of the Company in substantially the form of Exhibit A, dated the
Effective Date, payable to that Lender in a principal amount equal to the amount
of its Commitment as originally in effect and
19
otherwise duly completed. The date, amount, interest rate and duration of
Interest Period of the Loan made by each Lender to the Company under Section
2.01, and each payment made on account of the principal of each such Loan, shall
be recorded by that Lender on its books and, prior to any transfer of the Note
evidencing the Loans held by it, endorsed by that Lender on the schedule
attached to that Note or any continuation of that Note; PROVIDED that the
failure of that Lender to make any such recordation or endorsement shall not
affect the obligations of the Company to make a payment when due of any amount
owing under this Agreement or under that Note in respect of the Loan to be
evidenced by that Note.
(b) EXCHANGE OF NOTES. No Lender shall be entitled to have its
Note subdivided, by exchange for promissory notes of lesser denominations or
otherwise, except in connection with a permitted assignment of all or any
portion of that Lender's relevant Commitment, Loan and Note pursuant to Section
10.06(b).
(c) NO SEPARATE ENFORCEMENT. No Lender shall be entitled to
file any proceeding to enforce its rights arising out of this Agreement and the
Notes or exercise any right of set off or any banker's lien without the prior
consent of the Administrative Agent, and it shall not be necessary for any other
Lender Party to consent to, or be joined as an additional party in, any
proceedings for those purposes.
ARTICLE III
PAYMENTS
Section 3.01. REPAYMENT OF LOANS. The Company hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of that Lender's Loan on the
Maturity Date.
Section 3.02. OPTIONAL PREPAYMENT OF LOANS.
(a) The Company may at any time and from time to time to
prepay the Borrowing in whole or in part, subject to prior notice in accordance
with Section 3.02(b).
(b) To make a prepayment under Section 3.02(a), the Company
must notify the Administrative Agent by telephone (confirmed by telecopy) of any
prepayment under this Section 3.02 not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment. Each such notice shall
be irrevocable and shall specify the prepayment date and the principal amount to
be prepaid. Promptly following receipt of any such notice, the Administrative
Agent will advise the Lenders of its contents. Each partial prepayment of the
Borrowing shall be in an amount that would be permitted in the case of an
advance of the Borrowing as provided in Section 2.02. Each prepayment of the
Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing. Prepayments shall be accompanied by accrued interest to the extent
required by Section 3.05.
Section 3.03. MANDATORY PREPAYMENTS.
(a) DISPOSITIONS. Without derogating from any restriction on
any such Disposition under the terms of the Basic Documents, no later than five
Business Days prior to
20
the occurrence of any such Disposition by the Company or any Subsidiary
Guarantor, the Company will deliver to the Lenders a statement, certified by a
Financial Officer of the Company, in form and detail satisfactory to the
Administrative Agent, of the amount of the Net Available Proceeds of that
Disposition and, to the extent that such Net Available Proceeds (when taken
together with the Net Available Proceeds of all prior Dispositions as to which a
payment has not yet been made under this Section 3.03(a)) exceed $25,000, the
Company will pay to the Administrative Agent an aggregate amount equal to 100%
of the Net Available Proceeds of that Disposition (together with 100% of the Net
Available Proceeds of all prior Dispositions as to which a payment has not yet
been made under this Section 3.03(a)), concurrently with the receipt of any such
Net Available Proceeds, that payment to be applied in each case to prepay the
Loans.
(b) EQUITY ISSUANCE. Without derogating from any effect of a
Change of Control under the Basic Documents, upon any Equity Issuance, the
Company will pay to the Administrative Agent an aggregate amount equal to 100%
of the Net Available Proceeds of that Equity Issuance, less that portion of any
such Net Available Proceeds as is required to be contributed by the Company to
HoldCo pursuant to the HoldCo Loan Documents as in effect on the Effective Date
and to be applied by HoldCo to the prepayment of the loans under the HoldCo
Credit Agreement or to the reduction of the commitments under the HoldCo Credit
Agreement, concurrently with the receipt of any such Net Available Proceeds,
that payment to be applied in each case to prepay the Loans.
(c) DEBT INCURRENCE. Without derogating from any restriction
on the incurrence of any such Indebtedness under the terms of the Basic
Documents, upon any Debt Incurrence by AcquisitionCo or any of its Subsidiaries,
the Company will pay to the Administrative Agent an aggregate amount equal to
100% of the Net Available Proceeds of that Debt Incurrence, concurrently with
the receipt of any such Net Available Proceeds, that payment to be applied in
each case to prepay the Loans.
(d) CASUALTY EVENT. Upon the date 30 days following the
receipt by the Company or by AcquisitionCo or any of its Subsidiaries of the
proceeds of insurance, condemnation award or other compensation (excluding
business interruption insurance) in respect of any Casualty Event affecting any
Property of the Company or of AcquisitionCo or any of its Subsidiaries (or upon
such earlier date as the Company or that Subsidiary determines not to repair or
replace the affected Property), the Company will pay to the Administrative Agent
an aggregate amount, if any, equal to 100% of the Net Available Proceeds of that
Casualty Event not previously applied (or set aside for) to the repair or
replacement of that Property, concurrently with the receipt of any such Net
Available Proceeds, that payment to be applied in each case to prepay the Loans.
Nothing in this Section 3.03(d) shall be deemed to limit any obligation of the
Company or any Subsidiary Guarantor pursuant to any of the Security Documents to
remit to a collateral or similar account maintained by the Administrative Agent
pursuant to any of the Security Documents the proceeds of insurance,
condemnation award or other compensation received in respect of any Casualty
Event.
(e) ABSENCE OF NEGOTIATIONS. Upon demand of the Administrative
Agent, the Company shall, within ten Business Days of that demand, prepay the
aggregate principal amount of the Loans, together with accrued interest and all
other Obligations if, by ten months after the Signing Date, the Company is not
engaged in good faith and ongoing negotiations with an
21
identified Person (or the representative of an identified group of Persons) of
definitive documents providing for either the Disposition of assets resulting in
Net Available Proceeds in excess of $47,000,000 or the refinancing in full of
the Obligations on or before the Maturity Date.
(f) Prepayments under this Section 3.03 shall be accompanied
by accrued interest to the extent required by Section 3.05.
Section 3.04. FEES.
(a) The Company will pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between the Company and the Administrative Agent.
(b) The Company will pay to each Lender, for its own account,
fees payable in the amounts and at the times separately agreed upon between the
Company and each such Lender.
(c) All fees payable under this Agreement shall be paid on the
dates due, in immediately available funds, to the Administrative Agent for
distribution as provided in this Section 3.04. All facility, participation fees
and fronting fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day). Fees shall not be refundable under any circumstances.
Section 3.05. INTEREST.
(a) The Loans shall bear interest at the Adjusted LIBO Rate
for each Interest Period in effect for the Loans plus the Applicable Margin. In
the event the Loans are made as or converted into Base Rate Loans pursuant to
the terms of this Agreement, the Loans shall bear interest at the Base Rate plus
the Applicable Margin.
(b) Notwithstanding the foregoing, if any Obligation is not
paid when due (whether at stated maturity, upon acceleration, on any optional or
mandatory prepayment date or otherwise) that overdue amount shall bear interest,
after as well as before judgment, at a rate per annum equal to the Post-Default
Rate. In addition, if any Default is continuing, each Loan shall bear interest
at the Post-Default Rate.
(c) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date; PROVIDED that (i) interest accrued pursuant to
Section 3.05(b) shall be payable on demand, (ii) in the event of any repayment
or prepayment of any Loan, accrued interest on the principal amount repaid or
prepaid shall be payable on the date of that repayment or prepayment and (iii)
in the event of any conversion of any Loan prior to the end of its then current
Interest Period, accrued interest on that Loan shall be payable on the effective
date of that conversion.
(d) All interest under the Basic Documents computed by
reference to the Base Rate when the Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
all other interest under the Basic Documents shall be computed on the basis of a
year of 360 days, and in each case shall be payable for the actual
22
number of days elapsed (including the first day but excluding the last day). The
applicable Base Rate or Adjusted LIBO Rate shall be determined by the
Administrative Agent, and that determination shall be conclusive absent manifest
error.
(e) The Company shall be entitled to direct the Administrative
Agent, upon three Business Days' prior written notice, to make a withdrawal on
any Interest Payment Date from the Cash Collateral Account to pay each Lender
all or any part of the interest (as so specified) due the Lenders on that
Interest Payment Date (up to the then amount of the Interest Reserve on deposit
in the Cash Collateral Account); PROVIDED that (i) any withdrawal for less than
all of the interest then due to all the Lenders shall be paid to the Lenders pro
rata and (ii) if a Default is continuing, (A) the Company may not without the
consent of the Administrative Agent direct any such withdrawal and (B) whether
or not requested by the Company, the Administrative Agent may make any such
withdrawal (without limiting its other rights, remedies, powers and privileges
in respect of the Cash Collateral Account under the Security Documents) and pay
the amount so withdrawn to the Lenders pro rata. If the Company has prepaid the
Loans in accordance with Section 3.02 or 3.03, the Administrative Agent shall
reduce the Interest Reserve to an amount that the Administrative Agent
determines in good faith is an appropriate amount to be thereafter available for
the payment of interest on the Loans outstanding.
Section 3.06. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING
OF SET-OFFS.
(a) The Company will make each payment required to be made by
it under this Agreement prior to 12:00 noon, New York City time, on the date
when due, in immediately available funds, without set-off or counterclaim. Any
amounts received after that time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest on that amount. All such
payments shall be made to the Administrative Agent at the offices of The Chase
Manhattan Bank specified in Annex 1, except payments to be made directly to any
specified Lender Party as expressly provided in this Agreement and except that
payments pursuant to Sections 4.01, 4.02, 4.03 and 10.02 shall be made directly
to the Persons entitled to them. The Administrative Agent will distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt of that payment. If any payment
is due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any payment
accruing interest, interest on that payment shall be payable for the period of
that extension. All payments shall be made in Dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts then due, those
funds shall be applied (i) first, towards payment of interest and fees then due,
ratably among the parties entitled to those funds in accordance with the amounts
of interest and fees then due to those parties and (ii) second, towards payment
of principal then due, ratably among the parties entitled to those funds in
accordance with the amounts of principal then due to those parties.
(c) If any Lender, by the exercise of any set-off or
counterclaim right or otherwise, obtains payment in respect of any Obligation
that results in that Lender's receiving payment of a greater proportion of the
aggregate amount of the Obligations owing to it, then the
23
Lender receiving that greater proportion shall purchase (for cash at face value)
participations in the Obligations owing to the other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of the Obligations;
PROVIDED that (i) if any such participations are purchased and all or any
portion of the payment giving rise to that purchase is recovered, those
participations shall be rescinded and the purchase price restored to the extent
of that recovery, without interest, and (ii) the provisions of this Section
3.06(c) shall not be construed to apply to any payment made by the Company
pursuant to and in accordance with the express terms of this Agreement or any
payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of the Obligations owing to it, other than to the Company
or any Affiliates (as to which the provisions of this Section 3.06(c) shall
apply). The Company consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Company rights of set-off and counterclaim with respect to that participation as
fully as if that Lender were a direct creditor of the Company in the amount of
that participation.
(d) Unless the Administrative Agent has received notice from
the Company prior to the date on which any payment is due to the Administrative
Agent for the account of any Lender Party that the Company will not make that
payment, the Administrative Agent may assume that the Company has made that
payment on that date and may, in reliance upon that assumption, distribute to
that Lender Party the amount due. In that event, if the Company has not in fact
made that payment, then each such Lender Party severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to that
Lender Party with interest on that amount, for each day from and including the
date that amount is distributed to it to but excluding the date of payment to
the Administrative Agent, at the greater of the Federal Funds Effective Rate and
a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender fails to make any payment required to be
made by it pursuant to Section 2.04(b) or 3.06(d), then the Administrative Agent
may, in its discretion, apply any amounts thereafter received by the
Administrative Agent for the account of that Lender to satisfy that Lender's
obligations under those Sections until all such unsatisfied obligations are
fully paid.
ARTICLE IV
YIELD PROTECTION, ETC
Section 4.01. ALTERNATE RATE OF INTEREST. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate for that Interest Period; or
(b) the Administrative Agent is advised by the Required
Lenders that the Adjusted LIBO Rate for that Interest Period will not adequately
and fairly reflect the cost to
24
those Lenders of making or maintaining their Loans included in that Borrowing
for that Interest Period;
then the Administrative Agent will give notice of those
circumstances to the Company and the Lenders by telephone or telecopy as
promptly as practicable and, until the Administrative Agent notifies the Company
and the Lenders that the circumstances giving rise to that notice no longer
exist, (i) the Borrowing requested to be made as a Eurodollar Borrowing shall be
made instead as a Base Rate Borrowing and (ii) Eurodollar Loans may not be
continued as a Eurodollar Loan and shall at the end of the applicable Interest
Period be converted to a Base Rate Loan; upon any such notice from the
Administrative Agent, each Base Rate Loan shall be converted to a Eurodollar
Loan as of, and with an Interest Period commencing, three Business Days after
the date of that notice.
Section 4.02. INCREASED COSTS.
(a) If any Change in Law:
(i) imposes, modifies or deems applicable any reserve,
special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Lender Party (except
any such reserve requirement reflected in the Adjusted LIBO Rate); or
(ii) imposes on any Lender Party or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans
made by that Lender Party;
and the result of any of the foregoing is to increase the cost to that Lender
Party of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by that Lender Party under any Basic Document, then the Company will
pay to that Lender Party such additional amount or amounts as will compensate
that Lender Party for the additional costs incurred or reduction suffered.
(b) If any Lender Party determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on that Lender Party's capital or on the capital of its holding
company, if any, as a consequence of this Agreement or the Loan made by that
Lender Party to a level below that which that Lender Party or its holding
company could have achieved but for that Change in Law (taking into
consideration that Lender Party's policies and the policies of its holding
company with respect to capital adequacy), then from time to time the Company
will pay to that Lender Party such additional amount or amounts as will
compensate that Lender Party or its holding company for any such reduction
suffered.
(c) To claim any amount under this Section 4.02, a Lender
Party must deliver to the Company a certificate setting forth the amount or
amounts necessary to compensate that Lender Party or its holding company, as the
case may be, under Section 4.02(a) or (b), which certificate shall be conclusive
absent manifest error. The Company will pay that Lender Party, as the case may
be, the amount shown as due on any such certificate within ten days after its
receipt.
25
(d) Failure or delay on the part of any Lender Party to demand
compensation pursuant to this Section 4.02 shall not constitute a waiver of that
Lender Party's right to demand that compensation; PROVIDED that the Company
shall not be required to compensate a Lender Party pursuant to this Section 4.02
for any increased costs or reductions incurred more than 270 days prior to the
date on which that Lender Party notifies the Company of the Change in Law giving
rise to those increased costs or reductions and of that Lender Party's intention
to claim compensation for those circumstances; PROVIDED FURTHER that, if the
Change in Law giving rise to those increased costs or reductions is retroactive,
then the 270-day period referred to above shall be extended to include that
period of retroactive effect.
Section 4.03. BREAK FUNDING PAYMENTS. In the event of (a) the
payment of any principal of any Eurodollar Loan other than on the last day of
the Interest Period for that Loan (including under Section 3.03 or as a result
of an Event of Default), (b) the conversion of any Eurodollar Loan other than on
the last day of its Interest Period, (c) the failure to borrow or prepay any
Loan on the date specified in any Borrowing Request or notice of prepayment
(whether or not that notice may be and in fact is revoked under Section 3.02(b))
or (d) the assignment of any Eurodollar Loan other than on the last day of its
Interest Period as a result of a request by the Company pursuant to Section
4.05, then, in any such event, the Company will compensate each Lender for the
loss, cost and expense attributable to that event. That loss, cost or expense to
any Lender shall be deemed to include an amount determined by that Lender to be
the excess, if any, of (i) the amount of interest that would have accrued on the
principal amount of that Loan had that event not occurred, at the Adjusted LIBO
Rate that would have been applicable to that Loan, for the period from the date
of that event to the last day of the then current Interest Period for that Loan
(or, in the case of a failure to borrow, for the period that would have been the
Interest Period for that Loan) over (ii) the amount of interest that would
accrue on that principal amount for that period at the interest rate that such
Lender would bid were it to bid, at the commencement of that period, for Dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. To claim any amount under this Section 4.03, the Lender must deliver to
the Company a certificate setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 4.03, which certificate shall be
conclusive absent manifest error. The Company will pay that Lender the amount
shown as due on any such certificate within ten days after its receipt.
Section 4.04. TAXES.
(a) Any and all payments by or on account of any Obligation
shall be made free and clear of and without deduction for any Indemnified Taxes
or Other Taxes; PROVIDED that if the Company is required to deduct any
Indemnified Taxes or Other Taxes from those payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
4.04) each Lender Party receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Company will make those
deductions and (iii) the Company will pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Company will pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
26
(c) The Company will indemnify each Lender Party, within ten
days after written demand, for the full amount of any Indemnified Taxes or Other
Taxes paid by that Lender Party on or with respect to any payment by or on
account of any Obligation (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 4.04) and any
penalties, interest and reasonable expenses arising from, or with respect to,
those Indemnified Taxes or Other Taxes, whether or not those Indemnified Taxes
or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. To claim any amount under this Section 4.04(c), a Lender
Party must deliver to the Company a certificate as to the amount of that payment
or liability, which certificate shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Company to a Governmental Authority, the Company
will deliver to the Administrative Agent the original or a certified copy of a
receipt issued by that Governmental Authority evidencing that payment, a copy of
the return reporting that payment or other evidence of that payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law or treaty of the jurisdiction in
which the Company is located, with respect to payments of any Obligations will
deliver to the Company (with a copy to the Administrative Agent), at the time or
times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Company as will permit those payments to be made without withholding or at a
reduced rate.
Section 4.05. ILLEGALITY. In the event that it becomes
unlawful or, by reason of a Change in Law, impossible for any Lender to honor
its obligation to make or maintain Eurodollar Loans, then that Lender will
promptly notify the Company of that event (with a copy to the Administrative
Agent) and that Lender's obligation to make or to continue, or to convert Base
Rate Loans into, Eurodollar Loans shall be suspended until such time as that
Lender may again make and maintain Eurodollar Loans. During that period of
suspension, the Loans that would otherwise be made or continued as Eurodollar
Loans shall be made or continued instead as Base Rate Loans.
ARTICLE V
CONDITIONS PRECEDENT
Section 5.01. EFFECTIVE DATE. The obligation of any Lender
Party to make the extension of credit under this Agreement shall not become
effective unless the Effective Date occurs on or before August 31, 2000 and
until the satisfaction (or the waiver in accordance with Section 10.04) of each
of the following conditions:
(a) DOCUMENTS. The Administrative Agent has received each of
the following documents, each of which shall be satisfactory to the
Administrative Agent (and to the extent specified below, to each other Lender
Party) in form and substance:
27
(i) CORPORATE DOCUMENTS. Such documents and certificates as
the Administrative Agent may reasonably request relating to the organization,
existence and good standing of each Obligor, the authorization of the
Transactions and any other legal matters relating to each Obligor, the Basic
Documents, the Restructuring Agreements or the Transactions.
(ii) OFFICER'S CERTIFICATE. A certificate of a senior officer
of the Company, dated the Effective Date, to the effect set forth in Sections
5.01(b)(i), (c), (d), (e) and (h).
(iii) FINANCIAL OFFICER'S CERTIFICATE. A certificate of one of
the Financial Officers of the Company, dated the Effective Date, to the effect
set forth in Section 5.01(f), which certificate shall set forth the basis of the
calculation under Section 5.01(f).
(iv) OPINION OF COUNSEL TO THE OBLIGORS. An opinion of each of
Jonathan Block, general counsel to the Company, and Gibson, Dunn & Crutcher LLP,
counsel to the Obligors, dated the Effective Date, (as between the two) in
substantially the form of Exhibit G-1 and an opinion of Fletcher, Heald &
Hildreth, P.L.C., special communications counsel to the Obligors, in
substantially the form of Exhibit G-2 and, in each case, covering such other
matters as any Lender Party may reasonably request (and each Obligor hereby
instructs each such counsel to deliver its respective opinion to the Lender
Parties).
(v) NOTES. The Notes, duly completed and executed.
(vi) SECURITY DOCUMENTS. The Security Agreement and the
Guarantee and Security Agreement, duly executed and delivered by the Company and
each other specified Obligor and the Administrative Agent and the certificates
identified under the name of each such Obligor in each such Security Document
accompanied by undated stock powers executed in blank, together with evidence
that each such Obligor has taken such other action (including delivering to
counsel for the Lenders, for filing, appropriately completed and duly executed
copies of Uniform Commercial Code financing statements and the filing of the
Security Documents with the FCC pursuant to Section 73.3613 of the FCC's rules)
as any such Security Document specifies or as the Administrative Agent requests
in order to create, perfect and establish the priority (subject only to Liens
permitted by Section 7.10) of the Liens granted by such Security Document.
(vii) RESTRUCTURING AGREEMENTS. Each Restructuring Agreement,
duly executed and delivered by its respective parties.
(viii) WARRANT AGREEMENT. The Warrant Agreement, duly executed
by the Company.
(ix) TAX SHARING AGREEMENT. A tax sharing agreement between
the Company and each of its Subsidiaries.
(x) PURCHASE AGREEMENT. The Purchase Agreement, duly executed
by the Company and the Seller.
28
(xi) STATION LICENSE MANAGEMENT AGREEMENT. A copy of the
Station License Management Agreement, duly executed by the License Subsidiary
and AcquisitionCo (it being understood that the Station License Management
Agreement will not, by its terms, be operative until the approval of the FCC
referred to in Section 7.11(b)).
(xii) GOVERNMENTAL APPROVALS. A copy of all Governmental
Approvals (including any of the FCC) (A) required in connection with the
execution and delivery of the Basic Documents and the Restructuring and (B)
referred to in Section 5.01(c)(ii), in each case certified as true and complete
by a senior officer of the Company.
(xiii) INSURANCE. (A) Certificates of insurance evidencing the
existence of all insurance required to be maintained by the Company and its
Subsidiaries pursuant to the Basic Documents and the designation of the
Administrative Agent as the loss payee under those policies to the extent
required by the Basic Documents in respect of all insurance covering tangible
Property, those certificates to be in such form and contain such information as
is specified in the Basic Documents and (B) a certificate a Financial Officer of
the Company setting forth the insurance obtained by the Company and its
Subsidiaries in accordance with the requirements of the Basic Documents and
stating that such insurance is in full force and effect and that all premiums
then due and payable with respect to that insurance have been paid.
(xiv) INTERCREDITOR AGREEMENT. The Intercreditor Agreement,
duly executed by the administrative agent under the HoldCo Credit Agreement.
(xv) OTHER DOCUMENTS. Such other documents as any Lender Party
may reasonably request.
(b) RESTRUCTURING. (i) The Restructuring has been completed in
accordance with (and not in waiver of) the terms of the Restructuring Agreements
and the Company has received all Governmental Approvals required in connection
with the Restructuring and (ii) the Restructuring has been completed in a manner
formally and substantially satisfactory to the Lender Parties.
(c) BRIDGE ACQUISITION.
(i) The acquisition of the Station to be funded with the
proceeds of the Borrowing has been accomplished in accordance with (and not in
waiver of) the terms of the Purchase Agreement.
(ii) The FCC Licenses for the Station have been validly issued
to, or validly transferred to, AcquisitionCo, free and clear of all Liens, the
Company has received all other Governmental Approvals (including those of the
FCC) required in connection with the acquisition of the Station and to give the
Company and its Subsidiaries the power and authority to operate the Station,
those FCC Licenses and other Governmental Approvals are in full force and effect
and no longer subject to further review by any Governmental Authority (except
that the Governmental Approval of the assignment of the FCC Licenses for the
Station to AcquisitionCo is subject to further review upon the filing of a
petition for reconsideration within 30 days after public notice of the grant of
that Governmental Approval or by the FCC en banc within 40 days after the grant
of that Governmental Approval) and all conditions and obligations
29
required to be satisfied in connection with, or pursuant to the terms of, each
such FCC License or other Governmental Approval have been satisfied in
accordance with the terms of each such FCC License or other Governmental
Approval.
(iii) The assets of the Station have been transferred to
AcquisitionCo, free of and clear of all Liens (other than Liens permitted under
Section 7.10).
(iv) The amount paid for radio station KALC-FM does not exceed
$47,000,000 and the amount to be borrowed for the payment of transaction
expenses in connection with that acquisition, together with all amounts
previously borrowed for transaction expenses of the Bridge Acquisition, does not
exceed $2,335,235.
(d) NO DEFAULT. No Default has occurred and is continuing.
(e) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in Article VI are true and complete on and as of
the Effective Date with the same force and effect as if made on and as of that
date (or, if applicable, as of any specific date as of which that representation
or warranty is expressly stated to have been made).
(f) FINANCIAL CONDITION. Adjusted Operating Cash Flow for the
period of four consecutive fiscal quarters ending on or most recently ended
prior to the Effective Date is not less than $41,000,000, and the Total Leverage
Ratio, as of the Effective Date, does not exceed 9.0 to 1.0.
(g) WARRANTS. The Warrants have been issued to the Lenders,
pro rata in accordance with their respective Commitments, and delivered to the
Administrative Agent.
(h) HOLDCO LOAN DOCUMENTS. Each HoldCo Loan Document has been
duly executed and delivered by all the parties to each such document and all of
the conditions to the initial release of funds under the HoldCo Credit Agreement
have been satisfied or waived in accordance with the provisions of that
agreement.
(i) FEES. The Company has paid or delivered such fees and
other consideration as the Company has agreed to pay or deliver to any Lender
Party or an Affiliate of that Lender Party in connection with this Agreement,
including the fees and expenses of Milbank, Tweed, Hadley & McCloy LLP, counsel
to the Administrative Agent, in connection with the negotiation, preparation,
execution and delivery of the Basic Documents (to the extent that statements for
those fees and expenses have been delivered to the Company).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Lender Party that:
Section 6.01. ORGANIZATION; POWERS. Each of the Company and
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority and all Governmental Approvals (including
30
all FCC Licenses) to carry on its business as now conducted and, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where that qualification is
required.
Section 6.02. AUTHORIZATION; ENFORCEABILITY. The Transactions
are within the Company's corporate powers and have been duly authorized by all
necessary corporate (including, if required, stockholder) action. This Agreement
has been, and the other Basic Documents, the Restructuring Agreements and the
Purchase Agreement will be, duly executed and delivered by the Company, and each
Basic Document and the Restructuring Agreements to which the Company is a party
constitutes, or when so delivered will constitute, a legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
The Warrants will have been duly issued as of the Effective Date, the Company
has reserved for issuance a sufficient number of shares of Company Stock for
issuance upon exercise of the Warrants, and those shares, when issued, will be
duly issued, validly authorized and non-assessable shares of Company Stock.
Section 6.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. The Transactions (a) do not
require any Governmental Approval of any Governmental Authority, except as (i)
will have been obtained or made and will be in full force and effect as of the
Effective Date or (ii) in the case of the Bridge Acquisition, is set forth in
Schedule 6.03, (b) do not require any consent or approval of any Person except
as (i) will have been obtained and will be in full force and effect as of the
Effective Date or (ii) in the case of the Bridge Acquisition, is set forth in
Schedule 6.03, (c) will not violate any applicable Governmental Rule or the
charter, by-laws or other organizational documents of the Company or any of its
Subsidiaries, (d) will not violate or result in a default under any indenture,
agreement or other instrument binding upon the Company or any of its
Subsidiaries or its or any of its Subsidiaries' Property or give rise to a right
under any such indenture, agreement or other instrument to require any payment
to be made by the Company or any of its Subsidiaries and (e) will not result in
the creation or imposition of any Lien (other than a Permitted Encumbrance) on
any Property of the Company or any of its Subsidiaries. None of the Obligors is
subject to, or has any obligations under, the Indenture.
Section 6.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.
(a) The Company has furnished to each Lender Party its
consolidated balance sheet and statements of income, stockholders equity and
cash flows (i) as of and for the fiscal year ended December 31, 1999, as
reported on by Ernst & Young LLP, independent public accountants, and (ii) as of
and for the fiscal quarter and the portion of the fiscal year ended June 30,
2000, certified by one of its Financial Officers. Those financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Company and its consolidated Subsidiaries as of
those dates and for those periods in accordance with GAAP consistently applied,
subject to year-end audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii) above.
31
(b) Since December 31, 1999, there has been no material
adverse change in the business, Properties, operations, prospects or condition,
financial or otherwise, of the Company and its Subsidiaries, taken as a whole,
or of the Seller or the Station.
Section 6.05. PROPERTIES.
(a) Each of the Company and its Subsidiaries has (or, in the
case of the assets to be acquired in the Bridge Acquisition will, upon the
acquisition of those assets, have) good title to, or valid leasehold interests
in, all its Property, except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
its Properties for their intended purposes.
(b) Each of the Company and its Subsidiaries owns or is
licensed to use (or, in the case of the trademarks, trade names, copyrights,
patents and other intellectual Property related to the assets to be acquired in
the Bridge Acquisition and the acquisitions by HoldCo under the Purchase
Agreement will, upon the acquisition of those assets, own or be licensed to use)
all trademarks, trade names, copyrights, patents and other intellectual Property
material to its business, and the use of any such Property by the Company and
its Subsidiaries does not and will not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(c) Each of the Company and its Subsidiaries owns all of the
capital stock or other ownership interests of each of its respective
Subsidiaries free of any outstanding Equity Rights.
Section 6.06. LITIGATION AND ENVIRONMENTAL MATTERS.
(a) There are no actions, suits or proceedings by or before
any arbitrator or Governmental Authority pending against or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that involve any of the Basic Documents, the
Restructuring Agreements or the Transactions.
(b) Except for the Disclosed Matters and except with respect
to any other matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, neither the
Company nor any of its Subsidiaries (i) has failed to comply with any FCC
Regulation or Environmental Law or to obtain, maintain or comply with any
Governmental Approval required under any FCC Regulation or Environmental Law,
(ii) has become subject to any Environmental Liability, (iii) has received
notice of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability.
(c) There has been no change in the status of the Disclosed
Matters that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.
32
Section 6.07. COMPLIANCE WITH LAWS AND AGREEMENTS. Each of the
Company and its Subsidiaries is in compliance with all Governmental Rules
applicable to it or its Property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. Except as set forth in Schedule 6.07, neither the
Company nor any of its Subsidiaries are in default under any indenture,
agreement or other instrument binding upon the Company or any of its
Subsidiaries or its or any of its Subsidiaries' Property nor has a waiver of any
such default been granted.
Section 6.08. INVESTMENT AND HOLDING COMPANY STATUS. Neither
the Company nor any of its Subsidiaries is or, after the Restructuring and the
Bridge Acquistions, will be (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940, (b) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935 or (c) subject to any other Governmental Rule
restricting its ability to incur Indebtedness, to grant Liens or to issue
Guarantees.
Section 6.09. TAXES. Each of the Company and its Subsidiaries
has timely filed or caused to be filed all Tax returns and reports required to
have been filed and has paid or caused to be paid all Taxes required to have
been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Company or any such Subsidiary, as
applicable, has set aside on its books adequate reserves in accordance with GAAP
or (b) to the extent that the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
Section 6.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting those amounts,
exceed by more than $100,000 the fair market value of the assets of that Plan,
and the present value of all accumulated benefit obligations of all underfunded
Plans (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting those amounts, exceed by more than $100,000 the
fair market value of the assets of all such underfunded Plans.
Section 6.11. LABOR RELATIONS.
(a) No employee of the Company or any Subsidiary is currently
a member of a collective bargaining unit and to the knowledge of the Company,
there are no threatened or contemplated attempts to organize for collective
bargaining purposes any of the employees of the Company or any Subsidiary.
(b) No unfair labor practice complaint or sex, age, race or
other discrimination claim has been brought during the last five (5) years
against the Company or any of the Subsidiaries before any Governmental
Authority. Since January 1, 1997, there has been no work stoppage, strike or
other concerted action by employees of the Company or any Subsidiary. During
that period, the Company and the Subsidiaries have complied in all material
respects with
33
all applicable Governmental Rules and other laws relating to the employment of
labor, including those relating to wages, hours and collective bargaining.
Section 6.12. DISCLOSURE. The Company has disclosed to the
Lender Parties all indentures, agreements and instruments and all corporate and
other restrictions to which it or any of its Subsidiaries is subject, and all
other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. None of the
reports, financial statements, certificates or other information furnished by or
on behalf of the Company to any Lender Party in connection with or under any
Basic Document (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements so made, in the light of the circumstances
under which they were made, not misleading; PROVIDED that, with respect to
projected financial information, the Company represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.
ARTICLE VII
COVENANTS
The Company covenants and agrees with each Lender Party that,
so long as any Commitment is outstanding and until payment in full of all
Obligations:
Section 7.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Company will furnish to each Lender Party:
(a) within 105 days after the end of each fiscal year of the
Company, (i) its audited consolidated balance sheet and related statements of
operations, stockholders' equity and cash flows and (ii) unaudited consolidating
balance sheets and related statements of operations and stockholders' equity, in
each case as of the end of and for that year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on (in
the case of the consolidated financial statements) by Ernst & Young LLP or other
independent public accountants of recognized national standing (without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of that audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year of the Company, its (i) consolidated balance
sheet and related statements of operations, stockholders' equity and cash flows
and (ii) unaudited consolidating balance sheets and related statements of
operations and stockholders' equity, in each case as of the end of and for that
fiscal quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting fairly
in all material respects the financial condition and results of operations of
the Company and its consolidated Subsidiaries on a consolidated basis and of
each
34
of the Company and its Subsidiaries (as applicable) in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) concurrently with any delivery of financial statements
under clause (a) or (b) above, a certificate of a Financial Officer of the
Company (i) certifying as to whether or not a Default has occurred and, if a
Default has occurred, specifying the details of, and any action taken or
proposed to be taken with respect to, that Default, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Section 7.17 and
(iii) stating whether or not any change in GAAP or in the application of GAAP
has occurred since the date of the audited financial statements referred to in
Section 6.04 and, if any such change has occurred, specifying the effect of that
change on the financial statements accompanying that certificate;
(d) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that reported on
those financial statements stating whether or not they obtained knowledge during
the course of their examination of those financial statements of any Default
(which certificate may be limited to the extent required by accounting rules or
guidelines);
(e) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials filed by
the Company or any Subsidiary with the Securities and Exchange Commission or
with any national securities exchange or distributed by the Company to its
shareholders generally;
(f) promptly after the same becomes available, copies of all
periodic or special reports filed by the Company or any of its Subsidiaries
with, and all communications received from, the FCC to the extent such report or
communication reflects information material to the business operations or
condition of the Company or any of its Subsidiaries or any claimed violation of
any Governmental Rule by the Company or any of its Subsidiaries; and
(g) promptly following any request for the same, such other
information regarding the operations, business affairs and financial condition
of the Company, any other Obligor or any Subsidiaries of any Obligor or
compliance with the terms of the Basic Documents, as any Lender Party may
reasonably request.
Section 7.02. NOTICES OF MATERIAL EVENTS. The Company will
furnish to each Lender Party prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against or
affecting the Company or any of its Affiliates that, if adversely determined,
could reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Company and its Subsidiaries in an aggregate amount
exceeding $100,000;
35
(d) any Casualty Event involving Property of the Company or
any Subsidiary Guarantor having a fair market value in excess of $250,000; and
(e) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section 7.02 shall be accompanied by a
statement of a Financial Officer or other executive officer of the Company
setting forth the details of the event or development requiring that notice and
any action taken or proposed to be taken with respect to that event or
development.
Section 7.03. EXISTENCE; CONDUCT OF BUSINESS. The Company
will, and will cause each of its Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the Governmental Approvals (including all FCC Licenses) material
to the conduct of its business; PROVIDED, that this Section 7.03 shall not be
construed to prohibit any transaction permitted by Section 7.11.
Section 7.04. PAYMENT OF OBLIGATIONS. The Company will, and
will cause each of its Subsidiaries to, pay its obligations, including for
Taxes, that, if not paid, could result in a Material Adverse Effect before the
same become delinquent or in default, except any such obligation (a) the
validity or amount of which is being contested in good faith by appropriate
proceedings, (b) with respect of which the Company or that Subsidiary has set
aside on its books adequate reserves in accordance with GAAP and (c) the failure
to pay which pending that contest could not reasonably be expected to result in
a Material Adverse Effect.
Section 7.05. MAINTENANCE OF PROPERTIES; INSURANCE. The
Company will, and will cause each of its Subsidiaries to, (a) keep and maintain
all Property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations. The Company will,
and will cause each of its Subsidiaries to, maintain also the insurance
specified in Annex 2.
Section 7.06. BOOKS AND RECORDS; INSPECTION RIGHTS. The
Company will, and will cause each of its Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. The
Company will, and will cause each of its Subsidiaries to, permit any
representatives designated by any Lender Party, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested.
Section 7.07. COMPLIANCE WITH LAWS. The Company will, and will
cause each of its Subsidiaries to, comply with all Governmental Rules (including
all FCC Regulations) applicable to it or its Property, except where the failure
to do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
36
Section 7.08. USE OF PROCEEDS. The proceeds of the Loans will
be used only for the purpose of:
(a) financing the acquisition (the "BRIDGE ACQUISITION") of
Denver, Colorado radio station KALC-FM for a purchase price not exceeding
$47,000,000 and paying related transaction expenses in an amount not exceeding
$2,335,235;
(b) funding the Interest Reserve in the Cash Collateral
Account;
(c) paying any Fees and expenses due to any Lender Party on
the Effective Date; and
(d) to the extent not used as otherwise provided in this
Section 7.08, for working capital purposes in the ordinary course of the
business of AcquisitionCo;
PROVIDED that no part of the proceeds of any Loan will be used, whether directly
or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations U and X.
Section 7.09. INDEBTEDNESS. The Company will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness created under the Basic Documents;
(b) Indebtedness existing on the Signing Date and set forth in
Schedule 7.09 but not any extensions, renewals or replacements of any such
Indebtedness;
(c) Indebtedness of the Company to AcquisitionCo and of
AcquisitionCo to the Company, PROVIDED that Indebtedness is Subordinated
Indebtedness;
(d) Guarantees by the Company of Indebtedness of AcquisitionCo
permitted by Section 7.09(e) or (f);
(e) Indebtedness of AcquisitionCo incurred to finance the
acquisition, construction or improvement of any fixed or capital assets
(including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to that acquisition) and extensions, renewals and replacements of any such
Indebtedness that do not increase its outstanding principal amount; PROVIDED
that (i) such Indebtedness is incurred prior to or concurrently with that
acquisition or the completion of that construction or improvement and (ii) the
aggregate principal amount of Indebtedness permitted by this clause (e) shall
not exceed $1,000,000 at any time outstanding;
(f) Indebtedness of AcquisitionCo as an account party in
respect of standby letters of credit;
(g) a Guarantee (as in effect on the Signing Date) by the
Company of the Indebtedness under the HoldCo Credit Agreement described in
clause (i) of Section 7.09;
37
(h) in the case of HoldCo, the Indebtedness of HoldCo under
the Indenture; provided that the aggregate principal amount of that Indebtedness
shall not exceed $100,000,000 at any time outstanding; and
(i) in the case of HoldCo and any of its Subsidiaries, (i) the
Indebtedness of HoldCo under the HoldCo Credit Agreement (PROVIDED that the
aggregate principal amount of that Indebtedness shall not exceed $275,000,000 at
any time outstanding) and (ii) any other Indebtedness permitted to be incurred
by HoldCo and its Subsidiaries under the HoldCo Credit Agreement as in effect on
the Signing Date.
Section 7.10. LIENS. The Company will not, and will not permit
any of its Subsidiaries to, create, incur, assume or permit to exist any Lien on
any Property, except:
(a) Permitted Encumbrances;
(b) any Lien on any Property of the Company or any of its
Subsidiaries existing on the Signing Date and set forth in Schedule 7.10;
PROVIDED that (i) such Lien shall not apply to any other Property of the Company
or any of its Subsidiaries and (ii) such Lien shall secure only those
obligations that it secures on the Signing Date;
(c) any Lien existing on any Property prior to its acquisition
by AcquisitionCo; PROVIDED that (i) such Lien is not created in contemplation of
or in connection with that acquisition, (ii) such Lien shall not apply to any
other Property of the Company or any of its Subsidiaries and (iii) such Lien
shall secure only those obligations that it secures on the date of that
acquisition;
(d) Liens on fixed or capital assets acquired, constructed or
improved by AcquisitionCo; PROVIDED that (i) such Liens secure Indebtedness
permitted by clause (e) of Section 7.09, (ii) such Liens and the Indebtedness
they secure are incurred prior to or concurrently with such acquisition or the
completion of such construction or improvement, (iii) the Indebtedness secured
by those Liens does not exceed 80% of the cost of acquiring, constructing or
improving those fixed or capital assets and (iv) such Lien shall not apply to
any other Property of the Company or any of its Subsidiaries;
(e) in respect of HoldCo or any of its Subsidiaries, any Liens
permitted by the HoldCo Credit Agreement as in effect on the Signing Date;
(f) the Lien of The Bank of New York, as the administrative
agent under the HoldCo Credit Agreement, on the capital stock of HoldCo and
AcquisitionCo; provided that such Lien shall at all times be subordinate to the
Lien of the Administrative Agent under the Security Agreement as provided in the
Intercreditor Agreement; and
(g) the Liens of the Basic Documents.
Section 7.11. FUNDAMENTAL CHANGES.
(a) The Company will not, and will not permit any of its
Subsidiaries to, merge or consolidate with any other Person, sell, transfer,
lease or otherwise dispose of (in one transaction
38
or in a series of transactions) all or substantially all of its Property or all
or substantially all of the stock of any of its Subsidiaries (in each case,
whether now owned or in the future acquired) or liquidate or dissolve, except
that, if at the time of, and immediately after giving effect to, that event, no
Default has occurred and is continuing,
(i) any Wholly-Owned Subsidiary of the Company (other than any
Subsidiary Guarantor) may merge into the Company in a transaction in which the
Company is the surviving corporation;
(ii) any Wholly-Owned Subsidiary of the Company (other than
any Subsidiary Guarantor) may merge into any other Wholly-Owned Subsidiary of
the Company (other than any Subsidiary Guarantor) in a transaction in which the
surviving entity is a Subsidiary of the Company;
(iii) any Wholly-Owned Subsidiary of the Company (other than
any Subsidiary Guarantor) may dispose of its Property to the Company or to
another Wholly-Owned Subsidiary of the Company; and
(iv) any Subsidiary of the Company (other than any Subsidiary
Guarantor) may liquidate or dissolve if the Company determines in good faith
that such liquidation or dissolution is in the best interests of the Company and
is not materially disadvantageous to the Lender Parties;
PROVIDED that any such merger involving a Person that is not a Wholly Owned
Subsidiary of the Company immediately prior to that merger shall not be
permitted unless also permitted by Section 7.12 and the Company and its
Subsidiaries may make the Dispositions permitted by Section 7.21.
(b) The Company will not engage in any business other than the
ownership of the capital stock of HoldCo and AcquisitionCo and will not own or
lease any assets other than that capital stock and its rights in and to the Cash
Collateral Account, and will not permit any of its Subsidiaries to engage to any
material extent in any business other than businesses of the type conducted by
the Company and its Subsidiaries on the Signing Date and reasonably related
activities, except that AcquisitionCo may make the Bridge Acquisition and HoldCo
may make the radio station acquisitions from the Seller that are to be financed
by the HoldCo Credit Agreement. The Company will, within ten days after the
Effective Date, file such applications with the FCC as are necessary to permit
the transfer of each FCC License related to the Station to the License
Subsidiary, and the Company will, as promptly as possible after that filing (and
in any event within 60 days after the Effective Date) cause each FCC License
related to the Station to be transferred to the License Subsidiary and to be
held at all times thereafter by the License Subsidiary, all in conformity with
the FCC Regulations so that those FCC Licenses are validly held by, or reissued
to, the License Subsidiary; the Company will further concurrently provide
evidence of all such actions to the Administrative Agent (including an opinion
of Fletcher, Heald & Hildreth, P.L.C., special communications counsel to the
Obligors, substantially in the form of Exhibit G-2 delivered on the Effective
Date). The Company will not permit the License Subsidiary to engage in any
business activity other than as expressly set forth in the Station
39
License Management Agreement or to terminate, amend or otherwise modify the
Station License Management Agreement.
(c) The Company will not, and will not permit any of its
Subsidiaries to:
(i) enter into any so-called "local marketing agreements" or
any other arrangements with any other radio broadcasting station (other than
with the Company or another Subsidiary with respect to one of their radio
stations) pursuant to which the parties agree to function cooperatively in terms
of programming, advertising, sales, management, consulting or similar services,
except for any such agreements or arrangements existing on the Signing Date or
on the Effective Date or otherwise established on commercially reasonable terms
(as determined in the reasonable opinion of the Company); or
(ii) enter into any so-called "time brokerage agreements" or
any other agreements or arrangements under which any radio station (i) sells
broadcast time to any other radio broadcasting station (other than to, in the
case of a station owned by HoldCo and its Subsidiaries, another station so
owned) that programs such broadcast time and sells its own commercial
advertising announcements during such broadcast time or (ii) purchases broadcast
time on any other radio broadcasting station (other than to, in the case of a
station owned by HoldCo and its Subsidiaries, another station so owned) for the
purpose of programming such broadcast time and selling its commercial
advertisements during such time, except for any such agreements or arrangements
existing on the Signing Date or on the Effective Date or otherwise established
on commercially reasonable terms (as determined in the reasonable opinion of the
Company).
Section 7.12. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS. The Company will not, and will not permit any of its Subsidiaries
to, hold or acquire (including pursuant to any merger with any Person that was
not a Wholly Owned Subsidiary of the Company prior to that merger) the capital
stock, partnership or other ownership interests, Indebtedness or other
securities of any other Person, make any deposit with, or make any loan or other
extension of credit to, any other Person, enter into any Guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of any
other Person or acquire (in one transaction or a series of transactions) any
Property of any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) investments by the Company existing on the Signing Date
and disclosed in Schedule 7.12 in the capital stock of its Subsidiaries;
(c) loans or extensions of credit made by the Company to
AcquisitionCo and made by AcquisitionCo to the Company to the extent permitted
by Section 7.09;
(d) Guarantees constituting Indebtedness permitted by Section
7.09; and
(e) in the case of HoldCo and its Subsidiaries, any
investments permitted by the HoldCo Credit Agreement.
40
Section 7.13. HEDGING AGREEMENTS. The Company will not, and
will not permit any other Obligor to, enter into any Hedging Agreement, other
than (except in the case of the License Subsidiary) in the ordinary course of
business to hedge or mitigate risks to which the Company or any other Obligor is
exposed in the conduct of its business or the management of its liabilities.
Section 7.14. RESTRICTED PAYMENTS. The Company will not, and
will not permit any of its Subsidiaries to, declare or make or agree to pay or
make, directly or indirectly, any Restricted Payment, except (a) dividends by
the Company with respect to its capital stock payable solely in additional
shares of its common stock, (b) dividends by Subsidiaries of the Company ratably
with respect to their capital stock (c) Restricted Payments by the Company in
accordance with stock option plans or other benefit plans for management or
employees of the Company and its Subsidiaries and (d) in the case of HoldCo and
its Subsidiaries, as permitted by the HoldCo Credit Agreement as in effect on
the Signing Date.
Section 7.15. TRANSACTIONS WITH AFFILIATES. The Company will
not, and will not permit any other Obligor to, sell, lease or otherwise transfer
any Property to, purchase, lease or otherwise acquire any Property from, or
otherwise engage in any other transactions with, any of its Affiliates, except
(a) in the ordinary course of business at prices and on terms and conditions not
less favorable to the Company or any such Obligor than could be obtained on an
arm's-length basis from unrelated third parties, (b) transactions between the
Company and one or more other Obligors not involving any other Affiliate of the
Company and (c) any Restricted Payment permitted by Section 7.14.
Section 7.16. RESTRICTIVE AGREEMENTS. The Company will not,
and will not permit any other Obligor to enter into, incur or permit to exist
any agreement or other arrangement that, directly or indirectly, prohibits,
restricts or imposes any condition upon (a) the ability of the Company or any
other Obligor to create, incur or permit to exist any Lien upon any of its
Property or (b) the ability of any other Obligor to pay dividends or other
distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Company or any other Obligor or to Guarantee
Indebtedness of the Company or any other Obligor, other than (i) restrictions
and conditions imposed by law or by this Agreement, (ii) restrictions and
conditions existing on the Signing Date and identified on Schedule 7.16 (but not
any extension or renewal of, or any amendment or modification expanding the
scope of, any such restriction or condition), (iii) customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary pending
that sale, PROVIDED those restrictions and conditions apply only to the
Subsidiary that is to be sold and that sale is permitted under the Basic
Documents, (iv) in the case of clause (a) above, (A) restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if those restrictions or conditions apply only to the Property
securing that Indebtedness and (B) customary provisions in leases and other
contracts restricting the assignment of those leases or contracts and (v)
restrictions and conditions imposed by the HoldCo Loan Documents.
Section 7.17. FINANCIAL CONDITION. The Company will not permit
the Total Leverage Ratio as of the end of any fiscal quarter to exceed 9.0 to
1.0.
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Section 7.18. SUBORDINATED INDEBTEDNESS. Neither the Company
nor any other Obligor will purchase, redeem, retire or otherwise acquire for
value, or set apart any money for a sinking, defeasance or other analogous fund
for, the purchase, redemption, retirement or other acquisition of, or make any
voluntary payment or prepayment of the principal of or interest on, or any other
amount owing in respect of, any Subordinated Indebtedness, except (other than
when any Default has occurred and is continuing) for regularly scheduled
payments of principal and interest in respect of that Subordinated Indebtedness
required pursuant to the instruments evidencing that Subordinated Indebtedness.
Section 7.19. ADDITIONAL GUARANTORS. The Company will take
such action, and will cause each of its Subsidiaries to take such action, from
time to time as shall be necessary to ensure that all Subsidiaries of
AcquisitionCo (other than Inactive Subsidiaries) are Subsidiary Guarantors and,
thereby, Obligors. Without limiting the generality of the foregoing, in the
event that AcquisitionCo forms any new Subsidiary after the Signing Date that
the Company anticipates will not be an Inactive Subsidiary (or, in the event
that any Inactive Subsidiary ceases to be an Inactive Subsidiary) the Company
will cause that new Subsidiary (or the Inactive Subsidiary that ceases to be an
Inactive Subsidiary) to become a Subsidiary Guarantor (and, thereby, an Obligor)
pursuant to the Guarantee and Security Agreement, and if appropriate, a separate
Guarantee and Security Agreement (or other document as is appropriate to create,
perfect and establish the priority (subject only to Liens permitted by Section
7.10) of Liens in favor of the Administrative Agent for the benefit of the
Lenders on all of the Property of that Subsidiary), in form and substance
satisfactory to each Lender Party, and to deliver such proof of corporate
action, incumbency of officers and other documents as is consistent with those
delivered by each Obligor pursuant to Section 5.01 upon the Effective Date or as
any Lender Party reasonably requests. In addition, the Company will cause 100%
of the capital stock of each new Subsidiary of AcquisitionCo to be pledged to
the Collateral Agent pursuant to the Security Documents.
Section 7.20. ENVIRONMENTAL COMPLIANCE. The Company will, and
will cause each of its Subsidiaries to, comply with all Environmental Laws and
will obtain and maintain, or cause to be obtained and maintained in full force
and effect, all Governmental Approvals required under Environmental Laws.
Section 7.21. DISPOSITIONS. The Company will not, and will not
permit any of its Subsidiaries to, make any Dispositions of all or any part of
its or their Property, except (a) Dispositions in the ordinary course of
business if the value (determined as the lower of book value and fair market
value) of the Property subject to such Dispositions does not exceed $250,000 in
any period of 12 consecutive months, (b) Dispositions of Property that is
obsolete or otherwise no longer useful in the business of the Company or any
such Subsidiary if the value (determined as the lower of book value and fair
market value) of the Property subject to such Dispositions does not exceed
$250,000 in any period of 12 consecutive months, (c) a Disposition of the
Station by AcquisitionCo or any of its Subsidiaries to HoldCo or any of its
Subsidiaries or to any third party, PROVIDED that the purchase price for the
Station is equal to the greater of the fair market value of the Station and the
actual purchase price paid by the Company for the Station on the Effective Date
(i.e., $47,000,000) and that the purchase price is paid in cash, (d) other
Dispositions of Property if the value (determined as the lower of book value and
fair market value) of the Property subject to such Dispositions does not exceed
$250,000 in any
42
period of 12 consecutive months, (e) Dispositions by HoldCo and its Subsidiaries
provided that the sale price for any Property subject to any such Disposition is
equal to at least the fair market value of that Property and at least 75% of the
sale price is paid in cash and (f) Dispositions of Property referred to in
Section 3.03(e).
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. EVENTS OF DEFAULT. If one or more of the
following events ("EVENTS OF DEFAULT") occurs:
(a) The Company (i) fails to pay any principal of any Loan
when due (whether at its stated maturity or on any mandatory or optional
prepayment date) or (ii) fails to pay any interest on any Loan or any other
Obligation when due and that failure continues unremedied for two or more days;
(b) Any representation, warranty or certification made or
deemed made in any Basic Document by any Obligor or any certificate furnished to
any Lender Party pursuant to the provisions of any Basic Document proves in any
material respect to have been false or misleading when made or furnished or
deemed made or furnished;
(c) The Company fails to perform any of its obligations under
any of Sections 7.01(g), 7.02(a), 7.02(e), 7.08, 7.09, 7.10, 7.11, 7.12, 7.13,
7.14, 7.15, 7.16, 7.17, 7.18, 7.19 and 7.21; or any Obligor fails to perform any
of its other obligations under any Basic Document and that failure continues
unremedied for 30 days after notice of that failure to the Company by the
Administrative Agent (which shall be given at the request of any Lender);
(d) Any Obligor or any Subsidiary of any Obligor fails to make
any payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness and that failure results in that
Indebtedness becoming due prior to its maturity;
(e) Any other event or condition occurs that results in the
Material Indebtedness under the HoldCo Credit Agreement or any other Material
Indebtedness becoming due prior to its scheduled maturity or that (except as to
the Indebtedness under the HoldCo Credit Agreement and the Indenture) enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance of any Material Indebtedness,
prior to its scheduled maturity; PROVIDED that this Section 8.01(e) shall not
apply to secured Indebtedness that becomes due as a result of the voluntary sale
or transfer of the Property securing that Indebtedness;
(f) Any Obligor or any Subsidiary of any Obligor admits in
writing its inability to, or is generally unable to, pay its debts as those
debts become due;
(g) Any Obligor or any Subsidiary of any Obligor (i) applies
for, or consents to the appointment of, or the taking of possession by, a
receiver, a custodian, a trustee, an examiner or a liquidator of itself or of
all or a substantial part of its Property, (ii) makes a general
43
assignment for the benefit of its creditors, (iii) commences a voluntary case
under the Bankruptcy Code, (iv) files a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment of debts,
(v) fails to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Bankruptcy Code or (vi) takes any corporate action to authorize any of the
foregoing;
(h) A proceeding or case is commenced, in any court of
competent jurisdiction, seeking (i) composition or readjustment of the debts of
any Obligor or any Subsidiary of any Obligor, (ii) the appointment of a
receiver, custodian, trustee, examiner, liquidator or the like of any Obligor or
any Subsidiary of any Obligor or of all or any substantial part of its or any
such Subsidiary's property or (iii) similar relief in respect of any Obligor or
any Subsidiary of any Obligor under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, in each case
without the application or consent of the affected Obligor or the affected
Subsidiary of any Obligor, and that proceeding or case continues undismissed, or
an order, judgment or decree approving or ordering any of the foregoing is
entered and continues unstayed and in effect, for a period of 60 or more days;
or an order for relief against any Obligor or any Subsidiary of any Obligor is
entered in an involuntary case under the Bankruptcy Code;
(i) A final judgment or judgments for the payment of more than
$1,000,000 in the aggregate (regardless of insurance coverage) are rendered by a
one or more Governmental Authorities having jurisdiction against any Obligor or
any Subsidiary of any Obligor, and that Obligor or Subsidiary fails, within 30
days of the entry of each such judgment, either (A) to discharge (or to cause or
provide for that discharge) each such judgment or (B) both to procure stay of
execution of each such judgment and, within that 30-day period (or such longer
period during which execution of the that judgment has been stayed) to appeal
from, and during that appeal to procure the continued stay of execution for,
each such judgment;
(j) An ERISA Event occurs that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
could reasonably be expected to result in liability of the Company and its
Subsidiaries in an aggregate amount exceeding (i) $100,000 in any year or (ii)
$250,000 for all periods;
(k) A Change of Control occurs;
(l) A reasonable basis exists for the assertion against any
Obligor or any Subsidiary of any Obligor of (or there shall have been asserted
against any Obligor or any Subsidiary of any Obligor) any Environmental Claims
or Liabilities that, in the judgment of the Required Lenders, are reasonably
likely to be determined adversely to any Obligor or any Subsidiary of any
Obligor and, individually or in the aggregate, likely to have a Material Adverse
Effect;
(m) Any Obligor seeks (or purports) to terminate or revoke any
obligation under any Basic Document to which it is a party, any Basic Document
ceases to be in full force and effect or the Lien of any Security Document
ceases to be a valid, perfected and first priority Lien (subject only to Liens
permitted by Section 7.10);
44
(n) Any Person initiates any case or proceeding before any
Governmental Authority or arbitrator seeking a determination, or there is any
determination by any Governmental Authority or arbitrator, that any Obligor has
any liability or obligation under the Indenture; or
(o) Any FCC License of the Company or any Subsidiary is
revoked or cancelled, expires or is suspended for more than three consecutive
days, other than (to the extent not otherwise prohibited by the Basic Documents)
by reason of a voluntary surrender (except in the case of the Station) not in
response to any adverse action or threatened adverse action by any Governmental
Authority or a Disposition, and any such action either (i) pertains to the main
broadcasting license of any radio station operated by the Company or any of its
Subsidiaries or (ii) is reasonably likely to have a Material Adverse Effect;
then: (i) in the case of an Event of Default other than one referred to in
Section 8.01(g) or (h) with respect to the Company, the Administrative Agent may
and, upon the request of the Required Lenders will, by notice to the Company,
(A) terminate the Commitments and they shall thereupon terminate and (B) declare
all or any of the Obligations (including any amounts payable under Article IV)
to be forthwith due and payable, whereupon those amounts shall be immediately
due and payable without presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by the Company; and (ii) in the
case of the occurrence of an Event of Default referred to in Section 8.01(g) or
(h) with respect to the Company, the Commitments shall automatically terminate
and all Obligations (including any amounts payable under Article IV) shall
automatically become immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Company.
ARTICLE IX
THE ADMINISTRATIVE AGENT
Section 9.01. APPOINTMENT, POWERS AND IMMUNITIES. Each Lender
Party hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers under the Basic Documents as are delegated to the
Administrative Agent by the terms of the Basic Documents, together with all
reasonably incidental actions and powers.
The Person serving as the Administrative Agent shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and that
Person and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Company or any its Affiliates as if it
were not the Administrative Agent.
The Administrative Agent shall not have any duties or
obligations except those expressly set forth in the Basic Documents. Without
limiting the generality of the foregoing (a) the Administrative Agent shall not
be subject to any fiduciary or other implied duties, whether or not a Default
has occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or exercise any discretionary powers,
except those expressly
45
contemplated by the Basic Documents or that the Administrative Agent is required
to exercise in writing by the number or percentage of the Lenders as is
necessary under the circumstances as provided in the Basic Documents and (c)
except as expressly set forth in the Basic Documents, the Administrative Agent
shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Company or any of its Affiliates that
is communicated to or obtained by the Person serving as Administrative Agent or
any of its Affiliates in any capacity. The Administrative Agent shall not be
liable for any action taken or not taken by it with the consent or at the
request of the number or percentage of the Lenders as is necessary under the
circumstances as provided in the Basic Documents or in the absence of its own
gross negligence or wilful misconduct. The Administrative Agent shall be deemed
not to have knowledge of any Default unless and until written notice of that
Default is given to the Administrative Agent by the Company or another Lender
Party, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with any Basic Document, (ii) the contents of any
certificate, report or other document delivered under or in connection with any
Basic Document, (iii) the performance or observance by any other Person of any
of the covenants, agreements or other terms or conditions set forth in the Basic
Documents, (iv) the validity, enforceability, effectiveness or genuineness of
any Basic Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article V or elsewhere in any Basic
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely, and shall
not incur any liability for relying, upon any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. The Administrative
Agent also may rely, and it shall not incur any liability for relying, upon any
statement made to it orally or by telephone and believed by it to be made by the
proper Person. The Administrative Agent may consult with legal counsel (who may
be counsel for the Company), independent accountants and other experts selected
by it, and it shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties
and exercise its rights and powers by or through any one or more subagents
appointed by the Administrative Agent. The Administrative Agent and any such
subagent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such subagent, and those provisions
shall apply to their respective activities in connection with the syndication of
the credit facilities provided for in this Agreement as well as activities as
Administrative Agent. Except for action expressly required of the Administrative
Agent under the Basic Documents, the Administrative Agent shall in all cases be
fully justified in failing or refusing to act under any Basic Document unless it
receives further assurances to its satisfaction from the other Lender Parties of
their indemnification obligations under Section 10.03 against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
46
Section 9.02. RESIGNATION. Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this Section 9.02,
the Administrative Agent may resign at any time by notifying the other Lender
Parties and the Company. Upon any such resignation, the Required Lenders shall
have the right, in consultation with the Company, to appoint a successor. If no
successor has been so appointed by the Required Lenders and has accepted that
appointment within 30 days after the retiring Administrative Agent gives its
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Lender Parties, appoint a successor Administrative Agent which shall be a
bank with an office in New York, New York, or an Affiliate of any such bank.
Upon the acceptance of its appointment as Administrative Agent by a successor,
that successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent and the retiring
Administrative Agent shall be discharged from its duties and obligations under
the Basic Documents. The fees payable by the Company to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Company and that successor. After the
Administrative Agent's resignation, the provisions of this Article IX and
Section 10.02 shall continue in effect for the benefit of that retiring
Administrative Agent, its subagents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.
Section 9.03. NONRELIANCE. Each Lender Party acknowledges that
it has, independently and without reliance upon the Administrative Agent or any
other Lender Party and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender Party also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender Party and
based on such documents and information as it from time to time deems
appropriate, continue to make its own decisions in taking or not taking action
under or based upon any Basic Document and any related agreement or any
document.
Section 9.04. THE SYNDICATION AGENT AND THE DOCUMENTATION
AGENT. Neither the Syndication Agent nor the Documentation Agent shall have any
rights, powers, responsibilities, duties or obligations under the Basic
Documents except as are applicable to all Lenders as such.
ARTICLE X
MISCELLANEOUS
Section 10.01. NOTICES. Except where telephonic notice is
expressly permitted, all notices, requests and other communications provided for
in this Agreement (and under the Basic Documents that make reference to this
Section 10.01) shall be given or made in writing and delivered by hand or
courier service, mailed by certified or registered mail or sent by telecopy to
the intended recipient as specified below its name on Annex 1 or, as to any
party, at such other address as is designated by that party in a notice to each
other party. Except as otherwise provided in any Basic Document, all such
communications shall be deemed to have been duly given or made upon receipt.
47
Section 10.02. EXPENSES, INDEMNIFICATION, ETC.
(a) The Company will pay: (i) all reasonable out-of-pocket
expenses of the Administrative Agent (including the reasonable fees and expenses
of Milbank, Tweed, Hadley & McCloy LLP, counsel to Administrative Agent), in
connection with (A) the negotiation, preparation, execution and delivery of the
Basic Documents and the extension of credit under this Agreement and (B) any
modification, supplement or waiver of any of the terms of any Basic Document and
(ii) all out-of-pocket expenses of each Lender Party (including counsels' fees
and expenses) in connection with (A) any Default and any enforcement or
collection proceedings (including any bankruptcy, reorganization, workout or
other similar proceeding) resulting from that Default or in connection with the
negotiation of any restructuring or "work-out" (whether or not consummated) of
the obligations of the Company under the Basic Documents and (B) the enforcement
of this Section 10.02.
(b) The Company will indemnify each Lender Party and each of
the Related Parties from, and hold each of them harmless against, any and all
judgments, losses, liabilities, damages or expenses incurred by any of them in
connection with or by reason of (i) the execution and delivery of the Basic
Documents or any related agreement, instrument or document, or the performance
by any Person of its obligations under the Basic Documents, (ii) the
Transactions, (iii) the making of any Loan or the use of the proceeds of any
Loan, (iv) any actual or claimed presence or release of Hazardous Materials on
or from any Property owned, leased or operated by the Company or any of its
Subsidiaries or (v) any actual or prospective claim, litigation, investigation
or proceeding related to any of the foregoing, whether based on contract, tort
or any other theory (but excluding any such losses, liabilities, damages or
expenses incurred by reason of the gross negligence or willful misconduct of the
Person to be indemnified). It shall not be a condition to any such
indemnification that the Administrative Agent or any Lender be a party to any
such investigation, litigation or other proceeding.
(c) To the extent that the Company fails to pay any amount
required to be paid by it to the Administrative Agent (or any Related Party of
that Person) under the preceding provision of this Section 10.02, each other
Lender severally agrees to pay to the Administrative Agent that Lender's
Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of that unpaid amount;
PROVIDED that the unreimbursed expense or indemnified judgment, loss, liability,
damage, or expense, as the case may be, was incurred by or asserted against the
Administrative Agent in its capacity as such or against its Related Party in
connection with that capacity.
(d) To the extent permitted by applicable law, the Company
will not assert, and hereby waives, any claim against any Lender Party or its
Related Parties, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages).
(e) All amounts due under this Section 10.02 shall be payable
not later than five days after written demand.
Section 10.03. WAIVER. No failure on the part of any Lender
Party to exercise and no delay in exercising, and no course of dealing with
respect to, any right, remedy, power or
48
privilege under this Agreement or any Note shall operate as a waiver of that
right, remedy, power or privilege, nor shall any single or partial exercise of
any right, power or privilege under this Agreement or any Note preclude any
other or further exercise of any such right, remedy, power or privilege or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided in this Agreement and the Notes are cumulative
and not exclusive of any rights, remedies, powers and privileges provided by
law.
Section 10.04. AMENDMENTS, ETC.
(a) THIS AGREEMENT. No provision of this Agreement may be
waived, modified or supplemented except by a written instrument signed by the
Company, the Administrative Agent and the Required Lenders or by the Company and
the Administrative Agent acting with the consent of the Required Lenders;
PROVIDED that no such instrument shall: (i) increase, or extend the time or
waive any requirement for the reduction or termination of, any Commitment of any
Lender without its consent, (ii) without the consent of each Lender Party whose
Obligation is affected by that action (A) extend the date fixed for the payment
of any Obligation under this Agreement or the Notes, (B) reduce the amount of
any such payment of principal, (C) reduce the rate at which interest or any fee
is payable under this Agreement or alter the basis for calculating any other
Obligation or (D) alter the rights or obligations of the Company to prepay the
Loans, (iii) without the consent of each Lender, (A) alter the terms of this
Section 10.04 or the definition of the term "Required Lenders" or modify in any
other manner the number or percentage of the Lenders required to make any
determinations or to waive any rights under, or to modify any provision of, this
Agreement or (C) alter Section 3.06(b) to change the pro rata sharing of
payments; and (iv) alter the rights and duties of the Administrative Agent
without its consent. Any modification, supplement or waiver shall be for such
period and shall be subject to such conditions as shall be specified in the
instrument effecting the same, and any such waiver shall be effective only in
the specific instance and for the purpose for which given.
(b) CONSENTS UNDER OTHER BASIC DOCUMENTS. Except as otherwise
provided in Section 10.04(a) with respect to this Agreement, the Administrative
Agent shall, upon the direction of the Required Lenders (but not otherwise),
consent to any modification, supplement or waiver under any of the Basic
Documents, PROVIDED that, without the prior consent of each Lender, the
Administrative Agent will not (except as provided in this Agreement or in the
Security Documents) release any collateral or otherwise terminate any Lien under
any Basic Document, agree to additional obligations being secured by that
collateral security (unless the Lien for those additional obligations is junior
to the Lien in favor of the Obligations) or release any Subsidiary Guarantor
from its obligations under any Basic Documents, except that no such consent
shall be required, and the Administrative Agent is hereby authorized, to release
any Lien covering Property that is the subject of a disposition of Property
permitted under this Agreement.
Section 10.05. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of its parties and their respective
successors and permitted assigns.
Section 10.06. ASSIGNMENTS AND PARTICIPATIONS.
(a) The Company may not assign any of its rights or
obligations under this Agreement or under the Notes without the prior written
consent of all the Lender Parties.
49
(b) Each Lender may assign all or any part of its Obligation,
its Notes and its Commitments, together with, in any such case, its related
rights, remedies, powers and privileges under the Basic Documents (but only with
the consent of the Company and the Administrative Agent); PROVIDED that (i) no
such consent shall be required in the case of any assignment to another Lender
or an Affiliate of a Lender; (ii) any such partial assignment shall be in an
amount at least equal to $1,000,000 unless the Company and the Administrative
Agent otherwise agree; (iii) each such assignment shall be made in such manner
so that the same portion of its Obligations, Notes and Commitments is assigned
to the respective assignee; (iv) the assigning Lender and the assignee shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing fee of $3,500, PROVIDED that no such processing fee
shall be payable prior to the end of the Initial Syndication Period and (v) no
consent of the Company shall be required if an Event of Default has occurred and
is continuing. Upon the execution and delivery of an Assignment and Acceptance,
the required consents and the recording required by Section 10.06(d), the
assignee shall have, to the extent of that assignment, the obligations, rights
and benefits of a Lender under the Basic Documents holding the Obligations,
Notes and Commitments assigned to it (and, if applicable, previously held by
that assignee) and the assigning Lender shall, to the extent of that assignment,
be released from the Commitments so assigned (and in the case of full assignment
shall cease to be a party to this Agreement but shall continue to be entitled to
the benefits of Article IV and Section 10.02). Any transfer that does not comply
with this Section 10.06(b) shall be treated as a sale of a participation under
Section 10.06(e).
(c) The Administrative Agent, acting for this purpose as an
agent of the Company, will maintain at one of its offices in New York City, New
York a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the Commitment
of, and principal amount of the Obligations owing to, each Lender Party pursuant
to the terms of the Basic Documents from time to time (the "REGISTER"). The
entries in the Register shall be conclusive, and the Company, the Administrative
Agent and each other Lender Party may treat each Person whose name is recorded
in the Register as a Lender for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by the
Company and any Lender Party, at any reasonable time and from time to time upon
reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the processing fee
referred to in Section 10.06(b) and any written consent to that assignment
required by Section 10.06(b), the Administrative Agent shall accept that
Assignment and Acceptance and record the information contained in the Register.
No assignment shall be effective for purposes of this Agreement unless it has
been recorded in the Register as provided in this Section 10.06(d).
(e) A Lender may sell or agree to sell to one or more other
Persons a participation in all or any part of its Obligations, its Note and its
Commitments and its related rights, remedies, powers and privileges under the
Basic Documents; PROVIDED that (i) each purchaser of a participation shall not,
except as otherwise provided in Section 4.07(c), have any rights, remedies,
powers or privileges under any Basic Document (that purchaser's rights against
that Lender in respect of that participation to be those set forth in the
agreements executed by that Lender in favor of that purchaser), (ii) the selling
Lender's obligation under the Basic
50
Documents shall remain unchanged and it shall remain responsible to the other
parties for the performance of those obligations and (iii) the other parties may
continue to deal solely and directly with that selling Lender. All amounts
payable by the Company to any Lender under Article IV in respect of that
Lender's Obligations and Commitments shall be determined as if that Lender had
not sold or agreed to sell any such participating interest, and as if that
Lender were funding its obligations in the same way that it is funding the
portion of those obligations in which no participations have been sold. In no
event shall a Lender that sells a participation agree with its purchaser to take
or to refrain from taking any action under any Basic Document except that such
Lender may agree with that purchaser that it will not, without the consent of
that purchaser, agree to any action that, pursuant to Section 10.04(a)(i), (ii)
or (iii), requires the consent of that Lender.
(f) In addition to the assignments and participations
permitted under the foregoing provisions of this Section 10.06, any Lender may
grant a security interest in all or any portion of its Obligations, its Notes
and its rights under the Basic Documents to secure its obligations, including
any assignment and pledge, to any Federal Reserve Bank. No such assignment shall
release the assigning Lender from its obligations under the Basic Documents or
substitute any such secured party for that Lender as a party to any Basic
Document.
(g) Notwithstanding anything in this Section 10.06 to the
contrary, no Lender may assign or participate any interest in any Obligation,
Note or Commitment (or any related rights, remedies, powers or privileges) to
the Company or any of its Affiliates or Subsidiaries without the prior written
consent of each other Lender Party.
Section 10.07. SURVIVAL. The obligations of the Company under
Article IV and Section 10.02 and the obligations of the Lenders under Section
10.02 shall survive the repayment of the Obligations and the termination of the
Commitments. In addition, each representation and warranty made, or deemed to be
made by a notice of any extension of credit, in or pursuant to any Basic
Document shall survive the making or deemed making of that representation and
warranty, and no Lender Party shall be deemed to have waived, by reason of
making any extension of credit, any Default that may arise by reason of that
representation or warranty proving to have been false or misleading,
notwithstanding that such or any other Lender Party may have had notice or
knowledge or reason to believe that such representation or warranty was false or
misleading at the time that extension of credit was made.
Section 10.08. AGREEMENTS SUPERSEDED. This Agreement
supersedes all prior agreements and understandings, written or oral, between the
parties with respect to the subject matter of this Agreement.
Section 10.09. SEVERABILITY. Any provision of this Agreement
or the Notes that is prohibited or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of that prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or the Notes, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable that provision in any other
jurisdiction.
51
Section 10.10. CAPTIONS. The table of contents, captions and
section headings appearing in this Agreement are included solely for convenience
of reference and are not intended to affect the interpretation of any provision
of this Agreement.
Section 10.11. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties to this Agreement may execute this
Agreement by signing any such counterpart. Delivery of an executed counterpart
of a signature page to this Agreement by hand or by telecopy shall be as
effective as the delivery of a fully executed counterpart of this Agreement.
Section 10.12. TREATMENT OF CERTAIN INFORMATION;
CONFIDENTIALITY. Each Lender Party agrees (on behalf of itself and each of its
Related Parties) to use reasonable precautions to keep confidential, in
accordance with its customary procedures for its own confidential information,
any nonpublic information supplied to it by the Company pursuant to this
Agreement that is identified by the Company as confidential at the time it is
delivered to the that Lender Party; PROVIDED that nothing in this Agreement
shall limit the disclosure of any such information (a) to the extent required by
Governmental Rule, (b) to counsel for any Lender Party, (c) to bank examiners,
auditors or accountants, (d) to any other party to this Agreement or any
Affiliate of that party, (e) in connection with any litigation to which any one
or more of the parties to this Agreement is a party, (f) to any assignee or
participant (or prospective assignee or participant) of any Lender so long as
that assignee or participant (or prospective assignee or participant) first
executes and delivers to that Lender an agreement substantially to the same
effect as this Section 10.12, (g) to the extent that such information becomes
publicly available (other than as a result of a breach of this Section 10.12) or
is received from a source other than the Company or (h) with the consent of the
Company.
Section 10.13. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW
YORK. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
STATE COURT SITTING IN THE STATE OF NEW YORK AND THE COUNTY OF NEW YORK FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR IN THE FUTURE HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Section 10.14. WAIVER OF JURY TRIAL. EACH PARTY HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
52
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
COMPANY:
SALEM COMMUNICATIONS CORPORATION
By:
-----------------------------------
Name:
Title:
ADMINISTRATIVE AGENT:
--------------------
ING (U.S.) CAPITAL LLC
By:
-----------------------------------
Name:
Title:
LENDERS:
ING (U.S.) CAPITAL LLC
By:
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-----------------------------------
Name:
Title:
FLEET NATIONAL BANK
By:
-----------------------------------
Name:
Title:
ANNEX 1
Addresses for Notices and Commitments of the Lenders
ING (U.S.) CAPITAL LLC $70,000,000
55 East 52nd Street
New York, New York 10055
Telephone: (212) 409-1743
Telecopy: (212) 409-7813
Attention: Pamela Kaye
Pay to The Chase Manhattan Bank N.A., New York, NY
ABA 021-000-021
Favor: ING Barings
Account: 066-297-311
Reference: Salem
THE BANK OF NEW YORK $20,000,000
One Wall Street, 16th Floor
Ney York, New York 10286
Contact Names for Operations Matters: Gladys Vasquez
Telephone: (212) 635-8730
Facsimile: (212) 635-8679
Pay to The Bank of New York, New York, NY
ABA 0211000018
Account GL-111556
Attention: Commercial Loans
Reference: Salem Communications
FLEET NATIONAL BANK $10,000,000
One Federal Street, 3rd Floor
Boston, Massachussets 02110
Telephone: (617) 346-4364
Facsimile: (617) 346-4345
Contact Names for Operations Matters: Yin Kuen Lee /
Kevin Davenport
Telephone: (212) 819-6051 / 6052
Facsimile: (212) 819-6204
Pay to Fleet Bank, N.A., New York, NY
ABA 021-300-019
Name of Account: CLS Wire Clearing Account
Account 1510351-03102
Reference: Salem Communications
ANNEX 2
INSURANCE REQUIREMENTS
[Attached]
SCHEDULE 6.03
GOVERNMENTAL APPROVALS
FCC approvals of transfer of FCC Licenses of KALC-FM (Denver,
CO) from AcquisitionCo to the License Subsidiary.
SCHEDULE 6.06
LITIGATION AND CLAIMS
None.
SCHEDULE 6.07
DEFAULTS
None.
SCHEDULE 7.09
INDEBTEDNESS
1. Capital lease obligation of $183,274 acquired through OnePlace.
2. Buyer's additional obligation of $190,400 due October 2001 under asset
purchase agreement to acquire GospelMedia.
SCHEDULE 7.10
LIENS
None.
SCHEDULE 7.12
SUBSIDIARIES
Salem Communications Corporation (Parent)
Subsidiaries:
1. Salem Comunications Acquisition Corporation
Subsidiaries:
SCA License Corporation
2. Salem Communications Holding Corporation
Subsidiaries:
ATEP Radio, Inc.
Bison Media, Inc.
Caron Broadcasting, Inc.
CCM Communications, Inc.
Common Ground Broadcasting
Golden Gate Broadcasting Company, Inc.
Inland Radio, Inc.
Inspiration Media of Texas, Inc.
Inspiration Media, Inc.
Kingdom Direct, Inc.
New England Continental Media, Inc.
New Inspiration Broadcasting Company, Inc.
OnePlace, Ltd.
Pennsylvania Media Associates, Inc.
Radio 1210, Inc.
Reach Satellite Network, Inc.
Salem Media Corporation
Salem Media of Colorado, Inc.
Salem Media of Georgia, Inc.
Salem Media Hawaii, Inc.
Salem Media Kentucky, Inc.
Salem Media Ohio, Inc.
Salem Media Oregon, Inc.
Salem Media Pennsylvania, Inc.
Salem Media Texas, Inc.
Salem Media of Virginia, Inc.*
Salem Music Network, Inc.
Salem Radio Network Incorporated
Salem Radio Properties, Inc.
Salem Radio Representatives, Inc.
South Texas Broadcasting, Inc.
SRN News Network, Inc.
Vista Broadcasting, Inc.
*Note: Salem Media of Virginia, Inc. is owned 15% by Salem
Communications Holding Corporation, 40% by Golden Gate
Broadcasting Company, Inc. and 45% by New Inspiration
Broadcasting Company, Inc.
SCHEDULE 7.16
RESTRICTIVE AGREEMENTS
None.
EXHIBIT A
[FORM OF NOTE]
PROMISSORY NOTE
$[-----]
New York, New York
FOR VALUE RECEIVED, Salem Communications Corporation, a
California corporation (the "COMPANY"), hereby promises to pay to [_____] (the
"LENDER"), at the account of ING (U.S.) Capital LLC specified in the Credit
Agreement, the principal sum of [_____] Dollars, in lawful money of the United
States of America and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay interest on the
unpaid principal amount of the Loan made by the Lender, at that office, in like
money and funds, for the period commencing on the date of that Loan until that
Loan is paid in full, at the rates per annum and on the dates provided in the
Credit Agreement.
The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of the Loan made by the Lender to the Company, and each
payment made on account of the principal of that Loan, shall be recorded by the
Lender on its books and, prior to any transfer of this Note, endorsed by the
Lender on the schedule attached to this Note or any continuation of that
schedule, PROVIDED that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Company to make a payment
when due of any amount owing under the Credit Agreement or under this Note in
respect of the Loan made by the Lender.
This Note is one of the Notes referred to in the Credit
Agreement dated as of August 24, 2000 (as modified and supplemented and in
effect from time to time, the "CREDIT AGREEMENT") between the Company and the
Lenders (including this Lender) for whom ING (U.S.) Capital LLC is the
Administrative Agent, and evidences the Loan made by the Lender under the Credit
Agreement. Capitalized terms used but not defined in this Note have the
respective meanings assigned to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the
maturity of this Note upon the occurrence of certain events and for prepayments
of the Loans upon the terms and conditions specified in the Credit Agreement.
This Note is secured by and entitled to the benefits of the Security Documents.
Except as permitted by Section 10.06(b) of the Credit
Agreement, this Note may not be assigned by the Lender to any other Person.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK.
SALEM COMMUNICATIONS CORPORATION
By: _______________________
Name:
Title:
SCHEDULE OF LOANS
This Note evidences the Loan made under the Credit Agreement
to the Company, on the dates, in the principal amounts, of the Types, bearing
interest at the rates and having Interest Periods (if applicable) of the
durations set forth below, subject to the payments, continuations, conversions
and prepayments of principal set forth below:
Amount
Date Paid,
Made, Principal Duration Prepaid,
Continued Amount Type of Continued Unpaid
or of of Interest Interest or Principal Notation
Converted Loan Loan Rate Period Converted Amount Made by
--------- ---- ---- ---- ------ --------- ------ -------
EXHIBIT B
[FORM OF ASSIGNMENT AND ACCEPTANCE]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of August
24, 2000 (as amended to date, the "CREDIT AGREEMENT"), between Salem
Communications Corporation and the Lenders named in the Credit Agreement for
whom ING (U.S.) Capital LLC is the Administrative Agent. Terms defined in the
Credit Agreement are used in this Assignment and Acceptance with the same
meanings.
The Assignor named below hereby sells and assigns, without
recourse, to the Assignee named below, and the Assignee hereby purchases and
assumes, without recourse, from the Assignor, effective as of the Assignment
Date set forth below, the interests set forth below (the "ASSIGNED INTEREST") in
the Assignor's rights and obligations under the Credit Agreement, including the
Obligations set forth below, but excluding accrued interest and fees to and
excluding the Assignment Date. The Assignee hereby acknowledges receipt of a
copy of the Basic Documents. From and after the Assignment Date (i) the Assignee
shall be a party to and be bound by the provisions of the Credit Agreement and,
to the extent of the Assigned Interest, have the rights and obligations of a
Lender under the Basic Documents and (ii) the Assignor shall, to the extent of
the Assigned Interest, relinquish its rights and be released from its
obligations under the Basic Documents.
This Assignment and Acceptance is being delivered to the
Administrative Agent together with, if the Assignee is a Foreign Lender, any
documentation required to be delivered by the Assignee pursuant to Section
4.04(e) of the Credit Agreement, duly completed and executed by the Assignee.
The [Assignee/Assignor] shall pay the fee payable to the Administrative Agent
pursuant to Section 10.06(b) of the Credit Agreement.
This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and performed in the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(the "ASSIGNMENT DATE"):
Percentage Assigned of
Commitment
(set forth, to at
least 8 decimals, as a
percentage of the
Principal Amount aggregate Commitments
Assigned of All Lenders)
---------------- ----------------------
Commitment Assigned: $ %
Loans:
The terms set forth above are hereby agreed to:
[NAME OF ASSIGNOR],
as the Assignor
By: ___________________________________
Name:
Title:
[NAME OF ASSIGNEE],
as the Assignee
By: ___________________________________
Name:
Title:
The undersigned hereby consent to the within assignment:
SALEM COMMUNICATIONS ING (U.S.) CAPITAL LLC,
CORPORATION as the Administrative Agent,
By: By:
------------------------------ -------------------------------
Name: Name:
Title: Title:
EXHIBIT C
EXECUTION COPY
*****************************************************************
SECURITY AGREEMENT
Dated as of August 24, 2000
between
SALEM COMMUNICATIONS CORPORATION
and
ING (U.S.) CAPITAL LLC
as the administrative agent
*****************************************************************
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................1
Section 1.01 Certain Defined Terms....................................1
Section 1.02 Interpretation...........................................2
ARTICLE II COLLATERAL........................................................2
Section 2.01 Grant....................................................2
Section 2.02 Perfection...............................................3
Section 2.03 Preservation and Protection of Security Interests........3
Section 2.04 Attorney-in-Fact.........................................4
Section 2.05 Special Provisions Relating to Stock Collateral
and Investment Property..................................4
Section 2.06 Rights and Obligations...................................5
Section 2.07 Termination..............................................5
ARTICLE III CASH PROCEEDS OF COLLATERAL......................................6
Section 3.01 Cash Collateral Account..................................6
Section 3.02 Certain Proceeds.........................................6
Section 3.03 Investment of Balance in Cash Collateral Account.........6
ARTICLE IV REPRESENTATIONS...................................................7
Section 4.01 Title....................................................7
Section 4.02 Pledged Stock............................................7
ARTICLE V COVENANTS..........................................................7
Section 5.01 Books and Records........................................7
Section 5.02 Removals, Etc............................................8
Section 5.03 Sales and Other Liens....................................8
Section 5.04 Stock Collateral.........................................8
Section 5.05 Further Assurances.......................................8
ARTICLE VI REMEDIES..........................................................8
Section 6.01 Events of Default, Etc...................................8
Section 6.02 Deficiency...............................................9
Section 6.03 Private Sale............................................10
Section 6.04 Application of Proceeds.................................10
Section 6.05 Certain Regulatory Requirements.........................11
ARTICLE VII MISCELLANEOUS...................................................11
Section 7.01 Administrative Agent....................................11
Section 7.02 Notices.................................................12
Section 7.03 Expenses, Etc...........................................12
Section 7.04 Waiver..................................................12
Section 7.05 Amendments, Etc.........................................13
Section 7.06 Successors and Assigns..................................13
i
Section 7.07 Survival................................................13
Section 7.08 Agreements Superseded...................................13
Section 7.09 Severability............................................13
Section 7.10 Captions................................................13
Section 7.11 Counterparts............................................13
Section 7.12 Governing Law; Submission to Jurisdiction...............13
Section 7.13 Waiver of Jury Trial....................................14
Annex 1 - Pledged Stock
ii
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "AGREEMENT") dated as of August
24, 2000 is made between SALEM COMMUNICATIONS CORPORATION, a California
corporation (the "OBLIGOR") and ING (U.S.) CAPITAL LLC, as the agent (in that
capacity, the "ADMINISTRATIVE AGENT") for the Lenders referred to below.
The Credit Agreement dated as of August 24, 2000 (the "CREDIT
AGREEMENT") between the Obligor, the Administrative Agent and the lenders
identified in the Credit Agreement (the "LENDERS") for whom the Administrative
Agent acts as the administrative agent provides, subject to its terms and
conditions, for certain extensions of credit to the Obligor. It is a condition
to the obligations of the Administrative Agent and the Lenders under the Credit
Agreement that the Obligor executes and delivers, and grants the Liens provided
for in, this Agreement.
To induce the Lender Parties to enter into, and to extend
credit under, the Credit Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Obligor agrees to pledge and grant a security interest in the Collateral as
security for the Secured Obligations. Accordingly, the Obligor agrees with the
Administrative Agent as follows:
ARTICLE I
DEFINITIONS
Section 1.01 CERTAIN DEFINED TERMS. Unless otherwise defined,
all capitalized terms used in this Agreement that are defined in the Credit
Agreement (including terms incorporated by reference) shall have the respective
meanings assigned to them in the Credit Agreement. In addition, the following
terms shall have the following meanings under this Agreement:
"CASH COLLATERAL ACCOUNT" shall have the meaning assigned to
that term in Section 3.01.
"COLLATERAL" shall have the meaning assigned to that term in
Section 2.01.
"ISSUERS" shall mean, collectively, each direct Subsidiary of
the Obligor that is the issuer (as defined in the Uniform Commercial Code) of
any shares of capital stock now owned or in the future acquired by the Obligor,
including the respective corporations identified in Annex 1 under the caption
"ISSUER."
"INVESTMENT PROPERTY" shall have the meaning assigned to that
term in Section 2.01(a).
"PLEDGED STOCK" shall have the meaning assigned to that term
in Section 2.01(a).
"SECURED OBLIGATIONS" shall mean (a) any and all Obligations
and (b) any and all obligations of the Obligor for the performance of its
agreements, covenants and undertakings under or in respect of the Basic
Documents.
"STOCK COLLATERAL" shall have the meaning assigned to that
term in Section 2.01(a).
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the State of New York from time to time or, by reason of
mandatory application, any other applicable jurisdiction. Section 1.02
INTERPRETATION. In this Agreement, unless otherwise indicated, the singular
shall include the plural and plural the singular; words importing any gender
shall include the other gender; references to statutes or regulations shall be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" shall include printing, typing, lithography and other means of
reproducing words in a tangible visible form; the words "including," "includes"
and "include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to this Agreement; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
extensions and other modifications to those instruments (without, however,
limiting any prohibition on any such amendments, extensions or modifications by
the terms of the Basic Documents); and references to Persons shall include their
respective successors and permitted assigns and, in the case of Governmental
Authorities, Persons succeeding to their respective functions and capacities.
ARTICLE II
COLLATERAL
Section 2.01 GRANT. As collateral security for the prompt
payment in full when due (whether at stated maturity, upon acceleration, on any
optional or mandatory prepayment date or otherwise) and performance of the
Secured Obligations, the Obligor hereby pledges and grants to the Administrative
Agent, for the benefit of the Lender Parties, a security interest in all of the
Obligor's right, title and interest in and to the following property, whether
now owned or in the future acquired by the Obligor and whether now existing or
in the future coming into existence (collectively, the "COLLATERAL"):
(a) (i) all of the shares of capital stock of the Issuers
represented by the respective certificates identified in Annex 1 and all other
shares of capital stock of whatever class of the Issuers, now owned or in the
future acquired by the Obligor, together with in each case the certificates
representing the same (collectively, the "PLEDGED STOCK");
(ii) all shares, securities, moneys or property representing a
dividend on, or a distribution or return of capital in respect of, any of the
Pledged Stock, resulting from a split-up, revision, reclassification or other
like change of any of the Pledged Stock or otherwise received in exchange for
any of the Pledged Stock and all rights issued to the holders of, or otherwise
in respect of, any of the Pledged Stock;
-2-
(iii) without affecting the obligations of the Obligor under
any provision prohibiting that action under any Basic Document, in the event of
any consolidation or merger in which any Issuer is not the surviving
corporation, all shares of each class of the capital stock of the successor
corporation (unless that successor corporation is the Obligor itself) formed by
or resulting from that consolidation or merger (collectively, and together with
the property described in clauses (i) and (ii) above, the "STOCK COLLATERAL");
and
(iv) all other securities (whether certificated or
uncertificated), security entitlements, securities accounts, commodities
contracts and commodity accounts (each as defined in the Uniform Commercial
Code), together with in each case the certificates representing the same
(collectively, the "INVESTMENT PROPERTY");
(b) the Cash Collateral Account and the balances and all
Investment Property and financial assets (as defined in the Uniform Commercial
Code) from time to time held in or credited to the Cash Collateral Account;
(c) all other tangible and intangible property of the Obligor;
and
(d) all proceeds and products in whatever form of all or any
part of the other Collateral with respect to all or any part of the other
Collateral (together with all rights to recover and proceed with respect to the
same), and all accessories to, substitutions for and replacements of all or any
part of the other Collateral.
Section 2.02 PERFECTION. The Obligor will (i) concurrently
with the execution and delivery of this Agreement, file or deliver for filing
such financing statements and other documents in such offices as are necessary
or as the Administrative Agent may request to perfect and establish the priority
(subject only to Liens permitted under Section 7.10 of the Credit Agreement) of
the Liens granted by this Agreement, (ii) concurrently with the execution and
delivery of this Agreement, deliver to the Administrative Agent all certificates
identified in Annex 1, accompanied by undated stock powers duly executed in
blank and (iii) take all such other actions as are necessary or as the
Administrative Agent may request to perfect and establish the priority (subject
only to those permitted Liens) of the Liens granted by this Agreement.
Section 2.03 PRESERVATION AND PROTECTION OF SECURITY
INTERESTS. The Obligor will:
(a) upon the acquisition after the Signing Date by the Obligor
of any Stock Collateral or any certificate evidencing or representing any
Investment Property, promptly either (x) transfer and deliver to the
Administrative Agent all such Stock Collateral together with the certificates
representing that Stock Collateral and that Investment Property duly endorsed in
blank or accompanied by undated stock powers duly executed in blank) or (y) take
such other action as the Administrative Agent deems necessary or appropriate to
create, perfect and establish the priority (subject only to Liens permitted
under Section 7.10 of the Credit Agreement) of the Liens granted by this
Agreement in that Stock Collateral and Investment Property; and
-3-
(b) give, execute, deliver, file or record any and all
financing statements, notices, contracts, agreements or other instruments,
obtain any and all Governmental Approvals and take any and all steps that may be
necessary or as the Administrative Agent may request to create, perfect,
establish the priority (subject only to Liens permitted under Section 7.10 of
the Credit Agreement) of, or to preserve the validity, perfection or priority
(subject only to those permitted Liens) of, the Liens granted by this Agreement
or to enable the Administrative Agent to exercise and enforce its rights,
remedies, powers and privileges under this Agreement with respect to those
Liens, including causing any or all of the Stock Collateral and Investment
Property to be transferred of record into the name of the Administrative Agent
or its nominee (and the Administrative Agent agrees that if any Stock Collateral
and Investment Property is transferred into its name or the name of its nominee,
the Administrative Agent will thereafter promptly give to the Obligor copies of
any notices and communications received by it with respect to the Stock
Collateral and Investment Property pledged by the Obligor).
Section 2.04 ATTORNEY-IN-FACT. Subject to the rights of the
Obligor under Sections 2.05, the Obligor hereby appoints the Administrative
Agent its attorney-in-fact effective on the Signing Date and terminating upon
the termination of this Agreement for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instruments that the
Administrative Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, to preserve the validity, perfection and priority (subject
only to Liens permitted under Section 7.10 of the Credit Agreement) of the Liens
granted by this Agreement and, following any Default, to exercise its rights,
remedies, powers and privileges under this Agreement. This appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, the Administrative Agent shall be entitled
under this Agreement upon the occurrence and continuation of any Event of
Default (or, in respect of Section 3.01, any Default) (i) to ask, demand,
collect, sue for, recover, receive and give receipt and discharge for amounts
due and to become due under and in respect of all or any part of the Collateral;
(ii) to receive, endorse and collect any drafts, instruments, documents and
chattel paper in connection with clause (i) above (including any draft or check
representing the proceeds of insurance or the return of unearned premiums);
(iii) to file any claims or take any action or proceeding that the
Administrative Agent may deem necessary or advisable for the collection of all
or any part of the Collateral, including the collection of any compensation due
and to become due under any contract or agreement with respect to all or any
part of the Collateral; and (iv) to execute, in connection with any sale or
disposition of the Collateral under Section 6.01, any endorsements, assignments,
bills of sale or other instruments of conveyance or transfer with respect to all
or any part of the Collateral.
Section 2.05 SPECIAL PROVISIONS RELATING TO STOCK COLLATERAL
AND INVESTMENT PROPERTY.
(a) So long as no Event of Default has occurred and is
continuing, the Obligor shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Stock Collateral for all
purposes not inconsistent with the terms of any Basic Document, PROVIDED that
the Obligor will not vote the Stock Collateral in any manner that is
inconsistent with the terms of any Basic Document; and the Administrative Agent
will, at the Obligor's expense, execute and deliver to the Obligor or cause to
be executed and delivered to the Obligor all such proxies, powers of attorney,
dividend and other orders and other instruments, without
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recourse, as the Obligor may reasonably request for the purpose of enabling the
Obligor to exercise the rights and powers that it is entitled to exercise
pursuant to this Section 2.05(a).
(b) So long as no Event of Default has occurred and is
continuing, the Obligor shall be entitled to receive and retain any dividends on
the Stock Collateral paid in cash out of earned surplus.
(c) If any Event of Default has occurred and is continuing,
and whether or not any Lender Party exercises any available right to declare any
Secured Obligation due and payable or seeks or pursues any other right, remedy,
power or privilege available to it under applicable law, this Agreement or any
other Basic Document (but subject to Section 6.05), all dividends and other
distributions on the Stock Collateral shall be paid directly to the
Administrative Agent and retained by it in the Cash Collateral Account as part
of the Stock Collateral, subject to the terms of this Agreement, and, if the
Administrative Agent so requests, the Obligor will execute and deliver to the
Administrative Agent appropriate additional dividend, distribution and other
orders and instruments to that end, PROVIDED that if that Event of Default is
cured, any such dividend or distribution paid to the Administrative Agent prior
to that cure shall, upon request of the Obligor (except to the extent applied to
the Secured Obligations), be returned by the Administrative Agent to the
Obligor.
Section 2.06 RIGHTS AND OBLIGATIONS.
(a) The Obligor shall remain liable to perform its duties and
obligations under the Governmental Approvals included in the Collateral in
accordance with their respective terms to the same extent as if this Agreement
had not been executed and delivered. Neither the Administrative Agent nor any
Lender shall have any duty, obligation or liability under or in respect to any
Governmental Approval included in the Collateral by reason of this Agreement or
any other Basic Document, nor shall the Administrative Agent or any Lender be
obligated to perform any of the duties or obligations of the Obligor under any
such Governmental Approval or to take any action to collect or enforce any claim
(for payment) under any such Governmental Approval.
(b) No Lien granted by this Agreement in the Obligor's right,
title and interest in any Governmental Approval shall be deemed to be a consent
by the Administrative Agent or any Lender to any such Governmental Approval.
(c) No reference in this Agreement to proceeds or to the sale
or other disposition of Collateral shall authorize the Obligor to sell or
otherwise dispose of any Collateral except to the extent otherwise expressly
permitted by the terms of any Basic Document.
(d) Neither the Administrative Agent nor any Lender shall be
required to take steps necessary to preserve any rights against prior parties to
any part of the Collateral.
Section 2.07 TERMINATION. When all Secured Obligations have
been paid in full and the Commitments have expired or been terminated, this
Agreement shall terminate, and the Administrative Agent will forthwith cause to
be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect of the Collateral, to or on the order of the Obligor.
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The Administrative Agent will also execute and deliver to the Obligor upon that
termination such Uniform Commercial Code termination statements and such other
documentation as is reasonably requested by the Obligor to effect the
termination and release of the Liens granted by this Agreement on the
Collateral.
ARTICLE III
CASH PROCEEDS OF COLLATERAL
Section 3.01 CASH COLLATERAL ACCOUNT. There is hereby
established with ING Barings LLC a cash collateral account (the "CASH COLLATERAL
ACCOUNT") in the name and under the control of the Administrative Agent into
which there shall be deposited, among other things, (a) the amounts, if any,
described in Section 3.03 of the Credit Agreement, (b) the proceeds of any Loans
made for the purpose of funding the Interest Reserve, (c) all amounts required
to be deposited in the Cash Collateral Account pursuant to the Guarantee and
Security Agreement and (d) from time to time such other cash proceeds of any of
the Collateral required to be delivered to the Administrative Agent pursuant to
this Agreement or the Credit Agreement, and into which the Obligor may from time
to time deposit any additional amounts that it wishes to pledge to the
Administrative Agent for the benefit of the Lender Parties as additional
collateral security under this Agreement. The balance from time to time in the
Cash Collateral Account shall constitute part of the Collateral and shall not
constitute payment of the Secured Obligations until applied as provided in this
Agreement. If any Event of Default has occurred and is continuing, the
Administrative Agent may (and, if instructed by the Required Lenders, will) in
its (or their) discretion apply or cause to be applied (subject to collection)
the balance from time to time outstanding to the credit of the Cash Collateral
Account (i) in the case of the Interest Reserve, to make interest payments as
described in Section 3.05(e) of the Credit Agreement and (ii) in the case of all
other amounts on credit in the Cash Collateral Account and, upon any Event of
Default, the Interest Reserve, to the payment of the Secured Obligations in the
manner specified in Section 6.04. The balance from time to time in the Cash
Collateral Account shall be subject to withdrawal only as provided in this
Agreement and Section 3.05(e) of the Credit Agreement.
Section 3.02 CERTAIN PROCEEDS. The Obligor agrees that if the
proceeds of any Collateral shall be received by it, the Obligor will as promptly
as possible deposit those proceeds into the Cash Collateral Account. Until so
deposited, all such proceeds shall be held in trust by the Obligor for and as
the property of the Administrative Agent and shall not be commingled with any
other funds or property of the Obligor.
Section 3.03 INVESTMENT OF BALANCE IN CASH COLLATERAL ACCOUNT.
Amounts on deposit in the Cash Collateral Account shall be invested from time to
time in such Permitted Investments as the Obligor (or, if any Default has
occurred and is continuing, the Administrative Agent) determines; failing a
determination by the Obligor, investments shall be made in United States
Treasury obligations selected by the Administrative Agent. All such Permitted
Investments (and the earnings from them) shall be held in the name and be under
the control of the Administrative Agent. At any time after the occurrence and
during the continuance of an Event of Default, the Administrative Agent may
(and, if instructed by the Required Lenders, will) in its (or their) discretion
at any time and from time to time elect to liquidate any such
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Permitted Investments and to apply or cause to be applied the proceeds of that
action to the payment of the Secured Obligations in the manner specified in
Section 6.04.
ARTICLE IV
REPRESENTATIONS
As of the Signing Date and as of the date of each extension of
credit by the Lenders, the Obligor represents and warrants to each Lender Party
as follows:
Section 4.01 TITLE. The Obligor is the sole beneficial owner
of the Collateral in which it purports to grant a Lien pursuant to this
Agreement, and the Collateral is free and clear of all Liens, except for Liens
permitted under Section 7.10 of the Credit Agreement. The Liens granted by this
Agreement in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders have attached and constitute a perfected
security interest in all of that Collateral prior to all other Liens (except
those permitted Liens).
Section 4.02 PLEDGED STOCK.
(a) The Pledged Stock evidenced by the certificates identified
in Annex 1 is duly authorized, validly existing, fully paid and nonassessable,
and none of that Pledged Stock is subject to any contractual restriction, or any
restriction under the charter or by-laws of the respective Issuer of that
Pledged Stock, upon the transfer of that Pledged Stock (except for any such
restriction contained in any Basic Document and as arise under the FCC
Regulations).
(b) The Pledged Stock evidenced by the certificates identified
in Annex 1 constitutes all of the issued and outstanding shares of capital stock
of any class of the Issuers beneficially owned by the Obligor on the Signing
Date (whether or not registered in the name of the Obligor), and Annex 1
correctly identifies, as at the Signing Date, the respective Issuers of that
Pledged Stock, the respective class and par value of the shares comprising that
Pledged Stock and the respective number (and registered owners) of the shares
evidenced by each such certificate.
ARTICLE V
COVENANTS
Section 5.01 BOOKS AND RECORDS. The Obligor will:
(a) keep full and accurate books and records relating to the
Collateral and stamp or otherwise mark those books and records in such manner as
the Administrative Agent may reasonably require in order to reflect the Liens
granted by this Agreement; and
(b) permit representatives of the Administrative Agent, upon
reasonable notice, at any time during normal business hours to inspect and make
abstracts from its books and records pertaining to the Collateral and, if an
Event of Default has occurred and is
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continuing, permit representatives of the Administrative Agent to be present at
the Obligor's place of business to receive copies of all communications and
remittances relating to the Collateral and forward copies of any notices or
communications received by the Obligor with respect to the Collateral, all in
such manner as the Administrative Agent may request.
Section 5.02 REMOVALS, ETC. Without at least 30 days' prior
written notice to the Administrative Agent, the Obligor will not:
(a) change its corporate name, or the name under which it does
business, from the name shown on the signature pages to this Agreement; or
(b) maintain any of its books and records with respect to the
Collateral at any office, or maintain its principal place of business at any
place, other than at the address initially indicated for notices to it under
Section 7.02 or at one of the locations identified in Annex 6 or in transit from
one of those locations to another.
Section 5.03 SALES AND OTHER LIENS. Except as otherwise
permitted under Section 7.10, 7.11 or 7.21 of the Credit Agreement, without the
prior written consent of the Administrative Agent (granted with the
authorization of the Lenders as specified in Section 10.04 of the Credit
Agreement), the Obligor will not dispose of any Collateral, create, incur,
assume or suffer to exist any Lien upon any Collateral or file or suffer to be
on file or authorize to be filed, in any jurisdiction, any financing statement
or like instrument with respect to all or any part of the Collateral in which
the Administrative Agent is not named as the sole secured party for the benefit
of the Lenders.
Section 5.04 STOCK COLLATERAL. The Obligor will cause the
Stock Collateral to constitute at all times 100% of the total number of shares
of each class of capital stock of each Issuer then outstanding. The Obligor will
cause all such shares to be duly authorized, validly issued, fully paid and
nonassessable and to be free of any contractual restriction or any restriction
under the charter or bylaws of the respective Issuer of that Stock Collateral,
upon the transfer of that Stock Collateral (except for any such restriction
contained in any Basic Document and as arise under the FCC Regulations).
Section 5.05 FURTHER ASSURANCES. The Obligor will, from time
to time upon the written request of the Administrative Agent, execute and
deliver such further documents and do such other acts and things as the
Administrative Agent may reasonably request in order fully to effect the
purposes of this Agreement.
ARTICLE VI
REMEDIES
Section 6.01 EVENTS OF DEFAULT, ETC. If any Event of Default
has occurred and is continuing:
(a) the Administrative Agent in its discretion may require the
Obligor to, and the Obligor will, assemble the Collateral owned by it at such
place or places, reasonably
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convenient to both the Administrative Agent and the Obligor, designated in the
Administrative Agent's request;
(b) the Administrative Agent in its discretion may make any
reasonable compromise or settlement it deems desirable with respect to any of
the Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, all or any part of the
Collateral;
(c) the Administrative Agent in its discretion may, in its
name or in the name of the Obligor or otherwise, demand, sue for, collect or
receive any money or property at any time payable or receivable on account of or
in exchange for all or any part of the Collateral, but shall be under no
obligation to do so;
(d) the Administrative Agent in its discretion may, upon five
business days' prior written notice to the Obligor of the time and place, sell,
lease or otherwise dispose of all or any part of the Collateral that is then or
will subsequently come into the possession, custody or control of the
Administrative Agent, any other Lender Party or any of their respective agents,
at such place or places as the Administrative Agent deems best, for cash, for
credit or for future delivery (without thereby assuming any credit risk) and at
public or private sale, without demand of performance or notice of intention to
effect any such disposition or of the time or place of any such sale (except
such notice as is required above or by applicable statute and cannot be waived),
and any Lender Party or any other Person may be the purchaser, lessee or
recipient of all or any part of the Collateral so disposed of at any public sale
(or, to the extent permitted by law, at any private sale) and thereafter hold
the same absolutely, free from any claim or right of whatsoever kind, including
any right or equity of redemption (statutory or otherwise), of the Obligor, and
the Obligor hereby waives and releases any such demand, notice and right or
equity. The Administrative Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and that sale may be made
at any time or place to which the sale may be so adjourned; and
(e) the Administrative Agent shall have, and in its discretion
may exercise, all of the rights, remedies, powers and privileges with respect to
the Collateral of a secured party under the Uniform Commercial Code (whether or
not the Uniform Commercial Code is in effect in the jurisdiction where those
rights, remedies, powers and privileges are asserted) and such additional
rights, remedies, powers and privileges to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights, remedies, powers
and privileges in respect of this Agreement or the Collateral may be asserted,
including the right, to the maximum extent permitted by law, to exercise all
voting, consensual and other powers of ownership pertaining to the Collateral as
if the Administrative Agent were the sole and absolute owner of the Collateral
(and the Obligor will take all such action as may be appropriate to give effect
to that right).
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 6.01 shall be applied in accordance with
Section 6.04.
Section 6.02 DEFICIENCY. If the proceeds of, or other
realization upon, the Collateral by virtue of the exercise of remedies under
Section 6.01 are insufficient to cover the
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costs and expenses of that exercise and the payment in full of the other
Secured Obligations, the Obligor shall remain liable for any deficiency.
Section 6.03 PRIVATE SALE.
(a) No Lender Party shall incur any liability as a result of
the sale, lease or other disposition of all or any part of the Collateral at any
private sale pursuant to Section 6.01 conducted in a commercially reasonable
manner. The Obligor hereby waives any claims against any Lender Party that may
arise by reason of the fact that the price at which the Collateral may have been
sold at such a private sale was less than the price that might have been
obtained at a public sale or was less than the aggregate amount of the Secured
Obligations, even if the Administrative Agent accepts the first offer received
and does not offer the Collateral to more than one offeree.
(b) The Obligor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933 and applicable state
securities laws and in the FCC Regulations, the Administrative Agent may be
compelled to limit purchasers of all or any part of the Collateral to those who
will agree, among other things, to acquire that Collateral for their own
account, for investment and not with a view to distribution or resale or to
those to whom the FCC has granted or will grant approval. The Obligor
acknowledges that any such private sales may be at prices and on terms less
favorable to the Administrative Agent than those obtainable through a public
sale without those restrictions, and, notwithstanding those circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Administrative Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Collateral for the period of time necessary to permit the respective Issuer of
that Collateral to register it for public sale.
Section 6.04 APPLICATION OF PROCEEDS. Except as otherwise
expressly provided in this Agreement, the proceeds of, or other realization
upon, all or any part of the Collateral by virtue of the exercise of remedies
under Section 6.01 and any other cash at the time held by the Administrative
Agent under Section 3.01 or Section 6.01 shall be applied by the Administrative
Agent:
FIRST, to the payment of the costs and expenses of that
exercise of remedies, including reasonable out-of-pocket costs and expenses of
the Administrative Agent, the fees and expenses of its agents and counsel and
all other expenses incurred and advances made by the Administrative Agent in
that connection;
NEXT, to the payment in full of the remaining Secured
Obligations equally and ratably in accordance with their respective amounts then
due and owing or as the Lender Parties holding the same may otherwise agree; and
FINALLY, subject to the rights of the other holder of any Lien
in the relevant Collateral, to the payment to the Obligor or as a court of
competent jurisdiction may direct of any surplus then remaining.
As used in this Section 6, "PROCEEDS" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any
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property received under any bankruptcy, reorganization or other similar
proceeding as to the Obligor or any issuer of, or account debtor or other
obligor on, any of the Collateral.
Section 6.05 CERTAIN REGULATORY REQUIREMENTS. Notwithstanding
any contrary provision in any Basic Document, no action shall be taken under
this Agreement by the Administrative Agent or any Lender Party with respect to
any item of Collateral unless and until all applicable requirements (if any) of
the FCC Regulations have been satisfied with respect to such action and there
have been obtained such Governmental Approvals (if any) as may be required to be
obtained under the FCC Regulations under the terms of any such FCC License.
Without limiting the generality of the foregoing, the Administrative Agent (on
behalf of itself and the Lenders) hereby agrees that (a) voting and consensual
rights in the Stock Collateral will remain with the Obligor upon and following
the occurrence of an Event of Default unless and until any required prior
approvals of the FCC to the transfer of such voting and consensual rights to the
Administrative Agent have been obtained; (b) upon the occurrence of any Event of
Default and foreclosure of the Stock Collateral pursuant to this Agreement there
will be either a private or public sale of the Stock Collateral; and (c) prior
to the exercise of voting or consensual rights by the purchaser at any such
sale, the prior consent of the FCC pursuant to 47 U.S.C. ss.310(d) will be
obtained. It is the intention of the parties to this Agreement that the Liens in
favor of the Administrative Agent on the Collateral shall in all relevant
aspects be subject to and governed by the FCC Regulations and that nothing in
this Agreement shall be construed to diminish the control exercised by the
Obligor except in accordance with the provisions of the FCC Regulations. The
Obligor agrees that upon request from time to time by the Administrative Agent
it will use its best efforts to obtain any Governmental Approvals referred to in
this Section 6.05, including upon any request of the Administrative Agent
following an Event of Default, to prepare, sign and file with the FCC (or cause
to be prepared signed and filed with the FCC) any application or application for
consent to the assignment of the FCC Licenses or transfer of control required to
be signed by the Obligor or any of its Subsidiaries necessary or appropriate
under the FCC Regulations for approval of any sale or transfer of any of the
Stock Collateral or the assets of the Obligor or any of its Subsidiaries or any
transfer of control in respect of any FCC License.
ARTICLE VII
MISCELLANEOUS
Section 7.01 ADMINISTRATIVE AGENT. As provided in Section 9.01
of the Credit Agreement, each Lender Party has appointed ING (U.S.) Capital LLC
as its Administrative Agent for purposes of this Agreement. In that capacity,
ING (U.S.) Capital LLC shall be entitled to all the rights and benefits accorded
the Administrative Agent by Article IX of the Credit Agreement and any other
applicable provision of the Basic Documents. Following the payment in full of
all Obligations outstanding under the Credit Agreement and all other Guarantied
Obligations and the termination or expiration of the Commitments, the provisions
of Article IX of the Credit Agreement shall be deemed to continue in full force
and effect for the benefit of the Administrative Agent under this Agreement.
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Section 7.02 NOTICES. All notices, requests and other
communications provided for in this Agreement shall be given or made in writing
and delivered by hand or courier service, mailed by certified or registered mail
or sent by telecopy to the intended recipient as specified below or, as to any
party, at such other address as is designated by that party in a notice to each
other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given or made upon receipt.
To the Obligor: Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Telephone: (805) 343-4531
Telecopy: (805) 384-4532
Attention: Dirk Gastaldo, Vice President
and Chief Financial Officer
with a copy to: Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Telephone: (805) 987-0400, ext. 106
Telecopy: (805) 384-4505
Attention: Jonathan L. Block, Esq.,
Secretary
To the Administrative Agent: ING (U.S.) Capital LLC
55 East 52nd Street
New York, New York 10055
Telephone: (212) 409-1743
Telecopy: (212) 409-7813
Attention: Pamela Kaye
Section 7.03 EXPENSES, ETC. The Obligor will pay all
out-of-pocket expenses (including reasonable counsels' fees and expenses) of
each Lender Party in connection with any enforcement or collection proceeding
(including any bankruptcy, reorganization, restructuring, "work out" or other
similar proceeding) as to any of the obligations of the Obligor under this
Agreement, the negotiation of any restructuring or "work out" (whether or not
consummated) or the enforcement of this Section 7.03. All amounts due under this
Agreement not paid when due shall bear interest until paid at a rate per annum
equal to the Post-Default Rate.
Section 7.04 WAIVER. No failure or delay by any Lender Party
in exercising any remedy, right, power or privilege under this Agreement or any
other Basic Document shall operate as a waiver of that remedy, right, power or
privilege, nor shall any single or partial exercise of that remedy, right, power
or privilege preclude any other or further exercise of that remedy, right, power
or privilege or the exercise of any other remedy, right, power or privilege. The
remedies, rights, powers and privileges provided by this Agreement are
cumulative and not exclusive of any remedies, rights, powers or privileges
provided by the other Basic Documents or by law.
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Section 7.05 AMENDMENTS, ETC. No provision of this Agreement
may be waived, modified or supplemented except by an instrument in writing
signed by the Obligor and the Administrative Agent (with the consent of the
Lenders as specified in Section 10.04 of the Credit Agreement). Any
modification, supplement or waiver shall be for such period and subject to such
conditions as shall be specified in the written instrument effecting the same
and shall be binding upon each Lender Party and the Obligor, and any such waiver
shall be effective only in the specific instance and for the purpose for which
given.
Section 7.06 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of its parties and their respective
successors and assigns. The Obligor may not assign or transfer its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent (with further consent of the Lenders as specified under
Section 10.04 of the Credit Agreement).
Section 7.07 SURVIVAL. Each representation and warranty made,
or deemed to be made by a notice of any extension of credit, in or pursuant to
this Agreement shall survive the making or deemed making of that representation
and warranty, and no Lender Party shall be deemed to have waived, by reason of
making any extension of credit, any Default that may arise by reason of that
representation or warranty proving to have been false or misleading,
notwithstanding that such or any other Lender Party may have had notice or
knowledge or reason to believe that such representation or warranty was false or
misleading at the time that extension of credit was made.
Section 7.08 AGREEMENTS SUPERSEDED. This Agreement supersedes
all prior agreements and understandings, written or oral, among the parties with
respect to the subject matter of this Agreement.
Section 7.09 SEVERABILITY. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of that prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable that provision in any other
jurisdiction.
Section 7.10 CAPTIONS. The table of contents, captions and
section headings appearing in this Agreement are included solely for convenience
of reference and are not intended to affect the interpretation of any provision
of this Agreement.
Section 7.11 COUNTERPARTS. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties to the Agreement may execute this
Agreement by signing any such counterpart. Delivery of an executed counterpart
of a signature page to this Agreement by hand or by telecopy shall be effective
as the delivery of a fully executed counterpart of this Agreement.
Section 7.12 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW
YORK. THE OBLIGOR
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HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT
SITTING IN NEW YORK, NEW YORK FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. THE OBLIGOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR IN THE FUTURE HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
Section 7.13 WAIVER OF JURY TRIAL. THE OBLIGOR AND THE
ADMINISTRATIVE AGENT (ON BEHALF OF ITSELF AND THE OTHER LENDER PARTIES) HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
[The remainder of this page is intentionally left blank.
Signature pages follow.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
SALEM COMMUNICATIONS CORPORATION
By: ________________________________________
Name:
Title:
ING (U.S.) CAPITAL LLC
By: ________________________________________
Name:
Title:
Annex 1
PLEDGED STOCK
Certificate Registered
Issuer Nos. Owner Number of Shares
------ ------- ------- ----------------
Salem Communications Holding 1 Salem Communications 1,000 shares of common
Corporation Corporation stock, par value $0.01
Salem Communications 1 Salem Communications 1,000 shares of common
Acquisition Corporation Corporation stock, par value $0.01
EXHIBIT D
EXECUTION COPY
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GUARANTEE AND SECURITY AGREEMENT
Dated as of August 24, 2000
between
SALEM COMMUNICATIONS
ACQUISITION CORPORATION
and
SCA LICENSE CORPORATION
each as an obligor
and
ING (U.S.) CAPITAL LLC
as the administrative agent
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS..........................................................1
Section 1.01 Certain Defined Terms......................................1
Section 1.02 Interpretation.............................................3
ARTICLE II COLLATERAL..........................................................4
Section 2.01 Grant......................................................4
Section 2.02 Intellectual Property......................................6
Section 2.03 Perfection.................................................6
Section 2.04 Preservation and Protection of Security Interests..........7
Section 2.05 Attorney-in-Fact...........................................8
Section 2.06 Special Provisions Relating to Stock Collateral and
Investment Property........................................9
Section 2.07 Use of Intellectual Property..............................10
Section 2.08 Instruments...............................................10
Section 2.09 Use of Collateral.........................................10
Section 2.10 Rights and Obligations....................................10
Section 2.11 Release of Motor Vehicles.................................11
Section 2.12 Termination...............................................11
Section 2.13 Cash Collateral Account...................................11
Section 2.14 Certain Proceeds..........................................12
Section 2.15 Investment of Balance in Cash Collateral Account..........12
ARTICLE III GUARANTEE.........................................................12
Section 3.01 Guarantee.................................................12
Section 3.02 Acknowledgments, Waivers and Consents.....................12
Section 3.03 Understanding With Respect to Waivers and Consents........17
Section 3.04 Subrogation...............................................17
Section 3.05 Reinstatement.............................................18
Section 3.06 Remedies..................................................18
Section 3.07 Separate Action...........................................18
Section 3.08 Subordination of Indebtedness of the Company; Security
Interest..................................................18
Section 3.09 Certain Limitations.......................................19
Section 3.10 Rights of Contribution....................................19
Section 3.11 Revocation................................................20
ARTICLE IV REPRESENTATIONS....................................................20
Section 4.01 Title.....................................................20
Section 4.02 Pledged Stock.............................................20
Section 4.03 Intellectual Property.....................................21
ARTICLE V COVENANTS ..........................................................21
Section 5.01 Books and Records.........................................21
Section 5.02 Removals, Etc.............................................22
Section 5.03 Sales and Other Liens.....................................22
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Section 5.04 Stock Collateral..........................................22
Section 5.05 Further Assurances........................................23
ARTICLE VI REMEDIES ..........................................................23
Section 6.01 Events of Default, Etc....................................23
Section 6.02 Deficiency................................................24
Section 6.03 Private Sale..............................................24
Section 6.04 Application of Proceeds...................................24
Section 6.05 Certain Governmental Requirements.........................25
ARTICLE VII MISCELLANEOUS.....................................................26
Section 7.01 Administrative Agent......................................26
Section 7.02 Notices...................................................26
Section 7.03 Expenses, Etc.............................................26
Section 7.04 Waiver....................................................27
Section 7.05 Amendments, Etc...........................................27
Section 7.06 Successors and Assigns....................................27
Section 7.07 Survival..................................................27
Section 7.08 Agreements Superseded.....................................27
Section 7.09 Severability..............................................27
Section 7.10 Captions..................................................28
Section 7.11 Counterparts..............................................28
Section 7.12 Governing Law; Submission to Jurisdiction.................28
Section 7.13 Waiver of Jury Trial......................................28
Annex 1 - Pledged Stock
Annex 2 - List of Copyrights, Copyright Registrations and
Applications for Copyright Registration
Annex 3 - List of Patents and Patent Applications
Annex 4 - List of Trade Names, Trademarks, Service Marks, Trademark
and Service Mark Registrations and Applications for
Trademark and Service Mark Registrations
Annex 5 - List of Contracts, Licenses and Other Agreements
Annex 6 - List of Locations
Annex 7 - Form of Landlord's Access Agreement
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GUARANTEE AND SECURITY AGREEMENT
This GUARANTEE AND SECURITY AGREEMENT (this "AGREEMENT") dated
as of August 24, 2000 is made between SALEM COMMUNICATIONS ACQUISITION
CORPORATION, a Delaware corporation, and SCA LICENSE CORPORATION, a Delaware
corporation (each, an "OBLIGOR" and collectively, the "OBLIGORS") and ING (U.S.)
CAPITAL LLC, as the agent (in that capacity, the "ADMINISTRATIVE AGENT") for the
Lenders referred to below.
The Credit Agreement dated as of August 24, 2000 (the "CREDIT
AGREEMENT") between Salem Communications Corporation, a California corporation
(the "COMPANY"), the Administrative Agent and the lenders identified in the
Credit Agreement (the "LENDERS") for whom the Administrative Agent acts as the
administrative agent provides, subject to its terms and conditions, for certain
extensions of credit to the Company. It is a condition to the obligations of
Administrative Agent and the Lenders under the Credit Agreement that each
Obligor executes and delivers, and grants the Liens provided for, in this
Agreement.
To induce the Lender Parties to enter into, and to extend
credit under, the Credit Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each Obligor agrees to pledge and grant a security interest in the Collateral as
security for the Secured Obligations. Accordingly, the Obligors agree with the
Administrative Agent as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. Unless otherwise defined,
all capitalized terms used in this Agreement that are defined in the Credit
Agreement (including terms incorporated by reference) shall have the respective
meanings assigned to them in the Credit Agreement. In addition, the following
terms shall have the following meanings under this Agreement:
"ACCOUNTS" shall have the meaning assigned to that term in
Section 2.01(b).
"CASH COLLATERAL ACCOUNT" shall have the meaning assigned to
that term in the Security Agreement.
"COLLATERAL" shall have the meaning assigned to that term in
Section 2.01.
"COPYRIGHT COLLATERAL" shall mean all Copyrights, whether now
owned or in the future acquired by any Obligor, including each Copyright
identified in Annex 2.
"COPYRIGHTS" shall mean, collectively, (a) all copyrights,
copyright registrations and applications for copyright registrations, (b) all
renewals and extensions of all copyrights, copyright registrations and
applications for copyright registration and (c) all rights, now existing
or in the future coming into existence, (i) to all income, royalties, damages
and other payments (including in respect of all past, present or future
infringements) now or in the future due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future infringements
with respect to any of the foregoing and (iii) otherwise accruing under or
pertaining to any of the foregoing throughout the world.
"DOCUMENTS" shall have the meaning assigned to that term in
Section 2.01(f).
"EQUIPMENT" shall have the meaning assigned to that term in
Section 2.01(e).
"INSTRUMENTS" shall have the meaning assigned to that term in
Section 2.01(c).
"INTELLECTUAL PROPERTY" shall mean all Copyright Collateral,
all Patent Collateral and all Trademark Collateral, together with (a) all
inventions, processes, production methods, proprietary information, know-how and
trade secrets; (b) all licenses or user or other agreements granted to any
Obligor with respect to any of the foregoing, in each case whether now or in the
future owned or used, including the licenses or other agreements with respect to
the Copyright Collateral, the Patent Collateral or the Trademark Collateral
listed in Annex 5; (c) all information, customer lists, identification of
suppliers, data, plans, blueprints, specifications, designs, drawings, recorded
knowledge, surveys, engineering reports, test reports, manuals, materials
standards, processing standards, performance standards, catalogs, computer and
automatic machinery software and programs; (d) all field repair data, sales data
and other information relating to sales or service of products now or in the
future manufactured; (e) all accounting information and all media in which or on
which any information or knowledge or data or records may be recorded or stored
and all computer programs used for the compilation or printout of that
information, knowledge, records or data; (f) all Governmental Approvals now held
or in the future obtained by any Obligor in respect of any of the foregoing; and
(g) all causes of action, claims and warranties now owned or in the future
acquired by any Obligor in respect of any of the foregoing. Intellectual
Property shall include all of the foregoing owned or acquired by each Obligor on
a worldwide basis.
"INVENTORY" shall have the meaning assigned to that term in
Section 2.01(d).
"INVESTMENT PROPERTY" shall have the meaning assigned to that
term in Section 2.01(a).
"ISSUERS" shall mean, collectively, each direct Subsidiary of
any Obligor that is the issuer (as defined in the Uniform Commercial Code) of
any shares of capital stock now owned or in the future acquired by any Obligor,
including the respective corporations identified in Annex 1 under the caption
"ISSUER."
"MOTOR VEHICLES" shall mean motor vehicles, tractors, trailers
and other like property, whether or not the title to any such property is
governed by a certificate of title or ownership.
"PATENT COLLATERAL" shall mean all Patents, whether now owned
or in the future acquired by any Obligor, including each Patent identified in
Annex 3.
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"PATENTS" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals, extensions
and continuations-in-part of all patents or patent applications and (c) all
rights, now existing or in the future coming into existence, (i) to all income,
royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or in the future due or payable under or
with respect to any of the foregoing, (ii) to sue for all past, present and
future infringements with respect to any of the foregoing and (iii) otherwise
accruing under or pertaining to any of the foregoing throughout the world,
including all inventions and improvements described or discussed in all such
patents and patent applications.
"PLEDGED STOCK" shall have the meaning assigned to that term
in Section 2.01(a).
"SECURED OBLIGATIONS" shall mean (a) any and all Obligations
and (b) any and all obligations of the Obligors for the performance of their
agreements, covenants and undertakings under or in respect of the Basic
Documents.
"STOCK COLLATERAL" shall have the meaning assigned to that
term in Section 2.01(a).
"TRADEMARK COLLATERAL" shall mean all Trademarks, whether now
owned or in the future acquired by any Obligor, including each Trademark
identified in Annex 4. Notwithstanding the foregoing, the Trademark Collateral
shall not include any Trademark that would be rendered invalid, abandoned, void
or unenforceable by reason of its being included as part of the Trademark
Collateral.
"TRADEMARKS" shall mean, collectively, (a) all trade names,
trademarks and service marks, logos, trademark and service mark registrations
and applications for trademark and service mark registrations, (b) all renewals
and extensions of any of the foregoing and (c) all rights, now existing or in
the future coming into existence, (i) to all income, royalties, damages and
other payments (including in respect of all past, present and future
infringements) now or in the future due or payable under or with respect to any
of the foregoing, (ii) to sue for all past, present and future infringements
with respect to any of the foregoing and (iii) otherwise accruing under or
pertaining to any of the foregoing throughout the world, together, in each case,
with the product lines and goodwill of the business connected with the use of,
or otherwise symbolized by, each such trade name, trademark and service mark.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the State of New York from time to time or, by reason of
mandatory application, any other applicable jurisdiction.
Section 1.02. INTERPRETATION. In this Agreement, unless
otherwise indicated, the singular shall include the plural and plural the
singular; words importing any gender shall include the other gender; references
to statutes or regulations shall be construed as including all statutory or
regulatory provisions consolidating, amending or replacing the statute or
regulation referred to; references to "writing" shall include printing, typing,
lithography and other means of reproducing words in a tangible visible form; the
words "including," "includes" and "include" shall be deemed to be followed by
the words "without limitation"; references to articles, sections (or
subdivisions of sections), exhibits, annexes or schedules are to this Agreement;
3
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments, extensions and other modifications to those
instruments (without, however, limiting any prohibition on any such amendments,
extensions or modifications by the terms of the Basic Documents); and references
to Persons shall include their respective successors and permitted assigns and,
in the case of Governmental Authorities, Persons succeeding to their respective
functions and capacities.
ARTICLE II
COLLATERAL
Section 2.01. GRANT. As collateral security for the prompt
payment in full when due (whether at stated maturity, upon acceleration, on any
optional or mandatory prepayment date or otherwise) and performance of the
Secured Obligations, each Obligor hereby pledges and grants to the
Administrative Agent, for the benefit of the Lender Parties, a security interest
in all of that Obligor's right, title and interest in and to the following
property, whether now owned or in the future acquired by that Obligor and
whether now existing or in the future coming into existence (collectively, the
"COLLATERAL"):
(a) (i) all of the shares of capital stock of the Issuers
represented by the respective certificates identified in Annex 1 under the name
of that Obligor and all other shares of capital stock of whatever class of the
Issuers, now owned or in the future acquired by that Obligor, together with in
each case the certificates representing the same (collectively, the "PLEDGED
STOCK");
(ii) all shares, securities, moneys or property representing a
dividend on, or a distribution or return of capital in respect of, any of the
Pledged Stock, resulting from a split-up, revision, reclassification or other
like change of any of the Pledged Stock or otherwise received in exchange for
any of the Pledged Stock and all rights issued to the holders of, or otherwise
in respect of, any of the Pledged Stock;
(iii) without affecting the obligations of any Obligor under
any provision prohibiting that action under any Basic Document, in the event of
any consolidation or merger in which any Issuer is not the surviving
corporation, all shares of each class of the capital stock of the successor
corporation (unless that successor corporation is that Obligor itself) formed by
or resulting from that consolidation or merger (collectively, and together with
the property described in clauses (i) and (ii) above, the "STOCK COLLATERAL");
and
(iv) all other securities (whether certificated or
uncertificated), security entitlements, securities accounts, commodities
contracts and commodity accounts (each as defined in the Uniform Commercial
Code), together with in each case the certificates representing the same
(collectively, the "INVESTMENT PROPERTY");
(b) all accounts and general intangibles (each as defined in
the Uniform Commercial Code) of that Obligor constituting a right to the payment
of money, whether or not earned by performance, including all moneys due and to
become due to that Obligor in repayment of any loans or advances, in payment for
goods (including Inventory and Equipment)
4
sold or leased or for services rendered, in payment of tax refunds and in
payment of any guarantee of any of the foregoing (collectively, the "ACCOUNTS");
(c) all instruments, chattel paper or letters of credit (each
as defined in the Uniform Commercial Code) of that Obligor evidencing,
representing, arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Accounts (collectively, the
"INSTRUMENTS");
(d) all inventory (as defined in the Uniform Commercial Code)
and all other goods (including Motor Vehicles) of that Obligor that are held by
that Obligor for sale, lease or furnishing under a contract of service
(including to its Subsidiaries or Affiliates), that are so leased or furnished
or that constitute raw materials, work in process or material used or consumed
in its business, including all spare parts and related supplies, all goods
obtained by that Obligor in exchange for any such goods, all products made or
processed from any such goods and all substances, if any, commingled with or
added to any such goods (collectively, the "INVENTORY");
(e) all equipment (as defined in the Uniform Commercial Code)
and all other goods (including Motor Vehicles) of that Obligor that are used or
acquired for use primarily in its business, including all spare parts and
related supplies, all goods obtained by that Obligor in exchange for any such
goods, all substances, if any, commingled with or added to those goods and all
upgrades and other improvements to those goods, in each case to the extent not
constituting Inventory (collectively, the "EQUIPMENT");
(f) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of that Obligor covering, evidencing or
representing Inventory or Equipment (collectively, the "DOCUMENTS");
(g) all contracts and other agreements of that Obligor
relating to the sale or other disposition of all or any part of the Inventory,
Equipment or Documents and all rights, warranties, claims and benefits of that
Obligor against any Person arising out of, relating to or in connection with all
or any part of the Inventory, Equipment or Documents of that Obligor, including
any such rights, warranties, claims or benefits against any Person storing or
transporting any such Inventory or Equipment or issuing any such Documents;
(h) all other accounts or general intangibles of that Obligor
not constituting Accounts, including, to the extent related to all or any part
of the other Collateral, all books, correspondence, credit files, records,
invoices, tapes, cards, computer runs and other papers and documents in the
possession or under the control of that Obligor or any computer bureau or
service company from time to time acting for that Obligor;
(i) the balance and all Investment Property from time to time
held in or to the credit of the Cash Collateral Account;
(j) all other tangible and intangible property of that
Obligor, including all Intellectual Property;
5
(k) all rights of any Obligor under or relating to all FCC
Licenses issued to that Obligor and the proceeds of those FCC Licenses, PROVIDED
that such security interest does not include at any time any FCC License to the
extent (but only to the extent) that at that time the Administrative Agent may
not validly possess a security interest in that FCC License pursuant to the FCC
Regulations, as in effect at that time, but such security interest does include,
to the maximum extent permitted by law, all rights incident or appurtenant to
any FCC Licenses issued to any Obligor and the right to receive all proceeds
derived from or in connection with the sale, assignment or transfer of those FCC
Licenses; and
(l) all proceeds and products in whatever form of all or any
part of the other Collateral, including all proceeds of insurance and all
condemnation awards and all other compensation for any Casualty Event with
respect to all or any part of the other Collateral (together with all rights to
recover and proceed with respect to the same), and all accessories to,
substitutions for and replacements of all or any part of the other Collateral.
In addition to the foregoing, each Obligor party to a Station
License Management Agreement hereby consents to the inclusion by the other party
to that agreement of that other party's rights, title and interest in that
agreement as part of the Collateral.
Section 2.02. INTELLECTUAL PROPERTY. For the purpose of
enabling the Administrative Agent to exercise its rights, remedies, powers and
privileges under Section 6.01 at that time or times as the Administrative Agent
is lawfully entitled to exercise those rights, remedies, powers and privileges,
and for no other purpose, each Obligor hereby grants to the Administrative
Agent, to the extent assignable, an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to that Obligor)
to use, assign, license or sublicense any of the Intellectual Property of that
Obligor, together with reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used for
the compilation or printout of those items.
Section 2.03. PERFECTION. Each Obligor will (i) concurrently with the execution
and delivery of this Agreement, file or deliver for filing such financing
statements and other documents in such offices as are necessary or as the
Administrative Agent may request to perfect and establish the priority (subject
only to Liens permitted under Section 7.10 of the Credit Agreement) of the Liens
granted by this Agreement, (ii) concurrently with the execution and delivery of
this Agreement, deliver and pledge to the Administrative Agent any and all
Instruments, endorsed or accompanied by such instruments of assignment and
transfer in such form and substance as the Administrative Agent may request,
(iii) cause the Administrative Agent (to the extent requested by the
Administrative Agent) to be listed as the lienholder on all certificates of
title or ownership relating to Motor Vehicles in the name of that Obligor and
deliver to the Administrative Agent originals of all such certificates of title
or ownership for the Motor Vehicles together with the odometer statements for
each respective Motor Vehicle, (iv) concurrently with the execution and delivery
of this Agreement, deliver to the Administrative Agent all certificates
identified in Annex 1, accompanied by undated stock powers duly executed in
blank and (v) take all such other actions as are necessary or as the
Administrative Agent may request to perfect and establish the priority (subject
only to those permitted Liens) of the Liens granted by this Agreement, including
as soon as possible following the Signing Date, filing this Agreement (or any
other form or instrument as the Administrative Agent may request) with the
6
U.S. Patent and Trademark Office and the Copyright Office (as the case may be);
provided that no Obligor is obligated to take any action to perfect the Liens
granted by this Agreement as to any Motor Vehicle perfection as to which would
require the Administrative Agent to be reflected as a lienholder on any
certificate of title or ownership. The Obligors agree to use all commercially
reasonable efforts to deliver from each owner or lessor of real property an
access agreement, in substantially the form of Annex 7, to the Administrative
Agent within 30 days after the Effective Date.
Section 2.04. PRESERVATION AND PROTECTION OF SECURITY
INTERESTS. Each Obligor will:
(a) upon the acquisition after the Signing Date by that
Obligor of any Stock Collateral or any certificate evidencing or representing
any Investment Property, promptly either (x) transfer and deliver to the
Administrative Agent all such Stock Collateral (together with the certificates
representing that Stock Collateral and that Investment Property duly endorsed in
blank or accompanied by undated stock powers duly executed in blank) or (y) take
such other action as the Administrative Agent deems necessary or appropriate to
create, perfect and establish the priority (subject only to Liens permitted
under Section 7.10 of the Credit Agreement) of the Liens granted by this
Agreement in that Stock Collateral and Investment Property;
(b) upon the acquisition after the Signing Date by that
Obligor of any Instrument, promptly deliver and pledge to the Administrative
Agent all such Instruments, endorsed or accompanied by such instruments of
assignment and transfer in such form and substance as the Administrative Agent
may request;
(c) if so requested by the Administrative Agent following the
occurrence of a Default, deliver to the Administrative Agent originals of the
certificates of title or ownership for those Motor Vehicles with the
Administrative Agent listed as lienholder, together with the manufacturer's
statement of origin and odometer statements; PROVIDED, however, if the Motor
Vehicle to be acquired is subject to a purchase money security interest
permitted by Section 7.10 of the Credit Agreement, the Administrative Agent
shall be listed as a junior lienholder to the Person holding that purchase money
security interest;
(d) without limiting the obligations of that Obligor under
Section 2.04(c), upon the acquisition after the Signing Date by that Obligor of
any Equipment covered by a certificate of title or ownership, promptly notify
the Administrative Agent of that event and, if so requested by the
Administrative Agent, cause the Administrative Agent to be listed as the
lienholder on that certificate of title and within 120 days after the
acquisition of that equipment deliver evidence of the same to the Administrative
Agent;
(e) upon that Obligor's acquiring, or otherwise becoming
entitled to the benefits of, any Copyright (or copyrightable material), Patent
(or patentable invention), Trademark (or associated goodwill) or other
Intellectual Property or upon or prior to that Obligor's filing, either directly
or through the Administrative Agent, any licensee or any other designee, of any
application with any Governmental Authority for any Copyright, Patent, Trademark
or other Intellectual Property, in each case after the Signing Date, execute and
deliver
7
such contracts, agreements and other instruments as the Administrative Agent may
request to create, perfect and establish the priority (subject only to Liens
permitted under Section 7.10 of the Credit Agreement) of the Liens granted by
this Agreement in that and any related Intellectual Property and, if requested
by the Administrative Agent, amend Annex 2, 3 or 4 (as the case may be) to
reflect the inclusion of any such Intellectual Property as part of the
Collateral (it being agreed that the failure to amend any such Annex shall not
affect the Liens granted by this Agreement on any such Intellectual Property);
and
(f) give, execute, deliver, file or record any and all financing statements,
notices, contracts, agreements or other instruments, obtain any and all
Governmental Approvals and take any and all steps that may be necessary or as
the Administrative Agent may request to create, perfect, establish the priority
(subject only to Liens permitted under Section 7.10 of the Credit Agreement) of,
or to preserve the validity, perfection or priority (subject only to those
permitted Liens) of, the Liens granted by this Agreement or to enable the
Administrative Agent to exercise and enforce its rights, remedies, powers and
privileges under this Agreement with respect to those Liens, including causing
any or all of the Stock Collateral and Investment Property to be transferred of
record into the name of the Administrative Agent or its nominee (and the
Administrative Agent agrees that if any Stock Collateral and Investment Property
is transferred into its name or the name of its nominee, the Administrative
Agent will thereafter promptly give to that Obligor copies of any notices and
communications received by it with respect to the Stock Collateral and
Investment Property pledged by that Obligor), PROVIDED that notices to account
debtors in respect of any Accounts or Instruments shall be subject to the
provisions of Section 3.02(b).
Section 2.05. ATTORNEY-IN-FACT.
(a) Subject to the rights of that Obligor under Sections 2.06,
2.07, 2.08 and 2.09, each Obligor hereby appoints the Administrative Agent its
attorney-in-fact effective on the Signing Date and terminating upon the
termination of this Agreement for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instruments that the
Administrative Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, to preserve the validity, perfection and priority (subject
only to Liens permitted under Section 7.10 of the Credit Agreement) of the Liens
granted by this Agreement and, following any Default, to exercise its rights,
remedies, powers and privileges under this Agreement. This appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, the Administrative Agent shall be entitled
under this Agreement upon the occurrence and continuation of any Event of
Default (or, in respect of Section 3.01, any Default) (i) to ask, demand,
collect, sue for, recover, receive and give receipt and discharge for amounts
due and to become due under and in respect of all or any part of the Collateral;
(ii) to receive, endorse and collect any Instruments or other drafts,
instruments, documents and chattel paper in connection with clause (i) above
(including any draft or check representing the proceeds of insurance or the
return of unearned premiums); (iii) to file any claims or take any action or
proceeding that the Administrative Agent may deem necessary or advisable for the
collection of all or any part of the Collateral, including the collection of any
compensation due and to become due under any contract or agreement with respect
to all or any part of the Collateral; and (iv) to execute, in connection with
any sale or disposition of the
8
Collateral under Section 6.01, any endorsements, assignments, bills of sale or
other instruments of conveyance or transfer with respect to all or any part of
the Collateral.
(b) Without limiting the rights and powers of the
Administrative Agent under Section 2.05(a), each Obligor hereby appoints the
Administrative Agent as its attorney-in-fact, effective the Signing Date and
terminating upon the termination of this Agreement, for the purpose of (i)
executing on behalf of that Obligor title or ownership applications for filing
with appropriate state agencies to enable Motor Vehicles now owned or in the
future acquired by that Obligor to be retitled and the Administrative Agent to
be listed as lienholder as to those Motor Vehicles, (ii) filing such
applications with such state agencies and (iii) executing such other documents
and instruments on behalf of, and taking such other action in the name of, that
Obligor as the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement (including the purpose of creating in
favor of the Administrative Agent a perfected Lien on the Motor Vehicles and
exercising the rights, remedies, powers and privileges of the Administrative
Agent under Section 6.01). This appointment as attorney-in-fact is irrevocable
and coupled with an interest.
Section 2.06. SPECIAL PROVISIONS RELATING TO STOCK COLLATERAL
AND INVESTMENT PROPERTY.
(a) So long as no Event of Default has occurred and is
continuing, the Obligors shall have the right to exercise all voting, consensual
and other powers of ownership pertaining to the Stock Collateral and Investment
Property for all purposes not inconsistent with the terms of any Basic Document,
provided that the Obligors will not vote the Stock Collateral in any manner that
is inconsistent with the terms of any Basic Document; and the Administrative
Agent will, at the Obligors' expense, execute and deliver to the Obligors or
cause to be executed and delivered to the Obligors all such proxies, powers of
attorney, dividend and other orders and other instruments, without recourse, as
the Obligors may reasonably request for the purpose of enabling the Obligors to
exercise the rights and powers that they are entitled to exercise pursuant to
this Section 2.06(a).
(b) So long as no Event of Default has occurred and is
continuing, the Obligors shall be entitled to receive and retain any dividends,
distribution or earnings on the Stock Collateral and the Investment Property
paid in cash and (in the case of any capital stock) out of earned surplus.
(c) If any Event of Default has occurred and is continuing,
and whether or not the Administrative Agent exercises any available right to
declare any Secured Obligation due and payable or seeks or pursues any other
right, remedy, power or privilege available to it under applicable law, this
Agreement or any other Basic Document but subject to Section 6.05, all
dividends, distributions or earnings on the Stock Collateral and the Investment
Property shall be paid directly to the Administrative Agent and retained by it
in the Collateral Account as part of the Investment Property, subject to the
terms of this Agreement, and, if the Administrative Agent so requests, the
Obligors shall execute and deliver to the Administrative Agent appropriate
additional dividend, distribution and other orders and instruments to that end,
PROVIDED that if that Event of Default is cured, any such dividend or
distribution paid to the Administrative Agent
9
prior to that cure shall, upon request of the Obligors (except to the extent
applied to the Secured Obligations), be returned by the Administrative Agent to
the Obligors.
Section 2.07. USE OF INTELLECTUAL PROPERTY. Subject to that
action not otherwise constituting a Default and so long as no Event of Default
has occurred and is continuing, the Obligors shall be permitted to exploit, use,
enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of the
business of the Obligors. In furtherance of the foregoing, so long as no Event
of Default has occurred and is continuing, the Administrative Agent will from
time to time, upon the request of the Obligors through the Company, execute and
deliver any instruments, certificates or other documents, in the form so
requested, which such Obligors (through the Company) certify are appropriate (in
their judgment) to allow them to take any action permitted above or by the other
Basic Documents (including relinquishment of the license provided pursuant to
Section 2.02 as to any specific Intellectual Property). The exercise of rights,
remedies, powers and privileges under Section 6.01 by the Administrative Agent
shall not terminate the rights of the holders of any licenses or sublicenses
previously granted by each Obligor in accordance with the first sentence of this
Section 2.07.
Section 2.08. INSTRUMENTS. So long as no Default has occurred
and is continuing, each Obligor may retain for collection in the ordinary course
of business any Instruments obtained by it in the ordinary course of business,
and the Administrative Agent will, promptly upon the request, and at the expense
of, that Obligor (through the Company), make appropriate arrangements for making
any Instruments pledged by the Obligors available to the respective Obligor for
purposes of presentation, collection or renewal. Any such arrangement shall be
effected, to the extent deemed appropriate by the Administrative Agent, against
a trust receipt or like document.
Section 2.09. USE OF COLLATERAL. So long as no Event of
Default has occurred and is continuing, each Obligor shall, in addition to its
rights under Sections 2.06, 2.07 and 2.08 in respect of the Collateral
contemplated in those sections, be entitled to use and possess the other
Collateral and to exercise its rights, title and interest in all contracts,
agreements, licenses and Governmental Approvals, subject to the rights,
remedies, powers and privileges of the Administrative Agent under Articles III
and VI and to that use, possession or exercise not otherwise constituting a
Default.
Section 2.10. RIGHTS AND OBLIGATIONS.
(a) Each Obligor shall remain liable to perform its duties and
obligations under the contracts and agreements included in the Collateral in
accordance with their respective terms to the same extent as if this Agreement
had not been executed and delivered. The exercise by the Administrative Agent or
any Lender of any right, remedy, power or privilege in respect of this Agreement
shall not release any Obligor from any of its duties and obligations under those
contracts and agreements. Neither the Administrative Agent nor any Lender shall
have any duty, obligation or liability under those contracts and agreements or
in respect to any Governmental
10
Approval included in the Collateral by reason of this Agreement or any other
Basic Document, nor shall the Administrative Agent or any Lender be obligated to
perform any of the duties or obligations of any Obligor under any such contract
or agreement or any such Governmental Approval or to take any action to collect
or enforce any claim (for payment) under any such contract or agreement or
Governmental Approval.
(b) No Lien granted by this Agreement in the Obligors' right,
title and interest in any contract, agreement or Governmental Approval shall be
deemed to be a consent by the Administrative Agent or any Lender to any such
contract, agreement or Governmental Approval.
(c) No reference in this Agreement to proceeds or to the sale
or other disposition of Collateral shall authorize any Obligor to sell or
otherwise dispose of any Collateral except to the extent otherwise expressly
permitted by the terms of any Basic Document.
(d) Neither the Administrative Agent nor any Lender shall be
required to take steps necessary to preserve any rights against prior parties to
any part of the Collateral.
Section 2.11. RELEASE OF MOTOR VEHICLES. So long as no Default
has occurred and is continuing, upon the request of, and as the expense of, any
Obligor, the Administrative Agent will execute and deliver to that Obligor such
instruments as that Obligor reasonably requests to remove any notation of the
Administrative Agent as lienholder on any certificate of title for any Motor
Vehicle; PROVIDED that any such instruments shall be delivered, and the release
shall be effective, only upon receipt by the Administrative Agent of a
certificate from that Obligor stating that the Motor Vehicle the Lien on which
is to be released is to be sold or has suffered a casualty loss (with title
passing to the appropriate casualty insurance company in settlement of the claim
for that loss) and payment to the Administrative Agent of any proceeds of that
sale or casualty loss to the extent provided in the Credit Agreement.
Section 2.12. TERMINATION. When all Secured Obligations have
been paid in full and the Commitments have expired or been terminated, this
Agreement shall terminate, and the Administrative Agent will forthwith cause to
be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect of the Collateral, to or on the order of the
respective Obligors and to be released, canceled and granted back all licenses
and rights referred to in Section 2.02. The Administrative Agent will also
execute and deliver to the respective Obligors upon that termination such
Uniform Commercial Code termination statements, certificates for terminating the
Liens on the Motor Vehicles and such other documentation as is reasonably
requested by the Obligors to effect the termination and release of the Liens
granted by this Agreement on the Collateral.
Section 2.13. CASH COLLATERAL ACCOUNT. Pursuant to the
Security Agreement, the Cash Collateral Account has been established in the name
and under the control of the Administrative Agent into which there shall be
deposited, among other things, (a) from time to time the cash proceeds of any of
the Collateral required to be delivered to the Administrative Agent pursuant to
this Agreement and (b) all proceeds derived from or in connection with the sale,
assignment or transfer of any FCC Licenses issued to any Obligor, and into which
any Obligor may from time to time deposit any additional amounts that it wishes
to pledge to the Administrative Agent for the benefit of the Lender Parties as
additional collateral security under this Agreement. The balance from time to
time in the Cash Collateral Account shall constitute part of the Collateral and
shall not constitute payment of the Secured Obligations until applied as
11
provided in this Agreement. The balance from time to time in the Cash Collateral
Account shall be subject to withdrawal only as provided in the Security
Agreement.
Section 2.14. CERTAIN PROCEEDS.
(a) If any Default has occurred and is continuing, each
Obligor will, upon request of the Administrative Agent, promptly notify (and
that Obligor hereby authorizes the Administrative Agent so to notify) each
account debtor in respect of any Accounts and Instruments that such Collateral
has been assigned to the Administrative Agent under this Agreement and that any
payments due or to become due in respect of that Collateral are to be made
directly to the Administrative Agent. All such payments made to the
Administrative Agent shall be immediately deposited in the Cash Collateral
Account.
(b) Each Obligor agrees that if the proceeds of any Collateral
(including payments made in respect of Accounts and Instruments) shall be
received by it, that Obligor will as promptly as possible deposit those proceeds
into the Cash Collateral Account. Until so deposited, all such proceeds shall be
held in trust by each Obligor for and as the property of the Administrative
Agent and shall not be commingled with any other funds or property of that
Obligor.
Section 2.15. INVESTMENT OF BALANCE IN CASH COLLATERAL
ACCOUNT. Amounts on deposit in the Cash Collateral Account shall be invested
from time to time as provided in the Security Agreement.
ARTICLE III
GUARANTEE
Section 3.01. GUARANTEE. To the extent and solely to the
extent of the Collateral, each Obligor hereby guarantees to each Lender Party
the timely payment in full when due (whether at stated maturity, by acceleration
or otherwise) and performance of the Secured Obligations in each case strictly
in accordance with their terms. The guarantee under this Section 3.01 is
irrevocable and unconditional in nature and is made with respect to any Secured
Obligations now existing or in the future arising. Each Obligors' liability
under this Section 3.01 shall continue until full satisfaction of all Secured
Obligations. The guarantee under this Section 3.01 is a guarantee of due and
punctual payment and performance and is not merely a guarantee of collection.
Section 3.02. ACKNOWLEDGMENTS, WAIVERS AND CONSENTS. Each
Obligor acknowledges that the obligations undertaken by it under this Agreement
involve the guarantee of obligations of Persons other than itself and that such
obligations are absolute, irrevocable and unconditional under any and all
circumstances. In full recognition and in furtherance of the foregoing, each
Obligor agrees that:
(a) Without affecting the enforceability or effectiveness of
this Agreement in accordance with its terms and without affecting, limiting,
reducing, discharging or terminating the liability of any Obligor, or the
rights, remedies, powers and privileges of the Lender Parties
12
under this Agreement, the Lender Parties may, at any time and from time to time
and without notice or demand of any kind or nature whatsoever:
(i) amend, supplement, modify, extend, renew, waive,
accelerate or otherwise change the time for payment or performance of, or the
terms of, all or any part of the Secured Obligations (including any increase or
decrease in the rate or rates of interest on all or any part of the Secured
Obligations);
(ii) amend, supplement, modify, extend, renew, waive or
otherwise change, or enter into or give, any Basic Document or any agreement,
security document, guarantee, letter of credit, approval, consent or other
instrument with respect to all or any part of the Secured Obligations, any Basic
Document or any such other instrument or any term or provision of the foregoing;
(iii) accept or enter into new or additional agreements,
security documents, guarantees, letters of credit or other instruments in
addition to, in exchange for or relative to any Basic Document, all or any part
of the Secured Obligations or any collateral now or in the future serving as
security for the Secured Obligations;
(iv) accept or receive (including from any other Obligor)
partial payments or performance on the Secured Obligations (whether as a result
of the exercise of any right, remedy, power or privilege or otherwise);
(v) accept, receive and hold any additional collateral for all
or any part of the Secured Obligations (including from any other Obligor);
(vi) release, reconvey, terminate, waive, abandon, allow to
lapse or expire, fail to perfect, subordinate, exchange, substitute, transfer,
foreclose upon or enforce any collateral, security documents, guarantees or
letters of credit for or relative to all or any part of the Secured Obligations;
(vii) apply any collateral or the proceeds of any collateral,
guarantee (including the obligations of any other Obligor) or letter of credit
to all or any part of the Secured Obligations in such manner and extent as any
Lender Party may in its discretion determine;
(viii) release any Person (including any other Obligor) from
any personal liability with respect to all or any part of the Secured
Obligations;
(ix) settle, compromise, release, liquidate or enforce upon
such terms and in such manner as the Lender Parties may determine or as
applicable law may dictate all or any part of the Secured Obligations or any
collateral, guarantee or letter of credit for or relative to all or any part of
the Secured Obligations (including as to any other Obligor);
(x) consent to the merger or consolidation of, the sale of
substantial assets by, or other restructuring or termination of the corporate
existence of the Company or any other Person (including any other Obligor);
13
(xi) proceed against the Company, any Obligor or any other
Person or against any collateral, any other guarantee or any letter of credit
provided by any Person for or relative to all or any part of the Secured
Obligations and exercise the rights, remedies, powers and privileges of the
Lender Parties under the Basic Documents or otherwise in such order and such
manner as any Lender Party may in its discretion determine, without any
necessity first to proceed against any other Person or any collateral or to
enforce any right, remedy, power or privilege as to any other Person or
collateral before commencing to proceed against or otherwise to enforce this
Agreement as to any Obligor;
(xii) foreclose upon any deed of trust, mortgage or other
instrument creating or granting Liens on any interest in real property by
judicial or nonjudicial sale or by deed in lieu of foreclosure, bid any amount
or make no bid in any foreclosure sale or make any other election of remedies
with respect to those Liens or exercise any right of set-off;
(xiii) obtain the appointment of a receiver with respect to
any collateral for all or any part of the Secured Obligations and apply the
proceeds of that receivership as any Lender Party may in its discretion
determine (it being agreed that nothing in this clause (xiii) shall be deemed to
make any Lender Party a party in possession in contemplation of law, except at
its option);
(xiv) enter into such other transactions or business dealings
with the Company, any other Obligor, any Subsidiary or Affiliate of the Company
or any other Person as any Lender Party may desire; and
(xv) do all or any combination of the actions set forth in
this Section 3.02(a).
(b) The enforceability and effectiveness of this Agreement and
the liability of the Obligors, and the rights, remedies, powers and privileges
of the Lender Parties, under this Agreement shall not be affected, limited,
reduced, discharged or terminated, and each Obligor hereby expressly waives to
the fullest extent permitted by law any defense now or in the future arising, by
reason of:
(i) the illegality, invalidity or unenforceability of all or
any part of the Secured Obligations, any Basic Document or any agreement,
security document, guarantee, letter of credit or other instrument for or
relative to all or any part of the Secured Obligations;
(ii) any disability or other defense with respect to all of
any part of the Secured Obligations of the Company, any other Obligor, any other
guarantor, any issuer of any issuer of any letter of credit or any other Person,
including the effect of any statute of limitations that may bar the enforcement
of all or any part of the Secured Obligations or the obligations of any such
other Person;
(iii) the illegality, invalidity or unenforceability of any
security document, guarantee, letter of credit or other instrument for or
relative to all or any part of the Secured Obligations or the lack of perfection
or continuing perfection or failure of the priority of any Lien on any
collateral for all or any part of the Secured Obligations;
14
(iv) the cessation, for any cause whatsoever, of the liability
of the Company, any other Obligor, any other guarantor, any issuer of any letter
of credit or any other Person for all or any part of the Secured Obligations
(other than, subject to Section 3.05, by reason of the full payment and
performance of all Secured Obligations);
(v) any failure of any Lender Party to marshal assets in favor
of the Company or any other Person (including any other Obligor), to exhaust any
collateral for all or any part of the Secured Obligations, to pursue or exhaust
any right, remedy, power or privilege it may have against any other Obligor, the
Company, any other guarantor, any issuer of any letter of credit or any other
Person with respect to all or any part of the Secured Obligations or to take any
action whatsoever to mitigate or reduce that or any other Obligor's liability
under this Agreement, no Lender Party being under any obligation to take any
such action notwithstanding the fact that all or any part of the Secured
Obligations may be due and payable and that the Company may be in default of its
obligations under any Basic Document;
(vi) any failure of any Lender Party to give notice of sale or
other disposition of any collateral (including any notice of any judicial or
nonjudicial foreclosure or sale of any interest in real property serving as
collateral) for all or any part of the Secured Obligations to the Company, any
Obligor or any other Person or any defect in, or any failure by any Obligor or
any other Person to receive, any notice that may be given in connection with any
sale or disposition of any collateral;
(vii) any failure of any Lender Party to comply with
applicable laws in connection with the sale or other disposition of any
collateral for all or any part of the Secured Obligations;
(viii) any judicial or nonjudicial foreclosure or sale of, or
other election of remedies with respect to, any interest in real property or
other collateral serving as security for all or any part of the Secured
Obligations, even though that foreclosure, sale or election of remedies may or
will impair the subrogation rights of any Obligor or may or will preclude any
Obligor from obtaining reimbursement, contribution, indemnification or other
recovery from any other Obligor, the Company, any other guarantor, any issuer of
any letter of credit or any other Person and even though the Company may or will
not, as a result of that foreclosure, sale or election of remedies, be liable
for any deficiency;
(ix) any benefits the Company, any other Obligor, any other
guarantor, any issuer of any letter of credit or any other Person may or would
otherwise derive from Section 580a, 580b, 580d or 726 of the California Code of
Civil Procedure or any comparable provisions of the laws of any other
jurisdiction;
(x) any act or omission of any Lender Party or any other
Person that directly or indirectly results in or aids the discharge or release
of the Company, any other Obligor, any other guarantor, any issuer of any letter
of credit or any other Person of or from all or any part of the Secured
Obligations or of any collateral, security agreement, guarantee, letter of
credit or other instrument for all or any part of the Secured Obligations by
operation of law or otherwise;
15
(xi) any law that provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more burdensome
than that of the principal or that reduces a surety's or guarantor's obligation
in proportion to the principal obligation;
(xii) the possibility that the obligations of the Company to
the Lender Parties may at any time and from time to time exceed the aggregate
liability of the Obligors under this Agreement;
(xiii) any counterclaim, set-off or other claim that the
Company, any other Obligor, any other guarantor, any issuer of any letter of
credit or any other Person has or alleges to have with respect to all or any
part of the Secured Obligations;
(xiv) any failure of any Lender Party to file or enforce a
claim in any bankruptcy or other proceeding with respect to any Person;
(xv) the election by any Lender Party, in any bankruptcy
proceeding of any Person, of the application or nonapplication of Section
1111(b)(2) of the Federal Bankruptcy Code;
(xvi) any extension of credit or the grant of any Lien under
Section 364 of the Federal Bankruptcy Code;
(xvii) any use of cash collateral under Section 363 of the
Federal Bankruptcy Code;
(xviii) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any Person;
(xix) the avoidance of any Lien in favor of the Administrative
Agent or any other Lender Party for any reason;
(xx) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, liquidation or dissolution proceeding commenced by or
against any Person, including any discharge of, or bar or stay against
collecting, all or any part of the Secured Obligations (or any interest on all
or any part of the Secured Obligations) in or as a result of any such
proceeding;
(xxi) any action taken by any Lender Party that is authorized
by this Section 3.02 or otherwise in this Agreement or by any other provision of
any Basic Document or any omission to take any such action; or
(xxii) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
(c) Each Obligor expressly waives, for the benefit of the and
the Lenders, all set-offs and counterclaims and all presentments, demands for
payment or performance, notices of nonpayment or nonperformance, protests,
notices of protest, notices of dishonor and all other notices or demands of any
kind or nature whatsoever with respect to the Secured
16
Obligations, and all notices of acceptance of this Agreement or of the
existence, creation, incurring or assumption of new or additional Secured
Obligations. Each Obligor further expressly waives the benefit of any and all
statutes of limitation and any and all laws providing for the exemption of
Property from execution or for valuation and appraisal upon foreclosure, to the
maximum extent permitted by applicable law.
(d) Each Obligor represents and warrants to the Lender Parties
that it has established adequate means of obtaining financial and other
information pertaining to the business, operations and condition (financial and
otherwise) of the Company and its properties on a continuing basis and that it
is now and will in the future remain fully familiar with the business,
operations and condition (financial and otherwise) of the Company and its
properties. Each Obligor further represents and warrants that it has reviewed
and approved each of the Basic Documents and is fully familiar with the
transaction contemplated by the Basic Documents and that it will in the future
remain fully familiar with that transaction and with any new Basic Documents and
the transactions contemplated by those Basic Documents. Each Obligor hereby
expressly waives and relinquishes any duty on the part of any Lender Party
(should any such duty exist) to disclose to any Obligor any matter of fact or
other information related to the business, operations or condition (financial or
otherwise) of the Company or its properties or to any Basic Document or the
transactions undertaken pursuant to, or contemplated by, any such Basic
Document, whether now or in the future known by any Lender Party.
(e) Each Obligor intends that its rights and obligations shall
be those expressly set forth in this Agreement and that its obligations shall
not be affected, limited, reduced, discharged or terminated by reason of any
principles or provisions of law that conflict with the terms of this Agreement.
Section 3.03. UNDERSTANDING WITH RESPECT TO WAIVERS AND
CONSENTS. Each Obligor warrants and agrees that each of the waivers and consents
set forth in this Agreement is made voluntarily and unconditionally after
consultation with outside legal counsel and with full knowledge of its
significance and consequences, with the understanding that events giving rise to
any defense or right waived may diminish, destroy or otherwise adversely affect
rights that any Obligor otherwise may have against the Company, any Lender Party
or any other Person or against any collateral. If, notwithstanding the intent of
the parties that the terms of this Agreement shall control in any and all
circumstances, any such waivers or consents are determined to be unenforceable
under applicable law, those waivers and consents shall be effective to the
maximum extent permitted by law.
Section 3.04. SUBROGATION. Each Obligor hereby waives, until
the payment and satisfaction in full of all of the Secured Obligations and the
expiration and termination of the Commitments, under the Credit Agreement, any
right, remedy, power or privilege, such as any right of subrogation,
contribution or indemnity or related remedy, power or privilege, arising
(whether by contract or operation of law, including under the Federal Bankruptcy
Code) against the Company, any other Obligor, any other guarantor, any issuer of
any letter of credit or any other Person or any collateral by reason of any
payment or other performance pursuant to the provisions of this Agreement and,
if any amount is paid to any Obligor on account of those rights, remedies,
powers or privileges, it will hold that amount in trust for the benefit of, and
pay the same over to, the Administrative Agent (for the benefit of the other
Lender Parties) on
17
account of the Secured Obligations. Each Obligor understands that the exercise
by any Lender Party of any right, remedy, power or privilege that it may have
under the Basic Documents, security agreement, guarantee, letter of credit or
other instrument for or relative to all or any part of the Secured Obligations
or otherwise may affect or eliminate each Obligor's right of subrogation or
similar recovery against the Company, any other Obligor, any other guarantor,
any issuer of any letter of credit or any other Person or against any collateral
and that each Obligor may therefore incur partially or totally nonreimbursable
liability under this Agreement. Nevertheless, each Obligor hereby authorizes and
empowers the Administrative Agent and the other Lender Parties to exercise, in
its or their sole discretion, any combination of those rights, remedies, powers
and privileges.
Section 3.05. REINSTATEMENT. The obligations of each Obligor
under this Agreement shall be automatically reinstated if and to the extent that
for any reason any payment by or on behalf of the Company, any other Obligor,
any other guarantor, any issuer of any letter of credit or any other Person or
any other application of funds (including the proceeds of any collateral for all
or any part of the Secured Obligations) in respect of all or any part of the
Secured Obligations is rescinded or must be otherwise restored by any holder of
those Secured Obligations, whether as a result of any proceedings in bankruptcy,
reorganization or otherwise and each Obligor will jointly and severally
indemnify each Lender Party on demand for all reasonable costs and expenses
(including fees and expenses of counsel) incurred by that Lender Party in
connection with that rescission or restoration.
Section 3.06. REMEDIES. The Obligors hereby agree that,
between them and the Lender Parties, the obligations of the Company under the
Credit Agreement and the other Basic Documents may be declared to be forthwith
(or may become automatically) due and payable as provided in Section 8.01 of the
Credit Agreement for purposes of Section 3.01 notwithstanding any stay,
injunction or other prohibition preventing that declaration (or those
obligations becoming due and payable as against the Company) and that, in the
event of that declaration (or that obligation being deemed due and payable),
those obligations (whether or not due and payable by the Company) shall
forthwith become due and payable for purposes of Section 3.01.
Section 3.07. SEPARATE ACTION. The Administrative Agent may
bring and prosecute a separate action or actions against any Obligor whether or
not the Company, any other Obligor, any other guarantor, any issuer of any
letter of credit or any other Person is joined in any such action or a separate
action or actions are brought against the Company, any other Obligor, any other
guarantor, any issuer of any letter of credit or any other Person or any
collateral for all or any part of the Secured Obligations. The obligations of
each Obligor under, and the effectiveness of, this Agreement are not conditioned
upon the existence or continuation of any other guarantee or any letter of
credit for or relative to all or any part of the Secured Obligations.
Section 3.08. SUBORDINATION OF INDEBTEDNESS OF THE COMPANY;
SECURITY INTEREST.
(a) Each Obligor agrees that any indebtedness now or in the
future owed to it by the Company is hereby subordinated to the Secured
Obligations. If the Administrative Agent so requests, any such indebtedness
shall be collected, enforced and received by any Obligor as trustee for the
Administrative Agent and shall be paid over to the Administrative
18
Agent (for the benefit of the other Lender Parties) in kind on account of the
Secured Obligations. If, after the Administrative Agent's request, any Obligor
fails to collect or enforce any such indebtedness or to pay the proceeds of that
indebtedness to the Administrative Agent, the Administrative Agent as the
Obligors' attorney-in-fact may do such acts and sign such documents in that
Obligor's name and on that Obligor's behalf as the Administrative Agent
considers necessary or desirable to effect that collection, enforcement or
payment, and the Administrative Agent is hereby appointed each Obligor's
attorney-in-fact for that purpose.
(b) Each Obligor hereby grants to the Administrative Agent
(for the benefit of the Lender Parties) a security interest in any indebtedness
referred to in Section 3.08(a) and in any personal property of the Company in
which any Obligor now has or in the future acquires any right, title or
interest. Each Obligor agrees that such security interest shall be additional
security for the Secured Obligations and shall be superior to any right of that
Obligor in that Property until the Secured Obligations have been fully satisfied
and performed.
Section 3.09. CERTAIN LIMITATIONS. In any proceeding involving
any state corporate law or any state or federal bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
obligations of that Obligor under Section 3.01 would otherwise be held or
determined to be void, invalid or unenforceable or if the claims of the Lender
Parties in respect of those obligations would be subordinated to the claims of
any other creditors on account of any Obligor's liability under Section 3.01,
then, notwithstanding any other provision of this Agreement to the contrary, the
amount of that liability shall, without any further action by any Obligor, any
Lender Party or any other Person, be automatically limited and reduced to the
highest amount that is valid and enforceable and not subordinated to the claims
of other creditors as determined in that action or proceeding.
Section 3.10. RIGHTS OF CONTRIBUTION. The Obligors hereby
agree, as between themselves, that if any Obligor shall become an Excess Funding
Obligor (as defined below) by reason of the payment by such Obligor of any
Secured Obligations, each other Obligor shall, on demand of the Excess Funding
Obligor (but subject to the next sentence), pay to the Excess Funding Obligor an
amount equal to that Obligor's Pro Rata Share (as defined below and determined,
for this purpose, without reference to the properties, debts and liabilities of
such Excess Funding Obligor) of the Excess Payment (as defined below) in respect
of such Secured Obligations. The payment obligation of an Obligor to any Excess
Funding Obligor under this Section 3.10 shall be subordinate and subject in
right of payment to the prior payment in full of the obligations of that Obligor
under the other provisions of this Article III and that Excess Funding Obligor
shall not exercise any right or remedy with respect to that excess until payment
and satisfaction in full of all of such obligations.
For purposes of this Section 3.10, (i) "EXCESS FUNDING
OBLIGOR" means, in respect of any Secured Obligations, an Obligor that has paid
an amount in excess of its Pro Rata Share of such Secured Obligations, (ii)
"EXCESS PAYMENT" means, in respect of any Secured Obligations, the amount paid
by an Excess Funding Obligor in excess of its Pro Rata Share of such Secured
Obligations and (iii) "PRO RATA SHARE" means, for any Obligor, the ratio
(expressed as a percentage) of (x) the amount by which the aggregate present
fair saleable value of all properties of that Obligor (excluding any shares of
stock of any other Obligor) exceeds the amount of all the debts and liabilities
of that Obligor (including contingent, subordinated, unmatured and
19
unliquidated liabilities, but excluding the obligations of that Obligor under
this Agreement and any obligations of any other Obligor that have been
Guaranteed by that Obligor) to (y) the amount by which the aggregate fair
saleable value of all properties of all of the Obligors exceeds the amount of
all the debts and liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of the Obligors under
this Agreement and under the other Basic Documents) of all of the Obligors,
determined as of the Effective Date.
Section 3.11. REVOCATION. To the fullest extent permitted by
law, each Obligor hereby waives all rights it may have to revoke its obligations
under Section 3.01 with respect to all or any part of the Secured Obligations.
ARTICLE IV
REPRESENTATIONS
As of the Signing Date and as of the date of each extension of
credit by the Lenders, each Obligor represents and warrants to each Lender Party
as follows:
Section 4.01. TITLE. Each Obligor is the sole beneficial owner
of the Collateral in which it purports to grant a Lien pursuant to this
Agreement, and the Collateral is free and clear of all Liens, except for Liens
permitted under Section 7.10 of the Credit Agreement. The Liens granted by this
Agreement in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders have attached and (upon the filing of this
Agreement (or any other form or instrument as the Administrative Agent may
request) with the Copyright Office as called for under Section 2.03) constitute
a perfected security interest in all of that Collateral (other than Intellectual
Property registered or otherwise located outside of the United States of
America) prior to all other Liens (except those permitted Liens).
Section 4.02. PLEDGED STOCK.
(a) The Pledged Stock evidenced by the certificates identified
in Annex 1 is duly authorized, validly existing, fully paid and nonassessable,
and none of that Pledged Stock is subject to any contractual restriction, or any
restriction under the charter or by-laws of the respective Issuer of that
Pledged Stock, upon the transfer of that Pledged Stock (except for any such
restriction contained in any Basic Document and as arise under the FCC
Regulations).
(b) The Pledged Stock evidenced by the certificates identified
in Annex 1 constitutes all of the issued and outstanding shares of capital stock
of any class of the Issuers beneficially owned by that Obligor on the Signing
Date (whether or not registered in the name of that Obligor), and Annex 1
correctly identifies, as at the Signing Date, the respective Issuers of that
Pledged Stock, the respective class and par value of the shares comprising that
Pledged Stock and the respective number (and registered owners) of the shares
evidenced by each such certificate.
20
Section 4.03. INTELLECTUAL PROPERTY.
(a) Annexes 2, 3 and 4 set forth completely and correctly all
Copyrights, Patents and Trademarks owned by each respective Obligor on the
Signing Date; except pursuant to licenses and other user agreements entered into
by that Obligor in the ordinary course of business and listed in Annex 5, that
Obligor owns and possesses the right to use, and has done nothing to authorize
or enable any other Person to use, any Copyright, Patent or Trademark listed in
Annex 2, 3 or 4 under the name of that Obligor; all registrations listed in
Annexes 2, 3 and 4 are valid and in full force and effect; and, except as may be
set forth in Annex 5, each Obligor owns and possesses the right to use all
Copyrights, Patents and Trademarks listed in Annexes 2, 3 and 4 under the name
of that Obligor.
(b) Annex 5 sets forth completely and correctly all licenses
and other user agreements included in the Intellectual Property on the Signing
Date;
(c) To any Obligor's knowledge, (i) except as set forth in
Annex 5, there is no violation by others of any right of any Obligor with
respect to any Copyright, Patent or Trademark listed in Annex 2, 3 or 4 under
the name of that Obligor and (ii) no Obligor is infringing in any respect upon
any Copyright, Patent or Trademark of any other Person; and no proceedings have
been instituted, are pending against any Obligor or, to any Obligor's knowledge,
have been threatened against, and no claim has been received by, any Obligor,
alleging any such violation, except as may be set forth in Annex 5.
(d) No Obligor owns any Trademarks registered in the United
States of America to which the last sentence of the definition of Trademark
Collateral applies.
ARTICLE V
COVENANTS
Section 5.01. BOOKS AND RECORDS. Each Obligor will:
(a) keep full and accurate books and records relating to the
Collateral and stamp or otherwise mark those books and records in such manner as
the Administrative Agent may reasonably require in order to reflect the Liens
granted by this Agreement;
(b) furnish to the Administrative Agent from time to time
(but, unless a Default has occurred and is continuing, no more frequently than
quarterly) statements and schedules further identifying and describing the
Copyright Collateral, the Patent Collateral and the Trademark Collateral and
such other reports in connection with the Copyright Collateral, the Patent
Collateral and the Trademark Collateral, as the Administrative Agent may
reasonably request, all in reasonable detail;
(c) prior to filing, either directly or through an
Administrative Agent, licensee or other designee, any application for any
Copyright, Patent or Trademark, furnish to the Administrative Agent prompt
notice of that proposed filing; and
21
(d) permit representatives of the Administrative Agent, upon
reasonable notice, at any time during normal business hours to inspect and make
abstracts from its books and records pertaining to the Collateral and, if an
Event of Default has occurred and is continuing, permit representatives of the
Administrative Agent to be present at that Obligor's place of business to
receive copies of all communications and remittances relating to the Collateral
and forward copies of any notices or communications received by that Obligor
with respect to the Collateral, all in such manner as the Administrative Agent
may request.
Section 5.02. REMOVALS, ETC. Without at least 30 days' prior
written notice to the Administrative Agent, no Obligor will:
(a) change its corporate name, or the name under which it does
business, from the name shown on the signature pages to this Agreement; or
(b) maintain any of its books and records with respect to the
Collateral at any office, or maintain its principal place of business at any
place, or permit any Inventory or Equipment to be located anywhere, other than
at the address initially indicated for notices to it under Section 7.02 or at
one of the locations identified in Annex 6 under its name or in transit from one
of those locations to another.
Section 5.03. SALES AND OTHER LIENS. Except as otherwise
permitted or required under Section 7.10, 7.11 or 7.21 of the Credit Agreement,
without the prior written consent of the Administrative Agent (granted with the
authorization of the Lenders as specified in Section 10.04 of the Credit
Agreement), the Obligors will not dispose of any Collateral, create, incur,
assume or suffer to exist any Lien upon any Collateral or file or suffer to be
on file or authorize to be filed, in any jurisdiction, any financing statement
or like instrument with respect to all or any part of the Collateral in which
the Administrative Agent is not named as the sole secured party for the benefit
of the Lenders.
Section 5.04. STOCK COLLATERAL. The Obligors will cause the
Stock Collateral to constitute at all times 100% of the total number of shares
of each class of capital stock of each Issuer then outstanding. The Obligors
will cause all such shares to be duly authorized, validly issued, fully paid and
nonassessable and to be free of any contractual restriction or any restriction
under the charter or bylaws of the respective Issuer of that Stock Collateral,
upon the transfer of that Stock Collateral (except for any such restriction
contained in any Basic Document).
Section 5.05. FURTHER ASSURANCES. Each Obligor will, from time
to time upon the written request of the Administrative Agent, execute and
deliver such further documents and do such other acts and things as the
Administrative Agent may reasonably request in order fully to effect the
purposes of this Agreement.
ARTICLE VI
REMEDIES
Section 6.01. EVENTS OF DEFAULT, ETC. If any Event of Default
has occurred and is continuing:
22
(a) the Administrative Agent in its discretion may require
each Obligor to, and each Obligor will, assemble the Collateral owned by it at
such place or places, reasonably convenient to both the Administrative Agent and
that Obligor, designated in the Administrative Agent's request;
(b) the Administrative Agent in its discretion may make any
reasonable compromise or settlement it deems desirable with respect to any of
the Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, all or any part of the
Collateral;
(c) the Administrative Agent in its discretion may, in its
name or in the name of any Obligor or otherwise, demand, sue for, collect or
receive any money or property at any time payable or receivable on account of or
in exchange for all or any part of the Collateral, but shall be under no
obligation to do so;
(d) the Administrative Agent in its discretion may, upon five
business days' prior written notice to the Obligors of the time and place, sell,
lease or otherwise dispose of all or any part of the Collateral that is then or
will subsequently come into the possession, custody or control of the
Administrative Agent, any other Lender Party or any of their respective agents,
at such place or places as the Administrative Agent deems best, for cash, for
credit or for future delivery (without thereby assuming any credit risk) and at
public or private sale, without demand of performance or notice of intention to
effect any such disposition or of the time or place of any such sale (except
such notice as is required above or by applicable statute and cannot be waived),
and any Lender Party or any other Person may be the purchaser, lessee or
recipient of all or any part of the Collateral so disposed of at any public sale
(or, to the extent permitted by law, at any private sale) and thereafter hold
the same absolutely, free from any claim or right of whatsoever kind, including
any right or equity of redemption (statutory or otherwise), of the Obligors, and
each Obligor hereby waives and releases any such demand, notice and right or
equity. In the event of any sale, license or other disposition of any of the
Trademark Collateral, the goodwill connected with and symbolized by the
Trademark Collateral subject to that disposition shall be included, and the
Obligors will supply to the Administrative Agent or its designee, for inclusion
in that sale, assignment or other disposition, all Intellectual Property
relating to that Trademark Collateral. The Administrative Agent may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
the sale, and that sale may be made at any time or place to which the sale may
be so adjourned; and
(e) the Administrative Agent shall have, and in its discretion
may exercise, all of the rights, remedies, powers and privileges with respect to
the Collateral of a secured party under the Uniform Commercial Code (whether or
not the Uniform Commercial Code is in effect in the jurisdiction where those
rights, remedies, powers and privileges are asserted) and such additional
rights, remedies, powers and privileges to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights, remedies, powers
and privileges in respect of this Agreement or the Collateral may be asserted,
including the right, to the maximum extent permitted by law, to exercise all
voting, consensual and other powers of ownership pertaining to the Collateral as
if the Administrative Agent were the sole and absolute owner of the Collateral
(and the Obligors will take all such action as may be appropriate to give effect
to that right).
23
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 6.01 and of the exercise of the license
granted to the Administrative Agent in Section 2.02 shall be applied in
accordance with Section 6.04.
Section 6.02. DEFICIENCY. If the proceeds of, or other
realization upon, the Collateral by virtue of the exercise of remedies under
Section 6.01 and of the exercise of the license granted to the Administrative
Agent in Section 2.02 are insufficient to cover the costs and expenses of that
exercise and the payment in full of the other Secured Obligations, the Obligors
shall remain liable for any deficiency.
Section 6.03. PRIVATE SALE.
(a) No Lender Party shall incur any liability as a result of
the sale, lease or other disposition of all or any part of the Collateral at any
private sale pursuant to Section 6.01 conducted in a commercially reasonable
manner. Each Obligor hereby waives any claims against any Lender Party that may
arise by reason of the fact that the price at which the Collateral may have been
sold at such a private sale was less than the price that might have been
obtained at a public sale or was less than the aggregate amount of the Secured
Obligations, even if the Administrative Agent accepts the first offer received
and does not offer the Collateral to more than one offeree.
(b) The Obligors recognize that, by reason of certain
prohibitions contained in the Securities Act of 1933 and applicable state
securities laws and in the FCC Regulations, the Administrative Agent may be
compelled to limit purchasers of all or any part of the Collateral to those who
will agree, among other things, to acquire that Collateral for their own
account, for investment and not with a view to distribution or resale or to
those to whom the FCC has granted or will grant approval. The Obligors
acknowledge that any such private sales may be at prices and on terms less
favorable to the Administrative Agent than those obtainable through a public
sale without those restrictions, and, notwithstanding those circumstances, agree
that any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Administrative Agent shall have no obligation to
engage in public sales and no obligation to delay the sale of any Collateral for
the period of time necessary to permit the respective Issuer of that Collateral
to register it for public sale.
Section 6.04. APPLICATION OF PROCEEDS. Except as otherwise
expressly provided in this Agreement, the proceeds of, or other realization
upon, all or any part of the Collateral by virtue of the exercise of remedies
under Section 6.01 or of the exercise of the license granted in Section 2.02 and
any other cash at the time held by the Administrative Agent under Section 3.01
or Section 6.01 shall be applied by the Administrative Agent:
FIRST, to the payment of the costs and expenses of that
exercise of remedies, including reasonable out-of-pocket costs and expenses of
the Administrative Agent, the fees and expenses of its agents and counsel and
all other expenses incurred and advances made by the Administrative Agent in
that connection;
24
NEXT, to the payment in full of the remaining Secured
Obligations equally and ratably in accordance with their respective amounts then
due and owing or as the Lender Parties holding the same may otherwise agree; and
FINALLY, subject to the rights of the other holder of any Lien
in the relevant Collateral, to the payment to the respective Obligor or as a
court of competent jurisdiction may direct of any surplus then remaining.
As used in this Section 6, "PROCEEDS" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to any Obligor or any issuer of,
or account debtor or other obligor on, any of the Collateral.
Section 6.05. CERTAIN GOVERNMENTAL REQUIREMENTS.
Notwithstanding any contrary provision in any Basic Document, no action shall be
taken under this Agreement by the Administrative Agent or any Lender Party with
respect to any item of Collateral unless and until all applicable requirements
(if any) of the FCC Regulations have been satisfied with respect to such action
and there have been obtained such Governmental Approvals (if any) as may be
required to be obtained under the FCC Regulations under the terms of any such
FCC License. Without limiting the generality of the foregoing, the
Administrative Agent (on behalf of itself and the Lenders) hereby agrees that
(a) voting and consensual rights in the Stock Collateral will remain with the
relevant Obligors upon and following the occurrence of an Event of Default
unless and until any required prior approvals of the FCC to the transfer of such
voting and consensual rights to the Administrative Agent have been obtained; (b)
upon the occurrence of any Event of Default and foreclosure of the Stock
Collateral pursuant to this Agreement there will be either a private or public
sale of the Stock Collateral; and (c) prior to the exercise of voting or
consensual rights by the purchaser at any such sale, the prior consent of the
FCC pursuant to 47 U.S.C. ss.310(d) will be obtained. It is the intention of the
parties to this Agreement that the Liens in favor of the Administrative Agent on
the Collateral shall in all relevant aspects be subject to and governed by the
FCC Regulations and that nothing in this Agreement shall be construed to
diminish the control exercised by any Obligor except in accordance with the
provisions of the FCC Regulations. Each Obligor agrees that upon request from
time to time by the Administrative Agent it will use its best efforts to obtain
any Governmental Approvals referred to in this Section 6.05, including upon any
request of the Administrative Agent following an Event of Default, to prepare,
sign and file with the FCC (or cause to be prepared signed and filed with the
FCC) any application or application for consent to the assignment of the FCC
Licenses or transfer of control required to be signed by that Obligor or any of
its Subsidiaries necessary or appropriate under the FCC Regulations for approval
of any sale or transfer of any of the Stock Collateral or the assets of that
Obligor or any of its Subsidiaries or any transfer of control in respect of any
FCC License.
25
ARTICLE VII
MISCELLANEOUS
Section 7.01. ADMINISTRATIVE AGENT. As provided in Section
9.01 of the Credit Agreement, each Lender Party has appointed ING (U.S.) Capital
LLC as its Administrative Agent for purposes of this Agreement. In that
capacity, ING (U.S.) Capital LLC shall be entitled to all the rights and
benefits accorded the Administrative Agent by Article IX of the Credit Agreement
and any other applicable provision of the Basic Documents. Following the payment
in full of all Obligations outstanding under the Credit Agreement and all other
Guarantied Obligations and the termination or expiration of the Commitments, the
provisions of Article IX of the Credit Agreement shall be deemed to continue in
full force and effect for the benefit of the Administrative Agent under this
Agreement.
Section 7.02. NOTICES. All notices, requests and other
communications provided for in this Agreement shall be given or made in writing
and delivered by hand or courier service, mailed by certified or registered mail
or sent by telecopy to the intended recipient as specified below or, as to any
party, at such other address as is designated by that party in a notice to each
other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given or made upon receipt.
To the Obligors: Salem Communications Acquisition Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Telephone: (805) 343-4531
Telecopy: (805) 384-4532
Attention: Dirk Gastaldo, Vice President
and Chief Financial Officer
with a copy to: Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Telephone: (805) 987-0400, ext. 106
Telecopy: (805) 384-4505
Attention: Jonathan L. Block, Esq.,
Secretary
To the Administrative Agent: ING (U.S.) Capital LLC
55 East 52nd Street
New York, New York 10055
Telephone: (212) 409-1743
Telecopy: (212) 409-7813
Attention: Pamela Kaye
Section 7.03. EXPENSES, ETC. The Obligor jointly and severally
will pay all out-of-pocket expenses (including reasonable counsels' fees and
expenses) of each Lender Party in connection with any enforcement or collection
proceeding (including any bankruptcy,
26
reorganization, restructuring, "work out" or other similar proceeding) as to any
of the obligations of any Obligor under this Agreement, the negotiation of any
restructuring or "work out" (whether or not consummated) or the enforcement of
this Section 7.03. All amounts due under this Agreement not paid when due shall
bear interest until paid at a rate per annum equal to the Post-Default Rate.
Section 7.04. WAIVER. No failure or delay by any Lender Party
in exercising any remedy, right, power or privilege under this Agreement or any
other Basic Document shall operate as a waiver of that remedy, right, power or
privilege, nor shall any single or partial exercise of that remedy, right, power
or privilege preclude any other or further exercise of that remedy, right, power
or privilege or the exercise of any other remedy, right, power or privilege. The
remedies, rights, powers and privileges provided by this Agreement are
cumulative and not exclusive of any remedies, rights, powers or privileges
provided by the other Basic Documents or by law.
Section 7.05. AMENDMENTS, ETC. No provision of this Agreement
may be waived, modified or supplemented except by an instrument in writing
signed by the Obligors and the Administrative Agent (with the consent of the
Lenders as specified in Section 10.04 of the Credit Agreement). Any
modification, supplement or waiver shall be for such period and subject to such
conditions as shall be specified in the written instrument effecting the same
and shall be binding upon each Lender Party and each Obligor, and any such
waiver shall be effective only in the specific instance and for the purpose for
which given.
Section 7.06. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of its parties and their respective
successors and assigns. No Obligor may assign or transfer its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent (with further consent of the Lenders as specified under
Section 10.04 of the Credit Agreement).
Section 7.07. SURVIVAL. Each representation and warranty made,
or deemed to be made by a notice of any extension of credit, in or pursuant to
this Agreement shall survive the making or deemed making of that representation
and warranty, and no Lender Party shall be deemed to have waived, by reason of
making any extension of credit, any Default that may arise by reason of that
representation or warranty proving to have been false or misleading,
notwithstanding that such or any other Lender Party may have had notice or
knowledge or reason to believe that such representation or warranty was false or
misleading at the time that extension of credit was made.
Section 7.08. AGREEMENTS SUPERSEDED. This Agreement supersedes
all prior agreements and understandings, written or oral, among the parties with
respect to the subject matter of this Agreement.
Section 7.09. SEVERABILITY. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of that prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable that provision in any other
jurisdiction.
27
Section 7.10. CAPTIONS. The table of contents, captions and
section headings appearing in this Agreement are included solely for convenience
of reference and are not intended to affect the interpretation of any provision
of this Agreement.
Section 7.11. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties to the Agreement may execute this
Agreement by signing any such counterpart. Delivery of an executed counterpart
of a signature page to this Agreement by hand or by telecopy shall be effective
as the delivery of a fully executed counterpart of this Agreement.
Section 7.12. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW
YORK. EACH OBLIGOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
STATE COURT SITTING IN NEW YORK, NEW YORK FOR THE PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH OBLIGOR IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR IN THE
FUTURE HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
Section 7.13. WAIVER OF JURY TRIAL. EACH OBLIGOR AND THE
ADMINISTRATIVE AGENT (ON BEHALF OF ITSELF AND THE OTHER LENDER PARTIES) HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
[The remainder of this page is intentionally left blank.
Signature pages follow.]
28
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
OBLIGORS:
SALEM COMMUNICATIONS
ACQUISITION CORPORATION
By: ________________________________________
Name:
Title:
SCA LICENSE CORPORATION
By: ________________________________________
Name:
Title:
ADMINISTRATIVE AGENT:
ING (U.S.) CAPITAL LLC
By: ________________________________________
Name:
Title:
Annex 1
PLEDGED STOCK
Certificate Registered
Issuer Nos. Owner Number of Shares
------ ---- ------- ----------------
SCA License Corporation 1 Salem 1,000 shares of common
Communications stock, par value $0.01
Acquisition
Corporation
Annex 2
LIST OF COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
OBLIGOR: SALEM COMMUNICATIONS ACQUISITION CORPORATION
TITLE DATE FILED REGISTRATION NO. EFFECTIVE DATE
NONE
OBLIGOR: SCA LICENSE CORPORATION
TITLE DATE FILED REGISTRATION NO. EFFECTIVE DATE
NONE
Annex 3
LIST OF PATENTS AND PATENT APPLICATIONS
OBLIGOR: SALEM COMMUNICATIONS ACQUISITION CORPORATION
TITLE DATE FILED REGISTRATION NO. EFFECTIVE DATE
NONE
OBLIGOR: SCA LICENSE CORPORATION
TITLE DATE FILED REGISTRATION NO. EFFECTIVE DATE
NONE
Annex 4
LIST OF TRADE NAMES, TRADEMARKS, SERVICES MARKS,
TRADEMARK AND SERVICE MARK REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS
U.S. TRADEMARKS
OBLIGOR: SALEM COMMUNICATIONS ACQUISITION CORPORATION
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
---- ------------------ ---------------
NONE
OBLIGOR: SCA LICENSE CORPORATION
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
---- ------------------ ---------------
NONE
FOREIGN TRADEMARKS
OBLIGOR: SALEM COMMUNICATIONS ACQUISITION CORPORATION
Application (A) Registration or
Mark Registration (R) County Filing Date (F)
---- ---------------- ------ ---------------
NONE
OBLIGOR: SCA LICENSE CORPORATION
Application (A) Registration or
Mark Registration (R) County Filing Date (F)
---- ---------------- ------ ---------------
NONE
Annex 5
LIST OF CONTRACTS, LICENSES AND OTHER AGREEMENTS
OBLIGOR: SALEM COMMUNICATIONS ACQUISITION CORPORATION
Licenses
--------
"Alice" (R-Colorado) 2145746
"Five Thousand Dollar Thursdays" (R-Colorado) 19991224371
"Shortcuts to Y-2 Cash" (R-Colorado) 19991224372
"Last Millenium Lunch" (R-Colorado) 19991224373
OBLIGOR: SCA LICENSE CORPORATION
NONE
Annex 6
LIST OF LOCATIONS
OBLIGOR: SALEM COMMUNICATIONS ACQUISITION CORPORATION
Studio Transmitter
------ -----------
KALC(FM) _________ Lookout Mountain
One Tabor Center _________ Denver, Colorado
1200 - 17th Street, Suite 2300
Denver, Colorado 80202
OBLIGOR: SCA LICENSE CORPORATION
OFFICE LOCATION
---------------
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Annex 7
FORM OF LANDLORD'S ACCESS AGREEMENT
THIS LANDLORD'S ACCESS AGREEMENT (this "AGREEMENT"), dated as
of [______________], 2000, is made by [ _________] (the "LANDLORD") for the
benefit of ING (U.S.) Capital LLC acting in its capacity as the administrative
agent for the Lenders under the Credit Agreement referred to below (together
with its successors and assigns in that capacity, the "ADMINISTRATIVE AGENT").
The Landlord and Salem Communications Acquisition Corporation,
a Delaware corporation (the "TENANT") are parties to the Lease Agreement dated
[_________] (as amended, modified, supplemented and in effect from time to time,
the "LEASE") demising certain premises more particularly described on SCHEDULE
(the "PREMISES");
The Tenant's shareholder (the "PARENT") and the Lenders have
entered into the Credit Agreement dated as of August 24, 2000 (as amended,
modified, supplemented and in effect from time to time, the "CREDIT AGREEMENT"),
pursuant to which the Lenders have agreed to extend certain loans to the Parent.
Pursuant to the Credit Agreement, the Tenant has entered into
a Guarantee and Security Agreement dated as of August 24, 2000, with the
Administrative Agent under which it has granted to the Administrative Agent for
the benefit of the Lenders a lien and security interest in all of its personal
property (the "PERSONAL PROPERTY"), including Personal Property located at the
Premises.
NOW, THEREFORE, in consideration of the mutual agreements
contained in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. The Landlord hereby warrants, represents and certifies for
the benefit of the Administrative Agent and the Lenders as follows:
(a) Each of this Agreement and the Lease is the legal, valid
and binding obligation of the Landlord enforceable against the Landlord in
accordance with its respective terms.
(b) The Lease is in full force and effect and has not been
amended, modified, supplemented or superseded, either orally or in writing, in
any respect. All previous defaults or failures of conditions on the part of the
Tenant under the Lease have either been cured to the satisfaction of the
Landlord or have been irrevocably waived by the Landlord. No default or failure
of condition on the part of the Tenant under the terms of the Lease has occurred
and is currently continuing, the Landlord currently has no right to terminate
the Lease or alter, limit or otherwise interfere with the Tenant's possession,
use or enjoyment of the Premises and, to the
best of the Landlord's knowledge, no act, event, contingency or circumstance
exists or has occurred that would give the Landlord any right to terminate the
Lease or alter, limit or otherwise interfere with the Tenant's possession, use
or enjoyment of the Premises.
2. The Landlord waives and relinquishes any landlord's lien,
rights of levy or distraint, claim, security interest or other interest the
Landlord may now or hereafter have in or with respect to all or any part of the
Personal Property, whether for rent or otherwise. The Personal Property may be
installed in or located on the Premises and is not and shall not be deemed a
fixture or part of the real property but shall at all times be considered
personal property for all purposes.
3. The Administrative Agent, at its option, may enter and use
the Premises for the purpose of repossessing, removing, selling or otherwise
dealing with any of the Personal Property, and the license so granted shall be
irrevocable and shall continue from the date the Administrative Agent enters the
Premises for a period of up to 90 days after the receipt by the Administrative
Agent of written notice from the Landlord directing removal of the Personal
Property; provided, that, (a) for each day that the Administrative Agent uses
the Premises pursuant to the license so granted, unless the Landlord has
otherwise been paid rent in respect of any of such period, the Administrative
Agent shall pay the regularly scheduled rent provided under the Lease, prorated
on a per diem basis to be determined on a thirty (30) day month, without thereby
assuming the Lease or incurring any other obligations of the Tenant and (b) any
damage to the Premises caused by the Administrative Agent or its representatives
will be repaired by the Administrative Agent at its sole expense.
4. Any person succeeding to the Administrative Agent in its
capacity as the administrative agent for the Lenders under the Credit Agreement
or otherwise appointed by the holders of the obligations of the Parent under or
in respect of the Credit Agreement Administrative Agent to hold or otherwise act
with respect to all or any part of the collateral for the Credit Agreement as
administrative agent, collateral agent, security representative or trustee for
such holders shall automatically and without any further action or consent on
the part of any party to this Agreement succeed to all of the rights and
benefits of the Administrative Agent under this Agreement.
5. The Landlord acknowledges that (a) the obligations under
the Credit Agreement are made and entered into in material reliance by the
Administrative Agent and the Lenders upon this Agreement and the
representations, warranties, statements and covenants contained in this
Agreement and (b) such representations, warranties, statements and covenants are
made for the benefit and protection of Administrative Agent, the Lenders and
their respective successors and assignees.
6. This Agreement shall be binding upon the successors and
assigns of Landlord and shall inure, together with the rights and remedies of
the Administrative Agent under this Agreement, to the benefit of the
Administrative Agent and its successors and assignees.
7. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
2
STATE OF CALIFORNIA APPLICABLE TO CONTRACT MADE AND PERFORMED IN THE STATE OF
[CALIFORNIA][COLORADO].
3
MTHM DRAFT
MAY 8, 2000
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date and year first written above.
[NAME OF LANDLORD]
By: ____________________________
Name:
Title:
ACKNOWLEDGED BY:
- ---------------
SALEM COMMUNICATIONS ACQUISITION CORPORATION,
a Delaware corporation
By: ___________________________
Name:
Title:
ACCEPTED BY:
- -----------
ING (U.S.) Capital LLC
By: ___________________________
Name:
Title:
By: ___________________________
Name:
Title:
SCHEDULE A
EXHIBIT E
EXECUTION COPY
================================================================================
WARRANT AND REGISTRATION RIGHTS AGREEMENT
BETWEEN
SALEM COMMUNICATIONS CORPORATION,
THE WARRANT HOLDERS IDENTIFIED IN THIS AGREEMENT
AND
ING (U.S.) CAPITAL LLC
================================================================================
TABLE OF CONTENTS
PAGE
SECTION 1. Issuance of Warrants........................................1
SECTION 2. Warrant Certificate.........................................1
SECTION 3. Delivery to Administrative Agent............................1
SECTION 4. Registration of Warrant Shares..............................2
SECTION 5. Indemnification.............................................9
SECTION 6. Resales to Institutional Purchasers........................10
SECTION 7. Notices....................................................10
SECTION 8. Successors and Assigns.....................................11
SECTION 9. Governing Law; Submission to Jurisdiction..................11
SECTION 10. WAIVER OF JURY TRIAL.......................................11
SECTION 11. Benefits of This Agreement.................................11
SECTION 12. Captions...................................................11
SECTION 13. Agreements Superseded......................................11
SECTION 14. Counterparts...............................................11
Annex 1 -- Form of Warrant Certificate
-i-
This WARRANT AND REGISTRATION RIGHTS AGREEMENT (this
"AGREEMENT"), dated as of August 24, 2000, is between SALEM COMMUNICATIONS
CORPORATION, a Delaware corporation (the "COMPANY"), the institutions identified
on the signature pages to this Agreement (the "WARRANT HOLDERS") and ING (U.S.)
CAPITAL LLC , in its capacity as the administrative agent (in that capacity, the
"ADMINISTRATIVE AGENT") for the lenders under the Credit Agreement (the "CREDIT
AGREEMENT") dated as of August 24, 2000 between the Company and those lenders
(the "Lenders").
RECITALS
A. The Credit Agreement provides for the Company to
enter into this Agreement and to issue to the Warrant Holders Warrant
exercisable initially for 716,096 shares of Company Stock.
B. Capitalized terms defined in the Credit Agreement are
used, unless otherwise defined, in this Agreement with the same respective
meanings, and the rules of interpretation set forth in Section 1.02 of the
Credit Agreements shall apply to this Agreement.
ACCORDINGLY, the parties agree as follows:
SECTION 1. ISSUANCE OF WARRANTS(a) The Company hereby issues
to each Warrant Holder, subject to the conditions and restrictions contained in
this Agreement, and each Warrant Holder hereby accepts from the Company, the
Warrant set forth below next to its name:
Name of Warrant Holder Number of Warrant Number of Initial Shares Under the Warrant
- ---------------------- ----------------- ------------------------------------------
ING (U.S.) Capital LLC 1 501,267
The Bank of New York 2 143,219
Fleet National Bank 3 71,610
Neither any Warrant Holder nor the Administrative Agent shall be responsible for
the failure of any other Warrant Holders representations in its Warrant
Certificate to be true or for the failure of any other Warrant Holder to comply
with the terms of its Warrant Certificate.
SECTION 2. WARRANT CERTIFICATE. The certificates evidencing
the Warrants (each, a "WARRANT CERTIFICATE") to be delivered pursuant to this
Agreement shall be in registered form only and shall be substantially in the
form set forth in ANNEX 1. The Company shall number and register the Warrant
Certificates to be issued on the Effective Date as provided in Section 1 and
shall thereafter maintain a register in which the transfer of any Warrants are
registered.
SECTION 3. DELIVERY TO ADMINISTRATIVE AGENT. All of the
Warrant Certificates to be issued on the Effective Date shall be delivered to
the Administrative Agent to hold in escrow for the benefit of the Warrant
Holders as provided in this Agreement. Prior to the Distribution Date, a Warrant
Holder may transfer all or any part of its Warrant only in connection with and
proportional to a transfer of all or part of its Loan. If a Warrant Holder
wishes so to transfer all or any part of its Warrant, it shall so advise the
Administrative Agent in writing. As promptly as reasonably possible after its
receipt of any such advise, the Administrative Agent shall make that Warrant
available to that Warrant Holder for the purpose of executing any assignment
document required by that Warrant, the Administrative Agent shall submit, on
behalf of that Warrant Holder, the Warrant together with that assignment
document to the Company for registration of transfer and the Administrative
Agent shall receive and retain any Warrant or Warrants issued upon such a
transfer as provided in this Agreement. If the Obligations are paid in full
prior to the Distribution Date, the Administrative Agent shall return all
Warrant Certificates then held by it to the Company for cancellation, and the
Administrative Agent shall thereafter have no further duties or obligations with
respect to any Warrants or Warrant Certificates. If the maturity of the Loans is
accelerated as provided in the Credit Agreement or if the Obligations have not
been paid in full on or before the Maturity Date, then, on the date (the
"DISTRIBUTION DATE") that is the earlier of the Business Day on which any such
acceleration occurs and the Business Day immediately after the Maturity Date,
the Administrative Agent shall deliver to each Warrant Holder the Warrant
Certificate registered in the name of that Warrant Holder at its address
pursuant to the Credit Agreement. From and after the delivery of the Warrant
Certificates to the Warrant Holders, each Warrant Holder shall be entitled to
transfer, exercise and otherwise deal with its Warrant in accordance with its
terms without regard to this Section 3, and the Administrative Agent shall have
no further duties or obligations with respect to any Warrants or Warrant
Certificates. The Administrative Agent shall not release any Warrant
Certificates except as expressly set forth in this Section 3. In acting under
this Section 3, the Administrative Agent shall be entitled to all of the rights,
immunities and privileges provided for by Article IX of the Credit Agreement.
The Company's obligation to repay the Loans in full shall not be diminished by
the issuance or exercise of any Warrant.
SECTION 4. REGISTRATION OF WARRANT SHARES.
(a) REGISTRATION RIGHTS. Unless, following any request of
holder (each a "WS HOLDER") of any securities issued upon the exercise of any
Warrant or upon the transfer of any such securities (the "WARRANT SHARES") to
register all or any part of its Warrant Shares or to include all or any part of
its shares in any registration statement under the Act as provided in this
Section 4, the Company delivers to the WS Holder making that request an opinion
of counsel reasonably acceptable to the WS Holder to the effect that all of the
Warrant Shares of that WS Holder may be sold or otherwise transferred without
registration under the Act pursuant to Rule 144 under the Act and further
delivers to that WS Holder certificates representing all of those Warrant Shares
that do not contain any restrictive legend or the Company has previously
delivered such an opinion and such certificates to that WS Holder, the Company
shall register or include in a registration under the Act the Warrant Shares
subject to any such request in accordance with this Section 4. The provisions of
this Section 4 are for the express benefit of the Warrant Holders and each
successive person to whom the Warrant Holder or any subsequent transferee of the
Warrant Holder has transferred all or part of any Warrant or any Warrant Shares,
and the Company's obligations under this Section 4 may be enforced by any WS
Holder.
(b) REQUIRED REGISTRATION. Subject to the limitations
contained in Section 4(a) or 4(e), if any WS Holder provides written notice
(specifying the intended method of disposition)
-2-
to the Company requesting it to effect the registration of any of that WS
Holder's Warrant Shares under the Act (the "REQUEST NOTICE"), the Company shall
promptly give written notice of any such proposed registration to all WS Holders
and shall, as expeditiously as possible, use its best efforts to effect the
registration under the Act of:
(i) the Warrant Shares that the Company has been
requested to register pursuant to the Request Notice for disposition by the WS
Holder submitting that Request Notice in accordance with the intended method of
disposition described in that Request Notice; and
(ii) all other Warrant Shares, the WS Holder or WS
Holders of which shall have made written request (stating the intended method of
disposition of such securities by it or them) to the Company to include those
securities in the above registration process within 30 days after the giving of
such written notice by the Company, all as necessary to permit the sale of those
Warrant Shares in accordance with the intended methods of disposition so stated
by the other WS Holder or WS Holders.
If, in the case of an underwritten public offering of Warrant
Shares to be so registered, the managing underwriter advises that the number of
securities to be so registered is too large a number to be reasonably sold, the
number of such securities sought to be registered by each WS Holder shall be
reduced, pro rata in proportion to the number of securities sought to be
registered by all WS Holders, to the extent necessary to reduce the number of
securities to be registered to the number recommended by the managing
underwriter.
The Company will not grant to any Person at any time on or
after the date of this Agreement the right (a "PARTICIPATION RIGHT") to request
the Company to register any securities of the Company under the Act by reason of
the exercise by any WS Holder of its rights under this Section 4 unless the
Participation Right provides that the securities of any such Person shall not be
registered and sold at the same time as the Warrant Shares if the managing
underwriter for the WS Holder or WS Holders advises the Company in writing that
sale of those securities would adversely affect the amount of, or price at
which, the respective Warrant Shares being registered under this Section 4 can
be sold.
The Company agrees (x) not to effect any public or private
sale or distribution of its securities, including a sale pursuant to Regulation
D under the Act, during the 10-day period prior to, and during the 180-day
period beginning on, the closing date of an underwritten offering made pursuant
to a registration statement filed pursuant to this Section 4(b) and (y) to the
extent required by the managing underwriter, to use its best efforts to cause
each holder of its equity securities or securities convertible to equity
securities (other than equity securities distributed as part of any public
offering) purchased from the Company at any time prior to, on or after the date
of this Agreement to agree not to effect any public or private sale or
distribution of any such securities during such period, including a sale
pursuant to Rule 144 or Rule 144A under the Act (except as part of such
underwritten registration, if permitted).
The Company recognizes that money damages may be inadequate to
compensate the WS Holders for a breach by the Company of its obligations under
this Section 4(b) and Section 4(c), and the Company agrees that in the event of
such a breach each affected WS Holder
-3-
may apply for an injunction or specific performance or the granting of such
other equitable remedies as may be awarded by a court of competent jurisdiction
in order to afford each such WS Holder the benefits of this Section 4(b) and
that the Company shall not object to such application, entry of such injunction
or granting of such other equitable remedies on the grounds that money damages
will be sufficient to compensate each such WS Holder.
The Company may include in any required registration under
this Section 4(b) any other shares of Common Stock (including issued and
outstanding shares of Common Stock as to which Company stockholders, other than
the WS Holders, have contracted with the Company for incidental or "piggyback"
registration rights), provided that if the inclusion in such registration of
such shares would, in the reasonable judgment of the managing underwriter, cause
the proceeds or the price per unit the WS Holders will derive from such
registration to be reduced or the number of securities to be registered at the
instance of the Company or such other company stockholders is too large a number
to be reasonably sold, the other shares of Common Stock sought to be included
shall be excluded to the extent deemed appropriate by the managing underwriter.
Any shares other than the Warrant Shares that are included in any required
registration shall be included only on the same basis as Warrant Shares being
included, and the holders of any such shares or the Company, as the case may be,
shall, in respect to their participation in the required registration, be
subject to the same requirements and restrictions as the WS Holders
participating in that registration.
(c) INCIDENTAL REGISTRATION. Subject to the limitations
contained in Section 4(a) or 4(e), if the Company at any time proposes to
register any of its securities under the Act pursuant to a registration
statement on Form S-1, S-2, S-3 or S-4 or the equivalent (otherwise than
pursuant to Section 4(b) or to register debt securities under Form S-3 or any
comparable successor form), whether of its own accord or at the request of any
holder or holders of those securities, it will each such time give written
notice to all WS Holders of its intention so to do.
Upon the written request of any WS Holder or WS Holders given
within 30 days after receipt of any such notice from the Company (stating the
intended method of disposition of Warrant Shares by the requesting WS Holder or
WS Holders), the Company will use its best efforts to cause all the Warrant
Shares covered by any such request to be registered under the Act pursuant to
the registration statement referred to above, all as necessary to permit the
sale of those Warrant Shares in accordance with the intended methods of
disposition so stated by the requesting WS Holder or WS Holders.
If the managing underwriter for the respective offering
advises the Company in writing that the inclusion in any such registration of
some or all of the Warrant Shares sought to be registered by the WS Holder or WS
Holders will, in its opinion, cause the proceeds or the price per unit the
Company or the initial requesting or demanding holder of securities will derive
from such registration to be reduced or that the number of securities to be
registered at the instance of the Company or such requesting or demanding holder
plus the number of securities sought to be registered by the WS Holders is, in
its opinion, too large a number to be reasonably sold, the number of securities
sought to be registered for each WS Holder shall be reduced as set forth below:
-4-
(i) the number of securities sought to be registered
by any holder or holders of any securities, other than Warrant Shares or on
account of the Company, shall be reduced pro rata, to the extent necessary to
reduce the number of securities to be registered to the number recommended by
the managing underwriter (the "RECOMMENDED NUMBER");
(ii) if the reduction provided for in clause (i)
above does not reduce the number of securities to be registered to the
Recommended Number, then the number of shares of Warrant Shares shall be reduced
pro rata, among the WS Holders, to the extent necessary to reduce the number of
securities to be registered to the Recommended Number.
The Company will not grant to any Person at any time on or
after the Closing Date the right to request the Company to register any
securities of the Company under the Act unless such right provides that if the
managing underwriter for the respective WS Holders believes that sale of any
such securities would adversely affect the amount of, or price at which, the
respective Warrant Shares being registered under this Section 4(c) can be sold
then the amount of such securities that may be registered and sold shall be
reduced in accordance with clause (i) above.
(d) REGISTRATION PROCEDURES.
(i) If and whenever the Company is required by the
provisions of this Section 4 to use its best efforts to effect the registration
of any Warrant Shares under the Act, the Company will (except as otherwise
provided in this Agreement), as expeditiously as possible,
(A) cooperate with any underwriters for, and the WS
Holders of, such Warrant Shares and enter into a usual and customary
underwriting agreement with respect to those Warrant Shares (provided that the
Company shall not be required to enter into more than two such underwriting
agreements (one for a domestic offering and one for an international offering)
in connection with any such registration) and take all such other reasonable
actions as are necessary or advisable to permit, expedite and facilitate the
disposition of such Warrant Shares in the manner contemplated by the related
registration statement, in each case to the same extent as if all the securities
then being offered were for the account of the Company, and the Company will
provide to any WS Holder, any underwriter participating in any distribution of
those Warrant Shares pursuant to a registration statement and any attorney,
accountant or other agent retained by any WS Holder or underwriter, reasonable
access to appropriate Company officers and employees to answer questions and to
supply information reasonably requested by any such WS Holder, underwriter,
attorney, accountant or agent in connection with any such registration
statement;
(B) furnish or cause to be furnished to each WS
Holder covered by any such registration statement, addressed to each such WS
Holder, a copy of the opinion of counsel for the Company, and a copy of the
"comfort" letter signed by the independent public accountants who have certified
the Company's financial statements included in the registration statement,
delivered on the closing date to the underwriters of registered Warrant Shares;
-5-
(C) prepare and file with the Commission a
registration statement with respect to those securities and use its best efforts
to cause that registration statement to become and remain effective; and prepare
and file with the Commission such amendments and supplements to that
registration statement and the related prospectus as may be necessary to keep
that registration statement effective and to comply with the provisions of the
Act with respect to the sale or other disposition of all securities covered by
that registration statement whenever the WS Holder or WS Holders of those
securities desire to sell or otherwise dispose of the same; provided that no
such registration statement will be filed by the Company until counsel for the
applicable WS Holders have had a reasonable opportunity to review the same and
to exercise their rights under clause (A) above and no amendment to any such
registration statement naming any such WS Holders as selling shareholders shall
be filed with the Commission until each such WS Holder has had at least seven
days to review the registration statement as originally filed and theretofore
amended and to exercise their rights under clause (A) above;
(D) furnish to each WS Holder such numbers of copies
of a summary prospectus or other prospectus, including a preliminary prospectus,
in conformity with the requirements of the Act, and such other documents, as
each such WS Holder may reasonably request in order to facilitate the public
sale or other disposition of the securities owned by each such WS Holder;
(E) use its best efforts to register or qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as each WS Holder shall request, and do any
and all other acts and things that may be necessary or advisable to enable each
such WS Holder to consummate the public sale or other disposition in such
jurisdictions of the securities owned by each such WS Holder, except that the
Company shall not for any such purpose be required to qualify to do business as
a foreign corporation in any jurisdiction in which it is not so qualified or to
file in any such jurisdiction any general consent to service;
(F) in the event of the issuance of any stop order
suspending the effectiveness of any registration statement or of any order
suspending or preventing the use of any prospectus or suspending the
qualification of any Warrant Shares for sale in any jurisdiction, use its best
efforts promptly to obtain its withdrawal;
(G) in the event any prospectus used in connection
with the distribution of Warrant Shares registered under the Act pursuant to the
provisions of this Section 4 is discovered to contain any untrue statement of
any material fact or any omission to state in that prospectus a material fact
required to be stated in that prospectus or necessary to make the statements in
that prospectus not misleading, promptly provide each WS Holder that shall have
requested registration of Warrant Shares with amended prospectuses correcting
all such statements;
(H) otherwise use its best efforts to comply with
all applicable rules and regulations of the Securities and Exchange Commission,
and make available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months, beginning
with the first fiscal quarter beginning after the effective date of the
-6-
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Act; and
(I) list such securities on any securities exchange
on which any stock of the Company is then listed, if the listing of such
securities is then permitted under the rules of any such exchange; PROVIDED,
HOWEVER, that notwithstanding any other provision of this Section 4, the Company
shall not be required to maintain the effectiveness of any registration
statement for a period in excess of one year (PLUS any period during which the
effectiveness of that registration has been suspended). From time to time after
a transfer of any Warrant Shares pursuant to a registration statement the
Company will file all reports required to be filed by it under the Act, the
Securities Exchange Act of 1934 and the rules and regulations adopted by the
Securities and Exchange Commission under either such act, and take such further
action as any WS Holder or WS Holders, all to the extent required to enable it
or them to sell Warrant Shares pursuant to those laws and regulations. Upon
written request, the Company will deliver to each such WS Holder a written
statement as to whether it has complied with such requirements.
(ii) In connection with the registration of Warrant
Shares under the Act pursuant to the provisions of this Section 4, each WS
Holder requesting such registration will (except as otherwise provided in this
Agreement), as expeditiously as possible,
(A) in the event of the issuance of any stop order
suspending the effectiveness of any registration statement or of any order
suspending or preventing the use of any prospectus or suspending the
qualification of any Warrant Shares for sale in any jurisdiction, use its best
efforts promptly to discontinue the disposition of the Warrant Shares owned by
that Holder in each such jurisdiction until the order applicable to that
jurisdiction has been withdrawn; and
(B) in the event any prospectus used in connection
with the distribution of Warrant Shares registered under the Act pursuant to the
provisions of this Section 4 is discovered to contain any untrue statement of
any material fact or any omission to state in that prospectus a material fact
required to be stated in that prospectus or necessary to make the statements in
that prospectus not misleading, use its best efforts promptly to discontinue the
disposition of the Warrant Shares owned by such WS Holder until amended
prospectuses correcting those statements have been provided to the WS Holder.
(e) EXPENSES; LIMITATIONS ON REGISTRATION. All expenses
incident to the Company's performance of its obligations in connection with any
registration of the Warrant Shares under this Agreement, including printing
expenses, fees and disbursements of counsel for the Company, fees of the
National Association of Securities Dealers, Inc. in connection with its review
of any offering contemplated in any registration statement and expenses of any
special audits to which the Company shall agree or which shall be necessary to
comply with Governmental Rules in connection with any such registration shall be
paid by the Company. In addition, the Company shall pay (i) all registration and
filing fees for the Warrant Shares under federal and state securities laws, (ii)
expenses of registering or qualifying under or complying with the securities or
blue sky laws of any jurisdictions pursuant to Section 4(d)(i)(E), and (iii)
fees and disbursements of counsel for the WS Holders. Notwithstanding the
foregoing, in
-7-
the event a WS Holder withdraws its request for registration of Warrant Shares
other than by reason of (A) the Company's failure to perform its obligations in
connection with any such registration, (B) the failure to be timely satisfied of
any closing condition contained in any underwriting agreement entered into in
connection with any such registration and not within the exclusive control of
that WS Holder, (C) the termination of such underwriting agreement by the
underwriters other than by reason of the failure on the part of that WS Holder
to perform its obligations under that agreement or (D) the occurrence of any
change that, in the sole judgment of that WS Holder, may materially adversely
affect the selling price or marketability of the Warrant Shares for which
registration was requested, including (1) any material adverse change in the
business, business prospects, properties, condition (financial or otherwise) or
operations of the Company, (2) the suspension of trading in the Common Stock by
the Securities and Exchange Commission or any national securities exchange or
automated quotation system or trading in securities generally on the New York
Stock Exchange or the establishment of limited or minimum prices on any such
national exchange or quotation system, (3) the declaration of any banking
moratorium by Federal, New York or California authorities or (4) the occurrence
of any outbreak or escalation of hostilities, the declaration by the United
States of any national emergency or war or the occurrence of any other calamity
or crisis the effect of which on financial markets is such, in the sole judgment
of the managing underwriter for that WS Holder, as to make it impracticable or
inadvisable to proceed with the offering of the Warrant Shares, then that WS
Holder shall bear those expenses. In addition, under all circumstances, each WS
Holder shall pay one hundred percent (100%) of the gross underwriting spread or
fees with respect to its Warrant Shares covered by any registration pursuant to
this Section 4.
It shall be a condition precedent to the obligation of the
Company to take any action pursuant to this Section 4 in respect of the Warrant
Shares to be registered at the request of the WS Holder, that the WS Holder
requesting registration of those Warrant Shares furnish to the Company such
information regarding that WS Holder, those Warrant Shares and the intended
method of disposition of those Warrant Shares as the Company shall reasonably
request and as shall be required in connection with the action to be taken by
the Company.
The WS Holders shall be entitled to one effective registration
pursuant to requests made under Section 4(b) and an unlimited number of
registrations pursuant to requests made under Section 4(c); PROVIDED that any
such registration request made by the requisite number of WS Holders
(established pursuant to the next succeeding paragraph of this Section 4(e))
that is withdrawn (other than by reason of the Company's failure to perform its
obligations under this Agreement or any of the events described in clause (D)
above) by the majority (in number of Warrant Shares sought to be so registered)
of the WS Holders making any such request, after the respective registration
statement has become effective, shall be treated as an "effective" registration
for purposes of this Agreement.
The Company shall not be required to effect any registration
of Warrant Shares pursuant to the request of any WS Holder or WS Holders made
under Section 4(b) if less than 25% of the Warrant Shares then outstanding is to
be registered in such registration.
The Company agrees that it will not file a registration
statement under the Act, either for securities held by any holders of the
Company's securities, other than WS Holders, or
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for securities newly issued by the Company, until 180 days after the effective
date of any registration statement filed pursuant to the request of a WS Holder
or WS Holders under Section 4(b) (or such shorter period ending upon the
completion of the sale of all Warrant Shares so registered), other than a
registration statement (i) on Form S-4 or S-8 or any successor forms then in
effect under the Act, (ii) pursuant to which the Company is offering to exchange
its own securities or (iii) relating to dividend reinvestment plans, or relating
to an offering of securities initiated prior to the request of any WS Holder.
SECTION 5. INDEMNIFICATION.
(a) In the event of any registration of any Warrant Shares
under the Act pursuant to Section 4, the Company shall indemnify and hold
harmless the WS Holder of those Warrant Shares and any underwriter of those
Warrant Shares, and their respective directors and officers, and each other
Person, if any, who controls that WS Holder or any such underwriter within the
meaning of the Act ("CONTROLLING PERSON"), against any losses, claims, damages
or liabilities, joint or several, to which that WS Holder or underwriter or any
such director or officer or Controlling Person may become subject under the Act
or any other Governmental Rule, insofar as those losses, claims, expenses,
damages or liabilities (or actions in respect of the same) arise out of or are
based upon (i) any alleged untrue statement of any material fact contained, on
its effective date, in any registration statement under which those securities
were registered under the Act or in any preliminary prospectus or final
prospectus contained in any such registration statement, or any amendment or
supplement to any such registration statement, or (ii) any alleged omission to
state in any such statement, prospectus, amendment or supplement a material fact
required to be stated in any such statement, prospectus, amendment or supplement
or necessary to make the statements in any such statement, prospectus, amendment
or supplement not misleading, and shall reimburse that WS Holder and each such
director, officer or Controlling Person for any legal or any other expenses
reasonably incurred by that WS Holder and each such director, officer or
Controlling Person in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any alleged untrue statement or
alleged omission made in such registration statement, preliminary prospectus,
prospectus, or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by that WS Holder specifically for use in any such document. The indemnity
provided in this subsection shall remain in full force and effect regardless of
any investigation made by or on behalf of any WS Holder or any such director,
officer or Controlling Person, and shall survive the transfer of any such
securities by any WS Holder.
(b) Each WS Holder shall, by acceptance of its Warrant Shares,
severally and not jointly, indemnify and hold harmless the Company and any
underwriter of Warrant Shares and their respective directors and officers and
each other Person, if any, who controls the Company or any such underwriter
(within the meaning of the Act) against any losses, claims, expenses, damages or
liabilities, joint or several, to which the Company or any such underwriter or
any such director or officer or any such Person may become subject under the Act
or any other Governmental Rule, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any alleged untrue statement of any material fact
-9-
contained, on its effective date, in any registration statement under which
Warrant Shares were registered under the Act, or in any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement to any
such registration statement, or (ii) any alleged omission to state in any such
statement, prospectus, amendment or supplement a material fact required to be
stated in any such statement, prospectus, amendment or supplement or necessary
to make the statements in any such statement, prospectus, amendment or
supplement not misleading, in each case to the extent, but only to the extent,
that any such alleged untrue statement or alleged omission was contained in
written information furnished to the Company through an instrument duly executed
by such holder specifically for use in any such document, and shall reimburse
the Company, any such underwriter or any such director, officer or other Person
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such loss, claim, damage, liability or action.
(c) Indemnification similar to that specified in clauses (a)
and (b) of this Section 5 shall be given by the Company and each WS Holder (with
such modifications as shall be appropriate) to each other and to any underwriter
with respect to any required registration or other qualification of any Warrant
Shares under any federal or state law or regulation of governmental authority
other than the Act. The indemnity and expense reimbursements obligations of the
Company under clauses (a) and (b) of this Section 5 shall be in addition to any
liability the Company may otherwise have.
(d) Each Person ("INDEMNITOR") who under the preceding
provisions of this Section 5 agrees to indemnify another Person ("INDEMNITEE")
shall have the right to designate counsel (reasonably acceptable to the
Indemnitee) to defend any case or proceeding against the Indemnitee arising in
respect of any claim of liability for which any such indemnification may be
claimed, to the end that duplication of legal expense may be minimized; provided
that, if the Indemnitee notifies the Indemnitor that the former has been advised
by its counsel that any single counsel in any such case or proceeding would have
a conflict of interest in representing both the Indemnitor and the Indemnitee,
the Indemnitee may designate its own counsel in any such case or proceeding and,
to the extent so provided above in this Section 5, shall be entitled to be
reimbursed by Indemnitor for its legal expenses reasonably incurred in
connection with defending itself in any such case or proceeding.
SECTION 6. RESALES TO INSTITUTIONAL PURCHASERS. The Company
agrees that if at any time, and for so long, as the Company is not required to
file periodic reports pursuant to the Exchange Act, the Company will promptly
provide any requesting WS Holder, upon reasonable request, with all information
necessary for that WS Holder to comply with Rule 144A under the Act with respect
to the resale of any Warrant Share to a "qualified institutional buyer" as that
term is defined in that rule.
SECTION 7. NOTICES. Except where telephonic notice is
expressly permitted, all notices, requests and other communications provided for
in this Agreement shall be given or made in writing and delivered by hand or
courier service, mailed by certified or registered mail or sent by telecopy to
the intended recipient as specified below its name in the signature pages of
this Agreement or, as to any party, at such other address as is designated by
that party in a notice
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to each other party. All such communications shall be deemed to have been duly
given or made upon receipt.
SECTION 8. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of its parties and their respective
successors and permitted assigns.
SECTION 9. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT AND THE WARRANT CERTIFICATES ISSUED UNDER THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW YORK. THE COMPANY
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT
SITTING IN THE STATE OF NEW YORK AND THE COUNTY OF NEW YORK FOR THE PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
IN THE FUTURE HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 10. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
SECTION 11. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company and the holder any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Administrative Agent, the Warrant Holders and the WS Holders.
SECTION 12. CAPTIONS. The table of contents, captions and
section headings appearing in this Agreement are included solely for convenience
of reference and are not intended to affect the interpretation of any provision
of this Agreement.
SECTION 13. AGREEMENTS SUPERSEDED. This Agreement supersedes
all prior agreements and understandings, written or oral, between the parties
with respect to the subject matter of this Agreement.
SECTION 14. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties to this Agreement may execute this
Agreement by signing any such counterpart. Delivery of an executed counterpart
of a signature page to the Agreement by hand or by telecopy shall be as
effective as the delivery of a fully executed counterpart of this Agreement.
-11-
IN WITNESS WHEREOF, the Company, ING (U.S.) Capital LLC and
each Warrant Holder have caused this Agreement to be executed and delivered by
their respective officers thereunto duly authorized, all as of the day and year
first above written.
SALEM COMMUNICATIONS CORPORATION
By: _______________________________
Name:
Title:
ING (U.S.) CAPITAL LLC, as the Administrative
Agent
By: _______________________________
Name:
Title:
ING (U.S.) CAPITAL LLC
By: _______________________________
Name:
Title:
THE BANK OF NEW YORK
By: _______________________________
Name:
Title:
FLEET NATIONAL BANK
By: _______________________________
Name:
Title:
Annex 1
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THE
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (2) THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT
REGISTRATION UNDER THE ACT IS NOT REQUIRED OR THE HOLDER OR THE COMPANY HAS
OBTAINED A NO-ACTION LETTER FROM THE APPROPRIATE GOVERNMENTAL AUTHORITY TO THE
SAME EFFECT OR (3) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE ACT UNDER RULE 144 (OR ANY SUCCESSOR PROVISION) OF THE ACT. THIS WARRANT
IS ALSO SUBJECT TO THE WARRANT AGREEMENT REFERRED TO BELOW.
WARRANT NO. _____ Dated: ______________
SALEM COMMUNICATIONS CORPORATION
WARRANT TO PURCHASE [ ] SHARES
OF CLASS A COMMON STOCK
SALEM COMMUNICATIONS CORPORATION, a Delaware corporation (the
"COMPANY"), hereby certifies that, for value received,
______________________________ (the "INITIAL HOLDER") or its registered
transferees, successors or assigns (collectively and together with the Initial
Holder, the "HOLDER") is the registered Holder of warrants (the "WARRANTS") to
subscribe for and purchase up to ___________________ fully paid and
nonassessable shares of Common Stock (as from time to time adjusted pursuant to
Section 4, the "WARRANT SHARES") of the Company, at a purchase price per share
equal to (i) $0.01 per share (as adjusted from time to time pursuant to Section
4, the "WARRANT PRICE"), subject to the provisions and upon the terms and
conditions of this Warrant. In this Warrant, (a) the term "COMMON STOCK" shall
mean the Company's presently authorized Class A Common Stock, $0.01 par value
and any stock into or for which such Common Stock may hereafter be converted or
exchanged, (b) the term "DATE OF GRANT" shall mean the date of this Warrant and
(c) the term "WARRANT" shall be deemed to include any warrant issued upon
transfer or partial exercise of this Warrant, unless the context clearly
requires otherwise. This Warrant is being issued pursuant to, and is subject to,
the Warrant and Registration Rights Agreement dated as of July ___, 2000 (the
"WARRANT AGREEMENT") between the Company, the institutions named in the Warrant
Agreement and ING (U.S.) Capital LLC (in its capacity as the Administrative
Agent (as defined in the Warrant Agreement)), and the Holder is entitled to the
benefits of the Warrant Agreement. Capitalized terms defined in the Warrant
Agreement and used, unless otherwise defined, in this Warrant with the same
respective meanings.
SECTION 1. TERM. The purchase rights represented by this
Warrant are exercisable, in whole or in part, at any time and from time to time
from the Distribution Date through and including the close of business on the
tenth year anniversary of this Warrant (the "Expiration Date"). Upon the
exercise of all or the specified portion of the Warrant and the payment of the
applicable purchase price, the Holder shall be entitled to the number of Warrant
Shares for which it has exercised this Warrant. If this Warrant is not exercised
before the close of business on the Expiration Date, it will become void and all
rights under this Warrant will thereupon cease.
SECTION 2. EXERCISE.
(a) CASH EXERCISE AND METHOD OF EXERCISE. Subject to Section
1, the purchase rights represented by this Warrant may be exercised by the
Holder, in whole at any time or in part from time to time, by the surrender of
this Warrant (with the notice of exercise form attached as Exhibit A duly
executed) at the principal office of the Company, and, except as otherwise
provided for in this Warrant, by the payment to the Company of an amount equal
to the then applicable Warrant Price multiplied by the number of Warrant Shares
then being purchased.
(b) CASHLESS RIGHT TO CONVERT WARRANT INTO COMMON STOCK; NET
ISSUANCE. In addition to and without limiting the rights of the Holder under the
terms of this Warrant, the Holder shall have the right to convert all or part of
this Warrant (the "CONVERSION RIGHT") into shares of Common Stock as provided in
this Section 2(b) at any time or from time to time during the term of this
Warrant. Upon the exercise of the Conversion Right with respect to all or a
specified portion of the Warrant Shares (the "CONVERTED WARRANT SHARES"), the
Holder shall
2
(without payment by the Holder of any cash or other cash consideration) be
entitled to that number of shares of fully paid and nonassessable Common Stock
as is equal to the quotient obtained by dividing (i) the value of this Warrant
(or the specified portion of this Warrant) on the Conversion Date, which value
shall be equal to (A) the aggregate fair market value (determined as provided in
Section 4) of the Converted Warrant Shares issuable upon exercise of this
Warrant (or the specified portion of this Warrant) on the Conversion Date less
(B) the aggregate Warrant Price of the Converted Warrant Shares immediately
prior to the exercise of the Conversion Right by (ii) the fair market value of
one share of Common Stock on the Conversion Date.
The Conversion Right may be exercised by the Holder by, and
such exercise shall be effective upon, the surrender of this Warrant at the
principal office of the Company together with a written statement specifying
that the Holder intends to exercise the Conversion Right and indicating the
number of Converted Warrant Shares being surrendered in the exercise of the
Conversion Right. No fractional shares shall be issuable upon exercise of the
Conversion Right, and, if the number of shares to be issued determined in
accordance with the foregoing formula is other than a whole number, the Company
shall pay to the Holder an amount in cash equal to the fair market value of the
resulting fractional share on the Conversion Date. For purposes of Section 4 of
the Warrant Agreement, shares issued pursuant to the Conversion Right shall be
treated as if they were issued upon the exercise of this Warrant.
(c) ISSUANCE OF SHARES AND NEW WARRANT. The person or persons
in whose name or names any certificate or certificates representing Warrant
Shares to be issued upon any exercise of this Warrant under Section 2(a) or 2(b)
shall be deemed to have become the holder or holders of record of, and shall be
treated for all purposes as the record holder or holders of, the shares
represented by each such certificate (and those shares shall be deemed to have
been issued) immediately prior to the close of business on the date on which
this Warrant is so exercised if it is exercised prior to the close of business
on that date; otherwise, the date of record shall be the next business day. In
the event of any exercise of the rights represented by this Warrant under
Section 2(a) or 2(b), certificates for the Warrant Shares purchased shall be
delivered by the Company at its expense to the Holder as soon as possible and in
any event within ten days after any such exercise and, unless this Warrant has
been fully exercised, a new Warrant representing the portion of the Warrant
Shares, if any, with respect to which this Warrant has not then been exercised
shall also be issued to the Holder as soon as possible and in any event within
such ten-day period. At the time this Warrant is exercised, the Holder shall
make such representations, and such legends will be placed in certificates
representing the Warrant Shares issued, as may be reasonably required in the
opinion of counsel to the Company to permit the Warrant Shares to be issued
without registration under the Act.
SECTION 3. STOCK FULLY PAID; RESERVATION OF SHARES. All
Warrant Shares that may be issued upon the exercise of the rights represented by
this Warrant will, upon issuance pursuant to the terms and conditions of this
Warrant, be fully paid and nonassessable shares of Common Stock, and free from
all taxes, liens, charges and pre-emptive rights (except for the restrictions
imposed by the legend appearing on the top of the front page of this Warrant).
The Holder shall pay all transfer taxes, if any, attributable to the issuance of
the Warrant Shares upon the exercise of this Warrant. During the period within
which the rights represented by this Warrant may be exercised, the Company will
at all times have authorized, and reserved for the purpose of the issue upon
exercise of the purchase rights evidenced by this Warrant, a sufficient
3
number of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
SECTION 4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES.
The number and kind of Warrant Shares purchasable upon the exercise of this
Warrant and the Warrant Price shall be subject to adjustment from time to time
upon the occurrence of certain events as set forth below:
(a) ADJUSTMENT FOR INITIAL ERRORS AND THE HAPPENING OF CERTAIN
EVENTS.
(i) The Company hereby acknowledges that the number
of Warrant Shares constituting the initial number of securities purchasable upon
the exercise of this Warrant (the "EXERCISE QUANTITY") was calculated based upon
the Company's representation that the number of outstanding shares of Common
Stock of the Company as of the Date of Grant, calculated on a fully diluted
basis using the treasury stock method as contemplated by the Accounting
Principles Board Opinion No. 15 (as referred to in the Statement of Financial
Accounting Standards No. 128) (as so calculated on any date, the "FULLY DILUTED
SHARES"), as of the Date of Grant and before giving effect to the issuance of
any of the Warrants or Warrant Shares, totaled 17,902,392 shares. If for any
reason it shall hereafter be determined that the number of outstanding shares of
Common Stock as of the Date of Grant differed from that amount, then the Company
or the Holder (whichever shall discover any such error) shall notify the other
of such determination in writing, and, if and only if such an adjustment would
result in an increase in the Warrant Shares, the Company shall forthwith (but in
no event more than five days thereafter) reissue all of the outstanding Warrants
with an appropriate proportional adjustment in the number of Warrant Shares to
be effective from the Date of Grant.
(ii) Any adjustments to the Warrant Price and the
number of Warrant Shares issuable upon exercise of the Warrant pursuant to the
other subsections of this Section 4 prior to the date of any increase or
decrease in the Exercise Quantity pursuant to Sections 4(a)(1) or (2) shall be
recalculated as if any such increased or decreased Exercise Quantity had been
the Exercise Quantity since the Date of Grant, but no such adjustment shall
affect the number of Warrant Shares issued upon any exercise of this Warrant
prior to the date any such adjustment is made.
(b) MERGER, SALE, RECLASSIFICATION. In the case of any (i)
consolidation or merger of the Company with or into another entity (other than a
merger or reorganization (A) in which the Company is the continuing corporation
and which does not result in any reclassification or change of the then
outstanding shares of Common Stock or issuance of any dividend or other
distribution of cash, securities or property to Holders of the then outstanding
shares of Common Stock, or (B) resulting solely in a change in par value, or
from par value to no par value, or from no par value to par value, or in a stock
split, subdivision or combination that is the subject of another paragraph in
this Section 4), (ii) sale or other disposition of all or substantially all of
the Company's assets or distribution of property to stockholders (other than
distributions payable out of earnings or retained earnings) or (iii)
reclassification, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of any stock
split, subdivision or combination that is the subject of another paragraph in
4
this Section 4), then the Company shall take all necessary actions (including
but not limited to executing and delivering to the Holder an additional Warrant
or other instrument, in form and substance mutually agreeable to the Company and
the Holder) to ensure that the Holder shall thereafter have the right to
receive, at a total purchase price not to exceed that payable upon the exercise
of the unexercised portion of this Warrant, and in lieu of the shares of Common
Stock previously issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon the
effectiveness of such consolidation, merger, sale or other disposition,
reclassification, change or conversion by a Holder of the number of shares of
Common Stock then purchasable under this Warrant (which, in the case of such a
transaction in which holders of Common Stock were entitled to elect between
different forms of consideration, shall be deemed to be the form of
consideration received by a plurality of the electing holders of Common Stock).
Such new Warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
4. The provisions of this Section 4(b) shall similarly apply to successive
reclassifications, changes and conversions.
(c) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine its outstanding shares of Common Stock, the Warrant
Price shall be proportionately decreased in the case of a split or subdivision
or proportionately increased in the case of a combination, effective at the
close of business on the date the split, subdivision or combination becomes
effective.
(d) STOCK DIVIDENDS AND OTHER DISTRIBUTIONS. If the Company at
any time while this Warrant is outstanding and unexpired shall (i) pay a
dividend with respect to Common Stock payable in Common Stock or (ii) make any
other distribution with respect to Common Stock (except any distribution
specifically provided for in Section 4(b) or Section 4(c)) payable in Common
Stock, then the Warrant Price shall be adjusted, from and after the date of
determination of stockholders entitled to receive any such dividend or
distribution, to equal the price determined by multiplying the Warrant Price in
effect immediately prior to that date of determination by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock (on a
fully diluted basis) outstanding immediately prior to such dividend or
distribution and (ii) the denominator of which shall be the total number of
shares of Common Stock (on a fully diluted basis) outstanding immediately after
such dividend or distribution. No adjustment in respect of any cash dividends
paid by the Company will be made during the term of this Warrant or upon the
exercise of this Warrant.
(e) RIGHTS OFFERINGS. In case the Company shall, at any time
after the Date of Grant, issue to holders of shares of the capital stock of the
Company (solely as a result of such holders' status as stockholders of the
Company) any rights, options or warrants entitling them to subscribe for or
purchase shares of Common Stock (or securities convertible or exchangeable into
Common Stock) at a price per share of Common Stock (or having a conversion or
exchange price per share of Common Stock if a security convertible or
exchangeable into Common Stock) less than the fair market value per share of
Common Stock on the record date for any such issuance (or the date of issuance,
if there is no record date), the Warrant Price to be in effect on and after that
record date (or issuance date, as the case may be) shall be adjusted to equal
the price determined by multiplying the Warrant Price in effect immediately
prior to such record date (or issuance date, as the case may be) by a fraction
(i) the numerator of which shall be the
5
number of Fully Diluted Shares of Common Stock outstanding on that record date
(or issuance date, as the case may be) plus the number of shares of Common Stock
that the aggregate offering price of the total number of shares of Common Stock
so to be offered (or the aggregate initial exchange or conversion price of the
exchangeable or convertible securities so to be offered) would purchase at that
fair market value on that record date (or issuance date, as the case may be) and
(ii) the denominator of which shall be the number of Fully Diluted Shares of
Common Stock outstanding on that record date (or issuance date, as the case may
be) plus the number of additional shares of Common Stock to be offered for
subscription or purchase (or into which the convertible securities to be offered
are initially exchangeable or convertible). In case any such subscription price
may be paid in part or in whole in a form other than cash, the fair market value
of any such consideration shall be determined by the Board of Directors of the
Company in good faith as set forth in a duly adopted board resolution certified
by the Company's Secretary or Assistant Secretary. Such an adjustment shall be
made successively whenever such an issuance occurs; and in the event that any
such rights, options, warrants, or convertible or exchangeable securities are
not so issued or are canceled, expire or cease to be convertible or exchangeable
before they are exercised, converted, or exchanged (as the case may be), then
the Warrant Price shall again be adjusted to be the Warrant Price that would
then be in effect if any such issuance had not occurred, but any such subsequent
adjustment shall not affect the number of Warrant Shares issued upon any
exercise of this Warrant prior to the date any such subsequent adjustment is
made.
(f) OTHER ISSUANCES AND ADJUSTMENTS.
(i) In case the Company or any of its subsidiaries
shall, at any time after the Date of Grant, issue shares of Common Stock or
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or acquire shares of Common Stock (excluding (i)
shares, rights, options, warrants, or convertible or exchangeable securities
outstanding on the Date of Grant or issued in any of the transactions described
in Sections 4(b), 4(c), 4(d) or 4(e), (ii) shares issued upon the exercise of
any such rights, options or warrants or upon conversion or exchange of any such
convertible or exchangeable securities, including, without limitation, the
conversion of any of the Company's preferred stock or Class B common stock;
(iii) shares issued in connection with an underwritten public offering under the
Act; and (iv) shares of Common Stock issued, issuable, reserved or issuance to
directors, officers, employees or consultants of the Company or any subsidiary
in connection with their service as directors, officers, employees or
consultants pursuant to any stock grant, stock option, warrant or other right
issued by the Company and approved by the Board of Directors of the Company
under a duly adopted stock option or incentive plan approved by its stockholders
and in existence on the Date of Grant), at a price per share of Common Stock
(determined in the case of any such rights, options, warrants, or convertible or
exchangeable securities by dividing (x) the total amount received and receivable
by the Company in consideration of the sale and issuance of any such rights,
options, warrants, or convertible or exchangeable securities, plus the total
minimum consideration payable to the Company upon exercise, conversion, or
exchange of the same by (y) the total maximum number of shares of Common Stock
covered by any such rights, options, warrants, or convertible or exchangeable
securities) less than the fair market value per share of Common Stock
(determined in accordance with Section 4(h) and in the case of rights, options,
warrants or convertible or exchangeable securities, determined at the time of
issuance of any such securities rather than upon exercise of any such
securities), in each case on the date the
6
Company fixes the offering price of any such shares, rights, options, warrants,
or convertible or exchangeable securities, then the Warrant Price shall be
adjusted to equal the price determined by multiplying the Warrant Price in
effect immediately prior to any such sale or issuance by a fraction (i) the
numerator of which shall be the sum of (A) the number of Fully Diluted Shares
outstanding immediately prior to any such sale and issuance plus (B) the number
of shares of Common Stock that the aggregate consideration received or
receivable in connection with any such sale or issuance would purchase at that
fair market value per share and (ii) the denominator of which shall be the total
number of Fully Diluted Shares outstanding immediately after any such sale and
issuance. Such an adjustment shall be made successively whenever such a sale or
issuance is made.
(ii) In case the Company or any of its subsidiaries
shall, at any time after the Date of Grant, make or agree to (i) any downward
adjustment in the exercise, exchange or conversion price of, (ii) any increase
in the number of shares of Common Stock issuable upon the exercise, conversion
or exchange of, or (iii) any change in the consideration payable for the
exercise, conversion or exchange of, any rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
acquire shares of Common Stock, other than such adjustment that is specifically
contemplated and required under the terms of any such instrument as of the Date
of Grant, then the Warrant Price shall be adjusted so that it shall equal the
price determined by multiplying the Warrant Price in effect immediately prior to
any such event by a fraction the numerator of which shall be the sum of (A) the
number of shares of Common Stock outstanding immediately prior to any such
event, plus (B) the number of shares of Common Stock to be issued upon any such
exercise, conversion or exchange immediately prior to any such event, multiplied
by the aggregate amount of the fair market value of the consideration to be
received by the Company upon any such exercise, conversion or exchange
immediately thereafter, and the denominator shall be the sum of (X) the number
of shares of Common Stock outstanding immediately after any such event plus (Y)
the number of shares of Common Stock to be issued upon any such exercise,
conversion or exchange immediately after any such event, multiplied by the
aggregate amount of the fair market value of the consideration to be received by
the Company upon any such exercise, conversion or exchange immediately prior to
any such event. Such an adjustment shall be made successively whenever such an
event occurs.
(iii) For the purposes of an adjustment under this
Section 4(f), the maximum number of shares of Common Stock which the holder of
any right, option, warrant or convertible or exchangeable security shall be
entitled to subscribe for or purchase shall be deemed to be issued and
outstanding; furthermore, the consideration received by the Company for the same
shall be deemed to be equal to the price per share of Common Stock (determined
in the case of any such rights, options, warrants, or convertible or
exchangeable securities by dividing (x) the total amount received and receivable
by the Company in consideration of the sale and issuance of any such rights,
options, warrants, or convertible or exchangeable securities, plus the total
minimum consideration payable to the Company upon exercise, conversion, or
exchange of the same by (y) the total maximum number of shares of Common Stock
covered by any such rights, options, warrants, or convertible or exchangeable
securities) multiplied by the number of shares deemed issued and outstanding in
the previous sentence. In case the Company shall issue shares of Common Stock,
or issue or make an adjustment to the exercise, exchange or conversion price of
rights, options, warrants, or convertible or exchangeable securities containing
7
the right to subscribe for or acquire shares of Common Stock for a consideration
consisting, in whole or in part, of consideration other than cash or its
equivalent, then in determining the price per share of Common Stock and the
consideration received by the Company, the Board of Directors of the Company
shall determine, in good faith, the fair market value of said property, and such
determination shall be described in a duly adopted board resolution certified by
the Company's Secretary or Assistant Secretary. In case the Company shall issue
shares of Common Stock, or issue or make an adjustment to the exercise or
conversion price of rights, options, warrants, or convertible or exchangeable
securities containing the right to subscribe for or acquire shares of Common
Stock, together with one or more other security as a part of a unit at a price
per unit, then in determining the price per share of Common Stock and the
consideration received or to be received by the Company, the Board of Directors
of the Company shall determine, in good faith, which determination shall be
described in a duly adopted board resolution certified by the Company's
Secretary or Assistant Secretary, the fair market value of the rights, options,
warrants, or convertible or exchangeable securities then being sold as part of
such unit.
(g) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in
the Warrant Price, the number of Warrant Shares shall be adjusted, to the
nearest whole share, to the product obtained by multiplying the number of
Warrant Shares purchasable immediately prior to any such adjustment in the
Warrant Price by a fraction, the numerator of which shall be the Warrant Price
immediately prior to any such adjustment and the denominator of which shall be
the Warrant Price immediately after any such adjustment.
(h) DETERMINATION OF FAIR MARKET VALUE. In this Warrant, "FAIR
MARKET VALUE" as of a particular date (the "DETERMINATION DATE") shall mean (i)
if the Common Stock is publicly traded at the time of determination, the average
of the closing prices on that day of the Common Stock on all domestic securities
exchanges on which the Common Stock is then listed, or, if there have been no
sales on any such exchange on that day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of that day or, if on any
such day the Common Stock is not so listed, the average of the representative
bid and asked prices quoted on the NASDAQ system as of 4:00 P.M., New York time,
on that day, or if on any day the Common Stock is not quoted on the Nasdaq
system, the average of the highest bid and lowest asked prices on such day in
the domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization, in each such case
averaged over a period of ten days consisting of the day as of which "FAIR
MARKET VALUE" is being determined and the nine consecutive business days prior
to such day (PROVIDED that, if fair market value is being determined as of the
date of a firm commitment public offering of the Common Stock, fair market value
as of that date shall be the offering price for the Common Stock subject to that
public offering); or (ii) if the Common Stock is not publicly traded at the time
of determination, the Common Stock price per share determined by dividing Market
Value by the outstanding number of Fully Diluted Shares of Common Stock.
"MARKET VALUE" shall mean the highest price that would be paid
for the entire common equity of the Company on a going-concern basis in an
arm's-length transaction between a willing buyer and a willing seller (neither
acting under compulsion), using valuation techniques then prevailing in the
securities industry (but without giving effect to any discount in respect of a
minority interest) and assuming full disclosure and understanding of all
relevant information and
8
a reasonable period of time for effectuating any sale. For the purposes of
determining the "MARKET VALUE", (a) the exercise price of options or warrants to
acquire Common Stock that are deemed to have been exercised for the purpose of
determining the issued and outstanding number of Fully Diluted Shares of Common
Stock shall be deemed to have been received by the Company, (b)(i) the
liquidation preference or indebtedness, as the case may be, represented by
securities which are deemed exercised for or converted into Common Stock for the
purpose of determining the issued and outstanding number of Fully Diluted Shares
of Common Stock and (ii) any contractual limitation in respect of the shares of
Common Stock relating to voting rights, shall be deemed to have been eliminated
or canceled and (c) full effect shall be given to any discount that may arise as
the result of the fact that the shares of Common Stock are not publicly traded.
SECTION 5. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price
or the number of Warrant Shares adjusted pursuant to Section 4, the Company
shall mail to the Holders a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the Warrant Price and the number of Warrant Shares after giving effect to
such adjustment.
SECTION 6. FRACTIONAL SHARES. No fractional shares of Common
Stock will be issued in connection with any exercise hereunder, but in lieu of
such fractional shares the Company shall make a cash payment therefor based on
the fair market value (as determined in accordance with Section 4(h)) of a share
of Common Stock on the date of exercise.
SECTION 7. COMPLIANCE WITH SECURITIES ACT; DISPOSITION OF
WARRANT OR WARRANT SHARES.
(a) COMPLIANCE WITH SECURITIES ACT. The Holder, by acceptance
of this Warrant, agrees that this Warrant and any Warrant Shares issued upon
exercise of this Warrant are being or will be acquired for investment and that
the Holder will not offer, sell or otherwise dispose of this Warrant or any
Warrant Shares issued upon exercise of this Warrant except under circumstances
that will not result in a violation of the Act. Upon exercise of this Warrant,
unless the Warrant Shares to be received upon any such exercise are intended to
be included in a registration statement under the Act, the Holder shall confirm
in writing, by executing the form attached as Schedule 1 to Exhibit A, that the
Warrant Shares so purchased are being acquired for investment and not with a
view toward distribution or resale in violation of the Act. Notwithstanding the
foregoing, the Company agrees that the Initial Holder may transfer all or any
portion of this Warrant prior to the Distribution Date to a person who is also
becoming a Lender under the Credit Agreement by reason of the Holder's transfer
to that person all or any portion of its loan under the Credit Agreement, any
such transfer of all or a part of this Warrant to be proportional to the
transfer of that loan (the "INITIAL TRANSFER"). Subject to Section 7(b), all
Warrants issued upon any transfer of all or any part of this Warrant shall bear
the same legend as set forth on the face of this Warrant. Subject to Section
7(b), all Warrant Shares issued upon exercise of this Warrant or upon transfer
of any Warrant Share shall be stamped or imprinted with a legend in
substantially the following form:
9
"THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED UNLESS (1) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (2) THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO
THE COMPANY, THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED
OR THE HOLDER OR THE COMPANY HAS OBTAINED A NO-ACTION LETTER
FROM THE APPROPRIATE GOVERNMENTAL AUTHORITY TO THE SAME EFFECT
OR (3) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT UNDER RULE 144 (OR ANY SUCCESSOR
PROVISION) OF THE ACT. THESE SHARES ARE ALSO SUBJECT TO, AND
ENTITLED TO CERTAIN RIGHTS UNDER, THE WARRANT AND REGISTRATION
RIGHTS AGREEMENT DATED AS OF JULY ___, 2000 (THE "WARRANT
AGREEMENT") BETWEEN SALEM COMMUNICATIONS CORPORATION, THE
INSTITUTIONS NAMED IN THE WARRANT AGREEMENT AND ING (U.S.)
CAPITAL LLC (IN ITS CAPACITY AS THE ADMINISTRATIVE AGENT (AS
DEFINED IN THE WARRANT AGREEMENT))."
In addition, in connection with the issuance of this Warrant,
the Holder specifically represents to the Company by acceptance of this Warrant
as follows:
(i) The Holder is aware of the Company's business
affairs and financial condition and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this
Warrant. The Holder is acquiring this Warrant for its own account for investment
purposes only and not with a view to, or for resale in connection with any
"distribution" of this Warrant for purposes of the Act in violation of the Act.
The Holder acknowledges that the Holder, or the Holder's representatives, if
any, has been given access to information about the Company, has had an
opportunity to verify the accuracy of such information and to ask questions of
the Company's officers and directors and has received answers to the Holder's
satisfaction. The Holder understands that the valuation and terms of the Warrant
have been made solely through and upon negotiations between the Company and the
Holder, and not by an independent accountant, auditor, investment banker or
third party. The Holder represents that the Holder has evaluated the fairness of
the terms and conditions of the Warrant to the extent the Holder has deemed
necessary. In addition, the Holder is not purchasing the Warrant as a result or
subsequent to: (1) any advertisement, article, notice, or other publication
published in any newspaper, magazine, or similar broadcast media over the
internet, television, or radio or (2) any seminar or meeting whose attendees,
including the Holder, were invited as a result of, subsequent to, or pursuant
to, any general solicitation.
(ii) The Holder understands that this Warrant and
the Warrant Shares have not been registered under the Act in reliance upon a
specific exemption from the registration requirements of the Act, that depends
upon, among other things, the bona fide nature of the Holder's investment intent
as expressed above.
10
(iii) The Holder understands that this Warrant and
the Warrant Shares may be held indefinitely unless subsequently registered under
the Act and any applicable state securities laws or unless exemptions from
registration are otherwise available.
(iv) The Holder is aware of the provisions of Rule
144 promulgated under the Act, which, in substance, permit limited public resale
of "restricted securities" acquired, directly or indirectly, from the issuer of
those securities (or from an affiliate of any such issuer), in a non-public
offering subject to the satisfaction of certain conditions, if applicable,
including, among other things: the availability of certain public information
about the Company, the resale occurring not less than one year after the party
has purchased and paid for the securities to be sold; the sale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker and the amount of securities being sold during any
three-month period not exceeding the specified limitations stated in that rule.
(v) The Holder understands that at the time the
Holder may wish to sell this Warrant and the Warrant Shares there may be no
public market on which to make such a sale, and that, even if such a public
market then exists, the Company may not be satisfying the current public
information requirements of Rule 144, and that, in such an event, the Holder may
be precluded from selling this Warrant and the Warrant Shares under Rule 144
even if the one-year minimum holding period has been satisfied.
(b) DISPOSITION OF WARRANT OR WARRANT SHARES. On and after the
Distribution Date, this Warrant and the Warrant Shares may be detached and sold
or otherwise transferred, in whole or in part, separately from the loans made
pursuant to the Credit Agreement. If the Holder wishes to offer, sell or
otherwise dispose of this Warrant or any Warrant Shares acquired pursuant to the
exercise of this Warrant, the Holder agrees to deliver to the Company, prior to
the registration of any such transfer, a notice indicating its intention to do
so and a written opinion of the Holder's counsel (which may be in-house counsel
for the Holder), if reasonably requested by the Company, to the effect that any
such offer, sale or other disposition may then be effected without registration
or qualification under the Act of this Warrant or any such Warrant Shares and
indicating whether or not under the Act certificates for this Warrant or such
Warrant Shares to be sold or otherwise disposed of require any restrictive
legend as to applicable restrictions on transferability in order to ensure
compliance with applicable law; PROVIDED that the foregoing requirement of an
opinion shall not apply: (i) to any Initial Transfer, (ii) if any such offer,
sale or other disposition is to be made pursuant to an effective registration
statement under the Act (whether under the Warrant Agreement or otherwise),
(iii) if the Holder delivers to the Company (or the Company has otherwise
obtained) a no-action letter from the SEC (or other appropriate Governmental
Authority) to the same effect as the opinion described above or (iv) if any such
offer, sale or other disposition is made in accordance with Rule 144 under the
Act and the Company has been provided with reasonable assurances that the
provisions of Rule 144 have been satisfied. If the Company determines that the
opinion of counsel for the Holder is not satisfactory to the Company, the
Company shall so notify the Holder in writing as promptly as possible after that
determination has been made (any such opinion in respect of which no such notice
is delivered to the Holder within ten days of the delivery of the opinion to the
Company shall be deemed to be satisfactory to the Company). If (x) such an
opinion of the Holder indicates that no restrictive legend is required, (y) the
Company has delivered to the Holder the opinion of counsel referred to in
Section 4 of the Warrant Agreement or clauses (ii), (iii) or (iv)
11
above are applicable, the Company shall deliver to the Holder a new certificate
or certificates for this Warrant or any Warrant Shares without the restrictive
legend otherwise called for by this Warrant and the restrictions of this Section
7 shall no longer apply. The Company may issue stop transfer instructions to its
transfer agent or, if acting as its own transfer agent, the Company may stop
transfer on its corporate books, in connection with any offer, sale or
disposition not made in compliance with the foregoing.
SECTION 8. RIGHTS AS STOCKHOLDERS; INFORMATION. The Holder, as
such, shall not be entitled to vote or receive dividends or be deemed a holder
of Common Stock or any other securities of the Company that may at any time be
issuable on the exercise of this Warrant for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of the directors or upon any matter submitted to a vote of
stockholders, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise, until this Warrant shall have been exercised
and the Warrant Shares shall have become deliverable. Notwithstanding the
foregoing, the Company will transmit to the Holder such information, documents
and reports as are generally distributed to the holders of any class or series
of the securities of the Company concurrently with the distribution of any such
material to the stockholders.
SECTION 9. REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to the Holder of this Warrant as follows:
(a) The representations and warranties of the Company, to the
extent applicable to the Warrant Agreement, this Warrant and the Warrant Shares
are true and correct as of the Date of Grant; and
(b) As of the Date of Grant, the authorized capital stock of
the Company (of all classes and series, including Common Stock and preferred
stock), the par value of that stock, and the issued and outstanding amounts of
that stock, are as set forth on Schedule 9(b). The issuance and sale of all such
interests was in compliance with all applicable federal and state securities
laws, and all issued and outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid, and non-assessable. Other than the
Warrants and other than as specified on Schedule 9(b), as of the Date of Grant
there are no Equity Rights (as defined in the Credit Agreement) relating to the
issued or unissued shares of the Company's capital stock or other securities,
including any right of conversion or exchange under any outstanding security or
other instrument. Other than the Warrant Agreement, the Warrant and the Warrant
Shares are not and will not be subject to any voting trust agreement or other
contract, agreement, arrangement, commitment or understanding to which the
Company is a party, including any such agreement, arrangement, commitment or
understanding restricting or otherwise relating to the voting or disposition of
Common Stock.
SECTION 10. MODIFICATION AND WAIVER. Subject to Section 22,
this Warrant and any provision of may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement is sought.
12
SECTION 11. CERTAIN RESTRICTIONS ON EXERCISE OF THIS WARRANT.
No part of this Warrant may be exercised while held by any bank organized under
the laws of the United States of America or any state or by the United States
office of any "foreign bank" (within the meaning of Section 1(b)(1) or 1(b)(3)
of the International Banking Act of 1978 (the "IBA") that is a "branch" or an
"agency" within the meaning of Section 1(b)(1) or 1(b)(3) of the IBA, in each
case to the extent that the laws applicable to any such bank or foreign bank
would not permit it to hold the Warrant Shares issuable upon any such exercise.
SECTION 12. NOTICES. Except where telephonic notice is
expressly permitted, all notices, requests and other communications provided for
in this Warrant shall be given or made in writing and delivered by hand or
courier service, mailed by certified or registered mail or sent by telecopy to
the intended recipient as specified in the signature pages of this Warrant or,
as to any party, at such other address as is designated by that party in a
notice to each other party. All such communications shall be deemed to have been
duly given or made upon receipt.
SECTION 13. SUCCESSORS AND ASSIGNS. This Warrant shall be
binding upon and inure to the benefit of the parties to this Warrant and their
respective successors and permitted assigns.
SECTION 14. LOST WARRANTS OR STOCK CERTIFICATES. The Company
covenants to the Holder that, upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any loss, theft or destruction, upon receipt of an executed
lost securities bond or indemnity reasonably satisfactory to the Company, or in
the case of any such mutilation upon surrender and cancellation of this Warrant,
the Company will promptly make and deliver a new Warrant, of like tenor, in lieu
of the lost, stolen, destroyed or mutilated Warrant.
SECTION 15. CAPTIONS. The captions and section headings
appearing in this Warrant are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Warrant.
SECTION 16. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW YORK.
SECTION 17. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Each of the respective representations and warranties of the Company
and the Holder contained in this Warrant shall survive the Date of Grant, the
exercise or conversion of all or part of this Warrant and the termination or
expiration of any rights under this Warrant. Each of the respective agreements
of each of the Company and the Holder contained in this Warrant shall survive
indefinitely until, by their respective terms, they are no longer operative.
SECTION 18. REMEDIES. In case any one or more of the
agreements contained in this Warrant shall have been breached, the Holder (in
the case of a breach by the Company) or the Company (in the case of a breach by
the Holder) may proceed to protect and enforce its
13
rights either by suit, including, but not limited to, an action for damages as a
result of any such breach and an action for specific performance of any such
agreement.
SECTION 19. ACCEPTANCE. Receipt of this Warrant by the Holder
shall constitute acceptance of and agreement to its terms and conditions.
SECTION 20. NO IMPAIRMENT OF RIGHTS. The Company will not, by
amendment of its Charter or through any other means, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but the Company
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder against impairment.
SECTION 21. AMENDMENT. This Warrant may be amended by written
agreement of the Company and Majority Holders, and such amendment shall be
binding on the Holder; PROVIDED, HOWEVER, that without the consent of the Holder
no such amendment may (i) increase the Warrant Price, (ii) decrease the number
of Warrant Shares (other than pursuant to any adjustments provided in this
Warrant ), (iii) change the Distribution Date or the Expiration Date or (iv)
adversely impact any right of the Holder in a manner different than the other
holders of Warrants issued pursuant to the Warrant Agreement.
SECTION 22. WARRANT AGREEMENT. The Company shall provide to
the Holder, upon written request, a true copy of the Warrant Agreement, as
amended and modified to date.
SECTOPM 23. OFFICE OF THE COMPANY. So long as this Warrant
remains outstanding, the Company shall maintain an office where this Warrant may
be presented for exercise, transfer, division or combination as provided in this
Warrant either directly at the location of its executive office or indirectly
through a transfer agent for the Common Stock. Currently, such an office is
maintained at 4880 Santa Rosa Road, Suite 300, Camarillo, California 93012.
SECTION 21. AGREEMENTS SUPERSEDED. This Warrant supersedes all
prior agreements and understandings, written or oral, between the parties with
respect to the subject matter of this Warrant.
[The remainder of this page is intentionally left blank.
Signature pages follow.]
14
IN WITNESS WHEREOF, the Company has executed this Warrant as
of the day and year first above written.
SALEM COMMUNICATIONS CORPORATION
By: ____________________________________________
Name: __________________________________________
Title: _________________________________________
ADDRESS:
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Telephone: (805) 987-0400
Facsimile: (805) 982-8570
Attention: Dirk Gastaldo
Vice President and Chief
Financial Officer
SCHEDULE 9(B)
AUTHORIZED CAPITAL STOCK OF THE COMPANY
Authorized Issued
Class A Common Stock, 80,000,000 17,902,392
$0.01 par value
Class B Common Stock, 20,000,000 5,553,696
$0.01 par value
Preferred Stock, 10,000,000 0
undesignated
EXHIBIT A
NOTICE OF EXERCISE
To: Salem Communications Corporation
1. The undersigned hereby elects to purchase _____ shares of
Common Stock of Salem Communications Corporation pursuant to the terms of the
attached Warrant, and tenders with this Notice payment of the purchase price of
those shares in full.
2. Please issue a certificate or certificates representing
those shares in the name of the undersigned or in such other name or names as
are specified below:
----------------------------- -----------------------------
(Name)
-----------------------------
(Address)
3. The undersigned represents that those shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution of those shares and that
the undersigned has no present intention of distributing or reselling such
shares in violation of the Securities Act of 1933. The undersigned has executed
an Investment Representation Statement attached as Schedule 1 to this Notice.
____________________ (Signature) __________________(Date)
4. Please issue a new Warrant for the unexercised portion of
the attached Warrant in the name of the undersigned or in such other name as is
specified below:
5. I elect to convert this Warrant pursuant to the cashless
Conversion Right described in Section 2(c) of the Warrant Agreement for
___________ Warrant Shares. (check here)
Date: _________________________
By: (Warrantholder)___________________
Name: (Print)_________________________
Its:___________________________________
SCHEDULE 1
INVESTMENT REPRESENTATION STATEMENT
Purchaser:
Company: Salem Communications Corporation
Security: Common Stock
Amount:
Date:
In connection with the purchase of the above-listed securities
(the "REGISTRABLE SECURITIES"), the undersigned (the "PURCHASER") represents to
the Company as follows:
(A) The Purchaser is aware of the Company's business affairs and
financial condition and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire
the Registrable Securities. The Purchaser is acquiring Registrable
Securities for its own account for investment purposes only and not
with a view to, or for resale in connection with any "distribution" of
the Registrable Securities for purposes of the Securities Act of 1933
(the "ACT") in violation of the Act. The Purchaser acknowledges that
the Purchaser, or the Purchaser's representatives, if any, has been
given access to information about the Company, has had an opportunity
to verify the accuracy of such information and to ask questions of the
Company's officers and directors and has received answers to the
Purchaser's satisfaction.
(B) The Purchaser understands that Registrable Securities have
not been registered under the Act in reliance upon a specific
exemption from the registration requirements of the Act, that depends
upon, among other things, the bona fide nature of the Purchaser's
investment intent as expressed above.
(C) The Purchaser understands that Registrable Securities may be
held indefinitely unless subsequently registered under the Act and any
applicable state securities laws or unless exemptions from
registration are otherwise available. In addition, the Purchaser
understands that the certificate evidencing the Registrable Securities
will be imprinted with the legend referred to in the Warrant under
which the Registrable Securities are being purchased.
(D) The Purchaser is aware of the provisions of Rule 144
promulgated under the Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly,
from the issuer of those securities (or from an affiliate of any such
issuer), in a non-public offering subject to the satisfaction of
certain conditions, if applicable, including, among other things: the
availability of certain public information about the Company, the
resale occurring not less than one year after the party has purchased
and paid for the securities to be sold; the sale being made through a
broker in
an unsolicited "broker's transaction" or in transactions directly with
a market maker and the amount of securities being sold during any
three-month period not exceeding the specified limitations stated in
that rule.
(E) The Purchaser understands that at the time the Purchaser may
wish to sell the Registrable Securities there may be no public market
on which to make such a sale, and that, even if such a public market
then exists, the Company may not be satisfying the current public
information requirements of Rule 144, and that, in such an event, the
Purchaser may be precluded from selling the Registrable Securities
under Rule 144 even if the one-year minimum holding period has been
satisfied.
Purchaser:_________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
Warrant Shares set forth below:
NAME AND ADDRESS OF ASSIGNEE NUMBER OF WARRANT SHARES
------------------------------ ------------------------
and does hereby irrevocably constitute and appoint _____________________
Attorney to make sure transfer on the books of _____________________, maintained
for the purpose, with full power of substitution in the premises.
Dated: ______________________
---------------------------
Signature
---------------------------
Witness
NOTICE: The signature to the assignment must correspond with the name
as written upon the face of the Warrant in every particular,
without alteration or enlargement or any change whatever.
The signature to this assignment must be guaranteed by a bank
or trust company having an office or correspondent in New
York, New York or by a firm having membership on the New York
Stock Exchange.
EXHIBIT F
EXECUTION COPY
STATION LICENSE MANAGEMENT AGREEMENT
This STATION LICENSE MANAGEMENT AGREEMENT (this "AGREEMENT") dated
as of August 24, 2000, is made between Salem Communications Acquisition
Corporation, a Delaware corporation ("ACQUISITIONCO"), and SCA License
Corporation, a Delaware corporation (the "LICENSE SUBSIDIARY").
RECITALS
A. AcquisitionCo holds the licenses identified on Annex 1 (the
"LICENSES") issued by the Federal Communications Commission (the "FCC") pursuant
to the Federal Communications Act of 1934 (the "COMMUNICATIONS ACT") to operate
Denver, Colorado radio station KALC-FM (the "STATION").
B. AcquisitionCo, the owner of all of the stock of the
License Subsidiary, owns all of the other assets and facilities (the
"FACILITIES") used or useful in the operation of the Station.
C. Within 60 days after the date of this Agreement, AcquisitionCo
will cause all of the Licenses to be transferred to the License Subsidiary and
will, within that time period, obtain or cause the License Subsidiary to obtain,
all necessary approvals from the FCC in accordance with the regulations of the
FCC under the Communications Act and all other governmental approvals necessary
for the transfer of the Licenses from AcquisitionCo to the License Subsidiary.
D. The License Subsidiary and AcquisitionCo desire to enter into
this Agreement to ensure that, on and after the date on which the transfer of
the Licenses to the License Subsidiary is effected (the "TRANSFER DATE"),
AcquisitionCo manages the Station's operations in accordance with policies
established by the License Subsidiary and in accordance with the regulations of
the FCC under the Communications Act and all other governmental rules applicable
to the License Subsidiary by reason of the License Subsidiary being a licensee
of any licenses issued by the FCC pursuant to the Communications Act (the "FCC
REGULATIONS").
ACCORDINGLY, the parties agree as follows:
Section 1. ACQUISITIONCO DUTIES. Subject to the provisions of
Section 2 of this Agreement, AcquisitionCo shall manage and direct the
day-to-day operations of the Station, including, without limitation, providing
staffing, determining the Station's programming schedule, selling advertising
time, operating and maintaining the Facilities, and assuring compliance with the
FCC Regulations. AcquisitionCo shall operate and maintain the Facilities in such
manner as is, and shall operate and maintain such equipment and hire and
supervise such employees as are, necessary to the fulfillment of its
responsibilities under this Agreement. All expenses and capital costs incurred
in operating and maintaining the Station shall be paid by AcquisitionCo, and all
advertising and other receipts collected in operating the Station shall be
retained by AcquisitionCo. AcquisitionCo shall not be entitled to any further
compensation for the services rendered by it under this Agreement.
Section 2. CONTROL BY LICENSE SUBSIDIARY. The License Subsidiary
shall at all times from and after the Transfer Date exercise ultimate control
over the programming, personnel, operations and policies of the Station and,
from and after the Transfer Date, AcquisitionCo shall operate the Station in
compliance with that control. From and after the Transfer Date, AcquisitionCo
shall provide the License Subsidiary with such books of account, records and
reports, including quarterly programming schedules and reports, as the License
Subsidiary may reasonably request from time to time, and AcquisitionCo shall
afford the License Subsidiary and its officers and employees access at all times
to all aspects of the Station's operations. Without limiting the foregoing
reservation of control, the License Subsidiary shall have the right (a) to
require the deletion of any program if the License Subsidiary believes that its
transmission would be contrary to the public interest, (b) to require the
transmission of any program if the License Subsidiary believes that its
transmission would serve the public interest and (c) to relieve any person of
his or her duties at the Station if the License Subsidiary believes that his or
her conduct is inconsistent with the policies or rules of the License Subsidiary
or the FCC or is otherwise inconsistent with the public interest. This Section 2
shall be construed so as to vest in License Subsidiary from and after the
Transfer Date all powers that may be necessary for discharge of its
responsibilities as a licensee under the FCC Regulations.
Section 3. COMPLIANCE WITH LAW. AcquisitionCo shall at all
times operate the Station in compliance with the FCC Regulations, as in
effect from time to time.
Section 4. MODIFICATION OF FACILITIES. AcquisitionCo may, at its
discretion, modify the Station's Facilities from time to time, at its expense,
subject to (from and after the Transfer Date) the License Subsidiary's approval
of the modifications. If prior FCC approval of such modifications is required,
AcquisitionCo shall obtain the approval of the FCC or, from and after the
Transfer Date, shall prepare an appropriate application for the License
Subsidiary to sign and file with the FCC, and no such change shall be
implemented prior to the grant of FCC consent. Any application for a license to
cover any construction permit shall similarly be obtained by AcquisitionCo or,
from and after the Transfer Date, prepared by AcquisitionCo for signature and
filing by the License Subsidiary.
Section 5. FCC FILINGS. From and after the Transfer Date,
AcquisitionCo shall cooperate with the License Subsidiary in furnishing any
information that may be requested by the FCC in connection with the operation of
the Station, including, without limitation, any technical or engineering
information. AcquisitionCo shall file with the FCC or, from and after the
Transfer Date, shall prepare, for the License Subsidiary's signature and filing
with the FCC, an appropriate license renewal application and such other reports,
documents and filings as may be necessary from time to time to keep in force and
effect all FCC authorizations for operating the Station. The License Subsidiary
shall cooperate with AcquisitionCo in signing and filing such license renewal
applications and other reports, documents and filings as AcquisitionCo shall
from time to time prepare and submit to the License Subsidiary.
2
Section 6. NOTICES. All notices under this Agreement shall be given
in writing by first class United States mail, postage prepaid, addressed as
follows, or to such other address as either party may specify from time to time:
If to the License Subsidiary: SCA License Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Telephone: (805) 343-4531
Telecopy: (805) 384-4532
Attention: Dirk Gastaldo, Vice President
and Chief Financial Officer
If to AcquisitionCo: Salem Communications Acquisition Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Telephone: (805) 343-4531
Telecopy: (805) 384-4532
Attention: Dirk Gastaldo, Vice President
and Chief Financial Officer
Section 7. TERM. The term of this Agreement shall begin on the date
of this Agreement and shall terminate upon the occurrence of any of the
following events (unless earlier terminated pursuant to the provisions of
Section 8 of this Agreement):
(a) revocation or expiration without renewal of the License
held by the License Subsidiary to operate the Station; or
(b) mutual agreement of the parties to terminate this Agreement.
Section 8. TERMINATION. The License Subsidiary shall have the right
to terminate this Agreement by written notice to AcquisitionCo at any time
during the term of this Agreement upon the occurrence of any of the following
events:
(a) any material failure by AcquisitionCo to perform any of
its obligations under this Agreement;
(b) the insolvency of AcquisitionCo, the appointment of a
receiver of the property of AcquisitionCo or any assignment for the
benefit of creditors of AcquisitionCo;
(c) the filing of a voluntary or involuntary petition by or
against AcquisitionCo under the Bankruptcy laws of the United States of
America; or
(d) the foreclosure of any lien or security interest in, or the
placement or issuance of any levy, writ of attachment, writ of garnishment, writ
of execution or similar process against, AcquisitionCo or any property of
AcquisitionCo (including the shares of stock of the License Subsidiary owned by
AcquisitionCo) or securities representing an ownership interest in
AcquisitionCo.
3
Section 9. ASSIGNMENT. AcquisitionCo shall not assign this Agreement
or any of AcquisitionCo's rights or obligations under this Agreement or sell or
transfer the Facilities without the prior written consent of the License
Subsidiary, and any attempted assignment, sale or transfer by AcquisitionCo not
in compliance with this provision shall, at the License Subsidiary's option, be
null and void; PROVIDED, HOWEVER, that AcquisitionCo may replace portions of the
Facilities from time to time provided that such replacements do not impair the
Station's operations. Nothing in this Agreement shall be interpreted to prevent
AcquisitionCo from granting a lien, security interest or other encumbrance on
any of the Facilities or either party to grant a lien, security interest or
other encumbrance on its rights or obligations under this Agreement. This
Agreement shall bind and inure to the benefit of the permitted successors and
assigns of the parties.
Section 10. GOVERNING LAW. This Agreement shall be governed
by and construed in accordance with the law of the State of California
applicable to contracts made and performed in the State of California.
Section 11. CONSTRUCTION. It is the intent of the parties
that operation of the Station under this Agreement comply with the FCC
Regulations, and all provisions of this Agreement shall be so construed.
Section 12. SEVERABILITY. If any provision of this Agreement is
declared void or invalid by any governmental authority with jurisdiction over
this Agreement, then the remainder of this Agreement shall remain in full force
and effect without the offending provision, provided that such remainder
substantially reflects the original agreement of the parties.
Section 13. AMENDMENTS. This Agreement represents the entire
understanding of the parties hereto with respect to the subject matter of this
Agreement and may be amended only by a writing signed by both parties.
Section 14. PRIOR AGREEMENTS SUPERSEDED. This Agreement
shall supersede all prior agreements between the parties hereto relating
to the management or operation of the Station.
[The remainder of this page is intentionally left blank.
Signature pages follow.]
4
IN WITNESS WHEREOF THIS AGREEMENT, the parties have executed this
Agreement as of the date first above written.
SALEM COMMUNICATIONS ACQUISITION
CORPORATION
By:__________________________________
Name:
Title:
SCA LICENSE CORPORATION
By:__________________________________
Name:
Title:
ANNEX 1
STATION LICENSES
----------------
EXHIBIT G-1
[FORM OF OPINION OF COUNSEL TO THE OBLIGORS]
ING (U.S.) Capital LLC, as
Administrative Agent
55 East 52nd Street
New York, New York 10055
Each of the Lenders named on Schedule A
hereto
RE: SALEM COMMUNICATIONS CORPORATION
Ladies and Gentlemen:
I have acted as legal counsel and Secretary to Salem Communications Corporation,
a Delaware corporation (the "Borrower"), Salem Communications Acquisition
Corporation, a Delaware corporation (the "Company") and their subsidiaries in
connection with:
(i) the Credit Agreement dated as of August __, 2000 (the "Credit
Agreement") between the Borrower, ING (U.S.) Capital LLC, as
Administrative Agent (the "Agent"), the Bank of New York, as
Syndication Agent, Fleet National Bank, as Documentation Agent, and
certain lenders party thereto (the "Lenders" and collectively with the
Agent the "Credit Parties");
(ii) the Promissory Notes dated as of the date hereof (the
"Notes") made by the Borrower payable to the order of the Lenders;
(iii) the Station License Mangement Agreement dated as of the
date hereof (the "Station License Management Agreement") by and
between the Company and its wholly-owned subsidiary SCA License
Corporation, a Delaware corporation ("SCA" and collectively with the
Company, the "Guarantors");
(iv) the Security Agreement dated as of the date hereof (the
"Company Security Agreement") by and between the Borrower and the
Agent;
(v) the Guarantee and Security Agreement dated as of the date
hereof (the "Guarantee and Security Agreement") by and between the
Company, SCA and the Agent; and
(vi) the Warrant and Registration Rights Agreement dated as of
the date hereof (the "Warrant Agreement") between the Borrower, the
Agent and the institutions party thereto as Warrant Holders (the
"Warrant Holders").
Each capitalized term used and not defined herein has the meaning assigned to
that term in the Credit Agreement. The Borrower and the Guarantors are
collectively referred to as the
August ___, 2000
Page 2
"Obligors." The Company Security Agreement and the Guarantee and Security
Agreement are collectively referred to herein as the "Collateral Documents." The
Credit Agreement, the Notes, the Station Management Agreement, the Collateral
Documents and the Warrant Agreement are collectively referred to as the
"Financing Documents." The Uniform Commercial Code as enacted and in effect in
the State of New York is referred to herein as the "NYUCC." All terms defined in
the NYUCC are used herein as defined therein.
In rendering the opinions expressed below, I have assumed with your permission
that:
a) The documents submitted to me as originals are authentic and
the documents submitted to me as certified or reproduction
copies conform to the originals;
b) Each of the parties to the Financing Documents (other than
the Obligors) has all requisite power and authority to
execute, deliver and perform its obligations under each of
the Financing Documents to which it is a party, the
execution and delivery of such Financing Documents by such
party and performance of its obligations thereunder have
been duly authorized by all necessary action and do not
violate any law, regulation, order, judgment or decree
applicable to such party, and such Financing Documents are
legal, valid and binding obligations of such party,
enforceable against it in accordance with their respective
terms;
c) There are no agreements or understandings between or among
Credit Parties, the Obligors or third parties that would
expand, modify or otherwise affect the terms of the
Financing Documents or the respective rights or obligations
of the parties thereunder (except for that certain letter
agreement between the Agent and the Borrower with an
effective date of August __, 2000, as to which I express no
opinion hereunder);
d) The Warrants are held for the account of the Warrant Holders
and not with a view to, or in connection with, the
distribution thereof within the meaning of the Securities
Act of 1933, as amended (the "Securities Act");
e) Each Warrant Holder has access to such information as it
deems necessary to make its investment decisions with
respect to its Warrant; and
f) The Warrant Holders are in compliance with the provisions
set forth in Section 7 of the Warrants, each Warrant Holder
and each other person to whom offers were made is an
"accredited investor" within the meaning of Regulation D
promulgated under the Securities Act, none of the Warrant
Holders has taken or intends to take any action that would
subject the issuance and sale of the Warrants to the
registration requirements of the
August ___, 2000
Page 3
Securities Act, and the offer and sale of the Warrants
occurred pursuant to private negotiations between the
Obligors and the Warrant Holders.
In rendering this opinion, I; have made such inquiries and examined, among other
things, originals or copies, certified or otherwise identified to my
satisfaction, of such records, agreements, certificates, instruments and other
documents as I have considered necessary or appropriate for purposes of this
opinion. As to certain factual matters, I have relied upon the representations
and warranties of the Obligors in the Financing Documents, certificates of
officers of the Obligors or certificates obtained from public officials.
Based on the foregoing and in reliance thereon, and subject to the assumptions,
exceptions, qualifications and limitations set forth herein, I am of the opinion
that:
(i) The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power to execute and deliver, and perform its obligations under,
the Financing Documents to which it is a party and to borrow under the Credit
Agreement. The Borrower is duly qualified to do business as a foreign
corporation, and is in good standing, in the State of California.
(ii) Each other Obligor is a corporation duly incorporated,
validly existing and in good standing under the laws the jurisdiction indicated
opposite its name on the attached Schedule 1, and has the corporate power to
execute and deliver, and to perform its obligations under, the Financing
Documents to which it is a party. Each of the Company and SCA is duly qualified
to do business as a foreign corporation, and is in good standing in the State of
California.
(iii) The execution and delivery by each Obligor of, and the
performance by it of its obligations under, the Financing Documents to which it
is a party and the borrowing by the Borrower under the Credit Agreement have
been duly authorized by all necessary corporate action on the part of that
Obligor.
(iv) Each Obligor has duly executed and delivered the
Financing Documents to which it is a party.
(v) The Station License Management Agreement will, when
effective in accordance with its terms, constitute the legal, valid and binding
obligation of each Obligor which is a party thereto, enforceable against each
such Obligor in accordance with its respective terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
transfer or other similar laws relating to or affecting the rights of creditors
generally and is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including without limitation (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing. The choice of the law
of the State of New York to govern the Financing Documents (other than the
Station
August ___, 2000
Page 4
Management License Agreement) will be honored by the courts of the State of
California or a federal court applying California law, subject, in the context
of any particular dispute, to the application of any fundamental public policy
of the jurisdiction the laws of which would apply in the absence of that stated
choice.
(vi) No authorization, consent or other approval of, or
registration, declaration or other filing with, (A) any governmental authority
of the United States of America, the State of California or the State of New
York or (B) under the Delaware General Corporation Law, any governmental
authority of the State of Delaware is required on the part of any Obligor for
the execution and delivery by it of, or for the performance by that Obligor of
its obligations under, the Financing Documents to which it is a party or for the
borrowing by the Borrower under the Credit Agreement, except for the FCC
Approval contemplated in connection with the transfer of certain FCC Licenses
from the Company to SCA as required under the Credit Agreement, and as may be
necessary for the creation, perfection or priority of the Liens of the Financing
Documents.
(vii) The execution and delivery by each Obligor of, and the
performance by that Obligor of its obligations under, the Financing Documents to
which it is a party and the borrowing by the Borrower under the Credit Agreement
do not and will not (a) violate any law, rule or regulation of the United States
of America, the State of California or the State of New York applicable to that
Obligor or the Delaware General Corporation Law, (b) violate any provision of
the Certificate of Incorporation or bylaws of that Obligor or (c) result in a
breach of, constitute a default under, require consent under, result in or
require the creation of any lien on any property of any Obligor (other than the
Liens of the Financing Documents) or result in the acceleration or required
prepayment of any indebtedness pursuant to the terms of, any agreement,
instrument or order (including any arbitral award) listed on the attached
Schedule 2. No Obligor has any contractual liability under the Indenture.
(ix) The use of the proceeds of the Loans to be made on the
date of this opinion letter for the purposes specified in the Credit Agreement
does not violate Regulation U of the Board of Governors of the Federal Reserve
System.
(x) No Obligor is required to register as an investment
company or a company controlled by an investment company within the meaning of
the Investment Company Act of 1940.
(xi) The issued and outstanding capital stock of each of
HoldCo and AcquisitionCo consists of 1,000 shares of common stock, respectively,
all shares of that respective capital stock are validly issued, duly authorized
and non-assessable shares of that respective capital stock, the certificates
representing 100% of those shares are registered in the name of the Borrower and
neither the face of any of those certificates nor the stock records of HoldCo or
AcquisitionCo show any Equity Rights or adverse claim as to any such shares. The
issued and outstanding capital stock of SCA consists of 1,000 shares of common
stock, all shares of that capital
August ___, 2000
Page 5
stock are validly issued, duly authorized and non-assessable shares of that
capital stock, the certificate representing 100% of those shares is registered
in the name of AcquisitionCo and neither the face of that certificate nor the
stock records of the SCA show any Equity Rights or adverse claim as to any such
shares.
(xii) The shares of Company Stock of Borrower to be issued
upon exercise of the Warrants pursuant to the Warrant Agreement will, when
issued and paid for in accordance with the Warrants, be validly issued, duly
authorized and non-assessable shares of Company Stock.
I advise you that, to my current actual knowledge, there are no material pending
or threatened actions, suits, proceedings or investigations against any Obligor
in any court or by or before any arbitrator or governmental authority and there
are no matters required to be disclosed on Schedule 6.06 to the Credit Agreement
that have not been disclosed thereon. For purposes of the preceding sentence,
the phrase "to my current actual knowledge" is intended to indicate that, during
the course of my representation of the Obligors, no information that would give
me current actual knowledge of the inaccuracy of the statements made in that
sentence has come to my attention and that I have obtained, discussed with
appropriate representatives of the Obligors the contents of and relied, as
stated above, upon certificates of appropriate representatives of the Obligors
as to the matters covered by those certificates. Except to the extent otherwise
set forth above, however, I have not undertaken any independent inquiry to
determine the accuracy of any such statement; no inference as to my knowledge of
any matters bearing on the accuracy of any such statement should be drawn from
the fact of my representation of the Obligors.
The foregoing opinions are also subject to the following comments and
qualifications:
(a) The enforceability of certain provisions of the Station
License Management Agreement may be limited by laws rendering unenforceable (1)
the release of a party from, or the indemnification of a party against,
liability for its own wrongful or negligent acts under certain circumstances and
(2) indemnification contrary to United States of America or state securities
laws and the public policy underlying those laws.
(b) The enforceability of provisions in the Station License
Management Agreement to the effect that terms may not be waived or modified
except in writing may be limited under certain circumstances.
(c) I express no opinion as to any federal or state securities
laws except as expressly set forth in paragraphs (ix) and (x) above or as to any
FCC Regulation.
Terms used in my opinions in paragraph (xi) above or in the related comments and
qualifications that are defined in the NYUCC are used with the same meanings,
unless otherwise defined, in this opinion letter.
The foregoing opinions are limited to matters involving the federal laws of the
United States of America, the laws of the State of California and the Delaware
General Corporation Law (the
August ___, 2000
Page 6
"DGCL"), and I do not express any opinion as to any other laws. I am not
admitted to practice law in the State of Delaware or the State of New York. I am
generally familiar with the DGCL as presently in effect. I note that the
Financing Documents (other than the Station License Management Agreement)
provide that they are to be governed by the laws of the State of New York, and
in that connection, I have assumed, for the purposes of this opinion, that the
laws of the State of New York are identical to the laws of the State of
California. The opinions expressed herein are based upon the law and
circumstances as they are in effect or exist on the date hereof, and I assume no
obligation to revise or supplement this letter in the event of future changes in
the law or interpretations thereof with respect to circumstances or events that
may occur subsequent to the date hereof.
This opinion letter is rendered to the Credit Parties by me as counsel to the
Obligors pursuant to Section 5.01(a)(iv) of the Credit Agreement and may not be
quoted or relied upon by any person other than the Credit Parties or for any
purpose other than in connection with the transactions contemplated by the
Financing Documents without my prior written consent in each instance, provided
that the Credit Parties may provide this opinion (i) to bank examiners and other
regulatory authorities should they so request in connection with their normal
examinations, (ii) to the independent auditors and attorneys of the Credit
Parties, (iii) pursuant to order or legal process of any court or governmental
agency, (iv) in connection with any legal action to which any Credit Party is a
party arising out of the transactions contemplated by the Financing Documents,
or (v) the proposed assignee of or participant in the interest of any Credit
Party under the Financing Documents.
Very truly yours,
August ___, 2000
Page 7
ING (U.S.) Capital LLC, as
Administrative Agent
55 East 52nd Street
New York, New York 10055
Each of the Lenders named on
Schedule I hereto
Re: Salem Communications Corporation
Ladies and Gentlemen:
We have acted as counsel to Salem Communications Corporation, a
Delaware corporation (the "Borrower"), and Salem Communications Acquisition
Corporation, a Delaware corporation (the "Company") and their subsidiaries in
connection with:
(i) the Credit Agreement dated as of August 24, 2000 (the
"Credit Agreement") between the Borrower, ING (U.S.) Capital LLC, as
Administrative Agent (the "Agent"), the Bank of New York, as
Syndication Agent, Fleet National Bank, as Documentation Agent, and
certain lenders party thereto (the "Lenders" and collectively with the
Agent the "Credit Parties"),
(ii) the Promissory Notes dated as of the date hereof (the
"Notes") made by the Borrower payable to the order of the Lenders,
(iii) the Security Agreement dated as of the date hereof (the
"Company Security Agreement") by and between the Borrower and the
Agent,
(iv) the Guarantee and Security Agreement dated as of the date
hereof (the "Guarantee and Security Agreement") by and between the
Company, SCA License Corporation, a Delaware corporation ("SCA" and
collectively with the Company the "Guarantors"), and the Agent;
(v) the financing statements on Form UCC-1, naming the
Borrower, the Company or SCA, as the case may be, as debtor, and the
Agent, as secured party (the "Financing Statements") on file or to be
filed in the Office of the Secretary of State of the State of
California or the Office of the Secretary of State of the State of
Colorado (each, a "Filing Office"), as the case may be; and
(vi) the Warrant and Registration Rights Agreement dated as of
August 24, 2000 (the "Warrant Agreement"), between the Borrower, the
Agent and the institutions party thereto as Warrant Holders (the
"Warrant Holders").
Each capitalized term used and not defined herein has the meaning assigned to
that term in the Credit Agreement. The Borrower and the Guarantors are
collectively referred to as the
August ___, 2000
Page 8
"Obligors." The Company Security Agreement and the Guarantee and Security
Agreement are collectively referred to herein as the " Collateral Documents."
The personal property or fixtures collateral described in the Collateral
Documents is collectively referred to herein as the "Personal Property
Collateral." The Credit Agreement, the Notes, the Collateral Documents and the
Warrant Agreement are collectively referred to as the "Financing Documents." The
Uniform Commercial Code as enacted and in effect in the State of New York is
referred to herein as the "NYUCC." Each of California and Colorado is referred
to herein as a "Specified State." The NYUCC and the Uniform Commercial
Code--Secured Transactions and the Uniform Commercial Code--Investment
Securities as enacted and in effect in the Specified States are each referred to
herein as a "Code." All section references to any Code (other than the NYUCC)
are to the equivalent sections under the uniform version of the Code as in
effect in the applicable Specified State. All terms defined in the NYUCC are
used herein as defined therein.
We have assumed with your permission that:
a) The documents submitted to us as originals are authentic and
the documents submitted to us as certified or reproduction
copies conform to the originals;
b) Each of the Obligors is a validly existing corporation in good
standing under the laws of its state of incorporation and each
Obligor has all requisite power and authority to execute,
deliver and perform its obligations under the Financing
Documents to which it is a party and to own its properties;
c) The execution and delivery by each Obligor of the Financing
Documents to which it is a party and the performance of its
obligations thereunder have been duly authorized by all
necessary corporate action;
d) Each Financing Document has been duly executed and delivered
by each Obligor party thereto;
e) Each of the parties to the Financing Documents (other than the
Obligors) has all requisite power and authority to execute,
deliver and perform its obligations under each of the
Financing Documents to which it is a party, the execution and
delivery of such Financing Documents by such party and
performance of its obligations thereunder have been duly
authorized by all necessary action and do not violate any law,
regulation, order, judgment or decree applicable to such
party, and such Financing Documents are legal, valid and
binding obligations of such party, enforceable against it in
accordance with their respective terms;
f) There are no agreements or understandings between or among
Credit Parties, the Obligors or third parties that would
expand, modify or otherwise affect the terms of the Financing
Documents or the respective rights or obligations of the
parties thereunder (except for that certain letter agreement
between the Agent and the
August ___, 2000
Page 9
Borrower with an effective date of August 24, 2000, as to
which we express no opinion hereunder);
g) Each Obligor has, and will have at all times relevant to this
opinion, rights in the Personal Property Collateral within the
meaning of Section 9-203(1)(c) of the NYUCC;
h) To the extent that the ability of the Agent to enforce
remedies under the Collateral Documents in respect of
inventory may be affected thereby, the Obligors are in
compliance with the Fair Labor Standards Act (SEE CITICORP
INDUSTRIAL CREDIT, INC. V. BROCK, 483 U.S. 27, 107 S.Ct. 2694
--------------------------------------------- (1987));
i) The Financing Statements will be submitted for filing in the
relevant Filing Office accompanied by the appropriate filing
fee, will be accepted for filing in the relevant Filing Office
and will be properly filed and indexed in the relevant Filing
Office;
j) The Warrants are held for the account of the Warrant Holders
and not with a view to, or in connection with, the
distribution thereof within the meaning of the Securities Act
of 1933, as amended (the "Securities Act");
k) Each Warrant Holder has access to such information as it deems
necessary to make its investment decisions with respect to its
Warrant; and
l) The Warrant Holders are in compliance with the provisions set
forth in Section 7 of the Warrants, each Warrant Holder and
each other person to whom offers were made is an "accredited
investor" within the meaning of Regulation D promulgated under
the Securities Act, none of the Warrant Holders has taken or
intends to take any action that would subject the issuance and
sale of the Warrants to the registration requirements of the
Securities Act, and the offer and sale of the Warrants
occurred pursuant to private negotiations between the Obligors
and the Warrant Holders.
In rendering this opinion, we have made such inquiries and examined, among other
things, originals or copies, certified or otherwise identified to our
satisfaction, of such records, agreements, certificates, instruments and other
documents as we have considered necessary or appropriate for purposes of this
opinion. As to certain factual matters, we have relied upon the representations
and warranties of the Obligors in the Financing Documents, certificates of
officers of the Obligors or certificates obtained from public officials.
Based on the foregoing and in reliance thereon, and subject to the
assumptions, exceptions, qualifications and limitations set forth herein, we are
of the opinion that:
1. Each of the Financing Documents constitutes a legal, valid and
binding obligation of each Obligor party thereto, enforceable against it in
accordance with its terms.
August ___, 2000
Page 10
2. Each Guarantor has granted a valid security interest in favor of the
Agent for the benefit of the Lenders in the Personal Property Collateral
described in the Guarantee and Security Agreement, securing the performance of
the obligations of such Guarantor under the Financing Documents, to the extent
that a security interest can be created therein under Article 9 of the NYUCC.
The Borrower has granted a valid security interest in favor of the Agent for the
benefit of the Lenders in the Personal Property Collateral described in the
Security Agreement, securing the performance of the obligations of the Borrower
under the Financing Documents, to the extent that a security interest can be
created therein under Article 9 of the NYUCC. Upon the filing of the Financing
Statements with Filing Offices in the respective Specified States, such security
interests in such Personal Property Collateral will be perfected to the extent
that security interests therein can be perfected by filing UCC-1 financing
statements under the applicable Code. Upon delivery to the Agent in the State of
New York of certificates representing the capital stock identified in Annex 1 to
the Security Agreement and the Guarantee and Security Agreement, respectively
(the "Pledged Stock"), the Agent will have a valid and perfected security
interest in the Pledged Stock, securing the obligations of the respective
Obligor under the Financing Documents.
The foregoing opinions are subject to the following exceptions,
qualifications and limitations:
A. We render no opinion herein as to matters involving the
laws of any jurisdiction other than the State of New York, the United States of
America and, for purposes of the third sentence of paragraph 2, the laws of the
Specified States. Without limitation, we have not examined the question of which
law a court in the State of California would determine to govern the
interpretation or enforcement of the Financing Documents and our opinion is
based on the assumption that the internal laws of the State of New York and the
laws of the United States of America would govern the provisions of such
Financing Documents and the transactions contemplated thereby. Our opinions in
the third sentence of paragraph 2 are limited to the Code of the Specified
States. This opinion is limited to the effect of the present state of the laws
of the State of New York, the United States of America and, to the limited
extent set forth above, the Code of the Specified States and the facts as they
presently exist. We assume no obligation to revise or supplement this opinion in
the event of future changes in such laws or the interpretations thereof or such
facts.
B. Our opinion is subject to (i) the effect of any bankruptcy,
insolvency, reorganization, moratorium, arrangement or similar laws affecting
the rights and remedies of creditors rights generally (including, without
limitation, the effect of statutory or other laws regarding fraudulent transfers
or preferential transfers or distributions by corporations to stockholders) and
(ii) general principles of equity, including without limitation concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance, injunctive relief or other equitable
remedies, regardless of whether enforceability is considered in a proceeding in
equity or at law.
August ___, 2000
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C. We express no opinion as to the effect on the
enforceability of the Guarantee and Security Agreement against any Guarantor of
any facts or circumstances occurring after the date hereof that would constitute
a defense to the obligation of a surety, unless such defense has been waived
effectively by such Guarantor.
D. We express no opinion regarding (i) the effectiveness of
any waiver (whether or not stated as such) under the Financing Documents of, or
any consent thereunder relating to, any unknown future rights or the rights of
any party thereto existing, or duties owing to it, as a matter of law; (ii) the
effectiveness of any waiver (whether or not stated as such) contained in the
Financing Documents of rights of any party, or duties owing to it, that is
broadly or vaguely stated or does not describe the right or duty purportedly
waived with reasonable specificity; (iii) provisions relating to
indemnification, exculpation or contribution, to the extent such provisions may
be held unenforceable as contrary to public policy or federal or state
securities laws or due to the negligence or willful misconduct of the
indemnified party; (iv) any provision in any Financing Document waiving the
right to object to venue in any court; (v) any consent or agreement to submit to
the jurisdiction of any Federal Court; (vi) any waiver of the right to jury
trial; (vii) any power of attorney purportedly created by any of the Financing
Documents; (viii) any rights of setoff (other than such as are provided by
Section 151 of the Debtor and Creditor Law of the State of New York, as
interpreted by applicable judicial decisions); (ix) any waivers or variations of
rights of a debtor, including a guarantor, or duties of a secured party under
provisions referred to in Section 9-501(3) of the NYUCC; or (x) any provisions
of the Financing Documents that may be construed as penalties or forfeitures.
E. We express no opinion with respect to the legality,
validity, binding nature or enforceability of any provision of the Financing
Documents (i) to the effect that rights or remedies are not exclusive, that
every right or remedy is cumulative and may be exercised in addition to any
other right or remedy, that the election of some particular remedy does not
preclude recourse to one or more others or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy or (ii) requiring written amendments or waivers of such documents insofar
as it suggests that, other than as provided in Section 15-301 of the General
Obligations Law of the State of New York, as interpreted by applicable judicial
decisions, oral or other modifications, amendments or waivers could not be
effectively agreed upon by the parties or that the doctrine of promissory
estoppel might not apply.
F. We express no opinion herein as to perfection of any of the
security interests in any of the Personal Property Collateral, except as
expressly provided in the third and fourth sentence of paragraph 2 hereof, and
we express no opinion herein as to priority of any of the security interests in
any of the Personal Property Collateral (and therefore, except as expressly
provided in the third and fourth sentence of paragraph 2, no opinion as to the
respective rights of the Agent or any Lender, on one hand, and any third party
(including, without limitation, a trustee or debtor-in-possession in bankruptcy,
a transferee of or a holder of an encumbrance on any Personal Property
Collateral or a creditor of any Obligor), on the other hand).
August ___, 2000
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G. We express no opinion as to any provision in the Collateral
Documents (i) that may be deemed to permit the Agent or any other person to sell
or otherwise dispose of any Personal Property Collateral except in compliance
with the NYUCC, applicable laws of the United States and other applicable state
and local laws, or (ii) any provision that may be deemed to impose on the Agent
standards for the care of the Personal Property Collateral in the possession or
control of the Agent other than as provided in Section 9-207 of the NYUCC or to
render such standards inapplicable.
H. Our opinion is subject to the effect of Section 9-311 of
the NYUCC, which provides that the rights of any Obligor in the Personal
Property Collateral may be voluntarily or involuntarily transferred
notwithstanding a provision in a security agreement to the contrary. We call to
your attention that certain third parties, such as buyers of goods in the
ordinary course of business, holders in due course of negotiable instruments or
protected purchasers of securities, could acquire an interest in the Personal
Property Collateral free of the security interests, even if the security
interests are perfected in accordance with applicable law.
I. We express no opinion with respect to (i) the location,
existence or non-existence of any Personal Property Collateral, (ii) that
portion of the Personal Property Collateral (other than the Pledged Stock) as to
which filing of a financing statement under the Code in a Specified State is not
sufficient to perfect a security interest therein under the Code including,
without limitation, goods and equipment not located in any Specified State,
(iii) the perfection of any security interest in accounts which are obligations
of the Federal government, any agency or department thereof or any state or
local government or any agency or political subdivision thereof, to the extent
that any applicable laws require any actions in addition to the filing of
financing statements under the Code in any Specified State, (iv) any part of the
Personal Property Collateral that is or may be such that a security interest
therein is not covered by Article 9 of the NYUCC by virtue of Section 9-102 or
9-104, or (v) any security interests in any FCC Licenses (as defined in the
Credit Agreement).
J. We express no opinion as to the enforceability or
perfection of any security interest in any Personal Property Collateral that is
subject to a statute or treaty of the United States that provides for a national
or international registration or a national or international certificate of
title for the perfection of a security interest therein or that specifies a
place of filing different from that specified in the Code for filing to perfect
such security interest, including motor vehicles, patents, trademarks or
copyrights. We further express no opinion as to transfers of interests or rights
in patents, trademarks or copyrights in connection with exercise of remedies
against Personal Property Collateral under the Financing Documents.
K. We express no opinion as to the creation, validity,
enforceability or perfection of any security interest (i) in any part of the
Personal Property Collateral in which a security interest would not be covered
by the NYUCC by virtue of Section 9-102 or 9-104 thereof, (ii) except as
provided in Sections 9-104(g) and 9-306 of the NYUCC with respect to insurance
proceeds payable by reason of loss or damage to Personal Property Collateral, in
any interest in or claim in or under policies of insurance, (iii) in Personal
Property Collateral that
August ___, 2000
Page 13
consists or will consist of deposit accounts (including, without limitation, any
Cash Collateral Accounts under the Collateral Documents) or (iv) in any Personal
Property Collateral that consists or will consist of consumer goods, farm
products, timber, minerals and the like or accounts resulting from the sale
thereof.
L. We express no opinion with respect to (i) the adequacy or
accuracy of the descriptions of the Personal Property Collateral contained in
the Collateral Documents or in any Financing Statements or other documents
prepared in connection therewith or (ii) the creation, validity, enforceability
or perfection of any security interest in the proceeds of any Personal Property
Collateral except to the extent provided in Section 9-306 of the NYUCC.
M. Perfection of the security interests generally will be
terminated under the circumstances described in Sections 9-103, 9-402 and 9-403
of the NYUCC, and the corresponding provisions of each applicable Code, unless
appropriate action is taken as provided therein. Without limitation, (i) all the
financing statements filed must be continued at prescribed intervals by the
timely filing of continuation statements and (ii) a new or amended financing
statement may be required to be filed to retain any perfected security interest
in the event an Obligor changes its name, identity, corporate structure or
location of its chief executive office or chief place of business.
N. Our opinion with respect to the Collateral Documents is
qualified to the extent that such agreements and the security interests granted
to the Agent thereunder may be subject to the rights of lessees, account debtors
or other obligors of the Obligors, the terms of the leases or other contracts
between the Obligors and such lessees, account debtors or other obligors, and
any claims or defenses of such lessees, account debtors or other obligors
against the Obligors arising under or outside such leases or other contracts.
O. Our opinion is subject to, in the case of the pledge of any
securities under the Collateral Documents, the following qualifications: (i) the
Agent may not be entitled to vote the pledged securities or to receive dividends
or other distributions directly from the issuer thereof prior to becoming the
record holder of the pledged securities; (ii) none of the pledged securities or
any interest therein may be sold or further transferred by the Agent without
registration under the Securities Act, except pursuant to an exemption from
registration contained in such Act, and qualification or exemption from
qualification under any applicable State securities or Blue Sky laws; and (iii)
compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 may be
required prior to the exercise of any remedies thereunder.
P. For purposes of our opinion in the fourth sentence of
paragraph 2, we have assumed that (i) the certificates representing the Pledged
Stock are indorsed to the Agent or in blank by an effective indorsement (as such
term is defined in the NYUCC), and (ii) the Agent will maintain possession of
the Pledged Stock and will not deliver (as such term is defined in the NYUCC)
the Pledged Stock to any third person.
August ___, 2000
Page 14
Q. We express no opinion as to the applicability to, or the
effect of noncompliance by, any Credit Party with any state or federal laws
applicable to the transactions contemplated by the Financing Documents because
of the nature of the business of such Credit Party.
This opinion is rendered to the Credit Parties in connection with the
Financing Documents and may not be relied upon by any person other than the
Credit Parties or by the Credit Parties in any other context, provided that the
Credit Parties may provide this opinion (i) to bank examiners and other
regulatory authorities should they so request in connection with their normal
examinations, (ii) to the independent auditors and attorneys of the Credit
Parties, (iii) pursuant to order or legal process of any court or governmental
agency, (iv) in connection with any legal action to which any Credit Party is a
party arising out of the transactions contemplated by the Financing Documents,
or (v) the proposed assignee of or participant in the interest of any Credit
Party under the Financing Documents. This opinion may not be quoted without the
prior written consent of this Firm.
Very truly yours,
August ___, 2000
Page 15
EXHIBIT G-2
[FORM OF OPINION OF SPECIAL COMMUNICATIONS COUNSEL TO THE OBLIGORS]
We have acted as special communications counsel to Salem Communications
Corporation (the "Company") in connection with the Credit Agreement dated as of
August ___, 2000 (the "Credit Agreement") between the Company and the lenders
identified in the Credit Agreement (the "Lenders") for whom ING (U.S.) Capital
LLC, is acting as the Administrative Agent (together with the Lenders, the
"Lender Parties"), with regard to matters related to the Communications Act of
1934, as amended, and the rules, regulations, interpretations, policies, and
published opinions of the FCC (collectively, the "Communications Laws") in
connection with the FCC Licenses held or to be held by the Subsidiary Guarantor
for the Station owned by the Company and the Subsidiary Guarantor and regulation
by the FCC under the Communications Laws of the operations of such Station. All
capitalized terms defined in the Credit Agreement are used with the same
meanings, unless otherwise defined, in this opinion letter.
In rendering the opinions expressed below, we have examined (a)(i) the
Credit Agreement, the Notes, the Warrant Agreement, the Warrants and the Station
License Management Agreement and (ii) the Security Agreement and the Guarantee
and Security Agreement (collectively, the "Security Documents" and, together
with the documents listed in clause (a)(i) above, the "Loan Documents") and such
other documents as we have deemed necessary as a basis for the opinions
expressed below. In our examination, we have assumed the genuineness of all
signatures, the authenticity of documents submitted to us as originals, the
conformity with authentic original documents of all documents submitted to us as
copies and, in the case of documents executed prior to the date of this opinion
letter, that there has been no course of conduct that would alter the terms of
these documents from those reviewed by us. As to relevant facts, we have relied
solely upon (a) a review of the pertinent public files of the FCC and inquiries
of appropriate staff members of the FCC, (b) an examination of appropriate files
of this firm and an inquiry of this firm's lawyers who have had substantial
responsibility for the Obligors' legal matters handled by this firm, and (c)
representations made by the Obligors in the Loan Documents and by them to the
FCC in documents and filings which are available in the public files of the FCC.
We have assumed the correctness and completeness of FCC public files and of
records and certificates issued by the FCC. We have not performed any on-site
investigations of the Station or of any other FCC licensed facilities owned or
operated by the Obligors, and in any event do not express any opinion regarding
the actual operations of the Station. You should be aware that records of the
FCC that are public as a matter of law (E.G., pursuant to the Federal Freedom of
Information Act) may not, in fact, be contained in the public files of the FCC
which we examined in connection with this opinion. Furthermore, there may be
records of matters pending at the FCC that are not available for inspection by
the public as a matter of law.
In rendering the opinions expressed below, we have assumed that all of
the documents referred to in this opinion have been duly authorized by, have
been or will be executed and delivered by, and constitute legal, valid, binding
and enforceable obligations of, all of the parties
August ___, 2000
Page 16
to those documents, that all signatories to those documents have been duly
authorized and that all such parties are duly organized and validly existing and
have the power and authority (corporate, partnership, company, trust or other)
or, in the case of individuals, the legal capacity, to execute, deliver and
perform those documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
(i) No authorization, consent or other approval of, or
registration, declaration or other filing with, the FCC or any other
governmental authority of the United States of America having jurisdiction under
the Communications Laws is required on the part of any Obligor for the execution
and delivery by it of, or for the performance by that Obligor of its obligations
under, the Loan Documents to which it is a party or for the borrowing by the
Company under the Credit Agreement, except for (a) the filing with the FCC,
within 30 days following the execution of the Loan Documents, of such of the
Loan Documents as is required by Section 73.3613 of the FCC's rules and (b) the
approval of the FCC prior to the exercise of any rights under any Security
Document that would constitute a transfer of control or an assignment of a
broadcast license as interpreted by the FCC. We render no opinion as to whether
the FCC would grant the approval referred to in clause (b) of the preceding
sentence.
(ii) The execution and delivery by each Obligor of, and the
performance by that Obligor of its obligations under, the Loan Documents to
which it is a party and the borrowing by the Company under the Credit Agreement
do not and will not violate any FCC Regulation.
(iii) Each of the FCC Licenses listed on Annex 1 to the
Station License Management Agreement has been issued by the FCC and is in full
force and effect. To our knowledge, no other FCC Licenses are required for the
existing operation of the Station operating under authority of those FCC
Licenses. On August __, 2000, the FCC granted the application for consent to
assignment (File No. BALH-20000307ABH, KALC) of the main station FCC License and
associated broadcast auxiliary FCC Licenses for the operation of the Station to
AcquisitionCo. That grant by the FCC is valid and subsisting, and no further
approval or action of the FCC is required to permit the assignments of such FCC
Licenses to AcquisitionCo pursuant to the terms of the Purchase Agreement. We
have no knowledge of any reason why the FCC would not approve, upon application,
assignment of the FCC Licenses to the License Subsidiary following completion of
the assignment of the FCC Licenses to AcquisitionCo.
We advise you that, to our knowledge, there are no pending or
threatened actions, suits, proceedings or investigations against any Obligor by
or before the FCC which could, individually or in the aggregate, have a Material
Adverse Effect. We have no knowledge that each Obligor is not in compliance with
all applicable Communications Laws.
August ___, 2000
Page 17
The foregoing opinions are limited to matters involving the
Communications Laws, and we do not express any opinion as to any other laws.
As used herein, the term "full force and effect" means to our
knowledge: (a) the orders issuing the FCC Authorizations have become effective;
(b) no stay of effectiveness of such orders has been issued by the FCC; and (c)
the FCC Authorizations have not been invalidated by any subsequent published FCC
action. As used herein, the expression "to our knowledge" or expressions of like
import means the conscious awareness of facts or other information by lawyers in
our firm representing the Obligors.
This opinion letter is provided to you by us as counsel to the Obligors
pursuant to Section 5.01(a)(iv) of the Credit Agreement and may not be relied
upon by any other person or for any purpose other than in connection with the
transactions contemplated by the Loan Documents without our prior written
consent in each instance.
EXHIBIT G-2
[FORM OF OPINION OF SPECIAL COMMUNICATIONS COUNSEL TO THE OBLIGORS]
[Attached]