-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Aglb2J3HmUJ+IzdCYNsTunhETxYCfCBnqeABcdwTDminMtyQ/tCpkteII8j8fM1l MruJOA6oQ8NO2VFAVoxwYA== 0000912057-02-031535.txt : 20020813 0000912057-02-031535.hdr.sgml : 20020813 20020813153922 ACCESSION NUMBER: 0000912057-02-031535 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RADIO UNICA CORP CENTRAL INDEX KEY: 0001067636 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 650776004 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-61211 FILM NUMBER: 02729603 BUSINESS ADDRESS: STREET 1: 8400 NW 52ND STREET SUITE 101 CITY: MIAMI STATE: FL ZIP: 33166 MAIL ADDRESS: STREET 1: 8400 NW 52ND STREET SUITE 101 CITY: MIAMI STATE: FL ZIP: 33166 10-Q 1 a2085959z10-q.txt 10-Q ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q /X/ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002 OR / / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 COMMISSION FILE NO. 333-61211 RADIO UNICA CORP. (Exact name of registrant as specified in its charter) DELAWARE 65-0776004 (State of Incorporation) (I.R.S. Employer Identification Number) 8400 N.W. 52ND STREET, SUITE 100 MIAMI, FL 33166 (Address of principal executive offices) (Zip Code) 305-463-5000 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES /X/ NO / / Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of August 13, 2002, 100 shares of Common Stock, $.01 par value were outstanding. ================================================================================ RADIO UNICA CORP. TABLE OF CONTENTS
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements............................................................ 2 Item 2. Management's Discussion and Analysis............................................ 9 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K................................................ 15
RADIO UNICA CORP. CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31, 2002 2001 - ----------------------------------------------------------------------------------------------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 1,385,698 $ 964,042 Accounts receivable, net of allowance for doubtful accounts of $1,285,364 and $1,253,425, respectively 10,412,495 10,251,340 Prepaid expenses and other current assets 1,799,599 1,541,874 ------------------ ------------------ Total current assets 13,597,792 12,757,256 Property and equipment, net 24,769,257 23,971,415 Broadcast licenses, net of accumulated amortization of $10,336,623 98,200,730 98,200,730 Other intangible assets, net 9,433,143 9,055,938 Other assets 541,648 344,543 ------------------ ------------------ $ 146,542,570 $ 144,329,882 ================== ================== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 496,674 $ 2,216,655 Accrued expenses 3,264,875 2,887,929 Current portion of notes payable 978,188 984,991 Deferred revenue and fees 647,550 658,943 ------------------ ------------------ Total current liabilities 5,387,287 6,748,518 Other liabilities 75,000 55,000 Notes payable 1,128,202 1,139,276 Due to parent, net 93,482,010 85,742,845 Deferred taxes 910,424 988,460 Senior discount notes 156,625,953 147,934,782 Commitments and contingencies Stockholders' deficit: Common stock; $.01 par value; 1,000 shares authorized, 100 shares issued and outstanding 1 1 Additional paid-in-capital 59,612,074 59,612,074 Deferred compensation expense (259,351) (570,817) Accumulated deficit (170,419,030) (157,320,257) ------------------ ------------------ Total stockholders' deficit (111,066,306) (98,278,999) ------------------ ------------------ $ 146,542,570 $ 144,329,882 ================== ==================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 2 RADIO UNICA CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, - ------------------------------------------------------------------------------------------------------------- 2002 2001 2002 2001 -------------- --------------- --------------- --------------- Net revenue $ 12,178,532 $ 9,923,227 $ 20,340,268 $ 15,544,556 Operating expenses: Direct operating 1,302,953 2,424,287 2,498,426 4,092,283 Selling, general and administrative 4,612,478 4,246,408 8,808,171 8,358,988 Network 3,712,702 3,964,496 7,473,748 7,702,038 Corporate 874,900 852,626 1,722,142 1,686,310 Cost of promotion services 1,263,837 700,507 2,051,193 700,507 Depreciation and amortization 752,700 1,592,253 1,491,950 3,259,793 Stock option compensation 151,321 177,806 311,466 355,614 -------------- --------------- --------------- --------------- 12,670,891 13,958,383 24,357,096 26,155,533 -------------- --------------- --------------- --------------- Loss from operations (492,359) (4,035,156) (4,016,828) (10,610,977) Other income (expense): Interest expense (4,600,358) (4,163,348) (9,111,780) (8,226,361) Interest income 1,615 10,135 4,719 19,669 Other (4,440) 208,338 (52,920) 216,046 -------------- --------------- --------------- --------------- (4,603,183) (3,944,875) (9,159,981) (7,990,646) -------------- --------------- --------------- --------------- Loss before income taxes (5,095,542) (7,980,031) (13,176,809) (18,601,623) Income tax benefit 39,018 78,035 78,036 78,035 -------------- --------------- --------------- --------------- Net loss $ (5,056,524) $ (7,901,996) $ (13,098,773) $ (18,523,588) ============== =============== =============== =============== Net loss per common share - basic and diluted $ (50,565) $ (79,020) $ (130,988) $ (185,236) ============== =============== =============== =============== Weighted average common shares outstanding - basic and diluted 100 100 100 100 ============== =============== =============== ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 3 RADIO UNICA CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ------------------------------------- 2002 2001 - ----------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net loss $ (13,098,773) $ (18,523,588) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,491,950 3,259,793 Provision for bad debts 31,939 (25,825) Accretion of interest on senior discount notes 8,691,171 7,753,383 Amortization of deferred financing costs 319,962 385,820 Stock option compensation expense 311,466 355,614 Loss on investment in unconsolidated company - 131,677 Deferred income taxes (78,036) (78,035) Other (118,835) (653,683) Changes in assets and liabilities, net of effects of acquisitions: Accounts receivable (193,093) (696,282) Prepaid expenses and other current assets (257,725) (339,272) Other assets (198,317) (67,847) Accounts payable (1,719,982) 524,127 Accrued expenses 376,948 611,450 Deferred revenue 107,442 78,816 Other liabilities 20,000 25,000 ---------------- ---------------- Net cash used in operating activities (4,313,883) (7,258,852) ---------------- ---------------- INVESTING ACTIVITIES Acquisition of property and equipment (2,157,440) (1,603,352) Acquisition of wholly owned subsidiary, net of cash received - (1,342,687) ---------------- ---------------- Net cash used in investing activities (2,157,440) (2,946,039) ---------------- ---------------- FINANCING ACTIVITIES Intercompany payable, net 7,739,164 10,481,578 Repayment of notes payable (17,878) (27,096) Deferred financing costs (828,307) - ---------------- ---------------- Net cash provided by financing activities 6,892,979 10,454,482 ---------------- ---------------- Net decrease in cash and cash equivalents 421,656 249,591 Cash and cash equivalents at beginning of period 964,042 143,619 ---------------- ---------------- Cash and cash equivalents at end of period $ 1,385,698 $ 393,210 ================ ================ Issuance of note payable in connection with acquisition of wholly owned subsidiary $ - $ 2,078,561 ================ ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. 4 RADIO UNICA CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited consolidated condensed financial statements of Radio Unica Corp. and subsidiaries (the "Company") for the periods indicated herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and in accordance with generally accepted accounting principles for interim financial information. Accordingly, the financial statements do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. The consolidated condensed financial statements include the accounts of the Company and all majority owned subsidiaries over which the Company has control. All significant intercompany accounts and transactions have been eliminated in consolidation. For further information, refer to the Company's 2001 consolidated financial statements and notes thereto. The Company's revenue and cash flows are typically lowest in the first calendar quarter. Seasonal fluctuations are common in the radio broadcasting industry and are due primarily to fluctuations in consumer spending. 2. SEGMENT OPERATING RESULTS Pursuant to the provisions of Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards (`SFAS") No. 131, "Disclosure About Segments of a Business Enterprise and Related Information", the Company is required to report segment information. The Company classified its businesses into two reporting segments: radio broadcasting and promotion services. The radio broadcasting segment includes the operations of the Company's radio network, the operations of all owned and/or operated radio stations and corporate expenses. The promotion services segment includes the operations of the Company's marketing and promotions business The Company evaluates performance based on several factors, of which the primary financial measures are business segment net revenue, operating income (loss) and earnings (loss) from operations plus depreciation and amortization and stock option compensation expense ("EBITDA"). EBITDA is presented not as an alternative measure of operating results or cash flow from operations (as determined in accordance with generally accepted accounting principles ("GAAP")), but because it is a widely accepted supplemental financial measure of a company's ability to service debt. The Company's calculation of EBITDA may not be comparable to similarly titled measures reported by other companies since all companies do not calculate this non-GAAP measure in the same fashion. The Company's EBITDA calculation is not intended to represent cash used in operating activities, since it does not include interest and taxes and changes in operating assets and liabilities, nor is it intended to represent the net increase or decrease in cash, since it does not include cash provided by (used in) investing and financing activities. 5 RADIO UNICA CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 2. SEGMENT OPERATING RESULTS, CONTINUED Results by segment are as follows:
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, --------------------------------- --------------------------------- 2002 2001 2002 2001 --------------------------------- --------------------------------- (UNAUDITED) (UNAUDITED) Net revenue Radio broadcasting $ 9,978,077 $ 8,729,605 $ 16,626,974 $ 14,350,934 Promotion services 2,200,455 1,193,622 3,713,294 1,193,622 -------------- --------------- -------------- --------------- Consolidated $ 12,178,532 $ 9,923,227 $ 20,340,268 $ 15,544,556 ============== =============== ============== =============== Operating income (loss) Radio broadcasting $ (831,108) $ (4,230,908) $ (4,486,745) $ (10,806,729) Promotion services 338,749 195,752 469,917 195,752 -------------- --------------- -------------- --------------- Consolidated $ (492,359) $ (4,035,156) $ (4,016,828) $ (10,610,977) ============== =============== ============== =============== EBITDA Radio broadcasting $ 17,264 $ (2,482,844) $ (2,793,456) $ (7,213,317) Promotion services 394,398 217,747 580,044 217,747 -------------- --------------- -------------- --------------- Consolidated $ 411,662 $ (2,265,097) $ (2,213,412) $ (6,995,570) ============== =============== ============== =============== Total Assets Radio broadcasting $ 140,530,997 $ 146,162,213 Promotion services 6,011,573 5,252,686 -------------- --------------- Consolidated $ 146,542,570 $ 151,414,899 ============== ===============
6 RADIO UNICA CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 3. NEW ACCOUNTING STANDARDS Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets". Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually, or more frequently if indicators arise, for impairment. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives. As prescribed by SFAS No. 142, the Company has completed its transitional impairment test on its goodwill and broadcast licenses and has determined that no impairment exists. The Company has determined that its broadcast licenses have indefinite lives. As required by SFAS No. 142, the results for the periods prior to its adoption have not been restated. A reconciliation of previously reported net loss and net loss per share to the amounts adjusted for the exclusion of the amortization of goodwill and broadcast licenses is as follows.
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------------- ------------------------------- 2002 2001 2002 2001 -------------- ------------- -------------- -------------- Net loss as reported $ (5,056,524) $ (7,901,996) $ (13,098,773) $ (18,523,588) Goodwill and broadcast licenses amortization - 956,929 - 1,935,010 -------------- ------------- -------------- -------------- Net loss as adjusted $ (5,056,524) $ (6,945,067) $ (13,098,773) $ (16,588,578) ============== ============= ============== ============== Net loss per common share - basic and diluted As reported $ (50,565) $ (79,020) $ (130,988) $ (185,236) ============== ============= ============== ============== As adjusted $ (50,565) $ (69,451) $ (130,988) $ (165,886) ============== ============= ============== ==============
Effective January 1, 2002 the Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 superseded SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and the accounting and reporting provisions of Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations - -Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," for the disposal of a segment of a business. SFAS No. 144 also amended Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. Consistent with SFAS No. 121, SFAS No. 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Our adoption of SFAS No. 144 did not have an effect on our consolidated financial statements. 7 RADIO UNICA CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 4. REVOLVING CREDIT FACILITY On June 25, 2002, the Company and all its subsidiaries entered into a credit agreement for a senior secured revolving credit facility (the "Revolving Credit Facility") providing for up to $20 million of availability with General Electric Capital Corporation ("GECC"). The Revolving Credit Facility will mature on February 1, 2006. Amounts outstanding under the Revolving Credit Facility bear interest at a rate of either (i) the Index Rate (as defined) plus 2.5% or (ii) LIBOR plus 3.5%. The obligations under the Revolving Credit Facility are guaranteed by Radio Unica Communications Corp. ("RUCC"), the sole stockholder of the Company, and secured by substantially all the assets and stock of the Company and its subsidiaries and by the assets of RUCC. The Company will pay certain fees in connection with the Revolving Credit Facility, including an Unused Line Fee (as defined) ranging between 0.50% and 0.75% annually on the aggregate unused portion of the Revolving Credit Facility. The Company may use the borrowings available under the Revolving Credit Facility for working capital, general corporate needs, to provide funds for future Permitted Acquisitions (as defined), for capital expenditures, to pay interest, and to the extent permitted by the agreement for Permitted Senior Note Repurchases (as defined). The Revolving Credit Facility contains certain financial and operational covenants and customary events of default, including, among others, payment defaults and default in the performance of other covenants, breach of representations or warranties, cross-default to other indebtedness, certain bankruptcy or ERISA defaults, the entry of certain judgments against the Company or any subsidiary, and any security interest or guarantee that ceases to be in effect. The Revolving Credit Facility also provides that an event of default will occur upon the occurrence of a Change of Control of RUCC (as defined). 8 RADIO UNICA CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, among others, statements concerning the Company's outlook for 2000 and beyond, the Company's expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. The forward-looking statements in this report are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the statements. OVERVIEW We generate radio broadcasting revenue from sales of network advertising time, and sales of local and national advertising time on radio stations that we own and those that we operate under local marketing agreements (collectively "O&Os"). Advertising rates are, in large part, based upon the network's and each station's ability to attract audiences in demographic groups targeted by advertisers. All radio broadcasting revenue is stated net of any agency commissions. We recognize radio broadcasting revenue when the commercials are broadcast. We also generate revenue from our promotional and merchandising services company, MASS Promotions, Inc. ("MASS"). We recognize revenue generated by MASS when the promotional and/or merchandising services are performed. Our operating expenses consist of programming expenses, marketing and selling costs, including commissions paid to our sales staff, technical and engineering costs, cost of promotion services and general and administrative expenses. The Company presents EBITDA not as an alternative measure of operating results or cash flow from operations (as determined in accordance with generally accepted accounting principles ("GAAP")), but because it is a widely accepted supplemental financial measure of a company's ability to service debt. The Company's calculation of EBITDA may not be comparable to similarly titled measures reported by other companies since all companies do not calculate this non-GAAP measure in the same fashion. The Company's EBITDA calculation is not intended to represent cash used in operating activities, since it does not include interest and taxes and changes in operating assets and liabilities, nor is it intended to represent the net increase or decrease in cash, since it does not include cash provided by (used in) investing and financing activities. RESULTS OF OPERATIONS THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2001 The results of operations for the three months ended June 30, 2002 are not comparable to the same period in 2001 primarily due to the acquisition of MASS, which took place on April 30, 2001. Consequently, only two months of MASS' operations are included in the results for the quarter ended June 30, 2001. NET REVENUE. Net revenue increased by approximately $2.3 million or 23% to approximately $12.2 million for the three months ended June 30, 2002 from approximately $9.9 million for the comparable period in the prior year. The increase in net revenue relates to increased revenue generated by promotional and merchandising services associated with MASS of approximately $1.0 million, and increased rates and revenue market share at the network and O&Os. 9 RADIO UNICA CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) OPERATING EXPENSES. Operating expenses decreased by approximately $1.3 million or 9% to approximately $12.7 million for the three months ended June 30, 2002 from approximately $14.0 million for the comparable period in the prior year. The decrease in operating expenses is due to decreased direct operating expenses of approximately $1.1 million, decreased network expenses of approximately $0.3 million and decreased depreciation and amortization of approximately $0.8 million offset in part by the increased cost associated with the operations of MASS of approximately $0.4 million of selling, general and administrative expenses and approximately $0.6 million of cost of promotion services. Direct operating expenses decreased by approximately $1.1 million or 46% to approximately $1.3 million for the three months ended June 30, 2002 from approximately $2.4 million for the comparable period in the prior year. The decrease in direct operating expenses is primarily due to decreased advertising spending in 2002, decreases in headcount at certain stations and the termination of a time brokerage agreement and station operations in San Diego. Selling, general and administrative expenses increased by approximately $0.4 million or 9% to approximately $4.6 million for the three months ended June 30, 2002 from approximately $4.2 million for the comparable period in the prior year. The increase in selling, general and administrative expenses primarily relates to the increase in general and administrative expenses associated with MASS of approximately $0.4 million. This increase is primarily due to the additional month of MASS' expenses in 2002 as well as the growth of MASS as a business segment. Network expenses decreased approximately $0.3 million or 6% to approximately $3.7 million for the three months ended June 30, 2002 from approximately $4.0 million for the comparable period in the prior year. The decrease in network expenses is primarily due to decreased advertising spending for the three months ended June 30, 2002 of approximately $0.3 million. Corporate expenses remained constant at approximately $0.9 million for the three months ended June 30, 2002 and 2001. Corporate expenses are comprised of the cost of corporate management and legal and professional fees. Cost of promotion services increased by approximately $0.6 million or 80% to $1.3 million for the three months ended June 30, 2002 from approximately $0.7 million for the comparable period in the prior year. The increase in the cost of promotion services is directly related to the increase in MASS' revenue and the additional month of MASS' expenses in 2002. Depreciation and amortization decreased by approximately $0.8 million or 53% to approximately $0.8 million for the three months ended June 30, 2002 from approximately $1.6 million for the comparable period in the prior year. The decrease in depreciation and amortization is due to the fact that effective January 1, 2002 the Company ceased the amortization of goodwill and broadcast licenses with indefinite useful lives in accordance with the provisions of Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets". Stock option compensation expense remained constant at approximately $0.2 million for the three months ended June 30, 2002 and 2001. Stock option compensation expense represents a non-cash charge relating to the vesting of stock options granted to employees to purchase shares of the Company's common stock. 10 RADIO UNICA CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) OTHER INCOME (EXPENSE). Other income (expense) decreased by approximately $0.7 million or 17% to approximately $(4.6) million for the three months ended June 30, 2002 from approximately $(3.9) million for the comparable period in the prior year. Other income (expense) for the three months ended June 30, 2002 included interest expense of approximately $(4.6) million. Interest expense primarily relates to the interest on the outstanding balance of the Senior Discount Notes. The Company had approximately $(4.2) million in interest expense and $0.2 million of interest and other income during the three months ended June 30, 2001. INCOME TAX BENEFIT. The Company recorded an income tax benefit of approximately $39,000 for the three months ended June 30, 2002 and approximately $78,000 for the comparable period in the prior year. The benefit results from the Company's ability to utilize a portion of its net operating tax loss carryforwards to offset existing deferred tax liabilities. NET LOSS. Net loss decreased by approximately $2.8 million or 36% to approximately $(5.1) million for the three months ended June 30, 2002 from approximately $(7.9) million for the comparable period in the prior year. The decrease in net loss is mainly the result of the increase in the Company's revenue of approximately $2.3 million and decreased operating expenses of approximately $1.3 million, offset in part by the increase in general and administrative expenses associated with MASS of approximately $0.4 million and the increase in interest expense related to the Senior Discount Notes of approximately $0.4 million. EBITDA. EBITDA less the non-cash charge relating to the stock option compensation expense of approximately $0.2 million increased by approximately $2.7 million or 118% to approximately $0.4 million for the three months ended June 30, 2002 from approximately $(2.3) million for the comparable period in the prior year. EBITDA increased by approximately $2.7 million or 111% to approximately $0.3 million for the three months ended June 30, 2002 from approximately $(2.4) million for the comparable period in the prior year. The increase in EBITDA is mainly a result of the increase in revenue generated by MASS, increased rates and revenue market share at the network and O&Os, and decreased operating expenses relating to the radio broadcasting business. SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2001 The results of operations for the six months ended June 30, 2002 are not comparable to the same period in 2001 primarily due to the acquisition of MASS, which took place on April 30, 2001. Consequently, only two months of MASS' operations are included in the results for the six months ended June 30, 2001. NET REVENUE. Net revenue increased by approximately $4.8 million or 31% to approximately $20.3 million for the six months ended June 30, 2002 from approximately $15.5 million for the comparable period in the prior year. The increase in net revenue relates to increased revenue generated by promotional and merchandising services associated with MASS of approximately $2.5 million, and increased rates and revenue market share at the network and O&Os. OPERATING EXPENSES. Operating expenses decreased by approximately $1.8 million or 7% to approximately $24.4 million for the six months ended June 30, 2002 from approximately $26.2 million for the comparable period in the prior year. The decrease in operating expenses is due to decreased direct operating expenses of approximately $1.6 million, increased selling, general and administrative expenses of approximately $0.4 million, decreased network expenses of approximately $0.4 million, increased cost of promotion services of approximately $1.4 million and decreased depreciation and amortization of approximately $1.8 million. 11 RADIO UNICA CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) Direct operating expenses decreased by approximately $1.6 million or 39% to approximately $2.5 million for the six months ended June 30, 2002 from approximately $4.1 million for the comparable period in the prior year. The decrease in direct operating expenses is primarily due to decreased advertising spending in 2002, decreases in headcount at certain stations and the termination of a time brokerage agreement and station operations in San Diego. Selling, general and administrative expenses increased by approximately $0.4 million or 5% to approximately $8.8 million for the six months ended June 30, 2002 from approximately $8.4 million for the comparable period in the prior year. The increase in selling, general and administrative expenses primarily relates to the increase in general and administrative costs associated with MASS of approximately $0.8 million offset in part by a decrease of approximately $0.4 million related to the radio broadcasting business The increase in general and administrative expenses associated with MASS is primarily due to the additional four months of MASS' expenses in 2002 as well as the growth of MASS as a business segment. Network expenses decreased by approximately $0.2 million or 3% to approximately $7.5 million for the six months ended June 30, 2002 from approximately $7.7 million for the comparable period in the prior year. The decrease in network expenses is primarily due to decreased advertising spending. Corporate expenses remained constant at approximately $1.7 million for the six months ended June 30, 2002 and 2001. Corporate expenses are comprised of the cost of corporate management and legal and professional fees. Cost of promotion services increased by approximately $1.4 million or 193% to $2.1 million for the six months ended June 30, 2002 from approximately $0.7 million for the comparable period in the prior year. The increase in the cost of promotion services is directly related to the increase in MASS' revenue and the additional four months of MASS' expenses in 2002. Depreciation and amortization decreased by approximately $1.8 million or 55% to approximately $1.5 million for the six months ended June 30, 2002 from approximately $3.3 million for the comparable period in the prior year. The decrease in depreciation and amortization is due to the fact that effective January 1, 2002 the Company ceased the amortization of goodwill and broadcast licenses with indefinite useful lives in accordance with the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets". Stock option compensation expense decreased by approximately $0.1 million or 12% to approximately $0.3 million for the six months ended June 30, 2002 from approximately $0.4 million for the comparable period in the prior year. Stock option compensation expense represents a non-cash charge relating to the vesting of stock options granted to employees to purchase shares of the Company's common stock. OTHER INCOME (EXPENSE). Other income (expense) decreased by approximately $1.2 million or 15% to approximately $(9.2) million for the six months ended June 30, 2002 from approximately $(8.0) million for the comparable period in the prior year. Other income (expense) for the six months ended June 30, 2002 is mainly comprised of interest expense of approximately $(9.1) million and other expense of approximately $0.1 million. Interest expense primarily relates to the interest on the outstanding balance of the Senior Discount Notes. The Company had approximately $(8.2) million in interest expense and approximately $0.2 million in interest and other income during the six months ended June 30, 2001. 12 RADIO UNICA CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) INCOME TAX BENEFIT. The Company recorded an income tax benefit of approximately $0.1 million for the six months ended June 30, 2002 and 2001. The benefit results from the Company's ability to utilize a portion of its net operating tax loss carryforwards to offset existing deferred tax liabilities. NET LOSS. Net loss decreased by approximately $5.4 million or 29% to approximately $13.1 million for the six months ended June 30, 2002 from approximately $18.5 million for the comparable period in the prior year. The decrease in net loss is mainly the result of the increase in the Company's revenue of approximately $4.8 million and decreased operating expenses of approximately $1.8 million, offset in part by the increase in interest expense related to the Senior Discount Notes of approximately $0.9 million and decreased interest and other income of approximately $0.3 million. EBITDA. EBITDA less the non-cash charge relating to the stock option compensation expense of approximately $0.3 million increased by approximately $4.8 million or 68% to approximately $(2.2) million for the six months ended June 30, 2002 from approximately $(7.0) million for the comparable period in the prior year. EBITDA increased by approximately $4.8 million or 66% to approximately $(2.5) million for the six months ended June 30, 2002 from approximately $(7.3) million for the comparable period in the prior year. The increase in EBITDA is mainly a result of the increase in revenue generated by MASS, increased rates and revenue market share at the network and O&Os, and decreased operating expenses relating to the radio broadcasting business. LIQUIDITY AND CAPITAL RESOURCES The Company has had negative cash flows since inception. Working capital and financing for the Company's acquisitions to date have been provided primarily by the proceeds from RUCC's initial public offering, the issuance of the 11 3/4% Senior Discount Notes due August 1, 2006 and the issuance of promissory notes, common stock and preferred stock to RUCC's shareholders. On June 25, 2002, the Company entered into an agreement for a senior secured revolving credit facility (the "Revolving Credit Facility") providing for up to $20 million of availability. The Revolving Credit Facility will mature on February 1, 2006. 13 RADIO UNICA CORP. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (CONTINUED) LIQUIDITY AND CAPITAL RESOURCES, CONTINUED Net cash used in operating activities decreased by approximately $2.9 million or 41% to approximately $4.3 million for the six months ended June 30, 2002 from approximately $7.3 million for the comparable period in the prior year. Net cash used in investing activities was approximately $2.2 million and $3.0 million for the six months ended June 30, 2002 and 2001, respectively. The decrease of approximately $0.8 million from 2002 to 2001 is primarily due to the acquisition of MASS which took place during April 2001, offset in part by the increase in capital expenditures associated with signal upgrades currently in process for our New York and Dallas stations. Net cash provided by financing activities was approximately $6.9 million and $10.5 million for the six months ended June 30, 2002 and 2001, respectively. The decrease of approximately $3.6 million from 2002 to 2001 is due to fewer borrowings from RUCC of approximately $2.8 million as well as approximately $0.8 million of deferred financing cost which was incurred in connection with the Revolving Credit Facility.. Capital expenditures primarily relate to the purchase of broadcast equipment for the network and O&Os, leasehold improvements, computer equipment and telecommunications equipment. Capital expenditures were approximately $2.2 million and $1.6 million for the six months ended June 30, 2002 and 2001, respectively. The increase in capital expenditures is primarily due to signal upgrades that are currently in process for our New York and Dallas stations. The Company believes that the remaining proceeds from RUCC's initial public offering and the borrowing availability under the Revolving Credit Facility will provide adequate resources to fund the Company's operating expenses, working capital requirements and capital expenditures. The Company's first interest payment under the Senior Discount Notes in the amount of approximately $9.3 million is due on February 1, 2003 and semiannually through August 1, 2006. The Company will utilize its current cash position, cash generated from operations and the borrowing availability under the Revolving Credit Facility to fund such payments. There can be no assurance that the Company will have sufficient funds or will generate future cash flows to meet all of the of the Company's obligations and commitments. The failure to generate such sufficient cash flow could significantly adversely affect the market value of the Company's Senior Discount Notes, and the Company's ability to pay the principal of and interest on the Senior Discount Notes. 14 RADIO UNICA CORP. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits required by Item 601 of Regulation S-K. 10.1 Credit Agreement dated as of June 25, 2002 among Radio Unica Corp. and subsidiaries as borrowers and General Electric Capital Corporation, as Agent and Lender. 99. Certification (a) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Radio Unica Corp. /s/ Steven E. Dawson By: ------------------------- Steven E. Dawson Chief Financial Officer Date: August 13, 2002 15 INDEX TO EXHIBITS a) Exhibits required by Item 601 of Regulation S-K 10.1 Credit Agreement dated as of June 25, 2002 among Radio Unica Corp. and subsidiaries as borrowers and General Electric Capital Corporation, as Agent and Lender. 99. Certification EX-10.1 3 a2085959zex-10_1.txt EXHIBIT 10.1 EXHIBIT 10.1 ================================================================================ CREDIT AGREEMENT Dated as of June 25, 2002 among RADIO UNICA CORP. and THE ENTITIES LISTED ON ANNEX 1 HERETO, as Borrowers, THE OTHER CREDIT PARTIES SIGNATORY HERETO, as Credit Parties, THE LENDERS SIGNATORY HERETO FROM TIME TO TIME, as Lenders, and GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and Lender ================================================================================ TABLE OF CONTENTS
Page ---- 1. AMOUNT AND TERMS OF CREDIT...............................................................................2 1.1 CREDIT FACILITIES...............................................................................2 1.2 LETTERS OF CREDIT...............................................................................3 1.3 PREPAYMENTS.....................................................................................3 1.4 USE OF PROCEEDS.................................................................................5 1.5 INTEREST AND APPLICABLE MARGINS.................................................................6 1.6 [Intentionally Reserved.].......................................................................7 1.7 [Intentionally Reserved.].......................................................................7 1.8 CASH MANAGEMENT SYSTEMS.........................................................................7 1.9 FEES............................................................................................7 1.10 RECEIPT OF PAYMENTS.............................................................................8 1.11 APPLICATION AND ALLOCATION OF PAYMENTS..........................................................8 1.12 LOAN ACCOUNT AND ACCOUNTING.....................................................................9 1.13 INDEMNITY......................................................................................10 1.14 ACCESS.........................................................................................11 1.15 TAXES..........................................................................................11 1.16 CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY..................................................12 1.17 SINGLE LOAN....................................................................................14 2. CONDITIONS PRECEDENT....................................................................................14 2.1 CONDITIONS TO THE INITIAL LOANS................................................................14 2.2 FURTHER CONDITIONS TO EACH LOAN................................................................15 3. REPRESENTATIONS AND WARRANTIES..........................................................................15 3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW.......................................................16 3.2 EXECUTIVE OFFICES, COLLATERAL LOCATIONS, FEIN..................................................16 3.3 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS........................................16 3.4 FINANCIAL STATEMENTS AND PROJECTIONS...........................................................17 3.5 MATERIAL ADVERSE EFFECT........................................................................18 3.6 OWNERSHIP OF PROPERTY; LIENS...................................................................18 3.7 LABOR MATTERS..................................................................................19 3.8 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK; INDEBTEDNESS........................19 3.9 GOVERNMENT REGULATION..........................................................................19 3.10 MARGIN REGULATIONS.............................................................................20 3.11 TAXES..........................................................................................20 3.12 ERISA..........................................................................................21 3.13 NO LITIGATION..................................................................................21 3.14 BROKERS........................................................................................22 3.15 INTELLECTUAL PROPERTY..........................................................................22 3.16 FULL DISCLOSURE................................................................................22 3.17 ENVIRONMENTAL MATTERS..........................................................................22 3.18 INSURANCE......................................................................................23 3.19 DEPOSIT AND DISBURSEMENT ACCOUNTS..............................................................23
ii 3.20 GOVERNMENT CONTRACTS...........................................................................24 3.21 NETWORK AFFILIATES.............................................................................24 3.22 AGREEMENTS AND OTHER DOCUMENTS.................................................................24 3.23 SOLVENCY.......................................................................................24 3.24 STATUS OF PARENT...............................................................................24 3.25 SECURITY INTERESTS.............................................................................25 3.26 RUC DISCOUNT NOTES.............................................................................25 3.27 FCC MATTERS/BROADCASTING BUSINESS..............................................................25 4. FINANCIAL STATEMENTS AND INFORMATION....................................................................26 4.1 REPORTS AND NOTICES............................................................................26 4.2 COMMUNICATION WITH ACCOUNTANTS.................................................................26 5. AFFIRMATIVE COVENANTS...................................................................................27 5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS...............................................27 5.2 PAYMENT OF CHARGES.............................................................................27 5.3 BOOKS AND RECORDS..............................................................................28 5.4 INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL..............................................28 5.5 COMPLIANCE WITH LAWS...........................................................................30 5.6 SUPPLEMENTAL DISCLOSURE........................................................................30 5.7 INTELLECTUAL PROPERTY..........................................................................30 5.8 ENVIRONMENTAL MATTERS..........................................................................30 5.9 LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS, BAILEE LETTERS AND REAL ESTATE PURCHASES..........31 5.10 [Intentionally Reserved.]......................................................................32 5.11 FURTHER ASSURANCES.............................................................................32 5.12 FCC REPORTS AND COMMUNICATIONS.................................................................32 5.13 OPERATING AGREEMENTS...........................................................................32 6. NEGATIVE COVENANTS......................................................................................32 6.1 MERGERS, SUBSIDIARIES, ETC.....................................................................32 6.2 INVESTMENTS; LOANS AND ADVANCES................................................................35 6.3 INDEBTEDNESS...................................................................................36 6.4 EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS......................................................37 6.5 CAPITAL STRUCTURE AND BUSINESS.................................................................37 6.6 GUARANTEED INDEBTEDNESS........................................................................38 6.7 LIENS..........................................................................................38 6.8 SALE OF STOCK AND ASSETS.......................................................................38 6.9 ERISA..........................................................................................39 6.10 FINANCIAL COVENANTS............................................................................39 6.11 HAZARDOUS MATERIALS............................................................................39 6.12 SALE-LEASEBACKS................................................................................39 6.13 CANCELLATION OF INDEBTEDNESS...................................................................39 6.14 RESTRICTED PAYMENTS............................................................................39 6.15 CHANGE OF CORPORATE NAME OR LOCATION; CHANGE OF FISCAL YEAR....................................39 6.16 NO IMPAIRMENT OF INTERCOMPANY TRANSFERS........................................................40 6.17 NO SPECULATIVE TRANSACTIONS....................................................................40 6.18 LEASES; REAL ESTATE PURCHASES..................................................................40 6.19 CHANGES RELATING TO SUBORDINATED DEBT; MATERIAL CONTRACTS......................................40 6.20 CREDIT PARTIES OTHER THAN BORROWERS............................................................41
iii 6.21 LICENSE SUBS...................................................................................41 6.22 LIMITATION ON SALE OR DISCOUNT OF RECEIVABLES..................................................41 7. TERM 42 7.1 TERMINATION....................................................................................42 7.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING ARRANGEMENTS.............................42 8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES..................................................................42 8.1 EVENTS OF DEFAULT..............................................................................42 8.2 REMEDIES.......................................................................................45 8.3 WAIVERS BY CREDIT PARTIES......................................................................45 9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT.....................................................45 9.1 ASSIGNMENT AND PARTICIPATIONS..................................................................45 9.2 APPOINTMENT OF AGENT...........................................................................48 9.3 AGENT'S RELIANCE, ETC..........................................................................49 9.4 GE CAPITAL AND AFFILIATES......................................................................49 9.5 LENDER CREDIT DECISION.........................................................................49 9.6 INDEMNIFICATION................................................................................50 9.7 SUCCESSOR AGENT................................................................................50 9.8 SETOFF AND SHARING OF PAYMENTS.................................................................51 9.9 ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION; ACTIONS IN CONCERT.......................51 10. SUCCESSORS AND ASSIGNS..................................................................................54 10.1 SUCCESSORS AND ASSIGNS.........................................................................54 11. MISCELLANEOUS...........................................................................................54 11.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT..................................................54 11.2 AMENDMENTS AND WAIVERS.........................................................................54 11.3 FEES AND EXPENSES..............................................................................56 11.4 NO WAIVER......................................................................................57 11.5 REMEDIES.......................................................................................57 11.6 SEVERABILITY...................................................................................58 11.7 CONFLICT OF TERMS..............................................................................58 11.8 CONFIDENTIALITY................................................................................58 11.9 GOVERNING LAW..................................................................................58 11.10 NOTICES 59 11.11 SECTION TITLES.................................................................................60 11.12 COUNTERPARTS...................................................................................60 11.13 WAIVER OF JURY TRIAL...........................................................................60 11.14 PRESS RELEASES AND RELATED MATTERS.............................................................60 11.15 REINSTATEMENT..................................................................................61 11.16 ADVICE OF COUNSEL..............................................................................61 11.17 NO STRICT CONSTRUCTION.........................................................................61 12. CROSS-GUARANTY..........................................................................................62 12.1 CROSS-GUARANTY.................................................................................62 12.2 WAIVERS BY BORROWERS...........................................................................63 12.3 BENEFIT OF GUARANTY............................................................................63 12.4 SUBORDINATION OF SUBROGATION, ETC..............................................................63
iv 12.5 ELECTION OF REMEDIES...........................................................................63 12.6 LIMITATION.....................................................................................64 12.7 CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS..............................................64 12.8 LIABILITY CUMULATIVE...........................................................................65
v INDEX OF APPENDICES Annex A (Recitals) - Definitions Annex B (SECTION 1.2) - Letters of Credit Annex C (SECTION 1.8) - Cash Management System Annex D (SECTION 2.1(a)) - Closing Checklist Annex E (SECTION 4.1(a)) - Financial Statements and Projections -- Reporting Annex F (SECTION 4.1(b)) - Collateral Reports Annex G (SECTION 6.10) - Financial Covenants Annex H (SECTION 9.9(a)) - Lenders' Wire Transfer Information Annex I (SECTION 11.10) - Notice Addresses Annex J (from Annex A - Commitments definition) Commitments as of Closing Date Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance Exhibit 1.1(a)(ii) - Form of Revolving Note Exhibit 1.5(e) - Form of Notice of Conversion/Continuation Exhibit 9.1(a) - Form of Assignment Agreement Exhibit B-1 - Application for Standby Letter of Credit Schedule 1.1 - Agent's Representatives Disclosure Schedule 1.4 - Sources and Uses; Funds Flow Memorandum Disclosure Schedule 3.1 - Type of Entity; State of Organization Disclosure Schedule 3.2 - Executive Offices, Collateral Locations, FEIN Disclosure Schedule 3.4(a) - Financial Statements Disclosure Schedule 3.4(b) - Pro Forma Disclosure Schedule 3.4(c) - Projections Disclosure Schedule 3.6 - Real Estate and Leases Disclosure Schedule 3.7 - Labor Matters Disclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock Disclosure Schedule 3.11 - Tax Matters Disclosure Schedule 3.12 - ERISA Plans Disclosure Schedule 3.13 - Litigation Disclosure Schedule 3.15 - Intellectual Property Disclosure Schedule 3.17 - Hazardous Materials Disclosure Schedule 3.18 - Insurance Disclosure Schedule 3.19 - Deposit and Disbursement Accounts Disclosure Schedule 3.20 - Government Contracts Disclosure Schedule 3.22 - Material Agreements Disclosure Schedule 3.27(a) - FCC Licenses Disclosure Schedule 3.27(f) - Local Marketing Agreements and Time Brokerage Agreements Disclosure Schedule 5.1 - Trade Names Disclosure Schedule 6.2 - Investments; Loans and Advances Disclosure Schedule 6.3 - Indebtedness
vi Disclosure Schedule 6.4(a) - Transactions with Affiliates Disclosure Schedule 6.7 - Existing Liens Disclosure Schedule 6.20 - Credit Parties Other than Borrowers
vii This CREDIT AGREEMENT (this "AGREEMENT"), dated as of June 25, 2002 among RADIO UNICA CORP., a Delaware corporation ("RUC"); the entities listed on ANNEX 1 hereto (each of the entities listed on ANNEX 1 hereto and RUC is sometimes referred to herein as, a "BORROWER" and collectively as, the "BORROWERS"); the other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, "GE CAPITAL"), for itself, as Lender, and as Agent for Lenders; and the other Lenders signatory hereto from time to time. RECITALS WHEREAS, Borrowers have requested that Lenders extend a revolving credit facility to Borrowers of up to Twenty Million Dollars ($20,000,000.00) in the aggregate for the purpose of providing (a) working capital financing for Borrowers, (b) funds for other general corporate purposes of Borrowers, (c) funds for certain approved future acquisitions, and (d) funds for other purposes permitted hereunder; and for these purposes, Lenders are willing to make certain loans and other extensions of credit to Borrowers of up to such amount upon the terms and conditions set forth herein; WHEREAS, Borrowers have agreed to secure all of their obligations under the Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a security interest in and lien upon all of their existing and after-acquired personal and real property; WHEREAS, RADIO UNICA COMMUNICATIONS CORP., a Delaware corporation and the parent of RUC ("PARENT"), is willing to guarantee all of the obligations of Borrowers to Agent and Lenders under the Loan Documents and Parent is willing to pledge to Agent, for the benefit of Agent and Lenders, all of the Stock of RUC, together with all of its other assets, to secure such guaranty; WHEREAS, the Borrowers' business is a mutual and collective enterprise, and the Borrowers believe that the consolidation of all loans and other accommodations under this Agreement will enhance the Borrowers' aggregate borrowing powers and facilitate the administration of their relationship with the Agent and the Lenders, all to the Borrowers' respective individual and mutual advantage; and WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them in ANNEX A and, for purposes of this Agreement and the other Loan Documents, the rules of construction set forth in ANNEX A shall govern. All Annexes, Disclosure Schedules, Exhibits and other attachments (collectively, "APPENDICES") hereto, or expressly identified to this Agreement, are incorporated herein by reference, and taken together with this Agreement, shall constitute but a single agreement. These Recitals shall be construed as part of this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the parties hereto agree as follows: 1. AMOUNT AND TERMS OF CREDIT 1.1 CREDIT FACILITIES. (a) REVOLVING CREDIT FACILITY. (i) Subject to the terms and conditions hereof, each Lender agrees to make available to Borrowers from time to time until the Commitment Termination Date its Pro Rata Share of advances (each, a "REVOLVING CREDIT ADVANCE"). The Pro Rata Share of the Revolving Loan of any Lender shall not at any time exceed its separate Commitment. The obligations of each Lender hereunder shall be several and not joint. Until the Commitment Termination Date, Borrowers may borrow, repay and reborrow under this SECTION 1.1(a); PROVIDED; that the amount of any Revolving Credit Advance to be made at any time shall not exceed the lesser of (A) the Borrowing Availability at such time or (B) the Commitments at such time. Each Revolving Credit Advance shall be made on notice by Borrower Representative on behalf of the applicable Borrower to one of the representatives of Agent identified in SCHEDULE 1.1 at the address specified therein. Any such notice must be given no later than (1) 11:00 a.m. (New York time) on the Business Day of the proposed Revolving Credit Advance, in the case of an Index Rate Loan, or (2) 11:00 a.m. (New York time) on the date which is 3 Business Days prior to the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice (a "NOTICE OF REVOLVING CREDIT ADVANCE") must be given in writing (by telecopy or overnight courier) substantially in the form of EXHIBIT 1.1(a)(i), and shall include (A) a certification by Borrower Representative that Borrowers are, as of the date of such Advance, in compliance with all of the terms and conditions contained in the Loan Documents, including the Financial Covenants contained herein, together with a written calculation, in detail satisfactory to Agent, of such Financial Covenant compliance, (B) the information required in such Exhibit, and (C) such other information as may be required by Agent. If any Borrower desires to have the Revolving Credit Advances bear interest by reference to a LIBOR Rate, Borrower Representative must comply with SECTION 1.5(e). (ii) Except as provided in SECTION 1.12, Borrowers shall execute and deliver to each Lender a note to evidence the Commitment of that Lender. Each note shall be in the principal amount of the Commitment of the applicable Lender, dated the Closing Date and substantially in the form of EXHIBIT 1.1(a)(ii) (each a "REVOLVING NOTE" and, collectively, the "REVOLVING NOTES"). Each Revolving Note shall represent the obligation of the Borrowers to pay the amount of the applicable Lender's Commitment or, if less, such Lender's Pro Rata Share of the aggregate unpaid principal amount of all Revolving Credit Advances to Borrowers together with interest thereon as prescribed in SECTION 1.5. The entire unpaid balance of the aggregate Revolving Loan and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the Commitment Termination Date. (b) [Intentionally Reserved.] (c) RELIANCE ON NOTICES; APPOINTMENT OF BORROWER REPRESENTATIVE. Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any Notice of Revolving Credit Advance, Notice of Conversion/Continuation or similar notice believed by 2 Agent to be genuine. Agent may assume that each Person executing and delivering any notice in accordance herewith was duly authorized, unless the responsible individual acting thereon for Agent has actual knowledge to the contrary. Each Borrower hereby designates RUC as its representative and agent on its behalf for the purposes of issuing Notices of Revolving Credit Advances and Notices of Conversion/Continuation, giving instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, requesting Letters of Credit, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers under the Loan Documents. Borrower Representative hereby accepts such appointment. Agent and each Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice or communication from all Borrowers, and may give any notice or communication required or permitted to be given to any Borrower or Borrowers hereunder to Borrower Representative on behalf of such Borrower or Borrowers. Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower. 1.2 LETTERS OF CREDIT. Subject to and in accordance with the terms and conditions contained herein and in ANNEX B, Borrower Representative, on behalf of the applicable Borrower, shall have the right to request, and Lenders agree to incur, or purchase participations in, Letter of Credit Obligations in respect of each Borrower. 1.3 PREPAYMENTS. (a) VOLUNTARY PREPAYMENTS. Borrowers may at any time on at least 5 days' prior written notice by Borrower Representative to Agent (i) voluntarily prepay and permanently reduce the Commitment; PROVIDED that (A) any such prepayment and permanent reduction shall be in an amount of at least $500,000, and (B) the remaining Commitment following any such prepayment and permanent reduction shall be in an amount of at least $10,000,000 or (ii) terminate the Commitment; PROVIDED that upon any such termination, all Loans and other Obligations shall be immediately due and payable in full and all Letter of Credit Obligations shall be cash collateralized or otherwise satisfied in accordance with ANNEX B. Any such voluntary prepayment and permanent reduction or any such termination of the Commitment must be accompanied by the payment of any LIBOR funding breakage costs in accordance with SECTION 1.13(b). Upon any such prepayment and permanent reduction or termination of the Commitment, each Borrower's right to request Revolving Credit Advances, or request that Letter of Credit Obligations be incurred on its behalf shall simultaneously be terminated; but, in the case of a voluntary prepayment, solely to the extent of such prepayment. 3 (b) MANDATORY PREPAYMENTS. (i) In the event and on each occasion that (A) the outstanding balance of the Revolving Loan exceeds the Borrowing Availability, or (B) the outstanding balance of the Revolving Loan exceeds the Commitments, Borrowers shall immediately repay the aggregate outstanding Loans to the extent required to eliminate any such excess. If any such excess remains after repayment in full of the aggregate outstanding Revolving Credit Advances, Borrowers shall provide cash collateral for the Letter of Credit Obligations in the manner set forth in ANNEX B to the extent required to eliminate such excess. (ii) In the event and on each occasion that any Net Proceeds are received by or on behalf of any Credit Party in respect of any Prepayment Event, Borrowers shall, immediately after such Net Proceeds are received, prepay the Loans in accordance with SECTION 1.3(c) in an aggregate amount equal to such Net Proceeds; PROVIDED that, in the case of any event described in clause (a) of the definition of the term Prepayment Event, if the Borrower Representative shall deliver to the Agent a certificate of a Financial Officer to the effect that the Borrowers intend to apply the Net Proceeds from such event (or a portion thereof specified in such certificate) (such Net Proceeds or portion thereof, the "REINVESTMENT AMOUNT"), within 180 days after receipt of such Net Proceeds, to acquire real property, equipment or other tangible assets to be used in the business of the Borrowers and which are reasonably acceptable to Agent, and certifying that no Default or Event of Default has occurred and is continuing, then no prepayment shall be required pursuant to this paragraph in respect of the Net Proceeds in respect of such event (or the portion of such Net Proceeds specified in such certificate, if applicable) except to the extent of any such Net Proceeds therefrom that have not been so applied by the end of such 180-day period, at which time a prepayment shall be required in an amount equal to such Net Proceeds that have not been so applied. (iii) In the event and on each occasion that any Credit Party (i) issues Stock (other than Stock issued in connection with a Permitted Acquisition), or (ii) incurs Indebtedness for borrowed money (other than the Loans or Indebtedness permitted to be incur pursuant to SECTION 6.3(a)), no later than the Business Day following the date of receipt of the proceeds thereof, such Credit Party shall, or if such Credit Party is not a Borrower shall (x) contribute the same to the equity of a Borrower and (y) cause such Borrower to, prepay the Loans in an amount equal to the Net Proceeds received in connection therewith or, in the case of a Permitted Equity Transaction, 50% of the Net Proceeds thereof. Any such prepayment shall be applied in accordance with SECTION 1.3(c). (iv) Beginning on March 31, 2003 for the Fiscal Year 2002 and annually thereafter, on March 31st of each year for the immediately preceding Fiscal Year, Borrowers shall prepay the Obligations in an amount equal to Fifty percent (50%) of Excess Cash Flow for the immediately preceding Fiscal Year. Any prepayments from Excess Cash Flow paid pursuant to this CLAUSE (iv) shall be applied in accordance with SECTION 1.3(c). Each such prepayment shall be accompanied by a certificate signed by Borrower Representative certifying the manner in which Excess Cash Flow and the resulting prepayment were calculated, which certificate shall be in form and substance reasonably satisfactory to Agent. 4 (c) APPLICATION OF CERTAIN MANDATORY PREPAYMENTS. Any prepayments made by any Borrower pursuant to SECTIONS 1.3(b)(ii) OR (b)(iii) above shall be applied as follows: FIRST, to Fees and reimbursable expenses of Agent then due and payable pursuant to any of the Loan Documents; SECOND, to interest then due and payable on Revolving Credit Advances made to such Borrower; THIRD, to the principal balance of Revolving Credit Advances outstanding to such Borrower until the same have been paid in full; FOURTH, to any Letter of Credit Obligations of such Borrower to provide cash collateral therefor in the manner set forth in ANNEX B, until all such Letter of Credit Obligations have been fully cash collateralized in the manner set forth in ANNEX B. The Commitment shall be permanently reduced by the amount of any such prepayments made pursuant to SUBCLAUSES (ii) and (iii) of SECTION 1.3(b), but shall not be permanently reduced by the amount of any such prepayments made pursuant to SUBCLAUSES (i) and (iv) of SECTION 1.3(b). Notwithstanding the foregoing, the Commitment shall not be permanently reduced by the amount of any prepayment pursuant to clause (iii) of SECTION 1.3(b) to the extent such prepayment results from the Net Proceeds of a Permitted Equity Transaction consummated on or before the 180th day following the Closing Date. (d) APPLICATION OF PREPAYMENTS FROM INSURANCE AND CONDEMNATION PROCEEDS. Prepayments from insurance or condemnation proceeds in accordance with SECTION 5.4(c) and the Mortgages, respectively, shall be applied as follows: insurance proceeds from casualties or losses to cash or Inventory shall be applied to the Revolving Credit Advances of the Borrower that incurred such casualties or losses; insurance or condemnation proceeds from casualties or losses to Equipment, Fixtures and Real Estate shall be applied to the Revolving Credit Advances of the Borrower that incurred such casualties or losses. The Commitment shall not be permanently reduced by the amount of any such prepayments. If insurance or condemnation proceeds received by a particular Borrower exceed the outstanding principal balances of the Loans to that Borrower or if the precise amount of insurance or condemnation proceeds allocable to Inventory as compared to Equipment, Fixtures and Real Estate are not otherwise determined, the allocation and application of those proceeds shall be determined by Agent, subject to the approval of Requisite Lenders. (e) NO IMPLIED CONSENT. Nothing in this SECTION 1.3 shall be construed to constitute Agent's or any Lender's consent to any transaction that is not permitted by other provisions of this Agreement or the other Loan Documents. 1.4 USE OF PROCEEDS. Borrowers shall utilize the proceeds of the Revolving Loan solely for the financing of Borrowers' ordinary working capital and general corporate needs (including payment of interest), to provide funds for future Permitted Acquisitions, and, to the extent herein permitted, Permitted Senior Note Repurchases and Capital Expenditures. DISCLOSURE SCHEDULE (1.4) contains a description of Borrowers' sources and uses of funds as of the Closing Date, including Loans and Letter of Credit Obligations to be made or incurred on that date, and a funds flow memorandum detailing how funds from each source are to be transferred to particular uses. 5 1.5 INTEREST AND APPLICABLE MARGINS. (a) Borrowers shall pay interest to Agent, for the ratable benefit of Lenders in accordance with the various Loans being made by each Lender, in arrears on each applicable Interest Payment Date, at the following rates: the Index Rate, PLUS two and one-half percent (2.5%) per annum or, at the election of Borrower Representative, the applicable LIBOR Rate, PLUS three and one-half percent (3.5%) per annum, in each case, based on the aggregate Revolving Credit Advances outstanding from time to time. (b) If any payment on any Loan becomes due and payable on a day other than a Business Day, the maturity thereof will be extended to the next succeeding Business Day (except as set forth in the definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. (c) All computations of Fees calculated on a per annum basis and interest shall be made by Agent on the basis of a 360-day year for the actual number of days occurring in the period for which such interest and Fees are payable. The Index Rate is a floating rate determined for each day. Each determination by Agent of an interest rate and Fees hereunder shall be final, binding and conclusive on Borrowers, absent manifest error. (d) So long as an Event of Default has occurred and is continuing under SECTION 8.1(a), (h) OR (i) or so long as any other Default or Event of Default has occurred and is continuing and at the election of Agent (or upon the written request of Requisite Lenders) confirmed by written notice from Agent to Borrower Representative, the interest rates applicable to the Loans and the Letter of Credit Fees shall be increased by two percentage points (2%) per annum above the rates of interest or the rate of such Fees otherwise applicable hereunder ("DEFAULT RATE"), and all outstanding Obligations shall bear interest at the Default Rate applicable to such Obligations. Interest and Letter of Credit Fees at the Default Rate shall accrue from the initial date of such Default or Event of Default until that Default or Event of Default is cured or waived in writing and shall be payable upon demand. (e) Subject to the conditions precedent set forth in SECTION 2.2, Borrower Representative shall have the option to (i) request that any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding Loans from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs in accordance with SECTION 1.13(b), if such conversion is made prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue all or any portion of any Loan as a LIBOR Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan shall commence on the first day after the last day of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans having the same proposed LIBOR Period to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of $250,000 and integral multiples of $250,000 in excess of such amount. Any such election must be made by 11:00 a.m. (New York time) on the 3rd Business Day prior to (1) the date of any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be continued as such, or (3) the date on which Borrower Representative wishes to convert any Index Rate Loan to a LIBOR Loan for a 6 LIBOR Period designated by Borrower Representative in such election. If no election is received with respect to a LIBOR Loan by 11:00 a.m. (New York time) on the 3rd Business Day prior to the end of the LIBOR Period with respect thereto (or if a Default or an Event of Default has occurred and is continuing or if the additional conditions precedent set forth in SECTION 2.2 shall not have been satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period. Borrower Representative must make such election by notice to Agent in writing, by telecopy or overnight courier. In the case of any conversion or continuation, such election must be made pursuant to a written notice (a "NOTICE OF CONVERSION/CONTINUATION") in the form of EXHIBIT 1.5(e). (f) Notwithstanding anything to the contrary set forth in this SECTION 1.5, if a court of competent jurisdiction determines in a final order that the rate of interest payable hereunder exceeds the highest rate of interest permissible under law (the "MAXIMUM LAWFUL RATE"), then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder shall be equal to the Maximum Lawful Rate; PROVIDED, HOWEVER, that if at any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest received by Agent, on behalf of Lenders, is equal to the total interest that would have been received had the interest rate payable hereunder been (but for the operation of this paragraph) the interest rate payable since the Closing Date as otherwise provided in this Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of interest and in the manner provided in SECTIONS 1.5(a) THROUGH (e), unless and until the rate of interest again exceeds the Maximum Lawful Rate, and at that time this paragraph shall again apply. In no event shall the total interest received by any Lender pursuant to the terms hereof exceed the amount that such Lender could lawfully have received had the interest due hereunder been calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum Lawful Rate is calculated pursuant to this paragraph, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made. If, notwithstanding the provisions of this SECTION 1.5(f), a court of competent jurisdiction shall finally determine that a Lender has received interest hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent permitted by applicable law, promptly apply such excess in the order specified in SECTION 1.11 and thereafter shall refund any excess to Borrowers or as a court of competent jurisdiction may otherwise order. 1.6 [Intentionally Reserved.] 1.7 [Intentionally Reserved.] 1.8 CASH MANAGEMENT SYSTEMS. On or prior to the Closing Date, Borrowers will establish and will maintain until the Termination Date, the cash management systems described in ANNEX C (the "CASH MANAGEMENT SYSTEMS"). 1.9 FEES. (a) In consideration for extending and closing the Revolving Loan and committing funds with respect thereto, Borrowers shall pay to Agent, for the ratable benefit of 7 such Lenders, on the Closing Date a closing fee (the "CLOSING FEE") in the amount of two and one-quarter percent (2.25%) of the Commitment MINUS the Commitment Fee. (b) As additional compensation for the Lenders, Borrowers shall pay to Agent, for the ratable benefit of Lenders, in arrears, on the first Business Day of each month prior to the Commitment Termination Date and on the Commitment Termination Date, an unused line fee (the "UNUSED LINE FEE") for Borrowers' non-use of available funds in an amount equal to (i) one-half of one percent (0.50%) per annum, in the event the Usage, as of the date of determination, is equal to or greater than Fifty percent (50%) of the Commitments then existing, and (ii) three-quarters of one percent (0.75%) per annum, in the event the Usage, as of the date of determination, is less than Fifty percent (50%) of the Commitments then existing (in each case, calculated on the basis of a 360 day year for actual days elapsed), MULTIPLIED BY the difference between (x) the Commitment (as it may be reduced from time to time) and (y) the average for the period of the daily closing balances of the aggregate Revolving Loan outstanding during the period for which such Fee is due (the applicable amount described in this clause (y) being, the "USAGE"). (c) Borrowers shall pay to Agent, for the ratable benefit of Lenders, the Letter of Credit Fee as provided in ANNEX B. (d) In connection with Agent's initial and ongoing audits and field examinations, Borrowers shall pay to Agent, for the ratable benefit of Lenders, a field examination fee (the "FIELD EXAMINATION FEE") in an amount equal to $750 per auditor, PLUS out-of-pocket expenses, which Field Examination Fee shall be due and payable by Borrowers to Agent at the completion of each audit and/or field examination completed by Agent or Lenders in accordance with the terms hereof. (e) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Agent for distribution, as set forth herein, to the Lenders entitled thereto. Fees due and owing hereunder and paid shall not be refundable under any circumstances. 1.10 RECEIPT OF PAYMENTS. Borrowers shall make each payment under this Agreement not later than 2:00 p.m. (New York time) on the day when due in immediately available funds in Dollars to the Collection Account. For purposes of computing interest and Fees and determining Borrowing Availability as of any date, all payments shall be deemed received on the first Business Day following the Business Day on which immediately available funds therefor are received in the Collection Account prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New York time on any Business Day or on a day that is not a Business Day shall be deemed to have been received on the following Business Day. 1.11 APPLICATION AND ALLOCATION OF PAYMENTS. (a) So long as no Default or Event of Default has occurred and is continuing, (i) payments consisting of proceeds of the Collateral received in the ordinary course of business shall be applied to the Revolving Loan; (ii) voluntary prepayments shall be applied as determined by Borrower Representative, subject to the provisions of SECTION 1.3(a); and (iii) mandatory 8 prepayments shall be applied as set forth in SECTIONS 1.3(c) AND 1.3(d). All payments and prepayments applied to a particular Loan shall be applied ratably to the portion thereof held by each Lender as determined by its Pro Rata Share. As to any other payment, and as to all payments made when a Default or Event of Default has occurred and is continuing or following the Commitment Termination Date, each Borrower hereby irrevocably waives the right to direct the application of any and all payments received from or on behalf of such Borrower, and each Borrower hereby irrevocably agrees that Agent shall have the continuing exclusive right to apply any and all such payments against the Obligations of Borrowers as Agent may deem advisable notwithstanding any previous entry by Agent in the Loan Account or any other books and records. In the absence of a specific determination by Agent with respect thereto, payments shall be applied to amounts then due and payable in the following order: (1) to Fees and Agent's expenses reimbursable hereunder; (2) to interest on the Loans, ratably in proportion to the interest accrued as to each Loan; (3) to principal payments on the Loans and to provide cash collateral for Letter of Credit Obligations in the manner described in ANNEX B, ratably to the aggregate, combined principal balance of the Loans and outstanding Letter of Credit Obligations; and (4) to all other Obligations, including expenses of Lenders to the extent reimbursable under SECTION 11.3. (b) Agent is authorized to, and at its sole election may, charge to the Revolving Loan balance on behalf of each Borrower and cause to be paid all Fees, expenses, Charges, costs (including insurance premiums in accordance with SECTION 5.4(a)) and interest and principal, other than principal of the Revolving Loan, owing by Borrowers under this Agreement or any of the other Loan Documents if and to the extent Borrowers fail to pay promptly any such amounts as and when due, even if the amount of such charges would exceed Borrowing Availability at such time. At Agent's option and to the extent permitted by law, any charges so made shall constitute part of the Revolving Loan hereunder. 1.12 LOAN ACCOUNT AND ACCOUNTING. Agent shall maintain a loan account (the "LOAN ACCOUNT") on its books to record: all Advances, all payments made by Borrowers, and all other debits and credits as provided in this Agreement with respect to the Loans or any other Obligations. All entries in the Loan Account shall be made in accordance with Agent's customary accounting practices as in effect from time to time. The balance in the Loan Account, as recorded on Agent's most recent printout or other written statement, shall, absent manifest error, be presumptive evidence of the amounts due and owing to Agent and Lenders by each Borrower; PROVIDED, that any failure to so record or any error in so recording shall not limit or otherwise affect any Borrower's duty to pay the Obligations. Agent shall render to Borrower Representative a monthly accounting of transactions with respect to the Loans setting forth the balance of the Loan Account as to each Borrower for the immediately preceding month. Unless Borrower Representative notifies Agent in writing of any objection to any such accounting (specifically describing the basis for such objection), within 30 days after the date thereof, each and every such accounting shall (absent manifest error) be deemed final, binding and conclusive on Borrowers in all respects as to all matters reflected therein. Only those items expressly objected to in such notice shall be deemed to be disputed by Borrowers. Notwithstanding any provision herein contained to the contrary, any Lender may elect (which election may be revoked) to dispense with the issuance of Notes to 9 that Lender and may rely on the Loan Account as evidence of the amount of Obligations from time to time owing to it. 1.13 INDEMNITY. (a) Each Credit Party that is a signatory hereto shall jointly and severally indemnify and hold harmless each of Agent, Lenders and their respective Affiliates, and each such Person's respective officers, directors, employees, attorneys, agents and representatives (each, an "INDEMNIFIED PERSON"), from and against any and all suits, actions, proceedings, claims, damages, losses, liabilities and expenses (including reasonable attorneys' fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal) that may be instituted or asserted against or incurred by any such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents and the administration of such credit, and in connection with or arising out of the transactions contemplated hereunder and thereunder and any actions or failures to act in connection therewith, including any and all Environmental Liabilities and legal costs and expenses arising out of or incurred in connection with disputes between or among any parties to any of the Loan Documents (collectively, "INDEMNIFIED LIABILITIES"); PROVIDED, that no such Credit Party shall be liable for any indemnification to an Indemnified Person (x) to the extent that any such suit, action, proceeding, claim, damage, loss, liability or expense results from that Indemnified Person's gross negligence or willful misconduct, and (y) with respect to Indemnified Liabilities, to the extent caused solely and directly by a dispute among Lenders or a dispute between any Lender and Agent. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER. (b) To induce Lenders to provide the LIBOR Rate option on the terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to the last day of any applicable LIBOR Period (whether that repayment is made pursuant to any provision of this Agreement or any other Loan Document or occurs as a result of acceleration, by operation of law or otherwise); (ii) any Borrower shall default in payment when due of the principal amount of or interest on any LIBOR Loan; (iii) any Borrower shall refuse to accept any borrowing of, or shall request a termination of, any borrowing of, conversion into or continuation of, LIBOR Loans after Borrower Representative has given notice requesting the same in accordance herewith; or (iv) any Borrower shall fail to make any prepayment of a LIBOR Loan after Borrower Representative has given a notice thereof in accordance herewith, then Borrowers shall jointly and severally indemnify and hold harmless each Lender from and against all losses, costs and expenses resulting from or arising from any of the foregoing. Such indemnification shall include any loss (including loss of margin) or expense arising from the reemployment of funds obtained by it or from fees payable to terminate deposits from which such funds were obtained. For the purpose of calculating amounts payable to a Lender under this subsection, each Lender shall be 10 deemed to have actually funded its relevant LIBOR Loan through the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount of that LIBOR Loan and having a maturity comparable to the relevant LIBOR Period; PROVIDED, that each Lender may fund each of its LIBOR Loans in any manner it sees fit, and the foregoing assumption shall be utilized only for the calculation of amounts payable under this subsection. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. As promptly as practicable under the circumstances, each Lender shall provide Borrower Representative with its written certification of its calculation of all amounts payable pursuant to this SECTION 1.13(b), and such calculation shall be binding on the parties hereto unless Borrower Representative shall object in writing within 15 Business Days of receipt thereof, specifying the basis for such objection in detail. In no event shall a Lender make a claim for amounts hereunder for any expenses incurred prior to one hundred twenty (120) days before the date on which such certification was sent to Borrower Representative. Notwithstanding the foregoing, Borrowers shall not be liable for any payments pursuant to this SECTION 1.13(b) due to the operation of SECTION 1.16(c). 1.14 ACCESS. Each Credit Party that is a party hereto shall, during normal business hours, from time to time as Agent reasonably determines to be appropriate: (a) provide Agent and any of its officers, employees and agents access to its properties, facilities, advisors and employees (including officers) of each Credit Party and to the Collateral, (b) permit Agent, and any of its officers, employees and agents, to inspect, audit and make extracts from any Credit Party's books and records, and (c) permit Agent, and its officers, employees and agents, to inspect, review, evaluate and make test verifications and counts of the Collateral of any Credit Party. If a Default or Event of Default has occurred and is continuing or if access is necessary to preserve or protect the Collateral as determined by Agent, each such Credit Party shall provide such access to Agent and to each Lender at all times and without advance notice. Furthermore, so long as any Event of Default has occurred and is continuing, Borrowers shall provide Agent and each Lender with access to their suppliers and customers. Each Credit Party shall make available to Agent and its counsel, as quickly as is possible under the circumstances, originals or copies of all books and records that Agent may reasonably request. Each Credit Party shall deliver any document or instrument necessary for Agent, as it may from time to time reasonably request, to obtain records from any service bureau or other Person that maintains records for such Credit Party, and shall maintain duplicate records or supporting documentation on media, including computer tapes and discs owned by such Credit Party. Agent will give Lenders at least 5 days' prior written notice of scheduled audits. Representatives of other Lenders may accompany Agent's representatives on scheduled audits at no charge to Borrowers. 1.15 TAXES. (a) Any and all payments by each Borrower hereunder (including any payments made pursuant to SECTION 12) or under the Notes shall be made, in accordance with this SECTION 1.15, free and clear of and without deduction for any and all present or future Taxes. If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder (including any sum payable pursuant to SECTION 12) or under the Notes, (i) the sum 11 payable shall be increased as much as shall be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this SECTION 1.15) Agent or Lenders, as applicable, receive an amount equal to the sum they would have received had no such deductions been made, (ii) such Borrower shall make such deductions, and (iii) such Borrower shall pay the full amount deducted to the relevant taxing or other authority in accordance with applicable law. Within 30 days after the date of any payment of Taxes, Borrower Representative shall furnish to Agent the original or a certified copy of a receipt evidencing payment thereof. Agent and Lenders shall not be obligated to return or refund any amounts received pursuant to this Section. (b) Each Credit Party that is a signatory hereto shall jointly and severally indemnify and, within 10 days of demand therefor, pay Agent and each Lender for the full amount of Taxes (including any Taxes imposed by any jurisdiction on amounts payable under this SECTION 1.15) paid by Agent or such Lender, as appropriate, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted. (c) Each Lender organized under the laws of a jurisdiction outside the United States (a "FOREIGN LENDER") as to which payments to be made under this Agreement or under the Notes are exempt from United States withholding tax under an applicable statute or tax treaty shall provide to Borrower Representative and Agent a properly completed and executed IRS Form W-8ECI or Form W-8BEN or other applicable form, certificate or document prescribed by the IRS or the United States certifying as to such Foreign Lender's entitlement to such exemption (a "CERTIFICATE OF EXEMPTION"). Any foreign Person that seeks to become a Lender under this Agreement shall provide a Certificate of Exemption to Borrower Representative and Agent prior to becoming a Lender hereunder. No foreign Person may become a Lender hereunder if such Person fails to deliver a Certificate of Exemption in advance of becoming a Lender. 1.16 CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY. (a) If any Lender shall have determined that any law, treaty, governmental (or quasi-governmental) rule, regulation, guideline or order regarding capital adequacy, reserve requirements or similar requirements or compliance by any Lender with any request or directive regarding capital adequacy, reserve requirements or similar requirements (whether or not having the force of law), in each case, adopted after the Closing Date, from any central bank or other Governmental Authority increases or would have the effect of increasing the amount of capital, reserves or other funds required to be maintained by such Lender and thereby reducing the rate of return on such Lender's capital as a consequence of its obligations hereunder, then Borrowers shall from time to time upon demand by such Lender (with a copy of such demand to Agent) pay to Agent, for the account of such Lender, additional amounts sufficient to compensate such Lender for such reduction. A certificate as to the amount of that reduction and showing the basis of the computation thereof submitted by such Lender to Borrower Representative and to Agent shall, absent manifest error, be final, conclusive and binding for all purposes. (b) If, due to either (i) the introduction of or any change in any law or regulation (or any change in the interpretation thereof) or (ii) the compliance with any guideline 12 or request from any central bank or other Governmental Authority (whether or not having the force of law), in each case adopted after the Closing Date, there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining any Loan, then Borrowers shall from time to time, upon demand by such Lender (with a copy of such demand to Agent), pay to Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to Borrower Representative and to Agent by such Lender, shall be conclusive and binding on Borrowers for all purposes, absent manifest error. Each Lender agrees that, as promptly as practicable after it becomes aware of any circumstances referred to above which would result in any such increased cost, the affected Lender shall, to the extent not inconsistent with such Lender's internal policies of general application, use reasonable commercial efforts to minimize costs and expenses incurred by it and payable to it by Borrowers pursuant to this SECTION 1.16(b). (c) Notwithstanding anything to the contrary contained herein, if the introduction of or any change in any law or regulation (or any change in the interpretation thereof) shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree to make or to make or to continue to fund or maintain any LIBOR Loan, then, unless that Lender is able to make or to continue to fund or to maintain such LIBOR Loan at another branch or office of that Lender without, in that Lender's opinion, adversely affecting it or its Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to Borrower Representative through Agent, (i) the obligation of such Lender to agree to make or to make or to continue to fund or maintain LIBOR Loans shall terminate and (ii) each Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by such Borrower to such Lender, together with interest accrued thereon, unless Borrower Representative on behalf of such Borrower, within 5 Business Days after the delivery of such notice and demand, converts all LIBOR Loans into Index Rate Loans; PROVIDED, HOWEVER, Borrowers shall not be liable for any payments pursuant to SECTION 1.13(b) due to the operation of this subsection (c). (d) Within 15 days after receipt by Borrower Representative of written notice and demand from any Lender (an "AFFECTED LENDER") for payment of additional amounts or increased costs as provided in SECTIONS 1.15(a), 1.16(a) OR 1.16(b), Borrower Representative may, at its option, notify Agent and such Affected Lender of its intention to replace the Affected Lender. So long as no Default or Event of Default has occurred and is continuing, Borrower Representative, with the consent of Agent, may obtain, at Borrowers' expense, a replacement Lender ("REPLACEMENT LENDER") for the Affected Lender, which Replacement Lender must be reasonably satisfactory to Agent. If Borrowers obtain a Replacement Lender within 90 days following notice of their intention to do so, the Affected Lender must sell and assign its Loans and Commitments to such Replacement Lender for an amount equal to the principal balance of all Loans held by the Affected Lender and all accrued interest and Fees with respect thereto through the date of such sale; PROVIDED, that Borrowers shall have reimbursed such Affected Lender for the additional amounts or increased costs that it is entitled to receive under this Agreement through the date of such sale and assignment. Notwithstanding the foregoing, Borrowers shall not have the right to obtain a Replacement Lender if the Affected Lender rescinds its demand for increased costs or additional amounts within 15 days following its receipt of Borrowers' notice of intention to replace such Affected Lender. Furthermore, if Borrowers 13 give a notice of intention to replace and do not so replace such Affected Lender within 90 days thereafter, Borrowers' rights under this SECTION 1.16(d) shall terminate and Borrowers shall promptly pay all increased costs or additional amounts demanded by such Affected Lender pursuant to SECTIONS 1.15(a), 1.16(a) AND 1.16(b). 1.17 SINGLE LOAN. All Loans to each Borrower and all of the other Obligations of each Borrower arising under this Agreement and the other Loan Documents shall constitute one general obligation of such Borrower secured, until the Termination Date, by all of the Collateral. 2. CONDITIONS PRECEDENT 2.1 CONDITIONS TO THE INITIAL LOANS. No Lender shall be obligated to make any Loan or incur any Letter of Credit Obligations on the Closing Date, or to take, fulfill, or perform any other action hereunder, until the following conditions have been satisfied or provided for in a manner satisfactory to Agent, or waived in writing by Agent and Lenders: (a) CREDIT AGREEMENT; LOAN DOCUMENTS. This Agreement or counterparts hereof shall have been duly executed by, and delivered to, Borrowers, each other Credit Party, Agent and Lenders; and Agent shall have received such documents, instruments, agreements and legal opinions as Agent shall reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents, including all those listed in the Closing Checklist attached hereto as ANNEX D, each in form and substance reasonably satisfactory to Agent. (b) MATTERS RELATING TO SENIOR CREDIT FACILITY. Agent shall have received satisfactory evidence that the Senior Credit Facility (as such term is defined in the RUC Indenture) which existed on and as of July 8, 1998 has been terminated and all obligations of any Credit Party thereunder have been indefeasibly paid in full. (c) APPROVALS. Agent shall have received (i) satisfactory evidence that the Credit Parties have obtained all required consents and approvals of all Persons including all requisite Governmental Authorities, to the execution, delivery and performance of this Agreement and the other Loan Documents, or (ii) an officer's certificate in form and substance reasonably satisfactory to Agent affirming that no such consents or approvals are required. (d) PAYMENT OF FEES. Borrowers shall have paid the Fees required to be paid on the Closing Date in the respective amounts specified in SECTION 1.9, and shall have reimbursed Agent for all fees, costs and expenses of closing (including, without limitation, fees, charges and disbursements of counsel) presented as of the Closing Date. (e) CAPITAL STRUCTURE: OTHER INDEBTEDNESS. The capital structure of each Credit Party and the terms and conditions of all Indebtedness of each Credit Party shall be acceptable to Agent in its sole discretion. 14 (f) DUE DILIGENCE. Agent shall have completed its business and legal due diligence, including without limitation a roll forward of its previous Collateral audit, with results reasonably satisfactory to Agent. 2.2 FURTHER CONDITIONS TO EACH LOAN. Except as otherwise expressly provided herein, no Lender shall be obligated to fund any Advance, convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if, as of the date thereof: (a) any representation or warranty by any Credit Party contained herein or in any other Loan Document is untrue or incorrect in any material respect as of such date, except to the extent that such representation or warranty expressly relates to an earlier date and except for changes therein expressly permitted or expressly contemplated by this Agreement and Agent or Requisite Lenders have determined not to make such Advance, convert or continue any Loan as LIBOR Loan or incur such Letter of Credit Obligation as a result of the fact that such warranty or representation is untrue or incorrect; (b) any event or circumstance having a Material Adverse Effect has occurred since the date hereof as determined by the Requisite Lenders and Agent or Requisite Lenders have determined not to make such Advance, convert or continue any Loan as a LIBOR Loan or incur such Letter of Credit Obligation as a result of the fact that such event or circumstance has occurred; (c) any Default or Event of Default has occurred and is continuing or would result after giving effect to any Advance (or the incurrence of any Letter of Credit Obligation), and Agent or Requisite Lenders shall have determined not to make any Advance, convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation as a result of that Default or Event of Default; or (d) after giving effect to any Advance (or the incurrence of any Letter of Credit Obligations), the outstanding principal amount of the aggregate Revolving Loan would exceed the Borrowing Availability, the aggregate amount of the Revolving Loan would exceed the Revolving Loan Commitments or the outstanding face amount of Letters of Credit would exceed the L/C Sublimit, as the case may be. The request and acceptance by any Borrower of the proceeds of any Advance, the incurrence of any Letter of Credit Obligations or the conversion or continuation of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the date thereof, a representation and warranty by Borrowers that the conditions in this SECTION 2.2 have been satisfied. 3. REPRESENTATIONS AND WARRANTIES To induce Lenders to make the Loans and to incur Letter of Credit Obligations, the Credit Parties executing this Agreement, jointly and severally, make the following representations and warranties to Agent and each Lender with respect to all Credit Parties, each and all of which shall survive the execution and delivery of this Agreement. 15 3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Credit Party (a) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation or organization set forth in DISCLOSURE SCHEDULE (3.1); (b) is duly qualified to conduct business and is in good standing in each other jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect; (c) has the requisite power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease and to conduct its business as now, heretofore and proposed to be conducted; (d) subject to specific representations regarding Environmental Laws, the Communications Act (and the regulations promulgated thereunder) and FCC Licenses, has all material licenses, permits, consents or approvals from or by, and has made all material filings with, and has given all material notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation and conduct; (e) is in compliance with its charter and bylaws or partnership or operating agreement, as applicable; and (f) subject to specific representations set forth herein regarding ERISA, Environmental Laws, communications laws, including the Communications Act, tax and other laws, is in compliance with all applicable provisions of law, except where the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 3.2 EXECUTIVE OFFICES, COLLATERAL LOCATIONS, FEIN. As of the Closing Date, the current location of each Credit Party's chief executive office and the premises at which any Collateral is located are set forth in DISCLOSURE SCHEDULE (3.2), and none of such locations has changed within the 12 months preceding the Closing Date. In addition, DISCLOSURE SCHEDULE (3.2) lists the federal employer identification number and organizational identification number, if any, of each Credit Party. 3.3 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS. The execution, delivery and performance by each Credit Party of the Loan Documents to which it is a party and the creation of all Liens provided for therein: (a) are within such Person's power; (b) have been duly authorized by all necessary corporate, limited liability company or limited partnership action; (c) do not contravene any provision of such Person's charter, bylaws or partnership or operating agreement, as applicable; (d) do not violate any law or regulation, or any order or decree of any court or Governmental Authority; (e) do not conflict with or result in the breach or termination of, constitute a default under or accelerate or permit the acceleration of any performance required by, any indenture (including specifically the RUC Indenture), mortgage, deed of trust, lease, agreement or other instrument to which such Person is a party or by which such Person or any of its property is bound; (f) do not result in the creation or imposition of any Lien upon any of the property of such Person other than those in favor of Agent, on behalf of itself and Lenders, pursuant to the Loan Documents; and (g) do not require the consent or approval of any Governmental Authority or any other Person, except those referred to in SECTION 2.1(c), all of which will have been duly obtained, made or complied with 16 prior to the Closing Date. On or prior to the Closing Date, each of the Loan Documents shall have been duly executed and delivered by each Credit Party that is a party thereto and each such Loan Document shall then constitute a legal, valid and binding obligation of such Credit Party enforceable against it in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, and other similar laws affecting the rights of creditors generally or by equitable principals generally. 3.4 FINANCIAL STATEMENTS AND PROJECTIONS. Except for the Projections, all Financial Statements concerning Borrowers and their respective Subsidiaries that are referred to below have been prepared in accordance with GAAP consistently applied throughout the periods covered (except as disclosed therein and except, with respect to unaudited Financial Statements, for the absence of footnotes and normal year-end audit adjustments) and present fairly in all material respects the financial position of the Persons covered thereby as at the dates thereof and the results of their operations and cash flows for the periods then ended. (a) FINANCIAL STATEMENTS. The following Financial Statements attached hereto as DISCLOSURE SCHEDULE (3.4(a)) have been delivered on the date hereof: (i) The audited consolidated balance sheets at December 31, 2001 and the related consolidated statements of operations, changes in Series A redeemable cumulative preferred stock and stockholders' equity (deficit) and statement(s) of cash flows of Parent and its Subsidiaries for the Fiscal Years then ended, certified by Ernst & Young, LLP. (ii) The unaudited consolidated balance sheet(s) at March 31, 2002 and the related consolidated and consolidating statement(s) of income and consolidated statement(s) of cash flows of Parent and its Subsidiaries for the Fiscal Quarter then ended. (b) PRO FORMA. The Pro Forma delivered on the date hereof and attached hereto as DISCLOSURE SCHEDULE (3.4(b)) was prepared by Borrowers giving pro forma effect to the transactions contemplated hereby and was based on the unaudited consolidated balance sheets of Parent and its Subsidiaries dated March 31, 2002, and was prepared in accordance with GAAP, with only such adjustments thereto as would be required in accordance with GAAP and for normal year-end adjustments. (c) PROJECTIONS. The Projections delivered on the date hereof and attached hereto as DISCLOSURE SCHEDULE (3.4(c)) have been prepared by Borrowers in light of the past operations of their businesses and reflect projections for the 3 year period beginning on January 1, 2002 on a quarter-by-quarter basis for the initial two years covered thereby and on a year-by-year basis thereafter. The Projections are based upon estimates and assumptions stated therein, all of which Borrowers believe to be reasonable and fair in light of current conditions and current facts known to Borrowers and, as of the Closing Date, reflect Borrowers' good faith and reasonable estimates of the future financial performance of Borrowers and of the other information projected therein for the period set forth therein. 17 3.5 MATERIAL ADVERSE EFFECT. Between December 31, 2001 and the Closing Date: (a) no Credit Party has incurred any obligations, contingent or noncontingent liabilities, liabilities for Charges, long-term leases or unusual forward or long-term commitments that are not reflected in the Pro Forma and that, alone or in the aggregate, could reasonably be expected to have a Material Adverse Effect; (b) no contract, lease or other agreement or instrument has been entered into by any Credit Party or has become binding upon any Credit Party's assets and no law or regulation applicable to any Credit Party has been adopted that has had or could reasonably be expected to have a Material Adverse Effect; and (c) no Credit Party is in default and to the best of Borrowers' knowledge no third party is in default under any material contract, lease or other agreement or instrument, that alone or in the aggregate could reasonably be expected to have a Material Adverse Effect. Between December 31, 2001 and the Closing Date no event has occurred, that alone or together with other events, could reasonably be expected to have a Material Adverse Effect. 3.6 OWNERSHIP OF PROPERTY; LIENS. As of the Closing Date, the real estate ("REAL ESTATE") listed in DISCLOSURE SCHEDULE (3.6) constitutes all of the real property owned, leased, subleased, or used by any Credit Party which (i) is necessary for the continuing operation of a Radio Station in substantially the same manner as such Radio Station is operated by Borrowers as of the Closing Date or (ii) has, in the case of owned Real Estate, a fair market value of $100,000 or greater or, in the case of leased subleased, or used Real Estate, annual payments of $50,000 or greater (any such Real Estate, individually and collectively, the "MATERIAL REAL ESTATE"). Each Credit Party owns good and marketable fee simple title to all of its owned Material Real Estate, and valid and marketable leasehold interests in all of its leased Material Real Estate, all as described on DISCLOSURE SCHEDULE (3.6), and copies of all such leases or a summary of terms thereof reasonably satisfactory to Agent have been delivered to Agent. DISCLOSURE SCHEDULE (3.6) further describes any Real Estate with respect to which any Credit Party is a lessor, sublessor or assignor as of the Closing Date. Each Credit Party also has good and marketable title to, or valid leasehold interests in, all of its personal property and assets. As of the Closing Date, none of the properties and assets of any Credit Party are subject to any Liens other than Permitted Encumbrances, and there are no facts, circumstances or conditions known to any Credit Party that may result in any Liens (including Liens arising under Environmental Laws) other than Permitted Encumbrances. Each Credit Party has received all deeds, assignments, waivers, consents, nondisturbance and attornment or similar agreements, bills of sale and other documents, and has duly effected all recordings, filings and other actions necessary to establish, protect and perfect such Credit Party's right, title and interest in and to all such Real Estate and other properties and assets. DISCLOSURE SCHEDULE (3.6) also describes any purchase options, rights of first refusal or other similar contractual rights pertaining to any Material Real Estate. As of the Closing Date, no portion of any Credit Party's Material Real Estate has suffered any material damage by fire or other casualty loss that has not heretofore been repaired and restored in all material respects to its original condition or otherwise remedied. As of the Closing Date, all material permits required to have been issued or appropriate to enable the Material Real Estate to be lawfully occupied and used for all of the purposes for which it is currently occupied and used have been lawfully issued and are in full force and effect. 18 3.7 LABOR MATTERS. As of the Closing Date (a) no strikes or other material labor disputes against any Credit Party are pending or, to any Credit Party's knowledge, threatened; (b) hours worked by and payment made to employees of each Credit Party comply in all material respects with the Fair Labor Standards Act and each other federal, state, local or foreign law applicable to such matters; (c) all material payments due from any Credit Party for employee health and welfare insurance have been paid or accrued as a liability on the books of such Credit Party; (d) except as set forth in DISCLOSURE SCHEDULE (3.7), no Credit Party is a party to or bound by any (i) collective bargaining agreement or (ii) management agreement, consulting agreement, employment agreement, bonus, restricted stock, stock option, or stock appreciation plan or agreement or any similar plan, agreement or arrangement with any individual (1) where information regarding the compensation of such individual would be required to be disclosed pursuant to Item 402 of Regulation S-K, if such Credit Party were subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or (2) where any agreement(s) between such individual and one or more of the Credit Parties individually, or in the aggregate, provide for guaranteed compensation to such Person equal to or in excess of $200,000 per year, and true and complete copies of any agreements described on DISCLOSURE SCHEDULE (3.7) have been delivered to Agent); (e) there is no organizing activity involving any Credit Party pending or, to any Credit Party's knowledge, threatened by any labor union or group of employees; (f) there are no representation proceedings pending or, to any Credit Party's knowledge, threatened with the National Labor Relations Board, and no labor organization or group of employees of any Credit Party has made a pending demand for recognition; and (g) except as set forth in DISCLOSURE SCHEDULE (3.7), there are no material complaints or charges against any Credit Party pending or, to the knowledge of any Credit Party, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by any Credit Party of any individual. 3.8 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK; INDEBTEDNESS. Except as set forth in DISCLOSURE SCHEDULE (3.8), as of the Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint venture or partnership with any other Person, or is an Affiliate of any other Person. All of the issued and outstanding Stock of each Credit Party (other than Parent) is owned by each of the Stockholders and in the amounts set forth in DISCLOSURE SCHEDULE (3.8). Except as set forth in DISCLOSURE SCHEDULE (3.8), there are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which any Credit Party (other than Parent) may be required to issue, sell, repurchase or redeem any of its Stock or other equity securities or any Stock or other equity securities of its Subsidiaries. All outstanding Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Closing Date (except for the Obligations) is described in SECTION 6.3 (including DISCLOSURE SCHEDULE (6.3)). 3.9 GOVERNMENT REGULATION. No Credit Party is an "investment company" or an "affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined 19 in the Investment Company Act of 1940. No Credit Party is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, or any other federal or state statute that restricts or limits its ability to incur Indebtedness or to perform its obligations hereunder. The making of the Loans by Lenders to Borrowers, the incurrence of the Letter of Credit Obligations on behalf of Borrowers and the application of the proceeds thereof and repayment thereof will not violate any provision of any such statute or any rule, regulation or order issued by the Securities and Exchange Commission. 3.10 MARGIN REGULATIONS. No Credit Party is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" as such terms are defined in Regulation U of the Federal Reserve Board as now and from time to time hereafter in effect (such securities being referred to herein as "MARGIN STOCK"). No Credit Party owns any Margin Stock, and none of the proceeds of the Loans or other extensions of credit under this Agreement will be used, directly or indirectly, for the purpose of purchasing or carrying any Margin Stock, for the purpose of reducing or retiring any Indebtedness that was originally incurred to purchase or carry any Margin Stock or for any other purpose that might cause any of the Loans or other extensions of credit under this Agreement to be considered a "purpose credit" within the meaning of Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or permit to be taken any action that might cause any Loan Document to violate any regulation of the Federal Reserve Board. 3.11 TAXES. All material tax returns, reports and statements, including information returns, required by any Governmental Authority to be filed by any Credit Party have been filed with the appropriate Governmental Authority and all Charges have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof (or any such fine, penalty, interest, late charge or loss has been paid), excluding Charges or other amounts being contested in accordance with SECTION 5.2(b). Proper and accurate amounts have been withheld by each Credit Party from its respective employees for all periods in full and complete compliance with all applicable federal, state, local and foreign laws and such withholdings have been timely paid to the respective Governmental Authorities. DISCLOSURE SCHEDULE (3.11) sets forth as of the Closing Date those taxable years for which any Credit Party's tax returns are currently being audited by the IRS or any other applicable Governmental Authority, and any assessments or, to the knowledge of Borrowers, threatened assessments in connection with such audit, or otherwise currently outstanding. Except as described in DISCLOSURE SCHEDULE (3.11), no Credit Party has executed or filed with the IRS or any other Governmental Authority any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Charges. None of the Credit Parties and their respective predecessors are liable for any Charges: (a) under any agreement (including any tax sharing agreements) or (b) to each Credit Party's knowledge, as a transferee. As of the Closing Date, no Credit Party has agreed or been requested to make any adjustment under IRC Section 481(a), by reason of a change in accounting method or otherwise, which would have a Material Adverse Effect. 20 3.12 ERISA. (a) DISCLOSURE SCHEDULE (3.12) lists (i) all ERISA Affiliates and (ii) all Plans and separately identifies all Pension Plans, including Title IV Plans, Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree Welfare Plans. Copies of all such listed Plans, together with a copy of the latest IRS/DOL 5500-series form for each such Plan, have been delivered to Agent. Except with respect to Multiemployer Plans, each Qualified Plan has been determined by the IRS to qualify under Section 401 of the IRC, the trusts created thereunder have been determined to be exempt from tax under the provisions of Section 501 of the IRC, and nothing has occurred that would cause the loss of such qualification or tax-exempt status. Each Plan is in compliance with the material, applicable provisions of ERISA and the IRC, including the timely filing of all reports required under the IRC or ERISA, including the statement required by 29 CFR Section 2520.104-23. Neither any Credit Party nor ERISA Affiliate has failed to make any contribution or pay any amount due as required by either Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan. Neither any Credit Party nor ERISA Affiliate has engaged in a "prohibited transaction," as defined in Section 406 of ERISA and Section 4975 of the IRC, in connection with any Plan, that would subject any Credit Party to a material tax on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the IRC. (b) Except as set forth in DISCLOSURE SCHEDULE (3.12): (i) no Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event described in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is reasonably expected to occur; (iii) there are no pending, or to the knowledge of any Credit Party, threatened claims (other than claims for benefits in the normal course), sanctions, actions or lawsuits, asserted or instituted against any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to incur any liability as a result of a complete or partial withdrawal from a Multiemployer Plan; (v) within the last five years no Title IV Plan of any Credit Party or ERISA Affiliate has been terminated, whether or not in a "standard termination" as that term is used in Section 4041(b)(1) of ERISA, nor has any Title IV Plan of any Credit Party or any ERISA Affiliate (determined at any time within the last five years) with Unfunded Pension Liabilities been transferred outside of the "controlled group" (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such time); (vi) except in the case of any ESOP, Stock of all Credit Parties and their ERISA Affiliates makes up, in the aggregate, no more than 10% of fair market value of the assets of any Plan measured on the basis of fair market value as of the latest valuation date of any Plan; and (vii) no liability under any Title IV Plan has been satisfied with the purchase of a contract from an insurance company that is not rated AAA by the Standard & Poor's Corporation or an equivalent rating by another nationally recognized rating agency. 3.13 NO LITIGATION. No action, claim, lawsuit, demand, investigation or proceeding is now pending or, to the knowledge of any Credit Party, threatened against any Credit Party, before any Governmental Authority or before any arbitrator or panel of arbitrators (collectively, "LITIGATION"), (a) that challenges any Credit Party's right or power to enter into or perform any of 21 its obligations under the Loan Documents to which it is a party, or the validity or enforceability of any Loan Document or any action taken thereunder, or (b), except as set forth on DISCLOSURE SCHEDULE (3.13), that has a reasonable risk of being determined adversely to any Credit Party and that, if so determined, could be reasonably be expected to have a Material Adverse Effect. Except as set forth on DISCLOSURE SCHEDULE (3.13), as of the Closing Date there is no Litigation pending or, to any Credit Party's knowledge, threatened, that seeks damages in excess of $500,000 or injunctive relief against, or alleges criminal misconduct of, any Credit Party. 3.14 BROKERS. Except for CIBC World Markets (whose fees have been disclosed to the Agent), no broker or finder brought about the obtaining, making or closing of the Loans, and no Credit Party or Affiliate thereof has any obligation to any Person in respect of any finder's or brokerage fees or commissions in connection therewith. The Credit Parties, jointly and severally, agree to indemnify and hold harmless the Agent and each Lender from and against any claims, demand, liability, proceedings, costs or expenses asserted with respect to or arising in connection with any such fees or commissions. 3.15 INTELLECTUAL PROPERTY. As of the Closing Date, each Credit Party owns or has rights to use all Intellectual Property necessary to continue to conduct its business as now or heretofore conducted by it or proposed to be conducted by it, and each Patent, Trademark, Copyright and License is listed, together with application or registration numbers, as applicable, in DISCLOSURE SCHEDULE (3.15). To their knowledge, each Credit Party conducts its business and affairs without infringement of or interference with any Intellectual Property of any other Person in any material respect. Except as set forth in DISCLOSURE SCHEDULE (3.15), no Credit Party is aware of any infringement claim by any other Person with respect to any Intellectual Property. 3.16 FULL DISCLOSURE. No information contained in this Agreement, any of the other Loan Documents, any Projections, Financial Statements or Collateral Reports or other written reports from time to time delivered hereunder or any written statement furnished by or on behalf of any Credit Party to Agent or any Lender pursuant to the terms of this Agreement contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. The Liens granted to Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents will at all times be fully perfected first priority Liens in and to the Collateral described therein, subject, as to priority, only to Permitted Encumbrances. 3.17 ENVIRONMENTAL MATTERS. (a) Except as set forth in DISCLOSURE SCHEDULE (3.17), and to the knowledge of the Credit Parties, as of the Closing Date: (i) the Real Estate is free of contamination from any Hazardous Material except for such contamination that would not adversely impact the value or 22 marketability of such Real Estate and that would not result in Environmental Liabilities that could reasonably be expected to exceed $500,000; (ii) no Credit Party has caused or suffered to occur any Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate; (iii) the Credit Parties are and have been in compliance with all Environmental Laws, except for such noncompliance that would not result in Environmental Liabilities which could reasonably be expected to exceed $500,000; (iv) the Credit Parties have obtained, and are in compliance with, all Environmental Permits required by Environmental Laws for the operations of their respective businesses as presently conducted or as proposed to be conducted, except where the failure to so obtain or comply with such Environmental Permits would not result in Environmental Liabilities that could reasonably be expected to exceed $500,000, and all such Environmental Permits are valid, uncontested and in good standing; (v) no Credit Party is involved in operations or knows of any facts, circumstances or conditions, including any Releases of Hazardous Materials, that are likely to result in any Environmental Liabilities of such Credit Party which could reasonably be expected to exceed $500,000, and no Credit Party has permitted any current or former tenant or occupant of the Real Estate to engage in any such operations; (vi) there is no Litigation arising under or related to any Environmental Laws, Environmental Permits or Hazardous Material that seeks damages, penalties, fines, costs or expenses in excess of $500,000 or injunctive relief against, or that alleges criminal misconduct by, any Credit Party; (vii) no notice has been received by any Credit Party identifying it as a "potentially responsible party" or requesting information under CERCLA or analogous state statutes, and to the knowledge of the Credit Parties, there are no facts, circumstances or conditions that may result in any Credit Party being identified as a "potentially responsible party" under CERCLA or analogous state statutes; and (viii) the Credit Parties have provided to Agent copies of all existing environmental reports, reviews and audits and all written information pertaining to actual or potential Environmental Liabilities, in each case relating to any Credit Party. (b) Each Credit Party hereby acknowledges and agrees that Agent (i) is not now, and has not ever been, in control of any of the Real Estate or any Credit Party's affairs, and (ii) does not have the capacity through the provisions of the Loan Documents or otherwise to influence any Credit Party's conduct with respect to the ownership, operation or management of any of its Real Estate or compliance with Environmental Laws or Environmental Permits. 3.18 INSURANCE. DISCLOSURE SCHEDULE (3.18) lists all insurance policies of any nature maintained, as of the Closing Date, for current occurrences by each Credit Party, as well as a summary of the terms of each such policy. 3.19 DEPOSIT AND DISBURSEMENT ACCOUNTS. DISCLOSURE SCHEDULE (3.19) lists all banks and other financial institutions at which any Credit Party maintains deposit or other accounts as of the Closing Date, including any Disbursement Accounts, and such Schedule correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor. 23 3.20 GOVERNMENT CONTRACTS. Except as set forth in DISCLOSURE SCHEDULE (3.20), as of the Closing Date, no Credit Party is a party to any contract or agreement with any Governmental Authority and no Credit Party's Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or any similar state or local law. 3.21 NETWORK AFFILIATES. As of the Closing Date, there exists no actual or, to the knowledge of any Credit Party, threatened termination or cancellation of, or any material adverse modification or change in the business relationship of any Credit Party with any network affiliate of the Credit Parties, the occurrence of which could be reasonably likely to have a Material Adverse Effect. 3.22 AGREEMENTS AND OTHER DOCUMENTS. As of the Closing Date, each Credit Party has provided to Agent or its counsel, on behalf of Lenders, accurate and complete copies (or summaries) of all of the following agreements or documents to which it is subject and each of which is listed in DISCLOSURE SCHEDULE (3.22): (a) supply agreements and purchase agreements not terminable by such Credit Party within 60 days following written notice issued by such Credit Party and involving transactions in excess of $500,000 per annum; (b) leases of Equipment having a remaining term of one year or longer and requiring aggregate rental and other payments in excess of $500,000 per annum; (c) licenses and permits held by the Credit Parties, the absence of which could be reasonably likely to have a Material Adverse Effect; (d) instruments and documents evidencing any Indebtedness or Guaranteed Indebtedness of such Credit Party and any Lien granted by such Credit Party with respect thereto; (e) instruments and agreements evidencing the issuance of any equity securities, warrants, rights or options to purchase equity securities of such Credit Party (other than Parent); (f) any affiliate agreement with any Station or group of Stations not owned by a Credit Party; and (g) any agreement(s) with any single on-air personality which individually, or in the aggregate, provide for guaranteed compensation to such Person equal to or in excess of $200,000 per year. 3.23 SOLVENCY. Both before and after giving effect to (a) the Loans and Letter of Credit Obligations to be made or incurred on the Closing Date or such other date as Loans and Letter of Credit Obligations requested hereunder are made or incurred, (b) the disbursement of the proceeds of such Loans pursuant to the instructions of Borrower Representative; and (c) the payment and accrual of all transaction costs in connection with the foregoing, each Credit Party is and will be Solvent. 3.24 STATUS OF PARENT. Other than its ownership of Stock and the obligations evidenced by the Loan Documents, Parent does not engage in any business activities (other than Permitted Parent Activities) and has no Indebtedness or any other liabilities. 24 3.25 SECURITY INTERESTS. The representations and warranties in the Collateral Documents are true and correct in all material respects. 3.26 RUC DISCOUNT NOTES. As of the Closing Date, Borrowers have delivered to Agent a complete and correct copy of the RUC Indenture and the RUC Discount Notes (including all schedules, exhibits, amendments, supplements, modifications, assignments and all other documents delivered pursuant thereto or in connection therewith). Borrower Representative has the corporate power and authority to incur the Indebtedness evidenced by the RUC Discount Notes. No Lien has been granted by any Credit Party as security for the RUC Discount Notes. All Obligations, including the Letter of Credit Obligations, constitute "Permitted Indebtedness" pursuant to clause (i) of the definition thereof in the RUC Indenture and all of the Liens granted to Agent, for the benefit of Lenders, constitute "Permitted Liens" pursuant to clause (xvi) of the definition thereof in the RUC Indenture. 3.27 FCC MATTERS/BROADCASTING BUSINESS. (a) [Intentionally Omitted]. (b) [Intentionally Omitted]. (c) The License Subs are the holders of all FCC Licenses duly issued in respect of all Radio Stations owned and operated by each Borrower and each Subsidiary thereof (other than those Radio Stations operated under a Local Marketing Agreement), which FCC Licenses are set forth on DISCLOSURE SCHEDULE 3.27(c). Such FCC Licenses constitute all of the authorizations by the FCC necessary for the operation of the business of each Borrower and each of its respective Subsidiaries substantially in the manner presently being conducted by them, other than those FCC Licenses the failure of which to hold could not reasonably be expected, individually or in the aggregate, to have a material adverse effect on the operation of a Major Market Radio Station substantially in the manner presently being operated. Such FCC Licenses are validly issued and in full force and effect, unimpaired by any act or omission of any Borrower or any Subsidiary thereof. (d) Except as set forth in DISCLOSURE SCHEDULE 3.27(d), neither of the Borrowers nor any Subsidiary thereof is a party to any investigation, notice of violation, order or complaint issued by or before the FCC which could reasonably be expected to have a Material Adverse Effect. Except for such proceedings that affect the radio broadcasting industry generally and which are set forth in DISCLOSURE SCHEDULE 3.27(d), there are no proceedings by or before the FCC, which, individually or in the aggregate, in any manner materially threaten or have a material adverse effect on the validity of any FCC Licenses, other than FCC Licenses for any Radio Station which is not Major Market Radio Station. No Credit Party has knowledge of a threat of any investigation, notice of violation, order, complaint or proceeding before the FCC 25 which could reasonably be expected to have a Material Adverse Effect or has any reason to believe that any FCC Licenses will not be renewed in the ordinary course. (e) Each Borrower and each of its respective Subsidiaries (i) have duly and timely filed all filings which are required to be filed by such Borrower and each such Subsidiary under the Communications Act and the rules and regulations of the FCC, the failure to file of which, individually or in the aggregate, could reasonably be expected to have a material adverse effect on the operation of a Major Market Radio Station substantially in the manner presently being operated, (ii) have paid all regulatory fees required to be paid by the FCC, the failure of which to pay, individually or in the aggregate, could reasonably be expected to have a material adverse effect on the operation of a Major Market Radio Station substantially in the manner presently being operated and (iii) are in all respects in compliance with the Communications Act and the rules, regulations and written policies of the FCC, including the rules and regulations of the FCC relating to the transmission of radio signals, the failure to comply with which the failure to file of which, individually or in the aggregate, could reasonably be expected to have a material adverse effect on the operation of a Major Market Radio Station substantially in the manner presently being operated. (f) Except as set forth on DISCLOSURE SCHEDULE 3.27(f), no Borrower nor any of its respective Subsidiaries is a party to any Time Brokerage Agreement or to any Local Marketing Agreement. (g) Each of the License Subs shall have as its sole asset or assets the FCC Licenses related to the Radio Stations and a management agreement with the respective Borrower related to such FCC Licenses. Neither such Borrower nor any other Subsidiary of such Borrower (which is not a License Sub) shall hold any FCC Licenses. The Borrowers shall not permit the License Subs to have any business activities, operations, assets, Indebtedness, guaranties or Liens (other than in favor of Agent). 4. FINANCIAL STATEMENTS AND INFORMATION 4.1 REPORTS AND NOTICES. (a) Each Credit Party executing this Agreement hereby agrees that from and after the Closing Date and until the Termination Date, it shall deliver to Agent or to Agent and Lenders, as required, the Financial Statements, notices, Projections and other information at the times, to the Persons and in the manner set forth in ANNEX E. (b) Each Credit Party executing this Agreement hereby agrees that, from and after the Closing Date and until the Termination Date, it shall deliver to Agent or to Agent and Lenders, as required, the various Collateral Reports at the times, to the Persons and in the manner set forth in ANNEX F. 4.2 COMMUNICATION WITH ACCOUNTANTS. Each Credit Party executing this Agreement authorizes (a) Agent and (b) so long as a Default or an Event of Default has occurred and is continuing, each Lender, to communicate 26 directly with its independent certified public accountants, including Ernst & Young, LLP, and authorizes and, at Agent's request, shall instruct those accountants and advisors to disclose and make available to Agent and each Lender any and all Financial Statements and other supporting financial documents, schedules and information relating to any Credit Party (including copies of any issued management letters) with respect to the business, financial condition and other affairs of any Credit Party. 5. AFFIRMATIVE COVENANTS Each Credit Party executing this Credit Agreement jointly and severally agrees as to all Credit Parties that from and after the date hereof and until the Termination Date: 5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Each Credit Party shall: (i) do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights and franchises; (ii) preserve and keep in full force and effect the FCC Licenses (other than Excluded FCC Licenses); (iii) continue to conduct its business substantially as now conducted or as otherwise permitted hereunder; (iv) at all times maintain, preserve and protect all of its assets and properties used or useful in the conduct of its business, and keep the same in good repair, working order and condition in all material respects (taking into consideration ordinary wear and tear) and from time to time make, or cause to be made, all necessary or appropriate repairs, replacements and improvements thereto consistent with industry practices; and (v) transact business only in such corporate and trade names as are set forth in DISCLOSURE SCHEDULE (5.1), except, as to any of the foregoing activities, where any such activities are otherwise expressly permitted hereunder and except as to clauses (ii) and (iv), the extent any such failures would, individually or in the aggregate, not reasonably be expected to have a material adverse effect on the operation of a Major Market Radio Station substantially in the manner presently being operated. 5.2 PAYMENT OF CHARGES. (a) Subject to SECTION 5.2(b), each Credit Party shall pay and discharge or cause to be paid and discharged promptly all Charges payable by it, including (i) Charges imposed upon it, its income and profits, or any of its property (real, personal or mixed) and all Charges with respect to tax, social security and unemployment withholding with respect to its employees, (ii) lawful claims for labor, materials, supplies and services or otherwise, and (iii) all storage or rental charges payable to warehousemen or bailees, in each case, before any thereof shall become past due; PROVIDED, HOWEVER, a Credit Party may in good faith contest any Charge by appropriate proceedings, if such Credit Party shall have set aside on its books a sufficient reserve (segregated to the extent required by GAAP) with respect thereto. (b) Each Credit Party may in good faith contest, by appropriate proceedings, the validity or amount of any Charges, Taxes or claims described in SECTION 5.2(a); PROVIDED, that (i) adequate reserves with respect to such contest are maintained on the books of such Credit Party, in accordance with GAAP; (ii) no Lien shall be imposed to secure payment of such Charges (other than payments to warehousemen and/or bailees) that is superior to any of the 27 Liens securing the Obligations and such contest is maintained and prosecuted continuously and with diligence and operates to suspend collection or enforcement of such Charges; (iii) none of the Collateral becomes subject to forfeiture or loss as a result of such contest; (iv) such Credit Party shall promptly pay or discharge such contested Charges, Taxes or claims and all additional charges, interest, penalties and expenses, if any, and shall deliver to Agent evidence reasonably acceptable to Agent of such compliance, payment or discharge, if such contest is terminated or discontinued adversely to such Credit Party or the conditions set forth in this SECTION 5.2(b) are no longer met; and (v) Agent has not advised Borrowers in writing that Agent reasonably believes that nonpayment or nondischarge thereof could have or result in a Material Adverse Effect. 5.3 BOOKS AND RECORDS. Each Credit Party shall keep adequate books and records with respect to its business activities in which proper entries, reflecting all financial transactions, are made in accordance with GAAP and on a basis consistent with the Financial Statements attached as DISCLOSURE SCHEDULE (3.4(a)). 5.4 INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL. (a) The Credit Parties shall, at their sole cost and expense, maintain the policies of insurance described on DISCLOSURE SCHEDULE (3.18) as in effect on the date hereof or otherwise in form and amounts and with insurers reasonably acceptable to Agent; PROVIDED, HOWEVER, Parent may reduce the amount of coverage under Parent's directors' and officers' insurance to an amount not less than $5,000,000. Such policies of insurance (or the loss payable and additional insured endorsements delivered to Agent) shall contain provisions pursuant to which the insurer agrees to provide 30 days prior written notice to Agent in the event of any non-renewal, cancellation or amendment of any such insurance policy. If any Credit Party at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above, or to pay all premiums relating thereto, Agent may at any time or times thereafter obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto that Agent deems advisable. Agent shall have no obligation to obtain insurance for any Credit Party or pay any premiums therefor. By doing so, Agent shall not be deemed to have waived any Default or Event of Default arising from any Credit Party's failure to maintain such insurance or pay any premiums therefor. All sums so disbursed, including reasonable attorneys' fees, court costs and other charges related thereto, shall be payable on demand by Borrowers to Agent and shall be additional Obligations hereunder secured by the Collateral. (b) Agent reserves the right at any time upon any change in any Credit Party's risk profile (including any change in the product mix maintained by any Credit Party or any laws affecting the potential liability of such Credit Party) to require additional forms and limits of insurance to, in Agent's opinion, adequately protect both Agent's and Lender's interests in all or any portion of the Collateral and to ensure that each Credit Party is protected by insurance in amounts and with coverage customary for its industry. If reasonably requested by Agent, each Credit Party shall deliver to Agent from time to time a report of a reputable insurance broker, reasonably satisfactory to Agent, with respect to its insurance policies. 28 (c) Each Credit Party shall deliver to Agent, in form and substance reasonably satisfactory to Agent, endorsements to (i) all "All Risk" and business interruption insurance naming Agent, on behalf of itself and Lenders, as loss payee, and (ii) all general liability and other liability policies naming Agent, on behalf of itself and Lenders, as additional insured. Each Credit Party irrevocably makes, constitutes and appoints Agent (and all officers, employees or agents designated by Agent), so long as any Default or Event of Default has occurred and is continuing or the anticipated insurance proceeds exceed $750,000, as such Credit Party's true and lawful agent and attorney-in-fact for the purpose of making, settling and adjusting claims under such "All Risk" policies of insurance, endorsing the name of such Credit Party on any check or other item of payment for the proceeds of such "All Risk" policies of insurance and for making all determinations and decisions with respect to such "All Risk" policies of insurance. Agent shall have no duty to exercise any rights or powers granted to it pursuant to the foregoing power-of-attorney. Borrower Representative shall promptly notify Agent of any loss, damage, or destruction to the Collateral in the amount of $250,000 or more, whether or not covered by insurance. After deducting from such proceeds the expenses, if any, incurred by Agent in the collection or handling thereof, Agent may, at its option, apply such proceeds to the reduction of the Obligations in accordance with SECTION 1.3(d); PROVIDED that in the case of insurance proceeds pertaining to any Credit Party that is not a Borrower, such insurance proceeds shall be applied ratably to all of the Loans owing by each Borrower, or permit or require the applicable Credit Party to use such money, or any part thereof, to replace, repair, restore or rebuild the Collateral in a diligent and expeditious manner with materials and workmanship of substantially the same quality as existed before the loss, damage or destruction. Notwithstanding the foregoing, if the casualty giving rise to such insurance proceeds could not reasonably be expected to constitute a Prepayment Event, Agent shall permit the applicable Credit Party to replace, restore, repair or rebuild the property; PROVIDED that if such Credit Party shall not have entered into binding agreements to complete such replacement, restoration, repair or rebuilding within 180 days of such casualty or such committed amounts shall not have been applied within 359 days after such casualty, Agent may apply such insurance proceeds to the Obligations in accordance with SECTION 1.3(d); PROVIDED, FURTHER, that in the case of insurance proceeds pertaining to any Credit Party that is not a Borrower, such insurance proceeds shall be applied ratably to all of the Loans owing by each Borrower. All insurance proceeds that are to be made available to any Borrower to replace, repair, restore or rebuild the Collateral shall be applied by Agent to reduce the outstanding principal balance of the Revolving Loan of such Borrower (which application shall not result in a permanent reduction of the Commitment) and upon such application, Agent shall establish a Reserve in an amount equal to the amount of such proceeds so applied. All insurance proceeds made available to any Credit Party that is not a Borrower to replace, repair, restore or rebuild Collateral shall be deposited in a cash collateral account. Thereafter, such funds shall be made available to such Credit Party to provide funds to replace, repair, restore or rebuild the Collateral as follows: (i) Borrower Representative shall request a Revolving Credit Advance or a release from the cash collateral account be made to such Credit Party in the amount requested to be released; (ii) so long as the conditions set forth in SECTION 2.2 have been met, Lenders shall make such Revolving Credit Advance or Agent shall release funds from the cash collateral account; and (iii) in the case of insurance proceeds applied against the Revolving Loan, the Reserve established with respect to such insurance proceeds shall be reduced by the amount of such Revolving Credit Advance. To the extent not used to replace. 29 repair, restore or rebuild the Collateral, such insurance proceeds shall be applied in accordance with SECTION 1.3(d); PROVIDED that in the case of insurance proceeds pertaining to any Credit Party that is not a Borrower, such insurance proceeds shall be applied ratably to all of the Loans owing by each Borrower. 5.5 COMPLIANCE WITH LAWS. Each Credit Party shall comply with all federal, state, local and foreign laws and regulations applicable to it, including those relating to communications, ERISA and labor matters and Environmental Laws, Environmental Permits, and FCC matters except to the extent that the failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 5.6 SUPPLEMENTAL DISCLOSURE. From time to time as may be reasonably requested by Agent (which request will not be made more frequently than once each year absent the occurrence and continuance of a Default or an Event of Default), the Credit Parties shall supplement each Disclosure Schedule hereto, or any representation herein or in any other Loan Document, with respect to any matter hereafter arising that, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedule or as an exception to such representation or that is necessary to correct any information in such Disclosure Schedule or representation which has been rendered inaccurate thereby (and, in the case of any supplements to any Disclosure Schedule, such Disclosure Schedule shall be appropriately marked to show the changes made therein); PROVIDED that (a) no such supplement to any such Disclosure Schedule or representation shall amend, supplement or otherwise modify any Disclosure Schedule or representation, or be or be deemed a waiver of any Default or Event of Default resulting from the matters disclosed therein, except as consented to by Agent and Requisite Lenders in writing, and (b) no supplement shall be required or permitted as to representations and warranties that relate solely to the Closing Date. 5.7 INTELLECTUAL PROPERTY. Each Credit Party will conduct its business and affairs without infringement of or interference with any Intellectual Property of any other Person in any material respect. 5.8 ENVIRONMENTAL MATTERS. Each Credit Party shall and shall cause each Person within its control to: (a) conduct its operations and keep and maintain its Real Estate in compliance with all Environmental Laws and Environmental Permits other than noncompliance that could not reasonably be expected to have a Material Adverse Effect; (b) implement any and all investigation, remediation, removal and response actions that are appropriate or necessary to maintain the value and marketability of the Real Estate or to otherwise comply with Environmental Laws and Environmental Permits pertaining to the presence, generation, treatment, storage, use, disposal, transportation or Release of any Hazardous Material on, at, in, 30 under, above, to, from or about any of its Real Estate; (c) notify Agent promptly after such Credit Party becomes aware of any violation of Environmental Laws or Environmental Permits or any Release on, at, in, under, above, to, from or about any Real Estate that is reasonably likely to result in Environmental Liabilities in excess of $500,000; and (d) promptly forward to Agent a copy of any order, notice, request for information or any communication or report received by such Credit Party in connection with any such violation or Release or any other matter relating to any Environmental Laws or Environmental Permits that could reasonably be expected to result in Environmental Liabilities in excess of $500,000, in each case whether or not the Environmental Protection Agency or any Governmental Authority has taken or threatened any action in connection with any such violation, Release or other matter. If Agent at any time has a reasonable basis to believe that there may be a violation of any Environmental Laws or Environmental Permits by any Credit Party or any Environmental Liability arising thereunder, or a Release of Hazardous Materials on, at, in, under, above, to, from or about any of its Real Estate, that, in each case, could reasonably be expected to have a Material Adverse Effect, then each Credit Party shall, upon Agent's written request (i) cause the performance of such environmental audits including subsurface sampling of soil and groundwater, and preparation of such environmental reports, at Borrowers' expense, as Agent may from time to time reasonably request, which shall be conducted by reputable environmental consulting firms reasonably acceptable to Agent and shall be in form and substance reasonably acceptable to Agent, and (ii) permit Agent or its representatives to have access to all Real Estate for the purpose of conducting such environmental audits and testing as Agent deems appropriate, including subsurface sampling of soil and groundwater. Borrowers shall reimburse Agent for the costs of such audits and tests and the same will constitute a part of the Obligations secured hereunder. 5.9 LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS, BAILEE LETTERS AND REAL ESTATE PURCHASES. Each Credit Party shall obtain a landlord's agreement, mortgagee agreement or bailee letter, as applicable, from the lessor of each of parcel of Material Real Estate and shall use its reasonable best efforts to obtain such agreements from the lessor of each other leased property, mortgagee of owned property or bailee with respect to any warehouse, processor or converter facility or other location where Collateral is stored or located, which agreement or letter shall contain a waiver or subordination of all Liens or claims that the landlord, mortgagee or bailee may assert against the Collateral at that location, and shall otherwise be reasonably satisfactory in form and substance to Agent. After the Closing Date, no real property or warehouse space shall be leased by any Credit Party without the prior written consent of Agent (which consent, in Agent's discretion, may be conditioned upon the establishment of Reserves acceptable to Agent) or, unless and until a reasonably satisfactory landlord agreement or bailee letter, as appropriate, shall first have been obtained with respect to such location. Each Credit Party shall timely and fully pay and perform its material obligations under all leases and other agreements with respect to each leased location or public warehouse where any Collateral is or may be located. To the extent otherwise permitted hereunder, if any Credit Party proposes to acquire a fee ownership interest in Real Estate after the Closing Date, it shall first provide to Agent a mortgage or deed of trust granting Agent a first priority Lien on such Real Estate, together with environmental audits, mortgage title insurance commitment, and, if required by Agent, supplemental casualty insurance and flood insurance, and such other documents, 31 instruments or agreements reasonably requested by Agent, in each case, in form and substance reasonably satisfactory to Agent. 5.10 [Intentionally Reserved.] 5.11 FURTHER ASSURANCES. Each Credit Party executing this Agreement agrees that it shall and shall cause each other Credit Party to, at such Credit Party's expense and upon request of Agent, duly execute and deliver, or cause to be duly executed and delivered, to Agent such further instruments and do and cause to be done such further acts as may be necessary or proper in the reasonable opinion of Agent to carry out more effectively the provisions and purposes of this Agreement or any other Loan Document. 5.12 FCC REPORTS AND COMMUNICATIONS. In addition to and not in lieu of the requirements set forth in item (o) of ANNEX E, the Credit Parties shall provide Agent, promptly after the same becomes available, with copies of all (i) letters of inquiry, notices of apparent liability, hearing designation orders or any other orders, rulings or decisions of the FCC naming any of the Radio Stations and (ii) any correspondence, pleading or other response from any Borrower or any of its respective Subsidiaries to the FCC with respect to the foregoing. Each Borrower and its respective Subsidiaries shall comply fully with all FCC filing requirements described in 47 C.F.R. Sections 73.3613 and 73.3615 and shall provide copies to Agent of all filings made pursuant to such requirements. Without limiting the generality of the foregoing, Borrower and its respective Subsidiaries shall file the Loan Documents at the FCC within 30 days of the execution thereof and shall provide a copy to Agent of such filing. 5.13 OPERATING AGREEMENTS. Each Borrower shall, and shall cause each of its respective Subsidiaries to maintain, and not breach or violate, any and all Operating Agreements and other material contracts and rights necessary to operate each Radio Station, except where the failure to so maintain or comply, individually or in the aggregate, could not reasonably be expected to, individually or in the aggregate, have a material adverse effect on the ability of Borrower to operate any Major Market Radio Station in substantially the same manner as such Major Market Radio Station is operated on the Closing Date. 6. NEGATIVE COVENANTS Each Credit Party executing this Agreement jointly and severally agrees as to all Credit Parties that, unless the prior written consent or written waiver of Agent and the Requisite Lenders is otherwise obtained, from and after the date hereof until the Termination Date: 6.1 MERGERS, SUBSIDIARIES, ETC. No Credit Party shall directly or indirectly, by operation of law or otherwise, (a) form or acquire any Subsidiary, or (b) merge with, consolidate with, acquire all or substantially all of the assets or Stock of, or otherwise combine with or acquire, any Person, other than (i) transactions permitted pursuant to SECTION 6.2, and (ii) the merger or consolidation of a Credit Party into another Credit Party, so long as the Credit Party surviving is a Borrower, if such 32 merger or consolidation involved such Borrower. Notwithstanding the foregoing, any Borrower may acquire all or substantially all of the assets or Stock of any Person (the "TARGET") (in each case, a "PERMITTED ACQUISITION") subject to the satisfaction of each of the following conditions: (i) Agent shall receive at least 15 Business Days' prior written notice of such proposed Permitted Acquisition, which notice shall include a reasonably detailed description of such proposed Permitted Acquisition; (ii) such Permitted Acquisition shall only involve assets located in the United States or Canada (or, in the case of a proposed marketing company to be established by Borrowers, Mexico, subject to the consent of Agent, which consent will not be unreasonably withheld) and comprising a business, or those assets of a business, of the type engaged in by Credit Parties as of the Closing Date or directly related thereto, and which business would not subject Agent or any Lender to regulatory or third party approvals in connection with the exercise of its rights and remedies under this Agreement or any other Loan Documents other than (A) approvals applicable to the exercise of such rights and remedies with respect to Borrowers prior to such Permitted Acquisition and (B) approvals required in connection with the transfer of any FCC Licenses acquired in such Permitted Acquisition; (iii) such Permitted Acquisition shall be consensual and shall have been approved by the Target's board of directors; (iv) no additional Indebtedness, Guaranteed Indebtedness, contingent obligations or other liabilities (other than ordinary indemnity obligations contained in the purchase agreement) shall be incurred, assumed or otherwise be reflected on a consolidated balance sheet of Borrowers and Target after giving effect to such Permitted Acquisition, except (A) Loans made hereunder and (B) ordinary course trade payables, accrued expenses, secured Indebtedness of Target which would be permitted under SECTION 6.3(a)(i) and unsecured Indebtedness of the Target to the extent no Default or Event of Default has occurred and is continuing or would result after giving effect to such Permitted Acquisition; (v) the sum of all amounts payable in connection with all Permitted Acquisitions (including all transaction costs and all Indebtedness, liabilities and contingent obligations incurred or assumed in connection therewith or otherwise reflected on a consolidated balance sheet of Borrowers and Target) shall not exceed $5,000,000; (vi) the Target shall not have incurred an operating loss for the trailing twelve-month period preceding the date of the Permitted Acquisition, as determined based upon the Target's financial statements for its most recently completed fiscal year and its most recent interim financial period completed within 60 days prior to the date of consummation of such Permitted Acquisition; (vii) the business and assets acquired in such Permitted Acquisition shall be free and clear of all Liens (other than Permitted Encumbrances); 33 (viii) at or prior to the closing of any Permitted Acquisition, Agent will be granted a first priority perfected Lien (subject to Permitted Encumbrances) in all assets acquired pursuant thereto or in the assets and Stock of the Target, and Borrowers and the Target shall have executed such documents and taken such actions as may be required by Agent in connection therewith; (ix) Concurrently with delivery of the notice referred to in CLAUSE (i) above, Borrowers shall have delivered to Agent, in form and substance reasonably satisfactory to Agent: (A) a pro forma consolidated balance sheet, income statement and cash flow statement of Borrowers and their Subsidiaries (the "ACQUISITION PRO FORMA"), based on recent financial statements, which shall fairly present in all material respects the assets, liabilities, financial condition and results of operations of Borrowers and their Subsidiaries in accordance with GAAP consistently applied, but taking into account such Permitted Acquisition and the funding of all Loans in connection therewith, and such Acquisition Pro Forma shall reflect that on a pro forma basis, no Event of Default has occurred and is continuing or would result after giving effect to such Permitted Acquisition and Borrowers would have been in compliance with the financial covenants set forth in ANNEX G for the four quarter period reflected in the Compliance Certificate most recently delivered to Agent pursuant to ANNEX E prior to the consummation of such Permitted Acquisition (after giving effect to such Permitted Acquisition and all Loans funded in connection therewith as if made on the first day of such period); (B) updated versions of the most recently delivered Projections covering the 3-year period commencing on the date of such Permitted Acquisition and otherwise prepared in accordance with the Projections (the "ACQUISITION PROJECTIONS") and based upon historical financial data of a recent date reasonably satisfactory to Agent, taking into account such Permitted Acquisition; and (C) a certificate of the chief financial officer of each Borrower to the effect that: (w) each Borrower will be Solvent upon the consummation of the Permitted Acquisition; (x) the Acquisition Pro Forma fairly presents the financial condition of Borrowers (on a consolidated basis) as of the date thereof after giving effect to the Permitted Acquisition; (y) the Acquisition Projections are reasonable estimates of the future financial performance of Borrowers subsequent to the date thereof based upon the historical performance of Borrowers and the Target and show that Borrowers shall continue to be in compliance with the financial covenants set forth in ANNEX G for the 3-year period thereafter; and (z) Borrowers have completed their due diligence investigation with respect to the Target and such Permitted Acquisition, which investigation was conducted in a manner similar to that which would have been conducted by a prudent purchaser of a comparable business and the results of which investigation were delivered to Agent and Lenders; 34 (x) on or prior to the date of such Permitted Acquisition, Agent shall have received, in form and substance reasonably satisfactory to Agent, copies of the acquisition agreement and related agreements and instruments, and all opinions, if any, certificates, lien search results and other documents reasonably requested by Agent including those specified in the last sentence of SECTION 5.9; (xi) at the time of such Permitted Acquisition and after giving effect thereto, no Default or Event of Default has occurred and is continuing; (xii) Agent and Lenders shall have consented in writing to such Permitted Acquisition and Borrowers shall have reimbursed Agent for all fees, costs and expenses of its review thereof (including, without limitation, fees, charges and disbursements of counsel); (xiii) If applicable, at the time of any Permitted Acquisition, Borrowers shall cause each of the FCC Licenses being acquired by a Borrower or any of its Subsidiaries to be transferred to one or more License Subs. Promptly after the transfer of the FCC Licenses to the License Subs, Borrowers shall provide to Agent copies of any required consents to such transfer from the FCC and any other Governmental Authority, together with a certificate of Borrower Representative stating that all necessary authorizations relating to such transfer have been obtained or made, are in full force and effect and are not subject to any pending or, to their knowledge, threatened reversal or cancellation; and (xiv) If applicable, within thirty (30) days after the consummation of any Permitted Acquisition, Borrowers shall file any Ownership Reports required to be filed with the FCC. 6.2 INVESTMENTS; LOANS AND ADVANCES. Except as specifically disclosed on DISCLOSURE SCHEDULE (6.2), no Credit Party shall make or permit to exist any investment in, or make, accrue or permit to exist loans or advances of money to, any Person, through the direct or indirect lending of money, holding of securities or otherwise, except that: (a) Credit Parties may make investments in an aggregate amount of up to $250,000; (b) Credit Parties may hold investments comprised of notes payable, or stock or other securities issued by Account Debtors to a Credit Party pursuant to negotiated agreements with respect to settlement of such Account Debtor's Accounts in the ordinary course of business, so long as the aggregate amount of such Accounts so settled by Borrowers does not exceed $500,000; (c) each Credit Party may maintain its existing investments in its Subsidiaries as of the Closing Date; (d) any Credit Party may make (i) investments in any other Credit Party (including intercompany loans and advances to any other Credit Party to the extent permitted by SECTION 6.3(a)(vii)) and (ii) Permitted Acquisitions to the extent permitted by SECTION 6.1; (e) each Credit Party may make investments consisting of loans permitted by SECTION 6.4(b); (f) each Credit Party may make investments consisting of the receipt of non-cash consideration from a sale of assets (including the Stock of a Subsidiary) permitted pursuant to SECTION 6.8; (g) each Credit Party may make investments consisting of Guaranteed Indebtedness to the extent permitted by SECTION 6.6; (h) each Credit Party may make investments in (1) direct obligations of, 35 or obligations guaranteed by, the United States of America or any agency thereof for the payment of which guarantee or obligations the full faith and credit of the United States of America is pledged, (2) time deposits and certificates of deposit, maturing no more than one year from the date of creation thereof, issued by commercial banks organized under the laws of the United States of America, each having combined capital, surplus and undivided profits of not less than three hundred million dollars ($300,000,000) and having a senior unsecured rating of "A-" or "A3" or better by a nationally recognized rating agency, and (3) repurchase agreements covering securities of the type described in this SECTION 6.2, provided such repurchase agreements mature no more than seven (7) days from the date of creation thereof, and (i) each Credit Party may make investments in commercial paper rated at least A-1 or the equivalent by S&P or P-1 or the equivalent by Moody's; PROVIDED, HOWEVER, no such investment may be made by any Credit Party pursuant to subsections (a) - (i) hereof unless, on or prior to the date it is acquired or made by such Credit Party, such investment shall be subject to the valid, enforceable and perfected first-priority security interest of Agent, for the benefit of Lenders. 6.3 INDEBTEDNESS. (a) No Credit Party shall create, incur, assume or permit to exist any Indebtedness, except (without duplication) (i) Indebtedness secured by purchase money security interests and Capital Leases permitted in SECTION 6.7(c) and refinancings thereof or amendments or modifications thereof which do not have the effect of increasing the principal amount thereof or changing the amortization thereof (other than to extend the same) and which are otherwise on terms and conditions no less favorable to any Credit Party, Agent or any Lender than the terms of the Indebtedness being refinanced, amended or modified, (ii) the Loans and the other Obligations, (iii) unfunded pension fund and other employee benefit plan obligations and liabilities to the extent they are permitted to remain unfunded under applicable law, (iv) existing Indebtedness described in DISCLOSURE SCHEDULE (6.3) and refinancings thereof or amendments or modifications thereto that do not have the effect of increasing the principal amount thereof or changing the amortization thereof (other than to extend the same) and that are otherwise on terms and conditions no less favorable to any Credit Party, Agent or any Lender, as determined by Agent, than the terms of the Indebtedness being refinanced, amended or modified, (v) Indebtedness specifically permitted under SECTION 6.1; (vi) Indebtedness specifically permitted under SECTION 6.17; (vii) Indebtedness consisting of intercompany loans and advances made by any Borrower to any other Credit Party and guarantees by the Parent or any Credit Party of Indebtedness permitted hereby; PROVIDED, that each of the following conditions are satisfied ("PERMITTED INTERCOMPANY INDEBTEDNESS"): (A) such loans and advances are subordinated to the Obligations in a manner and by documentation acceptable to Agent and any instrument evidencing such loans or advances is pledged to Agent as security for the Obligations; (B) each Credit Party shall record all intercompany transactions and note the subordinated nature thereof on its books and records in a manner reasonably satisfactory to Agent; (C) at the time any such intercompany loan or advance is made by any Borrower to any other Credit Party and after giving effect thereto, such Borrower shall be Solvent; and (D) no Default or Event of Default would occur and be continuing after giving effect to any such proposed intercompany loan; and (viii) other Indebtedness of Borrowers which (A) is unsecured, (B) does not exceed $5,000,000 in the aggregate at any time, and (C) is subordinated to the Obligations pursuant to documents and instruments and under terms and conditions satisfactory to Agent, in its sole discretion. 36 (b) No Credit Party shall, directly or indirectly, voluntarily purchase, redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in respect of any Indebtedness, other than (i) the Obligations; (ii) Indebtedness secured by a Permitted Encumbrance if the asset securing such Indebtedness has been sold or otherwise disposed of in accordance with SECTION 6.8; (iii) Indebtedness permitted by SECTION 6.3(a)(iv) upon any refinancing thereof in accordance with SECTION 6.3(a)(iv); and (iv) the Permitted Senior Note Repurchases. 6.4 EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS. (a) Except as otherwise expressly permitted in this SECTION 6 with respect to Affiliates or as specifically set forth on DISCLOSURE SCHEDULE (6.4)(a), no Credit Party shall enter into or be a party to any transaction with any other Credit Party or any Affiliate thereof except in the ordinary course of business and pursuant to the reasonable requirements of such Credit Party's business and upon fair and reasonable terms that are no less favorable to such Credit Party than would be obtained in a comparable arm's length transaction with a Person not an Affiliate of such Credit Party. In addition, if any such transaction or series of related transactions involves payments in excess of $300,000 in the aggregate, the terms of these transactions must be disclosed in advance to and approved in writing by Agent and Lenders. All such transactions existing as of the date hereof are described in DISCLOSURE SCHEDULE 6.4(a). Notwithstanding anything to the contrary set forth herein, the obligations of Messrs. Blaya and Dawson under the Shareholder Notes, as the same exist as of the Closing Date, may be forgiven, extended or amended (to the extent such amendment does not have the result of increasing the amount due to the holder of such Shareholder Note) by the applicable Credit Party. (b) No Credit Party shall enter into any lending or borrowing transaction with any employees of any Credit Party, except loans to its respective employees in the ordinary course of business consistent with past practices for travel and entertainment expenses, relocation costs and similar purposes up to a maximum of $150,000 to any employee and up to a maximum of $250,000 in the aggregate at any one time outstanding. 6.5 CAPITAL STRUCTURE AND BUSINESS. No Credit Party shall (a) make any changes in any of its business objectives, purposes or operations that could in any way adversely affect the repayment of the Loans or any of the other Obligations or could otherwise reasonably be expected to have or result in a Material Adverse Effect, (b) make any change in its capital structure as described in DISCLOSURE SCHEDULE (3.8), including the issuance or sale of any shares of Stock, warrants or other securities convertible into Stock or any revision of the terms of its outstanding Stock; PROVIDED that Parent may issue or sell shares of its Stock for cash so long as (i) the proceeds thereof are applied in prepayment of the Obligations as required by SECTION 1.3(b), and (ii) no Change of Control occurs after giving effect thereto, or (c) amend its charter or bylaws in a manner that would adversely affect Agent or Lenders or such Credit Party's duty or ability to repay the Obligations. No Credit Party shall engage in any business other than the commercial radio business (which shall be deemed to include, without limitation, programming, production and distribution), and, in the case of MASS, promotional and marketing activities reasonably related thereto. 37 6.6 GUARANTEED INDEBTEDNESS. No Credit Party shall create, incur, assume or permit to exist any Guaranteed Indebtedness except (a) the Guarantees, (b) by endorsement of instruments or items of payment for deposit to the general account of any Credit Party, and (c) for Guaranteed Indebtedness incurred for the benefit of any other Credit Party if the primary obligation is expressly permitted by this Agreement other than Indebtedness, if any, of a Target existing at the time such Target is acquired. 6.7 LIENS. No Credit Party shall create, incur, assume or permit to exist any Lien on or with respect to its Accounts or any of its other properties or assets (whether now owned or hereafter acquired) except for (a) Permitted Encumbrances; (b) Liens in existence on the date hereof and summarized on DISCLOSURE SCHEDULE (6.7) securing the Indebtedness described on DISCLOSURE SCHEDULE (6.3) and permitted refinancings, extensions and renewals thereof, including extensions or renewals of any such Liens; PROVIDED that the principal amount of the Indebtedness so secured is not increased and the Lien does not attach to any other property; and (c) Liens created after the date hereof by conditional sale or other title retention agreements (including Capital Leases) or in connection with purchase money Indebtedness with respect to Equipment and Fixtures acquired by any Credit Party in the ordinary course of business, involving the incurrence of an aggregate amount of purchase money Indebtedness and Capital Lease Obligations of not more than $5,000,000 outstanding at any one time for all such Liens (PROVIDED that such Liens attach only to the assets subject to such purchase money debt and such Indebtedness is incurred within 20 days following such purchase and does not exceed 100% of the purchase price of the subject assets). In addition, no Credit Party shall become a party to any agreement, note, indenture or instrument, or take any other action, that would prohibit the creation of a Lien on any of its properties or other assets in favor of Agent, on behalf of itself and Lenders, as additional collateral for the Obligations, except operating leases, Capital Leases or Licenses which prohibit Liens upon the assets that are subject thereto. 6.8 SALE OF STOCK AND ASSETS. No Credit Party shall sell, transfer, convey, assign or otherwise dispose of any of its properties or other assets, including the Stock of any of its Subsidiaries (whether in a public or a private offering or otherwise) or any of its Accounts, other than (a) the sale of Inventory in the ordinary course of business; and (b) the sale, transfer, conveyance or other disposition by a Credit Party of Equipment, Fixtures or Real Estate having a value not exceeding $250,000 in any single transaction, $500,000 in the aggregate in any Fiscal Year, or $1,000,000 in the aggregate during the term hereof; and (c) a Permitted Equity Transaction. With respect to any disposition of assets or other properties permitted pursuant to CLAUSES (b) above, subject to SECTION 1.3(b), Agent agrees on reasonable prior written notice to release its Lien on such assets or other properties in order to permit the applicable Credit Party to effect such disposition and shall execute and deliver to Borrowers, at Borrowers' expense, appropriate UCC amendment statements and other releases as reasonably requested by Borrowers. 38 6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA Affiliate to, cause or permit to occur an event that could result in the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event could reasonably be expected to have a Material Adverse Effect. 6.10 FINANCIAL COVENANTS. Borrowers shall not breach or fail to comply with any of the Financial Covenants. 6.11 HAZARDOUS MATERIALS. No Credit Party shall cause or permit a Release of any Hazardous Material on, at, in, under, above, to, from or about any of the Real Estate where such Release would (a) violate in any respect, or form the basis for any Environmental Liabilities under, any Environmental Laws or Environmental Permits or (b) otherwise adversely impact the value or marketability of any of the Real Estate or any of the Collateral, other than such violations or Environmental Liabilities that could not reasonably be expected to have a Material Adverse Effect. 6.12 SALE-LEASEBACKS. No Credit Party shall engage in any sale-leaseback, synthetic lease or similar transaction involving any of its assets. 6.13 CANCELLATION OF INDEBTEDNESS. No Credit Party shall cancel any claim or debt owing to it, except for reasonable consideration negotiated on an arm's length basis and in the ordinary course of its business consistent with past practices or as expressly permitted by SECTION 6.4(a). 6.14 RESTRICTED PAYMENTS. No Credit Party shall make any Restricted Payment, except (a) intercompany loans and advances among Borrowers and Guarantors to the extent permitted by SECTION 6.3, (b) dividends and distributions by Subsidiaries of any Borrower paid to such Borrower, (c) employee loans permitted under SECTION 6.4(b), (d) payments of principal and interest on Permitted Intercompany Indebtedness, and (e) Permitted Payments, in each case, so long as at the time of the making of any such payment, no Default or Event of Default shall then exist or be caused thereby. 6.15 CHANGE OF CORPORATE NAME OR LOCATION; CHANGE OF FISCAL YEAR. No Credit Party shall (a) change its name as it appears in official filings in the state of its incorporation or other organization, (b) change its chief executive office, principal place of business, corporate offices or warehouses or locations at which Collateral is held or stored, or the location of its records concerning the Collateral, (c) change the type of entity that it 39 is, (d) change its organization identification number, if any, issued by its state of incorporation or other organization, or (e) change its state of incorporation or organization, in each case without at least 30 days prior written notice to Agent and after Agent's written acknowledgment that any reasonable action requested by Agent in connection therewith, including to continue the perfection of any Liens in favor of Agent, on behalf of Lenders, in any Collateral, has been completed or taken, and PROVIDED that any such new location shall be in the continental United States. No Credit Party shall change its Fiscal Year. 6.16 NO IMPAIRMENT OF INTERCOMPANY TRANSFERS. No Credit Party shall directly or indirectly enter into or become bound by any agreement, instrument, indenture or other obligation (other than this Agreement and the other Loan Documents) that could directly or indirectly restrict, prohibit or require the consent of any Person with respect to the payment of dividends or distributions or the making or repayment of intercompany loans by a Subsidiary of any Borrower to a Borrower or between Borrowers. 6.17 NO SPECULATIVE TRANSACTIONS. No Credit Party shall engage in any transaction involving commodity options, futures contracts or similar transactions, except solely to hedge against fluctuations in the prices of commodities owned or purchased by it and the values of foreign currencies receivable or payable by it and interest swaps, caps or collars. 6.18 LEASES; REAL ESTATE PURCHASES. No Credit Party shall enter into any operating lease for Equipment or Real Estate, if the aggregate of all such operating lease payments payable in any year for all Credit Parties on a consolidated basis would exceed $500,000; PROVIDED, HOWEVER, the Credit Parties may (x) purchase real estate for the purpose of constructing a transmitter site in the Sacramento, California area for a price not to exceed $300,000, and (y) amend or renew an operating lease for Equipment or Real Estate, if such amendment or renewal (i) does not have the effect of increasing the principal amount of the obligations thereof by more than 15%, (ii) is otherwise on terms and conditions not materially less favorable to any Credit Party, than the terms of the agreement being amended or renewed, and (iii) does not otherwise result in the breach of any representation, warrants or covenant of any Credit Party hereunder. Except as permitted under SECTION 6.1 in connection with a Permitted Acquisition, no Credit Party shall purchase a fee simple ownership interest in Real Estate with an aggregate purchase price in excess of $500,000. 6.19 CHANGES RELATING TO SUBORDINATED DEBT; MATERIAL CONTRACTS. (a) No Credit Party shall change or amend the terms of (i) any of the RUC Discount Note Documents or (ii) any Subordinated Debt (or any indenture or agreement in connection therewith) if the effect of such amendment is to: (1) increase the interest rate on such Subordinated Debt; (2) change the dates upon which payments of principal or interest are due on such Subordinated Debt other than to extend such dates; (3) change any default or event of default other than to delete or make less restrictive any default provision therein, or add any 40 covenant with respect to such Subordinated Debt; (4) change the redemption or prepayment provisions of such Subordinated Debt other than to extend the dates therefor or to reduce the premiums payable in connection therewith; (5) grant any security or collateral to secure payment of such Subordinated Debt; or (6) change or amend any other term if such change or amendment would materially increase the obligations of the Credit Party thereunder or confer additional material rights on the holder of such Subordinated Debt in a manner adverse to any Credit Party, Agent or any Lender. (b) No Credit Party shall change or amend the terms of any of the following material contracts (other than changes or amendments which (1) are, individually or in the aggregate with all other changes or amendments to any agreement from the Closing Date, not material to such agreement or (2) have the effect of making the economic terms of such agreement more favorable to the applicable Credit Party): (i) that certain Management and Stockholder Agreement, dated as of April 30, 2001, by and among Mass Promotions, Inc., MASS Services, Inc. and Alicia Martinez-Fonts and Maria Madruga; (ii) that certain Time Brokerage Agreement, dated April 12, 2001, by and between Radio Unica of Miami License Corp. and Hispanic Christian Radio, LLC;(iii) that certain Time Brokerage Agreement, dated June 1, 2001, by and between Radio Unica of New York License Corp., a Delaware corporation, and Radio Restoration; and (iv) that certain Agreement, dated September 23, 1998, by and between Radio Unica Corp. and Inter/Forever Sports, Inc., as the same has been amended on or before the Closing Date. 6.20 CREDIT PARTIES OTHER THAN BORROWERS. Except as otherwise described in DISCLOSURE SCHEDULE (6.20), none of the Credit Parties other than Borrowers (including specifically Parent) shall engage in any trade or business (other than, in the case of Parent, the Permitted Parent Activities), or own any assets (other than Stock of their Subsidiaries) or incur any Indebtedness or Guaranteed Indebtedness (other than the Obligations). 6.21 LICENSE SUBS. No Borrower nor any Subsidiary thereof, other than a License Sub, shall hold any FCC Licenses. Borrowers shall not permit the License Subs to have any business activities, operations, assets, Indebtedness, guaranties or Liens (other than those in favor of Agent). 6.22 LIMITATION ON SALE OR DISCOUNT OF RECEIVABLES. No Borrower nor any Subsidiary thereof, shall discount or sell with recourse, or sell for less than the greater of the face value or market value thereof, any of its notes receivable or accounts receivable, other than in the ordinary course of its business consistent with past practices; PROVIDED, HOWEVER, that, regardless of Borrowers' ordinary course conduct or their respective past practices, other than the forgiveness of certain Indebtedness under the Shareholder Notes in accordance with SECTION 6.4(a), no Borrower nor any Subsidiary thereof shall discount or sell with recourse, or sell for less than the greater of the face value or market value thereof, any note receivable or account receivable with a face amount in excess of $500,000 for a discount in excess of fifty percent (50%), without the prior written consent of Agent. 41 7. TERM 7.1 TERMINATION. The financing arrangements contemplated hereby shall be in effect until the Commitment Termination Date, and the Loans and all other Obligations shall be automatically due and payable in full on such date. 7.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING ARRANGEMENTS. Except as otherwise expressly provided for in the Loan Documents, no termination or cancellation (regardless of cause or procedure) of any financing arrangement under this Agreement shall in any way affect or impair the obligations, duties and liabilities of the Credit Parties or the rights of Agent and Lenders relating to any unpaid portion of the Loans or any other Obligations, due or not due, liquidated, contingent or unliquidated, or any transaction or event occurring prior to such termination, or any transaction or event, the performance of which is required after the Commitment Termination Date. Except as otherwise expressly provided herein or in any other Loan Document, all undertakings, agreements, covenants, warranties and representations of or binding upon the Credit Parties, and all rights of Agent and each Lender, all as contained in the Loan Documents, shall not terminate or expire, but rather shall survive any such termination or cancellation and shall continue in full force and effect until the Termination Date; PROVIDED, that the provisions of SECTION 11, the payment obligations under SECTIONS 1.15 and 1.16, and the indemnities contained in the Loan Documents shall survive the Termination Date. 8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES 8.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events (regardless of the reason therefor) shall constitute an "EVENT OF DEFAULT" hereunder: (a) Any Borrower (i) (A) fails to make any payment of principal of the Loans or any of the other Obligations when due and payable, or (B) fails to make any payment of interest on, or Fees owing in respect of, the Loans or any of the other Obligations within three (3) Business Days of when due and payable, or (ii) fails to pay or reimburse Agent or Lenders for any expense reimbursable hereunder or under any other Loan Document within 10 days following Agent's demand for such reimbursement or payment of expenses. (b) Any Credit Party fails or neglects to perform, keep or observe any of the provisions of SECTIONS 1.4, 1.8, 5.4(a) OR 6, or any of the provisions set forth in ANNEXES C OR G, respectively. (c) Any Borrower or any other Credit Party fails or neglects to perform, keep or observe any of the provisions of SECTION 4 or any provisions set forth in ANNEXES E OR F, respectively, and the same shall remain unremedied for 3 Business Days or more. 42 (d) Any Credit Party fails or neglects to perform, keep or observe any other provision of this Agreement or of any of the other Loan Documents (other than any provision embodied in or covered by any other clause of this SECTION 8.1) and the same shall remain unremedied for 30 days or more. (e) A default or breach occurs under any other agreement, document or instrument to which any Credit Party is a party that is not cured within any applicable grace period therefor, and such default or breach (i) involves the failure to make any payment when due in respect of any Indebtedness or Guaranteed Indebtedness (other than the Obligations) of any Credit Party in excess of $500,000 in the aggregate (including (x) undrawn committed or available amounts and (y) amounts owing to all creditors under any combined or syndicated credit arrangements), or (ii) causes, or permits any holder of such Indebtedness or Guaranteed Indebtedness or a trustee to cause, Indebtedness or Guaranteed Indebtedness or a portion thereof in excess of $500,000 in the aggregate to become due prior to its stated maturity or prior to its regularly scheduled dates of payment, or cash collateral in respect thereof to be demanded, in each case, regardless of whether such default is waived, or such right is exercised, by such holder or trustee. (f) Any representation or warranty herein or in any Loan Document or in any written statement, report, financial statement or certificate made or delivered to Agent or any Lender by any Credit Party is untrue or incorrect in any material respect as of the date when made or deemed made. (g) Assets of any Credit Party with a fair market value of $500,000 or more are attached, seized, levied upon or subjected to a writ or distress warrant, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors of any Credit Party and such condition continues for 30 days or more. (h) A case or proceeding is commenced against any Credit Party seeking a decree or order in respect of such Credit Party (i) under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such Credit Party or for any substantial part of any such Credit Party's assets, or (iii) ordering the winding-up or liquidation of the affairs of such Credit Party, and such case or proceeding shall remain undismissed or unstayed for 60 days or more or a decree or order granting the relief sought in such case or proceeding shall be entered by a court of competent jurisdiction. (i) Any Credit Party (i) files a petition seeking relief under the Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or other similar law, (ii) consents to or fails to contest in a timely and appropriate manner the institution of proceedings thereunder or the filing of any such petition or the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such Credit Party or for any substantial part of any such Credit Party's assets, (iii) makes an assignment for the benefit of creditors, (iv) takes any action in furtherance of any of the foregoing; or (v) admits in writing its inability to, or is generally unable to, pay its debts as such debts become due. 43 (j) A final judgment or judgments for the payment of money in excess of $500,000 (in excess of amounts covered by insurance, in instances as to which the insurance carrier has acknowledged coverage) in the aggregate at any time are outstanding against one or more of the Credit Parties and the same are not, within 30 days after the entry thereof, discharged or execution thereof stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay. (k) Any material provision of any Loan Document for any reason ceases to be valid, binding and enforceable in accordance with its terms (or any Credit Party shall challenge the enforceability of any Loan Document or shall assert in writing, or engage in any action or inaction based on any such assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not valid, binding and enforceable in accordance with its terms), or any Lien created under any Loan Document ceases to be a valid and perfected first priority Lien (except as otherwise permitted herein or therein) in any of the Collateral purported to be covered thereby. (l) Any Change of Control occurs. (m) Any Borrower's on-the-air broadcast operations at any Radio Station shall be interrupted at any time for more than forty-eight (48) hours, whether or not consecutive, during any period of five (5) consecutive days, and such interruption could reasonably be expected to have a Material Adverse Effect. (n) [Intentionally Omitted]. (o) Any material License (other than any Excluded FCC Licenses), shall be cancelled, terminated, rescinded, revoked, suspended, impaired, otherwise finally denied renewal, or otherwise modified in any material adverse respect, or shall be renewed on terms that materially and adversely affect the economic or commercial value or usefulness thereof; or any material License (other than any Excluded FCC Licenses) shall cease to be in full force and effect; or the grant of any material License shall have been stayed, vacated or reversed, or modified in any material adverse respect by judicial or administrative proceedings; or any administrative law judge or other representative of the FCC shall have issued an initial decision in any non-comparative material License renewal, material License revocation or any comparative (multiple applicant) proceeding to the effect that any material License should be revoked or not be renewed; or any other proceeding shall have been instituted by or shall have been commenced before any court, the FCC or any other regulatory body that could reasonably be expected to, individually or in the aggregate, result in (i) cancellation, termination, rescission, revocation, material impairment, suspension or denial of renewal of a material License affecting a Major Market Radio Station, or (ii) a modification of a material License affecting a Major Market Radio Station in a material adverse respect or a renewal thereof on terms that materially and adversely affect the economic or commercial value or usefulness thereof. (p) There occurs an Event of Default (as defined by the RUC Indenture) by RUC or any guarantor under the RUC Indenture. 44 8.2 REMEDIES. (a) If any Default or Event of Default has occurred and is continuing, Agent may (and at the written request of the Requisite Lenders shall), without notice, suspend the Revolving Loan facility with respect to additional Advances and/or the incurrence of additional Letter of Credit Obligations, whereupon any additional Advances and additional Letter of Credit Obligations shall be made or incurred in Agent's sole discretion (or in the sole discretion of the Requisite Lenders, if such suspension occurred at their direction) so long as such Default or Event of Default is continuing. If any Default or Event of Default has occurred and is continuing, Agent may (and at the written request of Requisite Lenders shall), without notice except as otherwise expressly provided herein, increase the rate of interest applicable to the Loans and the Letter of Credit Fees to the Default Rate. (b) If any Event of Default has occurred and is continuing, Agent may (and at the written request of the Requisite Lenders shall), without notice: (i) terminate the Revolving Loan facility with respect to further Advances or the incurrence of further Letter of Credit Obligations; (ii) declare all or any portion of the Obligations, including all or any portion of any Loan to be forthwith due and payable, and require that the Letter of Credit Obligations be cash collateralized as provided in ANNEX B, all without presentment, demand, protest or further notice of any kind, all of which are expressly waived by each Borrower and each other Credit Party; or (iii) exercise any rights and remedies provided to Agent under the Loan Documents or at law or equity, including all remedies provided under the Code; PROVIDED, that upon the occurrence of an Event of Default specified in SECTIONS 8.1(h) OR (i), the Revolving Loan facility shall be immediately terminated and all of the Obligations, including the aggregate Revolving Loan, shall become immediately due and payable without declaration, notice or demand by any Person. 8.3 WAIVERS BY CREDIT PARTIES. Except as otherwise provided for in this Agreement or by applicable law, each Credit Party waives (including for purposes of SECTION 12): (a) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Agent on which any Credit Party may in any way be liable, and hereby ratifies and confirms whatever Agent may do in this regard, (b) all rights to notice and a hearing prior to Agent's taking possession or control of, or to Agent's replevy, attachment or levy upon, the Collateral or any bond or security that might be required by any court prior to allowing Agent to exercise any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling and exemption laws. 9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT 9.1 ASSIGNMENT AND PARTICIPATIONS. (a) Subject to the terms of this SECTION 9.1, any Lender may make an assignment to a Qualified Assignee of, or sell participations in, at any time or times, the Loan 45 Documents, Loans, Letter of Credit Obligations and any Commitment or any portion thereof or interest therein, including any Lender's rights, title, interests, remedies, powers or duties thereunder. Any assignment by a Lender shall: (i) require the consent of Agent (which consent shall not be unreasonably withheld or delayed with respect to a Qualified Assignee) and the execution of an assignment agreement (an "ASSIGNMENT AGREEMENT") substantially in the form attached hereto as EXHIBIT 9.1(a) and otherwise in form and substance reasonably satisfactory to, and acknowledged by, Agent; (ii) be conditioned on such assignee Lender representing to the assigning Lender and Agent that it is purchasing the applicable Loans to be assigned to it for its own account, for investment purposes and not with a view to the distribution thereof; (iii) after giving effect to any such partial assignment, the assignee Lender shall have Commitments in an amount at least equal to $2,500,000 and the assigning Lender shall have retained Commitments in an amount at least equal to $5,000,000; and (iv) include a payment to Agent of an assignment fee of $3,500. In the case of an assignment by a Lender under this SECTION 9.1, the assignee shall have, to the extent of such assignment, the same rights, benefits and obligations as all other Lenders hereunder. The assigning Lender shall be relieved of its obligations hereunder with respect to its Commitments or assigned portion thereof from and after the date of such assignment. Each Borrower hereby acknowledges and agrees that any assignment shall give rise to a direct obligation of Borrowers to the assignee and that the assignee shall be considered to be a "Lender". In all instances, each Lender's liability to make Loans hereunder shall be several and not joint and shall be limited to such Lender's Pro Rata Share of the applicable Commitment. In the event Agent or any Lender assigns or otherwise transfers all or any part of the Obligations, Agent or any such Lender shall so notify Borrowers and Borrowers shall, upon the request of Agent or such Lender, execute new Notes in exchange for the Notes, if any, being assigned. Notwithstanding the foregoing provisions of this SECTION 9.1(a), any Lender may at any time pledge the Obligations held by it and such Lender's rights under this Agreement and the other Loan Documents to a Federal Reserve Bank, and any Lender that is an investment fund may assign the Obligations held by it and such Lender's rights under this Agreement and the other Loan Documents to another investment fund managed by the same investment advisor; PROVIDED, that no such pledge to a Federal Reserve Bank shall release such Lender from such Lender's obligations hereunder or under any other Loan Document. (b) Any participation by a Lender of all or any part of its Commitments shall be made with the understanding that all amounts payable by Borrowers hereunder shall be determined as if that Lender had not sold such participation, and that the holder of any such participation shall not be entitled to require such Lender to take or omit to take any action hereunder except actions directly affecting (i) any reduction in the principal amount of, or interest rate or Fees payable with respect to, any Loan in which such holder participates, (ii) any extension of the scheduled amortization of the principal amount of any Loan in which such holder participates or the final maturity date thereof, and (iii) any release of all or substantially all of the Collateral (other than in accordance with the terms of this Agreement, the Collateral Documents or the other Loan Documents). Solely for purposes of SECTIONS 1.13, 1.15, 1.16 AND 9.8, each Borrower acknowledges and agrees that a participation shall give rise to a direct obligation of Borrowers to the participant and the participant shall be considered to be a "Lender". Except as set forth in the preceding sentence no Borrower nor any Credit Party shall have any obligation or duty to any participant. Neither Agent nor any Lender (other than the 46 Lender selling a participation) shall have any duty to any participant and may continue to deal solely with the Lender selling a participation as if no such sale had occurred. (c) Except as expressly provided in this SECTION 9.1, no Lender shall, as between Borrowers and that Lender, or Agent and that Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment, transfer or negotiation of, or granting of participation in, all or any part of the Loans, the Notes or other Obligations owed to such Lender. (d) Each Credit Party executing this Agreement shall assist any Lender permitted to sell assignments or participations under this SECTION 9.1 as reasonably required to enable the assigning or selling Lender to effect any such assignment or participation, including the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested and, if requested by Agent, the preparation of informational materials for, and the participation of management in meetings with, potential assignees or participants. Each Credit Party executing this Agreement shall certify the correctness, completeness and accuracy of all descriptions of the Credit Parties and their respective affairs contained in any selling materials provided by them and all other information provided by them and included in such materials, except that any Projections delivered by Borrowers shall only be certified by Borrowers as having been prepared by Borrowers in compliance with the representations contained in SECTION 3.4(c). (e) Any Lender may furnish any information concerning Credit Parties in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants); PROVIDED that such Lender shall obtain from assignees or participants confidentiality covenants substantially equivalent to those contained in SECTION 11.8. (f) [Intentionally Reserved.] (g) Notwithstanding anything to the contrary contained herein, any Lender (a "GRANTING LENDER"), may grant to a special purpose funding vehicle (an "SPC"), identified as such in writing by the Granting Lender to Agent and Borrowers, the option to provide to Borrowers all or any part of any Loans that such Granting Lender would otherwise be obligated to make to Borrowers pursuant to this Agreement; PROVIDED THAT (i) nothing herein shall constitute a commitment by any SPC to make any Loan; and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if such Loan were made by such Granting Lender. No SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). Any SPC may (i) with notice to, but without the prior written consent of, Borrowers and Agent assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by Borrowers and Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This SECTION 9.1(g) may not be amended without the prior written 47 consent of each Granting Lender, all or any of whose Loans are being funded by an SPC at the time of such amendment. For the avoidance of doubt, the Granting Lender shall for all purposes, including without limitation, the approval of any amendment or waiver of any provision of any Loan Document or the obligation to pay any amount otherwise payable by the Granting Lender under the Loan Documents, continue to be the Lender of record hereunder. 9.2 APPOINTMENT OF AGENT. GE Capital is hereby appointed to act on behalf of all Lenders as Agent under this Agreement and the other Loan Documents. The provisions of this SECTION 9.2 are solely for the benefit of Agent and Lenders and no Credit Party nor any other Person shall have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement and the other Loan Documents, Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for any Credit Party or any other Person. Agent shall have no duties or responsibilities except for those expressly set forth in this Agreement and the other Loan Documents. The duties of Agent shall be mechanical and administrative in nature and Agent shall not have, or be deemed to have, by reason of this Agreement, any other Loan Document or otherwise a fiduciary relationship in respect of any Lender. Except as expressly set forth in this Agreement and the other Loan Documents, Agent shall not have any duty to disclose, and shall not be liable for failure to disclose, any information relating to any Credit Party or any of their respective Subsidiaries or any Account Debtor that is communicated to or obtained by GE Capital or any of its Affiliates in any capacity. Neither Agent nor any of its Affiliates nor any of their respective officers, directors, employees, agents or representatives shall be liable to any Lender for any action taken or omitted to be taken by it hereunder or under any other Loan Document, or in connection herewith or therewith, except for damages caused by its or their own gross negligence or willful misconduct. If Agent shall request instructions from Requisite Lenders, Supermajority Lenders or all affected Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Loan Document, then Agent shall be entitled to refrain from such act or taking such action unless and until Agent shall have received instructions from Requisite Lenders, Supermajority Lenders or all affected Lenders, as the case may be, and Agent shall not incur liability to any Person by reason of so refraining. Agent shall be fully justified in failing or refusing to take any action hereunder or under any other Loan Document (a) if such action would, in the opinion of Agent, be contrary to law or the terms of this Agreement or any other Loan Document, (b) if such action would, in the opinion of Agent, expose Agent to Environmental Liabilities or (c) if Agent shall not first be indemnified to its satisfaction against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Without limiting the foregoing, no Lender shall have any right of action whatsoever against Agent as a result of Agent acting or refraining from acting hereunder or under any other Loan Document in accordance with the instructions of Requisite Lenders, Supermajority Lenders or all affected Lenders, as applicable. 48 9.3 AGENT'S RELIANCE, ETC. Neither Agent nor any of its Affiliates nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other Loan Documents, except for damages caused by its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, Agent: (a) may treat the payee of any Note as the holder thereof until Agent receives written notice of the assignment or transfer thereof signed by such payee and in form reasonably satisfactory to Agent; (b) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Credit Party or to inspect the Collateral (including the books and records) of any Credit Party; (e) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (f) shall incur no liability under or in respect of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. 9.4 GE CAPITAL AND AFFILIATES. With respect to its Commitments hereunder, GE Capital shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include GE Capital in its individual capacity. GE Capital and its Affiliates may lend money to, invest in, and generally engage in any kind of business with, any Credit Party, any of their Affiliates and any Person who may do business with or own securities of any Credit Party or any such Affiliate, all as if GE Capital were not Agent and without any duty to account therefor to Lenders. GE Capital and its Affiliates may accept fees and other consideration from any Credit Party for services in connection with this Agreement or otherwise without having to account for the same to Lenders. Each Lender acknowledges the potential conflict of interest between GE Capital as a Lender holding disproportionate interests in the Loans and GE Capital as Agent. 9.5 LENDER CREDIT DECISION. Each Lender acknowledges that it has, independently and without reliance upon Agent or any other Lender and based on the Financial Statements referred to in SECTION 3.4(a) and such other documents and information as it has deemed appropriate, made its own credit and financial analysis of the Credit Parties and its own decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon Agent or any 49 other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. Each Lender acknowledges the potential conflict of interest of each other Lender as a result of Lenders holding disproportionate interests in the Loans, and expressly consents to, and waives any claim based upon, such conflict of interest. 9.6 INDEMNIFICATION. Lenders agree to indemnify Agent (to the extent not reimbursed by Credit Parties and without limiting the obligations of Credit Parties hereunder), ratably according to their respective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted to be taken by Agent in connection therewith; PROVIDED, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent's gross negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan Document, to the extent that Agent is not reimbursed for such expenses by Credit Parties. 9.7 SUCCESSOR AGENT. Agent may resign at any time by giving not less than 30 days' prior written notice thereof to Lenders and Borrower Representative. Upon any such resignation, the Requisite Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Requisite Lenders and shall have accepted such appointment within 30 days after the resigning Agent's giving notice of resignation, then the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or otherwise shall be a commercial bank or financial institution or a subsidiary of a commercial bank or financial institution if such commercial bank or financial institution is organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least $500,000,000. If no successor Agent has been appointed pursuant to the foregoing, within 30 days after the date such notice of resignation was given by the resigning Agent, such resignation shall become effective and the Requisite Lenders shall thereafter perform all the duties of Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor Agent as provided above. Any successor Agent appointed by Requisite Lenders hereunder shall be subject to the approval of Borrower Representative, such approval not to be unreasonably withheld or delayed; PROVIDED that such approval shall not be required if a Default or an Event of Default has occurred and is continuing. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning Agent. Upon the earlier of the acceptance of any appointment as Agent hereunder by a successor 50 Agent or the effective date of the resigning Agent's resignation, the resigning Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents, except that any indemnity rights or other rights in favor of such resigning Agent shall continue. After any resigning Agent's resignation hereunder, the provisions of this SECTION 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was acting as Agent under this Agreement and the other Loan Documents. 9.8 SETOFF AND SHARING OF PAYMENTS. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default and subject to SECTION 9.9(f), each Lender is hereby authorized at any time or from time to time, without notice to any Credit Party or to any other Person, any such notice being hereby expressly waived, to offset and to appropriate and to apply any and all balances held by it at any of its offices for the account of any Borrower or any Guarantor (regardless of whether such balances are then due to such Borrower or Guarantor) and any other properties or assets at any time held or owing by that Lender or that holder to or for the credit or for the account of any Borrower or any Guarantor against and on account of any of the Obligations that are not paid when due. Any Lender exercising a right of setoff or otherwise receiving any payment on account of the Obligations in excess of its Pro Rata Share thereof shall purchase for cash (and the other Lenders or holders shall sell) such participations in each such other Lender's or holder's Pro Rata Share of the Obligations as would be necessary to cause such Lender to share the amount so offset or otherwise received with each other Lender or holder in accordance with their respective Pro Rata Shares (other than offset rights exercised by any Lender with respect to SECTIONS 1.13, 1.15 OR 1.16). Each Borrower and each Guarantor agrees, to the fullest extent permitted by law, that (a) any Lender may exercise its right to offset with respect to amounts in excess of its Pro Rata Share of the Obligations and may sell participations in such amounts so offset to other Lenders and holders and (b) any Lender so purchasing a participation in the Loans made or other Obligations held by other Lenders or holders may exercise all rights of offset, bankers' lien, counterclaim or similar rights with respect to such participation as fully as if such Lender or holder were a direct holder of the Loans and the other Obligations in the amount of such participation. Notwithstanding the foregoing, if all or any portion of the offset amount or payment otherwise received is thereafter recovered from the Lender that has exercised the right of offset, the purchase of participations by that Lender shall be rescinded and the purchase price restored without interest. 9.9 ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION; ACTIONS IN CONCERT. (a) ADVANCES; PAYMENTS. (i) Agent shall notify Lenders, promptly after receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00 p.m. (New York time) on the date such Notice of Revolving Advance is received, by telecopy, telephone or other similar form of transmission. Each Lender shall make the amount of such Lender's Pro Rata Share of such Revolving Credit Advance available to Agent in same day funds by wire transfer to Agent's 51 account as set forth in ANNEX H not later than 3:00 p.m. (New York time) on the requested funding date, in the case of an Index Rate Loan, and not later than 11:00 a.m. (New York time) on the requested funding date, in the case of a LIBOR Loan. After receipt of such wire transfers (or, in the Agent's sole discretion, before receipt of such wire transfers), subject to the terms hereof, Agent shall make the requested Revolving Credit Advance to the Borrower designated by Borrower Representative in the Notice of Revolving Credit Advance. All payments by each Lender shall be made without setoff, counterclaim or deduction of any kind. (ii) On the 2nd Business Day of each calendar week or more frequently at Agent's election (each, a "SETTLEMENT DATE"), Agent shall advise each Lender by telephone, or telecopy of the amount of such Lender's Pro Rata Share of principal, interest and Fees paid for the benefit of Lenders with respect to each applicable Loan. Provided that each Lender has funded all payments or Advances required to be made by it and has purchased all participations required to be purchased by it under this Agreement and the other Loan Documents as of such Settlement Date, Agent shall pay to each Lender such Lender's Pro Rata Share of principal, interest and Fees paid by Borrowers since the previous Settlement Date for the benefit of such Lender on the Loans held by it. To the extent that any Lender (a "NON-FUNDING LENDER") has failed to fund all such payments and Advances or failed to fund the purchase of all such participations, Agent shall be entitled to set off the funding short-fall against that Non-Funding Lender's Pro Rata Share of all payments received from Borrowers. Such payments shall be made by wire transfer to such Lender's account (as specified by such Lender in ANNEX H or the applicable Assignment Agreement) not later than 2:00 p.m. (New York time) on the next Business Day following each Settlement Date. (b) AVAILABILITY OF LENDER'S PRO RATA SHARE. Agent may assume that each Lender will make its Pro Rata Share of each Revolving Credit Advance available to Agent on each funding date. If such Pro Rata Share is not, in fact, paid to Agent by such Lender when due, Agent will be entitled to recover such amount on demand from such Lender without setoff, counterclaim or deduction of any kind. If any Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly notify Borrower Representative and Borrowers shall immediately repay such amount to Agent. Nothing in this SECTION 9.9(b) or elsewhere in this Agreement or the other Loan Documents shall be deemed to require Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its Commitments hereunder or to prejudice any rights that Borrowers may have against any Lender as a result of any default by such Lender hereunder. To the extent that Agent advances funds to any Borrower on behalf of any Lender and is not reimbursed therefor on the same Business Day as such Advance is made, Agent shall be entitled to retain for its account all interest accrued on such Advance until reimbursed by the applicable Lender. (c) RETURN OF PAYMENTS. (i) If Agent pays an amount to a Lender under this Agreement in the belief or expectation that a related payment has been or will be received by Agent from Borrowers and such related payment is not received by Agent, then Agent will be entitled to recover such amount from such Lender on demand without setoff, counterclaim or deduction of any kind. 52 (ii) If Agent determines at any time that any amount received by Agent under this Agreement must be returned to any Borrower or paid to any other Person pursuant to any insolvency law or otherwise, then, notwithstanding any other term or condition of this Agreement or any other Loan Document, Agent will not be required to distribute any portion thereof to any Lender. In addition, each Lender will repay to Agent on demand any portion of such amount that Agent has distributed to such Lender, together with interest at such rate, if any, as Agent is required to pay to any Borrower or such other Person, without setoff, counterclaim or deduction of any kind. (d) NON-FUNDING LENDERS. The failure of any Non-Funding Lender to make any Revolving Credit Advance or any payment required by it hereunder shall not relieve any other Lender (each such other Lender, an "OTHER LENDER") of its obligations to make such Advance or purchase such participation on such date, but neither any Other Lender nor Agent shall be responsible for the failure of any Non-Funding Lender to make an Advance, purchase a participation or make any other payment required hereunder. Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender shall not have any voting or consent rights under or with respect to any Loan Document or constitute a "Lender" (or be included in the calculation of "Requisite Lenders" or "Supermajority Lenders" hereunder) for any voting or consent rights under or with respect to any Loan Document. At Borrower Representative's request, Agent or a Person reasonably acceptable to Agent shall have the right with Agent's consent and in Agent's sole discretion (but shall have no obligation) to purchase from any Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at Agent's request, sell and assign to Agent or such Person, all of the Commitments of that Non-Funding Lender for an amount equal to the principal balance of all Loans held by such Non-Funding Lender and all accrued interest and fees with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment Agreement. (e) DISSEMINATION OF INFORMATION. Agent shall use reasonable efforts to provide Lenders with any notice of Default or Event of Default received by Agent from, or delivered by Agent to, any Credit Party, with notice of any Event of Default of which Agent has actually become aware and with notice of any action taken by Agent following any Event of Default; PROVIDED, that Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent's gross negligence or willful misconduct. Lenders acknowledge that Borrowers are required to provide Financial Statements and Collateral Reports to Lenders in accordance with ANNEXES E AND F hereto and agree that Agent shall have no duty to provide the same to Lenders. (f) ACTIONS IN CONCERT. Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or enforce its rights arising out of this Agreement or the Notes (including exercising any rights of setoff) without first obtaining the prior written consent of Agent and Requisite Lenders, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the Notes shall be taken in concert and at the direction or with the consent of Agent or Requisite Lenders. 53 10. SUCCESSORS AND ASSIGNS 10.1 SUCCESSORS AND ASSIGNS. This Agreement and the other Loan Documents shall be binding on and shall inure to the benefit of each Credit Party, Agent, Lenders and their respective successors and assigns (including, in the case of any Credit Party, a debtor-in-possession on behalf of such Credit Party), except as otherwise provided herein or therein. No Credit Party may assign, transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder or under any of the other Loan Documents without the prior express written consent of Agent and Lenders. Any such purported assignment, transfer, hypothecation or other conveyance by any Credit Party without the prior express written consent of Agent and Lenders shall be void. The terms and provisions of this Agreement are for the purpose of defining the relative rights and obligations of each Credit Party, Agent and Lenders with respect to the transactions contemplated hereby and no Person shall be a third party beneficiary of any of the terms and provisions of this Agreement or any of the other Loan Documents. 11. MISCELLANEOUS 11.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT. The Loan Documents constitute the complete agreement between the parties with respect to the subject matter thereof and may not be modified, altered or amended except as set forth in SECTION 11.2. Any letter of interest, commitment letter, or fee letter (other than the GE Capital Fee Letter) or confidentiality agreement, if any, between any Credit Party and Agent or any Lender or any of their respective Affiliates, predating this Agreement and relating to a financing of substantially similar form, purpose or effect shall be superseded by this Agreement. 11.2 AMENDMENTS AND WAIVERS. (a) Except for actions expressly permitted to be taken by Agent, no amendment, modification, termination or waiver of any provision of this Agreement or any other Loan Document, or any consent to any departure by any Credit Party therefrom, shall in any event be effective unless the same shall be in writing and signed by Agent and Borrowers, and by Requisite Lenders, Supermajority Lenders or all affected Lenders, as applicable. Except as set forth in clauses (b) and (c) below, all such amendments, modifications, terminations or waivers requiring the consent of any Lenders shall require the written consent of Requisite Lenders. (b) No amendment, modification, termination or waiver of or consent with respect to any provision of this Agreement that waives compliance with the conditions precedent set forth in SECTION 2.2 to the making of any Loan or the incurrence of any Letter of Credit Obligations shall be effective unless the same shall be in writing and signed by Agent, Requisite Lenders and Borrowers. Notwithstanding anything contained in this Agreement to the contrary, no waiver or consent with respect to any Default or any Event of Default shall be effective for purposes of the conditions precedent to the making of Loans or the incurrence of Letter of Credit Obligations set forth in SECTION 2.2 and SECTION 2.3 unless the same shall be in writing and signed by Agent, Requisite Lenders and Borrowers. 54 (c) No amendment, modification, termination or waiver shall, unless in writing and signed by Agent and each Lender directly affected thereby: (i) increase the principal amount of any Lender's Commitment (which action shall be deemed to directly affect all Lenders (ii) reduce the principal of, rate of interest on or Fees payable with respect to any Loan or Letter of Credit Obligations of any affected Lender; (iii) extend any scheduled payment date (other than payment dates of mandatory prepayments under SECTION 1.3(b)(ii)-(iv)) or final maturity date of the principal amount of any Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment of interest or Fees as to any affected Lender; (v) release any Guaranty or, except as otherwise permitted herein or in the other Loan Documents, release, or permit any Credit Party to sell or otherwise dispose of, any Collateral with a value exceeding $5,000,000 in the aggregate (which action shall be deemed to directly affect all Lenders); (vi) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans that shall be required for Lenders or any of them to take any action hereunder; and (vii) amend or waive this SECTION 11.2 or the definitions of the terms "Requisite Lenders", or "Supermajority Lenders" insofar as such definitions affect the substance of this SECTION 11.2. Furthermore, no amendment, modification, termination or waiver affecting the rights or duties of Agent or L/C Issuer under this Agreement or any other Loan Document shall be effective unless in writing and signed by Agent or L/C Issuer, as the case may be, in addition to Lenders required hereinabove to take such action. Each amendment, modification, termination or waiver shall be effective only in the specific instance and for the specific purpose for which it was given. No amendment, modification, termination or waiver shall be required for Agent to take additional Collateral pursuant to any Loan Document. No amendment, modification, termination or waiver of any provision of any Note shall be effective without the written concurrence of the holder of that Note. No notice to or demand on any Credit Party in any case shall entitle such Credit Party or any other Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this SECTION 11.2 shall be binding upon each holder of the Notes at the time outstanding and each future holder of the Notes. (d) If, in connection with any proposed amendment, modification, waiver or termination (a "PROPOSED CHANGE"): (i) requiring the consent of all affected Lenders, the consent of Requisite Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in this CLAUSE (i) and in CLAUSES (ii), (iii) and (iv) below being referred to as a "NON-CONSENTING LENDER"), (ii) requiring the consent of Supermajority Lenders, the consent of Requisite Lenders is obtained, but the consent of Supermajority Lenders is not obtained, (iii) requiring the consent of Requisite Lenders, the consent of Lenders holding 51% or more of the aggregate Commitments is obtained, but the consent of Requisite Lenders is not obtained, then, so long as Agent is not a Non-Consenting Lender, at Borrower Representative's request, Agent or a Person reasonably acceptable to Agent shall have the right with Agent's 55 consent and in Agent's sole discretion (but shall have no obligation) to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon Agent's request, sell and assign to Agent or such Person, all of the Commitments of such Non-Consenting Lenders for an amount equal to the principal balance of all Loans held by the Non-Consenting Lenders and all accrued interest and Fees with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment Agreement. (e) Upon payment in full in cash and performance of all of the Obligations (other than indemnification Obligations), termination of the Commitments and a release of all claims against Agent and Lenders, and so long as no suits, actions, proceedings or claims are pending or threatened against any Indemnified Person asserting any damages, losses or liabilities that are Indemnified Liabilities, Agent shall deliver to Borrowers termination statements, mortgage releases and other documents necessary or appropriate to evidence the termination of the Liens securing payment of the Obligations. 11.3 FEES AND EXPENSES. Borrowers shall reimburse (i) Agent for all fees, costs and expenses (including the reasonable fees and expenses of all of its counsel, advisors, consultants and auditors) and (ii) Agent (and, with respect to CLAUSES (c) and (d) below, all Lenders) for all fees, costs and expenses, including the reasonable fees, costs and expenses of counsel or other advisors (including environmental and management consultants and appraisers), incurred in connection with the negotiation and preparation of the Loan Documents and incurred in connection with: (a) the forwarding to Borrowers or any other Person on behalf of Borrowers by Agent of the proceeds of any Loan (including a wire transfer fee of $25 per wire transfer); (b) any amendment, modification or waiver of, consent with respect to, or termination of, any of the Loan Documents or advice in connection with the syndication and administration of the Loans made pursuant hereto or its rights hereunder or thereunder; (c) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Agent, any Lender, a Borrower or any other Person and whether as a party, witness or otherwise) in any way relating to the Collateral, any of the Loan Documents or any other agreement to be executed or delivered in connection herewith or therewith, including any litigation, contest, dispute, suit, case, proceeding or action, and any appeal or review thereof, in connection with a case commenced by or against either or both of the Borrowers or any other Person that may be obligated to Agent by virtue of the Loan Documents; including any such litigation, contest, dispute, suit, proceeding or action arising in connection with any work-out or restructuring of the Loans during the pendency of one or more Events of Default; PROVIDED that in the case of reimbursement of counsel for Lenders other than Agent, such reimbursement shall be limited to one counsel for all such Lenders; PROVIDED, further, that no Person shall be entitled to reimbursement under this clause (c) in respect of any litigation, contest, dispute, suit, proceeding or action to the extent any of the foregoing results from such Person's gross negligence or willful misconduct; 56 (d) any attempt to enforce any remedies of Agent against any or all of the Credit Parties or any other Person that may be obligated to Agent or any Lender by virtue of any of the Loan Documents, including any such attempt to enforce any such remedies in the course of any work-out or restructuring of the Loans during the pendency of one or more Events of Default; PROVIDED, that in the case of reimbursement of counsel for Lenders other than Agent, such reimbursement shall be limited to one counsel for all such Lenders; (e) any workout or restructuring of the Loans during the pendency of one or more Events of Default; and (f) efforts to (i) monitor the Loans or any of the other Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their respective affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of any of the Collateral; including, as to each of clauses (a) through (f) above, all reasonable attorneys' and other professional and service providers' fees arising from such services and other advice, assistance or other representation, including those in connection with any appellate proceedings, and all expenses, costs, charges and other fees incurred by such counsel and others in connection with or relating to any of the events or actions described in this SECTION 11.3, all of which shall be payable, on demand, by Borrowers to Agent. Without limiting the generality of the foregoing, such expenses, costs, charges and fees may include: fees, costs and expenses of accountants, environmental advisors, appraisers, investment bankers, management and other consultants and paralegals; court costs and expenses; photocopying and duplication expenses; court reporter fees, costs and expenses; long distance telephone charges; air express charges; telegram or telecopy charges; secretarial overtime charges; and expenses for travel, lodging and food paid or incurred in connection with the performance of such legal or other advisory services. 11.4 NO WAIVER. Agent's or any Lender's failure, at any time or times, to require strict performance by the Credit Parties of any provision of this Agreement or any other Loan Document shall not waive, affect or diminish any right of Agent or such Lender thereafter to demand strict compliance and performance herewith or therewith. Any suspension or waiver of an Event of Default shall not suspend, waive or affect any other Event of Default whether the same is prior or subsequent thereto and whether the same or of a different type. Subject to the provisions of SECTION 11.2, none of the undertakings, agreements, warranties, covenants and representations of any Credit Party contained in this Agreement or any of the other Loan Documents and no Default or Event of Default by any Credit Party shall be deemed to have been suspended or waived by Agent or any Lender, unless such waiver or suspension is by an instrument in writing signed by an officer of or other authorized employee of Agent and the applicable required Lenders, and directed to Borrowers specifying such suspension or waiver. 11.5 REMEDIES. Agent's and Lenders' rights and remedies under this Agreement shall be cumulative and nonexclusive of any other rights and remedies that Agent or any Lender may 57 have under any other agreement, including the other Loan Documents, by operation of law or otherwise. Recourse to the Collateral shall not be required. 11.6 SEVERABILITY. Wherever possible, each provision of this Agreement and the other Loan Documents shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement or any other Loan Document shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement or such other Loan Document. 11.7 CONFLICT OF TERMS. Except as otherwise provided in this Agreement or any of the other Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement conflicts with any provision in any of the other Loan Documents, the provision contained in this Agreement shall govern and control. 11.8 CONFIDENTIALITY. Agent and each Lender agree to use commercially reasonable efforts (equivalent to the efforts Agent or such Lender applies to maintaining the confidentiality of its own confidential information) to maintain as confidential all confidential information provided to them by the Credit Parties and designated as confidential for a period of 2 years following receipt thereof, except that Agent and any Lender may disclose such information (a) to Persons employed or engaged by Agent or such Lender; (b) to any bona fide assignee or participant or potential assignee or participant that has agreed to comply with the covenant contained in this SECTION 11.8 (and any such bona fide assignee or participant or potential assignee or participant may disclose such information to Persons employed or engaged by them as described in CLAUSE (a) above); (c) as required or requested by any Governmental Authority or reasonably believed by Agent or such Lender to be compelled by any court decree, subpoena or legal or administrative order or process; (d) as, on the advice of Agent's or such Lender's counsel, is required by law; (e) in connection with the exercise of any right or remedy under the Loan Documents or in connection with any Litigation to which Agent or such Lender is a party; or (f) that ceases to be confidential through no fault of Agent or any Lender. 11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. 58 EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID. 11.10 NOTICES. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other parties, or whenever any of the parties desires to give or serve upon any other parties any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be deemed to have been validly served, given or delivered: (a) upon the earlier of actual receipt and 3 Business Days after deposit in the United States Mail, registered or certified mail, return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile promptly confirmed by delivery of a copy by personal delivery or United States Mail as otherwise provided in this SECTION 11.10); (c) 1 Business Day after deposit with a reputable overnight courier with all charges prepaid or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address or 59 facsimile number indicated in ANNEX I or to such other address (or facsimile number) as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to any Person (other than Borrower Representative or Agent) designated in ANNEX I to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. 11.11 SECTION TITLES. The Section titles and Table of Contents contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. 11.12 COUNTERPARTS. This Agreement may be executed in any number of separate counterparts, each of which shall collectively and separately constitute one agreement. 11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO. 11.14 PRESS RELEASES AND RELATED MATTERS. Each Credit Party executing this Agreement agrees that neither it nor its Affiliates will in the future issue any press releases or other public disclosure using the name of GE Capital or its affiliates or referring to this Agreement, the other Loan Documents without at least 2 Business Days' prior notice to GE Capital and without the prior written consent of GE Capital unless (and only to the extent that) such Credit Party or Affiliate is required to do so under law and then, in any event, such Credit Party or Affiliate will consult with GE Capital before issuing such press release or other public disclosure. Each Credit Party consents to the publication by 60 Agent or any Lender of a tombstone or similar advertising material relating to the financing transactions contemplated by this Agreement. Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements. 11.15 REINSTATEMENT. This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Borrower for liquidation or reorganization, should any Borrower become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of any Borrower's assets, and shall continue to be effective or to be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a "voidable preference," "fraudulent conveyance," or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 11.16 ADVICE OF COUNSEL. Each of the parties represents to each other party hereto that it has discussed this Agreement and, specifically, the provisions of SECTIONS 11.9 and 11.13, with its counsel. 11.17 NO STRICT CONSTRUCTION. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. 11.18 FCC APPROVALS. Notwithstanding anything herein or in any other Loan Documents to the contrary, to the extent this Agreement or any other Loan Document purports to require any Credit Party to grant to Agent, on behalf and for the ratable benefit of Lenders, a security interest in the FCC Licenses of such Credit Party, Agent, on behalf and for the ratable benefit of Lenders, shall only have a security interest in such FCC licenses at such times and to the extent that a security interest in such FCC licenses is permitted under Applicable Law. Notwithstanding anything herein or in any other Loan Documents, but without limiting or waiving in any way the Obligations of the Parent, the Borrowers or any Credit Party, as the case may be, hereunder or thereunder, the Agent's and Lenders' rights hereunder are subject to the Communications Act. The Agent (on behalf of Lenders) and the Lenders will not take any action pursuant to this Agreement which would constitute or result in any assignment or transfer of control of any FCC License, whether de jure or de facto, if such assignment or transfer of control would require under then existing law (including the Communications Act), the prior approval of the FCC or any Governmental Authority, without first obtaining such approval. Each of the 61 Parent, Borrowers and any Credit Party, as the case may be, shall take any action which Agent may reasonably request in order to cause Agent (on behalf of the Lenders) and the Lenders to obtain and enjoy the full rights and benefits granted by this Agreement and the Guarantees, including specifically, at the cost and expense of the Parent, the Borrowers and any Credit Party, shall assist in obtaining the approval of the FCC or other Governmental Authority for an action or transaction contemplated by this Agreement or the Guarantees which are then required by law, and specifically, without limitation, upon request upon and during the continuance of an Event of Default, shall prepare, sign (or the electronic equivalent thereof) and file (or cause to be filed) with the FCC or other Governmental Authority the assignor's, transferor's or controlling person's portion of any application or applications for consent to (i) the assignment of any FCC License or transfer of control thereof, (ii) any sale of property constituting Collateral by Agent on behalf of Lenders, or (iii) any assignment by Agent, the Lenders or their designees of voting rights or management rights in property constituting any Collateral effected in accordance with the terms of this Agreement or any other Loan Documents, and thereafter shall vigorously prosecute such application or applications. 12. CROSS-GUARANTY 12.1 CROSS-GUARANTY. Each Borrower hereby agrees that such Borrower is jointly and severally liable for, and hereby absolutely and unconditionally guarantees to Agent and Lenders and their respective successors and assigns, the full and prompt payment (whether at stated maturity, by acceleration or otherwise) and performance of, all Obligations owed or hereafter owing to Agent and Lenders by each and every other Borrower. Each Borrower agrees that its guaranty obligation hereunder is a continuing guaranty of payment and performance and not of collection, that its obligations under this SECTION 12 shall not be discharged until payment and performance, in full, of the Obligations has occurred, and that its obligations under this SECTION 12 shall be absolute and unconditional, irrespective of, and unaffected by, (a) the genuineness, validity, regularity, enforceability or any future amendment of, or change in, this Agreement, any other Loan Document or any other agreement, document or instrument to which any Borrower is or may become a party; (b) the absence of any action to enforce this Agreement (including this SECTION 12) or any other Loan Document or the waiver or consent by Agent and Lenders with respect to any of the provisions thereof; (c) the existence, value or condition of, or failure to perfect its Lien against, any security for the Obligations or any action, or the absence of any action, by Agent and Lenders in respect thereof (including the release of any such security); (d) the insolvency of any Credit Party; or (e) any other action or circumstances that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor. 62 Each Borrower shall be regarded, and shall be in the same position, as principal debtor with respect to the Obligations guaranteed hereunder. 12.2 WAIVERS BY BORROWERS. Each Borrower expressly waives all rights it may have now or in the future under any statute, or at common law, or at law or in equity, or otherwise, to compel Agent or Lenders to marshall assets or to proceed in respect of the Obligations guaranteed hereunder against any other Credit Party, any other party or against any security for the payment and performance of the Obligations before proceeding against, or as a condition to proceeding against, such Borrower. It is agreed among each Borrower, Agent and Lenders that the foregoing waivers are of the essence of the transaction contemplated by this Agreement and the other Loan Documents and that, but for the provisions of this SECTION 12 and such waivers, Agent and Lenders would decline to enter into this Agreement. 12.3 BENEFIT OF GUARANTY. Each Borrower agrees that the provisions of this SECTION 12 are for the benefit of Agent and Lenders and their respective successors, transferees, endorsees and assigns, and nothing herein contained shall impair, as between any other Borrower and Agent or Lenders, the obligations of such other Borrower under the Loan Documents. 12.4 SUBORDINATION OF SUBROGATION, ETC. Notwithstanding anything to the contrary in this Agreement or in any other Loan Document, and except as set forth in SECTION 12.7, each Borrower hereby expressly and irrevocably subordinates to payment of the Obligations any and all rights at law or in equity to subrogation, reimbursement, exoneration, contribution, indemnification or set off and any and all defenses available to a surety, guarantor or accommodation co-obligor until the Obligations are indefeasibly paid in full in cash. Each Borrower acknowledges and agrees that this subordination is intended to benefit Agent and Lenders and shall not limit or otherwise affect such Borrower's liability hereunder or the enforceability of this SECTION 12, and that Agent, Lenders and their respective successors and assigns are intended third party beneficiaries of the waivers and agreements set forth in this SECTION 12.4. 12.5 ELECTION OF REMEDIES. If Agent or any Lender may, under applicable law, proceed to realize its benefits under any of the Loan Documents giving Agent or such Lender a Lien upon any Collateral, whether owned by a Borrower or by any other Person, either by judicial foreclosure or by non-judicial sale or enforcement, Agent or any Lender may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this SECTION 12. If, in the exercise of any of its rights and remedies, Agent or any Lender shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against a Borrower or any other Person, whether because of any applicable laws pertaining to "election of remedies" or the like, each Borrower hereby consents to such action by Agent or such Lender and waives any claim based upon such action, even if such action by Agent or such Lender shall result in a full or partial loss of any rights of subrogation that each Borrower might otherwise have had but for such action by Agent or such Lender. Any election of remedies that results in the denial or impairment of the right of Agent or any Lender to seek a deficiency judgment against a Borrower shall not impair any other Borrower's obligation to pay the full amount of the Obligations. In the event Agent or any Lender shall bid at any foreclosure or trustee's sale or at any private sale permitted by law or the Loan Documents, Agent or such 63 Lender may bid all or less than the amount of the Obligations and the amount of such bid need not be paid by Agent or such Lender but shall be credited against the Obligations. The amount of the successful bid at any such sale, whether Agent, Lender or any other party is the successful bidder, shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the amount of the Obligations guaranteed under this SECTION 12, notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which Agent or any Lender might otherwise be entitled but for such bidding at any such sale. 12.6 LIMITATION. Notwithstanding any provision herein contained to the contrary, each Borrower's liability under this SECTION 12 (which liability is in any event in addition to amounts for which such Borrower is primarily liable under SECTION 1) shall be limited to an amount not to exceed as of any date of determination the greater of: (a) the net amount of all Loans advanced to each other Borrower under this Agreement and then re-loaned or otherwise transferred to, or for the benefit of, such Borrowers; and (b) the amount that could be claimed by Agent and Lenders from such Borrowers under this SECTION 12 without rendering such claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law after taking into account, among other things, such Borrowers' right of contribution and indemnification from the other Borrowers under SECTION 12.7. 12.7 CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS. (a) To the extent that any Borrower shall make a payment under this SECTION 12 of all or any of the Obligations (other than Loans made to that Borrower for which it is primarily liable) (a "GUARANTOR PAYMENT") that, taking into account all other Guarantor Payments then previously or concurrently made by any other Borrower, exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment in the same proportion that such Borrower's "Allocable Amount" (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Borrowers as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the Obligations and termination of the Commitments, such Borrower shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, the other Borrowers for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment. (b) As of any date of determination, the "Allocable Amount" of each Borrower shall be equal to the maximum amount of the claim that could then be recovered from such Borrower under this SECTION 12 without rendering such claim voidable or avoidable under 64 Section 548 of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law. (c) This SECTION 12.7 is intended only to define the relative rights of Borrowers and nothing set forth in this SECTION 12.7 is intended to or shall impair the obligations of Borrowers, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Agreement, including SECTION 12.1. Nothing contained in this SECTION 12.7 shall limit the liability of any Borrower to pay the Loans made directly or indirectly to that Borrower and accrued interest, Fees and expenses with respect thereto for which such Borrower shall be primarily liable. (d) The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of the Borrower to which such contribution and indemnification is owing. (e) The rights of the indemnifying Borrowers against other Credit Parties under this SECTION 12.7 shall be exercisable upon the full and indefeasible payment of the Obligations and the termination of the Commitments. 12.8 LIABILITY CUMULATIVE. The liability of Borrowers under this SECTION 12 is in addition to and shall be cumulative with all liabilities of each Borrower to Agent and Lenders under this Agreement and the other Loan Documents to which such Borrower is a party or in respect of any Obligations or obligation of the other Borrowers, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary. [SIGNATURES FOLLOW ON NEXT PAGE] 65 IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above. RADIO UNICA CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- BLAYA INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- ORO SPANISH BROADCASTING, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA NETWORK, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF CHICAGO, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 66 RADIO UNICA OF CHICAGO LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF DALLAS, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF DALLAS LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF DENVER, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF DENVER LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF FRESNO, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 67 RADIO UNICA OF FRESNO LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF HOUSTON LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF LOS ANGELES, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF LOS ANGELES LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF McALLEN, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF McALLEN LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 68 RADIO UNICA OF MIAMI, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF MIAMI LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF NEW YORK, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF NEW YORK LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF PHOENIX, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF PHOENIX LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 69 RADIO UNICA OF SACRAMENTO, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF SACRAMENTO LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF SAN ANTONIO, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF SAN ANTONIO LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF SAN DIEGO, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF SAN DIEGO LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 70 RADIO UNICA OF SAN FRANCISCO, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF SAN FRANCISCO LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA SALES CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF TUCSON, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- RADIO UNICA OF TUCSON LICENSE CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- MASS PROMOTIONS, INC. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 71 GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and Lender By: ------------------------------------- Duly Authorized Signatory 72 The following Persons are signatories to this Agreement in their capacity as Credit Parties and not as Borrowers. RADIO UNICA COMMUNICATIONS CORP. By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 73 ANNEX 1 Blaya Inc. Oro Spanish Broadcasting, Inc. Radio Unica Network, Inc. Radio Unica of Chicago, Inc. Radio Unica of Chicago License Corp.* Radio Unica of Dallas, Inc. Radio Unica of Dallas License Corp.* Radio Unica of Denver, Inc. Radio Unica of Denver License Corp.* Radio Unica of Fresno, Inc. Radio Unica of Fresno License Corp.* Radio Unica of Houston License Corp.* Radio Unica of Los Angeles, Inc. Radio Unica of Los Angeles License Corp.* Radio Unica of McAllen, Inc. Radio Unica of McAllen License Corp.* Radio Unica of Miami, Inc. Radio Unica of Miami License Corp.* Radio Unica of New York, Inc. Radio Unica of New York License Corp.* Radio Unica of Phoenix, Inc. Radio Unica of Phoenix License Corp.* Radio Unica of Sacramento, Inc. Radio Unica of Sacramento License Corp.* Radio Unica of San Antonio, Inc. Radio Unica of San Antonio License Corp.* Radio Unica of San Diego, Inc. Radio Unica of San Diego License Corp.* Radio Unica of San Francisco, Inc. Radio Unica of San Francisco License Corp.* Radio Unica Sales Corp. Radio Unica of Tucson, Inc. Radio Unica of Tucson License Corp.* Mass Promotions, Inc. * Indicates such Credit Party is a License Sub. 1-1 ANNEX A (RECITALS) TO CREDIT AGREEMENT DEFINITIONS Capitalized terms used in the Loan Documents shall have (unless otherwise provided elsewhere in the Loan Documents) the following respective meanings, and all references to Sections, Exhibits, Schedules or Annexes in the following definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to the Agreement: "ACCOUNT DEBTOR" means any Person who may become obligated to any Credit Party under, with respect to, or on account of, an Account, Chattel Paper or General Intangibles (including a payment intangible). "ACCOUNTING CHANGES" has the meaning ascribed thereto in ANNEX G. "ACCOUNTS" means all "accounts," as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, including (a) all accounts receivable, other receivables, book debts and other forms of obligations (other than forms of obligations evidenced by Chattel Paper, Documents or Instruments), (including any such obligations that may be characterized as an account or contract right under the Code), (b) all of each Credit Party's rights in, to and under all purchase orders or receipts for goods or services, (c) all of each Credit Party's rights to any goods represented by any of the foregoing (including unpaid sellers' rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), (d) all rights to payment due to any Credit Party for property sold, leased, licensed, assigned or otherwise disposed of, for a policy of insurance issued or to be issued, for a secondary obligation incurred or to be incurred, for energy provided or to be provided, for the use or hire of a vessel under a charter or other contract, arising out of the use of a credit card or charge card, or for services rendered or to be rendered by such Credit Party or in connection with any other transaction (whether or not yet earned by performance on the part of such Credit Party), and (e) all collateral security of any kind, given by any Account Debtor or any other Person with respect to any of the foregoing. "ADVANCE" means any Revolving Credit Advance. "AFFILIATE" means, with respect to any Person, (a) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary voting power in the election of directors of such Person, (b) each Person that controls, is controlled by or is under common control with such Person, (c) each of such Person's officers, directors, joint venturers and partners and (d) in the case of Borrowers, the immediate family members, spouses and lineal descendants of individuals who are Affiliates of a Borrower. For the purposes of this definition, "CONTROL" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management A-1 or policies, whether through the ownership of voting securities, by contract or otherwise; PROVIDED, HOWEVER, that the term "AFFILIATE" shall specifically exclude Agent and each Lender. "AGENT" means GE Capital in its capacity as Agent for Lenders or its successor appointed pursuant to SECTION 9.7. "AGREEMENT" means the Credit Agreement by and among Borrowers, the other Credit Parties party thereto, GE Capital, as Agent and Lender and the other Lenders from time to time party thereto, as the same may be amended, supplemented, restated or otherwise modified from time to time. "APPENDICES" has the meaning ascribed to it in the recitals to the Agreement. "ASSIGNMENT AGREEMENT" has the meaning ascribed to it in SECTION 9.1(a). "BANKRUPTCY CODE" means the provisions of Title 11 of the United States Code, 11 U.S.C.Sections 101 ET SEQ., as now constituted or hereafter amended. "BLOCKED ACCOUNTS" has the meaning ascribed to it in ANNEX C. "BORROWERS" and "BORROWER" have the respective meanings ascribed thereto in the preamble to the Agreement. "BORROWER PLEDGE AGREEMENTS" means the pledge agreements of even date herewith executed by each Borrower in favor of Agent, on behalf of itself and Lenders, pledging all Stock of its respective Subsidiaries, if any. "BORROWER REPRESENTATIVE" means RUC in its capacity as Borrower Representative pursuant to the provisions of SECTION 1.1(c). "BORROWING AVAILABILITY" means as of any date of determination, the Maximum Amount MINUS the sum of the Revolving Credit Advances then outstanding (including Letter of Credit Obligations) MINUS the Reserves. "BROADCAST CASH FLOW" means, with respect to Borrowers (other than MASS) for any fiscal period, without duplication, an amount equal to (x) Radio Station Revenues for such period, MINUS, (y) the sum of radio station and network expenses, including (i) selling expenses, (ii) cost of sales and (iii) general and administrative expenses at the radio station level (but not the corporate level). "BUSINESS DAY" means any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State of New York and in reference to LIBOR Loans shall mean any such day that is also a LIBOR Business Day. "CAPITAL EXPENDITURES" means, with respect to any Person, all expenditures (by the expenditure of cash or the incurrence of Indebtedness) by such Person during any measuring A-2 period for any fixed assets, including those acquired in a Permitted Acquisition, or improvements or for replacements, substitutions or additions thereto that have a useful life of more than one year and that are required to be capitalized under GAAP. "CAPITAL LEASE" means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person. "CAPITAL LEASE OBLIGATION" means, with respect to any Capital Lease of any Person, the amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease. "CASH COLLATERAL ACCOUNT" has the meaning ascribed to it ANNEX B. "CASH EQUIVALENTS" has the meaning ascribed to it in ANNEX B. "CASH MANAGEMENT SYSTEMS" has the meaning ascribed to it in SECTION 1.8. "CHANGE OF CONTROL" means any event, transaction or occurrence, as a result of which (a) Warburg Pincus Ventures, L.P., any successor funds thereto or any related entity which satisfies the requirements of clause (b) of the definition of Affiliate, together with any officer or director of Parent on the Closing Date (and any spouse and any trust, holding company, or similar entity established by and controlled by any of such individuals for the principal benefit of them or their spouses, lineal descendants or other family members), collectively, cease to own and control all of the economic and voting rights associated with ownership of at least 50.1% of the outstanding capital Stock of all classes of Parent on a fully diluted basis, (b) Parent ceases to own and control all of the economic and voting rights associated with ownership of at least one hundred percent (100%) of the outstanding capital Stock of all classes of RUC, or (c) any Borrower ceases to own and control all of the economic and voting rights associated with one hundred percent (100%) of all of the outstanding capital Stock of any of its Subsidiaries; PROVIDED, HOWEVER, in the case of Mass, Inc. such threshold shall be forty-nine percent (49%). "CHARGES" means all federal, state, county, city, municipal, local, foreign or other governmental taxes (including taxes owed to the PBGC at the time due and payable), levies, assessments, charges, liens, claims or encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll, income or gross receipts of any Credit Party, (d) any Credit Party's ownership or use of any properties or other assets, or (e) any other aspect of any Credit Party's business. "CHATTEL PAPER" means any "chattel paper," as such term is defined in the Code, including electronic chattel paper, now owned or hereafter acquired by any Credit Party. "CLOSING DATE" means June 25, 2002. A-3 "CLOSING CHECKLIST" means the schedule, including all appendices, exhibits or schedules thereto, listing certain documents and information to be delivered in connection with the Agreement, the other Loan Documents and the transactions contemplated thereunder, substantially in the form attached hereto as ANNEX D. "CODE" means the Uniform Commercial Code as the same may, from time to time, be enacted and in effect in the State of New York; PROVIDED, that to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article 9 shall govern; PROVIDED FURTHER, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Agent's or any Lender's Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term "CODE" shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions. "COLLATERAL" means the property covered by the Security Agreements, the Mortgages and the other Collateral Documents and any other property, real or personal, tangible or intangible, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of Agent, on behalf of itself and Lenders, to secure the Obligations. "COLLATERAL DOCUMENTS" means the Security Agreements, the Pledge Agreements, the Mortgages, the Guaranties, the Trademark Security Agreement and all similar agreements entered into guaranteeing payment of, or granting a Lien upon property as security for payment of, the Obligations. "COLLATERAL REPORTS" means the reports with respect to the Collateral referred to in ANNEX F. "COLLECTION ACCOUNT" means that certain account of Agent, account number 502-328-54 in the name of Agent at Deutsche Bank Trust Company Americas in New York, New York ABA No. 021 001 033, or such other account as may be specified in writing by Agent as the "Collection Account." "COMMITMENT FEE" shall mean the amount of seventy-five thousand dollars ($75,000) paid by Borrowers to Agent upon acceptance of the Commitment Letter. "COMMITMENT LETTER" means that certain letter agreement by and among Borrowers and Agent, dated as of May 10, 2002. "COMMITMENT TERMINATION DATE" means the earliest of (a) February 1, 2006, (b) the date which is six (6) months prior to the maturity of the RUC Discount Notes, (c) the date of termination of Lenders' obligations to make Advances and to incur Letter of Credit Obligations A-4 or permit existing Loans to remain outstanding pursuant to SECTION 8.2(b), and (d) the date of indefeasible prepayment in full by Borrowers of the Loans and the cancellation and return (or stand-by guarantee) of all Letters of Credit or the cash collateralization of all Letter of Credit Obligations pursuant to ANNEX B, and the permanent reduction of all Commitments to zero dollars ($0). "COMMITMENTS" mean (a) as to any Lender, such Lender's Commitment to make Revolving Credit Advances as set forth on ANNEX J to the Agreement or in the most recent Assignment Agreement executed by such Lender and (b) as to all Lenders, the aggregate of all Lenders' Commitments, which aggregate commitment shall be twenty million dollars ($20,000,000.00) on the Closing Date, as to each of clauses (a) and (b), as such Commitments may be reduced, amortized or adjusted from time to time in accordance with the Agreement. "COMMUNICATIONS ACT" means the Federal Communications Act of 1934 and any successor statute thereto (as amended from time to time), together with any and all rules, regulations and written policies promulgated pursuant thereto or in connection therewith. "COMPLIANCE CERTIFICATE" has the meaning ascribed to it in ANNEX E. "CONCENTRATION ACCOUNTS" has the meaning ascribed to it in ANNEX C. "CONTRACTS" means all "contracts," as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, in any event, including all contracts, undertakings, or agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) in or under which any Credit Party may now or hereafter have any right, title or interest, including any agreement relating to the terms of payment or the terms of performance of any Account. "CONTROL LETTER" means a letter agreement between Agent and (i) the issuer of uncertificated securities with respect to uncertificated securities in the name of any Credit Party, (ii) a securities intermediary with respect to securities, whether certificated or uncertificated, securities entitlements and other financial assets held in a securities account in the name of any Credit Party, (iii) a futures commission merchant or clearing house, as applicable, with respect to commodity accounts and commodity contracts held by any Credit Party, whereby, among other things, the issuer, securities intermediary or futures commission merchant disclaims any security interest in the applicable financial assets, acknowledges the Lien of Agent, on behalf of itself and Lenders, on such financial assets, and agrees to follow the instructions or entitlement orders of Agent without further consent by the affected Credit Party. "CONVERSION DATE" means March 31, 2003. "COPYRIGHT LICENSE" means any and all rights now owned or hereafter acquired by any Credit Party under any written agreement granting any right to use any Copyright or Copyright registration. A-5 "COPYRIGHT SECURITY AGREEMENTS" means the Copyright Security Agreements made in favor of Agent, on behalf of itself and Lenders, by each applicable Credit Party. "COPYRIGHTS" means all of the following now owned or hereafter adopted or acquired by any Credit Party: (a) all copyrights and General Intangibles of like nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including all registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof, and (b) all reissues, extensions or renewals thereof. "CREDIT PARTIES" means each Borrower and each Guarantor and each other Person party hereto as a "Credit Party" on the signature pages hereof. "CUMULATIVE OPERATING REVENUES" means, for the period from July 1, 2002 through the applicable date of determination, revenues (exclusive of reciprocal and barter revenues in excess of 7% of gross revenues (before deducting agency commissions) derived from sources other than reciprocal or barter transactions) of the Borrowers and their Subsidiaries derived directly from (i) the operation of Radio Stations and related programming, production and distribution activities during such period, and (ii) MASS during such period, in each case, net of any agency commissions paid to any third parties with respect to the generation of such revenue. "DEFAULT" means any event that, with the passage of time or notice or both, would, unless cured or waived, become an Event of Default. "DEFAULT RATE" has the meaning ascribed to it in SECTION 1.5(d). "DEPOSIT ACCOUNTS" means all "deposit accounts" as such term is defined in the Code, now or hereafter held in the name of any Credit Party. "DISBURSEMENT ACCOUNTS" has the meaning ascribed to it in ANNEX C. "DISCLOSURE SCHEDULES" means the Schedules prepared by Borrowers and denominated as Disclosure SCHEDULES (1.4) through (6.7) in the Index to the Agreement. "DOCUMENTS" means all "documents," as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located. "DOLLARS" or "$" means lawful currency of the United States of America. "EBITDA" means, with respect to any Person for any fiscal period, without duplication, an amount equal to (a) consolidated net income of such Person for such period determined in accordance with GAAP, MINUS (b) the sum of (i) income tax credits, (ii) interest income, (iii) gain from extraordinary items for such period, (iv) any aggregate net gain (but not any aggregate net loss) during such period arising from the sale, exchange or other disposition of A-6 capital assets by such Person (including any fixed assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets and all securities), and (v) any other non-cash gains that have been added in determining consolidated net income, in each case to the extent included in the calculation of consolidated net income of such Person for such period in accordance with GAAP, but without duplication, PLUS (c) the sum of (i) any provision for income taxes, (ii) interest expense, (iii) loss from extraordinary items for such period, (iv) the amount of non-cash charges (including depreciation and amortization) for such period, (v) amortized debt discount for such period, and (vi) the amount of any deduction to consolidated net income as the result of any grant to any members of the management of such Person of any Stock, in each case to the extent included in the calculation of consolidated net income of such Person for such period in accordance with GAAP, but without duplication. For purposes of this definition, the following items shall be excluded in determining consolidated net income of a Person: (1) the income (or deficit) of any other Person accrued prior to the date it became a Subsidiary of, or was merged or consolidated into, such Person or any of such Person's Subsidiaries; (2) the income (or deficit) of any other Person (other than a Subsidiary) in which such Person has an ownership interest, except to the extent any such income has actually been received by such Person in the form of cash dividends or distributions; (3) the undistributed earnings of any Subsidiary of such Person to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation or requirement of law applicable to such Subsidiary; (4) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of income accrued during such period; (5) any write-up of any asset; (6) any net gain from the collection of the proceeds of life insurance policies; (7) any net gain arising from the acquisition of any securities, or the extinguishment, under GAAP, of any Indebtedness, of such Person; (8) in the case of a successor to such Person by consolidation or merger or as a transferee of its assets, any earnings of such successor prior to such consolidation, merger or transfer of assets; and (9) any deferred credit representing the excess of equity in any Subsidiary of such Person at the date of acquisition of such Subsidiary over the cost to such Person of the investment in such Subsidiary. "ENVIRONMENTAL LAWS" means all applicable federal, state, local and foreign laws, statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, and any applicable judicial or administrative interpretation thereof, including any applicable judicial or administrative order, consent decree, order or judgment, imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. Sections 9601 ET SEQ.) ("CERCLA"); the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. Sections 5101 ET SEQ.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 ET SEQ.); the Solid Waste Disposal Act (42 U.S.C. Sections 6901 ET SEQ.); The Toxic Substance Control Act (15 U.S.C. Sections 2601 ET SEQ.); the Clean Air Act (42 U.S.C. Sections 7401 ET SEQ.); the Federal Water PollutIon Control Act (33 U.S.C. Sections 1251 ET SEQ.); the Occupational Safety and Health Act (29 U.S.C. Sections 651 ET SEQ.); and the Safe Drinking Water Act (42 U.S.C. A-7 Sections 300(f) ET SEQ.), and any and all regulations promulgated thereunder, and all analogous state, local anD foreign counterparts or equivalents and any transfer of ownership notification or approval statutes. "ENVIRONMENTAL LIABILITIES" means, with respect to any Person, all liabilities, obligations, responsibilities, response, remedial and removal costs, investigation and feasibility study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages, property damages, natural resource damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants), fines, penalties, sanctions and interest incurred as a result of or related to any claim, suit, action, investigation, proceeding or demand by any Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, including any arising under or related to any Environmental Laws, Environmental Permits, or in connection with any Release or threatened Release or presence of a Hazardous Material whether on, at, in, under, from or about or in the vicinity of any real or personal property. "ENVIRONMENTAL PERMITS" means all permits, licenses, authorizations, certificates, approvals or registrations required by any Governmental Authority under any Environmental Laws. "EQUIPMENT" means all "equipment," as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located and, in any event, including all such Credit Party's machinery and equipment, including processing equipment, conveyors, machine tools, data processing and computer equipment, including embedded software and peripheral equipment and all engineering, processing and manufacturing equipment, office machinery, furniture, materials handling equipment, tools, attachments, accessories, automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other equipment of every kind and nature, trade fixtures and fixtures not forming a part of real property, together with all additions and accessions thereto, replacements therefor, all parts therefor, all substitutes for any of the foregoing, fuel therefor, and all manuals, drawings, instructions, warranties and rights with respect thereto, and all products and proceeds thereof and condemnation awards and insurance proceeds with respect thereto. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any regulations promulgated thereunder. "ERISA AFFILIATE" means, with respect to any Credit Party, any trade or business (whether or not incorporated) that, together with such Credit Party, are treated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC. "ERISA EVENT" means, with respect to any Credit Party or any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA A-8 Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan amendment as a termination under Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party or ERISA Affiliate to make when due required contributions to a Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other event or condition that might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan under Section 4041A of ERISA or the reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt status; or (j) the termination of a Plan described in Section 4064 of ERISA. "ESOP" means a Plan that is intended to satisfy the requirements of Section 4975(e)(7) of the IRC. "EVENT OF DEFAULT" has the meaning ascribed to it in SECTION 8.1. "EXCESS CASH FLOW" means, without duplication, with respect to any applicable Fiscal Year of Borrowers and their respective Subsidiaries, consolidated net income of Borrowers and their respective Subsidiaries, PLUS (a) depreciation, amortization and interest expense of Borrowers and their respective Subsidiaries to the extent deducted in determining consolidated net income, PLUS decreases or MINUS increases (as the case may be) (b) in Working Capital, MINUS (c) Capital Expenditures during such Fiscal Year, MINUS (d) interest expense paid or accrued (excluding any original issue discount, interest paid in kind or amortized debt discount, to the extent included in determining interest expense) and scheduled principal payments paid or payable in respect of Funded Debt, PLUS or MINUS (as the case may be) (e) extraordinary gains or losses which are cash items not included in the calculation of net income, MINUS (f) mandatory prepayments paid in cash pursuant to SECTION 1.3. For the purposes of this definition, "WORKING CAPITAL" means the current assets (as calculated in accordance with GAAP) of Borrowers and their respective Subsidiaries, MINUS current liabilities (as calculated in accordance with GAAP) of Borrowers and their respective Subsidiaries. "EXCLUDED FCC LICENSES" means (i) the surrender by Radio Unica of Miami License Corp. of its FCC License for either (but not both of) of its AM radio stations WNMA (1210 KHz), Miami Springs, Florida or WJCC (1700 KHz), Miami Springs, Florida, in accordance with applicable FCC requirements, and (ii) the surrender by Radio Unica of New York License Corp. of its FCC License for either (but not both of) of its AM radio station WJDM (1530 KHz), Elizabeth, New Jersey or its operating AM radio station WWRU (1660 KHz), Jersey City, New Jersey in accordance with applicable FCC requirements. "FAIR LABOR STANDARDS ACT" means the Fair Labor Standards Act, 29 U.S.C. Section 201 ET SEQ. A-9 "FCC" means the United States Federal Communications Commission or any successor agency thereto. "FCC LICENSE(S)" means any governmental approval or authorization issued to a Borrower or any Subsidiary by the FCC or acquired or otherwise transferred to a Borrower or any Subsidiary, pursuant to the Communications Act. "FEDERAL FUNDS RATE" means, for any day, a floating rate equal to the weighted average of the rates on overnight Federal funds transactions among members of the Federal Reserve System, as determined by Agent in its sole discretion, which determination shall be final, binding and conclusive (absent manifest error). "FEDERAL RESERVE BOARD" means the Board of Governors of the Federal Reserve System. "FEES" means any and all fees payable to Agent or any Lender pursuant to the Agreement or any of the other Loan Documents. "FIELD EXAMINATION FEE" has the meaning assigned to such term in SECTION 1.9(d). "FINANCIAL COVENANTS" means the financial covenants set forth in ANNEX G. "FINANCIAL OFFICER" means the Chief financial Officer or Vice President - Finance of Borrower Representative. "FINANCIAL STATEMENTS" means the consolidated and consolidating income statements and consolidated statements of cash flows and balance sheets of Borrowers delivered in accordance with SECTION 3.4 and ANNEX E. "FISCAL MONTH" means any of the monthly accounting periods of Borrowers. "FISCAL QUARTER" means any of the quarterly accounting periods of Borrowers, ending on March 31, June 30, September 30 and December 31 of each year. "FISCAL YEAR" means any of the annual accounting periods of Borrowers ending on December 31 of each year. "FIXTURES" means all "fixtures" as such term is defined in the Code, now owned or hereafter acquired by any Credit Party. "FUNDED DEBT" means, with respect to any Person, without duplication, all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such Person's option under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of more than one year from the date of creation thereof, and specifically including Capital Lease Obligations, current maturities of A-10 long-term debt, revolving credit and short-term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt of other Persons. "GAAP" means generally accepted accounting principles in the United States of America consistently applied, as such term is further defined in ANNEX G to the Agreement. "GE CAPITAL" means General Electric Capital Corporation, a Delaware corporation. "GENERAL INTANGIBLES" means all "general intangibles," as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, including all right, title and interest that such Credit Party may now or hereafter have in or under any Contract, all payment intangibles, customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor and reissues, extensions or renewals thereof, rights in Intellectual Property, interests in partnerships, joint ventures and other business associations, licenses, permits, copyrights, trade secrets, proprietary or confidential information, inventions (whether or not patented or patentable), technical information, procedures, designs, knowledge, know-how, software, data bases, data, skill, expertise, experience, processes, models, drawings, materials and records, goodwill (including the goodwill associated with any Trademark or Trademark License), all rights and claims in or under insurance policies (including insurance for fire, damage, loss and casualty, whether covering personal property, real property, tangible rights or intangible rights, all liability, life, key man and business interruption insurance, and all unearned premiums), uncertificated securities, choses in action, deposit, checking and other bank accounts, rights to receive tax refunds and other payments, rights to receive dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged Stock and Investment Property, rights of indemnification, all books and records, correspondence, credit files, invoices and other papers, including without limitation all tapes, cards, computer runs and other papers and documents in the possession or under the control of such Credit Party or any computer bureau or service company from time to time acting for such Credit Party. "GOODS" means all "goods" as defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located, including embedded software to the extent included in "goods" as defined in the Code. "GOVERNMENTAL AUTHORITY" means any nation or government, any state or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "GUARANTEED INDEBTEDNESS" means as to any Person, any obligation of such Person guaranteeing, providing comfort or otherwise supporting any Indebtedness, lease, dividend, or other obligation ("PRIMARY OBLIGATION") of any other Person (the "PRIMARY OBLIGOR") in any manner, including any obligation or arrangement of such Person to (a) purchase or repurchase any such primary obligation, (b) advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary A-11 obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the primary obligor, (c) purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (d) protect the beneficiary of such arrangement from loss (other than product warranties given in the ordinary course of business) or (e) indemnify the owner of such primary obligation against loss in respect thereof (except for ordinary and customary indemnification obligations in underwriting agreements or in purchase and sale agreements). The amount of any Guaranteed Indebtedness at any time shall be deemed to be an amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranteed Indebtedness is incurred and (y) the maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness, or, if not stated or determinable, the maximum reasonably anticipated liability (assuming full performance) in respect thereof. "GUARANTIES" means, collectively, the Parent Guaranty and any other guaranty executed by any Guarantor in favor of Agent and Lenders in respect of the Obligations. "GUARANTOR PAYMENT" shall have the meaning ascribed to such term in SECTION 12.7(a). "GUARANTORS" means Parent and each other Person, if any, that executes a guaranty or other similar agreement in favor of Agent, for itself and the ratable benefit of Lenders, in connection with the transactions contemplated by the Agreement and the other Loan Documents. "HAZARDOUS MATERIAL" means any substance, material or waste that is regulated by, or forms the basis of liability now or hereafter under, any Environmental Laws, including any material or substance that is (a) defined as a "solid waste," "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste," "restricted hazardous waste," "pollutant," "contaminant," "hazardous constituent," "special waste," "toxic substance" or other similar term or phrase under any Environmental Laws, or (b) petroleum or any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or any radioactive substance. "INDEBTEDNESS" means, with respect to any Person, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property payment for which is deferred 6 months or more, but excluding obligations to trade creditors incurred in the ordinary course of business that are unsecured and not overdue by more than 6 months unless being contested in good faith, (b) all reimbursement and other obligations with respect to letters of credit, bankers' acceptances and surety bonds, whether or not matured, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Capital Lease Obligations and the present value (discounted at the Index Rate as in effect on the Closing Date) of future rental payments under all synthetic leases, (f) all obligations of such Person under commodity purchase or option agreements or other commodity price hedging A-12 arrangements, in each case whether contingent or matured, (g) all obligations of such Person under any foreign exchange contract, currency swap agreement, interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to alter the risks of that Person arising from fluctuations in currency values or interest rates, in each case whether contingent or matured, (h) all Indebtedness referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, and (i) the Obligations. "INDEMNIFIED LIABILITIES" has the meaning ascribed to it in SECTION 1.13. "INDEMNIFIED PERSON" has the meaning ascribed to in SECTION 1.13. "INDEX RATE" means, for any day, a floating rate equal to the higher of (i) the rate publicly quoted from time to time by THE WALL STREET JOURNAL as the "base rate on corporate loans posted by at least 75% of the nation's 30 largest banks" (or, if THE WALL STREET JOURNAL ceases quoting a base rate of the type described, the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15 (519) entitled "Selected Interest Rates" as the Bank prime loan rate or its equivalent), and (ii) the Federal Funds Rate plus 50 basis points per annum. Each change in any interest rate provided for in the Agreement based upon the Index Rate shall take effect at the time of such change in the Index Rate. "INDEX RATE LOAN" means a Loan or portion thereof bearing interest by reference to the Index Rate. "INSTRUMENTS" means all "instruments," as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located, and, in any event, including all certificated securities, all certificates of deposit, and all promissory notes and other evidences of indebtedness, other than instruments that constitute, or are a part of a group of writings that constitute, Chattel Paper. "INTELLECTUAL PROPERTY" means any and all Licenses, Patents, Copyrights, Trademarks, and the goodwill associated with such Trademarks. "INTEREST PAYMENT DATE" means (a) as to any Index Rate Loan, the first Business Day of each Fiscal Month while such Loan is outstanding, and (b) as to any LIBOR Loan, the last day of the applicable LIBOR Period; PROVIDED that, in addition to the foregoing, each of (x) the date upon which all of the Commitments have been terminated and the Loans have been paid in full and (y) the Commitment Termination Date shall be deemed to be an "Interest Payment Date" with respect to any interest that has then accrued under the Agreement. "INTEREST RESERVE" shall refer to a Reserve in an initial amount equal to $3,500,000, subject to the following reductions: A-13 (i) upon completion of each Fiscal Quarter commencing with the Fiscal Quarter ending on September 30, 2002, upon and subject to Agent's confirmation of Borrowers' timely payment of all applicable interest payments due pursuant to this Agreement during the immediately preceding Fiscal Quarter, the Interest Reserve shall be reduced by an amount equal to $233,333, and (ii) upon Agent's satisfactory review of a Compliance Certificate evidencing Borrowers' compliance with all of the then applicable Financial Covenants for any Fiscal Quarter ending on or after June 30, 2003, the Interest Reserve shall be reduced to $0, so long as (A) no Default or Event of Default exists on and as of such date, and (B) no Default or Event of Default would result from the reduction of Interest Reserve to $0 on such date. "INVENTORY" means all "inventory," as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, wherever located, and in any event including inventory, merchandise, goods and other personal property that are held by or on behalf of any Credit Party for sale or lease or are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process, finished goods, returned goods, or materials or supplies of any kind, nature or description used or consumed or to be used or consumed in such Credit Party's business or in the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies and embedded software. "INVESTMENT PROPERTY" means all "investment property" as such term is defined in the Code now owned or hereafter acquired by any Credit Party, wherever located, including (i) all securities, whether certificated or uncertificated, including stocks, bonds, interests in limited liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all securities entitlements of any Credit Party, including the rights of any Credit Party to any securities account and the financial assets held by a securities intermediary in such securities account and any free credit balance or other money owing by any securities intermediary with respect to that account; (iii) all securities accounts of any Credit Party; (iv) all commodity contracts of any Credit Party; and (v) all commodity accounts held by any Credit Party. "IRC" means the Internal Revenue Code of 1986 and all regulations promulgated thereunder. "IRS" means the Internal Revenue Service. "L/C ISSUER" has the meaning ascribed to it in ANNEX B. "L/C SUBLIMIT" has the meaning ascribed to it in ANNEX B. "LENDERS" means GE Capital, the other Lenders named on the signature pages of the Agreement, and, if any such Lender shall decide to assign all or any portion of the Obligations, such term shall include any assignee of such Lender. A-14 "LETTER OF CREDIT FEE" has the meaning ascribed to it in ANNEX B. "LETTER OF CREDIT OBLIGATIONS" means all outstanding obligations incurred by Agent and Lenders at the request of Borrower Representative, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance of Letters of Credit by Agent or another L/C Issuer or the purchase of a participation as set forth in ANNEX B with respect to any Letter of Credit. The amount of such Letter of Credit Obligations shall equal the maximum amount that may be payable at such time or at any time thereafter by Agent or Lenders thereupon or pursuant thereto. "LETTERS OF CREDIT" means documentary or standby letters of credit issued for the account of any Borrower by any L/C Issuer, and bankers' acceptances issued by any Borrower, for which Agent and Lenders have incurred Letter of Credit Obligations. "LETTER-OF-CREDIT RIGHTS" means "letter-of-credit rights" as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, including rights to payment or performance under a letter of credit, whether or not such Credit Party, as beneficiary, has demanded or is entitled to demand payment or performance. "LIBOR BUSINESS DAY" means a Business Day on which banks in the City of London are generally open for interbank or foreign exchange transactions. "LIBOR LOAN" means a Loan or any portion thereof bearing interest by reference to the LIBOR Rate. "LIBOR PERIOD" means, with respect to any LIBOR Loan, each period commencing on a LIBOR Business Day selected by Borrower Representative pursuant to the Agreement and ending one month thereafter, as selected by Borrower Representative's irrevocable notice to Agent as set forth in SECTION 1.5(e); PROVIDED, that the foregoing provision relating to LIBOR Periods is subject to the following: (a) if any LIBOR Period would otherwise end on a day that is not a LIBOR Business Day, such LIBOR Period shall be extended to the next succeeding LIBOR Business Day unless the result of such extension would be to carry such LIBOR Period into another calendar month in which event such LIBOR Period shall end on the immediately preceding LIBOR Business Day; (b) any LIBOR Period that would otherwise extend beyond the Commitment Termination Date shall end 2 LIBOR Business Days prior to such date; (c) any LIBOR Period that begins on the last LIBOR Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such LIBOR Period) shall end on the last LIBOR Business Day of a calendar month; A-15 (d) Borrower Representative shall select LIBOR Periods so as not to require a payment or prepayment of any LIBOR Loan during a LIBOR Period for such Loan; and (e) Borrower Representative shall select LIBOR Periods so that there shall be no more than 6 separate LIBOR Loans in existence at any one time. "LIBOR RATE" means for each LIBOR Period, a rate of interest determined by Agent equal to: (a) the offered rate for deposits in United States Dollars for the applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m. (London time), on the second full LIBOR Business Day next preceding the first day of such LIBOR Period (unless such date is not a Business Day, in which event the next succeeding Business Day will be used); divided by (b) a number equal to 1.0 MINUS the aggregate (but without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on the day that is 2 LIBOR Business Days prior to the beginning of such LIBOR Period (including basic, supplemental, marginal and emergency reserves under any regulations of the Federal Reserve Board or other Governmental Authority having jurisdiction with respect thereto, as now and from time to time in effect) for Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board) that are required to be maintained by a member bank of the Federal Reserve System. If such interest rates shall cease to be available from Telerate News Service, the LIBOR Rate shall be determined from such financial reporting service or other information as shall be mutually acceptable to Agent and Borrower Representative. "LICENSE" means any FCC License, Copyright License, Patent License, Trademark License or other license of rights or interests now held or hereafter acquired by any Credit Party. "LICENSE SUB" shall mean each Borrower or Subsidiary of a Borrower which has no assets other than FCC Licenses and shall include each of the Borrowers designated as such on ANNEX 1. "LIEN" means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction). "LITIGATION" has the meaning ascribed to it in SECTION 3.13. "LOAN ACCOUNT" has the meaning ascribed to it in SECTION 1.12. A-16 "LOAN DOCUMENTS" means the Agreement, the Notes, the Collateral Documents, the Master Standby Agreement, and all other agreements, instruments, documents and certificates identified in the Closing Checklist executed and delivered to, or in favor of, Agent or any Lenders and including all other pledges, powers of attorney, consents, assignments, contracts, notices, and all other written matter whether heretofore, now or hereafter executed by or on behalf of any Credit Party, or any employee of any Credit Party, and delivered to Agent or any Lender in connection with the Agreement or the transactions contemplated thereby. Any reference in the Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to the Agreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative. "LOANS" means the Revolving Loan and each Advance thereunder. "LOCAL MARKETING AGREEMENT" means, with respect to a Station operated by a Person, an agreement or arrangement with a Station operated by another Person pursuant to which the parties agree to function cooperatively in terms of programming, advertising, sales, management, consulting or similar services. "MAJOR MARKET RADIO STATION" means each Radio Station other than (i) KVJY (AM) Pharr, Texas, (ii) KWRU (AM) Fresno, California, or (iii) KQTL (AM) Sahuarita, Arizona. "MARGIN STOCK" has the meaning ascribed to in SECTION 3.10. "MASS" means Mass Promotions, Inc., a Delaware corporation. "MASS SELLER NOTE" means that certain Promissory Note, dated as of April 30, 2001, issued by RUC in favor of MASS, in the original principal amount of not more than $2,100,000. "MASS PROFIT" shall mean, with respect to Borrowers for any fiscal period, an amount equal to (x) revenues (exclusive of reciprocal and barter revenues) of MASS for such period (which shall include the amount of management fees due to and actually received by Mass Promotion, Inc. pursuant to that certain Management and Stockholder Agreement, dated as of April 30, 2001, by and among Mass Promotions, Inc., MASS Services, Inc. and Alicia Martinez-Fonts and Maria Madruga), MINUS, to the extent included in determining revenues for such period, (y) the sum of expenses, including (i) selling expenses, (ii) cost of sales, and (iii) general and administrative expenses at the MASS level (but not the corporate level). "MASTER STANDBY AGREEMENT" means the Master Agreement for Standby Letters of Credit dated as of the Closing Date among Borrowers, as Applicants, and GE Capital, as issuer. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the business, assets, operations, prospects or financial or other condition of the Credit Parties, taken as a whole, (b) Borrowers' ability to pay any of the Loans or any of the other Obligations in A-17 accordance with the terms of the Agreement, (c) any Guarantor's ability to honor Guaranty Obligations, (d) the Collateral or Agent's Liens, on behalf of itself and Lenders, on the Collateral or the priority of such Liens, or (e) Agent's or any Lender's rights and remedies under the Agreement and the other Loan Documents. It is agreed that any action taken by the National Association of Securities Dealers resulting in the failure of Parent to maintain a listing of its common stock on NASDAQ shall not be deemed a Material Adverse Effect. "MATERIAL REAL ESTATE" has the meaning ascribed to it in SECTION 3.6. "MAXIMUM AMOUNT" means, as of any date of determination, an amount equal to the Commitment of all Lenders as of that date. "MORTGAGED PROPERTIES" has the meaning assigned to it in ANNEX D. "MORTGAGES" means each of the mortgages, deeds of trust, leasehold mortgages, leasehold deeds of trust, collateral assignment of leases or other real estate security documents delivered by any Credit Party to Agent on behalf of itself and Lenders with respect to the Mortgaged Properties, all in form and substance reasonably acceptable to Agent. "MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is making, is obligated to make or has made or been obligated to make, contributions on behalf of participants who are or were employed by any of them. "NET PROCEEDS" means, with respect to any event, (a) the cash proceeds received in respect of such event including (i) any cash received in respect of any non-cash proceeds, but only as and when received, and (ii) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees, commissions and out-of-pocket expenses properly attributable to such transaction paid by the Credit Party to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a condemnation or similar proceeding), amounts payable to holders of senior Liens (other than the Loans) (to the extent such Liens constitute Permitted Encumbrances hereunder), and (iii) the amount of an appropriate reserve for income taxes in accordance with GAAP in connection therewith. "NON-FUNDING LENDER" has the meaning ascribed to it in SECTION 9.9(a)(ii). "NOTES" means, collectively, the Revolving Notes. "NOTICE OF CONVERSION/CONTINUATION" has the meaning ascribed to it in SECTION 1.5(e). "NOTICE OF REVOLVING CREDIT ADVANCE" has the meaning ascribed to it in SECTION 1.1(a). A-18 "OBLIGATIONS" means all loans, advances, debts, liabilities and obligations for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by any Credit Party to Agent or any Lender, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or other instrument, arising under the Agreement or any of the other Loan Documents. This term includes all principal, interest (including all interest that accrues after the commencement of any case or proceeding by or against any Credit Party in bankruptcy, whether or not allowed in such case or proceeding), Fees, Charges, expenses, attorneys' fees and any other sum chargeable to any Credit Party under the Agreement or any of the other Loan Documents. "OPERATING AGREEMENT" shall mean any programming agreement, Time Brokerage, Local Marketing or similar agreement, network affiliation agreement, franchise agreement, lease or other agreement of any Borrower or any of its respective Subsidiaries relating to the operation of a Station, the termination or adverse modification of which could reasonably be expected to have a Material Adverse Effect. "OWNERSHIP REPORTS" means, with respect to any Station, the reports and certifications filed with the FCC pursuant to 47 C.F.R. Section 73.3615, or any comparable reports filed pursuant to any successor regulation thereto. "PARENT" shall have the meaning ascribed to such term in the preamble hereof. "PARENT GUARANTY" means the Parent Guaranty of even date herewith executed by Parent in favor of Agent, on behalf of itself and Lenders. "PARENT PLEDGE AGREEMENT" means the pledge agreement of even date herewith executed by Parent in favor of Agent, on behalf of itself and Lenders, pledging all Stock of RUC. "PARENT SECURITY AGREEMENT" means the Security Agreement of even date herewith entered into by and among Agent, on behalf of itself and Lenders, and Parent. "PATENT LICENSE" means rights under any written agreement now owned or hereafter acquired by any Credit Party granting any right with respect to any invention on which a Patent is in existence. "PATENT SECURITY AGREEMENTS" means the Patent Security Agreements made in favor of Agent, on behalf of itself and Lenders, by each applicable Credit Party. "PATENTS" means all of the following in which any Credit Party now holds or hereafter acquires any interest: (a) all letters patent of the United States or of any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or of any other country, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State, or any other country, and (b) all reissues, continuations, continuations-in-part or extensions thereof. A-19 "PBGC" means the Pension Benefit Guaranty Corporation. "PENSION PLAN" means a Plan described in Section 3(2) of ERISA. "PERMITTED ACQUISITION" shall have the meaning assigned to such term in SECTION 6.1. "PERMITTED ENCUMBRANCES" means the following encumbrances: (a) Liens for taxes or assessments or other governmental Charges not yet due and payable or which are being contested in accordance with SECTION 5.2(b); (b) pledges or deposits of money securing statutory obligations under workmen's compensation, unemployment insurance, social security or public liability laws or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of money securing bids, tenders, contracts (other than contracts for the payment of money) or leases to which any Credit Party is a party as lessee made in the ordinary course of business; (d) inchoate and unperfected workers', mechanics' or similar liens arising in the ordinary course of business, so long as such Liens attach only to Equipment, Fixtures and/or Real Estate; (e) deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings to which any Credit Party is a party; (f) any attachment or judgment lien not constituting an Event of Default under SECTION 8.1(j); (g) zoning restrictions, easements, licenses, or other restrictions on the use of any Real Estate or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair the use, value, or marketability of such Real Estate; (h) presently existing or hereafter created Liens in favor of Agent, on behalf of Lenders; and (i) Liens expressly permitted under CLAUSES (b) and (c) of SECTION 6.7 of the Agreement. "PERMITTED INTERCOMPANY INDEBTEDNESS" shall have the meaning assigned to such term in SECTION 6.3(a)(viii). "PERMITTED PARENT ACTIVITIES" shall mean activities or operation necessary for Parent to (i) maintain its corporate existence, (ii) issue securities from time to time, as permitted in this Agreement (including Permitted Equity Transactions), (iii) fulfill its reporting and other obligations under federal and state securities law, including engaging and paying fees and costs of non-affiliated legal and accounting professionals, and (iv) maintaining investments, to the extent such investments are permitted by SECTION 6.2. "PERMITTED EQUITY TRANSACTION(S)" means, at any time so long as no Default or Event of Default then exists or is continuing, one or more transactions by Parent where (a) Parent realizes up to $20,000,000 from the issuance of common or preferred Stock of Parent which, (i) is not mandatorily redeemable, in whole or in part, or required to be repurchased or redeemed, in whole or in part, by any Credit Party, and which does not require the payment of cash dividends, in each case prior to the date which is six (6) months after the Commitment Termination Date; (ii) is not secured by the assets of any Credit Party; (iii) does not constitute Guaranteed Indebtedness of any Credit Party; (iv) is not convertible or exchangeable into Indebtedness of any Credit Party; (v) is consented to in writing by Agent following Agent's review of the documentation with respect thereto and Agent's satisfaction that the transactions conform to the requirements of a Permitted Equity Transaction, (b) the Net Proceeds of such issuance are A-20 immediately contributed to the equity of one or more Borrowers for general working capital purposes, and (c) Borrowers immediately after such Net Proceeds are received, prepay the Loans in accordance with SECTION 1.3(c) in an aggregate amount equal to fifty percent (50%) of such Net Proceeds. "PERMITTED PAYMENTS" shall mean (i) regularly scheduled payments of interest and principal on the MASS Seller Note to the extent permitted under the terms of the MASS Subordination Agreement, and (ii) a Permitted Senior Note Payment. "PERMITTED SENIOR NOTE PAYMENT" means a payment or distribution by Borrowers to RUC consisting of interest on the RUC Discount Notes in an aggregate amount less than or equal to the amount of, and not earlier than fifteen (15) Business Days prior to the due date of, any regularly scheduled interest payment due after the Closing Date on the RUC Discount Notes as in effect on the Closing Date. "PERMITTED SENIOR NOTE REPURCHASES" shall mean and refer to the purchase and immediate retirement or cancellation by Borrowers of RUC Discount Notes having a maximum purchase price (including, all related transaction expenses) of not more than $10,000,000 in the aggregate, PROVIDED, HOWEVER, (i) at the time of any such purchase, no Default or Event of Default then exists or would (after giving effect to such purchase) be caused thereby, and (ii) such purchase shall be made in accordance with all applicable laws and the RUC Indenture. "PERSON" means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof). "PLAN" means, at any time, an "employee benefit plan", as defined in Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains, contributes to or has an obligation to contribute to or has maintained, contributed to or had an obligation to contribute to at any time within the past 7 years on behalf of participants who are or were employed by any Credit Party or ERISA Affiliate. "PLEDGE AGREEMENTS" means the Borrower Pledge Agreements and the Parent Pledge Agreement. "PREPAYMENT EVENT" means: (a) any sale, transfer or other disposition (including pursuant to a sale and leaseback transaction) of any property or asset of any Credit Party, other than (i) dispositions described in SECTION 6.8 (a), and (ii) other dispositions resulting in aggregate Net Proceeds not exceeding in the aggregate, the lesser of (A) $10,000,000 or (B) any lesser amount that would, pursuant to the terms and conditions of the RUC Indenture, require RUC to make an "Excess Proceeds Offer" (as such term is defined in the RUC Indenture); or A-21 (b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Borrower or any Credit Party (A) in excess of $250,000 in the aggregate, or (B) in connection with any asset of such Borrower or Credit Party which is material to its business (regardless of whether the $250,000 threshold has been met or otherwise), but only to the extent that (i) the Net Proceeds therefrom have not been applied or committed by contract to be applied to repair, restore or replace such property or asset within 180 days after such event or (ii) in the case of any such Net Proceeds committed to be so applied (but not yet applied) as of the date that is 180 days after such event, such Net Proceeds have not been so applied within 359 days after such event. "PROCEEDS" means "proceeds," as such term is defined in the Code, including (a) any and all proceeds of any insurance, indemnity, warranty or guaranty payable to any Credit Party from time to time with respect to any of the Collateral, (b) any and all payments (in any form whatsoever) made or due and payable to any Credit Party from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority (or any Person acting under color of governmental authority), (c) any claim of any Credit Party against third parties (i) for past, present or future infringement of any Patent or Patent License, or (ii) for past, present or future infringement or dilution of any Copyright, Copyright License, Trademark or Trademark License, or for injury to the goodwill associated with any Trademark or Trademark License, (d) any recoveries by any Credit Party against third parties with respect to any litigation or dispute concerning any of the Collateral including claims arising out of the loss or nonconformity of, interference with the use of, defects in, or infringement of rights in, or damage to, Collateral, (e) all amounts collected on, or distributed on account of, other Collateral, including dividends, interest, distributions and Instruments with respect to Investment Property and pledged Stock, and (f) any and all other amounts, rights to payment or other property acquired upon the sale, lease, license, exchange or other disposition of Collateral and all rights arising out of Collateral. "PRO FORMA" means the unaudited consolidated and consolidating balance sheet of Borrowers and their Subsidiaries as of March 31, 2002, in accordance with GAAP after giving PRO FORMA effect to the transactions contemplated hereby. "PROJECTIONS" means Borrowers' forecasted consolidated: (a) balance sheets; (b) profit and loss statements; (c) cash flow statements; and (d) capitalization statements, all prepared on a Subsidiary by Subsidiary or division-by-division basis, if applicable, and otherwise consistent with the historical Financial Statements of the Borrowers, together with appropriate supporting details and a statement of underlying assumptions. "PRO RATA SHARE" means with respect to all matters relating to any Lender, (a) the percentage obtained by dividing (i) the Commitment of that Lender by (ii) the aggregate Commitments of all Lenders, as any such percentages may be adjusted by assignments permitted pursuant to SECTION 9.1, and (b) with respect to all Loans on and after the Commitment Termination Date, the percentage obtained by dividing (i) the aggregate outstanding principal A-22 balance of the Loans held by that Lender, by (ii) the outstanding principal balance of the Loans held by all Lenders. "QUALIFIED PLAN" means a Pension Plan that is intended to be tax-qualified under Section 401(a) of the IRC. "QUALIFIED ASSIGNEE" means (a) any Lender, any Affiliate of any Lender and, with respect to any Lender that is an investment fund that invests in commercial loans, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and (b) any commercial bank, savings and loan association or savings bank or any other entity which is an "accredited investor" (as defined in Regulation D under the Securities Act of 1933) which extends credit or buys loans as one of its businesses, including insurance companies, mutual funds, lease financing companies and commercial finance companies, in each case, which has a rating of BBB or higher from S&P and a rating of Baa2 or higher from Moody's at the date that it becomes a Lender and which, through its applicable lending office, is capable of lending to Borrowers without the imposition of any withholding or similar taxes; PROVIDED that no Person determined by Agent to be acting in the capacity of a vulture fund or distressed debt purchaser shall be a Qualified Assignee, and no Person or Affiliate of such Person (other than a Person that is already a Lender) holding Subordinated Debt or Stock issued by any Credit Party shall be a Qualified Assignee. "RADIO STATIONS" shall mean the following Stations KBLA (AM), Santa Monica, CA; WWRU (AM), Jersey City, NJ; WJDM (AM), Elizabeth NJ; WNMA (AM) Miami Springs, FL; WJCC (AM), Miami Springs, FL; WNTD (AM), Chicago, IL; KXYZ (AM), Houston, TX; KIQI (AM), San Francisco, CA; KAHZ (AM), Hurst, TX; KZDC (AM), San Antonio, TX; KIDR (AM), Phoenix, AZ; KVJY (AM), Pharr, TX; KWRU (AM), Fresno, CA; KATD (AM), Pittsburg, CA; KCUV (AM), Englewood, CO; KQTL (AM), Sahuarita, AZ; and any other radio Stations acquired by Borrower or any of its Subsidiaries in a Permitted Acquisition. "RADIO STATION REVENUES" means, for any period, revenues (exclusive of reciprocal and barter revenues in excess of 5% of revenues derived from sources other than reciprocal or barter transactions for such period) of the Borrowers and their Subsidiaries derived directly from the operation of Radio Stations, network operation and related programming, production and distribution activities during such period., net of any agency commissions to any third parties with respect to such revenues. "RATABLE SHARE" has the meaning ascribed to it in SECTION 1.1(b). "REAL ESTATE" has the meaning ascribed to it in SECTION 3.6. "REINVESTMENT AMOUNT" has the meaning ascribed to such term in SECTION 1.3(b)(ii). A-23 "RELEASE" means any release, threatened release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material in the indoor or outdoor environment, including the movement of Hazardous Material through or in the air, soil, surface water, ground water or property. "REQUISITE LENDERS" means Lenders having (a) more than 66 2/3% of the Commitments of all Lenders, or (b) if the Commitments have been terminated, more than 66 2/3% of the aggregate outstanding amount of all Loans. "RESERVES" means (i) such reserves, if any, against Borrowing Availability that Agent may, in its reasonable credit judgment, establish in accordance with SECTION 5.9, and (ii) the Interest Reserve (which shall be deemed to a Reserve established by the reasonable exercise of Agent's credit judgment). "RESTRICTED PAYMENT" means, with respect to any Credit Party (a) the declaration or payment of any dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of Stock; (b) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of such Credit Party's Stock or any other payment or distribution made in respect thereof, either directly or indirectly; (c) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to, the MASS Seller Note or any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire Stock of such Credit Party now or hereafter outstanding; (e) any payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of, any shares of such Credit Party's Stock or of a claim for reimbursement, indemnification or contribution arising out of or related to any such claim for damages or rescission; (f) any payment, loan, contribution, or other transfer of funds or other property to any Stockholder of such Credit Party other than payment of compensation in the ordinary course of business to Stockholders who are employees of such Person; and (g) any payment of management fees (or other fees of a similar nature) by such Credit Party to any Stockholder of such Credit Party or its Affiliates. "RETIREE WELFARE PLAN" means, at any time, a Welfare Plan that provides for continuing coverage or benefits for any participant or any beneficiary of a participant after such participant's termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC and at the sole expense of the participant or the beneficiary of the participant. "REVOLVING CREDIT ADVANCE" has the meaning ascribed to it in SECTION 1.1(a)(i). "REVOLVING LOAN" means, at any time, the sum of (i) the aggregate amount of Revolving Credit Advances outstanding to Borrowers PLUS (ii) the aggregate Letter of Credit Obligations incurred on behalf of Borrowers. Unless the context otherwise requires, references A-24 to the outstanding principal balance of the Revolving Loan shall include the outstanding balance of Letter of Credit Obligations. "REVOLVING NOTE" has the meaning ascribed to it in SECTION 1.1(a)(ii). "RUC DISCOUNT NOTES" shall mean those certain 11 3/4% Senior Discount Notes due 2006 in an aggregate principal amounT of $158,088,000 issued by RUC under the terms of the RUC Indenture. "RUC DISCOUNT NOTE DOCUMENTS" shall mean the RUC Indenture, the RUC Discount Notes and all other documents or instruments executed in connection with the foregoing, as from time to time modified, amended, extended, renewed or restated in accordance with the terms hereof. "RUC INDENTURE" shall mean that certain Indenture, dated as of July 27, 1998, by and among RUC, the guarantors named therein and Wilmington Trust Company, as Trustee, as the same remains unamended by the parties thereto. "SECURITY AGREEMENTS" means the Security Agreements of even date herewith entered into by and among Agent, on behalf of itself and Lenders, and each Credit Party that is a signatory thereto, including the Parent Security Agreement. "SENIOR INTEREST COVERAGE RATIO" means, with respect to any Person for any period, the ratio of EBITDA to Senior Interest Expense. "SENIOR INTEREST EXPENSE" means, with respect to any Person for any fiscal period, cash interest expense of such Person determined in accordance with GAAP for the relevant period ended on such date, with respect to any Senior Secured Debt of such Person. "SENIOR SECURED DEBT" means the aggregate amount of all senior secured Indebtedness and Capital Leases incurred by the Borrowers or their Subsidiaries. "SHAREHOLDER NOTES" mean, collectively (i) that certain secured promissory note, due and payable November 13, 2005, from Mr. Joaquin Blaya in favor of Parent in the original principal amount of $549,701, and (ii) those two certain secured promissory notes, due and payable November 13, 2005 and December 15, 2003, respectively, from Mr. Steven E. Dawson in favor of Parent, in the original aggregate principal amount of $240,000. "SOFTWARE" means all "software" as such term is defined in the Code, now owned or hereafter acquired by any Credit Party, other than software embedded in any category of Goods, including all computer programs and all supporting information provided in connection with a transaction related to any program. "SOLVENT" means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of A-25 such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities (such as litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, represents the amount that can be reasonably be expected to become an actual or matured liability. "STAGE 1 BROADCAST CASH FLOW" means, with respect to Borrowers for any fiscal period, an amount equal to the sum of (i) Broadcast Cash Flow for such period, PLUS (ii) MASS Profit for such period. "STATION" means all related licenses (including FCC Licenses), franchises and permits issued under federal, state or local laws from time to time which authorized a Person to receive or distribute, or both, over the airwaves, audio and visual, radio or microwave signals within a geographic area for the purpose of broadcasting radio programming, together with all property owned or used in connection with the broadcast of the programming pursuant to, and all interest of such Person to receive revenues from any other Person which derives revenues from or pursuant to, said licenses, franchises and permits. The term "Station" shall also include a corporation or other entity organized in the United States of America or any State thereof which shall own one or more Stations. "STOCK" means all shares, options, warrants, general or limited partnership interests, membership interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity whether voting or nonvoting, including common stock, preferred stock or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934). "STOCKHOLDER" means, with respect to any Person, each holder of Stock of such Person. "SUBORDINATED DEBT" means any Indebtedness of any Credit Party subordinated to the Obligations in a manner and form satisfactory to Agent and Lenders in their sole discretion, as to right and time of payment and as to any other rights and remedies thereunder. "SUBSIDIARY" means, with respect to any Person, (a) any corporation of which an aggregate of more than 50% of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of 50% or more of such Stock whether A-26 by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than 50% or of which any such Person is a general partner or may exercise the powers of a general partner. Unless the context otherwise requires, each reference to a Subsidiary shall be a reference to a Subsidiary of a Borrower. "SUPERMAJORITY LENDERS" means Lenders having (a) 80% or more of the Commitments of all Lenders, or (b) if the Commitments have been terminated, 80% or more of the aggregate outstanding amount of the Revolving Loan and Letter of Credit Obligations. "SUPPORTING OBLIGATIONS" means all "supporting obligations" as such term is defined in the Code, including letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments, or Investment Property. "TARGET" has the meaning assigned to such term in SECTION 6.1. "TAXES" means taxes, levies, imposts, deductions, Charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on or measured by the net income of Agent or a Lender by the jurisdictions under the laws of which Agent and Lenders are organized or conduct business or any political subdivision thereof. "TERMINATION DATE" means the date on which (a) the Loans have been indefeasibly repaid in full, (b) all other Obligations under the Agreement and the other Loan Documents have been completely discharged (c) all Letter of Credit Obligations have been cash collateralized, canceled or backed by standby letters of credit in accordance with ANNEX B, and (d) Borrowers shall have no further right to borrow any monies under the Agreement. "TIME BROKERAGE AGREEMENT" means, with respect to a Station operated by a Person, an agreement or arrangement with a Station operated by another Person pursuant to which any Station (i) sells broadcast time to any other Station that programs such broadcast time and sells its own commercial advertising announcements during such broadcast time, or (ii) purchases broadcast time on any other Station for the purpose of programming such broadcast time and selling its commercial advertisements during such time. "TITLE IV PLAN" means a Pension Plan (other than a Multiemployer Plan), that is covered by Title IV of ERISA, and that any Credit Party or ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them. "TRADEMARK SECURITY AGREEMENTS" means the Trademark Security Agreements made in favor of Agent, on behalf of Lenders, by each applicable Credit Party. "TRADEMARK LICENSE" means rights under any written agreement now owned or hereafter acquired by any Credit Party granting any right to use any Trademark. A-27 "TRADEMARKS" means all of the following now owned or hereafter existing or adopted or acquired by any Credit Party: (a) all trademarks, trade names, corporate names, business names, trade styles, service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof; (b) all reissues, extensions or renewals thereof; and (c) all goodwill associated with or symbolized by any of the foregoing. "UNFUNDED PENSION LIABILITY" means, at any time, the aggregate amount, if any, of the sum of (a) the amount by which the present value of all accrued benefits under each Title IV Plan exceeds the fair market value of all assets of such Title IV Plan allocable to such benefits in accordance with Title IV of ERISA, all determined as of the most recent valuation date for each such Title IV Plan using the actuarial assumptions for funding purposes in effect under such Title IV Plan, and (b) for a period of 5 years following a transaction which might reasonably be expected to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that could be avoided by any Credit Party or any ERISA Affiliate as a result of such transaction. "UNUSED LINE FEE " has the meaning assigned to such term in SECTION 1.9(b). "USAGE" has the meaning assigned to such term in SECTION 1.9(b). "VALUE" means the lower of the cost or the appraised value of the applicable Collateral, which appraised value shall be based upon the most recent appraisal conducted, which appraisal shall be acceptable to Agent, in its sole discretion. "WELFARE PLAN" means a Plan described in Section 3(i) of ERISA. Rules of construction with respect to accounting terms used in the Agreement or the other Loan Documents shall be as set forth in ANNEX G. All other undefined terms contained in any of the Loan Documents shall, unless the context indicates otherwise, have the meanings provided for by the Code to the extent the same are used or defined therein; in the event that any term is defined differently in different Articles or Divisions of the Code, the definition contained in Article or Division 9 shall control. Unless otherwise specified, references in the Agreement or any of the Appendices to a Section, subsection or clause refer to such Section, subsection or clause as contained in the Agreement. The words "herein," "hereof" and "hereunder" and other words of similar import refer to the Agreement as a whole, including all Annexes, Exhibits and Schedules, as the same may from time to time be amended, restated, modified or supplemented, and not to any particular section, subsection or clause contained in the Agreement or any such Annex, Exhibit or Schedule. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, A-28 feminine or neuter gender shall include the masculine, feminine and neuter genders. The words "including", "includes" and "include" shall be deemed to be followed by the words "without limitation"; the word "or" is not exclusive; references to Persons include their respective successors and assigns (to the extent and only to the extent permitted by the Loan Documents) or, in the case of governmental Persons, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations shall include any amendments of the same and any successor statutes and regulations. Whenever any provision in any Loan Document refers to the knowledge (or an analogous phrase) of any Credit Party, such words are intended to signify that such Credit Party has actual knowledge or awareness of a particular fact or circumstance or that such Credit Party, if it had exercised reasonable diligence, would have known or been aware of such fact or circumstance. A-29 ANNEX B (SECTION 1.2) TO CREDIT AGREEMENT LETTERS OF CREDIT (a) ISSUANCE. Subject to the terms and conditions of the Agreement, Agent and Lenders agree to incur, from time to time prior to the Commitment Termination Date, upon the request of Borrower Representative, on behalf of the applicable Borrower and for such Borrower's account, Letter of Credit Obligations by causing Letters of Credit to be issued by GE Capital or a Subsidiary thereof or a bank or other legally authorized Person selected by or acceptable to Agent in its sole discretion (each, an "L/C ISSUER") for such Borrower's account and guaranteed by Agent; PROVIDED, that if the L/C Issuer is a Lender, then such Letters of Credit shall not be guaranteed by Agent but rather each Lender shall, subject to the terms and conditions hereinafter set forth, purchase (or be deemed to have purchased) risk participations in all such Letters of Credit issued with the written consent of Agent, as more fully described in paragraph (b)(ii) below. The aggregate amount of all such Letter of Credit Obligations shall not at any time exceed the lesser of (i) two million dollars ($2,000,000) (the "L/C SUBLIMIT") and (ii) the Commitment less the aggregate outstanding principal balance of the Revolving Credit Advances. No such Letter of Credit shall have an expiry date that is more than one year following the date of issuance thereof, unless otherwise determined by the Agent, in its sole discretion, and neither Agent nor Lenders shall be under any obligation to incur Letter of Credit Obligations in respect of, or purchase risk participations in, any Letter of Credit having an expiry date that is later than the Commitment Termination Date. (b) (i) ADVANCES AUTOMATIC; PARTICIPATIONS. In the event that Agent or any Lender shall make any payment on or pursuant to any Letter of Credit Obligation, such payment shall then be deemed automatically to constitute a Revolving Credit Advance to the applicable Borrower under SECTION 1.1(a) of the Agreement regardless of whether a Default or Event of Default has occurred and is continuing and notwithstanding any Borrower's failure to satisfy the conditions precedent set forth in SECTION 2, and each Lender shall be obligated to pay its Pro Rata Share thereof in accordance with the Agreement. The failure of any Lender to make available to Agent for Agent's own account its Pro Rata Share of any such Revolving Credit Advance or payment by Agent under or in respect of a Letter of Credit shall not relieve any other Lender of its obligation hereunder to make available to Agent its Pro Rata Share thereof, but no Lender shall be responsible for the failure of any other Lender to make available such other Lender's Pro Rata Share of any such payment. (ii) If it shall be illegal or unlawful for any Borrower to incur Revolving Credit Advances as contemplated by paragraph (b)(i) above because of an Event of Default described in SECTIONS 8.1(h) OR (i) or otherwise or if it shall be illegal or unlawful for any Lender to be deemed to have assumed a ratable share of the reimbursement obligations owed to an L/C Issuer, or if the L/C Issuer is a Lender, then (A) immediately and without further action whatsoever, each Lender shall be deemed to have irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an undivided interest and participation equal B-1 to such Lender's Pro Rata Share (based on the Commitments) of the Letter of Credit Obligations in respect of all Letters of Credit then outstanding and (B) thereafter, immediately upon issuance of any Letter of Credit, each Lender shall be deemed to have irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the case may be) an undivided interest and participation in such Lender's Pro Rata Share (based on the Commitments) of the Letter of Credit Obligations with respect to such Letter of Credit on the date of such issuance. Each Lender shall fund its participation in all payments or disbursements made under the Letters of Credit in the same manner as provided in the Agreement with respect to Revolving Credit Advances. (c) CASH COLLATERAL. (i) If Borrowers are required to provide cash collateral for any Letter of Credit Obligations pursuant to the Agreement prior to the Commitment Termination Date, each Borrower will pay to Agent for the ratable benefit of itself and Lenders cash or cash equivalents acceptable to Agent ("CASH EQUIVALENTS") in an amount equal to 110% of the maximum amount then available to be drawn under each applicable Letter of Credit outstanding for the benefit of such Borrower. Such funds or Cash Equivalents shall be held by Agent in a cash collateral account (the "CASH COLLATERAL ACCOUNT") maintained at a bank or financial institution acceptable to Agent. The Cash Collateral Account shall be in the name of the applicable Borrower and shall be pledged to, and subject to the control of, Agent, for the benefit of Agent and Lenders, in a manner satisfactory to Agent. Each Borrower hereby pledges and grants to Agent, on behalf of itself and Lenders, a security interest in all such funds and Cash Equivalents held in the Cash Collateral Account from time to time and all proceeds thereof, as security for the payment of all amounts due in respect of the Letter of Credit Obligations and other Obligations, whether or not then due. The Agreement, including this ANNEX B, shall constitute a security agreement under applicable law. (ii) If any Letter of Credit Obligations, whether or not then due and payable, shall for any reason be outstanding on the Commitment Termination Date, Borrowers shall either (A) provide cash collateral therefor in the manner described above, or (B) cause all such Letters of Credit and guaranties thereof, if any, to be canceled and returned, or (C) deliver a stand-by letter (or letters) of credit in guaranty of such Letter of Credit Obligations, which stand-by letter (or letters) of credit shall be of like tenor and duration (plus 30 additional days) as, and in an amount equal to 110% of, the aggregate maximum amount then available to be drawn under, the Letters of Credit to which such outstanding Letter of Credit Obligations relate and shall be issued by a Person, and shall be subject to such terms and conditions, as are satisfactory to Agent in its sole discretion. (iii) From time to time after funds are deposited in the Cash Collateral Account by a Borrower, whether before or after the Commitment Termination Date, Agent may apply such funds or Cash Equivalents then held in the Cash Collateral Account to the payment of any amounts, and in such order as Agent may elect, as shall be or shall become due and payable by such Borrower to Agent and Lenders with respect to such Letter of Credit Obligations of such Borrower and, upon the satisfaction in full of all Letter of Credit Obligations of such Borrower, to any other Obligations of any Borrower then due and payable. B-2 (iv) No Borrower nor any Person claiming on behalf of or through any Borrower shall have any right to withdraw any of the funds or Cash Equivalents held in the Cash Collateral Account, except that upon the termination of all Letter of Credit Obligations and the payment of all amounts payable by Borrowers to Agent and Lenders in respect thereof, any funds remaining in the Cash Collateral Account shall be applied to other Obligations then due and owing and upon payment in full of such Obligations, any remaining amount shall be paid to Borrowers or as otherwise required by law. Interest earned on deposits in the Cash Collateral Account shall be for the account of Agent. (d) FEES AND EXPENSES. Borrowers agree to pay to Agent for the benefit of Lenders, as compensation to such Lenders for Letter of Credit Obligations incurred hereunder, (i) all costs and expenses incurred by Agent or any Lender on account of such Letter of Credit Obligations, and (ii) for each month during which any Letter of Credit Obligation shall remain outstanding, a fee (the "LETTER OF CREDIT FEE") in an amount equal to three and one-half percent (3.50%) per annum multiplied by the maximum amount available from time to time to be drawn under the applicable Letter of Credit. Such fee shall be paid to Agent for the benefit of the Lenders in arrears, on the first day of each month and on the Commitment Termination Date. In addition, Borrowers shall pay to any L/C Issuer, on demand, such fees (including all per annum fees), charges and expenses of such L/C Issuer in respect of the issuance, negotiation, acceptance, amendment, transfer and payment of such Letter of Credit or otherwise payable pursuant to the application and related documentation under which such Letter of Credit is issued. (e) REQUEST FOR INCURRENCE OF LETTER OF CREDIT OBLIGATIONS. Borrower Representative shall give Agent at least 2 Business Days' prior written notice requesting the incurrence of any Letter of Credit Obligation. The notice shall be accompanied by the form of the Letter of Credit (which shall be acceptable to the L/C Issuer) and a completed Application for Standby Letter of Credit in the form of EXHIBIT B-1 attached hereto. Notwithstanding anything contained herein to the contrary, Letter of Credit applications by Borrower Representative and approvals by Agent and the L/C Issuer may be made and transmitted pursuant to electronic codes and security measures mutually agreed upon and established by and among Borrower Representative, Agent and the L/C Issuer. (f) OBLIGATION ABSOLUTE. The obligation of Borrowers to reimburse Agent and Lenders for payments made with respect to any Letter of Credit Obligation shall be absolute, unconditional and irrevocable, without necessity of presentment, demand, protest or other formalities, and the obligations of each Lender to make payments to Agent with respect to Letters of Credit shall be unconditional and irrevocable. Such obligations of Borrowers and Lenders shall be paid strictly in accordance with the terms hereof under all circumstances including the following: (i) any lack of validity or enforceability of any Letter of Credit or the Agreement or the other Loan Documents or any other agreement; (ii) the existence of any claim, setoff, defense or other right that any Borrower or any of its respective Affiliates or any Lender may at any time have B-3 against a beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom any such transferee may be acting), Agent, any Lender, or any other Person, whether in connection with the Agreement, the Letter of Credit, the transactions contemplated herein or therein or any unrelated transaction (including any underlying transaction between any Borrower or any of its respective Affiliates and the beneficiary for which the Letter of Credit was procured); (iii) any draft, demand, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by Agent (except as otherwise expressly provided in paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of Credit or guaranty thereof against presentation of a demand, draft or certificate or other document that does not comply with the terms of such Letter of Credit or such guaranty; (v) any other circumstance or event whatsoever, that is similar to any of the foregoing; or (vi) the fact that a Default or an Event of Default has occurred and is continuing. (g) INDEMNIFICATION; NATURE OF LENDERS' DUTIES. (i) In addition to amounts payable as elsewhere provided in the Agreement, Borrowers hereby agree to pay and to protect, indemnify, and save harmless Agent and each Lender from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys' fees) that Agent or any Lender may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit or guaranty thereof, or (B) the failure of Agent or any Lender seeking indemnification or of any L/C Issuer to honor a demand for payment under any Letter of Credit or guaranty thereof as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority, in each case other than to the extent solely as a result of the gross negligence or willful misconduct of Agent or such Lender (as finally determined by a court of competent jurisdiction). (ii) As between Agent and any Lender and Borrowers, Borrowers assume all risks of the acts and omissions of, or misuse of any Letter of Credit by beneficiaries, of any Letter of Credit. In furtherance and not in limitation of the foregoing, to the fullest extent permitted by law, neither Agent nor any Lender shall be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document issued by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or B-4 assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (C) failure of the beneficiary of any Letter of Credit to comply fully with conditions required in order to demand payment under such Letter of Credit; PROVIDED, that in the case of any payment by Agent under any Letter of Credit or guaranty thereof, Agent shall be liable to the extent such payment was made solely as a result of its gross negligence or willful misconduct (as finally determined by a court of competent jurisdiction) in determining that the demand for payment under such Letter of Credit or guaranty thereof complies on its face with any applicable requirements for a demand for payment under such Letter of Credit or guaranty thereof; (D) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they may be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a payment under any Letter of Credit or guaranty thereof or of the proceeds thereof; (G) the credit of the proceeds of any drawing under any Letter of Credit or guaranty thereof; and (H) any consequences arising from causes beyond the control of Agent or any Lender. None of the above shall affect, impair, or prevent the vesting of any of Agent's or any Lender's rights or powers hereunder or under the Agreement. (iii) Nothing contained herein shall be deemed to limit or to expand any waivers, covenants or indemnities made by Borrowers in favor of any L/C Issuer in any letter of credit application, reimbursement agreement or similar document, instrument or agreement between or among Borrowers and such L/C Issuer, including any Master Standby Agreement entered into with Agent. B-5 ANNEX C (SECTION 1.8) TO CREDIT AGREEMENT CASH MANAGEMENT SYSTEM Each Borrower shall, and shall cause its Subsidiaries to, establish and maintain the Cash Management Systems described below: (a) On or before the Closing Date and until the Termination Date, each Borrower shall (i) establish blocked accounts ("BLOCKED ACCOUNTS") at one or more of the banks set forth in DISCLOSURE SCHEDULE (3.19), and (ii) deposit and cause any Credit Party to deposit or cause to be deposited promptly, and in any event no later than (1) the third Business Day after the date of receipt thereof if no Default or Event of Default then exists and is continuing or (2) the first Business Day after the date of receipt thereof if any Default or Event of Default then exists and is continuing, all cash, checks, drafts or other similar items of payment relating to or constituting payments made in respect of any and all Collateral into one or more Blocked Accounts in such Borrower's name or any such Subsidiary's name and at a bank identified in DISCLOSURE SCHEDULE (3.19) (each, a "RELATIONSHIP BANK"). (b) Each Borrower may maintain, in its name, an account (each a "DISBURSEMENT ACCOUNT" and collectively, the "DISBURSEMENT ACCOUNTS") at a bank reasonably acceptable to Agent into which Agent shall, from time to time, deposit proceeds of Revolving Credit Advances made to Borrower pursuant to SECTION 1.1 for use by such Borrower solely in accordance with the provisions of SECTION 1.4. (c) On or before the Closing Date (or such later date as Agent shall consent to in writing), each bank where a Disbursement Account is maintained and all other Relationship Banks, shall have entered into tri-party blocked account agreements with Agent, for the benefit of itself and Lenders, and the applicable Borrower and its Subsidiaries, as applicable, in form and substance reasonably acceptable to Agent, which shall become operative on or prior to the Closing Date (or such later date to which the Agent shall have consented in writing). Each such blocked account agreement shall provide, among other things, that (i) all items of payment deposited in such account and proceeds thereof deposited in the applicable Blocked Account are held by such bank as agent or bailee-in-possession for Agent, on behalf of itself and Lenders, (ii) the bank executing such agreement has no rights of setoff or recoupment or any other claim against such account, as the case may be, other than for payment of its service fees and other charges directly related to the administration of such account and for returned checks or other items of payment, and (iii) from and after the Closing Date, with respect to banks at which a Blocked Account is maintained, such bank agrees, from and after the receipt of a notice (an "ACTIVATION NOTICE") from Agent (which Activation Notice may be given by Agent at any time at which (1) a Default or Event of Default has occurred and is continuing, (2) Agent reasonably believes based upon information available to it that a Default or an Event of Default is likely to occur; (3) Agent reasonably believes that an event or circumstance that is likely to have a C-1 Material Adverse Effect has occurred, or (4) Agent reasonably has grounds to question the integrity of any Borrower's Cash Management Systems or any Borrower's compliance with the provisions of this ANNEX C or any other provisions of the Loan Documents to the extent related to such Cash Management Systems (any of the foregoing being an "ACTIVATION EVENT"), to forward immediately all amounts in each Blocked Account to the Collection Account and to commence the process of daily sweeps from such Blocked Account into the Collection Account. From and after the date Agent has delivered an Activation Notice to any bank with respect to any Blocked Account(s), no Borrower shall, or shall cause or permit any Subsidiary thereof to, accumulate or maintain cash in Disbursement Accounts or payroll accounts as of any date of determination in excess of checks outstanding against such accounts as of that date and amounts necessary to meet minimum balance requirements. In the event Agent has consented in writing, Borrower may direct, through a standing, irrevocable instruction, the Relationship Banks so indicated on DISCLOSURE SCHEDULE (3.19) to transfer any and all funds on deposit with such Relationship Bank to a Blocked Account (i) at any time when such funds are in an amount equal to or greater than $10,000 or (ii) in any event, no less frequently than once a week, in lieu of entering a blocked account agreement with such Relationship Banks. (d) So long as no Default or Event of Default has occurred and is continuing, Borrowers may amend DISCLOSURE SCHEDULE (3.19) to add or replace a Relationship Bank, Lock Box or Blocked Account or to replace any Disbursement Account; PROVIDED, that (i) Agent shall have consented in writing in advance to the opening of such account or Lock Box with the relevant bank and (ii) prior to the time of the opening of such account or Lock Box, the applicable Borrower or its Subsidiaries, as applicable, and such bank shall have executed and delivered to Agent a tri-party blocked account agreement, in form and substance reasonably satisfactory to Agent. Borrowers shall close any of their accounts (and establish replacement accounts in accordance with the foregoing sentence) promptly and in any event within 30 days following notice from Agent that the creditworthiness of any bank holding an account is no longer acceptable in Agent's reasonable judgment, or as promptly as practicable and in any event within 60 days following notice from Agent that the operating performance, funds transfer or availability procedures or performance with respect to accounts of the bank holding such accounts or Agent's liability under any tri-party blocked account agreement with such bank is no longer acceptable in Agent's reasonable judgment. (e) The Blocked Accounts and Disbursement Accounts shall be cash collateral accounts, with all cash, checks and other similar items of payment in such accounts securing payment of the Loans and all other Obligations, and in which each Borrower and each of its Subsidiaries shall have granted a Lien to Agent, on behalf of itself and Lenders, pursuant to the Security Agreements. (f) All amounts deposited in the Collection Account shall be deemed received by Agent in accordance with SECTION 1.10 and shall be applied (and allocated) by Agent in accordance with SECTION 1.11. In no event shall any amount be so applied unless and until such amount shall have been credited in immediately available funds to the Collection Account. C-2 (g) Each Borrower shall and shall cause its Affiliates, officers, employees, agents, directors or other Persons acting for or in concert with Borrower (each a "RELATED PERSON") to (i) hold in trust for Agent, for the benefit of itself and Lenders, all checks, cash and other items of payment received by such Borrower or any such Related Person, and (ii) within (1) three Business Days, if no Default or Event of Default then exists and is continuing or (2) one Business Day, if any Default or Event of Default then exists and is continuing, after receipt by such Borrower or any such Related Person of any checks, cash or other items of payment, deposit the same into a Blocked Account of such Borrower. Each Borrower and each Related Person thereof acknowledges and agrees that all cash, checks or other items of payment constituting proceeds of Collateral are part of the Collateral. All proceeds of the sale or other disposition of any Collateral, shall be deposited directly into the applicable Blocked Accounts. C-3 ANNEX D (SECTION 2.1(a)) TO CREDIT AGREEMENT CLOSING CHECKLIST In addition to, and not in limitation of, the conditions described in SECTION 2.1 of the Agreement, pursuant to SECTION 2.1(a), the following items must be received by Agent in form and substance satisfactory to Agent on or prior to the Closing Date (each capitalized term used but not otherwise defined herein shall have the meaning ascribed thereto in ANNEX A to the Agreement): A. APPENDICES. All Appendices to the Agreement, in form and substance satisfactory to Agent. B. REVOLVING NOTES. Duly executed originals of the Revolving Notes for each applicable Lender, dated the Closing Date. C. SECURITY AGREEMENTS. Duly executed originals of the Security Agreements, dated the Closing Date, and all instruments, documents and agreements executed pursuant thereto. D. INSURANCE. Satisfactory evidence that the insurance policies required by SECTION 5.4 are in full force and effect, together with appropriate evidence showing loss payable and/or additional insured clauses or endorsements, as requested by Agent, in favor of Agent, on behalf of Lenders. E. SECURITY INTERESTS AND CODE FILINGS. (a) Evidence satisfactory to Agent that Agent (for the benefit of itself and Lenders) has a valid and perfected first priority security interest in the Collateral, including (i) such documents duly executed by each Credit Party (including financing statements under the Code and other applicable documents under the laws of any jurisdiction with respect to the perfection of Liens) as Agent may request in order to perfect its security interests in the Collateral and (ii) copies of Code search reports listing all effective financing statements that name any Credit Party as debtor, together with copies of such financing statements, none of which shall cover the Collateral. (b) [Intentionally Omitted.] (c) Control Letters from (i) all issuers of uncertificated securities and financial assets held by each Borrower, (ii) all securities intermediaries with respect to all securities accounts and securities entitlements of each Borrower, and (iii) all futures commission agents and clearing houses with respect to all commodities contracts and commodities accounts held by any Borrower. D-1 F. INTELLECTUAL PROPERTY SECURITY AGREEMENTS. Duly executed originals of Trademark Security Agreements, Copyright Security Agreements and Patent Security Agreements, each dated the Closing Date and signed by each Credit Party which owns Trademarks, Copyrights and/or Patents, as applicable, all in form and substance reasonably satisfactory to Agent, together with all instruments, documents and agreements executed pursuant thereto. G. PARENT GUARANTY. Guaranty executed by Parent in favor of Agent, for the benefit of Lenders. H. INITIAL NOTICE OF REVOLVING CREDIT ADVANCE. Duly executed originals of a Notice of Revolving Credit Advance, dated the Closing Date, with respect to the initial Revolving Credit Advance to be requested by Borrower Representative on the Closing Date. I. LETTER OF DIRECTION. Duly executed originals of a letter of direction from Borrower Representative addressed to Agent, on behalf of itself and Lenders, with respect to the disbursement on the Closing Date of the proceeds of the initial Revolving Credit Advance. J. CASH MANAGEMENT SYSTEM; BLOCKED ACCOUNT AGREEMENTS. Evidence satisfactory to Agent that, as of the Closing Date, Cash Management Systems complying with ANNEX C to the Agreement have been established and are currently being maintained in the manner set forth in such ANNEX C, together with copies of duly executed tri-party blocked account and lock box agreements, reasonably satisfactory to Agent, with the banks as required by ANNEX C. K. CHARTER AND GOOD STANDING. For each Credit Party, such Person's (a) charter and all amendments thereto, (b) good standing certificates (including verification of tax status) in its state of organization or incorporation and (c) good standing certificates (including verification of tax status) and certificates of qualification to conduct business in each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, each dated a recent date prior to the Closing Date and certified by the applicable Secretary of State or other authorized Governmental Authority. L. OPERATING AND PARTNERSHIP AGREEMENTS AND RESOLUTIONS. For each Credit Party, (a) such bylaws or other operating or partnership agreement, together with all amendments thereto and (b) resolutions of such Person's Board of Directors, approving and authorizing the execution, delivery and performance of the Loan Documents to which such Person is a party and the transactions to be consummated in connection therewith, each certified as of the Closing Date by such Person's corporate secretary or an assistant secretary as being in full force and effect without any modification or amendment. M. INCUMBENCY CERTIFICATES. For each Credit Party, signature and incumbency certificates of the officers of each such Person executing any of the Loan Documents, certified as of the Closing Date by such Person's corporate secretary or an assistant secretary as being true, accurate, correct and complete. D-2 N. OPINIONS OF COUNSEL. Duly executed originals of opinions of Stroock & Stroock & Lavan LLP, counsel for the Credit Parties, and Skadden, Arps, Slate, Meagher & Flom LLP, special FCC counsel for the Credit Parties, together with any local counsel opinions reasonably requested by Agent, each in form and substance reasonably satisfactory to Agent and its counsel, dated the Closing Date, and each accompanied by a letter addressed to such counsel from the Credit Parties, authorizing and directing such counsel to address its opinion to Agent, on behalf of Lenders, and to include in such opinion an express statement to the effect that Agent and Lenders are authorized to rely on such opinion. O. PLEDGE AGREEMENTS. Duly executed originals of each of the Pledge Agreements accompanied by (as applicable) (a) share certificates representing all of the outstanding Stock being pledged pursuant to such Pledge Agreement and stock powers for such share certificates executed in blank and (b) the original Intercompany Notes and other instruments evidencing Indebtedness being pledged pursuant to such Pledge Agreement, duly endorsed in blank. P. ACCOUNTANTS' LETTERS. A letter from the Credit Parties to their independent auditors authorizing the independent certified public accountants of the Credit Parties to communicate with Agent and Lenders in accordance with SECTION 4.2. S. APPOINTMENT OF AGENT FOR SERVICE. An appointment of CT Corporation as each Credit Party's agent for service of process. T. [Intentionally Omitted.] U. OFFICER'S CERTIFICATE. Agent shall have received duly executed originals of a certificate of a responsible officer of each Borrower, dated the Closing Date, stating that, since December 31, 2001 (a) no event or condition has occurred or is existing which could reasonably be expected to have a Material Adverse Effect; (b) there has been no material adverse change in the industry in which such Borrower operates; (c) no Litigation has been commenced which, if successful, would have a Material Adverse Effect or could challenge any of the transactions contemplated by the Agreement and the other Loan Documents; (d) there have been no Restricted Payments made by any Credit Party; and (e) there has been no material increase in liabilities, liquidated or contingent, and no material decrease in assets of any Borrower or any of such Borrower's respective Subsidiaries. V. WAIVERS. Agent, on behalf of Lenders, shall have received landlord waivers and consents, bailee letters and mortgagee agreements in form and substance reasonably satisfactory to Agent, in each case for the properties located in New York tower site and the Miami, Florida headquarters and tower site. W. MORTGAGES. Mortgages covering all of the Real Estate (the "MORTGAGED PROPERTY"), together with: (a) title insurance policies reasonably satisfactory in form and substance to Agent, in its sole discretion, and (b) evidence that counterparts of the Mortgages have been recorded in all places to the extent necessary or desirable, in the judgment of Agent, to D-3 create a valid and enforceable first priority Lien (subject to Permitted Encumbrances) on each Mortgaged Property in favor of Agent for the benefit of itself and the Lenders (or in favor of a trustee as may be required or desirable under local law). X. SUBORDINATION AND INTERCREDITOR AGREEMENTS. Agent and Lenders shall have received any and all subordination and/or intercreditor agreements, all in form and substance reasonably satisfactory to Agent, in its sole discretion, as Agent shall have deemed necessary or appropriate with respect to any Indebtedness of any Credit Party. Y. ENVIRONMENTAL REPORTS. Agent shall have received Phase I Environmental Site Assessment Reports, consistent with American Society for Testing and Materials (ASTM) Standard E 1527-94 and applicable state requirements, on all of the Real Estate, dated no more than 6 months prior to the Closing Date, prepared by environmental engineers reasonably satisfactory to Agent, all in form and substance reasonably satisfactory to Agent, in its sole discretion; and Agent shall have further received such environmental review and audit reports, including Phase II reports, with respect to the Real Estate of any Credit Party as Agent shall have requested, and Agent shall be satisfied, in its sole discretion, with the contents of all such environmental reports. Agent shall have received letters executed by the environmental firms preparing such environmental reports, in form and substance reasonably satisfactory to Agent, authorizing Agent and Lenders to rely on such reports. Z. APPRAISALS. Agent shall have received appraisals as to all Equipment and as to each parcel of Real Estate owned by each Credit Party, each of which shall be in form and substance reasonably satisfactory to Agent. AA. AUDITED FINANCIALS; FINANCIAL CONDITION. Agent shall have received the Financial Statements, Projections and other materials set forth in SECTION 3.4, certified by a Financial Officer in each case in form and substance reasonably satisfactory to Agent, and Agent shall be satisfied, in its sole discretion, with all of the foregoing. Agent shall have further received a certificate of a Financial Officer on behalf of each Borrower, based on such Pro Forma and Projections, to the effect that (a) such Borrower will be Solvent upon the consummation of the transactions contemplated herein; (b) the Pro Forma fairly presents the financial condition of such Borrower as of the date thereof after giving effect to the transactions contemplated by the Loan Documents; (c) the Projections are based upon estimates and assumptions stated therein, all of which such Borrower believes to be reasonable and fair in light of current conditions and current facts known to such Borrower and, as of the Closing Date, reflect such Borrower's good faith and reasonable estimates of its future financial performance and of the other information projected therein for the period set forth therein; and (d) containing such other statements with respect to the solvency of such Borrower and matters related thereto as Agent shall reasonably request. BB. MASTER STANDBY AGREEMENT. A Master Agreement for Standby Letters of Credit among Borrowers and GE Capital. D-4 DD. OTHER DOCUMENTS. Such other certificates, documents and agreements respecting any Credit Party as Agent may reasonably request. D-5 ANNEX E (SECTION 4.1(a)) TO CREDIT AGREEMENT FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING Borrowers shall deliver or cause to be delivered to Agent or to Agent and Lenders, as indicated, the following: (a) MONTHLY FINANCIALS. To Agent and Lenders, within 30 days after the end of each Fiscal Month, financial information regarding Borrowers and their Subsidiaries, certified by a Financial Officer consisting of consolidated (i) unaudited balance sheets as of the close of such Fiscal Month and the related statements of income and cash flows for that portion of the Fiscal Year ending as of the close of such Fiscal Month; (ii) consolidated and consolidating unaudited statements of income and consolidated unaudited statements of cash flows for such Fiscal Month, setting forth in comparative form the figures for the corresponding period in the prior year and the figures contained in the Projections for such Fiscal Year, all prepared in accordance with GAAP (subject to normal year-end adjustments); and (iii) a summary of the outstanding balance of all Intercompany Notes as of the last day of that Fiscal Month. Such financial information shall be accompanied by (A) a statement in reasonable detail (each, a "COMPLIANCE CERTIFICATE") showing the calculations used in determining compliance with each Financial Covenant that is tested on a monthly basis and a statement as to the value (during such period and cumulatively since the Closing Date) realized from the sale, transfer, conveyance, assignment or otherwise disposition of any properties or other assets, and (B) the certification of a Financial Officer that (i) such financial information presents fairly in accordance with GAAP (subject to normal year-end adjustments) the financial position and results of operations of Borrowers and their Subsidiaries, on a consolidated and consolidating basis, in each case as at the end of such Fiscal Month and for that portion of the Fiscal Year then ended and (ii) any other information presented is true, correct and complete in all material respects and that there was no Default or Event of Default in existence as of such time or, if a Default or Event of Default has occurred and is continuing, describing the nature thereof and all efforts undertaken to cure such Default or Event of Default. (b) QUARTERLY FINANCIALS. To Agent and Lenders, within 45 days after the end of each Fiscal Quarter, consolidated financial information regarding Borrowers and their Subsidiaries, certified by a Financial Officer, including (i) unaudited balance sheets as of the close of such Fiscal Quarter and the related statements of income and cash flow for that portion of the Fiscal Year ending as of the close of such Fiscal Quarter and (ii) consolidated and consolidating unaudited statements of income and consolidated unaudited statements of cash flows for such Fiscal Quarter, in each case setting forth in comparative form the figures for the corresponding period in the prior year and the figures contained in the Projections for such Fiscal Year, all prepared in accordance with GAAP (subject to normal year-end adjustments). Such financial information shall be accompanied by (A) a Compliance Certificate in respect of each of the Financial Covenants that is tested on a quarterly basis and (B) the certification of a Financial Officer that (i) such financial information presents fairly in accordance with GAAP (subject to E-1 normal year-end adjustments) the financial position, results of operations and statements of cash flows of Borrowers and their Subsidiaries, on both a consolidated and consolidating basis, as at the end of such Fiscal Quarter and for that portion of the Fiscal Year then ended, (ii) any other information presented is true, correct and complete in all material respects and that there was no Default or Event of Default in existence as of such time or, if a Default or Event of Default has occurred and is continuing, describing the nature thereof and all efforts undertaken to cure such Default or Event of Default. In addition, Borrowers shall deliver to Agent and Lenders, within 30 days after the end of each Fiscal Quarter, a management discussion and analysis that includes a comparison to budget for that Fiscal Quarter and a comparison of performance for that Fiscal Quarter to the corresponding period in the prior year. (c) OPERATING PLAN. To Agent and Lenders, as soon as available, but not later than 30 days after the end of each Fiscal Year, an annual operating plan for Borrowers, on a consolidated and consolidating basis, approved by the Board of Directors of Parent, for the following Fiscal Year, which (i) includes a statement of all of the material assumptions on which such plan is based, (ii) includes quarterly balance sheets, income statements and statements of cash flows for the following year and (iii) integrates sales, gross profits, operating expenses, operating profit, cash flow projections and Borrowing Availability projections, all prepared on the same basis and in similar detail as that on which operating results are reported (and in the case of cash flow projections, representing management's good faith estimates of future financial performance based on historical performance), and including plans for personnel, Capital Expenditures and facilities. (d) ANNUAL AUDITED FINANCIALS. To Agent and Lenders, within 90 days after the end of each Fiscal Year, audited Financial Statements for Borrowers and their Subsidiaries on a consolidated basis, consisting of balance sheets and statements of income and retained earnings and cash flows, setting forth in comparative form in each case the figures for the previous Fiscal Year, which Financial Statements shall be prepared in accordance with GAAP and certified without qualification, by an independent certified public accounting firm of national standing or otherwise acceptable to Agent. Such Financial Statements shall be accompanied by (i) a statement prepared in reasonable detail showing the calculations used in determining compliance with each of the Financial Covenants, (ii) a report from such accounting firm to the effect that, in connection with their audit examination, nothing has come to their attention to cause them to believe that a Default or Event of Default has occurred (or specifying those Defaults and Events of Default that they became aware of), it being understood that such audit examination extended only to accounting matters and that no special investigation was made with respect to the existence of Defaults or Events of Default, (iii) a letter addressed to Agent, on behalf of itself and Lenders, in form and substance reasonably satisfactory to Agent and subject to standard qualifications required by nationally recognized accounting firms, signed by such accounting firm acknowledging that Agent and Lenders are entitled to rely upon such accounting firm's certification of such audited Financial Statements, (iv) the annual letters to such accountants in connection with their audit examination detailing contingent liabilities and material litigation matters, and (v) the certification of a Financial Officer on behalf of each Borrower that all such Financial Statements present fairly in accordance with GAAP the financial position, results of operations and statements of cash flows of Borrowers and their Subsidiaries on a consolidated E-2 and consolidating basis, as at the end of such Fiscal Year and for the period then ended, and that there was no Default or Event of Default in existence as of such time or, if a Default or Event of Default has occurred and is continuing, describing the nature thereof and all efforts undertaken to cure such Default or Event of Default. (e) MANAGEMENT LETTERS. To Agent and Lenders, within 5 Business Days after receipt thereof by any Credit Party, copies of all final management letters, exception reports or similar letters or reports received by such Credit Party from its independent certified public accountants. (f) DEFAULT NOTICES. To Agent and Lenders, as soon as practicable, and in any event within 5 Business Days after an executive officer of any Borrower has actual knowledge of the existence of any Default, Event of Default or other event that has had a Material Adverse Effect, telephonic or telecopied notice specifying the nature of such Default or Event of Default or other event, including the anticipated effect thereof, which notice, if given telephonically, shall be promptly confirmed in writing on the next Business Day. (g) PUBLIC FILINGS AND PRESS RELEASES. To Agent and Lenders, promptly upon their becoming available, copies of: (i) all Financial Statements, reports, notices and proxy statements made publicly available by any Credit Party to its security holders; (ii) all regular and periodic reports and all registration statements and prospectuses, if any, filed by any Credit Party with any securities exchange or with the Securities and Exchange Commission or any governmental or private regulatory authority; and (iii) all press releases and other statements made available by any Credit Party to the public concerning material changes or developments in the business of any such Person. (h) SUBORDINATED DEBT AND EQUITY NOTICES. To Agent, as soon as practicable, copies of all material written notices given or received by any Credit Party with respect to any Subordinated Debt or Stock of such Person, and, within 2 Business Days after any Credit Party obtains knowledge of any matured or unmatured event of default with respect to any Subordinated Debt, notice of such event of default. (i) SUPPLEMENTAL SCHEDULES. To Agent, supplemental disclosures, if any, required by SECTION 5.6. (j) LITIGATION. To Agent in writing, promptly upon learning thereof, notice of any Litigation commenced or threatened against any Credit Party that (i) seeks damages in excess of $500,000, (ii) seeks injunctive relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its assets or against any Credit Party or ERISA Affiliate in connection with any Plan, (iv) alleges criminal misconduct by any Credit Party, or (v) alleges the violation of any law regarding, or seeks remedies in connection with, any Environmental Liabilities. (k) INSURANCE NOTICES. To Agent, disclosure of losses or casualties required by SECTION 5.4. E-3 (l) LEASE DEFAULT NOTICES. To Agent, within 2 Business Days after receipt thereof, copies of (i) any and all default notices received under or with respect to any Material Real Estate, and (ii) such other notices or documents as Agent may reasonably request. (m) LEASE AMENDMENTS. To Agent, within 2 Business Days after receipt thereof, copies of all material amendments to leases relating to any Material Real Estate. (n) OTHER DOCUMENTS. To Agent and Lenders, such other financial and other information respecting any Credit Party's business or financial condition as Agent or any Lender shall from time to time reasonably request. (o) FCC DOCUMENTS. To Agent, within two (2) Business Days after receipt thereof, copies of (i) all letters of inquiry, notices of apparent liability, hearing designation orders or any other orders, rulings or decisions issued by the FCC with respect to any FCC License, and (ii) any correspondence, pleading or other response from any Borrower or any of its respective Subsidiaries to the FCC with respect to the foregoing. E-4 ANNEX F (SECTION 4.1(b)) TO CREDIT AGREEMENT COLLATERAL REPORTS Borrowers shall deliver or cause to be delivered the following: (a) To Agent, at the time of delivery of each of the annual Financial Statements delivered pursuant to ANNEX E, (i) a listing of government contracts of each Borrower subject to the Federal Assignment of Claims Act of 1940; and (ii) a list of any applications for the registration of any Patent, Trademark or Copyright filed by any Credit Party with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in the prior Fiscal Quarter; (b) Each Borrower, at its own expense, shall deliver to Agent such appraisals of its assets as Agent may request at any time after the occurrence and during the continuance of a Default or an Event of Default, such appraisals to be conducted by an appraiser, and in form and substance reasonably satisfactory to Agent; and (c) Such other reports, statements and reconciliations with respect to the Collateral or Obligations of any or all Credit Parties as Agent shall from time to time request in its reasonable discretion. F-1 ANNEX G (SECTION 6.10) TO CREDIT AGREEMENT FINANCIAL COVENANTS Borrowers shall not breach or fail to comply with any of the following financial covenants, each of which shall be calculated in accordance with GAAP consistently applied: (a) From the Closing Date through and including the Conversion Date: (i) MAXIMUM CAPITAL EXPENDITURES. Borrowers and their Subsidiaries on a consolidated basis shall not make Capital Expenditures during the Fiscal Year ending December 31, 2002 that exceed an aggregate amount of $3,000,000.00. (ii) MINIMUM CUMULATIVE OPERATING REVENUE. Borrowers and their Subsidiaries on a consolidated basis shall maintain at the end of each Fiscal Quarter set forth below, Cumulative Operating Revenue (as calculated for the periods set forth below) of not less than the following:
Minimum Cumulative Period Operating Revenues ------ ------------------ Three months ending $ 9,500,000 September 30, 2002 Six months ending $18,500,000 December 31, 2002 Nine months ending $28,500,000 March 31, 2003
(iii) MINIMUM CUMULATIVE STAGE 1 BROADCAST CASH FLOW. Borrowers and their Subsidiaries shall maintain on a consolidated basis at the end of each Fiscal Quarter set forth below, minimum cumulative Stage 1 Broadcast Cash Flow (as calculated for the periods commencing July 1, 2002 and ending on each of the dates set forth below) of not less than the following:
Minimum Cumulative Period Stage 1 Broadcast Cash Flow ------ --------------------------- Three months ending $ 0 September 30, 2002 Six months ending $1,200,000 December 31, 2002 Nine months ending $2,500,000 March 31, 2003
G-1 (b) From and after the Conversion Date: (i) MAXIMUM CAPITAL EXPENDITURES. Borrowers and their Subsidiaries on a consolidated basis shall not make Capital Expenditures during any Fiscal Year that exceed an aggregate amount of (A) $1,000,000.00 PLUS (B) any portion of the permitted Capital Expenditures for the immediately preceding Fiscal Year of Borrowers which were not utilized by Borrowers during such immediately preceding Fiscal Year. (ii) MAXIMUM SENIOR SECURED DEBT. Borrowers and their Subsidiaries on a consolidated basis shall not have at any time Senior Secured Debt in an amount in excess of (i) Broadcast Cash Flow for the twelve months then ended multiplied by six (6.0), PLUS (ii) Mass Profit for the twelve months then ended multiplied by two and three-quarters (2.75). (iii) MINIMUM SENIOR INTEREST COVERAGE RATIO. Borrowers and their Subsidiaries on a consolidated basis shall have at the end of each Fiscal Quarter set forth below, a Senior Interest Coverage Ratio for the 12-month period then ended of not less than the following: 1.5 to 1.0 for each Fiscal Quarter during the period from the date hereof through and including March 31, 2004; 2.0 to 1.0 for each Fiscal Quarter during the period from April 1, 2004 through and including March 31, 2005; and 2.10 to 1.0 for each Fiscal Quarter thereafter. Unless otherwise specifically provided herein, any accounting term used in the Agreement shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in accordance with GAAP consistently applied. That certain items or computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way be construed to limit the foregoing. If any "Accounting Changes" (as defined below) occur and such changes result in a change in the calculation of the financial covenants, standards or terms used in the Agreement or any other Loan Document, then Borrowers, Agent and Lenders agree to enter into negotiations in order to amend such provisions of the Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating Borrowers' and their Subsidiaries' financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made; PROVIDED, HOWEVER, that the agreement of Requisite Lenders to any required amendments of such provisions shall be sufficient to bind all Lenders. "ACCOUNTING CHANGES" means (i) changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successor thereto or any agency with similar functions), (ii) changes in accounting principles concurred in by any Borrower's certified public accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17 and EITF 88-16, and the application of the accounting principles set forth in FASB 109, including the establishment of reserves pursuant thereto and G-2 any subsequent reversal (in whole or in part) of such reserves; and (iv) the reversal of any reserves established as a result of purchase accounting adjustments. All such adjustments resulting from Accounting Changes for expenditures made subsequent to the Closing Date (including capitalization of costs and expenses or payment of pre-Closing Date liabilities) shall be treated as expenses in the period the expenditures are made and deducted as part of the calculation of EBITDA in such period. If Agent, Borrowers and Requisite Lenders agree upon the required amendments, then after appropriate amendments have been executed and the underlying Accounting Change with respect thereto has been implemented, any reference to GAAP contained in the Agreement or in any other Loan Document shall, only to the extent of such Accounting Change, refer to GAAP, consistently applied after giving effect to the implementation of such Accounting Change. If Agent, Borrowers and Requisite Lenders cannot agree upon the required amendments within 30 days following the date of implementation of any Accounting Change, then all Financial Statements delivered and all calculations of financial covenants and other standards and terms in accordance with the Agreement and the other Loan Documents shall be prepared, delivered and made without regard to the underlying Accounting Change. For purposes of SECTION 8.1, a breach of a Financial Covenant contained in this ANNEX G shall be deemed to have occurred as of any date of determination by Agent or as of the last day of any specified measurement period, regardless of when the Financial Statements reflecting such breach are delivered to Agent. G-3 ANNEX H (SECTION 9.9(a)) to CREDIT AGREEMENT WIRE TRANSFER INFORMATION Name: General Electric Capital Corporation Bank: Deutsche Bank Trust Company Americas New York, New York ABA #: 021001033 Account #: 50232854 Account Name: GECC/CAF Depository Reference: CFC Radio Unica H-1 ANNEX I (SECTION 11.10) TO CREDIT AGREEMENT NOTICE ADDRESSES (A) If to Agent or GE Capital, at General Electric Capital Corporation 2325 Lakeview Parkway, Suite 700 Alpharetta, Georgia 30004-1976 Attention: Radio Unica, Account Manager Telecopier No.: 678-624-7903 Telephone No.: 678-624-7978 with copies to: Smith, Gambrell & Russell, LLP Suite 3100, Promenade II 1230 Peachtree Street, N.E. Atlanta, Georgia 30309 Attention: John R. Schneider, Esq. Telecopier No.: 404-815-3509 Telephone No.: 404-815-3500 AND General Electric Capital Corporation 2325 Lakeview Parkway, Suite 700 Alpharetta, Georgia 30004-1976 Attention: Mark O'Leary, Esq. Telecopier No.: (678) 624-7903 Telephone No.: (678) 624-7958 (B) If to any Borrower, at Radio Unica Corp. 8400 N.W. 52nd Street, Suite 101 Miami, Florida 33166 Attention: Steven E. Dawson Telecopier No.: 305-463-5022 Telephone No.: 305-463-5020 I-1 with copies to: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038 Attention: Martin H. Neidell, Esq. Telecopier No.: 212-806-6006 Telephone No.: 212-806-5836 I-2 ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION) to CREDIT AGREEMENT Lender(s) Commitment ------------------------------------ $20,000,000.00 General Electric Capital Corporation EX-99 4 a2085959zex-99.txt EXHIBIT 99 EXHIBIT 99 CERTIFICATION I, Joaquin Blaya, Chief Executive Officer of Radio Unica Corp. (the "Company"), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, do hereby certify as follows: 1. The quarterly report on Form 10-Q of the Company for the period ended June 30, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. IN WITNESS WHEREOF, I have executed this Certification this 13th day of August, 2002. /s/ Joaquin Blaya ------------------------------------- Joaquin Blaya Chairman and Chief Executive Officer CERTIFICATION I, Steven E. Dawson, Chief Financial Officer of Radio Unica Corp. (the "Company"), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, do hereby certify as follows: 1. The quarterly report on Form 10-Q of the Company for the period ended June 30, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. IN WITNESS WHEREOF, I have executed this Certification this 13th day of August, 2002. /s/ Steven E. Dawson -------------------------- Steven E. Dawson Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----