<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1998
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
AMERICAN LAWYER MEDIA HOLDINGS, INC.
(Exact Name of Registrant as specified in its Charter)
DELAWARE 2711 13-3980412
(State or jurisdiction (Primary Standard (I.R.S. Employer
of incorporation Industrial Identification Number)
or formation) Classification Code
Number)
--------------------------
AMERICAN LAWYER MEDIA HOLDINGS, INC.
345 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010
(212) 779-9200
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------------------
WILLIAM L. POLLAK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AMERICAN LAWYER MEDIA HOLDINGS, INC.
345 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010
(212) 779-9200
(Name, address, including zip code, and telephone number, including area code of
agent for service)
------------------------------
COPIES TO:
ROBERT A. PROFUSEK, ESQ.
JONES, DAY, REAVIS & POGUE
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 326-3939
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462 (b)
under the Securities Act, check the following box and list the Securities Act
registration statement number of earlier effective registration statements for
the same offering. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT(1) PRICE(1) FEE(1)
<S> <C> <C> <C> <C>
12 1/4% Senior Discount Notes due 2008,
Series B.................................. $63,275,000 100% $63,275,000 $18,666.13
</TABLE>
(1) In accordance with Rule 457(f)(2), the registration fee is calculated based
on the book value, which has been calculated as of April 14, 1998, of the
outstanding 12 1/4% Senior Discount Notes due 2008 of American Lawyer Media
Holdings, Inc. to be canceled in the exchange transaction hereunder.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 15, 1998
AMERICAN LAWYER MEDIA HOLDINGS, INC.
OFFER TO EXCHANGE
ITS 12 1/4% SENIOR DISCOUNT NOTES DUE 2008, SERIES B,
FOR ANY AND ALL OF ITS OUTSTANDING
12 1/4% SENIOR DISCOUNT NOTES DUE 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON
, 1998, UNLESS EXTENDED.
American Lawyer Media Holdings, Inc., a Delaware corporation ("Holdings"),
hereby offers (the "Exchange Offer"), upon the terms and conditions set forth in
this Prospectus (the "Prospectus") and the accompanying Letter of Transmittal
(the "Letter of Transmittal"), to exchange $1,000 principal amount of its
12 1/4% Senior Discount Notes due 2008, Series B (the "Exchange Discount
Notes"), registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a registration statement of which this Prospectus
is a part, for each $1,000 principal amount at maturity of its outstanding
12 1/4% Senior Discount Notes due 2008 (the "Old Discount Notes"), of which
$63,275,000 aggregate principal amount at maturity is outstanding as of the date
hereof. The form and terms of the Exchange Discount Notes are the same as the
form and terms of the Old Discount Notes except that (i) the Exchange Discount
Notes bear a Series B designation, (ii) the Exchange Discount Notes will be
registered under the Securities Act and do not bear legends restricting the
transfer thereof and (iii) the holders of the Exchange Discount Notes will not
be entitled to the rights of holders of Old Discount Notes under the
Registration Rights Agreement (as defined). The Exchange Discount Notes will
evidence the same debt as the Old Discount Notes (which they replace) and will
be issued under and be entitled to the benefits of the Indenture dated as of
December 22, 1997 (the "Indenture") by and among Holdings, as issuer, and The
Bank of New York, as trustee. The Old Discount Notes and the Exchange Discount
Notes are sometimes referred to herein collectively as the "Discount Notes." See
"The Exchange Offer" and "Description of the Discount Notes."
The Exchange Discount Notes will mature on December 15, 2008. The issue
price of the Exchange Discount Notes represents a yield to maturity of 12 1/4%
(computed on a semi-annual bond equivalent basis) calculated from December 22,
1997. The Exchange Discount Notes will accrete at a rate of 12 1/4%, compounded
semi-annually, to an aggregate principal amount of $63,275,000 by December 15,
2002. Cash interest will not accrue on the Exchange Discount Notes prior to
December 15, 2002. Commencing on June 15, 2003, cash interest on the Exchange
Discount Notes will be payable until maturity, at a rate of 12 1/4% per annum,
semi-annually in arrears on each June 15 and December 15. See "Description of
the Discount Notes."
The Exchange Discount Notes will be redeemable at the option of Holdings, in
whole or in part, at any time on or after December 15, 2002, at the redemption
prices set forth herein, together with accrued and unpaid interest thereon (and
Liquidated Damages (as defined), if any) to the date of redemption. In addition,
Holdings, at its option, at any time on or prior to December 15, 2000, may
redeem all, but not less than all, of the Exchange Discount Notes then
outstanding at a redemption price equal to 112.25% of the Accreted Value (as
defined) thereof (plus Liquidated Damages, if any) with the Net Cash Proceeds
(as defined) of a Public Equity Offering (as defined), provided that any such
redemption occurs within 90 days following the closing of any such Public Equity
Offering. See "Description of the Discount Notes--Optional Redemption."
In the event of a Change of Control (as defined), each holder of the
Exchange Discount Notes will be entitled to require Holdings to purchase such
holder's Exchange Discount Notes at a purchase price equal to 101% of the
Accreted Value thereof together with accrued and unpaid interest thereon (and
Liquidated Damages), if any, to the repurchase date. In addition, Holdings is
obligated in certain instances to offer to repurchase the Exchange Discount
Notes at a purchase price in cash equal to 100% of the Accreted Value thereof
plus accrued and unpaid interest thereon (and Liquidated Damages, if any), to
the date of repurchase with the Net Cash Proceeds of certain asset sales. See
"Description of the Discount Notes--Certain Covenants--Limitation on Sale of
Assets and Subsidiary Stock."
(COVER CONTINUED ON FOLLOWING PAGE)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 20 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD DISCOUNT NOTES IN THE
EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1998.
<PAGE>
The Exchange Discount Notes will be senior unsecured general obligations of
Holdings. The Discount Notes will rank PARI PASSU in right of payment to all
existing and future senior indebtedness of Holdings and will rank senior in
right of payment to any Subordinated Indebtedness (as defined) of Holdings. The
Exchange Discount Notes will be effectively subordinated in right of payment to
all existing and future liabilities of subsidiaries of Holdings, including
indebtedness under the Senior Notes (as defined) and trade payables and deferred
revenues. As of December 31, 1997, after giving effect to the consummation of
the Transactions (as defined), such subsidiaries would have had approximately
$208.4 million of such liabilities outstanding. Holdings' pro forma earnings
were insufficient to cover fixed charges by approximately $20.6 million for the
year ended December 31, 1997.
Holdings will accept for exchange any and all Old Discount Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on
, 1998, unless extended by Holdings in its sole discretion (the
"Expiration Date"). Tenders of Old Discount Notes may be withdrawn at any time
prior to 5:00 p.m. on the Expiration Date. In the event the Company terminates
the Exchange Offer and does not accept for exchange any Old Discount Notes with
respect to the Exchange Offer, the Company will promptly return the Old Discount
Notes to the holders thereof. The Exchange Offer is not conditioned upon any
minimum amount of Old Discount Notes being tendered for exchange, but is
otherwise subject to certain customary conditions. The Old Discount Notes may be
tendered only in integral multiples of $1,000. The Old Discount Notes were sold
by Holdings on December 22, 1997 to Wasserstein Perella Securities, Inc.,
BancAmerica Robertson Stephens and BancBoston Securities Inc. (the "Initial
Purchasers") in a transaction not registered under the Securities Act in
reliance upon an exemption under the Securities Act (the "Initial Discount Note
Offering"). The Initial Purchasers subsequently placed the Old Discount Notes
with qualified institutional buyers in reliance upon Rule 144A under the
Securities Act. Accordingly, the Old Discount Notes may not be reoffered, resold
or otherwise transferred in the United States unless registered under the
Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The Exchange Discount Notes are
being offered hereunder in order to satisfy the obligations of Holdings under
the Registration Rights Agreement entered into by Holdings and the Initial
Purchasers (the "Registration Rights Agreement") in connection with the Initial
Discount Note Offering. See "The Exchange Offer."
Based upon interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in certain no-action letters issued to
third parties in similar transactions, Holdings believes that the Exchange
Discount Notes issued pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by any holder thereof (other than any such
holder that is (i) an "affiliate" of Holdings within the meaning of Rule 405
under the Securities Act, or (ii) a broker-dealer that acquired the Old Discount
Notes in a transaction other than part of its market-making or other trading
activities) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such Exchange Discount Notes
are acquired in the ordinary course of such holder's business and such holder
has no arrangement or understanding with any person to participate in the
distribution of such Exchange Discount Notes. See "The Exchange Offer--Resale of
the Exchange Discount Notes." However, the Commission has not considered the
Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the Commission would make a similar determination
with respect to the Exchange Offer as in such other circumstances. Holders of
Old Discount Notes wishing to accept the Exchange Offer must represent to
Holdings, as required by the Registration Rights Agreement, that such conditions
have been met. Each broker-dealer (a "Participating Broker-Dealer") that
receives Exchange Discount Notes for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Discount Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a Participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer in connection with
resales of Exchange Discount Notes received in exchange for Old Discount Notes
where such Old Discount Notes were acquired by such Participating Broker-Dealer
as a
ii
<PAGE>
result of market-making activities or other trading activities. Holdings has
agreed that, for a period of 180 days after the Expiration Date, it will make
this Prospectus available to any Participating Broker-Dealer for use in
connection with any such resale. See "Plan of Distribution."
Holders of Old Discount Notes not tendered and accepted in the Exchange
Offer will continue to hold such Old Discount Notes and will be entitled to all
the rights and benefits and will be subject to the limitations applicable
thereto under the Indenture and with respect to transfer under the Securities
Act.
Holdings will not receive any proceeds from the Exchange Offer. Holdings has
agreed to bear the expenses of the Exchange Offer. No underwriter is being used
in connection with the Exchange Offer.
There has not previously been any public market for the Old Discount Notes
or the Exchange Discount Notes. Holdings does not intend to list the Exchange
Discount Notes on any securities exchange or to seek approval for quotation
through any automated quotation system. There can be no assurance that an active
market for the Exchange Discount Notes will develop. See "Risk Factors--Absence
of a Public Market Could Adversely Affect the Value of Exchange Discount Notes."
Moreover, to the extent that Old Discount Notes are tendered and accepted in the
Exchange Offer, the trading market for untendered and tendered but unaccepted
Old Discount Notes could be adversely affected.
Concurrently with the Initial Discount Note Offering, American Lawyer Media,
Inc. (the "Company"), a subsidiary of Holdings, sold $175 million in initial
aggregate principal amount of its 9 3/4% Senior Notes due 2007 (the "Old Senior
Notes") (the "Initial Senior Note Offering," and together with the Initial
Discount Note Offering, the "Initial Offerings").
Concurrently with this Exchange Offer, the Company is offering to exchange
(the "Senior Note Exchange Offer," and together with this Exchange Offer, the
"Exchange Offers"), $1,000 principal amount at maturity of its 9 3/4% Senior
Notes due 2007, Series B (the "Exchange Senior Notes") registered under the
Securities Act pursuant to a registration statement, for each $1,000 principal
amount at maturity of its outstanding Old Senior Notes, of which $175 million
aggregate principal amount is outstanding as of the date hereof. The Old Senior
Notes and the Exchange Senior Notes are sometimes referred to herein
collectively as the "Senior Notes." See "The Transactions" and "Description of
Other Indebtedness-- Description of the Senior Notes."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL HOLDINGS ACCEPT SURRENDERS
FOR EXCHANGE FROM, HOLDERS OF OLD DISCOUNT NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HOLDINGS.
NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF
TRANSMITTAL, NOR ANY EXCHANGE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE DISCOUNT NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
iii
<PAGE>
The Exchange Discount Notes will be available initially only in book-entry
form and Holdings expects that the Exchange Discount Notes issued pursuant to
the Exchange Offer will be issued in the form of a Global Note (as defined),
which will be deposited with, or on behalf of, The Depository Trust Company
("DTC") and registered in its name or in the name of Cede & Co., its nominee.
Beneficial interests in the Global Note representing the Exchange Discount Notes
will be shown on, and transfers thereof will be effected through, records
maintained by DTC and its participants. After the initial issuance of the Global
Note, Exchange Discount Notes in certificated form will be issued in exchange
for the Global Note only under limited circumstances as set forth in the
Indenture. See "Description of the Discount Notes--Book-Entry; Delivery; Form
and Transfer."
AVAILABLE INFORMATION
Holdings has filed with the Commission a registration statement on Form S-4
(the "Exchange Offer Registration Statement," which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, and the rules and regulations promulgated thereunder, covering the Exchange
Offer contemplated hereby. This Prospectus does not contain all the information
set forth in the Exchange Offer Registration Statement. For further information
with respect to Holdings and the Exchange Offer, reference is made to the
Exchange Offer Registration Statement. Statements made in this Prospectus as to
the contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Exchange Offer Registration Statement, including
the exhibits thereto, can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and inspected at the Commission's regional offices at 7
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
Suite 1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
materials can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of such site is http://www.sec.gov.
As a result of the filing of the Exchange Offer Registration Statement with
the Commission, Holdings will become subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith will be required to file periodic reports and other
information with the Commission. The obligation of Holdings to file periodic
reports and other information with the Commission will be suspended if the
Discount Notes are held of record by fewer than 300 holders as of the beginning
of any fiscal year of Holdings other than the fiscal year in which the Exchange
Offer Registration Statement is declared effective. Holdings has agreed that,
whether or not it is subject to the reporting requirements of Section 13 or
Section 15(d) of the Exchange Act, for so long as the Old Discount Notes or the
Exchange Discount Notes remain outstanding, it will file with the Commission and
distribute to holders of the Old Discount Notes and the Exchange Discount Notes,
as applicable, copies of the financial information that would have been
contained in such annual reports and quarterly reports, including management's
discussion and analysis of financial conditions and results of operations, that
would have been required to be filed with the Commission pursuant to the
Exchange Act. See "Description of the Discount Notes--Reports."
iv
<PAGE>
------------------------
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains "forward-looking statements" that are subject to a
number of risks and uncertainties, many of which are beyond Holdings' control.
Forward-looking statements are typically identified by the words "believe,"
"expect," "anticipate," "intend," "estimate" and similar expressions. Actual
results could differ materially from those contemplated by these forward-looking
statements as a result of factors such as those described under "Risk Factors."
In light of these risks and uncertainties, there can be no assurance that the
results and events contemplated by the forward-looking statements contained in
this Prospectus will in fact transpire. Prospective purchasers are cautioned not
to place undue reliance on these forward-looking statements. Holdings does not
undertake any obligation to update or revise any forward-looking statements. All
subsequent written or oral forward-looking statements attributable to Holdings
or persons acting on behalf of Holdings are expressly qualified in their
entirety by the discussion under "Risk Factors."
v
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL DATA, INCLUDING
THE FINANCIAL STATEMENTS AND NOTES THERETO, INCLUDED ELSEWHERE IN THIS
PROSPECTUS. ON AUGUST 27, 1997, BUT EFFECTIVE AS OF AUGUST 1, 1997, ALM ACQUIRED
SUBSTANTIALLY ALL OF THE ASSETS AND ASSUMED CERTAIN OF THE LIABILITIES RELATED
TO AMERICAN LAWYER MEDIA, L.P. (THE "ALM ACQUISITION"). IN ADDITION, ON DECEMBER
22, 1997, ALM ACQUIRED ALL OF THE ISSUED AND OUTSTANDING CAPITAL STOCK OF
NATIONAL LAW PUBLISHING COMPANY, INC. (THE "NLP ACQUISITION" AND, TOGETHER WITH
THE ALM ACQUISITION, THE "ACQUISITIONS"). REFERENCES HEREIN TO THE COMPANY'S
ESTIMATED CIRCULATION INCLUDE TOTAL PAID AND FREE CIRCULATION FOR ALL OF THE
COMPANY'S PERIODICALS. REFERENCES HEREIN TO READERSHIP INCLUDE ESTIMATED
CIRCULATION PLUS COMBINED PASS-ALONG READERSHIP UNADJUSTED FOR ANY OVERLAP WHICH
EXISTS AMONG READERS OF THE COMPANY'S VARIOUS PUBLICATIONS. UNLESS THE CONTEXT
OTHERWISE REQUIRES: (I) "HOLDINGS" REFERS TO AMERICAN LAWYER MEDIA HOLDINGS,
INC., WHICH IS THE ISSUER OF THE DISCOUNT NOTES AND THE PARENT COMPANY OF THE
COMPANY, AND TO HOLDINGS' PREDECESSOR, CRANBERRY PARTNERS, LLC. (II) THE
"COMPANY" REFERS TO AMERICAN LAWYER MEDIA, INC. AND ITS SUBSIDIARIES AFTER
GIVING EFFECT TO THE ACQUISITIONS; (III) "ALM" REFERS TO AMERICAN LAWYER MEDIA,
INC. AND ITS SUBSIDIARIES (AND TO ITS PREDECESSOR, ALM HOLDINGS, LLC) SINCE THE
CONSUMMATION OF THE ALM ACQUISITION BUT PRIOR TO THE NLP ACQUISITION AND, WHERE
APPLICABLE, TO AMERICAN LAWYER MEDIA, L.P. AND ITS SUBSIDIARIES PRIOR TO THE ALM
ACQUISITION; (IV) "OLD ALM" REFERS TO AMERICAN LAWYER MEDIA, L.P. AND ITS
SUBSIDIARIES PRIOR TO THE ALM ACQUISITION; (V) "NLP" REFERS TO NATIONAL LAW
PUBLISHING COMPANY, INC. AND ITS SUBSIDIARIES PRIOR TO THE NLP ACQUISITION; AND
(VI) "INVESTORS" REFERS TO U.S. EQUITY PARTNERS, L.P. ("USEP") AND ITS
AFFILIATES AND CERTAIN OTHER INVESTORS CONTROLLED BY OR MANAGED BY WP MANAGEMENT
PARTNERS, LLC, ("WPMP"), THE MERCHANT BANKING ARM OF WASSERSTEIN PERELLA GROUP,
INC. ("WPG"). USEP, WPMP AND WPG ARE AFFILIATES OF WASSERSTEIN PERELLA
SECURITIES, INC.
THE COMPANY
COMPANY OVERVIEW
Holdings is a holding company, the principal assets of which consist of all
the outstanding capital stock of the Company. All of Holdings' operations are
conducted through the Company. The Company believes that the combination of ALM
and NLP creates the nation's largest legal journalism organization, with
estimated readership of over one million. The Company publishes 16 periodicals,
including several leading national periodicals and regional publications serving
four of the five largest state legal markets. The Company's
nationally-recognized periodicals include THE AMERICAN
LAWYER-Registered Trademark-, a monthly magazine containing articles and
features targeted to attorneys practicing in large law firms, and THE NATIONAL
LAW JOURNAL-Registered Trademark-, the nation's largest selling legal newspaper,
which covers the law, lawyers and the business of the legal profession. The
Company's regional publications are led by the NEW YORK LAW
JOURNAL-Registered Trademark-, which has the largest paid circulation of any
regional legal newspaper in the United States. In addition to the NEW YORK LAW
JOURNAL, the Company publishes five other daily newspapers serving Georgia,
Northern California, Miami, Fort Lauderdale and Palm Beach, as well as four
weekly newspapers serving New Jersey, Texas, Washington, D.C. and Connecticut.
The Company's periodicals are well established in their markets and are
widely recognized for editorial excellence and for providing sophisticated news
reporting and analysis of legal issues. The Company's newspapers function as
professional tools that are indispensable to attorneys (particularly litigators)
in their day-to-day practices, providing important information such as news,
court opinions, court calendars and legal notices. The Company's newspapers are
leaders in their local markets, resulting in an average subscription renewal
rate of approximately 80%.
In addition to the periodicals referred to above, the Company publishes
CORPORATE COUNSEL MAGAZINE-TM-, a leading magazine for corporate in-house
attorneys, LAW TECHNOLOGY PRODUCT NEWS-TM- and AMLAW TECH-TM-, two leading legal
technology magazines, as well as IP WORLDWIDE-TM-, a leading specialty magazine
focusing on intellectual property.
1
<PAGE>
The Company has also successfully established an ancillary products and
services business that creates and packages information for attorneys and
business professionals. This business includes a portfolio of publications
covering a variety of specialized legal interests and practice areas, including
25 newsletters and 112 books on topics of national and regional interest. Each
year, the Company organizes or sponsors numerous professional seminars and
conferences that cover issues of current legal interest. The Company also
provides case tracking and monitoring services and publishes various directories
used by legal professionals.
In addition, the Company has begun to develop an internet services business
and currently has a number of law-related internet websites including LAW
JOURNAL EXTRA!-Registered Trademark-, COUNSEL CONNECT-Registered Trademark-, CAL
LAW-TM-, ILLINOIS LAW-TM- and TEX LAW-TM-. These websites give attorneys online
access to news and other legal materials and facilitate the exchange of
information among members of the legal community.
The Company derives its revenues principally from advertising and
subscriptions, with additional revenues generated by its ancillary products and
services business. The Company had pro forma net revenues of $103.2 million and
pro forma EBITDA of $25.6 million for the year ended December 31, 1997. The
Company's pro forma EBITDA, excluding its Internet Services business, was $26.7
million for the year ended December 31, 1997. For the year ended December 31,
1997, approximately 56.2% of the Company's pro forma revenues were from
advertising, 20.8% were from subscriptions, 21.9% were from ancillary products
and services and 1.1% were from internet services.
Because the Company's periodicals are the preeminent legal publications in
each of their respective regional markets, they are relied upon by many
advertisers as the primary advertising vehicle to reach attorneys in those
markets. The Company believes that its large readership and broad coverage of
the U.S. legal market uniquely positions the Company to enable national
advertisers of law- and business-related products to reach the legal industry in
a targeted and cost-efficient manner. The Company also believes that its
newly-created national presence, combined with the affluence and other favorable
demographic characteristics of its readership, will enhance its ability to
attract national consumer advertisers, particularly those targeting upscale
consumers.
NLP has operated in a centralized manner and has focused on the continued
development of its periodicals business and on expanding into various ancillary
products and services, including books, newsletters and seminars. ALM, on the
other hand, has operated eight autonomous regional businesses and has focused
primarily on developing a geographically diverse periodicals business (although
each regional business has from time to time developed various ancillary
products and services). The Company intends to centralize and consolidate its
ancillary products and services business as well as certain selling, general and
administrative functions. Furthermore, the Company intends to aggressively
cross-sell its various periodicals, products and services to both readers and
advertisers. The Company expects that implementing these elements of its
business strategy will result in substantial cost savings, enhanced subscription
and advertising revenues and accelerated growth in its ancillary products and
services business.
BUSINESS STRATEGY
ALM's geographic breadth and emphasis on high-quality editorial content have
placed it at the forefront of legal journalism; NLP's historical marketing
strengths and meticulous business execution have permitted it to produce
consistently high levels of operating profit and cash flow. The fundamental
strategy underlying the ALM-NLP combination is to leverage the strengths of both
businesses by adopting the best practices of each across the Company as a whole
and to capitalize on the opportunities inherent in the combination.
2
<PAGE>
The Company believes that the ALM-NLP combination presents numerous cost
savings opportunities including:
- CONSOLIDATING AND REDUCING SG&A: Cost savings opportunities from the
ALM-NLP combination include (i) consolidating and centralizing certain
functions, including national advertising sales, accounting, tax,
information systems, human resources, cash management, risk management and
legal; (ii) reducing employee benefit costs through the combination of
disparate employee plans and programs; (iii) reducing rent expense by
combining ALM's and NLP's corporate headquarters into a single location;
and (iv) taking advantage of increased purchasing power resulting from the
expanded size of the Company.
- CENTRALIZING ANCILLARY PRODUCTS AND SERVICES: The Company intends to draw
on NLP's experience and success in product development by consolidating
the development and marketing of various ancillary products and services
across the broad regional coverage of ALM's publications to realize cost
savings and efficiencies.
- RATIONALIZING THE COMPANY'S INTERNET BUSINESS: The Company is in the
process of discontinuing its Counsel Connect internet service and
transferring the most viable components of that service into a new,
enhanced service that better capitalizes on the combined companies'
unparalleled access to legal information.
The ALM-NLP combination is also expected to result in numerous revenue
enhancement opportunities including:
- LEVERAGING ANCILLARY PRODUCTS AND SERVICES: NLP has an extensive portfolio
of ancillary products and services, including newsletters, books, seminars
and conferences. The Company believes that the market penetration of these
products and services will be substantially enhanced by selling across the
combined companies through (i) advertising in all of the Company's
periodicals, (ii) marketing to new customer lists, (iii) pursuing a
broader direct mail effort and (iv) more aggressive telemarketing. The
expanded scope of the operations created as a result of the ALM-NLP
combination will allow the Company to develop and market new products and
services that would not previously have been feasible.
- ENHANCED ABILITY TO ATTRACT NATIONAL ADVERTISING: The Company believes
that there are substantial opportunities to attract increased amounts of
national advertising. As the nation's largest legal journalism
organization with a combined readership of over one million, the Company
believes it will be able to provide advertisers with a unique ability to
effectively and efficiently reach the legal community on a national level.
The Company intends to form a national sales group, which neither ALM nor
NLP had prior to the combination. The Company also believes that it will
be able to increasingly attract national consumer advertising directed
toward the Company's large and affluent readership.
- ACQUISITIONS AND DEVELOPMENT: While the Company publishes 16 periodicals,
including periodicals in four of the five largest state legal markets as
well as several national legal periodicals, the Company believes that
there are numerous opportunities to expand into new markets. As a result
of synergies among the Company's various publications and its resulting
ability to efficiently create content, sell advertising and provide
administrative services, the Company believes that it will be able to
enter new markets with a competitive advantage. Accordingly, the Company
intends to (i) selectively pursue acquisitions of additional regional
legal publishing businesses and ancillary businesses, such as newsletters,
books and seminars, (ii) create new publications in geographic areas in
which the Company does not currently operate and (iii) develop ancillary
products or services not currently offered by the Company.
3
<PAGE>
OPERATING STRENGTHS
The Company believes that it has the following operating strengths:
HIGH REVENUE STABILITY. The Company's high subscription renewal rates
(historically averaging approximately 80%) and high advertiser retention rates
provide considerable revenue and profit stability and form a strong base of
business from which to grow. The Company believes that its high subscription
renewal rates result from (i) the high editorial quality of its publications,
(ii) its coverage of increasingly complex legal issues that are not adequately
covered in other publications, and (iii) the indispensable nature of the
Company's publications for the day-to-day practice of law for many attorneys.
The Company attributes its high advertiser retention rates to the fact that its
periodicals are the primary legal publication in their respective markets and
are therefore relied upon by many advertisers as their primary vehicles for
reaching attorneys in those markets.
FAVORABLE CASH FLOW CHARACTERISTICS. The Company has favorable cash flow
characteristics resulting from its stable revenues, high level of advance
payments by subscribers, low working capital investment, minimal capital
expenditure needs, predictable cost structure and high margins. The Company
outsources most of its printing and all of its distribution requirements to
third parties. As a result, the Company requires minimal capital expenditures.
Pro forma capital expenditures for the year ended December 31, 1997 were $1.3
million. Because cash receipts associated with subscriptions are received toward
the beginning of a subscription cycle, the Company's periodicals business
requires minimal investment in working capital. Due to the preeminent position
of the Company's periodicals in each of its markets, the Company has been able
to charge relatively high advertising rates and has enjoyed strong subscription
pricing characteristics, resulting in consistently high operating margins.
DIVERSITY OF PUBLICATIONS. The Company publishes two leading national
publications, THE AMERICAN LAWYER and THE NATIONAL LAW JOURNAL, several national
specialty magazines including CORPORATE COUNSEL MAGAZINE, LAW TECHNOLOGY PRODUCT
NEWS, AMLAW TECH and IP WORLDWIDE, and ten newspapers serving distinct state and
local legal markets across the United States. With a diverse revenue base
generated from numerous markets and from subscribers practicing in an array of
specialty areas, the Company enjoys significant revenue and cash flow stability.
EXPERIENCED STAFF. The Company's core group of editors, publishers and
journalists have built their professional careers primarily in the legal
publishing industry. These editors, publishers and journalists bring substantial
experience to the Company as well as detailed knowledge of each of the Company's
specific regional markets. Their local knowledge and depth of experience enable
the Company to continue to provide thought-provoking coverage of the legal
industry and develop new, innovative and informative periodicals, products and
services.
4
<PAGE>
CORPORATE ORGANIZATION
The following chart summarizes the ownership structure of the Company and
its primary operating entities and divisions.
[FLOWCHART]
5
<PAGE>
COMPANY PRODUCT OFFERING
<TABLE>
<CAPTION>
<S> <C> <C> <C>
BUSINESS ALM NLP
- ------------ ----------------------------- ----------------------------------------------
PERIODICALS
- -------------------------------------------
Newspapers NEW JERSEY LAW JOURNAL NEW YORK LAW JOURNAL
TEXAS LAWYER THE NATIONAL LAW
LEGAL TIMES JOURNAL
THE CONNECTICUT LAW TRIBUNE
THE RECORDER
FULTON COUNTY DAILY REPORT
MIAMI DAILY BUSINESS REVIEW
BROWARD DAILY BUSINESS REVIEW
PALM BEACH DAILY BUSINESS
REVIEW
Magazines THE AMERICAN LAWYER LAW TECHNOLOGY PRODUCT NEWS
AMLAW TECH IP WORLDWIDE
CORPORATE COUNSEL MAGAZINE
ANCILLARY PRODUCTS AND SERVICES
- -------------------------------------------------------------------
Newsletters CORPORATE CONTROL ALERT ACCOUNTING FOR LAW THE INTERNET
FIRMS NEWSLETTER:
THE BANKRUPTCY LEGAL & BUSINESS
STRATEGIST ASPECTS
BUSINESS CRIMES LAW FIRM PARTNERSHIP &
BULLETIN: BENEFITS REPORT
COMPLIANCE AND LEADER'S FRANCHISING
LITIGATION BUSINESS & LAW ALERT
CABLE TV AND NEW MEDIA LEGAL TECH
COMMERCIAL LEASING LAW MARKETING FOR LAWYERS
& STRATEGY THE MATRIMONIAL
COMPUTER LAW STRATEGIST
STRATEGIST MEDICAL MALPRACTICE
THE CORPORATE LAW & STRATEGY
COUNSELLOR MEDICAL/LEGAL ASPECTS
EMPLOYMENT LAW OF BREAST IMPLANTS
STRATEGIST MONEY LAUNDERING LAW
ENTERTAINMENT LAW & REPORT
FINANCE MULTIMEDIA STRATEGIST
ENVIRONMENTAL NEW YORK REAL ESTATE
COMPLIANCE AND LAW REPORTER
LITIGATION STRATEGY PRODUCT LIABILITY LAW
EQUIPMENT LEASING & STRATEGY
THE INTELLECTUAL
PROPERTY STRATEGIST
Books 28 Books 84 Books
Seminars 4 Seminars 19 Seminars
Conferences 2 Conferences 1 Conference
Other DAILY DECISION SERVICE CASE ALERT SERVICE
Various Practice Directories MA/3000
INTERNET SERVICES
- -------------------------------------------
COUNSEL CONNECT LAW JOURNAL EXTRA!
CAL LAW
ILLINOIS LAW
TEX LAW
</TABLE>
6
<PAGE>
THE TRANSACTIONS
THE INITIAL DISCOUNT NOTE OFFERING
The Old Discount Notes were sold by Holdings on December 22, 1997 to the
Initial Purchasers pursuant to a Purchase Agreement, dated December 22, 1997,
among Holdings and the Initial Purchasers (the "Purchase Agreement"). The
Initial Purchasers subsequently resold the Old Discount Notes to qualified
institutional buyers pursuant to Rule 144A under the Securities Act.
Pursuant to the Purchase Agreement, Holdings and the Initial Purchasers
entered into a Registration Rights Agreement, dated as of December 22, 1997 (the
"Registration Rights Agreement"), which grants the holders of the Old Discount
Notes certain exchange and registration rights. The Exchange Offer is intended
to satisfy such exchange rights, which rights terminate upon the consummation of
the Exchange Offer.
The Initial Discount Note Offering was consummated on December 22, 1997 and
was made in conjunction with a series of transactions, including the Initial
Senior Note Offering, the NLP Acquisition, the Equity Contribution (as defined
below), the Investor Equity Contribution (as defined below) and the repayment of
the ALM Promissory Note (as defined below) and the WP Promissory Note (as
defined below) and accrued interest thereon (together with the Initial Discount
Note Offering, the "Transactions").
THE ACQUISITIONS
ALM ACQUISITION. On August 27, 1997, but effective as of August 1, 1997,
the Investors, through ALM, consummated the ALM Acquisition, pursuant to which
ALM purchased substantially all of the assets and assumed certain of the
liabilities related to Old ALM. The purchase price for the ALM Acquisition was
$63.0 million. The ALM Acquisition and the payment of related fees and expenses
were financed through the issuance of a $31.5 million secured promissory note by
ALM to the former owner of Old ALM (the "ALM Promissory Note") and the issuance
of a $32.0 million equity bridge note by ALM to an affiliate of WPG (the "WP
Promissory Note").
NLP ACQUISITION. Pursuant to the Stock Purchase Agreement (as defined under
the caption "Transactions--The Acquisitions--NLP Acquisition", ALM purchased all
of the issued and outstanding capital stock of NLP. The purchase price for the
NLP Acquisition was $203.2 million. The NLP Acquisition was consummated on
December 22, 1997.
THE FINANCINGS
In order to enable ALM to finance the NLP Acquisition, to repay the ALM
Promissory Note and the WP Promissory Note and accrued interest thereon, and to
pay related fees, expenses and restructuring costs, Holdings issued the Old
Discount Notes and entered into certain other financing transactions, as
described below.
EQUITY CONTRIBUTION. Holdings contributed an aggregate of $108.8 million
(the "Equity Contribution") to the capital of the Company. The Equity
Contribution consisted of (a) $75.0 million of equity capital invested in
Holdings by the Investors (the "Investor Equity Contribution") and (b) net
proceeds of approximately $33.8 million received by Holdings in connection with
the Initial Discount Note Offering.
INITIAL SENIOR NOTE OFFERING. Concurrently with the Initial Discount Note
Offering, the Company offered $175.0 million aggregate principal amount of its
9 3/4% Senior Notes due 2007 (the "Senior Notes"). Interest on the Senior Notes
will accrue at the rate of 9 3/4% per annum from December 22, 1997 and be
payable semi-annually in arrears on June 15 and December 15 of each year. The
Senior Notes are senior unsecured general obligations of the Company, PARI PASSU
in right of payment to all existing and future senior indebtedness of the
Company and senior in right of payment to all existing and future subordinated
7
<PAGE>
indebtedness of the Company. See "Description of Other Indebtedness--Description
of the Senior Notes."
RECENT TRANSACTIONS
LEGALTECH ACQUISITION. On March 3, 1998, a newly formed wholly-owned
subsidiary of the Company purchased all of the assets and assumed certain of the
liabilities related to Corporate Presentations, Inc. ("Corporate Presentations"
or "LegalTech"), a producer of trade shows, conferences and seminars relating to
law and internet technology, for approximately $10.8 million in cash (the
"LegalTech Acquisition"). The Company funded the LegalTech Acquisition with
available cash flow. For the year ended November 30, 1997, LegalTech had net
revenues of $2.2 million and EBITDA of $0.9 million. See "Recent Transactions."
LCL ACQUISITION. On March 31, 1998, the Company and a wholly-owned
subsidiary of the Company entered into a definitive agreement with Legal
Communications, Ltd. ("LCL"), a publisher of regional publications serving
primarily the Pennsylvania legal community and a provider of certain membership-
based online information services, to acquire, effective as of April 1, 1998,
substantially all of the legal publishing-related assets and to assume certain
liabilities of LCL for an aggregate purchase price of $20 million in cash (the
"LCL Acquisition") subject to changes in the net worth of LCL between December
31, 1997 and March 31, 1998. The closing of the LCL Acquisition is subject to
customary closing conditions. For the year ended December 31, 1997, LCL had net
revenues of $8.5 million and EBITDA of $1.9 million. See "Recent Transactions."
REVOLVING CREDIT FACILITY. On March 25, 1998, the Company entered into a
five-year $40.0 million, senior secured revolving credit facility (the
"Revolving Credit Facility") to be available for working capital and general
corporate purposes, including acquisitions and capital expenditures. The Company
intends to use the Revolving Credit Facility, in part, for the purposes of
funding future acquisitions and internal product development and growth. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Pro Forma Liquidity and Capital Resources" and "Description of Other
Indebtedness--Revolving Credit Facility."
ADDITIONAL EQUITY CONTRIBUTION. On April 14, 1998, Holdings contributed an
aggregate of $15 million to the equity capital of the Company. The proceeds of
the equity contribution are intended to be used to fund acquisitions and to
provide capital for aggressive internal growth.
THE INVESTORS
All of the Company's equity securities are held by Holdings. All of
Holdings' equity securities are currently held by U.S. Equity Partners, L.P.
("USEP"), its affiliates and a co-investor of USEP, which has granted to WP
Management Partners, LLC ("WPMP") an irrevocable proxy to vote such equity
securities held by such co-investor. WPMP is the general partner of USEP, a
private equity fund sponsored by Wasserstein Perella Group, Inc. As the general
partner of USEP, WPMP has the right to elect the members of the Board of
Directors of Holdings and accordingly controls the policies and operations of
Holdings and the Company on behalf of USEP. Holdings' principal executive
offices are located at 345 Park Avenue South, New York, New York 10010, and its
telephone number at such address is (212) 779-9200.
8
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered................ $63,275,000 aggregate principal amount at maturity of
12 1/4% Senior Discount Notes due 2008, Series B of
Holdings.
The Exchange Offer................ $1,000 principal amount at maturity of Exchange Discount
Notes in exchange for each $1,000 principal amount at
maturity of Old Discount Notes. As of the date hereof,
$63,275,000 aggregate principal amount at maturity of
Old Discount Notes is outstanding. Holdings will issue
the Exchange Discount Notes to holders on or promptly
after the Expiration Date.
Based upon interpretations by the staff of the
Commission set forth in certain no-action letters issued
to third parties in similar transactions, Holdings
believes that the Exchange Discount Notes issued
pursuant to the Exchange Offer may be offered for
resale, resold and otherwise transferred by any holder
thereof (other than any such holder that is (i) an
"affiliate" of Holdings within the meaning of Rule 405
under the Securities Act, or (ii) a broker-dealer that
acquired the Old Discount Notes in a transaction other
than part of its market-making or other trading
activities) without compliance with the registration and
prospectus delivery requirements of the Securities Act,
provided that such Exchange Discount Notes are acquired
in the ordinary course of such holder's business and
such holder has no arrangement or understanding with any
person to participate in the distribution of such
Exchange Discount Notes. See "The Exchange Offer--Resale
of the Exchange Discount Notes." However, the Commission
has not considered the Exchange Offer in the context of
a no-action letter and there can be no assurance that
the staff of the Commission would make a similar
determination with respect to the Exchange Offer as in
such other circumstances. Holders of Old Discount Notes
wishing to accept the Exchange Offer must represent to
Holdings, as required by the Registration Rights
Agreement, that such conditions have been met. Each
Participating Broker-Dealer that receives Exchange
Discount Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such
Exchange Discount Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not be
deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with
resales of Exchange Discount Notes received in exchange
for Old Discount Notes where such Old Discount Notes
were acquired by such Participating Broker-Dealer as a
result of market-making activities or other trading
activities. Holdings has agreed that, for a period of
180 days after the Expiration Date, it will make this
Prospectus available to any
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Participating Broker-Dealer for use in connection with
any such resale. See "Plan of Distribution."
Any holder who tenders in the Exchange Offer with the
intention to participate, or for the purpose of
participating, in a distribution of the Exchange
Discount Notes cannot rely on the position of the staff
of the Commission enunciated in no-action letters and,
in the absence of an exemption therefrom, must comply
with the registration and prospectus delivery
requirements of the Securities Act in connection with
any resale transaction. Failure to comply with such
requirements in such instance may result in such holder
incurring liability under the Securities Act for which
the holder is not indemnified by Holdings.
Expiration Date................... The Exchange Offer will expire at 5:00 p.m., New York
City time, on , 1998 unless the Exchange
Offer is extended, in which case the term "Expiration
Date" means the latest date and time to which the
Exchange Offer is extended.
Accreted Value and Accrued
Interest on the Exchange
Discount Notes and the Old
Discount Notes.................. Each Exchange Discount Note will accrete at a rate of
12 1/4%, compounded semi-annually, to an aggregate
principal amount of $63,275,000 by December 15, 2002.
Cash interest will not accrue on the Exchange Discount
Notes prior to December 15, 2002. Commencing June 15,
2003, cash interest on the Exchange Discount Notes will
be payable until maturity at a rate of 12 1/4% per
annum, semi-annually in arrears on each June 15 and
December 15. The Old Discount Notes will continue to
accrete at the rate of 12 1/4% per annum to, but
excluding, the date of issuance of the Exchange Discount
Notes, and will cease to accrete upon cancellation of
the Old Discount Notes and issuance of the Exchange
Discount Notes. Any Old Discount Notes not tendered or
accepted for exchange will continue to accrete at the
rate of 12 1/4% per annum in accordance with their
terms. The Accreted Value of the Exchange Discount Notes
upon issuance will equal the Accreted Value of the Old
Discount Notes accepted for exchange immediately prior
to issuance of the Exchange Discount Notes.
Conditions to the Exchange
Offer........................... The Exchange Offer is subject to certain customary
conditions, which may be waived by Holdings. See "The
Exchange Offer-- Conditions."
Procedures for Tendering Old
Discount Notes.................. Each holder of Old Discount Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a facsimile
thereof or transmit an Agent's Message (as defined) in
connection with a book-entry transfer, in accordance
with the instructions contained herein and therein, and
mail or otherwise deliver such Letter of Transmittal,
such facsimile or such Agent's Message, together
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
with the Old Discount Notes and any other required
documentation to the Exchange Agent (as defined) at the
address set forth herein. By executing the Letter of
Transmittal or Agent's Message, each holder will
represent to Holdings that, among other things, (i) the
Exchange Discount Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course
of business of the person receiving such Exchange
Discount Notes, whether or not such person is the
holder, and (ii) that neither the holder nor any such
other person (a) has any arrangement or understanding
with any person to participate in the distribution of
such Exchange Discount Notes, (b) is engaging in or
intends to engage in the distribution of such Exchange
Notes, or (c) is an "affiliate," as defined under Rule
405 of the Securities Act, of Holdings.
See "The Exchange Offer--Procedures for Tendering" and
"--Resale of the Exchange Discount Notes."
Untendered Old Discount Notes..... Following the consummation of the Exchange Offer,
holders of Old Discount Notes eligible to participate
but who do not tender their Old Discount Notes will not
have any further exchange rights and such Old Discount
Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of
the market for such Old Discount Notes could be
adversely affected.
Consequences of Failure
to Exchange..................... The Old Discount Notes that are not exchanged pursuant
to the Exchange Offer will remain restricted securities.
Accordingly, such Old Discount Notes may be resold only
(i) to Holdings,
(ii) pursuant to Rule 144A or Rule 144 under the
Securities Act or pursuant to some other exemption under
the Securities Act, (iii) outside the United States to a
foreign person pursuant to the requirements of Rule 904
under the Securities Act, or (iv) pursuant to an
effective registration statement under the Securities
Act. See "The Exchange Offer--Consequences of Failure to
Exchange."
Shelf Registration Statement...... If any holder of the Old Discount Notes (other than any
such holder which is an "affiliate" of Holdings within
the meaning of Rule 405 under the Securities Act) is not
eligible under applicable securities laws to participate
in the Exchange Offer, and such holder has satisfied
certain conditions relating to the provision of
information to Holdings for use therein, Holdings has
agreed to register the Old Discount Notes on a shelf
registration statement (the "Shelf Registration
Statement") and use its reasonable best efforts to cause
it to be declared effective by the Commission as
promptly as practical on or after the consummation of
the Exchange Offer. Holdings has agreed to maintain the
effectiveness of the Shelf Registration Statement for,
under certain circumstances, a maximum of two years, to
cover resales of the Old Discount Notes held by any such
holders.
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
Special Procedures for Beneficial
Owners.......................... Any beneficial owner whose Old Discount Notes are
registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to
tender should contact such registered holder promptly
and instruct such registered holder to tender on such
beneficial owner's behalf. If such beneficial owner
wishes to tender on such owner's own behalf, such owner
must, prior to completing and executing the Letter of
Transmittal and delivering its Old Discount Notes,
either make appropriate arrangements to register
ownership of the Old Discount Notes in such owner's name
or obtain a properly completed bond power from the
registered holder. The transfer of registered ownership
may take considerable time. Holdings will keep the
Exchange Offer open for not less than thirty days in
order to provide for the transfer of registered
ownership.
Guaranteed Delivery Procedures.... Holders of Old Discount Notes who wish to tender their
Old Discount Notes and whose Old Discount Notes are not
immediately available or who cannot deliver their Old
Discount Notes, the Letter of Transmittal or any other
documents required by the Letter of Transmittal of the
Exchange Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration Date must
tender their Old Discount Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures."
Withdrawal Rights................. Tenders may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
Acceptance of Old Discount Notes
and Delivery of Exchange
Discount Notes.................. Holdings will accept for exchange any and all Old
Discount Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City time,
on the Expiration Date. The Exchange Discount Notes
issued pursuant to the Exchange Offer will be delivered
promptly following the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer."
Use of Proceeds................... There will be no cash proceeds to Holdings from the
exchange pursuant to the Exchange Offer.
Registration Rights Agreement..... The Exchange Offer is intended to satisfy the
registration rights of Holders of Old Discount Notes
under the Registration Rights Agreement, which rights
terminate upon consummation of the Exchange Offer. See
"The Exchange Offer--Purpose and Effect of the Exchange
Offer."
Exchange Agent.................... The Bank of New York (the "Exchange Agent").
</TABLE>
THE EXCHANGE DISCOUNT NOTES
<TABLE>
<S> <C>
General........................... The form and terms of the Exchange Discount Notes are
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
the same as the form and terms of the Old Discount Notes
(which they replace) except that (i) the Exchange
Discount Notes will bear a Series B designation, (ii)
the Exchange Discount Notes shall have been registered
under the Securities Act and will not bear legends
restricting the transfer thereof, and (iii) the holders
of Exchange Discount Notes will not be entitled to the
rights of holders of Old Discount Notes under the
Registration Rights Agreement, including the provisions
providing for Liquidated Damages (as defined) in certain
circumstances relating to the timing of the Exchange
Offer, which rights will terminate when the Exchange
Offer is consummated. See "The Exchange Offer--Purpose
and Effect of the Exchange Offer." The Exchange Discount
Notes will evidence the same debt as the Old Discount
Notes and will be entitled to the benefits of the
Indenture. See "Description of the Discount Notes."
Maturity Date..................... December 15, 2008.
Original Issue Discount........... The Discount Notes were offered at an original issue
discount for United States federal income tax purposes.
Thus, although cash interest will not be payable on the
Discount Notes prior to June 15, 2003, original issue
discount will accrue from the date of first issuance of
the Discount Notes under the Indenture and will be
included as interest income periodically (including for
periods ending prior to June 15, 2003) in a holder's
gross income for United States federal income tax
purposes in advance of receipt of the cash payments to
which the income is attributable. See "Certain U.S.
Federal Income Tax Considerations."
Interest.......................... 12 1/4% (computed on a semi-annual bond equivalent
basis) calculated from December 22, 1997. The Discount
Notes will accrete at a rate of 12 1/4%, compounded
semi-annually, to an aggregate principal amount of
$63,275,000 by December 15, 2002. Cash interest will not
accrue on the Discount Notes prior to December 15, 2002.
Commencing June 15, 2003, cash interest on the Discount
Notes will be payable until maturity at a rate of
12 1/4% per annum, semi-annually in arrears on each June
15 and December 15 to the Persons (as defined) in whose
names such Discount Notes are registered at the close of
business on June 1 and December 1, respectively,
immediately preceding such date.
Ranking........................... The Exchange Discount Notes will be senior unsecured
general obligations of Holdings. The Discount Notes will
rank PARI PASSU in right of payment to all existing and
future senior indebtedness of Holdings and will rank
senior in right of payment to all future Subordinated
Indebtedness of Holdings. The Exchange Discount Notes
will be effectively subordinated in right of payment to
all existing and future liabilities of Holdings'
subsidiaries, including indebtedness under the Senior
Notes and trade payables and deferred revenues. As of
December 31, 1997, after giving effect to the
Transactions, Holdings' subsidiaries had approximately
$208.4 million of such liabilities outstanding.
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
Optional Redemption............... The Discount Notes may be redeemed for cash on or after
December 15, 2002 at the option of Holdings, in whole or
in part, at the redemption prices set forth herein, plus
accrued and unpaid interest thereon (and Liquidated
Damages, if any) to the date of redemption. The Discount
Notes will also be subject to redemption, at any time
prior to December 15, 2002, at the option of Holdings,
in whole or in part, at a redemption price equal to 100%
of the Accreted Value thereof plus the applicable
Make-Whole Premium plus accrued and unpaid interest
thereon (and Liquidated Damages), if any. At any time on
or prior to December 15, 2000, Holdings may redeem all,
but not less than all, of the Discount Notes then
outstanding, at a redemption price equal to 112.25% of
the Accreted Value thereof (plus Liquidated Damages, if
any) to the date of redemption out of the Net Cash
Proceeds of a Public Equity Offering; PROVIDED, HOWEVER,
that such redemption shall occur within 90 days of the
closing of such Public Equity Offering. See "Description
of the Discount Notes--Optional Redemption."
Change of Control................. Upon a Change of Control, each holder of the Discount
Notes will have the right to require Holdings to
repurchase all or any part of such holder's Discount
Notes at a price in cash equal to 101% of the Accreted
Value thereof, together with accrued and unpaid interest
thereon (and Liquidated Damages), if any, to the date of
repurchase. Holdings does not have, and in the future
may not have, any assets other than the capital stock of
the Company. As a result, Holdings' ability to
repurchase all or any part of the Discount Notes upon a
Change of Control will be dependent upon the receipt of
dividends or other distributions from the Company and
its direct and indirect subsidiaries. The Senior Note
Indenture (as defined) and the Revolving Credit Facility
restrict the ability of the Company to pay dividends and
to make any other distributions to Holdings. If Holdings
is unable to obtain dividends from the Company
sufficient to permit the repurchase of the Discount
Notes, Holdings will likely not have the financial
resources to repurchase Discount Notes upon the
occurrence of a Change of Control. There can be no
assurance that Holdings' subsidiaries will have the
resources available to pay any such dividend or make any
such distribution. Furthermore, the Revolving Credit
Facility provides that certain change of control events
will constitute a default thereunder, and the Senior
Note Indenture provides that, in the event of a Change
of Control, the Company will be required to offer to
repurchase the Senior Notes at the price specified
therefor. Holdings' failure to make a Change of Control
Offer (as defined) when required or to purchase Discount
Notes when tendered would constitute an Event of Default
(as defined) under the Indenture (as defined). See "Risk
Factors--Possible Inability to Repurchase Discount Notes
Upon Change of Control," "Description of Other
Indebtedness--Revolving Credit Facility" and
"Description of the Discount Notes--
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
Certain Covenants--Repurchase of Discount Notes at the
Option of the Holder Upon Change of Control" and
"--Events of Default and Remedies."
Restrictive Covenants............. The Indenture under which the Discount Notes were issued
contains certain covenants that, among other things,
limit (i) the incurrence of additional indebtedness by
Holdings and its Restricted Subsidiaries, (ii) the
payment of dividends and other restricted payments by
Holdings and its Restricted Subsidiaries, (iii) the
creation of restrictions on distributions from
Restricted Subsidiaries, (iv) asset sales, (v)
transactions with affiliates, (vi) the incurrence of
liens and (vii) mergers and consolidations. All of these
limitations and prohibitions, however, are subject to a
number of important qualifications and exceptions. See
"Description of the Discount Notes--Certain Covenants."
</TABLE>
RISK FACTORS
See "Risk Factors, " which begins at page 20, for a discussion of certain
factors that should be considered before tendering the Old Discount Notes in
exchange for Exchange Discount Notes.
SUMMARY PRO FORMA INFORMATION
Effective as of August 1, 1997, Old ALM was acquired by ALM. In addition, on
December 22, 1997, ALM acquired all of the issued and outstanding capital stock
of NLP. The following table sets forth summary pro forma operating data for
Holdings for the years ended December 31, 1996 and 1997. The pro forma operating
data gives effect to the Transactions and the Acquisitions as if each such
transaction had occurred on January 1, 1996 and 1997, respectively. The summary
pro forma financial information is for illustrative purposes only and does not
purport to be indicative of what the actual results of operations of Holdings
would have been for the periods presented had the Transactions and the
Acquisitions in fact occurred at such prior times, nor does it purport to
represent Holdings' future results of operations. The summary pro forma
information should be read in conjunction with the pro forma Statements of
Operations and notes thereto included elsewhere in this Prospectus. See "Pro
Forma Financial Information."
15
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
SUMMARY COMBINED PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997
----------------- -----------------
<S> <C> <C>
OPERATING DATA:
Revenues:
Periodicals:
Advertising............................................................ $ 49,978 $ 57,958
Subscription........................................................... 21,063 21,483
Ancillary Products and Services.......................................... 21,865 22,600
Internet Services........................................................ 747 1,149
-------- --------
Total Revenues....................................................... $ 93,653 $ 103,190
-------- --------
Operating Costs and Expenses:
Editorial................................................................ 13,070 13,183
Production and Distribution.............................................. 21,148 22,557
Selling.................................................................. 16,470 16,507
General and Administrative............................................... 21,281 23,112
Internet Services........................................................ 2,804 2,200
Depreciation and Amortization............................................ 23,568 24,084
-------- --------
Total Operating Costs and Expenses................................... 98,341 101,643
-------- --------
Operating (loss) income.............................................. (4,668) 1,547
Interest expense, net...................................................... (22,118) (22,105)
Other income (expense)..................................................... 181 --
-------- --------
(Loss) before income taxes................................................. (26,625) (20,558)
Provision for income taxes................................................. -- 250
-------- --------
Net (loss)................................................................. $ (26,625) $ (20,808)
-------- --------
-------- --------
OTHER DATA:
EBITDA:(1)
Periodicals and Ancillary Products and Services.......................... $ 20,937 $ 26,682
Internet Services........................................................ (2,057) (1,051)
-------- --------
Total................................................................ $ 18,880 $ 25,631
-------- --------
-------- --------
Capital Expenditures:
Periodicals and Ancillary Products and Services.......................... $ 1,604 $ 1,269
Internet Services(2)..................................................... 26 42
-------- --------
Total................................................................ $ 1,630 $ 1,311
-------- --------
-------- --------
Interest coverage ratio(3)................................................. 0.85x 1.16x
Total debt to EBITDA ratio(4).............................................. 11.10x 8.20x
</TABLE>
- ------------------------
(1) "EBITDA" is defined as income before interest, income taxes, depreciation
and amortization and gain on sale of assets. EBITDA is not a measure of
performance under generally accepted accounting principles ("GAAP"). Such
items excluded from income in calculating EBITDA are significant components
in understanding and evaluating Holdings' financial performance. While
EBITDA should not be considered in isolation or as a substitute for net
income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP or as a measure of
profitability or liquidity, management understands that EBITDA is
customarily used in evaluating publishing companies. The EBITDA measures
presented herein may not be comparable to similarly titled measures of other
companies.
(2) Excludes capital expenditures related to COUNSEL CONNECT of $1.084 million
in 1996 and $1.539 million in 1997.
(3) Ratio equal to EBITDA divided by interest expense. Interest expense includes
$5.056 million of non-cash interest expense related to the Discount Notes
and amortization of deferred financing costs related to the Discount Notes,
the Senior Notes and the Revolving Credit Facility in each of the years
ended December 31, 1996 and 1997, respectively. The ratio of EBITDA to cash
interest expense for the years ended December 31, 1996 and 1997 is 1.11 and
1.50, respectively.
(4) Ratio equal to long-term debt at December 31, 1996 and 1997 divided by
EBITDA for the year.
16
<PAGE>
SUMMARY FINANCIAL INFORMATION AND OTHER DATA
The following tables present summary historical financial information (i)
for Old ALM, as of and for the years ended December 31, 1993, 1994, 1995 and
1996, (ii) for NLP, as of and for the years ended December 31, 1993, 1994, 1995
and 1996, (iii) for Old ALM, as of and for the seven months ended July 31, 1997,
(iv) for Holdings, as of and for the five months ended December 31, 1997, and
(v) for NLP, as of and for the period from January 1, 1997 through December 21,
1997. The summary financial information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical financial statements and notes thereto included
elsewhere in this Prospectus.
17
<PAGE>
AMERICAN LAWYER MEDIA, L.P. AND AMERICAN LAWYER MEDIA HOLDINGS, INC.
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PREDECESSOR COMPANY AMERICAN LAWYER
--------------------------------------------------------- MEDIA HOLDINGS, INC
SEVEN MONTHS FIVE MONTHS
YEARS ENDED DECEMBER 31, ENDED ENDED
------------------------------------------ JULY 31, DECEMBER 31,
1993 1994 1995 1996 1997 1997
--------- --------- --------- --------- ------------- ---------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Periodicals:
Advertising.............................. $ 22,569 $ 23,872 $ 25,037 $ 26,659 $ 18,146 $ 13,410
Subscription............................. 10,242 10,483 10,884 11,304 6,719 5,260
Ancillary Products and Services............ 7,374 7,980 8,387 8,467 4,532 4,142
Internet Services.......................... 135 685 3,238 5,474 2,148 40
--------- --------- --------- --------- ------------- ----------
Total Revenues......................... 40,320 43,020 47,546 51,904 31,545 22,852
--------- --------- --------- --------- ------------- ----------
Operating Costs and Expenses:
Editorial.................................. 7,109 7,075 7,073 7,141 4,023 3,323
Production and Distribution................ 10,678 11,170 12,587 12,469 6,919 5,766
Selling.................................... 6,662 7,208 6,913 7,479 4,640 3,656
General and Administrative................. 15,303 15,790 16,506 16,829 9,531 7,145
Internet Services.......................... 2,634 7,760 10,854 11,886 6,464 43
Depreciation and Amortization.............. 4,047 3,506 2,680 2,488 1,590 3,273
Shutdown of ALM Internet Services.......... -- -- -- -- -- 4,823
--------- --------- --------- --------- ------------- ----------
Total Operating Costs and Expenses..... 46,433 52,509 56,613 58,292 33,167 28,029
--------- --------- --------- --------- ------------- ----------
Operating (loss)....................... (6,113) (9,489) (9,067) (6,388) (1,622) (5,177)
Interest expense, net........................ (478) (667) (1,384) (1,972) (1,420) (2,534)
--------- --------- --------- --------- ------------- ----------
(Loss) before minority interest.............. (6,591) (10,156) (10,451) (8,360) (3,042) (7,711)
Minority interest............................ -- 1,847 2,334 172 -- --
--------- --------- --------- --------- ------------- ----------
Net (loss)................................... $ (6,591) $ (8,309) $ (8,117) $ (8,188) $ (3,042) $ (7,711)
--------- --------- --------- --------- ------------- ----------
--------- --------- --------- --------- ------------- ----------
BALANCE SHEET DATA:
(At End of Period)
Working capital (deficit).................... $ (6,571) $ (6,376) $ (7,066) $ (7,009) $ (5,895) $ (7,042)
Total assets................................. 20,896 20,931 19,313 19,482 18,982 365,528
Long-term debt (including current
maturities)................................ 11,212 13,524 22,114 30,150 34,742 210,119
Partners' (Deficit) & Stockholders' Equity
........................................... (3,332) (11,647) (19,759) (26,300) (29,342) 67,289
OTHER DATA:
EBITDA:(1)
Periodicals and Ancillary Products and
Services................................. $ 433 $ 1,092 $ 1,229 $ 2,512 $ 4,284 $ 2,922
Internet Services.......................... (2,499) (7,075) (7,616) (6,412) (4,316) (4,826)
--------- --------- --------- --------- ------------- ----------
Total.................................. $ (2,066) $ (5,983) $ (6,387) $ (3,900) $ (32) $ (1,904)
--------- --------- --------- --------- ------------- ----------
--------- --------- --------- --------- ------------- ----------
Capital Expenditures:
Periodicals and Ancillary Products and
Services................................. $ 878 $ 1,102 $ 864 $ 1,118 $ 439 $ 357
Internet Services.......................... 210 386 617 1,084 1,532 7
--------- --------- --------- --------- ------------- ----------
Total.................................. $ 1,088 $ 1,488 $ 1,481 $ 2,202 $ 1,971 $ 364
--------- --------- --------- --------- ------------- ----------
--------- --------- --------- --------- ------------- ----------
</TABLE>
- ------------------------
(1) EBITDA is not a measure of performance under GAAP. Items excluded from
income in calculating EBITDA are significant components in understanding and
evaluating Old ALM's and Holdings' financial performance. While EBITDA
should not be considered in isolation or as a substitute for net income,
cash flows from operating activities and other income or cash flow statement
data prepared in accordance with GAAP or as a measure of profitability or
liquidity, management understands that EBITDA is customarily used in
evaluating publishing companies. The EBITDA measures presented herein may
not be comparable to similarly titled measures of other companies.
18
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
YEAR ENDED DECEMBER 31, 1997 THROUGH
------------------------------------------ DECEMBER 21,
1993 1994 1995 1996 1997
--------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
OPERATING DATA:
Revenues:
Periodicals:
Advertising.................................................. $ 16,546 $ 18,612 $ 21,387 $ 23,319 $ 26,402
Subscription................................................. 8,610 9,105 9,694 9,759 9,504
Ancillary Products and Services................................ 10,824 11,437 12,729 13,398 13,926
Internet Services.............................................. -- -- 264 747 1,109
--------- --------- --------- --------- -------------
Total Revenues............................................. 35,980 39,154 44,074 47,223 50,941
--------- --------- --------- --------- -------------
Operating Costs and Expenses:
Editorial...................................................... 4,811 5,451 5,778 5,929 5,837
Production and Distribution.................................... 7,009 7,621 8,146 8,679 9,872
Selling........................................................ 7,693 8,831 9,776 8,991 8,211
General and Administrative..................................... 7,109 7,726 7,620 8,047 8,722
Internet Services.............................................. -- -- 2,947 1,704 1,657
Depreciation and Amortization.................................. 3,087 3,130 6,329 7,487 7,283
Special Compensation Charge.................................... -- -- -- -- 6,926
--------- --------- --------- --------- -------------
Total Operating Costs and Expenses......................... 29,709 32,759 40,596 40,837 48,508
--------- --------- --------- --------- -------------
Operating income........................................... 6,271 6,395 3,478 6,386 2,433
Interest expense, net............................................ (4,487) (4,734) (5,458) (6,013) (5,137)
Other income (expense)........................................... (284) (320) (211) 181 --
--------- --------- --------- --------- -------------
Income (loss) before income taxes................................ 1,500 1,341 (2,191) 554 (2,704)
Benefit (provision) for income taxes............................. (777) (763) 523 (3,007) (2,508)
--------- --------- --------- --------- -------------
Net income (loss) before cumulative effect of change in
accounting principle........................................... 723 578 (1,668) (2,453) (5,212)
Cumulative effect of change in accounting principle.............. 4,046 -- -- -- --
--------- --------- --------- --------- -------------
Net income (loss)................................................ $ 4,769 $ 578 $ (1,668) $ (2,453) $ (5,212)
--------- --------- --------- --------- -------------
--------- --------- --------- --------- -------------
BALANCE SHEET DATA:
(At End of Period)
Working capital (deficit)........................................ $ (1,532) $ (2,868) $ (4,717) $ (2,081) $ (2,204)
Total assets..................................................... 20,886 21,217 154,125 147,311 139,610
Long-term debt (including current maturities).................... 45,500 54,600 70,900 70,300 59,500
Stockholder's equity (deficit)................................... (33,945) (44,842) 65,620 63,167 64,782
OTHER DATA:
EBITDA:(1)
Periodicals and Ancillary Products and Services................ $ 9,358 $ 9,525 $ 12,490 $ 14,830 $ 10,264
Internet Services.............................................. -- -- (2,683) (957) (548)
--------- --------- --------- --------- -------------
Total...................................................... $ 9,358 $ 9,525 $ 9,807 $ 13,873 $ 9,716
--------- --------- --------- --------- -------------
--------- --------- --------- --------- -------------
Capital Expenditures:
Periodicals and Ancillary Products and Services................ $ 739 $ 1,511 $ 436 $ 486 $ 473
Internet Services.............................................. -- 296 172 26 42
--------- --------- --------- --------- -------------
Total...................................................... $ 739 $ 1,807 $ 608 $ 512 $ 515
--------- --------- --------- --------- -------------
--------- --------- --------- --------- -------------
</TABLE>
- ------------------------
(1) EBITDA is not a measure of performance under GAAP. Items excluded from
income in calculating EBITDA are significant components in understanding and
evaluating NLP's financial performance. While EBITDA should not be
considered in isolation or as a substitute for net income, cash flows from
operating activities and other income or cash flow statement data prepared
in accordance with GAAP or as a measure of profitability or liquidity,
management understands that EBITDA is customarily used in evaluating
publishing companies. The EBITDA measures presented herein may not be
comparable to similarly titled measures of other companies.
19
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE EXCHANGE DISCOUNT NOTES REPRESENTS A HIGH DEGREE OF
RISK. PRIOR TO TENDERING OLD DISCOUNT NOTES IN EXCHANGE FOR EXCHANGE DISCOUNT
NOTES, PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY ALL THE INFORMATION IN
THIS PROSPECTUS AND, IN PARTICULAR, THE FOLLOWING RISK FACTORS.
THIS PROSPECTUS CONTAINS "FORWARD-LOOKING STATEMENTS" THAT ARE SUBJECT TO A
NUMBER OF RISKS AND UNCERTAINTIES, MANY OF WHICH ARE BEYOND HOLDINGS' CONTROL.
FORWARD-LOOKING STATEMENTS ARE TYPICALLY IDENTIFIED BY THE WORDS "BELIEVE,"
"EXPECT," "ANTICIPATE," "INTEND," "ESTIMATE" AND SIMILAR EXPRESSIONS. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF FACTORS SUCH AS THOSE DESCRIBED UNDER "RISK FACTORS."
IN LIGHT OF THESE RISKS AND UNCERTAINTIES, THERE CAN BE NO ASSURANCE THAT THE
RESULTS AND EVENTS CONTEMPLATED BY THE FORWARD-LOOKING STATEMENTS CONTAINED IN
THIS PROSPECTUS WILL IN FACT TRANSPIRE. PROSPECTIVE PURCHASERS ARE CAUTIONED NOT
TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. HOLDINGS DOES NOT
UNDERTAKE ANY OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS. ALL
SUBSEQUENT WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO HOLDINGS
OR PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE
DISCUSSION UNDER "RISK FACTORS."
LIMITATION ON ACCESS TO SUBSIDIARIES' CASH FLOW; HOLDING COMPANY STRUCTURE
Holdings is a holding company, and its ability to pay cash interest on and
principal of the Discount Notes is dependent upon the receipt of dividends or
other distributions from its direct and indirect subsidiaries. Holdings does not
have, and in the future may not have, any assets other than the capital stock of
the Company. Holdings, the Company and the Company's subsidiaries are parties to
the Revolving Credit Facility, and the Company and its Restricted Subsidiaries
are parties to the indenture governing the Senior Notes (the "Senior Note
Indenture"), each of which impose substantial restrictions on the ability of the
Company and its subsidiaries or its Restricted Subsidiaries, as the case may be,
to pay dividends or make other distributions to Holdings, and any dividend
payment or other distribution will be subject to the satisfaction of certain
financial conditions set forth therein. The ability of the Company and its
subsidiaries to comply with such conditions or the other financial covenants in
the Revolving Credit Facility or in the Senior Note Indenture may be affected by
events that are beyond Holdings' or the Company's control. The breach of any
such covenant could result in a default under the Senior Note Indenture and/or
the Revolving Credit Facility, and in the event of any such default, the holders
of the Senior Notes or the lenders under the Revolving Credit Facility could
elect to accelerate the maturity of all the Senior Notes or the loans under the
Revolving Credit Facility. If the maturity of the Senior Notes or the loans
under the Revolving Credit Facility were accelerated, all such outstanding debt
would have to be paid in full before the Company or its subsidiaries could
distribute any assets or cash to Holdings. There can be no assurance that the
earnings or cash flow of Holdings' subsidiaries will be adequate to permit
Holdings to service its debt obligations or, even if adequate, that such
subsidiaries will be able to pay dividends or to make distributions to Holdings
in amounts sufficient to enable Holdings to service its debt obligations as and
when such amounts become due and payable. Future borrowings by the Company and
its subsidiaries can be expected to contain similar restrictions or prohibitions
on the payment of dividends and the making of distributions by the Company and
its subsidiaries to Holdings. See "Description of Other Indebtedness-- Revolving
Credit Facility."
In addition, under Delaware law, a subsidiary of a company is permitted to
pay dividends on its capital stock only out of its surplus or, if it has no
surplus, out of its net profits for the year in which a dividend is declared or
for the immediately preceding fiscal year. Surplus is defined as the excess of a
company's total assets over the sum of its total liabilities plus the par value
of its outstanding capital stock. In order to pay a cash dividend, a company
must have surplus or net profits equal to the full amount of the dividend at the
time the dividend is declared. In determining a company's ability to pay
dividends, Delaware law permits the board of directors of a company to revalue
its assets and liabilities from time to time to their fair market values in
order to create surplus. Holdings cannot predict what the value of its
subsidiaries' assets or the amounts of their liabilities will be in the future.
Accordingly, there can be no assurance that
20
<PAGE>
Holdings' subsidiaries will be able to dividend or distribute any amounts to
Holdings in the future and, therefore, there can be no assurance that Holdings
will be able to meet its debt service obligations on the Discount Notes.
Because Holdings is a holding company, claims of the holders of the Discount
Notes will be structurally junior to claims of all creditors of Holdings'
subsidiaries, except to the extent that Holdings is itself recognized as a
creditor of any such subsidiary, in which case the claims of Holdings would
still be subordinate to the claims of any secured creditor of such subsidiary.
In the event of insolvency, liquidation, reorganization, dissolution or other
winding-up of Holdings' subsidiaries, Holdings will not receive any funds
available to pay to creditors of the subsidiaries until the claims of such
creditors have been paid in full. As of December 31, 1997, after giving effect
to the Transactions, the aggregate amount of liabilities of Holdings'
subsidiaries, including indebtedness under the Senior Notes and including trade
payables and deferred revenues, was approximately $208.4 million.
SUBSTANTIAL LEVERAGE; LIQUIDITY
Holdings and the Company incurred a significant amount of indebtedness in
connection with the Initial Discount Note Offering and the Initial Senior Note
Offering. As of December 31, 1997, after giving effect to the Transactions, the
indebtedness of Holdings and its subsidiaries was approximately $210.1 million
and Holdings' stockholders' equity was approximately $67.3 million. Holdings'
pro forma earnings were insufficient to cover pro forma fixed charges by $20.6
million for the year ended December 31, 1997. See "Pro Forma Financial
Information." In addition, the Company's strategy contemplates strategic
acquisitions, and a portion of the cost of such acquisitions may be financed
through the incurrence of additional indebtedness, subject to restrictions
contained in the Indenture, the Senior Note Indenture (collectively, the
"Indentures") and the Revolving Credit Facility. There can be no assurance that
financing will continue to be available on terms acceptable to Holdings and to
the Company or at all.
The level of Holdings' and the Company's indebtedness could have substantial
consequences to holders of the Discount Notes, including: (i) a substantial
portion of Holdings' and the Company's cash flow from operations must be
dedicated to debt service and will not be available for operations; (ii)
Holdings' and the Company's ability to obtain additional financing in the future
for working capital, investments, general corporate purposes or acquisitions may
be limited; (iii) Holdings' and the Company's level of indebtedness could limit
their flexibility in reacting to changes in the industry, competitive pressures
and economic conditions generally; (iv) the Indentures and the Revolving Credit
Facility contain financial and restrictive covenants, the failure to comply with
which may result in an event of default which, if not cured or waived, could
have a material adverse effect on Holdings; and (v) Holdings and the Company may
be substantially more leveraged than certain of their competitors, which may
place Holdings and the Company at a competitive disadvantage.
Holdings' ability to make scheduled payments on its indebtedness or to
refinance its debt obligations will depend upon its future operating
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, many of which are beyond its control.
There can be no assurance that Holdings' and the Company's operating results and
cash flow and capital resources will be sufficient to meet their operating
expenses and to service their debt obligations as they become due. If Holdings
and the Company are unable to generate sufficient cash flow from operations in
the future to service their indebtedness and to meet their other commitments,
Holdings and the Company will be required to adopt one or more alternatives,
such as refinancing or restructuring their indebtedness, selling material assets
or operations, reducing or delaying investments in their businesses, or seeking
to raise additional debt or equity capital. There can be no assurance that any
of these actions could be effected, or if they are effected, that they could be
effected on a timely basis or on satisfactory terms, or that these actions would
enable Holdings and the Company to continue to satisfy their cash requirements.
In addition, the terms of existing or future debt agreements, including the
Indentures and the Revolving Credit Facility, may prohibit Holdings and the
Company from adopting any of these alternatives. See
21
<PAGE>
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Description of the Discount Notes" and "Description of Other
Indebtedness."
ORIGINAL ISSUE DISCOUNT; LIMITATIONS ON HOLDERS' CLAIMS
The Discount Notes were issued at a substantial original issue discount from
their principal amount at maturity. Consequently, purchasers of the Discount
Notes are required to include amounts in gross income for federal income tax
purposes in advance of receipt of the cash payments to which the income is
attributable. See "Certain U.S. Federal Income Tax Considerations" for a more
detailed discussion of the federal income tax consequences to the purchasers of
the Discount Notes resulting from the purchase, ownership or disposition
thereof.
Under the Indenture, in the event of an acceleration of the maturity of the
Discount Notes upon the occurrence of an Event of Default (as defined herein),
the holders of the Discount Notes may be entitled to recover only the amount
which may be declared due and payable pursuant to the Indenture, which prior to
December 15, 2002 will be less than the principal amount at maturity of such
Discount Notes. See "Description of the Discount Notes--Events of Default and
Remedies."
If a bankruptcy case is commenced by or against Holdings under the United
States Bankruptcy Code (the "Bankruptcy Code"), the claims of a holder of
Discount Notes with respect to the principal amount thereof may be limited to an
amount equal to the sum of (i) the issue price of the Discount Notes and (ii)
that portion of the original issue discount (as determined on the basis of such
issue price) which is not deemed to constitute "unmatured interest" for purposes
of the Bankruptcy Code. Accordingly, holders of the Discount Notes under such
circumstances may, even if sufficient funds are available, receive a lesser
amount than they would be entitled to under the express terms of the Indenture.
In addition, there can be no assurance that a bankruptcy court would compute the
accrual of interest under the same rules as those used for the calculation of
original issue discount under federal income tax law and, accordingly, a holder
might be required to recognize gain or loss in the event of a distribution
related to such a bankruptcy case.
POSSIBLE INABILITY TO REPURCHASE DISCOUNT NOTES UPON CHANGE OF CONTROL
In the event of a Change of Control, each holder of Discount Notes will have
the right to require Holdings to repurchase all or any part of such holder's
Discount Notes at the offer price specified therefor in the Indenture. Holdings
does not have, and in the future may not have, any assets other than the capital
stock of the Company (which was pledged to secure the Company's obligations
under the Revolving Credit Facility). As a result, Holdings' ability to
repurchase all or any part of the Discount Notes upon the occurrence of a Change
of Control will be dependent upon the receipt of dividends or other
distributions from the Company. The Senior Note Indenture and the Revolving
Credit Facility restrict the ability of the Company to pay dividends and to make
any other distributions to Holdings. In any event, there can be no assurance
that Holdings' subsidiaries will have the resources available to pay such
dividend or make any such distribution. If Holdings does not obtain dividends or
other distributions from the Company sufficient to permit the repurchase of the
Discount Notes, Holdings will likely not have the financial resources to
purchase Discount Notes upon the occurrence of a Change of Control. Holdings'
failure to make a Change of Control offer when required or to purchase tendered
Discount Notes would constitute an Event of Default under the Indenture.
Furthermore, the Revolving Credit Facility provides that certain change of
control events will constitute a default thereunder. In addition, the Senior
Note Indenture provides that, in the event of a Change of Control, the Company
will be required to offer to repurchase the Senior Notes at the price specified
therein. See "Description of the Discount Notes" and "Description of Other
Indebtedness."
22
<PAGE>
INTEGRATION OF COMPANIES AND LIMITED RELEVANCE OF HISTORICAL INFORMATION
In August 1997 the Investors, through ALM, consummated the ALM Acquisition,
and in December 1997, ALM consummated the NLP Acquisition. Prior to the
Acquisitions, ALM and NLP operated independently, and the success of the Company
will depend in part on the Company's ability to integrate the operations of
these entities. The integration of the operations of ALM and NLP will entail the
reorganization of certain functions to achieve the cost savings outlined in the
business strategy and to realize the full potential of the business
opportunities available to the combined company. There can be no assurance that
the Company will be able to successfully integrate these businesses or that the
Company will not encounter delays or incur unanticipated costs in such
integration. As a result of the Acquisitions, the historical financial
information of Holdings, Old ALM and NLP presented in this Prospectus is of
limited relevance in understanding what the results of operations, financial
position or cash flows of Holdings would have been for the historical periods
presented had Holdings in fact been organized and owned all of its subsidiaries
for such periods. See "Pro Forma Financial Information," "Selected Historical
Consolidated Financial Information" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
DEPENDENCE ON SUCCESSFUL IMPLEMENTATION OF BUSINESS STRATEGY
The Company plans to adopt a refined business and operating strategy. This
strategy includes the implementation of certain operating improvements and the
adoption of expanded circulation and advertising plans. There can be no
assurance that the Company will be able to fully implement this new strategy or
that the anticipated results of this strategy, including the reduction of
certain operating expenses, will be realized. Implementation of this strategy
could be affected by a number of factors beyond the Company's control, such as
operating difficulties, increased operating costs, regulatory developments,
general economic conditions, increased competition, or the inability to obtain
adequate financing for its operations on suitable terms. In addition, after
gaining experience with the Company's operations under its new strategy, the
Company may decide to alter or discontinue certain aspects of its strategy. Any
such failure to implement the Company's new strategy may adversely affect
Holdings' and the Company's ability to service their indebtedness, including
their ability to make principal and interest payments on the Discount Notes and
the Senior Notes, as applicable. See "Business--Business Strategy."
Holdings has reflected, on a pro forma basis for the years ended December
31, 1996 and 1997, the anticipated benefits that may result from the operating
improvements and cost reduction measures anticipated as a result of the
implementation of the Company's strategy. The pro forma adjustments set forth in
this Prospectus are based on a number of estimates and assumptions that, while
considered reasonable by Holdings, should not be viewed as indicative of either
the results that would have occurred had the Company's strategy been implemented
on the dates indicated or Holdings' actual or future results or financial
position. Prospective investors are cautioned not to place undue reliance on
these adjustments. See "Pro Forma Financial Information."
RESTRICTIONS IMPOSED BY TERMS OF THE INDENTURES AND THE REVOLVING CREDIT
FACILITY
The Indentures and the Revolving Credit Facility impose certain operating
and financial restrictions on Holdings and the Company. The Indentures limit,
among other things, (i) the incurrence of additional indebtedness by Holdings,
the Company and their Restricted Subsidiaries, (ii) the payment of dividends and
other restricted payments by Holdings, the Company and their Restricted
Subsidiaries, (iii) the creation of restrictions on distributions from Holdings'
and the Company's Restricted Subsidiaries, (iv) asset sales, (v) transactions
with affiliates, (vi) the incurrence of liens and (vii) mergers and
consolidations. The Revolving Credit Facility requires the Company to maintain
specified financial ratios, among other obligations, including a maximum total
leverage ratio, a minimum interest coverage ratio and a minimum fixed charge
coverage ratio, each as defined in the agreement governing the Revolving Credit
Facility. In addition, the Revolving Credit Facility restricts, among other
things, the ability of the Company
23
<PAGE>
and its subsidiaries to: (i) declare dividends or redeem or repurchase capital
stock; (ii) prepay, redeem or purchase debt; (iii) incur liens and engage in
sale/leaseback transactions; (iv) make loans and investments; (v) incur
indebtedness and contingent obligations; (vi) amend or otherwise alter debt and
other material agreements; (vii) make capital expenditures; (viii) engage in
mergers, consolidations, acquisitions and asset sales; (ix) transact with
affiliates and (x) alter their lines of business or accounting methods. The
ability of Holdings and the Company to comply with such covenants may be
affected by events beyond their control, including prevailing economic and
financial conditions. A breach of any of these covenants could result in a
default under the Revolving Credit Facility and/or the Indentures. Upon the
occurrence of an event of default under the Revolving Credit Facility or the
Indentures, the lenders under the Revolving Credit Facility could elect to
declare all amounts outstanding thereunder, together with accrued and unpaid
interest, to be immediately due and payable. If the Company were unable to repay
any such amounts, such lenders could proceed against the collateral securing
such indebtedness, which collateral includes all of the outstanding capital
stock of the Company, which is the sole asset of Holdings. If the lenders under
the Revolving Credit Facility accelerate the payment of such indebtedness, there
can be no assurance that the assets of the Company would be sufficient to repay
in full such indebtedness and the other indebtedness of the Company and
Holdings, including the Discount Notes. See "Description of the Discount Notes--
Certain Covenants" and "Description of Other Indebtedness--Revolving Credit
Facility."
CONCENTRATION OF REVENUE FROM CERTAIN PUBLICATIONS
For the year ended December 31, 1997, the NEW YORK LAW JOURNAL accounted for
24.9% of the Company's total pro forma revenues. The Company believes that the
NEW YORK LAW JOURNAL will continue to represent a significant portion of the
Company's total revenues in the future. While the Company has a broad range of
publications, a significant decline in the performance of the NEW YORK LAW
JOURNAL or any of the Company's other publications could have a material adverse
effect on Holdings' results of operations and its ability to service its
indebtedness, including its ability to make principal and interest payments on
the Discount Notes.
ADVERTISING REVENUE
The Company's largest single source of revenue is advertising. For the year
ended December 31, 1997, approximately 56.2% of the Company's pro forma revenues
were from advertising. Advertising revenues of the publishing industry in
general are cyclical and dependent upon general economic conditions. As compared
to general-interest newspaper and magazine publishers, the Company believes that
its advertising revenues are less susceptible to changes in general economic
conditions due to the fact that a significant portion of the Company's
advertising revenues are for products and services that are used exclusively by
attorneys, law firms and corporate legal departments. There can be no assurance,
however, that the Company's results of operations will not be adversely affected
by general economic conditions in the future. The Company's revenues may also be
affected by state or local government regulations, particularly with respect to
the publication of legal-notice advertising. If states or localities in which
the Company operates were to enact legislation modifying the manner, number or
frequency of legal notice requirements, the Company's results of operations
could be adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
FLUCTUATIONS IN PAPER COSTS AND POSTAL RATES
For the year ended December 31, 1997, the Company spent $4.9 million on
paper and $3.4 million on postage, accounting for 4.8% and 3.3%, respectively,
of total pro forma revenues for such period. While paper prices have
historically shown considerable price volatility and postal rates have increased
from time to time, due to their overall small expense as a percentage of
revenues, the Company has generally been able to pass through such increased
costs to advertisers and subscribers. No assurance can be given, however, that
future fluctuations in paper prices or significant increases in postal rates
will not have a
24
<PAGE>
material adverse effect on the results of operations and financial condition of
the Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Overview."
COMPETITION
The Company competes for advertising and circulation revenues with
publishers of other special-interest legal newspapers and magazines with similar
editorial content. However, in most markets where the Company competes, its
newspaper is the only newspaper serving the particular needs of the legal
community. The Company also competes for advertising revenues with
general-interest magazines, newspapers and other forms of media, including
broadcast and cable television, radio, direct marketing and electronic media.
The Company also faces competition from other legal publishers and legal service
providers in its ancillary products and services business, including from book
and newsletter publishers and internet and other online services, certain of
which competitors are larger and have greater financial resources than the
Company. There can be no assurance that the Company will be able to compete
effectively with such competitors in the future. See "Business--Competition."
CONTROLLING STOCKHOLDER
Holdings holds all of the Company's equity securities. A majority of
Holdings' equity securities are held by U.S. Equity Partners, L.P. and its
affiliates. The general partner of U.S. Equity Partners, L.P., a private equity
fund sponsored by WPG, is WPMP. As the general partner of U.S. Equity Partners,
L.P., WPMP has the ability to elect all of the members of the Board of Directors
of Holdings and accordingly controls the policies and operations of Holdings and
the Company. Circumstances may occur in which the interests of the equity
holders of Holdings and the Company could be in conflict with the interests of
the holders of the Discount Notes. In addition, the direct and/or indirect
equity investors in Holdings and the Company may have an interest in pursuing
acquisitions, divestitures or other transactions that, in their judgment, could
enhance their equity investment, even though such transactions might involve
risks to the holders of the Discount Notes. See "Principal Stockholders."
DEPENDENCE ON KEY PERSONNEL
The success of the Company's operations may depend, in part, on the
successful assimilation of its key personnel, including editors, publishers and
journalists, as well as its ability to attract additional talented personnel to
the Company as it implements its strategy. Holdings and the Company have
retained the services of certain key personnel of ALM and NLP, including
editors, publishers and journalists, all of whom have significant experience in
the publishing industry. Effective March 1998, the Company employed William L.
Pollak as its President and Chief Executive Officer, replacing Randall J.
Weisenburger. See "Certain Transactions." Although the Company believes it will
be able to attract and retain talented personnel to the Company and that it
could replace key personnel should the need arise, the inability to attract or
retain such personnel could have a material adverse effect on the Company. See
"Management--Directors, Executive Officers and Key Employees."
FRAUDULENT TRANSFER CONSIDERATIONS
Holdings' obligations under the Discount Notes may be subject to review
under state or federal fraudulent transfer laws in the event of the bankruptcy
or other financial difficulty of Holdings.
Under those laws, if a court, in a lawsuit by an unpaid creditor or
representative of creditors of Holdings, such as a trustee in bankruptcy or
Holdings as a debtor in possession under chapter 11 of the Bankruptcy Code, were
to find that when Holdings issued the Discount Notes, it (a) received less than
fair consideration or reasonably equivalent value therefor, and (b) either (i)
was or was rendered insolvent, (ii) was engaged in a business or transaction for
which its remaining unencumbered assets constituted unreasonably small capital
or (iii) intended to incur or believed (or reasonably should have believed) that
it
25
<PAGE>
would incur debts beyond its ability to pay as such debts matured (or, in the
event New York law is applicable, it is a defendant in an action for money
damages or a judgment in such an action has been docketed against it, if, after
final judgment for the plaintiff, it fails to satisfy such judgment), the court
could avoid the Discount Notes and Holdings' obligations thereunder, or
subordinate the Discount Notes to all of Holdings' other obligations, and in
either case order the return of any amounts paid thereunder to Holdings or to a
fund for the benefit of its creditors. It should be noted that a court could
avoid the Discount Notes and Holdings' obligations thereunder without regard to
factors (a) and (b) above if it found that Holdings issued the Discount Notes
with actual intent to hinder, delay, or defraud its creditors.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction being applied. Generally, however, an entity
would be considered insolvent if the sum of its debts (including contingent or
unliquidated debts) is greater than all of its property at a fair valuation or
if the present fair salable value of its assets is less than the amount that
will be required to pay its probable liability on its existing debts as they
become absolute and matured.
ABSENCE OF A PUBLIC MARKET COULD ADVERSELY AFFECT THE VALUE OF EXCHANGE DISCOUNT
NOTES
The Old Discount Notes were issued to, and Holdings believes are currently
owned by, a relatively small number of beneficial owners. Prior to the Exchange
Offer, there was no public market for the Old Discount Notes. The Old Discount
Notes have not been registered under the Securities Act and will be subject to
restrictions on transferability to the extent that they are not exchanged for
Exchange Discount Notes by holders who are entitled to participate in this
Exchange Offer. The holders of Old Discount Notes (other than any such holder
that is an "affiliate" of Holdings within the meaning of Rule 405 under the
Securities Act) who are not eligible to participate in the Exchange Offer are
entitled to certain registration rights, and Holdings is required to file a
Shelf Registration Statement with respect to such Old Discount Notes.
The Exchange Discount Notes will constitute a new issue of securities with
no established trading market. Holdings does not intend to list the Exchange
Discount Notes on any national securities exchange or stock market. The Initial
Purchasers have advised Holdings that they currently intend to make a market in
the Exchange Discount Notes, but they are not obligated to do so and may
discontinue such market making at any time. In addition, such market making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the Exchange Offer and the pendency of
the Shelf Registration Statement. Accordingly, no assurance can be given that an
active public or other market will develop for the Exchange Discount Notes or as
to the liquidity of the trading market for the Exchange Discount Notes. If a
trading market does not develop or is not maintained, holders of the Exchange
Discount Notes may experience difficulty in reselling the Exchange Discount
Notes or may be unable to sell them at all. If a market for the Exchange
Discount Notes develops, any such market may be discontinued at any time.
If a public trading market develops for the Exchange Discount Notes, future
trading prices of such securities could trade at prices lower than the initial
offering price depending on many factors including, among others, prevailing
interest rates, Holdings' results of operations and the market for similar
securities. Depending on prevailing interest rates, the market for similar
securities, and other factors, including the financial condition of Holdings,
the Exchange Discount Notes may trade at a discount from their principal amount.
FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES COULD ADVERSELY AFFECT HOLDERS
Issuance of the Exchange Discount Notes in exchange for the Old Discount
Notes pursuant to the Exchange Offer will be made only after a timely receipt by
Holdings of such Old Discount Notes, a properly completed and duly executed
Letter of Transmittal and all other required documents. Therefore, holders of
the Old Discount Notes desiring to tender such Old Discount Notes in exchange
for Exchange
26
<PAGE>
Discount Notes should allow sufficient time to ensure timely delivery. Holdings
is under no duty to give notification of defects or irregularities with respect
to the tender of Old Discount Notes for exchange. Old Discount Notes that are
not tendered or are tendered but not accepted will, following the consummation
of the Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof, and, upon consummation of the Exchange Offer certain
registration rights under the Registration Rights Agreement will terminate. In
addition, any holder of Old Discount Notes who tenders in the Exchange Offer for
the purpose of participating in a distribution of the Exchange Discount Notes
may be deemed to have received restricted securities, and if so, will be
required to comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. Each broker-dealer
that receives Exchange Discount Notes for its own account in exchange for Old
Discount Notes, where such Old Discount Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Discount Notes. See "Plan of Distribution." To
the extent that Old Discount Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Old
Discount Notes could be adversely affected. See "The Exchange Offer."
27
<PAGE>
THE TRANSACTIONS
The Initial Discount Note Offering was consummated on December 22, 1997 and
was made in conjunction with the Transactions.
THE ACQUISITIONS
ALM ACQUISITION. On August 27, 1997, but effective as of August 1, 1997,
the Investors, through ALM, consummated the ALM Acquisition, pursuant to which
ALM purchased substantially all of the assets and assumed certain of the
liabilities related to Old ALM. The purchase price for the ALM Acquisition was
$63.0 million. The ALM Acquisition and the payment of related fees and expenses
were financed through the issuance of the ALM Promissory Note, a $31.5 million
secured promissory Note issued by ALM to the former owner of Old ALM, and the
issuance of the WP Promissory Note, a $32.0 million equity bridge Note issued by
ALM to an affiliate of WPG. The ALM Promissory Note accrued interest at a rate
of 10% per annum. The WP Promissory Note accrued interest at a rate of 9% per
annum.
NLP ACQUISITION. Pursuant to a Stock Purchase Agreement, dated October 23,
1997 (the "Stock Purchase Agreement"), among ALM, Boston Ventures Limited
Partnership IV, Boston Ventures Limited Partnership IVA and Mr. James A.
Finkelstein, ALM purchased all of the issued and outstanding capital stock of
NLP. The purchase price for the NLP Acquisition was $203.2 million. The NLP
Acquisition was consummated on December 22, 1997.
THE FINANCINGS
In order to enable ALM to finance the NLP Acquisition, to repay the ALM
Promissory Note and the WP Promissory Note and accrued interest thereon, and to
pay related fees, expenses and restructuring costs, Holdings conducted the
Initial Discount Note Offering, and Holdings and ALM entered into certain other
financing transactions, as described below:
EQUITY CONTRIBUTIONS. Holdings contributed an aggregate of $108.8 million
to the capital of ALM. The Equity Contribution was funded by (a) $75.0 million
Investor Equity Contribution and (b) net proceeds of approximately $33.8 million
received by Holdings in connection with the Initial Discount Note Offering.
INITIAL SENIOR NOTE OFFERING. Concurrently with the Initial Discount Note
Offering, the Company offered $175.0 million aggregate principal amount of its
Senior Notes. Interest on the Senior Notes will accrue at the rate of 9 3/4% per
annum from December 22, 1997 and be payable semi-annually in arrears on June 15
and December 15 of each year. See "Description of Other
Indebtedness--Description of the Senior Notes."
SOURCES AND USES OF FUNDS
The following table illustrates the sources and uses of funds related to the
Transactions (in millions).
<TABLE>
<CAPTION>
SOURCES OF FUNDS USES OF FUNDS
- ----------------------------------------------- -----------------------------------------------
<S> <C> <C> <C>
The Senior Notes............................... $ 175.0 Repayment of ALM Promissory Note (2)........... $ 32.5
Equity Contribution(1)......................... 75.0 Repayment of WP Promissory Note(3)............. 33.0
The Discount Notes............................. 33.8 NLP Acquisition................................ 203.2
One-time Restructuring Costs................... 2.8
Fees and Expenses.............................. 12.3
--------- ---------
Total Sources of Funds......................... $ 283.8 Total Uses of Funds............................ $ 283.8
--------- ---------
--------- ---------
</TABLE>
- ------------------------------
(1) Represents the Equity Contribution of $75.0 million of capital invested in
Holdings by the Investors.
(2) Represents repayment of the principal of and accrued but unpaid interest on
the ALM Promissory Note. The ALM Promissory Note accrued interest at a rate
of 10% per annum.
(3) Represents repayment of the principal of and accrued but unpaid interest on
the WP Promissory Note. The WP Promissory Note accrued interest at a rate of
9% per annum.
28
<PAGE>
USE OF PROCEEDS
The net proceeds to Holdings from the Initial Discount Note Offering,
approximately $33.8 million (after deducting discounts to the Initial Purchasers
and other Initial Discount Note Offering expenses), were used to fund, in part,
a capital contribution to ALM which, together with the proceeds to ALM of the
Initial Senior Note Offering, was used to consummate the NLP Acquisition, to
repay the principal and accrued interest on each of the ALM Promissory Note and
the WP Promissory Note, to pay certain fees and expenses, and to pay one-time
restructuring costs in connection with the Transactions.
The Exchange Offer is intended to satisfy certain of Holdings' obligations
under the Registration Rights Agreement. Holdings will not receive any cash
proceeds from the issuance of the Exchange Discount Notes offered hereby. In
consideration for issuing the Exchange Discount Notes contemplated in this
Prospectus, Holdings will receive Old Discount Notes in like principal amount,
the form and terms of which are the same as the form and terms of the Exchange
Discount Notes (which replace the Old Discount Notes), except as otherwise
described herein.
CAPITALIZATION
The following table sets forth the consolidated capitalization of Holdings
as of December 31, 1997 after giving effect to the Initial Discount Notes
Offering and the other Transactions and the application of the net proceeds
received therefrom. The Old Discount Notes surrendered in exchange for Exchange
Discount Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the Exchange Discount Notes will not result in any increase or
decrease in the indebtedness of Holdings. As such, no effect has been given to
the Exchange Offer in the following capitalization table. The information in
this table should be read in conjunction with "The Transactions," "Unaudited
Combined Pro Forma Statements of Operations," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and accompanying notes thereto appearing elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------
<S> <C>
(IN THOUSANDS)
Short-term debt:
Short-term borrowings..................................................................... --
--------
Long-term debt (less current portion):
Discount Notes............................................................................ $ 35,119
Company Borrowings:
Senior Notes............................................................................ 175,000
--------
Total Long-term debt (less current portion)........................................... 210,119
--------
Stockholders' equity:
Additional paid-in capital................................................................ 75,000(1)
Accumulated deficit....................................................................... (7,711)
--------
Total Stockholders' equity............................................................ 67,289
--------
Total capitalization................................................................ $ 277,408
--------
--------
</TABLE>
- ------------------------
(1) Represents the Investor Equity Contribution.
29
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The Unaudited Combined Pro Forma Statements of Operations for the years
ended December 31, 1996 and 1997 give effect to the Transactions and the
Acquisitions as if each such transaction had occurred on January 1, 1996 and
1997, respectively.
The Unaudited Combined Pro Forma Statements of Operations should be read in
conjunction with the historical consolidated financial statements of Holdings,
Old ALM and NLP, including the notes thereto, included elsewhere in this
Prospectus and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." The Unaudited Combined Pro Forma Statements of
Operations represent management's best estimate of the effects of the
Transactions and the Acquisitions and do not purport to be indicative of the
results that would have actually been obtained had such transactions been
consummated for the years presented, or that may be obtained in the future.
AMERICAN LAWYER MEDIA HOLDINGS, INC.
UNAUDITED COMBINED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
------------------------------------------------------------
ELIMINATION
OLD OLD ALM OF COUNSEL NLP
ALM (A) ALM (B) NLP (C) ACQUISITION (D) CONNECT (E) ACQUISITION (F) OTHER (G)
----------- ----------- ----------- --------------- ------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
OPERATING DATA:
Revenues:
Periodicals:
Advertising.................. $ 18,146 $ 13,410 $ 26,402 $ -- $ -- $ -- $ --
Subscription................. 6,719 5,260 9,504 -- -- -- --
Ancillary Products and
Services................... 4,532 4,142 13,926 -- -- -- --
Internet Services............ 2,148 40 1,109 -- (2,148) -- --
----------- ----------- ----------- ------- ------------- ------- -----------
Total Revenues................. 31,545 22,852 50,941 -- (2,148) -- --
----------- ----------- ----------- ------- ------------- ------- -----------
Operating Costs and Expenses:
Editorial.................... 4,023 3,323 5,837 -- -- -- --
Production and
Distribution............... 6,919 5,766 9,872 -- -- -- --
Selling...................... 4,640 3,656 8,211 -- -- -- --
General and Administrative... 9,531 7,145 8,722 -- -- -- (2,286)
Internet Services............ 6,464 43 1,657 -- (5,964) -- --
Depreciation and
Amortization............... 1,590 3,273 7,283 1,945 -- 9,993 --
Shutdown of ALM Internet
Services................... -- 4,823 -- -- (4,823) -- --
Special Compensation
Charge..................... -- -- 6,926 -- -- (6,926) --
----------- ----------- ----------- ------- ------------- ------- -----------
Total Operating Costs and
Expenses..................... 33,167 28,029 48,508 1,945 (10,787) 3,067 (2,286)
----------- ----------- ----------- ------- ------------- ------- -----------
Operating income (loss)........ (1,622) (5,177) 2,433 (1,945) 8,639 (3,067) 2,286
Interest expense, net.......... (1,420) (2,534) (5,137) (2,656) -- 5,137 --
----------- ----------- ----------- ------- ------------- ------- -----------
Income (loss) before income
taxes........................ (3,042) (7,711) (2,704) (4,601) 8,639 2,070 2,286
Provision (benefit) for income
taxes........................ -- -- 2,508 -- -- (2,258) --
----------- ----------- ----------- ------- ------------- ------- -----------
Net income (loss).............. $ (3,042) $ (7,711) $ (5,212) $ (4,601) $ 8,639 $ 4,328 $ 2,286
----------- ----------- ----------- ------- ------------- ------- -----------
----------- ----------- ----------- ------- ------------- ------- -----------
<CAPTION>
COMBINED
FINANCING PRO
(H) FORMA
------------- -----------
<S> <C> <C>
OPERATING DATA:
Revenues:
Periodicals:
Advertising.................. $ -- $ 57,958
Subscription................. -- 21,483
Ancillary Products and
Services................... -- 22,600
Internet Services............ -- 1,149
------------- -----------
Total Revenues................. -- 103,190
------------- -----------
Operating Costs and Expenses:
Editorial.................... -- 13,183
Production and
Distribution............... -- 22,557
Selling...................... -- 16,507
General and Administrative... -- 23,112
Internet Services............ -- 2,200
Depreciation and
Amortization............... -- 24,084
Shutdown of ALM Internet
Services................... -- --
Special Compensation
Charge..................... -- --
------------- -----------
Total Operating Costs and
Expenses..................... -- 101,643
------------- -----------
Operating income (loss)........ -- 1,547
Interest expense, net.......... (15,495) (22,105)
------------- -----------
Income (loss) before income
taxes........................ (15,495) (20,558)
Provision (benefit) for income
taxes........................ -- 250
------------- -----------
Net income (loss).............. $ (15,495) $ (20,808)
------------- -----------
------------- -----------
</TABLE>
<TABLE>
<S> <C>
OTHER DATA:
EBITDA: (i)
Periodicals and Ancillary Products and Services................................................................... $ 26,682
Internet Services................................................................................................. (1,051)
-----------
Total............................................................................................................... $ 25,631
-----------
-----------
Capital Expenditures: (j)
Periodicals and Ancillary Products and Services................................................................... $ 1,269
Internet Services................................................................................................... 42
-----------
Total............................................................................................................... $ 1,311
-----------
-----------
Interest coverage ratio (k)......................................................................................... 1.16x
Earnings to fixed charges ratio (l)................................................................................. --
Fixed charges coverage deficiency (m)............................................................................... $ 20,558
</TABLE>
30
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO UNAUDITED COMBINED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
(a) Represents the historical statement of operations of Old ALM for the seven
months ended July 31, 1997.
(b) Represents the consolidated statement of operations of Holdings for the five
months ended December 31, 1997, after giving effect to the ALM Acquisition
at August 1, 1997 and the NLP acquisition at December 22, 1997.
(c) Represents the historical statement of operations of NLP for the period from
January 1, 1997 through December 21, 1997.
(d) Represents the adjustments to give effect to the ALM Acquisition as if it
were consummated at January 1, 1997. The following adjustments were made:
<TABLE>
<S> <C>
AMORTIZATION:
Removal of historical amortization............................................. (687)
Amortization of goodwill and intangibles....................................... 2,632
---------
$ 1,945
---------
---------
INTEREST EXPENSE:
Removal of Old ALM's interest expense on amounts due to General Partner........ $ (1,420)
Accrual of interest on WP Promissory Note (9% per annum)....................... 1,936
Accrual of interest on ALM Promissory Note (10% per annum)..................... 2,140
---------
$ 2,656
---------
---------
</TABLE>
(e) Represents the removal of ALM's Internet Services (see Note 4 in the
consolidated financial statements as of and for the five months ended
December 31, 1997 of ALM) excluding administrative costs allocated by the
corporate division of Old ALM.
(f) Represents the adjustments to give effect to the NLP Acquisition as if it
were consummated at January 1, 1997. The following adjustments were made:
<TABLE>
<S> <C>
AMORTIZATION:
Removal of historical amortization............................................ (6,709)
Amortization of goodwill and intangibles...................................... 16,702
---------
$ 9,993
---------
---------
</TABLE>
SPECIAL COMPENSATION CHARGE:
Represents the elimination of the special compensation charge related to the
buyout of management stock options in connection with the NLP acquisition.
INTEREST EXPENSE:
Elimination of $5,137 of interest expense on the historical debt of NLP
which was not acquired.
INCOME TAXES:
The income tax benefit considers the reversal of historical interest
expense, the federal income tax benefit related to the filing of a
consolidated tax return including ALM and the interest expense related to
the Initial Discount Note Offering. The resulting combined pro forma
provision for income taxes reflects the provision for state income taxes due
as a result of the requirement to file non-combined returns in certain
states, principally New York.
31
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO UNAUDITED COMBINED PRO FORMA STATEMENT OF OPERATIONS (CONTINUED)
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
(g) The adjustment relates to the elimination or reduction of certain costs and
expenses which have either already occurred or which will be eliminated or
reduced as a result of activities expected to be completed shortly following
the completion of the Transactions, as follows:
<TABLE>
<S> <C>
Rent Expense(1)................................................................ $ 326
Compensation of former ALM Chairman (2)........................................ 200
Employee Benefits (3).......................................................... 1,731
Other (4)...................................................................... 29
---------
$ 2,286
---------
---------
</TABLE>
----------------------------
(1) Represents the identified savings resulting principally from relocating
ALM's New York office to new space expected to be completed during 1998.
This results from lower lease costs based on current available space and
reduced space requirements and other factors. Savings resulting from
consolidating various regional offices are also included.
(2) Represents the historical compensation and benefits of the former
Chairman of ALM, who resigned prior to the ALM Acquisition.
(3) The Company has completed a thorough analysis of ALM's employee benefit
program (primarily retirement and health benefits) and has identified
various changes thereto, including the freeze of the pension plan and
modifications to the medical and dental plan. These changes have been or
will be made during 1998.
(4) Represents Old ALM's share of losses from its interest in the Court TV
Law Center joint venture. This joint venture was terminated in March,
1997.
(h) Adjustments with respect to interest expense are as follows:
<TABLE>
<S> <C>
Interest expense as if the Initial Offerings had occurred on January 1, 1997:
Discount Notes ($35,000) at a rate of 12.25%................................ $ 4,168
Senior Notes ($175,000) at a rate of 9.75%.................................. $ 16,589
Removal of interest expense with respect to the ALM Promissory Note and the WP
Promissory Note............................................................. (6,030)
Amortization of deferred financing costs...................................... 768
---------
Total interest expense........................................................ $ 15,495
---------
---------
</TABLE>
(i) EBITDA is not a measure of performance under GAAP. Items excluded from
income in calculating EBITDA are significant components in understanding and
evaluating the Company's financial performance. While EBITDA should not be
considered in isolation or as a substitute for net income, cash flows from
operating activities and other income or cash flow statements data prepared
in accordance with GAAP or as a measure of profitability or liquidity,
management understands that EBITDA is customarily used in evaluating
publishing companies. The EBITDA measures presented herein may not be
comparable to similarly titled measures of other companies.
(j) Excludes capital expenditures related to COUNSEL CONNECT of $1,539.
(k) Ratio equal to EBITDA divided by interest expense.
(l) Earnings used in computing the ratio of earnings to fixed charges consist of
income before provision for income taxes plus fixed charges. Fixed charges
include interest expense and the implied interest element of rent expense
for the period. For purposes of calculating this ratio, earnings were
negative and insufficient to cover fixed charges.
(m) Deficiency is equal to the shortfall in earnings to cover fixed charges.
32
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
UNAUDITED COMBINED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OLD ALM ELIMINATION
OLD ACQUISITION OF COUNSEL NLP
ALM (A) NLP (B) (C) CONNECT (D) ACQUISITION (E) OTHER (F) FINANCING (G)
----------- ----------- ------------- ------------- --------------- ----------- -------------
(DOLLARS IN THOUSANDS)
OPERATING DATA:
Revenues:
Periodicals:
Advertising..... $ 26,659 $ 23,319 $ -- $ -- $ -- $ -- $ --
Subscription.... 11,304 9,759 -- -- -- -- --
Ancillary Products
and Services.... 8,467 13,398 -- -- -- -- --
Internet
Services........ 5,474 747 -- (5,474) -- -- --
----------- ----------- ------------- ------------- ------- ----------- -------------
Total
Revenues.... 51,904 47,223 -- (5,474) -- -- --
----------- ----------- ------------- ------------- ------- ----------- -------------
Operating Costs and
Expenses:
Editorial......... 7,141 5,929 -- -- -- -- --
Production and
Distribution.... 12,469 8,679 -- -- -- -- --
Selling........... 7,479 8,991 -- -- -- -- --
General and
Administrative... 16,829 8,047 -- -- -- (3,595) --
Internet
Services........ 11,886 1,704 -- (10,786) -- -- --
Depreciation and
Amortization.... 2,488 7,487 3,344 -- 10,249 -- --
----------- ----------- ------------- ------------- ------- ----------- -------------
Total
Operating
Costs and
Expenses.... 58,292 40,837 3,344 (10,786) 10,249 (3,595) --
----------- ----------- ------------- ------------- ------- ----------- -------------
Operating
income
(loss)...... (6,388) 6,386 (3,344) 5,312 (10,249) 3,595 --
Interest expenses,
net............... (1,972) (6,013) (4,058) -- 6,013 -- (16,088)
Other income
(expense)......... -- 181 -- -- -- -- --
Minority interest... 172 -- -- (172) -- -- --
----------- ----------- ------------- ------------- ------- ----------- -------------
Income (loss) before
income taxes...... (8,188) 554 (7,402) 5,140 (4,236) 3,595 (16,088)
Provision (benefit)
for income
taxes............. -- 3,007 -- -- (3,007) -- --
----------- ----------- ------------- ------------- ------- ----------- -------------
Net income (loss)... $ (8,188) $ (2,453) $ (7,402) $ 5,140 $ (1,229) $ 3,595 $ (16,088)
----------- ----------- ------------- ------------- ------- ----------- -------------
----------- ----------- ------------- ------------- ------- ----------- -------------
OTHER DATA:
EBITDA: (h)
Periodicals and Ancillary Products and Services........................................................................
Internet Services......................................................................................................
Total..............................................................................................................
Capital
Expenditures:
Periodicals and Ancillary Products and Services........................................................................
Internet Services (i)..................................................................................................
Total..............................................................................................................
Interest coverage ratio (j)..............................................................................................
Total debt to EBITDA ratio (k)...........................................................................................
Earnings to fixed charge ratio (l).......................................................................................
Fixed charges coverage deficiency (m)....................................................................................
<CAPTION>
<S> <C>
COMBINED
PRO FORMA
-----------
OPERATING DATA:
Revenues:
Periodicals:
Advertising..... $ 49,978
Subscription.... 21,063
Ancillary Products
and Services.... 21,865
Internet
Services........ 747
-----------
Total
Revenues.... 93,653
-----------
Operating Costs and
Expenses:
Editorial......... 13,070
Production and
Distribution.... 21,148
Selling........... 16,470
General and
Administrative... 21,281
Internet
Services........ 2,804
Depreciation and
Amortization.... 23,568
-----------
Total
Operating
Costs and
Expenses.... 98,341
-----------
Operating
income
(loss)...... (4,668)
Interest expenses,
net............... (22,118)
Other income
(expense)......... 181
Minority interest... --
-----------
Income (loss) before
income taxes...... (26,625)
Provision (benefit)
for income
taxes............. --
-----------
Net income (loss)... $ (26,625)
-----------
-----------
OTHER DATA:
EBITDA: (h)
Periodicals and An $ 20,937
Internet Services. (2,057)
-----------
Total......... $ 18,880
-----------
-----------
Capital
Expenditures:
Periodicals and An $ 1,604
Internet Services 26
-----------
Total......... $ 1,630
-----------
-----------
Interest coverage ra 0.85x
Total debt to EBITDA 11.10x
Earnings to fixed ch --
Fixed charges covera $ 26,625
</TABLE>
33
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO UNAUDITED COMBINED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
(a) Represents the historical statement of operations of Old ALM for the year
ended December 31, 1996.
(b) Represents the historical statement of operations of NLP for the year ended
December 31, 1996.
(c) Represents the adjustments to give effect to the ALM Acquisition as if it
were consummated at January 1, 1996. The following adjustments were made:
<TABLE>
<S> <C>
AMORTIZATION:
Removal of historical amortization............................... $ (1,169)
Amortization of goodwill and intangibles......................... 4,513
---------
Net adjustment..................................................... $ 3,344
---------
---------
INTEREST EXPENSE:
Removal of Old ALM's interest expense on amounts due to General
Partner.......................................................... $ (1,972)
Accrual of interest on WP Promissory Note (9% per annum)........... 2,880
Accrual of interest on ALM Promissory Note (10% per annum)......... 3,150
---------
$ 4,058
---------
---------
</TABLE>
(d) Represents the removal of ALM's Internet Services (See Note 4 in the
consolidated financial statements as of and for the year ended December 31,
1997 of ALM) excluding administrative costs allocated by the corporate
division of Old ALM.
(e) Represents the adjustments to give effect to the NLP Acquisition as if it
was consummated at January 1, 1996. The following adjustments were made:
<TABLE>
<S> <C>
AMORTIZATION:
Removal of historical amortization............................... $ (6,923)
Amortization of goodwill and intangibles......................... 17,172
---------
Net adjustment..................................................... $ 10,249
---------
---------
</TABLE>
INTEREST EXPENSE:
Elimination of $6,013 of interest expense on the historical debt of NLP
which was not acquired.
INCOME TAXES:
The income tax benefit considers the reversal of historical interest
expense, the Federal income tax benefit related to the filing of a
consolidated tax return including ALM and the interest expense related to
the ALM Offering.
34
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO UNAUDITED COMBINED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 (CONTINUED)
(DOLLARS IN THOUSANDS)
(f) The adjustment relates to the elimination or reduction of certain costs and
expenses which have either already occurred or which will be eliminated or
reduced as a result of activities to be completed shortly following the
completion of the Transactions, as follows:
<TABLE>
<S> <C>
Rent Expense (1).................................................... $ 313
Compensation of former ALM Chairman (2)............................. 1,300
Employee Benefits (3)............................................... 1,682
Other (4)........................................................... 300
---------
$ 3,595
---------
---------
</TABLE>
- ------------------------
(1) Represents the identified savings resulting principally from
relocating ALM's New York office to new space expected to be completed
during 1998. This results from lower lease costs based on current
available space and reduced space requirements and other factors.
Savings resulting from consolidating various regional offices are also
included.
(2) Represents the historical compensation and benefits of the former
Chairman of ALM, who resigned prior to the ALM Acquisition.
(3) The Company has completed a thorough analysis of ALM's employee
benefit program (primarily retirement and health benefits) and has
identified various changes thereto including the freeze of the pensions
plan and modifications to the medical and dental plan. These changes
have been or will be made in 1998.
(4) Consists primarily of Old ALM's share of losses from its interest in
the Court TV Law Center joint venture. This joint venture was
terminated in March, 1997.
(g) Additional interest expense based upon the new debt:
<TABLE>
<S> <C>
Interest expense as if the Initial Offerings had occurred on
January 1, 1996:
Discount Notes ($35,000) at a rate of 12.25%................... $ 4,288
Senior Notes ($175,000) at a rate of 9.75%..................... 17,062
Removal of interest expense with respect to the ALM Promissory Note
and the WP Promissory Note....................................... (6,030)
Amortization of deferred financing costs........................... 768
---------
Total interest expense............................................. $ 16,088
---------
---------
</TABLE>
(h) EBITDA is not a measure of performance under GAAP. Items excluded from
income in calculating EBITDA are significant components in understanding and
evaluating Holdings' and the Company's financial performance. While EBITDA
should not be considered in isolation or as a substitute for net income,
cash flows from operating activities and other income or cash flow statement
data prepared in accordance with GAAP or as a measure of profitability or
liquidity, management understands that EBITDA is customarily used in
evaluating publishing companies. The EBITDA measures presented herein may
not be comparable to similarly titled measures of other companies.
(i) Excludes capital expenditures related to COUNSEL CONNECT of $1,084.
(j) Ratio equal to EBITDA divided by interest expense. Interest expense includes
$5,056 of non-cash interest expense related to the Discount Notes and
amortization of deferred financing costs related to the Senior Notes, the
Discount Notes and a possible revolving credit facility. The ratio of EBITDA
to cash interest expense for the year ended December 31, 1996 is 1.11x.
35
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO UNAUDITED COMBINED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 (CONTINUED)
(DOLLARS IN THOUSANDS)
(k) Ratio equal to long-term debt at December 31, 1996 divided by EBITDA for the
period.
(l) Earnings used in computing the ratio of earnings to fixed charges consist of
income before provision for income taxes plus fixed charges. Fixed charges
include interest expense and the implied interest element of rent expense
for the period. For purposes of calculating this ratio, earnings were
negative and insufficient to cover fixed charges.
(m) Deficiency is equal to the shortfall in earnings to cover fixed charges.
36
<PAGE>
SELECTED CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
The following tables present selected historical financial information (i)
for Old ALM, as of and for the years ended December 31, 1993, 1994, 1995 and
1996, (ii) for NLP, as of and for the years ended December 31, 1993, 1994, 1995
and 1996, (iii) for Old ALM, as of and for the seven months ended July 31, 1997,
(iv) for Holdings, as of and for the five months ended December 31, 1997, and
(v) for NLP, as of and for the period from January 1, 1997 through December 21,
1997. The financial data for Holdings, as of and for the five months ended
December 31, 1997 and the financial data for Old ALM for the seven months ended
July 31, 1997 and the years ended December 31, 1995 and 1996 were derived from
financial statements audited by Arthur Andersen LLP. The financial data for NLP
as of and for the period from January 1, 1997 through December 21, 1997 were
derived from financial statements audited by Arthur Andersen LLP and financial
data for NLP for the years ended December 31, 1995 and 1996 were derived from
financial statements audited by Leslie Sufrin and Company, P.C. The audited
financial statements and the related notes thereto are included elsewhere in
this Prospectus. Unaudited financial data include (i) Old ALM financial data for
the years ended December 31, 1993 and 1994, and (ii) NLP financial data for the
years ended December 31, 1993 and 1994. In the opinion of management such
unaudited financial data have been prepared on the same basis as the audited
financial statements included elsewhere herein, and include all normal recurring
adjustments necessary for a fair presentation of the financial position and
results of operations for such periods. Results of operations for the interim
periods presented are not necessarily indicative of the results of operations
for the full year. The selected financial information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the historical and pro forma financial statements
and notes thereto included elsewhere in this Prospectus. See "Pro Forma
Financial Information" and "Index to Financial Statements."
37
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
AMERICAN LAWYER MEDIA HOLDINGS, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PREDECESSOR COMPANY AMERICAN LAWYER
----------------------------------------------------------- MEDIA HOLDINGS,
INC.
YEARS ENDED DECEMBER 31, SEVEN MONTHS FIVE MONTHS
------------------------------------------ ENDED JULY 31, ENDED DECEMBER 31,
1993 1994 1995 1996 1997 1997
--------- --------- --------- --------- --------------- -------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Periodicals:
Advertising................................. $ 22,569 $ 23,872 $ 25,037 $ 26,659 $ 18,146 13,410
Subscription................................ 10,242 10,483 10,884 11,304 6,719 5,260
Ancillary Products and Services............... 7,374 7,980 8,387 8,467 4,532 4,142
Internet Services............................. 135 685 3,238 5,474 2,148 40
--------- --------- --------- --------- ------- -------
Total Revenues............................ 40,320 43,020 47,546 51,904 31,545 22,852
--------- --------- --------- --------- ------- -------
Operating Costs and Expenses:
Editorial..................................... 7,109 7,075 7,073 7,141 4,023 3,323
Production and Distribution................... 10,678 11,170 12,587 12,469 6,919 5,766
Selling....................................... 6,662 7,208 6,913 7,479 4,640 3,656
General and Administrative.................... 15,303 15,790 16,506 16,829 9,531 7,145
Internet Services............................. 2,634 7,760 10,854 11,886 6,464 43
Depreciation and Amortization................. 4,047 3,506 2,680 2,488 1,590 3,273
Shutdown of ALM Internet Services............. -- -- -- -- -- 4,823
--------- --------- --------- --------- ------- -------
Total Operating Costs and Expenses........ 46,433 52,509 56,613 58,292 33,167 28,029
--------- --------- --------- --------- ------- -------
Operating (loss).......................... (6,113) (9,489) (9,067) (6,388) (1,622) (5,177)
Interest expense, net........................... (478) (667) (1,384) (1,972) (1,420) (2,534)
--------- --------- --------- --------- ------- -------
(Loss) before minority interest................. (6,591) (10,156) (10,451) (8,360) (3,042) (7,711)
Minority interest............................... -- 1,847 2,334 172 -- --
--------- --------- --------- --------- ------- -------
Net (loss)...................................... $ (6,591) $ (8,309) $ (8,117) $ (8,188) $ (3,042) $ (7,711)
--------- --------- --------- --------- ------- -------
--------- --------- --------- --------- ------- -------
BALANCE SHEET DATA:
(At End of Period)
Working capital (deficit)....................... $ (6,571) $ (6,376) $ (7,066) $ (7,009) $ (5,895) $ (7,042)
Total assets.................................... 20,896 20,931 19,313 19,482 18,982 365,528
Long-term debt (including current maturities)... 11,212 13,524 22,114 30,150 34,742 210,119
Partners' (deficit) and Stockholders' equity.... (3,332) (11,647) (19,759) (26,300) (29,342) 67,289
OTHER DATA:
EBITDA: (1)
Periodicals and Ancillary Products and
Services.................................... $ 433 $ 1,092 $ 1,229 $ 2,512 $ 4,284 $ 2,922
Internet Services............................. (2,499) (7,075) (7,616) (6,412) (4,316) (4,826)
--------- --------- --------- --------- ------- -------
Total..................................... $ (2,066) $ (5,983) $ (6,387) $ (3,900) $ (32) $ (1,904)
--------- --------- --------- --------- ------- -------
--------- --------- --------- --------- ------- -------
Capital Expenditures:
Periodicals and Ancillary Products and
Services.................................... $ 878 $ 1,102 $ 864 $ 1,118 $ 439 $ 357
Internet Services............................. 210 386 617 1,084 1,532 7
--------- --------- --------- --------- ------- -------
Total..................................... $ 1,088 $ 1,488 $ 1,481 $ 2,202 $ 1,971 $ 364
--------- --------- --------- --------- ------- -------
--------- --------- --------- --------- ------- -------
</TABLE>
- ------------------------
(1) EBITDA is not a measure of performance under GAAP. Items excluded from
income in calculating EBITDA are significant components in understanding and
evaluating Old ALM's and Holdings' financial performance. While EBITDA
should not be considered in isolation or as a substitute for net income,
cash flows from operating activities and other income or cash flow statement
data prepared in accordance with GAAP or as a measure of profitability or
liquidity, management understands that EBITDA is customarily used in
evaluating publishing companies. The EBITDA measures presented herein may
not be comparable to similarly titled measures of other companies.
38
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED DECEMBER 31, JANUARY 1, 1997
------------------------------------------ THROUGH
1993 1994 1995 1996 DECEMBER 21, 1997
--------- --------- --------- --------- -------------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)
OPERATING DATA:
Revenues:
Periodicals:
Advertising........................................ $ 16,546 $ 18,612 $ 21,387 $ 23,319 $ 26,402
Subscription....................................... 8,610 9,105 9,694 9,759 9,504
Ancillary Products and Services...................... 10,824 11,437 12,729 13,398 13,926
Internet Services.................................... -- -- 264 747 1,109
--------- --------- --------- --------- ----------
Total Revenues................................... 35,980 39,154 44,074 47,223 50,941
--------- --------- --------- --------- ----------
Operating Costs and Expenses:
Editorial............................................ 4,811 5,451 5,778 5,929 5,837
Production and Distribution.......................... 7,009 7,621 8,146 8,679 9,872
Selling.............................................. 7,693 8,831 9,776 8,991 8,211
General and Administrative........................... 7,109 7,726 7,620 8,047 8,722
Internet Services.................................... -- -- 2,947 1,704 1,657
Depreciation and Amortization........................ 3,087 3,130 6,329 7,487 7,283
Special Compensation Charge.......................... -- -- -- -- 6,926
--------- --------- --------- --------- ----------
Total Operating Costs and Expenses............... 29,709 32,759 40,596 40,837 48,508
--------- --------- --------- --------- ----------
Operating income................................. 6,271 6,395 3,478 6,386 2,433
Interest expense, net.................................. (4,487) (4,734) (5,458) (6,013) (5,137)
Other income (expense)................................. (284) (320) (211) 181 --
--------- --------- --------- --------- ----------
Income (loss) before income taxes...................... 1,500 1,341 (2,191) 554 (2,704)
Benefit (provision) for income taxes................... (777) (763) 523 (3,007) (2,508)
--------- --------- --------- --------- ----------
Net income (loss) before cumulative effect of change in
accounting principle................................. 723 578 (1,668) (2,453) (5,212)
Cumulative effect of change in accounting principle.... 4,046 -- -- -- --
--------- --------- --------- --------- ----------
Net income (loss)...................................... $ 4,769 $ 578 $ (1,668) $ (2,453) $ (5,212)
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
BALANCE SHEET DATA:
(At End of Period)
Working capital (deficit).............................. $ (1,532) $ (2,868) $ (4,717) $ (2,081) $ (2,204)
Total assets........................................... 20,886 21,217 154,125 147,311 139,610
Long-term debt (including current maturities).......... 45,500 54,600 70,900 70,300 59,500
Stockholders' equity (deficit)......................... (33,945) (44,842) 65,620 63,167 64,782
OTHER DATA:
EBITDA: (1)
Periodicals and Ancillary Products and Services...... $ 9,358 $ 9,525 $ 12,490 $ 14,830 $ 10,264
Internet Services.................................... -- -- (2,683) (957) (548)
--------- --------- --------- --------- ----------
Total............................................ $ 9,358 $ 9,525 $ 9,807 $ 13,873 $ 9,716
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
Capital Expenditures:
Periodicals and Ancillary Products and Services...... $ 739 $ 1,511 $ 436 $ 486 $ 473
Internet Services.................................... -- 296 172 26 42
--------- --------- --------- --------- ----------
Total............................................ $ 739 $ 1,807 $ 608 $ 512 $ 515
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
</TABLE>
- ------------------------
(1) EBITDA is not a measure of performance under GAAP. Items excluded from
income in calculating EBITDA are significant components in understanding and
evaluating NLP's financial performance. While EBITDA should not be
considered in isolation or as a substitute for net income, cash flows from
operating activities and other income or cash flow statement data prepared
in accordance with GAAP or as a measure of profitability or liquidity,
management understands that EBITDA is customarily used in evaluating
publishing companies. The EBITDA measures presented herein may not be
comparable to similarly titled measures of other companies.
39
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
In August 1997, the Investors, through ALM, consummated the ALM Acquisition,
and in December 1997 ALM consummated the NLP Acquisition. Prior to the
Acquisitions, ALM and NLP operated independently, and the success of the Company
will depend in part on the Company's ability to integrate the operations of
these entities. The integration of the operations of ALM and NLP will entail the
reorganization of certain functions to achieve the cost savings outlined in the
business strategy and to realize the full potential of the business
opportunities available to the combined Company. There can be no assurance that
the Company will be able to successfully integrate these businesses or that the
Company will not encounter delays or incur unanticipated costs in such
integration.
The combination of ALM and NLP creates the nation's largest legal journalism
organization, with estimated readership of over one million. ALM's geographic
breadth and emphasis on high-quality editorial content have placed it at the
forefront of legal journalism; NLP's historical marketing strengths and
meticulous business execution have permitted it to produce consistently high
levels of operating profit and cash flow. The fundamental strategy underlying
the ALM-NLP combination is to leverage the strengths of both businesses by
adopting the best practices of each across the Company as a whole and to
capitalize on the opportunities inherent in the combination.
Historically, NLP has operated in a centralized manner and has focused its
resources on the continued development of its periodicals business as well as
expanding into various ancillary products and services, including books,
newsletters and seminars. ALM, on the other hand, has operated eight autonomous
regional businesses and has focused primarily on developing a geographically
diverse periodicals business (although each regional business has from time to
time developed various ancillary products and services). The Company intends to
centralize and consolidate its ancillary products and services business as well
as certain selling, general and administrative functions. Furthermore, the
Company intends to aggressively cross-sell its periodicals, products and
services to both readers and advertisers. The Company expects that the
implementation of these elements of its business strategy will result in
substantial cost savings, enhanced subscription and advertising revenues and an
acceleration in the growth of the Company's ancillary products and services
business.
PURCHASE ACCOUNTING EFFECTS. The Acquisitions have been accounted for using
the purchase method of accounting. The results of operations of Old ALM have
been included in the financial statements of the Company since August 1, 1997,
the effective date of the ALM Acquisition, and the results of operations of NLP
have been included in the financial statements of the Company since December 22,
1997, the closing date of the NLP Acquisition. As a result, the Acquisitions
will prospectively affect the Company's results of operations in certain
significant respects. In connection with the ALM Acquisition, the purchase price
was $63.0 million and the excess of the purchase price over the book value of
net tangible assets acquired was $67.7 million. The aggregate purchase price for
the NLP Acquisition was $203.2 million, and the excess of the purchase price
over the book value of net tangible assets acquired was $257.6 million. The
excess purchase price of both Acquisitions has been allocated to the tangible
and intangible assets acquired by the Company based upon their respective fair
values as of the acquisition date.
RESULTS OF OPERATIONS--ALM
REVENUE RECOGNITION. ALM recognizes advertising revenues on the issue date
of the related publications. Advertising revenues are generated from the
placement of display and classified advertisements, as well as legal notices.
Advertising fees billed and/or received for advertisements to be released in
future months are included in deferred revenue. Subscription revenues are
deferred and recognized on a pro rata basis over the term of the related
subscription, principally one year. Ancillary products and services revenues
consist primarily of sales of professional books, subscriptions to newsletters,
seminar and conference income and income from electronic products. Book revenues
are recognized upon shipment
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and are reflected net of estimated returns. Newsletter revenues are recognized
on the same basis as periodical subscription revenues. Seminar and conference
revenues are recognized when the seminar or conference is held.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
The following discussion for the year ended December 31, 1997 is derived
from the financial information for Old ALM for the seven months ended July 31,
1997 and for ALM for the five months ended December 31, 1997, including
adjustments for the ALM Acquisition and financial information for NLP for the
period from December 22, 1997 through December 31, 1997. As a result, the
financial information for the combined year ended December 31, 1997 has not been
prepared on a basis in conformity with GAAP. The following table presents the
calculation for such combined period and for the year ended December 31, 1996
(in thousands):
<TABLE>
<CAPTION>
OLD ALM AMERICAN LAWYER MEDIA HOLDINGS, INC.
---------------------------- ------------------------------------
COMBINED
YEAR SEVEN MONTHS FIVE MONTHS YEAR
ENDED ENDED ENDED ENDED
DECEMBER, 31, JULY 31, DECEMBER, 31, DECEMBER, 31,
1996 1997 1997 1997
------------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C>
OPERATING DATA:
Revenues:
Periodicals
Advertising................... 26,659 18,146 13,410 31,556
Subscription.................. 11,304 6,719 5,260 11,979
Ancillary Products and
Services...................... 8,467 4,532 4,142 8,674
Internet Services............... 5,474 2,148 40 2,188
------ ------ ------ ------
Total revenues.............. 51,904 31,545 22,852 54,397
------ ------ ------ ------
Operating Costs and Expenses:
Editorial....................... 7,141 4,023 3,323 7,346
Production and Distribution..... 12,469 6,919 5,766 12,685
Selling......................... 7,479 4,640 3,656 8,296
General and Administrative...... 16,829 9,531 7,145 16,676
Internet Services............... 11,886 6,464 43 6,507
Depreciation and Amortization... 2,488 1,590 3,273 4,863
Shutdown of ALM Internet
Services...................... -- -- 4,823 4,823
------ ------ ------ ------
Total Operating Costs and
Expenses.................. 58,292 33,167 28,029 61,196
------ ------ ------ ------
Operating (loss)............ (6,388) (1,622) (5,177) (6,799)
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
INTERNET SERVICES. ALM is in the process of discontinuing its COUNSEL
CONNECT internet service and transferring the most viable components of that
service into a new, enhanced service that better capitalizes on the combined
companies' unparalleled access to legal information, and as a result, the
following comparison of the years ended December 31, 1996 and 1997 excludes
operating data relating to COUNSEL CONNECT. Management believes that such a
comparison provides a meaningful discussion of ALM's results of operations for
such periods.
Net operating losses for Internet Services were $6.4 million for the year
ended December 31, 1996 and $9.1 million for the year ended December 31, 1997.
The historical financial data for ALM for the five months ended December 31,
1997 includes expenses of $4.8 million related to the shutdown. This amount
includes Internet Services net operating loss of $1.8 million as well as a
provision of $3.0 million to cover severance costs, uncollectible receivables,
writedown of computer and network equipment and the termination or restructuring
of certain contracts related to network services that provided internet access.
OVERVIEW. Net revenues (excluding Internet Services) increased $5.8
million, or 12.4%, from $46.4 million for the year ended December 31, 1996 to
$52.2 million for the year ended December 31, 1997. Total operating costs and
expenses (excluding Internet Services) increased $3.5 million, or 7.5%, from
$46.4
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<PAGE>
million to $49.9 million over the same periods. Operating income (excluding
Internet Services) increased $2.3 million from breakeven for the year ended
December 31, 1996 to $2.3 million for the year ended December 31, 1997 while
EBITDA increased $4.7 million from $2.5 million to $7.2 million over the same
periods.
REVENUES. Advertising revenues increased $4.9 million, or 18.4%, from $26.7
million for the year ended December 31, 1996 to $31.6 million for the year ended
December 31, 1997. The increase in advertising revenues was primarily
attributable to an increase in the total volume of advertising pages stemming,
in part, from both the increase in the frequency of CORPORATE COUNSEL MAGAZINE
and from strong legal industry trends.
Subscription revenues increased $0.7 million, or 6.0%, from $11.3 million
for the year ended December 31, 1996 to $12.0 million for the year ended
December 31, 1997. While total paid circulation remained essentially constant,
subscription rates increased relative to the same period in 1996. A portion of
the increase in subscription revenues was also attributable to ALM's newly
initiated efforts to convert its CORPORATE COUNSEL MAGAZINE from free
distribution to a paid subscriber base as well as the inclusion of NLP's
subscription revenue for the period from December 22, 1997 through December 31,
1997 of $0.3 million.
Revenues from ancillary products and services increased $0.2 million, or
2.4%, from $8.5 million for the year ended December 31, 1996 to $8.7 million for
the year ended December 31, 1997. The increase is due to the inclusion of NLP's
ancillary revenue of $0.5 million for the period from December 22, 1997 through
December 31, 1997.
OPERATING EXPENSES. Total operating costs and expenses (excluding Internet
Services) increased $3.5 million, or 7.5%, from $46.4 million for the year ended
December 31, 1996 to $49.9 million for the year ended December 31, 1997.
Editorial expenses increased $0.2 million, or 2.9%, from $7.1 million for the
year ended December 31, 1996 to $7.4 million for the year ended December 31,
1997 due to the inclusion of NLP's editorial expenses of $0.2 million for the
period from December 22, 1997 through December 31, 1997. Production and
distribution expenses increased $0.2 million, or 1.7%, from $12.5 million for
the year ended December 31, 1996 to $12.7 million for the year ended December
31, 1997 due to the inclusion of NLP's production and distribution cost of $0.3
million for the period from December 22, 1997 through December 31, 1997. Selling
expenses increased $0.8 million, or 10.9%, from $7.5 million for the year ended
December 31, 1996 to $8.3 million for the year ended December 31, 1997. This
increase was a direct result of increased advertising sales and associated
commissions as well as the inclusion of $0.4 million of NLP expenses for the
period from December 22, 1997 through December 31, 1997. General and
administrative expenses decreased $0.2 million, or 0.9%, from $16.8 million to
$16.7 million over the same periods. This decrease was due, in part, to the
elimination in 1997 of certain executive bonus compensation for the former
Chairman of Old ALM, who resigned prior to the ALM Acquisition.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses were
$2.5 million for the year ended December 31, 1996 and $4.9 million for the year
ended December 31, 1997. These expenses are not comparable for the two periods
due to purchase accounting adjustments related to the ALM and NLP Acquisitions.
Amortization of goodwill and intangibles related to the acquisition for the five
months ended December 31, 1997 was $2.4 million.
OPERATING INCOME. As a result of the foregoing factors, operating income
(excluding Internet Services) increased $2.3 million from breakeven for the year
ended December 31, 1996 to $2.3 million for the year ended December 31, 1997.
EBITDA increased $4.7 million from $2.5 million for the year ended December 31,
1996 to $7.2 million for the year ended December 31, 1997.
CAPITAL EXPENDITURES. Capital expenditures for the year ended December 31,
1997 were $0.8 million excluding $1.5 million for Internet Services. The
majority of such expenditures related to ongoing activities. Capital
expenditures for the year ended December 31, 1996 were $1.1 million excluding
$1.1 million for Internet Services.
42
<PAGE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
OVERVIEW. Net revenues increased $4.4 million, or 9.2%, from $47.5 million
for the year ended December 31, 1995 to $51.9 million for the year ended
December 31, 1996. Excluding Internet Services, revenues increased $2.1 million,
or 4.8%, from $44.3 million to $46.4 million. Operating costs and expenses
increased $1.7 million, or 3.0%, from $56.6 million to $58.3 million while
operating costs and expenses excluding Internet Services increased $0.6 million,
or 1.4%, from $45.8 million to $46.4 million. Operating loss decreased $2.7
million, or 29.5%, from $9.1 million for the year ended December 31, 1995 to
$6.4 million for the year ended December 31, 1996. Excluding Internet Services,
operating income increased $1.5 million from an operating loss of $1.5 million
for the year ended December 31, 1995 to breakeven for the year ended December
31, 1996. EBITDA increased $2.5 million from a loss of $6.4 million for the year
ended December 31, 1995 to a loss of $3.9 million for the year ended December
31, 1996. Excluding Internet Services, EBITDA increased $1.3 million, or 104.4%,
from $1.2 million to $2.5 million.
REVENUES. Advertising revenues increased $1.6 million, or 6.5%, from $25.0
million for the year ended December 31, 1995 to $26.7 million for the year ended
December 31, 1996. This increase was attributable, in large part, to a marked
increase in advertising volume caused both by heightened demand for law-related
advertising in general and by the introduction of a new publication, AMLAW TECH.
This new magazine, coupled with an additional issue of CORPORATE COUNSEL
MAGAZINE, resulted in increased total advertising pages in 1996. In its first
year of publication, AMLAW TECH generated $0.5 million of advertising revenues.
Advertising revenue growth is also due, in part, to an increase in advertising
rates.
Subscription revenues increased $0.4 million, or 3.9%, from $10.9 million
for the year ended December 31, 1995 to $11.3 million for the year ended
December 31, 1996. An increase in subscription rates was offset, in part, by a
minimal decrease in circulation.
Revenues from ancillary products and services increased $0.1 million, or
1.0%, from $8.4 million for the year ended December 31, 1995 to $8.5 million for
the year ended December 31, 1996. This increase was due, in part, to the
introduction of a new regional lecture series, partially offset by a decrease in
revenues at ALM's printing facilities.
Revenues from Internet Services increased $2.2 million, or 69.1%, from $3.2
million for the year ended December 31, 1995 to $5.5 million for the year ended
December 31, 1996. This increase resulted from increased usage stemming from
heightened interest in law-related issues. Increased revenues were specifically
attributable to an increase in both the number of subscribers and subscription
rates.
OPERATING EXPENSES. Operating costs and expenses increased $1.7 million, or
3.0%, from $56.6 million for the year ended December 31, 1995 to $58.3 million
for the year ended December 31, 1996. Editorial expenses remained essentially
constant at $7.1 million for the years ended December 31, 1995 and December 31,
1996. Production and distribution expenses decreased $0.1 million, or 0.9%, from
$12.6 million for the year ended December 31, 1995 to $12.5 million for the year
ended December 31, 1996. The additional costs associated with the publication of
a new quarterly magazine, AMLAW TECH, were offset by cost reductions at ALM's
printing facilities. Selling expenses increased $0.6 million, or 8.2%, from $6.9
million for the year ended December 31, 1995 to $7.5 million for the year ended
December 31, 1996. This increase was a direct result of increased advertising
sales and associated commissions. General and administrative expenses increased
by $0.3 million, or 2.0%, from $16.5 million for the year ended December 31,
1995 to $16.8 million for the year ended December 31, 1996. The majority of this
increase was attributable to an increase in employee benefit expenses. Internet
Services expenses increased $1.0 million, or 9.5%, from $10.9 million for the
year ended December 31, 1995 to $11.9 million for the year ended December 31,
1996. This increase was due both to increased costs associated with growing
customer usage and to operating expenses related to COUNSEL CONNECT'S transition
from a proprietary system to an internet-based system.
43
<PAGE>
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
decreased $0.2 million, or 7.2%, from $2.7 million for the year ended December
31, 1995 to $2.5 million for the year ended December 31, 1996.
OPERATING INCOME. As a result of the above factors, operating loss
decreased $2.7 million, or 29.5%, from $9.1 million for the year ended December
31, 1995 to $6.4 million for the year ended December 31, 1996. Excluding
Internet Services, operating income increased $1.5 million from an operating
loss of $1.5 million for the year ended December 31, 1995 to breakeven for the
year ended December 31, 1996. EBITDA increased $2.5 million from a loss of $6.4
million for the year ended December 31, 1995 to a loss of $3.9 million for the
year ended December 31, 1996. Excluding Internet Services, EBITDA increased $1.3
million, or 104.4%, from $1.2 million for the year ended December 31, 1995 to
$2.5 million for the year ended December 31, 1996.
CAPITAL EXPENDITURES. Capital expenditures were $2.2 million for the year
ended December 31, 1996, including $1.1 million for Internet Services. Capital
expenditures for the year ended December 31, 1995 were $1.5 million, including
$0.6 million for Internet Services.
RESULTS OF OPERATIONS--NLP
REVENUE RECOGNITION. NLP recognizes advertising revenues, net of related
advertising agency commissions, on the issue date of the related publications,
except for revenue from certain classified advertisements which are recognized
when the last of a series of advertisements runs. Advertising revenues are
generated from the placement of display and classified advertisements, as well
as legal notices. Advertising fees billed and/or received for advertisements to
be released in future months are included in deferred revenue. Subscription
revenues are deferred and recognized on a pro rata basis over the term of the
related subscription, generally one year. Ancillary revenues consist principally
of sales of professional books, subscriptions to newsletters, seminar and
conference income and income from electronic products. Book revenues are
recognized upon shipment and are reflected net of estimated returns. Newsletter
revenues are recognized on the same basis as subscription revenues. Seminar and
conference revenues are recognized when the seminar or conference is held.
Internet Services revenues consist primarily of revenues from display
advertising on LAW JOURNAL EXTRA! Internet advertising revenues are recognized,
net of related advertising agency commissions, during the period in which the
advertisement runs on the service.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996.
The following discussion for the year ended December 31, 1997 is derived
from the financial information for NLP until the consummation of the NLP
Acquisition, which occurred on December 22, 1997. As a result, the financial
information for the year ended December 31, 1996 is compared to the period from
January 1, 1997 through December 21, 1997.
OVERVIEW. Net revenues increased by $3.7 million, or 7.9%, from $47.2
million for the year ended December 31, 1996 to $50.9 million for the year ended
December 31, 1997. Total operating costs and expenses increased $7.7 million, or
18.8%, from $40.8 million to $48.5 million. As a result, operating income
decreased $4.0 million, or 61.9%, from $6.4 million to $2.4 million. Included in
the operating costs for 1997 however, was a special compensation charge of $6.9
million reflecting stock option and bonus payments related to the sale of NLP,
which were paid by the sellers. Without this charge, total operating costs and
expenses increased at a rate substantially less than the rate of increase in
revenues over the same period, increasing only $0.8 million, or 1.8%, from $40.8
million to $41.6 million with operating income increasing $3.0 million, or
46.6%, from $6.4 million to $9.4 million. Internet Services revenues increased
$0.4 million, or 48.5%, from $0.7 million for the year ended December 31, 1996
to $1.1 million for the year ended December 31, 1997, while Internet Services
expenses remained essentially constant at $1.7 million for the same periods.
Accordingly, excluding both the special compensation charge and the net
operating loss from Internet Services, operating income would have increased
$2.6 million, or 34.9%, from $7.3
44
<PAGE>
million to $9.9 million, while EBITDA would have increased $2.4 million, or
15.9%, from $14.8 million to $17.2 million over the same periods.
REVENUES. Advertising revenues increased $3.1 million, or 13.2%, from $23.3
million for the year ended December 31, 1996 to $26.4 million for the year ended
December 31, 1997. This increase was due principally to an increase in
advertising rates, an overall increase in advertising pages and the publication
of three additional issues of LAW TECHNOLOGY PRODUCT NEWS partially offset by
the inclusion of the results from the final eleven days of 1997 in the Company's
figures. In relation to advertising revenues, this period includes seven issues
of the NEW YORK LAW JOURNAL and two issues of THE NATIONAL LAW JOURNAL.
Subscription revenues decreased $0.3 million, or 2.6%, from $9.8 million for
the year ended December 31, 1996 to $9.5 million for the year ended December 31,
1997 due to the inclusion of the results from the final eleven days of 1997 in
the Company's figures. Otherwise, increases in subscription rates at both the
NEW YORK LAW JOURNAL and THE NATIONAL LAW JOURNAL were largely offset by
decreases in paid circulation at both publications.
Revenues from ancillary products and services increased $0.5 million, or
3.9%, from $13.4 million for the year ended December 31, 1996 to $13.9 million
for the year ended December 31, 1997. Significant growth was realized in
newsletters, seminars, books (driven by the addition of four new titles) and
MA/3000, NLP's case tracking and docketing service, as well as a 31.4% increase
in royalty income from licensing NLP's proprietary content to third party
information providers. Overall, however, the increase was partially offset by
the inclusion of the results from the final eleven days of 1997 in the Company's
figures. In addition, a change in the revenue recognition policy for books
resulted in a portion of the sales, which under the traditional policy would
have been realized in 1997, being included in the results for 1998.
Revenues from Internet Services increased $0.4 million, or 48.5%, from $0.7
million for the year ended December 31, 1996 to $1.1 million for the year ended
December 31, 1997. This increase is attributable primarily to strong growth in
display advertising on LAW JOURNAL EXTRA!. Internet advertising revenues have
grown rapidly since the conversion of LAW JOURNAL EXTRA! from a proprietary
online system to a predominantly advertising-supported web-based service at the
end of 1995.
OPERATING EXPENSES. Total operating costs and expenses increased $7.7
million, or 18.8%, from $40.8 million, or 86.5% of revenues, for the year ended
December 31, 1996 to $48.5 million, or 95.2% of revenues, for the year ended
December 31, 1997. Included in the operating costs for 1997 however, was a
special compensation charge of $6.9 million reflecting stock option and bonus
payments related to the sale of NLP which were paid by the sellers. Without this
charge, total operating costs and expenses increased at a rate substantially
less than the rate on increase in revenues over the same period, increasing only
$0.8 million, or 1.8%, from $40.8 million to $41.6 million. Due to the nature of
the business, incremental revenue growth often does not require corresponding
increases in operating expenses. Editorial expenses decreased slightly, by $0.1
million, or 1.6%, from $5.9 million for the year ended December 31, 1996 to $5.8
million for the year ended December 31, 1997, reflecting the inclusion of the
results from the final eleven days of 1997, in the Company's figures. Editorial
expenses consist primarily of salaries of editorial staff and fees paid to
outside contributors. While the overall change in editorial expenses was
insignificant, changes were made to the mix of editorial staff to add coverage
of certain areas that have strong advertiser support.
Production and distribution expenses increased $1.2 million, or 13.7%, from
$8.7 million for the year ended December 31, 1996 to $9.9 million for the year
ended December 31, 1997. This increase is primarily the result of a change in
the expense classification of fulfillment costs of $1.0 million from selling to
production and distribution. Otherwise, the marginal increase of $0.2 million,
or 1.9%, was attributable primarily to LAW TECHNOLOGY PRODUCT NEWS, which
experienced an increase in production and distribution expenses of 39.2% due to
the addition of three issues and an increase in controlled circulation of 10,000
per issue, partially offset the final seven issues of the NEW YORK LAW JOURNAL
and two issues of THE NATIONAL LAW JOURNAL, which are included in the Company's
results.
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<PAGE>
Selling expenses decreased $0.8 million, or 8.7% from $9.0 million for the
year ended December 31, 1996 to $8.2 million for the year ended December 31,
1997. This decrease is primarily the result of a change in the expense
classification of fulfillment costs of $1.0 million from selling to production
and distribution and of bad debt expense of $0.7 million from selling to general
and administrative. Without these changes, the increase of $0.9 million, or
10.8%, is primarily due to a change in method of accounting for deferred
subscriber acquisition costs, an increase in efforts designed to update and
improve the controlled circulation list of LAW TECHNOLOGY PRODUCT NEWS and a
17.3% increase in commission expense directly related to the increase in
advertising sales.
General and administrative expenses increased $0.7 million, or 8.4%, from
$8.0 million for the year ended December 31, 1996 to $8.7 million for the year
ended December 31, 1997. This increase is primarily the result of a change in
the expense classifictaion of bad debt expenses of $0.7 million from selling to
general and administrative. Without this change, general and administrative
expenses remained essentially constant despite the increase in revenues.
Internet Services expenses remained essentially constant at $1.7 million for
the years ended December 31, 1996 and 1997. Such expenses are comprised
primarily of website maintenance costs, advertising sales expenses and expenses
related to editorial staff for the LAW JOURNAL EXTRA! service.
Depreciation and amortization expenses decreased by $0.2 million, or 2.7%,
from $7.5 million for the year ended December 31, 1996 to $7.3 million for the
year ended December 31, 1997.
OPERATING INCOME. As a result of the above factors, and without the special
compensation charge of $6.9 million, operating income would have increased $3.0
million, or 46.6%, from $6.4 million, or 13.5% of revenues, for the year ended
December 31, 1996 to $9.4 million, or 18.4% of revenues, for the year ended
December 31, 1997, and EBITDA would have increased $2.8 million, or 20.0%, from
$13.9 million, or 29.4% of revenues, for the year ended December 31, 1996 to
$16.6 million, or 32.7% of revenues, for the year ended December 31, 1997. The
increase in operating margins was due to NLP's ability to hold increases in
operating costs and expenses to 1.8% while revenues grew at 7.9%.
CAPITAL EXPENDITURES. Capital expenditures remained essentially constant at
$0.5 million for the years ended December 31, 1996 and 1997.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
OVERVIEW. Net revenues increased by $3.1 million, or 7.0%, from $44.1
million for the year ended December 31, 1995 to $47.2 million for the year ended
December 31, 1996. Total operating costs and expenses increased at a rate
substantially less than the rate of increase in revenues over the same period,
increasing $0.2 million, or 0.5%, from $40.6 million to $40.8 million. As a
result, operating income increased $2.9 million, or 83.6%, from $3.5 million to
$6.4 million, while EBITDA increased $4.1 million, or 41.8%, from $9.8 million
to $13.9 million. Internet Services revenues increased $0.4 million, or 133.0%,
from $0.3 million for the year ended December 31, 1995 to $0.7 million for the
year ended December 31, 1996, while Internet Services expenses decreased by $1.2
million, or 41.4%, from $2.9 million to $1.7 million for the same periods.
During 1995, the Company determined that its provisions for doubtful
accounts with respect to revenues recognized in years prior to 1995, principally
with respect to its legal advertising revenues, should be increased by $946,000
due to, among other things, the concentration of credit risk associated with its
advertising agents. This additional provision for doubtful accounts has been
included in selling expense for the twelve months ended December 31, 1995.
Excluding these additional provisions and excluding the net operating loss from
Internet Services, EBITDA increased by $0.9 million, or 6.2%, from $14.0 million
for the year ended December 31, 1995 to $14.8 million for the year ended
December 31, 1996.
REVENUES. Advertising revenues increased $1.9 million, or 8.9%, from $21.4
million for the year ended December 31, 1995 to $23.3 million for the year ended
December 31, 1996. This increase was due
46
<PAGE>
principally to an increase in advertising rates, the increase from two to six in
the number of issues of IP WORLDWIDE and strong growth in advertising revenue at
LAW TECHNOLOGY PRODUCT NEWS.
Subscription revenues increased by $0.1 million, or 1.0%, from $9.7 million
for the year ended December 31, 1995 to $9.8 million for the year ended December
31, 1996. Increases in subscription rates at both the NEW YORK LAW JOURNAL and
THE NATIONAL LAW JOURNAL were largely offset by a small decrease in the number
of paid subscriptions to both publications.
Revenues from ancillary products and services increased by $0.7 million or
5.5% from $12.7 million for the year ended December 31, 1995 to $13.4 million
for the year ended December 31, 1996. This increase was due principally to
increases in revenues from MA/3000 and from books (driven by the addition of
four new titles in 1996).
Revenues from Internet Services increased by $0.4 million, or 133.0%, from
$0.3 million for the year ended December 31, 1995 to $0.7 million for the year
ended December 31, 1996. Advertising revenues from LAW JOURNAL EXTRA! increased
dramatically, more than offsetting the corresponding decline in subscription
revenues, as LAW JOURNAL EXTRA! completed its conversion from a
subscriber-oriented proprietary system to a free, advertising-based website.
OPERATING EXPENSES. Total operating costs and expenses increased $0.2
million, or 0.5%, from $40.6 million, or 92.1% of revenues, for the year ended
December 31, 1995 to $40.8 million, or 86.5% of revenues, for the year ended
December 31, 1996. Editorial expenses increased minimally, by $0.1 million, or
1.7%, from $5.8 million for the year ended December 31, 1995 to $5.9 million for
the year ended December 31, 1996.
Production and distribution expenses increased by $0.6 million, or 7.4%,
from $8.1 million for the year ended December 31, 1995 to $8.7 million for the
year ended December 31, 1996. Much of this increase is attributable to the
reallocation of production staff from LAW JOURNAL EXTRA!, the expenses of which
are accounted for separately, to other areas following the completion of the LAW
JOURNAL EXTRA! start up and conversion. The increase from two to six in the
number of issues of IP WORLDWIDE also contributed to this increase, partially
offset by decreases in paper costs.
Selling expenses decreased by $0.8 million, or 8.2%, from $9.8 million for
the year ended December 31, 1995 to $9.0 million for the year ended December 31,
1996. This decrease is due primarily to the additional provisions in 1995
discussed in the overview above, partially offset by an increase in commissions
related to the increase in advertising sales and to increased advertising sales
efforts related to the increase in number of issues of IP WORLDWIDE.
General and administrative expenses increased $0.4 million, or 5.3%, from
$7.6 million for the year ended December 31, 1995 to $8.0 million for the year
ended December 31, 1996. This increase was due in part to the re-allocation of
staff from LAW JOURNAL EXTRA! following completion of its start up and
conversion.
Internet Services expenses decreased $1.2 million, or 41.4%, from $2.9
million for the year ended December 31, 1995 to $1.7 million for the year ended
December 31, 1996. This decrease resulted primarily from a dramatic reduction in
staff as well as in advertising and promotion expenses relating to LAW JOURNAL
EXTRA! due to its shift away from a subscriber-based system following the
completion of its start up and conversion.
Depreciation and amortization expenses increased $1.2 million, or 19.0%,
from $6.3 million for the year ended December 31, 1995 to $7.5 million for the
year ended December 31, 1996. This increase resulted primarily from the
amortization of goodwill created by the acquisition of NLP by Boston Ventures
Limited Partnership IV, Boston Ventures Limited Partnership IVA and James A.
Finkelstein in December 1995, partially offset by the write off in 1995 of
unamortized deferred financing costs in connection with such acquisition.
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<PAGE>
OPERATING INCOME. As a result of the above factors, operating income
increased $2.9 million, or 82.9%, from $3.5 million, or 7.9% of revenues, for
the year ended December 31, 1995 to $6.4 million, or 13.5% of revenues, for the
year ended December 31, 1996, and EBITDA increased $4.1 million, or 41.8%, from
$9.8 million, or 22.2% of revenues, for the year ended December 31, 1995 to
$13.9 million, or 29.4% of revenues, for the year ended December 31, 1996.
CAPITAL EXPENDITURES. Capital expenditures decreased by $0.1 million, or
16.7%, from $0.6 million for the year ended December 31, 1995 to $0.5 million
for the year ended December 31, 1996.
PRO FORMA LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL. The Company has favorable cash flow characteristics
resulting from its high level of advance payments by subscribers, low working
capital investment, minimal capital expenditure needs, predictable cost
structure and high margins. Because cash receipts associated with subscriptions
are received toward the beginning of a subscription cycle, the Company's
periodicals business requires minimal investment in working capital.
LIQUIDITY. Holdings is a holding company which has no significant assets
other than its investments in its direct and indirect subsidiaries, and
therefore, its ability to make payments with respect to the Exchange Discount
Notes is dependent upon the receipt of dividends or other payments from the
Company. The Company's principal sources of funds are anticipated to be cash
flows from operating activities, which may be supplemented by borrowings under
the Revolving Credit Facility. Based upon the successful implementation of their
strategy, Holdings and the Company believe that these funds will be sufficient
to meet its current and future financial obligations, including the payment of
principal and interest on the Discount Notes, working capital, capital
expenditures and other obligations. No assurance can be given, however, that
this will be the case. The Company's future operating performance and ability to
service or refinance the Senior Notes and to repay, extend or refinance any
credit agreements to which it is a party and Holdings ability to service or
refinance the Discount Notes will be subject to future economic conditions and
to financial, business and other factors, many of which are beyond the Company's
control. See "Risk Factors."
The Senior Note Indenture and the Revolving Credit Facility significantly
restrict the distribution of funds by Holdings' subsidiaries. See "Description
of Other Indebtedness--Description of the Senior Notes." There can be no
assurance that the agreements governing indebtedness of Holdings' subsidiaries
will permit such subsidiaries to distribute funds to Holdings in amounts
sufficient to pay the Accreted Value or the principal or interest on the
Exchange Discount Notes when the same becomes due (whether at maturity, upon
acceleration or redemption or otherwise). The Exchange Discount Notes will be
effectively subordinated in right of payment to all existing and future claims
of creditors of subsidiaries of Holdings, including the holders of the Senior
Notes and trade creditors. After giving effect to the Transactions as of
December 31, 1997, the subsidiaries of Holdings had approximately $208.4 million
aggregate principal amount of liabilities outstanding.
CAPITAL EXPENDITURES. The Company's operations are not capital intensive.
Pro forma capital expenditures were $1.3 million in the year ended December 31,
1997.
YEAR 2000 COMPLIANCE
The Company is in the process of modifying, upgrading or replacing its
computer software applications and systems which the Company expects will
accommodate the "Year 2000" dating changes necessary to permit correct recording
of year dates for 2000 and later years. The Company does not expect that the
cost of its Year 2000 compliance program will be material to its financial
condition or results of operations. The Company believes that it will be able to
achieve compliance by the end of 1999, and does not currently anticipate any
material disruption in its operations as the result of any failure by the
Company to be in compliance. The Company does not currently have any information
concerning the compliance status of its suppliers and customers.
48
<PAGE>
BUSINESS
UNLESS REFERENCE IS MADE SPECIFICALLY TO ALM OR NLP, THE DISCUSSIONS IN THIS
SECTION REFER TO THE COMPANY ON A PRO FORMA BASIS, AFTER GIVING EFFECT TO THE
ACQUISITIONS.
COMPANY OVERVIEW
Holdings is a holding company, the principal assets of which consist of all
the outstanding capital stock of ALM. All of Holdings' operations are conducted
through the Company. The Company believes that the combination of ALM and NLP
creates the nation's largest legal journalism organization, with estimated
readership of over one million. The Company publishes 16 periodicals, including
several leading national periodicals and regional publications serving four of
the five largest state legal markets. The Company's nationally-recognized
periodicals include THE AMERICAN LAWYER, a monthly magazine containing articles
and features targeted to attorneys practicing in large law firms, and THE
NATIONAL LAW JOURNAL, the nation's largest selling legal newspaper, which covers
the law, lawyers and the business of the legal profession. The Company's
regional publications are led by the NEW YORK LAW JOURNAL, which has the largest
circulation of any regional legal newspaper in the United States. In addition to
the NEW YORK LAW JOURNAL, the Company publishes five other daily newspapers
serving Georgia, Northern California, Miami, Fort Lauderdale and Palm Beach, as
well as four weekly newspapers serving New Jersey, Texas, Washington, D.C. and
Connecticut.
The Company's periodicals are well established in their markets and are
widely recognized for editorial excellence and for providing sophisticated news
reporting and analysis of legal issues. The Company's newspapers function as
professional tools that are indispensable to attorneys (particularly litigators)
in their day-to-day practices, providing important information such as news,
court opinions, court calendars and legal notices. The Company's newspapers are
leaders in their local markets, resulting in an average subscription renewal
rate of approximately 80%.
In addition to the periodicals referred to above, the Company publishes
CORPORATE COUNSEL MAGAZINE, a leading magazine for corporate in-house attorneys,
LAW TECHNOLOGY PRODUCT NEWS and AMLAW TECH, two leading legal technology
magazines, as well as IP WORLDWIDE, a leading specialty magazine focusing on
intellectual property.
The Company has also successfully established an ancillary products and
services business that creates and packages information for attorneys and
business professionals. This business includes a portfolio of publications
covering a variety of specialized legal interests and practice areas, including
25 newsletters and 112 books on topics of national and regional interest. Each
year, the Company organizes or sponsors numerous professional seminars and
conferences that cover issues of current legal interest. The Company also
provides case tracking and monitoring services and publishes various directories
used by legal professionals.
In addition, the Company has begun to develop an internet services business
and currently has a number of law-related internet websites including LAW
JOURNAL EXTRA!, COUNSEL CONNECT, CAL LAW, ILLINOIS LAW and TEX LAW. These
websites give attorneys online access to news and other legal materials and
facilitate the exchange of information among members of the legal community.
The Company derives its revenues principally from advertising and
subscriptions, with additional revenues generated by its ancillary products and
services business. The Company had pro forma net revenues of $103.2 million and
pro forma EBITDA of $25.6 million for the year ended December 31, 1997. The
Company's pro forma EBITDA, excluding its Internet Services business, was $26.7
million for the year ended December 31, 1997. For the year ended December 31,
1997 approximately 56.2% of the Company's pro forma revenues were from
advertising, 20.8% were from subscriptions, 21.9% were from ancillary products
and services and 1.1% were from Internet Services.
49
<PAGE>
Because the Company's periodicals are the preeminent legal publications in
each of their respective regional markets, they are relied upon by many
advertisers as the primary advertising vehicle to reach attorneys in those
markets. The Company believes that its large readership and broad coverage of
the U.S. legal market uniquely position the Company to enable national
advertisers of law- and business-related products to reach the legal industry in
a targeted and cost-efficient manner. The Company also believes that its
newly-created national presence, combined with the affluence and other favorable
demographic characteristics of its readership, will enhance its ability to
attract national consumer advertisers, particularly those targeting upscale
consumers.
NLP has operated in a centralized manner and has focused on the continued
development of its periodicals business and on expanding into various ancillary
products and services, including books, newsletters and seminars. ALM, on the
other hand, has operated eight autonomous regional businesses and has focused
primarily on developing a geographically diverse periodicals business (although
each regional business from time to time developed various ancillary products
and services). The Company intends to centralize and consolidate its ancillary
products and services business as well as certain selling, general and
administrative functions. Furthermore, the Company intends to aggressively
cross-sell its various periodicals, products and services to both readers and
advertisers. The Company expects that implementing these elements of its
business strategy will result in substantial cost savings, enhanced subscription
and advertising revenues and accelerated growth in its ancillary products and
services business.
BUSINESS STRATEGY
ALM's geographic breadth and emphasis on high-quality editorial content have
placed it at the forefront of legal journalism; NLP's historical marketing
strengths and meticulous business execution have permitted it to produce
consistently high levels of operating profit and cash flow. The fundamental
strategy underlying the ALM-NLP combination is to leverage the strengths of both
businesses by adopting the best practices of each across the Company as a whole
and to capitalize on the opportunities inherent in the combination.
The Company believes that the ALM-NLP combination presents numerous cost
savings opportunities including:
- CONSOLIDATING AND REDUCING SG&A: Cost savings opportunities from the
ALM-NLP combination include (i) consolidating and centralizing certain
functions, including national advertising sales, accounting, tax,
information systems, human resources, cash management, risk management and
legal; (ii) reducing employee benefit costs through the combination of
disparate employee plans and programs; (iii) reducing rent expense by
combining ALM's and NLP's corporate headquarters into a single location;
and (iv) taking advantage of increased purchasing power resulting from the
expanded size of the Company.
- CENTRALIZING ANCILLARY PRODUCTS AND SERVICES: The Company intends to draw
on NLP's experience and success in product development by consolidating
the development and marketing of various ancillary products and services
across the broad regional coverage of ALM's publications to realize cost
savings and efficiencies.
- RATIONALIZING THE COMPANY'S INTERNET BUSINESS: The Company is in the
process of discontinuing its Counsel Connect internet service and
transferring the most viable components of that service into a new,
enhanced service that better capitalizes on the combined companies'
unparalleled access to legal information.
The ALM-NLP combination is also expected to result in numerous revenue
enhancement opportunities including:
50
<PAGE>
- LEVERAGING ANCILLARY PRODUCTS AND SERVICES: NLP has an extensive portfolio
of ancillary products and services, including newsletters, books, seminars
and conferences. The Company believes that the market penetration of these
products and services will be substantially enhanced by selling across the
combined companies through (i) advertising in all of the Company's
periodicals, (ii) marketing to new customer lists, (iii) pursuing a
broader direct mail effort and (iv) more aggressive telemarketing. The
Company believes that the expanded scope of the operations created as a
result of the ALM-NLP combination will allow the Company to develop and
market new products and services that would not previously have been
feasible.
- ENHANCED ABILITY TO ATTRACT NATIONAL ADVERTISING: The Company believes
that there are substantial opportunities to attract increased amounts of
national advertising. As the nation's largest legal journalism
organization with a combined readership of over one million, the Company
believes it will be able to provide advertisers with a unique ability to
effectively and efficiently reach the legal community on a national level.
The Company intends to form a national sales group, which neither ALM nor
NLP had prior to the combination. The Company also believes that it will
be able to increasingly attract national consumer advertising directed
toward the Company's large and affluent readership.
- ACQUISITIONS AND DEVELOPMENT: While the Company publishes 16 periodicals
including periodicals in four of the five largest state legal markets and
several national legal periodicals, the Company believes that there are
numerous opportunities to expand into new markets. As a result of
synergies among the Company's various publications and its resulting
ability to efficiently create content, sell advertising and provide
administrative services, the Company believes that it will be able to
enter new markets with a competitive advantage. Accordingly, the Company
intends to (i) selectively pursue acquisitions of additional regional
legal publishing businesses and ancillary businesses, such as newsletters,
books and seminars, (ii) create new publications in geographic areas in
which the Company does not currently operate and (iii) develop ancillary
products or services not currently offered by the Company.
OPERATING STRENGTHS
The Company believes that it has the following operating strengths:
HIGH REVENUE STABILITY. The Company's high subscription renewal rates
(historically averaging approximately 80%) and high advertiser retention rates
provide considerable revenue and profit stability and form a strong base of
business from which to grow. The Company believes that its high subscription
renewal rates result from (i) the high editorial quality of its publications,
(ii) its coverage of increasingly complex legal issues that are not adequately
covered in other publications, and (iii) the indispensable nature of the
Company's publications for the day-to-day practice of law for many attorneys.
The Company attributes its high advertiser retention rates to the fact that its
periodicals are the primary legal publications in their respective markets and
are therefore relied upon by many advertisers as their primary vehicles for
reaching attorneys in those markets.
FAVORABLE CASH FLOW CHARACTERISTICS. The Company has favorable cash flow
characteristics resulting from its stable revenues, high level of advance
payments by subscribers, low working capital investment, minimal capital
expenditure needs, predictable cost structure and high margins. The Company
outsources most of its printing and all of its distribution requirements to
third parties. As a result, the Company requires minimal capital expenditures.
Pro forma capital expenditures for the year ended December 31, 1997 were $1.3
million. Because cash receipts associated with subscriptions are received toward
the beginning of a subscription cycle, the Company's periodicals business
requires minimal investment in working capital. Due to the preeminent position
of the Company's periodicals in each of its markets, the Company has been able
to charge relatively high advertising rates and has enjoyed strong subscription
pricing characteristics, resulting in consistently high operating margins.
51
<PAGE>
DIVERSITY OF PUBLICATIONS. The Company publishes two leading national
publications, THE AMERICAN LAWYER and THE NATIONAL LAW JOURNAL, several national
specialty magazines including CORPORATE COUNSEL MAGAZINE, LAW TECHNOLOGY PRODUCT
NEWS, AMLAW TECH and IP WORLDWIDE, and ten newspapers serving distinct state and
local legal markets across the United States. With a diverse revenue base
generated from numerous legal markets and from subscribers practicing in an
array of specialty areas, the Company enjoys significant revenue and cash flow
stability.
EXPERIENCED STAFF. The Company's core group of editors, publishers and
journalists have built their professional careers primarily in the legal
publishing industry. These editors, publishers and journalists bring substantial
experience to the Company as well as detailed knowledge of each of the Company's
markets. Their local knowledge and depth of experience enable the Company to
continue to provide thought-provoking coverage of the legal industry and develop
new, innovative and informative periodicals, products and services.
PRODUCT LINES
PERIODICALS. The Company's newspaper and magazine business publishes 16
national, regional and local periodicals that serve legal and business
professionals. The Company's periodicals have a combined circulation of
approximately 260,000. Based on various independent subscriber surveys and
management's estimates, the Company believes that the pass-along rate for its
publications results in an estimated combined readership of over one million.
The subscription renewal rate for the Company's periodicals averages
approximately 80%.
NEWSPAPERS. The Company's newspapers provide news, features, analysis and
commentary about the world of law and advocacy. Feature articles and stories
covering the local, state and federal courts and law firms are supplemented by
reports and analyses of cutting-edge legal issues. The Company is committed to
providing high quality and balanced coverage of its local markets. Most of the
Company's newspapers serve as the newspaper of record for their respective legal
markets. Lawyers look to the newspapers for reports on local court rulings and
opinions, as well as information regarding local court dockets.
The Company publishes 11 newspapers including THE NATIONAL LAW JOURNAL, the
leading national legal newspaper in the United States, NEW YORK LAW JOURNAL,
which has the largest circulation of any regional legal newspaper, as well as
nine other daily and weekly newspapers. In aggregate, the Company's newspapers
serve eight state markets, including New York, New Jersey, Washington, D.C.,
Georgia, Florida, Texas, Northern California and Connecticut, which cover
approximately 46% of all active attorneys in the United States. Each of the
Company's regional newspapers has a significant presence in its respective
market. However, with publications in only eight of the top 20 state legal
markets, the Company is still positioned for significant growth and further
market penetration.
52
<PAGE>
The following table sets forth information regarding the Company's
newspapers:
NEWSPAPERS
<TABLE>
<CAPTION>
ESTIMATED
YEAR OF TOTAL TOTAL
TITLE MARKET FOUNDING CIRCULATION(1) READERSHIP(2)
- ------------------------------------------------ ---------------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
WEEKLY NEWSPAPERS
THE NATIONAL LAW JOURNAL........................ National 1978 37,622 163,800
NEW JERSEY LAW JOURNAL.......................... New Jersey 1878 9,569 59,700
TEXAS LAWYER.................................... Texas 1985 10,341 65,100
LEGAL TIMES..................................... Washington, D.C. 1978 10,776 75,600
THE CONNECTICUT LAW TRIBUNE..................... Connecticut 1974 3,228 23,800
DAILY NEWSPAPERS
NEW YORK LAW JOURNAL............................ New York 1888 15,425 66,700
THE RECORDER.................................... Northern California 1877 8,027 48,500
FULTON COUNTY DAILY REPORT...................... Georgia 1890 6,615 37,700
MIAMI DAILY BUSINESS REVIEW..................... South Florida 1926 5,148 37,800
BROWARD DAILY BUSINESS REVIEW................... South Florida 1926 2,772 20,400
PALM BEACH DAILY BUSINESS REVIEW................ South Florida 1926 1,990 14,700
</TABLE>
- ------------------------
(1) References in the table above to the Company's total circulation include
total paid and free circulation.
(2) References in the table above to the Company's estimated total readership
include total circulation plus combined pass-along readership unadjusted for
any overlap which exists among readers of the Company's various
publications.
MAGAZINES. THE AMERICAN LAWYER anchors the Company's magazine portfolio.
Founded in 1979, THE AMERICAN LAWYER is a glossy magazine that features stories
on the strategies, successes, failures and personalities of the most important
figures in the legal world. The target audience for the publication is attorneys
practicing in large law firms and corporate legal departments across the United
States. THE AMERICAN LAWYER has been the winner of National Magazine awards
granted by the American Society of Magazine Editors four times, and has been
nominated for 22 such awards since its founding.
The Company's other magazines focus on specific practice areas or segments
within the legal profession and certain topics applicable to the business of
law. The Company's specialty legal magazines include CORPORATE COUNSEL MAGAZINE,
one of the nation's largest magazines focused on issues of importance to
in-house lawyers at large and mid-size corporations, and IP WORLDWIDE,which
covers developments in intellectual property law. The Company also publishes the
two leading technology magazines targeted to the legal community, AMLAW TECH and
LAW TECHNOLOGY PRODUCT NEWS, which focus on information technology and its
applications to the practice of law. AMLAW TECH is targeted toward partners at
law firms with purchase-making authority, while LAW TECHNOLOGY PRODUCT NEWS is
targeted toward attorneys and information services departments in law offices.
53
<PAGE>
The Company publishes the following five magazines:
MAGAZINES
<TABLE>
<CAPTION>
ESTIMATED
YEAR OF TOTAL TOTAL
TITLE FOUNDING FREQUENCY CIRCULATION(1) READERSHIP(2)
- ---------------------------------------------- ----------- ------------------------ ------------- -------------
<S> <C> <C> <C> <C>
THE AMERICAN LAWYER........................... 1979 10 times per year 17,005 126,800
AMLAW TECH.................................... 1996 4 times per year 30,000 60,000(3)
CORPORATE COUNSEL MAGAZINE.................... 1994 6 times per year 38,200 76,400(3)
IP WORLDWIDE.................................. 1995 6 times per year 10,000 20,000(3)
LAW TECHNOLOGY PRODUCT NEWS................... 1993 15 times per year 55,000 110,000(3)
</TABLE>
- ------------------------
(1) References in the table above to the Company's total circulation include
total paid and free circulation.
(2) References in the table above to the Company's estimated total readership
include total circulation plus combined pass-along readership unadjusted for
any overlap which exists among readers of the Company's various
publications.
(3) These magazines are distributed primarily free of charge. For these
publications, the Company assumes only two readers per copy.
NEWSLETTERS. The Company's newsletter division publishes 25 newsletters
which cover specialized legal practice areas. Circulation for the Company's
newsletters ranges from approximately 300 to 1,700, with an average circulation
of over 700. The total number of paid subscribers for all newsletters was
approximately 18,000 as of December 31, 1997. Because the editorial content of
the Company's newsletters is targeted toward the particular interests of lawyers
practicing in various specialty areas, a typical monthly newsletter supports a
subscription rate of over $100 per year.
Of the Company's 25 newsletters, only CORPORATE CONTROL
ALERT-REGISTERED TRADEMARK-, the Company's leading newsletter, was developed by
ALM. CORPORATE CONTROL ALERT is targeted to a broad audience of attorneys,
investment bankers and corporate executives, providing exclusive reports on
corporate takeovers worldwide and commands a subscription price significantly
higher than the Company's other newsletters. The Company believes that
circulation of existing newsletters can be increased substantially by beginning
to market NLP's newsletters to subscribers in ALM's regional markets. In
addition, the Company believes that a significant number of new titles can be
developed and marketed to the Company's combined customer base. Due to low
production costs and inventory requirements, the Company estimates that the
break-even number of subscribers for a newsletter is approximately 350.
The following table sets forth a list of the Company's newsletters:
NEWSLETTERS
Accounting for Law Firms
The Bankruptcy Strategist
Business Crimes Bulletin: Compliance
and Litigation
Cable TV and New Media
Commercial Leasing Law & Strategy
Computer Law Strategist
Corporate Control Alert
The Corporate Counsellor
Employment Law Strategist
Entertainment Law & Finance
Environmental Compliance and
Litigation Strategy
Equipment Leasing
The Intellectual Property Strategist
The Internet Newsletter: Legal &
Business Aspects
Law Firm Partnership & Benefits Report
Leader's Franchising Business & Law Alert
Legal Tech
Marketing for Lawyers
The Matrimonial Strategist
Medical Malpractice Law & Strategy
Medical/Legal Aspects of Breast Implants
Money Laundering Law Report
Multimedia Strategist
New York Real Estate Law Reporter
Product Liability Law & Strategy
54
<PAGE>
BOOKS. The Company currently publishes 112 books on a broad array of legal
topics. These books generally focus on practical legal subjects that arise in
the daily professional lives of lawyers. Most of the Company's books are updated
once or twice per year with inserts to keep the material current. These updates
are inexpensive to produce and are viewed by attorneys as necessary to preserve
the utility of the original texts. Because updates generate recurring revenues
and have higher margins than the original books, the Company focuses on
publishing books that cover particularly dynamic areas of law that lend
themselves to frequent supplementation.
The Company most often develops the concept for a new book and then solicits
an author to write the text. However, in certain cases, the Company has received
unsolicited manuscripts which it has ultimately published. Authors tend to be
receptive to working with the Company because its established market presence
and its reputation for high-quality legal journalism lend credibility to an
author's work. Authors are also attracted by the Company's ability to
efficiently promote a new book and its author through the Company's many
publications. Authors who have written books for the Company include prominent
attorneys and judges such as Martin Lipton, Judge Jed Rakoff, James Freund and
James Goodale.
Historically, most of ALM's books focused on state issues, while NLP's books
dealt primarily with national legal topics. The Company intends to capitalize on
the growing complexity of the law and the increasing need for well-written legal
information about emerging practice areas by aggressively marketing applicable
book titles in its periodicals and newsletters. The Company believes that its
book business will benefit from the combined national reach of its newspapers
and magazines, which should provide an efficient marketing platform for the
Company's legal products.
The following tables set forth the Company's current offering of books:
BOOKS
STATE AND LOCAL SUBJECTS
Connecticut Appellate Practice and Procedure
Connecticut Criminal Caselaw Handbook
Connecticut Foreclosures
Connecticut Labor and Employment Law
Connecticut Summary Process Manual
Connecticut Unfair Trade Practices Act
Connecticut Uninsured and Underinsured Motorist
Courtroom Success: A View From the Bench
Dallas County Bench Book (Texas)
Encyclopedia of New Jersey Causes of Action
Georgia Bench Book
Guide to Connecticut Limited Liability Companies
Handbook of Forms for the Connecticut Family Lawyer
Harris County Bench Book (Texas)
Insurance Laws
Marketing and Maintaining a Family Law Mediation Practice
Mediation: A Texas Practice Guide
New Jersey Employment Law
New Jersey Insurance Law
New Jersey Product Liability Law
Pleadings and Pretrial Practice (Connecticut)
Representing Clients in Mediation
Tarrant County Bench Book (Texas)
Travis County Bench Book (Texas)
Texas Criminal Codes and Rules
Texas Legal Malpractice
Texas Legal Research
Visiting Judges Bench Book
55
<PAGE>
BOOKS
NATIONAL SUBJECTS
A Practical Guide to Equal Employment Opportunity
A Practical Guide to the Occupational Safety
and Health Act
Acquisitions Under the Hart-Scott-Rodino
Antitrust Improvements Act
All About Cable
Anatomy of a Merger: Strategies and Techniques
for Negotiating Corporate Acquisitions
Antitrust Basics
Antitrust: An Economic Approach
Changing the Situs of a Trust
Class Actions: The Law of 50 States
Communications Law and Practice
Computer Law: Drafting and Negotiating Forms
and Agreements
Corporate Internal Investigations
Corporate Sentencing Guidelines: Compliance
and Mitigation
Divorce, Separation and the Distribution of
Property
Doing Business on the Internet
Due Diligence in Business Transactions
Employee Benefits Law: ERISA and Beyond
Raoul Felder's Encyclopedia of Matrimonial Clauses
Environmental Enforcement: Civil and Criminal
Environmental Law Lexicon
Environmental Regulation of Real Property
Estate Planning
Executive Compensation
Executive Stock Options and Stock Appreciation Rights
Federal Bank Holding Company Law
Federal Rules of Civil Procedure
Federal Taxation of Intellectual Property Transfers
Federal Taxation of Real Estate
Federal Taxation of S Corporations
Federal Trade Commission: Law, Practice and Procedure
Ferrara on Insider Trading and The Wall
Franchising: Realities and Remedies
Franchising: Realities and Remedies Forms Volume
Going Private
Ground Leases and Land Acquisition Contracts
Health Care Fraud
Hospital Liability
I'd Rather Do It Myself: How to Set Up Your Own Law Firm
Insurance Coverage Disputes
Intellectual Property Law: Commercial, Creative and Industrial Property
Internet and Online Law
Law and Business in the European Single Market
Law Firm Accounting and Financial Management
Lawyering: A Realistic Approach to Legal Practice
Legal Research and Law Library Management
Lender Liability and Banking Litigation
Licensing of Intellectual Property
Marketing the Law Firm: Business Development Techniques
Maximizing Law Firm Profitability: Hiring, Training and Developing Productive
Lawyers
Merit Systems Protection Board: Rights and Remedies
Model Terms of Engagement
Modern Visual Evidence
Multifamily Housing: Federal Programs for the Private Sector
Multimedia Law: Forms and Analysis
Negotiated Acquisitions of Companies, Subsidiaries and Divisions
Negotiating and Drafting Office Leases
Negotiation: Strategies for Law and Business
Partnership and Joint Venture Agreements
Private Real Estate Syndications
Product Liability
Product Liability: Winning Strategies and Techniques
Products Liability: Recreation and Sports Equipment
Real Estate, A Guide for the Profession
Real Estate Financing
Reducing Personal Income Taxes: A Guide to Deductions and Credits
Reorganizations under Chapter 11 of the Bankruptcy Code
RICO: Civil and Criminal, Law and Strategy
Savings Institutions: Mergers, Acquisitions and Conversions
Securities Regulation: Liabilities and Remedies
Sex Discrimination and Sexual Harassment in the Workplace
Shareholder Derivative Litigation: Besieging the Board
Shopping Center and Store Leases
Start-Up Companies: Planning, Financing and Operating the Successful Business
State Antitrust Law
Structured Settlements and Periodic Payment Judgments
Takeovers and Freezeouts
Tax Aspects of Divorce and Separation
The Law and Practice of Secured Transactions: Working with Article 9
The Preparation and Trial of Medical Malpractice Cases
Trade Secrets
Travel Law
Use of Statistics in Equal Employment Opportunity Litigation
White Collar Crime: Business and Regulatory Offenses
Winning Attorney's Fees from the U.S. Government
56
<PAGE>
SEMINARS AND CONFERENCES. The Company conducts a number of seminars and
conferences for lawyers and other professionals in related fields. The Company's
seminars complement its other products and services both by serving as powerful
marketing vehicles for the Company's existing books and newsletters, and by
generating ideas for new seminars, books and newsletters. Seminars also
introduce the Company to lawyers who may subsequently write articles or books
for the Company.
In addition to its seminar business, the Company operates a small number of
conferences. While its seminars typically involve one or more speakers making
presentations to groups of 75-250 people, conferences generally feature an array
of booths and presentations from various participants over the course of several
days. The Company currently operates four conferences, and plans to coordinate
additional related conferences in the coming years. The Company believes that
its current status as a leading provider of law-related technology conferences
will enable it to provide similar conferences more frequently and in different
geographic regions in the future. By establishing a series of recurring
conferences, the Company expects to benefit from both a returning core of
attendees and word-of-mouth publicity.
The Company believes that its new combined national presence will enable it
to increase revenues generated by its seminar and conference business. The
Company expects that it will be able to leverage the overhead costs of
developing a seminar by holding the same seminar in multiple cities.
Furthermore, by cross-selling those seminars and conferences that have appeal
throughout its national network, the Company expects to increase attendance at
each individual event.
The following table sets forth the seminars and conferences held in 1997:
SEMINARS
New Jersey Civil Caselaw Review
Acquisitions of Subsidiaries, Divisions and Private Companies
The American Lawyer's Management Roundtable
The Art of Due Diligence and Related Drafting Techniques
Baker's Dozen: Using 13 Recent Supreme Court Cases to Improve Your Personal
Injury Practice
Computer Law: Negotiating Complex Transactions
Distribution and Dealer Termination
Employment Compensation Strategies
Entire Controversy Pathfinder
General Counsel Conference
Transferring and Protecting Intellectual Property
in Mergers and Acquisitions
Joint Ventures & Strategic Alliances
Law Firm Financial Management and Accounting
Lead Liability Litigation: Legal and Business Issues
Legal and Business Aspects of the Internet
Legal Ethics in the Electronic Age
Negotiating Contracts in the Entertainment Industry
Negotiating Corporate Acquisitions
Obstetrical Malpractice: Failure to Diagnose Fetal Distress
Securities Practice in the Electronic Era
Sports Law: Representing and Advising Athletes, Teams, Leagues and Sports
Associations
Trial of an Obstetrical Malpractice Case
Valuation of a Professional Practice
CONFERENCES
Law Tech
Legal Tech Net
Southeastern Law Tech
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INTERNET SERVICES. The Company operates several leading legal websites
including LAW JOURNAL EXTRA!, COUNSEL CONNECT, CAL LAW, ILLINOIS LAW and TEXAS
LAW. LAW JOURNAL EXTRA!, the largest commercial legal website, provides
up-to-date legal news and information from NLP's publications as well as a
variety of other sources as a convenient gateway to other legal information on
the Internet. COUNSEL CONNECT, the leading subscription-based website, offers
subscribers a wide range of legal information, including various online seminars
and discussion groups, legal news and other services that assist attorneys in
the day-to-day practice of law. While COUNSEL CONNECT is the leading
subscriber-based legal website, the rapid evolution of the Internet has rendered
its business model uneconomic. As such, the Company is in the process of
discontinuing COUNSEL CONNECT and transferring those elements of the service
with a strong subscriber following as well as COUNSEL CONNECT's trade name,
subscriber lists and related technology to a new enhanced service. The Company's
combined Internet strategy is to develop several websites combining COUNSEL
CONNECT's subscriber-based model with LAW JOURNAL EXTRA!'s advertising-based
model and to supplement the combined services with various online commerce
initiatives. The Company believes the integration of these alternative models
will create a flexible platform from which to broadly serve the diverse needs of
the legal community.
OTHER PRODUCTS AND SERVICES. The Company's uniquely focused customer base
and extensive access to legal information has enabled the Company to create a
wide array of high margin ancillary businesses, including: (i)
MA/3000-REGISTERED TRADEMARK-, a case tracking and docketing software package
that allows litigators in New York to track court activity published in the NEW
YORK LAW JOURNAL, and (ii) DAILY DECISION SERVICE-TM-, a service which offers
subscribers faxed copies on request of both published and unpublished New Jersey
state and federal court opinions.
MARKETING AND SALES
At December 31, 1997, the Company had approximately 187 employees whose
responsibilities included attracting new subscribers and advertisers for its
periodicals and marketing and selling its ancillary products and services. The
Company's regional businesses have focused their sales efforts primarily on
local advertisers. The Company intends to establish a national sales staff to
oversee the sales and servicing of national accounts in an effort to
substantially increase the quantity of its national advertising. The Company
believes that its extensive readership base gives it a unique opportunity to
create a channel through which advertisers can efficiently reach a large
percentage of the nation's attorneys with a single advertising purchase.
Furthermore, the Company intends to aggressively cross-sell its periodicals and
ancillary products and services to its combined customer base.
PRINTING AND DISTRIBUTION
Layouts for the Company's publications are prepared in-house, while the
large majority of the Company's printing activities, and all of its distribution
activities, are outsourced. The Company believes that its relationships with its
printers and distributors are good. Due to economies of scale resulting from the
Acquisitions, the Company believes that opportunities may exist to streamline
certain elements of production and distribution and to purchase raw materials
more effectively. See "Risk Factors--Fluctuations in Paper Costs and Postal
Rates" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Overview."
COMPETITION
The Company competes for advertising and subscription revenues with
publishers of special-interest legal newspapers and magazines with similar
editorial content. However, in most of the Company's markets, its newspaper is
the only newspaper focused on serving the legal community. The Company also
competes for advertising revenues with other national legal publications, as
well as general-interest magazines and other forms of media, including broadcast
and cable television, radio, direct marketing and electronic media. Factors
which may affect competition for advertisers include effective costs of such
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advertising compared to other forms of media, and the size and characteristics
of the readership of the Company's publications. In competing with
general-interest publishers and other forms of media for advertising, the
Company believes it offers a more cost-effective means of reaching the legal
community in each of its regional markets. The Company also faces significant
competition from other legal publishers and legal service providers in its
ancillary products and services business.
INTELLECTUAL PROPERTY
The Company owns a number of registered and unregistered trademarks for use
in connection with its business, including trademarks in the titles of its major
periodicals such as THE AMERICAN LAWYER-REGISTERED TRADEMARK-, CORPORATE COUNSEL
MAGAZINE-TM-, THE NATIONAL LAW JOURNAL-REGISTERED TRADEMARK-, and NEW YORK LAW
JOURNAL-REGISTERED TRADEMARK-. Provided that trademarks remain in continuous use
in connection with similar goods or services, their term can be perpetual,
subject, with respect to registered trademarks, to the timely renewal of such
registrations in the United States Patent and Trademark Office.
The Company approaches copyright ownership with respect to its publications
in the same manner as is customary within the publishing industry generally.
Consequently, the Company owns the copyright in all of its newspapers, magazines
and newsletters, as compilations, and also owns the copyright in most of its
books. With respect to the specific articles in its publications, the Company
generally obtains the assignment of all right, title and interest in original
materials created by the Company's full-time journalists and editors as well as
by paid contributors. For articles authored by outside contributors, the Company
generally obtains only the exclusive "first-time publication" and non-exclusive
republication rights. Judicial opinions, court schedules and docketing
information are provided to the Company directly by the courts, on a
non-exclusive basis, and are public information. The Company also claims
ownership of the copyright in its MA/3000-REGISTERED TRADEMARK- tracking and
docketing software. See "--Product Lines--Other Products and Services."
Copyrights in software can be enforced against plagiarists of the source code or
the copyrightable "look and feel" of the program, but do not protect the
concepts and ideas contained in the program, nor do they prevent others from
developing a competing case tracking and docketing program.
The Company licenses the content of certain of its publications and forms to
third parties, including West Publishing Company, and LEXIS/NEXIS, on a
non-exclusive basis, for republication and dissemination on electronic databases
marketed by the licensees. After the expiration of their initial terms (the
latest of which is October 1999), the licenses automatically renew, subject to
either parties' right to terminate at the end of each subsequent term.
Some of the Company's products, such as the DAILY DECISION SERVICE-TM-
utilize the extensive databases of court decisions compiled by the Company. The
Company also has extensive subscriber and other customer databases which it
believes would be extremely difficult to replicate. The Company attempts to
protect these databases and lists as trade secrets by restricting access thereto
and/or by the use of non-disclosure agreements. There can be no assurance,
however, that the means taken to protect the confidentiality of these items will
be sufficient, or that others will not independently develop similar databases
and customer lists.
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PROPERTIES
The Company operates from various locations throughout the United States.
Its corporate headquarters are based in New York. Information relating to the
Company's corporate headquarters and other significant regional offices which
are owned or leased is set forth in the following table:
<TABLE>
<CAPTION>
LEASE
STREET ADDRESS CITY/STATE SQUARE FOOTAGE EXPIRATION
- ----------------------------------------------- ------------------------------ --------------- ---------------
<S> <C> <C> <C>
345 Park Avenue South.......................... New York, NY 55,000 Sept. 2008
600 Third Avenue............................... New York, NY 23,125 Dec. 1998
238 Mulberry Street............................ Newark, NJ 7,022 Dec. 2006
625 Polk Street................................ San Francisco, CA 7,100 Apr. 2000
900 Jackson Street............................. Dallas, TX 10,190 Dec. 2003
1005 Congress Street........................... Austin, TX 1,992 May 1999
815 Walker Street.............................. Houston, TX 1,724 May 2001
190 Pryor Street, S.W.......................... Atlanta, GA 20,000 Owned
1730 M Street, N.W............................. Washington, DC 8,856 Mar. 2001
1 Post Road.................................... Fairfield, CT 6,520 Dec. 2002
1 S.E. Third Avenue............................ Miami, FL 19,742 Sept. 2004
150 N.E. 7th Street............................ Miami, FL 17,001 Sept. 2004
633 South Andrews Avenue....................... Fort Lauderdale, FL 3,408 Jan. 1998
100 South Dixie Highway........................ W. Palm Beach, FL 3,053 Jan. 1999
</TABLE>
EMPLOYEES AND LABOR RELATIONS
As of December 31, 1997, the Company employed approximately 735 full-time
employees, 20 of whom are subject to a single collective bargaining agreement.
The Company believes that its relations with its employees are satisfactory.
LEGAL PROCEEDINGS
The Company is a party to various litigation matters incidental to the
conduct of its business. The Company does not believe that the outcome of any of
the matters in which it is currently involved will have a material adverse
effect on its financial condition or on the results of its operations.
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RECENT TRANSACTIONS
LEGALTECH ACQUISITION. On March 3, 1998, a newly formed wholly-owned
subsidiary of the Company purchased all of the assets and assumed certain of the
liabilities related to Corporate Presentations for approximately $10.8 million
in cash. The Company funded the LegalTech Acquisition with available cash flow.
For the year ended November 30, 1997, LegalTech had net revenues of $2.2 million
and EBITDA of $0.9 million.
Corporate Presentations is a leading producer of trade shows and conferences
relating to law practice technology. Under its LegalTech-Registered Trademark-
tradename, Corporate Presentations produces conferences and exhibitions in New
York City, Los Angeles, Chicago, Atlanta and Washington. The conferences are
generally three-day events that include vendor exhibits, a seminar program and a
variety of workshops and focus sessions. Attendees typically include attorneys
in private practice, corporate counsel, law firm administrators and information
technology personnel, while exhibitors include a wide variety of software,
hardware, publishing and other technology product related companies. The Company
believes Corporate Presentations benefits greatly from its relationships with
co-sponsors. For example, Price Waterhouse is responsible for coordinating the
seminar programs at all LegalTech events and, as a result, regularly invites its
law practice and law technology consulting clients to LegalTech events,
providing LegalTech vendors with an increasingly diversified audience.
LCL ACQUISITION. On March 31, 1998, the Company and a wholly-owned
subsidiary of the Company entered into a definitive agreement with LCL, to
acquire, effective as of April 1, 1998, substantially all of the legal
publishing-related assets and to assume certain liabilities of LCL for an
aggregate purchase price of $20 million in cash subject to changes in the net
worth of LCL between December 31, 1997 and March 31, 1998. The closing of the
LCL Acquisition is subject to customary closing conditions. For the year ended
December 31, 1997, LCL had net revenues of $8.5 million and EBITDA of $1.9
million.
LCL is a multi-media publisher of regional publications serving primarily
the Pennsylvania statewide legal community and the metropolitan Philadelphia
legal community. LCL publishes through four divisions: (i) the newspaper
/newsletter division; (ii) the reference text division; (iii) the specialty
publishing division; and (iv) the electronic publishing division. The
newspaper/newsletter division is anchored by THE LEGAL INTELLIGENCER, a daily
newspaper serving metropolitan Philadelphia. The newspaper/newsletter division
also produces a weekly newspaper, PENNSYLVANIA LAW WEEKLY, and a monthly
newsletter, LEGAL.ONLINE, which is offered in both print and electronic form.
The reference text division offers digested court information and decisions
through a series of texts. The specialty publishing division provides
third-party services for the Philadelphia Bar Association and the Pennsylvania
Trial Lawyers Association. LCL's relationships with the Associations enables LCL
to have access to more than 25,000 attorneys in Pennsylvania. The electronic
publishing division provides access to content and to assorted company products
through a set of internet sites, foremost among them PALAWNET, a paid-access
site comprised of all the current and archival content of LCL's publications.
REVOLVING CREDIT FACILITY. On March 25, 1998, the Company entered into a
five-year $40.0 million, senior secured revolving credit facility (the
"Revolving Credit Facility") to be available for working capital and general
corporate purposes, including acquisitions and capital expenditures. The Company
intends to use the Revolving Credit Facility, in part, for the purposes of
funding future acquisitions and internal product development and growth. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Pro Forma Liquidity and Capital Resources" and "Description of Other
Indebtedness--Revolving Credit Facility."
ADDITIONAL EQUITY CONTRIBUTION. On April 14, 1998, Holdings contributed an
aggregate of $15 million to the equity capital of the Company. The proceeds of
the equity contribution are intended to be used to fund acquisitions and to
provide capital for aggressive internal growth.
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MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth certain information regarding (i) the
executive officers and directors of the Company and Holdings, (ii) the executive
officers and key employees of ALM, LLC, and (iii) the executive officers and key
employees of NLP, as of March 15, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- --------- -----------------------------------------------------------------
<S> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY AND HOLDINGS
Bruce Wasserstein...................... 50 Chairman and Director
William L. Pollak...................... 42 President, Chief Executive Officer and Director
Anup Bagaria........................... 25 Director
Michael J. Biondi...................... 40 Director
Robert C. Clark........................ 54 Director
Donald G. Drapkin...................... 50 Director
James A. Finkelstein................... 49 Director
Andrew G.T. Moore, II.................. 62 Director
Randall J. Weisenburger................ 39 Director
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF ALM, LLC
Joseph Calve........................... 44 Editor and Publisher of TEXAS LAWYER
Eric Effron............................ 43 Editor and Publisher of LEGAL TIMES
S. Richard Gard, Jr.................... 38 Editor and Publisher of FULTON COUNTY DAILY REPORT
Joanne Harras.......................... 36 Vice President, Finance
Tom Januszewski........................ 31 Publisher of THE CONNECTICUT LAW TRIBUNE
Aric Press............................. 48 Editor-in-Chief of THE AMERICAN LAWYER
Peter Scheer........................... 47 Editor and Publisher of THE RECORDER
Robert Steinbaum....................... 46 Publisher of NEW JERSEY LAW JOURNAL
Edward Wasserman....................... 49 Chairman and Editor-in-Chief of DAILY BUSINESS REVIEW
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF NLP
James A. Finkelstein................... 49 President and Chief Executive Officer of NLP
Steven Farbman......................... 37 Senior Vice President and Chief Operating Officer of NLP
Ben Gerson............................. 49 Editor-in-Chief of THE NATIONAL LAW JOURNAL
Ruth Hochberger........................ 47 Editor-in-Chief of NEW YORK LAW JOURNAL
Alan Kaplan............................ 53 Vice President of NLP
Paul Mastronardi....................... 39 Vice President, Finance of NLP
Rose-Ann Morangelli.................... 49 Vice President and Director of Marketing of NLP
Kevin Vermuelen........................ 34 Vice President of Sales; Associate Publisher, LAW TECHNOLOGY
PRODUCT NEWS
Mark S. Winwood........................ 46 President of Law Journal Information Systems
Stuart Wise............................ 45 Publisher of Leader Publications
</TABLE>
Each Director is elected annually and serves until the next annual meeting
of stockholders or until his or her successor is duly elected and qualified. The
Directors are each compensated $20,000 per year for their service as Directors
and receive reimbursement of expenses incurred from their attendance at Board of
Directors meetings. Directors will also be eligible to participate in an equity
participation plan to be established.
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EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY AND HOLDINGS
BRUCE WASSERSTEIN is Chairman of the Board of Directors of ALM and Holdings.
He is Chairman, Chief Executive Officer and founder of WPG. Previously, Mr.
Wasserstein served as a Director and the Chairman of Maybelline, Inc. and as a
Director of Collins & Aikman Corp. Before establishing WPG, Mr. Wasserstein was
Co-Head of Investment Banking at The First Boston Corporation, and a Managing
Director and Member of its Management Committee. Prior to joining First Boston
in 1977, Mr. Wasserstein was an attorney at Cravath, Swaine & Moore in New York
City. Mr. Wasserstein graduated with honors from the University of Michigan in
1967. In 1971 he graduated from Harvard Business School as a Baker Scholar with
high distinction, and earned a J.D., CUM LAUDE, from Harvard Law School. In 1972
he was a Knox Traveling Fellow at Cambridge University, graduating with a
graduate diploma in Comparative Legal Studies in Economic Regulation. Mr.
Wasserstein is a member of the Council on Foreign Relations. He has served as a
member of the SEC's Advisory Committee on Tender Offers and as a member of the
Visiting Committees of Harvard Law School and the University of Michigan.
WILLIAM L. POLLAK has served as President, Chief Executive Officer and
Director since March 1998. Before joining the Company, Mr. Pollak spent 16 years
at the New York Times, where he held a variety of positions, most recently as
Executive Vice President, Circulation. Mr. Pollak received an M.B.A. from
Harvard Business School in 1982 and a B.A. from Harvard College in 1978.
ANUP BAGARIA has served as a Director of ALM and Holdings since their
founding. He is a Vice President of WP Management Partners, LLC. He graduated
from the Massachusetts Institute of Technology.
MICHAEL J. BIONDI has served as a Director of ALM and Holdings since March
1998. He is Chairman and Chief Executive Officer of Wasserstein Perella & Co.,
Inc. Mr. Biondi holds M.B.A. and J.D. degrees from the Wharton School and the
University of Pennsylvania Law School, respectively. Prior to joining
Wasserstein Perella, Mr. Biondi was a member of the First Boston Mergers &
Acquisitions Group, and practiced law at Skadden, Arps, Slate, Meagher & Flom.
ROBERT C. CLARK has served as a Director of ALM and Holdings since their
founding. He has been Dean of the Harvard Law School since 1989 and is Royall
Professor of Law. Mr. Clark joined Harvard Law School in 1979 after four years
at Yale Law School, where he was a tenured professor. Mr. Clark is a corporate
law specialist and author of numerous texts and legal articles. Prior to his
academic career, he was an attorney with Ropes & Gray. Professor Clark has a
Ph.D. from Columbia University and a J.D. MAGNA CUM LAUDE from Harvard Law
School. He is currently a Director of Collins & Aikman Corp. and of Beneficial
Corporation. He was previously a Director of Maybelline, Inc.
DONALD G. DRAPKIN has served as a Director of ALM and Holdings since their
founding. He has been a Director and Vice Chairman of MacAndrews & Forbes
Holdings Inc. and various of its affiliates since March 1987. Prior to joining
MacAndrews & Forbes, Mr. Drapkin was a partner in the law firm of Skadden, Arps,
Slate, Meagher & Flom for more than five years. Mr. Drapkin also is a Director
of the following corporations which file reports pursuant to the Exchange Act:
Algos Pharmaceutical Corporation, Black Rock Asset Investors, Cardio
Technologies, Inc., The Cosmetic Center, Inc., The Coleman Company, Inc.,
Coleman Worldwide Corporation, Genta, Inc., Marvel III Holdings Inc., Revlon
Consumer Products Corporation, Revlon, Inc., Revlon Worldwide Inc., Playboy
Enterprises, Inc., Weider Nutrition International, Inc., and VIMRx
Pharmaceuticals Inc. On December 27, 1996, Marvel Holdings Inc., Marvel (Parent)
Holdings Inc., Marvel Entertainment Group, Inc., of which Mr. Drapkin was a
Director, and several of their respective subsidiaries, and Marvel III Holdings
Inc., of which Mr. Drapkin is a Director, filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code.
JAMES A. FINKELSTEIN has served as a Director of ALM and Holdings since
March 1998.
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ANDREW G. T. MOORE, II has served as a Director of ALM and Holdings since
their founding. He is a Managing Director of Wasserstein Perella and is a former
Justice of the Delaware Supreme Court. Justice Moore served on the Delaware
Supreme Court for 12 years until 1994. Justice Moore has served as the Lehmann
Distinguished Visiting Professor of Law at Washington University in St. Louis.
He has also served as an adjunct professor of law at the Georgetown University
Law Center, University of Iowa College of Law and Widener University School of
Law, where he taught seminars in advanced corporation law. He also teaches
comparative principles of international corporation law at the Tulane University
Institute of European Legal Studies in Paris, and has been a guest lecturer at
various law schools and national corporate law programs in the United States,
Canada and Europe. He graduated from Tulane University with B.B.A. and J.D.
degrees. He served as law clerk to Delaware Chief Justice Charles L. Terry, Jr.
in 1963. From 1964-1982 Justice Moore practiced law in Wilmington, Delaware,
primarily in the field of corporate litigation. He was a partner of the firm of
Connolly, Bove, Lodge & Hutz.
RANDALL J. WEISENBURGER has served as a Director of ALM and Holdings since
their founding. He is a Managing Director of Wasserstein Perella & Co., Inc.
("Wasserstein Perella") and is the President and CEO of WP Management Partners,
LLC. Mr. Weisenburger is a Director and the Co-Chairman of Collins & Aikman
Corp. and a Director of Sunbelt Manufacturing, Inc., Alliance Entertainment
Corp. and Yardley of London, Inc. Previously, Mr. Weisenburger was a Director
and Vice Chairman of Maybelline, Inc. and a Director of Pneumo Abex Corp. Mr.
Weisenburger is a founding member of Wasserstein Perella. He holds an M.B.A.
from the Wharton School of Business, where he was named the Henry Ford II
Scholar, and a B.S. in Accounting and Finance from Virginia Tech.
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF ALM, LLC
JOSEPH CALVE has served as Editor and Publisher of TEXAS LAWYER since 1995.
Prior to that, he was employed at THE CONNECTICUT LAW TRIBUNE. Mr. Calve is a
former practicing attorney, specializing in litigation at two firms, Cole &
Deitz in New York City and Rucci, Gruss, Jex & Gleason in Darien, Connecticut.
Mr. Calve received his J.D. from Western New England College School of Law in
1985, his M.A. from New York University and his B.A. from the University of
Colorado in 1981 and 1977, respectively.
ERIC EFFRON has served as Editor and Publisher of LEGAL TIMES since 1991.
From 1986 to 1991, he served in a number of editorial posts at LEGAL TIMES.
Prior to such time, his journalism experience included positions at THE NATIONAL
LAW JOURNAL, THE LOS ANGELES DAILY JOURNAL and THE NEW HAVEN REGISTER. Mr.
Effron received an M.S. from the Columbia University Graduate School of
Journalism in 1979 and a B.A., MAGNA CUM LAUDE, from Clark University in 1977.
S. RICHARD GARD, JR. has served as Editor and Publisher of FULTON COUNTY
DAILY REPORT since 1995. He has held several editorial positions at FULTON
COUNTY DAILY REPORT since joining as one of its first staff reporters in 1987.
Prior to that, Mr. Gard was an associate at Carter & Ansley, an Atlanta law
firm, where he had an insurance defense and general civil litigation practice.
Mr. Gard received his J.D. from the University of Georgia School of Law in 1984
and a B.A. with distinction from the University of Virginia in 1981.
JOANNE HARRAS has served as Vice President, Finance of ALM, LLC since 1995.
She joined Old ALM in 1987 as Assistant Controller and served as the Controller
of The American Lawyer magazine group from 1991 to 1995. Prior to joining Old
ALM, Ms. Harras was employed for three years with Seymour Schneidman and
Associates, a mid-size accounting firm specializing in publishing. Ms. Harras
graduated from Pace University in 1983 with a B.B.A. in Accounting and is a
Certified Public Accountant.
TOM JANUSZEWSKI has served as Publisher of THE CONNECTICUT LAW TRIBUNE since
January, 1998. Prior to that, Mr. Januszewski served as New England regional
director for Counsel Connect. He graduated from Fairfield University with a B.A.
in English in 1988 and earned his law degree from the Quinnipiac College School
of Law in 1993. After graduation, he worked as a content developer for GTE Main
Street, an
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interactive television project. He created programming and contributed to the
design and operation of the service.
ARIC PRESS has served as Editor-in-Chief of THE AMERICAN LAWYER magazine
since January 1998. From 1979 to January 1998, he was employed at NEWSWEEK
magazine where he most recently served as a senior editor. At NEWSWEEK, Mr.
Press was responsible for supervising law, science, education, religion and
sports coverage. Mr. Press received his J.D. from New York University and his
B.A. from Cornell University.
PETER SCHEER has served as Editor and Publisher of THE RECORDER since 1991.
Mr. Scheer started with Old ALM in 1987 as publisher of LEGAL TIMES. Prior to
joining Old ALM, Mr. Scheer was a lawyer specializing in appellate litigation in
Washington, D.C. and held various government and private legal positions since
his graduation from Harvard Law School in 1978. He graduated PHI BETA KAPPA from
Amherst College in 1973.
ROBERT STEINBAUM has served as Publisher of the NEW JERSEY LAW JOURNAL since
1987. Prior to that, he was an Assistant U.S. Attorney in Newark, New Jersey and
a private practitioner in Washington, D.C. and Newark, New Jersey. Mr. Steinbaum
received his J.D. from Georgetown University Law Center in 1976 and a B.A.
degree, MAGNA CUM LAUDE, from Yale University in 1973.
EDWARD WASSERMAN is Chairman and Editor-in-Chief of South Florida's three
DAILY BUSINESS REVIEWS. Before joining Old ALM in 1986, he served as Executive
Business Editor of THE MIAMI HERALD. Mr. Wasserman received a Ph.D. from the
London School of Economics in 1980, a Masters of Philosophy from the University
of Paris in 1972 and a B.A. degree, CUM LAUDE, in politics and economics from
Yale University in 1970.
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF NLP
JAMES A. FINKELSTEIN joined The New York Law Publishing Company in 1970 and
became its President and Chief Executive Officer in 1974. In addition, he
currently serves as President and Chief Executive Officer of NLP and is the
founder and Publisher of THE NATIONAL LAW JOURNAL and the Publisher of the NEW
YORK LAW JOURNAL. Mr. Finkelstein holds a B.A. from New York University and an
Honorary Doctor of Laws degree from Hofstra Law School. He currently serves on
the Faculty of Arts and Sciences Board of Overseers at New York University.
STEVEN FARBMAN has served in a variety of capacities at NLP since January
1986, including President of Law Journal Seminars-Press since 1988 and Senior
Vice President and Chief Operating Officer since 1992. Prior to joining NLP, Mr.
Farbman spent two years as Business Manager of NEW YORK CONSTRUCTION NEWS, a
weekly newspaper based in New York City and worked in marketing for Warner
Communications, Inc. Mr. Farbman graduated from The George Washington University
in Washington, D.C.
BEN GERSON has served as Editor-in-Chief of THE NATIONAL LAW JOURNAL since
1994. He originally joined NLP in 1981 as News Editor and later became Legal
Editor for THE NATIONAL LAW JOURNAL. From 1986 to 1990, he served as the
founding editor of the Op-Ed page for NEW YORK NEWSDAY, and later became Sunday
and Op-Ed Editor for both LONG ISLAND NEWSDAY and NEW YORK NEWSDAY. He received
his J.D. from Boston College Law School in 1979 and his B.A. degree from
Brandeis University in 1970.
RUTH HOCHBERGER has served as Editor-in-Chief of the NEW YORK LAW JOURNAL
since 1989. She originally joined NLP in 1976 as a feature reporter for the NEW
YORK LAW JOURNAL and was founding publisher of NLP's newsletter division, Leader
Publications, before returning to the NEW YORK LAW JOURNAL in 1989. Ms.
Hochberger received her J.D. in 1975 and her B.A. degree from Boston College in
1972.
ALAN KAPLAN has been a Vice President of NLP since 1993. Mr. Kaplan
originally joined NLP in 1982 responsible for special projects. He became
President of Law Journal Seminars-Press in 1983 and held that position until
1987, at which time he left NLP. Mr. Kaplan rejoined NLP in 1993 and is
currently working on performance improvement programs at NLP's newsletter
division. Mr. Kaplan holds a B.A. from Tufts University and a J.D., MAGNA CUM
LAUDE, from New York Law School.
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PAUL MASTRONARDI joined NLP in March 1996 as Chief Financial Officer and was
elected Vice President, Finance in April 1996. He served as Director of
Financial Planning for Bantam Doubleday Bell, a division of Bertelsmann Inc.,
from April 1995 to March 1996. Prior to that time, Mr. Mastronardi spent
fourteen years at Gruner & Jahr USA Publishing, where he served in a variety of
capacities, including Staff Accountant, Manager of Information Systems, Senior
Financial Manager and Director of Financial Planning. Mr. Mastronardi holds a
B.S. in Accounting and an M.S. in Finance from St. John's University.
ROSE-ANN MORANGELLI has been a Vice President and Director of Marketing for
NLP since 1990. Prior to such time, Ms. Morangelli served as Vice President of
Law Journal Seminars-Press. Ms. Morangelli joined NLP when Law Journal
Seminars-Press was launched in 1971. She was previously employed by the
Practicing Law Institute.
KEVIN VERMUELEN has been a Vice President of Sales for NLP since 1996. In
addition, he also serves as Associate Publisher of LAW TECHNOLOGY PRODUCT NEWS
and Director of Advertising for the NEW YORK LAW JOURNAL. Mr. Vermuelen joined
NLP in October 1992. He previously worked for Miller Freeman and Gordon
Publications as a Regional Manager. Mr. Vermuelen graduated from Brockport State
University in 1985.
MARK S. WINWOOD has been a President of NLP's Law Journal Information
Systems Division since 1986. Mr. Winwood joined NLP as Assistant Editor on the
founding staff of THE NATIONAL LAW JOURNAL in 1978 and served as Art Director
during the first five years of its publication. Mr. Winwood was responsible for
the 1986 startup of Law Journal Information Systems, and supervises, on a daily
basis, all aspects of the division's operations.
STUART WISE has been Publisher of Leader Publications at NLP since 1990. Mr.
Wise joined NLP in 1980. He has worked in the Newsletter Division since 1987,
when he became Managing Editor. In 1990 Mr. Wise became the Publisher of the
division with overall responsibility for the day-to-day editorial and business
operations.
EXECUTIVE COMPENSATION
The Company was formed in August 1997 and did not conduct any operations or
have any employees prior to the ALM Acquisition in August 1997. For the year
ended December 31, 1997, the only executive officers of the Company were Randall
J. Weisenburger, who served as President and Chief Executive Officer, and Anup
Bagaria, who served as Vice President and Secretary of the Company. Neither of
Mr. Weisenburger or Mr. Bagaria received compensation from any person in respect
of their service rendered to the Company. Effective March 1998, the Company
hired William L. Pollak as its President and Chief Executive Officer, replacing
Mr. Weisenburger. See "Certain Transactions."
INCENTIVE COMPENSATION PROGRAMS
As part of its business strategy, the Company intends to adopt a new
compensation program for key employees designed to more closely link
compensation to the Company's overall performance. Furthermore, for senior
executives, the Company intends to establish a long-term incentive compensation
program setting aside options to purchase between 3.0% and 5.0% of the Company's
common stock. The Company has made no final determination with respect to whom
such securities will be issued.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has established an Executive Committee and intends to establish
two other standing committees: (i) an Audit Committee and (ii) Compensation
Committee. There is no standing nominating committee of the Board.
The Executive Committee consists of three members, currently Bruce
Wasserstein, Randall J. Weisenburger and Anup Bagaria. The Executive Committee
has been delegated the authority to approve (i) the acquisition and divestiture
by the Company or an affiliate of the Company of all or a portion of one or
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more business entities for a price of up to $25 million, (ii) the appointment of
senior officers of the Company or its affiliates and termination of such
employment, (iii) the preparation and approval of short-term and long-term
budgets, and (iv) other material policy-level decisions to the extent permitted
by the Delaware General Corporation Law.
The Audit Committee shall review and, as it shall deem appropriate,
recommend to the Board internal accounting and financial controls for the
Company and auditing practices and procedures to be employed in the preparation
and review of financial statements of the Company. The Audit Committee shall
make recommendations to the Board concerning the engagement of independent
public accountants to audit the annual financial statements of the Company and
the scope of the audit to be undertaken by such accountants. Arthur Andersen LLP
presently serves as the independent auditors of the Company. The Company expects
that two or three Directors will be appointed to the Audit Committee.
The Compensation Committee shall review and, as it deems appropriate,
recommend to the Board policies, practices and procedures relating to the
compensation of managerial employees and the establishment and administration of
employee benefit plans. The Compensation Committee shall have and exercise all
authority under any employee stock option plans of the Company, if any, as the
committee therein specified (unless the Board resolution appoints any other
committee to exercise such authority), and shall otherwise advise and consult
with the officers of the Company as may be requested regarding managerial
personnel policies. The Company expects that two or three Directors will be
appointed to the Compensation Committee.
CERTAIN TRANSACTIONS
The Company is a wholly-owned subsidiary of Holdings. A majority of
Holdings' equity securities are held by USEP and its affiliates. USEP is a
Delaware limited partnership investment fund of which WPMP is the general
partner. WPMP is controlled by Wasserstein Perella & Co., Inc. In accordance
with the Notes, WPMP is entitled to receive a monitoring fee in an amount not to
exceed $1.0 million in respect of any year. For advisory services rendered by
WPMP to the Company in connection with the LegalTech Acquisition, the Company
paid WPMP a fee of 1% of the purchase price for LegalTech. For advisory services
rendered by WPMP to the Company in connection with the LCL Acquisition, the
Company will pay WPMP a fee of 1% of the purchase price for LCL at the closing
of the LCL Acquisition. See "Recent Transactions."
The Company may engage in transactions with its affiliates, including
entities owned or controlled by certain of its principal shareholders. The
Company believes that such transactions will be no more favorable to the Company
than similar transactions with non-affiliates. The Indenture will contain a
covenant requiring that transactions with affiliates of the Company be on terms
substantially as favorable to the Company as would be obtainable by the Company
at the time in a comparable arm's length transaction with a person other than an
affiliate. See "Description of the Notes--Certain Covenants-- Limitation on
Transactions with Affiliates."
The Company has an employment agreement with William L. Pollak which
provides for the employment of Mr. Pollak with the Company as President and
Chief Executive Officer (effective March 9, 1998) until March 9, 2003, unless
sooner terminated (the "Employment Period"). The employment agreement provides
for an annual base salary of $400,000, subject to annual increases commencing on
March 9, 1999. In addition to the base salary, the employment agreement provides
for a bonus of $400,000 after the first year of the Employment Period and a
bonus of not less than 50% and not more than 150% of the base salary, as
determined by the Board of Directors, in each of the remaining years of the
Employment Period. Mr. Pollak will also receive a payment for options granted to
him and forfeited upon his resignation from THE NEW YORK TIMES COMPANY. The
employment agreement provides that if Mr. Pollak's employment is terminated by
the Company without cause or by Mr. Pollak with good reason, Mr. Pollak will be
entitled to severance equal to the total value of Mr. Pollak's salary through
the termination date to the extent accrued,
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but unreimbursed, and his salary for one year commencing on the termination date
and any accrued but unpaid bonus.
PRINCIPAL STOCKHOLDERS
All of the outstanding shares of the Company are beneficially owned by
Holdings. The following table sets forth certain information regarding
beneficial ownership of Holdings by (i) each person (or group of affiliate
persons) known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock of Holdings, (ii) each Director, Director nominee, and
the Chief Executive Officer and Vice President of the Company, and (iii) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES OF PERCENTAGE OF TOTAL SHARES
OF BENEFICIAL OWNER COMMON STOCK OF COMMON STOCK OUTSTANDING
- --------------------------------------------------------- ------------------- ----------------------------
<S> <C> <C>
U.S. Equity Partners, L.P. (1)........................... 36,996 36.996 %
ALM Offshore Intermediate Holdings, Inc. (2)............. 14,411 14.411 %
Wasserstein & Co., Inc................................... 48,593 48.593 %
------- -------
Total................................................ 100,000 100.000 %
</TABLE>
- ------------------------
(1) Includes approximately 3.4% of the issued and outstanding common stock of
Holdings held by a co-investor of U.S. Equity Partners, L.P. ("USEP"), which
has granted to WPMP, the general partner of USEP, an irrevocable proxy to
vote such shares of common stock.
(2) ALM Offshore Intermediate Holdings, Inc., is a wholly-owned subsidiary of
U.S. Equity Partners (Offshore), L.P.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Discount Notes were originally sold by Holdings on December 22, 1997
to the Initial Purchasers pursuant to the Purchase Agreement. The Initial
Purchasers subsequently resold the Old Discount Notes to qualified institutional
buyers in reliance on Rule 144A under the Securities Act. As a condition of the
Purchase Agreement, Holdings entered into the Registration Rights Agreement with
the Initial Purchasers pursuant to which Holdings has agreed, for the benefit of
the holders of the Old Discount Notes, at Holdings' cost, (i) to file the
Exchange Offer Registration Statement within 120 days after the date of the
original issue of the Old Discount Notes with the Commission with respect to the
Exchange Offer for the Exchange Discount Notes; (ii) use its reasonable best
efforts to cause the Exchange Offer Registration Statement to be declared
effective under the Securities Act within 180 days after the date of the
original issuance of the Old Discount Notes and (iii) use its best efforts to
cause the Exchange Offer Registration Statement to be effective continuously, to
keep the Exchange Offer open for a period of not less than 20 business days and
to cause the Exchange Offer to be consummated no later than the 30th business
day after it is declared effective by the Commission. Upon the Exchange Offer
Registration Statement being declared effective, the Company will offer the
Exchange Discount Notes in exchange for surrender of the Old Discount Notes. For
each Old Discount Note surrendered to the Company pursuant to the Exchange
Offer, the holder of such Old Discount Note will receive an Exchange Discount
Note having a principal amount equal to that of the surrendered Old Discount
Note. Interest on each Old Discount Note will accrue from the last interest
payment date on which interest was paid on the Old Discount Note surrendered in
exchange therefor or, if no interest has been paid on such Old Discount Note,
from the date of its original issue. Interest on each Exchange Discount Note
will accrue from the date of its original issue.
The Registration Rights Agreement provides that (i) if Holdings fails to
file an Exchange Offer Registration Statement with the Commission on or prior to
the 120th day after the date of original issue of the Old Discount Notes, (ii)
if the Exchange Offer Registration Statement is not declared effective by the
Commission on or prior to the 180th day after the date of original issue of the
Old Discount Notes, (iii) the Exchange Offer is not consummated on or before the
30th business day after the Exchange Offer Registration Statement is declared
effective, (iv) if obligated to file the Shelf Registration Statement and
Holdings fails to file the Shelf Registration Statement with the Commission on
or prior to the 30th business day after such filing obligation arises, (v) if
obligated to file a Shelf Registration Statement and the Shelf Registration
Statement is not declared effective on or prior to the 90th day after the
obligation to file a Shelf Registration Statement arises, or (vi) if the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
the case may be, is declared effective but thereafter ceases to be effective or
useable in connection with resales of the Transfer Restricted Securities (as
defined below), such time of non-effectiveness or non-useability (each, a
"Registration Default"), Holdings agrees to pay to each holder of Transfer
Restricted Securities affected thereby liquidated damages ("Liquidated Damages")
in an amount equal to $0.10 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such holder for each week or portion thereof that
the Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default. The amount of Liquidated
Damages shall increase by an additional $0.05 per week per $1,000 in principal
amount of Transfer Restricted Securities with respect to each subsequent 90-day
period until all Registration Defaults have been cured, up to a maximum amount
of Liquidated Damages of $0.25 per week, per $1,000 in principal amount of
Transfer Restricted Securities. Holdings shall not be required to pay Liquidated
Damages for more than one Registration Default at any given time. Following the
cure of all Registration Defaults, the accrual of Liquidated Damages will cease.
All accrued Liquidated Damages shall be paid by Holdings to the holders entitled
thereto in the same manner as interest payments on the Old Discount Notes on
semi-annual damages payment dates which correspond to interest payment dates for
the Old Discount Notes.
For the purposes of the Registration Rights Agreement, "Transfer Restricted
Securities" means each Old Discount Note until the earliest of the date of which
(i) such Old Discount Note is exchanged in the Exchange Offer and entitled to be
resold to the public by the holder thereof without complying with the
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prospectus delivery requirements of the Securities Act, (ii) such Old Discount
Note has been disposed of in accordance with the Shelf Registration Statement,
(iii) such Old Discount Note is disposed of by a broker-dealer pursuant to the
"Plan of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of this Prospectus) or (iv) such Old Discount Note is
distributed to the public pursuant to Rule 144 under the Securities Act or is
salable pursuant to Rule 144(k) under the Securities Act.
The Registration Rights Agreement describes certain representations that
holders of Old Discount Notes are required to make to Holdings in order to
participate in the Exchange Offer. Holders of Old Discount Notes also are
required to deliver information to be used in connection with the Shelf
Registration Statement and to provide comments on the Shelf Registration
Statement within the time periods set forth in the Registration Rights Agreement
in order to have their Old Discount Notes included in the Shelf Registration
Statement and benefit from the provisions regarding Liquidated Damages set forth
above.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by, all the provisions of the Registration Rights Agreement, a copy
of which is filed as an exhibit to the Exchange Offer Registration Statement of
which this Prospectus is a part.
Following the consummation of the Exchange Offer, holders of the Old
Discount Notes who were eligible to participate in the Exchange Offer but who
did not tender their Old Discount Notes will not have any further registration
rights and such Old Discount Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of the market for such Old
Discount Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, Holdings will accept any and all Old Discount
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time,
on the Expiration Date. Holdings will issue $1,000 principal amount of Exchange
Discount Notes in exchange for each $1,000 principal amount of outstanding Old
Discount Notes accepted in the Exchange Offer. Holders of Old Discount Notes may
tender some or all of their Old Discount Notes pursuant to the Exchange Offer.
However, Old Discount Notes may be tendered only in integral multiples of
$1,000.
The form and terms of the Exchange Discount Notes are the same as the form
and terms of the Old Discount Notes except that (i) the Exchange Discount Notes
bear a Series B designation, (ii) the Exchange Discount Notes will be registered
under the Securities Act and hence will not bear legends restricting the
transfer thereof and (iii) the holders of the Exchange Discount Notes will not
be entitled to certain rights under the Registration Rights Agreement, including
the provisions providing for an increase in the interest rate on the Old
Discount Notes in certain circumstances relating to the timing of the Exchange
Offer, all of which rights will terminate when the Exchange Offer is
consummated. The Exchange Discount Notes will evidence the same debt as the Old
Discount Notes and will be entitled to the benefits of the Indenture.
As of the date of this Prospectus, $63,275,000 aggregate principal amount at
maturity of Old Discount Notes was outstanding. Holdings has fixed the close of
business on , 1998 as the record date for the Exchange Offer for
purposes of determining the persons to whom this Prospectus and the Letter of
Transmittal will be mailed initially.
Holders of Old Discount Notes do not have any appraisal or dissenters'
rights under the General Corporation Law of Delaware or in the Indenture in
connection with the Exchange Offer. Holdings intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder.
Holdings shall be deemed to have accepted validly tendered Old Discount
Notes when, as and if Holdings has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as
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agent for the tendering holders for the purpose of the receiving the Exchange
Discount Notes from Holdings.
If any tendered Old Discount Notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth in this
Prospectus or otherwise, the certificates for any such unaccepted Old Discount
Notes will be returned, without expense, to the tendering holder thereof as
promptly as practicable after the Expiration Date.
Holders who tender Old Discount Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of Old
Discount Notes pursuant to the Exchange Offer. Holdings will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection with
the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless Holdings, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, Holdings will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
Holdings reserves the right, in its sole discretion, (i) to delay accepting
any Old Discount Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "--Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of the
Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders.
ACCRETION OF THE DISCOUNT NOTES; INTEREST
The Old Discount Notes that are tendered in the Exchange Offer will accrete
at a rate of 12 1/4, compounded semi-annually, to but excluding the date of
issuance of the Exchange Discount Notes. Any Old Discount Notes not tendered or
accepted for exchange will continue to accrete in accordance with their terms
and will cease to accrete upon cancellation of the Old Discount Notes and
issuance of the Exchange Discount Notes. From and after the date of issuance of
the Exchange Discount Notes, the Exchange Discount Notes shall accrete at the
rate of 12 1/4% per annum, but no cash interest will accrue or be payable in
respect of the Exchange Discount Notes prior to December 15, 2002. Thereafter,
cash interest on the Exchange Discount Notes will be payable until maturity at a
rate of 12 1/4% per annum, semi-annually in arrears, on each June 15 and
December 15, commencing June 15, 2003.
PROCEDURES FOR TENDERING
Only a holder of Old Discount Notes may tender such Old Discount Notes in
the Exchange Offer. To tender in the Exchange Offer, a holder must complete,
sign and date the accompanying Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by the Letter of Transmittal
or transmit an Agent's Message in connection with a book-entry transfer, and
mail or otherwise deliver such Letter of Transmittal or such facsimile or
Agent's Message, together with the tendered Old Discount Notes and any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. To be tendered effectively, the Old Discount
Notes, Letter of Transmittal or Agent's Message and other required documents
must be completed and received by the Exchange Agent at the address set forth
below under "Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date. Delivery of the Old Discount Notes may be made by book-entry
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transfer in accordance with the procedures described below. Confirmation of such
book-entry transfer must be received by the Exchange Agent prior to the
Expiration Date.
The term "Agent's Message" means a message, transmitted by a book-entry
transfer facility to, and received by, the Exchange Agent forming a part of a
confirmation of a book-entry, which states that such book-entry transfer
facility has received an express acknowledgment from the participant in such
book-entry transfer facility tendering the Old Discount Notes that such
participant has received and agrees: (i) to participate in the Automated Tender
Option Program ("ATOP"); (ii) to be bound by the terms of the Letter of
Transmittal; and (iii) that Holdings may enforce such agreement against such
participant.
By executing the Letter of Transmittal or Agent's Message, each holder will
make to Holdings the representations set forth above in the second paragraph
under the heading "--Resale of the Exchange Discount Notes."
The tender of Old Discount Notes by a holder and the acceptance thereof by
Holdings will constitute agreement between such holder and Holdings in
accordance with the terms and subject to the conditions set forth herein and in
the Letter of Transmittal or Agent's Message.
THE METHOD OF DELIVERY OF OLD DISCOUNT NOTES AND THE LETTER OF TRANSMITTAL
OR AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT
THE ELECTION AND SOLE RISK OF THE HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY CONFIRMED BY THE EXCHANGE AGENT. AS AN ALTERNATIVE TO DELIVERY BY
MAIL, HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD DISCOUNT NOTES
SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Discount Notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See instructions
for "Signatures on this Letter of Transmittal; Bond Powers and Endorsements;
Guarantee of Signatures" included as part of the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below) unless
the Old Discount Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Discount Notes listed therein, such Old Discount Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Old Discount
Notes with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Discount Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to Holdings of their authority to so act must be submitted with the
Letter of Transmittal.
Holdings understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the Old
Discount Notes at the book-entry transfer facility, The Depository Trust Company
(the "Book-Entry Transfer Facility"), for the purpose of facilitating the
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Exchange Offer, and subject to the establishment thereto, any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make book-entry delivery of Old Discount Notes by causing such Book-Entry
Transfer Facility to transfer such Old Discount Notes into the Exchange Agent's
account with respect to the Old Discount Notes in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. Although delivery of the Old
Discount Notes may be effected through book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility, unless an Agent's Message
is received by the Exchange Agent in compliance with ATOP, an appropriate Letter
of Transmittal properly completed and duly executed with any required signature
guarantee and all other required documents must in each case be transmitted to
and received or confirmed by the Exchange Agent at its address set forth below
on or prior to the Expiration Date, or, if the guaranteed delivery procedures
described below are complied with, within the time period provided under such
procedures. Delivery of documents to the Book-Entry Transfer Facility does not
constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Discount Notes and withdrawal of tendered
Old Discount Notes will be determined by Holdings in its sole discretion, which
determination will be final and binding. Holdings reserves the absolute right to
reject any and all Old Discount Notes not properly tendered or any Old Discount
Notes Holdings' acceptance of which would, in the opinion of counsel for
Holdings, be unlawful. Holdings also reserves the right in its sole discretion
to waive any defects, irregularities or conditions of tender as to particular
Old Discount Notes. Holdings' interpretation of the terms and conditions of the
Exchange Offer (including the instructions in the Letter of Transmittal) will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Old Discount Notes must be cured within such time
as Holdings shall determine. Although Holdings intends to notify holders of
defects or irregularities with respect to tenders of Old Discount Notes, neither
Holdings , the Exchange Agent nor any person shall incur any liability for
failure to give such notification. Tender of Old Discount Notes will not be
deemed to have been made until such defects or irregularities have been cured or
waived. Any Old Discount Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Discount Notes and (i) whose Old
Discount Notes are not immediately available, (ii) who cannot deliver their Old
Discount Notes, the Letter of Transmittal or any other required documents to the
Exchange Agent or (iii) who cannot complete the procedures for book-entry
transfer, prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution; and
(b) prior to the Expiration Date, the Exchange Agent received from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate
number(s) of the such Old Discount Notes and the principal amount of Old
Discount Notes tendered, stating that the tender is being made thereby
and guaranteeing that, within five New York Stock Exchange trading days
after the Expiration Date, the Letter of Transmittal (or facsimile
thereof) (or, in the case of a book-entry transfer, an Agent's Message)
together with the certificate(s) representing the Old Discount Notes (or
a confirmation of book-entry transfer of such Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility), and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) the certificate(s) representing all tendered Old Discount Notes in
proper form for transfer (or a confirmation of a book-entry transfer of
such Old Discount Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility), together with a Letter of Transmittal (of
facsimile thereof), properly completed and duly executed, with any
required signature guarantees (or, in
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the case of a book-entry transfer, an Agent's Message) and all other
documents required by the Letter of Transmittal are received by the
Exchange Agent within five New York Stock Exchange trading days after the
Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Discount Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Discount Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
To withdraw a tender of Old Discount Notes in the Exchange Offer, a
telegram, telex, letter or facsimile transmission notice of withdrawal must be
received by the Exchange Agent at its address set forth herein prior to 5:00
p.m., New York City time, on the Expiration Date. Any such notice of withdrawal
must (i) specify the name of the person having deposited the Old Discount Notes
to be withdrawn (the "Depositor"), (ii) identify the Old Discount Notes to be
withdrawn (including the certificate number(s) and principal amount of such Old
Discount Notes, or, in the case of Old Discount Notes transferred by book-entry
transfer, the name and number of the account at the Book-Entry Transfer Facility
to be credited), (iii) be signed by the holder in the same manner as the
original signature on the Letter of Transmittal by which such Old Discount Notes
were tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the Old
Discount Notes register the transfer of such Old Discount Notes into the name of
the person withdrawing the tender and (iv) specify the name in which any such
Old Discount Notes are to be registered, if different from that of the
Depositor. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by Holdings, whose
determination shall be final and binding on all parties. Any Old Discount Notes
so withdrawn will be deemed not to have been validly tendered for purposes of
the Exchange Offer and no Exchange Discount Notes will be issued with respect
thereto unless the Old Discount Notes so withdrawn are validly retendered. Any
Old Discount Notes which have been tendered but which are not accepted for
exchange will be returned to the holder thereof without cost to such holder as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Discount Notes may be retendered by
following one of the procedures described above under "--Procedures for
Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Holdings shall not be
required to accept for exchange, or exchange Notes for, any Old Discount Notes,
and may terminate or amend the Exchange Offer as provided herein before the
acceptance of such Old Discount Notes, if:
(a) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of Holdings, might materially impair the
ability of Holdings to proceed with the Exchange Offer, or any material
adverse development has occurred in any existing action or proceeding
with respect to Holdings or any of its subsidiaries; or
(b) any law, statue, rule, regulation or interpretation by the staff of the
Commission is proposed, adopted or enacted, which, in the sole judgment
of Holdings, might materially impair the ability of Holdings to proceed
with the Exchange Offer or materially impair the contemplated benefits of
the Exchange Offer to Holdings; or
(c) any governmental approval has not been obtained, which approval Holdings
shall, in its sole discretion, deem necessary for the consummation of the
Exchange Offer as contemplated hereby.
If Holdings determines in its sole discretion that any of the conditions are
not satisfied, Holdings may (i) refuse to accept any Old Discount Notes and
return all tendered Old Discount Notes to the tendering holders, (ii) extend the
Exchange Offer and retain all Old Discount Notes tendered prior to the
expiration
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of the Exchange Offer, subject, however, to the rights of holders to withdraw
such Old Discount Notes (see "--Withdrawal of Tenders") or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Old Discount Notes which have not been withdrawn.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
<TABLE>
<S> <C> <C>
BY REGISTERED OR CERTIFIED FACSIMILE TRANSMISSION BY HAND OR OVERNIGHT DELIVERY:
MAIL: NUMBER:
The Bank of New York (Eligible Institutions Only) The Bank of New York
101 Barclay Street, 7E (212) 815-6339 101 Barclay Street
New York, New York 10286 Corporate Trust Services
Attn: Reorganization Section Window
CONFIRM BY TELEPHONE Ground Level
OR FOR INFORMATION CALL: New York, New York 10286
(212) 815-5788 Attn: Reorganization Section--
Floor 7E
</TABLE>
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by Holdings. The principal
solicitation is being made by mail; however, additional solicitation may be made
by telegraph, telecopy, telephone or in person by officers and regular employees
of Holdings and its affiliates.
Holdings has not retained any dealer-manager in connection with the Exchange
Offer and will not make any payments to brokers, dealers, or others soliciting
acceptances of the Exchange Offer. Holdings, however, will pay the Exchange
Agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by Holdings. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Discount Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Discount Notes or Old Discount Notes for principal amounts
not tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered holder
of the Old Discount Notes tendered, or if a transfer tax is imposed for any
reason other than the exchange of Old Discount Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted to the Exchange Agent, the amount of such transfer taxes will be
billed directly to such tendering holder.
ACCOUNTING TREATMENT
The Exchange Discount Notes will be recorded at the same carrying value as
the Old Discount Notes, which is face value, as reflected in Holdings'
accounting records on the date of exchange. Accordingly, no gain or loss for
accounting purposes will be recognized by Holdings. The expenses of the Exchange
Offer will be capitalized and expensed over the term of the Exchange Discount
Notes.
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CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Discount Notes that are not exchanged for Exchange Discount Notes
pursuant to the Exchange Offer will remain restricted securities. Accordingly,
such Old Discount Notes may be resold only (i) to Holdings (upon redemption
thereof or otherwise), (ii) so long as the Old Discount Notes are eligible for
resale pursuant to Rule 144A, to a person inside the United States whom the
seller reasonably believes is a qualified institutional buyer within the meaning
of Rule 144A under the Securities Act in a transaction meeting the requirements
of Rule 144A, in accordance with Rule 144A under the Securities Act, or pursuant
to another exemption from the registration requirements, of the Securities Act
(and based upon an opinion of counsel reasonably acceptable to Holdings), (iii)
outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act, or (iv) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United
States.
RESALE OF THE EXCHANGE DISCOUNT NOTES
Based upon interpretations by the staff of the Commission set forth in
certain no-action letters issued to third parties in similar transactions,
Holdings believes that the Exchange Discount Notes issued pursuant to the
Exchange Offer may be offered for resale, resold and otherwise transferred by
any holder thereof (other than any such holder that is (i) an "affiliate" of
Holdings within the meaning of Rule 405 under the Securities Act, or (ii) a
broker-dealer that acquired the Old Discount Notes in a transaction other than
part of its market-making or other trading activities) without compliance with
the registration and prospectus delivery requirements of the Securities Act,
provided that such Exchange Discount Notes are acquired in the ordinary course
of such holder's business and such holder has no arrangement or understanding
with any person to participate in the distribution of such Exchange Discount
Notes. However, the Commission has not considered the Exchange Offer in the
context of a no-action letter and there can be no assurance that the staff of
the Commission would make a similar determination with respect to the Exchange
Offer as in such other circumstances.
As contemplated by the Registration Rights Agreement and the staff's
no-action letters referred to above, each holder accepting the Exchange Offer is
required to represent to Holdings in the Letter of Transmittal that (i) the
Exchange Discount Notes are to be acquired by the holder or the person receiving
such Exchange Discount Notes, whether or not such person is the holder, in the
ordinary course of business, (ii) the holder or any such other person (other
than a broker-dealer referred to in the next sentence) is not engaging and does
not intend to engage, in distribution of the Exchange Discount Notes, (iii) the
holder or any such other person has no arrangement or understanding with any
person to participate in the distribution of the Exchange Discount Notes, (iv)
neither the holder nor any such other person is an "affiliate" of Holdings
within the meaning of Rule 405 under the Securities Act, and (v) the holder or
any such other person acknowledges that if such holder or any other person
participates in the Exchange Offer for the purpose of distributing the Exchange
Discount Notes it must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale of the Exchange
Discount Notes and cannot rely on those no-action letters. Holders of Old
Discount Notes wishing to accept the Exchange Offer must represent to Holdings,
as required by the Registration Rights Agreement, that such conditions have been
met. Each Participating Broker-Dealer that receives Exchange Discount Notes for
its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Discount
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Exchange Discount
Notes received in exchange for Old Discount Notes where such Old Discount Notes
were acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities. Holdings has agreed that, for a period
of 180 days after the Expiration Date, it will make this Prospectus available to
any Participating Broker-Dealer for use in connection with any such resale. See
"Plan of Distribution."Any holder who tenders in the Exchange Offer with the
intention to participate, or for the purpose of participating, in a distribution
of the Exchange Discount
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Notes cannot rely on the position of the staff of the Commission enunciated in
no-action letters and, in the absence of an exemption therefrom, must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction. Failure to comply with such
requirements in such instance may result in such holder incurring liability
under the Securities Act for which the holder is not indemnified by Holdings.
For a description of the procedures for resales by Participating Broker-Dealers,
see "Plan of Distribution."
In the event that changes in the law or the applicable interpretations of
the staff of the Commission do not permit Holdings to effect the Exchange Offer,
or if for any other reason the Exchange Offer is not consummated within 180 days
of the date of the original issuance of the Old Discount Notes, Holdings will
(i) file the Shelf Registration Statement covering the resale of the Old
Discount Notes, (ii) use its reasonable best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act and
(iii) use its reasonable best efforts to keep effective the Shelf Registration
Statement for two years after its effective date. Holdings will, in the event of
the filing of the Shelf Registration Statement, provide to each applicable
holder of the Old Discount Notes copies of the prospectus which is a part of the
Shelf Registration Statement, notify each such holder when the Shelf
Registration Statement has become effective and take certain other actions as
are required to permit unrestricted resale of the Old Discount Notes. A holder
of the Old Discount Notes that sells such Old Discount Notes pursuant to the
Shelf Registration Statement generally will be required to be named as a selling
security holder in the related prospectus and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement which are applicable to such a
holder (including certain indemnification obligations). In addition, each holder
of the Old Discount Notes will be required to deliver information to be used in
connection with the Shelf Registration Statement and to provide comments on the
Shelf Registration Statement within the time periods set forth in the Exchange
Offer Registration Statement and to benefit from the provisions set forth in the
following paragraph.
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DESCRIPTION OF THE DISCOUNT NOTES
The Old Notes were issued and the Exchange Discount Notes will be issued
pursuant to an Indenture, dated as of December 22, 1997 among Holdings and The
Bank of New York, as trustee (the "Trustee"). The terms of the Exchange Discount
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") as in effect on the date of the Indenture. The Exchange Discount
Notes are subject to all such terms, and holders of the Exchange Discount Notes
are referred to the Indenture and the Trust Indenture Act for a statement of
them. The following is a summary of the material terms and provisions of the
Exchange Discount Notes. This summary does not purport to be a complete
description of the Exchange Discount Notes and is subject to the detailed
provisions of, and qualified in its entirety by reference to, the Exchange
Discount Notes and the Indenture (including the definitions contained therein).
The form and terms of the Exchange Discount Notes are the same as the form and
terms of the Old Discount Notes (which they replace) except that (i) the
Exchange Discount Notes bear a Series B designation, (ii) the Exchange Discount
Notes will be registered under the Securities Act and will not bear legends
restricting the transfer thereof, and (iii) the holders of Exchange Discount
Notes will not be entitled to certain rights under the Registration Rights
Agreement relating to the Old Discount Notes, including the provisions providing
for the payment of Liquidated Damages in certain circumstances relating to the
timing of the Exchange Offer, which rights will terminate when the Exchange
Offer is consummated. A copy of the form of Indenture may be obtained from
Holdings by any holder or prospective investor upon request. Definitions
relating to certain capitalized terms used in this "Description of the Discount
Notes" are set forth under "--Certain Definitions" and throughout this
description. Capitalized terms that are used but not otherwise defined herein
have the meanings assigned to them in the Indenture and such definitions are
incorporated herein by reference. Wherever particular provisions of the
Indenture are referred to in this summary, such provisions are incorporated by
reference as a part of the statements made and such statements are qualified by
such reference.
GENERAL
The Exchange Discount Notes will be senior, unsecured, general obligations
of Holdings, limited in initial aggregate principal amount to $35.0 million
(accreting to $63.275 million principal amount at maturity) and will be PARI
PASSU in right of payment to all existing and future unsubordinated Indebtedness
of Holdings and senior in right of payment to all subordinated Indebtedness of
Holdings. The operations of Holdings are conducted entirely through its
Subsidiaries and, therefore, the Exchange Discount Notes will be effectively
subordinated in right of payment to all existing and future obligations of
Holdings' Subsidiaries. In addition, Holdings will be dependent upon the cash
flow of its Subsidiaries to meet its obligations, including its obligations
under the Discount Notes. See "Risk Factors--Limitation on Access to
Subsidiaries' Cash Flow; Holding Company Structure."
The Senior Note Indenture will, and it is expected that any Credit Agreement
(as such term is defined below) will, restrict the ability of ALM to pay
dividends or make any other distributions to Holdings. The ability of ALM to
comply with the conditions in the Senior Note Indenture and any Credit Agreement
permitting such dividends and distributions may be affected by events beyond
ALM's control. As of December 31, 1997, after giving effect to the consummation
of the Transactions, Holdings' Subsidiaries had approximately $208.4 million
aggregate principal amount of liabilities outstanding, including indebtedness
under the Senior Notes, trade payables and deferred revenues. The Indenture will
permit the incurrence of certain additional Indebtedness of Holdings and
Holdings' Subsidiaries in the future. See "-- Certain Covenants--Limitation on
Incurrence of Additional Indebtedness." The Discount Notes will be issued only
in fully registered form, without coupons, in denominations of $1,000 and
integral multiples thereof.
As of the Issue Date, all of Holdings' direct and indirect Subsidiaries will
be Restricted Subsidiaries. However, under certain circumstances, Holdings and
ALM will be able to designate current or future
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<PAGE>
Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be
subject to many of the restrictive covenants set forth in the Indenture.
The Discount Notes will mature on December 15, 2008. The Discount Notes will
be issued at a substantial discount to their aggregate principal amount at
maturity such that the gross proceeds from the issuance of the Discount Notes
will be $35.0 million. Until December 15, 2002, no interest will accrue on the
Discount Notes, but the Accreted Value will increase (representing amortization
of original issue discount) between the date of original issuance and December
15, 2002, on a semi-annual bond equivalent basis using a 360-day year comprised
of twelve 30-day months, such that on December 15, 2002 the Accreted Value will
be equal to the full principal amount at maturity of the Discount Notes.
Beginning on December 15, 2002, interest on the Discount Notes will accrue at
the rate of 12 1/4% per annum and will be payable until maturity semi-annually
in arrears on June 15 and December 15 of each year, commencing on June 15, 2003,
to Holders of record on the immediately preceding June 1 and December 1,
respectively. Interest on the Discount Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
December 15, 2002.
Principal of, premium, if any, and accrued and unpaid interest on the
Discount Notes (and Liquidated Damages, if any) will be payable, and the
Discount Notes may be presented for registration of transfer or exchange, at the
office or agency of Holdings maintained for such purpose, which office or agency
shall be maintained in the Borough of Manhattan, The City of New York. Except as
set forth below, at the option of Holdings, payment of interest may be made by
check mailed to the holders of the Discount Notes at the addresses set forth
upon the registry books of Holdings. No service charge will be made for any
registration of transfer or exchange of Discount Notes, but Holdings may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. Until otherwise designated by Holdings,
Holdings' office or agency will be the corporate trust office of the Trustee
presently located at the office of the Trustee in the Borough of Manhattan, The
City of New York.
OPTIONAL REDEMPTION
Holdings will not have the right to redeem any Discount Notes prior to
December 15, 2002 (other than as described in the next following paragraphs).
The Discount Notes will be redeemable for cash at the option of Holdings, in
whole or in part, at any time on or after December 15, 2002, upon not less than
30 days' nor more than 60 days' notice to each Holder of Discount Notes, at the
following redemption prices (expressed as percentages of the principal amount at
maturity) if redeemed during the 12-month period commencing December 15 of the
years indicated below, in each case (subject to the right of holders of record
on a Record Date to receive the corresponding accrued and unpaid interest due
thereon (and the corresponding Liquidated Damages, if any) on an Interest
Payment Date corresponding to such Record Date that is on or prior to such
Redemption Date) together with accrued and unpaid interest (and Liquidated
Damages, if any) thereon to the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- -------------------------------------------------------------- -----------
<S> <C>
2002.......................................................... 106.125%
2003.......................................................... 104.083%
2004.......................................................... 102.042%
2005 and thereafter........................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time on or prior to December 15, 2000,
Holdings may (but shall not have the obligation to) redeem all but not less than
all of the aggregate principal amount of the Discount Notes then outstanding, at
a redemption price equal to 112.25% of the Accreted Value thereof (plus
Liquidated Damages, if any) to the Redemption Date out of the Net Cash Proceeds
of a Public Equity Offering; PROVIDED HOWEVER, that such redemption shall occur
within 90 days of the closing of such Public Equity Offering.
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The Discount Notes will also be subject to redemption, at any time or from
time to time prior to December 15, 2002, upon not less than 10 nor more than 20
days' notice to each Holder of Discount Notes redeemed, at the option of
Holdings, in whole or in part, in integral multiples of $1,000, at a redemption
price equal to 100% of the Accreted Value thereof plus the applicable Make-Whole
Premium plus accrued and unpaid Liquidated Damages, if any, to but excluding the
Redemption Date. "Make-Whole Premium" means, with respect to a Discount Note at
any time, the greater of (a) 12.25% of the Accreted Value of such Discount Note
and (b) the excess of (i) the present value at such time, discounted from the
first date on which such Discount Note could be redeemed at the option of
Holdings, of the principal amount at maturity of such Discount Note plus the
amount of premium that would be due on such Discount Note were it to be redeemed
on the first date on which such Discount Note could be redeemed at the option of
Holdings, computed using a discount rate equal to the Treasury Rate plus 50
basis points, over (ii) the then outstanding Accreted Value of such Discount
Note. "Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least five Business Days prior to the date
fixed for repayment (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the then
remaining Weighted Average Life to Maturity of the Discount Notes (calculated as
if the first date on which the Discount Notes can be redeemed at the option of
Holdings were the final maturity of the Discount Notes); PROVIDED, HOWEVER, that
if such Weighted Average Life to Maturity of the Discount Notes is not equal to
the constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if such Weighted Average Life to Maturity of the Discount
Notes is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.
If less than all of the Discount Notes are to be redeemed at any time,
selection of Discount Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Discount Notes are listed, or, if the Discount Notes are
not so listed, on a pro rata basis, by lot or by such other method as the
Trustee shall deem fair and appropriate; PROVIDED, that no Discount Notes of
$1,000 or less shall be redeemed in part. Notices of redemption shall be mailed
by first class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Discount Notes to be redeemed at its registered address.
If any Discount Note is redeemed in part only, the notice of redemption that
relates to such Discount Note shall state the portion of the principal thereof
to be redeemed. A new Discount Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Discount Note. On and after the Redemption Date,
interest ceases to accrue on Discount Notes or portions of them called for
redemption unless Holdings defaults on such payments due on such Redemption
Date.
The Discount Notes will not have the benefit of any sinking fund.
CERTAIN COVENANTS
REPURCHASE OF DISCOUNT NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF
CONTROL
The Indenture provides that in the event that a Change of Control has
occurred, each Holder will have the right, at such Holder's option, pursuant to
an offer (subject only to conditions required by applicable law, if any) by
Holdings (the "Change of Control Offer"), to require Holdings to repurchase all
or any part of such Holder's Discount Notes (PROVIDED, that the principal amount
of such Discount Notes must be $1,000 or an integral multiple thereof) on a date
(the "Change of Control Purchase Date") that is no later than 90 Business Days
after the date of occurrence of such Change of Control, at a cash price equal to
101% of the Accreted Value thereof, together with accrued and unpaid interest if
any thereon (and Liquidated Damages, if any), (the "Change of Control Purchase
Price") to the Change of Control
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Purchase Date. The Change of Control Offer shall be made within 60 Business Days
following a Change of Control and shall remain open for at least 20 Business
Days following the mailing of such Change of Control Offer but in no event
longer than 30 Business Days, unless required by law (the "Change of Control
Offer Period"). Upon expiration of the Change of Control Offer Period, Holdings
promptly shall purchase all Discount Notes properly tendered in response to the
Change of Control Offer.
As used herein, a "Change of Control" means (a) any merger or consolidation
of Holdings with or into any Person or any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all of the assets of
Holdings, on a consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction(s), any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable), other than a Permitted
Transferee, is or becomes the "beneficial owner" (as defined in Rules 13(d) and
14(d) of the Exchange Act), directly or indirectly, of more than 50% of the
total voting power in the aggregate normally entitled to vote in the election of
members of the board of directors, managers, or trustees, as applicable, of the
transferee(s) or surviving entity or entities, (b) any "person" or "group" (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable), other than a Permitted Transferee, is or
becomes the "beneficial owner," directly or indirectly, of more than 50% of the
total voting power in the aggregate of all classes of Equity Interests of
Holdings then outstanding normally entitled to vote in elections of members of
the board of directors, managers, or trustees, as applicable, or (c) during any
period of 12 consecutive months after the Issue Date, individuals who at the
beginning of any such 12-month period constituted the Board of Directors of
Holdings (together with any new directors whose election by such Board of
Directors or whose nomination for election by the holders of Equity Interests of
Holdings was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of Holdings then in
office.
The Indenture will provide that, prior to the commencement of a Change of
Control Offer, but in any event within 30 days following any Change of Control,
Holdings will, or will cause ALM to, (a)(i) repay in full (and, as applicable,
terminate all commitments under) the Senior Notes, any Credit Agreement, and all
other Indebtedness of Restricted Subsidiaries requiring repayment upon a Change
of Control or (ii) offer to repay in full (and, as applicable, terminate all
commitments under) such Credit Agreement, the Senior Notes and all such other
Indebtedness of Restricted Subsidiaries and repay the Indebtedness owed to each
lender which has accepted such offer in full or (b) obtain the requisite
consents under such Credit Agreement, the Senior Notes and all such other
Indebtedness of Restricted Subsidiaries to permit the repurchase of the Discount
Notes as provided herein. Holdings' failure to comply with the preceding
sentence shall constitute an Event of Default described in clause (c) and not in
clause (b) under "--Events of Default and Remedies" below.
On or before the Change of Control Purchase Date, Holdings will (a) accept
for payment Discount Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (b) deposit with the Paying Agent cash sufficient to
pay the Change of Control Purchase Price (together with accrued and unpaid
interest and Liquidated Damages, if any), of all Discount Notes so tendered and
(c) deliver to the Trustee Discount Notes so accepted together with an Officers'
Certificate listing the Discount Notes or portions thereof being purchased by
Holdings. The Paying Agent promptly will pay the Holders of Discount Notes so
accepted an amount equal to the Change of Control Purchase Price (together with
accrued and unpaid interest, if any, and Liquidated Damages, if any), and the
Trustee promptly will authenticate and deliver to such Holders a new Discount
Note equal in principal amount to any unpurchased portion of the Discount Note
surrendered. Any Discount Notes not so accepted will be delivered promptly by
Holdings to the Holder thereof. Holdings will publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Purchase Date.
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Holdings will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by Holdings and
purchases all Discount Notes validly tendered and not withdrawn under such
Change of Control Offer.
The Change of Control purchase feature of the Discount Notes may make more
difficult or discourage a takeover of Holdings, and, thus, the removal of
incumbent management.
The phrase "all or substantially all" of the assets of Holdings will likely
be interpreted under applicable state law and will be dependent upon particular
facts and circumstances. As a result, there may be a degree of uncertainty in
ascertaining whether a sale or transfer of "all or substantially all" of the
assets of Holdings has occurred. In addition, no assurances can be given that
Holdings will be able to acquire any or all of the Discount Notes tendered upon
the occurrence of a Change of Control.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this covenant, compliance by
Holdings with such laws and regulations shall not in and of itself cause a
breach of its obligations under such covenant.
If the Change of Control Purchase Date hereunder is on or after an interest
payment record date and on or before the associated Interest Payment Date, any
accrued and unpaid interest (and Liquidated Damages, if any, due on such
Interest Payment Date) will be paid to the Person in whose name a Discount Note
is registered at the close of business on such record date, and such accrued and
unpaid interest (and Liquidated Damages, if applicable) will not be payable to
Holders who tender the Discount Notes pursuant to the Change of Control Offer.
The Senior Note Indenture restricts, and any Credit Agreement may restrict,
the ability of ALM to pay dividends or make other distributions to Holdings. If
Holdings is unable to obtain dividends or other distributions from ALM
sufficient to permit the repurchase of the Discount Notes upon a Change of
Control, Holdings will likely not have the financial resources to purchase
Discount Notes. There can be no assurance that Holdings' Subsidiaries will have
the resources available to pay any such dividend or make any such distribution.
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS
The Indenture provides that, except as set forth in this covenant, Holdings
will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, issue, assume, guarantee, incur, become directly or indirectly
liable with respect to (including as a result of an Acquisition), or otherwise
become responsible for, contingently or otherwise (individually and
collectively, to "incur" or, as appropriate, an "incurrence"), any Indebtedness
(including Acquired Indebtedness), other than Permitted Indebtedness, unless (a)
in the case of an incurrence of Indebtedness by ALM or any of its Restricted
Subsidiaries, after giving effect to the incurrence of such Indebtedness and the
receipt and application of the proceeds thereof, the ratio of the total
Indebtedness of ALM and its Restricted Subsidiaries (excluding (x) any
Indebtedness owed to a Restricted Subsidiary of ALM by any other Restricted
Subsidiary of ALM or by ALM and (y) any Indebtedness owed to ALM by any
Restricted Subsidiary of ALM) to ALM's Consolidated EBITDA (determined on a PRO
FORMA basis for the last four fiscal quarters of ALM for which financial
statements are available at the date of determination) is less than (i) 6.5 to 1
if the Indebtedness is incurred prior to December 15, 1999 and (ii) 6.0 to 1 if
the Indebtedness is incurred on or after December 15, 1999, (b) in the case of
an incurrence of Indebtedness by Holdings or any of its Restricted Subsidiaries,
after giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds thereof, the ratio of the total Indebtedness of
Holdings and its Restricted Subsidiaries (excluding (x) any Indebtedness owed to
a Restricted Subsidiary of Holdings by any other Restricted Subsidiary of
Holdings or by Holdings and (y) any Indebtedness owed to Holdings by a
Restricted Subsidiary of Holdings) to Holdings'
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consolidated EBITDA (determined on a PRO FORMA basis for the last four fiscal
quarters of Holdings for which financial statements are available at the date of
determination) is less than (i) 7.5 to 1 if the Indebtedness is incurred prior
to December 15, 1999 and (ii) 7.0 to 1 if the Indebtedness is incurred on or
after December 15, 1999 and (c) no Default or Event of Default shall have
occurred and be continuing at the time of the incurrences of such Indebtedness
(the "Incurrence Date") or shall occur as a consequence of the incurrence of
such Indebtedness. In determining the ratio of total Indebtedness to
Consolidated EBITDA for purposes of the immediately preceding sentence, (a) if
the Indebtedness which is the subject of a determination under this provision is
Acquired Indebtedness, or Indebtedness incurred in connection with the
simultaneous acquisition of any Person, business, property or assets, then such
ratio shall be determined by giving effect to (on a PRO FORMA basis, as if the
transaction had occurred at the beginning of the four-quarter period) both the
incurrence or assumption of such Acquired Indebtedness or such other
Indebtedness by Holdings or any Restricted Subsidiary, as the case may be
(together with any other Acquired Indebtedness or other Indebtedness incurred or
assumed by Holdings or any Restricted Subsidiary, as the case may be, in
connection with Acquisitions consummated by Holdings or such Restricted
Subsidiary, as the case may be, during such four-quarter period) and the
inclusion in the Consolidated EBITDA of Holdings or any Restricted Subsidiary,
as the case may be, of the Consolidated EBITDA of the acquired Person, business,
property or assets and any PRO FORMA expense and cost reductions calculated on a
basis consistent with Regulation S-X under the Securities Act as in effect and
as applied as of the Issue Date (together with the Consolidated EBITDA of, and
PRO FORMA expense and cost reductions relating to, any other Person, business,
property or assets acquired or disposed of by Holdings or such Restricted
Subsidiary, as the case may be, during such four-quarter period) and (b) if
since the end of such four-quarter period any Indebtedness of Holdings or any of
its Restricted Subsidiaries has been repaid, repurchased, defeased or otherwise
discharged (other than Indebtedness under a revolving credit or similar
arrangement unless such revolving credit Indebtedness has been permanently
repaid and has not been replaced), Indebtedness as of the end of such
four-quarter period shall be calculated after giving effect on a PRO FORMA basis
as if such Indebtedness had been repaid, repurchased, defeased or otherwise
discharged as of the beginning of such four-quarter period. The accretion of
original issue discount (and any accruals of interest) on the Discount Notes and
on any other Indebtedness that has been issued with an original issue discount
shall not be deemed an incurrence of Indebtedness for purposes of this covenant.
Notwithstanding the foregoing, Holdings will not incur any Indebtedness that
is either senior to or PARI PASSU in right of payment to the Discount Notes,
except that, to the extent that such Indebtedness is otherwise permitted to be
incurred under the Indenture, up to $1.0 million of Indebtedness at any time
outstanding may rank PARI PASSU with the Discount Notes.
Indebtedness of any Person which is outstanding at the time such Person
becomes a Restricted Subsidiary of Holdings (including upon designation of any
subsidiary or other Person as a Restricted Subsidiary) or is merged with or into
or consolidated with Holdings or a direct or indirect Restricted Subsidiary of
Holdings shall be deemed to have been incurred at the time such Person becomes
such a direct or indirect Restricted Subsidiary of Holdings or is merged with or
into or consolidated with Holdings or a direct or indirect Restricted Subsidiary
of Holdings, as applicable.
LIMITATION ON RESTRICTED PAYMENTS
The Indenture provides that Holdings will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, make any Restricted Payment
if, after giving effect to such Restricted Payment on a PRO FORMA basis, (a) a
Default or an Event of Default shall have occurred and be continuing, (b)
Holdings is not permitted to incur at least $1.00 of additional Indebtedness
pursuant to clause (b) of the first paragraph of the "Limitation on Incurrence
of Additional Indebtedness" covenant, or (c) the aggregate amount of all
Restricted Payments made by Holdings and its Restricted Subsidiaries, including
after giving effect to such proposed Restricted Payment, from and after the
Issue Date, would exceed the sum of (i) 50% of the aggregate Adjusted
Consolidated Net Income of Holdings for the period (taken as one
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accounting period), commencing January 1, 1998, to and including the last day of
the fiscal quarter ended immediately prior to the date of each such calculation
(or, in the event Adjusted Consolidated Net Income for such period is a deficit,
then minus 100% of such deficit), plus (ii) the aggregate Net Cash Proceeds
received by Holdings from the sale of its Qualified Equity Interests (other than
(A) to a Subsidiary of Holdings and (B) to the extent applied in connection with
a Qualified Exchange), after the Issue Date, plus (iii) 100% of the aggregate
amount of cash and the Determined Fair Market Value of property other than cash
contributed to the capital of Holdings following the Issue Date, plus (iv) the
amount by which Indebtedness of Holdings or any Restricted Subsidiary is reduced
on Holdings' balance sheet upon the conversion or exchange (other than by a
Subsidiary) subsequent to the Issue Date of any Indebtedness of Holdings or a
Restricted Subsidiary convertible or exchangeable for Qualified Equity Interests
of Holdings (less the amount of any cash or other property (other than such
Qualified Equity Interest) distributed by Holdings or any Restricted Subsidiary
upon such conversion or exchange), plus (v) to the extent that any Restricted
Investment that was made after the Issue Date is sold for cash, or otherwise
liquidated or repaid for cash, the amount of the cash return of capital with
respect to such Restricted Investment (less any taxes and transaction costs
associated with such sale or liquidation), plus (vi) in case any Unrestricted
Subsidiary has been redesignated a Restricted Subsidiary or has been merged,
consolidated or amalgamated with or into, transfers or conveys assets to, or is
liquidated into, Holdings or a Restricted Subsidiary, the Determined Fair Market
Value of the Investment of Holdings or a Restricted Subsidiary, as the case may
be, in such Unrestricted Subsidiary at the time of such redesignation,
combination or transfer (or of the assets transferred or conveyed, as
applicable), after deducting any Indebtedness associated with the Unrestricted
Subsidiary so designated or combined or with the assets so transferred or
conveyed.
The provisions of the immediately preceding paragraph will not prohibit (a)
a Qualified Exchange or (b) the payment of any dividend on Qualified Equity
Interests within 60 days after the date of its declaration if such dividend
could have been made on the date of such declaration in compliance with the
foregoing provisions. In addition, clauses (b) and (c) of the immediately
preceding paragraph will not prohibit (a) repurchases of Equity Interests from
officers or employees of Holdings or its Subsidiaries upon death, disability or
termination of employment in an aggregate amount with respect to all officers
and employees not to exceed $250,000 per year or $2.0 million in the aggregate
on and after the Issue Date and repurchases of Equity Interests deemed to occur
upon exercise of stock options if such Equity Interests represent a portion of
the exercise price of such options, (b) dividends or other Restricted Payments
to Holdings, which do not in the aggregate exceed (i) the actual amount used by
Holdings to pay legal fees and expenses, audit expenses, Commission filing fees,
corporate franchise or similar taxes plus (ii) the actual amount used by
Holdings to pay directors' fees, employee costs and miscellaneous administrative
expenses, PROVIDED that the aggregate amount expended in any calendar year for
the purposes set forth in this subclause (ii) shall not exceed $250,000 plus
(iii) payments to Holdings to permit Holdings to pay federal, state, local or
foreign tax liabilities, not to exceed with respect to any calendar year the
amount of all such tax liabilities that would be otherwise payable by the
Company and its Subsidiaries to the appropriate taxing authorities if they filed
separate tax returns for such calendar year, but only to the extent that
Holdings has an obligation to pay such tax liabilities relating to the assets,
operations or capital of the Company and its Subsidiaries, PROVIDED, HOWEVER,
that (x) in determining the amount of any such tax payments that is permitted to
be paid by the Company and its Subsidiaries in respect of their federal income
tax liability, such payment shall be determined on the basis of assuming that
the Company is the parent company of an affiliated group filing a consolidated
federal income tax return and that Holdings and each such Subsidiary is a member
of such affiliated group and (y) any payments made pursuant to this subclause
(iii) shall either be used by Holdings to pay such tax liabilities within 90
days of Holdings' receipt of such payment or refunded to the payee; and
PROVIDED, FURTHER, that the amount of all payments made pursuant to this clause
(b) shall be excluded from the calculation of the amount available for
Restricted Payments pursuant to the preceding paragraph, (c) distributions not
to exceed $100,000 in the aggregate to Holdings to make payments of Liquidated
Damages to the holders of Discount Notes as may be required under the
registration rights agreement relating to the Discount Notes, (d) the purchase
or redemption of
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any Indebtedness from the Net Cash Proceeds of any Asset Sale to the extent
permitted under the terms of the "Limitation on Sales of Assets and Subsidiary
Stock" covenant, (e) the purchase or redemption of any Indebtedness following a
Change of Control pursuant to provisions of such Indebtedness substantially
similar to those described under the "Repurchase of Discount Notes at the Option
of Holder upon a Change of Control" covenant above after Holdings shall have
complied with the provisions under such covenant, including the payment of the
applicable Change of Control Purchase Price, (f) the payment by Holdings or any
Restricted Subsidiary of monitoring fees paid to WPMP or an Affiliate not in
excess of $1.0 million in respect of any year, whether or not actually paid in
such year or deferred and paid in any subsequent year; PROVIDED that the
obligation to pay any such fees shall be subordinated to the Discount Notes, (g)
payments by Holdings or any of its Subsidiaries to Wasserstein Perella or an
Affiliate made for any financial advisory, financing, underwriting or placement
services or in respect of other investment banking activities, including,
without limitation, in connection with acquisitions or divestitures which
payments are approved by a majority of the Board of Directors of Holdings in
good faith, (h) investments in Unrestricted Subsidiaries, partnerships or joint
ventures involving Holdings or any of its Restricted Subsidiaries, if the amount
of such Investment (after taking into account the amount of all other
Investments made pursuant to this clause (h), less any return of capital
realized or any repayment of principal received on such Investments, or any
release or other cancellation of any guarantee constituting such Investments,
which has not at such time been reinvested in Investments made pursuant to this
clause (h)), does not exceed $5.0 million, PROVIDED, that the aggregate amount
of all such Investments in Unrestricted Subsidiaries shall not exceed $5.0
million at any one time outstanding, and (i) dividends and other distributions
made by ALM to, or the purchase, redemption or other Acquisition or retirement
for value of Equity Interests of ALM from, all holders of ALM's Equity Interests
on a pro rata basis. The full amount of any Restricted Payment made pursuant to
clauses (a), (d), (e) and (h) of the immediately preceding sentence, however,
will be deducted in the calculation of the aggregate amount of Restricted
Payments available to be made referred to in clause (c) of the immediately
preceding paragraph.
For purposes of this covenant, the amount of any Restricted Payment, if
other than in cash, shall be the Determined Fair Market Value thereof; PROVIDED,
that in the case of a Restricted Payment consisting of a Restricted Investment
arising as the result of the designation of a Restricted Subsidiary as an
Unrestricted Subsidiary, the amount of the Investment in such Unrestricted
Subsidiary resulting therefrom shall, if greater than $5.0 million, be
determined by the opinion of a Third-Party Evaluator.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
The Indenture provides that Holdings will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, assume or suffer to
exist any consensual restriction on the ability of any Restricted Subsidiary to
pay dividends or make other distributions to or on behalf of, or to pay any
obligation to or on behalf of, or otherwise to transfer assets or property to or
on behalf of, or make or pay loans or advances to or on behalf of, Holdings or
any Restricted Subsidiary, except (a) restrictions imposed by the Discount Notes
or the Indenture, (b) restrictions imposed by the Senior Notes or the Senior
Note Indenture or by other indebtedness of ALM ranking senior to or PARI PASSU
with the Senior Notes or the guarantees thereof, as applicable, provided such
restrictions are no more restrictive than those imposed by the Senior Note
Indenture or the Senior Notes, (c) restrictions imposed by applicable law, (d)
existing restrictions under Indebtedness outstanding on the Issue Date, (e)
restrictions pursuant to any Credit Agreement or any amendment thereto whether
or not such Credit Agreement is in effect on the Issue Date or is placed into
effect later, or any Refinancing Indebtedness in respect thereof (PROVIDED any
restrictions or requirements of any such amendment or Refinancing Indebtedness
are no more restrictive than those imposed by any Credit Agreement as of the
first date after the Issue Date that such Credit Agreement is in place), (f)
restrictions under any Acquired Indebtedness not incurred in violation of the
Indenture or any agreement relating to any Person, property, asset, or business
acquired by any Restricted Subsidiary, which restrictions in each case existed
at the time of Acquisition, were not put in place in connection with or in
anticipation of such Acquisition and are not applicable to any Person, property,
asset
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or business other than the Person, property, asset or business acquired, (g)
restrictions solely with respect to a Restricted Subsidiary imposed pursuant to
a binding agreement which has been entered into for the sale or disposition of
all or substantially all of the Equity Interests or assets of such Restricted
Subsidiary, PROVIDED such restrictions apply solely to the Equity Interests or
assets of such Restricted Subsidiary which are being sold, (h) restrictions on
transfer contained in Purchase Money Indebtedness incurred pursuant to paragraph
(f) of the definition of "Permitted Indebtedness" PROVIDED such restrictions
relate only to the transfer of the property acquired with the proceeds or
otherwise secured by such Purchase Money Indebtedness, and (i) in connection
with and pursuant to permitted Refinancings, replacements or restrictions
imposed pursuant to clause (a), (b), (d), (e), (f) or (h) of this paragraph that
are not more restrictive than those being replaced and do not apply to any other
person or assets other than those that would have been covered by the
restrictions in the Indebtedness so refinanced. Notwithstanding the foregoing,
neither (a) customary provisions restricting subletting or assignment of any
lease or other contract entered into in the ordinary course of business,
consistent with industry practice, nor (b) Liens permitted under the terms of
the Indenture on assets securing Indebtedness ranking senior to the Senior Notes
or Purchase Money Indebtedness incurred in accordance with the "Limitation on
Incurrence of Additional Indebtedness" covenant shall in and of themselves be
considered a restriction on the ability of the applicable Restricted Subsidiary
to transfer such agreement or assets, as the case may be.
LIMITATION ON LIENS SECURING INDEBTEDNESS
The Indenture provides that Holdings will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien of
any kind, other than Permitted Liens, upon any of their respective assets, now
owned or acquired on or after the date of the Indenture, or upon any income or
profits therefrom unless Holdings provides, and causes its Restricted
Subsidiaries to provide, concurrently therewith, that the Discount Notes are
equally and ratably so secured, PROVIDED that, if such Indebtedness is
Subordinated Indebtedness, the Lien securing such Subordinated Indebtedness
shall be subordinate and junior to the Lien securing the Discount Notes.
LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK
The Indenture provides that Holdings will not, and will not permit any
Restricted Subsidiary to, in one or a series of related transactions, convey,
sell, transfer, assign or otherwise dispose of, directly or indirectly, any of
its property, business or assets, including by merger or consolidation (in the
case of a Restricted Subsidiary of Holdings), and including any sale or other
transfer or issuance of any Capital Stock of any Restricted Subsidiary, whether
by Holdings or a Restricted Subsidiary of either or through the issuance, sale
or transfer of Capital Stock by a Restricted Subsidiary, and including any sale
and leaseback transaction (any of the foregoing, an "Asset Sale"), unless (a)(i)
within 300 days after the date of such Asset Sale, the Net Cash Proceeds
therefrom (the "Asset Sale Offer Amount") are applied to the optional redemption
of the Discount Notes in accordance with the terms of the Indenture or any other
Indebtedness of Holdings ranking on a parity with the Discount Notes from time
to time outstanding with similar provisions requiring Holdings to make an offer
to purchase or to redeem such Indebtedness with the proceeds of asset sales, PRO
RATA in proportion to the Accreted Value of the Discount Notes and the
respective principal amounts (or accreted values in the case of Indebtedness
issued with an original issue discount) of such other Indebtedness then
outstanding, or to the repurchase of the Discount Notes and such other
Indebtedness pursuant to a cash offer (subject only to conditions required by
applicable law, if any) (PRO RATA in proportion to the respective principal
amounts (or accreted values in the case of Indebtedness issued with an original
issue discount) of the Discount Notes and such other Indebtedness then
outstanding) (the "Asset Sale Offer") at a purchase price of 100% of the
Accreted Value of the Discount Notes or the principal amount (or accreted value
in the case of Indebtedness issued with an original issue discount) of such
other Indebtedness (the "Asset Sale Offer Price") together with accrued and
unpaid interest and Liquidated Damages, if any, to the date of payment, or (ii)
within 300 days following such Asset Sale, the Asset Sale Offer Amount is (A)
invested (or committed, pursuant to a
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binding commitment subject only to reasonable, customary closing conditions, to
be invested, and in fact is so invested, within an additional 90 days) in a
Person, business, assets or property which in the good faith reasonable judgment
of the Board of Directors will constitute or be a part of a Related Business of
Holdings or such Restricted Subsidiary (if it continues to be a Subsidiary)
immediately following such transaction or (B) used to retire or repay
Indebtedness of Holdings and/or any Restricted Subsidiary that is senior to or
PARI PASSU with the Discount Notes or to permanently reduce the amount of such
Indebtedness (provided that, in the case of a revolving credit arrangement or
similar arrangement that makes credit available, such commitment is permanently
reduced by such amount), (b) with respect to any Asset Sale or related series of
Asset Sales involving securities, property or assets with an aggregate
Determined Fair Market Value in excess of $500,000, at least 75% of the
consideration for such Asset Sale or series of related Asset Sales consists of
(x) cash or Cash Equivalents or (y) property or assets usable by Holdings or any
Restricted Subsidiary in the ordinary course of conduct of a Related Business;
PROVIDED, that if the Determined Fair Market Value of property or assets of the
kind specified in this subclause (y) exceeds $5.0 million, then the Determined
Fair Market Value thereof shall be determined by a Third-Party Evaluator; and
PROVIDED, FURTHER, that the principal amount of the following shall be deemed to
be cash for purposes of this clause (b): (i) any Indebtedness (as shown on
Holdings' or such Restricted Subsidiary's most recent balance sheet or in the
notes thereto) of Holdings or any Restricted Subsidiary that is assumed or
forgiven by the transferee of any such assets and (ii) any securities, notes or
other obligations received by Holdings or any such Restricted Subsidiary from
such transferee that are converted by Holdings or such Restricted Subsidiary
into cash within 30 days of the closing of such Asset Sale (but in the case of
this subclause (ii), only to the extent of the cash received), (c) no Default or
Event of Default shall have occurred and be continuing at the time of, or would
occur after giving effect, on a PRO FORMA basis, to, such Asset Sale, and (d)
the Board of Directors of Holdings determines in good faith that Holdings or
such Restricted Subsidiary, as applicable, receives at least the Determined Fair
Market Value as a result of such Asset Sale.
The Indenture provides that an Acquisition of Discount Notes pursuant to an
Asset Sale Offer may be deferred until the accumulated Net Cash Proceeds from
Asset Sales not applied to the uses set forth above (the "Excess Proceeds")
exceeds $5.0 million and that each Asset Sale Offer shall remain open for 20
Business Days following its commencement but in no event longer than 30 Business
Days (the "Asset Sale Offer Period"). Not later than five Business Days after
the termination of the Asset Sale Offer Period (the "Asset Sale Purchase Date"),
Holdings shall apply the Asset Sale Offer Amount plus an amount equal to accrued
and unpaid interest and Liquidated Damages, if any, to the purchase of all
Discount Notes or any other Indebtedness properly tendered (on a PRO RATA basis
if the Asset Sale Offer Amount is insufficient to purchase all Discount Notes
and any other Indebtedness so tendered) at the Asset Sale Offer Price (together
with accrued and unpaid interest and Liquidated Damages, if any). To the extent
that the aggregate amount of Discount Notes and such other Indebtedness tendered
pursuant to an Asset Sale Offer is less than the Asset Sale Offer Amount,
Holdings may use any remaining Net Cash Proceeds for general corporate purposes
as otherwise permitted by the Indenture, and following each Asset Sale Offer the
Excess Proceeds amount shall be reset to zero. If required by applicable law,
the Asset Sale Offer Period may be extended as so required; however, if so
extended it shall nevertheless constitute an Event of Default if within 60
Business Days of its commencement the Asset Sale Offer is not consummated or the
properly tendered Discount Notes are not purchased pursuant thereto. Holdings
may apply as a credit in satisfaction of all or any part of Holdings' obligation
to make an Asset Sale Offer the aggregate principal amount of Discount Notes
purchased by Holdings in open-market transactions (i.e., excluding Discount
Notes optionally redeemed, or required to be purchased by Holdings, pursuant to
the terms of the Indenture) within the previous 300 days immediately preceding
the close of the Asset Sale Offer Period.
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Notwithstanding the foregoing provisions of the prior paragraph, Holdings
and each of its Restricted Subsidiaries may:
(a) in the ordinary course of business, convey, sell, transfer, assign
or otherwise dispose of inventory, other personal property and services in
the ordinary course of business;
(b) convey, sell, transfer, assign or otherwise dispose of assets
pursuant to and in accordance with the covenant "Limitation on Merger, Sale
or Consolidation" and the covenant "Limitation on Restricted Payments";
(c) convey, sell, transfer, assign or otherwise dispose of damaged, worn
out or other obsolete property in the ordinary course of business, so long
as such property is no longer necessary for the proper conduct of the
business of Holdings or such Restricted Subsidiary, as applicable;
(d) may convey, sell, transfer or assign assets to Holdings or any of
its Restricted Subsidiaries;
(e) surrender or waive contract rights or the settle, release or
surrender contract, tort or other claims of any kind;
(f) grant Liens not prohibited by the Indenture;
(g) engage in any transaction or series of related transactions that
would otherwise be an Asset Sale where the Determined Fair Market Value of
the assets sold, leased, conveyed or otherwise disposed of was less than
$1.0 million; and
(h) sell or discount, in each case without recourse (other than recourse
for a breach of a representation or warranty), accounts receivable arising
in the ordinary course of business, but only in connection with the
collection or compromise thereof.
In addition to the foregoing, Holdings will not and will not permit any
Restricted Subsidiary to directly or indirectly make any Asset Sale of any of
the Equity Interests of any Restricted Subsidiary (other than ALM) if after
giving effect to such Asset Sale, Holdings or any such Restricted Subsidiary
would own less than a majority of the Equity Interests of such Restricted
Subsidiary unless such Asset Sale is of Holdings' or such Restricted
Subsidiary's entire Equity Interest in such Restricted Subsidiary.
The Senior Note Indenture restricts, and any Credit Agreement may restrict,
the ability of ALM and its Restricted Subsidiaries to pay dividends or make any
other distributions to Holdings. If Holdings is unable to obtain dividends or
other distributions from ALM and its Restricted Subsidiaries sufficient to
permit the repurchase of the Discount Notes, Holdings will likely not have the
financial resources to purchase Discount Notes pursuant to an Asset Sale Offer.
There can be no assurance that Holdings' Restricted Subsidiaries will have the
resources available to pay any such dividend or make any such distribution.
Holdings' failure to make an Asset Sale Offer when required or to purchase
Discount Notes when tendered would constitute an Event of Default under the
Discount Notes Indenture. See "Risk Factors--Substantial Leverage; Liquidity"
and "--Limitation on Access to Subsidiaries' Cash Flow; Holding Company
Structure."
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this covenant, compliance by
Holdings or any of its Subsidiaries with such laws and regulations shall not in
and of itself cause a breach of its obligations under such covenant.
If the payment date in connection with an Asset Sale Offer hereunder is on
or after an interest payment Record Date and on or before the associated
Interest Payment Date, any accrued and unpaid interest (and Liquidated Damages,
if any, due on such Interest Payment Date) will be paid to the person in whose
name a Discount Note is registered at the close of business on such Record Date,
and such interest
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(or Liquidated Damages, if applicable) will not be payable to holders who tender
Discount Notes pursuant to such Asset Sale Offer.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Indenture provides that neither Holdings nor any of its Restricted
Subsidiaries will be permitted on or after the Issue Date to enter into or
suffer to exist any contract, agreement, arrangement or transaction with any
Affiliate (an "Affiliate Transaction"), or any series of related Affiliate
Transactions (other than Exempted Affiliate Transactions), (a) unless it is
determined that the terms of such Affiliate Transaction are fair and reasonable
to Holdings, and no less favorable to Holdings than could have been obtained in
an arm's length transaction with a non-Affiliate, (b) if involving consideration
to either party in excess of $1.0 million, unless such Affiliate Transaction(s)
is evidenced by an Officers' Certificate addressed and delivered to the Trustee
certifying that such Affiliate Transaction (or Transactions) has been approved
by a resolution of the Board of Directors and (c) if involving consideration to
either party in excess of $5.0 million, unless in addition, Holdings, prior to
the consummation thereof, obtains a written favorable opinion as to the fairness
of such transaction to Holdings from a financial point of view from a
Third-Party Evaluator.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture provides that Holdings will not consolidate with or merge with
or into another person or, directly or indirectly, sell, lease, convey or
transfer all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions, to
another Person or group of Affiliated Persons or adopt a plan of liquidation,
unless (a) either (i) Holdings is the continuing entity or (ii) the resulting,
surviving or transferee entity or, in the case of a plan of liquidation, the
entity which receives the greatest value from such plan of liquidation is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of Holdings in connection with the Discount Notes and the
Indenture; (b) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a PRO FORMA basis to such transaction; (c)
immediately after giving effect to such transaction on a PRO FORMA basis, the
Consolidated Net Worth of the consolidated surviving or transferee entity or, in
the case of a plan of liquidation, the entity which receives the greatest value
from such plan of liquidation, is at least equal to the Consolidated Net Worth
of Holdings immediately prior to such transaction; and (d) the consolidated
resulting, surviving or transferee entity or, in the case of a plan of
liquidation, the entity which receives the greatest value from such plan of
liquidation, would immediately thereafter be permitted to incur at least $1.00
of additional Indebtedness pursuant to clause (a) of the first paragraph of the
"Limitation on Incurrence of Additional Indebtedness" covenant above.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of Holdings or consummation of a plan of liquidation in accordance
with the foregoing, the successor corporation formed by such consolidation or
into which Holdings is merged or to which such transfer is made or, in the case
of a plan of liquidation, the entity which receives the greatest value from such
plan of liquidation shall succeed to and (except in the case of a lease) be
substituted for, and may exercise every right and power of, Holdings under the
Indenture with the same effect as if such successor corporation had been named
therein as Holdings, and (except in the case of a lease) Holdings shall be
released from the obligations under the Discount Notes and the Indenture except
with respect to any obligations that arise from, or are related to, such
transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Restricted Subsidiaries, Holdings' interest in which constitutes all or
substantially all of the properties and assets of Holdings, shall be deemed to
be the transfer of all or substantially all of the properties and assets of
Holdings.
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LIMITATION ON LINES OF BUSINESS
The Indenture provides that neither Holdings nor any Restricted Subsidiary
shall directly or indirectly engage to any substantial extent in any line or
lines of business activity other than that which, in the reasonable good faith
judgment of the Board of Directors of Holdings, is a Related Business.
LIMITATION ON STATUS AS INVESTMENT COMPANY
The Indenture prohibits Holdings and its Subsidiaries from taking any action
or conducting their businesses and operations in such a way as would cause them
to be required to register as an "investment company" (as that term is defined
in the Investment Company Act of 1940, as amended), or would otherwise cause
them to become subject to regulation under the Investment Company Act.
REPORTS
The Indenture provides that whether or not Holdings is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, Holdings
shall deliver to the Trustee and, to each Holder and to prospective purchasers
of Discount Notes identified to Holdings by an Initial Purchaser, within 15 days
after it is or would have been (if it were subject to such reporting
obligations) required to file such with the Commission, annual and quarterly
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the Commission, if Holdings were
subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by
Holdings' certified independent public accountants as such would be required in
such reports to the Commission, and, in each case, together with a management's
discussion and analysis of financial condition and results of operations that
would be so required and, unless the Commission will not accept such reports,
file with the Commission the annual, quarterly and other reports that it is or
would have been required to file with the Commission.
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (a) the failure to pay any
installment of interest (or Liquidated Damages, if any) on the Discount Notes as
and when the same becomes due and payable and the continuance of any such
failure for 30 days, (b) the failure to pay all or any part of the principal, or
premium, if any, on the Discount Notes when and as the same becomes due and
payable at maturity, redemption, by acceleration or otherwise, including,
without limitation, payment of the Change of Control Purchase Price or the Asset
Sale Offer Price, or otherwise, (c) the failure by either of Holdings or any
Restricted Subsidiary to observe or perform any other covenant or agreement
contained in the Discount Notes or the Indenture and the continuance of such
failure for a period of 45 days after written notice is given to Holdings by the
Trustee or to Holdings and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Discount Notes outstanding specifying the
default and demanding that same be remedied, (d) certain events of bankruptcy,
insolvency or reorganization in respect of Holdings or any of its Significant
Subsidiaries, (e) a default in Indebtedness of Holdings or any of its Restricted
Subsidiaries with an aggregate principal amount in excess of $5.0 million (i)
resulting from the failure to pay principal at final maturity or (ii) as a
result of which the maturity of such Indebtedness has been accelerated prior to
its stated maturity, and (f) final unsatisfied judgments not covered by
insurance aggregating in excess of $5.0 million, at any one time rendered
against Holdings or any of its Significant Subsidiaries and not stayed, bonded
or discharged within 60 days. The Indenture will provide that if a Default
occurs and is continuing, the Trustee must, within 90 days after the occurrence
of such Default, give to the Holders notice of such Default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (d) above with respect to Holdings or any
Significant Subsidiary), then in every such case, unless the principal of all of
the Discount Notes shall have already become due and payable, either the Trustee
or the
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Holders of at least 25% in aggregate principal amount of the Discount Notes (or,
if prior to December 15, 2002, 25% of the then aggregate Accreted Value of the
Discount Notes) then outstanding, by notice in writing to Holdings (and to the
Trustee if given by Holders) (an "Acceleration Notice"), may declare the
Accreted Value of and accrued and unpaid interest on (and Liquidated Damages, if
any) all the outstanding Discount Notes to be due and payable immediately,
provided that if there are any amounts outstanding under any Credit Agreement,
such obligations shall become immediately due and payable upon the first to
occur of an acceleration under any Credit Agreement or the Senior Notes or 5
business days after receipt by Holdings and the Representative under any Credit
Agreement and the trustee under the Senior Note Indenture of such an
acceleration notice but only if such Event of Default is then continuing. If an
Event of Default specified in clause (d) above occurs with respect to Holdings
or any Significant Subsidiary, the Accreted Value of and accrued and unpaid
interest on (and Liquidated Damages, if any) all the outstanding Discount Notes
will be immediately due and payable without any declaration or other act on the
part of the Trustee or the Holders. The Holders of a majority of the aggregate
Accreted Value of the Discount Notes generally are authorized to rescind any
such acceleration if all existing Events of Default (other than (a) the
non-payment of the principal of, premium, if any, and accrued and unpaid
interest and Liquidated Damages, if any, on the Discount Notes which have become
due solely by such acceleration, (b) with respect to defaults with respect to
any provision requiring a supermajority approval to amend, which default may
only be waived by such a supermajority and (c) with respect to any covenant or
provision which cannot be modified or amended without the consent of the Holder
of each outstanding Discount Note affected) have been cured or waived as
provided in the Indenture.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee will be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
Holders, unless such Holders have offered to the Trustee reasonable security or
indemnity. Subject to all provisions of the Indenture and applicable law, the
Holders of a majority of the aggregate Accreted Value of the Discount Notes at
the time outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee.
Notice of any redemption will be sent, by first class mail, at least 30 days
and not more than 60 days prior to the date fixed for redemption to the Holder
of each Discount Note to be redeemed to such Holder's last address as then shown
upon the registry books of the Registrar. Any notice which relates to a Discount
Note to be redeemed in part only must state the portion of the principal amount
equal to the unredeemed portion thereof and must state that on and after the
Redemption Date, upon surrender of such Discount Note, a new Discount Note or
Discount Notes in a principal amount equal to the unredeemed portion thereof
will be issued. On and after the Redemption Date, interest will cease to accrue
on the Discount Notes or portions thereof called for redemption, unless Holdings
defaults in the payment thereof.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Holdings may, at its option and at any time, elect to have its obligations
discharged with respect to the outstanding Discount Notes ("Legal Defeasance").
Such Legal Defeasance means that Holdings shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Discount
Notes, except for (a) the rights of Holders to receive payment in respect of the
principal of, premium, if any, and interest on the Discount Notes when such
payments are due, (b) Holdings' obligations with respect to the Discount Notes
concerning issuing temporary Discount Notes, registration of Discount Notes,
mutilated, destroyed, lost or stolen Discount Notes and the maintenance of an
office or agency for payments, (c) the rights, powers, trust, duties and
immunities of the Trustee and Holdings' obligations in connection therewith and
(d) the Legal Defeasance provisions of the Indenture. In addition, Holdings may,
at its option and at any time, elect to have the obligations of Holdings
released with respect to certain
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covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Discount Notes. In the event
Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, reorganization and insolvency events) described under
"Events of Default and Remedies" will no longer constitute Events of Default
with respect to the Discount Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (a)
Holdings must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders cash in U.S. dollars, U.S. Government Obligations, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal at
maturity of, premium, if any, and interest and Liquidated Damages on the
Discount Notes on the stated date for payment thereof or on the applicable
redemption date, as the case may be; (b) in the case of Legal Defeasance,
Holdings shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that (i) Holdings has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the holders will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred; (c) in the case of Covenant Defeasance,
Holdings shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred; (d) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit (other than an
Event of Default or Default resulting from the borrowing of funds to be applied
to such deposit); (e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under the Indenture
or any other material agreement or instrument to which Holdings or any of its
Subsidiaries is a party or by which Holdings or any of its Subsidiaries is
bound; (f) Holdings shall have delivered to the Trustee an Officers' Certificate
stating that the deposit was not made by Holdings with the intent of preferring
the Holders over any other creditors of Holdings or with the intent of
defeating, hindering, delaying or defrauding any other creditors of Holdings or
others; (g) Holdings shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with; (h) Holdings shall have delivered to the
Trustee an opinion of counsel to the effect that after the 91st day following
the deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; and (i) certain other customary conditions precedent are
satisfied.
If the funds deposited with the Trustee to effect Legal Defeasance or
Covenant Defeasance are insufficient to pay the principal of, premium, if any,
and interest on the Discount Notes when due, then the obligations of Holdings
under the Indenture will be revived and no such defeasance will be deemed to
have occurred.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors of Holdings may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary, PROVIDED, that (a) no Default or Event of Default
is existing or will occur as a consequence thereof, (b) immediately after giving
effect to such designation, on a PRO FORMA basis, Holdings could incur at least
$1.00 of additional Indebtedness pursuant to clause (a) of the first paragraph
of the "Limitation on Incurrence of Additional Indebtedness" covenant and (c)
the amount of the Investment in such Unrestricted Subsidiary (as determined
pursuant to the definition of "Investment" above) is permitted to
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be made under the "Limitation on Restricted Payments" covenant. Each such
designation shall be evidenced by filing with the Trustee a certified copy of
the resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions. If, at
any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture, and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
Holdings as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the "Limitation on Incurrence of Additional
Indebtedness" covenant, Holdings shall be in default of such covenant). The
Board of Directors of Holdings may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; PROVIDED that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of
Holdings of any outstanding Indebtedness of such Unrestricted Subsidiary and
such designation shall only be permitted if (a) such Indebtedness is permitted
under the "Limitation on Incurrence of Additional Indebtedness" covenant and (b)
no Default or Event of Default would be in existence immediately following such
designation.
AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting Holdings and the Trustee to
enter into a supplemental indenture for certain limited purposes without the
consent of the Holders. With the consent of the Holders of not less than a
majority of the aggregate Accreted Value of the Discount Notes at the time
outstanding, Holdings and the Trustee are permitted to amend or supplement the
Indenture or any supplemental indenture or modify the rights of the Holders;
PROVIDED, that no such modification may, without the consent of Holders of at
least 66 2/3% of the aggregate Accreted Value of Discount Notes at the time
outstanding, modify the provisions (including the defined terms used therein) of
the covenant "Repurchase of Discount Notes at the Option of the Holder upon a
Change of Control" in a manner adverse to the Holders and, PROVIDED, FURTHER,
that no such modification may, without the consent of each Holder affected
thereby: (a) change the Stated Maturity on any Discount Note, or reduce the
principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon the redemption at the option of
Holdings thereof, or change the place of payment where, or the coin or currency
in which, any Discount Note or any premium or the interest thereon is payable,
or impair the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof (or, in the case of redemption at the
option of Holdings, on or after the Redemption Date), or reduce the Change of
Control Purchase Price or the Asset Sale Offer Price or alter the provisions
(including the defined terms used therein) regarding the right of Holdings to
redeem the Discount Notes in a manner adverse to the Holders, or (b) reduce the
percentage in the Accreted Value of the outstanding Discount Notes, the consent
of whose Holders is required for any such amendment, supplemental indenture or
waiver provided for in the Indenture, or (c) modify any of the waiver
provisions, except to increase any required percentage or to provide that
certain other provisions of the Indenture cannot be modified or waived without
the consent of the Holder of each outstanding Discount Note affected thereby.
In connection with any amendment, supplement or waiver under the Indenture,
the Company may, but shall not be obligated to, offer to any Holder who consents
to such amendment, supplement or waiver, or to all Holders, consideration for
such Holders' consent to such amendment, supplement or waiver.
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NO PERSONAL LIABILITY OF MEMBERS, PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS
The Indenture provides that no direct or indirect holder of Equity
Interests, member, management committee member, partner, employee, officer or
director, as such, past, present or future of Holdings or any successor entity
shall have any personal liability in respect of the obligations of Holdings
under the Indenture or the Discount Notes solely by reason of his or its status
as such stockholder, member, partner, employee, officer or director.
GOVERNING LAW
The Indenture provides that it and the Discount Notes will be governed by,
and construed in accordance with, the laws of the State of New York but without
giving effect to applicable principles of conflict of law to the extent that the
application of the law of another jurisdiction would be required thereby.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it by the Indenture, and use the same
degree of care and skill in its exercise as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
The Indenture and the provisions of the Trust Indenture Act contain certain
limitations on the rights of the Trustee, should it become a creditor of
Holdings, to obtain payments of claims in certain cases or to realize on certain
property received in respect of any such claim as security or otherwise. Subject
to the Trust Indenture Act, the Trustee will be permitted to engage in other
transactions; PROVIDED, that if the Trustee acquires any conflicting interest as
described in the Trust Indenture Act, it must eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"ACCRETED VALUE" means, as of any date of determination, the sum (rounded to
the nearest whole dollar) of (a) the initial offering price of each $1,000 in
principal amount at maturity of Discount Notes and (b) the portion of the excess
of the principal amount of Discount Notes over such initial offering price which
shall have been accreted thereon through such date, such amounts to be so
accreted on a daily basis at the rate of 12 1/4% per annum (computed on a
semi-annual bond equivalent basis) compounded semi-annually on each June 15 and
December 15 from the date of issuance of the Discount Notes through the date of
determination. On and after December 15, 2002, the Accreted Value of each
Discount Note shall be equal to its principal amount at maturity.
"ACQUIRED INDEBTEDNESS" means Indebtedness of any Person existing at the
time such Person becomes a Restricted Subsidiary of Holdings, including by
designation, or is merged or consolidated into or with Holdings or one of its
Restricted Subsidiaries or is assumed by Holdings or a Restricted Subsidiary in
connection with the acquisition of assets from such Person.
"ACQUISITION" means the purchase or other acquisition of any Person or all
or substantially all the assets of any Person by any other Person or any
division or line of business of such Person, whether by purchase, merger,
consolidation, or other transfer, and whether or not for consideration.
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"ADJUSTED CONSOLIDATED NET INCOME" means, with respect to any Person, for
any Period, the Consolidated Net Income of such Person for such Period plus any
non-cash charges for such Period relating to the amortization of goodwill or
other intangibles or any other purchase accounting adjustment resulting from any
Acquisition.
"AFFILIATE" means, with respect to any Person, any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, the term "control"
means the power to direct the management and policies of a Person, directly or
through one or more intermediaries, whether through the ownership of voting
securities, by contract, or otherwise, PROVIDED, that with respect to ownership
interest in Holdings and its Subsidiaries, a Beneficial Owner of 10% or more of
the total voting power normally entitled to vote in the election of directors,
managers or trustees, as applicable, shall for such purposes be deemed to
constitute control.
"BENEFICIAL OWNER" or "BENEFICIAL OWNER" for purposes of the definitions of
"Change of Control" and "Affiliate" has the meaning attributed to it in Rules
13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue Date), whether
or not applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares or other Equity Interests that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time.
"BOARD OF DIRECTORS" means, with respect to any Person, the board of
directors (or, in the case of a partnership, limited liability company or
similar entity, the management committee or other body exercising substantially
similar functions) of such Person or any committee of the Board of Directors of
such Person authorized, with respect to any particular matter, to exercise the
power of the board of directors of such Person.
"BOARD RESOLUTION" means, with respect to any Person, a copy of a resolution
certified by the Secretary or an Assistant Secretary of such Person to have been
duly adopted by the Board of Directors of such Person and to be in full force
and effect on the date of such certification, and delivered to the Trustee.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"CAPITAL STOCK" means (a) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of common stock and preferred stock of such Person and (b) with respect to any
Person that is not a corporation, any and all partnership, membership or other
equity interests of such Person.
"CAPITALIZED LEASE OBLIGATION" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the U.S. Government or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having at least the second highest
rating obtainable from either Standard & Poor's Rating Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having at least the second highest rating obtainable from either S&P or Moody's;
(iv) certificates of deposit or bankers' acceptances maturing within one year
from the date of acquisition thereof issued by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia
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having at the date of acquisition combined capital and surplus of not less than
$500.0 million; (v) shares of any money market mutual fund that (a) has its
assets invested continuously in the types of investments referred to in clauses
(i) and (ii) above, (b) has net assets of not less than $500.0 million and (c)
has at least the second highest rating obtainable from either S&P or Moody's;
and (vi) repurchase agreements with respect to, and which are fully secured by a
perfected security interest in, obligations of a type described in clause (i) or
clause (ii) above and are with any commercial bank described in clause (iv)
above.
"CONSOLIDATED EBITDA" means, with respect to any Person, for any period, the
Adjusted Consolidated Net Income of such Person for such period adjusted to add
thereto (to the extent deducted from net revenues in determining Consolidated
Net Income), without duplication, the sum of (a) consolidated income tax
expense, (b) consolidated depreciation and amortization expense, PROVIDED that
consolidated depreciation and amortization of a Subsidiary that is a less than
wholly owned Subsidiary shall only be added to the extent of the equity interest
of such Person in such Subsidiary, (c) Consolidated Fixed Charges, and (d) all
other expenses reducing Consolidated Net Income for such period that do not
represent cash disbursements for such period (excluding any expense to the
extent it represents an accrual of or reserve for cash disbursements for any
subsequent period prior to the Stated Maturity of the Discount Notes) less, to
the extent included in the calculation of Consolidated Net Income, the amount of
all cash payments made by such Person or any of its Subsidiaries during such
period to the extent such payments relate to non-cash charges that were added
back in determining Consolidated EBITDA for such period or any prior period,
PROVIDED that with respect to Holdings each of the foregoing items shall be
determined on a consolidated basis with respect to Holdings and its Restricted
Subsidiaries only.
"CONSOLIDATED FIXED CHARGES" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such Person and its
Consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap or
Hedging Obligations, in each case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable (or guaranteed) by such Person or
any of its Consolidated Subsidiaries in respect of preferred stock (other than
by Subsidiaries of such Person to such Person or such Person's wholly owned
subsidiaries). For purposes of this definition, (a) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined in good faith by the Company to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP, (b) interest expense
attributable to any Indebtedness represented by the guarantee by such Person or
a Subsidiary of such Person of an obligation of another Person shall be deemed
to be the interest expense attributable to the Indebtedness guaranteed and (c)
with respect to Holdings, each of the foregoing items shall be determined on a
consolidated basis with respect to Holdings and its Restricted Subsidiaries
only.
"CONSOLIDATED NET INCOME" means, with respect to any Person, for any period,
the net income (or loss) of such Person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication): (a) all gains (but not losses) which are
either extraordinary (as determined in accordance with GAAP) or are nonrecurring
(including any gain from the sale or other disposition of assets outside the
ordinary course of business or from the issuance or sale of any capital stock),
(b) the net income, if positive, of any Person, other than a Restricted
Subsidiary, in which such Person or any of its Consolidated Subsidiaries has an
interest, except to the extent of the amount of any dividends or distributions
actually paid in cash to such Person or a Restricted Subsidiary of such Person
during such period, but in any case not in excess of such Person's pro rata
share of such Person's net income for such period, (c) the net income or loss of
any Person acquired in a pooling of interests transaction for any
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period prior to the date of such acquisition, and (d) the net income, if
positive, of any of such Person's Consolidated Subsidiaries (other than ALM and
its Restricted Subsidiaries, if the Person in question is Holdings) to the
extent that the declaration or payment of dividends or similar distributions is
not at the time permitted by operation of the terms of its charter or bylaws or
any other agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Consolidated Subsidiary.
"CONSOLIDATED NET WORTH" of any Person at any date means the aggregate
consolidated stockholders' equity of such Person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such Person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Equity Interests or treasury stock of such Person and its
Consolidated Subsidiaries, (b) all upward revaluations and other write-ups in
the book value of any asset of such person or a Consolidated Subsidiary of such
Person subsequent to the Issue Date, and (c) all investments in subsidiaries
that are not Consolidated Subsidiaries and in Persons that are not Subsidiaries.
"CONSOLIDATED SUBSIDIARY" means, for any Person, each Subsidiary of such
Person (whether now existing or hereafter created or acquired) the financial
statements of which are consolidated for financial statement reporting purposes
with the financial statements of such Person in accordance with GAAP.
"CREDIT AGREEMENT" means an agreement by and among Holdings (which term, for
the purposes of this definition only, shall also include any of Holdings'
Affiliates that shall be a party thereto), ALM, and the lenders, arrangers and
syndication agents from time to time party thereto providing for a senior
revolving credit facility or similar facility, as such Credit Agreement and/or
related documents may be amended, restated, supplemented, renewed, replaced,
refinanced, restructured or otherwise modified from time to time whether or not
with the same agent, trustee, representative lenders or holders, PROVIDED that
any such Credit Agreement may be secured. Without limiting the generality of the
foregoing, the term "Credit Agreement" shall include any amendment, amendment
and restatement, renewal, extension, restructuring, supplement or modification
to any such Credit Agreement and all refundings, refinancings and replacements
thereof, including any agreement (a) extending the maturity of any Indebtedness
incurred thereunder or contemplated thereby, (b) adding or deleting borrowers or
guarantors thereunder, so long as such borrowers and guarantors include one or
more of Holdings and its Subsidiaries and their respective successors and
assigns, (c) increasing the amount of Indebtedness incurred thereunder or
available to be borrowed thereunder or (d) otherwise altering the terms and
conditions thereof in a manner not prohibited by the terms of the Indenture.
"DETERMINED FAIR MARKET VALUE" shall mean Fair Market Value as determined by
the Board of Directors, except that with respect to the evaluation of any
Person, business, property, asset or transaction, or series or group thereof,
involving more than $5.0 million, Determined Fair Market Value shall be
determined by a Third-Party Evaluator.
"DISQUALIFIED EQUITY INTERESTS" means (a) except as set forth in (b), with
respect to any Person, Equity Interests of such Person that, by its terms, or by
the terms of any agreement or instrument pursuant to which such Equity Interests
are issued or by the terms of any security into which such Equity Interest is
convertible, exercisable or exchangeable, is, or upon the happening of an event
or the passage of time or both would be, required to be redeemed or repurchased
(including at the option of the holder thereof) by such Person or any of its
Restricted Subsidiaries, in whole or in part, on or prior to the Stated Maturity
of the Discount Notes and (b) with respect to any Restricted Subsidiary of such
Person (including with respect to any direct or indirect Restricted Subsidiary
of Holdings), any Equity Interests other than any common equity with no
preference, privileges, or redemption or repayment provisions.
"EQUITY INTEREST" of any Person means any shares, interests, participations
or other equivalents (however designated) in such Person's equity, and shall in
any event include any Capital Stock issued by, or partnership or membership
interests in, such Person.
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"EXEMPTED AFFILIATE TRANSACTION" means (a) transactions with any officer,
director, partner or managing member in his or her capacity as such, entered
into in the ordinary course of business, including without limitation customary
employee, director or manager compensation or indemnification arrangements
approved by the Board of Directors of Holdings, (b) Permitted Investments and
transactions otherwise permitted under the terms of the "Limitation on
Restricted Payments" covenant discussed above, and (c) transactions solely
between Holdings and any of its Restricted Subsidiaries or solely among
Restricted Subsidiaries of Holdings.
"FAIR MARKET VALUE" means, with respect to any Person, business, asset,
property or transaction, the price that could be negotiated in an arm's length,
free market transaction, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession in the United States as in effect on the Issue Date.
"INDEBTEDNESS" of any Person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of such Person, to the extent such
liabilities and obligations would appear as a liability upon the consolidated
balance sheet of such Person in accordance with GAAP, (i) in respect of borrowed
money (whether or not the recourse of the lender is to the whole of the assets
of such Person or only to a portion thereof), (ii) evidenced by bonds, notes,
debentures or similar instruments, (iii) representing the balance deferred and
unpaid of the purchase price of any property or services, except those incurred
in the ordinary course of its business that would constitute ordinarily a trade
payable to trade creditors; (b) all liabilities and obligations, contingent or
otherwise, of such Person (i) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (ii) relating to any Capitalized Lease
Obligation, or (iii) evidenced by a letter of credit or a reimbursement
obligation of such Person with respect to any letter of credit other than trade
letters of credit, to the extent not issued pursuant to the Revolving Credit
Facility or any Refinancing Indebtedness in respect thereof, but only to the
extent such letters of credit are drawn upon and not paid or reimbursed by such
Person within 30 days of incurrence; (c) all net obligations of such Person
under Interest Swap or Hedging Obligations; (d) all liabilities and obligations
of others of the kind described in the preceding clause (a), (b) or (c) that
such Person has guaranteed or that is otherwise its legal liability or which are
secured by any assets or property of such person and all obligations to
purchase, redeem or acquire any Equity Interests; (e) any and all refinancings
and refundings (whether direct or indirect) of, or amendments, modifications or
supplements to (in any such case, which increases the principal amount of
Indebtedness thereunder or the assets covered by any associated Lien), any
liability of the kind described in any of the preceding clauses (a), (b), (c) or
(d), or this clause (e), whether or not between or among the same parties; and
(f) all Disqualified Equity Interests of such Person (measured at the greater of
its voluntary or involuntary maximum fixed repurchase price plus accrued and
unpaid dividends). For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Equity Interests which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Equity
Interests as if such Disqualified Equity Interests were purchased on any date on
which Indebtedness shall be required to be determined pursuant to the Indenture,
and if such price is based upon, or measured by, the Fair Market Value of such
Disqualified Equity Interests, such Fair Market Value to be determined in good
faith by the Board of Directors (or managing general partner) of the issuer of
such Disqualified Equity Interests.
"INTEREST SWAP OR HEDGING OBLIGATION" means any obligation of any Person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement
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whereby, directly or indirectly, such person is entitled to receive from time to
time periodic payments calculated by applying either a fixed or floating rate of
interest on a stated notional amount in exchange for periodic payments made by
such Person calculated by applying a fixed or floating rate of interest on the
same notional amount.
"INVESTMENT" by any Person in any other Person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such Person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership, membership or other
ownership interests or other securities, including any options or warrants, of
such other Person or any agreement to make any such acquisition; (b) the making
by such Person of any deposit with, or advance, loan or other extension of
credit to, such other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such other Person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable, trade credit,
endorsements for collection or deposits arising in the ordinary course of
business); (c) other than guarantees of Indebtedness to the extent permitted by
the "Limitation on Incurrence of Additional Indebtedness" covenant, the entering
into by such Person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of such other
Person; (d) the making of any capital contribution by such person to such other
Person; and (e) the designation by the Board of Directors of Holdings of any
Person (including without limitation a Restricted Subsidiary) to be an
Unrestricted Subsidiary. Holdings shall be deemed to make an Investment in an
amount equal to the Determined Fair Market Value of the net assets of any
Restricted Subsidiary (or, if neither Holdings nor any of its Restricted
Subsidiaries has theretofore made an Investment in such Subsidiary, in an amount
equal to the Investments being made), at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, and any property
transferred to an Unrestricted Subsidiary from Holdings or a Restricted
Subsidiary shall be deemed an Investment valued at its Determined Fair Market
Value at the time of such transfer.
"ISSUE DATE" means the date of first issuance of the Discount Notes under
the Indenture.
"LIEN" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
"NET CASH PROCEEDS" means the aggregate amount of cash or Cash Equivalents
received by Holdings in the case of a sale of Qualified Equity Interests and by
Holdings and its Restricted Subsidiaries in respect of an Asset Sale plus, in
the case of an issuance of Qualified Equity Interests upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of Holdings were issued for cash on or after
the Issue Date, the amount of cash originally received by Holdings upon the
issuance of such securities (including options, warrants, rights and convertible
or exchangeable debt) less, in each case, the sum of all payments, fees,
commissions and (in the case of Asset Sales, reasonable and customary), expenses
(including, without limitation, the fees and expenses of legal counsel and
investment banking fees and expenses) incurred in connection with such Asset
Sale or sale of Qualified Equity Interests, and, in the case of an Asset Sale
only, less (i) the amount (estimated reasonably and in good faith by the Board
of Directors of Holdings of income, franchise, sales and other applicable taxes
required to be paid by Holdings or any of its respective Subsidiaries in
connection with such Asset Sale and (ii) appropriate amounts to be provided by
the Company or any Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by Holdings or any Restricted Subsidiary, as the case may be, after
such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither Holdings nor
any of its Restricted Subsidiaries (a) provide credit support of any kind
(including any undertaking, agreement or instrument
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that would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise) or (c) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Discount Notes) of Holdings or any of its Restricted Subsidiaries to declare
a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of Holdings or any of its Restricted Subsidiaries.
"OBLIGATIONS" means any principal, premium, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness.
"PERMITTED INDEBTEDNESS" means any of the following:
(a) Indebtedness of Holdings and its Restricted Subsidiaries, as
applicable, evidenced by (i) the Discount Notes represented by the Indenture
up to the amounts specified therein as of the date thereof; and (ii) the
Senior Notes and the Subsidiary Guarantees thereof and represented by the
Senior Note Indenture up to the amount specified therein as of the date
thereof;
(b) Refinancing Indebtedness incurred by Holdings or a Restricted
Subsidiary, as applicable, with respect to any Indebtedness described in
clause (a), (c), (f), (g) or (h) of this definition or incurred under the
first paragraph of the covenant "Limitation on Incurrence of Additional
Indebtedness," or which is Existing Indebtedness (after giving effect to the
Transactions), PROVIDED that (i) any such Refinancing Indebtedness that is
secured refinances only other Indebtedness that is similarly secured and
(ii) such secured Refinancing Indebtedness, to the extent secured, is
secured only by the assets that secured the Indebtedness so refinanced;
(c) Indebtedness of Holdings and its Restricted Subsidiaries solely in
respect of bankers acceptances, letters of credit and performance or surety
bonds (to the extent that such incurrence does not result in the incurrence
of any obligation to repay any obligation relating to borrowed money of
others), all in the ordinary course of business in accordance with customary
industry practices, in amounts and for the purposes customary in Holdings'
industry; PROVIDED, that the aggregate principal amount of such Indebtedness
at any one time outstanding (including any Refinancing Indebtedness in
respect thereof) shall not exceed $2.5 million;
(d) Indebtedness of Holdings to any Restricted Subsidiary, and
Indebtedness of any Restricted Subsidiary to any other Restricted Subsidiary
or to Holdings; PROVIDED, that in the case of Indebtedness of Holdings,
Holdings' Obligations under such Indebtedness shall be unsecured and,
whether or not expressly so stated in writing, shall be deemed to be
subordinated in all respects to Holdings' Obligations under the Discount
Notes and the Indentures;
(e) Guarantees by Holdings or any Restricted Subsidiary of Indebtedness
of Holdings or another Restricted Subsidiary, and Guarantees by Holdings of
any Indebtedness of any Restricted Subsidiary, in each case that is
otherwise permitted to be incurred pursuant to the Indenture;
(f) Purchase Money Indebtedness incurred by Holdings and its Restricted
Subsidiaries on or after the Issue Date, PROVIDED, that (i) the aggregate
principal amount of such Indebtedness incurred on or after the Issue Date
and outstanding at any time pursuant to this paragraph (f) (including any
Refinancing Indebtedness with respect to such Indebtedness) shall not exceed
$2.0 million, and (ii) in each case, such Indebtedness shall not constitute
more than 100% of the cost (determined in accordance with GAAP) to Holdings
or such Restricted Subsidiary, as applicable, of the property so purchased
or leased;
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(g) provided that no Event of Default shall have occurred and be
continuing, unsecured Indebtedness of Holdings and its Restricted
Subsidiaries (in addition to Indebtedness permitted by any other clause of
this definition) in an aggregate principal amount outstanding at any time
(including Refinancing Indebtedness in respect thereof) of up to $5.0
million (which, if such Indebtedness is incurred under a Credit Agreement,
may be secured Indebtedness);
(h) Indebtedness of Holdings and its Restricted Subsidiaries pursuant to
any Credit Agreement up to an aggregate principal amount outstanding at any
time (including any Refinancing Indebtedness with respect to such
Indebtedness) of $40.0 million, minus the amount of any such Indebtedness
(i) retired with the Net Cash Proceeds from any Asset Sale applied to
permanently reduce the outstanding amounts or the commitments with respect
to such Indebtedness pursuant to clause (a)(ii)(B) of the first paragraph of
the "Limitation on Sale of Assets and Subsidiary Stock" covenant, or (ii)
assumed by a transferee in an Asset Sale;
(i) Indebtedness arising from agreements of Holdings or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with
the disposition of any business, assets or a Subsidiary; PROVIDED, HOWEVER,
that the maximum assumable liability in respect of all such Indebtedness
shall at no time exceed 25% of the gross proceeds (with proceeds other than
cash or Cash Equivalents being valued at the fair market value thereof by
the Board of Directors of Holdings at the time received and without giving
effect to any subsequent changes in value) actually received by Holdings and
its Restricted Subsidiaries in connection with such disposition; and
(j) Interest Swap or Hedging Obligations of Holdings covering
Indebtedness of Holdings or any of its Restricted Subsidiaries and Interest
Swap or Hedging Obligations of any Restricted Subsidiary of Holdings
covering Indebtedness of such Restricted Subsidiary; PROVIDED, HOWEVER, that
such Interest Swap or Hedging Obligations are entered into to protect
Holdings and its Restricted Subsidiaries from fluctuations in interest rates
on Indebtedness incurred in accordance with the Indenture to the extent the
notional principal amount of such Interest Swap or Hedging Obligation does
not exceed the principal amount of the Indebtedness to which such Interest
Swap or Hedging Obligation relates.
"PERMITTED INVESTMENT" means Investments in (a) any of the Discount Notes or
the Senior Notes; (b) Cash Equivalents; (c) intercompany indebtedness to the
extent permitted under clause (d) of the definition of "Permitted Indebtedness";
(d) any Investments in Holdings or any Restricted Subsidiary by Holdings or
another Restricted Subsidiary, as applicable; (e) Investments by Holdings or any
Restricted Subsidiary in a Person, if as a result of such Investment (i) such
Person becomes a Restricted Subsidiary of Holdings or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, Holdings or a
Restricted Subsidiary of Holdings; (f) Investments in existence on the Issue
Date; (g) loans and advances to employees of Holdings or any of its Subsidiaries
in the ordinary course of business and on terms consistent with Holdings' and
ALM's practices in effect prior to the Issue Date, including travel, moving and
other like advances; (h) stock, obligations or securities received in the
ordinary course of business in settlement of debts owing to Holdings or a
Restricted Subsidiary thereof as a result of foreclosure, perfection,
enforcement of any Lien or in a bankruptcy proceeding; (i) Investments in
Persons to the extent any such Investment represents the non-cash consideration
otherwise permitted under the terms of the Indenture to be received by Holdings
or its Restricted Subsidiaries in connection with an Asset Sale; (j) Interest
Swap or Hedging Obligations to the extent permitted under the definition of
"Permitted Indebtedness"; (k) any issuance of Equity Interests of Holdings or
any Restricted Subsidiary in exchange for Equity Interests, property or assets
of another Person; (l) Investments consisting of the licensing or contribution
of intellectual property pursuant to joint marketing arrangements with other
Persons; (m) Investments consisting of purchases and acquisitions of inventory,
supplies, materials and equipment or licenses or leases of intellectual
property, in any case, in the ordinary course of business; and (n) additional
Investments in an aggregate amount not exceeding $1.0 million at any one time
outstanding.
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"PERMITTED LIEN" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of Holdings in accordance with GAAP; (c) statutory liens
of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or other
like Liens arising by operation of law in the ordinary course of business,
PROVIDED that (i) the underlying obligations are not overdue for a period of
more than 30 days or (ii) such Liens are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of Holdings or its Restricted Subsidiary, as the case
may be, in accordance with GAAP; (d) Liens securing the performance of bids,
trade contracts (other than borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (e) easements,
rights-of-way, zoning, similar restrictions and other similar encumbrances or
title defects which, singly or in the aggregate, do not in any case materially
detract from the value of the property, subject thereto (as such property is
used by Holdings or any of its Restricted Subsidiaries) or interfere with the
ordinary conduct of the business of Holdings or any of its Restricted
Subsidiaries; (f) Liens arising by operation of law in connection with
judgments, but only to the extent, for an amount and for a period not resulting
in an Event of Default with respect thereto; (g) pledges or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security legislation; (h) Liens
securing the Discount Notes; (i) Liens securing Indebtedness of a Person
existing at the time such Person becomes a Restricted Subsidiary or is merged
with or into Holdings or a Restricted Subsidiary or Liens securing Indebtedness
incurred in connection with an Acquisition, PROVIDED that such Liens were in
existence prior to the date of such Acquisition, merger or consolidation, were
not incurred in anticipation thereof, and do not extend to any other assets; (j)
Liens arising from Purchase Money Indebtedness permitted to be incurred pursuant
to clause (f) of the definition of "Permitted Indebtedness," PROVIDED, such
Liens relate solely to the property which is subject to such Purchase Money
Indebtedness; (k) leases or subleases granted to other persons in the ordinary
course of business not materially interfering with the conduct of the business
of Holdings or any of its Restricted Subsidiaries or materially detracting from
the value of the relative assets of Holdings or any Restricted Subsidiary; (l)
Liens arising from precautionary Uniform Commercial Code financing statement
filings regarding operating leases entered into by Holdings or any of its
Restricted Subsidiaries in the ordinary course of business; (m) Liens securing
Refinancing Indebtedness incurred to refinance any Indebtedness that was
previously so secured in a manner no more adverse to the Holders of the Discount
Notes in any material respect than the terms of the Liens securing such
refinanced Indebtedness PROVIDED that the Indebtedness secured is not increased
and the lien is not extended to any additional assets or property that would not
have been security for the Indebtedness refinanced; (n) Liens securing
Indebtedness of ALM and its Restricted Subsidiaries including, without
limitation, Liens securing the Senior Notes and Liens securing indebtedness
under any Credit Agreement; (o) Liens arising under options or agreements to
sell assets; (p) other Liens securing obligations incurred in the ordinary
course of business, which obligations do not exceed $1.0 million in the
aggregate at any one time outstanding; (q) Liens securing Interest Swap or
Hedging Obligations; (r) Liens on any property or assets of a Restricted
Subsidiary granted in favor of Holdings or any Wholly-Owned Restricted
Subsidiary; and (s) any extension, renewal or replacement, in whole or in part,
of any Lien described in the foregoing clauses (a) through (r); PROVIDED, that
any such extension, renewal or replacement shall not extend to any additional
property or assets.
"PERMITTED TRANSFEREE" means U.S. Equity Partners, L.P. and U.S. Equity
Partners (Offshore), L.P. or any of their respective Affiliates or successors.
The term "Permitted Transferee" shall be deemed to include any other holder or
holders of Equity Interests of Holdings having ordinary voting power if
Wasserstein Perella, or any Affiliate thereof, shall hold the irrevocable
general proxy of each such holder in respect of the shares held by such Holder.
"PERSON" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
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"PREFERRED STOCK" of any Person means any Equity Interest of such Person
that has preferential rights to any other Equity Interest of such Person with
respect to dividends or redemptions or upon liquidation.
"PUBLIC EQUITY OFFERING" means a public offering by Holdings of shares of
its common stock (however designated and whether voting or non-voting) and any
and all rights, warrants or options to acquire such Qualified Equity Interests.
"PURCHASE MONEY INDEBTEDNESS" of any Person means any Indebtedness of such
Person to any seller or other Person incurred solely to finance the acquisition
(including in the case of a Capitalized Lease Obligation, the lease) or
construction of any real or personal tangible property which, in the reasonable
good faith judgment of the Board of Directors of Holdings, is directly related
to a Related Business of Holdings and which is incurred concurrently with such
acquisition and is secured only by the assets so financed.
"QUALIFIED EQUITY INTERESTS" means any Equity Interests of Holdings that are
not Disqualified Equity Interests.
"QUALIFIED EXCHANGE" means any defeasance, redemption, retirement,
repurchase or other Acquisition of Equity Interests or Indebtedness of Holdings
issued on or after the Issue Date with the Net Cash Proceeds received by
Holdings from the substantially concurrent sale of Qualified Equity Interests or
any exchange of Qualified Equity Interests for any Equity Interests or
Indebtedness of Holdings issued on or after the Issue Date.
"REFINANCING INDEBTEDNESS" means Indebtedness (a) issued in exchange for, or
the proceeds from the issuance and sale of which are used substantially
concurrently to repay, redeem, defease, refund, refinance, discharge or
otherwise retire for value, in whole or in part, or (b) constituting an
amendment, modification or supplement to, or a deferral or renewal of ((a) and
(b) above are, collectively, a "Refinancing"), any Indebtedness in a principal
amount or having a liquidation preference not to exceed (after deduction of
reasonable and customary fees and expenses incurred in connection with the
Refinancing) the lesser of (i) the principal amount or liquidation preference of
the Indebtedness so refinanced (including premiums, if any, and fees in
connection therewith) and (ii) if such Indebtedness being Refinanced was issued
with an original issue discount, the accreted value thereof (as determined in
accordance with GAAP) at the time of such Refinancing; PROVIDED, that (A) such
Refinancing Indebtedness shall (I) not have Weighted Average Life to Maturity
shorter than that of the Indebtedness to be so refinanced at the time of such
Refinancing and (II) in all respects, be no less subordinated or junior, if
applicable, to the rights of Holders of the Discount Notes than was the
Indebtedness to be refinanced, (B) such Refinancing Indebtedness shall have no
installment of principal (or mandatory redemption payment) scheduled to come due
earlier than the scheduled maturity of any installment of principal of the
Indebtedness to be so refinanced which was scheduled to come due prior to the
Stated Maturity, and (C) such Refinancing Indebtedness shall be secured (if
secured) in a manner no more adverse to the Holders of the Discount Notes than
the terms of the Liens (if any) securing such refinanced Indebtedness,
including, without limitation, the amount of Indebtedness secured shall not be
increased.
"RELATED BUSINESS" means the business conducted (or proposed to be
conducted) by Holdings and its Restricted Subsidiaries as of the Issue Date and
any and all businesses that in the good faith judgment of the Board of Directors
of Holdings are reasonably related businesses.
"RESTRICTED INVESTMENT" means, in one or a series of related transactions,
any Investment, other than investments in Cash Equivalents and other Permitted
Investments; PROVIDED, HOWEVER, that a merger of another Person with or into
Holdings or a Restricted Subsidiary otherwise permitted in accordance with the
terms of the Indenture shall not be deemed to be a Restricted Investment so long
as the surviving entity is Holdings or a Wholly Owned Restricted Subsidiary.
"RESTRICTED PAYMENT" means, with respect to any Person, (a) the declaration
or payment of any dividend or other distribution in respect of Equity Interests
of such Person or any parent or Subsidiary of
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such Person, (b) any payment on account of the purchase, redemption or other
Acquisition or retirement for value of Equity Interests of such Person or any
Subsidiary or parent of such Person, (c) other than with the proceeds from the
substantially concurrent sale of, or in exchange for, Refinancing Indebtedness
any purchase, redemption, or other Acquisition or retirement for value of, any
payment in respect of any amendment of the terms of or any defeasance of, any
Subordinated Indebtedness, directly or indirectly, by such Person or a parent or
Subsidiary of such Person prior to the scheduled maturity, any scheduled
repayment of principal, or scheduled sinking fund payment, as the case may be,
of such Indebtedness and (d) any Restricted Investment by such Person; PROVIDED,
HOWEVER, that the term "Restricted Payment" does not include (i) any dividend,
distribution or other payment on or with respect to Equity Interests of an
issuer to the extent payable solely in shares of Qualified Equity Interests of
such issuer; (ii) any dividend, distribution or other payment to Holdings by any
Restricted Subsidiary; and (iii) dividends or distributions by a Restricted
Subsidiary of Holdings, provided that to the extent that a portion of such
dividend or distribution is paid to a holder of Equity Interests of such
Restricted Subsidiary other than the Company or a Restricted Subsidiary, such
portion of such dividend or distribution is not greater than such holder's pro
rata aggregate common equity interest in such Restricted Subsidiary.
"RESTRICTED SUBSIDIARY" means a Subsidiary of Holdings or of any Restricted
Subsidiary that is not an Unrestricted Subsidiary.
"SIGNIFICANT SUBSIDIARY" shall have the meaning provided under Regulation
S-X of the Securities Act, as in effect on the Issue Date, and in addition shall
include ALM.
"STATED MATURITY," when used with respect to any Discount Note, means
December 15, 2008.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of Holdings or a Restricted
Subsidiary that is expressly subordinated in right of payment by its terms or
the terms of any document or instrument or instrument relating thereto to the
Discount Notes.
"SUBSIDIARY," with respect to any Person, means (a) a corporation a majority
of whose Equity Interests with voting power, under ordinary circumstances, to
elect directors is at the time, directly or indirectly, owned by such Person, by
such Person and one or more Subsidiaries of such Person or by one or more
Subsidiaries of such Person, (b) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries of such Person, or such Person and
one or more Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof has at least majority ownership interest or (c) a
partnership in which such Person or a Subsidiary of such Person is, at the time,
a general partner and in which such Person, directly or indirectly, at the date
of determination thereof has at least a majority ownership interest. Unless the
context requires otherwise, Subsidiary means each direct and indirect Subsidiary
of Holdings.
"THIRD-PARTY EVALUATOR" shall mean an investment banking firm of national
reputation that is not an Affiliate of Holdings or a Subsidiary; PROVIDED, that,
if the subject matter, type or scope of the evaluation is outside the scope of
evaluation customarily done by investment banking firms, then such Third-Party
Evaluator shall be an accounting firm or appraisal or valuation firm of national
reputation that is not an Affiliate of, and is otherwise independent of,
Holdings and its Subsidiaries.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of Holdings that does not own
any Capital Stock of, or own or hold any Lien on any property of, Holdings or
any other Restricted Subsidiary of Holdings and that, at the time of
determination, shall be an Unrestricted Subsidiary (as designated by the Board
of Directors of Holdings); PROVIDED, that such Subsidiary (a) shall not engage,
to any substantial extent, in any line or lines of business activity other than
a Related Business, (b) has no Indebtedness other than Non-Recourse Debt, (c) is
a Person with respect to which neither Holdings nor any of its Restricted
Subsidiaries has any direct or indirect obligation to subscribe for additional
Equity Interests or maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified level of operating results
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and (d) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of Holdings or any of its Restricted Subsidiaries.
"U.S. GOVERNMENT OBLIGATIONS" means direct noncallable obligations of, or
noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" means a Restricted Subsidiary all the
Equity Interests of which are owned by Holdings or one or more Wholly-Owned
Restricted Subsidiaries of Holdings (other than directors' qualifying shares and
nominal amounts required to be held by foreign nationals under applicable law).
BOOK-ENTRY; DELIVERY; FORM AND TRANSFER
The Exchange Discount Notes initially will be represented by one or more
notes in registered, global form without interest coupons (collectively, the
"Global Note"). The Global Note will be deposited upon issuance with the
Trustee, as custodian for The Depository Trust Company ("DTC"), in New York, New
York, and registered in the name of DTC or its nominee, in each case for credit
to an account of a direct or indirect participant as described below. Discount
Notes sold to Institutional Accredited Investors may be represented by the
Global Note or, if such an investor may not hold an interest in the Global Note,
a certificated Discount Note.
Except as set forth below, the Global Note may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Note may be exchanged for Exchange
Discount Notes in certificated form without interest coupons ("Certificated
Notes") in certain limited circumstances. See "--Exchange of Book-Entry Discount
Notes for Certificated Notes."
The Discount Notes may be presented for registration of transfer and
exchange at the offices of the Registrar.
DTC has advised Holdings that DTC is a limited-purpose trust company created
to hold securities for its participating organizations (collectively, the
"Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between the Direct Participants through
electronic book-entry changes in accounts of Direct Participants. The Direct
Participants include securities brokers and dealers (including the Initial
Purchasers), banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities that
clear through or maintain a direct or indirect, custodial relationship with a
Direct Participant (collectively, the "Indirect Participants"). DTC may hold
securities beneficially owned by other persons only through the Direct
Participants or the Indirect Participants and such person's ownership interest
and transfer of ownership interest will be recorded only on the records of the
Direct Participants and the Indirect Participants, and not on the records
maintained by DTC.
DTC has also advised Holdings that, pursuant to DTC's procedures, (i) upon
deposit of the Global Note, DTC will credit the accounts of the Direct
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global Note allocated by the Initial Purchasers to such Direct
Participants, and (ii) DTC will maintain records of the ownership interests of
such Direct Participants in the Global Note and the transfer of ownership
interests by and between Direct Participants. DTC will not
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maintain records of the ownership interests of, or the transfer of ownership
interests by and between, Indirect Participants or other owners of beneficial
interests in the Global Note. Direct Participants and Indirect Participants must
maintain their own records of the ownership interests of, and the transfer of
ownership interests by and between, Indirect Participants and other owners of
beneficial interests in the Global Note.
The laws of some states require that certain persons take physical delivery
in definitive, certificated form of securities that they own. This may limit or
curtail the ability to transfer beneficial interests in the Global Note to such
persons. Because DTC can act only on behalf of the Direct Participants, which in
turn act on behalf of Indirect Participants and others, the ability of a person
having beneficial interests in the Global Note to pledge such interests to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be affected by the lack of a physical
certificate evidencing such interests. For certain other restrictions on the
transferability of such Discount Notes see "--Exchange of Book-Entry Discount
Notes for Certificated Discount Notes."
EXCEPT AS DESCRIBED BELOW, OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL NOTE
WILL NOT HAVE DISCOUNT NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE
PHYSICAL DELIVERY OF DISCOUNT NOTES IN CERTIFICATED FORM AND WILL NOT BE
CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY
PURPOSE.
Under the terms of the Indenture, Holdings and the Trustee will treat
persons in whose names the Discount Notes are registered (including Discount
Notes represented by Global Note) as the owners thereof for the purpose of
receiving payments and for any and all other purposes whatsoever. Payments in
respect of the principal, premium, Liquidated Damages, if any, and interest on
Global Note registered in the name of DTC or its nominee will be payable by the
Trustee to DTC or its nominee as the registered holder under the Indenture.
Consequently, neither Holdings, the Trustee nor any agent of Holdings or the
Trustee has or will have any responsibility or liability for (i) any aspect of
DTC's records or any Direct Participant's or Indirect Participant's records
relating to or payments made on account of beneficial ownership interests in the
Global Note or for maintaining, supervising or reviewing any of DTC's records or
any Direct Participant's or Indirect Participant's records relating to the
beneficial ownership interests in any Global Note or (ii) any other matter
relating to the actions and practices of DTC or any of its Direct Participants
or Indirect Participants.
DTC has advised Holdings that its current payment practice (for payments of
principal, interest and the like) with respect to securities such as the
Discount Notes is to credit the accounts of the relevant Direct Participants
with such payment on the payment date in amounts proportionate to such Direct
Participant's respective ownership interests in the Global Note as shown on
DTC's records. Payments by Direct Participants and Indirect Participants to the
beneficial owners of the Discount Notes will be governed by standing
instructions and customary practices between them and will not be the
responsibility of DTC, the Trustee or Holdings. Neither Holdings nor the Trustee
will be liable for any delay by DTC or its Direct Participants or Indirect
Participants in identifying the beneficial owners of the Discount Notes, and
Holdings and the Trustee may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee as the registered owner of the
Discount Notes for all purposes.
The Global Note will trade in DTC's Same-Day Funds Settlement System and,
therefore, transfers between Direct Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in immediately available
funds. Transfers between Indirect Participants who hold an interest through a
Direct Participant will be effected in accordance with the procedures of such
Direct Participant but generally will settle in immediately available funds.
DTC has advised Holdings that it will take any action permitted to be taken
by a holder of Discount Notes only at the direction of one or more Direct
Participants to whose account with DTC interests in the Global Note are credited
and only in respect of such portion of the aggregate principal amount of the
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Discount Notes as to which such Direct Participant or Direct Participants has or
have given such direction. However, if any of the events described under
"--Exchange of Book-Entry Discount Notes for Certificated Discount Notes"
occurs, DTC reserves the right to exchange the Global Note for Discount Notes in
certificated form, and to distribute such Discount Notes to its Direct
Participants.
The information in this section concerning DTC and its book-entry system has
been obtained from sources that Holdings believes to be reliable, but Holdings
takes no responsibility for the accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Note among accountholders in DTC, it is under no
obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither Holdings nor the Trustee nor
any agent of Holdings or the Trustee will have any responsibility for the
performance by DTC or its respective participants, indirect participants or
accountholders of their respective obligations under the rules and procedures
governing their operations.
EXCHANGE OF BOOK-ENTRY DISCOUNT NOTES FOR CERTIFICATED DISCOUNT NOTES
The Global Note is exchangeable for definitive Discount Notes in registered
certificated form if (i) DTC (x) notifies Holdings that it is unwilling or
unable to continue as depository for the Global Note and Holdings thereupon
fails to appoint a successor depository within 90 days or (y) has ceased to be a
clearing agency registered under the Exchange Act, (ii) Holdings, at its option,
notifies the Trustee in writing that it elects to cause the issuance of the
Discount Notes in certificated form or (iii) there shall have occurred and be
continuing a Default or an Event of Default with respect to the Discount Notes.
In all cases, certificated Discount Notes delivered in exchange for the Global
Note or beneficial interests therein will be registered in the names, and issued
in any approved denominations, requested by or on behalf of DTC (in accordance
with its customary procedures).
DTC has advised Holdings that it will take any action permitted to be taken
by a holder of Discount Notes only at the direction of one or more Direct
Participants to whose account interests in the Global Note are credited and only
in respect of such portion of the aggregate principal amount of the Discount
Notes as to which such Direct Participant or Direct Participants has or have
given direction.
Neither Holdings nor the Trustee will be liable for any delay by the holder
of the Global Note or the DTC in identifying the beneficial owners of Discount
Notes, and Holdings and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the holder of the Global Note or the
DTC for all purposes.
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DESCRIPTION OF OTHER INDEBTEDNESS
REVOLVING CREDIT FACILITY
ALM has entered into a $40.0 million, five-year senior secured revolving
credit facility (the "Revolving Credit Facility") with a group of banks to be
available for working capital and general corporate purposes, including
acquisitions and capital expenditures.
GUARANTEES; SECURITY. The Revolving Credit Facility is guaranteed by
Holdings and by all existing and future subsidiaries of ALM. In addition, the
Revolving Credit Facility is secured by a first priority security interest in
substantially all of the properties and assets of ALM and its existing and
future domestic subsidiaries, including a pledge of all of the stock of such
subsidiaries, and a pledge by Holdings of all of the stock of ALM.
INTEREST. The Revolving Credit Facility bears interest at a fluctuating
rate determined by reference to one or more reference rates plus a margin, based
on ALM's total leverage ratio.
FEES. ALM is required to pay customary fees with respect to the Revolving
Credit Facility, including an up-front arrangement fee, annual administrative
agency fees, and commitment fees on the unused portion of the Revolving Credit
Facility.
COMMITMENT REDUCTIONS. The commitments of the lenders under the Revolving
Credit Facility are required to be reduced to the extent of the proceeds of
asset sales and certain financings.
COVENANTS; EVENTS OF DEFAULT. The Revolving Credit Facility contains
customary covenants commensurate with the size of the Revolving Credit Facility
that restrict the ability of ALM and its subsidiaries to take certain actions.
Such covenants restrict the ability of ALM and its subsidiaries to, among other
things: (i) declare dividends or redeem or repurchase capital stock; (ii) incur
liens and engage in sale and leaseback transactions; (iii) make loans and
investments; (iv) incur indebtedness and contingent obligations; (v) make
capital expenditures; (vi) engage in mergers, consolidations, acquisitions and
asset sales; (vii) enter into transactions with affiliates; and (viii) make
changes in their lines of business or accounting methods. In general, such
covenants are subject to materiality concepts and baskets and other exceptions.
ALM is also required to comply with certain financial covenants, including: (i)
a maximum total leverage ratio; (ii) a minimum interest coverage ratio; and
(iii) a minimum fixed charge coverage ratio. The Revolving Credit Facility also
contains customary affirmative covenants and events of default, including a
Change of Control, as defined therein.
DESCRIPTION OF THE SENIOR NOTES
Concurrent with the Initial Discount Note Offering, the Company offered
$175.0 million aggregate principal amount of its 9 3/4% Senior Notes due 2007.
Interest on the Senior Notes will accrue at a rate of 9 3/4% per annum from
December 22, 1997, and will be payable in cash semi-annually on June 15 and
December 15 of each year, commencing June 15, 1998.
The Senior Notes will be senior unsecured general obligations of the
Company, PARI PASSU in right of payment to all existing and future senior
indebtedness of the Company and senior in right of payment to all subordinated
indebtedness of the Company.
The Senior Notes will be guaranteed (the "Subsidiary Guarantees") by each of
the Company's existing and future Restricted Subsidiaries (each, a "Guarantor"
and collectively, the "Guarantors"). Each Subsidiary Guarantee will be a senior
unsecured general obligation of the respective Guarantor, PARI PASSU in right of
payment to all existing and future senior indebtedness of such Guarantor and
senior in right of payment to all indebtedness of such Guarantor that is
subordinated to such Subsidiary Guarantee. Each
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Subsidiary Guarantee will be unconditional, but limited in amount to the extent
required by laws relating to fraudulent transfer or similar laws.
The Senior Notes may be redeemed on or after December 15, 2002 at the option
of the Company, in whole or in part, at the redemption prices set forth in the
Senior Note Indenture, plus accrued and unpaid interest thereon (and liquidated
damages, if any) to the date of redemption. At any time or from time to time
prior to December 15, 2002, the Senior Notes will also be subject to redemption
at the option of the Company, in whole or in part, at a redemption price equal
to 100% of the principal amount thereof plus the Make-Whole Premium (as defined
in the Senior Note Indenture) at the time of redemption plus accrued and unpaid
interest thereon (and liquidated damages, if any). At any time or from time to
time on or prior to December 15, 2000, the Company may redeem in the aggregate
up to 35% of the aggregate principal amount of the Senior Notes originally
outstanding, at a redemption price of 109.75% of the aggregate principal amount
so redeemed, together with accrued and unpaid interest (and liquidated damages,
if any) to the date of redemption out of the net cash proceeds of one or more
public equity offerings; PROVIDED, HOWEVER, that immediately following such
redemption not less than $113.8 million aggregate principal amount of the Senior
Notes remains outstanding; and PROVIDED FURTHER, that such redemption shall
occur within 90 days of the closing of such public equity offering.
Upon a Change of Control (as defined in the Senior Note Indenture), each
holder of Senior Notes will have the right to require the Company to repurchase
all or any part of such holder's Senior Notes at a repurchase price equal to
101% of the principal amount thereof plus accrued and unpaid interest thereon
(and liquidated damages, if any) to the date of repurchase.
The Company will be obligated in certain instances to make an offer to
repurchase the Senior Notes at a purchase price equal to 100% of the principal
amount at maturity thereof, together with accrued and unpaid interest thereon
(and liquidated damages, if any) to the purchase date, with the net cash
proceeds of certain asset sales.
The Senior Note Indenture under which the Senior Notes were issued contains
certain covenants that, among other things, limit (i) the incurrence of
additional indebtedness by the Company and its Restricted Subsidiaries, (ii) the
payment of dividends and other restricted payments by the Company and its
Restricted Subsidiaries, (iii) the creation of restrictions on distributions
from Restricted Subsidiaries of the Company, (iv) asset sales, (v) transactions
with affiliates, (vi) the incurrence of liens and (vii) mergers and
consolidations. These limitations are subject to a number of important
exceptions.
Pursuant to a registration rights agreement by and among the Company, the
Guarantors and the Initial Purchasers, the Company must use its reasonable best
efforts to file within 120 days, and cause to become effective within 180 days,
of the date of issuance of the Senior Notes an Exchange Offer Registration
Statement (as defined in such agreement) with respect to an offer to exchange
the Senior Notes for notes of the Company with terms substantially identical to
the Senior Notes.
The net proceeds from the sale of the Senior Notes were used, together with
the Equity Contribution, to consummate the NLP Acquisition, to repay the
principal and accrued interest on each of the ALM Promissory Note and the WP
Promissory Note, to pay certain fees and expenses, and to pay one-time
restructuring costs in connection therewith.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is based on the current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable Treasury regulations,
judicial authority and administrative rulings and practice. There can be no
assurance that the Internal Revenue Service (the "Service") will not take a
contrary view, and no ruling from the Service has been or will be sought.
Legislative, judicial or administrative changes or interpretations may be
forthcoming that could alter or modify the statements and conditions set forth
herein. Any such changes or interpretations may or may not be retroactive and
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could affect the tax consequences to holders. Certain holders (including
insurance companies, tax-exempt organizations, financial institutions,
broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States) may be subject to special rules not discussed
below. Holdings recommends that each holder consult such holder's own tax
advisor as to the particular tax consequences of exchanging such holder's Old
Discount Notes for Exchange Discount Notes, including the applicability and
effect of any state, local or foreign tax laws.
Holdings believes that the exchange of Old Discount Notes for Exchange
Discount Notes pursuant to the Exchange Offer will not be treated as an
"exchange" for federal income tax purposes because the Exchange Discount Notes
will not be considered to differ materially in kind or extent from the Old
Discount Notes. Rather, the Exchange Discount Notes received by a holder will be
treated as a continuation of the Old Discount Notes in the hands of such holder.
As a result, there will be no federal income tax consequences to holders
exchanging Old Discount Notes for Exchange Discount Notes pursuant to the
Exchange Offer.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Discount Notes for
its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Discount
Notes. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in connection with the resale of
Exchange Discount Notes received in exchange for Old Discount Notes where such
Old Discount Notes were acquired as a result of market-making activities or
other trading activities. Holdings has agreed that for a period of 180 days
after the Expiration Date, they will make this Prospectus, as amended or
supplemented, available to any Participating Broker-Dealer for use in connection
with any such resale. In addition, until , 1998 (90 days after the
commencement of the date of the Prospectus), all dealers effecting transactions
in the Exchange Discount Notes may be required to deliver a prospectus.
Holdings will not receive any proceeds from any sales of the Exchange
Discount Notes by Participating Broker Dealers. Exchange Discount Notes received
by Participating Broker-Dealers for their own account pursuant to the Exchange
Offer may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Discount Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
Participating Broker-Dealer and/or the purchasers of any such Exchange Discount
Notes. Any Participating Broker-Dealer that resells the Exchange Discount Notes
that were received by it for its own account pursuant to the Exchange Offer and
any broker or dealer that participates in a distribution of such Exchange
Discount Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange Discount Notes and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, Holdings will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any Participating Broker-Dealer that requests such documents
in the Letter of Transmittal.
LEGAL MATTERS
The validity of the Exchange Discount Notes offered hereby will be passed
upon for Holdings by Jones, Day, Reavis & Pogue, New York, New York.
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EXPERTS
Old ALM's consolidated balance sheets as of December 31, 1995 and 1996, and
its respective statements of operations and cash flows for each of the years
then ended, Old ALM's consolidated balance sheet as of July 31, 1997 and its
respective statements of operations and cash flows for the seven months then
ended, Holdings' consolidated balance sheet as of December 31, 1997 and its
respective statements of operations and cash flows for the five months then
ended, and NLP's consolidated balance sheet as of December 21, 1997 and its
related statements of operations and cash flows for the period from January 1,
1997 through December 21, 1997 included in this Prospectus, have been audited by
Arthur Andersen LLP, independent certified public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
NLP's consolidated balance sheets as of December 31, 1995 and 1996, and its
statements of operations and cash flows for each of the years then ended,
included in this Prospectus, have been audited by Leslie Sufrin and Company,
P.C., independent certified public accountants, as stated in their report
herein.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN LAWYER MEDIA HOLDINGS, INC.
Independent Auditor's Report of Independent Public Accountants as of and for the Five Months Ended
December 31, 1997 of American Lawyer Media Holdings, Inc............................................... F-3
Consolidated Balance Sheet as of December 31, 1997 of
American Lawyer Media Holdings, Inc.................................................................... F-4
Consolidated Statement of Operations for the Five Months Ended December 31, 1997 of American Lawyer Media
Holdings, Inc.......................................................................................... F-5
Consolidated Statement of Changes in Stockholders' Equity for the Five Months Ended December 31, 1997 of
American Lawyer Media Holdings, Inc.................................................................... F-6
Consolidated Statement of Cash Flows for the Five Months Ended December 31, 1997 of American Lawyer Media
Holdings, Inc.......................................................................................... F-7
Notes to the Consolidated Financial Statements as of December 31, 1997 of
American Lawyer Media Holdings, Inc.................................................................... F-8
FINANCIAL STATEMENTS OF AMERICAN LAWYER MEDIA, L.P. (OLD ALM)
Independent Auditor's Report of the Financial Statements as of and for the Seven Months Ended July 31,
1997 of American Lawyer Media, L.P..................................................................... F-19
Balance Sheet as of July 31, 1997 of American Lawyer Media, L.P.......................................... F-20
Statement of Operations for the Seven Months Ended July 31, 1997 of American Lawyer Media, L.P........... F-21
Statement of Changes in Partners' Capital and Accumulated Deficit for the Seven Months Ended July 31,
1997 of American Lawyer Media, L.P..................................................................... F-22
Statement of Cash Flows for the Seven Months Ended July 31, 1997 of American Lawyer Media, L.P........... F-23
Notes to the Financial Statements as of July 31, 1997 of American Lawyer Media, L.P...................... F-24
FINANCIAL STATEMENTS OF AMERICAN LAWYER MEDIA, L.P. (OLD ALM)
Independent Auditor's Report of the Financial Statements as of and for the Years Ended December 31, 1996
and 1995 of American Lawyer Media, L.P. ............................................................... F-29
Balance Sheets as of December 31, 1996 and 1995 of American Lawyer Media, L.P. .......................... F-30
Statements of Operations for the Years Ended December 31, 1996 and 1995 of American Lawyer Media,
L.P. .................................................................................................. F-31
Statements of Changes in Partners' Capital and Accumulated Deficit for the Years Ended December 31, 1996
and 1995 of American Lawyer Media, L.P. ............................................................... F-32
Statements of Cash Flows for the Years Ended December 31, 1996 and 1995 of American Lawyer Media,
L.P. .................................................................................................. F-33
Notes to the Financial Statements as of December 31, 1996 and 1995 of American Lawyer Media, L.P. ....... F-34
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS OF NATIONAL LAW PUBLISHING COMPANY, INC.
Independent Auditor's Report of the Consolidated Financial Statements as of and for the Period Ended
December 21, 1997 of National Law Publishing Company, Inc.............................................. F-39
Consolidated Balance Sheet at December 21, 1997 of National Law Publishing Company, Inc.................. F-40
Consolidated Statement of Operations for the Period from January 1, 1997 through December 21, 1997 of
National Law Publishing Company, Inc................................................................... F-41
Consolidated Statement of Stockholders' Equity for the Period from January 1, 1997 through December 21,
1997 of National Law Publishing Company, Inc........................................................... F-42
Consolidated Statement of Cash Flows for the Period from January 1, 1997 through December 21, 1997 of
National Law Publishing Company, Inc................................................................... F-43
Notes to the Unaudited Consolidated Financial Statements as of December 21, 1997 of National Law
Publishing Company, Inc. .............................................................................. F-44
CONSOLIDATED FINANCIAL STATEMENTS OF NATIONAL LAW PUBLISHING COMPANY, INC.
Independent Auditor's Report of the Consolidated Financial Statements as of and for the Years Ended
December 31, 1996 and 1995 of National Law Publishing Company, Inc..................................... F-52
Consolidated Balance Sheets as of December 31, 1996 and 1995 of National Law Publishing Company, Inc..... F-53
Consolidated Statements of Operations for the Years Ended December 31, 1996 and 1995 of National Law
Publishing Company, Inc................................................................................ F-54
Consolidated Statements of Stockholders' Equity (Deficiency) for the Years Ended
December 31, 1996 and 1995 of National Law Publishing Company, Inc..................................... F-55
Consolidated Statements of Cash Flows for Years Ended December 31, 1996 and 1995 of National Law
Publishing Company, Inc................................................................................ F-56
Notes to the Consolidated Financial Statements as of December 31, 1996 and 1995 of National Law
Publishing Company, Inc................................................................................ F-57
</TABLE>
F-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To American Lawyer Media Holdings, Inc.:
We have audited the accompanying consolidated balance sheet of American
Lawyer Media Holdings, Inc. (a Delaware corporation) as of December 31, 1997 and
the related consolidated statements of operations, changes in stockholders'
equity and cash flows for the five months then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Lawyer Media
Holdings, Inc. as of December 31, 1997, and the results of its operations and
its cash flows for the five months then ended in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
April 3, 1998
F-3
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AMERICAN LAWYER MEDIA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997
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<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................................................... $ 9,442
Accounts receivable, net of allowance for doubtful accounts and returns of $3,236................... 12,560
Inventories, net.................................................................................... 1,482
Other current assets................................................................................ 2,716
----------
Total current assets............................................................................ 26,200
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation and amortization of $613............... 5,630
INTANGIBLE ASSETS, net of accumulated amortization of $1,855.......................................... 163,305
GOODWILL, net of accumulated amortization of $498..................................................... 159,623
DEFERRED FINANCING COSTS.............................................................................. 7,678
DEFERRED INCOME TAXES................................................................................. 2,934
OTHER ASSETS.......................................................................................... 158
----------
Total assets.................................................................................... $ 365,528
----------
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................................................................................... $ 3,466
Accrued expenses.................................................................................... 12,604
Deferred income (including deferred subscription income of $16,502)................................. 17,172
----------
Total current liabilities....................................................................... 33,155
----------
SENIOR NOTES.......................................................................................... 175,000
----------
SENIOR DISCOUNT NOTES................................................................................. 35,119
----------
DEFERRED INCOME TAXES................................................................................. 51,515
----------
OTHER NONCURRENT LIABILITIES.......................................................................... 3,363
----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock--par value $0.01; 200,000 shares authorized; 100,000 shares issued and outstanding..... 1
Additional paid-in-capital.......................................................................... 74,999
Accumulated deficit................................................................................. (7,711)
----------
Total stockholders' equity...................................................................... 67,289
----------
Total liabilities and stockholders' equity...................................................... $ 365,528
----------
----------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this balance sheet.
F-4
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FIVE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997
---------
<S> <C>
NET REVENUES:
Periodicals
Advertising........................................................................................ $ 13,410
Subscription....................................................................................... 5,260
Ancillary Products and Services...................................................................... 4,142
Internet Services.................................................................................... 40
---------
Total net revenues............................................................................... 22,852
---------
OPERATING EXPENSES:
Editorial............................................................................................ 3,323
Production and Distribution.......................................................................... 5,766
Selling.............................................................................................. 3,656
General and Administrative........................................................................... 7,145
Internet Services.................................................................................... 43
Depreciation and Amortization........................................................................ 3,273
Shutdown of ALM Internet Services.................................................................... 4,823
---------
Total operating expenses......................................................................... 28,029
---------
Operating loss................................................................................... (5,177)
INTEREST EXPENSE, net.................................................................................. (2,534)
---------
Loss before income taxes......................................................................... (7,711)
PROVISION FOR INCOME TAXES............................................................................. --
---------
Net Loss......................................................................................... $ (7,711)
---------
---------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
F-5
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE FIVE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
---------------------- PAID-IN NET
SHARES PAR VALUE CAPITAL LOSS TOTAL
--------- ----------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
INCEPTION................................................ -- $ -- $ -- $ -- $ --
Issuance of common stock............................... 100,000 1 74,999 -- 75,000
Net loss............................................... -- -- -- (7,711) (7,711)
--------- ----- ----------- --------- ----------
BALANCE AT DECEMBER 31, 1997............................. 100,000 $ 1 $ 74,999 $ (7,711) $ (67,289)
--------- ----- ----------- --------- ----------
--------- ----- ----------- --------- ----------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
F-6
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FIVE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997
-----------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................................................................... $ (7,711)
Adjustments to reconcile net loss to net cash used in operating activities-
Depreciation and amortization.................................................................... 3,273
Decrease (increase) in-
Accounts receivable, net....................................................................... 515
Inventories.................................................................................... (74)
Other current assets........................................................................... 63
Other assets................................................................................... 89
Increase (decrease) in-
Accounts payable............................................................................... 1,200
Accrued expenses............................................................................... (421)
Deferred income................................................................................ (466)
Other noncurrent liabilities................................................................... 1,035
-----------
Total adjustments............................................................................ 5,214
-----------
Net cash used in operating activities........................................................ (2,497)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................................................... (364)
Purchase of businesses:
Negative working capital, other than cash...................................................... 9,229
Plant, property and equipment.................................................................. (8,058)
Intangible assets.............................................................................. (165,160)
Deferred income taxes.......................................................................... 50,107
Other noncurrent assets........................................................................ (1,748)
Cost in excess of net assets of company acquired............................................... (160,121)
Acquisition related costs and expenses 9,579
-----------
Net cash used in investing activities........................................................ (265,383)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution............................................................................... 75,000
Issuance of notes, net of fees and expenses of $7,678.............................................. 202,322
Proceeds from affiliate note....................................................................... 32,000
Repayment of affiliate note........................................................................ (32,000)
Note payable assumed in connection with acquisition................................................ 31,500
Repayment of note payable.......................................................................... (31,500)
-----------
Net cash provided by financing activities.................................................... 277,322
-----------
Net increase in cash......................................................................... 9,442
CASH, at inception................................................................................... --
-----------
CASH, end of period.................................................................................. $ 9,442
-----------
-----------
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period
Income taxes................................................................................... $ --
-----------
-----------
Interest....................................................................................... $ 1,954
-----------
-----------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
F-7
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION AND OPERATIONS
American Lawyer Media Holdings, Inc. ("Holdings") is the parent company of
American Lawyer Media, Inc. ("Media"). Holdings was formerly named Cranberry
Partners, LLC ("Cranberry"). Herein, Holdings, together with Media, are referred
to as the "Company".
Cranberry, a Delaware limited liability company, was formed on August 1,
1997. On August 27, 1997 (the "ALM Acquisition Closing"), Cranberry acquired
substantially all of the assets and liabilities of American Lawyer Media, L.P.
("Old ALM") for $63,000,000. The acquisition was effective retroactively to July
31, 1997. As of the ALM Acquisition Closing, all of the membership interests of
Cranberry were held by W.P. Management Partners, LLC on behalf of U.S. Equity
Partners, L.P. and certain of its affiliates. Old ALM is a publisher of legal
publications, which includes THE AMERICAN LAWYER, CORPORATE COUNSEL MAGAZINE,
AMLAW TECH, THE CONNECTICUT LAW TRIBUNE, LEGAL TIMES, NEW JERSEY LAW JOURNAL,
THE RECORDER, TEXAS LAWYER, FULTON COUNTY DAILY REPORT, and MIAMI DAILY BUSINESS
REVIEW. In addition, Old ALM operates Counsel Connect, a membership-based online
service exclusively for lawyers and legal professionals. The Company's
operations are based in New York with regional offices in seven states and the
District of Columbia.
Prior to the ALM Acquisition Closing, Cranberry formed ALM Holdings, LLC, a
Delaware limited liability company, and ALM Holdings, LLC formed two wholly
owned subsidiaries, ALM, LLC (a New York limited liability company) and Counsel
Connect, LLC; (a Delaware limited liability company) and one 99% owned
subsidiary, (the remaining 1% of which was, as of the ALM Acquisition Closing,
held by W.P. Management Partners, LLC on behalf of U.S. Equity Partners, L.P.
and certain of its affiliates), ALM IP, LLC (a Delaware limited liability
company). On the ALM Acquisition Closing, Cranberry transferred all of the
non-intellectual property publishing assets and liabilities acquired from Old
ALM to ALM, LLC, all the non-intellectual property Counsel Connect assets and
liabilities acquired from Old ALM to Counsel Connect, LLC, and all of the
intellectual property assets acquired from Old ALM to ALM IP, LLC.
On November 26, 1997, Cranberry was merged with and into ALM Capital Corp.
(a Delaware corporation); and ALM Capital Corp. was simultaneously renamed
American Lawyer Media Holdings, Inc. Also on November 26, 1997, ALM Holdings,
LLC was merged with and into ALM Capital Corp. II (a Delaware corporation), and
ALM Capital Corp. II was simultaneously renamed American Lawyer Media, Inc.
In December 1997, Holdings received capital contributions from its
stockholders, Wasserstein & Co., Inc., U.S. Equity Partners L.P. and U.S. Equity
Partners (Offshore) L.P., totaling $75 million. On December 22, 1997, Holdings
issued $35 million of 12.25% Senior Discount Notes in an offering under Rule
144A promulgated under the Securities Act of 1933, as amended (the "Act").
Simultaneously, Holdings contributed capital of $108.8 million to Media. Also on
December 22, 1997, Media issued $175 million of 9.75% Senior Notes in an
offering under Rule 144A promulgated under the Act. Media used a portion of the
capital and the proceeds from Media's Rule 144A offering to acquire all of the
outstanding capital stock of National Law Publishing Company, Inc. (a Delaware
corporation) ("Old NLP"), for approximately $203 million (the "NLP Acquisition")
through a wholly owned subsidiary, NLP Acquisition Co., Inc. (a New York
corporation) ("Acquisition"). Old NLP was then, on December 22, 1997, merged
with and into Acquisition with Acquisition surviving. Subsequent to the merger,
Acquisition was renamed National Law Publishing Company, Inc., ("NLP"). At the
closing of the NLP Acquisition, all intellectual property of NLP and its
subsidiaries was transferred to NLP IP Company, a wholly owned subsidiary of
NLP. Old NLP is a publisher of legal publications, which include NEW YORK LAW
JOURNAL, THE NATIONAL LAW JOURNAL and
F-8
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
1. ORGANIZATION AND OPERATIONS (CONTINUED)
LAW TECHNOLOGY PRODUCT NEWS. In addition, Old NLP operates LAW JOURNAL EXTRA!, a
membership-based internet service for lawyers and legal professionals, publishes
legal text and provides seminars targeted at the U.S. legal community.
2. ACQUISITIONS
The ALM acquisition has been accounted for under the purchase method and the
results of operations of the acquired publishing business have been included in
the financial statements since the date of acquisition (August 1, 1997). The
excess of the purchase price over net assets acquired is as follows (in
thousands):
<TABLE>
<S> <C> <C>
Total purchase price.................................... $ 63,000
Reimbursement from seller............................. (110)
---------
Adjusted purchase price................................. 62,890
Historical net liabilities at July 31, 1997........... 29,342
Elimination of historical intangible assets........... 5,545
Assets and liabilities not assumed/acquired........... (34,702)
Adjustment to record fixed assets at fair value....... (365)
Writeoff of leasehold improvements.................... 445
---------
Net liabilities assumed................................. 265
Adjustment for acquisition related costs and expenses... 4,546
---------
67,701
Identified intangibles.................................. (59,770)
---------
Excess of purchase price over net assets acquired....... $ 7,931
---------
---------
</TABLE>
In the accompanying statement of operations, the excess of purchase price
over net assets acquired are being amortized over fifteen years. As previously
discussed, the identified intangibles were transferred to ALM IP, LLC and are
being amortized on a straight-line basis over a weighted average useful life of
fifteen years.
The NLP acquisition of has been accounted for under the purchase method and
the results of operations of the acquired publishing business have been included
in the financial statements since the
F-9
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
2. ACQUISITIONS (CONTINUED)
date of acquisition (December 22, 1997). The excess of the purchase price over
the book value of net tangible assets acquired is as follows (in thousands):
<TABLE>
<S> <C> <C>
Total purchase price.................................... $ 203,218
Historical net assets at December 22, 1997............ (64,782)
Elimination of historical intangible assets........... 122,351
Elimination of historical debt........................ (59,500)
Adjustment to record assets at fair value............. 1,153
---------
Net assets acquired..................................... (778)
Provision of deferred income taxes principally related
to identified intangibles............................. 50,107
Adjustment for acquisition related costs and expenses... 5,033
---------
257,580
Identified intangibles.................................. (105,390)
---------
Excess of purchase price over net assets acquired....... $ 152,190
---------
---------
</TABLE>
In the accompanying statement of operations, the excess of purchase price
over net assets acquired are being amortized over fifteen years. As previously
discussed, the identified intangibles were transferred to NLP IP Company and are
being amortized on a straight-line basis over a weighted average useful life of
fifteen years.
The results of operations of NLP are included in the accompanying
consolidated statement of operations for the period from December 22, 1997 to
December 31, 1997. The following unaudited pro forma information presents a
summary of consolidated results of operations of the Company as if the NLP
Acquisition had occurred on August 1, 1997 (in thousands):
<TABLE>
<CAPTION>
FOR THE FIVE
MONTHS ENDED
DECEMBER 31,
1997
-------------
<S> <C>
Net revenues................................................................... $ 45,766
Net loss....................................................................... $ 7,073
</TABLE>
These unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as additional amortization
expense as a result of goodwill and other intangible assets, and interest
expense on acquisition debt. They do not purport to be indicative of the results
of operations which actually would have resulted had the combination been in
effect on August 1, 1997, or of future results of operations of the consolidated
entities.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of American
Lawyer Media Holdings, Inc. and its wholly-owned subsidiary, American Lawyer
Media, Inc. The accounts of American Lawyer Media
F-10
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Inc., its wholly-owned subsidiaries, ALM, LLC, Counsel Connect, LLC, and NLP
Co., Inc., and its 99% owned subsidiary, ALM IP, LLC. The accounts of NLP Co.,
Inc. include its wholly owned subsidiary NLP IP Company. Intercompany
transactions and balances have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CONCENTRATIONS OF CREDIT RISK
The Company's financial instruments that are exposed to concentration of
credit risk consist primarily of cash and cash equivalents and trade accounts
receivable. The Company believes it is not exposed to any significant credit
risk related to cash and cash equivalents. Concentrations of credit risk with
respect to trade accounts receivable are, except for amounts due from legal
advertising ad agents ("Legal Ad Agents"), generally limited due to the large
number of customers comprising the Company's customer base. Such Legal Ad Agents
do not have significant liquid net worth and, as a result, the Company is
exposed to a certain level of credit concentration risk in this area, which the
Company believes it has adequately provided for.
REVENUE RECOGNITION
Advertising revenues are generated from the placement of display and
classified advertisements, as well as legal notices, in the Company's
publications. Advertising revenue is recognized upon release of the related
publications to subscribers.
Subscription revenues are recognized on a pro rata basis as issues of a
subscription are served.
Ancillary revenues consist principally of third-party printing revenues,
newsletter subscriptions, sales of professional books, software and directories,
Lexis/Nexis royalty income, seminar income, and income from a daily fax service
of court decisions.
Internet services revenues are recognized upon the release of an
advertisement on the website.
DEFERRED SUBSCRIPTION INCOME
Deferred subscription income results from advance payments or orders for
subscriptions received from subscribers and is amortized on a straight-line
basis over the life of the subscription as issues are served. Subscription
receivables of approximately $1,772,000 are included in accounts receivable in
the accompanying consolidated balance sheet.
ADVERTISING AND PROMOTION COSTS
Advertising and promotion expenditures are expensed as the related
advertisement or campaign is released.
F-11
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
The Company considers time deposits and certificates of deposit with
original maturities of three months or less to be cash equivalents.
INVENTORIES
Inventories consist principally of paper and related binding materials
utilized by the Company and it's outside printers and professional books
published and sold by the Company. Inventories are stated at the lower of cost,
as determined by the average cost method, or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost, with the exception of fixed
assets acquired as part of the ALM and NLP Acquisitions, which are stated at
approximate fair market value as of the date of the acquisitions. Significant
improvements are capitalized, while expenditures for maintenance and repairs are
charged to expense as incurred. Depreciation is calculated using the
straight-line method over the estimated remaining useful lives of the assets
acquired as part of the ALM and NLP Acquisitions. Assets purchased after the ALM
and NLP Acquisitions are depreciated using the straight-line method over the
following estimated useful lives:
<TABLE>
<S> <C>
Buildings......................................................... 25 years
Furniture, machinery and equipment................................ 5-9 years
Computer equipment and software................................... 3-6 years
</TABLE>
Leasehold improvements are amortized over the shorter of the remaining lease
term or the estimated useful life.
GOODWILL
Goodwill represents the excess of purchase price over the fair value of net
assets acquired. It is stated at cost less accumulated amortization and is
amortized on a straight-line basis over a fifteen-year useful life. The Company
periodically assesses the recoverability of goodwill by determining whether the
amortization of goodwill over its estimated remaining life can be recovered
through projected undiscounted future consolidated operating cash flows.
INTANGIBLE ASSETS
Intangible assets represent advertiser commitments, trademarks, customer and
subscriber lists and non-compete agreements. They are stated at cost less
accumulated amortization and are amortized on a straight-line basis over a
weighted average useful life of fifteen years.
4. SHUTDOWN OF INTERNET SERVICES
The Company has operated Counsel Connect, a major legal internet site, since
1993. Counsel Connect operated as a subscription based service offering users
the opportunity to exchange legal information such
F-12
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
4. SHUTDOWN OF INTERNET SERVICES (CONTINUED)
as court opinions, insights about judges and legal opinions and special written
work. The Company, through Counsel Connect, provided general internet access (as
an "internet service provider") to its subscribers.
Since its inception, Counsel Connect has incurred substantial operating
losses. The Company has determined that it will cease to operate Counsel Connect
and has begun the wind down of its operations. Staff reductions and curtailments
of operating activities have already taken place commencing with the ALM
Acquisition in August, 1997. In connection with the NLP Acquisition, the Company
acquired LAW JOURNAL EXTRA!, a legal internet site. The Company is in the
process of transferring certain Counsel Connect employees and network equipment
to a new combined enhanced service. The accompanying statement of operations
includes a net expense of $4,823,400 related to the shutdown of Counsel Connect.
This amount includes Counsel Connect revenues of $1,122,200 and Counsel Connect
expenses before depreciation of $2,945,600 for the five months ended December
31, 1997 and a provision of $3,000,000 to cover severance costs, uncollectible
receivables, writedown of computer and network equipment and termination of
contracts related to network services which provided internet access. The
provision is a preliminary estimate of the total costs associated with these
items.
5. INCOME TAXES
Deferred income taxes are provided for the temporary differences between the
financial reporting and the tax basis of the Company's assets and liabilities
and principally consist of nondeductible goodwill and identified intangibles
relating to NLP, accelerated depreciation, allowance for doubtful accounts,
certain accrued liabilities not currently deductible for tax purposes and net
operating loss carryforwards.
The reconciliation between the provision for income taxes and the amount
computed by applying the statutory federal income tax rate to loss before income
taxes is as follows for the five months ended December 31, 1997:
<TABLE>
<S> <C>
Federal statutory income taxes..................................... $ (2,622)
Permanent differences (principally goodwill and intangible
amortization).................................................... 194
State and local income taxes....................................... (463)
Other.............................................................. (126)
Valuation allowance................................................ 3,017
---------
$ --
---------
---------
</TABLE>
Upon the creation of Holdings and American Lawyer Media, Inc. as discussed
in Note 1, the Company changed its tax status from an LLC to a C Corporation on
November 26, 1997. As of that date, a net deferred tax asset of $1,224,000 was
recorded relating to the Company's temporary differences. A valuation allowance
of $1,224,000 was also recorded against this net deferred tax asset.
F-13
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at December 31 (in
thousands):
<TABLE>
<CAPTION>
1997
---------
<S> <C>
Land................................................................................. $ 207
Buildings and improvements........................................................... 790
Furniture, machinery, and equipment.................................................. 2,739
Computer equipment and software...................................................... 2,507
---------
6,243
Accumulated depreciation and amortization............................................ (613)
---------
Net property, plant and equipment................................................ $ 5,630
---------
---------
</TABLE>
7. INTANGIBLE ASSETS
Intangible assets consisted of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
1997
----------
<S> <C>
Advertiser commitments............................................................ $ 880
Trademarks........................................................................ 82,650
Customer and subscriber lists..................................................... 69,670
Non-compete agreements............................................................ 11,960
----------
165,160
Accumulated amortization.......................................................... (1,855)
----------
Net intangible assets......................................................... $ 163,305
----------
----------
</TABLE>
8. RELATED PARTY TRANSACTIONS
The Company and CourtRoom Television Network ("CourtTV"), an affiliate of
Old ALM's general partner, share certain administrative resources and employees.
In addition, the Company has advertising revenue from Court TV under an
agreement made by the former owner of Old ALM. This agreement was terminated in
October 1997. The cost associated with Court TV employees who devote a portion
of their time to the Company's activities is charged to the Company based on an
estimate of the time spent on such activities. These charges amounted to
$99,191, while the revenue was $44,730 for the five months ended December 31,
1997. In addition, the Company has a receivable from CourtTV of $262,600 at
December 31, 1997 reflected in accounts receivable on the accompanying balance
sheet.
Included in accrued expenses on the accompanying balance sheet is $45,000
due to Wasserstein and Co, Inc. for payment of certain costs related to the
acquisition of Old ALM.
Approximately $6,500,000 of financing costs related to the Senior Notes as
defined in Note 11 and the Senior Discount Notes were paid to Wasserstein
Perella, an affiliate of the Company. In addition, approximately $4,150,000 of
acquisition related fees and expenses were either paid or remain due to
Wasserstein Perella.
F-14
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
9. COMMITMENTS AND CONTINGENCIES
Rent expense, including payments of real estate taxes, insurance and other
expenses required under certain leases, amounted to approximately $783,000 for
the five months ended December 31, 1997. This amount includes the monthly rent
payments for corporate headquarters discussed below.
At December 31, 1997, minimum rental commitments under noncancellable leases
were as follows (in thousands):
<TABLE>
<CAPTION>
REAL
ESTATE OTHER TOTAL
--------- ----------- ---------
<S> <C> <C> <C>
1998................................................................ $ 2,174 $ 75 $ 2,249
1999................................................................ 2,162 64 2,226
2000................................................................ 2,165 49 2,214
2001................................................................ 1,958 38 1,996
2002 and thereafter................................................. 10,349 9 10,358
--------- ----- ---------
$18,808... $ 235 $ 19,043
--------- ----- ---------
--------- ----- ---------
</TABLE>
Certain of the leases provide for free rent periods as well as rent
escalations. The rental commitments above represent actual rental payments to be
made. The financial statements reflect rent expense on a straight-line basis
over the terms of the leases. Approximately $1,800,000, representing accrued pro
rata future payments, net of receipts, is included in other noncurrent
liabilities in the accompanying balance sheet as of December 31, 1997.
ALM LLC leases its corporate headquarters from Old ALM's general partner.
Because the lease can be cancelled with ninety days notice, the commitments
under this lease are excluded from the above table. Monthly rent payments under
this lease total $74,700. This lease terminates on December 31, 1998.
The Company is involved in a number of legal proceedings, some of which are
significant, which arose in the ordinary course of business. In the opinion of
management, the ultimate outcome of these contingencies is not expected to have
a material adverse effect on the Company's financial position or results of
operations.
10. EMPLOYEE BENEFITS
NLP has a 401(k) profit sharing plan (the "NLP Plan") for all eligible
employees who have completed one year of service. Under the NLP Plan, NLP has
the option of making a matching contribution of up to 3% of a participant's
compensation. NLP may also annually contribute additional discretionary amounts
to participants. For the five months ended December 31, 1997, NLP did not make
any matching discretionary contributions to the NLP Plan. In addition,
approximately twenty NLP employees are covered by certain defined contribution
retirement plans sponsored by the Typographical Union. NLP did not make any
contributions to these retirement plans for the five months ended December 31,
1997.
ALM, LLC sponsors a 401(k) salary deferral plan (the "ALM Plan").
Participation in the ALM Plan is available for substantially all ALM LLC and
Counsel Connect LLC employees. The ALM Plan provides for employer matching of
employees' contributions, as defined. The cost of the ALM Plan for the five
months ended December 31, 1997 was $137,400.
F-15
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
10. EMPLOYEE BENEFITS (CONTINUED)
ALM LLC also sponsored a defined benefit plan covering substantially all ALM
LLC and Counsel Connect LLC employees. This plan was frozen effective December
31, 1997, resulting in an insignificant curtailment gain. The components of net
periodic pension cost for the five months ended December 31, 1997 were as
follows (in thousands):
<TABLE>
<CAPTION>
1997
---------
<S> <C>
Service cost.......................................................................... $ 160
Interest cost on projected benefit obligation......................................... 94
Actual return on assets............................................................... (173)
Net amortization and deferral......................................................... 119
---------
$ 200
---------
---------
</TABLE>
The following table sets forth the funded status of the Company's pension
plan and amounts recognized in the balance sheet as of December 31, 1997 (in
thousands):
<TABLE>
<CAPTION>
1997
---------
<S> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation............................................................ $ 2,948
---------
Accumulated benefit obligation....................................................... $ 3,305
---------
Projected benefit obligation......................................................... $ 3,305
Plan assets at fair value............................................................ $ 2,613
---------
Projected benefit obligation in excess of plan assets................................ $ 692
Unrecognized net gain................................................................ --
Unrecognized net transition obligation............................................... --
---------
Accrued pension liability............................................................ $ 692
---------
---------
</TABLE>
In determining the actuarial present value of the projected benefit
obligation as of December 31, 1997, the discount rate was 6.75%, the rate of
increase in future compensation levels was 3.00%, and the expected long-term
rate of return on assets was 9.00%.
ALM LLC also sponsors an Excess Benefit Pension Plan providing a benefit to
highly compensated employees in excess of the benefits provided by the tax
qualified defined benefit plan. The plan is an unfunded, non-qualified deferred
compensation plan. The plan was frozen as of December 31, 1997.
ALM LLC and Counsel Connect LLC sponsor a comprehensive medical and dental
insurance plan, which is available to substantially all employees. ALM LLC and
Counsel Connect LLC are self insured for claims submitted under this plan up to
predetermined amounts above which third party insurance applies.
11. NOTES PAYABLE
On December 22, 1997, Holdings issued $63,275,000 of 12.25% Senior Discount
Notes (the "Discount Notes") due December 15, 2008, at a discount rate of
$553.14 per Discount Note. Net proceeds for Holdings were $33,775,000, net of
discounts and commissions of $1,225,000. The Discount Notes will accrete
interest compounded semi-annually at a rate of 12.25% to an aggregate principal
amount of
F-16
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
11. NOTES PAYABLE (CONTINUED)
$63,275,000 by December 15, 2002. Commencing June 15, 2003, cash interest will
be payable semi-annually until maturity each June 15 and December 15. The
Discount Notes are senior, unsecured obligations of Holdings. The Discount Notes
may be redeemed at any time by Holdings, in whole or in part, at various
redemption prices that includes accrued and unpaid interest as well as any
existing liquidating damages. The Discount Notes contain certain covenants that,
among other things, limit the incurrence of additional indebtedness by the
Company and its subsidiaries, the payment of dividends and other restricted
payments by the Company and its subsidiaries, restrictions on distributions from
Restricted Subsidiaries, asset sales, transactions with affiliates, incurrence
of liens and mergers and consolidations. Financing costs, totaling $1,425,000,
have been capitalized on the accompanying balance sheet and are being amortized
over the term of the Discount Notes. Amortization of deferred financing costs is
recorded as interest expense. Assuming that there is no redemption of the
Discount Notes prior to maturity, the entire principal will be payable on
December 15, 2008.
On December 22, 1997, Media issued $175,000,000 of 9.75% senior notes
("Senior Notes") due December 15, 2007. The Senior Notes accrue interest at
9.75% which is payable in cash semi-annually on June 15 and December 15
(beginning June 15, 1998). The Senior Notes are unsecured general obligations of
Media and are guaranteed by each of Media's subsidiaries ("Restricted
Subsidiaries"). The Senior Notes may be redeemed at any time by Media, in whole
or in part, at various redemption prices that includes accrued and unpaid
interest as well as any existing liquidating damages. The Senior Notes contain
certain covenants that among other things, limit the incurrence of additional
indebtedness by Media and its Subsidiaries, the payment of dividends and other
restricted payments by Media and its Subsidiaries, asset sales, transaction with
affiliates, the incurrence of liens, and mergers and consolidations. Financing
costs, totaling $6,252,000, have been capitalized on the accompanying balance
sheet and are being amortized over the term of the Senior Notes. Amortization of
deferred financing costs is recorded as interest expense. Assuming there is no
redemption of the Senior Notes prior to maturity, the entire principal will be
payable on December 15, 2007.
12. FASB 107--FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents,
accounts receivable, accounts payable, accrued expenses, and notes payable. The
Company believes that the carrying amount for these accounts approximates fair
value.
13. SUBSEQUENT EVENTS
Pursuant to an Asset Purchase Agreement, dated as of March 3, 1998, among
Corporate Presentations, Inc., its sole stockholder and LegalTech, LLC, a wholly
owned indirect subsidiary of American Lawyer Media Inc., LegalTech, LLC, agreed
to purchase substantially all of the assets and assume certain of the
liabilities of Corporate Presentations, Inc. for approximately $10,800,000.
Corporate Presentations, Inc. is a producer of tradeshows and conferences for
the legal community. For advisory services rendered to the Company in connection
with the LegalTech Acquisition, the Company paid WPMP, an affiliate of Holdings,
a fee of 1% of the purchase price of LegalTech, LLC.
Pursuant to an Asset Purchase and Sale Agreement, dated as of March 27,
1998, among Legal Communications, Ltd., and ALM, LLC, a wholly owned subsidiary
of American Lawyer Media Inc., ALM, LLC agreed to purchase substantially all of
the assets and assume certain of the liabilities of Legal
F-17
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
13. SUBSEQUENT EVENTS (CONTINUED)
Communications, Ltd. for a purchase price of approximately $20,000,000. Legal
Communications, Ltd. is a publisher of regional legal publications. For advisory
services rendered to the Company in connection with the Legal Communications
Ltd. Acquisition, the Company intends to pay WPMP, an affiliate of Holdings, a
fee of 1% of the purchase price of Legal Communications, Ltd.
On March 25, 1998, the Company and American Lawyer Media, Inc. (as the
"Borrower") signed a Credit Agreement with various banks that has a combined
Revolving Commitment in the initial principal amount of $40,000,000. The
revolving credit facility is guaranteed by Holdings and by all subsidiaries of
Media. In addition, the revolving credit facility is secured by a first priority
security interest in substantially all of the properties and assets of Media and
its domestic subsidiaries, including a pledge of all of the stock of such
subsidiaries, and a pledge by Holdings of all of the stock of Media. Each
revolving loan shall bear interest on the outstanding principal amount from the
borrowing date until it becomes due at a rate per annum equal to the "Base Rate"
or the Eurodollar rate plus the "Applicable Margin" of 1.5% for base rate loans
and 2.5% for Eurodollar rate loans. The Base Rate is the higher of the Bank of
America publicly announced "Reference Rate" or the Federal Funds Rate plus 0.5%.
A commitment fee must be paid on the daily unused portion of the revolving
commitment. The Credit Agreement includes both affirmative and negative
covenants that include meeting certain financial ratios.
On April 2, 1998, the Board of Directors authorized Holdings to issue shares
of Holdings' $.01 par value per share common stock to U.S. Equity Partners, L.P.
in consideration of payment by U.S. Equity Partners, L.P. of $15,000,000.
F-18
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To American Lawyer Media, L.P.:
We have audited the accompanying balance sheet of American Lawyer Media,
L.P. as of July 31, 1997 and the related statements of operations, changes in
partners' capital and accumulated deficit and cash flows for the seven months
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Lawyer Media, L.P.
as of July 31, 1997, and the results of its operations and its cash flows for
the seven months then ended in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
New York, New York
November 20, 1997
F-19
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
BALANCE SHEET
JULY 31, 1997
(IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................................ $ 615
Accounts receivable, net of allowance for doubtful accounts of $1,661............ 5,726
Due from affiliate............................................................... 390
Inventories, net................................................................. 399
Other current assets............................................................. 557
---------
Total current assets......................................................... 7,687
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $7,354........... 5,594
INTANGIBLE ASSETS, net of accumulated amortization of $20,665...................... 4,488
GOODWILL, net of accumulated amortization of $247.................................. 1,057
OTHER ASSETS....................................................................... 156
---------
Total assets................................................................. $ 18,982
---------
---------
LIABILITIES AND PARTNERS' ACCUMULATED DEFICIT
CURRENT LIABILITIES:
Accounts payable................................................................. $ 744
Accrued expenses................................................................. 4,745
Deferred income (including deferred subscription income of $7,466)............... 8,093
---------
Total current liabilities.................................................... 13,582
DUE TO GENERAL PARTNER............................................................. 34,742
---------
Total liabilities............................................................ 48,324
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' ACCUMULATED DEFICIT...................................................... (29,342)
---------
Total liabilities and partners' accumulated deficit.......................... $ 18,982
---------
---------
</TABLE>
The accompanying notes to financial statements are an integral part of this
balance sheet.
F-20
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
STATEMENT OF OPERATIONS (NOTE 3)
FOR THE SEVEN MONTHS ENDED JULY 31, 1997
(IN THOUSANDS)
<TABLE>
<S> <C>
NET REVENUES:
Periodicals
Advertising.................................................................... $ 18,146
Subscription................................................................... 6,719
Ancillary Products and Services.................................................. 4,532
Internet Services................................................................ 2,148
---------
Total net revenues........................................................... 31,545
---------
OPERATING EXPENSES:
Editorial........................................................................ 4,023
Production and Distribution...................................................... 6,919
Selling.......................................................................... 4,640
General and Administrative....................................................... 9,531
Internet Services................................................................ 6,464
Depreciation and Amortization.................................................... 1,590
---------
Total operating expenses..................................................... 33,167
---------
Operating loss............................................................... (1,622)
INTEREST EXPENSE, net.............................................................. 1,420
---------
Net loss (Note 3)............................................................ $ (3,042)
---------
---------
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
F-21
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
AND ACCUMULATED DEFICIT
FOR THE SEVEN MONTHS ENDED JULY 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PARTNERS'
CONTRIBUTED EARNINGS/ ACCUMULATED
CAPITAL LOSSES DEFICIT
----------- ---------- ------------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996............................................... $ 31,677 $ (57,977) $ (26,300)
Net loss................................................................. -- (3,042) (3,042)
----------- ---------- ------------
BALANCE AT JULY 31, 1997................................................... $ 31,677 $ (61,019) $ (29,342)
----------- ---------- ------------
----------- ---------- ------------
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
F-22
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
STATEMENT OF CASH FLOWS
FOR THE SEVEN MONTHS ENDED JULY 31, 1997
(IN THOUSANDS)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss......................................................................... $ (3,042)
Adjustments to reconcile net loss to net cash used in operating activities--
Depreciation and amortization.................................................. 1,590
Interest expense............................................................... 1,420
Allowance for doubtful accounts................................................ 304
Decrease (increase) in--
Accounts receivable and due from affiliate................................... 1,057
Inventories.................................................................. 121
Other current assets......................................................... (21)
Other assets................................................................. (56)
Increase (decrease) in--
Accounts payable............................................................. (1,137)
Accrued expenses............................................................. (998)
Deferred income.............................................................. 85
---------
Total adjustments.......................................................... 2,365
---------
Net cash used in operating activities...................................... (677)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................................................. (1,971)
---------
Net cash used in investing activities........................................ (1,971)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from general partner............................................ 3,173
---------
Net cash provided by financing activities.................................... 3,173
---------
Net increase in cash......................................................... 525
CASH, beginning of period.......................................................... 90
---------
CASH, end of period................................................................ $ 615
---------
---------
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
F-23
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997
1. ORGANIZATION
American Lawyer Media, L.P. (the "Company") is a limited partnership of Time
Warner and Associated Newspapers. The sole general partner of American Lawyer
Media, L.P. is Time Warner. The Company is based in New York and has operations
in seven states and the District of Columbia. The Company publishes THE AMERICAN
LAWYER, CORPORATE COUNSEL MAGAZINE, AMLAW TECH, THE CONNECTICUT LAW TRIBUNE,
LEGAL TIMES, NEW JERSEY LAW JOURNAL, THE RECORDER, TEXAS LAWYER, FULTON COUNTY
DAILY REPORT, and the DAILY BUSINESS REVIEWS, all of which are divisions of the
Company. In addition, the Company consolidates its interest in Counsel Connect,
a New York general partnership. The partnership, which runs a membership-based
internet service exclusively for lawyers and legal professionals, was formed in
February 1994 by Mead Data Central and the Company. In February 1996, Mead Data
Central assigned its interest in the partnership to the Company and also
contributed the balance in its capital account of approximately $1,647,000, to
the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Advertising revenues are generated from the placement of display and
classified advertisements, as well as legal notices, in the Company's
publications. Advertising revenue is recognized upon release of the related
publications to subscribers. Allowances for estimated doubtful accounts are
provided based upon historical experience.
Subscription revenues are recognized on a pro rata basis as issues of a
subscription are served.
Ancillary revenues consist principally of third-party printing services,
newsletter subscriptions, sales of professional books and directories,
Lexis/Nexis royalty income, seminar income, and a daily fax service of court
decisions.
Internet services revenues consist of income earned from COUNSEL CONNECT
subscriptions and usage fees.
DEFERRED SUBSCRIPTION INCOME
Deferred subscription income results from advance payments or orders for
magazine subscriptions received from subscribers.
CIRCULATION PROMOTION (SUBSCRIPTION DIRECT MAIL) COSTS
Circulation promotion costs are charged to expense upon the release of the
campaign.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-24
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
The Company considers time deposits and certificates of deposit with
original maturities of three months or less to be cash equivalents.
INVENTORIES
Inventories consist principally of paper utilized by the Company and its
outside printers and professional books published and sold by the Company.
Inventories are stated at the lower of cost or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Significant improvements
are capitalized, while expenditures for maintenance and repairs are charged to
expense as incurred. Depreciation is calculated using the straight-line method
over the estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Machinery and equipment........................................... 5 years
Buildings......................................................... 25 years
Furniture and fixtures............................................ 5 years
Computer equipment and software................................... 3-5 years
</TABLE>
Leasehold improvements are amortized over the shorter of the remaining lease
term or the estimated useful life. The cost and accumulated depreciation of
property sold or retired are removed from the accounts upon disposition.
INTANGIBLES AND GOODWILL
Intangible assets, consisting primarily of noncompete agreements and
subscription lists, are valued at the appraised market value of the assets at
the date of acquisition, net of accumulated amortization. Intangibles are
amortized over the expected useful lives of the respective assets, ranging from
two to thirteen years. Goodwill represents the excess of purchase price over the
fair value of net assets acquired, less accumulated amortization. Goodwill is
being amortized on a straight-line basis over 40 years.
ACCOUNTS PAYABLE
Included in accounts payable are $425,000 of bank overdrafts as of July 31,
1997.
3. INCOME TAXES
No provision has been made in the accompanying statement of operations for
income taxes since, pursuant to provisions of the Internal Revenue Code, the net
loss appearing on the accompanying statement of operations is reportable by each
of the partners on their individual tax returns.
F-25
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 1997
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at July 31, 1997
(in thousands):
<TABLE>
<S> <C>
Machinery and equipment............................................ $ 10,323
Buildings and improvements......................................... 1,430
Furniture and fixtures............................................. 823
Land............................................................... 300
Automobiles........................................................ 72
---------
12,948
Accumulated depreciation and amortization.......................... (7,354)
---------
Net property, plant and equipment.............................. $ 5,594
---------
---------
</TABLE>
5. RELATED PARTY TRANSACTIONS
The Company has a business relationship with Courtroom Television Network
("Court TV"), an affiliate of the Company's general partner. Revenues are
generated through licensing fees charged to Court TV for editorial content and
sales of advertisements. The licensing fees for American Lawyer publications
totaled approximately $149,000 for the seven months ended July 31, 1997.
Advertising revenues from Court TV totaled approximately $122,000 for the seven
months ended July 31, 1997. In addition, the Company and Court TV share certain
editorial and administrative resources and employees, as well as office
facilities. The cost associated with employees who devote all or a portion of
their time to Court TV activities is charged to Court TV based on an estimate of
their time spent on such activities. These charges, which include an allocation
for the chairman of the Company, amounted to $321,000 for the seven months ended
July 31, 1997. Court TV is also charged a flat annual fee of $195,000 for use of
the Company's reporters for on-camera appearances and background reports.
Finally, an allocation is made to Court TV to cover general overhead costs
(e.g., rent, utilities, etc.) which amounted to approximately $53,000 for the
seven months ended July 31, 1997. Amounts due from Court TV are reflected as due
from affiliate on the accompanying balance sheet.
The Company's general partner provides certain legal, administrative,
accounting, and tax services for the Company. Charges for such services amounted
to approximately $47,000 for the seven months ended July 31, 1997.
6. DUE TO GENERAL PARTNER
Due to General Partner consists of borrowings from WCI/AMLAW Inc. and
interest accrued thereon. The borrowings bear interest at 1% under prime and do
not have a stated maturity date. This amount has been included in long- term
liabilities in the accompanying balance sheet since the amount is not intended
to be repaid within the next year.
7. COMMITMENTS AND CONTINGENCIES
Rent expense, including payments of real estate taxes, insurance and other
expenses required under certain leases, amounted to approximately $1,046,500 for
the seven months ended July 31, 1997, including rent accruals in excess of
payments of $6,600.
F-26
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 1997
7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Minimum rental commitments under noncancellable leases as of July 31, 1997
were as follows (in thousands):
<TABLE>
<CAPTION>
REAL SUBLEASE
ESTATE INCOME OTHER TOTAL
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
1997.............................................. $ 1,450 $ (650) $ 28 $ 828
1998.............................................. 3,161 (1,443) 70 1,788
1999.............................................. 3,094 (1,473) 59 1,680
2000.............................................. 3,087 (1,473) 44 1,658
2001.............................................. 2,906 (1,473) 33 1,466
2002 and thereafter............................... 17,424 (10,823) 5 6,606
--------- ---------- --------- ---------
$ 31,122 $ (17,335) $ 239 $ 14,026
--------- ---------- --------- ---------
--------- ---------- --------- ---------
</TABLE>
Certain of the leases provide for free rent periods as well as rent
escalations. The rental commitments above represent actual rental payments to be
made. The financial statements reflect rent expense and rental income on a
straight-line basis over the terms of the leases. An obligation of $6,600,
representing accrued pro rata future payments, net of receipts, is included in
the accompanying balance sheet.
The Company subleases a portion of its office facilities to Court TV. The
sublease charges summarized above are based on an oral agreement between the
Company and Court TV.
The lease for the Company's headquarters contains a provision whereby the
Company could elect not to renew the lease for the years 1999 through 2008 upon
payment of a $2,200,000 termination penalty.
The Company is involved in a number of legal proceedings, some of which are
significant, which arose in the ordinary course of business. In the opinion of
management, the ultimate outcome of these contingencies is not expected to have
a material adverse effect on the Company's financial position or results of
operations.
8. EMPLOYEE BENEFITS
The Company sponsors a retirement savings plan. Participation in this plan
is available for substantially all employees. The plan provides for employer
matching of employees' contributions, as defined. The cost of the plan was
$177,000 for the seven months ended July 31, 1997.
The Company has a defined benefit plan covering substantially all employees.
The Company's general funding policy is to contribute annual amounts that
satisfy the Internal Revenue Code funding requirements. The components of net
periodic pension cost for the year ended December 31, 1996 were as follows:
<TABLE>
<S> <C>
Service cost...................................................... $ 361,216
Interest cost on projected benefit obligation..................... 188,428
Actual return on assets........................................... (260,515)
Net amortization and deferral..................................... 178,602
---------
$ 467,731
---------
---------
</TABLE>
F-27
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 1997
8. EMPLOYEE BENEFITS (CONTINUED)
The following table sets forth the funded status of the Company's defined
benefit plan and amounts recognized in the balance sheet as of December 31,
1996:
<TABLE>
<S> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation....................................... $1,756,139
---------
Accumulated benefit obligation.................................. $1,988,235
---------
Projected benefit obligation.................................... $3,031,741
Plan assets at fair value....................................... 1,965,782
---------
Projected benefit obligation in excess of plan assets........... $1,065,959
Unrecognized net gain........................................... 155,802
Unrecognized net transition obligation.......................... (728,462)
---------
Accrued pension liability....................................... $ 493,299
---------
---------
</TABLE>
In determining the actuarial present value of the projected benefit
obligation as of December 31, 1996, the discount rate was 7.5%, the rate of
increase in future compensation levels was 6%, and the expected long-term rate
of return on assets was 9%.
The Company sponsors an Excess Benefit Pension Plan providing a benefit to
highly compensated employees in excess of the benefits provided by the tax
qualified defined benefit plan. The plan is an unfunded, non-qualified deferred
compensation plan.
The Company also sponsors a comprehensive medical and dental insurance plan
which is available to substantially all employees. The Company is self insured
for claims submitted under this plan up to predetermined amounts, above which
third party insurance applies.
9. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 107--FAIR VALUE OF FINANCIAL
INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents,
accounts receivable, accounts payable, accrued expenses, and due to general
partner. The carrying amount of these accounts approximates fair value.
F-28
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To American Lawyer Media, L.P.:
We have audited the accompanying balance sheets of American Lawyer Media,
L.P. as of December 31, 1996 and 1995, and the related statements of operations,
changes in partner's capital and accumulated deficit and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Lawyer Media, L.P.
as of December 31, 1996 and 1995, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
New York, New York
November 20, 1997
F-29
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................................... $ 90 $ 780
Accounts receivable, net of allowance for doubtful accounts of $1,357 in 1996 and $1,098
in 1995............................................................................... 6,496 5,899
Due from affiliate...................................................................... 981 289
Inventories, net........................................................................ 520 629
Other current assets.................................................................... 536 476
---------- ----------
Total current assets................................................................ 8,623 8,073
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $6,469 in 1996 and
$6,309 in 1995.......................................................................... 4,533 3,649
INTANGIBLE ASSETS, net of accumulated amortization of $19,911 in 1996 and $18,773 in
1995.................................................................................... 5,242 6,381
GOODWILL, net of accumulated amortization of $229 in 1996 and $198 in 1995................ 984 1,015
OTHER ASSETS.............................................................................. 100 195
---------- ----------
Total assets........................................................................ $ 19,482 $ 19,313
---------- ----------
---------- ----------
LIABILITIES AND PARTNERS' ACCUMULATED DEFICIT
CURRENT LIABILITIES:
Accounts payable........................................................................ $ 1,881 $ 836
Accrued expenses........................................................................ 5,743 6,672
Deferred income (including deferred subscription income of $7,221 in 1996 and $7,095 in
1995)................................................................................. 8,008 7,631
---------- ----------
Total current liabilities........................................................... 15,632 15,139
DUE TO GENERAL PARTNER.................................................................... 30,150 22,114
---------- ----------
Total liabilities................................................................... 45,782 37,253
COMMITMENTS AND CONTINGENCIES (Note 7)
MINORITY INTEREST IN CONSOLIDATED PARTNERSHIP (Note 1).................................... -- 1,819
PARTNERS' ACCUMULATED DEFICIT............................................................. (26,300) (19,759)
---------- ----------
Total liabilities and partners' accumulated deficit................................... $ 19,482 $ 19,313
---------- ----------
---------- ----------
</TABLE>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-30
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
--------- ----------
<S> <C> <C>
NET REVENUES:
Periodicals
Advertising............................................................................ $ 26,659 $ 25,037
Subscription........................................................................... 11,304 10,884
Ancillary Products and Services.......................................................... 8,467 8,387
Internet Services........................................................................ 5,474 3,238
--------- ----------
Total net revenues................................................................... 51,904 47,546
--------- ----------
OPERATING EXPENSES:
Editorial................................................................................ 7,141 7,073
Production and Distribution.............................................................. 12,469 12,587
Selling.................................................................................. 7,479 6,913
General and Administrative............................................................... 16,829 16,506
Internet Services........................................................................ 11,886 10,854
Depreciation and Amortization............................................................ 2,488 2,680
--------- ----------
Total operating expenses............................................................. 58,292 56,613
--------- ----------
Operating loss....................................................................... (6,388) (9,067)
--------- ----------
INTEREST EXPENSE, net...................................................................... 1,972 1,384
Loss before minority interest........................................................ (8,360) (10,451)
MINORITY INTEREST IN LOSS OF CONSOLIDATED PARTNERSHIP
(Note 1)................................................................................. 172 2,334
--------- ----------
Net loss (Note 3).................................................................... $ (8,188) $ (8,117)
--------- ----------
--------- ----------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-31
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
AND ACCUMULATED DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
PARTNERS'
CONTRIBUTED EARNINGS/ ACCUMULATED
CAPITAL LOSSES DEFICIT
----------- ---------- ------------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994............................................... $ 30,030 $ (41,672) $ (11,642)
Net loss................................................................. -- (8,117) (8,117)
----------- ---------- ------------
BALANCE AT DECEMBER 31, 1995............................................... 30,030 (49,789) (19,759)
Contribution of capital from minority partner............................ 1,647 -- 1,647
Net loss................................................................. -- (8,188) (8,188)
----------- ---------- ------------
BALANCE AT DECEMBER 31, 1996............................................... $ 31,677 $ (57,977) $ (26,300)
----------- ---------- ------------
----------- ---------- ------------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-32
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss................................................................................... $ (8,188) $ (8,117)
Adjustments to reconcile net loss to net cash used in operating activities--...............
Depreciation and amortization............................................................ 2,488 2,680
Interest expense......................................................................... 1,972 1,384
Minority share........................................................................... (172) (2,334)
Allowance for doubtful accounts.......................................................... 259 108
Decrease (increase) in--
Accounts receivable and due from affiliate............................................. (1,548) 757
Inventories............................................................................ 109 (105)
Other current assets................................................................... (60) (97)
Other assets........................................................................... 95 13
Increase (decrease) in--
Accounts payable....................................................................... 1,045 28
Accrued expenses....................................................................... (929) (146)
Deferred income........................................................................ 377 357
--------- ---------
Total adjustments.................................................................... 3,636 2,645
--------- ---------
Net cash used in operating activities................................................ (4,552) (5,472)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures....................................................................... (2,202) (1,481)
--------- ---------
Net cash used in investing activities................................................ (2,202) (1,481)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from general partner........................................................ 6,064 7,206
--------- ---------
Net cash provided by financing activities............................................ 6,064 7,206
--------- ---------
Net (decrease) increase in cash...................................................... (690) 253
CASH, beginning of year...................................................................... 780 527
--------- ---------
CASH, end of year............................................................................ $ 90 $ 780
--------- ---------
--------- ---------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-33
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. ORGANIZATION
American Lawyer Media, L.P. (the "Company") is a limited partnership of Time
Warner and Associated Newspapers. The sole general partner of American Lawyer
Media, L.P. is Time Warner. The Company is based in New York and has operations
in seven states and the District of Columbia. The Company publishes THE AMERICAN
LAWYER, CORPORATE COUNSEL MAGAZINE, AMLAW TECH, THE CONNECTICUT LAW TRIBUNE,
LEGAL TIMES, NEW JERSEY LAW JOURNAL, THE RECORDER, TEXAS LAWYER, FULTON COUNTY
DAILY REPORT, and the DAILY BUSINESS REVIEWS, all of which are divisions of the
Company. In addition, the Company consolidates its interest in Counsel Connect,
a New York general partnership. The partnership, which runs a membership-based
internet service exclusively for lawyers and legal professionals, was formed in
February 1994 by Mead Data Central and the Company. In February 1996, Mead Data
Central assigned its interest in the partnership to the Company and also
contributed the balance in its capital account of approximately $1,647,000, to
the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Advertising revenues are generated from the placement of display and
classified advertisements, as well as legal notices, in the Company's
publications. Advertising revenue is recognized upon release of the related
publications to subscribers. Allowances for estimated doubtful accounts are
provided based upon historical experience.
Subscription revenues are recognized on a pro rata basis as issues of a
subscription are served.
Ancillary revenues consist principally of third-party printing revenues,
newsletter subscriptions, sales of professional books and directories,
Lexis/Nexis royalty income, seminar income, and a daily fax service of court
decisions.
Internet services revenues consist of income earned from COUNSEL CONNECT
subscriptions and usage fees.
DEFERRED SUBSCRIPTION INCOME
Deferred subscription income results from advance payments or orders for
magazine subscriptions received from subscribers.
CIRCULATION PROMOTION (SUBSCRIPTION DIRECT MAIL) COSTS
Circulation promotion costs are charged to expense upon the release of the
campaign.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-34
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
The Company considers time deposits and certificates of deposit with
original maturities of three months or less to be cash equivalents.
INVENTORIES
Inventories consist principally of paper utilized by the Company and its
outside printers and professional books published and sold by the Company.
Inventories are stated at the lower of cost or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost. Significant improvements
are capitalized, while expenditures for maintenance and repairs are charged to
expense as incurred. Depreciation is calculated using the straight-line method
over the estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Machinery and equipment........................................... 5 years
Buildings......................................................... 25 years
Furniture and fixtures............................................ 5 years
Computer equipment and software................................... 3-5 years
</TABLE>
Leasehold improvements are amortized over the shorter of the remaining lease
term or the estimated useful life. The cost and accumulated depreciation of
property sold or retired are removed from the accounts upon disposition.
INTANGIBLES AND GOODWILL
Intangible assets, consisting primarily of non-compete agreements and
subscription lists, are valued at the appraised market value of the assets at
the date of acquisition, net of accumulated amortization. Intangibles are
amortized over the expected useful lives of the respective assets, ranging from
two to thirteen years. Goodwill represents the excess of purchase price over the
fair value of net assets acquired, less accumulated amortization. Goodwill is
being amortized on a straight-line basis over 40 years.
ACCOUNTS PAYABLE
Included in accounts payable are $1,537,000 and $335,000 of bank overdrafts
as of December 31, 1996 and 1995, respectively.
3. INCOME TAXES
No provision has been made in the accompanying statements of operations for
income taxes since, pursuant to provisions of the Internal Revenue Code, the net
losses appearing on the accompanying statement of operations is reportable by
each of the partners on their individual tax returns.
F-35
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at December 31,
1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Machinery and equipment.................................................. $ 8,469 $ 7,460
Buildings and improvements............................................... 1,398 1,349
Furniture and fixtures................................................... 763 777
Land..................................................................... 300 300
Automobiles.............................................................. 72 72
--------- ---------
11,002 9,958
Accumulated depreciation and amortization................................ (6,469) (6,309)
--------- ---------
Net property, plant and equipment.................................... $ 4,533 $ 3,649
--------- ---------
--------- ---------
</TABLE>
5. RELATED PARTY TRANSACTIONS
The Company has a business relationship with Courtroom Television Network
("Court TV"), an affiliate of the Company's general partner. Revenues are
generated through licensing fees charged to Court TV for editorial content and
sales of advertisements. The licensing fees for American Lawyer publications
were fixed at approximately $255,000 in both 1996 and 1995. Advertising revenues
from Court TV totaled approximately $244,000 and $233,000 for 1996 and 1995,
respectively. In addition, the Company and Court TV share certain editorial and
administrative resources and employees, as well as office facilities. The cost
associated with employees who devote all or a portion of their time to Court TV
activities is charged to Court TV based on an estimate of their time spent on
such activities. These charges, which include an allocation for the chairman of
the Company, amounted to $1,266,000 and $1,309,000 in 1996 and 1995,
respectively. Court TV is also charged a flat annual fee of $195,000 for use of
the Company's reporters for on-camera appearances and background reports.
Finally, an allocation is made to Court TV to cover general overhead costs
(e.g., rent, utilities, etc.) which amounted to approximately $90,000 in both
1996 and 1995. Amounts due from Court TV at December 31, 1996 and 1995 are
reflected as due from affiliate on the accompanying balance sheets.
The Company's general partner provides certain legal, administrative,
accounting, and tax services for the Company. Charges for such services amounted
to approximately $97,000 and $103,000, in 1996 and 1995, respectively.
6. DUE TO GENERAL PARTNER
Due to General Partner consists of borrowings from WCI/AMLAW Inc. and
interest accrued thereon. The borrowings bear interest at 1% under prime and do
not have a stated maturity date. This amount has been included in long-term
liabilities in the accompanying balance sheet since the amount is not intended
to be repaid within the next year.
F-36
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
7. COMMITMENTS AND CONTINGENCIES
Rent expense, including payments of real estate taxes, insurance and other
expenses required under certain leases, amounted to approximately $1,757,000 and
$1,726,000 for the year ended December 31, 1996 and 1995, respectively,
including rent accruals in excess of payments of $12,000 and $21,000 for the
year ended December 31, 1996 and 1995, respectively.
At December 31, 1996, minimum rental commitments under noncancelable leases
were as follows (in thousands):
<TABLE>
<CAPTION>
REAL SUBLEASE
ESTATE INCOME OTHER TOTAL
--------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
1997.................................................................... $ 3,481 $ (1,560) $ 67 $ 1,988
1998.................................................................... 3,161 (1,443) 70 1,788
1999.................................................................... 3,094 (1,473) 59 1,680
2000.................................................................... 3,087 (1,473) 44 1,658
2001.................................................................... 2,906 (1,473) 33 1,466
2002 and thereafter..................................................... 17,424 (10,823) 5 6,606
--------- ---------- ----- ---------
$ 33,153 $ (18,245) $ 278 $ 15,186
--------- ---------- ----- ---------
--------- ---------- ----- ---------
</TABLE>
Certain of the leases provide for free rent periods as well as rent
escalations. The rental commitments above represent actual rental payments to be
made. The financial statements reflect rent expense and rental income on a
straight-line basis over the terms of the leases. An obligation of $12,400,
representing accrued pro rata future payments, net of receipts, is included in
the accompanying balance sheet as of December 31, 1996.
The Company subleases a portion of its office facilities to Court TV. The
sublease charges summarized above are based on an oral agreement between the
Company and Court TV.
The lease for the Company's headquarters contains a provision whereby the
Company could elect not to renew the lease for the years 1999 through 2008 upon
payment of a $2,200,000 termination penalty.
The Company is involved in a number of legal proceedings, some of which are
significant, which arose in the ordinary course of business. In the opinion of
management, the ultimate outcome of these contingencies is not expected to have
a material adverse effect on the Company's financial position or results of
operations.
8. EMPLOYEE BENEFITS
The Company sponsors a retirement savings plan. Participation in this plan
is available for substantially all employees. The plan provides for employer
matching of employees' contributions, as defined. The cost of the plan for the
years ended December 31, 1996 and 1995, was $308,000 and $310,000, respectively.
The Company sponsors an Excess Benefit Pension Plan providing a benefit to
highly compensated employees in excess of the benefits provided by the tax
qualified defined benefit plan. The plan is an unfunded, non-qualified deferred
compensation plan.
F-37
<PAGE>
AMERICAN LAWYER MEDIA, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
8. EMPLOYEE BENEFITS (CONTINUED)
The Company also has a defined benefit plan covering substantially all
employees. The Company's general funding policy is to contribute annual amounts
that satisfy the Internal Revenue Code funding requirements. The components of
net periodic pension cost are as follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Service cost.......................................................... $ 361,216 $ 324,416
Interest cost on projected benefit obligation......................... 188,428 155,834
Actual return on assets............................................... (260,515) (90,023)
Net amortization and deferral......................................... 178,602 59,568
---------- ----------
$ 467,731 $ 449,795
---------- ----------
---------- ----------
</TABLE>
The following table sets forth the funded status of the Company's defined
benefit plan and amounts recognized in the balance sheet as of December 31:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation......................................... $ 1,756,139 $ 1,414,464
------------ ------------
Accumulated benefit obligation.................................... $ 1,988,235 $ 1,606,773
------------ ------------
Projected benefit obligation...................................... $ 3,031,741 $ 2,547,018
Plan assets at fair value......................................... 1,965,782 1,242,044
------------ ------------
Projected benefit obligation in excess of plan assets............. $ 1,065,959 $ 1,304,974
Unrecognized net gain (loss)...................................... 155,802 (174,550)
Unrecognized net transition obligation............................ (728,462) (788,030)
------------ ------------
Accrued pension liability......................................... $ 493,299 $ 342,394
------------ ------------
------------ ------------
</TABLE>
In determining the actuarial present value of the projected benefit
obligation, the discount rate was 7.5% as of December 31, 1996 and 1995; the
rate of increase in future compensation levels was 6% as of December 31, 1996
and 1995, and the expected long-term rate of return on assets was 9% as of
December 31, 1996 and 1995.
The Company sponsors a comprehensive medical and dental insurance plan which
is available to substantially all employees. The Company is self insured for
claims submitted under this plan up to predetermined amounts, above which third
party insurance applies.
9. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 107--
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash and cash equivalents,
accounts receivable, accounts payable, accrued expenses, and due to general
partner. The carrying amount of these accounts approximates fair value.
F-38
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the National Law Publishing Company, Inc.:
We have audited the accompanying consolidated balance sheet of National Law
Publishing Company, Inc. (a New York corporation) and subsidiaries as of
December 21, 1997 and the related consolidated statement of operations,
stockholders' equity and cash flows for the period from January 1, 1997 through
December 21, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of National Law Publishing
Company, Inc. and subsidiaries as of December 21, 1997, and the results of their
operations and their cash flows for the period from January 1, 1997 through
December 21, 1997 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
April 3, 1998
F-39
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 21, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 584
Accounts receivable, net of allowances for doubtful accounts and sales returns
of $1,014..................................................................... 7,402
Inventories, net................................................................ 1,010
Deferred income taxes........................................................... 800
Other current assets............................................................ 741
---------
Total current assets........................................................ 10,537
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation and amortization of
$2,250.......................................................................... 2,544
INTANGIBLE ASSETS, net of accumulated amortization of $14,306..................... 122,351
DEFERRED INCOME TAXES............................................................. 2,934
OTHER ASSETS...................................................................... 1,244
---------
Total assets................................................................ $ 139,610
---------
---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................................................ $ 1,522
Accrued expenses................................................................ 1,674
Deferred income (including deferred subscription income of $9,041).............. 9,545
---------
Total current liabilities................................................... 12,741
---------
LONG-TERM DEBT.................................................................... 59,500
DEFERRED INCOME TAXES............................................................. 926
---------
OTHER NONCURRENT LIABILITIES...................................................... 1,661
---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 125,000 shares authorized; 89,609 shares issued
and outstanding............................................................... 1
Paid-in capital................................................................. 72,993
Accumulated (deficit)........................................................... (8,212)
---------
Total stockholders' equity................................................ 64,782
---------
Total liabilities and stockholders' equity................................ $ 139,610
---------
---------
</TABLE>
The accompanying notes are an integral part of this balance sheet
F-40
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1997 THROUGH DECEMBER 21, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
REVENUES:
<S> <C>
Periodicals......................................................................
Advertising.................................................................... $ 26,402
Subscription................................................................... 9,504
Ancillary products and services.................................................. 13,926
Internet services................................................................ 1,109
---------
Total net revenues......................................................... 50,941
---------
OPERATING EXPENSES:
Editorial........................................................................ 5,837
Production and distribution...................................................... 9,872
Selling.......................................................................... 8,211
General and administrative....................................................... 8,722
Internet services................................................................ 1,657
Depreciation and amortization.................................................... 7,283
Special compensation charge...................................................... 6,926
---------
Total operating costs and expenses......................................... 48,508
---------
Operating income........................................................... 2,433
INTEREST EXPENSE, NET.............................................................. (5,137)
---------
Loss before income taxes................................................... (2,704)
PROVISION FOR INCOME TAXES......................................................... (2,508)
---------
Net loss................................................................... $ (5,212)
---------
---------
</TABLE>
The accompanying notes are an integral part of this statement
F-41
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JANUARY 1, 1997 THROUGH DECEMBER 21, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON PAID-IN ACCUMULATED TREASURY
STOCK CAPITAL (DEFICIT) STOCK TOTAL
----------- ----------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996............................ $ 1 $ 66,165 $ (3,000) $ -- $ 63,166
Contribution from Stockholder......................... 6,828 6,828
Net loss for the period from January 1, 1997 through
December 21, 1997................................... -- -- (5,212) -- (5,212)
----------- ----------- ------------ ----------- ---------
BALANCE AT DECEMBER 21, 1997............................ $ 1 $ 72,993 $ (8,212) $ -- $ 64,782
----------- ----------- ------------ ----------- ---------
----------- ----------- ------------ ----------- ---------
</TABLE>
The accompanying notes are an integral part of this statement
F-42
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 1997 THROUGH DECEMBER 21, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net loss........................................................................ $ (5,212)
Adjustments to reconcile net loss to net cash provided by operating activities--
Depreciation and amortization................................................. 7,283
Decrease in deferred income taxes............................................. 1,134
Special compensation charges.................................................. 6,828
Changes in operating assets and liabilities--.................................
(Increase) in accounts receivable........................................... (405)
(Increase) in inventories................................................... (174)
Decrease in prepaid expenses and other current assets....................... 37
Decrease in other assets.................................................... 317
(Decrease) in accounts payable and accrued expenses......................... (320)
Increase in deferred income................................................. 788
Increase in other noncurrent liabilities.................................... 1,016
---------
Net cash provided by operating activities................................. 11,292
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to furniture, equipment and leasehold improvements, net of loss on
disposal of fixed assets of $19............................................... (496)
---------
Net cash used in investing activities..................................... (496)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of debt.............................................................. (10,800)
---------
Net cash used in financing activities..................................... (10,800)
---------
Net decrease in cash and cash equivalents................................. (4)
CASH AND CASH EQUIVALENTS, beginning of period.................................... 588
---------
CASH AND CASH EQUIVALENTS, end of period.......................................... $ 584
---------
---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for--
Interest...................................................................... $ 5,528
Income taxes.................................................................. 341
---------
---------
</TABLE>
The accompanying notes are an integral part of this statement
F-43
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 21, 1997
1. ORGANIZATION
The National Law Publishing Company, Inc. ("National") through its wholly
owned operating subsidiary, New York Law Publishing Company, Inc. ("NYLP" or the
"Company") is considered a leading publisher of periodicals, books and
newsletters as well as a provider of seminars and electronic information
services targeted to the U.S. legal community. NYLP's principal periodical
publications are the New York Law Journal (a daily newspaper), The National Law
Journal (a weekly publication) and Law Technology Product News (published
approximately fifteen times per year). NYLP also wholly owns Law Journal EXTRA!,
Inc. ("LJX"). LJX is an on-line service available on the World Wide Web
providing access to various legal information and related services including
electronic versions of NYLP's principal periodicals.
On December 1, 1995, Boston Ventures Limited Partnership IV and Boston
Ventures Limited Partnership IVA (collectively "Boston Ventures"), through a
wholly-owned subsidiary, NLPC Acquisition, Inc. ("NAI"), acquired approximately
71,308 shares of National's common stock from Apollo Publishing Partners, L.P.
("Apollo") and James A. Finkelstein ("Finkelstein"), the chief executive of the
Company, and initiated a series of related transactions which resulted in Boston
Ventures acquiring approximately 94.3% of National for $141,958,454 in cash plus
acquisition related costs of $757,000.
In addition, on December 1, 1995, NAI was merged into National, with
National as the surviving corporation. In connection with the merger, Boston
Ventures received 60,916.5954 shares of National's common stock (approximately
94.3% of National's outstanding stock) in exchange for its shares of NAI.
Finkelstein retained 3,691.9149 shares of National, approximately 5.7% of its
outstanding stock. In addition, under a related stock option agreement,
Finkelstein was granted options to acquire up to an additional 6,461 shares of
National which vest, subject to certain employment and operating performance
criteria, over a five year period (Note 7).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CONCENTRATIONS OF CREDIT RISK
The Company's financial instruments that are exposed to concentration of
credit risk consist primarily of cash and cash equivalents and trade accounts
receivable. The Company believes it is not exposed to any significant credit
risk related to cash and cash equivalents. Concentrations of credit risk with
respect to trade accounts receivable are, except for amounts due from legal
advertising ad agents ("Legal Ad Agents"), generally limited due to the large
number of customers comprising the Company's customer base. Such Legal Ad Agents
do not have significant liquid net worth and, as a result, the Company is
exposed to a certain level of credit concentration risk in this area, which the
Company believes it has adequately provided for.
F-44
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 21, 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
Advertising revenues are generated from the placement of display and
classified advertisements, as well as legal notices, in the Company's
publications. Advertising revenue is recognized upon release of the related
publications to subscribers.
Subscription revenues are recognized on a pro rata basis as issues of a
subscription are served.
Ancillary revenues consist principally of newsletter subscriptions, sales of
professional books, software, royalty income and seminar income.
Internet services revenues are recognized upon the release of an
advertisement on the website.
DEFERRED SUBSCRIPTION INCOME
Deferred subscription income results from advance payments or orders for
subscriptions received from subscribers and is amortized on a straight-line
basis over the life of the subscription as issues are served. Subscription
receivables of $734,000 are included in accounts receivable in the accompanying
consolidated balance sheet.
EXPENSE RECOGNITION
ADVERTISING AND PROMOTION COSTS--Advertising expenditures are expensed when
the particular advertisement is released. The Company capitalizes direct
response promotional costs. At December 21, 1997 approximately $1,152,000 of
direct response promotional costs was recorded in other assets on the
accompanying consolidated balance sheet. Advertising expense was approximately
$3,018,000 for the period ended December 21, 1997. The amortization of direct
response promotion expenditures is included in selling expense in the
accompanying consolidated statements of operations.
EDITORIAL COSTS--All editorial costs are expensed as incurred.
CASH AND CASH EQUIVALENTS
The Company considers time deposits and certificates of deposit with
original maturities of three months or less to be cash equivalents.
INVENTORIES
Inventories consist principally of professional books published and sold by
the Company and related binding materials utilized. Inventories are stated at
the lower of cost, as determined by the average cost method, or market.
PROPERTY, PLANT AND EQUIPMENT
Furniture, equipment and leasehold improvements are stated at cost less
accumulated depreciation and amortization. Furniture, equipment and purchased
software are depreciated on a straight-line basis over their respective
estimated useful lives. Repairs and maintenance are charged to expense as
incurred. Leasehold improvements are amortized over the lives of the
improvements or the term of the related lease, whichever is shorter.
F-45
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 21, 1997
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSETS
Intangible assets include deferred financing costs with the amortization
and/or write-off of such costs classified as part of amortization expense.
Goodwill represents the excess of purchase price over the fair value of net
assets acquired.
3. PROPERTY, PLANT AND EQUIPMENT, NET
The following is a summary of property, plant and equipment at December 21,
1997:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL
(IN THOUSANDS) LIVES
--------------- ---------------
<S> <C> <C>
Computer equipment and purchased software.................... $ 2,971 6 years
Furniture and office equipment............................... 1,210 5 to 9 years
Leasehold improvements....................................... 613 7 to 10 years
------
4,794
Less-accumulated depreciation and amortization............... (2,250)
------
$ 2,544
------
------
</TABLE>
4. INTANGIBLE ASSETS, NET
The following is a summary of intangible assets at December 21, 1997:
<TABLE>
<CAPTION>
(IN AMORTIZATION
THOUSANDS) PERIODS
------------- ------------
<S> <C> <C>
Goodwill........................................................ $ 135,519 20 years
Deferred financing costs........................................ 1,138 7 years
-------------
136,657
Less-accumulated amortization................................... (14,306)
-------------
$ 122,351
-------------
-------------
</TABLE>
Total amortization expense of intangibles was approximately $6,709,000 for
the period ended December 21, 1997.
5. LONG-TERM DEBT
Long-term debt was comprised of the following at December 21, 1997:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Revolving credit facilities................................................... $ 59,500
Less-current portion of revolving credit facilities reduction amount.......... --
-------
$ 59,500
-------
-------
</TABLE>
F-46
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 21, 1997
5. LONG-TERM DEBT (CONTINUED)
REVOLVING CREDIT FACILITIES
On December 1, 1995, the Company entered into a revolving credit facility
agreement (the "Credit Agreement") with The First National Bank of Boston (the
"Bank"), as a lender and as agent for other lenders, under which NAI borrowed
$15,674,061 and NYLP borrowed $55,225,939 (aggregating $70,900,000) in
connection with Boston Ventures' acquisition of the Company. Upon NAI's merger
into National, NYLP assumed the $15,674,061 of Bank debt, in the form of a
dividend from NYLP to National. The Company's borrowing capacity under the
revolving credit facility, including cash loans and standby letters of credit of
up to $6 million, was $70.5 million through December 21, 1997, and decreases
semi-annually until final maturity on December 31, 2002 as follows:
<TABLE>
<CAPTION>
PERIOD AMOUNT
- ------------------------------------------------------------------------------ --------------
<S> <C>
(IN THOUSANDS)
January 1, 1998 through June 29, 1998......................................... $ 67,000
June 30, 1998 through December 30, 1998....................................... 63,250
December 31, 1998 through June 29, 1999....................................... 59,500
June 30, 1999 through December 30, 1999....................................... 55,250
December 31, 1999 through June 29, 2000....................................... 51,000
June 30, 2000 through December 30, 2000....................................... 45,750
December 31, 2000 through June 29, 2001....................................... 40,500
June 30, 2001 through December 30, 2001....................................... 33,750
December 31, 2001 through June 29, 2002....................................... 27,000
June 30, 2002 through final maturity date..................................... 19,000
Final maturity date (December 31, 2002)
</TABLE>
Available borrowings under this facility are further limited by the sum of
(a) the Company's letter of credit exposure and (b) certain stipulated
percentages of excess cash flow based on the ratio of the Company's consolidated
funded debt to consolidated operating cash flow, as defined. Outstanding
borrowings under the facility bear interest at a fluctuating rate, subject to
the Company's elected pricing option, at either the Base Rate, Eurodollar Rate,
and/or CD Rate, plus a variable margin based on the Company's ratio of
consolidated funded debt to consolidated operating cash flow, as defined. The
interest rate under this revolving credit facility approximated 8.0% for the
period ended December 21, 1997. Commitment fees are charged and payable
quarterly at either a .375% or .500% annual rate, depending on the Company's
ratio of consolidated funded debt to consolidated operating cash flow for the
immediately preceding quarter (the "Quarterly Funded Debt Ratio") and on the
average daily unused portion of the revolving credit facility. In addition,
letter of credit usage fees are payable at rates which range between 1.25% and
2.5% depending on the Quarterly Funded Debt Ratio and on the daily letter of
credit exposure during the three month period or portion thereof ending on such
payment date. The revolving credit facility is secured by the assets of National
and NYLP and the stock of NYLP and it subsidiaries.
The Credit Agreement requires, among other things, that the Company maintain
certain minimum levels of consolidated operating cash flow and certain
prescribed ratios of consolidated funded debt to consolidated operating cash
flows, consolidated operating cash flow to interest expense and consolidated
adjusted operating cash flow to consolidated fixed charges, as defined. The
Credit Agreement contains other restrictive covenants, including limitations on
indebtedness, investments and acquisitions, the disposition of assets,
transactions with affiliates and distributions to stockholders.
F-47
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 21, 1997
5. LONG-TERM DEBT (CONTINUED)
The Agreement provides that within 10 days after the Eurodollar Basic Rate
for three month Eurodollar Pricing Options first exceeds 5.875% per annum, the
Company will obtain and thereafter keep in effect one or more interest rate
protection agreements covering a notional amount of at least 50% of the
outstanding borrowings under the revolving credit facility for an aggregate
period of not less than two years.
6. INCOME TAXES
National and its subsidiaries file a consolidated Federal and combined New
York State and New York City income tax returns. NYLP also files income tax
returns in California and the District of Columbia. At December 21, 1997,
National had a net operating loss carryforwards available to offset future
taxable income for Federal income tax purposes of approximately $2.0 million.
These carryforwards expire in the years 2004 through 2010 and, as a result of
the change in ownership described in Note 1, are subject to the limitations of
Internal Revenue Code Section 382. At December 21, 1997, National had
approximately $75,000 of operating loss carryforwards for New York State and New
York City income tax purposes.
The provision for income taxes is comprised of the following for the period
from January 1, 1997 to December 21, 1997:
<TABLE>
<S> <C>
Current--
Federal.......................................................... $ 1,830
State and local.................................................. 610
---------
$ 2,440
---------
Deferred--
Federal.......................................................... 50
State and local.................................................. 18
---------
$ 68
---------
$ 2,508
---------
---------
</TABLE>
The reconciliation between the provision for income taxes and the amount
computed by applying the statutory Federal income tax rate to loss before income
taxes is as follows for the period from January 1, 1997 to December 21, 1997:
<TABLE>
<S> <C>
Federal statutory income taxes...................................... $ (947)
Permanent differences (principally goodwill amortization)........... 2,391
State and local income taxes, net of Federal benefit................ 352
Other............................................................... 712
---------
$ 2,508
---------
---------
</TABLE>
F-48
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 21, 1997
7. STOCKHOLDERS' EQUITY
STOCK OPTIONS
In connection with and as a condition of Boston Ventures' acquisition, the
Company entered into a stock option agreement (the "Agreement") with Finkelstein
which, subject to certain terms and conditions of the Agreement, granted
Finkelstein an option to purchase an aggregate of approximately 6,461 shares of
National's common stock. One-third of the shares covered by the option vest and
become exercisable in 60 equal installments of approximately 36 shares on the
last day of each month commencing on January 31, 1996 and continuing until
December 31, 2000. The remaining shares vest and become exercisable, subject to
the Company's attainment of two separate annual operating cash flow targets, as
defined, in equal annual installments of approximately 431 shares or
approximately 862 shares, respectively (if such respective operating cash flow
targets are reached), on December 31, 1996 through 2000 or upon sale, subject to
achieving certain performance targets. The vesting of all shares is generally
subject to Finkelstein being employed by the Company on such dates. The shares
are exercisable at a price of approximately $1,083 per share and expire on the
tenth anniversary date of the Agreement.
STOCKHOLDERS' AGREEMENT
On December 1, 1995, Boston Ventures, National and Finkelstein entered into
a stockholders' agreement which, among other things, allows Finkelstein, upon
the nonrenewal of his employment, as defined in his employment agreement to
require the Company to purchase all of his shares and liquidate and cash out his
vested option shares for fair value. The Company's obligation to acquire
Finkelstein's shares is subject to it being permitted by the Credit Agreement
and applicable law to do so. In addition, the stockholders' agreement gives the
Company, along with Boston Ventures, the right of first refusal with respect to
Finkelstein's shares.
8. RETIREMENT PLANS
The Company has a 401(k) profit sharing plan (the "Plan") for all eligible
employees who have completed one year of service. Under the Plan, the Company
has the option of making a matching contribution of up to 3% of a participant's
compensation. The Company may also annually contribute additional discretionary
amounts to participants. For the period ended December 21, 1997, the Company did
not make any matching discretionary contributions to the Plan.
In addition, approximately twenty Company employees are covered by certain
defined contribution retirement plans sponsored by the Typographical Union.
Company contributions to these retirement plans for the period ended December
21, 1997 were approximately $474,000.
F-49
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 21, 1997
9. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company leases office space under non-cancelable operating leases which
expire at various dates through October 2008. At December 21, 1997, the future
minimum payments due under these leases, net of sublease income are as follows:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31, AMOUNT
- ------------------------------------------------------------------------------ --------------
<S> <C>
(IN THOUSANDS)
1998.......................................................................... 1,093
1999.......................................................................... 1,173
2000.......................................................................... 1,177
2001.......................................................................... 1,177
Thereafter.................................................................... 8,611
-------
$ 13,231
-------
-------
</TABLE>
Rent expense, net of sublease income, was approximately $1,153,000 for the
period ended December 21, 1997.
At December 21, 1997, the Company had a letter of credit outstanding of
approximately $533,000 for the security deposit on its corporate office space.
EMPLOYMENT AGREEMENT
In connection with Boston Ventures' December 1, 1995 acquisition of the
Company, Finkelstein entered into a long-term employment agreement (the
"Employment Agreement") with the Company. The initial term of the Employment
Agreement is through December 31, 2000 and provides for, among other things, an
annual base salary which, beginning on June 30, 1996, and annually thereafter,
is to be increased by the greater of (i) 5% or (ii) the annual increase in the
consumer price index for all urban consumers not in excess of 8%.
LEGAL MATTERS
The Company is subject to certain legal actions and complaints that arise in
the ordinary course of its business. In the opinion of management, the amount of
the ultimate liability, if any, which may result from these legal actions and
complaints will not materially affect the consolidated financial statements of
the Company.
10. FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company has a number of financial instruments, none of which are held
for trading purposes. These financial instruments consist of cash and cash
equivalents, long-term debt and interest rate protection agreements. The Company
estimates that the fair value of all financial instruments at December 21, 1997
does not differ materially from the aggregate carrying values of its financial
instruments recorded in the accompanying consolidated balance sheet.
F-50
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 21, 1997
11. SUBSEQUENT EVENT
On December 22, 1997, Boston Ventures and Mr. James A. Finkelstein completed
a Stock Purchase Agreement with American Lawyer Media, LLC for the sale of NLP.
The purchase price for the NLP acquisition was approximately $203,200,000 in
cash. In connection with the sale of the Company, Boston Ventures cashed out
options held by certain management employees. The payment totaled approximately
$6,926,000 which is included as a special compensation charge in the
accompanying consolidated statement of operations.
F-51
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
National Law Publishing Company, Inc.
We have audited the consolidated balance sheets of National Law Publishing
Company, Inc. (the "Company") as of December 31, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity (deficiency), and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company as of December 31, 1996 and 1995, and the consolidated results of
its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
As discussed in Note 1, the Company's 1995 consolidated financial
statements, effective December 1, 1995, reflect the push down accounting effects
of Boston Ventures' acquisition cost for the Company. The consolidated financial
statements for the eleven month period prior to December 1, 1995 do not reflect
the push down accounting effects of the acquisition cost basis of the Company's
former stockholders.
LESLIE SUFRIN AND COMPANY, P.C.
February 19, 1997, except as to Note 7
which date is March 27, 1997
F-52
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................................. $ 588 $ 101
Accounts receivable, net of allowances for doubtful accounts and sales returns of
$1,086 in 1996 and $1,159 in 1995................................................... 6,997 6,496
Inventories, net...................................................................... 836 784
Deferred tax benefits (Note 9)........................................................ 4,293 3,208
Prepaid expenses and other current assets............................................. 778 860
----------- -----------
Total current assets.............................................................. 13,492 11,449
Furniture, equipment and leasehold improvements, net (Note 4)........................... 2,621 2,664
Intangible assets, net (Note 5)......................................................... 129,060 134,738
Deferred tax benefits (Note 9).......................................................... 577 4,354
Other assets (Note 6)................................................................... 1,561 920
----------- -----------
$ 147,311 $ 154,125
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses................................................. $ 3,516 $ 4,253
Current portion of long-term debt..................................................... 3,300 --
Due to stockholder (Note 7)........................................................... -- 5,000
Deferred revenue...................................................................... 8,757 6,913
----------- -----------
Total current liabilities......................................................... 15,573 16,166
Long-term debt (Note 7)................................................................. 67,000 70,900
Other non-current liabilities........................................................... 1,571 1,439
Commitments and contingencies
Stockholders' equity (Note 10):
Common stock, $.01 par value; 125,000 shares authorized; 89,609 shares issued and
outstanding......................................................................... 1 1
Additional paid-in capital............................................................ 66,165 66,165
Accumulated (deficit)................................................................. (2,999) (546)
----------- -----------
Total stockholders' equity........................................................ 63,167 65,620
----------- -----------
$ 147,311 $ 154,125
----------- -----------
----------- -----------
</TABLE>
See accompanying notes.
F-53
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
REVENUES:
Periodicals
Advertising............................................................................... $ 23,319 $ 21,387
Subscription.............................................................................. 9,759 9,694
Ancillary products and services............................................................. 13,398 12,729
Internet services........................................................................... 747 264
--------- ---------
Total net revenues.................................................................... 47,223 44,074
--------- ---------
OPERATING COSTS AND EXPENSES:
Editorial................................................................................. 5,929 5,778
Production and distribution............................................................... 8,679 8,146
Selling................................................................................... 8,991 9,776
General and administrative................................................................ 8,047 7,620
Internet services......................................................................... 1,704 2,947
Depreciation and amortization............................................................. 7,487 6,329
--------- ---------
Total operating costs and expenses.................................................... 40,837 40,596
--------- ---------
Operating income........................................................................ 6,386 3,478
INTEREST EXPENSE, NET....................................................................... (6,013) (5,458)
OTHER INCOME (EXPENSE)(Note 11)............................................................. 181 (211)
--------- ---------
Total other (expense)................................................................. (5,832) (5,669)
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES........................................................... 554 (2,191)
(PROVISION) BENEFIT FOR INCOME TAXES (Note 9)............................................... (3,007) 523
--------- ---------
NET (LOSS).................................................................................. $ (2,453) $ (1,668)
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
F-54
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN ACCUMULATED TREASURY
STOCK CAPITAL (DEFICIT) STOCK TOTAL
------------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995................................... $ 1 $ 2,261 $ (35,910) $ (11,194) $ (44,842)
Elimination of accumulated deficit and treasury stock at
December 1, 1995 resulting from Boston Ventures'
acquisition of approximately 94.3% of the Company (Note
1)....................................................... -- (48,226) 37,032 11,194 --
Fair value and other adjustments related to Boston
Ventures' acquisition.................................... -- 112,130 -- -- 112,130
Net (loss) for the year ended December 31, 1995............ -- -- (1,668) -- (1,668)
--
----------- ------------ ---------- ----------
Balance, December 31, 1995................................. 1 66,165 (546) -- 65,620
Net (loss) for the year ended December 31, 1996............ -- -- (2,453) -- (2,453)
--
----------- ------------ ---------- ----------
Balance, December 31, 1996................................. $ 1 $ 66,165 $ (2,999) $ -- $ 63,167
--
--
----------- ------------ ---------- ----------
----------- ------------ ---------- ----------
</TABLE>
See accompanying notes.
F-55
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net (loss)................................................................................... $ (2,453) $ (1,668)
Adjustments to reconcile net (loss) to net cash provided by operating activities:
Depreciation and amortization.............................................................. 7,487 6,329
Provision for deferred rent................................................................ 136 238
Deferred income taxes...................................................................... 2,692 (546)
Loss on disposal of fixed assets........................................................... 9 --
Changes in operating assets and liabilities:
(Increase) in accounts receivable........................................................ (335) (247)
(Increase) in inventories................................................................ (52) (104)
(Increase) decrease in prepaid expenses and other current assets......................... 82 (189)
(Increase) in other assets............................................................... (641) (899)
Increase (decrease) in accounts payable and accrued expenses............................. (737) 965
Increase (decrease) in deferred revenue.................................................. 432 (178)
(Decrease) in other non current liabilities.............................................. (4) (11)
--------- ---------
Net cash provided by operating activities.............................................. 6,616 3,690
--------- ---------
Cash flows from investing activities:
Additions to furniture, equipment and leasehold improvements............................... (512) (608)
Additions to intangible assets............................................................. (17) --
--------- ---------
Net cash (used in) investing activities................................................ (529) (608)
--------- ---------
Cash flows from financing activities:
Payments on line of credit................................................................. (8,524) (44,600)
Payment of stockholder debt................................................................ (5,000) --
Proceeds from line of credit............................................................... 7,924 --
Payment of deferred financing costs........................................................ -- (1,138)
Payment of acquisition costs............................................................... -- (2,839)
Payment of subordinated debt............................................................... -- (10,000)
Issuance of long-term debt................................................................. -- 70,900
Purchase of stock, warrants and options.................................................... -- (15,674)
--------- ---------
Net cash (used in) financing activities................................................ (5,600) (3,351)
--------- ---------
Net increase (decrease) in cash and cash equivalents........................................... 487 (269)
Cash and cash equivalents--beginning of year................................................... 101 370
--------- ---------
Cash and cash equivalents--end of year......................................................... $ 588 $ 101
--------- ---------
--------- ---------
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest................................................................................. $ 6,198 $ 5,303
--------- ---------
--------- ---------
Income taxes............................................................................. $ 117 $ 91
--------- ---------
--------- ---------
Supplemental disclosure of non cash activities:
Issuance of Note payable to stockholder in connection with the acquisition of a portion of
such stockholder's common stock on December 1, 1995 (Notes 1 and 7)....................... $ -- $ 5,000
--------- ---------
--------- ---------
Push-down of acquisition cost in excess of fair value of net assets acquired resulting in
an increase of stockholders' equity....................................................... $ -- $ 45,964
--------- ---------
--------- ---------
Purchase price adjustment related principally to the revaluation of deferred subscription
income at the acquisition date resulting in a corresponding increase to goodwill.......... $ 1,246 $ --
--------- ---------
--------- ---------
</TABLE>
See accompanying notes.
F-56
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. ORGANIZATION, NATURE OF BUSINESS AND CHANGE IN OWNERSHIP
The National Law Publishing Company, Inc. ("National") through its wholly
owned operating subsidiary, New York Law Publishing Company, Inc. ("NYLP") is a
leading publisher of periodicals, books and newsletters as well as a provider of
seminars and electronic information services targeted to the U.S. legal
community. NYLP's principal periodical publications are NEW YORK LAW JOURNAL (a
daily newspaper), THE NATIONAL LAW JOURNAL (a weekly publication) and LAW
TECHNOLOGY PRODUCT NEWS (published 12 times per year). NYLP also wholly owns Law
Journal EXTRA!, Inc. ("LJX"). LJX is an online service available on the World
Wide Web providing access to various legal information and related services
including electronic versions of NYLP's principal periodicals. In addition to
NYLP, National also owns all outstanding shares of PPC Publishing Corporation
("PPC"), whose sole asset is 25,000 shares of National's common stock. National
and its subsidiaries are collectively referred to as the "Company".
On December 1, 1995, Boston Ventures Limited Partnership IV and Boston
Ventures Limited Partnership IVA (collectively, "Boston Ventures"), through a
wholly-owned subsidiary, NLPC Acquisition, Inc. ("NAI"), acquired approximately
71,308 shares of National's common stock from Apollo Publishing Partners, L.P.
("Apollo") and James A. Finkelstein ("Finkelstein"), the chief executive of the
Company, and initiated a series of related transactions which resulted in Boston
Ventures acquiring approximately 94.3% of National for $141,958,454 in cash plus
acquisition related costs of $757,000. The following summarizes the series of
transactions which have been accounted for as acquisition related:
<TABLE>
<C> <S> <C>
(i) Purchase by NAI of 71,308.0851 shares of National stock (65,000 and
6,308.0851 shares acquired from Apollo and Finkelstein, respectively).... $77,258,645
(ii) Cash settlement and cancellation of a Finkelstein stock option and Apollo
stock warrant of 9,756 shares and 1,407 shares, respectively............. 9,415,417
(iii) Payment of NYLP bank debt and related accrued interest................... 43,083,087
(iv) Payment of National 13% subordinated notes and related accrued
interest................................................................. 10,119,167
(v) Payment of certain agreed upon transaction related expenses incurred by
the Company on behalf of Apollo and Finkelstein.......................... 2,082,138
-----------
$141,958,454
-----------
-----------
</TABLE>
In addition, on December 1, 1995, NAI was merged into National, with
National as the surviving corporation. In connection with the merger, Boston
Ventures received 60,916.5954 shares of National's common stock (approximately
94.3% of National's outstanding stock) in exchange for its shares of NAI.
Finkelstein retained 3,691.9149 shares of National, approximately 5.7% of its
outstanding stock. In addition, under a related stock option agreement,
Finkelstein was granted options to acquire up to an additional approximate 6,461
shares of National which vest, subject to certain employment and operating
performance criteria, over a five year period (See Note 10).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of National and
its direct and indirect wholly-owned subsidiaries. As a result of the
acquisition by Boston Ventures of approximately 94.3% of National's common stock
on December 1, 1995, the Company's assets and liabilities were adjusted to fair
value under what is commonly referred to as push down accounting. Since the fair
value of the Company's
F-57
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
tangible net assets approximated book value, the effect of applying push down
accounting has been to record goodwill and to adjust stockholders' equity
(deficiency) on that date to reflect Boston Ventures' acquisition cost.
Finkelstein's continuing interest in the Company has been reflected at its
historical cost basis and not at its $4 million stipulated fair value at the
time of Boston Ventures' acquisition. Had the Company made adjustments to "push
down" Finkelstein's approximate 5.7% interest at its stipulated fair value, the
Company's intangible assets and stockholders' equity at December 31, 1995 would
have each increased by $3,818,000 and its 1995 amortization expense and net loss
would have each increased by $16,000.
The Company's results of operations for the eleven months ended November 30,
1995 do not include push down accounting adjustments reflecting Apollo's and
Finkelstein's respective costs bases in the Company.
The consolidated statements of operations for 1995 reflects the Company's
consolidated results of operations for (i) the eleven months ended November 30,
1995 (the "Predecessor Period") determined without regard to the effects of push
down accounting and (ii) the month of December 1995 (the "Successor Period")
which reflects the effects of such push down accounting. The consolidated
results of operations for the Successor Period and Predecessor Periods are
summarized in Note 15.
All significant intercompany items and transactions have been eliminated in
consolidation.
B) USE OF ESTIMATES
The accompanying consolidated financial statements are prepared in
conformity with generally accepted accounting principles and, accordingly,
include certain amounts that are based, in part, on management's best estimates
and judgments. These estimates and judgments affect the reported amounts of
assets and liabilities and the amount of reported revenues and expenses. Actual
results could differ from these estimates and judgments.
C) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid short-term investments purchased
with an original maturity of three months or less to be cash equivalents.
D) CONCENTRATIONS OF CREDIT RISK
The Company's financial instruments that are exposed to concentration of
credit risk consist primarily of cash and cash equivalents and trade accounts
receivable. The Company's cash and cash equivalent balances are principally
maintained with one financial institution. At times, such balances may be in
excess of Federally insured limits; however, the Company believes it is not
exposed to any significant credit risk in this area. Concentrations of credit
risk with respect to trade accounts receivable are, except for amounts due from
legal advertising ad agents ("Legal Ad Agents"), generally limited due to the
large number of customers comprising the Company's customer base. Approximately
$8.4 million in 1996 and $7.6 million in 1995 of advertising revenues relate to
legal advertising in New York Law Journal. A significant portion of such revenue
is generated through Legal Ad Agents. Such Legal Ad Agents do not have
significant liquid net worth, and, as a result, the Company is exposed to a
certain level of credit concentration risk in this area, which it believes it
has adequately provided for.
F-58
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
During 1995, the Company determined that its provisions for doubtful
accounts with respect to revenues recognized in years prior to 1995, principally
with respect to its legal advertising revenues, should be increased by $946,000
due to, among other things, the concentration of credit risk associated with
Legal Ad Agents. This additional provision for doubtful accounts has been
included in selling expense in the accompanying 1995 consolidated statements of
operations.
The Company's recurring provision for doubtful accounts, which is based on a
review of its customer accounts, is included in selling and shipping expense in
the accompanying consolidated statements of operations.
E) INVENTORIES
Inventories, consisting of book texts and related binding materials, are
stated at the lower of cost or market, after appropriate reserves for obsolete
inventories. Cost is determined by the average cost method.
F) FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Furniture, equipment and leasehold improvements are stated at cost less
accumulated depreciation and amortization. Furniture, equipment and purchased
software are depreciated on a straight-line basis over their respective
estimated useful lives. Repairs and maintenance are charged to expense as
incurred. Leasehold improvements are amortized over the lives of the
improvements or the term of the related lease, whichever is shorter.
G) INTANGIBLE ASSETS
Intangible assets are stated at cost less accumulated amortization.
Intangible assets are amortized on a straight-line basis over their respective
useful lives. Intangible assets include deferred financing costs with the
amortization and/or write-off of such costs classified as part of amortization
expense rather than as interest expense. Goodwill represents the excess of
purchase price over the fair value of net assets acquired, including, beginning
on December 1, 1995, the push down accounting effects attributable to the Boston
Ventures' acquisition of the Company (See Note 1). The Company periodically
assesses the recoverability of goodwill by determining whether the amortization
of goodwill over its estimated remaining life can be recovered through projected
undiscounted future consolidated operating cash flows. The amount of goodwill
impairment, if any, is charged to operations at the time impairment is
determined by management. At December 31, 1996 and 1995, management determined
that there was no impairment of goodwill.
H) SOFTWARE DEVELOPMENT COSTS
The Company capitalizes directly related software development costs incurred
from the period technological feasibility is established until the product is
ready for release. Amounts capitalized are amortized over the estimated useful
life of the product and are evaluated by management, as to recoverability, based
upon whether the estimated future undiscounted net cash flows from the product
are sufficient to fully recover the unamortized remaining book value related to
such product.
F-59
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
I) REVENUE AND COST RECOGNITION
REVENUES:
(i) ADVERTISING--Advertising revenues are recognized, net of related
advertising agency commissions, on the date publications are released for
sale. Revenues billed and/or received for advertisements to be released in
future months are included in deferred revenue.
(ii) SUBSCRIPTIONS--Sales of publication subscriptions are deferred and
recognized as revenues over the term of the related subscriptions,
principally one year.
(iii) BOOKS AND RELATED UPDATES--Revenues are recognized upon shipment
date and are reflected net of estimated returns.
(iv) SEMINARS--Seminar revenues are recognized when the seminar is held.
COST AND EXPENSES
(i) ADVERTISING AND PROMOTION COSTS--Advertising expenditures are
expensed when the particular advertisement is released. Beginning in 1995,
direct response promotion costs are capitalized, subject to a net
recoverability evaluation, and amortized, on a straight-line basis, over
their estimated future benefit period. The amortization of direct response
promotion expenditures is included in selling and shipping expense in the
accompanying consolidated statements of operations. Prior to 1995, direct
response promotional costs were expenses upon advertisement and/or promotion
release date (See Note 3).
(ii) EDITORIAL COSTS--All editorial costs are expensed as incurred.
(iii) RENT EXPENSE--In accordance with generally accepted accounting
principles, rent expense reflects the straight-line amortization, over the
terms of the respective leases, of scheduled rent payments over such lease
terms. The excess of recognized rent expense over rent payments made to date
is included in the accompanying consolidated sheets as a deferred rent
obligation, included as part of other non current liabilities.
(iv) BARTER REVENUE AND EXPENSES--Revenue from barter transactions
(advertising space provided in exchange for goods and/or services) is
recognized as income when the advertisement is run. Costs and expenses
related to barter transactions are recognized when the merchandise and/or
service is received. Barter revenue and barter expense is reflected net in
the accompanying consolidated statements of operations.
J) INTEREST EXPENSE
Interest expense includes letter of credit usage and commitment fees and
excludes the amortization and/or other charges related to deferred financing
costs. With respect to interest rate swap agreements, the differential to be
paid or received is accrued as interest rates change and is recognized as an
adjustment to interest expense.
K) INCOME TAXES
The Company, for financial statement purposes, reports certain items of
income and expense in periods different from when such items are reported for
income tax purposes. The principal differences relate to the timing and
deductibility of bad debt allowances and book returns, the capitalization of
certain direct response promotional and inventory costs, depreciation of fixed
assets, and the straight-line expense recognition of office space rentals.
Deferred income tax assets and liabilities are computed annually for differences
between the financial statement and income tax bases of assets and liabilities
that will result in taxable or deductible amounts in the future based on enacted
tax laws and rates applicable to the periods
F-60
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
in which the differences are expected to affect taxable income. In addition, the
tax benefit related to net operating loss carryforwards and alternative minimum
tax ("AMT") credit carryforwards are reflected as deferred tax assets when the
realization of such tax benefit is more likely than not. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. Income tax expense for a particular period is equal to
the tax payable or refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities.
L) RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 consolidated financial
statements to conform with the current year presentation.
3. DIRECT RESPONSE PROMOTIONAL COSTS
Effective January 1, 1995, the Company adopted the American Institute of
Certified Public Accountants' Statement of Position 93-7. "Reporting on
Advertising Costs" (the "SOP"). The statement requires, among other things, that
direct response advertising costs, whose primary purpose is to elicit sales to
customers, be reported as an asset and amortized over the estimated period of
future benefit. Under the Company's previous accounting policy, promotional and
subscription acquisition costs were capitalized prior to the launching of a
direct marketing or subscription acquisition campaign and then expensed when the
promotional materials were mailed.
At December 31, 1996 and 1995, approximately $1,203,000 and $583,000 of
direct response promotional costs, net of accumulated amortization of $1,255,000
in 1996 and $224,000 in 1995 was recorded in other assets on the accompanying
consolidated balance sheet. Advertising expense was approximately $2,707,000 for
1996 and $2,826,000 for 1995.
4. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET
The following is a summary of furniture, equipment and leasehold
improvements at:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- ESTIMATED
1996 1995 USEFUL LIVES
--------- --------- ---------------
<S> <C> <C> <C>
(IN THOUSANDS)
Computer equipment and purchase software................ $ 2,558 $ 2,171 6 years
Furniture and office equipment.......................... 1,187 1,082 5 to 9 years
Leasehold improvements.................................. 589 579 7 to 10 years
--------- ---------
4,334 3,832
Less accumulated depreciation and amortization.......... (1,713) (1,168)
--------- ---------
$ 2,621 $ 2,664
--------- ---------
--------- ---------
</TABLE>
F-61
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
5. INTANGIBLE ASSETS, NET
The following is a summary of intangible assets at:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- AMORTIZATION
1996 1995 PERIODS
---------- ---------- ------------
<S> <C> <C> <C>
(IN THOUSANDS)
Goodwill............................................... $ 135,519 $ 134,256 (*)
Deferred financing costs............................... 1,138 1,138 7 years
---------- ----------
136,657 135,394
Less accumulated amortization.......................... (7,597) (656)
---------- ----------
$ 129,060 $ 134,738
---------- ----------
---------- ----------
</TABLE>
- ------------------------
(*) 38 years for periods prior to December 1, 1995 and 20 years thereafter.
Total amortization expense of intangibles was $6,941,000 and $5,303,000 for
the years ended December 31, 1996 and 1995, respectively. The 1995 amortization
expense includes an approximate $2 million charge relating to the unamortized
deferred financing cost attributable to the Predecessor Credit Facility which
was paid off as part of the Boston Ventures' December 1, 1995 acquisition.
During 1996, the Company implemented systems which, among other operational and
financial reporting enhancements, better quantify its deferred subscription
obligation for certain publications. As permitted by generally accepted
accounting principles, the Company has restated by approximately $1.3 million
the goodwill recorded on December 1, 1995 to reflect the difference between the
Company's deferred subscription obligation computed under its upgraded reporting
systems and the amount estimated by management on that date.
6. OTHER ASSETS
Other assets is comprised of the following at:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Deferred direct response promotional costs (a)............................... $ 1,203 $ 583
Capitalized software (b)..................................................... 204 150
Security deposits (c)........................................................ 97 89
Officers' life insurance--cash surrender value (d)........................... 43 83
Other........................................................................ 14 15
--------- ---------
$ 1,561 $ 920
--------- ---------
--------- ---------
</TABLE>
- ------------------------
(a) Represents direct mail promotional costs that relate to SOP 93-7 (See Note
3).
(b) During 1996, the Company introduced a CD-ROM Product. All development costs
incurred capitalized and are being amortized over a three year period.
(c) Represents security deposits required for leased properties.
(d) Represents the cash value of life insurance purchased on a former officer.
F-62
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
7. LONG-TERM DEBT
Long-term debt was comprised of the following at:
<TABLE>
<CAPTION>
DECEMBER
--------------------
<S> <C> <C>
1996 1995
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Revolving Credit Facilities (a)......................................... $ 70,300 $ 70,900
Less: current portion of Revolving Credit Facilities reduction amount... (3,300) --
--------- ---------
$ 67,000 $ 70,900
--------- ---------
--------- ---------
</TABLE>
(A) REVOLVING CREDIT FACILITIES
On December 1, 1995, the Company entered into a revolving credit facility
agreement (the "Credit Agreement") with The First National Bank of Boston (the
"Bank"), as a lender and as agent for other lenders, under which NAI borrowed
$15,674,061 and NYLP borrowed $55,225,939 (aggregating $70,900,000) in
connection with Boston Ventures' acquisition of the Company. Upon NAI's merger
into National, NYLP assumed the $15,674,061 of Bank debt, in the form of a
dividend from NYLP to National. Therefore, at December 31, 1995, the entire Bank
debt of $70.9 million was reflected as a NYLP borrowing. In addition, on January
2, 1996, NYLP borrowed approximately $5,022,000 from the Bank to pay the
Finkelstein $5 million Note and related accrued interest. The Finkelstein $5
million Note was issued in connection with the December 1, 1995 acquisition of
the Company (See Note 1). The Finkelstein Note and related accrued interest was
secured by an irrevocable letter of credit issued by the Bank. The Company's
borrowing capacity under the revolving credit facility, including cash loans and
standby letters of credit of up to $6 million, was $80 million through December
30, 1996, and decreases semi-annually until final maturity on December 31, 2002
as follows:
<TABLE>
<CAPTION>
PERIOD AMOUNT
- ------------------------------------------------------------------------------ --------------
<S> <C>
(IN THOUSANDS)
December 31, 1996 through June 29, 1997....................................... $ 74,000
June 30, 1997 through December 30, 1997....................................... 70,500
December 31, 1997 through June 29, 1998....................................... 67,000
June 30, 1998 through December 30, 1998....................................... 63,250
December 31, 1998 through June 29, 1999....................................... 59,500
June 30, 1999 through December 30, 1999....................................... 55,250
December 31, 1999 through June 29, 2000....................................... 51,000
June 30, 2000 through December 30, 2000....................................... 45,750
December 31, 2000 through June 29, 2001....................................... 40,500
June 30, 2001 through December 30, 2001....................................... 33,750
December 31, 2001 through June 29, 2002....................................... 27,000
June 30, 2002 through final maturity date..................................... 19,000
Final maturity date (December 31, 2002)
</TABLE>
Available borrowings under this facility are further limited by the sum of
(a) the Company's letter of credit exposure and (b) certain stipulated
percentages of excess cash flow based on the ratio of the
F-63
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
7. LONG-TERM DEBT (CONTINUED)
Company's consolidated funded debt to consolidated operating cash flow, as
defined. Outstanding borrowings under the facility bear interest at a
fluctuating rate, subject to the Company's elected pricing option, at either the
Base Rate, Eurodollar Rate, and/or CD Rate, plus a variable margin based on the
Company's ratio of consolidated funded debt to consolidated operating cash flow,
as defined. The interest rate under this revolving credit facility approximated
8.1% and 8.8% for the year and one month ended December 31, 1996 and 1995,
respectively. Commitment fees are charged and payable quarterly at either a
.375% or .500% annual rate, depending on the Company's ratio of consolidated
funded debt to consolidated operating cash flow for the immediately preceding
quarter (the "Quarterly Funded Debt Ratio") and on the average daily unused
portion of the revolving credit facility. In addition, letter of credit usage
fees are payable at rates which range between 1.25% and 2.5% depending on the
Quarterly Funded Debt Ratio and on the daily letter of credit exposure during
the three month period or portion thereof ending on such payment date. The
revolving credit facility is secured by the assets of National and NYLP and the
stock of NYLP and its subsidiaries.
The Credit Agreement requires, among other things, the Company maintain
certain minimum levels of consolidated operating cash flow and certain
prescribed ratios of consolidated funded debt to consolidated operating cash
flow, consolidated operating cash flow to interest expense and consolidated
adjusted operating cash flow to consolidated fixed charges, as defined. The
Credit Agreement contains other restrictive covenants, including limitations on
indebtedness, investments and acquisitions, the disposition of assets,
transactions with affiliates and distributions to stockholders.
The Company, prior to December 1, 1995, had a revolving credit facility with
two financial institutions (the "Predecessor Credit Facility"). The weighted
average interest rates under the Predecessor Credit Facility for the eleven
months ended November 30, 1995 approximated 9%. The Predecessor Credit Facility
was secured by the stock and assets of NYLP and any future NYLP subsidiaries.
(B) INTEREST RATE PROTECTION AGREEMENTS
The Agreement provides that within 10 days after the Eurodollar Basic Rate
for three month Eurodollar Pricing Options first exceeds 5.875% per annum, the
Company will obtain and thereafter keep in effect one or more interest rate
protection agreements covering a notional amount of at least 50% of the
outstanding borrowings under the revolving credit facility for an aggregate
period of not less than two years.
F-64
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
8. OTHER NON-CURRENT LIABILITIES
Other non-current liabilities was comprised of the following at:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Deferred rent (a).......................................................... $ 1,536 $ 1,400
Rent Security and deposit--sublease........................................ 23 22
Deferred compensation...................................................... 12 17
--------- ---------
$ 1,571 $ 1,439
--------- ---------
--------- ---------
</TABLE>
- ------------------------
(a) Represents the cumulative excess of rent expense recognized in accordance
with generally accepted accounting principles over cumulative cash rental
payments made.
9. INCOME TAXES
National and its subsidiaries file a consolidated Federal and combined New
York State and New York City income tax returns. NYLP also files income tax
returns in California and the District of Columbia. At December 31, 1996,
National had net operating loss carryforwards available to offset future taxable
income for Federal income tax purposes of approximately $11.2 million. These
carryforwards expire in the years 2004 through 2010 and, as a result of the
change in ownership described in Note 1, are subject to the limitations of
Internal Revenue Code Section 382. At December 31, 1996, National had net
operating loss carryforwards of approximately $5.3 million available to offset
future taxable income for New York State and New York City income tax purposes
which expire in the years 2005 through 2010.
The benefit (provision) for income taxes is comprised of the following for
the years ended:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
Current:
Federal................................................................... $ (110) $ 53
State and local........................................................... (205) (76)
--------- ---------
(315) (23)
--------- ---------
Deferred:
Federal................................................................... (1,621) 264
State and local........................................................... (1,071) 282
--------- ---------
(2,692) 546
--------- ---------
$ (3,007) $ 523
--------- ---------
--------- ---------
</TABLE>
F-65
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
9. INCOME TAXES (CONTINUED)
Net deferred tax assets were comprised of the following at:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
----------- ---------
<S> <C> <C>
(IN THOUSANDS)
Deferred tax assets:
Accounts receivable reserves......................................... $ 268 $ 357
Inventory capitalization............................................. 372 326
Deferred rent........................................................ 715 651
Federal, state and local operating loss carryforwards................ 4,472 6,674
Federal AMT credit................................................... 139 33
----------- ---------
5,966 8,041
----------- ---------
Deferred tax liabilities:
Depreciation......................................................... $ 442 $ 140
Deferred promotional costs........................................... 559 269
Product development costs............................................ 95 70
----------- ---------
1,096 479
----------- ---------
Net deferred tax assets.............................................. $ 4,870 $ 7,562
----------- ---------
----------- ---------
</TABLE>
The presentation of deferred tax assets and liabilities on the accompanying
consolidated balance sheet is as follows at:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Deferred tax benefits, current............................................ $ 4,293 $ 3,208
--------- ---------
Deferred tax liabilities, current......................................... -- --
--------- ---------
Net deferred tax benefits, current........................................ 4,293 3,208
--------- ---------
Deferred tax benefits, non-current........................................ 1,673 4,833
Deferred tax liabilities, non-current..................................... (1,096) (479)
--------- ---------
Net deferred tax benefits, non-current.................................... 577 4,354
--------- ---------
Net deferred tax assets................................................... $ 4,870 $ 7,562
--------- ---------
--------- ---------
</TABLE>
F-66
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
9. INCOME TAXES (CONTINUED)
The reconciliation between total tax expense (benefit) and the amount
computed by applying the statutory Federal income tax rate to income before
income taxes is as follows for the years ended:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1996 1995
--------- ---------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Federal statutory income taxes............................................. $ 188 $ (745)
Permanent differences (principally goodwill amortization).................. 2,181 265
State and local income taxes, net of federal benefit....................... 842 (136)
Other...................................................................... (204) 93
--------- ---------
$ 3,007 $ (523)
--------- ---------
--------- ---------
</TABLE>
10. STOCKHOLDERS' EQUITY (DEFICIENCY)
A) STOCK OPTIONS
In connection with and as a condition of Boston Ventures' acquisition, the
Company entered into a stock option agreement (the "Agreement") with Finkelstein
which, subject to certain terms and conditions of the Agreement, granted
Finkelstein an option to purchase an aggregate of approximately 6,461 shares of
National's common stock. One-third of the shares covered by the option vest and
become exercisable in 60 equal installments of approximately 36 shares on the
last day of each month commencing on January 31, 1996 and continuing until
December 31, 2000. The remaining shares vest and become exercisable, subject to
the Company's attainment of two separate annual operating cash flow targets, as
defined, in equal annual installments of approximately 431 shares or
approximately 862 shares, respectively (if such respective operating cash flow
targets are reached), on December 31, 1996 through 2000 or upon sale, subject to
achieving certain performance targets. The vesting of all shares is generally
subject to Finkelstein been employed by the Company on such dates. The shares
are exercisable at a price of approximately $1,083 per share and expire on the
tenth anniversary date of the Agreement.
B) STOCKHOLDERS' AGREEMENT
On December 1, 1995, Boston Ventures, National and Finkelstein entered into
a stockholders' agreement which, among other things, allows Finkelstein, upon
the non-renewal of his employment, as defined in his employment agreement (See
Note 13) to require the Company to purchase all of his shares and liquidate and
cash out his vested option shares for fair value. The Company's obligation to
acquire Finkelstein's shares is subject to it being permitted by the Credit
Agreement and applicable law to do so. In addition, the stockholders' agreement
gives the Company, along with Boston Ventures, the right of first refusal with
respect to Finkelstein's shares.
F-67
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
11. OTHER INCOME (EXPENSE)
Other income (expense) is comprised of the following items:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
Insurance claim recovery (a).................................................. $ 235 $ (80)
Litigation settlement......................................................... -- (25)
Barter income (loss).......................................................... (54) 125
Apollo management fee......................................................... -- (231)
--------- ---------
$ 181 $ (211)
--------- ---------
--------- ---------
</TABLE>
- ------------------------
(a) Represents an insurance reimbursement of approximately $287,000 relating to
employee theft, net of legal and professional costs of $52,000.
12. RETIREMENT PLANS
The Company has a 401(k) profit sharing plan (the "Plan") for all eligible
employees who have completed one year of service. Under the Plan, the Company
has the option of making a matching contribution of up to 3% of a participant's
compensation. During 1996 and 1995, the Company did not make any matching
discretionary contributions to the Plan.
In addition, approximately 20 Company employees are covered by certain
defined contribution retirement plans sponsored by the Typographical Union.
Company contributions to these retirement plans for 1996 and 1995 were $476,000
and $481,000, respectively.
13. COMMITMENTS AND CONTINGENCIES
A) OPERATING LEASES
The Company leases office space under non cancelable operating leases which
expire at various dates through October 2008. At December 31, 1996, the future
minimum payments due under these leases, net of sublease income, are as follows:
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31, AMOUNT
- ------------------------------------------------------------------------------ --------------
<S> <C>
(IN THOUSANDS)
1997.......................................................................... $ 1,027
1998.......................................................................... 1,129
1999.......................................................................... 1,187
2000.......................................................................... 1,190
2001.......................................................................... 1,177
Thereafter.................................................................... 8,620
-------
$ 14,330
-------
-------
</TABLE>
Rent expense, net of sublease income, was approximately $1,395,000 and
$1,335,000 for the years ended December 31, 1996 and 1995, respectively.
F-68
<PAGE>
NATIONAL LAW PUBLISHING COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
13. COMMITMENTS AND CONTINGENCIES (CONTINUED)
At December 31, 1996 and 1995, the Company had a letter of credit
outstanding of approximately $533,000 for the security deposit on its corporate
office space.
B) EMPLOYMENT AGREEMENT
In connection with Boston Ventures' December 1, 1995 acquisition of the
Company, Finkelstein entered into a long-term employment agreement (the
"Employment Agreement") with the Company. The initial term of the Employment
Agreement is through December 31, 2000 and provides for an annual base salary
which, beginning on June 30, 1996, and annually thereafter, is to be increased
by the greater of (i) 5% or (ii) the annual increase in the consumer price index
for all urban consumers not in excess of 8%.
C) LEGAL MATTERS
The Company is subject to certain legal actions and complaints that arise in
the ordinary course of its business. In the opinion of management, the amount of
the ultimate liability, if any, which may result from these legal actions and
complaints will not materially affect the consolidated financial statements of
the Company.
14. FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company has a number of financial instruments, none of which are held
for trading purposes. These financial instruments consist of cash and
equivalents, long term debt and interest rate projection agreements. The Company
estimates that the fair value of all financial instrument at December 31, 1996,
does not differ materially from the aggregate carrying values of its financial
instruments recorded in the accompanying consolidated balance sheet.
15. SUPPLEMENTARY 1995 CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION
The following table summarizes 1995's consolidated results of operations for
the Successor and Predecessor periods:
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR FULL
PERIOD PERIOD YEAR
----------- ----------- ---------
<S> <C> <C> <C>
(IN THOUSANDS)
Revenues................................................... $ 3,510 $ 40,564 $ 44,074
Operating income (loss).................................... (393) 3,871 3,478
(Loss) before income taxes................................. (953) (1,238) (2,191)
Net (loss)................................................. (546) (1,122) (1,668)
</TABLE>
F-69
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY HOLDINGS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION OF
AN OFFER IN ANY JURISDICTION WHERE, TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE
AFFAIRS OF HOLDINGS SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information........................... iv
Summary......................................... 1
Risk Factors.................................... 20
The Transactions................................ 28
Use of Proceeds................................. 29
Capitalization.................................. 29
Pro Forma Financial Information................. 30
Selected Historical Consolidated Financial
Information................................... 37
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 40
Business........................................ 49
Recent Transactions............................. 61
Management...................................... 62
Certain Transactions............................ 67
Principal Stockholders.......................... 68
The Exchange Offer.............................. 69
Description of the Discount Notes............... 78
Description of Other Indebtedness............... 108
Certain U.S. Federal Income Tax
Considerations................................ 109
Plan of Distribution............................ 110
Legal Matters................................... 110
Experts......................................... 111
Index to Financial Statements................... F-1
</TABLE>
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
AMERICAN LAWYER MEDIA
HOLDINGS, INC.
OFFER TO EXCHANGE
ITS 12 1/4% SENIOR DISCOUNT NOTES DUE 2008,
SERIES B FOR ANY AND ALL OF ITS OUTSTANDING
12 1/4% SENIOR DISCOUNT NOTES DUE 2008
---------------------
PROSPECTUS
---------------------
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
CERTIFICATE OF INCORPORATION. Article EIGHTH of the Certificate of
Incorporation of American Lawyer Media Holdings, Inc. ("Holdings") provides that
the Directors of Holdings shall be protected from personal liability, through
indemnification or otherwise, to the fullest extent permitted by the General
Corporation Law of the State of Delaware as from time to time in effect (the
"DGCL").
Paragraph 1 of Article EIGHTH states that a Director of Holdings shall under
no circumstances have any personal liability to Holdings or its stockholders for
monetary damages for breach of fiduciary duty as a Director except for those
breaches and acts or omissions with respect to which the DGCL expressly provides
that this provision shall not eliminate or limit such personal liability of
Directors. Neither the modification or repeal of paragraph 1 of Article EIGHTH
nor any amendment to the DGCL that does not have retroactive application shall
limit the right of Directors to exculpation from personal liability for any act
or omission occurring prior to such amendment, modification or repeal.
Paragraph 2 of Article EIGHTH states that Holdings shall indemnify each
Director and Officer of Holdings to the fullest extent permitted by applicable
law, except as may be otherwise provided in Holdings' By-Laws, and in
furtherance thereof the Board of Directors is expressly authorized to amend
Holdings' By-laws from time to time to give full effect thereto, notwithstanding
possible self interest of the Directors in the action being taken. Neither the
modification or repeal of paragraph 2 nor any amendment to the DGCL that does
not have retroactive application shall limit the right of Directors and Officers
to indemnification with respect to any act or omission occurring prior to such
modification, amendment or repeal.
BY-LAWS. Article IV of the By-laws of Holdings provides for
indemnification. Section 1 of Article IV states that Holdings (1) shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of Holdings) by reason of the fact that he or she is or was a director
or an officer of Holdings and (2) except as otherwise required by Section 3 of
Article IV, may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of Holdings) by reason of the fact that he or she
is or was an employee or agent of Holdings, or is or was serving at the request
of Holdings as a director, officer, employee, agent of or participant in another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of Holdings, and with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO
CONTENDERE or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of Holdings,
and, with respect to any criminal action or proceeding, had reasonable cause to
believe that his or her conduct was unlawful.
Section 2 of Article IV states that Holdings shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of Holdings to procure a judgment
in its favor by reason of the fact that he or she is or was a director, officer,
employee or agent of Holdings, or is or was serving at the request of Holdings
as a director, officer, employee, agent of or participant in another
corporation, partnership, joint venture, trust or other
II-1
<PAGE>
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of Holdings
and except that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his or her duty to Holdings
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper.
Section 3 of Article IV states that, to the extent that a person who is or
was a director, officer, employee or agent of Holdings has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Section 1 or Section 2 of Article IV, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith.
Section 4 of Article IV states that any indemnification under Section 1 or
Section 2 of Article IV (unless ordered by a court) shall be made by Holdings
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in said Sections 1 and 2. Such determination shall be made (1) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
Section 5 of Article IV states that expenses incurred by any person who may
have a right of indemnification under Article IV in defending a civil or
criminal action, suit or proceeding may be paid by Holdings in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
of Directors in the specific case upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he or she is entitled to be indemnified by the.
Company pursuant to Article IV.
Section 6 of Article IV states that the indemnification provided by Article
IV shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 7 of Article IV states that Holdings may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of Holdings, or is or was serving at the request of Holdings as a
director, officer, employee or agent of or participant in another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of such person's status as such, whether or not Holdings would have
the power to indemnify him or her against such liability under the provisions of
Article IV, Section 145 of the DGCL or otherwise.
Section 8 of Article IV states that the invalidity or unenforceability of
any provision of Article IV shall not affect the validity or enforceability of
the remaining provisions of Article IV.
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
Under the DGCL, directors, officers, employees, and other individuals may be
indemnified against expenses (including attorneys' fees), judgements, fines, and
amounts paid in settlement in connection with
II-2
<PAGE>
specified actions, suits or proceedings, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation--a
"derivative action") if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful. A similar standard of care is applicable in
the case of a derivative action, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with defense or
settlement of such an action and Delaware law requires court approval before
there can be any indemnification of expenses where the person seeking
indemnification has been found liable to the corporation.
Delaware corporations may limit the personal liability of their directors
for monetary damages for a breach of fiduciary duty, provided, however, that the
directors can still be held personally liable (i) for a breach of the duty of
loyalty to the corporation and its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL (described below), and (iv) for any
transaction from which the director derived an improper personal benefit.
Section 174 of the DGCL makes directors personally liable for unlawful dividends
or unlawful stock repurchases or redemptions in certain circumstances and
expressly sets forth a negligence standard with respect to such liability.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES.
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Purchase Agreement, dated as of October 23, 1997, by and among Boston Ventures Limited Partnership IV,
Boston Ventures Limited Partnership IVA, James A. Finkelstein and ALM Holdings, LLC, as amended.
3.1 Certificate of Incorporation of Holdings
3.2 By-laws of Holdings
4.1 Indenture, dated as of December 22, 1997, among Holdings and The Bank of New York
4.2 Form of Initial Notes (included in Exhibit 4.1)
4.3 Form of Exchange Notes (included in Exhibit 4.1)
4.4 Registration Rights Agreement dated as of December 22, 1997 among Holdings and the Initial Purchasers
*5.1 Opinion of Jones, Day, Reavis & Pogue
10.1 Lease, dated September 30, 1993, between Park Avenue South/Armory, Inc. and The New York Law Publishing
Company for premises at 345 Park Avenue South, New York, New York
10.2 First Supplemental Agreement, dated November 30, 1994, between Park Avenue South/ Armory, Inc. and The
New York Law Publishing Company for premises at 345 Park Avenue South, New York, New York
10.3 Credit Agreement, dated as of March 25, 1998, among Holdings, the Company, various banks, Bank of
America National Trust and Savings Association, BancBoston Securities Inc. and BancAmerica Robertson
Stephens
10.4 Indenture, dated as of December 22, 1997, among the Company, the Guarantors named therein and The Bank
of New York
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.5 Employment Agreement, dated as of February 9, 1998, by and between the Company and William L. Pollak
12.1 Statement re: computation of ratio of earnings to fixed charges
21.1 List of Subsidiaries of Holdings
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Leslie Sufrin and Company, P.C.
*23.3 Consent of Jones, Day, Reavis & Pogue (included in Exhibit 5.1)
24.1 Power of Attorney of Holdings (included in Part II of the Registration Statement)
25.1 Statement on Form T-1 of the eligibility of the Trustee
27.1 Financial Data Schedule
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter to DTC Participants
99.4 Form of Letter to clients and Form of Instruction to Book-Entry Transfer Participants
</TABLE>
- ------------------------
* To be filed by amendment
(B) FINANCIAL STATEMENT SCHEDULES
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To American Lawyer Media Holdings, Inc.
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of American Lawyer Media Holdings, Inc. for
the five months ended December 31, 1997 included in this registration statement
and have issued our report thereon dated April 3, 1998. Our audit was made for
the purpose of forming an opinion on the basic consolidated financial statements
taken as a whole. The schedule listed below is the responsibility of Holdings'
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic consolidated financial
statements. The schedule for the five months ended December 31, 1997 has been
subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
April 3, 1998
II-4
<PAGE>
AMERICAN LAWYER MEDIA HOLDINGS, INC.
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
FOR THE FIVE MONTHS ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
----------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
- --------------------------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
DEBIT DEBIT DEBIT DEBIT DEBIT
(CREDIT) (CREDIT) (CREDIT) (CREDIT) (CREDIT)
FOR THE FIVE MONTHS ENDED DECEMBER 31,
1997:
Allowance for doubtful accounts $ (1,661) $ (843) $ (1,014)(1) $ 282(2) $ (3,236)
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
- ------------------------
(1) Represents the addition of the NLP allowance for doubtful accounts ($1,014)
at the date of acquisition.
(2) Represents reversals of the allowance account and write-offs of accounts
receivable, net of recoveries.
ITEM 22. UNDERTAKINGS.
(1) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The undersigned registrant undertakes that every prospectus: (i) that is
filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
(3) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(4) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
Insofar as indemnification for liabilities arising out of the Securities Act
may be permitted to directors, officers or controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by a registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the successful
defense in any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, American Lawyer Media
Holdings, Inc. has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
in the State of New York, on April 15, 1998.
AMERICAN LAWYER MEDIA HOLDINGS, INC.
BY: /S/ WILLIAM L. POLLAK
-----------------------------------------
William L. Pollak
Director, President and Chief Executive
Officer
(PRINCIPAL EXECUTIVE OFFICER)
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints William
L. Pollak and Anup Bagaria and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
* * * * *
Pursuant to the Requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the date included.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ BRUCE WASSERSTEIN
- ------------------------------ Chairman of the Board of April 15, 1998
Bruce Wasserstein Directors
Director, President and
/s/ WILLIAM L. POLLAK Chief Executive Officer
- ------------------------------ (PRINCIPAL EXECUTIVE April 15, 1998
William L. Pollak OFFICER)
Director, Vice President
and Secretary
/s/ ANUP BAGARIA (PRINCIPAL FINANCIAL
- ------------------------------ OFFICER AND April 15, 1998
Anup Bagaria PRINCIPAL ACCOUNTING
OFFICER)
/s/ MICHAEL J. BIONDI
- ------------------------------ Director April 15, 1998
Michael J. Biondi
/s/ ROBERT C. CLARK
- ------------------------------ Director April 15, 1998
Robert C. Clark
/s/ DONALD G. DRAPKIN
- ------------------------------ Director April 15, 1998
Donald G. Drapkin
/s/ JAMES A. FINKELSTEIN
- ------------------------------ Director April 15, 1998
James A. Finkelstein
/s/ ANDREW G.T. MOORE, II
- ------------------------------ Director April 15, 1998
Andrew G.T. Moore, II
/s/ RANDALL J. WEISENBURGER
- ------------------------------ Director April 15, 1998
Randall J. Weisenburger
II-6
<PAGE>
Exhibit 2.1
PURCHASE AGREEMENT
PURCHASE AGREEMENT, entered into as of October 23, 1997, by and among
BOSTON VENTURES LIMITED PARTNERSHIP IV, a Delaware limited partnership ("BVLP
IV"), BOSTON VENTURES LIMITED PARTNERSHIP IVA, a Delaware limited partnership
("BVLP IVA"), JAMES A. FINKELSTEIN, an individual ("JAF") (BVLP IV, BVLP IVA and
JAF are collectively referred to as the "Sellers" and individually as a
"Seller"), ALM HOLDINGS, LLC, a Delaware limited liability company (the
"Buyer"), and BVLP IV and BVLP IVA (acting jointly as agent for the Sellers
hereunder, the "Agent").
Introduction
The Sellers, in the aggregate, own beneficially and of record one
hundred percent (100%) of the issued and outstanding capital stock of National
Law Publishing Company, Inc., a Delaware corporation (the "Company"), other than
the shares of the Company's capital stock owned by PPC (as defined below) (such
shares, other than those held by PPC, are referred to herein as the "Company
Stock"); the Company owns beneficially and of record one hundred percent (100%)
of the issued and outstanding capital stock of The New York Law Publishing
Company, a New York corporation ("NYLP"), and of PPC Publishing Corporation, a
New York corporation ("PPC"); NYLP owns beneficially and of record one hundred
percent (100%) of the issued and outstanding capital stock of Law Journal EXTRA,
Inc., a New York corporation ("LJE") (NYLP, PPC and LJE are hereinafter
collectively referred to as the "Subsidiaries" and individually as a
"Subsidiary"); and
The Sellers wish to sell, and the Buyer wishes to buy, all of the
Company Stock, on the terms and conditions set forth herein; and
The parties hereto desire to provide for the cash-out at the Closing
(as hereinafter defined) of the option(s) to purchase capital stock of the
Company outstanding immediately prior to the
<PAGE>
Closing, and for the payment of certain Employee Bonuses set forth in Schedule
2.03, on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.01. Purchase and Sale. Based on the representations,
warranties and covenants contained in this Agreement, and subject to the terms
and conditions hereof, at Closing (as hereinafter defined) the Sellers shall
sell, transfer, assign and deliver to the Buyer, and the Buyer shall purchase
from the Sellers all of the issued and outstanding Company Stock.
ARTICLE II
PURCHASE PRICE AND PAYMENT
Section 2.01. Purchase Price. The aggregate amount to be paid by the
Buyer for the Company Stock and for the other payments to be made pursuant
hereto shall be (a) $202,000,000, (b) plus the sum of the purchase price and
related expenses, if any, of the New Acquisition, which purchase price
(calculated on an all-in basis so as to include all assumed Indebtedness of the
acquired company and transaction costs and may not include any amount paid or
payable, directly or indirectly, to any Seller or any Affiliate of any Seller)
does not exceed $4,000,000 in the aggregate, and (c) plus the amount by which
Closing Working Capital (as hereinafter defined) exceeds $(3,885,648) or minus
the amount by which Closing Working Capital is less than $(3,885,648)
(collectively, the "Purchase Price") which shall be payable as set forth below.
Section 2.02. Certain Definitions. As used herein, the following terms
have the meanings set forth below:
2
<PAGE>
(a) "Closing Purchase Price" means the Purchase Price, without taking
into account the adjustment described in Subsection 2.01(c) above.
(b) "Closing Working Capital" means the amount, as of the close of
business on the day before the Closing Date, equal to (x) the sum of cash and
cash equivalents, accounts receivable (net), inventory (net), prepaid expenses
and other current assets (excluding deferred tax benefits (net) and prepaid
barter expenses) of the Company and its Subsidiaries, less (y) the amount of all
accounts payable, accrued expenses, deferred revenue and other current
liabilities (excluding the current portion of long-term debt (and interest
accrued thereon), all Employee Bonuses, and deferred barter income) and
including all income taxes payable of the Company and its Subsidiaries, all as
determined in accordance with generally accepted accounting principles
consistently applied ("GAAP") and on a basis consistent with the accounting
principles, practices, policies and procedures used in preparing the Audited
Statements.
(c) "Indebtedness" means all indebtedness for borrowed money of the
Company and its Subsidiaries as of immediately prior to the Closing, including
the unpaid principal balance thereof, accrued and unpaid interest and any
penalties or fees required to pay such Indebtedness in full at the Closing, the
amount of capital leases, deferred purchase obligations and any other amount
required to be shown on a consolidated balance sheet of the Company prepared in
accordance with GAAP as indebtedness (plus any current liability relating
thereto), plus, without duplication, any direct or indirect guarantee of any
such obligation of any other person or entity.
Section 2.03. Payments at Closing. At the Closing, the Buyer shall make
the following payments (in an amount, in the aggregate, equal to the Closing
Purchase Price):
(a) to (i) BankBoston, as agent (the "Bank"), in full satisfaction of
the Company's and the Subsidiaries' Indebtedness thereto, and (ii) to the
holders of all other Indebtedness of the Company, if any, the amount required to
pay in full such Indebtedness; and
(b) the remainder to the Agent, as agent for the Sellers or as
otherwise herein provided,
3
<PAGE>
in each case by wire transfer of immediately available funds to accounts
designated in writing by the Agent at least two business days prior to the
Closing. In the case of funds wired pursuant to clause (b) of this Section 2.03
(after the Agent deducts therefrom (i) the amount which the Agent determines to
be necessary to pay expenses of the Sellers relating to the transactions
contemplated hereby, which amount will be applied to pay such expenses, (ii) the
amount which the Agent determines to be necessary to pay any potential
adjustment to the Closing Purchase Price arising out of the Closing Working
Capital and (iii) the maximum amount which the Agent reasonably determines the
Sellers may be required to pay in respect of indemnification obligations to the
Buyer hereunder, and related fees and expenses), the Agent will forward (w) to
each Seller, such Seller's portion of the Purchase Price, (x) to each holder of
any option(s) for capital stock of the Company outstanding immediately prior to
the Closing, the cash-out amount payable in respect of such option(s), (y) to
each person listed on Schedule 2.03, a bonus in an amount up to the amount shown
thereon for such person, if and to the extent the Agent and JAF elect to pay
such bonus, all determined as set forth on Schedule 2.03 hereto, and (z) to the
Company, the Tax Withholding Amount (as defined in Schedule 2.03 hereto). Any
excess amounts retained by the Agent after payment of all purchase price
adjustments, indemnification obligations and expenses and Employee Bonuses will
be forwarded to the Sellers and the holders of such options who would otherwise
be entitled to receive such amounts. All payments made in satisfaction of the
Indebtedness and all payments made in respect of such option(s), whether such
payments are made by the Buyer or the Agent, shall be deemed to have been made
on behalf of NYLP or the Company, as the case may be. The Agent will indemnify
and hold the Buyer harmless from any claim of any Seller or any holder of an
option referred to above or any obligee in respect of any Indebtedness or
employees arising out the alleged misapplication of any sums paid by the Buyer
to the Agent under this Agreement.
Section 2.04. Determination of Working Capital Adjustment.
(a) Within 45 days after the Closing Date, the Buyer will deliver
to the Agent (i) a proposed balance sheet for the Company and its Subsidiaries
as of immediately prior to the Closing and (ii) a certificate setting forth the
Buyer's
4
<PAGE>
calculation of Closing Working Capital and the proposed adjustment to be made to
the Closing Purchase Price pursuant to Subsection 2.01(c) (the "Closing Working
Capital Certificate"). After the Closing and until the Closing Working Capital
is finally determined pursuant to this Section 2.04, in addition to Sellers'
rights set forth in Section 12.13, Sellers' duly authorized representatives
shall be entitled at all reasonable times to have access to the employees and
books and records of the Company as necessary in order to determine Sellers'
calculation of Closing Working Capital.
(b) If the Agent delivers written notice (the "Disputed Items
Notice") to the Buyer within 30 days after receipt by the Agent of the proposed
closing balance sheet and the Closing Working Capital Certificate, stating that
the Sellers object thereto, and specifying the basis for such objection and
setting forth the Sellers' proposed modification to the balance sheet and
computation of Closing Working Capital, the Buyer and the Agent will attempt to
resolve and finally determine the Closing Working Capital as promptly as
practicable.
(c) If the Buyer and the Agent are unable to agree upon the
computation of Closing Working Capital within 30 days after delivery of the
Disputed Items Notice, the Buyer and the Agent will select by lot an independent
"Big-6" accounting firm to resolve the disputed items and make a determination
of Closing Working Capital and any adjustment to the Purchase Price required as
a result thereof. Such determination will be made within 60 days after such
selection (or as promptly as practicable thereafter) and will be binding upon
the parties. The Buyer and the Sellers will use reasonable efforts to cause the
accounting firm to render its decision as soon as practicable thereafter,
including, without limitation, by promptly complying with all reasonable
requests by the accounting firm for information, books, records and similar
items. The accounting firm will make a determination as to each of the items in
dispute, which determination will be (i) in writing, (ii) furnished to each of
the parties hereto as promptly as practicable after the items in dispute have
been referred to the accounting firm, (iii) made in accordance with this
Agreement, and (iv) conclusive and binding upon each of the parties hereto. In
connection with their determination of the disputed items, the accounting firm
will be entitled to review the work papers, trial balances and similar materials
prepared by the Buyer in connection with its
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examination of the financial statements of the Company and its Subsidiaries; and
the accounting firm will not consider or make any adjustment in respect of any
matter which is not in dispute, other than an adjustment resulting from any
other adjustment in respect of a matter which is in dispute. The fees, costs and
expenses of the accounting firm so selected will be borne by the party whose
positions generally did not prevail in such determination (as determined by the
accounting firm), or if the accounting firm determines that neither party could
be fairly found to be the prevailing party, then such fees, costs and expenses
will be borne 50% by the Buyer and 50% by the Sellers.
(d) If the Agent does not deliver the Disputed Items Notice to the
Buyer within 30 days after receipt by the Agent of the items referred to in
Subsection (a) above, the amounts specified in the Closing Working Capital
Certificate will be conclusively presumed to be true and correct in all respects
and will be binding upon the parties.
(e) At such time as the Closing Working Capital is finally
determined, either (i) the Agent, on behalf of the Sellers, shall pay the Buyer
an amount equal to the excess of the Closing Purchase Price over the Purchase
Price, or (ii) the Buyer shall pay the Agent, for the benefit of the Sellers, an
amount equal to the excess of the Purchase Price over the Closing Purchase
Price. Each such payment shall be made by wire transfer of immediately available
funds and shall bear interest from the Closing Date to the date of payment at a
per annum rate equal to the sum of (x) the per annum rate of interest reported
by The Wall Street Journal as the three month London Interbank Offered Rate
(LIBOR) for the business day immediately preceding the Closing Date plus (y) 250
basis points.
Section 2.05. Additional Outstanding Shares. If at the time of the
Closing there are any outstanding shares of capital stock of the Company owned
by any person other than the Sellers or PPC as a result of the exercise of any
option therefor or otherwise, then the Sellers shall cause such person to become
a party to this Agreement (which shall be appropriately modified for such
purpose) as a Seller and to sell such shares to the Buyer pursuant hereto.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES
CONCERNING THE SELLERS AND THE AGENT
A. Each Seller hereby severally represents and warrants to the Buyer
that each of the statements contained in this Article III is true and correct:
Section 3.01A. Title. Such Seller is the sole record and beneficial
owner of the Company Stock set forth on Schedule 4.03 as being owned by such
Seller. Such Seller will have at the Closing, good, marketable and unencumbered
title to the Company Stock to be sold by such Seller hereunder. Such Seller has
full legal right, power and authority to enter into this Agreement and sell,
transfer, assign and deliver such Company Stock as herein agreed. Buyer will, on
transfer and delivery of the Company Stock at the Closing, acquire good and
marketable title to such Company Stock, free and clear of any of the following
(collectively, "Liens"): liens, encumbrances, security interests, claims of
other persons, voting trust or stockholder agreements or other similar
contracts, agreements, arrangements, commitments, options, rights of first
refusal or understandings, or restrictions on transfer other than restrictions
under generally applicable securities laws and other than liens, encumbrances,
security interests, claims of other persons, voting trust agreements or other
similar contracts, agreements, arrangements, commitments, options, rights of
first refusal or understandings, or restrictions on transfer caused by actions
of the Buyer. Such Seller has not granted any option or right, nor is a party to
any other agreement, which requires, or upon the passage of time or payment of
money, or occurrence of any other event, may require such Seller to transfer any
of the Company Stock being sold by such Seller to anyone other than the Buyer,
other than the Stockholders Agreement to be terminated at Closing pursuant to
Section 12.12.
Section 3.02A. Due Issuance. The Company Stock held by such Seller is
duly authorized, validly issued, fully paid and nonassessable.
Section 3.03A. Validity and Enforceability. This Agreement is, and each
of the other agreements and instruments of such Seller contemplated hereby will
be, the valid and binding obligations of such Seller, enforceable against such
Seller in accordance with their respective terms. The execution and performance
of this Agreement and the other instruments and
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agreements contemplated hereby by such Seller will not result in any violation
of, be in conflict with or constitute a default under, any law, statute,
regulation, ordinance, or contract, agreement, instrument, organizational
document, judgment, decree or order to which such Seller is a party or by which
such Seller is bound except for such violations, conflicts or defaults which are
not, individually or in the aggregate, material to the Company and its
Subsidiaries, taken as a whole or which would not adversely affect such Seller's
ability to consummate the transactions contemplated hereby.
Section 3.04A. Authorizations or Approvals. No third party
authorizations or approvals, including governmental authorizations or approvals,
other than those listed on Schedule 3.04A, are required to permit such Seller to
fulfill all its obligations under this Agreement.
Section 3.05A. Interests in Customers, Suppliers, Etc. Except as set
forth on Schedule 3.05A, neither such Seller, nor any entity controlled by,
controlling, or under common control with, Boston Ventures Management, Inc.,
nor, to the knowledge of such Seller, any officer or director of the Company or
its Subsidiaries who is an employee of the Company or its Subsidiaries or Boston
Ventures Management, Inc., possesses, directly or indirectly, any ownership
interest in, or is a director, officer or employee of, any person which is a
material supplier, customer, lessor, lessee or licensor of the Company or any
Subsidiary. Ownership of securities of a company whose securities are registered
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of
5% or less of any class of such securities shall not be deemed to be an
ownership interest for purposes of this Section 3.05A.
Section 3.06A. Litigation. There is no action, suit, investigation or
arbitration or administrative or other proceeding pending or, to the knowledge
of such Seller, threatened, against or affecting such Seller before any court or
arbitrator or any governmental body, agency or official which, individually or
in the aggregate, if determined or resolved adversely to such Seller, could
reasonably be expected to adversely affect the ability of such Seller to
consummate the transactions contemplated by this Agreement.
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B. The Agent makes the further representations to the Buyer as follows:
Section 3.01B. Organization and Existence. Each of BVLP IV and BVLP IVA
represents and warrants that it is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Section 3.02B. Authorization. Each of BVLP IV and BVLP IVA represents
and warrants that the execution, delivery and performance by it of this
Agreement and each of the agreements and instruments required to be delivered
hereby to which it is a party are within the respective powers of and have been
duly authorized by all necessary actions on its part.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY AND THE SUBSIDIARIES
The Sellers hereby jointly and severally represent and warrant to the
Buyer that each of the statements contained in this Article IV is true and
correct:
Section 4.01. Organization, Power and Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has full corporate power and authority to
own, lease and operate its properties and to carry on its business as such
business is now conducted. The copies of the Certificate of Incorporation and
Bylaws of the Company, each as amended to date (the "Company Charter Documents")
that have been delivered to the Buyer by the Sellers are complete and correct
copies thereof.
Section 4.02. Subsidiaries.
(a) Except as disclosed on Schedule 4.02(a), the Company has no
subsidiaries and does not, directly or indirectly, own or have the right to
acquire any equity interest in any other corporation, partnership, joint
venture, trust or other business organization. The record and beneficial owners
of all of the issued and outstanding capital stock of each of the Subsidiaries
and the respective numbers (and respective percentages) of such authorized and
outstanding shares of capital stock or other
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ownership interests held by such holders is as listed on Schedule 4.02(a). The
issued and outstanding shares of capital stock of the Subsidiaries are duly
authorized, validly issued, fully paid, non-assessable and free and clear of any
Lien, except Liens in favor of the Bank which will be extinguished at Closing in
accordance with Section 6.08. Except as set forth on Schedule 4.02(a), there are
no outstanding (i) shares of capital stock or any other securities of the
Subsidiaries, (ii) securities of the Company or any Subsidiary convertible into
or exchangeable for shares of capital stock or other securities or ownership
interest in any Subsidiary, or (iii) options or other rights to acquire from the
Company or any Subsidiary, or other obligation of the Company or any Subsidiary
to issue, any capital stock or other securities or ownership interest in, or any
securities convertible into or exchangeable for any capital stock or other
voting securities or ownership interests in any Subsidiary (the items in clauses
(i), (ii) and (iii), being referred to collectively as the "Subsidiary
Securities"). There are no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any Subsidiary Securities.
Upon consummation of the transactions contemplated by the Agreement, the Buyer
will own, directly or indirectly, 100% of the issued and outstanding capital
stock of each Subsidiary.
(b) Each of the Subsidiaries is duly organized, validly existing
and in good standing under the laws of its state of organization, as set forth
on Schedule 4.02(b). Each of the Subsidiaries has full corporate power and
authority to own, lease and operate its properties and to carry on its business
as such business is now conducted. The copies of the Certificate of
Incorporation and Bylaws of each Subsidiary, each as amended to date (the
"Subsidiary Charter Documents"), that have been delivered to the Buyer by the
Sellers are complete and correct copies thereof.
Section 4.03. Capitalization. Schedule 4.03 sets forth the authorized,
issued and outstanding shares of capital stock of the Company and a complete and
accurate list of the record owners of the capital stock of the Company and the
numbers (and respective percentages) of such authorized, issued and outstanding
shares of capital stock held by such holders. Except as set forth on
Schedule 4.03, there are no outstanding (i) shares of capital stock or other
securities of the Company, (ii) securities of the
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Company convertible into or exchangeable for shares of capital stock or other
securities of the Company, or (iii) options or other rights to acquire from the
Company, or other obligation of the Company to issue, any capital stock, other
securities or securities convertible into or exchangeable for capital stock or
other securities of the Company (the items in clauses (i), (ii), and (iii),
being referred to collectively as the "Company Securities"). The are no
outstanding obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Company Securities. Upon the consummation of the
transactions contemplated by this Agreement, the Buyer will own, directly or
indirectly, one hundred percent (100%) of the issued and outstanding capital
stock of the Company. PPC is the sole record and beneficial owner of the capital
stock of the Company set forth on Schedule 4.03 as being owned by PPC. PPC has
not granted any option or right, nor is a party to any other agreement, which
requires, or upon the passage of time or payment of money, or occurrence of any
other event, may require PPC to transfer any of the capital stock of the Company
owned by PPC. The capital stock of the Company held by PPC is duly authorized,
validly issued, fully paid and nonassessable.
Section 4.04. Qualification in Foreign Jurisdictions. Schedule 4.04
sets forth a complete and accurate list of each jurisdiction in which the
Company and each Subsidiary is duly qualified or licensed and in good standing
as a foreign corporation duly authorized to do business and there is no other
jurisdiction in which the character of the properties owned or leased or the
nature of the activities conducted by it makes such qualification or licensing
necessary, except for any jurisdiction(s) in which the failure to so qualify or
to be in good standing would not reasonably be expected to have a material
adverse effect on the financial condition, assets, results of operations or
business of the Company and its Subsidiaries, taken as a whole ("Material
Adverse Effect").
Section 4.05. Financial Statements. The Company has delivered to the
Buyer (a) the audited, consolidated balance sheet of the Company and its
Subsidiaries as at December 31, 1996 and December 31, 1995 (the "Audited
Statements") and the related audited, consolidated statements of operations,
stockholders' equity and cash flows of the Company and its Subsidiaries for the
years then ended and (b) the unaudited, consolidated balance sheet of the
Company and its Subsidiaries as at June 30, 1997
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(the "Balance Sheet Date") and at August 31, 1997 and the related unaudited,
consolidated statements of operations and cash flows of the Company and its
Subsidiaries for the six and eight month periods, respectively, then ended (the
"Unaudited Statements," and, together with the Audited Statements, the
"Financial Statements"). The Financial Statements and the notes thereto, if any,
fairly present the financial condition of the Company and its Subsidiaries at
such dates and the results of operations and cash flows for the Company and its
Subsidiaries for such periods, and were derived from the books and records of
the Company and its Subsidiaries and were prepared in accordance with generally
accepted accounting principles (except for the omission of the statements of
stockholders' equity and footnote disclosure and subject to year-end adjustments
which are not expected by the Sellers to be material individually or in the
aggregate, in the case of the Unaudited Statements) which were, except as set
forth on Schedule 4.05, consistently applied during the periods covered thereby.
Section 4.06. Absence of Certain Changes. Since the Balance Sheet Date,
(a) the Company and its Subsidiaries have conducted their respective businesses
in all material respects in the ordinary and usual course consistent with past
practice, (b) there has been no event, circumstance or condition relating
specifically to the Company or any Subsidiary (rather than to general economic
conditions or generally to the industries in which they operate) which has had a
Material Adverse Effect, (c) the Company has not made any dividend, distribution
or redemption in respect of its capital stock and (d) the Company and its
Subsidiaries have not taken any action or omitted to take any action which, if
taken or omitted subsequent to the date hereof and on or prior to the Closing,
would breach any of the agreements of the Company set forth in Section 6.02.
Section 4.07. Taxes. The representations set forth in this Section 4.07
are subject to the qualifications set forth on Schedule 4.07. The Buyer has been
provided with true and correct copies of the original and amended federal, state
and other Tax and/or estimated Tax and information returns filed by the Company
and its Subsidiaries through the date hereof (collectively, the "Returns") for
all open years. The Company and its Subsidiaries have prepared and filed in
compliance in all material respects with applicable law all Returns when due, or
at such other time without resulting in any liability of the Company or any of
its
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Subsidiaries in the future, and paid in all material respects all Taxes owed by
the Company or any Subsidiary, other than those not yet delinquent, provided
that, as to state Returns, the Sellers represent only with respect to Returns
filed in the states as specified on Schedule 4.07. All such Returns are true and
correct in all material respects. Neither the Company nor any Subsidiary has
ever executed any waiver that would have the effect of extending any applicable
statute of limitations in respect of any of its Tax liabilities. The charges,
accruals and reserves on the books of the Company in respect of taxes for all
fiscal periods are in the opinion of management adequate in accordance with
GAAP, and neither the Company nor any Seller knows of any unpaid assessment
against the Company of any material additional Taxes for any fiscal period or
any pending or threatened Tax examination or audit by any federal, state or
local taxing authority. All material Taxes and other assessments and levies
which the Company is required by law to withhold or to collect for payment have
been duly withheld and collected and paid to the proper governmental entity.
There are no Tax liens or claims pending or, to the knowledge of the Sellers,
threatened against the Company or any Subsidiary or their respective assets or
property. There are no outstanding tax sharing agreements or other such
arrangements between the Sellers, the Company or any other corporation or entity
(other than the Subsidiaries). There is no action, suit or proceeding now
pending and no claim, audit or investigation now pending against or with respect
to the Company or any Subsidiary in respect of any Tax; neither the Company nor
any Subsidiary will be required to include any adjustment in taxable income for
any Tax period (or portion thereof) ending after the Closing Date (a
"Post-Closing Tax Period") under Section 481(c) of the Code as a result of a
change in method of accounting for a Tax period (or portion thereof) ending on
or before the Closing Date (a "Pre-Closing Tax Period") or pursuant to the
provisions of any agreement entered into with any federal, state or local taxing
authority with regard to the Tax liability of the Company or any Subsidiary for
any Pre-Closing Tax Period; and, except as set forth on Schedule 4.07, to the
knowledge of the Company and the Sellers, neither the Company nor any Subsidiary
has been a member of an affiliated, consolidated, combined or unitary group or
participated in any other arrangement whereby any income, revenues, receipts,
gain or loss of the Company or any Subsidiary was determined or taken into
account for Tax purposes with reference to or in conjunction
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with any income, revenues, receipts, gain, loss, asset or liability of any other
person.
For purposes hereof, "Tax" means any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem, value added,
profits, license, withholding on amounts paid to or by the Company or any
Subsidiary, payroll, employment, excise, severance, property, environmental or
windfall profit tax or other tax or other like amount or charge, together with
any interest, penalty, addition to tax or additional amount imposed by any
federal, state or local taxing authority.
Section 4.08. Personal Property, Etc. Except as listed on Schedule
4.08, the Company and each Subsidiary has good title or a valid leasehold or
license interest in each item of personal property used by it in its business,
and which is material to the Company and its Subsidiaries, taken as a whole,
free and clear of any security interests or encumbrances of every kind, nature
and description, except for such as are not, individually or in the aggregate,
material to the Company and its Subsidiaries, taken as a whole, and the
operating assets of the Company and each Subsidiary are, in the aggregate, in
good operating condition and repair, normal wear and tear excepted. The assets
and properties of the Company and its Subsidiaries are adequate to conduct their
respective operations as currently conducted.
Section 4.09. Real Property. Neither the Company nor any of its
Subsidiaries owns any real property. Schedule 4.09 sets forth a true and
complete list of each interest in real property leased by the Company and its
Subsidiaries, including the lessor of such leased property, and identifies each
lease or any other arrangement under which such property is leased. The Company
and each Subsidiary enjoys peaceful and quiet possession of its leased premises
and has not received any notice asserting the existence of a default under any
such leasehold. The Company has not been informed that the lessor under any of
such leases has taken action or threatened to terminate the lease before the
expiration date specified in the lease. Each such lease is valid and in full
force and effect as to the Company and the Subsidiaries, as applicable, and, to
the knowledge of the Sellers and the Company, each other party thereto and the
Company and the Subsidiaries, as applicable, have performed all material
obligations required to be performed by law thereunder. Except as shown on
Schedule 4.09, the transactions contemplated by this
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Agreement will not entitle the lessor of any real property leased by the Company
or any Subsidiary to terminate the lease on such property prior to that
expiration date. None of the Sellers, the Company nor any of the Subsidiaries
has received any notice of any appropriation, condemnation or like proceedings,
or of any violation of any applicable zoning law, regulation or other law,
order, regulation, requirement or provision of any lease relating to or
effecting any of the leased properties, except as set forth on Schedule 4.09,
and, to the knowledge of the Sellers and the Company, no such proceeding has
been threatened or commenced.
Section 4.10. Intellectual Property, Etc.
(a) Schedule 4.10(a) hereto sets forth a true and complete list of
all material United States and state trademark and service mark registrations
and any pending applications therefor (together with any registration numbers in
respect thereof) and trade names, in each case which are held by the Company and
its Subsidiaries (the "Trademarks"). Except as set forth on Schedule 4.10(a), to
the knowledge of the Sellers, the Company or a Subsidiary is the owner of all
right, title and interest in and to the Trademarks, except for licenses granted
in the ordinary course of business and subject to the Liens in favor of the Bank
which will be extinguished pursuant to Section 6.08. Except as listed on
Schedule 4.10(a), the Company has not been notified (i) of any material claim by
any person that the Company or any Subsidiary is violating any trademark,
service mark or trade name owned by any other person, (ii) that it is using any
trademark, service mark or trade name which is confusingly similar to that of
any other person or (iii) of any material adverse claim of any other person
relating to the property set forth on Schedule 4.10(a) or Schedule 4.10(b) and
none of the Sellers or the Company knows of any basis for any such material
claim.
(b) Schedule 4.10(b) sets forth a true and complete list of all
material publications of the Company and its Subsidiaries currently in
publication (the "Publications"). Except as set forth in Schedule 4.10(b), the
Company or a Subsidiary owns the copyright in and to each of the Publications
(the "Copyrights"). The Publications published by the Company or its
Subsidiaries in the United States bear a copyright notice complying with the
applicable provisions of the Universal Copyright Convention. Except as set forth
on Schedule 4.10(b),
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the Company has not been notified of any material claim, and, to the knowledge
of the Sellers and the Company, no material unresolved claims have been asserted
or given since January 1, 1996, in each case by any person challenging the right
of the Company or its Subsidiaries to publish any of the Publications or
challenging or questioning the validity or enforceability of or the copyright to
any of the Publications or any license agreement related thereto, nor, to the
knowledge of the Sellers and the Company, is there any action, suit,
investigation or proceeding by or before any court or other governmental entity
which would reasonably be expected to materially adversely affect the validity
or enforceability of the copyright to or the right of the Company or any of its
Subsidiaries to publish any of the Publications.
Section 4.11. Information Relating to Certain Contracts and
Commitments. Schedule 4.11 hereto sets forth for the Company and its
Subsidiaries a complete and accurate list and compilation of all of the
following contracts, agreements and instruments (collectively, "Contracts"),
except those which will be terminated at or before the Closing:
(a) Contracts with respect to which the Company or any
Subsidiary is a party and which involve aggregate payments of more than
$75,000 or which place any material limitation on the method of
conducting or scope of the Company's or any Subsidiary's business,
including agreements containing covenants not to compete, other than
contracts (such as license agreements and royalty agreements) entered
into in the ordinary course of the Company's or any Subsidiary's
business;
(b) Contracts of the Company or any Subsidiary (i) with
shareholders, officers, employees, agents and/or consultants of the
Company or any Subsidiary involving annual payments in excess of
$100,000 or (ii) with the spouses or relatives of such persons
involving annual payments in excess of $25,000;
(c) Contracts of the Company or any Subsidiary relating to
Indebtedness;
(d) Contracts relating to any securities of the Company or any
Subsidiary or rights in connection therewith;
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(e) Contracts for the sale of any of the Company's or any
Subsidiary's material assets or properties other than in the ordinary
course of business;
(f) any partnership, joint venture or other similar Contract;
(g) any Contract relating to the acquisition or disposition of
any business (whether by merger, sale of stock, sale of assets or
otherwise);
(h) any warranty, guaranty or other similar undertaking with
respect to a contractual performance extended by the Company or any
Subsidiary, other than in the ordinary course of business;
(i) any Contract which contains restrictions with respect to
payment of dividends or any other distribution in respect of capital
stock of the Company or any of the Subsidiaries; and
(j) any Contract with any labor union or association
representing any employee.
All of the foregoing listed or required to be listed are herein called "Schedule
4.11 Contracts." Except as set forth in Schedule 4.11, there have been no
material amendments or side or supplemental arrangements to or in respect of any
Schedule 4.11 Contract. The Company has made available to the Buyer true and
correct copies of all Schedule 4.11 Contracts. Each Schedule 4.11 Contract is
valid and in full force and effect as to the Company and the Subsidiaries, as
applicable, and, to the knowledge of the Sellers and the Company, each other
party thereto, and the Company and the Subsidiaries, as applicable, have
performed all material obligations required to be performed by them thereunder.
Except as set forth on Schedule 4.11, neither the Company nor any Subsidiary is
in material default under or breach or violation of any Schedule 4.11 Contract,
and the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in any such default, breach or
violation of any Schedule 4.11 Contract or give any party the right to terminate
or materially alter the terms of any Schedule 4.11 Contract. To the knowledge of
the
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Sellers and the Company, no third party is in material default under any
material provision of any Schedule 4.11 Contract.
Section 4.12. Litigation. Except as disclosed on Schedule 4.12, there
is no litigation, action, suit, arbitration or administrative or other
proceeding pending or, to the knowledge of the Sellers and the Company,
threatened against the Company or any Subsidiary or any of their respective
properties before any court or arbitrator or any governmental body, agency or
official, or which otherwise challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement (collectively,
"Litigation").
Section 4.13. Required Consents, Etc. Except as set forth on Schedule
4.13, no consent, order, approval, authorization, declaration or filing,
including, without limitation, any consent, approval or authorization of or
declaration or filing with any third party under any of the Schedule 4.11
Contracts or any governmental authority is required on the part of the Company
or any Subsidiary for or in connection with the execution, delivery or
performance of this Agreement or sale of the Company Stock pursuant hereto,
except for those which, if not obtained, would not have a Material Adverse
Effect.
Section 4.14. Licenses and Permits. Schedule 4.14 hereto sets forth a
list of all licenses, permits and authorizations of governmental authorities
held by the Company or any Subsidiary which are material to their businesses
(collectively, the "Authorizations"). The Company and its Subsidiaries are in
material compliance with all Authorizations, and all of the Authorizations are
in full force and effect. No condition exists that with notice or lapse of time
or both would constitute a material default under any of the Authorizations.
Section 4.15. Compliance with Law. The Company and its Subsidiaries are
in compliance with all foreign, federal, state or local statutes, laws,
ordinances, judgments, decrees, orders or governmental rules, regulations,
policies and guidelines applicable to them, except where noncompliance would not
have a Material Adverse Effect (and except as to Environmental Laws, as to which
Section 4.21 applies).
Section 4.16. Employees and Compensation.
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(a) Except as described on Schedule 4.16(a) hereto, (i) no
employees of the Company or any Subsidiary are represented by any union; (ii)
neither the Company nor any Subsidiary is or has been a party to a collective
bargaining agreement and no collective bargaining agreement is currently being
negotiated by or on behalf of the Company or any of the Subsidiaries; (iii)
there is no labor strike, slowdown, stoppage or organizational effort pending
or, to the knowledge of the Sellers and the Company, threatened against the
Company or any Subsidiary; and (iv) no material claim in respect of the
employment of any current or former employee of the Company or any Subsidiary
has been asserted and is currently pending, or, to the knowledge of the Company
and the Sellers, threatened, against the Company or any of the Subsidiaries.
(b) Schedule 4.16(b) sets forth (i) a true and correct list of the
name and current annual salary of each officer or employee of the Company or any
Subsidiary whose annual cash compensation exceeds $100,000 and (ii) any other
form of compensation (other than salary or customary benefits) paid or payable
by the Company or any Subsidiary to each such person for the current fiscal
year. Neither the Company nor any Subsidiary will have any liability or
obligation to any employee in respect of any Employee Bonuses as of or following
the Closing.
(c) The relationships of the Company and its Subsidiaries with
their employees are in general good commercial working relationships.
Section 4.17. Benefit Plans.
(a) Schedule 4.17(a) hereto sets forth all material employee
benefit plans, agreements and arrangements of any type (including, but not
limited to, plans described in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), with respect to which the Company
or any ERISA Affiliate has any material obligation or liability or which are
maintained, contributed to or sponsored by the Company or any ERISA Affiliate
for the benefit of any current or former employee, officer or director of the
Company or any ERISA Affiliate (collectively, as to arrangements which are not
multiemployer plans as defined in Section 3(37) of ERISA, the "Benefit Plans",
and as to arrangements which are multiemployer plans as defined in Section 3(37)
of ERISA, the "Multiemployer
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Plans"). "ERISA Affiliate" means any entity that, together with the Company or a
Subsidiary would be considered a single employer within the meaning of Section
4001 of ERISA or Section 414 of the Internal Revenue Code of 1986, as amended
(the "Code").
(b) With respect to each Benefit Plan, the Company has made
available to Buyer as applicable true and complete copies of: (i) any and all
plan texts and agreements; (ii) any and all summary plan descriptions and
material modifications thereto; (iii) the most recent annual report; (iv) the
most recent annual and periodic accounting of plan assets; (v) the most recent
determination letter received from the Internal Revenue Service (the "Service");
(vi) a copy of each trust or other funding arrangement; and (vii) all other
material documents (including all amendments thereto) prepared in connection
with each such Benefit Plan.
(c) Except as set forth on Schedule 4.17(c), with respect to each
Benefit Plan and, with respect to each Multiemployer Plan, to the knowledge of
the Sellers: (i) such Plan has been administered and enforced in accordance with
its terms and all applicable laws in all material respects; (ii) no breach of
fiduciary duty has occurred with respect to which the Company, any Subsidiary or
any such Plan may be liable or otherwise damaged in any material respect;
(iii) no legal action, suit or claim is pending or, to the knowledge of the
Sellers and the Company, threatened, with respect to any such Plan (other than
claims for benefits in the ordinary course) as a result of which the Company,
any Subsidiary or any such Plan may be liable or otherwise damaged in any
material respect and, to the knowledge of the Sellers and the Company, no fact
or event exists that could give rise to any such action, suit or claim; (iv) no
non-exempt "prohibited transaction" (within the meaning of either Section
4975(c) of the Code or Section 406 of ERISA) has occurred with respect to which
the Company, any Subsidiary or any such Plan may be liable or otherwise damaged
in any material respect; and (v) the Company and its ERISA Affiliates have
satisfied in all material respects all of their statutory, regulatory and
contractual obligations that have matured with respect to each such Plan.
(d) Except as set forth on Schedule 4.17(d), no Benefit Plan is or
has been subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of
the Code. Except as set forth on
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Schedule 4.17(d), the present value of all "benefit liabilities" (whether or not
vested) (as defined in Section 4001(a)(16) of ERISA) under each Benefit Plan
which is subject to Title IV of ERISA did not exceed as of the most recent plan
actuarial valuation date the then current value of the assets of such Plan as
determined pursuant to Section 412 of the Code. For purposes of determining the
present value of benefit under any such Benefit Plan, the actuarial assumptions
and methods used under such Plan for the most recent plan actuarial valuation
shall be used and all benefits provided under the Plan shall be deemed to be
fully vested. Except as set forth on Schedule 4.17(d), none of the Benefit Plans
is (i) a plan or arrangement described under Section 4(b)(5) or 401(a)(1) of
ERISA or (ii) a plan maintained in connection with a trust described in Section
501(c)(9) of the Code. Except as set forth on Schedule 4.17(d), (i) none of the
Benefit Plans provides for the payment of separation, severance, termination or
similar-type benefits to any Person and (ii) none of the Benefit Plans provides
for or promises retiree medical or life insurance benefits to any current or
former employee, officer or director of the Company or any Subsidiary. Except as
set forth on Schedule 4.17(d), each of the Benefit Plans is subject only to the
laws of the United States or a political subdivision thereof.
(e) Except as set forth on Schedule 4.17(e), each Benefit Plan or
trust which is intended to be qualified or exempt from taxation under Section
401(a), 401(k) or 501(a) of the Code has received a favorable determination
letter from the Service that it is so qualified or exempt, and, to the knowledge
of the Sellers and the Company, no fact or event has occurred since the date of
such determination letter which reasonably could be expected to adversely affect
the qualified or exempt status of any Benefit Plan or trust in a manner that
cannot be cured.
(f) Neither the Company nor any ERISA Affiliate has incurred any
material liability for any excise tax arising under Section 4971, 4972, 4975,
4980 or 4980B of the Code and, to the knowledge of the Sellers and the Company,
no fact or event exists which reasonably could be expected to give rise to such
liability. Neither the Company nor any ERISA Affiliate has incurred any material
liability to the Pension Benefit Guaranty Corporation relating to Title IV of
ERISA (other than for the payment of premiums to the Pension Benefit Guaranty
Corporation), and, to the knowledge of the Sellers and the Company, no fact or
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event exists which reasonably could be expected to give rise to such liability.
(g) Except as set forth on Schedule 4.17(g), all material
contributions, premiums or payments required to be made with respect to any
Benefit Plan or Multiemployer Plan have been made on or before their due dates.
All such contributions have been fully deducted for income tax purposes and no
such deduction has been challenged or disallowed by any governmental entity,
and, to the knowledge of the Sellers and the Company, no fact or event exists
which reasonably could be expected to give rise to any such challenge or
disallowance.
(h) Except as set forth on Schedule 4.17(h), there has been no
amendment to, written interpretation of or announcement (whether or not written)
by the Company or any ERISA Affiliate thereof relating to, or change in employee
participation or coverage under, any Benefit Plan that would increase materially
the expense of maintaining such Benefit Plan above the level of the expense
incurred in respect thereto for the most recent fiscal year ended prior to the
date hereof.
Section 4.18. Banking Relations; Powers of Attorney. All material
arrangements which the Company or any Subsidiary has with any banking
institution are described on Schedule 4.18 indicating with respect to each of
such arrangements the type of arrangement maintained and the person or persons
authorized in respect thereof. Neither the Company nor any Subsidiary has
granted a power of attorney or other banking authority to any person except as
indicated on Schedule 4.18.
Section 4.19. Insurance. The Company, its Subsidiaries and their
respective businesses, properties and/or employees, officers and directors are
insured under the insurance policies or fidelity bonds listed on Schedule 4.19,
all of which are valid and in full force. Other than as listed on Schedule 4.19,
the Company has no other policies and fidelity bonds covering the assets,
business, operations, employees, officers and directors of the Company and its
Subsidiaries. There is no material claim by the Company or any Subsidiary
pending under any of such policies or bonds as to which, to the knowledge of the
Sellers, coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds. All premiums due and payable under all such policies and
bonds have been paid and the
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Company and its Subsidiaries have complied in all material respects with the
terms and conditions of all such policies and bonds. Such policies of insurance
and bonds are of the type and in amounts deemed by the management of the Company
to be sufficient. The Company does not know of any threatened termination of, or
premium increase with respect to, any of such policies or bonds.
Section 4.20. Brokers. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of any of the Sellers, the Agent, the Company or any Subsidiary who is entitled
to any fee or commission from the Buyer, the Company or any of the Subsidiaries
in connection with the transactions contemplated by this Agreement.
Section 4.21. Compliance with Environmental Laws. Except as set forth
on Schedule 4.21,
(a) All of the Company's and its Subsidiaries' current operations
are, and have been at all times, in compliance with all Environmental Laws (as
hereinafter defined), except where any failure to comply would not have a
Material Adverse Effect. The Company and its Subsidiaries have obtained all
permits, licenses and authorizations required under applicable Environmental
Laws, and the Company and its Subsidiaries and their respective operations are
in compliance with the terms and conditions of any required permits, licenses
and authorizations, in each case except where any failure would not have a
Material Adverse Effect.
(b) None of the Company's and its Subsidiaries' operations have
involved the use, handling, manufacture, treatment, processing, storage,
generation, release, discharge dumping or disposal of any Hazardous Substances
(as hereinafter defined), except in compliance in all material respects with all
applicable Environmental Laws, in each case except where any failure to comply
would not have a Material Adverse Effect.
(c) There is no pending or, to the knowledge of the Sellers, threatened
Environmental Claim (as hereinafter defined) against the Company or any
Subsidiary.
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(d) There has been no release by the Company or its Subsidiaries
of any Hazardous Substances at, on or under any property owned or leased by them
which would have a Material Adverse Effect.
(e) Since January 1, 1996, there has been no environmental
investigation, study, audit, test, review or other analysis conducted by or on
behalf of the Company or any Subsidiary (or by a third party of which the
Company has knowledge) in relation to the current or prior business of the
Company or any Subsidiary or any property or facility currently or, to the
knowledge of the Company and the Sellers, previously owned or leased by the
Company or any Subsidiary which has not been delivered to the Buyer prior to the
date hereof.
As used herein, the following terms shall have the meanings indicated
below:
"Environmental Laws" shall mean all federal, state and local statutes,
regulations, rules, codes and ordinances (including judicial and administrative
interpretations of the foregoing) relating to pollution, Hazardous Substances or
the discharge of materials into the Environment.
"Environment" shall mean soil, surface waters, groundwaters, land,
surface or subsurface strata and ambient air.
"Environmental Claim" shall mean any litigation, claim, proceeding,
order, directive, summons, complaint or citation, from any governmental
authority or any third person relating to Environmental Laws or Hazardous
Substances.
"Hazardous Substances" shall mean any substance which is a "hazardous
substance", "hazardous waste", "toxic substance", "toxic waste", "pollutant",
"contaminant" or words of similar import under any Environmental Law, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), and the Clean Air Act (42 U.S.C.
Section 7401 et seq.), and including without limitation, which contains
polychlorinated biphenyl or gasoline, diesel fuel or other petroleum
hydrocarbons or volatile organic compounds.
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Section 4.22. Audit Bureau of Circulation Reports. The Sellers and the
Company have delivered to the Buyer true, correct and complete copies of the
semi-annual Audit Bureau of Circulation Statements for the New York Law Journal
and The National Law Journal, covering in each case the four most recent
periods, which reports accurately reflect, in all material respects, the
circulation of such publications for the period to which they relate.
Section 4.23. Intercompany Accounts. Schedule 4.23 contains a complete
list of all intercompany balances as of the close of business on the date
immediately preceding the date hereof between BVLP IV, BVLP IVA and their
affiliates, on the one hand, and the Company and the Subsidiaries, on the other
hand. Other than (a) as disclosed on Schedule 4.23 and (b) compensation,
benefits and expense reimbursements paid in the ordinary course consistent with
past practices, since January 1, 1997 there has not been, and prior to the
Closing there will not be, any accrual of liability by the Company or any
Subsidiary to any of the Sellers or their affiliates or other transaction
between the Company or any Subsidiary, on the one hand, and any of the Sellers
and their affiliates, on the other hand, or any action taken (other than this
Agreement) which could reasonably be expected to result in any such accrual
after the Closing.
Section 4.24. Accounts Receivable. To the knowledge of the Company and
the Sellers, except as set forth on Schedule 4.24, all of the accounts
receivable reflected in the Unaudited Statements (net of the reserves set forth
therein) and all accounts receivable which have arisen since August 31, 1997
(net of any additional reserves established since August 31, 1997), are valid
and enforceable claims.
Section 4.25. Customer and Supplier Relations. The relationships of the
Company and its Subsidiaries with their advertisers and suppliers are in general
good commercial working relationships.
Section 4.26. No Undisclosed Liabilities. There are no material
liabilities of the Company or any Subsidiary of a kind required to be reflected
in a balance sheet prepared in accordance with GAAP (excluding footnote
disclosures) other than (a) liabilities provided for in the Financial Statements
or disclosed in the notes thereto; (b) liabilities referred to
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herein or in any Schedule hereto; and (c) other undisclosed liabilities incurred
since the date of the Unaudited Statements in the ordinary course of business
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to the Sellers that each of
the statements contained in this Article V is true and correct:
Section 5.01. Organization, Power and Standing. The Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware with all requisite limited liability company
power and authority to own its properties and to carry on its business as such
business is now conducted and presently proposed to be conducted.
Section 5.02. Power and Authority Relative to Transaction. The Buyer
has full limited liability company power and authority and has taken all
required action necessary to permit it to execute and deliver and to carry out
the terms of this Agreement and all other documents or instruments required
hereby and none of such actions will violate any provision of law or of the
certificate of formation or other organizational document of the Buyer or will
result in any breach of any agreement, mortgage, instrument, order or judgment
to which the Buyer is a party or by which its assets may be bound.
Section 5.03. Valid and Binding Obligation. This Agreement constitutes,
and each other instrument or agreement to be executed and delivered by the Buyer
in accordance herewith will constitute, the valid and legally binding obligation
of Buyer, enforceable against it in accordance with their respective terms.
Section 5.04. Brokers. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of the Buyer who is entitled to any fee or commission from the Sellers or the
Agent in connection with the transactions contemplated by this Agreement.
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Section 5.05. Financial Statements. The Buyer has delivered to the
Sellers the Buyer's unaudited financial statements as of and for the period
ending July 31, 1997, which have been restated to give effect to the acquisition
by the Buyer of the business of American Lawyer Media, L.P., true, correct and
complete copies of which are attached as Schedule 5.05 hereto. Such financial
statements fairly present, in all material respects, the financial condition of
the Buyer at such date and results of operations for such period (as so
restated). The net worth of the Buyer as of the date hereof determined in
accordance with GAAP would not be materially different from that set forth on
such financial statements.
Section 5.06. Investment Representations.
(a) The Buyer is acquiring the Company Stock for its own account
for investment only, and not with a view to, or for sale in connection with, any
distribution of the Company Stock in violation of the Securities Act of 1933, as
amended (the "Securities Act"), any rule or regulation under the Securities Act
or any state securities laws.
(b) The Buyer has had such opportunity as it has deemed adequate
to obtain from management of the Company such information about the business and
affairs of the Company as is necessary to permit the Buyer to evaluate the
merits and risks of its investment in the Company and its Subsidiaries.
(c) The Buyer has sufficient experience in business, financial and
investment matters to be able to evaluate the merits and risks involved in the
purchase of the Company Stock and to make an informed investment decision with
respect to such purchase.
(d) The Buyer understands that the Company Stock has not been
registered under the Securities Act and is therefore "restricted securities"
within the meaning of Rule 144 under the Securities Act, and the Company Stock
cannot be sold, transferred or otherwise disposed of unless it is subsequently
registered under the Securities Act or an exemption from registration is then
available.
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ARTICLE VI
COVENANTS
Section 6.01. Access to Information; Confidentiality.
(a) Until the Closing, or the earlier termination of this
Agreement in accordance with its terms, the Sellers shall, and shall cause the
Company and its Subsidiaries to, permit the Buyer and its counsel, accountants
and other representatives reasonable access, upon reasonable notice and during
normal business hours throughout the period prior to the Closing, to the senior
management personnel, attorneys, accounting firms, properties, books and records
of the Company and its Subsidiaries. Any such access shall be coordinated
through JAF.
(b) The confidentiality agreement between the Company and WP
Management Partners, LLC dated August 13, 1997 shall remain in full force and
effect and shall be applicable to the Buyer, but shall be subject to (and is
hereby amended by) the terms of Section 6.01(c) hereof.
(c) Notwithstanding the foregoing, (i) Buyer may disclose
information relating to the Company and its Subsidiaries or the transactions
contemplated hereby to potential investors in Buyer and potential financing
sources or other persons assisting in the financing in accordance with customary
practices in light of the potential investment or financing transaction under
consideration, (ii) the initial press release in respect of this Agreement and
the transactions contemplated hereby will be in such form to which the Agent and
the Buyer have previously agreed, and (iii) prior to the Closing or in the event
the Agreement is terminated, no other press release or similar public statement
in respect of this Agreement or the transactions contemplated hereby shall be
made without the written agreement of each of the parties hereto.
Section 6.02. Conduct of Business. Between the date of this Agreement
and the Closing, unless the Buyer shall otherwise consent in writing:
(a) Required Actions. The Sellers shall cause the Company and each
Subsidiary to do the following:
(i) maintain their respective corporate existences;
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(ii) conduct their businesses only in the ordinary course
consistent with past practice (including making capital
expenditures in the ordinary course consistent with past
practice), provided that the Company may (but shall not be
obligated to) consummate the contemplated acquisition of New
Jersey Lawyer, Inc. (the "New Acquisition"), which prior to
such acquisition will not otherwise have been directly or
indirectly affiliated with the Company, any of the
Subsidiaries or any of their shareholders, directors or
officers, and as to which no such person or entity shall have
any direct or indirect interest (including as principal or as
a financial or other advisor) other than by virtue of the
interest of the Company therein;
(iii) use reasonable efforts to: (A) preserve intact its business
organizations, (B) keep available the services of its officers
and employees, and (C) maintain its relationships and goodwill
with licensors, suppliers, distributors, subscribers,
advertisers, landlords, employees, agents and others having
business relationships with it; and
(iv) refrain from effecting any amendment or modification to the
Company Charter Documents or the Subsidiary Charter Documents
from their respective forms on the date of this Agreement.
(b) Prohibited Actions. The Sellers shall not permit the Company
or any Subsidiary to do any of the following:
(i) effect any amendment to the Company Charter Documents or the
respective organizational documents of the Subsidiaries;
(ii) acquire or dispose of any properties or assets except in the
ordinary course of business consistent with past practice;
(iii) make any dividend, distribution or redemption in respect of
the capital stock of the Company other than in accordance with
any Schedule 4.11 Contract
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in connection with the termination of any employee of the
Company and/or any of its Subsidiaries;
(iv) make any material change in accounting methods or practices,
except as required by law or GAAP;
(v) materially increase any bonuses, salaries or other
compensation to any director, officer, employee or stockholder
(other than JAF, as to whom no increase will be permitted,
except as required pursuant to his existing employment
agreement) or enter into any material employment, severance,
or similar agreement with any director, officer, or employee,
other than in the ordinary course of business;
(vi) materially increase any benefits under any profit sharing,
bonus, deferred compensation, savings, insurance, pension,
retirement or other employee benefit plan for or with any of
its employees (other than JAF, as to whom no increase will be
permitted, except as required pursuant to his existing
employment agreement), other than in the ordinary course of
business;
(vii) enter into any material contract or commitment (for capital
expenditures or otherwise) except material contracts and
commitments in the ordinary course of business, except as
necessary to consummate the New Acquisition and except for
capital expenditure commitments in accordance with plans as
previously disclosed to the Buyer;
(viii) incur, assume or guarantee Indebtedness, except current
borrowings in the ordinary course of business and except as
necessary to consummate the New Acquisition;
(ix) issue or sell any shares of capital stock (except upon
exercise of options therefor outstanding on the date hereof)
or any other securities, or issue any securities convertible
into, or options, warrants or rights to purchase or subscribe
to, or enter into any arrangement or contract with respect to
the issue and sale of, any shares
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of its capital stock or any other securities of the Company or
any Subsidiary, or make any other changes in their capital
structure; and
(x) agree to do any of the foregoing.
Prior to the Closing Date, or the earlier termination of this Agreement in
accordance with its terms, none of the Sellers, the Company, its Subsidiaries,
their respective officers or directors, agents or affiliates will, directly or
indirectly, encourage, initiate, solicit or engage in negotiations with any
person, other than the Buyer (and its affiliates and representatives),
concerning any purchase of any capital stock of the Company or any Subsidiary or
any merger, sale of all or any material portion of the business or similar
transaction involving the Company or any Subsidiary.
Section 6.03. Consents and Approvals. The Sellers and the Buyer shall
cooperate and use all reasonable efforts to obtain all governmental and
regulatory approvals and actions necessary to consummate the transactions
contemplated hereby which are required to be obtained by applicable law or
regulations or otherwise. The Sellers and the Company shall use reasonable
efforts to obtain all consents to the transactions which are the subject of this
Agreement which are required by any agreement or lease listed on Schedules 4.11
and/or 4.13 which is marked on such Schedules with an asterisk.
Section 6.04. HSR Act Filings. To the extent required in connection
with the transactions contemplated by this Agreement, each of the Buyer and the
Sellers shall promptly make any and all required filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and will request early termination of the waiting period required under
the HSR Act. The parties agree to cooperate and promptly respond to any
inquiries or investigations initiated by the Federal Trade Commission or the
Department of Justice in connection with any such filings.
Section 6.05. Resignations. Unless otherwise specified by the Buyer in
writing at least three (3) days prior to Closing, the Sellers shall cause each
member of the Board of Directors of the Company and/or any of its Subsidiaries
(other than JAF) to tender his or her resignation as such director effective as
of the Closing.
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Section 6.06. Reasonable Efforts. All parties hereto agree to use all
reasonable good faith efforts to obtain the satisfaction of the conditions
specified in this Agreement necessary to consummate the transactions
contemplated hereby as promptly as possible. Without limiting the generality or
effect of the foregoing, at the expense of the Buyer, the Company will furnish
all information and other assistance reasonably required by the Buyer in
connection with the Buyer's financing of the transactions referred to herein,
including participating in rating agency, road show and other presentations, so
long as the same does not result in any undue interruption of the business and
normal operations of the Company and its Subsidiaries, provided that (x) prior
to commencing such road show, the Buyer will give JAF at least five (5) business
days prior notice, (y) such road show shall be of a customary and reasonable
duration and (z) JAF shall be flown back and forth to New York City each weekend
and, if practicable taking into consideration the progress of the financing at
the time, once during each week that the road show continues.
Section 6.07. Satisfaction and Termination of Equity Arrangements. On
or prior to the Closing Date, the Company will satisfy and provide releases at
the Closing with respect to all liabilities under any phantom stock and other
equity-based plans.
Section 6.08. Termination of Security Interests and Swaps. Except as
set forth on Schedule 6.08, on or prior to the Closing Date, all Liens on or
against the Company, any Subsidiary or any of the capital stock of the Company
or any of the Subsidiaries or any of the respective assets or rights securing
Indebtedness immediately prior to the Closing Date shall be released and all
swaps and other similar arrangements listed or required to be listed on Schedule
4.11 shall be terminated, and Buyer shall be provided with documentation by
Sellers reasonably satisfactory to it evidencing such release and termination.
Section 6.09. Maintenance of Net Worth by the Buyer. From and after the
date hereof, the Buyer shall refrain from effecting any dividend or other
distribution, repurchase of capital stock, recapitalization, redemption or
similar transaction or guarantee the obligations of any other person to the
extent that such transaction would result in the reduction of Buyer's net worth
(determined in accordance with generally accepted accounting principles) to less
than $30,000,000.
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ARTICLE VII
CONDITIONS TO CLOSING
Section 7.01. Conditions Precedent to Buyer's Obligations. The
obligation of Buyer to purchase the Company Stock is expressly subject to the
fulfillment or its express written waiver of the following conditions on or
prior to the Closing Date:
(a) Representations and Warranties True; Obligations Performed.
(i) (A) The representations and warranties contained in Articles
III and IV that are qualified as to materiality or Material
Adverse Effect shall be true and correct at and as of the
Closing and (B) all other representations contained in
Articles III and IV shall be true and correct in all material
respects at and as of the Closing unless, in the case of both
clauses (A) and (B), the failure to be true and correct or
true and correct in all material respects, as aforesaid, is
not material to the Company and its Subsidiaries taken as a
whole (it being agreed that, for purposes of determining the
materiality to the Company and its Subsidiaries under this
Section 7.01(a)(i), (x) the effects of any breach of
representation or warranty will be considered both
individually and together with any other breach and (y) to the
extent of any breach by the Sellers of the representations and
warranties relating to Litigation as to which Sellers or the
Company first received notice after the date hereof and prior
to the Closing ("Post-signing Litigation"), any breach of
Section 4.12 will be deemed to be material for purposes of
this Section 7.01(a)(i) if such breach, individually and when
considered with any other breaches, has had or is reasonably
likely to have a Material Adverse Effect);
(ii) the Sellers, the Company and the Agent shall have performed in
all material respects, on or before the Closing Date, all
obligations contained in
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this Agreement which by the terms hereof are required to be
performed by Sellers, the Company and the Agent on or before
the Closing Date, unless the failure to perform any such
obligation on or before the Closing Date is not material to
the Company and its Subsidiaries taken as a whole; provided
that, for purposes of this Section 7.01(a)(ii), (A) the
effects of any failure to perform any such obligation on or
before the Closing Date will be considered both individually
and together with any other failure to perform; and (B) the
obligations of the Sellers set forth in Sections 2.05, 6.08,
8.02(a) and 8.02(b) shall have been performed in all respects
without reference to any materiality or Material Adverse
Effect qualification contained in such Sections; and
(iii) the Buyer shall have received a certificate signed by the
Sellers to such effect (the "Sellers' Closing Certificate").
(b) Required Consents. The Sellers shall have obtained all
consents, if any, to the transactions which are the subject of this Agreement
which are required by any agreement or lease listed on Schedules 4.11 and/or
4.13 and marked on such Schedules with an asterisk.
(c) No Injunction, etc. There shall not be (x) any order of any
court or governmental agency restraining or invalidating the transactions which
are the subject of this Agreement or (y) any litigation or other similar
proceeding seeking to enjoin, or seeking damages from the Buyer, the Company or
any Subsidiary on account of, the consummation of the transactions contemplated
by this Agreement which has had or is reasonably likely to have a Material
Adverse Effect (other than any such litigation or other similar proceeding
arising out of any action (or failure to act) on the part of the Buyer or any of
its employees, agents or representatives).
(d) Legal Opinions from Counsel for the Company and the Sellers.
Buyer shall have received the written opinion of Choate, Hall & Stewart, counsel
for the Company and the Sellers, dated as of the Closing Date and substantially
in the form of Exhibit 7.01(d) (the "Choate Hall Opinion").
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(e) HSR Act. The waiting period under the HSR Act applicable to
the transactions contemplated by this Agreement shall have expired or been
terminated.
(f) Actions at Closing. The actions and deliveries contemplated by
Section 8.02 shall have been fulfilled or shall be contemporaneously fulfilled.
(g) Termination of Stockholder Arrangements. The Company shall
have provided Buyer with evidence of the termination of each of the agreements
in respect of the capital stock of the Company and the Subsidiaries listed or
required to be listed on any Schedule hereto, including, without limitation, all
employee options.
(h) No Material Adverse Change. Since the Balance Sheet Date,
there shall have been no event, circumstance or condition relating specifically
to the Company (rather than to general economic conditions or generally to the
industries in which they operate) which has had or would reasonably be expected
to have a Material Adverse Effect.
(i) FIRPTA. The Company shall have furnished to Buyer, on or prior
to the Closing Date, a non-foreign person affidavit required by Section 1445 of
the Code.
Section 7.02. Conditions Precedent to Sellers' Obligations. The
obligation of the Sellers to sell the Company Stock is subject to the
fulfillment or express written waiver of the following conditions on or prior to
the Closing Date:
(a) Representations and Warranties True; Obligations Performed.
Each of the representations and warranties of the Buyer contained in Article V
shall be true and correct in all material respects at and as of the Closing, the
Buyer shall have performed, on or before the Closing Date, all obligations
contained in this Agreement which by the terms hereof are required to be
performed by Buyer on or before the Closing Date, and the Sellers shall have
received a certificate signed by an authorized officer of Buyer to such effect.
(b) Legal Opinion from Counsel for Buyer. Sellers shall have
received the written opinion of Jones, Day, Reavis & Pogue, counsel for Buyer,
dated the Closing Date, substantially in form of Exhibit 7.02(b) hereto (the
"Buyer's Counsel Opinion").
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(c) No Injunction, etc. There will not be (x) any order of any
court or governmental agency restraining or invalidating the transactions which
are the subject of this Agreement or (y) any litigation or other similar
proceeding seeking to enjoin, or seeking damages from any Seller, the Company or
any Subsidiary on account of, the consummation of the transactions contemplated
by this Agreement which has had or is reasonably likely to have a Material
Adverse Effect (other than any such litigation or other similar proceeding
arising out of any action (or failure to act) on the part of any Seller or any
of their employees, agents or representatives).
(d) HSR Act. The waiting period under the HSR Act applicable to
the transactions contemplated by this Agreement shall have expired or been
terminated.
(e) Actions at Closing. The actions and deliveries contemplated by
Section 8.03 shall have been fulfilled or shall be contemporaneously fulfilled.
(f) Substitution of Letter of Credit. The Buyer shall have
furnished to the landlord under the Company's lease of the premises located at
345 Park Avenue, New York, New York, a letter of credit satisfying the
applicable requirements of such lease in connection herewith.
ARTICLE VIII
CLOSING
Section 8.01. Date and Place of Closing. The consummation of the
transactions contemplated hereby (the "Closing") shall be held at 10:00 a.m. on
(a) December 19, 1997 or (b) if the conditions to Closing are not then satisfied
or waived, such later date (but in no event later than one (1) business day
prior to the applicable date specified in Section 11.01(f)) as is five (5) days
after all conditions to Closing contemplated by this Agreement have been
satisfied or waived, at the offices of Choate, Hall & Stewart, Exchange Place,
53 State Street, Boston, Massachusetts or at such other time and place as the
parties may mutually agree in writing (the "Closing Date").
Section 8.02. Deliveries at Closing by the Sellers. At the Closing,
provided the applicable conditions to the Closing
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<PAGE>
specified in Article VII are satisfied or duly waived, the Sellers shall deliver
or cause to be delivered to the Buyer the following:
(a) certificates representing all of the Company Stock duly
endorsed for transfer or with duly executed stock powers attached,
together with a new certificate or certificates duly issued in the name
of the Buyer representing the Company Stock;
(b) evidence of the cancellation of each of the options listed
on Schedule 4.03 hereto;
(c) the written resignations of those directors of the Company
and its Subsidiaries (other than JAF) as shall have been requested by
Buyer in writing at least three (3) days prior to the Closing;
(d) the Choate Hall Opinion; and
(e) such ancillary closing documents as the Buyer or its
counsel may reasonably request.
Section 8.03. Deliveries at Closing by Buyer. At the Closing, provided
the applicable conditions to the Closing specified in Article VII are satisfied
or duly waived, the Buyer shall deliver or cause to be delivered to the Sellers
the following:
(a) payment of the Purchase Price as provided in Section 2.03;
(b) the Buyer's Counsel Opinion; and
(c) such ancillary closing documents as the Sellers or their
counsel may reasonably request.
ARTICLE IX
FURTHER ASSURANCES
Section 9.01. Further Assurances. Following the Closing, the Sellers
shall execute and deliver to the Buyer such documents and take such other
actions as the Buyer may reasonably request in order to consummate more
effectively the transactions
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<PAGE>
contemplated hereby and to vest in the Buyer good title to the Company Stock
being transferred hereunder.
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01. Survival. The Sellers and the Buyer agree that the
representations and warranties contained in Article III and Sections 4.02, 4.03,
4.05, 4.07, 4.12, 4.20 and 4.23 of this Agreement, and the Sellers' Closing
Certificate to the extent solely relating thereto (the "Specified
Representations"), shall survive the Closing as follows: (a) the representations
and warranties contained in Sections 3.01A, 3.02A, 4.02, 4.03, 4.20 and 4.23
shall survive indefinitely, and (b) the remaining Specified Representations
shall survive the Closing for a period of three months, and no claim for
indemnification resulting from the breach of such representations and warranties
shall be made more than three months after the Closing Date. The Sellers and the
Buyer further agree that the other representations, warranties, covenants and
agreements contained herein shall not survive the Closing, except that
(x) Article II shall survive the Closing to the extent necessary to effectuate
the post-Closing determination of the Purchase Price provided for therein and
the distribution of amounts pursuant to Schedule 2.03, (y) Articles XI and XII
shall survive the Closing and (z) this Article X shall survive the Closing in
accordance with its terms.
Section 10.02. Indemnification of Buyer. Subject to Section 10.01, the
Sellers agree to indemnify the Buyer and hold it harmless against and in respect
of any and all payments, damages, claims, demands, losses, expenses, costs,
obligations and liabilities, including without limitation reasonable attorneys'
fees (collectively, "Losses"), which arise or result from any breach of any of
the Specified Representations. Notwithstanding the foregoing,
(a) (i) subject to clauses (ii) and (iii) of this Section
10.02(a), the Sellers shall have no obligation to make indemnification
payments hereunder that exceed in the aggregate $5,000,000 (the
"General Cap");
(ii) there shall be no dollar limit on the obligation of
the Sellers to indemnify the Buyer hereunder in respect of Losses
arising out of Litigation of which the
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<PAGE>
Sellers had knowledge and failed to notify the Buyer in writing prior
to the Closing and which (x) was required to be listed on Schedule 4.12
or (y) constituted Post-signing Litigation; and
(iii) the Sellers shall have no obligation to make aggregate
indemnification payments hereunder in respect of Losses arising out of
Litigation or Post-signing Litigation that in the aggregate exceed the
sum of the amount then available under the General Cap plus $2,500,000.
(b) the Sellers shall have no obligation to indemnify or hold
harmless the Buyer with respect to any single Loss (or Losses arising out of an
individual breach or series of related breaches of any Specified Representation)
which is (or are) less than $100,000, provided that if such amount is exceeded
then, subject to the other limitations herein, the Sellers will be liable for
the full amount of such single Loss (or Losses arising out of an individual
breach or series of related breaches of any Specified Representation);
(c) other than with respect to Litigation referred to in Section
10.02(a)(ii), the Sellers shall have no obligation to indemnify or hold harmless
the Buyer except to the extent that the aggregate amount of Losses incurred by
the Buyer (excluding Losses for which indemnification would not be available as
a result of clause (b) above) exceeds $2,000,000 (subject to the other
limitations contained in this Article X);
(d) the Sellers shall not be obligated to indemnify or hold
harmless the Buyer with respect to Losses arising out of breaches of the
representations or warranties of the Sellers known by the Buyer at or prior to
the Closing other than with respect to Post-signing Litigation.
In determining the foregoing thresholds and in otherwise determining the amount
of any Losses for which the Buyer is entitled to assert a claim for
indemnification, the amount of any such Losses shall be determined after
deducting therefrom the net amount of any insurance proceeds or other third
party recoveries actually received by the Buyer, the Company or any Subsidiary
in respect of such Losses (which recoveries the Buyer agrees to use diligent
efforts to obtain) and the amount of any tax benefit related thereto actually
realized. If an indemnification payment is received by the Buyer, and the Buyer,
the Company or any
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<PAGE>
Subsidiary later receives insurance proceeds or other third party recoveries, or
realizes tax benefits in respect of the related Losses, the Buyer shall
immediately pay to the Agent, for the account of the Sellers that made such
indemnification payment, a sum equal to the lesser of (i) the actual amount of
net insurance proceeds or other third party recoveries actually received, or tax
benefit actually realized or (ii) the actual amount of the indemnification
payment previously paid by the Sellers with respect to such Losses. The
limitations in this Section 10.02 will not apply to any breach of any covenant
or agreement of the parties that survives the Closing pursuant to Section 10.01.
Section 10.03. Procedure for Indemnification. Any party making a claim
for indemnification hereunder shall notify the indemnifying party of the claim
in writing, describing in reasonable detail (to the extent reasonably
practicable) the claim, the amount thereof, and the basis therefor. The party
from whom indemnification is sought shall respond to each such claim within 30
days of receipt of such notice. No action shall be taken pursuant to the
provisions of this Agreement or otherwise by the party seeking indemnification
until the later of (a) the expiration of the 30-day response period (unless
reasonably necessary to protect the rights of the party seeking
indemnification), or (b) 30 days following the termination of the 30-day
response period if a response received within such 30-day period by the party
seeking indemnification requested an opportunity to cure the matter giving rise
to indemnification (and, in such event, the amount of such claim for
indemnification shall be reduced to the extent so cured within such 30-day cure
period). If such demand is based on a claim by a third party, the indemnifying
party shall have the right to assume the entire control of the defense thereof,
including at its own expense, employment of counsel reasonably satisfactory to
the indemnified party, and, in connection therewith, the party claiming
indemnification shall reasonably cooperate, at the expense of the indemnifying
party, to make available to the defending party all pertinent information under
its control and shall not thereafter be indemnified for the cost of any counsel
retained by it in connection with such claim. In the event that the indemnifying
party assumes the entire control of the defense of such claim, then the
indemnifying party shall diligently maintain such defense and shall have the
right to settle or resolve any such claim by a third party, provided that
(i) any such settlement or resolution includes an unconditional release of the
indemnified party from liability and (ii) any settlement or resolution
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<PAGE>
contemplated by the Sellers, as the indemnifying party, that involves any action
by the Buyer or the Company (other than the payment of money which is paid by
the Sellers, subject to the limits contained in Section 10.02 hereof) shall not
be concluded without the prior written approval of the Buyer, which approval
shall not be unreasonably withheld.
Section 10.04. Remedies Exclusive. The remedies provided in this
Article X shall be the exclusive remedies of the parties hereto after the
Closing in connection with, arising out of or related to this Agreement and the
transactions contemplated hereby, except as required in connection with the
post-Closing adjustment to the Purchase Price provided for in Article II and
except for actual fraud and except for any breach of any agreement or covenant
hereunder that survives the Closing pursuant to Section 10.01. No other claim
for indemnification or damages (whether direct or indirect, incidental or
consequential, compensatory or punitive or otherwise) (or any similar claim)
resulting from the breach of any representation, warranty, covenant or agreement
set forth herein or in any certificate delivered pursuant hereto or otherwise
related to this Agreement and/or the transactions contemplated hereby shall be
made after the Closing Date.
ARTICLE XI
TERMINATION
Section 11.01. Termination. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated:
(a) by mutual written consent of Buyer and Sellers;
(b) by the Buyer, if (i) the Sellers shall have breached or failed
to perform in any material respect any of the their obligations, covenants or
agreements under this Agreement (subject to the proviso in Section 7.01(a)(ii),
if applicable), or if any of the representations and warranties contained in
Articles III and IV that is qualified as to materiality or Material Adverse
Effect shall not be true and correct or any other representation therein shall
not be true in any material respect, and (ii) such breach, failure or
misrepresentation is material to the Company and the Subsidiaries taken as a
whole and is not cured to the Buyer's reasonable satisfaction within thirty
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<PAGE>
(30) days after the Buyer gives the Sellers written notice identifying such
breach, failure or misrepresentation;
(c) by the Sellers, if (i) the Buyer shall have breached or failed
to perform any of its obligations, covenants or agreements under this Agreement,
or if any of the representations and warranties of the Buyer set forth in this
Agreement shall not be true in any material respect, and (ii) such breach,
failure or misrepresentation is not cured to the Sellers' reasonable
satisfaction within thirty (30) days after Sellers give the Buyer written notice
identifying such breach, failure or misrepresentation;
(d) by the Buyer, if the conditions set forth in Section 7.01
become incapable of satisfaction;
(e) by the Sellers, if the conditions set forth in Section 7.02
become incapable of satisfaction; or
(f) by either the Buyer or the Sellers if the Closing has not
occurred by February 16, 1998, provided that Buyer or the Sellers may also
terminate this Agreement at any time on or after January 1, 1998 if on the date
of termination (i) the Buyer's promissory note held by Time Warner (or any
instrument executed in connection with a refinancing of such note) shall then be
(or with the giving of notice, the passage of time or both would be) due or
(ii) Time Warner (or any holder of any such other instrument) shall have taken
any action to exercise its remedies under such promissory note (or other
instrument) in accordance with the terms thereof.
Section 11.02. Effect of Termination.
(a) If this Agreement is terminated (i) under Section 11.01(a) or
(ii) under Sections 11.01(d), (e) or (f) at a time when no party is in breach of
a representation or warranty or in violation of a covenant or agreement
contained herein, except as provided in Section 11.02(c), all further
obligations of the Sellers to the Buyer and of the Buyer to the Sellers will
terminate without further liability of any party hereto.
(b) If this Agreement is terminated under Section 11.01(b), (c),
(d), (e) or (f) at a time when one or more parties is in breach of a
representation or warranty or in violation of a covenant or agreement contained
in this Agreement (in each case
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<PAGE>
after giving effect to any applicable cure period and any other applicable
qualification set forth in such applicable section), except (i) as provided in
Section 11.02(c), the liabilities and obligations of the parties not in breach
or violation of this Agreement shall terminate, and (ii) the party or parties
which are in breach or violation of this Agreement shall remain liable for such
breaches and violations, and nothing shall be deemed to restrict the remedies
available against such party or parties. In the event that, upon such
termination, the Buyer is in breach or violation of this Agreement, the Buyer
shall immediately pay to the Company the sum of $5,000,000, as liquidated
damages, whereupon, notwithstanding any other provision hereof except Section
11.02(c), the Buyer shall have no further obligation hereunder, including as a
result of any breach hereof.
(c) The obligations of the Buyer under Sections 6.01(b) and
6.01(c)(iii) shall survive the termination of this Agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Notices. All notices to a party hereunder shall be
deemed to have been adequately given if delivered in person (in a manner through
which delivery may be verified) or sent by nationally recognized overnight
delivery service or mailed, certified mail, return receipt requested, or by
facsimile, to such party at its address or facsimile number set forth below (or
such other address or facsimile number as it may from time to time designate in
writing to the other parties hereto):
To the Sellers:
c/o Boston Ventures Management, Inc.
21 Custom House Street
Boston, Massachusetts 02110
Attention: James M. Wilson
Facsimile No.: (617) 737-3709 (if before
November 17, 1997)
(617) 350-1571 (effective
November 17, 1997)
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<PAGE>
and
James A. Finkelstein
____________________
____________________
____________________
Facsimile No.: ___________
with a copy (which shall not constitute notice) to:
Stephen M. L. Cohen, Esq.
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Facsimile No.: (617) 248-4000
To the Buyer:
ALM Holdings LLC
c/o Wasserstein & Co., Inc.
31 West 52nd Street, 27th Floor
New York, New York 10019
Attn: Randall J. Weisenburger
Facsimile No.: (212) 969-7880
with a copy (which shall not constitute notice) to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek, Esq.
Facsimile No.: (212) 755-7306
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<PAGE>
To the Agent:
c/o Boston Ventures Management, Inc.
21 Custom House Street
Boston, Massachusetts 02110
Attention: James M. Wilson
Facsimile No.: (617) 737-3709 (if before
November 17, 1997)
(617) 350-1571 (effective
November 17, 1997)
with a copy (which shall not constitute notice) to:
Stephen M. L. Cohen, Esq.
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Facsimile No.: (617) 248-4000
All such notices, requests and other communications will be deemed received on
the date delivered to the address of the recipient if delivered prior to 5:00
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice, request or communication will be deemed not
to have been received until the next succeeding business day in the place of
receipt.
Section 12.02. No Waiver. No failure to exercise and no delay in
exercising, on the part of the Buyer or the Sellers, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
Section 12.03. Amendments and Waivers. This Agreement may be modified
or amended only by a writing signed by the Buyer and the Sellers. No waiver of
any term or provision hereof shall be effective unless in writing signed by the
party waiving such term or provision.
Section 12.04. Choice of Law. This Agreement shall be governed by and
construed in accordance with the internal laws of
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<PAGE>
the State of New York, without regard to the choice of law provisions thereof.
Section 12.05. Binding Effect and Benefits. This Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
heirs, successors and assigns but may not be assigned by any party without the
written consent of the Buyer and the Sellers.
Section 12.06. Integration; Disclosure on Schedules. This writing,
together with the Exhibits and Schedules attached hereto, embodies the entire
agreement and understanding among the parties with respect to this transaction
and supersedes all prior discussions, understandings and agreements concerning
the matters covered hereby, except as set forth in Section 6.01. Information set
forth on any Schedule to this Agreement shall be deemed to be set forth on all
appropriate Schedules to this Agreement to the extent such information is
responsive to the representation and warranty to which such other schedule
relates and the relevance to such other schedule is apparent on the face of the
first schedule.
Section 12.07. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 12.08. Limitation on Scope of Agreement. If any provision of
this Agreement is unenforceable or illegal, such provision shall be enforced to
the fullest extent permitted by law and the remainder of the Agreement shall
remain in full force and effect.
Section 12.09. Provisions Concerning Agent. The Agent shall not be
liable to any Seller for any action taken by it in good faith pursuant to this
Agreement, and the Sellers shall jointly and severally indemnify the Agent from
any losses, claims, damages and expenses arising out of its serving as agent
hereunder.
Section 12.10. Headings. The headings of Articles and Sections
herein are inserted for convenience of reference only and shall be ignored in
the construction or interpretation hereof.
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<PAGE>
Section 12.11. Sales Tax; Expenses. Notwithstanding any provisions of
law imposing the burden of such taxes on the Sellers or the Buyer, as the case
may be, Buyer shall be responsible for and shall pay (a) all sales, use,
recording, ad valorem, excise, transfer and all other federal, state, local or
other taxes (other than taxes on income to the Sellers) and recording fees, if
any, which arise out of the sale by the Sellers of the Company Stock and other
transactions contemplated by this Agreement, and (b) all governmental charges,
if any, upon the sale or transfer of any of the Company Stock; provided that
taxes, fees and charges referred to in clauses (a) and (b) of this Section
12.11, in respect of which filings are made within 30 days after the Closing
Date, shall be borne equally by the Buyer, on the one hand, and the Sellers, on
the other hand. All legal and other costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses, except as otherwise expressly
provided herein.
Section 12.12. Termination of Contracts. Concurrent with the Closing
and without any further action required by any party, the Stockholders Agreement
dated as of December 1, 1995 among the Company, JAF, BVLP IV and BVLP IVA shall
terminate.
Section 12.13. Books and Records. The Buyer will retain after the
Closing Date all books and records pertaining to the Company and the
Subsidiaries in accordance with a reasonable records retention policy. After the
Closing, the Sellers' duly authorized representatives shall be entitled at all
reasonable times to have access to and to make copies of all such books and
records as necessary in connection with Sellers' tax returns and/or reasonably
required by the Sellers in connection with their acquisition and ownership of
the Company Stock up to and including the Closing.
Section 12.14. No Third-Party Beneficiaries. Nothing in this Agreement
will be construed as giving any person, other than the parties hereto and their
respective heirs, successors and permitted assigns, any right, remedy or claim
under or in respect of this Agreement or any provision hereof.
Section 12.15. Jurisdiction. Except as otherwise expressly provided in
this Agreement, any suit, action or proceeding seeking to enforce any provision
of, or based on any matter
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<PAGE>
arising out of or in connection with, this Agreement or the transactions
contemplated hereby may be brought in any court of competent jurisdiction in the
Borough of Manhattan or the United States District Court for the Southern
District of New York and each of the parties hereby consents to the jurisdiction
of such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding which is brought in any such court has been
brought in an inconvenient form. Process in any such suit, action or proceeding
may be served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 12.01 will
be deemed effective service of process on such party.
Section 12.16. Certain Interpretive Matters
(a) Unless the context otherwise requires,
(i) all references to Sections, Articles, Exhibits or Schedules
are to be Sections, Articles, Exhibit or Schedules of or to
this Agreement,
(ii) each term defined in this Agreement has the meaning assigned
to it,
(iii) each accounting term not otherwise defined in this Agreement
has the meaning assigned to it in accordance with generally
accepted accounting principles,
(iv) words in the singular include the plural and vice versa, and
(v) the term "including" means including without limitation. All
references to $ or dollar amounts will be to lawful currency
of the United States.
(b) No provision of this Agreement will be interpreted in favor
or, or against, any of the parties hereto by reason of the extent to which any
such party or its counsel participated
48
<PAGE>
in the drafting thereof or by reason of the extent to which any such provision
is inconsistent with any prior draft hereof or thereof.
(c) All references to the "knowledge of the Company" or "knowledge
of the Sellers" or words of similar import will be deemed to be references to
the actual knowledge of the individuals listed on Schedule 12.16(c).
Section 12.17. Publicity. If JAF at any time ceases to be employed by
the Company or any Subsidiary, no public statement will be made by JAF or the
Company without the other's prior written approval regarding the circumstances
(other than the fact) of such termination.
Section 12.18. Definitions. The following terms, as used in this
Agreement, have the meanings given to them in the section indicated:
<TABLE>
<CAPTION>
Term Section or Place Where Defined
<S> <C>
Agent First Paragraph
Audited Statements Section 4.05
Authorizations Section 4.14
Balance Sheet Date Section 4.05
Bank Section 2.03
Benefit Plans Section 4.17
Buyer First Paragraph
Buyer's Counsel Opinion Section 7.02
BVLP IV First Paragraph
BVLP IVA First Paragraph
Choate Hall Opinion Section 7.01
Closing Section 8.01
Closing Date Section 8.01
Closing Purchase Price Section 2.02(a)
Closing Working Capital Section 2.02(b)
Closing Working Capital Certificate Section 2.04(a)
Code Section 4.17
Company Introduction
Company Charter Documents Section 4.01
Company Stock Introduction
Company Securities Section 4.03
Contracts Section 4.11
Copyrights Section 4.10(b)
Disputed Items Notice Section 2.04(b)
Employee Bonuses Schedule 2.03
</TABLE>
49
<PAGE>
<TABLE>
<S> <C>
ERISA Section 4.17
Environment Section 4.21
Environmental Claim Section 4.21
Environmental Laws Section 4.21
Financial Statements Section 4.05
General Cap Section 10.02
HSR Act Section 6.04
Hazardous Substances Section 4.21
Indebtedness Section 2.02(c)
JAF First Paragraph
LJE Introduction
Liens Section 3.01
Litigation Section 4.12
Losses Section 10.02
Material Adverse Effect Section 4.04
New Acquisition Section 6.02
NYLP Introduction
Post-signing Litigation Section 7.01(a)
PPC First Paragraph
Publications Section 4.10(b)
Purchase Price Section 2.01
Returns Section 4.07
Schedule 4.11 Contracts Section 4.11
Securities Act Section 5.05
Sellers First Paragraph
Sellers' Closing Certificate Section 7.01
Service Section 4.17
Specified Representations Section 10.01
Subsidiaries Introduction
Subsidiary Charter Documents Section 4.02(b)
Subsidiary Securities Section 4.02(a)
Tax Section 4.07
Tax Withholding Amount Schedule 2.03
Trademarks Section 4.10(a)
Unaudited Statements Section 4.05
</TABLE>
50
<PAGE>
Section 12.19. Non-Assignability. This Agreement shall inure to the
benefit of and be binding on the parties hereto and their respective successors
and assigns. This Agreement shall not be assigned by any party hereto, without
the express written consent of the Buyer and the Agent, and any attempted
assignment, without such consents, shall be null and void; provided, however,
that (a) effective following the Closing, the Buyer may assign its rights or
delegate its duties to any affiliate of the Buyer, provided that no such
delegation will relieve the Buyer of its obligations hereunder, and (b) the
Buyer (or any such assignee) may assign its rights hereunder (or any portion
thereof) to any lender or other person or entity in connection with any
financing, provided that no such delegation will relieve the Buyer of its
obligations hereunder.
[Signatures appear on the following pages.]
51
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as a sealed instrument under the laws of the State of New York as of
the date first above written.
BUYER: ALM HOLDINGS, LLC
By_____________________________
Name: Randall J. Weisenburger
Title: President and Chief
Executive Officer
SELLERS: ______________________________
James A. Finkelstein
SELLERS AND AGENT: BOSTON VENTURES LIMITED
PARTNERSHIP IV
By: Boston Ventures Company
Limited Partnership IV, its
general partner
By____________________________
Name:
Title:
BOSTON VENTURES LIMITED
PARTNERSHIP IVA
By: Boston Ventures Company
Limited Partnership IV, its
general partner
By____________________________
Name:
Title:
52
<PAGE>
ds1/361282.15
53
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SCHEDULE 2.03
ALLOCATION OF PURCHASE PRICE AMONG THE SELLERS
(INCLUDING COMPUTATION OF THE "CASH OUT AMOUNT"
PAYABLE IN RESPECT OF OPTIONS)
(a) The amount to be paid by the Agent to each Seller in respect
of each share of Company Stock owned by such Seller (the "Per Share Amount")
shall be determined by (i) adding to the Purchase Price the amount of $7,712,273
(such amount representing the aggregate exercise price of the option(s) for
capital stock of the Company outstanding and exercisable immediately prior to
the Closing (the "Options")), (ii) subtracting therefrom (A) the amount paid at
Closing in full satisfaction of Indebtedness, (B) the amount of the Employee
Bonuses referred to in paragraph (b) below and (C) the amount reserved by the
Agent in order to pay the purchase price adjustments, any indemnification
obligations and any related expenses of the Sellers relating to the transactions
contemplated by the Agreement, and (iii) dividing the remainder by the total
number of shares of Company Stock plus the shares of capital stock of the
Company issuable upon exercise of the Options.
(b) Subject to paragraph (d) below, and if and to the extent the
Agent and the Sellers elect to pay any such bonus (each, an "Employee Bonus";
collectively, the "Employee Bonuses"), the following employees shall receive
Employee Bonuses in amounts up to those specified below upon the Closing:
<TABLE>
<S> <C>
Steven Farbman $172,160.00
Paul Mastronardi 172,160.00
Rose Ann Morangelli 43,470.00
Mark Winwood 43,470.00
Kevin Vermeulen 52,610.00
Ruth Hochberger 61,740.00
Joseph Lamport 80,000.00
Other Employees 74,390.00
-----------
Total $700,000.00
-----------
-----------
</TABLE>
(c) Subject to paragraph (d) below, the amount to be paid by the
Agent to each holder of an Option shall be determined by multiplying the
aggregate number of shares of capital stock
<PAGE>
subject to such Option by the remainder of (i) the Per Share Amount (as
determined above), minus (ii) the exercise price per share of such Option.
(d) The amount paid to any such holder of Options on the Closing
Date and the amount paid as a bonus to any employee pursuant to paragraph (b)
shall be reduced by the amount of such holder's or employee's share of any tax
withholding obligations applicable thereto, which amount as determined by the
Agent shall be furnished to the Company by the Agent, held by the Company and
paid when due, together with the employer's share, to the applicable taxing
authorities (the "Tax Withholding Amount").
(e) At such time as the Agent determines to distribute any amount
retained by it from the Purchase Price, the distribution of funds provided for
in this schedule shall be recalculated, taking into account the amounts
previously distributed and then to be distributed, so that each Seller and
holder of an Option receives the aggregate amount such person would have
received if all such amounts had been distributed at Closing.
(f) In connection with the foregoing, the Agent shall not make any
payment of any commission, fee or other similar amount payable to the Agent or
any of its affiliates. Except as provided in the preceding sentence, the Agent
may, after consultation with JAF, pay the expenses of the Sellers relating to
negotiating and closing the transactions contemplated by the Agreement in an
aggregate amount of up to $400,000. The Agent shall not pay any such expenses in
excess of such aggregate amount without the prior agreement of JAF. The Agent
may pay, out of funds received by it from the Buyer, all purchase price
adjustments, indemnification payments and related expenses deemed reasonable by
it.
ds1/361282.15
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
ALM CAPITAL CORP.
I, THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, as from time to time amended, do
hereby certify as follows:
FIRST: The name of the Corporation is
ALM Capital Corp.
SECOND: The registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, Delaware. The name of its registered agent in the State
of Delaware at such address is the Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage, directly or
indirectly, in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware as from
time to time amended.
FOURTH: The total authorized capital stock of the Corporation shall
be 1,000 shares of Common Stock, par value $.01 per share.
FIFTH: The name and mailing address of the incorporator is as
follows:
Name Mailing Address
---- ---------------
Sanford B. Kaynor, Jr. 599 Lexington Avenue
New York, New York 10022
SIXTH: The business of the Corporation shall be managed under the
direction of the Board of Directors except as otherwise provided by law. The
number of Directors of the Corporation shall be fixed from time to time by, or
in the manner provided in, the By-Laws. Election of Directors need not be by
written ballot unless the By-Laws of the Corporation shall so provide.
SEVENTH: The Board of Directors may make, alter or repeal the By-Laws
of the Corporation except as otherwise provided in the By-Laws adopted by the
Corporation's stockholders.
1
<PAGE>
EIGHTH: The Directors of the Corporation shall be protected from
personal liability, through indemnification or otherwise, to the fullest extent
permitted under the General Corporation Law of the State of Delaware as from
time to time in effect.
1. A Director of the Corporation shall under no circumstances have
any personal liability to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a Director except for those breaches and
acts or omissions with respect to which the General Corporation Law of the State
of Delaware, as from time to time amended, expressly provides that this
provision shall not eliminate or limit such personal liability of Directors.
Neither the modification or repeal of this paragraph 1 of Article EIGHTH nor any
amendment to said General Corporation Law that does not have retroactive
application shall limit the right of Directors hereunder to exculpation from
personal liability for any act or omission occurring prior to such amendment,
modification or repeal.
2. The Corporation shall indemnify each Director and Officer of the
Corporation to the fullest extent permitted by applicable law, except as may be
otherwise provided in the Corporations's By-Laws, and in furtherance hereof the
Board of Directors is expressly authorized to amend the Corporation's By-Laws
from time to time to give full effect hereto, notwithstanding possible self
interest of the Directors in the action being taken. Neither the modification
or repeal of this paragraph 2 of Article EIGHTH nor any amendment to the General
Corporation Law of the State of Delaware that does not have retroactive
application shall limit the right of Directors and Officers to indemnification
hereunder with respect to any act or omission occurring prior to such
modification, amendment or repeal.
NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
2
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this 24th day of
November, 1997.
/s/ Sanford B. Kaynor, Jr.
------------------------------
Sanford B. Kaynor, Jr.
Sole Incorporator
3
<PAGE>
Exhibit 3.2
BY-LAWS
OF
ALM CAPITAL CORP.
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of the stockholders of the
Corporation shall be held either within or without the State of Delaware, at
such place and on such date and time as the Board of Directors may designate
from time to time in the call of the meeting or in a waiver of notice thereof,
on such date as the Board of Directors shall fix by resolution in each year
beginning with the year 1997 for the purpose of electing directors and for the
transaction of such other business as may properly be brought before the
meeting.
Section 2. Special Meetings. Special Meetings of the stockholders may be
called by the Board of Directors or by the President, and shall be called by the
President or by the Secretary upon the written request of the holders of record
of at least thirty-five percent (35%) of the shares of stock of the Corporation,
issued and outstanding and entitled to vote, at such times and at such place
either within or without the State of Delaware as may be stated in the call or
in a waiver of notice thereof.
Section 3. Notice of Meetings. Notice of the time, place and purpose of
every meeting of stockholders shall be delivered personally or mailed not less
than ten days nor more than sixty days previous thereto to each stockholder of
record entitled to vote, at such stockholder's post office address appearing
upon the records of the Corporation or at such other address as shall be
furnished in writing by him or her to the Corporation for such purpose. Such
further notice shall be given as may be required by law or by these By-Laws.
Any meeting may be held without notice if all stockholders entitled to vote are
present in person or by proxy, or if notice is waived in writing, either before
or after the meeting, by those not present.
Section 4. Quorum. The holders of record of at least a majority of the
shares of the stock of the Corporation, issued and outstanding and entitled to
vote, present in person or by proxy, shall, except as otherwise provided by law
or by these By-Laws, constitute a quorum at all meetings of the stockholders; if
there be no such quorum, the holders of a majority of such shares so present or
represented may adjourn the meeting from time to time until a quorum shall have
been obtained.
Section 5. Organization of Meetings. Meetings of the stockholders shall be
presided over by the Chairman of the Board, if there be one, or if the Chairman
of the Board is not present by the President, or if the President is not
present, by a chairman to be chosen at the meeting. The
<PAGE>
Secretary of the Corporation, or in the Secretary of the Corporation's absence,
an Assistant Secretary, shall act as Secretary of the meeting, if present.
Section 6. Voting. At each meeting of stockholders, except as otherwise
provided by statute or the Certificate of Incorporation, every holder of record
of stock entitled to vote shall be entitled to one vote in person or by proxy
for each share of such stock standing in his or her name on the records of the
Corporation. Elections of directors shall be determined by a plurality of the
votes cast and, except as otherwise provided by statute, the Certificate of
Incorporation, or these By-Laws, all other action shall be determined by a
majority of the votes cast at such meeting. Each proxy to vote shall be in
writing and signed by the stockholder or by such stockholder's duly authorized
attorney.
At all elections of directors, the voting shall be by ballot or in such
other manner as may be determined by the stockholders present in person or by
proxy entitled to vote at such election. With respect to any other matter
presented to the stockholders for their consideration at a meeting, any
stockholder entitled to vote may, on any question, demand a vote by ballot.
A complete list of the stockholders entitled to vote at each such meeting,
arranged in alphabetical order, with the address of each, and the number of
shares registered in the name of each stockholder, shall be prepared by the
Secretary and shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 7. Inspectors of Election. The Board of Directors in advance of any
meeting of stockholders may appoint one or more Inspectors of Election to act at
the meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman of the meeting may, and on the request of any
stockholder entitled to vote shall, appoint one or more Inspectors of Election.
Each Inspector of Election, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of Inspector of
Election at such meeting with strict impartiality and according to the best of
his or her ability. If appointed, Inspectors of Election shall take charge of
the polls and, when the vote is completed, shall make a certificate of the
result of the vote taken and of such other facts as may be required by law.
Section 8. Action by Consent. Any action required or permitted to be taken
at any meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if, prior to such action, a written consent or
consents thereto, setting forth such action, is signed by the holders of record
of shares of the stock of the Corporation, issued and outstanding and entitled
to vote thereon, having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
2
<PAGE>
ARTICLE II
DIRECTORS
Section 1. Number, Quorum, Term, Vacancies, Removal. The Board of Directors
of the Corporation shall consist of at least two persons. The number of
directors may be changed by a resolution passed by a majority of the whole Board
or by a vote of the holders of record of at least a majority of the shares of
stock of the Corporation, issued and outstanding and entitled to vote.
A majority of the members of the Board of Directors then holding office
(but not less than one-third of the total number of directors nor less than two
directors) shall constitute a quorum for the transaction of business, but if at
any meeting of the Board there shall be less than a quorum present, a majority
of those present may adjourn the meeting from time to time until a quorum shall
have been obtained.
Directors shall hold office until the next annual election and until their
successors shall have been elected and shall have qualified, unless sooner
displaced.
Whenever any vacancy shall have occurred in the Board of Directors, by
reason of death, resignation, or otherwise, other than removal of a director
with or without cause by a vote of the stockholders, it shall be filled by a
majority of the remaining directors, though less than a quorum (except as
otherwise provided by law), or by the stockholders, and the person so chosen
shall hold office until the next annual election and until a successor is duly
elected and has qualified.
Any one or more of the directors of the Corporation may be removed either
with or without cause at any time by a vote of the holders of record of at least
a majority of the shares of stock of the Corporation, issued and outstanding and
entitled to vote, and thereupon the term of the director or directors who shall
have been so removed shall forthwith terminate and there shall be a vacancy or
vacancies in the Board of Directors, to be filled by a vote of the stockholders
as provided in these By-Laws.
Section 2. Meetings, Notice. Meetings of the Board of Directors shall be
held at such place either within or without the State of Delaware, as may from
time to time be fixed by resolution of the Board, or as may be specified in the
call or in a waiver of notice thereof. Regular meetings of the Board of
Directors shall be held at such times as may from time to time be fixed by
resolution of the Board, and special meetings may be held at any time upon the
call of two directors, the Chairman of the Board, if one be elected, or the
President, by oral, telegraphic or written notice, duly served on or sent or
mailed to each director not less than two days before such meeting. A meeting of
the Board may be held without notice immediately after the annual meeting of
stockholders at the same place at which such meeting was held. Notice need not
be given of regular meetings of the Board. Any meeting may be held without
notice, if all directors are present, or if notice is waived in writing, either
before or after the meeting, by those not present.
3
<PAGE>
Section 3. Committees. The Board of Directors may, in its discretion, by
resolution passed by a majority of the whole Board, designate from among its
members one or more committees which shall consist of two or more directors. The
Board may designate one or more directors as alternate members of any such
committee, who may replace any absent or disqualified member at any meeting of
the committee. Such committees shall have and may exercise such powers as shall
be conferred or authorized by the resolution appointing them. A majority of any
such committee may determine its action and fix the time and place of its
meetings, unless the Board of Directors shall otherwise provide. The Board shall
have power at any time to change the membership of any such committee, to fill
vacancies in it, or to dissolve it.
Section 4. Action by Consent. Any action required or permitted to be taken
at any meeting of the Board of Directors, or of any committee thereof, may be
taken without a meeting, if prior to such action a written consent or consents
thereto is signed by all members of the Board, or of such committee as the case
may be, and such written consent or consents is filed with the minutes of
proceedings of the Board or committee.
Section 5. Compensation. The Board of Directors may determine, from time to
time, the amount of compensation which shall be paid to its members. The Board
of Directors shall also have power, in its discretion, to allow a fixed sum and
expenses for attendance at each regular or special meeting of the Board, or of
any committee of the Board. In addition, the Board of Directors shall also have
power, in its discretion, to provide for and pay to directors rendering services
to the Corporation not ordinarily rendered by directors, as such, special
compensation appropriate to the value of such services, as determined by the
Board from time to time.
Section 6. Conference Telephone Meetings. One or more directors may
participate in a meeting of the Board of Directors, or of a committee of the
Board of Directors, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in a meeting pursuant to this section shall constitute
presence in person at such meeting.
ARTICLE III
OFFICERS
Section 1. Titles and Election. The officers of the Corporation, who shall
be chosen by the Board of Directors at its first meeting after each annual
meeting of stockholders, shall be a President, a Treasurer and a Secretary. The
Board of Directors from time to time may elect a Chairman of the Board, one or
more Vice Presidents, Assistant Secretaries, Assistant Treasurers and such other
officers and agents as it shall deem necessary, and may define their powers and
duties. Any number of offices may be held by the same person.
Section 2. Terms of Office. Officers shall hold office until their
successors are chosen and qualify.
4
<PAGE>
Section 3. Removal. Any officer may be removed, either with or without
cause, at any time, by the affirmative vote of a majority of the Board of
Directors.
Section 4. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the Secretary. Such resignation
shall take effect at the time specified therein, and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
Section 5. Vacancies. If the office of any officer or agent becomes
vacant by reason of death, resignation, retirement, disqualification, removal
from office or otherwise, the directors may choose a successor, who shall hold
office for the unexpired term in respect of which such vacancy occurred.
Section 6. Chairman of the Board. The Chairman of the Board of Directors,
if one be elected, shall preside at all meetings of the Board of Directors and
of the stockholders, and the Chairman shall have and perform such other duties
as from time to time may be assigned to the Chairman by the Board of Directors.
Section 7. President. The President shall be the chief executive officer of
the Corporation and, in the absence of the Chairman, shall preside at all
meetings of the Board of Directors, and of the stockholders. The President shall
exercise the powers and perform the duties usual to the chief executive officer
and, subject to the control of the Board of Directors, shall have general
management and control of the affairs and business of the Corporation; the
President shall appoint and discharge employees and agents of the Corporation
(other than officers elected by the Board of Directors) and fix their
compensation; and the President shall see that all orders and resolutions of the
Board of Directors are carried into effect. The President shall have the power
to execute bonds, mortgages and other contracts, agreements and instruments of
the Corporation, and shall do and perform such other duties as from time to time
may be assigned to the President by the Board of Directors.
Section 8. Vice Presidents. If chosen, the Vice Presidents, in the order of
their seniority, shall, in the absence or disability of the President, exercise
all of the powers and duties of the President. Such Vice Presidents shall have
the power to execute bonds, notes, mortgages and other contracts, agreements and
instruments of the Corporation, and shall do and perform such other duties
incident to the office of Vice President and as the Board of Directors, or the
President shall direct.
Section 9. Secretary. The Secretary shall attend all sessions of the Board
and all meetings of the stockholders and record all votes and the minutes of
proceedings in a book to be kept for that purpose. The Secretary shall give, or
cause to be given, notice of all meetings of the stockholders and of the Board
of Directors, and shall perform such other duties as may be prescribed by the
Board of Directors. The Secretary shall affix the corporate seal to any
instrument requiring it, and when so affixed, it shall be attested by the
signature of the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer who may affix the seal to any such instrument in the event
5
<PAGE>
of the absence or disability of the Secretary. The Secretary shall have and be
the custodian of the stock records and all other books, records and papers of
the Corporation (other than financial) and shall see that all books, reports,
statements, certificates and other documents and records required by law are
properly kept and filed.
Section 10. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys, and other valuable effects in the name and to the credit of
the Corporation, in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board, taking proper vouchers for such disbursements, and shall
render to the directors whenever they may require it, an account of all his or
her transactions as Treasurer and of the financial condition of the Corporation.
Section 11. Duties of Officers may be Delegated. In case of the absence or
disability of any officer of the Corporation, or for any other reason that the
Board may deem sufficient, the Board may delegate, for the time being, the
powers or duties, or any of them, of such officer to any other officer, or to
any director.
ARTICLE IV
INDEMNIFICATION
Section 1. Actions by Others. The Corporation (1) shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he or she is or was a
director or an officer of the Corporation and (2) except as otherwise required
by Section 3 of this Article, may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he or she is or was an employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee,
agent of or participant in another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts actually and reasonably incurred by such person in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the Corporation, and with respect to any criminal action or
proceeding, had no reasonable .cause to believe his or her conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of no1o contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
6
<PAGE>
Section 2. Actions by or in the Right of the Corporation. The Corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the Corporation to procure a judgment in its favor by reason of the fact that
he or she is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee, agent of or participant in another corporation, parmership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Corporation and except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his or
her duty to the Corporation unless and only to the extent that the Delaware
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper.
Section 3. Successful Defense. To the extent that a person who is or was a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Section 1 or Section 2 of this Article, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith.
Section 4. Specific Authorization. Any indemnification under Section 1 or
Section 2 of this Article (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in said Sections 1 and 2. Such determination shall be made (1) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
Section 5. Advance of Expenses. Expenses incurred by any person who may
have a right of indemnification under this Article in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount unless
it shall ultimately be determined that he or she is entitled to be indemnified
by the. Corporation pursuant to this Article.
Section 6. Right of Indemnity not Exclusive. The indemnification provided
by this Article shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise,
7
<PAGE>
both as to action in his or her official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Section 7. Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of or participant in another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity, or
arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify him or her against such liability under the
provisions of this Article, Section 145 of the General Corporation Law of the
State of Delaware or otherwise.
Section 8. Invalidity of any Provisions of this Article. The invalidity or
unenforceability of any provision of this Article shall not affect the validity
or enforceability of the remaining provisions of this Article.
ARTICLE V
CAPITAL STOCK
Section 1. Certificates. The interest of each stockholder of the
Corporation shall be evidenced by certificates for shares of stock in such form
as the Board of Directors may from time to time prescribe. The certificates of
stock shall be signed by the President or a Vice President and by the Secretary,
or the Treasurer, or an Assistant Secretary, or an Assistant Treasurer, sealed
with the seal of the Corporation or a facsimile thereof, and countersigned and
registered in such manner, if any, as the Board of Directors may by resolution
prescribe. Where any such certificate is countersigned by a transfer agent other
than the Corporation or its employee, or registered by a registrar other than
the Corporation or its employee, the signature of any such officer may be a
facsimile signature. In case any officer or officers who shall have signed, or
whose facsimile signature or signatures shall have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be adopted by the Corporation and
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures shall
have been used thereon had not ceased to be such officer or officers of the
Corporation.
Section 2. Transfer. The shares of stock of the Corporation shall be
transferred only upon the books of the Corporation by the holder thereof in
person or by his or her attorney, upon surrender for cancellation of
certificates for the same number of shares, with an assignment and power of
transfer endorsed thereon or attached thereto, duly executed, with such proof of
the authenticity of the signature as the Corporation or its agents may
reasonably require.
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<PAGE>
Section 3. Record Dates. The Board of Directors may fix in advance a date,
not less than ten nor more than sixty days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend, or the date for the
distribution or allotment of any fights, or the date when any change, conversion
or exchange of capital stock shall go into effect, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting, or entitled to receive payment of any such dividend, or to receive
any distribution or allotment of such fights, or to exercise the fights in
respect of any such change, conversion or exchange of capital stock, and in such
case only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such meeting, or to
receive payment of such dividend, or to receive such distribution or allotment
or fights or to exercise such fights, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record date
fixed as aforesaid.
Section 4. Lost Certificates. In the event that any certificate of stock is
lost, stolen, destroyed or mutilated, the Board of Directors may authorize the
issuance of a new certificate of the same tenor and for the same number of
shares in lieu thereof. The Board may in its discretion, before the issuance of
such new certificate, require the owner of the lost, stolen, destroyed or
mutilated certificate, or the legal representative of the owner to make an
affidavit or affirmation setting forth such facts as to the loss, destruction or
mutilation as it deems necessary, and to give the Corporation a bond in such
reasonable sum as it directs to indemnify the Corporation.
ARTICLE VI
CHECKS, NOTES, ETC.
Section 1. Checks, Notes, Etc. All checks and drafts on the Corporation's
bank accounts and all bills of exchange and promissory notes, and all
acceptances, obligations and other instruments for the payment of money, may be
signed by the President, any Vice President or the Treasurer and may also be
signed by such other officer or officers, agent or agents, as shall be thereunto
authorized from time to time by the Board of Directors.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 1. Offices. The registered office of the Corporation shall be
located at The Corporation Trust Company, 1209 Orange Street, in the City of
Wilmington, County of New Castle, in the State of Delaware and said corporation
shall be the registered agent of this Corporation in charge thereof. The
Corporation may have other offices either within or without the State of
Delaware at such places as shall be determined from time to time by the Board of
Directors or the business of the Corporation may require.
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Section 2. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 3. Corporate Seal. The seal of the Corporation shall be circular in
form and contain the name of the Corporation, and the year and state of its
incorporation. Such seal may be altered from time to time at the discretion of
the Board of Directors.
Section 4. Books. There shall be kept at such office of the Corporation as
the Board of Directors shall determine, within or without the State of Delaware,
correct books and records of account of all its business and transactions,
minutes of the proceedings of its stockholders, Board of Directors and
committees, and the stock book, containing the names and addresses of the
stockholders, the number of shares held by them, respectively, and the dates
when they respectively became the owners of record thereof, and in which the
transfer of stock shall be registered, and such other books and records as the
Board of Directors may from time to time determine.
Section 5. Voting of Stock. Unless otherwise specifically authorized by the
Board of Directors, all stock owned by the Corporation, other than stock of the
Corporation, shall be voted, in person or by proxy, by the President or any Vice
President of the Corporation on behalf of the Corporation.
ARTICLE VIII
AMENDMENTS
Section 1. Amendments. The vote of the holders of at least a majority of
the shares of stock of the Corporation, issued and outstanding and entified to
vote, shall be necessary at any meeting of stockholders to amend or repeal these
By-Laws or to adopt new By-laws. These By-Laws may also be amended or repealed,
or new By- Laws adopted, at any meeting of the Board of Directors by the vote of
at least a majority of the entire Board; provided that any By-laws adopted by
the Board may be amended or repealed by the stockholders in the manner set forth
above.
Any proposal to amend or repeal these By-Laws or to adopt new by-laws shall
be stated in the notice of the meeting of the Board of Directors or the
stockholders, or in the waiver of notice thereof, as the case may be, unless all
of the directors or the holders of record of all of the shares of stock of the
Corporation, issued and outstanding and entitled to vote, are present at such
meeting.
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Exhibit 4.1
American Lawyer Media Holdings, Inc.,
as Issuer
$63,275,000 aggregate principal amount at maturity
($35,000,000 aggregate initial principal amount at issuance)
12 1/4% Senior Discount Notes
due December 15, 2008
_____________
INDENTURE
Dated as of December 22, 1997
_____________
The Bank of New York,
as Trustee
<PAGE>
TABLE OF CONTENTS
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Article I
DEFINITIONS AND INCORPORATION
BY REFERENCE. . . . . . . . . . . . . . . . . 1
<S> <C> <C>
Section 1.01 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Other Definitions. . . . . . . . . . . . . . . . . . . . . . . 23
Section 1.03 Incorporation by Reference of Trust Indenture Act. . . . . . . 25
Section 1.04 Rules of Construction. . . . . . . . . . . . . . . . . . . . . 25
Article II
THE Discount Notes . . . . . . . . . . . . . . . 26
Section 2.01 Form and Dating. . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.02 Execution and Authentication . . . . . . . . . . . . . . . . . 29
Section 2.03 Registrar and Paying Agent . . . . . . . . . . . . . . . . . . 30
Section 2.04 Paying Agent to Hold Money in Trust. . . . . . . . . . . . . . 30
Section 2.05 Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.06 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.07 Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . 31
Section 2.08 Replacement Discount Notes . . . . . . . . . . . . . . . . . . 38
Section 2.09 Outstanding Discount Notes . . . . . . . . . . . . . . . . . . 38
Section 2.10 Treasury Discount Notes. . . . . . . . . . . . . . . . . . . . 39
Section 2.11 Temporary Discount Notes . . . . . . . . . . . . . . . . . . . 39
Section 2.12 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 2.13 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.14 Cusip Numbers. . . . . . . . . . . . . . . . . . . . . . . . . 40
Article III
REDEMPTION AND PREPAYMENT. . . . . . . . . . . . . . 40
Section 3.01 Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.02 Selection of Discount Notes to Be Redeemed . . . . . . . . . . 41
Section 3.03 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . 41
Section 3.04 Effect of Notice of Redemption . . . . . . . . . . . . . . . . 42
Section 3.05 Deposit of Redemption Price. . . . . . . . . . . . . . . . . . 42
Section 3.06 Discount Notes Redeemed in Part. . . . . . . . . . . . . . . . 43
Section 3.07 Optional Redemption. . . . . . . . . . . . . . . . . . . . . . 43
Section 3.08 No Mandatory Redemption. . . . . . . . . . . . . . . . . . . . 44
Article IV
COVENANTS. . . . . . . . . . . . . . . . . . 44
Section 4.01 Payment of Discount Notes. . . . . . . . . . . . . . . . . . . 44
Section 4.02 Maintenance of Office or Agency. . . . . . . . . . . . . . . . 45
Section 4.03 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.04 Compliance Certificate . . . . . . . . . . . . . . . . . . . . 46
Section 4.05 Compliance with Laws, Taxes. . . . . . . . . . . . . . . . . . 47
</TABLE>
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Section 4.06 Stay, Extension and Usury Laws . . . . . . . . . . . . . . . . 48
Section 4.07 Change of Control. . . . . . . . . . . . . . . . . . . . . . . 48
Section 4.08 Limitation on Sale of Assets and Subsidiary stock. . . . . . . 50
Section 4.09 Limitation on Restricted Payments. . . . . . . . . . . . . . . 55
Section 4.10 Limitation on Incurrence of Additional Indebtedness . . . . . 58
Section 4.11 Limitation on Liens Securing Indebtedness . . . . . . . . . . 59
Section 4.12 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries. . . . . . . . . . . . . . . 60
Section 4.13 Limitation on Transactions with Affiliates . . . . . . . . . . 61
Section 4.14 Future Guarantors. . . . . . . . . . . . . . . . . . . . . . . 61
Section 4.15 Limitation on Lines of Business. . . . . . . . . . . . . . . . 62
Section 4.16 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . 62
Section 4.17 Limitations on Status as Investment Company. . . . . . . . . . 62
Section 4.18 Designation of Restricted and Unrestricted Subsidiaries. . . . 62
Section 4.19 Trustee's Application for Instructions from Holdings . . . . . 63
Article V
SUCCESSORS . . . . . . . . . . . . . . . . . 63
Section 5.01 Merger, Sale Or Consolidation . . . . . . . . . . . . . . . . 63
Section 5.02 Successor Corporation Substituted. . . . . . . . . . . . . . . 64
Article VI
DEFAULTS AND REMEDIES. . . . . . . . . . . . . . . 65
Section 6.01 Events of Default. . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.02 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 6.03 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 6.04 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . 67
Section 6.05 Control by Majority. . . . . . . . . . . . . . . . . . . . . . 67
Section 6.06 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . 67
Section 6.07 Rights of Holders of Discount Notes to Receive Payment . . . . 68
Section 6.08 Collection Suit by Trustee . . . . . . . . . . . . . . . . . . 68
Section 6.09 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . 69
Section 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 6.11 Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . 70
Article VII
TRUSTEE . . . . . . . . . . . . . . . . . . 70
Section 7.01 Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.02 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . 71
Section 7.03 Individual Rights of Trustee . . . . . . . . . . . . . . . . . 73
Section 7.04 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . 73
Section 7.05 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . 73
Section 7.06 Reports by Trustee to Holders of the Discount Notes. . . . . . 73
Section 7.07 Compensation and Indemnity . . . . . . . . . . . . . . . . . . 74
Section 7.08 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . 75
</TABLE>
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Section 7.09 Successor Trustee by Merger, etc.. . . . . . . . . . . . . . . 76
Section 7.10 Eligibility; Disqualification. . . . . . . . . . . . . . . . . 76
Section 7.11 Preferential Collection of Claims Against Holdings . . . . . . 77
Article VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE. . . . . . . . . . 77
Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance . . . 77
Section 8.02 Legal Defeasance and Discharge . . . . . . . . . . . . . . . . 77
Section 8.03 Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . 78
Section 8.04 Conditions to Legal or Covenant Defeasance . . . . . . . . . . 78
Section 8.05 Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions. . . . . . . . . . . . . 80
Section 8.06 Repayment to Holdings. . . . . . . . . . . . . . . . . . . . . 81
Section 8.07 Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . 81
Article IX
AMENDMENT, SUPPLEMENT AND WAIVER. . . . . . . . . . . . 82
Section 9.01 Without Consent Of Holders Of Discount Notes . . . . . . . . . 83
Section 9.02 With Consent Of Holders Of Discount Notes. . . . . . . . . . . 83
Section 9.03 Compliance with Trust Indenture Act. . . . . . . . . . . . . . 85
Section 9.04 Revocation and Effect of Consents. . . . . . . . . . . . . . . 85
Section 9.05 Notation on or Exchange of Discount Notes. . . . . . . . . . . 85
Section 9.06 Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . 85
Article X
MISCELLANEOUS. . . . . . . . . . . . . . . . . 87
Section 10.01 Trust Indenture Act Controls . . . . . . . . . . . . . . . . . 87
Section 10.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 10.03 Communication by Holders of Discount Notes with Other
Holders of Discount Notes . . . . . . . . . . . . . . . . . . 88
Section 10.04 Certificate and Opinion as to Conditions Precedent . . . . . . 88
Section 10.05 Statements Required in Certificate or Opinion. . . . . . . . . 89
Section 10.06 Rules by Trustee and Agents . . . . . . . . . . . . . . . . . 89
Section 10.07 No Personal Liability of Directors, Officers, Employees
and Stockholders . . . . . . . . . . . . . . . . . . . . . . . 89
Section 10.08 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 10.09 No Adverse Interpretation of Other Agreements . . . . . . . . 90
Section 10.10 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 10.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 10.12 Counterpart Originals. . . . . . . . . . . . . . . . . . . . . 90
Section 10.13 Table of Contents, Headings, etc.. . . . . . . . . . . . . . . 90
</TABLE>
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EXHIBIT A SERIES A NOTE A - 1
EXHIBIT B SERIES B NOTE B - 1
EXHIBIT C FORM OF CERTIFICATE OF TRANSFER FROM U.S. GLOBAL C - 1
DISCOUNT NOTE OR IAI GLOBAL DISCOUNT NOTE TO REGULATION
S TEMPORARY GLOBAL DISCOUNT NOTE
EXHIBIT D FORM OF CERTIFICATE OF TRANSFER FROM REGULATION S D - 1
TEMPORARY GLOBAL DISCOUNT NOTE TO U.S. GLOBAL DISCOUNT
NOTE OR IAI GLOBAL DISCOUNT NOTE
EXHIBIT E FORM OF CERTIFICATE OF TRANSFER FROM GLOBAL DISCOUNT E - 1
NOTE OR TRANSFER RESTRICTED SECURITY TO TRANSFER
RESTRICTED SECURITY
EXHIBIT F FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE F - 1
EXHIBIT G FORM OF CERTIFICATE OF TRANSFERS OF REGULATION S G - 1
TEMPORARY GLOBAL DISCOUNT NOTE FOR REGULATION S
PERMANENT GLOBAL DISCOUNT NOTE
EXHIBIT H FORM OF CERTIFICATE OF TRANSFERS OF REGULATION S H - 1
TEMPORARY GLOBAL DISCOUNT NOTE FOR REGULATION S
PERMANENT GLOBAL DISCOUNT NOTE
EXHIBIT I FORM OF CERTIFICATE OF TRANSFERS OF REGULATION S
PERMANENT GLOBAL DISCOUNT NOTE FOR TRANSFER RESTRICTED
SECURITIES
</TABLE>
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INDENTURE dated as of December 22, 1997, among American Lawyer Media
Holdings, Inc., a Delaware corporation (the "Holdings") and The Bank of New
York, a New York banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of each other and for the
equal and ratable benefit of the Holders of the 12 1/4% Series A Senior Discount
Notes due 2008 (the " Series A Discount Notes") and the 12 1/4% Series B Senior
Discount Notes due 2008 (the "Series B Discount Notes") together with the Series
A Discount Notes (the "Discount Notes"):
Article I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions
"Accreted Value" means, as of any date of determination, the sum
(rounded to the nearest whole dollar) of (a) the initial offering price of each
$1,000 in principal amount at maturity of Discount Notes and (b) the portion of
the excess of the principal amount of Discount Notes over such initial offering
price which shall have been accreted thereon through such date, such amounts to
be so accreted on a daily basis at the rate of 12 1/4% per annum (computed on a
semi-annual bond equivalent basis) compounded semi-annually on each June 15 and
December 15 from the date of issuance of the Discount Notes through the date of
determination. On and after December 15, 2002, the Accreted Value of each
Discount Note shall be equal to its principal amount at maturity.
"Acquired Indebtedness" means Indebtedness of any Person existing at
the time such Person becomes a Restricted Subsidiary of Holdings, including by
designation, or is merged or consolidated into or with Holdings or one of its
Restricted Subsidiaries or is assumed by Holdings or a Restricted Subsidiary in
connection with the acquisition of assets from such Person.
"Acquisition" means the purchase or other acquisition of any Person or
all or substantially all the assets of any Person by any other Person or any
division or line of business of such Person, whether by purchase, merger,
consolidation, or other transfer, and whether or not for consideration.
"Adjusted Consolidated Net Income" means, with respect to any Person,
for any period, the Consolidated Net Income of such Person for such period plus
any
<PAGE>
non-cash charges for such period relating to the amortization of goodwill or
other intangibles or any other purchase accounting adjustment resulting from any
acquisition.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For purposes of this definition, the term "control"
means the power to direct the management and policies of a Person, directly or
through one or more intermediaries, whether through the ownership of voting
securities, by contract, or otherwise, provided, that with respect to ownership
interest in Holdings and its Subsidiaries, a Beneficial Owner of 10% or more of
the total voting power normally entitled to vote in the election of directors,
managers or trustees, as applicable, shall for such purposes be deemed to
constitute control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"ALM" means American Lawyer Media, Inc. and its subsidiaries (and its
predecessor, ALM Holdings, LLC) since the ALM Acquisition.
"ALM Acquisition" means the acquisition by ALM of substantially all of
the assets and certain liabilities related to American Lawyer Media L.P. on
August 27, 1997.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Bankruptcy Law" means title 11, U.S. Code, as amended, or any similar
federal or state law for the relief of debtors.
"Beneficial Owner" or "beneficial owner" for purposes of the
definitions of "Change of Control" and "Affiliate" has the meaning attributed to
it in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue
Date), whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares or other Equity Interests that any such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time.
"Board of Directors" means, with respect to any Person, the board of
directors (or, in the case of a partnership, limited liability company or
similar entity, the management committee or other body exercising substantially
similar functions) of such Person or any committee of the Board of Directors of
such Person authorized, with respect
2
<PAGE>
to any particular matter, to exercise the power of the board of directors or
similar body of such Person.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York,
are authorized or obligated by law or executive order to close.
"Capital Stock" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of common stock and preferred stock of such Person and (b) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the U.S. Government or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within one year from the date of acquisition thereof;
(b) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having at least the second highest
rating obtainable from either Standard & Poor's Rating Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (c) commercial paper maturing no more than
one year from the date of creation thereof and, at the time of acquisition,
having at least the second highest rating obtainable from either S&P or Moody's;
(d) certificates of deposit or bankers' acceptances maturing within one year
from the date of acquisition thereof issued by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia having at the date of acquisition combined capital and
surplus of not less than $500.0 million; (e) shares of any money market mutual
fund that (i) has its assets invested continuously in the types of investments
referred to in clauses (a) and (b) above, (ii) has net assets of not less than
$500.0 million and (iii) has at least the second highest
3
<PAGE>
rating obtainable from either S&P or Moody's; and (f) repurchase agreements with
respect to, and which are fully secured by a perfected security interest in,
obligations of a type described in clause (a) or clause (b) above and are with
any commercial bank described in clause (d) above.
"Change of Control" means (a) any merger or consolidation of Holdings
with or into any Person or any sale, transfer or other conveyance, whether
direct or indirect, of all or substantially all of the assets of Holdings, on a
consolidated basis, in one transaction or a series of related transactions, if,
immediately after giving effect to such transaction(s), any "person" or "group"
(as such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable), other than a Permitted Transferee, is or
becomes the "beneficial owner" (as defined in Rules 13(d) and 14(d) of the
Exchange Act), directly or indirectly, of more than 50% of the total voting
power in the aggregate normally entitled to vote in the election of members of
the board of directors, managers, or trustees, as applicable, of the
transferee(s) or surviving entity or entities, (b) any "person" or "group" (as
such terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act, whether or not applicable), other than a Permitted Transferee, is or
becomes the "beneficial owner," directly or indirectly, of more than 50% of the
total voting power in the aggregate of all classes of Equity Interests of
Holdings then outstanding normally entitled to vote in elections of members of
the board of directors, managers, or trustees, as applicable, or (c) during any
period of 12 consecutive months after the Issue Date, individuals who at the
beginning of any such 12-month period constituted the Board of Directors of
Holdings (together with any new directors whose election by such Board of
Directors or whose nomination for election by the Holders of Equity Interests of
Holdings was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of Holdings then in
office.
"Company" means American Lawyer Media, Inc.
"Consolidated EBITDA" means, with respect to any Person, for any
period, the Adjusted Consolidated Net Income of such Person for such period
adjusted to add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (a) consolidated
income tax expense, (b) consolidated depreciation and amortization expense,
provided that consolidated depreciation and amortization of a Subsidiary that is
a less than wholly owned subsidiary shall only be added to the extent of the
equity interest of such Person in such Subsidiary, (c) Consolidated Fixed
Charges, and (d) all other expenses reducing Consolidated Net Income for such
period that do not represent cash disbursements for such period (excluding any
expense to the extent it represents an accrual of or reserve for cash
disbursements for
4
<PAGE>
any subsequent period prior to the Stated Maturity of the Discount Notes) less,
to the extent included in the calculation of Consolidated Net Income, the amount
of all cash payments made by such Person or any of its Subsidiaries during such
period to the extent such payments relate to non-cash charges that were added
back in determining Consolidated EBITDA for such period or any prior period,
provided that with respect to Holdings each of the foregoing items shall be
determined on a consolidated basis with respect to Holdings and its Restricted
Subsidiaries only.
"Consolidated Fixed Charges" with respect to any Person means, for any
period, the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to Capitalized Lease Obligations) of such Person
and its Consolidated Subsidiaries during such period, including (i) original
issue discount and non-cash interest payments or accruals on any Indebtedness,
(ii) the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap or
Hedging Obligations, in each case to the extent attributable to such period,
(b) the amount of dividends accrued or payable (or guaranteed) by such person or
any of its Consolidated Subsidiaries in respect of preferred Equity Interests
(other than by Subsidiaries of such Person to such Person or such Person's
wholly owned subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined in good faith by the Company to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with GAAP and
(y) interest expense attributable to any Indebtedness represented by the
guarantee by such Person or a Subsidiary of such Person of an obligation of
another person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed and (c) with respect to Holdings, each of the foregoing
items shall be determined on a consolidated basis with respect to Holdings and
its Restricted Subsidiaries only.
"Consolidated Net Income" means, with respect to any Person, for any
period, the net income (or loss) of such Person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) all gains (but not losses)
which are either extraordinary (as determined in accordance with GAAP) or are
nonrecurring (including any gain from the sale or other disposition of assets
outside the ordinary course of business or from the issuance or sale of any
capital stock), (b) the net income, if positive, of any Person, other than a
Restricted Subsidiary, in which such Person or any of its Consolidated
Subsidiaries has an interest, except to the extent of the amount of any
dividends or distributions actually paid in cash
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to such Person or a Restricted Subsidiary of such Person during such period, but
in any case not in excess of such Person's pro rata share of such Person's net
income for such period, (c) the net income or loss of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition, and (d) the net income, if positive, of any of such Person's
Consolidated Subsidiaries (other than ALM and its Restricted Subsidiaries, if
the Person in question is Holdings) to the extent that the declaration or
payment of dividends or similar distributions is not at the time permitted by
operation of the terms of its charter or bylaws or any other agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Consolidated Subsidiary.
"Consolidated Net Worth" means, with respect to any Person at any date
means the aggregate consolidated stockholders' equity of such Person (plus
amounts of equity attributable to preferred stock) and its Consolidated
Subsidiaries, as would be shown on the consolidated balance sheet of such Person
prepared in accordance with GAAP, adjusted to exclude (to the extent included in
calculating such equity), (a) the amount of any such stockholders' equity
attributable to Disqualified Equity Interests or treasury stock of such Person
and its Consolidated Subsidiaries, (b) all upward revaluations and other
write-ups in the book value of any asset of such Person or a Consolidated
Subsidiary of such Person subsequent to the Issue Date, and (c) all investments
in subsidiaries that are not Consolidated Subsidiaries and in Persons that are
not Subsidiaries.
"Consolidated Subsidiary" means, for any Person, each subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such Person in accordance with GAAP.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give written notice to Holdings.
"Credit Agreement" means an agreement by and among Holdings (which
term, for purposes of this definition only shall also include any of Holdings's
Affiliates that shall be a party thereto), ALM, and the lenders, arrangers and
syndication agents from time to time party thereto providing for a senior
revolving credit facility or similar facility, as such Credit Agreement and/or
related documents may be amended, restated, supplemented, renewed, replaced,
refinanced, restructured or otherwise modified from time to time whether or not
with the same agent, trustee, representative lenders or holders, provided, that
such Credit Agreement may be secured. Without limiting the generality of the
foregoing, the term "Credit Agreement" shall include any amendment, amendment
and restatement, renewal, extension, restructuring, supplement or modification
to any such
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Credit Agreement and all refundings, refinancings and replacements thereof,
including any agreement (a) extending the maturity of any Indebtedness incurred
thereunder or contemplated thereby, (b) adding or deleting borrowers or
guarantors thereunder, so long as such borrowers and guarantors include one or
more of Holdings and its Subsidiaries and their respective successors and
assigns, (c) increasing the amount of Indebtedness incurred thereunder or
available to be borrowed thereunder or (d) otherwise altering the terms and
conditions thereof in a manner not prohibited by the terms of this Indenture.
"Custodian" means any receiver, trustee, assignee liquidator or
similar official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Depositary" means, with respect to the Discount Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depository with respect to the Discount Notes, until a successor
shall have been appointed and become such Depository pursuant to the applicable
provision of this Indenture, and, thereafter, "Depository" shall mean or include
such successor.
"Determined Fair Market Value" shall mean Fair Market Value as
determined by the Board of Directors, except that with respect to the evaluation
of any Person, business, property, asset or transaction, or series or group
thereof, involving more than $5.0 million, Determined Fair Market Value shall be
determined by a Third Party Evaluator.
"Direct Participants" means participating organizations in DTC,
including securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations,
including Euroclear and CEDEL.
"Discount Notes" means the 12 1/4% Senior Discount Notes due 2008
issued by Holdings.
"Disqualified Equity Interests" means (a) except as set forth in (b),
with respect to any Person, Equity Interests of such Person that, by their
terms, or by the terms of any agreement or instrument pursuant to which such
Equity Interests are issued, or by the terms of any security into which such
Equity Interests are convertible, exercisable or exchangeable, are, or upon the
happening of an event or the passage of time or both would be, required to be
redeemed or repurchased (including at the option of the Holder thereof) by such
Person or any of its Restricted Subsidiaries, in whole or in part, on or prior
to the Stated Maturity of the Discount Notes and (b) with respect to any
Restricted Subsidiary of
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such Person (including with respect to any direct or indirect Restricted
Subsidiary of Holdings), any Equity Interests other than any common equity with
no preference, privileges, or redemption or repayment provisions.
"Equity Interest" of any Person means any shares, interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any capital stock issued by, or
partnership or membership interests in, such Person.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by Holdings pursuant
to the Registration Rights Agreement to exchange Series B Discount Notes for
Series A Discount Notes.
"Exempted Affiliate Transaction" means (a) transactions with any
officer, director, partner or managing member in his or her capacity as such,
entered into in the ordinary course of business, including without limitation
customary employee, director or manager compensation or indemnification
arrangements approved by the Board of Directors of Holdings, (b) Permitted
Investments and transactions otherwise permitted under Section 4.09 hereof, and
(c) transactions solely between Holdings and any of its Restricted Subsidiaries
or solely among Restricted Subsidiaries of Holdings.
"Existing Indebtedness" means the Indebtedness of Holdings and its
Subsidiaries (other than Indebtedness, if any, under the Credit Agreement) in
existence on the date of this Indenture until such amounts are repaid.
"Fair Market Value" means, with respect to any Person, business,
asset, property or transaction, the price that could be negotiated in an arm's
length, free market transaction, between a willing seller and a willing and
able buyer, neither of whom is under undue pressure or compulsion to complete
the transaction.
"40-day Restricted Period" means the 40-day period commencing on the
day after the later of the Offering and the original Issue Date, as defined in
Regulation S of the Securities Act.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession in the United States, which
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are in effect on the date of this Indenture. All ratios and computations based
on GAAP contained in this Indenture shall be computed in conformity with GAAP
applied on a consistent basis, except that calculations made for purposes of
determining compliance with the terms of the covenants and with other provisions
of the Indenture shall be made without giving effect to depreciation,
amortization or other expenses recorded as a result of the application of
purchase accounting in accordance with Accounting Principles Board Option Nos.
16 and 17.
"Global Notes Legend" means the legend set forth in Exhibits A and B
to be placed on all Discount Notes issued under this Indenture except as
otherwise permitted by the provisions of Section 2.07 hereof.
"Holder" means a Person in whose name a Discount Note is registered on
the Registrar's books.
"IAI" means an institutional "accredited investor" as defined in Rule
501(a)(1), (2) (3) or (7) of the Securities Act.
"Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such Person, to the
extent such liabilities and obligations would appear as a liability upon the
consolidated balance sheet of such person in accordance with GAAP, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except those incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors; (b) all liabilities
and obligations, contingent or otherwise, of such Person (i) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks,
(ii) relating to any Capitalized Lease Obligation, or (iii) evidenced by a
letter of credit or a reimbursement obligation of such Person with respect to
any letter of credit other than trade letters of credit, to the extent not
issued pursuant to any Credit Agreement or any Refinancing Indebtedness in
respect thereof, but only to the extent such letters of credit are drawn upon
and not paid or reimbursed by such Person within 30 days of incurrence; (c) all
net obligations of such Person under Interest Swap or Hedging Obligations;
(d) all liabilities and obligations of others of the kind described in the
preceding clause (a), (b) or (c) that such Person has guaranteed or that is
otherwise its legal liability or which are secured by any assets or property of
such person and all obligations to purchase, redeem or acquire any Equity
Interests; (e) any and all refinancings and refundings (whether direct or
indirect) of, or amendments, modifications or supplements to (in any such case,
which increases the principal amount of Indebtedness thereunder or the assets
covered by any associated Lien), any liability of the kind
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described in any of the preceding clauses (a), (b), (c) or (d), or this clause
(e), whether or not between or among the same parties; and (f) all Disqualified
Equity Interests of such Person (measured at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid dividends).
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Equity Interests which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Equity Interests as
if such Disqualified Equity Interests were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture, and
if such price is based upon, or measured by, the Fair Market Value of such
Disqualified Equity Interests, such Fair Market Value to be determined in good
faith by the Board of Directors (or managing general partner) of the issuer of
such Disqualified Equity Interests.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participants" means, in relation to DTC, entities other than
Direct Participants that have access to DTC's book entry system by clearing
through or maintaining a direct or indirect, custodial relationship with a
Direct Participant.
"Initial Purchasers" means Wasserstein Perella Securities, Inc.,
BancAmerica Robertson Stephens and BancBoston Securities Inc. as the initial
purchasers under the purchase agreement between the Initial Purchasers and
Holdings, dated December 17, 1997.
"Interest Payment Date" means the date upon which interest payments on
the Discount Notes shall be made, as set forth in Exhibit A and Exhibit B
hereto.
"Interest Swap or Hedging Obligation" means any obligation of any
Person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such Person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Investment" by any Person in any other Person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership, membership
or other ownership interests or
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other securities, including any options or warrants, of such other Person or any
agreement to make any such acquisition; (b) the making by such Person of any
deposit with, or advance, loan or other extension of credit to, such other
Person (including the purchase of property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such property to
such other Person) or any commitment to make any such advance, loan or extension
(but excluding accounts receivable, trade credit, endorsements for collection or
deposits arising in the ordinary course of business); (c) other than guarantees
of Indebtedness to the extent permitted by Section 4.10, the entering into by
such Person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of such other
Person; (d) the making of any capital contribution by such person to such other
Person; and (e) the designation by the Board of Directors of Holdings of any
Person (including without limitation a Restricted Subsidiary) to be an
Unrestricted Subsidiary. Holdings shall be deemed to make an Investment in an
amount equal to the Determined Fair Market Value of the net assets of any
Restricted Subsidiary (or, if neither Holdings nor any of its Restricted
Subsidiaries has theretofore made an Investment in such Subsidiary, in an amount
equal to the Investments being made), at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, and any property
transferred to an Unrestricted Subsidiary from Holdings or a Restricted
Subsidiary of Holdings shall be deemed an Investment valued at its Determined
Fair Market Value at the time of such transfer.
"Issue Date" means the date of first issuance of the Discount Notes
under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Make-Whole Premium" means, with respect to a Note at any time, the
greater of (x) 12.25% of the Accreted Value of such Note and (y) the excess of
(i) the present value at such time, discounted from the first date on which such
Note could be
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redeemed at the option of Holdings pursuant to the provisions of paragraph (a)
of Section 3.07 of this Indenture, of the principal amount at maturity of such
Note plus the amount of premium that would be due on such Note were it to be
redeemed on the first date on which such Note could be redeemed at the option of
Holdings pursuant to the provisions of paragraph (a) of Section 3.07 of this
Indenture, computed using a discount rate equal to the Treasury Rate plus 50
basis points, over (ii) the then outstanding Accreted Value of such Note.
"Net Cash Proceeds" means the aggregate amount of cash or Cash
Equivalents received by Holdings in the case of a sale of Qualified Equity
Interests and by Holdings and its Restricted Subsidiaries in respect of an Asset
Sale plus, in the case of an issuance of Qualified Equity Interests upon any
exercise, exchange or conversion of securities (including options, warrants,
rights and convertible or exchangeable debt) of Holdings that were issued for
cash on or after the Issue Date, the amount of cash originally received by
Holdings upon the issuance of such securities (including options, warrants,
rights and convertible or exchangeable debt) less, in each case, the sum of all
payments, fees, commissions and (in the case of Asset Sales, reasonable and
customary) expenses (including, without limitation, the fees and expenses of
legal counsel and investment banking fees and expenses) incurred in connection
with such Asset Sale or sale of Qualified Equity Interests, and, in the case of
an Asset Sale only, less (a) the amount (estimated reasonably and in good faith
by the Board of Directors of Holdings) of income, franchise, sales and other
applicable taxes required to be paid by Holdings or any of its Subsidiaries in
connection with such Asset Sale and (b) appropriate amounts to be provided by
Holdings or any Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by Holdings or any Restricted Subsidiary, as the case may be, after
such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale.
"Non-Recourse Debt" means Indebtedness (a) as to which neither
Holdings nor any of its Restricted Subsidiaries (i) provide credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (ii) is directly or indirectly liable (as a guarantor
or otherwise) or (iii) constitutes the lender, (b) no default with respect to
which (including any rights that the Holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any Holder of any other Indebtedness (other than
the Discount Notes) of Holdings or any of its Restricted Subsidiaries to declare
a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (c) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of Holdings or any of its Restricted Subsidiaries.
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"Non-U.S. Person" means a Person other than a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to the
Global Discount Notes, or any successor entity thereto.
"Obligations" means any principal, premium, interest, penalties, fees,
indemnifications, reimbursement obligations, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering" means the offering of the Discount Notes by Holdings.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of
Holdings by at least one Officer.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.05 hereof. The counsel may be an employee of or counsel to Holdings, any
Subsidiary of Holdings or the Trustee.
"Parent" means Holdings or its successor.
"Permitted Indebtedness" means any of the following:
(a) Indebtedness of Holdings and its Restricted Subsidiaries, as
applicable, evidenced by (i) the Discount Notes represented by the Indenture up
to the amounts specified herein as of the date thereof and (ii) the Senior Notes
and the Subsidiary Guarantees thereof and represented by the Senior Note
Indenture up to the amount specified therein as of the date thereof;
(b) Refinancing Indebtedness incurred by Holdings or a Restricted
Subsidiary, as applicable, with respect to any Indebtedness described in clause
(a), (c), (f), (g) or (h) of this definition or incurred under the first
paragraph of Section 4.10 hereof or which is Existing Indebtedness (after giving
effect to the Transactions), provided that (i) any such Refinancing Indebtedness
that is secured refinances only other Indebtedness that is similarly secured and
(ii) such secured Refinancing Indebtedness, to the extent secured, is secured
only by the assets that secured the Indebtedness so refinanced;
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(c) Indebtedness of Holdings and its Restricted Subsidiaries solely in
respect of bankers acceptances, letters of credit and performance or surety
bonds (to the extent that such incurrence does not result in the incurrence of
any obligation to repay any obligation relating to borrowed money of others),
all in the ordinary course of business in accordance with customary industry
practices, in amounts and for the purposes customary in Holdings's industry;
provided, that the aggregate principal amount of such Indebtedness at any one
time outstanding (including any Refinancing Indebtedness in respect thereof)
shall not exceed $2.5 million;
(d) Indebtedness of Holdings to any Restricted Subsidiary, and
Indebtedness of any Restricted Subsidiary to any other Restricted Subsidiary or
to Holdings; provided, that in the case of Indebtedness of Holdings, Holdings's
Obligations under such Indebtedness shall be unsecured and, whether or not
expressly so stated in writing, shall be deemed to be subordinated in all
respects to Holdings's Obligations under the Discount Notes and the Indentures;
(e) Guarantees by Holdings or any Restricted Subsidiary of Indebtedness of
Holdings or another Restricted Subsidiary, and Guarantees by Holdings of any
Indebtedness of any Restricted Subsidiary, in each case that is otherwise
permitted to be incurred pusuant to this Indebture.
(f) Purchase Money Indebtedness incurred by Holdings and its Restricted
Subsidiaries on or after the Issue Date, provided, that (i) the aggregate
principal amount of such Indebtedness incurred on or after the Issue Date and
outstanding at any time pursuant to this paragraph (e) (including any
Refinancing Indebtedness with respect to such Indebtedness) shall not exceed
$2.0 million, and (ii) in each case, such Indebtedness shall not constitute more
than 100% of the cost (determined in accordance with GAAP) to Holdings or such
Restricted Subsidiary, as applicable, of the property so purchased or leased;
(g) provided that no Event of Default shall have occurred and be
continuing, unsecured Indebtedness of Holdings and its Restricted Subsidiaries
(in addition to Indebtedness permitted by any other clause of this definition)
in an aggregate principal amount outstanding at any time (including any
Refinancing Indebtedness in respect thereof) of up to $5.0 million (which, if
such Indebtedness is incurred under a Credit Agreement, may be secured
Indebtedness);
(h) Indebtedness of Holdings and its Restricted Subsidiaries pursuant to a
Credit Agreement up to an aggregate principal amount outstanding at any time
(including any Refinancing Indebtedness with respect to such Indebtedness) of
$40.0 million, minus the amount of any such Indebtedness (i) retired with the
Net Cash Proceeds from any Asset
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Sale (as defined in Section 4.08 hereof) and applied to permanently reduce the
outstanding amounts or the commitments with respect to such Indebtedness
pursuant to clause (a)(ii)(B) of the first paragraph of Section 4.08 hereof, or
(ii) assumed by a transferee in an Asset Sale;
(i) Indebtedness arising from agreements of Holdings or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary; provided, however, that the
maximum assumable liability in respect of all such Indebtedness shall at no time
exceed 25% of the gross proceeds (with proceeds other than cash or Cash
Equivalents being valued at the Determined Fair Market Value thereof by the
Board of Directors of Holdings at the time received and without giving effect to
any subsequent changes in value) actually received by Holdings and its
Restricted Subsidiaries in connection with such disposition; and
(j) Interest Swap or Hedging Obligations of Holdings covering
Indebtedness of Holdings or any of its Restricted Subsidiaries otherwise
permitted under this Indenture and Interest Swap or Hedging Obligations of
any Restricted Subsidiary of Holdings covering Indebtedness of such
Restricted Subsidiary otherwise permitted under this Indenture; provided,
however, that such Interest Swap or Hedging Obligations are entered into to
protect Holdings and its Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness incurred in accordance with the Indenture to
the extent the notional principal amount of such Interest Swap or Hedging
Obligations does not exceed the principal amount of the Indebtedness to which
such Interest Swap or Hedging Obligations relate.
"Permitted Investment" means Investments in (a) any of the Discount
Notes or the Senior Notes; (b) Cash Equivalents; (c) intercompany
indebtedness to the extent permitted under clause (d) of the definition of
"Permitted Indebtedness"; (d) any Investments in Holdings or any Restricted
Subsidiary by Holdings or another Restricted Subsidiary, as applicable; (e)
Investments by Holdings or any Restricted Subsidiary of Holdings in a Person,
if as a result of such Investment (i) such Person becomes a Restricted
Subsidiary of Holdings or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, Holdings or a Restricted Subsidiary of
Holdings, (f) Investments in existence on the Issue Date, (g) loans and
advances to employees of Holdings or any of its Subsidiaries in the ordinary
course of business and on terms consistent with Holdings's and ALM's
practices in effect prior to the Issue Date, including travel, moving and
other like advances, (h) stock, obligations or securities received in the
ordinary course of business in settlement of debts owing to Holdings or a
Restricted Subsidiary thereof as a result of foreclosure, perfection,
enforcement of any Lien or in a bankruptcy proceeding; (i) Investments in
Persons to the extent any such Investment represents the non-cash
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consideration otherwise permitted under the terms of the Indenture to be
received by Holdings or its Restricted Subsidiaries in connection with an
Asset Sale; (j) Interest Swap or Hedging Obligations to the extent permitted
under the definition of "Permitted Indebtedness" in this Indenture; (k) any
issuance of Equity Interests of Holdings or any Restricted Subsidiary in
exchange for Equity Interests, property or assets of another Person; provided
that the transactions underlying the issuance or exchange of such Equity
Interests are otherwise permitted by this Indenture, (l) Investments
consisting of the licensing or contribution of intellectual property pursuant
to joint marketing arrangements with other Persons; (m) Investments
consisting of purchases and acquisitions of inventory, supplies, materials
and equipment or licenses or leases of intellectual property, in any case, in
the ordinary course of business, and (n) additional Investments in an
aggregate amount not exceeding $1.0 million at any one time outstanding.
"Permitted Lien" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of Holdings in accordance with GAAP; (c) statutory liens
of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or other
like Liens arising by operation of law in the ordinary course of business,
provided that (i) the underlying obligations are not overdue for a period of
more than 30 days or (ii) such Liens are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of Holdings or its Restricted Subsidiary, as the case
may be, in accordance with GAAP; (d) Liens securing the performance of bids,
trade contracts (other than borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (e) easements,
rights-of-way, zoning, similar restrictions and other similar encumbrances or
title defects which, singly or in the aggregate, do not in any case materially
detract from the value of the property subject thereto (as such property is used
by Holdings or any of its Restricted Subsidiaries) or interfere with the
ordinary conduct of the business of Holdings or any of its Restricted
Subsidiaries; (f) Liens arising by operation of law in connection with
judgments, but only to the extent, for an amount and for a period not resulting
in an Event of Default with respect thereto; (g) pledges or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security legislation; (h) Liens
securing the Discount Notes; (i) Liens securing Indebtedness of a Person
existing at the time such Person becomes a Restricted Subsidiary or is merged
with or into Holdings or a Restricted Subsidiary or Liens securing Indebtedness
incurred in connection with an Acquisition, provided that such Liens were in
existence prior to the date of such Acquisition, merger or consolidation, were
not incurred in anticipation thereof, and do not extend to any other assets; (j)
Liens arising from Purchase Money Indebtedness permitted to be incurred
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pursuant to clause (f) of the definition of "Permitted Indebtedness," provided,
such Liens relate solely to the property which is subject to such Purchase Money
Indebtedness; (k) leases or subleases granted to other persons in the ordinary
course of business not materially interfering with the conduct of the business
of Holdings or any of its Restricted Subsidiaries or materially detracting from
the value of the relative assets of Holdings or any Restricted Subsidiary; (l)
Liens arising from precautionary Uniform Commercial Code financing statement
filings regarding operating leases entered into by Holdings or any of its
Restricted Subsidiaries in the ordinary course of business; (m) Liens securing
Refinancing Indebtedness incurred to refinance any Indebtedness that was
previously so secured in a manner no more adverse to the Holders of the Discount
Notes in any material respect than the terms of the Liens securing such
refinanced Indebtedness provided that the Indebtedness secured is not increased
and the lien is not extended to any additional assets or property that would not
have been security for the Indebtedness refinanced; (n) Liens securing
Indebtedness of ALM and its Restricted Subsidiaries including, without
limitation, Liens securing the Senior Notes and Liens securing indebtedness
under any Credit Agreement; (o) Liens arising under options or agreements to
sell assets; (p) other Liens securing obligations incurred in the ordinary
course of business, which obligations do not exceed $1.0 million in the
aggregate at any one time outstanding; (q) Liens securing Interest Rate Swap or
Hedging Obligations; (r) Liens on any property or assets of a Restricted
Subsidiary granted in favor of Holdings or any Wholly-Owned Restricted
Subsidiary; (s) Liens securing the Obligations under a Credit Agreement,
including revolving credit Indebtedness of up to $40.0 million and (t) any
extension, renewal or replacement, in whole or in part, of any Lien described in
the foregoing clauses (a) through (s); provided, that any such extension,
renewal or replacement shall not extend to any additional property or assets.
"Permitted Transferee" means, U.S. Equity Partners, L.P. and U.S.
Equity Partners (Offshore), L.P. or any of their respective Affiliates or
successors. The term "Permitted Transferee" shall be deemed to include any other
Holder or Holders of Equity Interests of Holdings having ordinary voting power
if Wasserstein Perella & Co., or any Affiliate thereof, shall hold the
irrevocable general proxy of each such Holder in respect of the shares held by
such Holder.
"Person" means any individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"Preferred Equity Interest" of any Person means any Equity Interest of
such Person that has preferential rights to any other Equity Interest of such
Person with respect to dividends or redemptions or upon liquidation.
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<PAGE>
"Public Equity Offering" means a public offering by Holdings of shares
of its common stock (however designated and whether voting or non-voting) and
any and all rights, warrants or options to acquire such Qualified Equity
Interests.
"Purchase Agreement" means the purchase agreement dated as of December
17, 1997 between the Initial Purchasers and Holdings.
"Purchase Money Indebtedness" of any Person means any Indebtedness of
such Person to any seller or other Person incurred solely to finance the
acquisition (including in the case of a Capitalized Lease Obligation, the lease)
or construction of any real or personal tangible property which, in the
reasonable good faith judgment of the Board of Directors of Holdings, is
directly related to a Related Business of Holdings and which is incurred
concurrently with such acquisition and is secured only by the assets so
financed.
"QIB" means a Qualified Institutional Buyer as defined in Rule 144A of
the Securities Act.
"Qualified Equity Interests" means any Equity Interests of Holdings
that are not Disqualified Equity Interests.
"Qualified Exchange" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Equity Interests or Indebtedness
of Holdings issued on or after the Issue Date with the Net Cash Proceeds
received by Holdings from the substantially concurrent sale of Qualified Equity
Interests or any exchange of Qualified Equity Interests for any Equity Interests
or Indebtedness of Holdings issued on or after the Issue Date.
"Record Date" means June 1 and December 1 of each year.
"Refinancing Indebtedness" means Indebtedness (a) issued in exchange
for, or the proceeds from the issuance and sale of which are used substantially
concurrently to repay, redeem, defease, refund, refinance, discharge or
otherwise retire for value, in whole or in part, or (b) constituting an
amendment, modification or supplement to, or a deferral or renewal of ((a) and
(b) above are, collectively, a "Refinancing"), any Indebtedness in a principal
amount or having a liquidation preference not to exceed (after deduction of
reasonable and customary fees and expenses incurred in connection with the
Refinancing) the lesser of (i) the principal amount or liquidation preference of
the Indebtedness so refinanced (including premiums, if any, and fees in
connection therewith) and (ii) if such Indebtedness being Refinanced was issued
with an original issue discount, the accreted value thereof (as determined in
accordance with GAAP) at the time of such
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<PAGE>
Refinancing; provided, that (A) such Refinancing Indebtedness shall (I) not have
a Weighted Average Life to Maturity shorter than that of the Indebtedness to be
so refinanced at the time of such Refinancing and (II) in all respects, be no
less subordinated or junior, if applicable, to the rights of Holders of the
Discount Notes than was the Indebtedness to be refinanced, (B) such Refinancing
Indebtedness shall have no installment of principal (or mandatory redemption
payment) scheduled to come due earlier than the scheduled maturity of any
installment of principal of the Indebtedness to be so refinanced which was
scheduled to come due prior to the Stated Maturity, and (C) such Refinancing
Indebtedness shall be secured (if secured) in a manner no more adverse to the
Holders of the Discount Notes than the terms of the Liens (if any) securing such
refinanced Indebtedness, including, without limitation, the amount of
Indebtedness secured shall not be increased.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among Holdings and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Related Business" means the business conducted (or proposed to be
conducted) by Holdings and its Subsidiaries as of the Issue Date and any and all
businesses that in the good faith judgment of the Board of Directors of Holdings
are reasonably related businesses.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than investments in Cash Equivalents and
other Permitted Investments; provided, however, that a merger of another Person
with or into Holdings or a Restricted Subsidiary otherwise permitted in
accordance with the terms of this Indenture shall not be deemed to be a
Restricted Investment so long as the surviving entity is Holdings or a direct
wholly owned Restricted Subsidiary.
"Restricted Payment" means, with respect to any Person, (a) the
declaration or payment of any dividend or other distribution in respect of
Equity Interests of such Person or any parent or Subsidiary of such Person,
(b) any payment on account of the purchase, redemption or other acquisition or
retirement for value of Equity Interests
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<PAGE>
of such Person or any Subsidiary or parent of such Person, (c) other than with
the proceeds from the substantially concurrent sale of, or in exchange for,
Refinancing Indebtedness, any purchase, redemption, or other acquisition or
retirement for value of, any payment in respect of any amendment of the terms of
or any defeasance of, any Subordinated Indebtedness, directly or indirectly, by
such Person or a parent or Subsidiary of such Person prior to the scheduled
maturity, any scheduled repayment of principal, or scheduled sinking fund
payment, as the case may be, of such Indebtedness and (d) any Restricted
Investment by such Person; provided, however, that the term "Restricted Payment"
does not include (i) any dividend, distribution or other payment on or with
respect to Equity Interests of an issuer to the extent payable solely in shares
of Qualified Equity Interests of such issuer; and (ii) any dividend,
distribution or other payment to Holdings by any Restricted Subsidiary; and
(iii) dividends or distributions by a Restricted Subsidiary of Holdings,
provided that to the extent that a portion of such dividend or distribution is
paid to a holder of Equity Interests of such Restricted Subsidiary other than a
Company or a Restricted Subsidiary, such portion of such dividend or
distribution is not greater than such holder's pro rata aggregate common equity
in such Restricted Subsidiary.
"Restricted Securities Legend" means the legend set forth in Exhibit A
and Exhibit B to be placed on all Series A Discount Notes issued under this
Indenture.
"Restricted Subsidiary" means a Subsidiary of Holdings or any
Restricted Subsidiary that is not an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Notes" means the 93/4% Senior Notes due 2007 being issued by
the Company.
"Senior Notes Indenture" means the Indenture, dated December 22, 1997,
between the Company, ALM LLC, Counsel Connect LLC, ALM IP, LLC and ALM Counsel
Connect Inc. as Guarantors and The Bank of New York, as trustee, relating to the
Senior Notes, as such indenture may be amended or supplemented from time to
time.
"Significant Subsidiary" shall have the meaning provided under
Regulation S-X of the Securities Act, as in effect on the Issue Date, and in
addition shall include ALM.
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"Shelf Registration Statement" means the shelf registration statement
filed under Rule 415 of the Securities Act pursuant to the Registration Rights
Agreement.
"Stated Maturity," when used with respect to any Discount Note, means
December 15, 2008.
"Subordinated Indebtedness" means Indebtedness of Holdings or a
Restricted Subsidiary that is expressly subordinated in right of payment by its
terms or the terms of any document or instrument or instrument relating thereto
to the Discount Notes, in the case of Holdings, or to the Discount Notes or a
Subsidiary Guarantee thereof, in the case of a Restricted Subsidiary.
"Subsidiary," with respect to any Person, means (a) a corporation a
majority of whose Equity Interests with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, (b) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (c) a partnership in which such Person or a Subsidiary of such Person is, at
the time, a general partner and in which such Person, directly or indirectly, at
the date of determination thereof has at least a majority ownership interest.
Unless the context requires otherwise, Subsidiary means each direct and indirect
Subsidiary of Holdings.
"Subsidiary Guarantees" means the Subsidiary Guarantees of the
Guarantors in the form set forth as Exhibit J to the Senior Note Indenture.
"Third-Party Evaluator" shall mean an investment banking firm of
national reputation that is not an Affiliate of Holdings or a Subsidiary;
provided, that if the subject matter, type or scope of the evaluation is outside
the scope of evaluation customarily done by investment banking firms, then such
Third Party Evaluator shall be an accounting firm or appraisal or valuation firm
of national reputation that is not an Affiliate of, and is otherwise independent
of, Holdings and its Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date
on which this Indenture is qualified under the TIA.
"Transactions" means the Offering, the acquisition by the Company of
National Law Publishing Company, Inc. pursuant to the Stock Purchase Agreement
dated as of October 23, 1997, the contribution of an aggregate of $108.5 million
to the equity capital of the Company by Holdings, and the repayment of a $31.5
million secured
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promissory note by ALM to the former owner of American Lawyer Media, L.P. and a
$32.0 million equity bridge note by ALM to an affiliate of Wasserstein Perella
Group, Inc.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) which
has become publicly available at least five Business Days prior to the date
fixed for repayment (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the then
remaining Weighted Average Life to Maturity of the Discount Notes (calculated as
if the first date on which the Discount Notes can be redeemed at the option of
Holdings pursuant to paragraph (a) of Section 3.07 hereof were the final
maturity of the Discount Notes); provided, however, that if such Weighted
Average Life to Maturity of the Discount Notes is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if such Weighted Average Life to Maturity of the Discount Notes is less
than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such in the preamble until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"Unrestricted Subsidiary" means any Subsidiary of Holdings that does
not own any Capital Stock of, or own or hold any Lien on any property of,
Holdings or any other Restricted Subsidiary of Holdings and that, at the time of
determination, shall be an Unrestricted Subsidiary (as designated by the Board
of Directors of Holdings); provided, that such Subsidiary (a) shall not engage,
to any substantial extent, in any line or lines of business activity other than
a Related Business, (b) has no Indebtedness other than Non-Recourse Debt, (c) is
a Person with respect to which neither Holdings nor any of its Restricted
Subsidiaries has any direct or indirect obligation to subscribe for additional
Equity Interests or maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified level of operating results; and
(d) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of Holdings or any of its Restricted Subsidiaries.
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"U.S. Government Obligations" means direct noncallable obligations of,
or noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
"U.S. Person" means (a) any individual resident in the United States,
(b) any partnership or corporation organized or incorporated under the laws of
the United States, (c) any estate of which an executor or administrator is a
U.S. Person (other than an estate governed by foreign law and of which at least
one executor or administrator is a non-U.S. Person who has sole or shared
investment discretion with respect to its assets), (d) any trust of which any
trustee is a U.S. Person (other than a trust of which at least one trustee is a
non-U.S. Person who has sole or shared investment discretion with respect to its
assets and no beneficiary of the trust (and no settler, if the trust is
revocable) is a U.S. Person), (e) any agency or branch of a foreign entity
located in the United States, (f) any non-discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. Person, (g) any discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary organized,
incorporated or (if an individual) resident in the United States (other than
such an account held for the benefit or account of a non-U.S. Person), (h) any
partnership or corporation organized or incorporated under the laws of a foreign
jurisdiction and formed by a U.S. Person principally for the purpose of
investing in securities not registered under the Securities Act (unless it is
organized or incorporated and owned, by "accredited investors" within the
meaning of Rule 501(a) under the Securities Act who are not natural persons,
estates or trusts); provided, however, that the term "U.S. Person" shall not
include (i) a branch or agency of a U.S. Person that is located and operating
outside the United States for valid business purposes as a locally regulated
branch or agency engaged in the banking or insurance business, (ii) any employee
benefit plan established and administered in accordance with the law, customary
practices and documentation of a foreign country and (iii) the international
organizations set forth in Section 902(o)(vii) of Regulation S under the
Securities Act and any other similar international organizations, and their
agencies, affiliates and pension plans.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
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"Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary all
the Equity Interests of which are owned by Holdings or one or more Wholly-Owned
Restricted Subsidiaries of Holdings (other than directors' qualifying shares and
nominal amounts required to be held by foreign nationals under applicable law).
Section 1.02 Other Definitions
<TABLE>
<CAPTION>
Term Defined in
Section
---- ----------
<S> <C>
"Acceleration Notice" 6.02
"Additional Guarantee" 10.07
"Additional Guarantor" 10.07
"Affiliate Transaction" 4.14
"Asset Sale" 4.08
"Asset Sale Offer" 4.08
"Asset Sale Offer Amount" 4.08
"Asset Sale Offer Period" 4.08
"Asset Sale Offer Price" 4.08
"Asset Sale Purchase Date" 4.08
"Benefitted Party" 11.01
"Calculation Date" 1.01
"Cedel" 2.01
"Change of Control Offer" 4.07
"Change of Control Offer Period" 4.07
"Change of Control Payment" 4.07
"Change of Control Purchase Date" 4.07
"Change of Control Purchase Price" 4.07
"Company" preamble
"Covenant Defeasance" 8.03
"Discount Notes" preamble
"DTC" 2.03
"Euroclear" 2.01
"Event of Default" 6.01
"Excess Proceeds" 4.08
"Global Discount Notes" 2.01
"IAI Global Discount Note" 2.01
"Incurrence Date" 4.10
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Term Defined in
Section
---- ----------
<S> <C>
"Institutional Accredited Investors" 2.06
"Legal Defeasance" 8.02
"Moody's" 1.01
"Offer Amount" 4.08
"Offer Period" 4.08
"Paying Agent" 2.03
"Payment Default" 6.01
"Payment Notice" 10.03
"Purchase Date" 4.08
"Refinancing" 1.01
"Registrar" 2.03
"Regulation S" 2.01
"Regulation S Permanent Global Discount Note" 2.07
"Regulation S Temporary Global Discount Note" 2.01
"Restricted Payments" 4.09
"Rule 144A" 2.01
"S&P" 1.01
"Securities Act" 2.06
"Series A Discount Notes" preamble
"Series B Discount Notes" preamble
"U.S. Global Discount Note" 2.01
</TABLE>
Section 1.03 Incorporation by Reference of Trust Indenture Act
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Discount Notes;
"indenture security Holder" means a Holder of a Discount Note;
"indenture to be qualified" means this Indenture;
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"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Discount Notes means Holdings and any successor
obligor upon the Discount Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04 Rules of Construction
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
Article II
THE DISCOUNT NOTES
Section 2.01 Form and Dating
(a) The Series A Discount Notes and the Trustee's certificate of
authentication thereon shall be substantially in the form of Exhibit A hereto,
which is hereby incorporated in and expressly made a part of this Indenture.
The Series B Discount Notes and the Trustee's certificate of authentication
thereon shall be substantially in the form of Exhibit B hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Discount Notes
may have notations, legends or endorsements required
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by law, stock exchange rule, agreements to which Holdings is subject, if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to Holdings). Holdings shall furnish any such legend not contained
in Exhibit A or Exhibit B to the Trustee in writing. Each Note shall be dated
the date of its authentication. The terms and provisions contained in the
Discount Notes shall constitute, and are hereby expressly made, a part of this
Indenture and Holdings and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
(b) Global Discount Notes. The Series A Discount Notes are being
offered and sold by Holdings pursuant to the Purchase Agreement.
The Series A Discount Notes offered and sold in reliance on Rule 144A
under the Securities Act ("Rule 144A") to QIBs, or offered and sold to IAIs,
both as provided in the Purchase Agreement, will be issued in denominations of
$1,000 and integral multiples thereof on the Issue Date initially in the form of
one or more permanent global Discount Notes in definitive, fully registered form
without interest coupons with the Global Notes Legend and the Restricted
Securities Legend set forth in Exhibit A hereto (each, respectively, a "U.S.
Global Discount Note" or an "IAI Global Discount Note") which shall be deposited
on behalf of the purchasers of the Series A Discount Notes represented thereby
with the Trustee, at its New York office, as custodian for the Depositary,
initially The Depository Trust Company ("DTC"), duly executed by Holdings and
authenticated by the Trustee as hereinafter provided, and registered in the name
of DTC or its nominee, in each case for credit to the accounts of DTC's Direct
Participants and Indirect Participants. The aggregate principal amount of the
U.S. Global Discount Note or the IAI Global Discount Note, as the case may be,
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depositary or its nominee, in
connection with the transfer or exchange of interests, as hereinafter provided.
The Series A Discount Notes offered and sold in offshore transactions
in reliance on Regulation S under the Securities Act ("Regulation S"), as
provided in the Purchase Agreement, will be issued in denominations of $1,000
and integral multiples thereof on the Issue Date initially in the form of a
single, temporary, global Note in definitive, fully registered form without
interest coupons with the Global Discount Notes Legend and Restricted Securities
Legend set forth in Exhibit A hereto (the "Regulation S Temporary Global
Discount Note"). The Regulation S Temporary Global Discount Note will be
deposited on behalf of the purchasers of the Series A Discount Notes represented
thereby with the Trustee, at its New York office, as custodian for the
Depositary, initially DTC, and registered in the name of a nominee of DTC for
credit to the accounts of Indirect Participants at the Euroclear System
("Euroclear") and Cedel Bank, societe
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<PAGE>
anonyme ("CEDEL"), duly executed by Holdings and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Regulation S
Temporary Global Discount Note may from time to time be increased or decreased
by adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with the transfer of interests as
hereinafter provided.
The Applicable Procedures shall apply to interests in the Regulation S
Temporary Global Discount Note and the Regulation S Permanent Global Discount
Note (as defined herein) that are held by the Holders through Euroclear or
Cedel.
Upon consummation of the Exchange Offer, the Series B Discount Notes
may be issued in the form of one or more permanent Global Discount Notes in
definitive, fully registered form without interest coupons with the Global Notes
Legend but not the Restricted Securities Legend set forth in Exhibit A hereto,
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by Holdings and authenticated by the Trustee as hereinafter provided.
The aggregate principal amount of such Global Discount Notes may from time to
time be increased or decreased by adjustments made on the records of the Trustee
and the Depositary or its nominee, in connection with the transfer or exchange
of interests, as hereinafter provided.
(c) Certificated Discount Notes. In addition to the provisions of
Section 2.11, entittlement holders with security entitlements in Global Discount
Notes may, upon request to the Trustee, receive a certificated Series A Discount
Note, which certificated Series Discount A Note shall bear the Restricted
Securities Legend set forth in Exhibit A hereto.
After a transfer of any Series A Discount Notes during the period of
the effectiveness of a Shelf Registration Statement with respect to the Series A
Discount Notes, all requirements for Restricted Securities Legends on such
Series A Note will cease to apply, and a certificated Series A Discount Note
without a Restricted Securities Legend will be available to the holder of such
Series A Discount Notes. Upon the consummation of an Exchange Offer with
respect to the Series A Discount Notes pursuant to which holders of Series A
Discount Notes are offered Series B Discount Notes in exchange for their Series
A Discount Notes, certificated Series A Discount Notes with the Restricted
Securities Legend set forth in Exhibit A hereto will be available to holders of
such Series A Discount Notes that do not exchange their Series A Discount Notes,
and Series B Discount Notes in certificated form without the Restricted
Securities Legend set forth in Exhibit A hereto will be available to holders
that exchange such Series A Discount Notes in such Exchange Offer.
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<PAGE>
(d) Each Global Discount Note shall represent such of the outstanding
Discount Notes as shall be specified therein and each shall provide that it
shall represent the aggregate amount of outstanding Discount Notes from time to
time endorsed thereon and that the aggregate amount of outstanding Discount
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges, redemptions and transfers of interest. Any
endorsement of a Global Discount Note to reflect the amount of any increase or
decrease in the amount of outstanding Discount Notes represented thereby shall
be made by the Trustee or the Note Custodian, at the direction of the Trustee,
in accordance with instructions given by the Holder thereof as required by
Section 2.07 hereof.
Except as set forth in Section 2.07 hereof, the Global Discount Notes
may be transferred, in whole and not in part, only to another nominee of the
Depositary or to a successor of the Depositary or its nominee.
(e) Book-Entry Provisions. This Section 2.01(e) shall apply only to
the Regulation S Temporary Global Discount Note, the U.S. Global Discount Note,
the IAI Global Discount Note, the Regulation S Permanent Global Discount Note
and the Series B Discount Notes issued in the form of one or more permanent
Global Discount Notes (collectively, the "Global Discount Notes") deposited with
or on behalf of the Depositary.
Holdings shall execute and the Trustee shall, in accordance with this
Section 2.01(e), authenticate and make available for delivery initially one or
more Global Discount Notes that (i) shall be registered in the name of the
Depositary or the nominee of the Depositary for such Global Discount Note or
Global Discount Notes or the nominee of such Depositary and (ii) shall be
delivered by the Trustee to the Depositary or pursuant to the Depositary's
instructions or held by the Trustee as custodian for the Depositary.
Direct Participants and Indirect Participants shall have no rights
either under this Indenture with respect to any Global Discount Note held on
their behalf by the Depositary or by the Trustee as custodian for the Depositary
or under such Global Discount Note, and the Depositary may be treated by
Holdings, the Trustee and any agent of Holdings or the Trustee as the absolute
owner of such Global Discount Note for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent Holdings, the Trustee or any agent
of Holdings or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Direct and Indirect Participants, the operation of
customary practices of such Depositary governing the exercise of the rights of
an owner of a beneficial interest in any Global Discount Note.
29
<PAGE>
Section 2.02 Execution and Authentication
Two Officers shall sign the Discount Notes for Holdings by manual or
facsimile signature. Holdings's seal shall be reproduced on the Discount Notes
and may be in facsimile form.
If an Officer whose signature is on a Discount Note no longer holds
that office at the time a Discount Note is authenticated, the Discount Note
shall nevertheless be valid.
A Discount Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Discount Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of Holdings signed by two
Officers, authenticate (1) Series A Discount Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Series A Discount Notes,
and (2) Series B Discount Notes for issue only in an Exchange Offer, pursuant to
the Registration Rights Agreement in exchange for Series A Discount Notes of a
like principal amount. The aggregate principal amount of Discount Notes
outstanding at any time may not exceed such amount except as provided in Section
2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to Holdings
to authenticate Discount Notes. An authenticating agent may authenticate
Discount Notes whenever the Trustee may do so. Each reference in this Indenture
to authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holdings or an
Affiliate of Holdings.
Section 2.03 Registrar and Paying Agent
Holdings shall maintain an office or agency where Discount Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Discount Notes may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Discount Notes and of their
transfer and exchange. Holdings may appoint one or more co-registrars and one
or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
Holdings may change any Paying Agent or Registrar without notice to any Holder.
Holdings shall promptly notify the Trustee in writing of the name and address of
any Agent not a party to this Indenture. If Holdings fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. Holdings or any of its Subsidiaries may act as Paying Agent or Registrar.
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Holdings initially appoints DTC to act as Depositary with respect to
the Global Discount Notes.
Holdings initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Discount
Notes.
Section 2.04 Paying Agent to Hold Money in Trust
Holdings shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Discount
Notes, and will notify the Trustee of any default by Holdings in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. Holdings at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than Holdings or a Subsidiary of
Holdings) shall have no further liability for the money. If Holdings or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to Holdings, the Trustee
shall serve as Paying Agent for the Discount Notes.
Section 2.05 Holder Lists
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, Holdings shall furnish to the Trustee at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Discount Notes and Holdings shall otherwise comply with TIA Section 312(a)
Section 2.06 Payment
Holdings and the Trustee will treat the persons in whose names the
Discount Notes are registered (including Discount Notes represented by Global
Discount Notes) as the owners thereof for the purpose of receiving payments and
for any and all other purposes whatsoever. Payments in respect of the principal,
premium, Liquidated Damages, if any, and interest on Global Discount Notes
registered in the name of DTC or its nominee will be payable by the Trustee to
DTC or its nominee as the registered holder under this Indenture. Consequently,
neither Holdings, the Trustee nor any agent
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of Holdings or the Trustee has or will have any responsibility or liability for
(i) any aspect of DTC's records or any Direct Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Discount Notes or for maintaining, supervising
or reviewing any of DTC's records or any Direct Participant's or Indirect
Participant's records relating to the beneficial ownership interests in any
Global Discount Note or (ii) any other matter relating to the actions and
practices of DTC or any of its Direct Participants or Indirect Participants.
Section 2.07 Transfer and Exchange
When Discount Notes are presented to the Registrar or a co-registrar
with a request to register a transfer or to exchange them for an equal principal
amount of Discount Notes of other denominations, the Registrar shall register
the transfer or make the exchange if its requirements for such transactions are
met; provided, that any Discount Notes presented or surrendered for registration
of transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to Holdings and the Registrar or
co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing. To permit registration of transfers and exchanges,
Holdings shall issue and the Trustee shall authenticate Discount Notes at the
Registrar's request. No service charge shall be made for any registration of
transfer or exchange (except as otherwise expressly permitted herein), but
Holdings may require payment of a sum sufficient to cover any transfer tax, fee,
assessment or similar governmental charge payable in connection therewith (other
than any such transfer tax or similar governmental charge payable upon exchanges
pursuant to Sections 2.11, 3.06 or 9.05 hereof).
Holdings shall not be required (i) to issue, register the transfer of
or exchange Discount Notes during a period beginning at the opening of business
15 days before the day of any selection of Discount Notes for redemption under
Section 3.02 hereof and ending at the close of business on the day of selection,
or (ii) to register the transfer, or exchange, or any Discount Note so selected
for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.
(a) Notwithstanding any provision to the contrary herein, so long as
a Global Discount Note remains outstanding and is held by or on behalf of
the Depositary, transfers of a Global Discount Note, in whole or in part,
or of any security entitlement therein, shall only be made in accordance
with Section 2.01(e) and this Section 2.07(a); provided, however, that
security entitlements with respect to a Global Discount Note may be created
in the form of, or transferred to other entitlement holders who take
delivery thereof in the form of a security entitlement in the same global
Discount Note in accordance with the transfer restrictions set forth in the
Restricted Securities Legend and under the heading "Notice to
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Investors" in Holdings's Offering Memorandum dated December 17, 1997.
Furthermore, notwithstanding any provision herein to the contrary,
transfers by an IAI (x) which is not a QIB and (y) is an initial investor
in the Series A Discount Notes, cannot be made to an IAI that is not a QIB.
(i) Except for transfers or exchanges made in accordance with clauses
(ii) through (iv) of this Section 2.07(a), transfers of a Global
Discount Note shall be limited to transfers of such Global Discount
Note in whole, but not in part, to nominees of the Depositary or to a
successor of the Depositary or such successor's nominee.
(ii) U.S. Global Discount Note or IAI Global Discount Note to
Regulation S Temporary Global Discount Note. If an entitlement holder
with a security entitlement in the U.S. Global Discount Note or the
IAI Global Discount Note deposited with the Depositary or the Trustee
as custodian for the Depositary, wishes at any time to transfer its
security entitlement in such U.S. Global Discount Note or such IAI
Global Discount Note, as the case may be, to a person who is required
to take delivery thereof in the form of a security entitlement the
Regulation S Temporary Global Discount Note, such owner may, subject
to the rules and procedures of the Depositary, exchange or cause the
exchange of such security entitlement for an equivalent security
entitlement in the Regulation S Temporary Global Discount Note. Upon
receipt by the Trustee, as Registrar, at its office in The City of New
York of (1) instructions given in accordance with the Depositary's
procedures from a Direct Participant or an Indirect Participant
directing the Trustee to create or cause to be credited a security
entitlement in the Regulation S Temporary Global Discount Note in an
amount equal to the security entitlement in the U.S. Global Discount
Note or in the IAI Global Discount Note, as the case may be, to be
exchanged, (2) a written order given in accordance with the
Depositary's procedures containing information regarding the
participant account of the Depositary and the Euroclear or Cedel
account to be credited with such increase and (3) a certificate in the
form of Exhibit C attached hereto given by the holder of such security
entitlement, then the Trustee, as Registrar, shall instruct the
Depositary to reduce or cause to be reduced the principal amount of
the U.S. Global Discount Note or the IAI Global Discount Note, as the
case may be, and to increase or cause to be increased the principal
amount of the Regulation S Temporary Global Discount Note by the
aggregate principal amount of the beneficial interest in the U.S.
Global Discount Note or the IAI Global Discount Note, as the case may
be, equal to the security entitlement in the Regula-
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tion S Temporary Global Discount Note to be exchanged or transferred,
to create or cause to be credited to the account of the person
specified in such instructions a security entitlement in the
Regulation S Temporary Global Discount Note equal to the reduction in
the principal amount of the U.S. Global Discount Note or the IAI
Global Discount Note, as the case may be, and to debit or cause to be
debited from the account of the person making such exchange or
transfer the security entitlement in the U.S. Global Discount Note or
the IAI Global Discount Note as the case may be, that is being
exchanged or transferred.
(iii) Regulation S Temporary Global Discount Note to U.S. Global
Discount Note or IAI Global Discount Note. If an entitlement holder
with a security entitlement in the Regulation S Temporary Global
Discount Note deposited with the Depositary or with the Trustee as
custodian for the Depositary wishes at any time to transfer its
security entitlement in such Regulation S Temporary Global Discount
Note to a person who is required to take delivery thereof in the form
of a security entitlement in the U.S. Global Discount Note or, subject
to Section 2.07(a)(vii), in the IAI Global Discount Note, such holder
may, subject to the rules and procedures of Euroclear or Cedel, as the
case may be, and the Depositary, exchange or cause the exchange of
such interest for an equivalent security entitlement in the U.S.
Global Discount Note or in the IAI Global Discount Note, as the case
may be. Upon receipt by the Trustee, as Registrar at its office in
The City of New York of (1) instructions from Euroclear or Cedel, if
applicable, and the Depositary, directing the Trustee, as Registrar,
to create or cause to be credited a security entitlement in the U.S.
Global Discount Notes or in the IAI Global Discount Note, as the case
may be, equal to the security entitlement in the Regulation S
Temporary Global Discount Note to be exchanged or transferred, such
instructions to contain information regarding the participant account
with the Depositary to be credited with such increase, (2) a written
order given in accordance with the Depositary's procedures containing
information regarding the participant account of the Depositary and
(3) a certificate in the form of Exhibit D attached hereto given by
the owner of such security entitlement, then Euroclear or Cedel or the
Trustee, as Registrar, as the case may be, will instruct the
Depositary to reduce or cause to be reduced the Regulation S Temporary
Global Discount Note and to increase or cause to be increased the
principal amount of the U.S. Global Discount Note or of the IAI Global
Discount Note, as the case may be, by the aggregate principal amount
of the security entitlement in the Regulation S Temporary Global
Discount Note
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to be exchanged or transferred and the Trustee, as Registrar, shall
instruct the Depositary, concurrently with such reduction, to create
or cause to be credited to the account of the person specified in such
instructions a security entitlement in the U.S. Global Discount Note
or in the IAI Global Discount Note, as the case may be, equal to the
reduction in the principal amount of the Regulation S Temporary Global
Discount Note and to debit or cause to be debited from the account of
the person making such exchange or transfer the security entitlement
in the Regulation S Temporary Global Discount Note that is being
exchanged or transferred.
(iv) Global Discount Note to Transfer Restricted Security. If an
entitlement holder with a security entitlement in a Global Discount
Note deposited with the Depositary or with the Trustee as custodian
for the Depositary wishes at any time to transfer its security
entitlement in such Global Discount Note to a person who is required
to take delivery thereof in the form of a Transfer Restricted
Security, such owner may, subject to the rules and procedures of
Euroclear or Cedel, if applicable, and the Depositary, cause the
exchange of such security entitlement for one or more Transfer
Restricted Securities of any authorized denomination or denominations
and of the same aggregate principal amount. Upon receipt by the
Trustee, as Registrar, at its office in The City of New York of (1)
instructions from Euroclear or Cedel, if applicable, and the
Depositary directing the Trustee, as Registrar, to authenticate and
deliver one or more Transfer Restricted Securities of the same
aggregate principal amount as the security entitlement in the Global
Discount Note to be exchanged, such instructions to contain the name
or names of the designated transferee or transferees, the authorized
denomination or denominations of the Transfer Restricted Securities to
be so issued and appropriate delivery instructions, (2) a certificate
in the form of Exhibit E attached hereto given by the owner of such
security entitlement to the effect set forth therein, (3) a
certificate in the form of Exhibit F attached hereto given by the
person acquiring the Transfer Restricted Securities for which such
security entitlement is being exchanged, to the effect set forth
therein, and (4) such other certifications, legal opinions or other
information as Holdings may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act, then Euroclear or Cedel, if applicable, or the
Trustee, as Registrar, as the case may be, will instruct the
Depositary to reduce or cause to be reduced such Global Discount Note
by the aggregate principal amount of the beneficial interest therein
to be exchanged and to debit or cause to be debited from the
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account of the person making such transfer the security entitlement in
the Global Discount Note that is being transferred, and concurrently
with such reduction and debit Holdings shall execute, and the Trustee
shall authenticate and make available for delivery, one or more
Transfer Restricted Securities of the same aggregate principal amount
in accordance with the instructions referred to above.
(v) Transfer Restricted Security to Transfer Restricted Security. If
a holder of a Transfer Restricted Security wishes at any time to
transfer such Transfer Restricted Security to a person who is required
to take delivery thereof in the form of a Transfer Restricted
Security, such holder may, subject to the restrictions on transfer set
forth herein and in such Transfer Restricted Security, cause the
exchange of such Transfer Restricted Security for one or more Transfer
Restricted Securities of any authorized denomination or denominations
and of the same aggregate principal amount. Upon receipt by the
Trustee, as Registrar, at its office in The City of New York of (1)
such Transfer Restricted Security, duly endorsed as provided herein,
(2) instructions from such holder directing the Trustee, as Registrar,
to authenticate and make available for delivery one or more Transfer
Restricted Securities of the same aggregate principal amount as the
Transfer Restricted Security to be exchanged such instructions to
contain the name or authorized denomination or denominations of the
Transfer Restricted Securities to be so issued and appropriate
delivery instructions, (3) a certificate from the holder of the
Restricted Security to be exchanged in the form of Exhibit E attached
hereto, (4) a certificate in the form of Exhibit F attached hereto
given by the person acquiring the Transfer Restricted Securities for
which such Transfer Restricted Security is being exchanged, to the
effect set forth therein, and (5) such other certifications, legal
opinions or other information as Holdings may reasonably require to
confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to the registration requirements
of the Securities Act, then the Trustee, as Registrar, shall cancel or
cause to be cancelled such Transfer Restricted Security and
concurrently therewith, Holdings shall execute, and the Trustee shall
authenticate and make available for delivery, one or more Transfer
Restricted Securities of the same aggregate principal amount at
maturity, in accordance with the instructions referred to above.
(vi) Other Exchanges. In the event that a security entitlement with
respect to a Global Discount Note is exchanged for Discount Notes in
definitive registered form pursuant to Section 2.11 prior to the
effective-
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ness of a Shelf Registration Statement with respect to such Discount
Notes, such Discount Notes may be exchanged only in accordance with
such procedures as are substantially consistent with the provisions of
clauses (ii) through (v) above (including the certification
requirements intended to ensure that such transfer comply with Rule
144A, Rule 144, Rule 501(a)(1), (2), (3) or (7) of Regulation D, or
Regulation S of the Securities Act, as the case may be) and such other
procedures as may from time to time to adopted by Holdings.
(vii) Restricted Period. Prior to the termination of the 40-day
Restricted Period with respect to the issuance of the Discount Notes,
transfers of security entitlements in the Regulation S Temporary
Global Discount Note to U.S. Persons shall be limited to transfers to
QIBs made pursuant to the provisions of Sections 2.07(a)(iii).
Holdings shall advise the Trustee as to the termination of the
restricted period and the Trustee may rely conclusively thereon.
(viii) Regulation S Temporary Global Discount Note to Regulation S
Permanent Global Discount Note. Following the termination of the
40-day Restricted Period with respect to the issuance of the Discount
Notes, security entitlements in the Regulation S Temporary Global
Discount Note shall be exchanged for security entitlements in a Global
Discount Note in definitive, fully registered from without interest
coupons, with the Global Notes Legend set forth in Exhibit A hereto,
but without the Restricted Securities Legend as set forth therein (a
"Regulation S Permanent Global Discount Note"), pursuant to the rules
and procedures of the Depositary; provided, however, that prior to (i)
the payment of interest or principal with respect to a holder's
security entitlement in the Regulation S Temporary Global Discount
Note and (ii) any exchange of such security entitlement for a security
entitlement in the Regulation S Permanent Global Discount Note,
Euroclear or Cedel shall receive a certificate substantially in the
form of Exhibit G hereto from the entitlement holder of such security
entitlement and Euroclear and Cedel shall deliver a certificate
substantially in the form of Exhibit H hereto to the Trustee (or the
paying agent if different from the Trustee). Upon proper presentment
to the Trustee of a certificate substantially in the form of Exhibit I
hereto and subject to the rules and procedures of DTC or its direct or
indirect participants, including Euroclear and Cedel, a security
entitlement in a Regulation S Permanent Global Discount Note may be
exchanged for a certificated Note that is free from any restriction on
transfer (other than such as are solely attributable to any holder's
status).
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(b) Except in connection with an Exchange Offer or a Shelf
Registration Statement contemplated by and in accordance with the terms of
the Registration Rights Agreement, if Series A Discount Notes are issued
upon the transfer, exchange or replacement of Series A Discount Notes
bearing the Restricted Securities Legend set forth in Exhibit A hereto, or
if a request is made to remove such Restricted Securities Legend on Series
A Discount Notes, the Series A Discount Notes so issued shall bear the
Restricted Securities Legend, or the Restricted Securities Legend shall not
be removed, as the case may be, unless there is delivered to Holdings such
satisfactory evidence, which may include an opinion of counsel licensed to
practice law in the State of New York, as may be reasonably required by
Holdings, that neither the legend nor the restrictions on transfer set
forth therein are required to ensure that transfers thereof comply with the
provisions of Rule 144A, Rule 144, Rule 501(a)(1), (2), (3) or (7) of
Regulation D or Regulation S under the Securities Act or, with respect to
Transfer Restricted Securities, that such Discount Notes are not
"restricted" within the meaning of Rule 144 under the Securities Act. Upon
provision of such satisfactory evidence, the Trustee, at the direction of
Holdings, shall authenticate and make available for delivery Series A
Discount Notes that do not bear the legend.
(c) Neither Holdings nor the Trustee shall have any responsibility
for any actions taken or not taken by the Depositary and Holdings shall
have no responsibility for any actions taken or not taken by the Trustee as
agent or custodian of the Depositary.
Section 2.08 Replacement Discount Notes
If any mutilated Discount Note is surrendered to the Trustee, or
Holdings and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Discount Note, Holdings shall issue and the
Trustee, upon the written order of Holdings signed by two Officers of Holdings,
shall authenticate a replacement Discount Note if the Trustee's requirements and
the requirements of Section 8-405 of the Uniform Commercial Code are met. If
required by the Trustee or Holdings, an indemnity bond must be supplied by the
Holder that is sufficient in the judgment of the Trustee and Holdings to protect
Holdings, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Discount Note is replaced. Holdings may charge the
Holder for Holdings's expenses in replacing a Discount Note.
Every replacement Discount Note is an additional obligation of
Holdings and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Discount Notes duly issued hereunder.
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Section 2.09 Outstanding Discount Notes
The Discount Notes outstanding at any time are all the Discount Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Discount
Note effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in this
Section, a Discount Note does not cease to be outstanding because Holdings or an
Affiliate of Holdings holds the Discount Note.
If a Discount Note is replaced pursuant to Section 2.08 hereof, it
ceases to be outstanding unless the Trustee and Holdings receives proof
satisfactory to them that the replaced Discount Note is held by a protected
purchaser.
If the principal amount of any Discount Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than Holdings, a Subsidiary or an Affiliate
of any thereof) holds in trust, in accordance with the provisions of this
Indenture, on a redemption date or maturity date, money sufficient to pay all
principal and interest payable on that date with respect to the Discount Notes
(or portions thereof) to be redeemed or maturing, as the case may be, then on
and after that date such Discount Notes (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
Section 2.10 Treasury Discount Notes
In determining whether the Holders of the required principal amount of
Discount Notes have concurred in any direction, notice, waiver or consent,
Discount Notes owned by Holdings or an Affiliate of Holdings shall be considered
as though not outstanding, except that for the purposes of determining whether
the Trustee shall be protected in relying on any such direction, notice, waiver
or consent, only Discount Notes that a Responsible Officer of the Trustee
actually knows are so owned shall be so considered.
Section 2.11 Temporary Discount Notes
Until definitive Discount Notes are ready for delivery, Holdings may
prepare and the Trustee shall authenticate temporary Discount Notes upon a
written order of Holdings signed by two Officers of Holdings. Temporary
Discount Notes shall be substantially in the form of definitive Discount Notes
but may have variations that Holdings considers appropriate for temporary
Discount Notes and as shall be reasonably acceptable to the Trustee. Without
unreasonable delay, Holdings shall prepare and the
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Trustee shall authenticate definitive Discount Notes in exchange for temporary
Discount Notes.
Until such exchange, holders of temporary Discount Notes shall be
entitled to all of the benefits of this Indenture.
Section 2.12 Cancellation
Holdings at any time may deliver Discount Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Discount Notes surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Discount Notes
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall destroy cancelled Notes (subject to the record retention
requirement of the Exchange Act) unless Holdings directs the Trustee to deliver
such cancelled Discount Notes to Holdings. Holdings may not issue new Discount
Notes to replace Discount Notes that it has paid or that have been delivered to
the Trustee for cancellation.
Section 2.13 Defaulted Interest
If Holdings defaults in a payment of interest on the Discount Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Discount Notes and in Section 4.01 hereof. Holdings shall promptly
notify the Trustee in writing of the amount of defaulted interest proposed to be
paid on each Discount Note and the date of the proposed payment. Holdings shall
fix or cause to be fixed each such special record date and payment date,
provided that no such special record date shall be less than 10 days prior to
the related payment date for such defaulted interest. At least 15 days before
the special record date, Holdings (or, upon the written request of Holdings, the
Trustee in the name and at the expense of Holdings) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date, the amount of such defaulted interest and interest payable on such
defaulted interest, if any, to be paid.
Section 2.14 Cusip Numbers
Holdings in issuing the Discount Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Discount Notes or as in any notice of a redemption and
that reliance may be placed only
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on the other identification numbers printed on the Discount Notes, and any such
redemption shall not be affected by any defect in or omission of such numbers.
Holdings will promptly notify the Trustee of any change in the "CUSIP" numbers.
Article III
REDEMPTION AND PREPAYMENT
Section 3.01 Notices to Trustee
If Holdings elects to redeem Discount Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days (unless a shorter period is acceptable to the Trustee) but not
more than 60 days before a redemption date, an Officers' Certificate setting
forth (a) the clause of this Indenture pursuant to which the redemption shall
occur, (b) the redemption date, (c) the principal amount of Discount Notes to be
redeemed and (d) the redemption price.
Section 3.02 Selection of Discount Notes to Be Redeemed
If fewer than all of the Discount Notes are to be redeemed at any
time, the Trustee shall select the Discount Notes to be redeemed among the
Holders of the Discount Notes in compliance with the requirements of the
principal national securities exchange, if any, on which the Discount Notes are
listed or, if the Discount Notes are not so listed, on a pro rata basis, by lot
or in accordance with any other method the Trustee considers fair and
appropriate. In the event of partial redemption by lot, the particular Discount
Notes to be redeemed shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Discount Notes not previously called for redemption.
The Trustee shall promptly notify Holdings in writing of the Discount
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Discount Notes and
portions of Discount Notes selected shall be in amounts of $1,000 or integral
multiples of $1,000; except that if all of the Discount Notes of a Holder are to
be redeemed, the entire outstanding amount of Discount Notes held by such
Holder, even if not an integral multiple of $1,000, shall be redeemed. Except
as provided in the preceding sentence, provisions of this Indenture that apply
to Discount Notes called for redemption also apply to portions of Discount Notes
called for redemption.
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Section 3.03 Notice of Redemption
Subject to the provisions of Section 3.07 hereof, at least 30 days but
not more than 60 days before a redemption date, Holdings shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Discount Notes are to be redeemed at its registered address.
The notice shall identify the Discount Notes (including applicable
CUSIP numbers) to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Discount Note is being redeemed in part, the portion of the
principal amount of such Discount Note to be redeemed and that, after the
redemption date upon surrender of such Discount Note, a new Note or Discount
Notes in principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Discount Note;
(d) the name and address of the Paying Agent;
(e) that Discount Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless Holdings defaults in making such redemption payment or
the Paying Agent is prohibited from making such payments pursuant to the terms
of this Indenture, interest on Discount Notes (or portions thereof) called for
redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the Discount Notes and/or the Section of this
Indenture pursuant to which the Discount Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP or ISIN number, if any, listed in such notice or printed on the
Discount Notes.
At Holdings's request, the Trustee shall give the notice of redemption
in Holdings's name and at its expense; provided, however, that Holdings shall
have delivered to a Responsible Officer of the Trustee, at least 45 days (unless
a shorter period is acceptable to the Trustee) prior to the redemption date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
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Section 3.04 Effect of Notice of Redemption
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Discount Notes called for redemption become irrevocably due and payable
on the redemption date at the redemption price stated in the notice. Failure to
give notice or any defect in the notice to any Holder shall not affect the
validity of the notice to any other Holder.
Section 3.05 Deposit of Redemption Price
At least one Business Day prior to the redemption date, Holdings shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Discount Notes to be redeemed on
that date other than Discount Notes or portions of Discount Notes called for
redemption which have been delivered by Holdings to the Trustee for
cancellation. The Trustee or the Paying Agent shall promptly return to Holdings
any money deposited with the Trustee or the Paying Agent by Holdings in excess
of the amounts necessary to pay the redemption price of, and accrued interest
on, all Discount Notes to be redeemed.
If Holdings complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Discount
Notes or the portions of Discount Notes called for redemption. If a Discount
Note is redeemed on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Discount Note was registered at the close
of business on such record date. If any Discount Note called for redemption
shall not be so paid upon surrender for redemption because of the failure of
Holdings to comply with the preceding paragraph, interest shall be paid on the
unpaid principal, from the redemption date until such principal is paid, and to
the extent lawful on any interest not paid on such unpaid principal, in each
case at the rate provided in the Discount Notes and in Section 4.01 hereof.
Section 3.06 Discount Notes Redeemed in Part
Upon surrender of a Discount Note that is redeemed in part, Holdings
shall issue and, upon Holdings's written request, the Trustee shall authenticate
for the Holder at the expense of Holdings a new Discount Note equal in principal
amount to the unredeemed portion of the Discount Note surrendered.
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Section 3.07 Optional Redemption
(a) Except as set forth in paragraphs (b) and (c) of this Section
3.07, Holdings shall not have the option to redeem the Discount Notes prior to
December 15, 2002. Thereafter, Holdings shall have the option to redeem the
Discount Notes, in whole or in part, upon not less than 30 days' nor more than
60 days' notice, at the redemption prices (expressed as percentages of principal
amount at maturity) set forth below plus accrued and unpaid interest (and
Liquidated Damages, if any) thereon to the applicable redemption date if
redeemed during the twelve-month period beginning on December 15 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002............................. 106.125
%
2003............................. 104.083
%
2004............................. 102.042
%
2005 and thereafter.............. 100.000
%
</TABLE>
(b) Notwithstanding the provisions of paragraph (a) of this Section
3.07, at any time or from time to time on or prior to December 15, 2000,
Holdings may (but shall not have the obligation to) redeem all but not less than
all of the aggregate principal amount of the Discount Notes then outstanding, at
a redemption price equal to 112.25% of the Accreted Value thereof (and
Liquidated Damages, if any) to the date of redemption out of the Net Cash
Proceeds of a Public Equity Offering; provided however, that such redemption
shall occur within 90 days of the closing of such Public Equity Offering.
(c) Notwithstanding the provisions of paragraph (a) of this Section
3.07, the Discount Notes will also be subject to redemption at any time or from
time to time prior to December 15, 2002 upon not less than 10 nor more than 20
days' notice to each Holder of Discount Notes redeemed, at the option of
Holdings, in whole or in part, in integral multiples of $1,000, at a redemption
price equal to 100% of the Accreted Value thereof plus the applicable Make-Whole
Premium plus accrued and unpaid interest (and Liquidated Damages, if any) to but
excluding the redemption date.
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Section 3.08 No Mandatory Redemption
Holdings shall not be required to make mandatory redemption payments
with respect to the Discount Notes.
Article IV
COVENANTS
Section 4.01 Payment of Discount Notes
Holdings shall pay or cause to be paid the principal of, premium, if
any, and interest on the Discount Notes on the dates and in the manner provided
in the Discount Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than Holdings or a
Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money
deposited by Holdings in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due.
Holdings shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
Holdings shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Discount
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.
To the extent any payment on the Discount Notes, whether by or on
behalf of Holdings, as proceeds of security or enforcement of any right of
setoff or otherwise, is declared to be fraudulent or preferential, set aside or
required to be paid to a trustee, receiver or other similar party under any
bankruptcy, insolvency, receivership or similar law, then if such payment is
recovered by, or paid over to, such trustee, receiver or other similar party,
the Discount Notes or part thereof originally intended to be satisfied by such
payment shall be deemed to be reinstated and outstanding as if such payment had
not occurred.
Section 4.02 Maintenance of Office or Agency
Holdings shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Discount Notes may be
surrendered for
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registration of transfer or for exchange and where notices and demands to or
upon Holdings in respect of the Discount Notes and this Indenture may be
served. Holdings shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at
any time Holdings shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
Holdings may also from time to time designate one or more other
offices or agencies where the Discount Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve Holdings of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. Holdings shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
Holdings hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of Holdings in accordance with Section 2.03 hereof.
Section 4.03 Reports
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Discount Notes are outstanding, Holdings shall furnish to all
Holders, the Trustee and to prospective purchasers of Discount Notes identified
to Holdings by an Initial Purchaser, within 15 days after it is or would have
been (if it were subject to such reporting obligations) required to file with
the SEC (i) all quarterly and annual financial statements substantially
equivalent to financial statements that would have been required to be included
in reports filed with the SEC on Forms 10-Q and 10-K if Holdings were required
to file such forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by Holdings's certified independent public
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if Holdings were required to file such reports. In
addition, whether or not required by the rules and regulations of the SEC, at
any time after the effectiveness of a registration statement with respect to the
Exchange Offer, Holdings shall file a copy of all such information with the SEC
for public availability (unless the SEC will not accept such a filing) and shall
promptly make such information available to all securities analysts and
prospective investors upon request.
(b) For so long as any Transfer Restricted Securities remain outstanding,
Holdings and the Guarantors shall furnish to all Holders and to securities
analysts and
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prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(c) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including Holdings's compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).
Section 4.04 Compliance Certificate
(a) Holdings shall deliver to the Trustee, within 120 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of Holdings and its Restriced Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether Holdings has kept, observed, performed and fulfilled
its obligations under this Indenture, and further stating, as to each such
Officer signing such certificate, that to the best of his or her knowledge
Holdings has kept, observed, performed and fulfilled each and every section
contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (or,
if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action Holdings is taking or proposes to take with respect thereto) and that to
the best of his or her knowledge no event has occurred and remains in existence
by reason of which payments on account of the principal of or interest, if any,
on the Discount Notes is prohibited or if such event has occurred, a description
of the event and what action Holdings is taking or proposes to take with respect
thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) hereof shall be accompanied by
a written statement of Holdings's independent public accountants (who shall be a
firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that Holdings has violated any
provisions of Article IV or Article V hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) Holdings shall, so long as any of the Discount Notes are outstanding,
deliver to a Responsible Officer of the Trustee, forthwith upon any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default
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<PAGE>
or Event of Default and what action Holdings is taking or proposes to take with
respect thereto.
Section 4.05 Compliance with Laws, Taxes
Holdings shall comply with, and shall cause each of its Restricted
Subsidiaries to comply with all statutes, laws, ordinances, or government rules
and regulations to which it is subject, the non-compliance with which would
materially affect the business, prospects, earnings, properties, assets or
condition, financial or otherwise, of Holdings and its Restricted Subsidiaries
taken as a whole.
Holdings shall pay, and shall cause each of its Restricted
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Discount Notes.
Section 4.06 Stay, Extension and Usury Laws
Holdings covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and Holdings (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 4.07 Change of Control
Upon the occurrence of a Change of Control, each Holder shall have the
right, at such Holder's option, pursuant to an offer (subject only to conditions
required by applicable law, if any) by Holdings (the "Change of Control Offer"),
to require Holdings to repurchase all or any part of such Holder's Discount
Notes (provided, that the principal amount of such Discount Notes must be $1,000
or an integral multiple thereof) on a date (the "Change of Control Purchase
Date") that is no later than 60 Business Days after the date of occurrence of
such Change of Control, at a cash price equal to 101% of the Accreted Value
thereof, together with accrued and unpaid interest if any, thereon (and
Liquidated Damages, if any) (the "Change of Control Purchase Price") to the
Change of Control Purchase Date. The Change of Control Offer shall be made
within 90 Business
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<PAGE>
Days following a Change of Control by mailing a notice to each Holder describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase Discount Notes pursuant to the procedures required by
this Indenture. The Change of Control Offer shall remain open for at least 20
Business Days following the mailing of such Change of Control Offer but in no
event longer than 30 Business Days, unless required by law (the "Change of
Control Offer Period"). Upon expiration of the Change of Control Offer Period,
Holdings promptly shall purchase all Discount Notes properly tendered in
response to the Change of Control Offer. Holdings shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Discount Notes as a result
of a Change of Control. To the extent that the provisions of any such
securities laws or regulations conflict with the provisions of this paragraph,
compliance by Holdings with such laws and regulations shall not in and of itself
cause a breach of its obligations under such covenant.
On or before the Change of Control Purchase Date, Holdings shall, to
the extent lawful (a) accept for payment all Discount Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (b) deposit with the
Paying Agent an amount equal to the Change of Control Purchase Price (together
with accrued and unpaid interest and Liquidated Damages, if any), of all
Discount Notes so tendered and (c) deliver or cause to be delivered to the
Trustee Discount Notes so accepted together with an Officers' Certificate
listing the Discount Notes or portions thereof being purchased by Holdings. The
Paying Agent shall promptly pay the Holders of Discount Notes so accepted an
amount equal to the Change of Control Purchase Price (together with accrued and
unpaid interest, if any, and Liquidated Damages, if any), and the Trustee shall
promptly authenticate and deliver to such Holders a new Discount Note equal in
principal amount to any unpurchased portion of the Discount Note surrendered;
provided that each such new Discount Note will be in a principal amount of
$1,000 or an integral multiple thereof. Any Discount Notes not so accepted will
be delivered promptly by Holdings to the Holder thereof. Holdings will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Purchase Date.
If the Change of Control Purchase Date hereunder is on or after an
interest payment Record Date and on or before the associated Interest Payment
Date, any accrued and unpaid interest (and Liquidated Damages, if any, due on
such Interest Payment Date) will be paid to the Person in whose name a Discount
Note is registered at the close of business on such Record Date, and such
accrued and unpaid interest (and Liquidated Damages, if applicable) will not be
payable to Holders who tender the Discount Notes pursuant to the Change of
Control Offer.
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<PAGE>
Holdings will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Indenture applicable to a Change of Control Offer made by Holdings and
purchases all Discount Notes validly tendered and not withdrawn under such
Change of Control Offer.
Section 4.08 Limitation on Sale of Assets and Subsidiary stock
Holdings shall not, and shall not permit any Restricted Subsidiary to,
in one or a series of related transactions, convey, sell, transfer, assign or
otherwise dispose of, directly or indirectly, any of its property, business or
assets, including by merger or consolidation (in the case of a Restricted
Subsidiary of Holdings), and including any sale or other transfer or issuance of
any Capital Stock of any Restricted Subsidiary, whether by Holdings or a
Restricted Subsidiary of either or through the issuance, sale or transfer of
Capital Stock by a Restricted Subsidiary, and including any sale and leaseback
transaction (any of the foregoing, an "Asset Sale"), unless:
(a)(i) within 300 days after the date of such Asset Sale, the Net Cash
Proceeds therefrom (the "Asset Sale Offer Amount") are applied to the optional
redemption of the Discount Notes in accordance with the terms of this Indenture
or any other Indebtedness of Holdings ranking on a parity with the Discount
Notes from time to time outstanding with similar provisions requiring Holdings
to make an offer to purchase or to redeem such Indebtedness with the proceeds of
asset sales, pro rata in proportion to the Accreted Value of the Discount Notes
and the respective principal amounts (or accreted values in the case of
Indebtedness issued with an original issue discount) of the Discount Notes and
such other Indebtedness then outstanding, or to the repurchase of the Discount
Notes and such other Indebtedness pursuant to a cash offer (subject only to
conditions required by applicable law, if any) (pro rata in proportion to the
respective principal amounts (or accreted values in the case of Indebtedness
issued with an original issue discount) of the Discount Notes and such other
Indebtedness then outstanding) (the "Asset Sale Offer") at a purchase price of
100% of the Accreted Value of the Discount Notes or the principal amount (or
accreted value in the case of Indebtedness issued with an original issue
discount) of such other Indebtedness (the "Asset Sale Offer Price") together
with accrued and unpaid interest and Liquidated Damages, if any, to the date of
payment or (ii) within 300 days following such Asset Sale, the Asset Sale Offer
Amount is (A) invested (or committed, pursuant to a binding commitment subject
only to reasonable, customary closing conditions, to be invested, and in fact is
so invested, within an additional 90 days) in a Person, business, assets or
property which in the good faith reasonable judgment of the Board of Directors
will constitute or be a part of a Related Business of Holdings or such
Restricted Subsidiary (if it continues to be a Subsidiary) immediately following
such transaction or (B) used to retire or repay Indebtedness of Holdings and/or
any Restricted
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<PAGE>
Subsidiary that is pari passu with the Discount Notes or to permanently reduce
the amount of such Indebtedness (provided that in the case of a revolving credit
arrangement or similar arrangement that makes credit available, such commitment
is permanently reduced by such amount).
(b) with respect to any Asset Sale or related series of Asset Sales
involving securities, property or assets with an aggregate Determined Fair
Market Value in excess of $500,000, at least 75% of the consideration for such
Asset Sale or series of related Asset Sales consists of (x) cash or Cash
Equivalents or (y) property or assets usable by Holdings or any Restricted
Subsidiary in the ordinary course of conduct of a Related Business; provided,
that if the Fair Market Value of property or assets of the kind specified in
this subclause (y) exceeds $5.0 million, then the Fair Market Value thereof
shall be determined by a Third Party Evaluator; and provided, further, that the
principal amount of the following shall be deemed to be cash for purposes of
this clause (b): (i) any Indebtedness (as shown on Holdings's or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto) of Holdings or
any Restricted Subsidiary that is assumed or forgiven by the transferee of any
such assets and (ii) any securities, notes or other obligations received by
Holdings or any such Restricted Subsidiary from such transferee that are
converted by Holdings or such Restricted Subsidiary into cash within 30 days of
the closing of such Asset Sale (but in the case of this subclause (ii), only to
the extent of the cash received),
(c) no Default or Event of Default shall have occurred and be continuing
at the time of, or would occur after giving effect, on a pro forma basis, to,
such Asset Sale, and
(d) the Board of Directors of Holdings determines in good faith that
Holdings or such Restricted Subsidiary, as applicable, receives at least
Determined Fair Market Value for such Asset Sale.
An acquisition of Discount Notes pursuant to an Asset Sale Offer may
be deferred until the accumulated Net Cash Proceeds from Asset Sales not applied
to the uses set forth above (the "Excess Proceeds") exceeds $5.0 million and
that each Asset Sale Offer shall remain open for 20 Business Days following its
commencement but in no event longer than 30 Business Days, except to the extent
that a longer period is required by applicable law (the "Asset Sale Offer
Period"). Not later than five Business Days after the termination of the Asset
Sale Offer Period (the "Asset Sale Purchase Date"), Holdings shall apply the
Asset Sale Offer Amount plus an amount equal to accrued and unpaid interest and
Liquidated Damages, if any, to the purchase of all Discount Notes or any other
Indebtedness properly tendered (on a pro rata basis if the Asset Sale Offer
Amount is insufficient to purchase all Discount Notes and any other Indebtedness
so tendered) at
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<PAGE>
the Asset Sale Offer Price (together with accrued and unpaid interest and
Liquidated Damages, if any). Payment for any Discount Notes so purchased shall
be made in the same manner as interest payments are made.
If the payment date in connection with an Asset Sale Offer hereunder
is on or after an interest payment Record Date and on or before the associated
Interest Payment Date, any accrued and unpaid interest (and Liquidated Damages,
if any, due on such Interest Payment Date) will be paid to the Person in whose
name a Discount Note is registered at the close of business on such Record Date,
and such interest (or Liquidated Damages, if applicable) will not be payable to
Holders who tender Discount Notes pursuant to such Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, Holdings shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Discount Notes pursuant to the Asset
Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
4.08 and the length of time the Asset Sale Offer shall remain open;
(b) the Asset Sale Offer Amount, the Asset Sale Offer Price and the
Asset Sale Purchase Date;
(c) that any Discount Note not tendered or accepted for payment shall
continue to accrete or accrue interest;
(d) that, unless Holdings defaults in making such payment, any
Discount Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrete or accrue interest after the Asset Sale Purchase Date;
(e) that Holders electing to have a Discount Note purchased pursuant
to an Asset Sale Offer may only elect to have all of such Discount Note
purchased and may not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Discount Note purchased pursuant
to any Asset Sale Offer shall be required to surrender the Discount Note,
with the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Discount Note completed, or transfer by book-entry transfer, to
Holdings, a depositary, if
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appointed by Holdings, or a paying agent at the address specified in the
notice at least three days before the Asset Sale Purchase Date;
(g) that Holders shall be entitled to withdraw their election if
Holdings, the depositary or the paying agent, as the case may be, receives,
not later than the expiration of the Asset Sale Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Discount Note the Holder delivered for
purchase and a statement that such Holder is withdrawing his election to
have such Discount Note purchased;
(h) that, if the aggregate principal amount of Discount Notes
surrendered by Holders exceeds the Asset Sale Offer Amount, Holdings shall
select the Discount Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by Holdings so that only Discount
Notes in denominations of $1,000, or integral multiples thereof, shall be
purchased); and
(i) that Holders whose Discount Notes were purchased only in part
shall be issued new Discount Notes equal in principal amount to the
unpurchased portion of the Discount Notes surrendered (or transferred by
book-entry transfer).
On or before the Asset Sale Purchase Date, Holdings shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Asset Sale Offer Amount of Discount Notes or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Asset Sale Offer Amount
has been tendered, all Discount Notes tendered, and shall promptly deliver to
the Trustee an Officers' Certificate stating that such Discount Notes or
portions thereof were accepted for payment by Holdings in accordance with the
terms of this Section 4.08. Holdings, the depository or the paying agent, as
the case may be, shall promptly (but in any case not later than five days after
the Change of Control Purchase Date) mail or deliver to each tendering Holder an
amount equal to the purchase price of the Discount Notes tendered by such Holder
and accepted by Holdings for purchase, and Holdings shall promptly issue a new
Note, and the Trustee, upon written request from Holdings shall authenticate and
mail or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by Holdings to the Holder thereof. Holdings shall
publicly announce the results of the Asset Sale Offer on the Change of Control
Purchase Date.
To the extent that the aggregate amount of Discount Notes and such
other Indebtedness tendered pursuant to an Asset Sale Offer is less than the
Asset Sale Offer
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Amount, Holdings may use any remaining Net Cash Proceeds for general corporate
purposes as otherwise permitted by the Indenture, and following each Asset Sale
Offer the Excess Proceeds amount shall be reset to zero. If required by
applicable law, the Asset Sale Offer Period may be extended as so required;
however, if so extended it shall nevertheless constitute an Event of Default if
within 60 Business Days of its commencement the Asset Sale Offer is not
consummated or the properly tendered Discount Notes are not purchased pursuant
thereto.
Holdings may apply as a credit in satisfaction of all or any part of
Holdings's obligation to make an Asset Sale Offer the aggregate principal amount
of Discount Notes purchased by Holdings in open-market transactions (i.e.,
excluding Discount Notes optionally redeemed, or required to be purchased by
Holdings, pursuant to the terms of this Indenture) within the previous 300 days
immediately preceding the close of the Asset Sale Offer Period and delivered to
the Trustee for cancellation.
Notwithstanding the foregoing provisions of the prior paragraphs:
(a) Holdings and its Restricted Subsidiaries may, in the ordinary
course of business, convey, sell, transfer, assign or otherwise dispose of
inventory, other personal property and services in the ordinary course of
business;
(b) Holdings and its Restricted Subsidiaries may convey, sell,
transfer, assign or otherwise dispose of assets pursuant to and in
accordance with Sections 4.09 and 5.01;
(c) Holdings and its Restricted Subsidiaries may convey, sell,
transfer, assign or otherwise dispose, sell or dispose of damaged, worn out
or other obsolete property in the ordinary course of business so long as
such property is no longer necessary for the proper conduct of the business
of Holdings or such Restricted Subsidiary, as applicable;
(d) Holdings and its Restricted Subsidiaries may convey, sell,
transfer, assign assets to Holdings or any of its Restricted Subsidiaries;
(e) Holdings and its Restricted Subsidiaries may surrender or waive
contract rights or settle, release or surrender of contract, tort or other
claims of any kind;
(f) Holdings and its Restricted Subsidiaries may grant Liens not
prohibited by the Indenture;
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(g) Holdings and its Restricted Subsidiaries may engage in any
transaction or series of related transactions that would otherwise be an
Asset Sale where the Determined Fair Market Value of the assets, sold,
leased, conveyed or otherwise disposed of was less than $1.0 million; and
(h) Holdings and its Restricted Subsidiaries may sell or discount, in
each case without recourse (other than recourse for a breach of a
representation or warranty), accounts receivable arising in the ordinary
course of business, but only in connection with the collection or
compromise thereof.
In addition to the foregoing, Holdings will not, and will not permit
any Restricted Subsidiary to, directly or indirectly make any Asset Sale of any
of the Equity Interests of any Restricted Subsidiary (other than ALM) if after
giving effect to such Asset Sale, Holdings or any such Restricted Subsidiary
would own less than a majority of the Equity Interests of such Restricted
Subsidiary unless such Asset Sale is of Holdings' or such Restricted
Subsidiary's entire Equity Interest in such Restricted Subsidiary.
Any Asset Sale Offer shall be made in compliance with all applicable
laws, rules, and regulations, including, if applicable, Regulation 14E of the
Exchange Act and the rules and regulations thereunder and all other applicable
Federal and state securities laws. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this section,
compliance by Holdings or any of its subsidiaries with such laws and
regulations shall not in and of itself cause a breach of its obligations
under such section.
Section 4.09 Limitation on Restricted Payments
Holdings shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, make any Restricted Payment if, after giving effect to
such Restricted Payment on a pro forma basis, (a) a Default or an Event of
Default shall have occurred and be continuing, (b) Holdings is not permitted to
incur at least $1.00 of additional Indebtedness pursuant to clause (b) of the
first paragraph of Section 4.10 hereof, (c) the aggregate amount of all
Restricted Payments made by Holdings and its Restricted Subsidiaries, including
after giving effect to such proposed Restricted Payment, from and after the
Issue Date, would exceed the sum of (i) 50% of the aggregate Adjusted
Consolidated Net Income of Holdings for the period (taken as one accounting
period), commencing January 1, 1998, to and including the last day of the fiscal
quarter ended immediately prior to the date of each such calculation (or, in the
event Adjusted Consolidated Net Income for such period is a deficit, then minus
100% of such deficit), plus (ii) the aggregate Net Cash Proceeds received by
Holdings from the sale of its Qualified Equity Interests (other than (A) to a
Subsidiary of Holdings and (B) to the extent
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applied in connection with a Qualified Exchange), after the Issue Date, plus
(iii) 100% of the aggregate amount of cash and the Determined Fair Market Value
of property other than cash contributed to the capital of Holdings following the
Issue Date, plus (iv) the amount by which Indebtedness of Holdings or any
Restricted Subsidiary is reduced on Holdings's balance sheet upon the conversion
or exchange (other than by a Subsidiary) subsequent to the Issue Date of any
Indebtedness of Holdings or a Restricted Subsidiary convertible or exchangeable
for Qualified Equity Interests of Holdings (less the amount of any cash or other
property (other than such Qualified Equity Interest) distributed by Holdings or
any Restricted Subsidiary upon such conversion or exchange), plus (v) to the
extent that any Restricted Investment that was made after the Issue Date is sold
for cash, or otherwise liquidated or repaid for cash, the amount of the cash
return of capital with respect to such Restricted Investment (less any taxes and
transaction costs associated with such sale or liquidation), plus (vi) in case
any Unrestricted Subsidiary has been redesignated a Restricted Subsidiary or has
been merged, consolidated or amalgamated with or into, transfers or conveys
assets to, or is liquidated into, Holdings or a Restricted Subsidiary, the
Determined Fair Market Value of the Investment of Holdings or a Restricted
Subsidiary, as the case may be, in such Unrestricted Subsidiary at the time of
such redesignation, combination or transfer (or of the assets transferred or
conveyed, as applicable), after deducting any Indebtedness associated with the
Unrestricted Subsidiary so designated or combined or with the assets so
transferred or conveyed.
The provisions of the immediately preceding paragraph will not
prohibit (a) a Qualified Exchange or (b) the payment of any dividend on
Qualified Equity Interests within 60 days after the date of its declaration if
such dividend could have been made on the date of such declaration in compliance
with the foregoing provisions. In addition, clauses (b) and (c) of the
immediately preceding paragraph will not prohibit (a) repurchases of Equity
Interests from officers or employees of Holdings or its Subsidiaries upon death,
disability or termination of employment in an aggregate amount with respect to
all officers and employees not to exceed $250,000 per year or $2.0 million in
the aggregate on and after the Issue Date, and repurchases of Equity Interests
deemed to occur upon exercise of stock options if such Equity Interests
represent a portion of the exercise price of such options; (b) the purchase or
redemption of any Indebtedness from the Net Cash Proceeds of any Asset Sale to
the extent permitted by Section 4.08 of this Indenture, (c) the purchase or
redemption of any Indebtedness following a Change of Control pursuant to
provisions of such Indebtedness substantially similar to those described under
Section 4.07 after Holdings shall have complied with the provisions under such
Section, including the payment of the applicable Change of Control Purchase
Price, (d) the payment by Holdings or any Restricted Subsidiary of monitoring
fees paid to WP Management Partners, LLC or an Affiliate not in excess of $1.0
million in respect of any year, whether or not actually paid in such year or
deferred and paid in any subsequent year; provided that the obligation to pay
any such fees shall be subordinated to the
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Discount Notes, (e) payments by Holdings or any of its Restricted Subsidiaries
to Wasserstein Perella & Co. or an Affiliate made for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by a majority of the
Board of Directors of Holdings in good faith, and (f) investments in
Unrestricted Subsidiaries, partnerships or joint ventures involving Holdings or
any of its Restricted Subsidiaries, if the amount of such Investment (after
taking into account the amount of all other Investments made pursuant to this
clause (f), less any return of capital realized or any repayment of principal
received on such Investments, or any release or other cancellation of any
guarantee constituting such Investment, which has not at such time been
reinvested in Investments made pursuant to this clause (f), does not exceed $5.0
million, provided, that the aggregate amount of all such Investments in
Unrestricted Subsidiaries shall not exceed $5.0 million at any one time
outstanding, and (g) dividends and other distributions made by ALM to, or the
purchase, redemption or other acquisition or retirement for value of Equity
Interests of ALM from, all holders of ALM's Equity Interests on a pro rata
basis. The full amount of any Restricted Payment made pursuant to clauses (a),
(b), (c) and (f) of the immediately preceding sentence, however, will be
deducted in the calculation of the aggregate amount of Restricted Payments
available to be made referred to in clause (c) of the immediately preceding
paragraph.
For purposes of this Section, the amount of any Restricted Payment, if
other than in cash, shall be the Determined Fair Market Value thereof; provided,
that in the case of a Restricted Payment consisting of a Restricted Investment
arising as the result of the designation of a Restricted Subsidiary as an
Unrestricted Subsidiary, the amount of the Investment in such Unrestricted
Subsidiary resulting therefrom shall, if greater than $5.0 million, be
determined by the opinion of a Third-Party Evaluator. Not later than the date
of making any Restricted Payment, Holdings shall deliver to the Trustee an
Officer's Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculation required by this Section 4.09
were computed, which calculations may be based upon Holdings's latest available
financial statements.
Section 4.10 Limitation on Incurrence of Additional Indebtedness
Except as set forth in this Section, Holdings shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly, issue, assume,
guarantee, incur, become directly or indirectly liable with respect to
(including as a result of an acquisition), or otherwise become responsible for,
contingently or otherwise (individually and collectively, to "incur" or, as
appropriate, an "incurrence"), any Indebtedness (including Acquired
Indebtedness), other than Permitted Indebtedness, unless (a) in the case of an
incurrence of Indebtedness by ALM or any of its Restricted Subsidiaries, after
giving
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effect to the incurrence of such Indebtedness and the receipt and application of
the proceeds thereof, the ratio of the total Indebtedness of ALM and its
Restricted Subsidiaries (excluding (x) any Indebtedness owed to a Restricted
Subsidiary of ALM by any other Restricted Subsidiary of ALM or by ALM and (y)
any Indebtedness owed to ALM by any Restricted Subsidiary of ALM) to ALM's
Consolidated EBITDA (determined on a pro forma basis for the last four fiscal
quarters of ALM for which financial statements are available at the date of
determination) is less than (i) 6.5 to 1 if the Indebtedness is incurred prior
to December 15, 1999 and (ii) 6.0 to 1 if the Indebtedness is incurred on or
after December 15, 1999, (b) in the case of an incurrence of Indebtedness by
Holdings or any of its Restricted Subsidiaries, after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the ratio of the total Indebtedness of Holdings and its Restricted
Subsidiaries (excluding (x) any Indebtedness owed to a Restricted Subsidiary of
Holdings by any other Restricted Subsidiary of Holdings or by Holdings and
(y) any Indebtedness owed to Holdings by a Restricted Subsidiary of Holdings) to
Holdings' Consolidated EBITDA (determined on a pro forma basis for the last four
fiscal quarters of Holdings for which financial statements are available at the
date of determination) is less than (i) 7.5 to 1 if the Indebtedness is incurred
prior to December 15, 1999 and (ii) 7.0 to 1 if the Indebtedness is incurred on
or after December 15, 1999 and (c) no Default or Event of Default shall have
occurred and be continuing at the time of the incurrences of such Indebtedness
(the "Incurrence Date") or shall occur as a consequence of the incurrence of
such Indebtedness.
In determining the ratio of total Indebtedness to Consolidated EBITDA
for purposes of the immediately preceding sentence, (a) if the Indebtedness
which is the subject of a determination under this provision is Acquired
Indebtedness, or Indebtedness incurred in connection with the simultaneous
acquisition of any Person, business, property or assets, then such ratio shall
be determined by giving effect to (on a pro forma basis, as if the transaction
had occurred at the beginning of the four-quarter period) both the incurrence or
assumption of such Acquired Indebtedness or such other Indebtedness by Holdings
or any Restricted Subsidiary, as the case may be, (together with any other
Acquired Indebtedness or other Indebtedness incurred or assumed by Holdings or
any Restricted Subsidiary, as the case may be, in connection with acquisitions
consummated by Holdings or any such Restricted Subsidiary as the case may be
during such four-quarter period) and the inclusion in Holdings's Consolidated
EBITDA of Holdings or such Restricted Subsidiary, as the case may be of the
Consolidated EBITDA of the acquired Person, business, property or assets and any
pro forma expense and cost reductions calculated on a basis consistent with
Regulation S-X under the Securities Act as in effect and as applied as of the
Issue Date (together with the Consolidated EBITDA of, and pro forma expense and
cost reductions relating to, any other Person, business, property or assets
acquired or disposed of by Holdings or such Restricted Subsidiary, as the case
may be during such four-quarter period) and (b) if since the end of such
four-quarter period any
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Indebtedness of Holdings or any of its Restricted Subsidiaries has been repaid,
repurchased, defeased or otherwise discharged (other than Indebtedness under a
revolving credit or similar arrangement unless such revolving credit
Indebtedness has been permanently repaid and has not been replaced),
Indebtedness as of the end of such four-quarter period shall be calculated after
giving effect on a pro forma basis as if such Indebtedness had been repaid,
repurchased, defeased or otherwise discharged as of the beginning of such
four-quarter period. The accretion of original issue discount (and any accruals
of interest) on the Discount Notes and on any other Indebtedness that has been
issued with an original issue discount shall not be deemed an incurrence of
Indebtedness for purposes of this covenant.
Indebtedness of any Person which is outstanding at the time such
Person becomes a Restricted Subsidiary of Holdings (including upon designation
of any subsidiary or other Person as a Restricted Subsidiary) or is merged with
or into or consolidated with Holdings or a direct or indirect Restricted
Subsidiary of Holdings shall be deemed to have been incurred at the time such
Person becomes such a Restricted Subsidiary of Holdings or is merged with or
into or consolidated with Holdings or a direct or indirect Restricted Subsidiary
of Holdings, as applicable.
Section 4.11 Limitation on Liens Securing Indebtedness
Holdings will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, assume or suffer to exist any Lien of
any kind, other than Permitted Liens, upon any of their respective assets, now
owned or acquired on or after the date of this Indenture, or upon any income or
profits therefrom unless Holdings provides, and causes its Restricted
Subsidiaries to provide, concurrently therewith, that the Discount Notes are
equally and ratably so secured, provided that, if such Indebtedness is
Subordinated Indebtedness, the Lien securing such Subordinated Indebtedness
shall be expressly subordinate and junior to the Lien securing the Discount
Notes.
Section 4.12 Limitation on Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries
Holdings shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create, assume or suffer to exist any consensual
restriction on the ability of any Restricted Subsidiary to pay dividends or make
other distributions to or on behalf of, or to pay any obligation to or on behalf
of, or otherwise to transfer assets or property to or on behalf of, or make or
pay loans or advances to or on behalf of, Holdings or any Restricted Subsidiary,
except (a) restrictions imposed by the Discount Note or this Indenture, (b)
restrictions imposed by the Senior Notes or the Senior Note Indenture or by
other Indebtedness of ALM ranking senior to or pari passu with the Senior
Notes or the
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guarantees thereof, as applicable, provided such restrictions are no more
restrictive than those imposed by the Senior Note Indenture or the Senior Notes,
(c) restrictions imposed by applicable law, (d) existing restrictions under
Indebtedness outstanding on the Issue Date, (e) restrictions pursuant to such
Credit Agreement or any amendment thereto, or any Refinancing Indebtedness in
respect thereof (provided any restrictions or requirements of any such amendment
or Refinancing Indebtedness are no more restrictive than those imposed by such
Credit Agreement as of the first date after the Issue Date that such Credit
Agreement is in place), (f) restrictions under any Acquired Indebtedness not
incurred in violation of this Indenture or any agreement relating to any Person,
property, asset, or business acquired by any Restricted Subsidiary, which
restrictions in each case existed at the time of acquisition, were not put in
place in connection with or in anticipation of such acquisition and are not
applicable to any Person, property, asset or business other than the Person,
property, asset or business acquired, (g) restrictions solely with respect to a
Restricted Subsidiary imposed pursuant to a binding agreement which has been
entered into for the sale or disposition of all or substantially all of the
Equity Interests or assets of such Restricted Subsidiary, provided such
restrictions apply solely to the Equity Interests or assets of such Restricted
Subsidiary which are being sold, (h) restrictions on transfer contained in
Purchase Money Indebtedness incurred pursuant to paragraph (f) of the definition
of "Permitted Indebtedness" provided such restrictions relate only to the
transfer of the property acquired with the proceeds or otherwise secured by such
Purchase Money Indebtedness, and (i) in connection with and pursuant to
permitted Refinancings, replacements or restrictions imposed pursuant to clauses
(a), (b), (d), (e), (f) or (h) of this Section 4.12 that are not more
restrictive than those being replaced and do not apply to any other person or
assets other than those that would have been covered by the restrictions in the
Indebtedness so refinanced. Notwithstanding the foregoing, neither (a) customary
provisions restricting subletting or assignment of any lease or other contract
entered into in the ordinary course of business, consistent with industry
practice, nor (b) Liens permitted under the terms of this Indenture on assets
securing indebtedness under the Indebtedness ranking senior to the Senior Notes
or Purchase Money Indebtedness incurred in accordance with Section 4.10 hereof
shall in and of themselves be considered a restriction on the ability of the
applicable Restricted Subsidiary to transfer such agreement or assets, as the
case may be.
Section 4.13 Limitation on Transactions with Affiliates
Holdings shall not and shall not permit any of its Restricted
Subsidiaries on or after the Issue Date to enter into or suffer to exist any
contract, agreement, arrangement or transaction with any Affiliate (an
"Affiliate Transaction"), or any series of related Affiliate Transactions
(other than Exempted Affiliate Transactions), (a) unless it is determined
that the terms of such Affiliate Transaction are fair and reasonable to
Holdings, and no less favorable to Holdings than could have been obtained in
an arm's
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length transaction with a non-Affiliate, (b) if involving consideration to
either party in excess of $1.0 million, unless such Affiliate Transaction(s) is
evidenced by an Officers' Certificate addressed and delivered to the Trustee
certifying that such Affiliate Transaction (or Transactions) has been approved
by a resolution of the Board of Directors and (c) if involving consideration to
either party in excess of $5.0 million, unless in addition Holdings, prior to
the consummation thereof, obtains a written favorable opinion as to the fairness
of such transaction to Holdings from a financial point of view from a Third
Party Evaluator.
Section 4.14 Limitation on Lines of Business
Neither Holdings nor any Restricted Subsidiary shall directly or
indirectly engage to any substantial extent in any line or lines of business
activity other than that which, in the reasonable good faith judgment of the
Board of Directors of Holdings, is a Related Business.
Section 4.15 Corporate Existence
Subject to Section 5 hereof, Holdings shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of
each of its Restricted Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of
Holdings or any such Restricted Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of Holdings and its Restricted
Subsidiaries; provided, however, that Holdings shall not be required to
preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Restricted Subsidiaries, if the Board of
Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of Holdings and its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Holders of the Discount Notes.
Section 4.16 Limitation on Status as Investment Company
Holdings and its Subsidiaries shall not take any action or conduct
their business and operations in such a way as would cause them to be
required to register as an "investment company" (as that term is defined in
the Investment Company Act of 1940, as amended), or would otherwise cause
them to become subject to regulation under the Investment Company Act.
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Section 4.17 Designation of Restricted and Unrestricted Subsidiaries
The Board of Directors of Holdings may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary, provided, that (a) no Default or
Event of Default is existing or will occur as a consequence thereof, (b)
immediately after giving effect to such designation, on a pro forma basis,
Holdings could incur at least $1.00 of additional Indebtedness pursuant to
clause (a) of the first paragraph of Section 4.10 hereof and (c) the amount
of the Investment in such Unrestricted Subsidiary (as determined pursuant to
the definition of "Investment" above) is permitted to be made under Section
4.09 hereof. Each such designation shall be evidenced by filing with the
Trustee a certified copy of the resolution giving effect to such designation
and an Officers' Certificate certifying that such designation complied with
the foregoing conditions. If, at any time, any Unrestricted Subsidiary would
fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of Holdings as of such date (and, if such
Indebtedness is not permitted nor incurred as of such date under Section 4.10
hereof, Holdings shall be in default of such Section 4.10). The Board of
Directors of Holdings may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation shall be deemed
to be an incurrence of Indebtedness by a Restricted Subsidiary of Holdings of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (a) such Indebtedness is permitted
under Section 4.10 hereof and (b) no Default or Event of Default would be in
existence following such designation.
Section 4.18 Trustee's Application for Instructions from Holdings
Any application by the Trustee for written instructions from
Holdings may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the
date on and/or after which such action shall be taken or such omission shall
be effective. The Trustee shall not be liable for any action taken by, or
omission of, the Trustee in accordance with a proposal included in such
application on or after the date specified in such application (which date
shall not be less than 3 (three) business days after the date any officer of
Holdings actually receives such application, unless any such officer shall
have consented in writing to any earlier date) unless prior to taking any
such action (or the effective date in the case of an omission), the Trustee
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
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Article V
SUCCESSORS
Section 5.01 Merger, Sale Or Consolidation
Holdings will not in a single transaction or series of related
transactions consolidate with or merge with or into (whether or not Holdings
is the surviving corporation) another person or, directly or indirectly,
sell, lease, convey or transfer all or substantially all of its assets
(computed on a consolidated basis), to another Person or group of Affiliated
Persons or adopt a plan of liquidation, unless (a) either (i) Holdings is the
continuing entity or (ii) the resulting, surviving or transferee entity or,
in the case of a plan of liquidation, the entity which receives the greatest
value from such plan of liquidation, is a corporation organized under the
laws of the United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the obligations of
Holdings in connection with the Discount Notes and this Indenture; (b) no
Default or Event of Default shall exist or shall occur immediately after
giving effect on a pro forma basis to such transaction; (c) immediately after
giving effect to such transaction on a pro forma basis, the Consolidated Net
Worth of the consolidated surviving or transferee entity or, in the case of a
plan of liquidation, the entity which receives the greatest value from such
plan of liquidation, is at least equal to the Consolidated Net Worth of
Holdings immediately prior to such transaction; and the consolidated
resulting, surviving or transferee entity or, in the case of a plan of
liquidation, the entity which receives the greatest value from such plan of
liquidation, would immediately thereafter be permitted to incur at least
$1.00 of additional Indebtedness pursuant to clause (a) of the first
paragraph of Section 4.10 hereof.
Section 5.02 Successor Corporation Substituted
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of Holdings or consummation of a plan of
liquidation in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into which Holdings is merged or to which
such transfer is made or, in the case of a plan of liquidation, the entity
which receives the greatest value from such plan of liquidation shall succeed
to and (except in the case of a lease) be substituted for, and may exercise
every right and power of, Holdings under this Indenture with the same effect
as if such successor corporation had been named therein as Holdings, and
(except in the case of a lease) Holdings shall be released from the
obligations under the Discount Notes and this Indenture except with respect
to any obligations that arise from, or are related to, such transaction.
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For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise) of all or substantially all of the properties and assets
of one or more Restricted Subsidiaries, Holdings's interest in which
constitutes all or substantially all of the properties and assets of Holdings
shall be deemed to be the transfer of all or substantially all of the
properties and assets of Holdings.
Article VI
DEFAULTS AND REMEDIES
Section 6.01 Events of Default
An "Event of Default" means:
(1) failure to pay any installment of interest (or Liquidated
Damages, if any) on the Discount Notes as and when the same becomes due and
payable and the continuance of any such failure for 30 days;
(2) failure to pay all or any part of the principal, or premium, if
any, on the Discount Notes when and as the same becomes due and payable at
maturity, redemption, by acceleration or otherwise, including, without
limitation, payment of the Change of Control Purchase Price or the Asset
Sale Offer Price, or otherwise;
(3) the failure by either of Holdings or any Restricted Subsidiary to
observe or perform any other covenant or agreement contained in the
Discount Notes or this Indenture and the continuance of such failure for a
period of 45 days after written notice is given to Holdings by the Trustee
or to Holdings and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Discount Notes outstanding specifying the default
and demanding that same be remedied;
(4) Holdings or any of its Significant Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law: commences a voluntary case;
consents to the entry of an order for relief against it in an involuntary
case; consents to the appointment of a Custodian of it or for all or
substantially all of its property; makes a general assignment for the
benefit of its creditors; or generally is not paying its debts as they
become due; or, a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that is for relief against Holdings or any
Significant Subsidiary in an involuntary case, appoints a Custodian of
Holdings or
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any Significant Subsidiary or for all or substantially all of the
property of Holdings or any Significant Subsidiary, or orders the
liquidation of Holdings or any Significant Subsidiary and the order or
decree remains unstayed and in effect for 60 consecutive days;
(5) a default in Indebtedness of Holdings or any of its Restricted
Subsidiaries with an aggregate principal amount in excess of $5.0 million
(i) resulting from the failure to pay principal at final maturity or
(ii) as a result of which the maturity of such Indebtedness has been
accelerated prior to its stated maturity; and
(6) final unsatisfied judgments not covered by insurance aggregating
in excess of $5.0 million, at any one time rendered against Holdings or any
of its Significant Subsidiaries and not stayed, bonded or discharged within
60 days.
Section 6.02 Acceleration
If an Event of Default occurs and is continuing (other than an Event
of Default specified in clause (4) of Section 6.01), then in every such case,
unless the principal of all of the Discount Notes shall have already become due
and payable, either the Trustee or the Holders of at least 25% in aggregate
Accreted Value of the Discount Notes, by notice in writing to Holdings (and to
the Trustee if given by Holders) (an "Acceleration Notice"), may declare the
Accreted Value of and accrued and unpaid interest on (and Liquidated Damages, if
any) all the outstanding Discount Notes to be due and payable immediately,
provided that if there are any amounts outstanding under any Credit Agreement,
such obligations shall become immediately due and payable upon the first to
occur of an acceleration under any Credit Agreement or the Senior Notes or 5
business days after receipt by Holdings and any representative under any Credit
Agreement and the trustee under the Senior Note Indenture of such an
acceleration notice but only if such Event of Default is then continuing. If an
Event of Default specified in clause (d) above occurs with respect to Holdings
or any Significant Subsidiary, the Accreted Value of and accrued and unpaid
interest on (and Liquidated Damages, if any) all the outstanding Discount Notes
will be immediately due and payable without any declaration or other act on the
part of the Trustee or the Holders. The Holders of a majority of the aggregate
Accreted Value of the Discount Notes generally are authorized to rescind any
such acceleration by written notice to the Trustee if all existing Events of
Default (other than (a) the non-payment of the principal of, premium, if any,
and accrued and unpaid interest and Liquidated Damages, if any, on the Discount
Notes which have become due solely by such acceleration, (b) with respect to
defaults with respect to any provision requiring a supermajority approval to
amend, which default may only be waived by such a supermajority and (c) with
respect to any covenant or provision which cannot be
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modified or amended without the consent of the Holder of each outstanding Note
affected) have been cured or waived as provided in this Indenture.
Section 6.03 Other Remedies
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Discount Notes or to enforce the performance of any
provision of the Discount Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Discount Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04 Waiver of Past Defaults
Holders of not less than a majority in aggregate Accreted Value of the
then outstanding Discount Notes by notice to the Trustee may on behalf of the
Holders of all of the Discount Notes waive an existing Default or Event of
Default and its consequences hereunder, except a continuing Default or Event of
Default in the payment of the principal of, premium and Liquidated Damages, if
any, or interest on, the Discount Notes (including in connection with an offer
to purchase) (provided, however, that the Holders of a majority in aggregate
Accreted Value of the then outstanding Discount Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration). Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
Section 6.05 Control by Majority
Holders of a majority in Accreted Value of the then outstanding
Discount Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Discount Notes or
that may involve the Trustee in liability.
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Section 6.06 Limitation on Suits
A Holder of a Discount Note may pursue a remedy with respect to this
Indenture or the Discount Notes only if:
(a) the Holder of a Discount Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in Accreted Value of the then outstanding
Discount Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Discount Note or Holders of Discount Notes offer and,
if requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in aggregate
Accreted Value of the then outstanding Discount Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Discount Note may not use this Indenture to prejudice the
rights of another Holder of a Discount Note or to obtain a preference or
priority over another Holder of a Discount Note.
Section 6.07 Rights of Holders of Discount Notes to Receive Payment
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Discount Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Discount Note, on or after the
respective due dates expressed in the Discount Note (including in connection
with an offer to purchase), or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.
Section 6.08 Collection Suit by Trustee
If an Event of Default specified in Section 6.01 occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against Holdings for the whole amount of principal
of, premium and Liquidated Damages, if any, and interest remaining unpaid on the
Discount Notes and interest on
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overdue principal and, to the extent lawful, interest and such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.09 Trustee May File Proofs of Claim
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Discount Notes allowed in any judicial proceedings relative to
Holdings (or any other obligor upon the Discount Notes), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Discount
Notes or the rights of any Holder, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 6.10 Priorities
If the Trustee collects any money pursuant to this Section, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
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Second: to Holders of Discount Notes for amounts due and unpaid on
the Discount Notes for principal and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Discount Notes for principal, premium and Liquidated
Damages, if any and interest, respectively; and
Third: to Holdings or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Discount Notes pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in Accreted Value of the then outstanding Discount Notes.
Article VII
TRUSTEE
Section 7.01 Duties of Trustee
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture, and use the
same degree of care and skill in its exercise, as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this
Indenture and no
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others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability. The Trustee
shall be under no obligation to exercise any of its rights and powers under this
Indenture at the request, order or direction of any of the Holders unless such
Holders shall have offered to the Trustee reasonable security or indemnity
satisfactory to it against any loss, liability or expense that might be incurred
by the Trustee in compliance with such request, order or direction.
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(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with Holdings. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02 Rights of Trustee
(a) The Trustee may conclusively rely upon any document, whether in its
original or facsimile form, believed by it to be genuine and to have been signed
or presented by the proper Person. The Trustee need not investigate any fact or
matter stated in any such document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice or opinion of such counsel with respect
to legal matters relating in any way to this Indenture and the Notes shall be
full and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture provided, however, that the Trustee's
conduct does not constitute wilful misconduct, negligence or bad faith.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from Holdings shall be sufficient if signed by an
Officer of Holdings.
(f) Except with respect to Section 4.01 herein, the Trustee shall have no
duty to inquire as to the performance of Holdings's covenants in Section 4
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.01(1), 6.01(2) and 4.01 or (ii) any Default or Event of Default of
which a Responsible Officer of the Trustee shall have received written
notification at the Corporate Trust Office of the Trustee and such notice
references the Discount Notes and this Indenture or obtained actual knowledge.
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Section 7.03 Individual Rights of Trustee
The Trustee in its individual or any other capacity may become the
owner or pledgee of Discount Notes and may otherwise deal with Holdings or any
Affiliate of Holdings with the same rights it would have if it were not
Trustee. However, the Trustee must comply with Sections 7.10 and 7.11 of this
Indenture. In addition, if the Trustee has any conflicting interest it must
eliminate such conflict within 90 days, or resign. Any Agent may do the same
with like rights and duties.
Section 7.04 Trustee's Disclaimer
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Discount Notes, it shall
not be accountable for Holdings's use of the proceeds from the Discount Notes or
any money paid to Holdings or upon Holdings's direction under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Discount
Notes or any other document in connection with the sale of the Discount Notes or
pursuant to this Indenture other than its certificate of authentication.
Section 7.05 Notice of Defaults
If a Default or Event of Default occurs and is continuing and if it is
actually known to a Responsible Officer of the Trustee, the Trustee shall mail
to each Holder of Discount Notes a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or interest on any Note,
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Discount Notes.
Section 7.06 Reports by Trustee to Holders of the Discount Notes
As promptly as practicable after each May 15 beginning with the May 15
following the date of the Indenture and for so long as the Notes remain
outstanding, and in any event prior to July 15 in each year, the Trustee shall
mail to the Holders of the Discount Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA Section 313(c).
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A copy of each report at the time of its mailing to the Holders of
Discount Notes shall be mailed to Holdings and filed with the SEC and each stock
exchange on which the Discount Notes are listed in accordance with TIA Section
313(d). Holdings shall promptly notify the Trustee whenever the Discount Notes
become listed on any stock exchange or delisted therefrom.
Section 7.07 Compensation and Indemnity
Holdings shall pay to the Trustee such reasonable compensation, as
Holdings and the Trustee shall from time to time agree in writing, for its
acceptance of this Indenture and its performance of services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. Except as otherwise provided herein, in addition
to compensating the Trustee for its services, Holdings shall reimburse the
Trustee promptly upon request for all reasonable out-of-pocket expenses incurred
or made by it in accordance with any provision of this Indenture (except any
such expenses as may be attributable to the Trustee's negligence or bad faith).
Such expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel.
Holdings shall indemnify each of the Trustee and any predecessor
Trustee against any and all losses, liabilities or expenses (including taxes
other than taxes based upon the income of the Trustee) incurred by it in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
Holdings (including this Section 7.07) and defending itself against any claim
(whether asserted by Holdings or any Holder or any other person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify Holdings
promptly of any claim for which it may seek indemnity. Failure by the Trustee
to so notify Holdings shall not relieve Holdings of its obligations hereunder.
Holdings shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel of its selection and Holdings shall pay
the reasonable fees and expenses of such counsel. Holdings need not reimburse
any expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own wilful misconduct, negligence or bad faith.
In addition, Holdings need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The obligations of Holdings under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
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To secure Holdings's payment obligations in this Section, the Trustee
shall have a Lien prior to the Discount Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Discount Notes. Such Lien shall survive the satisfaction
and discharge of this Indenture.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 6.01(4) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of administration
under the Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
Section 7.08 Replacement of Trustee
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying Holdings. The Holders constituting a
majority in principal amount of the then outstanding Discount Notes may remove
the Trustee by so notifying the Trustee and Holdings in writing. Holdings may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a receiver or other public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), Holdings shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in aggregate principal amount of the then outstanding Discount
Notes may, at the expense of Holdings, appoint a successor Trustee to replace
the successor Trustee appointed by Holdings.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, Holdings, or the
Holders owning at least 10% in aggregate principal amount of the then
outstanding Discount Notes may, at the expense of Holdings, petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Discount Note
who has been a Holder of a Discount Note for at least six months, fails to
comply with Section 7.10, such Holder of a Discount Note may petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Holdings. Thereupon, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Discount Notes. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee (including its agents and counsel) hereunder have been paid and
subject to the Lien provided for in Section 7.07 hereof. Notwithstanding
replacement of the Trustee pursuant to this Section 7.08, Holdings's obligations
under Section 7.07 hereof shall continue for the benefit of the retiring
Trustee.
Section 7.09 Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation without any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification
The Trustee shall at all times satisfy the requirements and comply
with Sections 3.10(a) and (b) of the TIA. Each successor Trustee shall be a
corporation organized and doing business under the laws of the United States of
America, any state thereof or the District of Columbia that is authorized under
such laws to exercise corporate trustee power, that is subject to supervision or
examination by Federal or state authorities and that has a combined capital and
surplus of at least $50.0 million as set forth in its most recent published
annual report of condition, subject to supervision or examination by Federal or
state authority; provided, however, that if Section 310(a) of the Trust
Indenture Act or the rules and regulations of the Commission under the Trust
Indenture Act at any time permit a corporation organized and doing business
under the laws of any other
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jurisdiction to serve as trustee of an indenture qualified under the Trust
Indenture Act, this Section 7.10 shall be automatically deemed amended to permit
a corporation organized and doing business under the laws of any such
jurisdiction to serve as Trustee hereunder. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. Neither Holdings nor any person directly or
indirectly controlling, controlled by or under common control with Holdings may
serve as Trustee. If at any time the Trustee with respect to any series of
Securities shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 7.11 Preferential Collection of Claims Against Company
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to and comply with TIA Section 311 to the
extent required thereby.
Article VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance
Holdings may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Discount Notes
upon compliance with the conditions set forth below in this Article 8.
Section 8.02 Legal Defeasance and Discharge
Upon Holdings's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, Holdings and the Guarantors shall, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed
to have been discharged from their obligations with respect to all outstanding
Discount Notes on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means
that Holdings shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Discount Notes, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.05
hereof and the other Sections of this Indenture referred to in (a) and (b)
below, and to have
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satisfied all its other obligations under such Discount Notes and this Indenture
(and the Trustee, on demand of and at the expense of Holdings, shall execute
proper instruments acknowledging the same), except for the following provisions
which shall survive until otherwise terminated or discharged hereunder: (a) the
rights of Holders of outstanding Discount Notes to receive solely from the trust
fund described in Section 8.04 hereof, and as more fully set forth in such
Section, payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages, if any, on such Discount Notes when such payments are
due, (b) Holdings's obligations with respect to such Discount Notes under
Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and Holdings's obligations in connection
therewith and (d) this Article 8. Subject to compliance with this Article 8,
Holdings may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
Section 8.03 Covenant Defeasance
Upon Holdings's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, Holdings shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13 and 4.14 hereof with respect to the outstanding Discount
Notes on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"), and the Discount Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver,
consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Discount Notes shall not be deemed outstanding for accounting purposes). For
this purpose, Covenant Defeasance means that, with respect to the outstanding
Discount Notes, Holdings may omit to comply with and shall have no liability
in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any
such covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof, but, except as specified above, the remainder of
this Indenture and such Discount Notes shall be unaffected thereby. In
addition, upon Holdings's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03 hereof, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, Sections 6.01(5) through 6.01(7)
hereof shall not constitute Events of Default.
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Section 8.04 Conditions to Legal or Covenant Defeasance
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Discount Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) Holdings must irrevocably deposit with the Trustee, in trust, for the
benefit of the Holders, cash in United States dollars, U.S. Government
Obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal at maturity of, premium, if any,
and interest and Liquidated Damages, if any, on the outstanding Discount
Notes on the stated maturity or on the applicable redemption date, as the
case may be and Holdings must specify whether the Discount Notes are being
defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, Holdings shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) Holdings has
received from, or there has been published by, the Internal Revenue Service
a ruling or (B) since the date of this Indenture, there has been a change
in the applicable federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm that, the
Holders of the outstanding Discount Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, Holdings shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Discount Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(d) no Event of Default or Default shall have occurred and be continuing
on the date of such deposit (other than an Event of Default or Default
resulting from the incurrence of Indebtedness all or a portion of the
proceeds of which will be
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used to defease the Discount Notes pursuant to this Article 8 concurrently
with such incurrence);
(e) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any other material
agreement or instrument (other than this Indenture) to which Holdings or
any of its Subsidiaries is a party or by which Holdings or any of its
Subsidiaries is bound;
(f) Holdings shall have delivered to the Trustee an Officers' Certificate
stating that the deposit was not made by Holdings with the intent of
preferring the Holders over any other creditors of Holdings or with the
intent of defeating, hindering, delaying or defrauding any other creditors
of Holdings;
(g) Holdings shall have delivered to the Trustee an Opinion of Counsel to
the effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; and
(h) Holdings shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
provided for, in the case of the Officer's Certificate, (a) through (g)
and, in the case of the Opinion of Counsel, clauses (a) (with respect to
the validity and perfection of the security interest), (b), (c) and (e) of
this paragraph relating to the Legal Defeasance or the Covenant Defeasance,
as applicable, have been complied with.
Section 8.05 Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions
Subject to Section 8.06 hereof, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding
Discount Notes shall be held in trust and applied by the Trustee, in accordance
with the provisions of such Discount Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including Holdings acting as Paying
Agent) as the Trustee may determine, to the Holders of such Discount Notes of
all sums due and to become due thereon in respect of principal, premium, if any,
and interest, but such money need not be segregated from other funds except to
the extent required by law.
Holdings shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or U.S. Government
Obligations deposited
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pursuant to Section 8.04 hereof or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the outstanding Discount Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to Holdings from time to time upon the request of
Holdings any money or U.S. Government Obligations held by it as provided in
Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 8.06 Repayment to Company
Any money deposited with the Trustee or any Paying Agent, or then held
by Holdings, in trust for the payment of the principal of, premium, if any,
Liquidated Damages or interest on any Note and remaining unclaimed for two years
after such principal, and premium, if any, or interest has become due and
payable shall be paid to Holdings on its request or (if then held by Holdings)
shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a secured creditor, look only to Holdings for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of Holdings as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of Holdings cause to be published
once, in The New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to Holdings.
Section 8.07 Reinstatement
If the Trustee or Paying Agent is unable to apply any United States
dollars or U.S. Government Obligations in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then Holdings's obligations under this Indenture and the Discount
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if Holdings makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, Holdings shall be subrogated to the rights of
the Holders
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of such Discount Notes to receive such payment from the money held by the
Trustee or Paying Agent.
Article IX
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01 Without Consent Of Holders Of Discount Notes
Notwithstanding Section 9.02 of this Indenture, Holdings and the
Trustee may amend or supplement this Indenture or the Discount Notes without the
consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Discount Notes in addition to or in
place of certificated Discount Notes;
(c) to provide for the assumption of Holdings's obligations to the Holders
of the Discount Notes in the case of a merger or consolidation pursuant to
Section 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Discount Notes or that does not adversely affect
the legal rights hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA.
Upon the request of Holdings accompanied by a resolution of its Board
of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with Holdings in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
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<PAGE>
Section 9.02 With Consent Of Holders Of Discount Notes
Except as provided below in this Section 9.02, Holdings, the
Guarantors and the Trustee may amend or supplement this Indenture and/or the
Discount Notes may be amended or supplemented with the consent of the Holders of
a majority in aggregate Accreted Value of the Discount Notes then outstanding
(including consents obtained in connection with a tender offer or exchange offer
for the Discount Notes), and, subject to Sections 6.04 and 6.07 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium, if any, or interest on the Discount
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Discount
Notes may be waived with the consent of the Holders of a majority in aggregate
Accreted Value of the then outstanding Discount Notes (including consents
obtained in connection with a tender offer or exchange offer for the Discount
Notes); provided, that no such amendment or supplement may, without the consent
of Holders of at least 66 2/3% of the aggregate Accreted Value of Discount Notes
at the time outstanding, modify the provisions of Section 4.07 hereof.
Upon the request of Holdings accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Discount Notes as aforesaid, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with Holdings in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Discount
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, Holdings shall mail to the Holders of Discount Notes affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure of
Holdings to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amended or supplemental Indenture
or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority
in aggregate Accreted Value of the Discount Notes then outstanding may waive
compliance in a particular instance by Holdings with any provision of this
Indenture or the Discount Notes. However, without
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<PAGE>
the consent of each Holder affected, an amendment or waiver may not (with
respect to any Discount Notes held by a non-consenting Holder):
(a) reduce the aggregate Accreted Value of Discount Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the Stated Maturity of any Discount
Note, extend the time for payment or alter or waive any of the provisions
with respect to the redemption of the Discount Notes, except as provided
above with respect to Sections 4.07 and 4.08 hereof;
(c) reduce the rate of or change the time or place or manner of payment
for payment of interest, including default interest, or premium on any
Discount Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Discount Notes (except a rescission of
acceleration of the Discount Notes by the Holders of a majority in
aggregate Accreted Value of the then outstanding Discount Notes and a
waiver of the payment default that resulted from such acceleration);
(e) impair the right to institute suit for the enforcement or payment of
premium or interest payable on or after the Stated Maturity of any Discount
Note (or, in the case of redemption at the option of Holdings, on or after
the redemption date);
(f) reduce the Change of Control Purchase Price or the Asset Sale Offer
Price or alter the provisions regarding the right of Holdings to redeem the
Discount Notes in a manner adverse to the Holders;
(g) make any Discount Note payable in money other than that stated in the
Discount Notes;
(h) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Discount Notes to
receive payments of principal of or interest on the Discount Notes; or
(i) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions of this Section 9.02.
83
<PAGE>
In connection with any amendment, supplement or waiver under this
Article IX, Holdings may, but shall not be obligated to, offer to any Holder who
consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
Section 9.03 Compliance with Trust Indenture Act
Every amendment or supplement to this Indenture or the Discount Notes
shall be set forth in an amended or supplemental Indenture that complies with
the TIA as then in effect.
Section 9.04 Revocation and Effect of Consents
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Discount Note is a continuing consent by the Holder of a
Discount Note and every subsequent Holder of a Discount Note or portion of a
Discount Note that evidences the same debt as the consenting Holder's Discount
Note, even if notation of the consent is not made on any Note. However, any
such Holder of a Discount Note or subsequent Holder of a Discount Note may
revoke the consent as to its Discount Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05 Notation on or Exchange of Discount Notes
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. Holdings in exchange
for all Discount Notes may issue and the Trustee shall authenticate new Discount
Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Discount Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
Section 9.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article IX if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
Holdings may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officer's
84
<PAGE>
Certificate and an Opinion of Counsel stating that the execution of such amended
or supplemental indenture is authorized or permitted by this Indenture.
Article X
MISCELLANEOUS
Section 10.01 Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 10.02 Notices
Any notice or communication by Holdings or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to Holdings:
American Lawyer Media Holdings, Inc.
600 Third Avenue
New York, New York 10016
Telephone No.: (212) 973-2800
Fax No.: (212) 973 2889
Attention: Randall J. Weisenburger
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Telephone No.: (212) 815-5835
Fax No.: (212) 815-5505
Attention: Corporate Trust Trustee Administration
Holdings or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
85
<PAGE>
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If Holdings mails a notice or communication to Holders, it shall mail
a copy to the Trustee and each Agent at the same time.
Section 10.03 Communication by Holders of Discount Notes with Other Holders of
Discount Notes
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Discount
Notes. Holdings, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
Section 10.04 Certificate and Opinion as to Conditions Precedent
Upon any request or application by Holdings to the Trustee to take any
action under this Indenture, Holdings shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 10.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 10.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
86
<PAGE>
Section 10.05 Statements Required in Certificate or Opinion
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 10.06 Rules by Trustee and Agents
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 10.07 No Personal Liability of Directors, Officers, Employees and
Stockholders
No past, present or future director, officer, employee, incorporator
or stockholder of Holdings, as such, shall have any liability for any
obligations of Holdings under the Discount Notes, this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Discount Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Discount Notes.
Section 10.08 Governing Law
THE INTERNAL LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF SHALL GOVERN
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<PAGE>
AND BE USED TO CONSTRUE THIS INDENTURE, THE DISCOUNT NOTES AND THE SUBSIDIARY
GUARANTEES.
Section 10.09 No Adverse Interpretation of Other Agreements
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of Holdings or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 10.10 Successors
All agreements of Holdings in this Indenture and the Discount Notes
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
Section 10.11 Severability
In case any provision in this Indenture or in the Discount Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 10.12 Counterpart Originals
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 10.13 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and headings of the
Sections and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following pages]
88
<PAGE>
SIGNATURES
Dated as of December 22, 1997 AMERICAN LAWYER MEDIA HOLDINGS , INC.
By: ____________________________________________
Name: ______________________
Title:______________________
Attest:
______________________________ (SEAL)
Name:
Title: Secretary
Dated as of December 22, 1997 THE BANK OF NEW YORK
By: _______________________________________
Name: ______________________
Title:______________________
Attest:
_______________________________
Name:
Title:
<PAGE>
EXHIBIT A
[FORM OF FACE OF SERIES A DISCOUNT NOTE]
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW
YORK, NEW YORK, TO HOLDINGS OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
AN PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC). ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THE DISCOUNT NOTES (OR THEIR PREDECESSORS) EVIDENCED HEREBY WERE
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE DISCOUNT NOTES EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE DISCOUNT NOTES EVIDENCED HEREBY IS HEREBY
A-1
<PAGE>
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE DISCOUNT NOTES EVIDENCED HEREBY AGREES FOR
THE BENEFIT OF HOLDINGS THAT (A) SUCH DISCOUNT NOTES MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE UNITED STATES TO
A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) TO A LIMITED NUMBER OF OTHER
INSTITUTIONAL "ACCREDITED INVESTORS" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT ("INSTITUTIONAL ACCREDITED INVESTORS"),
(c) (IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (d) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF HOLDINGS SO REQUESTS), (2) TO HOLDINGS OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
DISCOUNT NOTES EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE.
A-2
<PAGE>
CUSIP No. [ ]/ISIN No. [ ]
12 1/4% Series A Senior Discount Notes due 2008
No. $
AMERICAN LAWYER MEDIA HOLDINGS, INC., a Delaware corporation,
promises to pay to
or registered assigns,
the principal sum of
Dollars [or such other amount as is indicated on Schedule A hereof]* on December
15, 2008
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Dated: December 22, 1997
AMERICAN LAWYER MEDIA HOLDINGS, INC.
By: ____________________________________________
Name: ________________________________
Title:________________________________
By: ____________________________________________
Name: ________________________________
Title:________________________________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 12 1/4% Senior
Discount Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK, as Trustee
By:______________________________
Authorized Signatory
A-3
<PAGE>
- -------------------------------
* Applicable to Global Discount Notes only.
A-4
<PAGE>
(Form of Reverse of Series A Discount Note)
AMERICAN LAWYER MEDIA HOLDINGS, INC.
12 1/4% Senior Discount Notes due 2008
Capitalized terms used herein shall have the meanings assigned to them in
this Indenture referred to below unless otherwise indicated.
1. Interest. American Lawyer Media Holdings, Inc., a Delaware corporation
(the "Holdings"), promises to pay interest on the principal amount of this Note
at the rate and in the manner specified below. The Discount Notes will mature
on December 15, 2008. The Discount Notes will be issued at a substantial
discount to their aggregate principal amount at maturity such that the gross
proceeds from the issuance of the Discount Notes will be $35.0 million. Until
December 15, 2002, no interest will accrue on the Discount Notes, but the
Accreted Value will increase (representing amortization of original issue
discount) between the date of original issuance and December 15, 2002, on a
semi-annual bond equivalent basis using a 360-day year comprised of twelve
30-day months, such that on December 15, 2002 the Accreted Value will be equal
to the full principal amount at maturity of the Discount Notes. Beginning on
December 15, 2002, interest on the Discount Notes will accrue at the rate of
121 4% per annum and will be payable until maturity semi-annually in arrears on
June 15 and December 15 of each year, commencing on June 15, 2003, to Holders of
record on the immediately preceding June 1 and December 1, respectively.
Interest on the Discount Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 15, 2002.
Holdings shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate that is 1% per annum in excess of the rate then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. Liquidated Damages. The Holder of this Note is entitled to the
benefits of the Registration Rights Agreement relating to the Discount Notes
dated December 22, 1997, between Holdings, and the Initial Purchasers.
The Registration Rights agreement will provide that (i) if Holdings fails
to file an Exchange Offer Registration Statement (as defined in the Registration
Rights Agreement) with the SEC on or prior to the 120th day after the Closing
Date, (ii) if the Exchange Offer Registration Statement is not declared
effective by the SEC on
A-5
<PAGE>
or prior to the 180th day after the Closing Date, (iii) the Exchange Offer (as
defined in the Registration Rights Agreement) is not consummated on or before
the 30th business day after the Exchange Offer Registration Statement is
declared effective (iv) if obligated to file the Shelf Registration Statement
(as defined in the Registration Rights Agreement) and Holdings fails to file the
Shelf Registration Statement with the SEC on or prior to the 30th day after the
obligation to file arises, or (v) if obligated to file a Shelf Registration
Statement and the Shelf Registration Statement is not declared effective on or
prior to the 90th day after the obligation to file arises, or (vi) if the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
the case may be, is declared effective but thereafter ceases to be effective or
useable in connection with resales of the Transfer Restricted Securities, such
time of non-effectiveness or non-useability (each, a "Registration Default"),
Holdings agrees to pay to each Holder of Transfer Restricted Securities affected
thereby liquidated damages ("Liquidated Damages") in an amount equal to $0.10
per week per $1,000 in principal amount of Transfer Restricted Securities held
by the Holder for each week or portion thereof that the Registration Default
continues for the first 90-day period immediately following the occurrence of
such Registration Default. The amount of the Liquidated Damages shall increase
by an additional $0.05 per week per $1,000 in principal amount of Transfer
Restricted Securities with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of Liquidated
Damages of $0.25 per week, per $1,000 in principal amount of Transfer Restricted
Securities. Holdings shall not be required to pay Liquidated Damages for more
than one Registration Default at any given time. Following the cure of all
Registration Defaults, the accrual of Liquidated Damages will cease.
All accrued Liquidated Damages shall be paid by Holdings to the Holders entitled
thereto in the same manner as interest payments on the Discount Notes on
semi-annual damages payment dates which correspond to interest payment dates for
the Discount Notes.
3. Method of Payment. Holdings will pay interest on the Discount Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Discount Notes at the close of business on the June 1
or December 1 next preceding the Interest Payment Date, even if such Discount
Notes are cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. The Discount Notes will be payable as to principal,
premium, interest and Liquidated Damages, if any, at the office or agency of
Holdings maintained for such purpose within or without the City and State of New
York, or, at the option of Holdings, payment of interest and Liquidated Damages,
if any, may be made by check mailed to the Holders at their addresses set forth
in the register of Holders, and provided that payment by wire transfer of
immediately available funds will be required with
A-6
<PAGE>
respect to principal of and interest, premium and Liquidated Damages, if any, on
all Global Discount Notes and all other Discount Notes the Holders of which
shall have provided wire transfer instructions to Holdings or the Paying Agent.
Such payment shall be in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts.
4. Paying Agent and Registrar. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. Holdings
may change any Paying Agent or Registrar without notice to any Holder. Holdings
or any of its Subsidiaries may act in any such capacity.
5. Indenture. Holdings issued the Discount Notes under an Indenture dated
as of December 22, 1997 ("Indenture") by and among Holdings, and the Trustee.
The terms of the Discount Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Discount Notes are subject
to all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Discount Notes are unsecured obligations of
Holdings limited to $63,275,000 in aggregate principal amount at maturity.
6. Optional Redemption.
(a) Except as set forth in clauses (b) and (c) of this Section of the
Note, Holdings shall not have the option to redeem the Discount Notes prior to
December 15, 2002 except as provided below. Thereafter, Holdings shall have the
option to redeem the Discount Notes, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest (and Liquidated Damages, if any,) thereon to the applicable redemption
date if redeemed during the twelve-month period beginning on December 15 of the
years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002................................... 106.125
%
2003................................... 104.083
%
2004................................... 102.042
%
2005 and thereafter.................... 100.000
%
</TABLE>
A-7
<PAGE>
(b) Notwithstanding the provisions of clause (a) of this Section of
the Note, at any time or from time to time on or prior to December 15, 2000,
Holdings may (but shall not have the obligation to) redeem all but not less than
all of the aggregate principal amount of the Discount Notes then outstanding, at
a redemption price equal to 112.25% of the Accreted Value thereof (and
Liquidated Damages, if any) to the date of redemption out of the Net Cash
Proceeds of a Public Equity Offering; provided however, that such redemption
shall occur within 90 days of the closing of such Public Equity Offering.
(c) Notwithstanding the provisions of clause (a) of this Section of
the Note, the Discount Notes will also be subject to redemption, at any time
prior to December 15, 2002 upon not less than 10 nor more than 20 days' notice
to each Holder of Discount Notes redeemed, at the option of Holdings, in whole
or in part, in integral multiples of $1,000 at a redemption price equal to 100%
of the Accreted Value thereof plus the applicable Make-Whole Premium plus
accrued and unpaid interest (and Liquidated Damages, if any) to but excluding
the redemption date.
7. Mandatory Redemption.
Holdings shall not be required to make mandatory redemption payments with
respect to the Discount Notes.
8. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, each Holder shall have the
right, at such Holder's option, pursuant to an offer (subject only to conditions
required by applicable law, if any) by Holdings (the "Change of Control Offer"),
to require Holdings to repurchase all or any part of such Holder's Discount
Notes (provided, that the principal amount of such Discount Notes must be $1,000
or an integral multiple thereof) on a date (the "Change of Control Purchase
Date") that is no later than 60 Business Days after the date of occurrence of
such Change of Control, at a cash price equal to 101% of the Accreted Value
thereof, together with accrued and unpaid interest (and Liquidated Damages, if
any) (the "Change of Control Purchase Price") to the Change of Control Purchase
Date. The Change of Control Offer shall be made within 60 Business Days
following a Change of Control by mailing a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Discount Notes pursuant to the procedures required by this
Indenture. The Change of Control Offer shall remain open for at least 20
Business Days following the mailing of such Change of Control Offer but in no
event longer than 30 Business Days, unless required by law (the "Change of
Control Offer Period"). Upon expiration of the Change of Control Offer Period,
Holdings promptly shall purchase all Discount Notes properly tendered in
response to the Change of Control Offer. Holdings shall comply with the
A-8
<PAGE>
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Discount Notes as a result
of a Change of Control. To the extent that the provisions of any such
securities laws or regulations conflict with the provisions of this paragraph,
compliance by Holdings or any of the Guarantors with such laws and regulations
shall not in and of itself cause a breach of its obligations under such
covenant.
On or before the Change of Control Purchase Date, Holdings shall, to
the extent lawful (a) accept for payment all Discount Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (b) deposit with the
Paying Agent an amount equal to the Change of Control Purchase Price (together
with accrued and unpaid interest and Liquidated Damages, if any), of all
Discount Notes so tendered and (c) deliver or cause to be delivered to the
Trustee Discount Notes so accepted together with an Officers' Certificate
listing the Discount Notes or portions thereof being purchased by Holdings. The
Paying Agent shall promptly pay the Holders of Discount Notes so accepted an
amount equal to the Change of Control Purchase Price (together with accrued and
unpaid interest, if any, and Liquidated Damages, if any), and the Trustee shall
promptly authenticate and deliver to such Holders a new Note equal in principal
amount to any unpurchased portion of the Note surrendered; provided that each
such new Note will be in a principal amount of $1,000 or an integral multiple
thereof. Any Discount Notes not so accepted will be delivered promptly by
Holdings to the Holder thereof. Holdings will publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Purchase Date.
If the Change of Control Purchase Date hereunder is on or after an
interest payment Record Date and on or before the associated Interest Payment
Date, any accrued and unpaid interest (and Liquidated Damages, if any, due on
such Interest Payment Date) will be paid to the Person in whose name a Note is
registered at the close of business on such Record Date, and such accrued and
unpaid interest (and Liquidated Damages, if applicable) will not be payable to
Holders who tender the Discount Notes pursuant to the Change of Control Offer.
Holdings will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Indenture applicable to a Change of Control Offer made by Holdings and
purchases all Discount Notes validly tendered and not withdrawn under such
Change of Control Offer.
A-9
<PAGE>
(b) Holdings shall not, and shall not permit any Restricted Subsidiary to,
in one or a series of related transactions, convey, sell, transfer, assign or
otherwise dispose of, directly or indirectly, any of its property, business or
assets, including by merger or consolidation (in the case of a Restricted
Subsidiary of Holdings), and including any sale or other transfer or issuance of
any Capital Stock of any Restricted Subsidiary, whether by Holdings or a
Restricted Subsidiary of either or through the issuance, sale or transfer of
Capital Stock by a Restricted Subsidiary, and including any sale and leaseback
transaction (any of the foregoing, an "Asset Sale"), unless:
(i) within 300 days after the date of such Asset Sale, the Net Cash
Proceeds therefrom (the "Asset Sale Offer Amount") are applied to the
optional redemption of the Discount Notes in accordance with the terms of
this Indenture or any other Indebtedness of Holdings ranking on a parity
with the Discount Notes from time to time outstanding with similar
provisions requiring Holdings to make an offer to purchase or to redeem
such Indebtedness with the proceeds of asset sales, pro rata in proportion
to the Accreted Value of the Discount Notes and the respective principal
amounts (or accreted values in the case of Indebtedness issued with an
original issue discount) of the Discount Notes and such other Indebtedness
then outstanding, or to the repurchase of the Discount Notes and such other
Indebtedness pursuant to a cash offer (subject only to conditions required
by applicable law, if any) (pro rata in proportion to the respective
principal amounts (or accreted values in the case of Indebtedness issued
with an original issue discount) of the Discount Notes and such other
Indebtedness then outstanding) (the "Asset Sale Offer") at a purchase price
of 100% of the Accreted Value of the Discount Notes or the principal amount
(or accreted value in the case of Indebtedness issued with an original
issue discount) of such other Indebtedness (the "Asset Sale Offer Price")
together with accrued and unpaid interest and Liquidated Damages, if any,
to the date of payment, or (ii) within 300 days following such Asset Sale,
the Asset Sale Offer Amount is (A) invested (or committed, pursuant to a
binding commitment subject only to reasonable, customary closing
conditions, to be invested, and in fact is so invested, within an
additional 90 days) in a Person, business, assets or property which in the
good faith reasonable judgment of the Board of Directors will constitute or
be a part of a Related Business of Holdings or such Restricted Subsidiary
(if it continues to be a Subsidiary) immediately following such transaction
or (B) used to retire or repay Indebtedness of Holdings and/or any
Restricted Subsidiary that is senior to or pari passu with the Discount
Notes or to permanently reduce the amount of such Indebtedness (provided
that, in the case of a revolving credit arrangement or similar arrangement
that makes credit available, such commitment is permanently reduced by such
amount).
A-10
<PAGE>
(ii) with respect to any Asset Sale or related series of Asset Sales
involving securities, property or assets with an aggregate Determined Fair
Market Value in excess of $500,000, at least 75% of the consideration for
such Asset Sale or series of related Asset Sales consists of (x) cash or
Cash Equivalents or (y) property or services usable by Holdings or any
Restricted Subsidiary in the ordinary course of conduct of a Related
Business; provided, that if the Determined Fair Market Value of property or
assets of the kind specified in this subclause (y) exceeds $5.0 million,
then the Determined Fair Market Value thereof shall be determined by a
Third Party Evaluator; and provided, further, that the principal amount of
the following shall be deemed to be cash for purposes of this clause (b):
(i) any Indebtedness (as shown on Holdings's or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto) of Holdings
or any Restricted Subsidiary that is assumed or forgiven by the transferee
of any such assets and (ii) any securities, notes or other obligations
received by Holdings or any such Restricted Subsidiary from such transferee
that are converted by Holdings or such Restricted Subsidiary into cash
within 30 days of the closing of such Asset Sale (but in the case of this
subclause (ii), only to the extent of the cash received),
(c) no Default or Event of Default shall have occurred and be continuing
at the time of, or would occur after giving effect, on a pro forma basis, to,
such Asset Sale, and
(d) the Board of Directors of Holdings determines in good faith that
Holdings or such Restricted Subsidiary, as applicable, receives at least
Determined Fair Market Value for such Asset Sale.
An acquisition of Discount Notes pursuant to an Asset Sale Offer may
be deferred until the accumulated Net Cash Proceeds from Asset Sales not applied
to the uses set forth above (the "Excess Proceeds") exceeds $5.0 million and
that each Asset Sale Offer shall remain open for 20 Business Days following its
commencement but in no event longer than 30 Business Days, except to the extent
that a longer period is required by applicable law (the "Asset Sale Offer
Period"). Not later than five Business Days after the termination of the Asset
Sale Offer Period (the "Asset Sale Purchase Date") Holdings shall apply the
Asset Sale Offer Amount plus an amount equal to accrued and unpaid interest and
Liquidated Damages, if any, to the purchase of all Discount Notes or any other
Indebtedness properly tendered (on a pro rata basis if the Asset Sale Offer
Amount is insufficient to purchase all Discount Notes and any other Indebtedness
so tendered) at the Asset Sale Offer Price (together with accrued and unpaid
interest and Liquidated Damages, if any). Payment for any Discount Notes so
purchased shall be made in the same manner as interest payments are made.
A-11
<PAGE>
If the payment date in connection with an Asset Sale Offer hereunder
is on or after an interest payment Record Date and on or before the associated
Interest Payment Date, any accrued and unpaid interest (and Liquidated Damages,
if any, due on such Interest Payment Date) will be paid to the person in whose
name a Note is registered at the close of business on such Record Date, and such
interest (or Liquidated Damages, if applicable) will not be payable to Holders
who tender Discount Notes pursuant to such Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, Holdings shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Discount Notes pursuant to the Asset
Sale Offer. The Asset Sale Offer shall be made to all Holders.
9. Denominations, Transfer, Exchange. The Discount Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Discount Notes may be registered and
Discount Notes may be exchanged as provided in the Indenture. The Registrar and
the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and Holdings may require a Holder to pay any
taxes and fees required by law or permitted by the Indenture. Holdings need not
exchange or register the transfer of any Discount Note or portion of a Discount
Note selected for redemption, except for the unredeemed portion of any Discount
Note being redeemed in part. Also, it need not exchange or register the
transfer of any Discount Notes for a period of 15 days before a selection of
Discount Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Discount Note may
be treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Discount Notes may be amended or supplemented with the consent
of the Holders of a majority in aggregate Accreted Value of the then outstanding
Discount Notes, and any existing default or compliance with any provision of the
Indenture or the Discount Notes may be waived with the consent of the Holders of
a majority in aggregate Accreted Value of the then outstanding Discount Notes.
Without the consent of any Holder of a Discount Note, the Indenture or the
Discount Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Discount Notes in addition to or in
place of certificated Discount Notes, to provide for the assumption of
Holdings's obligations to Holders of the Discount Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Discount Notes (including the addition of any
Guarantors) or that does not
A-12
<PAGE>
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
12. Defaults. An "Event of Default" means: (1) failure to pay any
installment of interest (or Liquidated Damages, if any) on the Discount Notes as
and when the same becomes due and payable and the continuance of any such
failure for 30 days; (2) failure to pay all or any part of the principal, or
premium, if any, on the Discount Notes when and as the same becomes due and
payable at maturity, redemption, by acceleration or otherwise, including,
without limitation, payment of the Change of Control Purchase Price or the Asset
Sale Offer Price, or otherwise; (3) the failure by either of Holdings or any
Restricted Subsidiary to observe or perform any other covenant or agreement
contained in the Discount Notes or this Indenture and the continuance of such
failure for a period of 45 days after written notice is given to Holdings by the
Trustee or to Holdings and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Discount Notes outstanding specifying the
default and demanding that same be remedied; (4) Holdings or any of its
Significant Subsidiaries pursuant to or within the meaning of any Bankruptcy Law
commences a voluntary case; consents to the entry of an order for relief against
it in an involuntary case; consents to the appointment of a Custodian of it or
for all or substantially all of its property; makes a general assignment for the
benefit of its creditors; or generally is not paying its debts as they become
due; or, a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that is for relief against Holdings or any Restricted Subsidiary
in an involuntary case, appoints a Custodian of Holdings or any Significant
Subsidiary or for all or substantially all of the property of Holdings or any
Significant Subsidiary, or orders the liquidation of Holdings or any Significant
Subsidiary and the order or decree remains unstayed and in effect for
60 consecutive days; (5) a default in Indebtedness of Holdings or any of its
Restricted Subsidiaries with an aggregate principal amount in excess of $5.0
million (i) resulting from the failure to pay principal at final maturity or
(ii) as a result of which the maturity of such Indebtedness has been accelerated
prior to its stated maturity; and (6) final unsatisfied judgments not covered by
insurance aggregating in excess of $5.0 million, at any one time rendered
against Holdings or any of its Significant Subsidiaries and not stayed, bonded
or discharged within 60 days.
13. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of Holdings, and its Restricted Subsidiaries to, among other things,
engage in certain transactions with Affiliates, incur additional indebtedness
and make payments in respect of Equity Interests. The limitations are subject
to a number of important qualifications and limitations.
14. Trustee Dealings with Holdings. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for
A-13
<PAGE>
Holdings or its Affiliates, and may otherwise deal with Holdings or its
Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of Holdings, as such, shall not have any liability
for any obligations of Holdings under the Discount Notes or the Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Discount Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Discount Notes.
16. Authentication. This Discount Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
Holdings will furnish to any Holder upon written request and without charge
a copy of the Indenture and/or the Registration Rights Agreement. Requests may
be made to:
American Lawyer Media Holdings, Inc.
600 Third Avenue
New York, NY 10016
Telephone No.: (212) 973-2800
Fax No.: (212) 973 2889
Attention: Randall J. Weisenburger
A-14
<PAGE>
ASSIGNMENT FORM
To assign this Discount Note, fill in the form below: (I) or (we) assign and
transfer this Discount Note to
- --------------------------------------------------------------------------------
(Insert assignee's Social Security or tax I.D. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
agent to transfer this Discount Note on the books of Holdings. The agent may
substitute another to act for such agent.
Your Signature:_______________________________________________
(Sign exactly as your name appears on the face of this Discount Note)
Date:__________________________
By:_______________________________________________________
Notice: To be executed by an executive officer
Signature Guarantee:*_________________________________________
___________________
* Signature must be guaranteed.
A-15
<PAGE>
In connection with any transfer of any of the Discount Notes evidenced by this
certificate occurring prior to the date that is two years after the later of the
date of original issuance of such Discount Notes and the last date, if any, on
which such Discount Notes were owned by Holdings or any Affiliate of Holdings,
the undersigned confirms that such Discount Notes are being transferred
CHECK ONE BOX BELOW
(1) / / to Holdings; or
(2) / / pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(3) / / pursuant to and in compliance with Regulation S under the
Securities Act of 1933; or
(4) / / to an institutional "accredited investor" (as defined in
Schedule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933)
that has furnished to the Trustee a signed letter containing certain
representations and agreements (the form of which letter can be
obtained from the Trustee); or
(5) / / pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Discount Notes evidenced by this certificate in
the name of any person other than the registered holder thereof,
provided, however, that if box (3), (4) or (5) is checked, the Trustee
may require, prior to registering any such transfer of the Discount
Notes such legal opinions, certifications and other information as
Holdings has reasonably requested to confirm that such transfer is
being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of
1933, such as the exemption provided by Rule 144 under such Act.
-------------------------------------
Signature
Signature Guarantee*
- ----------------------------- --------------------------------------
Signature must be guaranteed Signature
- -----------------------------
* Signature must be guaranteed
A-16
<PAGE>
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it (a) is purchasing this
Discount Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, (b) is aware that the sale to it is being made in
reliance on Rule 144A, (c) acknowledges (i) it has been afforded an opportunity
to request from Holdings and to review, and has received, all additional
information considered by such person to be necessary to verify the accuracy of
or to supplement the information in the Offering Memorandum it has not relied on
the Initial Purchasers or any person affiliated with the Initial Purchasers in
connection with its investigation of the accuracy of such information or its
investment decision, and (iii) no person has been authorized to give information
or to make any representation concerning Holdings or the Discount Notes other
than as contained in the Offering Memorandum and information given by officers
and employees of Holdings in connection with such person's examination of
Holdings and the terms of the Offering and, if given or made, such other
representation should not be relied upon as having been authorized by Holdings
or the Initial Purchasers and (d) is aware that the transferor is relying upon
the undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date: _____________________
NOTICE: To be executed by an executive officer
- ----------------------------
A-17
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Discount Note purchased by Holdings
pursuant to Section 4.07 or 4.08 of the Indenture, check the box below:
/ / Section 4.07 / / Section 4.08
If you want to elect to have only part of this Discount Note purchased by
Holdings pursuant to Section 4.07 or Section 4.08 of the Indenture, state the
amount you elect to have purchased: $_______
Date:_____________ Your Signature:__________________________________
(Sign exactly as your name appears on the Discount Note)
By:____________________________
Notice: To be executed by an executive officer
Tax Identification No.:_______________________
Signature Guarantee:*_______________________________
- ---------------------------------
* Signature must be guaranteed.
A-18
<PAGE>
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT*
The following increases or decreases in the principal amount of this Global
Discount Note have been made:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Date of Exchange Amount of Amount of Principal Amount Signature of
or Transfer decrease in increase in of this Global authorized signatory
of this Global Principal Amount Discount Note of Trustee or
of this Global following such Note Custodian
Discount Note increase
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
_________________________________
* To be attached only to Global Discount Notes.
A-19
<PAGE>
EXHIBIT B
[FORM OF FACE OF SERIES B DISCOUNT NOTE]
[Global Notes Legend, if applicable]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO HOLDINGS OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL DISCOUNT NOTE SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL DISCOUNT NOTE SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
B-1
<PAGE>
CUSIP No. [ ]/ISIN No. [ ]
12 1/4% Series B Senior Note due 2008
No. $
AMERICAN LAWYER MEDIA HOLDINGS, INC., a Delaware corporation
promises to pay to
or registered assigns,
the principal sum of
Dollars [ (or such other amount as is indicated on Schedule A hereof)]* on
December 15, 2008.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Dated: December 22, 1997
AMERICAN LAWYER MEDIA HOLDINGS, INC.
By:__________________________
Name:___________________
Title:__________________
By:__________________________
Name:___________________
Title:__________________
(SEAL)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 12 1/4% Senior
Discount Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK, as Trustee
By:_____________________________
___________________
* Applicable to Global Discount Notes only
B-2
<PAGE>
Authorized Officer
B-3
<PAGE>
(Form of Reverse of Series B Note)
American Lawyer Media Holdings, Inc.
12 1/4% Senior Discount Notes due 2007
Capitalized terms used herein shall have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.
1. Interest. American Lawyer Media Holdings, Inc., a Delaware corporation
(the "Holdings"), promises to pay interest on the principal amount of this Note
at the rate and in the manner specified below. The Discount Notes will mature
on December 15, 2008. The Discount Notes will be issued at a substantial
discount to their aggregate principal amount at maturity such that the gross
proceeds from the issuance of the Discount Notes will be $35.0 million. Until
December 15, 2002, no interest will accrue on the Discount Notes, but the
Accreted Value will increase (representing amortization of original issue
discount) between the date of original issuance and December 15, 2002, on a
semi-annual bond equivalent basis using a 360-day year comprised of twelve
30-day months, such that on December 15, 2002 the Accreted Value will be equal
to the full principal amount at maturity of the Discount Notes. Beginning on
December 15, 2002, interest on the Discount Notes will accrue at the rate of
12 1/4% per annum and will be payable until maturity semi-annually in arrears on
June 15 and December 15 of each year, commencing on June 15, 2003, to Holders of
record on the immediately preceding June 1 and December 1, respectively.
Interest on the Discount Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 15, 2002.
Holdings shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue principal and premium, if any, from time to
time on demand at a rate that is 1% per annum in excess of the rate then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. Liquidated Damages. The Holder of this Discount Note is entitled to
the benefits of the Registration Rights Agreement relating to the Discount Notes
dated December 22, 1997, between Holdings, and the Initial Purchasers.
The Registration Rights agreement will provide that (i) if Holdings fails
to file an Exchange Offer Registration Statement (as defined in the Registration
Rights Agreement) with the SEC on or prior to the 120th day after the Closing
Date, (ii) if the Exchange Offer Registration Statement is not declared
effective by the SEC on or prior to the 180th day after the Closing Date, (iii)
the Exchange Offer (as defined in the
B-4
<PAGE>
Registration Rights Agreement) is not consummated on or before the 30th business
day after the Exchange Offer Registration Statement is declared effective (iv)
if obligated to file the Shelf Registration Statement (as defined in the
Registration Rights Agreement) and Holdings fails to file the Shelf Registration
Statement with the SEC on or prior to the 30th day after the obligation to file
arises, or (v) if obligated to file a Shelf Registration Statement and the Shelf
Registration Statement is not declared effective on or prior to the 90th day
after the obligation to file arises, or (vi) if the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, is declared
effective but thereafter ceases to be effective or useable in connection with
resales of the Transfer Restricted Securities, such time of non-effectiveness or
non-useability (each, a "Registration Default"), Holdings agrees to pay to each
Holder of Transfer Restricted Securities affected thereby liquidated damages
("Liquidated Damages") in an amount equal to $0.10 per week per $1,000 in
principal amount of Transfer Restricted Securities held by the Holder for each
week or portion thereof that the Registration Default continues for the first
90-day period immediately following the occurrence of such Registration Default.
The amount of the Liquidated Damages shall increase by an additional $0.05 per
week per $1,000 in principal amount of Transfer Restricted Securities with
respect to each subsequent 90-day period until all Registration Defaults have
been cured, up to a maximum amount of Liquidated Damages of $0.25 per week, per
$1,000 in principal amount of Transfer Restricted Securities. Holdings shall
not be required to pay Liquidated Damages for more than one Registration Default
at any given time. Following the cure of all Registration Defaults, the accrual
of Liquidated Damages will cease.
All accrued Liquidated Damages shall be paid by Holdings to the Holders entitled
thereto in the same manner as interest payments on the Discount Notes on
semi-annual damages payment dates which correspond to interest payment dates for
the Discount Notes.
3. Method of Payment. Holdings will pay interest on the Discount Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Discount Notes at the close of business on the June 1
or December 1 next preceding the Interest Payment Date, even if such Discount
Notes are cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with respect
to defaulted interest. The Discount Notes will be payable as to principal,
premium, interest and Liquidated Damages, if any, at the office or agency of
Holdings maintained for such purpose within or without the City and State of New
York, or, at the option of Holdings, payment of interest and Liquidated Damages,
if any, may be made by check mailed to the Holders at their addresses set forth
in the register of Holders, and provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest, premium and Liquidated Damages, if any, on all Global Discount Notes
and all other Discount Notes the Holders of which shall have provided wire
transfer instructions to
B-5
<PAGE>
Holdings or the Paying Agent. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.
4. Paying Agent and Registrar. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. Holdings
may change any Paying Agent or Registrar without notice to any Holder. Holdings
or any of its Subsidiaries may act in any such capacity.
5. Indenture. Holdings issued the Discount Notes under an Indenture dated
as of December 22, 1997 ("Indenture") by and among Holdings, and the Trustee.
The terms of the Discount Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Discount Notes are subject
to all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Discount Notes are unsecured obligations of
Holdings limited to $63,275,000 in aggregate principal amount at maturity.
6. Optional Redemption.
(a) Except as set forth in clauses (b) and (c) of this Section of the
Note, Holdings shall not have the option to redeem the Discount Notes prior to
December 15, 2002 except as provided below. Thereafter, Holdings shall have the
option to redeem the Discount Notes, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest (and Liquidated Damages, if any,) thereon to the applicable redemption
date if redeemed during the twelve-month period beginning on December 15 of the
years indicated below:
<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2002................................. 106.125
%
2003................................. 104.083
%
2004................................. 102.042
%
2005 and thereafter.................. 100.000
%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section of
the Note, at any time or from time to time on or prior to December 15, 2000,
Holdings may (but shall not have the obligation to) redeem all but not less than
all of the
B-6
<PAGE>
aggregate principal amount of the Discount Notes then outstanding, at a
redemption price equal to 112.25% of the Accreted Value thereof (and Liquidated
Damages, if any) to the date of redemption out of the Net Cash Proceeds of a
Public Equity Offering; provided however, that such redemption shall occur
within 90 days of the closing of such Public Equity Offering.
(c) Notwithstanding the provisions of clause (a) of this Section of
the Note, the Discount Notes will also be subject to redemption, at any time
prior to December 15, 2002 upon not less than 10 nor more than 20 days' notice
to each Holder of Discount Notes redeemed, at the option of Holdings, in whole
or in part, in integral multiples of $1,000 at a redemption price equal to 100%
of the Accreted Value thereof plus the applicable Make-Whole Premium plus
accrued and unpaid interest (and Liquidated Damages, if any) to but excluding
the redemption date.
7. Mandatory Redemption.
Holdings shall not be required to make mandatory redemption payments with
respect to the Discount Notes.
8. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, each Holder shall have the
right, at such Holder's option, pursuant to an offer (subject only to conditions
required by applicable law, if any) by Holdings (the "Change of Control Offer"),
to require Holdings to repurchase all or any part of such Holder's Discount
Notes (provided, that the principal amount of such Discount Notes must be $1,000
or an integral multiple thereof) on a date (the "Change of Control Purchase
Date") that is no later than 60 Business Days after the date of occurrence of
such Change of Control, at a cash price equal to 101% of the Accreted Value
thereof, together with accrued and unpaid interest (and Liquidated Damages, if
any) (the "Change of Control Purchase Price") to the Change of Control Purchase
Date. The Change of Control Offer shall be made within 60 Business Days
following a Change of Control by mailing a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Discount Notes pursuant to the procedures required by this
Indenture. The Change of Control Offer shall remain open for at least 20
Business Days following the mailing of such Change of Control Offer but in no
event longer than 30 Business Days, unless required by law (the "Change of
Control Offer Period"). Upon expiration of the Change of Control Offer Period,
Holdings promptly shall purchase all Discount Notes properly tendered in
response to the Change of Control Offer. Holdings shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Discount Notes as a result
of a Change of
B-7
<PAGE>
Control. To the extent that the provisions of any such securities laws or
regulations conflict with the provisions of this paragraph, compliance by
Holdings or any of the Guarantors with such laws and regulations shall not in
and of itself cause a breach of its obligations under such covenant.
On or before the Change of Control Purchase Date, Holdings shall, to
the extent lawful (a) accept for payment all Discount Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (b) deposit with the
Paying Agent an amount equal to the Change of Control Purchase Price (together
with accrued and unpaid interest and Liquidated Damages, if any), of all
Discount Notes so tendered and (c) deliver or cause to be delivered to the
Trustee Discount Notes so accepted together with an Officers' Certificate
listing the Discount Notes or portions thereof being purchased by Holdings. The
Paying Agent shall promptly pay the Holders of Discount Notes so accepted an
amount equal to the Change of Control Purchase Price (together with accrued and
unpaid interest, if any, and Liquidated Damages, if any), and the Trustee shall
promptly authenticate and deliver to such Holders a new Note equal in principal
amount to any unpurchased portion of the Note surrendered; provided that each
such new Note will be in a principal amount of $1,000 or an integral multiple
thereof. Any Discount Notes not so accepted will be delivered promptly by
Holdings to the Holder thereof. Holdings will publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Purchase Date.
If the Change of Control Purchase Date hereunder is on or after an
interest payment Record Date and on or before the associated Interest Payment
Date, any accrued and unpaid interest (and Liquidated Damages, if any, due on
such Interest Payment Date) will be paid to the Person in whose name a Note is
registered at the close of business on such Record Date, and such accrued and
unpaid interest (and Liquidated Damages, if applicable) will not be payable to
Holders who tender the Discount Notes pursuant to the Change of Control Offer.
Holdings will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Indenture applicable to a Change of Control Offer made by Holdings and
purchases all Discount Notes validly tendered and not withdrawn under such
Change of Control Offer.
(b) Holdings shall not, and shall not permit any Restricted Subsidiary to,
in one or a series of related transactions, convey, sell, transfer, assign or
otherwise dispose of, directly or indirectly, any of its property, business or
assets, including by merger or consolidation (in the case of a Restricted
Subsidiary of Holdings), and including any sale or other transfer or issuance of
any Capital Stock of any Restricted
B-8
<PAGE>
Subsidiary, whether by Holdings or a Restricted Subsidiary of either or through
the issuance, sale or transfer of Capital Stock by a Restricted Subsidiary, and
including any sale and leaseback transaction (any of the foregoing, an "Asset
Sale"), unless:
(i) within 300 days after the date of such Asset Sale, the Net Cash
Proceeds therefrom (the "Asset Sale Offer Amount") are applied to the
optional redemption of the Discount Notes in accordance with the terms of
this Indenture or any other Indebtedness of Holdings ranking on a parity
with the Discount Notes from time to time outstanding with similar
provisions requiring Holdings to make an offer to purchase or to redeem
such Indebtedness with the proceeds of asset sales, pro rata in proportion
to the Accreted Value of the Discount Notes and the respective principal
amounts (or accreted values in the case of Indebtedness issued with an
original issue discount) of the Discount Notes and such other Indebtedness
then outstanding, or to the repurchase of the Discount Notes and such other
Indebtedness pursuant to a cash offer (subject only to conditions required
by applicable law, if any) (pro rata in proportion to the respective
principal amounts (or accreted values in the case of Indebtedness issued
with an original issue discount) of the Discount Notes and such other
Indebtedness then outstanding) (the "Asset Sale Offer") at a purchase price
of 100% of the Accreted Value of the Discount Notes or the principal amount
(or accreted value in the case of Indebtedness issued with an original
issue discount) of such other Indebtedness (the "Asset Sale Offer Price")
together with accrued and unpaid interest and Liquidated Damages, if any,
to the date of payment, or (ii) within 300 days following such Asset Sale,
the Asset Sale Offer Amount is (A) invested (or committed, pursuant to a
binding commitment subject only to reasonable, customary closing
conditions, to be invested, and in fact is so invested, within an
additional 90 days) in a Person, business, assets or property which in the
good faith reasonable judgment of the Board of Directors will constitute or
be a part of a Related Business of Holdings or such Restricted Subsidiary
(if it continues to be a Subsidiary) immediately following such transaction
or (B) used to retire or repay Indebtedness of Holdings and/or any
Restricted Subsidiary that is senior to or pari passu with the Discount
Notes or to permanently reduce the amount of such Indebtedness (provided
that, in the case of a revolving credit arrangement or similar arrangement
that makes credit available, such commitment is permanently reduced by such
amount).
(ii) with respect to any Asset Sale or related series of Asset Sales
involving securities, property or assets with an aggregate Determined Fair
Market Value in excess of $500,000, at least 75% of the consideration for
such Asset Sale or series of related Asset Sales consists of (x) cash or
Cash Equivalents or (y) property or services usable by Holdings or any
Restricted
B-9
<PAGE>
Subsidiary in the ordinary course of conduct of a Related Business;
provided, that if the Determined Fair Market Value of property or assets of
the kind specified in this subclause (y) exceeds $5.0 million, then the
Determined Fair Market Value thereof shall be determined by a Third Party
Evaluator; and provided, further, that the principal amount of the
following shall be deemed to be cash for purposes of this clause (b):
(i) any Indebtedness (as shown on Holdings's or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto) of Holdings
or any Restricted Subsidiary that is assumed or forgiven by the transferee
of any such assets and (ii) any securities, notes or other obligations
received by Holdings or any such Restricted Subsidiary from such transferee
that are converted by Holdings or such Restricted Subsidiary into cash
within 30 days of the closing of such Asset Sale (but in the case of this
subclause (ii), only to the extent of the cash received),
(c) no Default or Event of Default shall have occurred and be continuing
at the time of, or would occur after giving effect, on a pro forma basis, to,
such Asset Sale, and
(d) the Board of Directors of Holdings determines in good faith that
Holdings or such Restricted Subsidiary, as applicable, receives at least
Determined Fair Market Value for such Asset Sale.
An acquisition of Discount Notes pursuant to an Asset Sale Offer may
be deferred until the accumulated Net Cash Proceeds from Asset Sales not applied
to the uses set forth above (the "Excess Proceeds") exceeds $5.0 million and
that each Asset Sale Offer shall remain open for 20 Business Days following its
commencement but in no event longer than 30 Business Days, except to the extent
that a longer period is required by applicable law (the "Asset Sale Offer
Period"). Not later than five Business Days after the termination of the Asset
Sale Offer Period (the "Asset Sale Purchase Date") Holdings shall apply the
Asset Sale Offer Amount plus an amount equal to accrued and unpaid interest and
Liquidated Damages, if any, to the purchase of all Discount Notes or any other
Indebtedness properly tendered (on a pro rata basis if the Asset Sale Offer
Amount is insufficient to purchase all Discount Notes and any other Indebtedness
so tendered) at the Asset Sale Offer Price (together with accrued and unpaid
interest and Liquidated Damages, if any). Payment for any Discount Notes so
purchased shall be made in the same manner as interest payments are made.
If the payment date in connection with an Asset Sale Offer hereunder
is on or after an interest payment Record Date and on or before the associated
Interest Payment Date, any accrued and unpaid interest (and Liquidated Damages,
if any, due on such Interest Payment Date) will be paid to the person in whose
name a Note is registered at the close of business on such Record Date, and such
interest (or
B-10
<PAGE>
Liquidated Damages, if applicable) will not be payable to Holders who tender
Discount Notes pursuant to such Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, Holdings shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Discount Notes pursuant to the Asset
Sale Offer. The Asset Sale Offer shall be made to all Holders.
9. Denominations, Transfer, Exchange. The Discount Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Discount Notes may be registered and
Discount Notes may be exchanged as provided in the Indenture. The Registrar and
the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and Holdings may require a Holder to pay any
taxes and fees required by law or permitted by the Indenture. Holdings need not
exchange or register the transfer of any Note or portion of a Discount Note
selected for redemption, except for the unredeemed portion of any Discount Note
being redeemed in part. Also, it need not exchange or register the transfer of
any Discount Notes for a period of 15 days before a selection of Discount Notes
to be redeemed or during the period between a record date and the corresponding
Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Discount Note may
be treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to Accreted Value, the
Indenture or the Discount Notes may be amended or supplemented with the consent
of the Holders of a majority in aggregate Accreted Value of the then outstanding
Discount Notes, and any existing default or compliance with any provision of the
Indenture or the Discount Notes may be waived with the consent of the Holders of
a majority in aggregate Accreted Value of the then outstanding Discount Notes.
Without the consent of any Holder of a Discount Note, the Indenture or the
Discount Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Discount Notes in addition to or in
place of certificated Discount Notes, to provide for the assumption of
Holdings's obligations to Holders of the Discount Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Discount Notes (including the addition of any
Guarantors) or that does not adversely affect the legal rights under the
Indenture of any such Holder, or to comply with the requirements of the SEC in
order to effect or maintain the qualification of the Indenture under the Trust
Indenture Act.
B-11
<PAGE>
12. Defaults. An "Event of Default" means: (1) failure to pay any
installment of interest (or Liquidated Damages, if any) on the Discount Notes as
and when the same becomes due and payable and the continuance of any such
failure for 30 days; (2) failure to pay all or any part of the principal, or
premium, if any, on the Discount Notes when and as the same becomes due and
payable at maturity, redemption, by acceleration or otherwise, including,
without limitation, payment of the Change of Control Purchase Price or the Asset
Sale Offer Price, or otherwise; (3) the failure by either of Holdings or any
Restricted Subsidiary to observe or perform any other covenant or agreement
contained in the Discount Notes or this Indenture and the continuance of such
failure for a period of 45 days after written notice is given to Holdings by the
Trustee or to Holdings and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Discount Notes outstanding specifying the
default and demanding that same be remedied; (4) Holdings or any of its
Significant Subsidiaries pursuant to or within the meaning of any Bankruptcy Law
commences a voluntary case; consents to the entry of an order for relief against
it in an involuntary case; consents to the appointment of a Custodian of it or
for all or substantially all of its property; makes a general assignment for the
benefit of its creditors; or generally is not paying its debts as they become
due; or, a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that is for relief against Holdings or any Restricted Subsidiary
in an involuntary case, appoints a Custodian of Holdings or any Significant
Subsidiary or for all or substantially all of the property of Holdings or any
Significant Subsidiary, or orders the liquidation of Holdings or any Significant
Subsidiary and the order or decree remains unstayed and in effect for
60 consecutive days; (5) a default in Indebtedness of Holdings or any of its
Restricted Subsidiaries with an aggregate principal amount in excess of $5.0
million (i) resulting from the failure to pay principal at final maturity or
(ii) as a result of which the maturity of such Indebtedness has been accelerated
prior to its stated maturity; and (6) final unsatisfied judgments not covered by
insurance aggregating in excess of $5.0 million, at any one time rendered
against Holdings or any of its Significant Subsidiaries and not stayed, bonded
or discharged within 60 days.
13. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of Holdings and its Restricted Subsidiaries to, among other things,
engage in certain transactions with Affiliates, incur additional indebtedness
and make payments in respect of Equity Interests. The limitations are subject
to a number of important qualifications and limitations.
14. Trustee Dealings with Holdings. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for Holdings or its Affiliates, and may otherwise deal with Holdings or its
Affiliates, as if it were not the Trustee.
B-12
<PAGE>
15. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of Holdings, as such, shall not have any liability
for any obligations of Holdings under the Discount Notes or the Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Discount Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Discount Notes.
16. Authentication. This Discount Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
Holdings will furnish to any Holder upon written request and without charge
a copy of the Indenture and/or the Registration Rights Agreement. Requests may
be made to:
American Lawyer Media Holdings, Inc.
600 Third Avenue
New York, NY 10016
Telephone No.: (212) 973-2800
Fax No.: (212) 973 2889
Attention: Randall J. Weisenburger
B-13
<PAGE>
ASSIGNMENT FORM
To assign this Discount Note, fill in the form below: (I) or (we) assign and
transfer this Discount Note to
- ------------------------------------------------------------------------------
(Insert assignee's Social Security or tax I.D. No.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_____________________________________________________
agent to transfer this Discount Note on the books of Holdings. The agent may
substitute another to act for such agent.
Your Signature:_______________________________________________
(Sign exactly as your name appears on the face of this Discount Note)
Date:__________________________
By:_______________________________________________________
Notice: To be executed by an executive officer
Signature Guarantee:*_________________________________________
_______________________
* Signature must be guaranteed.
B-14
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Discount Note purchased by Holdings
pursuant to Section 4.07 or 4.08 of the Indenture, check the box below:
/ / Section 4.07 / / Section 4.08
If you want to elect to have only part of this Discount Note purchased by
Holdings pursuant to Section 4.07 or Section 4.08 of the Indenture, state the
amount you elect to have purchased: $_______
Date:_____________ Your Signature:__________________________________
(Sign exactly as your name appears on the Note)
By:____________________________
Notice: To be executed by an executive officer
Tax Identification No.:_______________________
Signature Guarantee:*________________________________
_______________________
* Signature must be guaranteed.
B-15
<PAGE>
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT*
The following increases or decrease in the principal amount of this Global
Discount Note have been made:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Principal Amount Signature of
Date of Exchange Amount of Amount of of this Global authorized signa-
or Transfer decrease in increase in Discount Note tory of Trustee or
Principal Amount Principal Amount following such Note Custodian
of this Global of this Global decrease or in-
Discount Note Discount Note crease
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
_________________________________
* To be attached only to Global Discount Notes
B-16
<PAGE>
EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM
U.S. GLOBAL DISCOUNT NOTE OR IAI GLOBAL DISCOUNT NOTE
TO REGULATION S TEMPORARY GLOBAL DISCOUNT NOTE
(Transfers pursuant to Section 2.07(a)(ii) of the Indenture)
The Bank of New York, as Trustee
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration
Re: American Lawyer Media Holdings, Inc.
12 1/4% Senior Discount Notes Due 2008 (the "Discount Notes")
Reference is hereby made to the Indenture dated as of December 22,
1997 (the "Indenture") between American Lawyer Media Holdings, Inc., as Issuer
and The Bank of New York, as Trustee.
This letter relates to U.S. $63,275,000 aggregate principal amount at
maturity of Senior Discount Notes which are held in the form of the [Rule 144A
Global Discount Note (CUSIP No. )] [IAI Global Discount Note (CUSIP No.
)] with the Depositary in the name of [name of transferor] (the
"Transferor") to effect the transfer of the Discount Notes in exchange for an
equivalent security entitlement in the Regulation S Temporary Global Discount
Note.
In connection with such request, the Transferor does hereby certify
that such transfer has been effected In accordance with the transfer
restrictions set forth in the Discount Notes and (i) with respect to transfers
made in reliance on Regulation S, does hereby certify that:
(1) the offer of the Discount Notes was not made to a person in
the United States:
(2) the transaction was executed in on or through the facilities
of a designated offshore securities market and neither the Transferor
nor any person acting on its behalf knows that the transaction was
pre-arranged with a buyer in the United States:
(3) no directed selling efforts have been made in contravention
of the requirements of Rule 903(b) or 904(b) of Regulation S, as
applicable, and
C-1
<PAGE>
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the United States Securities Act of 1933,
as amended (the "Securities Act"):
(ii) with respect to transfers made in reliance on Rule 144 does hereby certify
that the Discount Notes are being transferred in a transaction permitted by Rule
144 under the Securities Act; (iii) with respect to transfers made in reliance
on Rule 144, does hereby certify that such Discount Notes are being transferred
in accordance with Rule 144A under the Securities Act to a transferee that the
Transferor reasonably believes is purchasing the Discount Notes for its own
account or an account with respect to which the transferee exercises sole
investment discretion and the transferee and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A, in a transaction meeting
the requirements of Rule 144A and in accordance with applicable securities laws
of any state of the United States or any other jurisdiction; and (iv) with
respect to transfers made in reliance on Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act does hereby certify that such Discount
Notes are being transferred to a transferee that the Transferor reasonably
believes is purchasing the Discount Notes for its own account or an account as
to which the transferee exercises sole investment discretion and the transferee
and any such account is an institutional "accredited investor" within the
meaning of Rule 501(a)(1,) (2), (3) or (7) of Regulation D under the Securities
Act and in accordance with applicable securities laws of any state, of the
United States or any other jurisdiction.
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1), as the
case may be.
You and Holdings are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Capitalized terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S.
[Name of Transferor]
By:________________
Name:
Title:
Date:
cc: American Lawyer Media Holdings, Inc.
600 Third Avenue
New York, New York 10016
Attn: Randall J. Weisenburger
C-2
<PAGE>
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM REGULATION S TEMPORARY GLOBAL DISCOUNT NOTE
TO U.S. GLOBAL DISCOUNT NOTE OR IAI GLOBAL DISCOUNT NOTE
(Transfers pursuant to Section 2.07(a)(iii) of the Indenture)
The Bank of New York, as Trustee
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration
Re: American Lawyer Media Holdings, Inc.
12 1/4% Discount Notes Due 2008 (the "Discount Notes")
Reference is hereby made to the Indenture dated as of December 22,
1997 (the "Indenture") between American Lawyer Media Holdings, Inc., as Issuer
and The Bank of New York, as Trustee. Capitalized terms used but not defined
herein shall have the respective meanings given them in the Indenture.
This letter relates to U.S. $63,275,000 aggregate principal amount at
maturity of Discount Notes which are held in the form of the Regulation S
Temporary Global Discount Note (ISIN No. [ ]) with the Depositary in the
name of [name of transferor] (the "Transferor") to effect the transfer of the
Discount Notes in exchange for an equivalent security entitlement in the [Rule
144A/IAI] Global Discount Note.
In connection with such request, and in respect of such Discount Notes
the Transferor does hereby certify that such Discount Notes are being
transferred in accordance with (i) the transfer restrictions set forth in the
Discount Notes and (ii) [Rule 144A under the United States Securities Act of
1933, as amended, to a transferee that the Transferor reasonable believes is
purchasing the Discount Notes for its own account or an account with respect to
which the transferee exercises sole investment discretion and the transferee and
any such account is a "qualified institutional buyer" within the meaning of Rule
144A, in a transaction meeting the requirements of Rule 144A and] [to a
transferee that the Transferor reasonable believes is purchasing the Discount
Notes for its own
D-1
<PAGE>
account or an account as to which the transferee exercises sole investment
discretion and the transferee and any such account is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D and] in accordance with applicable securities laws of any state of
the United States or any other jurisdiction.
[Name of Transferor],
By:___________________
Name:
Title:
Dated:
cc: American Lawyer Media Holdings, Inc.
600 Third Avenue
New York, New York 10016
Attn: Randall J. Weisenburger
D-2
<PAGE>
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL DISCOUNT NOTE OR TRANSFER RESTRICTED SECURITY
TO DISCOUNT TRANSFER RESTRICTED SECURITY
(Transfers pursuant to Section 2.07(a)(iv) or Section 2.07(a)(v) of the
Indenture)
The Bank of New York, as Trustee
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration
Re: American Lawyer Media Holdings, Inc.
12 1/4% Senior Discount Notes Due 2008 (the "Discount Notes")
Reference is hereby made to the Indenture dated as of December 22,
1997 (the "Indenture") between American Lawyer Media Holdings, Inc., as Issuer
and The Bank of New York, as Trustee. Capitalized terms used but not defined
herein shall have the respective meanings given them in the Indenture.
This letter relates to U.S. $63,275,000 aggregate principal amount at
maturity of Discount Notes which are held [in the form of the
[U.S./IAI/Regulation S] [Global] [Transfer Restricted] Discount Note/Security
(CUSIP Nos. /ISIN No. ) with the Depositary*] in the name of
[name of transferor] (the "Transferor") to effect the transfer of the Discount
Notes.
In connection with such request, and in respect of such Discount
Notes, the Transferor does hereby certify that such Discount Notes are being
transferred (i) in accordance with the transfer restrictions set forth in the
Discount Notes and (ii) to a transferee that the Transferor reasonably, believes
is an institutional "accredited investor" (as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the United States Securities Act of 1933, as
amended) and is acquiring at least $100,000 principal amount
_________________
* Insert, if appropriate.
E-1
<PAGE>
of Discount Notes for its own account or for one or more accounts as to which
the transferee exercises sole investment discretion and (iii) in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
[Name of Transferor]
By:___________________
Name:
Title:
Dated:
cc: American Lawyer Media Holdings, Inc.
600 Third Avenue
New York, New York 10016
Attn: Randall J. Weisenburger
E-2
<PAGE>
EXHIBIT F
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
(Transfers pursuant to Section 2.07(a)(iv) or Section 2.07(a)(v))
The Bank of New York, as Trustee
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration Department
Re: American Lawyer Media Holdings, Inc.
12 1/4% Senior Discount Notes Due 2008 (the "Discount Notes")
Reference is hereby made to the Indenture dated as of December 22,
1997 (the "Indenture") between American Lawyer Media Holdings, Inc., as Issuer
and The Bank of New York, as Trustee. Capitalized terms used but not defined
herein shall have the respective meanings given them in the Indenture.
This letter relates to U.S. $63,275,000 aggregate principal amount at
maturity of Discount Notes which are held in the form of the
[U.S./IAI/Regulation S] [Transfer Restricted] [Global] [Discount Note]
[Securities] (CUSIP Nos. [ ], [ ], [ ] / ISIN No. [ ]) with the
Depositary]* in the name of [name of transferor] (the "Transferor") to effect
the transfer of the Discount Notes to the undersigned.
In connection with such request, and in respect of such Discount Notes
we confirm that:
1. We understand that the Discount Notes were originally offered in
a transaction not involving any public offering in the United States within
the meaning of the United States Securities Act of 1933, as amended (the
"Securities Act"), that the Discount Notes have not been registered under
the Securities Act and that (A) the Discount Notes may be offered, resold,
pledged or otherwise transferred only (i) to a person who the seller
reasonably believes is a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in a transaction meeting the
requirements of Rule 144A, in a transaction meeting the requirements of
Rule 144 under the Securities Act, to a person who the seller reasonably
believes is an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act),
outside the United States in a transaction meeting the requirements of Rule
903 or 904 of Regulation S under the Securities Act or in accordance with
another exemption
- --------------------------
* Insert and modifying, if appropriate.
F-1
<PAGE>
from the registration requirements of the Securities Act (and based upon an
opinion of counsel if Holdings so requests), (ii) to Holdings or (iii)
pursuant to an effective registration statement, and, in each case, in
accordance with any applicable securities laws of any state of the United
States or any other applicable jurisdiction and (B) the purchaser will, and
each subsequent holder is required to, notify, any subsequent purchaser
from it of the resale restrictions set forth in (A) above.
2. We are a corporation, partnership or other entity having such
knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of an investment in
the Discount Notes, and we are (or any account for which we are
purchasing under paragraph 4 below is) an institutional
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act, able to bear the economic risk of
our proposed investment in the Securities.
3 . We are acquiring the Discount Notes for our own account (or
for accounts as to which we exercise sole investment
discretion and have authority to make, and do make, the
statements contained in this letter) and not with a view to
any distribution of the Discount Notes, subject,
nevertheless, to the understanding that the disposition of
our property shall at all times be and remain within our
control.
4. We are, and each account (if any) for which we are purchasing
Discount Notes is, purchasing Discount Notes having an aggregate
principal amount of not less than $100.000.
5 . We understand that (a) the Discount Notes will be delivered to us
in registered form only and that the certificate delivered to us
in respect of the Discount Notes will bear a legend substantially
to the following effect:
F-2
<PAGE>
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE 'SECURITIES ACT'). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF HOLDINGS THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED (X) PRIOR TO THE THIRD ANNIVERSARY OF THE ISSUANCE
HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF HOLDINGS AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF
SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO HOLDINGS , (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
('RULE 144A'), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS SECURITY). (3) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY (THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), AND, IF SUCH TRANSFER IS BEING EFFECTED BY CERTAIN
and (b) such certificates will be reissued without the foregoing legend
only in accordance with the terms of the Indenture.
6. We agree that in the event that at some future time we wish
to dispose of any of the Discount Notes, we will not do so unless:
(a) the Discount Notes are sold to Holdings or any
Subsidiary thereof;
(b) the Discount Notes are sold to a qualified
institutional buyer in compliance with Rule 144A under the Securities Act;
(c) the Discount Notes are sold to an institutional
accredited investor, as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act, acquiring at least $100,000 principal amount of the
Discount Notes that, prior to such transfer, furnishes to the Trustee a
signed letter containing certain representations and agreements relating to
the restrictions on transfer of the Discount Notes (the form of which
letter can be obtained from such Trustee);
(d) the Discount Notes are sold outside the United States
in compliance with Rule 903 or Rule 904 under the Securities Act;
(e) the Discount Notes are sold by us pursuant to Rule 144
under the Securities Act; or
F-3
<PAGE>
(f) the Discount Notes are sold pursuant to an effective
registration statement under the Securities Act.
Very truly yours,
[PURCHASER]
By:__________________________
Name:
Title:
Dated:
cc: American Lawyer Media Holdings, Inc.
600 Third Avenue
New York, New York 10016
Attn: Randall J. Weisenburger
F-4
<PAGE>
EXHIBIT G
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S TEMPORARY GLOBAL DISCOUNT NOTE
FOR REGULATION S PERMANENT GLOBAL DISCOUNT NOTE
(Transfers pursuant to Section 2.07(a)(viii))
(Transferor)
[MORGAN GUARANTY TRUST HOLDINGS
OF NEW YORK, BRUSSELS OFFICE AS
OPERATOR OF THE EUROCLEAR SYSTEM]
[CEDEL BANK, SOCIETE ANONYME]
Re: American Lawyer Media Holdings, Inc.
12 1/4% Senior Discount Notes Due 2008 (the "Discount Notes")
Reference is hereby made to the Indenture dated as of December 22,
1997 (the "Indenture") between American Lawyer Media Holdings, Inc., as Issuer
and The Bank of New York, as Trustee. Capitalized terms used but not defined
herein shall have the meanings given them in the Indenture.
This certificate relates to U.S. $63,275,000 aggregate principal
amount at maturity of Discount Notes which are held in the form of the
Regulation S Temporary Global Discount Note (ISIN No. ) with the
Depositary in the name [name of transferor] (the "Transferor") to effect the
transfer of the security entitlement in such Regulation S Temporary Global
Discount Note for a security entitlement in an equivalent aggregate principal
amount of the Regulation S Permanent Global Discount Note.
In connection with such request, and in respect of such Discount
Notes, we confirm that:
1. We are either not a U.S. person (as defined below) or we have
purchased our security entitlement in the above referenced Regulation S
Temporary Global Discount Note in a transaction that is exempt from the
registration requirements under the Securities Act.
2. We are delivering this certificate in connection with obtaining a
beneficial interest in the Regulation S Permanent Global Discount Note in
exchange for our security entitlement in the Regulation S Temporary Global
Discount Note.
For purposes of this certificate. "U.S. person" means (i) any
individual resident in the United States, (ii) any partnership or corporation
organized or incorporated under the laws of the United States. (iii) any estate
of which an executor or administrator
G-1
<PAGE>
is a U.S. person (other than an estate governed by foreign law and of which at
least one executor or administrator is a non-U.S. person who has sole or shared
investment discretion with respect to its assets), (iv) any trust of which any
trustee is a U.S. person (other than a trust of which at least one trustee is a
non-U.S. person who has sole or shared investment discretion with respect to its
assets and no beneficiary of the trust (and no settlor if the trust is
revocable) is a U.S. person), (v) any agency or branch of a foreign entity
located in the United States, (vi) any non-discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person, (vii) any discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary organized,
incorporated or (if an individual) resident in the United States (other than
such an account held for the benefit or account of a non-U.S. person), (viii)
any partnership or corporation organized or incorporated under the laws of a
foreign jurisdiction and formed by a U.S. person principally for the purpose of
investing in securities not registered under the Securities Act (unless it is
organized or incorporated, and owned, by accredited investors within the meaning
of Rule 501 (a) under the Securities Act who are not natural persons, estates or
trusts); provided, however, that the term "U.S. person" shall not include (A) a
branch or agency of a U.S. person that is located and operating outside the
United States for valid business purposes as a locally regulated branch or
agency engaged in the banking or insurance business, (B) any employee benefit
plan established and administered in accordance with the law, customary
practices and documentation of a foreign country and (C) the international
organizations set forth in Section 902(o)(7) of Regulation S under the
Securities Act and any other similar international organizations, and their
agencies, affiliates and pension plans.
We irrevocably authorize you to produce this certificate or a copy
hereof to any interested party in any administrative or other proceedings with
respect to the matters covered by this certificate.
Very truly yours,
[TRANSFEROR]
By:__________________________
Name:
Title:
To be completed by the account holder as, or
as agent for, the beneficial owner(s) of the
Discount Notes to which this certificate
relates.
Dated:
cc: American Lawyer Media Holdings, Inc.
600 Third Avenue
G-2
<PAGE>
New York, New York 10016
Attn: Randall J. Weisenburger
G-3
<PAGE>
EXHIBIT H
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S TEMPORARY GLOBAL DISCOUNT NOTE
FOR REGULATION S PERMANENT GLOBAL DISCOUNT NOTE
(Transfers pursuant to Section 2.07(a)(viii))
(Euroclear or Cedel)
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration Department
Re: American Lawyer Media Holdings, Inc.
12 1/4% Senior Discount Notes Due 2008 (the "Discount Notes")
Reference is hereby made to the Indenture dated as of December 22,
1997 (the "Indenture") between American Lawyer Media Holdings, Inc., as Issuer
and The Bank of New York, as Trustee. Capitalized terms used but not defined
herein shall have the meanings given them in the Indenture.
This certificate relates to U.S. $63,275,000 aggregate principal
amount at maturity of Discount Notes which are held in the form of the
Regulation S Temporary Global Discount Note (ISIN No. ) with the Depositary to
effect the transfer of the security entitlement in such Regulation S Temporary
Global Discount Note for a security entitlement in an equivalent aggregate
principal amount of the Regulation S Permanent Global Discount Note.
In connection with such request, this is to certify that, based solely
on certificates we have received in writing, by tested telex or by electronic
transmission from member organizations appearing in our records as persons being
entitled to a portion of the principal amount of the Regulation S Temporary
Global Discount Note set forth above (our "Member Organizations") substantially
to the effect set forth in the Indenture, U.S. $[ ] aggregate principal
amount of the Discount Notes is owned by persons that are not citizens or
residents of the United States, domestic partnerships, domestic corporations or
any estate or trust the income of which is subject to United States federal
income taxation regardless of its source or any other person deemed a "U.S.
person" under Regulation S under the Securities Act of 1993, as amended.
We further certify (i) that we are not making available herewith for
exchange (or if relevant, exercise of any rights of collection of any interest)
any portion of the Regulation S Global Discount Note excepted in such
certificates and (ii) that, as of the date hereof, we have not received any
notification from any of our Member
H-1
<PAGE>
Organizations to the effect that the statements made by such Member
Organizations with respect to any portion of the part submitted herewith for
exchange (or, if relevant, exercise of any rights of collection of any interest)
are no longer true and cannot be relied upon as of the date hereof.
We understand that this certificate is required in connection with
certain laws, and, if applicable, certain securities laws of the United States.
In connection therewith, if administrative or legal proceedings are commenced or
threatened in connection with which this certificate is or would be relevant, we
irrevocably authorize you to produce this certification to any interested party
in such proceedings.
Very truly yours,
[MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
BRUSSELS OFFICE AS OPERATOR OF THE EUROCLEAR
SYSTEM]
[CEDEL BANK, SOCIETE ANONYME]
By:______________________
Name:
Title:
Dated:
cc: American Lawyer Media Holdings, Inc.
600 Third Avenue
New York, New York 10016
Attn: Randall J. Weisenburger
H-2
<PAGE>
EXHIBIT I
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S PERMANENT GLOBAL DISCOUNT NOTE FOR
TRANSFER RESTRICTED SECURITIES
(Transfers pursuant to Section 2.07(a)(viii))
(Transferor)
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration Department
Re: American Lawyer Media Holdings, Inc.
12 1/4% Senior Discount Notes Due 2008 (the "Discount Notes")
Reference is hereby made to the Indenture dated as of December 22,
1997 (the "Indenture") between American Lawyer Media Holdings, Inc., as Issuer
and The Bank of New York, as Trustee. Capitalized terms used but not defined
herein shall have the respective meanings given them in the Indenture.
This certificate relates to U.S. $63,275,000 aggregate principal
amount at maturity of Discount Notes which are held in the form of the
Regulation S Permanent Global Discount Note (ISIN No. ) with the
Depositary in the name of [name of transferor] (the "Transferor") to effect the
transfer of the security entitlement in such Regulation S Permanent Global
Discount Note for a security entitlement in an equivalent aggregate principal
amount of Transfer Restricted Securities.
In connection with such request, and in respect of such Discount
Notes, we confirm that:
1 We are either not a U.S. person (as defined below) or we have
purchased our security entitlement in the above referenced Regulation S
Permanent Global Discount Note in a transaction that is exempt from the
registration requirements under the Securities Act.
2. We are delivering this certificate in connection with obtaining a
security entitlement in Transfer Restricted Securities in exchange for our
security entitlement in the Regulation S Permanent Global Discount Note.
For purposes of this certificate, "U.S. person" means (i) any
individual resident in the United States, (ii) any partnership or corporation
organized or incorporated under the laws of the United States, (iii) any estate
of which an executor or administrator is a U.S. person (other than an estate
governed by foreign law and of
I-1
<PAGE>
which at least one executor or administrator is a non-U.S. person who has sole
or shared investment discretion with respect to its assets), (iv) any trust of
which any trustee is a U.S. person (other than a trust of which at least one
trustee is a non-U.S. person who has sole or shared investment discretion with
respect to its assets and no beneficiary of the trust (and no settlor if the
trust is revocable) is a U.S. person), (v) any agency or branch of a foreign
entity located in the United States, (vi) any discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person, (vii) any discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary organized,
incorporated or (if an individual) resident in the United States (other than
such an account held for the benefit or account of a non-U.S. person), (viii)
any partnership or corporation organized or incorporated under the laws of a
foreign jurisdiction and formed by a U.S. person principally for the purpose of
investing in securities not registered under the Securities Act (unless it is
organized or incorporated, and owned, by accredited investors within the meaning
of Rule 501 (a) under the Securities Act who are not natural persons, estates or
trusts); provided, however, that the term "U.S. person" shall not include (A) a
branch or agency of a U.S. person that is located and operating outside the
United States for valid business purposes as a locally regulated branch or
agency engaged in the banking or insurance business, (B) any employee benefit
plan established and administered in accordance with the law, customary
practices and documentation of a foreign country and (C) the international
organizations set forth in Section 902(o)(7) of Regulation S under the
Securities Act and any other similar international organizations, and their
agencies, affiliates and pension plans.
We irrevocably authorize you to produce this certificate or a copy
hereof to any interested party in any administrative or other proceedings with
respect to the matters covered by this certificate.
Very truly yours,
[TRANSFEROR]
By:_______________________
Name:
Title:
To be completed by the account holder as, or
as agent for, the beneficial owner(s) of the
Discount Notes to which this certificate
relates.
Dated:
cc: American Lawyer Media Holdings, Inc.
600 Third Avenue
New York, New York 10016
I-2
<PAGE>
Attn: Randall J. Weisenburger
I-3
<PAGE>
Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
Dated as of December 22, 1997
by and among
American Lawyer Media Holdings, Inc.,
as Issuer
and
Wasserstein Perella Securities, Inc.
BancAmerica Robertson Stephens
BancBoston Securities Inc.,
as Initial Purchasers
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of December 22, 1997, by and among American Lawyer Media
Holdings, Inc., a Delaware corporation ("HOLDINGS") and Wasserstein Perella
Securities, Inc., BancAmerica Robertson Stephens and BancBoston Securities Inc.
( the "INITIAL PURCHASERS") who have agreed to purchase Holdings's 12.25% Series
A Senior Discount Notes due 2008 (the "DISCOUNT NOTES") pursuant to the
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
December 17, 1997 (the "PURCHASE AGREEMENT"), by and among Holdings and the
Initial Purchasers. In order to induce the Initial Purchasers to purchase the
Discount Notes, Holdings has agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a condition
to the obligations of the Initial Purchasers set forth in Section 2 of the
Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Indenture, dated December 22,
1997 (the "INDENTURE"), between Holdings and The Bank of New York, as Trustee,
relating to the Discount Notes and the New Discount Notes (as defined below).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.
CERTIFICATED SECURITIES: Definitive Discount Notes, as defined in the
Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Discount Notes to be issued in the Exchange Offer, (b) the
maintenance of such Exchange Offer Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the period
required pursuant to Section 3(b) hereof, and (c) the delivery by Holdings to
the Registrar under the Indenture of New Discount
2
<PAGE>
Notes in the same aggregate principal amount as the aggregate principal amount
of the Discount Notes tendered by Holders thereof pursuant to the Exchange
Offer.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by Holdings of a principal
amount of the New Discount Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal amount
of the Discount Notes that are tendered by such Holders in connection with such
exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
NEW DISCOUNT NOTES: Holdings's 12.25% Series B Senior Discount Notes
due 2008 to be issued pursuant to the Indenture: (i) in the Exchange Offer or
(ii) as contemplated by Section 4 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of Holdings
relating to (a) an offering of New Discount Notes pursuant to an Exchange Offer
or (b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) that is filed pursuant to
the provisions of this Agreement, and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
REGULATION S: Regulation S promulgated under the Act.
RESTRICTED BROKER-DEALER: Any Broker-Dealer that holds New Discount
Notes that were acquired in the Exchange Offer in exchange for the Discount
Notes that such Broker-Dealer acquired
3
<PAGE>
for its own account as a result of market making activities or other trading
activities (other than the Discount Notes acquired directly from Holdings or any
of its Affiliates).
RULE 144: Rule 144 promulgated under the Act.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Discount Note, until the earliest
of the date of which (i) such Discount Note is exchanged in the Exchange Offer
for a New Discount Note and entitled to be resold to the public by the Holder
thereof without complying with the prospectus delivery requirements of the Act,
(ii) such Discount Note has been disposed of in accordance with the Shelf
Registration Statement, (iii) such Discount Note is disposed of by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein), or (iv) such Note is distributed to the public pursuant to
Rule 144 under the Act or is salable pursuant to Rule 144(k) under the Act.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), Holdings shall (i) cause the Exchange Offer Registration
Statement to be filed with the Commission as soon as practicable after the
Closing Date (the "EXCHANGE OFFER FILING DATE"), but in no event later than 120
days after the Closing Date (such 120th day being the "FILING DEADLINE"), (ii)
use its reasonable best efforts to cause such Exchange Offer Registration
Statement to become effective at the earliest possible time, but in no event
later than 180 days after the Closing Date (such 180th day being the
"EFFECTIVENESS DEADLINE"), (iii) in connection with the foregoing, (A) file all
pre-effective amendments to such Exchange Offer Registration Statement as may be
necessary in order to cause it to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings, if any, in
connection with the registration and qualification of the New Discount Notes to
be made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the effectiveness of such
Exchange Offer Registration Statement, commence and Consummate the Exchange
Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the
4
<PAGE>
New Discount Notes to be offered in exchange for the Discount Notes that are
Transfer Restricted Securities and to permit resales of New Discount Notes by
Broker-Dealers that tendered into the Exchange Offer Discount Notes that such
Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than the Discount Notes acquired
directly from Holdings or any of its Affiliates) as contemplated by Section 3(c)
below.
(b) Holdings shall use its best efforts to cause the Exchange Offer
Registration Statement to be effective continuously, and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
PROVIDED, HOWEVER, that in no event shall such period be less than 20 Business
Days. Holdings shall cause the Exchange Offer to comply with all applicable
federal and state securities laws. No securities other than the New Discount
Notes shall be included in the Exchange Offer Registration Statement. Holdings
shall use its best efforts to cause the Exchange Offer to be Consummated on the
earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 30 Business Days thereafter (such
30th day being the "CONSUMMATION DEADLINE").
(c) Holdings shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Transfer Restricted
Securities acquired directly from Holdings or any Affiliate of Holdings), may
exchange such Transfer Restricted Securities pursuant to the Exchange Offer;
HOWEVER, such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any New Discount
Notes received by such Broker-Dealer in the Exchange Offer and that the
Prospectus contained in the Exchange Offer Registration Statement may be used by
such Broker-Dealer to satisfy such prospectus delivery requirement. Such "Plan
of Distribution" section shall also contain all other information with respect
to such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement.
To the extent necessary to ensure that the Prospectus contained in the
Exchange Offer Registration Statement is continuously available for sales of New
Discount Notes by Broker-Dealers, Holdings agrees to use its best efforts to
keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 6(c) hereof
and in conformity with the requirements of this Agreement, the Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of 180 days from the Consummation Deadline, or such shorter
period as will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold pursuant thereto. Holdings shall promptly
provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealer
5
<PAGE>
promptly upon request, and in no event later than one day after such request, at
any time during such period.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Exchange Offer is not permitted
by applicable law or Commission policy (after Holdings has complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Discount
Notes which are Transfer Restricted Securities notifies Holdings prior to the
20th Business Day following the Consummation Deadline that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange Offer,
(B) such Holder may not resell the New Discount Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder, or (C) such Holder is a Broker-Dealer
and holds the Discount Notes acquired directly from Holdings or any of its
Affiliates, then Holdings shall:
(x) cause to be filed, on or prior to 30 days after the earlier of (i) the
date on which Holdings determines that the Exchange Offer Registration Statement
cannot be filed as a result of clause (a)(i) above and (ii) the date on which
Holdings receives the notice specified in clause (a)(ii) above (such earlier
date, the "FILING DEADLINE"), a shelf registration statement pursuant to Rule
415 under the Act (which may be an amendment to the Exchange Offer Registration
Statement (the "SHELF REGISTRATION STATEMENT")), to register for public resale
to all Transfer Restricted Securities held by any such Holders who provides
Holdings with certain information for inclusion in the Shelf Registration
Statement, and
(y) shall use its best efforts to cause such Shelf Registration Statement
to become effective on or prior to 90 days after the Filing Deadline (such 90th
day the "EFFECTIVENESS DEADLINE").
If, after Holdings has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, Holdings is required to
file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e. clause (a)(i)
above), then the filing of the Exchange Offer Registration Statement shall be
deemed to satisfy the requirements of clause (x) above; PROVIDED that, in such
event, Holdings shall remain obligated to meet the Effectiveness Deadline set
forth in clause (y) above.
Holdings shall use its reasonable best efforts to keep any Shelf
Registration Statement required by this Section 4(a) continuously effective,
supplemented and amended as required by and subject to the provisions of
Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a), and to ensure that it conforms
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for the period
specified by Rule 144(k) (as extended pursuant to Section 6(c)(i)) following the
Closing Date or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold pursuant thereto.
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(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH
THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
Holdings in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to Holdings by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation
Deadline, (iv) if obligated to file the Shelf Registration Statement and
Holdings fails to file the Shelf Registration Statement with the Commission on
or prior to the Filing Deadline, (v) if obligated to file a Shelf Registration
Statement and the Shelf Registration Statement is not declared effective on or
prior to the Effectiveness Deadline, or (vi) if the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, is declared
effective but thereafter ceases to be effective or useable in connection with
resales of Transfer Restricted Securities, such time of non-effectiveness or
non-useability (each such event referred to in clauses (i) through (vi), a
"REGISTRATION DEFAULT"), then Holdings agrees to pay to each Holder of Transfer
Restricted Securities affected thereby liquidated damages in an amount equal to
$0.10 per week per $1,000 in principal amount of Transfer Restricted Securities
held by such Holder for each week or portion thereof that the Registration
Default continues for the first 90-day period immediately following the
occurrence of such Registration Default. The amount of the liquidated damages
shall increase by an additional $0.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $0.25 per week per $1,000 in principal amount of Transfer
Restricted Securities; PROVIDED that Holdings shall in no event be required to
pay liquidated damages for more than one Registration Default at any given time.
Notwithstanding anything to the contrary set forth herein, (1) upon filing of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of clause (i) above, (2) upon the
effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of clause (ii) above,
(3) upon Consummation of the Exchange Offer, in the case of clause (iii) above,
or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made useable in the case of clause (iv) above,
the liquidated damages payable with respect to the Transfer Restricted
Securities as a result of such clause (i), (ii), (iii) or (iv), as
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applicable, shall cease.
All accrued liquidated damages shall be paid by Holdings to the
Holders entitled thereto, in the manner provided for the payment of interest on
the Discount Notes in the Indenture, on each Interest Payment Date, as more
fully set forth in the Indenture and the Discount Notes. All obligations of
Holdings set forth in the preceding paragraph that are outstanding with respect
to any Transfer Restricted Security at the time such security ceases to be a
Transfer Restricted Security shall survive until such time as all such
obligations with respect to such security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, Holdings shall (x) comply with all applicable provisions of
Section 6(c) below, (y) use its best efforts to effect such exchange and to
permit the resale of New Discount Notes by Broker-Dealers that tendered Discount
Notes in the Exchange Offer that such Broker-Dealer acquired for its own account
as a result of its market making activities or other trading activities (other
than Discount Notes acquired directly from Holdings or any of its Affiliates)
being sold in accordance with the intended method or methods of distribution
thereof, and (z) comply with all of the following provisions:
(i) If, following the date hereof there has been announced a
change in Commission policy with respect to exchange offers such as
the Exchange Offer, that in the reasonable opinion of counsel to
Holdings raises a substantial question as to whether the Exchange
Offer is permitted by applicable federal law, Holdings hereby agrees
to seek a no-action letter or other favorable decision from the
Commission allowing Holdings to Consummate an Exchange Offer for such
Transfer Restricted Securities. Holdings hereby agrees to pursue the
issuance of such a decision to the Commission staff level. In
connection with the foregoing, Holdings hereby agrees to take all such
other actions as may be requested by the Commission or otherwise
required in connection with the issuance of such decision, including
without limitation (A) participating in telephonic conferences with
the Commission, (B) delivering to the Commission staff an analysis
prepared by counsel to Holdings setting forth the legal bases, if any,
upon which such counsel has concluded that such an Exchange Offer
should be permitted, and (C) diligently pursuing a resolution (which
need not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer,
each Holder of Transfer Restricted Securities (including, without
limitation, any Holder who is a Broker Dealer) shall furnish, upon the
request of Holdings, prior to the Consummation of the Exchange Offer,
a written representation to Holdings (which may be contained in the
letter of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an Affiliate of Holdings,
(B) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the New Discount Notes to be issued in the Exchange
Offer, and (C) it is acquiring the New Discount
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Notes in its ordinary course of business. Each Holder using the
Exchange Offer to participate in a distribution of the New Discount
Notes hereby acknowledges and agrees that, if the resales are of New
Discount Notes obtained by such Holder in exchange for the Discount
Notes acquired directly from Holdings or an Affiliate thereof, it (1)
could not, under Commission policy as in effect on the date of this
Agreement, rely on the position of the Commission enunciated in MORGAN
STANLEY AND CO., INC. (available June 5, 1991) and EXXON CAPITAL
HOLDINGS CORPORATION (available May 13, 1988), as interpreted in the
Commission's letter to SHEARMAN & STERLING dated July 2, 1993, and
similar no-action letters (including, if applicable, any no-action
letter obtained pursuant to clause (i) above), and (2) must comply
with the registration and prospectus delivery requirements of the Act
in connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, Holdings shall provide a supplemental letter to the
Commission (A) stating that Holdings and the Guarantors are
registering the Exchange Offer in reliance on the position of the
Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available
May 13, 1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991),
as interpreted in the Commission's letter to SHEARMAN & STERLING dated
July 2, 1993, and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) including a representation that
neither Holdings has not entered into any arrangement or understanding
with any Person to distribute the New Discount Notes to be received in
the Exchange Offer and that, to the best of Holdings's information and
belief, each Holder participating in the Exchange Offer is acquiring
the New Discount Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the New Discount Notes received in the Exchange Offer,
and (C) making any other undertaking or representation required by the
Commission as set forth in any no-action letter obtained pursuant to
clause (i) above, if applicable.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, Holdings shall (x) comply with all the provisions of
Section 6(c) below and (y) use its best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to Holdings pursuant to Section 4(b) hereof), and pursuant
thereto Holdings will prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the Act,
which form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement unless otherwise
specifically noted Holdings shall:
(i) use its reasonable best efforts to keep such Registration
Statement continuously
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effective and provide all requisite financial statements for the
period specified in Section 3 or 4 of this Agreement, as applicable.
Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective
and useable for resale of Transfer Restricted Securities during the
period required by this Agreement, Holdings shall file promptly an
appropriate amendment to such Registration Statement curing such
defect, and, if Commission review is required, use its best efforts to
cause such amendment to be declared effective as soon as practicable;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as
may be necessary to keep such Registration Statement effective for the
period specified in Section 3 or 4 of this Agreement, as applicable;
cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Act, and to comply fully with Rules 424, 430A and 462, as
applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the selling Holders and Initial Purchasers promptly
and, if requested by such Persons, confirm such advice in writing, (A)
when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any applicable
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission
for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the
Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any
of the preceding purposes, and (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact
made in the Registration Statement, the Prospectus, any amendment or
supplement thereto or any document incorporated by reference therein
untrue, or that requires the making of any additions to or changes in
the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes
in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under state securities or Blue Sky
laws, Holdings shall use its best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
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(iv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to the Initial Purchasers and each selling Holder
named in any Registration Statement or Prospectus in connection with
such exchange or sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included
therein or any amendments or supplements to any such Registration
Statement or Prospectus (including all documents incorporated by
reference after the initial filing of such Registration Statement),
which documents will be subject to the review and comment of such
Persons in connection with such sale, if any, for a period of at least
five Business Days, and Holdings will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) to which such any Persons shall reasonably
object within five Business Days after the receipt thereof. Such
Person shall be deemed to have reasonably objected to such filing if
such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains a material misstatement
or omission or fails to comply with the applicable requirements of the
Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
(A) provide copies of such document to the selling Holders and Initial
Purchasers in connection with such exchange or sale, if any, (B) make
Holdings's representatives available for discussion of such document
and other customary due diligence matters, and (C) include such
information in such document prior to the filing thereof as such
Persons may reasonably request; PROVIDED, HOWEVER, that such Persons
shall first agree in writing with Holdings that any information that
is reasonably and in good faith designated by Holdings in writing as
confidential at the time of delivery of such information shall be kept
confidential by such Persons, unless (i) disclosure of such
information is required by court or administrative order or is
necessary to respond to inquires of regulatory authorities, (ii)
disclosure of such information is required by law (including any
disclosure requirements pursuant to federal securities laws in
connection with the filing of such Registration Statement or the use
of any Prospectus), (iii) such information becomes generally available
to the public other than as a result of a disclosure or failure to
safeguard such information by such Person, or (iv) such information
becomes available to such Person from a source other than Holdings and
its subsidiaries and such source is not known, after due inquiry, by
such Person to be bound by a confidentiality agreement; PROVIDED
FURTHER, that the foregoing investigation shall be coordinated on
behalf of such Persons by one representative designated by and on
behalf of such Persons and any such confidential information shall be
available from such representative to such Persons so long as any
Person
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agrees to be bound by such confidentiality agreement;
(vii) make available at reasonable times for inspection by the
selling Holders and Initial Purchasers participating in any
disposition pursuant to such Registration Statement and any attorney
or accountant retained by such Persons, all financial and other
records and pertinent corporate documents of Holdings and cause
Holdings's officers, directors and employees to supply all information
reasonably requested by any such Persons, attorney or accountant in
connection with such Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness;
(viii) if requested by any selling Holders in connection with
such exchange or sale or any Initial Purchaser in connection with
market making activities, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
Initial Purchasers may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities and the use of the
Registration Statement or Prospectus for market making activities, and
make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after Holdings is
notified of the matters to be included in such Prospectus supplement
or post-effective amendment;
(ix) furnish to each selling Holder and each Initial Purchaser
who is deemed to be an affiliate of the Company, in connection with
such exchange or sale, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of
each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
(x) deliver to each selling Holder and each Initial Purchaser
who is deemed to be an affiliate of the Company without charge, as
many copies of the Prospectus (including each preliminary Prospectus)
and any amendment or supplement thereto as such Persons reasonably may
request; Holdings hereby consents to the use (in accordance with law)
of the Prospectus and any amendment or supplement thereto by each of
the selling Holders and such Initial Purchasers in connection with the
offering and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement thereto and the market
making activities of such Initial Purchasers, as the case may be;
(xi) in the case of a Shelf Registration Statement only, upon
the request of Holders of at least 50% in aggregate principal amount
of Transfer Restricted Securities, and, in the case of any applicable
Registration Statement, upon request of an Initial Purchaser who is
deemed to be an affiliate of the Company, if, for the purpose of
making a market, enter into such agreements (including underwriting
agreements) and make such representations and warranties and take all
such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities
pursuant to such Shelf Registration Statement contemplated by this
Agreement as may be reasonably requested by any Holder of Transfer
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Restricted Securities in connection with any sale or resale pursuant
to any applicable Shelf Registration Statement. In such connection
and in connection with market making activities by an Initial
Purchaser who is deemed to be an affiliate of the Company, Holdings
shall:
(A) upon the request of such Person, furnish (or in the
case of subparagraphs (2) and (3) below, use its best efforts to
cause to be furnished) to each such Person, upon the
effectiveness of the Shelf Registration Statement or upon
Consummation of the Exchange Offer, as the case may be:
(1) a certificate, dated such date, signed on behalf
of Holdings by (x) the President or any Vice President and
(y) a principal financial or accounting officer of Holdings,
confirming, as of the date thereof, the matters set forth in
paragraphs (a) through (d) of Section 7 of the Purchase
Agreement and such other similar matters as the such Person
may reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for
Holdings covering matters similar to those set forth in
paragraph (e) of Section 7 of the Purchase Agreement and
such other matters as such Person may reasonably request,
and in any event including a statement to the effect that
such counsel has participated in conferences with officers
and other representatives of Holdings, representatives of
the independent public accountants for Holdings and has
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or
fairness of such statements; and that such counsel advises
that, on the basis of the foregoing (relying as to
materiality to the extent such counsel deems appropriate
upon the statements of officers and other representatives of
Holdings) and without independent check or verification), no
facts came to such counsel's attention that caused such
counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective and, in
the case of the Exchange Offer Registration Statement, as of
the date of Consummation of the Exchange Offer, contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the
Prospectus contained in such Registration Statement as of
its date and, in the case of the opinion dated the date of
Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state
further that such counsel assumes no responsibility for, and
has not independently verified, the accuracy, completeness
or fairness of the financial statements, notes and schedules
and other financial data included in any Registration
Statement contemplated by this Agreement or the related
Prospectus; and
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(3) a customary comfort letter, dated the date of
Consummation of the Exchange Offer, or as of the date of
effectiveness of the Shelf Registration Statement, as the
case may be, from Holdings's independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection
with underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to Section
7(g) of the Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by such Persons to evidence compliance with
subclause (A) above and with any customary conditions contained
in any agreement entered into by Holdings pursuant to this clause
(xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all
other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by
the applicable Registration Statement; PROVIDED, HOWEVER, that
Holdings shall not be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xiii) issue, upon the request of any Holder of the Discount
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, New Discount Notes having an aggregate principal amount
equal to the aggregate principal amount of the Discount Notes
surrendered to Holdings by such Holder in exchange therefor or being
sold by such Holder; such New Discount Notes to be registered in the
name of such Holder or in the name of the purchaser(s) of such New
Discount Notes, as the case may be; in return, the Discount Notes held
by such Holder shall be surrendered to Holdings for cancellation;
(xiv) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the selling Holders to
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing
any restrictive legends; and to register such Transfer Restricted
Securities in such denominations and such names as the selling Holders
may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xv) use its reasonable best efforts to cause the disposition of
the Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the seller or
sellers thereof to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause
(xii) above;
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(xvi) provide a CUSIP or CINS number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with
The Depository Trust Company;
(xvii) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term
is defined in paragraph (c) of Rule 158 under the Act);
(xix) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate
with the Trustee and the Holders to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use its best
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to
be so qualified in a timely manner; and
(xx) provide promptly to each Holder and Initial Purchaser upon
request each document filed with the Commission pursuant to the
requirements of Section 13 or Section 15(d) of the Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder including each Initial
Purchaser agrees by acquisition of a Transfer Restricted Security, and each
Initial Purchaser who is required to deliver a prospectus in connection with
market making transactions, agrees that, upon receipt of the notice referred to
in Section 6(c)(iii)(C) or any notice from Holdings of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Person will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof or (ii) such Person is
advised in writing by Holdings that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT
NOTICE"). Each Person receiving a Suspension Notice hereby agrees that it will
either (i) destroy all copies of the Prospectus, other than permanent file
copies, then in such Person's possession which have been replaced by Holdings
with more recently dated Prospectuses or (ii) deliver to Holdings (at Holdings's
expense) all copies of the Prospectus, other than permanent file copies, then in
such Person's possession covering such Transfer Restricted Securities that was
current at the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the date of delivery of the Recommencement Notice.
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SECTION 7. REGISTRATION EXPENSES
All expenses incident to Holdings's performance of or compliance with
this Agreement will be borne by Holdings, regardless of whether a Registration
Statement becomes effective, including without limitation: (i) all registration
and filing fees and expenses; (ii) all fees and expenses of compliance with
federal securities and state Blue Sky or securities laws; (iii) all expenses of
printing (including printing certificates for the New Discount Notes to be
issued in the Exchange Offer and printing of Prospectuses whether for exchanges,
sales, market making or otherwise, messenger and delivery services and
telephone); (iv) all fees and disbursements of counsel for Holdings; (v) all
application and filing fees in connection with listing the New Discount Notes on
a national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of Holdings (including the expenses of any special
audit and comfort letters required by or incident to such performance).
Holdings will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of their officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by
Holdings.
SECTION 8. INDEMNIFICATION AND CONTRIBUTION
(a) Holdings agrees to indemnify and hold harmless each Holder, its
directors, its officers and each Person, if any, who controls (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) such Holder
(an "INDEMNIFIED HOLDER") from and against any and all losses, claims, damages,
liabilities or judgments (including any reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement, preliminary Prospectus
or Prospectus (or any amendment or supplement thereto) provided by Holdings to
any holder or any prospective purchaser of New Discount Notes or arising out of
or based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with information relating to any of
the Holders furnished in writing to Holdings by any of the Holders. In addition,
Holdings will not be required to indemnify a Holder if such Holder sold to the
person asserting the claim that the Discount Notes or New Discount Notes which
are the subject of such claim and such untrue statement or omission or alleged
untrue statement or omission (referred to above) was contained or made in any
preliminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto and the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material fact
that was the subject matter of the related proceeding and it is established by
Holdings in the related proceeding that such Holder failed to deliver or provide
a copy of the Prospectus (as amended or supplemented) to such Person with or
prior to the confirmation of the sale of such Discount Notes or New Discount
Notes sold to such
16
<PAGE>
Person if required by applicable law, unless such failure to deliver or provide
a copy of the Prospectus (as amended or supplemented) was a result of
noncompliance by Holdings with Section 6 of this Agreement.
(b) Each Indemnified Holder agrees, severally and not jointly, to
indemnify and hold harmless Holdings, and its directors and officers, and each
Person, if any, who controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) Holdings to the same extent as the foregoing
indemnity from Holdings to each of the Indemnified Holders, but only with
reference to information relating to such Indemnified Holder furnished in
writing to Holdings by the Indemnified Holder expressly for use in any
Registration Statement, preliminary Prospectus or Prospectus (or any amendment
to supplement thereto) with respect to any untrue statement or representation
made by such holder in writing to Holdings. In no event shall any Indemnified
Holder be liable or responsible for any amount in excess of the amount by which
the total amount received by such Indemnified Holder with respect to its sale of
Transfer Restricted Securities pursuant to a Registration Statement exceeds (i)
the amount paid by such Indemnified Holder for such Transfer Restricted
Securities and (ii) the amount of any damages that such Indemnified Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses (except that in the case of any action in
respect of which indemnity may be sought pursuant to both Sections 8(a) and
8(b), an Indemnified Holder shall not be required to assume the defense of such
action pursuant to this Section 8(c), but may employ separate counsel and
participate in the defense thereof, but the fees and expenses of such counsel,
except as provided below, shall be at the expense of the Indemnified Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action, suit or proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the indemnifying parties have agreed in writing to pay such
fees and expenses, (ii) the indemnifying party shall have failed timely to
assume the defense or to employ counsel reasonably satisfactory to the
indemnified party, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both the indemnified party
and the indemnifying party, and the indemnified party shall have been advised by
such counsel that representation of such indemnified party would be
inappropriate under the applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between the parties (in which case the
indemnifying party shall not have the right to assume the defense of such
action, suit or proceeding on behalf of the indemnified party). It is
understood, however, that the indemnifying parties shall, in connection with any
one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or
17
<PAGE>
circumstances, be liable for the fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all the indemnified
parties, and that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by a majority of the
Indemnified Holders, in the case of the parties indemnified pursuant to Section
8(a), and by Holdings, in the case of parties indemnified pursuant to Section
8(b). The indemnifying party shall indemnify and hold harmless the indemnified
party from and against any and all losses, claims, damages, liabilities and
judgments by reason of any settlement of any action (i) effected with its
written consent or (ii) effected without its written consent if the settlement
is entered into more than twenty (20) Business Days after the indemnifying party
shall have received a written request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. The indemnifying parties shall not be liable for
any settlement of any such action, suit or proceeding effected without their
written consent, or if there be a final judgment for the plaintiff in any such
action, suit or proceeding, the indemnifying parties agree to indemnify and hold
harmless the indemnified parties, to the extent provided in the paragraph (a),
from and against such loss, claim, damage, liability, expense or judgment by
reason of such settlement or judgment.
(d) To the extent that the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by Holdings, on the
one hand, and the Indemnified Holders, on the other hand, from their sale of
Transfer Restricted Securities or (ii) if the allocation provided by clause
8(d)(i) is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of Holdings, on the one hand, and of the Indemnified
Holders, on the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative fault of Holdings, on
the one hand, and of the Indemnified Holders, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by Holdings, on the one hand, or
by the Indemnified Holders, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities or judgments referred to above shall be
deemed to include, subject to the limitations set forth in the second paragraph
of Section 8(d), any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
Holdings and each Holder agree that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of
18
<PAGE>
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding the provisions of this Section 8, no Holder
or its related Indemnified Holders shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to the sale of its Transfer Restricted Securities
pursuant to a Registration Statement exceeds the sum of (A) the amount paid by
such Holder for such Transfer Restricted Securities PLUS (B) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Transfer Restricted Securities held by each of the Holders
hereunder and not joint.
(e) Any losses, claims, damages, liabilities, expenses or judgments
for which an indemnified party is entitled to indemnification or contribution
under this Section 8 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities, expenses or judgments are
incurred. The indemnity and contribution agreements contained in this Section 8
and the representations and warranties of Holdings set forth in this Agreement
shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any indemnified party, (ii) acceptance of
any Discount Notes and payment therefore hereunder, and (iii) any termination of
this Agreement. A successor to any indemnified party, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section 8.
(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
SECTION 9. RULE 144 AND RULE 144A
Holdings agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which Holdings
(i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities designated by such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A and (ii) is subject to
Section 13
19
<PAGE>
or 15 (d) of the Exchange Act, to make all filings required thereby in a timely
manner in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) REMEDIES. Holdings acknowledges and agrees that any failure by
Holdings to comply with its obligations under Sections 3 and 4 hereof may result
in material irreparable injury to the Initial Purchasers or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce Holdings's obligations under Sections 3 and 4
hereof. Holdings further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Holdings will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Holdings has not previously
entered into any agreement granting any registration rights with respect to its
securities to any Person. The rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of Holdings's securities under any agreement in effect on the date
hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), Holdings has obtained the written consent of
Holders of all outstanding Transfer Restricted Securities and (ii) in the case
of all other provisions hereof, Holdings has obtained the written consent of
Holders of a majority of the outstanding principal amount of Transfer Restricted
Securities (excluding Transfer Restricted Securities held by Holdings or its
Affiliates). Notwithstanding the foregoing, a waiver or consent to departure
from the provisions hereof that relates exclusively to the rights of Holders
whose securities are being tendered pursuant to the Exchange Offer and that does
not affect directly or indirectly the rights of other Holders whose securities
are not being tendered pursuant to such Exchange Offer may be given by the
Holders of a majority of the outstanding principal amount of Transfer Restricted
Securities subject to such Exchange Offer.
(d) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between Holdings, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect their rights or the rights of Holders
hereunder.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
20
<PAGE>
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
(ii) if to Holdings:
American Lawyer Media Holdings, Inc.
600 Third Avenue
NY, NY 10016
Telephone No.: (212) 973-2000
Fax No.: (212) 973-2889
Attention: Randall Weisenburger
With a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
NY, NY 10022
Telephone No.: (212) 326-3000
Fax No.: (212) 755-7306
Attention: James Odell, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment subsequent Holders of Transfer Restricted Securities; PROVIDED, that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Transfer Restricted Securities in violation of the terms hereof
or of the Purchase Agreement or the Indenture. If any transferee of any Holder
shall acquire Transfer Restricted Securities in any manner, whether by operation
of law or otherwise, such Transfer Restricted Securities shall be held subject
to all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively deemed to have agreed to
be bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such Person shall be entitled to receive
the benefits hereof.
21
<PAGE>
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
AMERICAN LAWYER MEDIA HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
22
<PAGE>
ACCEPTED AND AGREED TO:
WASSERSTEIN PERELLA SECURITIES, INC.
BANCAMERICA ROBERTSON STEPHENS
BANCBOSTON SECURITIES INC.
By: WASSERSTEIN PERELLA SECURITIES, INC.
By:
------------------------------------
Name:
Title:
23
<PAGE>
EXHIBIT A
NOTICE OF FILING OF
EXCHANGE OFFER REGISTRATION STATEMENT
To:
From: American Lawyer Media Holdings, Inc.
__% Senior Discount Notes due 2008
Date: ___, ___
For your information only (NO ACTION REQUIRED):
Today, ______, ___, we filed [an Exchange Registration Statement/a Shelf
Registration Statement] with the Securities and Exchange Commission. We
currently expect this registration statement to be declared effective within __
business days of the date hereof.
24
<PAGE>
Exhibit 10.1
================================================================================
AGREEMENT OF LEASE
between
PARK AVENUE SOUTH/ARMORY, INC.
Landlord,
and
TEE NEW YORK LAW PUBLISHING COMPANY
Tenant,
Dated: September 30, 1993
PREMISES:
Entire 7th and 8th Floors
Portion of the 9th Floor
345 Park Avenue South
New York, New York
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
Article 1 Rent ............................................................
Article 2 Preparation of the Demised Premises .............................
Article 3 Adjustments of Rent .............................................
Article 4 Electricity .....................................................
Article 5 Use .............................................................
Article 6 Alterations and Installations ...................................
Article 7 Repairs .........................................................
Article 8 Requirements of Law .............................................
Article 9 Insurance, Loss, Reimbursement, Liability .......................
Article 10 Damage by Fire or other Cause ..................................
Article 11 Assignment, Mortgaging, Subletting, Etc. .......................
Article 12 Intentionally Omitted ..........................................
Article 13 Adjacent Excavation - Shoring ..................................
Article 14 Condemnation ...................................................
Article 15 Access to Demised Premises; Changes ............................
Article l6 Conditions of Limitation .......................................
Article 17 Re-entry by Landlord, Injunction ...............................
Article 18 Damages ........................................................
Article 19 Landlord's Right to Perform Tenant's Obligations ...............
Article 20 Quiet Enjoyment ................................................
Article 2l Services and Equipment .........................................
Article 22 Definitions ....................................................
Article 23 Invalidity of Any Provision ....................................
i
<PAGE>
TABLE OF CONTENTS
Page
----
Article 24 Brokerage ......................................................
Article 25 Subordination ..................................................
Article 26 Estoppel Certificate ...........................................
Article 27 Legal Proceedings, Waiver of Jury Trial ........................
Article 28 Surrender of Premises ..........................................
Article 29 Rules and Regulations ..........................................
Article 30 Consents and Approvals .........................................
Article 31 Notices ........................................................
Article 32 No Waiver ......................................................
Article 33 Captions .......................................................
Article 34 Inability to Perform ...........................................
Article 35 No Representations by Landlord .................................
Article 36 Name of Building ...............................................
Article 37 Restrictions Upon Use ..........................................
Article 38 Arbitration ....................................................
Article 39 Indemnity ......................................................
Article 40 Memorandum of Lease ............................................
Article 41 Miscellaneous ..................................................
Article 42 Security .......................................................
Article 43 Holdover .......................................................
Article 44 Tenant's Work; Work Fund .......................................
Article 45 Basement Space .................................................
Article 46 Right of First Offering ........................................
Article 47 Additional Right of First Offering .............................
Article 48 Tenant's Antenna ...............................................
ii
<PAGE>
TABLE OF CONTENTS
SCHEDULES
A - Floor Plan ...................................................... A-l
B - Rules and Regulations ........................................... B-1
C - Landlord's Post-Commencement Work ............................... C-1
D - Cleaning Specifications ......................................... D-1
E - Termination Fixed Rent .......................................... E-1
F - Air-Cooled Units Location Plan .................................. F-1
G - Rules and Regulations for Alterations ........................... G-1
H - Ground Lessor Non-Disturbance Agreement ......................... H-1
I - Basement Space .................................................. I-1
J - Signage Plan .................................................... J-1
K - Fired Annual Rent Schedule ...................................... K-1
L - Form of Mortgagee Non-Disturbance Agreement ..................... L-1
M - Unabated Fixed Rent ............................................. M-1
N - Form of Security Letter of Credit ............................... N-1
O - Condenser Water Specifications .................................. O-1
<PAGE>
AGREEMENT OF LEASE made as of this 30th day of September, 1993, between
PARK AVENUE SOUTH/ARMORY, INC., a New York corporation, having an office at c/o
Montrose Realty Corporation, 380 Madison Avenue, New York, New York 10017-2593,
Attn: Thomas Warren, Vice President (hereinafter referred to as "Landlord") and
THE NEW YORK LAW PUBLISHING COMPANY, a New York corporation, having an office at
111 Eighth Avenue, New York. New York, 10014 (hereinafter referred to as
"Tenant").
W I T N E S S E T H
Landlord hereby leases and Tenant hereby hires from Landlord, in the
building (hereinafter referred to as the "Building") known as 345 Park Avenue
South, New York, New York, the following space: the entire seventh (7th) and
eighth (8th) and a portion of the ninth (9th) floor, all as shown by hatching on
the plans annexed hereto as Schedule A (which space is hereinafter collectively
referred to as the "demised premises"); for a term to commence on the date
hereof (hereinafter referred to as the "Commencement Date") and shall end on the
last day of the month preceding the month in which occurs the fifteenth (15th)
anniversary of the Commencement Date (such date on which the term of the Lease
expires is hereinafter referred to as the "Expiration Date") or on such date as
such term shall sooner cease and terminate as hereinafter provided.
Tenant shall have, as appurtenant to the demised premises, the
non-exclusive right to use for itself, its employees, invitees and visitors, in
common with others entitled thereto in accordance with the terms of this Lease
and subject to the Building Rules and Regulations: (i) public common areas in
the Building, including without limitation, sidewalks, loading facilities,
entrances and exits from public streets, lobbies, hallways, elevators, emergency
stairways, and such other facilities available to all tenants or occupants of
the Building as may be designated from time to time by Landlord to the extent
that same serve the demised premises; and (ii) with respect to those portions of
the demised premises that consist of less than the entire net rentable area of
any floor, the common facilities in the central core area of such floor.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, trustees, successors and assigns, hereby
covenant as follows:
ARTICLE 1
RENT
1.01. (a) Tenant shall pay to Landlord a fixed annual rent (hereinafter
referred to as "fixed annual rent") in the amounts set forth on Schedule K
annexed hereto and made part hereof.
<PAGE>
(b) Notwithstanding anything contained herein to the contrary, (i) no
fixed annual rent shall be due or payable during the period commencing on the
Commencement Date and ending on January 31, 1994, and (ii) the portion of
"Tenant's Tax Payments" and "Tenant's Expense Payments", as such terms are
defined in Article 3 hereof, which are allocable to the period commencing on the
Commencement Date and ending on January 31, 1995 (hereinafter called the
"Extended Abatement Period") shall be fully abated. The day following the
expiration of the Extended Abatement Period is herein called the "Escalation
Rent Commencement Date". For purposes hereof, the "Fixed Rent Commencement Date"
shall mean November 1, 1994.
(c) Tenant agrees to pay the fixed annual rent in lawful money of the
United States of America, in equal monthly installments in advance on the first
day of each calendar month during said term, at the office of Landlord or
Landlord's managing agent or such other place in the City of New York as
Landlord may designate, without any setoff or deduction whatsoever, except such
deduction as may be occasioned by the occurrence of any event permitting or
requiring a deduction from or abatement of rent as expressly set forth in this
Lease. Should the obligation to pay fixed annual rent commence on any day other
than on the first day of a month, then the monthly installment of fixed annual
rent for such month shall be prorated on a per diem basis.
(d) The first full month's installment of fixed annual rent due under this
Lease on the Rent Commencement Date and the security to be deposited under
Article 42 hereof shall be paid by Tenant upon the execution of this Lease.
1.02. Tenant shall pay the fixed annual rent and additional rent as above
and as hereinafter provided, by good and sufficient check (subject to
collection) drawn on a bank which is a member of the New York Clearinghouse
Association or a successor thereto. All sums other than fixed annual rent
payable by Tenant hereunder shall be deemed additional rent (for default in the
payment of which Landlord shall have the same remedies as for a default in the
payment of fixed annual rent), and shall be payable within twenty (20) days
after demand therefor, unless other payment dates are hereinafter provided.
1.03. If Tenant shall fail to pay when due any installment of fixed annual
rent or any payment of additional rent for a period of five (5) days after such
installment or payment shall have become due, Tenant shall pay interest thereon
at the Interest Rate (as such term is defined in Article 22 hereof), from the
date when such installment or payment shall have become due to the date of the
payment thereof, and such interest shall be deemed additional rent, provided,
however, that such interest shall not be due on the first two (2) such late
payments within any twelve (12) month period during the term hereof unless
Tenant shall have failed to cure such late payments within five (5) days after
the giving to Tenant of written notice thereof.
-2-
PARK AVE ARMORY/NYLPC - LEASE PT I
<PAGE>
1.04. If any of the fixed annual rent or additional rent payable under the
terms and provisions of this Lease shall be or become uncollectible, reduced or
required to be refunded because of any legal rent restrictions or controls,
Tenant shall enter into such agreement(s) and take such other steps (without any
cost, expense or liability to Tenant) as Landlord may reasonably request and as
may be legally permissible to permit Landlord to collect the maximum rents
which from time to time during the continuance of such legal rent restriction
may be legally permissible (and not in excess of the amounts reserved therefor
under this Lease). Upon the termination of such legal rent restriction, (a) the
rents shall become and thereafter be payable in accordance with the amounts
reserved herein for the periods following such termination and (b) Tenant shall
pay to Landlord, to the maximum extent legally permissible, an amount equal to
(i) the rents which would have been paid pursuant to this Lease but for such
legal rent restriction less (ii) the rents paid by Tenant during the period such
legal rent restriction was in effect.
ARTICLE 2
PREPARATION OF THE DEMISED PREMISES
2.01. (a) Tenant has examined the demised premises and agrees to accept
same in their "as is" condition as of the date hereof, subject to Landlord's
obligations under Section 7.01 hereof, and understands and agrees that Landlord
shall not be required to perform any work, supply any materials or incur any
expense to prepare the demised premises for Tenant's occupancy, except that
Landlord shall, at Landlord's sole cost and expense, perform the work in the
demised premises defined in Schedule C hereof as the "Landlord's
Post-Commencement Work".
(b) Landlord covenants that Landlord has, at Landlord's sole cost
and expense, performed the following work in the demised premises in a good and
workerlike manner in accordance with all Legal Requirements:
(i) totally demolished the demised premises slab-to-slab and
wall-to-wall (except the thirty (30) ton water-cooled air-conditioning
unit on the ninth (9th) floor and all sprinkler loops): and
(ii) performed asbestos removal in the demised premises in
accordance with Legal Requirements in order to remove all
asbestos-containing materials from the demised premises which are noted as
currently existing therein on Landlord's asbestos report, a copy of which
has been previously delivered to Tenant and delivered to Tenant a New York
City
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Form ACP-5 from the New York City Department of Environmental Protection
in connection with the final plans, as defined in Article 44 hereof.
2.02. (a) Landlord's Post-Commencement Work shall be deemed substantially
completed notwithstanding the fact that minor or insubstantial details of
demolition remain to be performed, the non-completion of which do not materially
interfere with the commencement of Tenant's Work in the demised premises.
(b) If the substantial completion of Landlord's Post-Commencement
Work shall be delayed due to any act or omission of Tenant or any of its
employees, agents or contractors ("Tenant's Delay") of which Tenant shall have
been given notice (which may be oral), then Landlord's Post-Commencement Work
shall be deemed substantially completed on the date when it would have so been
but for such delay.
ARTICLE 3
ADJUSTMENTS OF RENT
3.01. For the purposes of this Article 3, the following definitions shall
apply:
(a) The term "Base Tax" shall mean the "Taxes", as hereinafter
defined for the Tax Year commencing July 1, 1993 and ending June 30, 1994, as
finally determined.
(b) The term "Tenant's Proportionate Tax Share" shall be deemed to
mean 20.51 (20.51%) percent, calculated as the fraction, expressed as a
percentage, the numerator of which shall be 53,000, which Landlord and Tenant
agree for purposes of this Lease constitutes the rentable square footage of the
demised premises and the denominator of which is 258,438, which Landlord and
Tenant agree, constitutes the rentable square footage of the Building for
purposes of calculating Tenant's Proportionate Tax Share.
(c) The term "Taxes" shall mean all real estate taxes, assessments,
governmental levies, municipal taxes, county taxes or any other governmental
charge, general or special, ordinary or extraordinary, unforeseen as well as
foreseen, of any kind or nature whatsoever, which are or may be assessed levied
or imposed upon all or any part of the Land, the Building and the sidewalks,
plazas or streets in front of or adjacent thereto, and levied against Landlord
and/or the Land and/or Building, under the laws of the United States, the State
of New York, or any political subdivision thereof, or by the
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City of New York, or any political subdivision thereof. Except as set forth in
the following sentence, "Taxes" shall exclude franchise, income, estate, gains,
transfer, transit and profit taxes. If, due to a future change in the method of
taxation of real estate or in the taxing authority, a new or additional real
estate tax, or a franchise, income, transit, profit or other tax or governmental
imposition, however designated, shall be levied against Landlord, and/or the
Land and/or Building, in substitution in whole or in part for any tax which
would constitute "Taxes", or in lieu of additional Taxes, such tax or imposition
shall be deemed for the purposes hereof to be included within the term "Taxes".
(d) The term "Tax Year" shall mean each period of twelve months,
commencing on the first day of July of each such period, in which occurs any
part of the term of this Lease or such other period of twelve months occurring
during the term of this Lease as hereafter may be duly adopted as the fiscal
year for real estate tax purposes of the City of New York.
(e) The term "Operating Year" shall mean the calendar year 1993 and
each succeeding calendar year thereafter occurring during the term of this
Lease. The term "Base Year" shall mean the calendar years 1993 and 1994,
collectively.
(f) The term "Base Operating Expense Amount" shall mean 50% of the
sum of the Operating Expenses for the calendar years 1993 and 1994.
(g) "Operating Expenses" shall mean the total of all the costs and
expenses incurred or borne by Landlord in connection with the operation and
maintenance of the Building, and the services provided tenants therein,
including all expenses incurred as a result of Landlord's compliance with any of
its obligations hereunder other than Landlord's Work. Operating Expenses shall
include, without being limited thereto, but without duplication of any included
costs and expenses, the following: (i) salaries, wages, medical, surgical and
general welfare benefits (including group life insurance) and pension payments
of employees (up to and including the level of the Building manager) of Landlord
or the managing agent for the Building engaged in the operation and maintenance
of the Building; provided, however, that to the extent that such employees
provide services to both the Building and one or more other buildings, any
amounts included in this subparagraph (i) or subparagraph (ii) below shall be
appropriately prorated; (ii) payroll taxes, workmen's compensation, uniforms and
dry cleaning for the employees referred to in subdivision (i); (iii) the cost of
all charges for steam, heat, ventilation, air-conditioning and water (including
sewer rental) furnished to the Building (including common areas thereof),
together with any taxes on any such utilities; (iv) the cost of all charges for
rent, casualty, war risk (if
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obtainable from the United States government), and liability insurance
maintained by Landlord in respect of the Land and/or the Building, (v) the cost
of all building and cleaning supplies for the Building and the cost of charges
for the telephones installed at the Building for (A) the use of the Building
manager and (B) the Class E System telephone hook-up pursuant to Legal
Requirements; (vi) the cost of all charges for management, cleaning, window
cleaning and service contracts for any areas of the Building provided, however,
that in the case of management fees if Landlord or a Landlord Affiliate, as
defined in Section 22.06 hereof, is the managing agent of the Building, then the
management fee shall not exceed the then-prevailing rates for management fees
for office buildings charged by Manhattan-based well-recognized third-party
(unrelated) management companies managing substantial numbers of office
buildings in Manhattan comparable to the Building under comparable
circumstances; (vii) the cost of Building electric current. For the purposes of
clause (vii), the cost of Building electric current shall be deemed to mean the
cost of all electricity purchased, including any taxes thereon or fuel or other
adjustments in connection therewith, for use in the Building other than that
which is furnished to the demised space of other tenants in the Building; the
parties agree that thirty (30%) percent of the Building's payment to the public
utility for the purchase of electricity shall be deemed to be payment for
Building electric current; provided, however, that either party shall have the
right to cause, from time to time, an electrical survey to be performed with
respect to such Building electric current, subject to the provisions of
subsection 3.02D hereof; (viii) the cost relating to the public elevators and
public escalators; (ix) the cost relating to protection and security of the Land
and/or the Building; (x) the cost relating to lobby decorations (other than
artwork) and interior and exterior common area landscape maintenance; (xi)
repairs, replacements and improvements which are appropriate for the continued
operation of the Building as a first-class office building; (xii) painting of
non-tenantable areas; (xiii) professional and consulting fees (other than same
which are incurred in connection with capital costs which are not permitted
hereunder to be included in Operating Expenses); (xiv) association fees or dues
of the real estate organizations known as Building Owners and Managers
Association (BOMA) and the Real Estate Board of New York (or any successor
thereto); and (xv) the cost of expenditures made to the Building by reason of
the laws and requirements of any public authorities or the requirements of
insurance bodies; provided, however, that if under generally accepted accounting
principles consistently applied, any of the costs referred to in clause (xi) are
required to be capitalized (hereinafter called "Capital Costs"), only the
following Capital Costs, in addition to Capital Costs included in Operating
Expenses relating to clause (xv), shall be included in Operating Expenses:
I. if the cost of any improvement, alteration, replacement, repair
and/or any machinery or equipment set forth in clause (xi)
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hereof, which is designed to reduce the expenses which otherwise would be
included in Operating Expenses, is a Capital Cost, then such cost shall be
included in Operating Expenses in accordance with the provisions set forth
in the next sentence. If Landlord shall purchase any item of capital
equipment or make any capital expenditure designed to result in savings or
reductions in Operating Expenses, then the cost thereof shall be amortized
on a straight line basis, over the reasonable useful life of the item in
question (together with an interest factor equal to the Interest Rate at
the time of Landlord's having incurred said cost) provided, however, that
such amortization period shall be extended for the period necessary to
ensure that such annual amortized amount (together with such interest)
shall not exceed that amount of the actual savings in Operating Expenses
realized during such Operating Year. Upon Tenant's request, Landlord shall
submit to Tenant reasonable documentation supporting an estimate of the
potential cost savings which any such equipment or expenditure is designed
to effect. If Landlord shall lease any such item of capital equipment
designed to result in savings or reductions in Operating Expenses, then
the rental paid or incurred in connection with such leasing, or the annual
savings determined as described above, whichever is less, shall be
included in Operating Expenses for the Operating Year in which they were
incurred; and
II. the cost of any replacements set forth in clause (xi) hereof
which is a Capital Cost if (1) such replacement is made in lieu of a
repair of an item or any equipment which would constitute Operating
Expenses, because same has become obsolete such that it no longer
reasonably serves the purposes for which it was designed or because the
repair thereof is no longer reasonably and economically prudent and (2)
such replacement in lieu of a repair is reasonably necessary in accordance
with sound and fiscally prudent management and operating principles,
notwithstanding that the replacement is of a quality, design or utility
superior to that of the items being replaced, but only to the extent such
quality, design or utility shall not exceed the standard for the same then
prevailing for office buildings in Manhattan comparable to the Building.
With respect to the Capital Costs described in clause (xv) and in subclause (II)
above (but excluding Capital Costs described in subclause I above), such Capital
Costs (excluding Capital Costs described in subclause I above) shall not be
included in Operating Expenses but rather such Capital Costs, to the extent same
are not excluded from Operating Expenses pursuant to the following paragraph,
shall be amortized or depreciated, as the case may be, over a period of time
which shall be the shorter of (A) the reasonable useful life of the item in
question; or (B) fifteen (15) years. Such annual amortized amount, in all such
cases, together with interest thereon at the "Interest Rate" (as defined in
Section 22.03 hereof) in effect as of December 31 of the year in which such
expenditure is made, shall be included in Operating Expenses.
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Notwithstanding anything to the contrary set forth in the preceding
definition of Operating Expenses, the term "Operating Expenses", as used and
defined under this subsection 3.01(g), shall not, however, include the following
items: (1) depreciation and amortization (except as otherwise expressly provided
in clause (xv) and subclauses I and II of this subsection 3.01(g)); (2) interest
on and amortization of debts; (3) the cost of tenant improvements made for
tenant(s) of the Building; (4) brokerage or leasing commissions or finders fees
or any other similar payments made in connection with the procurement of
tenants; (5) financing or refinancing costs including, without limitation, legal
and accounting fees in connection with any such financing or refinancing; (6)
Taxes; (7) rental and other payments including, without limitation, rent and
additional rent whether paid to the ground lessor or any other third party,
under the "Ground Lease", as defined in Article 25 hereof or any future ground
lease; (8) franchise, income or other similar taxes imposed upon Landlord; (9)
the cost of electrical energy furnished directly to Tenant, other tenants or
occupants of the Building or any space available for leasing in the Building;
(10) salaries and fringe and other benefits of personnel above the grade of
building manager and such building manager's supervisor and all other indirect
expenses and taxes relating thereto; (11) any expense for which Landlord is
otherwise compensated through the proceeds of insurance or a condemnation award
(or would have been compensated by insurance if Landlord had obtained and
maintained the insurance required by mortgages, superior leases or this Lease);
(12) legal, arbitration and accounting fees incurred in connection with the
negotiation of, or disputes arising out of, any space lease in the Building or
any modification, amendment, extension, surrender or cancellation of same, other
than disputes in connection with Escalation Statements; (13) Landlord's
advertising and promotional costs for the Building; (14) costs and expenses
incurred by Landlord in connection with a sale of the Building or the lessee's
interest in any ground lease or any ownership interest in Landlord including,
without limitation, legal and accounting fees incurred in connection therewith;
(15) intentionally omitted; (16) any fee, expenditure, cost or expense paid by
Landlord to a Landlord Affiliate or an affiliate of the managing agent of the
Building in excess of the amount which would be paid to any independent third
party in an arm's-length transaction; (17) the cost of any work or services
performed for any new or existing tenant(s) of the Building (including Tenant),
whether at the expense of Landlord or Landlord Affiliates or such tenant(s), to
the extent that such work or services are in excess of the work or services
which Landlord or Landlord Affiliates are required to furnish Tenant under this
Lease, at the expense of Landlord or Landlord Affiliates; and (18) costs and
expenses incurred in connection with curing any claimed violation of any legal
requirements existing at the Building as of the Commencement Date; provided,
however, that costs to comply with any reinterpretation, amendment or
modification of such legal requirements or any rules and regulations promulgated
under such legal requirements and any of the
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foregoing enacted after the date hereof shall be includible in Operating
Expenses (subject, however, to the provisions of clauses (xi) and (xv) of this
subsection 3.01(g)); (19) costs of cleaning tenantable areas of the Building to
the extent such cleaning is in excess of the cleaning provided by Landlord
pursuant to Schedule D hereof; (20) legal fees for real estate tax certiorari
proceedings; (21) late payment penalties in the nature of interest or late fees
except to the extent reasonably incurred by Landlord in connection with a good
faith dispute with a supplier or contractor; (22) the amount of any money
judgment resulting from any tort liability of Landlord; (23) the rental paid or
incurred for Landlord's on-site leasing office; (24) the cost of installing,
operating and maintaining any specialty facility such as an observatory,
broadcasting facility, restaurant or luncheon club, athletic or recreational
club, theatre or cafeteria; (25) any expenses incurred in connection with
abatement, encapsulation, or removal of asbestos in the Building; (26) costs or
payments associated with Landlord's obtaining air rights or development rights;
and (27) the cost to provide overtime HVAC or other services to tenants of the
Building, which are in excess of the services which Landlord is obligated, at no
cost to Tenant, to provide hereunder.
If during all or part of any Operating Year including, without limitation,
the Base Year, Landlord shall not furnish any particular item(s) of work or
service (which would constitute an Operating Expenses hereunder) to portions of
the Building (including without limitation the demised premises) due to the fact
that such portions are not occupied or leased, or because such item of work or
service is not required or desired by the tenant (including without limitation
Tenant) of such portion, or such tenant is itself obtaining and providing such
item of work of service, or for any other reasons, then, for the purposes of
computing the additional rent payable hereunder pursuant to Section 3.02 hereof,
the amount of the expenses for such item(s) for such period shall be deemed to
be increased by an amount equal to the additional operating and maintenance
expenses which would reasonably have been incurred during such period by
Landlord if it had at its own expense furnished such items(s) of work or
services to ninety-five (95%) percent of the rentable area of the Building.
(h) The term "Tenant's Proportionate Operating Share" shall be
deemed to mean 21.84 (21.84%) percent, calculated as the fraction, expressed as
a percentage, the numerator of which is 53,000, which, Landlord and Tenant
agree, constitutes the rentable square footage of the demised premises, and the
denominator of which is 242,638, which Landlord and Tenant agree constitutes the
rentable square footage of the office space in the Building for purposes of
calculating Tenant's Proportionate Operating Share.
(i) "Tenant's Proportionate Share of Increase" shall mean the
percentage set forth in Section 3.01(h) multiplied by the increase in Operating
Expenses for an Operating Year over the Base Operating Expense Amount.
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(j) "Tenant's Projected Share of Increase" shall mean Tenant's
Proportionate Share of Increase for the prior Operating Year and the reasonably
estimated increase in costs for the current Operating Year divided by twelve
(12) and payable monthly by Tenant to Landlord as additional rent. If Tenant's
Projected Share of Increase shall reflect more than a four (4%) percent increase
over Tenant's Proportionate Share of Increase for the prior Operating Year, then
upon written request from Tenant, Landlord shall furnish to Tenant reasonable
evidence substantiating the amount of such estimated increase. If Tenant's
Projected Share of Increase shall reflect more than a ten (10%) percent increase
over Tenant's Proportionate Share of Increase for the prior Operating Year, then
Tenant shall have the right to dispute the correctness of such estimate,
specifying the aspects thereof which Tenant disputes. Any dispute relating to
any such estimate shall be resolved by arbitration as set forth in Section 3.09
hereof. Pending the resolution of such dispute, Tenant shall pay additional rent
in accordance with Landlord's Escalation Statement. Any overpayment by Tenant
shall be paid by Landlord within thirty (30) days after the resolution thereof
and if Landlord shall fail timely to make such payment to Tenant, then Tenant
may, upon written notice to Landlord, credit such amount against fixed annual
rent and additional rent under this Article 3 next becoming due hereunder. Any
such payment by Landlord or credit pursuant to the preceding sentence shall bear
interest at the Prime Rate from the date of the overpayment to the date of such
payment or credit.
(k) The term "Escalation Statement" shall mean a statement setting
forth in reasonable detail (i.e., with line item categories of Expenses
customarily used in similar escalation-type statements by owners of office
buildings comparable to the Building) the base amount, the current amount and
the amount payable by Tenant for a specified Tax Year or Operating Year (as the
case may be) pursuant to this Article 3.
3.02. A. After the expiration of each Operating Year or any part thereof
occurring after the Rent Commencement Date, Landlord shall furnish Tenant an
Escalation Statement setting forth Tenant's Proportionate Share of Increase,
with respect to the Operating Expenses incurred for such Operating Year. Within
thirty (30) days after receipt of such Escalation Statement for any such
Operating Year, Tenant shall pay Tenant's Proportionate Share of Increase to
Landlord as additional rent.
B. Commencing with the Operating Year in which the Escalation Rent
Commencement Date shall occur, Tenant shall pay to Landlord as additional rent
for the then Operating Year, Tenant's Projected Share of Increase. If the
Escalation Statement furnished by Landlord to Tenant pursuant to this Section
3.02 at the end of the then Operating Year shall indicate that Tenant's
Projected Share of Increase exceeded Tenant's Proportionate Share of
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Increase, Landlord shall forthwith pay the amount of such excess directly to
Tenant within thirty (30) days after the giving such statement and if Landlord
shall fail timely to make such payment to Tenant, then Tenant may, upon written
notice to Landlord, credit the amount of such excess against the subsequent
payments of fixed annual rent and additional rent due under this Article 3; if
such statement furnished by Landlord to Tenant hereunder shall indicate that
Tenant's Proportionate Share of Increase exceeded Tenant's Projected Share of
Increase for the then Operating Year, Tenant shall within twenty (20) days after
written request therefor pay the amount of such excess to Landlord. The "amount
of such excess" to be paid or credited to Tenant pursuant to the preceding
sentence shall include interest at the Prime Rate from the date of such
overpayment to the date paid to Tenant or the date credited to Tenant; provided,
however, that with respect to that portion of the amount of such excess which
shall exceed fifteen (15%) percent of the amount of Tenant's Proportionate Share
of Increase, such interest shall be at the Interest Rate.
C. Tenant, upon no less than five (5) Business Days' prior notice,
may elect to have a financial officer of Tenant and/or Tenant's consultants
(provided same have reasonable expertise in comparable financial matters)
examine such of Landlord's books and records (collectively, "Records") as are
relevant to the Escalation Statement in question, provided any such examination
shall be commenced within seventy-five (75) days after Tenant's receipt of an
Escalation Statement and concluded within sixty (60) days after the commencement
of such examination, provided that such sixty (60) day period shall be extended
for any reasonable period which is necessary for Tenant to complete such
examination provided same shall have been conducted in a reasonably diligent
manner. In making such examination, Tenant agrees, and shall cause its financial
officer and/or consultants to agree, to keep confidential any and all
information contained in the Records.
D. If the findings of any electrical survey performed in accordance
with clause (vii) of subsection 3.01(g) hereof shall support a modification of
the thirty (30%) percent amount set forth in such clause (vii), then the party
performing such survey shall give notice thereof to the other and shall submit
to the other party a copy of such survey. The other party shall have sixty (60)
days after the date that it receives a copy of such survey to give notice to the
first party that such party has engaged an electrical consultant to verify the
determination of such survey. If the second electrical consultant and the first
electrical consultant cannot agree within ten (10) days after the giving of such
notice on what an appropriate resolution of their dispute should be, then either
party, upon notice to the other, may submit the issue to arbitration in
accordance with the provisions of Article 38 of this Lease. While such dispute
is being resolved, Tenant shall pay such charges and payments as would be due
hereunder if Landlord's
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electrical consultant's determination were correct without prejudice to Tenant's
position. In the event that it is finally determined that there has been an
overpayment by Tenant, Landlord shall pay to Tenant the amount of such
overpayment within thirty (30) days after such final determination, together
with interest thereon at the Prime Rate, and if Landlord shall fail timely to
make such payment to Tenant, then Tenant may, upon written notice to Landlord.
credit the amount of Tenant's overpayment against subsequent payments of fixed
annual rent and additional rent under this Article 3 next becoming due from
Tenant hereunder, with interest thereon at the Prime Rate and in the event of an
underpayment, the amount of such underpayment by Tenant, together with interest
thereon at the Prime Rate, shall be paid by Tenant to Landlord within twenty
(20) days after such determination is made; such interest accruing from the date
such overpayment was made or such underpayment was due, as the case may be, to
the date credited or paid, as the case may be.
3.03. A. Tenant shall pay as additional rent for each Tax Year or portion
thereof occurring after the Escalation Rent Commencement Date, a sum
(hereinafter referred to as "Tenant's Tax Payment") equal to Tenant's
Proportionate Tax Share of the amount, if any, by which the Taxes for such Tax
Year exceed the Base Tax. Tenant's Tax Payment for each Tax Year shall be due
and payable in twelve (12) equal monthly installments, in advance, (on the first
day of each month during such Tax Year) based upon the Escalation Statement
furnished prior to the commencement of such Tax Year, until such time as a new
Escalation Statement for a subsequent Tax Year shall become effective. Upon
Tenant's written request, Landlord will furnish to Tenant a copy of the real
estate tax billing from the taxing authorities. If an Escalation Statement is
furnished to Tenant after the commencement of a Tax Year in respect of which
such Escalation Statement is rendered, then (a) until the first day of the month
following the month in which the Escalation Statement is furnished to Tenant,
Tenant shall pay to Landlord on the first day of each month an amount equal to
one-twelfth of the Tax Payment for the preceding Tax Year; and (b) within 15
days after the Escalation Statement for such Tax Year is furnished to Tenant,
Tenant shall pay to Landlord an amount equal to the amount of any underpayment
of Tenant's Tax Payment with respect to such Tax Year and, in the event of an
overpayment, Landlord shall pay the amount of the overpayment to Tenant within
thirty (30) days after the giving of such statement and if Landlord shall fail
timely to make such payment to Tenant, then Tenant may, upon written notice to
Landlord, credit the amount of Tenant's overpayment against subsequent payments
of fixed annual rent and additional rent under this Article 3 next becoming due
hereunder. If there shall be any increase in Taxes for any Tax Year, whether
during or after such Tax Year, Landlord shall furnish a revised Escalation
Statement for such Tax Year, and Tenant's Tax Payment for such Tax Year shall be
adjusted and paid in the same manner as provided in the preceding sentence. If
during the term of this Lease. Taxes are required to be paid (either to the
appropriate taxing
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authorities or as tax escrow payments to a superior mortgagee) in full or in
monthly, quarterly, or other installments, on any other date or dates than as
presently required, then Tenant's Tax Payments shall be correspondingly
accelerated or revised so that said Tenant's Tax Payments are due on the later
of 30 days after Landlord gives a notice to Tenant for payment of same and
twenty (20) days prior to the date payments are due to the taxing authorities or
the superior mortgagee. The benefit of any discount for any early payment or
prepayment of Taxes shall accrue solely to the benefit of Landlord and such
discount shall not be subtracted from Taxes; provided, however, that such
discount shall be subtracted from Taxes, if, at Landlord's request, installments
of Tenant's Tax Payment are made prior to the above due dates to enable Landlord
to obtain such discount.
B. If the real estate tax fiscal year of The City of New York shall
be changed during the term of this Lease, any Taxes for such fiscal year, a part
of which is included within a particular Tax Year and a part of which is not so
included, shall be apportioned on the basis of the number of days in such fiscal
year included in the particular Tax Year for the purpose of making the
computations under this Section 3.03.
C. If Landlord shall receive a refund of, or credit with respect to,
Taxes for any Tax Year. Tenant's Proportionate Tax Share of the net refund or
credit (after deducting from such total refund or credit the customary
out-of-pocket costs and expenses, including but not limited to, appraisal,
accounting and legal fees of obtaining the same, to the extent that such costs
and expenses were not payable pursuant to subsection 3.03(E) hereof) shall be
paid by Landlord within thirty (30) days after Landlord's receipt thereof and if
Landlord shall fail timely to make such payment to Tenant, then Tenant may, upon
written notice to Landlord, credit such amount against fixed annual rent and
additional rent under this Article 3 next becoming due hereunder; provided such
payment or credit to Tenant shall in no event exceed Tenant's Tax Payment paid
for such Tax Year.
D. If the Base Tax is reduced as a result of an appropriate
proceeding or otherwise, Landlord shall give notice to Tenant of the amount by
which the Tax Payments previously made were less than the Tax Payments required
to be made under this Article, together with reasonable documentation supporting
the calculation of such amount, and Tenant shall pay the amount of the
deficiency within thirty (30) days after demand therefor.
E. If it shall be the general custom for owners of office buildings
in Manhattan to retain the services of real estate tax certiorari attorneys for
such office buildings on a retainer or any basis other than on a contingency fee
basis, Tenant shall pay as additional rent hereunder within twenty (20) days
after delivery of a statement therefor for each Tax Year
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commencing with the 1994/95 Tax Year Tenant's Tax Share of any customary
out-of-pocket expenses incurred by Landlord in contesting any items of Taxes or
the assessed valuations of all or any part of the Land and/or the Building or
collecting any refund. If it shall be the general custom to pay same on a
contingency basis, then Tenant shall have no obligation to pay same pursuant to
this subsection 3.03(E) provided, however, that same shall be deducted from any
refund or credit of Taxes as set forth in subsection 3.03(C) hereof.
3.04. Tenant shall pay to Landlord within twenty (20) days after demand
therefor, but in no event earlier than twenty (20) days prior to the date the
same first becomes due, as additional rent, any occupancy tax or rent tax
hereafter enacted (to the extent related to the demised premises), if hereafter
required to be paid by Landlord, provided, such tax is in lieu of or in
substitution for the commercial rent occupancy tax currently paid by tenants
directly to the City of New York.
3.05. If the Escalation Rent Commencement Date is not the first day of a
Tax Year, or Operating Year, then the additional rent due hereunder for such Tax
Year or Operating Year shall be a proportionate share of said additional rent
for the entire Tax Year or Operating Year, said proportionate share to be based
upon the length of time that the Lease term will be in existence during such Tax
Year or Operating Year. Upon the date of any expiration or termination of this
Lease (except termination because of Tenant's default), whether the same be the
date hereinabove set forth for the expiration of the term or any prior or
subsequent date, a proportionate share of said additional rent for the Tax Year
or Operating Year during which such expiration or termination occurs shall be
due and payable by Tenant to Landlord as hereinafter set forth. The said
proportionate share shall be based upon the length of time that this Lease shall
have been in existence during such Tax Year or Operating Year. Prior to or
promptly after said expiration or termination, Landlord shall compute the
additional rent, if any, due from Tenant as aforesaid, which computations shall
either be based on amounts payable during such Tax Year or Operating Year or be
a reasonable good faith estimate based upon the most recent statements
theretofore prepared by Landlord and furnished to Tenant. If an estimate is
used, then Landlord shall cause statements to be prepared on the basis of
amounts payable during such Tax Year or Operating Year, and upon Landlord's
furnishing such statement to Tenant, Landlord and Tenant shall make appropriate
adjustments of amounts then owing.
3.06. Payments shall be made pursuant to this Article 3 notwithstanding
the fact that an Escalation Statement is furnished to Tenant after the
expiration of the term of this Lease.
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3.07. In no event shall the fixed annual rent ever be reduced by operation
of this Article 3 and the rights and obligations of Landlord and Tenant under
the provisions of this Article 3 with respect to any additional rent or refunds
thereof shall survive the termination of this Lease, subject to the
apportionment of such additional rent set forth in Section 3.05 hereof.
3.08. Landlord's failure to render an Escalation Statement with respect to
any Tax Year or Operating Year, respectively, shall not prejudice Landlord's
right to thereafter render an Escalation Statement with respect thereto or with
respect to any subsequent Tax Year or Operating Year. Both Tenant's obligation
to pay escalation for any Tax Year or Operating Year during the term of this
Lease and Landlord's obligation to make any refunds to Tenant required under
this Article 3 shall survive the expiration or earlier termination of this
Lease. Notwithstanding the foregoing or the provisions of Sections 3.06 and 3.07
hereof, if Landlord shall have failed to bill Tenant for any additional rent due
under this Article 3 within two (2) years after the expiration of any Operating
Year or within two (2) years after the expiration of any Tax Year (or after the
expiration of the two (2) year period following Landlord's receipt of a tax bill
from the taxing authority for such Tax Year, whichever is later with respect to
any Tax Year), then Tenant shall have the right to give Landlord notice thereof,
and if Landlord shall fail to furnish to Tenant a billing for such unbilled
items within thirty (30) days after the giving of Tenant's notice, time being of
the essence with respect to such thirty (30) days, then thereafter Landlord
shall have waived its right to obligate Tenant to pay the amount of any such
unbilled items.
3.09. Each Escalation Statement shall be conclusive and binding upon
Tenant unless within seventy-five (75) days after receipt of such Escalation
Statement Tenant shall notify Landlord that it questions the correctness of such
Escalation Statement. Any dispute relating to any Escalation Statement shall be
resolved by arbitration pursuant to Article 38 hereof, which arbitration shall
be by three (3) arbitrators each of whom shall have at least ten (10) years'
experience (i) in the operation and management of office buildings in Manhattan
comparable to the Building, or (ii) as either a Certified Public Accountant or a
real estate attorney, in either case practicing in a recognized New York City
accounting or law firm of at least twenty (20) members specializing in the
accounting or legal aspects of leasing and operation of office buildings in
Manhattan. Pending the determination of such dispute, Tenant shall pay
additional rent in accordance with the Escalation Statement that Tenant is
disputing, without prejudice to Tenant's position. In the event that it shall be
determined in such arbitration that Tenant overpaid additional rent under this
Article 3. then Landlord shall, within twenty (20) days after such
determination, refund to Tenant the amount of such overpayment with interest at
the Prime Rate from the date paid to the date refunded, and if Landlord shall
fail timely to make such payment to
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Tenant, then Tenant may, upon written notice to Landlord, credit the amount of
Tenant's overpayment together with such interest against subsequent payments of
fixed annual rent and additional rent under this Article 3 next becoming due
hereunder. If such overpayment exceeds twelve (12%) percent of the amount which
should have been paid, then Landlord shall reimburse Tenant for the reasonable
cost of Tenant's audit and the portion of such overpayment which exceeds 12%
shall bear interest at the Interest Rate in lieu of the Prime Rate. If such
overpayment shall exceed twenty (20%) percent of the amount which should have
been paid or if such overpayment shall, for more than two (2) Operating Years,
exceed twelve (12%) percent of the amount which should have been paid, then, in
either such event, the cost of such arbitration shall be borne by Landlord. If
it shall be determined in any such arbitration that Landlord has not overstated
Tenant's payments under Section 3.02A hereof, then the cost of such arbitration
shall be borne by Tenant.
3.10. If, for any Tax Year beginning on or after July 1, 1994, the Tenant
named herein or an "Affiliate" or "Successor," as defined in Article 11 hereof,
which Affiliate or Successor is then in occupancy of at least two (2) full
floors of the Building (hereinafter collectively in this Section 3.10 referred
to as "Tenant") shall request from Landlord in writing on or before January 15
of the Tax Year preceding the Tax Year in question Landlord's determination as
to whether Landlord intends to file an application with the Tax Commission of
the City of New York (the "Tax Commission"), or any successor body which has the
power to fix or review assessed valuations, for reduction of the assessed
valuation of the Building and/or the Land (any such application being herein
called a "Protest"), then Landlord shall notify Tenant, on or before February 15
of such preceding Tax Year, of such intention or of whether to the best of
Landlord's knowledge another tenant in the Building intends to file any such
Protest. If Landlord elects not to file, Landlord may provide Tenant together
with such notice a reasonable explanation as to why Landlord believes that such
Protest will not result in a significant decrease in the assessment of the Land
and the Building (any such Protest herein defined as "ill-advised"). If Landlord
elects not to file such Protest, Tenant shall then have the right, at Tenant's
sole cost and expense (but subject and subordinate to the right of any other
tenant in the Building to file any such Protest by reason of a right previously
given to such tenant and currently existing in such tenant's current lease), to
file such a Protest provided and upon condition that Tenant gives notice thereof
to Landlord not more than twenty (20) days after Landlord has so notified Tenant
of Landlord's intention and provided further that Tenant shall deliver to
Landlord duplicate copies of all documents to be submitted to the Tax Commission
in connection with such Protest at least four (4) business days prior to making
such submission to the Tax Commission. Landlord agrees to reasonably cooperate
with Tenant in connection with the filing of such Protest by Tenant in
accordance with Tenant's rights hereunder. Landlord further agrees that if
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the determination rendered in such Protest is unsatisfactory to Tenant in its
reasonable judgment, Tenant shall notify Landlord thereof and Tenant shall have
the right, at Tenant's sole cost and expense, to appeal such determination by
commencing and prosecuting real estate tax certiorari proceedings (herein called
"Tax Cert") using counsel of Tenant's choice reasonably satisfactory to
Landlord. All of the rights and obligations of Landlord and Tenant hereunder
with respect to a Protest shall also apply to a Tax Cert, including without
limitation the submission to Landlord of all documents and instruments at least
4 Business Days prior to submission in such Tax Cert. Tenant agrees that all
costs and expenses incurred in connection with such Protest and such Tax Cert
shall be paid by Tenant (and Tenant shall be permitted to recoup Tenant's
reasonable attorneys' fees expended in connection with such Protest and Tax Cert
from the amount of any refund, if any, resulting from such Protest or Tax Cert)
and Tenant shall indemnify Landlord for all costs, expenses (including
reasonable attorneys' fees), damages, losses, claims and liabilities incurred by
Landlord to unrelated third parties arising from such Protest and Tax Cert. In
addition, in the event that the assessed valuation of the Building and the Land
for the Tax Year which is the subject of Tenant's contest shall be increased by
reason of such Protest or such Tax Cert, then Tenant shall pay to Landlord, as
additional rent hereunder, the incremental amount of the increase in Taxes
resulting from such increase in such assessed valuation in such Tax Year and in
any Tax Year thereafter during the term of this Lease to the extent that such
increase in later years is due to such increase in the assessed valuation and,
in any event, only until such time as the increase in the assessed valuation
would have occurred even in the absence of Tenant's contest.
ARTICLE 4
ELECTRICITY
4.01. (a) Landlord shall furnish to Tenant at the electric closet
servicing each floor of the demised premises by means of Building system
feeders, risers and wiring such electric energy as Tenant shall from time to
time require for the conduct of Tenant's business at the demised premises not
exceeding, however, the following electric capacity (herein called the "Provided
Capacity"):
(i) eight (8) watts demand load per rentable square foot on the
seventh (7th) floor (exclusive of electric for the air-conditioning
equipment servicing such floor);
(ii) ten (10) watts demand load per rentable square foot on the
eighth (8th) floor (exclusive of electric for the air conditioning
equipment servicing such floor); and
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(iii) eight and one-half (8.5) watts demand load per rentable square
foot on the portion of the ninth (9th) floor comprising the demised
premises (exclusive of electric for the air-conditioning equipment
servicing such floor).
Such electricity shall be available for distribution through the demised
premises at Tenant's cost and expense, and Landlord shall give Tenant reasonable
access to areas on the 9th floor outside of the portion of the demised premises
located thereon to perform such distribution. Tenant shall be permitted to
reallocate among the floors of the demised premises the aggregate amount of the
Provided Capacity in amounts of electric capacity allocable to each floor which
are different from the allocation set forth in the foregoing clauses (i), (ii)
and (iii) provided that any and all work necessary to effectuate such different
allocations shall be Alterations to be performed by Tenant, at Tenant's sole
cost and expense, in accordance with the provisions of this Lease including
without limitation Article 6 hereof but Landlord will not unreasonably withhold
or delay its consent thereto even though such work affects a Building System.
Landlord covenants and represents that the feeders, risers and wiring serving
the demised premises shall be capable of supplying the Provided Capacity to the
demised premises in the allocations set forth in clauses (i), (ii) and (iii)
above, subject to the provisions of Schedule C annexed hereto. Submeters will be
installed by Landlord prior to the date that Tenant takes occupancy of the
demised premises for the conduct of its business to measure Tenant's consumption
of electric energy in the demised premises.
(b) Tenant agrees that electric current will be supplied by Landlord
to the demised premises and Tenant will pay Landlord or Landlord's designated
agent, as additional rent for the supplying of electric current, the amount
computed in accordance with the provisions of this Section 4.01, which amount
shall be determined based on Tenant's actual consumption of electricity at the
demised premises as measured by submeters. The amount to be charged to Tenant by
Landlord per "KW" and "KWHR" pursuant to this Article for electricity consumed
within the demised premises, shall be 103% of the amount at which Landlord from
time to time purchases each KW and KWHR of electricity for the same period from
the utility company, which amount (herein, as adjusted from time to time, called
"Landlord's Rate") shall be determined by dividing the cost established by said
utility company (averaged separately for KWs and KWHRs) during each respective
billing period of such utility company by the number of KWs and KWHRs consumed
by the Building appearing on the utility company invoice for such period. In no
event shall the additional rent billed to Tenant pursuant to this Article 4 for
submetered electricity supplied to the demised premises be less than Landlord's
actual
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cost therefor. Where more than one meter measures the service of Tenant, the
service rendered through all such meters shall be aggregated and treated as if
there were only one meter and billed in accordance with the rates herein. Bills
therefor shall be rendered at such times as Landlord may elect but not more
frequently than once a month and the amount shall be deemed to be, and be paid
as, additional rent. During the period of Tenant's construction occurring prior
to the installation of meters, Tenant will pay to Landlord a flat charge for
electricity of seventy cents ($0.70) per rentable square foot per annum. Such
charge shall be payable monthly as additional rent hereunder within ten (10)
days after demand therefor by Landlord.
(c) Landlord shall not in any way be liable or responsible to Tenant
for any loss or damage or expense which Tenant may sustain or incur if either
the quantity or character of electric service is changed or is no longer
available or suitable for Tenant's requirements except to the extent caused by
the gross negligence or wilful misconduct of Landlord or its agents or
employees. Tenant agrees that at all times its installations and use of electric
current shall never exceed the capacity of existing feeders to the Building or
the risers or wiring installations serving the demised premises. If Tenant
requests additional power in addition to the Provided Capacity, then if and to
the extent, in Landlord's good faith judgment, allocated power is available in
the Building for use by Tenant without resulting in allocation to Tenant of a
disproportionate amount of allocated power, Landlord shall, at Tenant's cost and
expense, provide and install in conformity with law any additional riser or
risers and/or any and all switch or switches to connect additional power to the
demised premises, and Tenant agrees to pay Landlord a connection charge for each
additional ampere of power or portion thereof so supplied to the demised
premises as set forth in the following sentence, together with the reasonable
cost of installing such additional risers, switches and related equipment. As of
the date hereof, Landlord's connection charge for each additional ampere is
$70.00 per ampere, subject to increase from time to time in the same percentage
as the increase in the "CPI", as defined in Article 22 hereof, shall increase
from year to year. All of the aforesaid costs and expenses are chargeable and
collectible as additional rent and shall be paid by Tenant to Landlord within
twenty (20) days after rendition of any bill or statement to Tenant therefor.
(d) Landlord may discontinue any of the aforesaid services upon
sixty (60) days notice to Tenant without being liable to Tenant therefor or
without in any way affecting this Lease or the liability of Tenant hereunder or
causing a diminution of rent and the same shall not be deemed to be a lessening
or diminution of services within the meaning of any law, rule or regulation now
or hereafter enacted, promulgated or issued, provided that either (i) such
discontinuance is required pursuant to any Legal Requirement or regulation of
the public utility company furnishing electric energy to the
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Building or (ii) Landlord discontinues furnishing electric energy to more than
two-thirds (2/3) of the rentable office space in the Building (including the
demised premises), and provided further that such sixty (60) day period shall be
extended for so long as shall be reasonably necessary for Tenant to obtain
electricity directly from the public utility company (except to the extent such
inability to obtain direct electricity is due to reasons solely within the
control of Tenant). In the event Landlord gives such notice of discontinuance,
Landlord shall permit Tenant to receive such service direct from the public
utility corporation upon condition that Landlord shall entirely segregate
Tenant's portion of Landlord's entire electrical system so that the same is in
no way dependent upon or connected to the remaining circuits or distribution
facilities of Landlord or any other tenant including, without limitation,
arranging for the installation of direct meters to measure the consumption of
electricity in the demised premises. The costs of segregating Tenant's
electrical system shall be borne equally by Landlord and Tenant and Tenant's
portion shall be additional rent hereunder if Landlord shall give such notice
pursuant to any Legal Requirement or regulation of the public utility company
furnishing electric energy to the Building. If Landlord shall voluntarily
discontinue furnishing such electric service, such costs shall be borne entirely
by Landlord.
4.02. Tenant shall make no electrical installations, alterations, or
additions (which adversely affect the Building's electrical system outside the
demised premises) without the prior written consent of Landlord in each
instance, which consent will not be unreasonably withheld. Tenant will comply
with the General Rules, Regulations, Terms and Conditions applicable to Service,
Equipment, Wiring and Changes in Requirements in accordance with the
requirements of the public utility supplying electricity to the Building in the
same manner as if Tenant were serviced directly by such utility. If any tax is
imposed upon Landlord's receipt from the sale or resale of electrical energy to
Tenant by any Federal, State or Municipal Authority, Tenant agrees that, where
permitted by law, Tenant's pro-rata share of such taxes shall be passed on to,
and included in the bill of, and paid by Tenant to Landlord.
ARTICLE 5
USE
5.01. The demised premises shall be used solely as and for executive,
administrative and general offices and for any other lawful uses incidental to
their use as general, administrative and executive offices, including, without
limitation, publishing company purposes, the preparation of layouts and art work
(but in no event to include printing of any nature other than computer word
processing) and the operation of Tenant's computers, data processing, word
processing and other business machines, and for no other purposes.
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5.02. Tenant shall not use or permit the use of the demised premises or
any part thereof in any way which would violate any of the covenants,
agreements, terms, provisions and conditions of this Lease or for any unlawful
purposes or in any unlawful manner or in violation of the Certificate of
Occupancy, if any, for the demised premises or the Building, and Tenant shall
not suffer or permit the demised premises or any part thereof to be used in any
manner or anything to be done therein or anything to be brought into or kept
therein which, in the reasonable judgment of Landlord, shall impair the
character, reputation or appearance of the Building, impair or interfere with
any of the Building services or the proper and economic heating, cleaning, air
conditioning or other servicing of the Building or the demised premises, or
impair or interfere with the use of any of the other areas of the Building by,
or create a nuisance to any of the other tenants or occupants of the Building.
Tenant further agrees that it will not commit any act of waste upon the demised
premises. Landlord agrees that any certificate of occupancy which may be
procured for the Building will permit office use purposes with respect to the
demised premises.
ARTICLE 6
ALTERATIONS AND INSTALLATIONS
6.01. Tenant shall make no alterations, installations, additions or
improvements in or to the demised premises (other than decorative work in the
nature of, without limitation, interior wall covering, carpeting, picture
hanging and cosmetic changes all of which shall not require Landlord's consent)
without Landlord's prior written consent and only by contractors or mechanics
first approved by Landlord, which approval as to such contractors and mechanics
Landlord agrees not to unreasonably withhold or delay. (Such work, alterations,
installations, additions and improvements, other than decorative work, are
hereinafter called "Alterations".) All Alterations and decorative work shall be
done at Tenant's sole expense and in compliance with the Building's Rules and
Regulations for Alterations, a copy of which is attached hereto as Exhibit G.
Any Alterations which may be undertaken by or for the account of Tenant to
prepare, equip, decorate and furnish the demised premises for Tenant's initial
occupancy (such work hereinafter sometimes called "Tenant's Work") and any
future Alterations in the demised premises shall be effected solely in
accordance with plans and specifications first approved in writing by Landlord.
Tenant shall reimburse Landlord promptly upon demand for any reasonable out of
pocket costs and expenses incurred by Landlord to unrelated third parties in
connection with Landlord's review of such Tenant's plans and specifications.
Landlord will not unreasonably withhold or delay its consent
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to requests for Alterations (provided they will not affect the outside of the
Building or adversely affect its (i) structural elements or (ii) electrical,
HVAC, plumbing or mechanical systems, the provisions of this parenthetical
proviso clause being hereinafter called the "Alterations Proviso"), and Landlord
agrees not to unreasonably withhold or delay its approval of the plans and
specifications for such Alterations. In the event that Landlord shall disapprove
Tenant's request for such consent to such Alterations and/or such plans and
specifications, Landlord's response shall include the reasons for such
disapproval. In the event that Landlord fails to respond to Tenant's request for
such consent to such plans and specifications within ten (10) Business Days,
Landlord shall be deemed to have consented to such request, provided Tenant's
request expressly references this Section 6.01 and such ten (10) Business Day
period and the consequences of Landlord's failure to respond within such ten
(10) Business Day period. Landlord hereby consents to Alterations for which the
estimated cost of labor and materials shall not exceed $50,000, which amount
shall be increased every three (3) years by the same percentage as the
percentage amount of increase in CPI as of such third anniversary over the CPI
as of the date of this Lease (either individually or in the aggregate with other
such Alterations being constructed at the same time) provided that with respect
to such Alterations the conditions of the Alterations Proviso are satisfied and
provided further that (i) no New York City Buildings Department BN application
shall be required in connection therewith, (ii) Tenant shall give Landlord
written notice thereof as well as copies of the plans and specifications
therefor, if any, at least ten (10) days prior to performing same, and (iii) any
such Alterations shall otherwise be performed in compliance with the provisions
of this Article 6.
Any such Alterations and decorative work shall be performed in accordance
with the foregoing and the following provisions of this Article 6:
1. All work shall be done in a good and workerlike manner.
2. In the event Tenant shall employ any contractor to do in the
demised premises any work permitted by this Lease, such contractor and any
subcontractor shall agree to employ only such labor as will not result in
jurisdictional disputes or strikes or result in causing disharmony with
other workers employed at the Building. Tenant will inform Landlord in
writing of the names of any contractor or subcontractor Tenant proposes to
use in the demised premises at least five (5) Business Days prior to the
beginning of work by such contractor or subcontractor.
3. All such work shall be effected in compliance with all applicable
laws, ordinances, rules and regulations of governmental bodies having or
asserting jurisdiction in the demised premises.
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4. Tenant shall keep the Building and the demised premises free and
clear of all liens for any work or material claimed to have been furnished
to Tenant or to the demised premises on Tenant's behalf, and all work to
be performed by Tenant shall be done in a manner which will not
unreasonably interfere with or disturb other tenants or occupants of the
Building.
5. During the progress of the work to be done by Tenant, said work
shall be subject to inspection by representatives of Landlord (at
Landlord's sole cost and expense) who shall be permitted access to the
demised premises and the opportunity to inspect, at all reasonable times
and upon reasonable prior notice (which may be oral), but this provision
shall not in any way whatsoever create any obligation on Landlord to
conduct such an inspection.
6. Prior to commencement of any work, Tenant shall furnish to
Landlord certificates evidencing the existence of:
(i) worker's compensation insurance covering all persons
employed for such work; and
(ii) reasonable comprehensive general liability and property
damage insurance naming Landlord, its mortgagees, lessors and
managing agents as to whom Landlord shall have given Tenant prior
notice and Tenant as insureds, with coverage of at least $3,000,000
single limit.
7. Before commencing any work (which costs in excess of $300,000
with respect to work to be performed on any one floor of the demised
premises, or in excess of $450,000 in the aggregate with respect to work
on more than one floor of the demised premises), Tenant shall furnish to
Landlord a completion bond or such other security for completion thereof
and payment therefor as shall be reasonably satisfactory to Landlord and
in an amount which will be 110% of Tenant's reasonable estimate of the
cost of performing such work. With respect to work costing less than the
amounts set forth in the preceding sentence but in excess of $50,000.00,
Tenant shall upon request from Landlord, submit to Landlord evidence
reasonably satisfactory to Landlord that Tenant has funds available
sufficient to pay for such work. Notwithstanding the foregoing, such bond
or other security shall not be required from the Tenant named herein or
any successor thereto described in Section 11.02 hereof with respect to
Tenant's Work or with respect to future Alterations in the demised
premises provided that in the case of a future Alteration or other work
which shall cost in excess of the amounts set forth in the first
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sentence of this clause (7), the Tenant named herein or said successor
shall furnish to Landlord reasonable written evidence that Tenant has
sufficient funds available for completion thereof. All dollar amounts set
forth in this Paragraph 7 shall be subject to annual increase on each
anniversary of the Commencement Date in the same percentage as the annual
increase in the CPI, as defined in Section 22.05 hereof.
Notice is hereby given that Landlord shall not be liable for any labor or
materials furnished or to be furnished to Tenant upon credit, and that no
mechanic's or other lien for any such labor or materials shall attach to or
affect the reversion or other estate or interest of Landlord in and to the
demised premises.
6.02. Any mechanic's lien, filed against the demised premises or the
Building for work claimed to have been done for, or materials claimed to have
been furnished to, Tenant shall be discharged by Tenant at its expense within
thirty (30) days after notice to Tenant (whether or not given by Landlord) of
such filing, by payment, filing of the bond required by law or otherwise.
6.03. All Alterations and decorative work made and installed by Landlord,
including without limitation any work referred to in Article 2 hereof, shall, at
the end of the term of this Lease, be the property of Landlord and shall be
surrendered with the demised premises as a part thereof at the end of the term
of this Lease.
6.04. All Alterations and decorative work made and installed by Tenant, or
at Tenant's expense, upon or in the demised premises which are of a permanent
nature and which cannot be removed without damage to the demised premises or
Building shall become and be the property of Landlord, and shall remain upon and
be surrendered with the demised premises as a part thereof at the end of the
term of this Lease, except that Landlord shall have the right and privilege at
any time up to six months prior to the expiration of the term of this Lease to
serve notice upon Tenant that any of such Alterations which constitute
"Specialty Alterations", as hereinafter defined, shall be removed and, in the
event of service of such notice, Tenant will, at Tenant's own cost and expense,
remove the same in accordance with such request, and repair and restore the area
of the demised premises affected by such removal. For purposes hereof, the term
"Specialty Alterations" shall mean those items which are not customarily
installed in an ordinary office installation and the removal of which is
substantially costly, such as vaults, auditoria, kitchens, private lavatories,
reinforced flooring, and the like (other than (i) one internal staircase to be
installed by Tenant between the 7th and 8th floors in the demised premises as
part of Tenant's Work, (ii) the internal executive
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bathroom to be installed by Tenant in the demised premises as part of Tenant's
Work, and (iii) any raised computer flooring, supplemental HVAC units and
built-in cabinets permitted to be installed in the demised premises).
6.05. Where furnished by or at the expense of Tenant, all furniture,
furnishings and trade fixtures, and any other movable property shall remain the
property of Tenant which may, at its option, remove all or any part thereof at
any time prior to the expiration of the term of this Lease. In case Tenant
shall decide not to remove any part of such property, Tenant shall notify
Landlord in writing not less than three (3) months prior to the expiration of
the term of this Lease, specifying the items of property which it has decided
not to remove. If, within thirty (30) days after the service of such notice,
Landlord shall request Tenant to remove any of the said property, Tenant shall,
at its expense, remove the same and repair any damage caused by such removal. As
to such property which Landlord does not request Tenant to remove, the same
shall be, if left by Tenant, deemed abandoned by Tenant and thereupon the same
shall become the property of Landlord.
6.06. If any Alterations, decorative work or other property which Tenant
shall have the right to remove or be requested by Landlord to remove as provided
in Sections 6.04 and 6.05 hereof (herein in this Section 6.06 called the
"property") are not removed on or prior to the expiration of the term of this
Lease, Landlord shall have the right to remove the property and to dispose of
the same without accountability to Tenant and at the sole cost and expense of
Tenant. In case of any damage to the demised premises or the Building resulting
from the removal of the property Tenant shall repair such damage or, in default
thereof, shall reimburse Landlord for Landlord's cost in repairing such damage.
This obligation shall survive any termination of this Lease. The mere presence
of Tenant's property in the demised premises after the expiration of the term
hereof shall not constitute Tenant's holding over in the demised premises.
6.07. Tenant shall keep records of Tenant's Alterations costing in excess
of $100,000, and of the cost thereof for at least five (5) years after the
performance thereof. Tenant shall, during such five (5) year period and within
30 days after demand by Landlord, furnish to Landlord copies of such records and
cost if Landlord shall require same in connection with any proceeding to reduce
the assessed valuation of the Building, or in connection with any proceeding
instituted pursuant to Article 16 hereof.
6.08. Landlord shall, at Tenant's written request, cooperate in all
reasonable respects with Tenant in the performance by Tenant of Tenant's
Alterations, including, without limitation, executing New York City Buildings
Department applications and other documents required by Legal Requirements to
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be executed by Landlord, and Landlord shall instruct its employees and
contractors to render such assistance and to cooperate with Tenant's employees,
representatives and contractors provided that to the extent that Landlord shall
incur any reasonable out-of-pocket expense to unrelated third parties in so
cooperating or in rendering such assistance, Tenant shall reimburse Landlord for
such expense as additional rent hereunder.
ARTICLE 7
REPAIRS
7.01. Landlord, at its own cost and expense (subject to recoupment
pursuant to Article 3 hereof), shall keep and maintain the public portions of
the Building and the systems and facilities of the Building serving the demised
premises (to the point of connection where the same enter the demised premises,
or in the case of the electric system, to the electric closet on each floor of
the demised premises except with respect to the Air-Cooled Units and the
Water-Cooled Unit as to which the extent of Landlord's maintenance obligations
shall be governed by the provisions of clause (ii) of subsection 21.01(a)
hereof) in good working order, condition and repair and shall make all repairs
thereto structural and otherwise, interior and exterior, as and when needed, to
the extent that such items affect the use, occupancy or enjoyment of the demised
premises for the conduct of Tenant's business, and Landlord shall make
structural repairs to the demised premises, except that nothing contained in the
foregoing shall obligate the Landlord to make those repairs for which Tenant is
specifically responsible pursuant to any of the provisions of this Lease. Tenant
shall take good care of the demised premises and shall, at its sole cost and
expense, make such non-structural repairs to the demised premises and the
fixtures and appurtenances therein as are necessitated by the act, omission,
occupancy or negligence of Tenant or by the use of the demised premises in a
manner contrary to the purposes for which same are leased to Tenant, as and when
needed to preserve them in good working order and condition. Notwithstanding the
foregoing, all damage or injury to the demised premises and its fixtures,
equipment and appurtenances whether requiring structural or non-structural
repairs, caused by or resulting from the negligence or willful misconduct of
Tenant, its servants, employees, invitees, contractors or licensees, shall be
repaired promptly by Tenant at its sole cost and expense. Tenant, at its
expense, shall promptly replace all damaged or broken doors and glass (other
than exterior windows) in and about the demised premises unless such damage was
caused by Landlord or its agents, employees or contractors, and shall be
responsible for all repairs, maintenance and replacement of wall and floor
coverings in the demised premises and for the repair and maintenance of all
sanitary and electrical fixtures and equipment therein. Tenant shall
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promptly make, at Tenant's expense, all repairs in or to the demised premises
for which Tenant is responsible hereunder, and any repairs required to be made
by Tenant hereunder to the mechanical, electrical, sanitary, heating,
ventilating, air-conditioning or other systems of the Building shall be
performed only by contractor(s) approved by Landlord, such approval not to be
unreasonably withheld or delayed. Any other repairs in or to the Building
outside the demised premises and the facilities and systems of the Building for
which Tenant is responsible, shall be performed by Landlord at a reasonable cost
and at Tenant's expense. Except as otherwise provided in Section 9.05 hereof,
all damage or injury to the demised premises and to its fixtures, appurtenances
and equipment or to the Building or to its fixtures, appurtenances and equipment
caused by Tenant moving property into or out of the Building or by installation
or removal of furniture, fixtures or other property, shall be repaired, restored
or replaced promptly by Tenant at its sole cost and expense, which repairs,
restorations and replacements shall be in quality and class substantially equal
to the original work or installations. If Tenant fails to make such repairs,
restoration or replacements within a reasonable period of time after demand is
made therefor by Landlord, the same may be made by Landlord at the expense of
Tenant and such expense shall be collectible as additional rent and shall be
paid by Tenant within 15 days after rendition of a bill therefor.
The exterior walls of the Building, the portions of any window sills
outside the windows, the windows, the fire stairs, any terraces or Building set
back areas, utility closets and any shafts passing through the floor on which
the demised premises are located are not part of the premises demised by this
Lease, and Landlord reserves all rights to such parts of the Building.
7.02. Tenant shall not place a load upon any floor of the demised premises
exceeding the floor load per square foot area which is allowed by law.
7.03. Business machines and mechanical equipment used by Tenant which
cause vibration, noise, cold or heat that is transmitted to the Building
structure or to any leased space to such a degree as to be objectionable to
Landlord or to any other tenant in the Building in Landlord's reasonable
judgment shall be placed and maintained by Tenant at its expense in settings of
cork, rubber or spring type vibration eliminators sufficient to absorb and
prevent such vibration or noise, or prevent transmission of such cold or heat.
The parties hereto recognize that the operation of elevators, air conditioning
and heating equipment will cause some vibration, noise, heat or cold which may
be transmitted to other parts of the Building and demised premises. Landlord
shall be under no obligation to endeavor to reduce such vibration, noise, heat
or cold provided that the same does not exceed the level thereof generally
maintained in office buildings comparable to the Building.
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7.04. Except as otherwise specifically provided in this Lease, there shall
be no allowance to Tenant for a diminution of rental value and no liability on
the part of Landlord by reason of inconvenience, annoyance or injury to business
arising from the making of any repairs, alterations, additions or improvements
in or to any portion of the Building or the demised premises or in or to
fixtures, appurtenances or equipment thereof.
7.05. Landlord shall use its reasonable efforts to minimize interference
with Tenant's access to and use and occupancy of the demised premises in making
any repairs, alterations, additions or improvements; provided, however, that
Landlord shall have no obligation to employ contractors or labor at so-called
overtime or other premium pay rates or to incur any other overtime costs or
expenses whatsoever, except that Landlord, at its expense, shall employ
contractors or labor at so-called overtime or other premium pay rates to remedy
any condition that either (i) threatens the health or safety of any occupant of
the demised premises or (ii) materially adversely interferes with Tenant's
ability to conduct its business at the demised premises. In all other cases, at
Tenant's request, Landlord shall, upon Tenant's written request therefor,
employ, if reasonably practicable, contractors or labor at so-called overtime or
other premium pay rates and Tenant shall be liable as additional rent hereunder
for the excess costs attributable thereto and shall pay same to Landlord within
fifteen (15) days after demand therefor.
ARTICLE 8
REQUIREMENTS OF LAW
8.01. (a) Tenant, at Tenant's sole cost and expense, shall comply with all
laws, orders and regulations of federal, state, county and municipal
authorities, and with any direction of any public officer or officers, pursuant
to law, which shall impose any violation, order or duty upon Landlord or Tenant
with respect to the demised premises, or the use or occupation thereof except
that Tenant shall not be responsible for making any alterations in the demised
premises in order to comply with any Legal Requirement which is applicable to
ordinary "office" use of the demised premises as opposed to Tenant's particular
manner of use of the demised premises, unless such alteration (i) is required as
a result of the making of any alteration by, or on behalf of, Tenant pursuant to
Articles 6 and/or 44 hereof, or (ii) arises out of, or is in connection with,
the making of, or constitutes a modification of, any alteration previously made
by or, on behalf of, Tenant. Landlord shall be responsible for compliance with
all other Legal Requirements which affect Tenant's use and occupancy of the
demised premises and which are not the obligation of Tenant under this Lease.
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(b) Notwithstanding anything to the contrary in the Lease, Tenant
shall be responsible for the cost of all present and future compliance with the
Disabilities Act, as defined in Section 22.04 hereof, in the demised premises,
except only to the extent that Landlord is responsible for such compliance only
(i) within the core bathrooms in the demised premises (but only to the extent
expressly set forth as part of Landlord's Work on Exhibit C hereof) and (ii)
with respect to the elevator call panels located on the seventh (7th), eighth
(8th) and ninth (9th) floor elevator lobbies of the Building.
(c) Without limiting the generality of the foregoing, tenant, at
Tenant's expense, shall cause the demised premises to be fully sprinklered in
accordance with the requirements of the Building Code of The City of New York
and all applicable rules and regulations pertaining thereto and Landlord shall
connect same to the Building system, such connection to be at Landlord's cost
and expense with respect to Tenant's Work, as set forth in subsection 44.02(g)
hereof, including without limitation the cost to connect Tenant's Pre Action
Sprinkler, the "Air-Cooled Units" defined in Section 21.01(a) hereof and
supplemental air-cooled HVAC units installed by Tenant as part of Tenant's Work,
it being understood and agreed, however, that Landlord shall have no liability
to maintain Tenant's Pre-Action Sprinkler or such supplemental HVAC units.
(d) In the event that there shall be discovered in the demised
premises (including, without limitation, any additional space included within
the demised premises pursuant to Article 46 or 47 hereof) or the Basement Space
any asbestos-containing materials which are required by Legal Requirements to be
removed, encapsulated or abated for any of the following reasons: (i) in order
to obtain a New York City Form ACP-5 in connection with the performance of
Alterations permitted to be performed hereunder by Tenant, (ii) by reason of
Landlord's failure to remove asbestos in accordance with Landlord's asbestos
report, a copy of which has been previously delivered to Tenant or in accordance
with subsection 45.01(a), 46.02(v)(A) or 47.09(A) hereof, or (iii) by reason of
a future change in Legal Requirements pursuant to which the mere presence of
asbestos-containing materials in the demised premises would give rise to the
obligation to remove, abate or encapsulate same, then provided that such
asbestos-containing materials shall not have been introduced therein by Tenant
or anyone claiming under Tenant, Landlord shall be responsible for, and shall
perform, such removal, encapsulation or abatement.
8.02. Notwithstanding the provisions of Section 8.01 hereof, Tenant, at
its own cost and expenses in its name and/or (whenever necessary) Landlord's
name, may contest, in any manner permitted by law (including appeals to a court,
or governmental department or authority having
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jurisdiction in the matter), the validity or the enforcement of any governmental
act, regulation or directive with which Tenant is required to comply pursuant to
this Lease, and may defer compliance therewith provided that:
(a) such non-compliance shall not subject Landlord to criminal
prosecution or subject the Land and/or Building to lien or sale:
(b) such non-compliance shall not be in violation of the Ground
Lease, as defined in Article 25 hereof;
(c) Tenant shall first deliver to Landlord a surety bond issued by a
surety company of recognized responsibility, or other security reasonably
satisfactory to Landlord in an amount reasonably satisfactory to Landlord,
indemnifying and protecting Landlord against any loss or injury by reason of
such non-compliance; provided, however, that such surety bond or other security
shall be required from the Tenant named herein or any successor thereto
described in Section 11.02 hereof only to the extent that same would be required
under paragraph 7 of Section 6.01 hereof; and
(d) Tenant shall promptly and diligently prosecute such contest.
Landlord, without expense or liability to it, shall cooperate with
Tenant and execute any documents or pleadings required for such purpose,
provided that Landlord shall reasonably be satisfied that the facts set forth in
any such documents or pleadings are accurate.
ARTICLE 9
INSURANCE, LOSS, REIMBURSEMENT, LIABILITY
9.01. Tenant shall not cause, do, or permit to be done any act or thing,
other than the same which are consistent with customary office use, upon the
demised premises, which will invalidate or be in conflict with New York standard
fire insurance policies covering the Building, and fixtures and property
therein, or which would increase the rate of fire insurance applicable to the
Building to an amount higher than it otherwise would be; and Tenant shall
neither do nor permit to be done any act or thing upon the demised premises
which shall subject Landlord to any liability or responsibility for injury to
any person or persons or to property by reason of any business or operation
being carried on within the demised premises.
9.02. If, as a result of any act or omission by Tenant (other than office
use in a customary manner) or violation of this Lease, the rate of fire
insurance applicable to the Building shall be increased to an amount
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higher than it otherwise would be, Tenant shall reimburse Landlord for all
increases of Landlord's fire insurance premiums so caused; such reimbursement to
be additional rent payable upon the first day of the month following any outlay
by Landlord for such increased fire insurance premiums. In any action or
proceeding wherein Landlord and Tenant are parties, a schedule or "make-up" of
rates for the Building or demised premises issued by the body making fire
insurance rates for the demised premises, shall be presumptive evidence of the
facts therein stated and of the several items and charges in the fire insurance
rate then applicable to the demised premises.
9.03. Landlord or its agents shall not be liable for any injury or damage
to persons or property resulting from fire, explosion, falling plaster, steam,
gas, electricity, water, rain or snow or leaks from any part of the Building, or
from the pipes, appliances or plumbing works or from the roof, street or
subsurface or from any other place or by dampness or by any other cause of
whatsoever nature, unless any of the foregoing shall be caused by or due to the
negligence of Landlord, its agents, servants, or employees.
9.04. Landlord or its agents shall not be liable for any damage which
Tenant may sustain, if at any time any window of the demised premises is broken,
or temporarily (restricted to less than 35% of the windows of the demised
premises, if temporary) or permanently closed, darkened or bricked up for any
reason whatsoever (other than a temporary closing, darkening or bricking up by
reason of a purely arbitrary act of Landlord without any business purpose)
provided that Landlord shall promptly repair any broken windows and shall use
reasonable efforts to minimize the duration of any such temporary closing,
darkening or bricking up which efforts shall be commercially reasonable but not
in excess of those which would be used by landlords of Manhattan office
buildings comparable to the Building, and Tenant shall not be entitled to any
compensation therefor or abatement of rent or to any release from any of
Tenant's obligations under this Lease, nor shall the same constitute an
eviction. Landlord agrees not to permanently close, darken or brick up windows
of the demised premises except to the extent required by Legal Requirements,
provided, however, that in the event that more than fifty (50%) percent of the
windows of the demised premises (other than lot line windows) are permanently
bricked up pursuant to Legal Requirements, Tenant may elect, at Tenant's option,
to terminate this Lease, by written notice (hereinafter called the "Termination
Notice") given to Landlord not more than sixty (60) days after said windows are
bricked up, and such termination shall be effective on the date selected by
Tenant in the Termination Notice which date shall not be less than thirty (30)
and not more than one hundred eighty (180) days after the date of the
Termination Notice. In the event Tenant does not send the Termination Notice to
Landlord on or before sixty (60) days have elapsed from the date that more than
fifty (50%) percent of the windows of the demised premises are permanently
bricked up pursuant to Legal Requirements,
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Tenant's right to terminate this Lease pursuant to the preceding sentence shall
be deemed null and void and deleted from this Lease. If this Lease shall be
terminated during the Permanent Rental Period, as defined in subsection 10.02(b)
hereof, pursuant to this Section 9.04 by the exercise of the right of
termination granted to Tenant hereunder, then, in such event, Tenant shall pay
to Landlord, prior to, and as a condition of, the occurrence of such
termination, an amount equal to the Termination Fixed Rent, as defined in
subsection 10.02(b) hereof, as of the date of such termination, subject to the
provisions of subsection 41.14(b) hereof.
9.05. Subject to the waivers provided in Section 9.08 hereof, Tenant shall
reimburse Landlord for all reasonable out-of-pocket expenses, damages or fines
incurred or suffered by Landlord, by reason of any breach, violation or
non-performance by Tenant, or its agents, servants or employees, of any covenant
or provision of this Lease, or by reason of damage to persons or property caused
by moving property of or for Tenant in or out of the Building, or by the
installation or removal of furniture or other property of or for Tenant except
as provided in Section 6.05 of this Lease, or by reason of or arising out of the
negligence or wilful misconduct Tenant, or its agents, servants or employees, in
the use or occupancy of the demised premises. Subject to the provisions of
Section 8.02 hereof, where applicable, Tenant shall have the right, at Tenant's
own cost and expense, to participate in the defense of any action or proceeding
brought against Landlord, and in negotiations for settlement thereof if,
pursuant to this Section 9.05, Tenant would be obligated to reimburse Landlord
for expenses, damages or fines incurred or suffered by Landlord.
9.06. Tenant shall give Landlord notice in case of fire or accidents in
the demised premises promptly after Tenant is aware of such event.
9.07. Tenant agrees to look solely to Landlord's estate and interest in
the Land and Building, or the lease of the Building, or of the Land and
Building, and the demised premises (and the proceeds of insurance applicable
thereto to the extent same are not applied to the repair and restoration of the
Building), for the satisfaction of any right or remedy of Tenant for the
collection of a judgment (or other judicial process) requiring the payment of
money by Landlord, in the event of any liability by Landlord, and no other
property or assets of Landlord (or the partners or members thereof if Landlord
is other than an individual or corporation) shall be subject to levy, execution,
attachment, or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this Lease, the relationship of Landlord and
Tenant hereunder, or Tenant's use and occupancy of the demised premises, or any
other liability of Landlord to Tenant.
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9.08. The parties hereto shall procure an appropriate clause in, or
endorsement on, any fire or extended coverage insurance covering the demised
premises, the Building and personal property, fixtures and equipment located
thereon or therein, pursuant to which the insurance companies waive subrogation
or consent to a waiver of right to recovery and having obtained such clauses or
endorsements of waiver of subrogation or consent to a waiver of right of
recovery, the parties will not make any claim against or seek to recover from
the other for any loss or damage to its property or the property of others
resulting from fire or other hazards covered by such fire and extended coverage
insurance, provided, however, that the release, discharge, exoneration and
covenant not to sue herein contained shall be limited by and be coextensive with
the terms and provisions of the waiver of subrogation clause or endorsements or
clauses or endorsements consenting to a waiver of right of recovery. If the
payment of an additional premium is required for the inclusion of such waiver of
subrogation provision, each party shall advise the other of the amount of any
such additional premiums and the other party at is own election may, but shall
not be obligated to, pay the same. If such other party shall not elect to pay
such additional premium, the first party shall not be required to obtain such
waiver of subrogation provision. If either party shall be unable to obtain the
inclusion of such clause even with the payment of an additional premium, then
such party shall attempt to name the other party as an additional insured (but
not a loss payee) under the policy. If the payment of an additional premium is
required for naming the other party as an additional insured (but not a loss
payee), each party shall advise the other of the amount of any such additional
premium and the other party at is own election may, but shall not be obligated
to, pay the same. If such other party shall not elect to pay such additional
premium or if it shall not be possible to have the other party named as an
additional insured (but not loss payee), even with the payment of an additional
premium, then (in either event) such party shall so notify the first party and
the first party shall not have the obligation to name the other party as an
additional insured. Tenant acknowledges that Landlord shall not carry insurance
on and shall not be responsible for damage to, Tenant's personal property or
Specialty Alterations, and that Landlord shall not carry insurance against, or
be responsible for any loss suffered by Tenant due to, interruption of Tenant's
business.
9.09. Tenant covenants and agrees to provide on or before the Commencement
Date and to keep in force during the term hereof for the benefit of Landlord and
Tenant a paid-up comprehensive general liability insurance policy naming Tenant
as the insured and the following entities as additional insureds: Landlord,
Landlord's managing agent, lessors under superior leases and the holders of any
mortgages affecting the Land and/or Building (whose names and addresses shall
have been furnished to Tenant). Such policy shall cover any liability
whatsoever, occasioned by any occurrence on or about the
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demised premises or any appurtenances thereto. Such policy is to be written by
good and solvent insurance companies reasonably satisfactory to Landlord, and
shall be in such limits as Landlord may reasonably require provided (i) such
limits do not exceed those customarily required from time to time by owners of
office buildings comparable to the Building and (ii) Landlord shall not increase
its requirements hereunder more frequently than once during each three-year
period of the term hereof. As of the date of this Lease, Landlord requires, and
Tenant shall keep in force, limits of liability thereunder of not less than the
amount of Three Million ($3,000,000) Dollars per occurrence for bodily or
personal injury (including death) and in the amount of Three Hundred Thousand
($300,000) Dollars in respect of property damage. Such insurance may be carried
under a blanket policy covering the demised premises and other locations of
Tenant, if any. Prior to the time such insurance is first required to be carried
by Tenant and thereafter, at least fifteen (15) days prior to the effective date
of any such policy, Tenant agrees to deliver to Landlord either a duplicate
original of the aforesaid policy or a certificate evidencing such insurance.
Said certificate shall contain an endorsement that such insurance may not be
cancelled except upon ten (10) days' notice to Landlord. Tenant shall also
maintain during the term hereof "all-risk" property insurance covering Tenant's
Property and Specialty Alterations to a limit of the replacement cost thereof,
and Tenant's failure to provide and keep in force the aforementioned insurance
shall be regarded as a material default hereunder entitling Landlord to exercise
any or all of the remedies provided in this Lease in the event of Tenant's
default.
9.10. Landlord shall obtain and keep in full force and effect insurance
against loss or damage by fire and other casualties to the Building including
all of Tenant's Alterations (other than Specialty Alterations) in such forms and
amounts as an institutional first mortgagee for the Building shall require or,
if there is no mortgage held by an institutional first mortgagee, in such forms
and amounts as owners of office buildings similar to the Building maintain from
time to time. For purposes of this Section 9.10, "institutional mortgagee" shall
mean a bank, trust company, savings and loan company, insurance company, real
estate investment trust or pension fund. Upon written request from Tenant,
Landlord shall submit reasonable evidence of the property insurance required to
be carried under this Section 9.10 as well as of the waiver of subrogation set
forth in Section 9.08 hereof.
ARTICLE 10
DAMAGE BY FIRE OR OTHER CAUSE
10.01. (a) If the Building or the demised premises shall be partially or
totally damaged or destroyed by fire or other cause, then whether
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or not the damage or destruction shall have resulted from the fault or neglect
of Tenant, or its employees, agents or visitors (and if this Lease shall not
have been terminated as in this Article 10 hereinafter provided), Landlord shall
repair the damage and restore and rebuild the Building and the demised premises,
at its expense (without limiting the rights of Landlord under any other
provisions of this Lease), with reasonable dispatch after notice to it of the
damage or destruction; provided, however, that Landlord shall not be required to
repair or replace any personal property installed by or on behalf of Tenant or
any Specialty Alterations.
(b) Prior to the substantial completion of Landlord's repair
obligations set forth in subsection 10.01(a) hereof, Landlord shall provide
Tenant and Tenant's contractor, subcontractors and materialmen access to the
demised premises to perform Alterations on the following terms and conditions
(but not to occupy the same for the conduct of business):
(1) Tenant shall not commence work in any portion of the
demised premises until the date specified in a notice from Landlord
to Tenant stating that the repairs required to be made by Landlord
have been or will be completed to the extent reasonably necessary,
in Landlord's reasonable discretion, to permit the commencement of
the Alterations then prudent to be performed in accordance with good
construction practice in the portion of the demised premises in
question without interference with, and consistent with the
performance of, the repairs remaining to be performed.
(2) Such access by Tenant shall be deemed to be subject to all
of the applicable provisions of this Lease.
(3) It is expressly understood that if Landlord shall be
delayed in substantially completing the repairs due to any acts of
Tenant, its agents, servants, employees or contractors, including,
without limitation, by reason of the performance of any Alteration,
by reason of Tenant's failure or refusal to comply or to cause its
architects, engineers, designers and contractors to comply with any
of Tenant's obligations described or referred to in this Lease, or
if such repairs are not completed because under good construction
scheduling practice such repairs should be performed after
completion of any Alteration, then such repairs shall be deemed
substantially complete on the date when the repairs would have been
substantially complete but for such delay. Any additional costs to
Landlord to
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complete any repairs occasioned by such delay shall be paid by
Tenant to Landlord within ten (10) days after demand, as additional
rent.
10.02. (a) If the Building or the demised premises shall be partially
damaged or partially destroyed by fire or other cause, then the fixed annual
rent and additional rent payable hereunder shall be abated to the extent that
the demised premises or any portion thereof shall have been rendered unusable
for the conduct of Tenant's business for the period from the date of such damage
or destruction to the date the damage has been repaired or restored, subject to
the provisions of subsection 10.02(b) hereof. If the demised premises or
Tenant's access to and from the demised premises shall be totally (which shall
be deemed to include substantially totally) damaged or destroyed or if the
demised premises shall be rendered completely (which shall be deemed to include
substantially completely) unusable for the conduct of Tenant's business on
account of fire or other cause, the fixed annual rent and additional rent for
the entire demised premises shall abate as of the date of the damage or
destruction and until Landlord has repaired, restored and rebuilt the Building
and the demised premises and such access, provided, however, that should Tenant
reoccupy a portion of the demised premises for the conduct of its business
during the period the restoration work is taking place and prior to the date
that the same are made completely tenantable, rents allocable to such portion
shall be payable by Tenant from the date of such occupancy. Landlord shall give
Tenant at least forty-five (45) days prior notice of Landlord's estimate of the
date of the substantial completion of such repair and restoration provided that
Landlord shall have no liability to Tenant, and Tenant's obligations hereunder
shall not be diminished or affected, if such repair and restoration shall not
have been substantially completed by Landlord's estimated date.
(b) Notwithstanding anything to the contrary in this Article 10, for
purposes of calculating the abatements (whether partial or total) of fixed
annual rent under Section 10.02(a) hereof allocable to the "Permanent Rental
Period", as hereinafter defined, the partial amounts of the fixed annual rent
hereinafter defined as the "Unabated Fixed Rent" shall not be considered and
such Unabated Fixed Rent shall in no event be subject to any of the abatements,
whether partial or total, set forth in subsection 10.02(a) hereof. It is
understood and agreed that during any period of partial or full abatement of
fixed annual rent under subsection 10.02(b) hereof occurring during the
Permanent Rental Period, or any portion thereof, Tenant shall continue to be
obligated to make monthly payments of the Unabated Fixed Rent pursuant to the
terms of this Lease. For purposes of this Lease, (a) the term "Permanent Rental
Period" shall mean the period commencing on February 1, 1994 and ending January
31, 2004; (b) the term "Unabated Fixed Rent" as applied to any period shall mean
the aggregate amount of the monthly payments set forth
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on Schedule M annexed hereto and made part hereof for the period in question;
and (c) the term "Termination Fixed Rent" shall mean the amounts set forth on
Schedule E annexed hereto and made a part hereof as of the dates set forth on
such Schedule E, subject to the provisions of subsection 41.14(b) hereof.
10.03. (a) if the Building shall be totally damaged or destroyed by fire
or other cause, or if the Building shall be so damaged or destroyed by fire or
other cause (whether or not the demised premises are damaged or destroyed) as to
require a reasonably estimated expenditure of more than forty (40%) percent of
the full insurance value of the Building immediately prior to the casualty, then
in either such case Landlord may terminate this Lease by giving Tenant notice to
such effect within one hundred twenty (120) days after the date of the casualty
provided that Landlord shall terminate the leases of tenants in the Building,
including Tenant and excluding Landlord or any Landlord Affiliate covering at
least 66-2/3% of rentable office space in the Building. In case of any damage or
destruction mentioned in this Article 10, as to which Landlord does not elect to
terminate this Lease, Tenant may terminate this Lease by notice to Landlord, if,
subject to the provisions of subsection 10.03(b) hereof, Landlord has not
completed the making of the required repairs and restored and rebuilt the
Building and the demised premises within twelve (12) months from the date of
such damage or destruction, or within such period after such date (not exceeding
three (3) months) as shall equal the aggregate period Landlord may have been
delayed in doing so by Force Majeure Causes, as defined in Section 34.01 hereof.
(b) Within ninety (90) days after the occurrence of any damage or
destruction of the demised premises or access thereto, Landlord shall give
Tenant notice of the date that, in the judgment of a reputable contractor or
architect designated by Landlord, it estimates Landlord shall be able to
substantially complete the required repairs and restorations (the "Anticipated
Completion Date") subject to delays for Force Majeure Causes. If the Anticipated
Completion Date shall be after the date which is twelve (12) months after the
date of such damage or destruction, then Tenant shall have the right, within
thirty (30) days after the notice of the Anticipated Completion Date is given,
to terminate this Lease by giving ten (10) Business Days' notice of such
termination to Landlord, and on the date occurring ten (10) Business Days after
the giving of such notice, this Lease will terminate as if such date were the
Expiration Date specified herein. If Tenant does not give such termination
notice within said thirty-day period, then the expiration of the twelve (12)
months restoration and repair period provided for in subsection 10.03(a) hereof
shall automatically be deemed extended to the Anticipated Completion Date, as
such date may be extended for Force Majeure Causes for not more than an
additional three (3) months.
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(c) If this Lease shall be terminated during the Permanent Rental
Period, pursuant to this Article 10 by the exercise of the rights of termination
granted to either Landlord or Tenant hereunder, then, in such event, Tenant
shall pay to Landlord within five (5) days after the occurrence of such
termination, an amount equal to the Termination Fixed Rent, as defined in
subsection 10.02(b) hereof as of the date of such termination, subject to the
provisions of subsection 41.14(b) hereof.
10.04. No damages, compensation or claim shall be payable by Landlord for
inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the demised premises or of the Building pursuant
to this Article 10.
10.05. During the eighteen (18) month period ending on the Expiration
Date, the twelve (12) month period set forth in Sections 10.03(a) and 10.03(b)
shall be reduced to four (4) months.
10.06. Landlord will not carry separate insurance of any kind on Tenant's
property, and, except as provided by law or by reason of its breach of any of
its obligations hereunder, shall not be obligated to repair any damage thereto
or replace the same. Tenant shall maintain insurance on Tenant's property, and
Landlord shall not be obligated to repair any damage thereto or replace the
same.
10.07. The provisions of this Article 10 shall be considered an express
agreement governing any cause of damage or destruction of the demised premises
by fire or other casualty, and Section 227 of the Real Property Law of the State
of New York, providing for such a contingency in the absence of an express
agreement, and any other law of like import, now or hereafter in force, shall
have no application in such case.
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ARTICLE 11
ASSIGNMENT, MORTGAGING, SUBLETTING, ETC.
11.01. Except as otherwise provided herein, Tenant shall not (a) assign or
otherwise transfer this Lease or the term and estate hereby granted, (b) sublet
the demised premises or any part thereof or allow the same to be used or
occupied by others or in violation of Article 5 hereof, (c) mortgage, pledge or
encumber this Lease or the demised premises or any part thereof in any manner or
permit any lien to be filed against the Lease, the demised premises or the
Building by reason of any act or omission on the part of Tenant, or (d) publicly
advertise, or authorize a broker to advertise (other than listing with brokers),
for a subtenant or an assignee, if such advertisement states a rental rate for
the demised premises without, in each instance set forth in the foregoing
clauses (a) through (d) of this Section 11.01, obtaining the prior consent of
Landlord, except as otherwise expressly provided in this Article 11 (except that
Tenant may continue to use any advertisement which was previously approved by
Landlord). For purposes of this Article 11 and except as otherwise expressly
permitted in Section 11.02 hereof, (i) the transfer of a majority of the issued
and outstanding capital stock of any corporate tenant, or of a corporate
subtenant, or the transfer of a majority of the total interest in any
partnership tenant or subtenant, however accomplished, whether in a single
transaction or in a series of transactions, shall be deemed an assignment of
this Lease, or of such sublease, as the case may be, except that the transfer of
the outstanding capital stock of any corporate tenant, or subtenant, shall be
deemed not to include the sale or transfer of such stock by persons or parties
through the "over-the-counter market" or through any recognized stock exchange,
(ii) any person or legal representative of Tenant, to whom Tenant's interest
under this Lease passes by operation of law, or otherwise, shall be bound by the
provisions of this Article 11; and (iii) a modification, amendment or extension
of a sublease which modifies (w) the use permitted thereunder, (x) the financial
terms thereof, (y) the premises demised thereunder, or (z) the term thereof,
shall be deemed a sublease.
11.02. (a) The provisions of Sections 11.01, 11.05, 11.06, 11.07 and 11.08
hereof shall not apply to an assignment of this Lease to (i) a corporation or
other entity into or with which Tenant is merged or consolidated or (ii) a
person or an entity to which substantially all of Tenant's assets are
transferred or to an entity to which all or substantially all of Tenant's stock
is transferred (provided that such sale of stock is not for the principal
purpose of transferring the leasehold estate hereunder), whether such transfer
of stock and/or assets is by means of foreclosure or otherwise or by the
exercise of any rights by any entity to which the stock and/or assets of Tenant
are pledged, or (iii) any person or entity which shall acquire all or any
portion of the assets of the Tenant named herein, or an Affiliate or Successor
of the Tenant named herein, which are allocable to all or a portion of the
on-going operations of the business then being conducted at the demised premises
(whether or not any other assets of the Tenant named herein are also
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acquired) or a person or entity who shall acquire the stock of the Tenant named
herein allocable to such business (whether or not all of the stock of the Tenant
named herein is also acquired) (any corporation, entity, or person set forth in
the foregoing clauses (i), (ii) and (iii) being herein called a "Successor"), or
(iv) any corporation or other entity controlled by, which controls or which is
under common control with, the Tenant named herein (herein called an
"Affiliate") provided such merger, consolidation or transfer of stock and/or
assets set forth in the preceding clauses (i), (ii) and (iii) is for a valid
business purpose and not principally for the purpose of transferring the
leasehold estate created hereby, and provided, further, that Tenant shall have
delivered to Landlord at least ten (10) days (but not more than twenty-five (25)
days) prior to the effective date of any such transaction: (1) a certified
statement (the "EBITDA Certificate") from the chief financial officer of such
successor or assignee, and (2) "Support Documentation," as hereinafter defined.
The EBITDA Certificate and Support Documentation shall evidence that with
respect to the twelve (12) month period ending with the month next preceding the
month in which occurs the date on which Tenant has delivered to Landlord the
items specified in clauses (1) and (2) of the foregoing sentence (such 12-month
period being herein called the "Fiscal Year"):
(A) (i) in the case of a sale of Tenant's assets, a merger or a
consolidation or other combination, EBITDA (Earnings Before
Interest, Taxes, Depreciation, Amortization and any other non-cash
charges, including, but not limited to, executive options) for the
Fiscal Year for the combined business (i.e., the EBITDA of such
successor or assignee combined with the EBITDA relating to the
business acquired and assumed from Tenant) is at least 1.35 times
required annual debt service for the Fiscal Year for such combined
business (i.e., the required annual debt service of such successor
or assignee combined with the required annual debt service relating
to the business assumed or acquired from Tenant), or (ii) in the
case of a sale of Tenant's stock, EBITDA for the Fiscal Year for
Tenant is at least 1.35 times the required annual debt service of
Tenant after such stock sale; and
(B) the total debt (including subordinate debt) for such combined
business on the last day of the Fiscal Year for the Fiscal Year does
not exceed six (6) times EBITDA for such combined business for the
Fiscal Year (or, in the case of a sale of stock, after such stock
sale, the total debt (including subordinate debt) does not exceed
six (6) times EBITDA for Tenant).
For purposes hereof, the term "Support Documentation" shall mean: (y) quarterly
financial statements both of the Tenant and of the entity into, or with, which
the Tenant is being consolidated or merged or to which Tenant's assets are being
sold, for at least three (3) quarters occurring during the Fiscal Year, which
statements are prepared for internal purposes and made
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available to financial institutions which are lenders of Tenant or such entity,
and (z) the annual audited financial statements both of the Tenant and of the
entity into, or with, which the Tenant is being consolidated or merged or to
which Tenant's assets are being sold, for the most recent fiscal year during
which any portion of the Fiscal Year occurs.
(b) Notwithstanding tine foregoing provisions of this subsection 11.01 to
the contrary:
(i) With respect to any transfer of substantially all of Tenant's
assets or of Tenant's stock by means of foreclosure by (or exercise
of any rights of) any entity to which the stock and/or assets of
Tenant are pledged, as set forth in clause (ii) of subsection
11.01(a) hereof, of which transfer Landlord shall have been given
notice, Tenant shall not be required to deliver to Landlord the
EBITDA Certificate or the Support Documentation or to satisfy the
conditions set forth in clauses (A) and (B) of subsection 11.01(a)
hereof if such entity is a savings and loan association, a savings
bank, a commercial bank or trust company, an insurance company, or a
Federal, state, municipal or private employees' welfare pension or
retirement fund or system, (or a wholly owned subsidiary of such
entity which is formed for the exclusive purpose of foreclosing on
such stock and/or assets and which has no assets or liabilities
other than those acquired or assumed in such foreclosure) provided
that any such entity (i) has total assets of at least One Billion
($1,000,000,000) Dollars, and (ii) reports to or is subject to the
supervision of the Insurance Department of the State of New York,
any agency or official exercising a comparable function on behalf of
any other state, the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the Department of Labor, the Federal
Reserve Board, the Federal Home Loan Bank Board, the Federal Savings
and Loan Insurance Corporation or any similar regulatory agency, or
any successor to any of the foregoing agencies, entities or
officials.
(ii) If, with respect to an assignment of this Lease pursuant to
clause (iii) of subsection 11.01(a) hereof, the principal business
being conducted at the demised premises as of the effective date of
such assignment is any business other than the publication of The
New York Law Journal or The National Law Journal or any other
business which services the legal profession, then the nature and
character of such business and such assignee's use of the demised
premises shall not detract from the character, reputation or dignity
of the Building in Landlord's reasonable judgment and Tenant shall
deliver to Landlord at least ten (10) days prior to the effective
date of such transaction, the name, business address and a
description of the nature and character of such business.
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For purposes hereof, "control" means ownership directly or indirectly of
50% or more of the outstanding voting stock, partnership interests or other
beneficial interests of the entity in question. In connection with any
transactions with Affiliates pursuant to subsection 11.01(a) hereof, any
cessation of such control by the Tenant named herein shall constitute an
assignment or subletting, as the case may be, which shall be subject to all of
the terms, provisions and conditions of this Article 11.
11.03. Any assignment or transfer, whether made with Landlord's consent as
required by Section 11.01, or without Landlord's consent pursuant to Section
11.02, shall be made only if, and shall not be effective until, the assignee
shall execute, acknowledge and deliver to Landlord a recordable agreement, in a
form consistent with the provisions of this Article 11, whereby the assignee
shall assume the obligations and performance of this Lease and agree to be bound
by and upon all of the covenants, agreements, terms, provisions and conditions
hereof on the part of Tenant to be performed or observed after the effective
date of such assignment or transfer and whereby the assignee shall agree that
the provisions of Section 11.01 hereof shall, notwithstanding such an assignment
or transfer, continue to be binding upon it in the future. Tenant covenants
that, notwithstanding any assignment or transfer, whether or not in violation of
the provisions of this Lease, and notwithstanding the acceptance of fixed annual
rent by Landlord from an assignee or transferee or any other party, Tenant shall
remain fully and primarily liable for the payment of the fixed annual rent and
additional rent due and to become due under this Lease and for the performance
of all of the covenants, agreements, terms, provisions and conditions of this
Lease on the part of Tenant to be performed or observed.
11.04. The liability of Tenant, and the due performance by Tenant of the
obligations on its part to be performed under this Lease, shall not be
discharged, released or impaired in any respect by an agreement or stipulation
made by Landlord or any grantee or assignee of Landlord, by way of mortgage, or
otherwise, extending the time of, or modifying any of the obligations contained
in this Lease, or by any waiver or failure of Landlord to enforce any of the
obligations on Tenant's part to be performed under this Lease, and Tenant shall
continue liable hereunder. If any such agreement or modification operates to
increase the obligations of a tenant under this Lease, the liability under this
Section 11.04 of the tenant named in the Lease or any of its successors in
interest, (unless such party shall have expressly consented in writing to such
agreement or modification) shall continue to be no greater than if such
agreement or modification had not been made. To charge Tenant named in this
Lease and its successors in interest, no demand or notice of any default shall
be required. Tenant and each of its successors in interest hereby expressly
waive any such demand or notice.
11.05. (a) If Tenant shall at any time or times during the term of this
Lease desire to assign this Lease or sublet, "for substantially the balance of
the term of this Lease", as hereinafter defined in the final
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sentence of this subsection 11.05(a), all or substantially all of the demised
premises or any portion or portions thereof consisting of an aggregate of 30% or
more of the entire demised premises (after aggregating all portions of the
demised premises which have theretofore been sublet with the portion thereof in
question), Tenant shall give notice thereof to Landlord (herein called "Tenant's
Article 11 Offer Notice"), which notice shall set forth in the case of a
subletting: (a) the area proposed to be sublet, (b) the commencement date and
term of the proposed subletting, (c) the work (including the construction of a
demising wall) to be performed by Tenant and/or the subtenant, if any, the work
contributions, if any, periods of rent free occupancy, if any, purchase price of
any of Tenant's furniture, fixtures and equipment, and (d) the rent and
additional rent and all other financial terms (the items set forth in the
foregoing clauses (c) and (d) are herein in the aggregate called the "Proposed
Rent Rate") pursuant to which Tenant is willing to enter into a sublease with a
third party. In the case of a proposed assignment, Tenant's Article 11 Offer
Notice shall set forth Tenant's intention to (x) assign the Lease in whole, it
being understood and agreed that partial assignments of the Lease are not
permitted hereunder, (y) the effective date of such proposed assignment, and (z)
all financial and other material terms of the proposed assignment. Tenant's
Article 11 Offer Notice shall be deemed an offer from Tenant to Landlord whereby
Landlord (or Landlord's designee) may, at its option, (i) accept an assignment
of this Lease from Tenant (if the proposed transaction is an assignment of this
Lease), (ii) sublease such space from Tenant for the remaining balance of the
term of this Lease (less one day) and upon the other terms and conditions
hereinafter set forth if the proposed transaction is a sublease for
substantially the balance of the term of this Lease, (iii) terminate this Lease
if the proposed transaction is (A) an assignment of the Lease (provided that
Landlord agrees to recognize any then-existing subtenants of Tenant on the terms
of such subleases as to which Landlord shall have given consent hereunder) or
(B) a sublease of all or substantially all of the demised premises for
substantially the balance of the term of this Lease; or (iv) terminate this
Lease with respect to the space covered by the proposed sublease. Said options
may be exercised by Landlord by notice to Tenant within thirty (30) days after
Tenant's Article 11 Offer Notice has been given to Landlord and during such
thirty (30) day period Tenant shall not assign this Lease or sublet such space
to any person. Tenant's Article 11 Offer Notice may also be in the form of an
executed counterpart of the proposed assignment or sublease together with such
other information required under Section 11.06 hereof, in which event the thirty
(30) day period referred to herein and the thirty (30) day period referred to in
Section 11.06 shall run concurrently. If Landlord shall fail to respond to
Tenant's notice during such 30 day period, Landlord shall be deemed to have
elected not to exercise any of its options hereunder provided that Tenant's
Article 11 Offer Notice shall have referenced the provisions of this Section
11.05(a) and such 30 day period and the consequences if Landlord shall fail to
respond within such 30 day period. The phrase "for substantially the balance of
the term of this Lease" shall mean the period equal to the remaining term of
this Lease less any period of time up to eighteen (18) months.
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(b) Intentionally omitted.
(c) If Landlord should elect to have Tenant execute and deliver a
sublease to Landlord or its designee pursuant to any of the provisions of this
Section 11.05, said sublease shall be in a form reasonably satisfactory to
Landlord and Tenant and on all the terms contained in this Lease, except that:
(i) The rental terms shall be at the Proposed Rent Rate subject to
the provisions of Section 11.07 hereof, if applicable and if the
Proposed Rent Rate shall be in excess of the rent provided for
herein Landlord shall be permitted to offset against the rental due
under any such sublease the amount of additional rent, if any, due
from Tenant pursuant to Section 11.07 hereof,
(ii) The sublease shall not provide for any work to be done for the
subtenant or for any initial rent concessions (except that the value
of same shall be amortized over the term of the sublease and the
annual portion thereof shall be reflected in the rental terms
pursuant to the foregoing clause (i) to the extent that same are
included in the Proposed Rent Rate) or contain provisions
inapplicable to a sublease,
(iii) The subtenant thereunder shall have the right to underlet the
subleased premises, in whole or in part, without Tenant's consent,
(iv) The subtenant thereunder shall have the right to make, or cause
to be made, any changes, alterations, decorations, additions and
improvements that such subtenant may desire or authorize, subject to
the provisions of clause (ix) of this Section 11.05(c),
(v) Such sublease shall expressly negate any intention that any
estate created by or under such sublease be merged with any other
estate held by either of the parties thereto,
(vi) Any consent required of Tenant, as lessor under that sublease,
shall be deemed granted if consent with respect thereto is granted
by Landlord,
(vii) The use of the sublet premises by the subtenant thereunder
shall be for general office use in accordance with all Legal
Requirements, and, in the case of a subletting of a partial floor of
the Building in which the Tenant named herein and/or its Affiliate
and/or Successor occupies the remaining portion of the demised
premises located on such floor and no less than 26,000 rentable
square feet of the demised premises in the aggregate, such use shall
exclude any use by a "Direct Competitor," as defined in Article 36
hereof,
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(viii) Any failure of the subtenant thereunder to comply with the
provisions of said sublease, other than with respect to the payment
of rent to Tenant, shall not constitute a default thereunder or
hereunder if Landlord has consented to such non-compliance, to the
extent that there shall be no adverse effect on Tenant resulting
therefrom (except to a de minimis extent),
(ix) Such sublease shall provide that Tenant's obligations with
respect to vacating the demised premises and removing any changes,
alterations, decorations, additions or improvements made in the
subleased premises shall be limited to those which accrued and
related to such as were made prior to the effective date of the
sublease and were not subsequently altered or changed,
(x) (1) Such sublease shall provide that the amount to be charged by
Tenant for such subtenant's electricity consumption shall be based
upon the same rates and provisions as provided in Section 4.01
herein and that such subtenant's consumption shall be measured by
the submeters located in the demised premises, subject to the
following provisions of this subsection 11.05(c)(x).
(2) In the event that the submeter measuring electricity
consumption in the subleased premises also measures consumption in
one or more other portions of the demised premises, then such
subtenant's consumption of electricity in the subleased premises and
the consumption of electricity by Tenant in such portion of the
demised premises shall each be equal to a percentage of the
consumption indicated on such submeter together such percentages
aggregating 100% of the consumption reflected by such submeter. Such
percentages shall be determined by survey performed from time to
time by a reputable, independent electrical consultant, selected by
Landlord or Tenant (the "Initial Electrical Consultant") provided
that Tenant may not initiate a survey hereunder more frequently than
once every two years. The Initial Electrical Consultant may make
surveys in the subleased premises and such portion of the demised
premises covering the electrical equipment and fixtures and use of
current therein, and the connected electrical load and usage and
such percentages shall be determined and/or redetermined in
accordance with such survey. The determination of such percentage
with respect to the subleased premises by the Initial Electrical
Consultant shall be binding and conclusive on the other party hereto
from and after the delivery of copies of such determination to the
other party hereto, unless within thirty (30) days after the
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delivery of such copies, the other party hereto disputes such
determination. If the other party hereto disputes the determination,
it shall, at its own expense, obtain from a reputable, independent
electrical consultant (the "Other Electrical Consultant") its own
survey, and a determination of such percentage with respect to the
subleased premises. The Other Electrical Consultant and the Initial
Electrical Consultant then shall seek to agree on a finding of such
determination of such percentage. If they cannot agree, they shall
choose a third reputable electrical consultant whose cost shall be
shared equally by Landlord and Tenant, to make a similar survey, and
the determination of such percentage by such third electrical
consultant shall be controlling. (If they cannot agree on such third
consultant, within ten (10) days, then either party may apply to the
Supreme Court in the County of New York for the appointment of such
third consultant.) However, pending such determination, such
subtenant shall pay to Tenant the electricity charge as determined
by the Initial Electrical Consultant, provided, however, if the
electricity charge determined as aforesaid is different from that
determined by the Initial Electrical Consultant, then Landlord and
Tenant shall make adjustment for any deficiency owed by such
subtenant or overage paid by such subtenant pursuant to the decision
of the third electrical consultant together with interest at the
Prime Rate from the date of such deficiency or overage to the date
repaid.
(d) Performance by Landlord, or its designee or any subtenant or
other occupant under a recapture sublease or assignment who occupies recaptured
space after the execution of a recapture sublease or assignment, shall be deemed
performance by Tenant of any similar obligation under this Lease. Tenant shall
not be liable for any default under this Lease or deemed to be in default
hereunder if such default is occasioned by or arises from any act or omission of
Landlord, its designee or any subtenant or other occupant under the recapture
sublease or assignment or is occasioned by or arises from any act or omission of
any such person and in the event of non-payment of rent, Tenant shall be
permitted to net out the amount of such non-payment by subtenant from the amount
of rent that Tenant is required to pay to Landlord hereunder.
11.06. In the event that Landlord does not exercise any of the options
available to it pursuant to Section 11.05 hereof, Landlord shall not
unreasonably withhold or delay its consent to an assignment of this Lease or a
subletting of all or any part of the demised premises, provided:
(a) Tenant shall furnish Landlord with the name and business address
of the proposed subtenant or assignee, information with respect to the nature
and character of the proposed subtenant's or assignee's business, current
financial information evidencing financial responsibility reasonably
satisfactory to Landlord, considering the responsibilities involved regardless
whether, in the case of an assignee other than a Successor, the financial
condition of such assignee would satisfy the conditions set forth in clauses (A)
and (B) of subsection 11.02(a) hereof, and an executed counterpart of the
sublease or assignment agreement;
(b) The proposed subtenant or assignee is a reputable party;
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(c) The nature and character of the proposed subtenant or assignee,
its business or activities and intended use of the demised premises is in
keeping with the standards of the Building;
(d) (Provided that Landlord shall have available for leasing in the
Building within five (5) months from the effective date of the proposed
transaction office space comparable in size and term to the space to be sublet
or assigned for the proposed term) the proposed subtenant or assignee is not
then an occupant of any part of the Building or a party who dealt with Landlord
or Landlord's agent (directly or through a broker) with respect to space in the
Building during the five (5) months immediately preceding Tenant's request for
Landlord's consent;
(e) Each sublease shall specifically state that (i) it is subject to
all of the terms, covenants, agreements, provisions, and conditions of this
Lease, (ii) the subtenant will not have the right to further assign its sublease
or sublet all or part of the demised premises or to allow same to be used by
others, without the consent of Landlord in each instance, provided, however,
that with respect to a future assignment or future underlettings by any direct
subtenants of Tenant or by any direct undertenant of any such direct subtenants
(herein collectively called "Undertenants"), Landlord agrees not to
unreasonably withhold or delay its consent in accordance with, and subject to
compliance by such Undertenants with the obligations of Tenant contained in the
provisions of Sections 11.01, 11.03, 11.04, 11.05, 11.06, 11.07 and 11.08 hereof
provided: (A) that Landlord shall have the rights (as against such Undertenants
and/or Tenant), and such Undertenants shall comply with the obligations of
Tenant, set forth in Sections 11.05 and 11.07 hereof with respect to any such
proposed underletting, applied as if such proposed underlettings or assignments
were a sublease of the premises demised under this Lease or an assignment of
this Lease by Tenant, except that for purposes of such application, (1) the
figure "50%" set forth in Section 11.07 shall be deemed to be "100%", and (2)
Landlord shall not have the options set forth in clauses (iii) and (iv) of
subsection 11.05(a), and (B) that the undersubtenants and assignees of such
Undertenants shall not have any right to further assign or undersublet all or
any part of the demised premises or to allow same to be used by others without
the consent of Landlord in each instance, (iii) a consent by Landlord thereto
shall not be deemed or construed to modify, amend or affect the terms and
provisions of this Lease, or Tenant's obligations hereunder, which shall
continue to apply to the premises involved, and the occupants thereof, as if the
sublease or assignment had not been made;
(f) Tenant shall have paid Landlord, within ten (10) days after
receipt of a bill therefor, the reasonable attorneys' fees incurred by Landlord
to review the requested consent;
(g) The proposed subtenant or assignee is not (i) a retail bank,
trust company, safe deposit business, savings and loan association or loan
company which intends to use the demised premises for retail uses; (ii) an
employment or recruitment agency; (iii) a school, college, university or
educational institution whether or not for profit except that the demised
premises may be used as executive offices of such entities set forth in this
clause (iii); (iv) a government or any subdivision or agency thereof;
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(h) Tenant shall not have advertised in the mass media the proposed
assignment together with a rental rate or the proposed subletting at a rental
rate (unless the rental rate information in such listing is not generally
available to persons other than brokers) less than the rental rates then being
charged under leases being entered into by Landlord for comparable space in the
Building and for a comparable term and Landlord agrees promptly to furnish to
Tenant such then-current rental rates upon written request therefor from Tenant;
(i) Tenant shall have complied with the applicable provisions in
Section 11.05 (to the extent same are applicable) and Landlord shall not have
made any of the elections provided for in Section 11.05 provided the time period
for Landlord's response under this Section 11.06 may overlap with that under
Section 11.05;
(j) With respect to aggregate financial terms, the proposed sublet
space and the proposed sublet term, there shall be no more than a seven and
one-half (7-1/2%) percent variation between the proposed sublease or the
proposed assignment and the corresponding provisions of Tenant's Article 11
Notice;
(k) There shall be no more than four (4) separately demised rentable
areas of any full floor portion of the demised premises, and no more than two
(2) separately demised rentable areas on any portion of the demised premises
constituting less than a full floor of the Building.
Landlord shall have twenty (20) days after Landlord has received all of
the information and materials described in this Section 11.06 to review Tenant's
proposal to assign or sublet. If Landlord shall fail to respond within such
twenty (20) day period, which period may coincide or overlap with the twenty
(20) day period described in Section 11.05(a), then Landlord shall be deemed to
have given its consent to Tenant's proposed sublet or assignment, provided that
Tenant's request for consent shall expressly reference this Section 11.06 and
consequences of Landlord's failure to respond within such twenty (20) day
period.
11.07. If Landlord shall give or shall be deemed to have given its consent
to any assignment of this Lease or to any sublease, Tenant shall pay to
Landlord, as additional rent, 50% of the following amounts:
(i) in the case of an assignment, an amount equal to all sums and
other consideration paid to Tenant by the assignee for or by reason of such
assignment (including, but not limited to, sums paid for the sale of Tenant's
fixtures, leasehold improvements, equipment, furniture, furnishings or other
personal property, less, in the case of a sale thereof, the then net unamortized
or undepreciated cost thereof determined on the basis of Tenant's federal income
tax returns) after deducting therefrom the amount of "Tenant's Costs", as
hereinafter defined; and
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(ii) in the case of a sublease, any rent, additional rent or other
consideration paid under the sublease or otherwise to Tenant by the subtenant
which is in excess of the fixed annual rent, additional rent and other charges
accruing during the term of the sublease in respect of the subleased space (at
the rate per square foot payable by Tenant hereunder) pursuant to the terms
hereof (including, but not limited to, sums paid for the sale or rental of
Tenant's fixtures, leasehold improvements, equipment, furniture or other
personal property, less, in the case of the sale or rental thereof, the then net
unamortized or undepreciated cost thereof determined on the basis of Tenant's
federal income tax returns) after deducting therefrom the amount of "Tenant's
Costs", as hereinafter defined.
The sums payable under this Section 11.07 shall be paid to Landlord within ten
(10) days after same are paid by the subtenant or assignee, as the case may be,
to Tenant.
For purposes hereof, "Tenant's Costs" shall mean the reasonable costs and
expenses incurred by Tenant in making such assignment or subletting on account
of brokerage fees and leasing commissions, advertising fees, and attorneys' fees
and disbursements paid by Tenant to independent third parties in connection with
such assignment or subletting, the reasonable cost of improvements and
alterations performed by Tenant to segregate or prepare the demised premises for
the assignee or subtenant, and rental abatements or credits and work allowances
given by Tenant.
11.08. (a) In the event that in connection with Tenant's request for
Landlord's consent pursuant to Section 11.06 hereof, Tenant submits to Landlord
a duplicate of a proposed sublease or proposed assignment with respect to the
proposed subletting or assignment set forth in Tenant's Article 11 Offer Notice
and the provisions of such sublease or assignment (as, for example, the space,
the term, or the Proposed Rent Rate) differ (by more than seven and one-half
(7-1/2%) percent from the statements set forth in the Tenant's Article 11 Offer
Notice, then in such event, Tenant's request for consent pursuant to Section
11.06 hereof shall be deemed to be an offer from Tenant to Landlord as to which
Landlord shall have all of the options set forth in Section 11.05 hereof
provided that Tenant may rescind such request (and its deemed offer) by giving
notice thereof to Landlord within five (5) Business Days after the date of
Landlord's response to Tenant's request provided further that Tenant shall have
such right of rescission only on condition that Tenant's request for Landlord's
consent shall expressly reference Tenant's intention to exercise such right of
rescission in the event that Landlord notifies Tenant of Landlord's exercise of
Landlord's options under Section 11.05 hereof.
(b) If Landlord fails to exercise any of its options under Section
11.05 hereof, and Tenant fails to request Landlord's consent to an assignment or
sublease on the terms and conditions set forth in Tenant's Article 11 Offer
Notice within nine (9) months from the date of Landlord's response to Tenant's
Article 11 Offer Notice, Tenant shall again comply with all of the provisions
and conditions of Section 11.05 hereof before assigning this Lease or subletting
all or part of the demised premises.
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11.09. If Tenant defaults in the payment of any rent and such default
remains uncured beyond the expiration of the applicable grace period, then
Landlord is authorized to collect any rents due or accruing from any assignee,
subtenant or other occupant of the demised premises and to apply the net amounts
collected to the fixed annual rent and additional rent reserved herein. The
receipt by Landlord of any amounts from an assignee or subtenant, or other
occupant of any part of the demised premises shall not be deemed or construed as
releasing Tenant from Tenant's obligations hereunder except to the extent of
rent applied or the acceptance of that party as a direct tenant.
11.10. Landlord shall not disclose to third parties (other than Landlord's
managing agent, leasing agent, accountants and attorneys) any financial
information or any other confidential information regarding Tenant's business
furnished to Landlord under this Article 11 except to the extent required by
Legal Requirements or under subpoena in connection with a legal proceeding and
Landlord will instruct its managing agent, leasing agent, accountants and
attorneys not to disclose any such information except as hereinbefore expressly
permitted.
ARTICLE 12
Intentionally Omitted
ARTICLE 13
ADJACENT EXCAVATION -- SHORING
13.01. If an excavation or other substructure work shall be made upon land
adjacent to the demised premises, or shall be authorized to be made, Tenant
shall afford to the person causing or authorized to cause such excavation,
license to enter upon the demised premises for the purpose of doing such work as
shall be necessary to preserve the wall of or the Building of which the demised
premises form a part from injury or damage and to support the same by proper
foundations without any claim for damages or indemnity against Landlord, or
(provided Tenant continues to have access to the demised premises) diminution or
abatement of rent. Landlord shall permit Tenant to be subrogated to the rights
of Landlord against any such person to the extent that Landlord or Tenant shall
have a claim for damages against such person. Landlord shall use reasonable
efforts to induce the person causing or authorized to cause such excavation to
minimize its interference with Tenant's use of the demised premises but Landlord
shall have no liability to Tenant nor shall Tenant's obligations under this
Lease be affected if Landlord's reasonable efforts are unsuccessful in
connection therewith.
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ARTICLE 14
CONDEMNATION
14.01. (a) In the event that the whole of the demised premises shall be
lawfully condemned or taken in any manner for any public or quasi-public use,
this Lease and the term and estate hereby granted shall forthwith cease and
terminate as of the date of vesting of title. In the event that only a part of
the demised premises shall be so condemned or taken, then, effective as of the
date of vesting of title, the fixed annual rent under Article 1 hereunder and
additional rents under Article 3 hereunder shall be abated in an amount thereof
apportioned according to the area of the demised premises so condemned or taken
relative to the area of the demised premises prior to such condemnation or
taking, subject to the provisions of Section 14.06 hereof. In the event that
only a part of the Building shall be so condemned or taken, then (a) provided
that more than (i) forty (40%) percent of the rentable area of the Building is
so condemned or taken, Landlord (whether or not the demised premises be
affected) may, at Landlord's option, terminate this Lease and the term and
estate hereby granted as of the date of such vesting of title by notifying
Tenant in writing of such termination within thirty (30) days following the date
on which Landlord shall have received notice of vesting of title, provided that
Landlord shall terminate the leases of tenants in the building (including Tenant
and excluding Landlord and Landlord's Affiliates) covering at least 66-2/3% of
the rentable office space in the building, or (b) if such condemnation or taking
shall be of a substantial part of the demised premises (i.e., twenty-five (25%)
percent or more of the rentable area thereof) or of all reasonable means of
access thereto, Tenant may, at Tenant's option, by delivery of notice in writing
to Landlord within thirty (30) days following the date on which Tenant shall
have received notice of vesting of title, terminate this Lease and the term and
estate hereby granted as of the date of vesting of title, or (c) if neither
Landlord nor Tenant elects to terminate this Lease, as aforesaid, this Lease
shall be and remain unaffected by such condemnation or taking, except that the
fixed annual rent payable under Article 1 and additional rents payable under
Article 3 shall be abated to the extent hereinbefore provided in this Article
14, subject to the provisions of subsection 14.01(b) hereof. In the event that
less than all of the demised premises shall be so condemned or taken and this
Lease and the term and estate hereby granted with respect to the remaining
portion of the demised premises are not terminated as hereinbefore provided,
Landlord will, with reasonable diligence and at its expense, restore the
remaining portion of the demised premises to a self-contained rental unit and/or
the access thereto as nearly as practicable to the same condition as it was in
prior to such condemnation or taking.
(b) Notwithstanding anything to the contrary in this Article 14, for
purposes of calculating the abatements (whether partial or total) of fixed
annual rent under subsection 14.01(a) hereof allocable to the Permanent Rental
Period, as defined in subsection 10.02(b) hereof, the partial amounts of the
fixed annual rent defined as the "Unabated Fixed Rent" in subsection 10.02(b)
hereof shall not be considered and such Unabated Fixed
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Rent shall in no event be subject to any of the abatements whether partial or
total, set forth in subsection 14.01(a) hereof. It is understood and agreed that
during any period of partial or full abatement of fixed annual rent under
subsection 14.01 hereof occurring during the Permanent Rental Period or any
portion thereof, Tenant shall continue to be obligated to make monthly payments
of the Unabated Fixed Rent pursuant to the terms of this Lease.
14.02. (a) In the event of its termination in any of the cases
hereinbefore provided, this Lease and the term and estate hereby granted shall
expire as of the date of such termination with the same effect as if that were
the Expiration Date, and the fixed annual rent and additional rents payable
hereunder shall be apportioned as of such date.
(b) If this Lease shall be terminated during the Permanent Rental
Period pursuant to this Article 14 by the exercise of the rights of termination
granted to either Landlord or Tenant hereunder, then, in such event, Tenant
shall pay to Landlord, prior to, and as a condition of, the occurrence of such
termination, an amount equal to the Termination Fixed Rent (as defined in
subsection 10.02(b) hereof) as of the date of such termination, subject to the
provisions of subsection 41.14(b) hereof.
14.03. In the event of any condemnation or taking hereinbefore mentioned
of all or a part of the Building, Landlord shall be entitled to receive the
entire award in the condemnation proceeding, including any award made for the
value of the estate vested by this Lease in Tenant, and Tenant hereby expressly
assigns to Landlord any and all right, title and interest of Tenant now or
hereafter arising in or to any such award or any part thereof, and Tenant shall
be entitled to receive no part of such award. Nothing contained herein shall be
deemed to prevent Tenant from making a separate claim in any condemnation
proceedings for any Tenant's property included in such taking, and for any
moving expenses provided such claim does not reduce Landlord's claim.
14.04. If the whole or any part of the demised premises shall be acquired
or condemned temporarily during the term of this Lease for any public or
quasi-public use or purpose, Tenant shall give prompt notice thereof to Landlord
and the term hereof shall not be reduced or affected in any way and Tenant shall
continue to pay in full all fixed annual rent and additional rent payable by
Tenant hereunder without reduction or abatement, and Tenant shall be entitled to
receive for itself any award or payments for such use, provided, however, that:
(a) if the acquisition or condemnation is for a period not extending
beyond the term of this Lease and if such award or payment is made less
frequently than in monthly installments, the same shall be paid to and held by
Landlord as a fund which Landlord shall apply from time to time to the
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fixed annual rent and additional rent payable by Tenant hereunder, except that,
if by reason of such acquisition or condemnation changes or alterations are
required to be made to the demised premises which would necessitate an
expenditure to restore the demised premises, then a portion of such award or
payment considered by Landlord as appropriate to cover the expenses of the
restoration shall be retained by Landlord, without application as aforesaid, and
applied toward the restoration of the demised premises as provided in subsection
14.01(a) hereof; or
(b) if the acquisition or condemnation is for a period extending
beyond the term of this Lease, such award or payment shall be apportioned
between Landlord and Tenant as of the Expiration Date; Tenant's share thereof,
if paid less frequently than in monthly installments, shall be paid to Landlord
and applied in accordance with the provisions of subsection 14.04(a) above,
provided, however, that the amount of any award or payment allowed or retained
for restoration of the demised premises shall remain the property of Landlord if
this Lease shall expire prior to the restoration of the demised premises.
14.05. In the event of any taking of less than the whole of the Building
which does not result in a termination of this Lease, or in the event of a
taking for a temporary use or occupancy of all or any part of the demised
premises which does not result in a termination of this Lease, Landlord, at its
expense, and whether or not any award or awards shall be sufficient for the
purpose, shall proceed with reasonable diligence to repair, alter and restore
the remaining parts of the Building and the demised premises to substantially
their former condition to the extent that the same may be feasible and so as to
constitute a complete and tenantable Building and demised premises.
ARTICLE 15
ACCESS TO DEMISED PREMISES; CHANGES
15.01. Tenant shall permit Landlord to erect, use and maintain pipes,
ducts and conduits in and through the demised premises, provided the same are
concealed behind walls and ceilings of the demised premises or, if such
concealment is reasonably impracticable, installed adjacent to such walls and
ceilings provided that same shall be furred and the usable area of the demised
premises is not reduced more than by a de minimis extent. Landlord shall install
such pipes, ducts and conduits by such methods and at such locations as will
minimize interference with and impairment of Tenant's layout and use of the
demised premises. Landlord or its agents or designees shall have the right, upon
reasonable prior notice to Tenant and accompanied by a representative of Tenant
if Tenant shall make the same available, to enter the demised premises, at
reasonable times during business hours, for the making of such repairs or
alterations as Landlord may deem necessary for the Building or which Landlord
shall be required to or shall have the right to make by the provisions of this
Lease or to keep the Building in good repair as a
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functioning office building, and shall also have the right to enter the demised
premises after reasonable prior notice and, at the election of Tenant, with a
representative of Tenant, if one is made available for the purpose of inspecting
them or exhibiting them to prospective purchasers or lessees of the entire
Building or to prospective mortgagees of the fee or of Landlord's interest in
the property of which the demised premises are a part or to prospective
assignees of any such mortgages or to the holder of any mortgage on the
Landlord's interest in the property, its agents or designees or, during the
twelve (12) months prior to the expiration of the term of this Lease, to
prospective tenants of the demised premises. Subject to the provisions of the
following sentence, Landlord shall be allowed to take all material into and upon
the demised premises (provided such material is not stored in the demised
premises overnight) that may be required for the repairs or alterations above
mentioned as the same is required for such purpose, without the same
constituting an eviction of Tenant in whole or in part, and the rent reserved
shall in no wise abate while said repairs or alterations are being made by
reason of loss or interruption of the business of Tenant because of the
prosecution of any such work. In connection with Landlord's access to the
demised premises, Landlord's ability to perform repairs or alterations and
Landlord's ability to bring materials into the demised premises pursuant to this
Section 15.01, Landlord shall exercise reasonable diligence so as to minimize
the disturbance to Tenant's use and enjoyment of the demised premises but
nothing contained herein shall be deemed to require Landlord to perform the same
on an overtime or premium pay basis, subject to the provisions of Section 7.05
hereof.
15.02. Landlord reserves the right, without the same constituting an
eviction and without incurring liability to Tenant therefor, to change the
arrangement and/or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairways, toilets and other public parts of the Building;
provided, however, that access to the Building shall not be unreasonably
obstructed or cut off and that there shall result no unreasonable obstruction of
access to the demised premises or unreasonable interference with the use or
enjoyment thereof, and that the size and/or configuration of the demised
premises are not changed thereby (except to a de minimis extent).
15.03. Landlord reserves the right to light, at Landlord's cost and
expense, from time to time all or any portion of the demised premises at night
for display purposes.
15.04. Deleted Prior to Execution.
15.05. If Tenant shall not be personally present to open and permit an
entry into the demised premises at any time when for any reason an entry therein
shall be urgently necessary by reason of fire or other emergency, Landlord or
Landlord's agents may, after attempting, if such attempt is reasonably
practicable, to give Tenant oral notice, forcibly enter the same without
rendering Landlord or such agents liable therefor (if during such entry Landlord
or Landlord's agents shall accord reasonable care to Tenant's property) and
without in any manner affecting the obligations and covenants of this Lease.
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ARTICLE 16
CONDITIONS OF LIMITATION
16.01. This Lease and the term and estate hereby granted are subject to
the limitation that whenever Tenant or any guarantor of Tenant's obligations
under this Lease shall make an assignment of the property of Tenant for the
benefit of creditors, or shall file a voluntary petition under any bankruptcy or
insolvency law or any involuntary petition alleging an act of bankruptcy or
insolvency shall be filed against Tenant or such guarantor under any bankruptcy
or insolvency law, or whenever a petition shall be filed by or against Tenant
under the reorganization provisions of the United States Bankruptcy Act or under
the provisions of any law of like import, or whenever a petition shall be filed
by Tenant or such guarantor under the arrangement provisions of the United
States Bankruptcy Act or under the provisions of any law of like import, or
whenever a permanent receiver of Tenant or such guarantors or of or for the
property of Tenant or such guarantor shall be appointed, then, Landlord may, (a)
at any time after receipt of notice of the occurrence of any such event, or (b)
if such event occurs without the acquiescence of Tenant or such guarantor, at
any time after the event continues for ninety (90) days, give Tenant a notice of
intention to end the term of this Lease at the expiration of five (5) days from
the date of service of such notice of intention, and upon the expiration of said
five (5) day period, this Lease and the term and estate hereby granted. whether
or not the term shall theretofore have commenced, shall terminate with the same
effect as if that day were the Expiration Date, but Tenant shall remain liable
for damages as provided in Article 18.
16.02. This Lease and the term and estate hereby granted are subject to
further limitation as follows:
(a) whenever Tenant shall default in the payment of any installment of
fixed annual rent, or in the payment of any additional rent or any other charge
payable by Tenant to Landlord, on any day upon which the same ought to be paid,
and such default shall continue for ten (10) days after Landlord shall have
given Tenant a notice specifying such default, or
(b) whenever Tenant shall do or permit anything to be done, whether by
action or inaction, in default of any of Tenant's obligations hereunder, and if
such situation shall continue and shall not be remedied by Tenant within thirty
(30) days after Landlord shall have given to Tenant a notice specifying the
same, or, in the case of a happening or default which cannot with due diligence
be cured within a period of thirty (30) days and the continuation of which for
the period required for cure will not subject Landlord to the risk of criminal
liability (as more particularly described in Article 8 hereof) or termination of
the Ground Lease (as defined in Section 25.06(a) hereof) or foreclosure of any
superior mortgage, if Tenant shall not, (i) within twenty (20) days after
Landlord shall have given Tenant notice thereof advise Landlord of Tenant's
intention to remedy such situation, (ii) duly commence to institute such cure
within said twenty (20) day period, and
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thereafter diligently and continuously prosecute to completion such cure, and
(iii) complete such remedy within such time after the date of the giving of said
notice to Landlord as shall reasonably be necessary, or
(c) whenever any event shall occur or any contingency shall arise whereby
this Lease or the estate hereby granted or the unexpired balance of the term
hereof would, by operation of law or otherwise, devolve upon or pass to any
person, firm or corporation other than Tenant, except as expressly permitted by
Article 11, or
(d) whenever Tenant shall default in the due keeping, observing or
performance of any covenant, agreement, provision or condition of Article 5
hereof on the part of Tenant to be kept, observed or performed and if such
default shall continue and shall not be remedied by Tenant within seven (7)
business days after Landlord shall have given to Tenant a notice specifying the
same,
then in any of said cases set forth in the foregoing subsections (a), (b), (c)
and (d) Landlord may give to Tenant a notice of intention to end the term of
this Lease at the expiration of five (5) days from the date of the service of
such notice of intention, and upon the expiration of said five (5) days this
Lease and the term and estate hereby granted, whether or not the term shall
theretofore have commenced, shall terminate with the same effect as if that day
were the Expiration Date, but Tenant shall remain liable for damages as provided
in Article 18.
ARTICLE 17
RE-ENTRY BY LANDLORD, INJUNCTION
17.01. If Tenant shall default in the payment of any installment of fixed
annual rent, or of any additional rent, on any date upon which the same ought to
be paid, and if such default shall continue for ten (10) days after Landlord
shall have given to Tenant a notice specifying such default, or if this Lease
shall expire as in Article 16 provided, Landlord or Landlord's agents and
employees may immediately or at any time thereafter re-enter the demised
premises, or any part thereof, either by summary dispossess proceedings or by
any suitable action or proceeding at law, or otherwise, without being liable to
indictment, prosecution or damages therefrom, to the end that Landlord may have,
hold and enjoy the demised premises again as and of its first estate and
interest therein. The word re-enter, as herein used, is not restricted to its
technical legal meaning. In the event of any termination of this Lease under the
provisions of Article 16 or if Landlord shall re-enter the demised premises
under the provisions of this Article 17 or in the event of the termination of
this Lease, or of re-entry, by or under any summary dispossess or other
proceedings or action or any provision of law by reason of default hereunder on
the part of Tenant, which remains uncured after notice and beyond the expiration
of the applicable cure period, Tenant shall thereupon pay to Landlord the fixed
annual rent and additional rent payable by
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Tenant to Landlord up to the time of such termination of this Lease, or of such
recovery of possession of the demised premises by Landlord, as the case may be,
and shall also pay to Landlord damages as provided in Article 18.
17.02. In the event of a breach or threatened breach by Tenant of any of
its obligations under this Lease, Landlord shall also have the right of
injunction. Except as otherwise expressly provided herein, the special remedies
to which Landlord may resort hereunder are cumulative and are not intended to be
exclusive of any other remedies or means of redress to which Landlord may
lawfully be entitled at any time and Landlord may invoke any remedy allowed at
law or in equity as if specific remedies were not provided for herein.
17.03. If this Lease shall terminate under the provisions of Article 16,
or if Landlord shall re-enter the demised premises under the provisions of this
Article 17, or in the event of the termination of this Lease, or of re-entry,
by or under any summary dispossess or other proceeding or action or any
provision of law by reason of default hereunder on the part of Tenant, which
remains uncured after notice and beyond beyond the expiration of the applicable
cure period, all moneys, if any, paid by Tenant to Landlord, whether as advance
rent, security or otherwise, shall be applied by Landlord against any fixed
annual rent or additional rent due from Tenant at the time of such termination
or re-entry or, at Landlord's option against any damages payable by Tenant under
Articles 16 and 18 or pursuant to law.
17.04. Tenant hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of Tenant being
evicted or dispossessed for any cause, or in the event of Landlord obtaining
possession of the demised premises, by reason of the violation by Tenant of any
of the covenants and conditions of this Lease or otherwise.
ARTICLE 18
DAMAGES
18.01. If this Lease is terminated under the provisions of Article 16, or
if Landlord shall re-enter the demised premises under the provisions of Article
17, or in the event of the termination of this Lease, or of re-entry, by or
under any summary dispossess or other proceeding or action or any provision of
law by reason of default hereunder on the part of Tenant, which remains uncured
after notice and beyond the expiration of the applicable cure period, Tenant
shall pay to Landlord as damages, at the election of Landlord, either
(a) a sum which at the time of such termination of this Lease or at the
time of any such re-entry by Landlord, as the case may be, represents the then
value (i.e., discounted to present value using a discount rate equal to the
Prime Rate at such time of reentry or termination) of the excess, if any, of
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(1) the aggregate of the fixed annual rent (subject to the
provisions of Section 18.02 hereof) and the additional rent payable
hereunder which would have been payable by Tenant (conclusively presuming
the additional rent to be the same as was payable for the year immediately
preceding such termination except that additional rent on account of
increases in Taxes and Operating Expenses shall be presumed to increase at
the average of the annual rates of increase thereof previously experienced
by Landlord during the period (not to exceed 3 years) prior to such
termination) for the period commencing with such earlier termination of
this Lease or the date of any such re-entry, as the case may be, and
ending with the Expiration Date, had this Lease not so terminated or had
Landlord not so re-entered the demised premises, over
(2) the aggregate fair rental value of the demised premises for the
same period, or
(b) sums equal to the fixed annual rent (subject to the provisions of
Section 18.02 hereof) and the additional rent (as above presumed) payable
hereunder which would have been payable by Tenant had this Lease not so
terminated, or had Landlord not so re-entered the demised premises, payable upon
the due dates therefor specified herein following such termination or such
re-entry and until the Expiration Date, provided, however, that if Landlord
shall re-let the demised premises during said period, Landlord shall credit
Tenant with the net rents received by Landlord from such re-letting, such net
rents to be determined by first deducting from the gross rents as and when
received by Landlord from such re-letting, the expenses incurred or paid by
Landlord in terminating this Lease or in re-entering the demised premises and in
securing possession thereof, as well as the expenses of re-letting, including
altering and preparing the demised premises for new tenants, brokers'
commissions, and all other expenses properly chargeable against the demised
premises and the rental thereof; it being understood that any such re-letting
may be for a period shorter or longer than the remaining term of this Lease; but
in no event shall Tenant be entitled to receive any excess of such net rents
over the sums payable by Tenant to Landlord hereunder, nor shall Tenant be
entitled in any suit for the collection of damages pursuant to this subsection
to a credit in respect of any net rents from a re-letting, except to the extent
that such net rents are actually received by Landlord. If the demised premises
or any part thereof should be re-let in combination with other space, then
proper apportionment on a square foot basis shall be made of the rent received
from such re-letting and of the expenses of re-letting. If the demised premises
or any part thereof be re-let by Landlord to an unrelated third party for the
unexpired portion of the term of this Lease, or any part thereof, before
presentation of proof of such damages to any court, commission or tribunal, the
amount of rent reserved upon such re-letting shall, prima facie, be the fair and
reasonable rental value for the demised premises, or part thereof, so re-let
during the term of the re-letting.
18.02. Notwithstanding anything to the contrary contained in Section 18.01
hereof, if this Lease is terminated or if Landlord shall re-enter the demised
premises during the Permanent Rental Period, then Tenant
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shall pay to Landlord, immediately upon such termination or re-entry (and not in
accordance with the schedule for payment of damages set forth in Section 18.01
hereof), the portion of the fixed annual rent equal to the Termination Fixed
Rent as of the date of such re-entry or termination, subject to the provisions
of subsection 41.14(b) hereof.
18.03. Suit or suits for the recovery of such damages, or any installments
thereof, may be brought by Landlord from time to time at its election, and
nothing contained herein shall be deemed to require Landlord to postpone suit
until the date when the term of this Lease would have expired if it had not been
so terminated under the provisions of Article 16, or under any provision of law,
or had Landlord not re-entered the demised premises. Nothing herein contained
shall be construed to limit or prejudice the right of Landlord to prove for and
obtain as liquidated damages by reason of the termination of this Lease or
re-entry of the demised premises for the default of Tenant under this Lease, an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, such damages are to be
proved whether or not such amount be greater, equal to, or less than any of the
sums referred to in Section 18.01. Nothing herein contained shall be construed
to limit or prejudice the right of Landlord to prove for and obtain as
liquidated damages by reason of the termination of this Lease or re-entry of the
demised premises for the default of Tenant under this Lease, an amount equal to
the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved whether or
not such amount be greater, equal to, or less than any of the sums referred to
in Section 18.01.
ARTICLE 19
LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS
19.01. If Tenant shall default in the observance or performance of any
term or covenant on Tenant's part to be observed or performed under or by virtue
of any of the terms or provisions in any Article of this Lease and such default
remains uncured after notice and beyond the expiration of the applicable cure
period, (a) Landlord may remedy such default for the account of Tenant,
immediately and without notice in case of emergency, or in any other case only
provided that Tenant shall fail to remedy such default with all reasonable
dispatch after Landlord shall have notified Tenant in writing of such default
and of Landlord's intention to exercise its self-help right pursuant to this
Section 19.01 and the applicable grace period for curing such default shall have
expired; and (b) if Landlord makes any reasonable expenditures or incurs any
reasonable obligations for the payment of money in connection with such default
including, but not limited to, reasonable attorneys' fees in instituting,
prosecuting or defending any action or proceeding, such sums paid or obligations
incurred, with interest at the Interest Rate, shall be deemed to be additional
rent hereunder and shall be paid by Tenant to Landlord within twenty (20) days
after rendition of a bill to Tenant therefor.
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ARTICLE 20
QUIET ENJOYMENT
20.01. Landlord covenants and agrees that subject to the terms and
provisions of this Lease, Tenant may peaceably and quietly enjoy the demised
premises and Tenant's rights under this Lease shall not be cut off or ended
before the expiration of the term of this Lease, subject however, to: (i) the
obligations of this Lease, and (ii) the provisions of Article 25 hereof with
respect to ground and underlying leases and mortgages which affect this Lease.
ARTICLE 21
SERVICES AND EQUIPMENT
21.01. So long as this Lease is in full force and effect, Landlord shall,
at its cost and expense:
(a) (i) maintain and operate the heating system serving the demised
premises, and shall furnish heat in the demised premises as may be reasonably
required for comfortable occupancy of the demised premises during Business Hours
of Business Days. Landlord covenants and agrees that the portion of the Building
heating system (the "Premises Heating System") servicing the demised premises
shall be in good working order and in compliance with all Legal Requirements on
or before the day that Tenant shall commence the conduct of its business in the
demised premises, and that Landlord shall maintain and repair the Premises
Heating System in good working order and condition and in compliance with all
Legal Requirements throughout the term of this Lease and that the Premises
Heating System shall be capable of maintaining inside conditions of
approximately 65(degree)F dry bulb when the outside winter temperature is
0(degree)F dry bulb. The foregoing capabilities of the system are based upon and
limited to the continuous closure of all exterior windows. "Business Hours"
shall mean 8:00 a.m. to 6:00 p.m. If Tenant shall require heat service at any
other time, Landlord shall furnish such service for such times provided Tenant
shall give Landlord notice thereof for overtime evening service on any Business
Day prior to 1:00 P.M. of such Business Day and for such overtime service on
weekends or holidays prior to noon on the next preceding Business Day, and
Tenant shall pay to Landlord within fifteen (15) days after demand for such
overtime service as set forth in the following sentence. As of the date hereof,
Landlord's Building Standard charge for overtime heating is $25 per hour per
floor (four (4) hour minimum required) subject to increase after the date hereof
from time to time equal to 103% of actual increases after the date hereof in
Landlord's out-of-pocket costs to provide same (but in no event shall such
charge exceed the Building Standard charge therefor).
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(ii) furnish air-conditioning in the demised premises as follows:
1. Landlord shall furnish air-conditioning in the 7th and 8th
floors of the Building through the eight (8) ceiling hung units,
Model C15G3B made by Cool Air Corp (herein called the "Air-Cooled
Units") installed therein as part of Tenant's Work which shall
provide air-conditioning service only to the 7th and 8th floors.
Tenant shall operate such Air-Cooled Units which shall be operable
on a 24-hour basis. The Air-Cooled Units shall be capable of
providing air-conditioning service during the term of this Lease in
accordance with the design specifications for same. All electricity
used in connection with the operation of the Air-Cooled Units shall
be obtained by Tenant at Tenant's expense pursuant to the provisions
of Article 4 hereof. After the installation of same in accordance
with Legal Requirements and with Tenant's final plans, the
maintenance and repair of the Air-Cooled Units shall be performed by
Landlord and the costs of such maintenance and repair shall be borne
by Landlord except that if Tenant shall operate such Air-Cooled
Units at times other than Business Hours of Business Days, Tenant
shall be liable to pay to Landlord, as additional rent hereunder
within ten (10) days after demand therefor, for such overtime
service (i.e., the operation of each Air-Cooled Unit for more than
an aggregate of 3,000 hours per calendar year for each such Unit) at
the rate of twenty-eight ($0.28) cents per hour per Unit on a
Unit-by-Unit basis except that Landlord shall permit Tenant a credit
in the following amounts per annum per unit to be applied against
such aggregate annual overtime costs on a Unit-by-Unit basis, as
follows:
7th Floor 8th Floor
--------- ---------
Unit 1 - $87.36 p/a Unit 1 - $56.00 p/a
Unit 2 - $72.80 p/a Unit 2 - $109.20 p/a
Unit 3 - $36.40 p/a Unit 3 - $56.00 p/a
Unit 4 - $36.40 p/a Unit 4 - $36.40 p/a
The location of each of the above-mentioned Units is set forth
on Schedule F annexed hereto and made a part hereof.
If the commencement or termination of this Lease shall occur
on any day other than the first day or the last day of a calendar
year, respectively, then the foregoing calculation shall be
prorated.
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2. Landlord shall furnish air-conditioning in the portion of
the 9th floor comprising the demised premises through a 30-ton
water-cooled air-conditioning unit (hereinafter called the
"Water-Cooled Unit") located within the demised premises which
operates off condenser water provided by Landlord from a central
cooling tower servicing the Building and which services the portion
of the demised premises located on the ninth (9th) floor and the
westerly portion of the ninth (9th) floor of the building directly
contiguous to the 9th floor portion of the demised premises (the
"Continuous A/C Premises"). The condensing unit for the Water-Cooled
Unit will function when seasonably required on Business Days, from
8:00 A.M. to 6:00 P.M. and shall be capable of providing condenser
water as set forth in the specifications annexed hereto as Schedule
O. Landlord shall maintain and keep the Water-Cooled Unit in good
order and repair and shall maintain and operate the Water-Cooled
Unit, subject to the design specifications of the systems and to
energy conservation requirements of, and voluntary energy
conservation programs sponsored by, governmental authorities (but
not in excess of programs customarily followed by owners of office
buildings comparable to the Building). All electricity used in
connection with the operation of the Water-Cooled Unit shall be
obtained by Tenant at Tenant's expense subject to the provisions
hereof pursuant to the provisions of Article 4 hereof, i.e., by
separate submeter to be installed by Landlord prior to the date that
Tenant shall occupy the demised premises for the conduct of its
business. During any period that the Contiguous A/C Premises shall
be unoccupied, Tenant shall bear 100% of such electricity costs for
operation of the Water-Cooled Unit during Business Hours of Business
Days provided, however, that Landlord agrees that during such period
the air ducts servicing the Contiguous A/C Premises from the
Water-Cooled Unit shall be blocked off. During any period that the
Contiguous A/C Premises are occupied, such electricity costs shall
be prorated on a rentable square foot basis for operation of the
Water-Cooled Unit during Business Hours of Business Days. In the
event that Tenant shall require air-conditioning service on the 9th
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floor portion of the demised premises on days other than Business
Days or on Business Days but during the hours other than from 8:00
A.M. to 6:00 P.M., then Tenant shall be capable of operating the
Water-Cooled Unit automatically by switch control and Landlord shall
equip the Water-Cooled Unit with a mechanism to record the periods
of overtime use requested by Tenant and if same is so operated by
Tenant, Tenant agrees to pay Landlord's charges for such overtime
service at the Building as additional rent. As of the date of this
Lease, Landlord's Building Standard charge for overtime
air-conditioning service is seven cents ($0.07) per hour per ton for
each Water-Cooled Unit serving the 9th floor portion of the demised
premises, subject to increase from time to time after the date
hereof equal to 103% of actual increases in Landlord's out-of-pocket
costs to provide same (but in no event shall such charge exceed the
Building Standard charge therefor).
(b) provide reasonable passenger and freight elevator service to the
demised premises during Business Hours of Business Days, and there shall be at
least one passenger elevator subject to call at all other times. Landlord agrees
not to modify the existing passenger elevator service serving the demised
premises in any way which would reduce the passenger elevator service to the
demised premises below current industry standard, i.e., one passenger car per
45,000 occupied rentable square feet, and Landlord agrees not to reduce the
number of elevator cabs servicing the demised premises to below three (3) cabs,
subject to the provisions of Section 21.03 hereof. The use of the elevators
shall be on a non-exclusive basis and shall be subject to the Rules and
Regulations, and the use of the freight elevators shall be on a first-come,
first-served basis. If the Building supplies manually operated elevator service,
Landlord may at any time substitute automatic control elevator service, without
reducing or otherwise affecting any of Tenant's obligations hereunder. Use of
the freight elevators by Tenant during non-Business hours and on non-Business
Days shall be provided by Landlord to Tenant on a first-come, first-served basis
upon advance notice to Landlord, and Tenant shall pay, as additional rent
hereunder within fifteen (15) days after demand the following charges therefor:
as of the date hereof, Landlord's Building Standard overtime freight elevator
charge is at the rate of $55 per hour, with a minimum of four (4) hours on
non-Business Days, subject to increases after the date hereof from time to time,
equal to 103% of increases after the date hereof in Landlord's actual
out-of-pocket costs to provide same (but in no event shall such charge exceed
the Building Standard charge therefor).
Tenant has informed Landlord that Tenant anticipates daily
deliveries to the demised premises of no more than 3,000 copies of Tenant's
newspapers during any non-Business Hours of Business Days and at any time during
non-Business Days and Landlord agrees, subject to the provisions of this
paragraph, that a passenger elevator may be used for same. Landlord shall
designate a passenger elevator car to be used for such deliveries (the
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"Delivery Car") and Landlord shall provide and install interior cab padding in
such passenger car on a daily basis prior to such delivery. Subject to Force
Majeure Causes and emergencies, the Delivery Car shall during non-Business Hours
be used only for such after-hours delivery and Tenant shall be liable to ensure
that the deliveryperson making such delivery shall effect same by use of his or
her rubber-wheeled hand-truck and that such deliveryperson shall lay protective
rubber walk-off mats, to be provided by Landlord and to be stored in a location
near the Building entrance lobby rendering same reasonably easily and promptly
accessible to such delivery person, for the purpose of protecting the carpeting
of the Building lobby during such access and egress by such deliveryperson.
Tenant shall also ensure that such deliveryperson shall remove such protective
mats upon completion of the delivery each evening. Tenant shall be responsible
for the cost of repairing all damage to the Building including, without
limitation, the Building lobby and the Delivery Car caused by, or resulting
from, such delivery and Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all loss, claim, damage. cost and liability
resulting from same. Notwithstanding anything to the contrary contained in this
paragraph, Landlord may, in its sole discretion, from time to time upon
reasonable advance notice to Tenant, modify the manner in which Tenant shall
have the right pursuant to this paragraph to make such delivery including,
without limitation, substituting another passenger elevator car or a freight
elevator car to be used as the Delivery Car, provided that Landlord provides to
Tenant elevator access to the demised premises for the purpose of such delivery
without Tenant's incurring overtime Building freight elevator charges or any
other Building charges therefor, and without diminishing the rights granted to
Tenant pursuant to this paragraph (except to a de minimis extent).
(c) (i) cause the demised premises, including the exterior and the
interior of the windows thereof, to be cleaned in accordance with the provisions
of Schedule D hereof. Landlord shall not be required to clean any portions of
the demised premises used for the preparation, serving or consumption of food or
beverages, training rooms, data processing or reproducing operations or private
lavatories or toilets. Tenant shall pay to Landlord within 15 days after demand
the costs incurred by Landlord for (a) extra cleaning work in the demised
premises required because of (i) negligence on the part of Tenant or its
subtenants or its or their employees or visitors, (ii) the use of portions of
the demised premises for special purposes requiring greater or more difficult
cleaning work than office areas, (iii) interior glass partitions or unusual
quantity of interior glass surfaces, and (iv) cleaning of materials or finishes
installed by Tenant or at its request which cleaning is not required under
Schedule D hereof, and (b) removal from the demised premises and the Building of
any refuse and rubbish of Tenant in excess of that ordinarily accumulated in
business office occupancy or at times other than Landlord's standard cleaning
times, and (c) the use of the demised premises by Tenant other than during
Business Hours on Business Days but only to the extent such usage actually
increases the amount of cleaning required to be performed in the demised
premises by more than an insignificant amount.
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(ii) If the cleaning contractor employed by Landlord shall, in the
reasonable judgment of Tenant, materially fail to satisfy the requirements of
Schedule D annexed hereto, then Tenant shall have the right to give Landlord
written notice of such failure, which notice shall set forth in reasonable
detail the items which evidence such failure. Landlord shall have ninety (90)
days to cure, or to cause its cleaning contractor to cure, such failure in all
material respects. During such 90-day period, Tenant shall cooperate with
Landlord in its effort to cure such failure by responding promptly to any
reasonable inquiries made to Tenant with respect to the cleaning service. If,
after the expiration of such 90-day cure period, such cleaning contractor shall,
in Tenant's reasonable judgment, not have cured such failure in all material
respects, then Tenant shall give Landlord notice thereof, and unless Landlord
disputes Tenant's determination as hereinafter set forth, Landlord shall, within
ninety (90) days of receipt of Tenant's notice replace the cleaning contractor
in question for the entire Building. If, however, in Landlord's reasonable
judgment, such cleaning contractor shall have cured such failure within such
180-day cure period in substantially all material respects, or if, in the first
instance, Landlord disputes the fact that such cleaning contractor failed to
satisfy the requirements of Schedule D hereto, then Landlord shall notify Tenant
thereof, and either party shall have the right to submit the dispute to
arbitration, in accordance with the provisions of Article 38 hereof. If the
arbitrators shall make a determination in Tenant's favor, then Landlord and
Tenant agree that Tenant's sole remedy shall be for Landlord to replace the
cleaning contractor in question for the entire Building within ninety (90) days
from the date of such determination. If, however, the arbitrators shall make a
determination in Landlord's favor, then in such event, Landlord shall not be
obligated to replace the cleaning contractor in question.
(d) Landlord, its cleaning contractor and their employees shall have
access to the demised premises after 5:30 p.m. and before 8:00 a.m. and shall
have the right to use, without charge therefor, all light, power and water in
the demised premises reasonably required to clean the demised premises as
required under paragraph (c) of this subsection 21.01.
(e) Landlord agrees to repaint the painted surfaces on the lower two
floors of the Building facade after the Commencement Date and Landlord agrees
that the costs of such repainting shall not be includible in Operating Expenses.
(f) Furnish hot and cold water for lavatory, drinking and office
cleaning purposes. If Tenant requires, uses or consumes water for any other
purposes, Tenant agrees to Landlord installing a meter or meters to measure
Tenant's water consumption, and Tenant further agrees to reimburse Landlord for
the reasonable cost of the meter or meters and the installation thereof, and to
pay for the reasonable maintenance of said meter equipment. Tenant shall
reimburse Landlord for 103% of Landlord's actual costs to provide all water
consumed, as measured by said meter or meters, including sewer rents, (but in no
event shall such charge exceed the Building Standard charge therefor).
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21.02. Intentionally omitted.
21.03. Landlord reserves the right, without any liability to Tenant and
without affecting Tenant's covenants and obligations hereunder and without
abatement of fixed annual rent, or additional rent, to stop or interrupt or
reduce service of any of the heating, ventilating, air-conditioning, electric,
sanitary, elevator or other Building systems serving the demised premises, or to
stop or interrupt or reduce any other services required of Landlord under this
Lease (whether or not specified in this Article 21) whenever and for so long as
may be necessary, by reason of (i) accidents, emergencies, or strikes, (ii) the
making of repairs or changes which Landlord is required or is permitted by this
Lease or by law to make or in good faith deems necessary to maintain and operate
the Building, (iii) difficulty in securing proper supplies of fuel, steam,
water, electricity, labor or supplies, or (iv) any other cause beyond Landlord's
reasonable control, whether similar or dissimilar; provided that except in case
of emergency, Landlord will notify Tenant in advance, if possible, of any such
stoppage and, if ascertainable, its estimated duration, and will proceed
diligently with the work necessary to resume such service as promptly as
possible and in a manner so as to minimize interference with Tenant's use and
enjoyment of the demised premises. Landlord agrees that the provisions of
Section 7.05 shall apply with respect to the performance of any such work.
21.04. It is expressly agreed that no persons, firms or corporations other
than those who have been approved by Landlord (such approval not to be
unreasonably withheld or delayed) will be permitted to furnish laundry, linen,
towels, and other similar supplies and services to tenants and licensees in the
Building. Landlord may fix, in its reasonable discretion, at any time and from
time to time, the hours during which and the regulations under which such
supplies and services are to be furnished.
21.05. Tenant agrees to employ such office maintenance contractor as
Landlord may from time to time designate, for all waxing, polishing, lamp
replacement and cleaning (other than those cleaning services Landlord is
obligated to furnish) provided that the quality thereof and the charges therefor
are reasonably comparable to that of other contractors. Tenant shall not employ
any other contractor for such services without Landlord's prior written consent,
which shall not be unreasonably withheld or delayed.
21.06. Landlord shall maintain, operate and manage the Building in a
manner consistent with that of other comparable office buildings in Manhattan.
Landlord will not be required to furnish any other services, except as otherwise
provided in this Lease.
21.07. Tenant shall have access to the demised premises on a
24-hour-per-day basis, subject to Landlord's reasonable security measures.
21.08. Landlord shall not unreasonably withhold its consent to the
installation in the demised premises by Tenant at Tenant's sole cost and expense
of a warming pantry (which may include a microwave and refrigerator) together
with a lunchroom unit provided that:
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(a) the use thereof shall be confined to Tenant's officers, Tenant's
employees and business invitees;
(b) the operation thereof shall not involve the installation of any
flues or other ventilation equipment or facilities, and shall not cause any
food, cooking or other odors to emanate from the demised premises to other parts
of the Building; and
(c) Tenant shall from time to time engage such first-class
extermination services as shall be necessary to protect the demised premises
against rats, mice, roaches and other insects or vermin.
(d) Tenant may install vending machines as a service exclusively for
Tenant's employees and business invitees.
21.09. Tenant shall have the right to maintain on the Building directory
Tenant's Proportionate Operating Share of listings for such directory, at no
cost to Tenant.
21.10. Notwithstanding anything in this Lease contained to the contrary,
if, as result of (a) the failure of Landlord to provide heating or
air-conditioning service, passenger or freight elevator service or any utility
services required to be provided under this Lease or to make any repairs or
maintenance Landlord is obligated to make under this Lease, (b) any repair,
alteration or other work performed by Landlord or its agents, employees or
contractors in the Building or in the demised premises, or (c) any negligent act
or omission of Landlord or its agents or employees, the demised premises or any
portion thereof of no less than 7,500 rentable square feet shall become
untenantable or unusable for Tenant's business purposes for a period in excess
of ten (10) consecutive Business Days and the cause thereof shall not be any
negligent act or omission of Tenant, its agents, representatives or employees
("Tenant's Acts") or any reason set forth in Article 34 of this Lease, and
Tenant shall give Landlord notice of such untenantability or unusability and
shall vacate the demised premises or any such portion thereof for the period of
such untenantability or unusability, then, in such event the fixed annual rent
payable pursuant to Section 1.01 hereof and Tenant's Tax Payment and Tenant's
Expense Payment allocable to such portion of the demised premises on a pro rata
rentable square foot basis shall abate from and after the first (1st) Business
Day of such untenantability or unusability until the demised premises or any
such portion thereof shall be rendered tenantable or usable for Tenant's
business purposes. In the event of any such event described in this Section
21.10, Landlord agrees to use reasonable diligent efforts to complete the cure
thereof and to be bound by, and subject to, the provisions of Section 7.05
hereof in connection with Landlord's cure of such failure.
21.11. Landlord covenants and agrees to provide, at Landlord's cost
subject to recoupment under Article 3 hereof, a concierge or Building lobby
attendant at the 345 Park Avenue South entrance of the Building 24 hours a day,
365 days a year.
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21.12. Landlord agrees that Tenant may install, at Tenant's sole cost and
expense, cable television in the demised premises for Tenant's use subject to
Landlord's reasonable approval of the plans and location for such installation.
ARTICLE 22
DEFINITIONS
22.01. The term "Landlord" as used in this Lease means only the owner, or
the mortgagee in possession, for the time being of the Land and Building (or the
owner of a lease of the Building or of the Land and Building), so that in the
event of any transfer of title to said Land and Building or said lease, or in
the event of a lease of the Building, or of the Land and Building, upon
notification to Tenant of such transfer or lease the said transferor Landlord
shall, from and after such transfer, be and hereby is entirely freed and
relieved of any and all covenants, obligations and liabilities of Landlord
hereunder, and it shall be deemed and construed as a covenant running with the
land without further agreement between the parties or their successors in
interest, or between the parties and the transferee of title to said Land and
Building or said lease, or the said lessee of the Building, or of the Land and
Building, that the transferee or the lessee has assumed and agreed to carry out
any and all such covenants, obligations and liabilities of Landlord hereunder.
22.02. The term "Business Days" as used in this Lease shall exclude
Saturdays, Sundays and all days recognized as holidays under the applicable (as
determined by the issue or matter in question) union contract.
22.03. "Interest Rate" shall mean a rate per annum equal to the lesser of
(a) 2% above the commercial lending rate (herein referred to as the "Prime
Rate") announced from time to time by Bankers Trust Company, as its prime rate
for 90-day unsecured loans, or (b) the maximum applicable legal rate, if any.
22.04. "Legal Requirements" shall mean laws, statutes and ordinances
(including building codes and zoning regulations and ordinances) and the orders,
rules, regulations, directives and requirements of all federal, state, county,
city and borough departments, bureaus, boards, agencies, offices, commissions
and other subdivisions thereof, or of any official thereof, or of any other
governmental public or quasi-public authority, whether now or hereafter in
force, including, without limitation, The Americans with Disabilities Act of
1990, Public Law 101-336, 42 U.S.C. ss.ss. 12101 et seq. (herein called the
"Disabilities Act"), which may be applicable to the Land or Building or the
demised premises or any part thereof, or the sidewalks, curbs or areas adjacent
thereto.
22.05. "CPI" shall mean the Consumer Price Index for All Urban Consumers
("CPI-AUC"), New York, New York-Northeastern New Jersey, All Items
(1982-1984=100), issued and published by the Bureau of Labor Statistics of the
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United States Department of Labor. In the event that CPI-AUC ceases to use a
1982-84 base rate of 100 as the basis of calculation, or if a substantial change
is made in the terms or number of items contained in CPI-AUC, then the CPI-AUC
shall be adjusted to the figure that would have been arrived at had the manner
of computing the CPI-AUC in effect at the date of this Lease not been altered.
If CPI-AUC is not available, the term CPI shall mean (i) a successor or
substitute index to CPI-AUC, appropriately adjusted; or (ii) if such a successor
or substitute index is not available or may not lawfully be used for the
purposes herein stated, a reliable governmental or other non-partisan
publication, selected by Landlord and approved by Tenant (which approval shall
not be unreasonably withheld or delayed), evaluating the information theretofore
used in determining CPI-AUC.
22.06. "Landlord Affiliate" shall mean any entity controlled by, which
controls or which is under common control with Landlord. For purposes hereof,
control means ownership directly or indirectly of 50% or more of the outstanding
voting stock, partnership interests or other beneficial interests of the entity
in question.
ARTICLE 23
INVALIDITY OF ANY PROVISION
23.01. If any term, covenant, condition or provision of this Lease or the
application thereof to any circumstance or to any person, firm or corporation
shall be invalid or unenforceable to any extent, the remaining terms, covenants,
conditions and provisions of this Lease or the application thereof to any
circumstances or to any person, firm or corporation other than those as to which
any term, covenant, condition or provision is held invalid or unenforceable,
shall not be affected thereby and each remaining term, covenant, condition and
provision of this Lease shall be valid and shall be enforceable to the fullest
extent permitted by law.
ARTICLE 24
BROKERAGE
24.01. Tenant covenants, represents and warrants that Tenant has had no
dealings or communications with any broker, or agent other than Galbreath
Riverbank, L.P. (which is currently representing Landlord) and Williams Real
Estate Company (hereinafter collectively called the "Brokers") in connection
with the consummation of this Lease and the negotiation thereof, and Tenant
covenants and agrees to pay, hold harmless and indemnify Landlord from and
against any and all cost, expense (including reasonable attorneys' fees and
disbursements) or liability for any compensation, commissions or charges claimed
by any broker or agent, other than the Brokers in the event of a breach of the
foregoing representation.
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24.02. Landlord covenants and agrees to pay, hold harmless and indemnify
Tenant from and against any and all cost, expense (including reasonable
attorneys' fees and disbursements) or liability for any compensation,
commissions or charges claimed by any broker or agent, claiming to have dealt
with Landlord with respect to this Lease or the negotiation thereof.
24.03. Landlord shall be responsible for any commission or fee payable to
the Brokers pursuant to separate agreements between Landlord and the Brokers.
24.04. The provisions of this Article 24 shall survive the expiration or
earlier termination of this Lease.
ARTICLE 25
SUBORDINATION
25.01. Provided and only so long as the so-called non-disturbance
agreements referenced in Section 25.06 are in full force and effect and subject
to the provisions of Section 25.06 hereof, this Lease is and shall be subject
and subordinate to the Ground Lease (as hereinafter defined) and all ground or
underlying leases which may hereafter affect the real property of which the
demised premises form a part and to all mortgages which may now or hereafter
affect such leases or such real property, and to all renewals, modifications,
replacements and extensions thereof. The provisions of this Section 25.01 shall
be self-operative and no further instrument of subordination shall be required.
In confirmation of such subordination, Tenant shall promptly execute and deliver
any instrument, in recordable form if required, that Landlord, the lessor of
the ground or underlying lease or the holder of any such mortgage or any of
their respective successors in interest may reasonably request to evidence such
subordination.
25.02. In the event of a termination of any ground or underlying lease
where the ground lessor has provided to Tenant a so-called non-disturbance
agreement as set forth in Section 25.06 hereof, or if the interests of Landlord
under this Lease are transferred by reason of, or assigned in lieu of,
foreclosure or other proceedings for enforcement of any mortgage where the
mortgagee has provided to Tenant a so-called non-disturbance agreement as set
forth in Section 25.06 hereof, or if the holder of any mortgage acquires a lease
in substitution therefor where the mortgagee has provided to Tenant a so-called
non-disturbance agreement as set forth in Section 25.06 hereof, then Tenant
under this Lease will, at the option to be exercised in writing by the lessor
under such ground or underlying lease or such mortgagee or purchaser, assignee
or lessee, as the case may be, either (i) attorn to it on the then-executory
terms and conditions of this Lease for the remainder of the term provided such
successor is entitled to possession of the demised premises and will perform for
its benefit all the terms, covenants and conditions of this Lease on Tenant's
part
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to be performed with the same force and effect as if said lessor, such mortgagee
or purchaser, assignee or lessee, were the landlord originally named in this
Lease, or (ii) enter into a new lease with said lessor or such mortgagee or
purchaser, assignee or lessee, as landlord, for the remaining term of this Lease
and otherwise on the same terms and conditions and with the same options, If
any, then remaining. The foregoing provisions of clause (i) of this Section
25.02 shall enure to the benefit of such lessor, mortgagee, purchaser, assignee
or lessee, shall be self-operative upon the exercise of such option, and no
further instrument snail be required to give effect to said provisions. Tenant,
however, upon demand of any such lessor, mortgagee, purchaser, assignee or
lessee agrees to execute, from time to time, instruments in confirmation of the
foregoing provisions of this Section 25.02, reasonably satisfactory to any such
lessor, mortgagee, purchaser, assignee or lessee, acknowledging such attornment
and setting forth the terms and conditions of its tenancy.
25.03. Anything herein contained to the contrary notwithstanding, under no
circumstances shall the aforedescribed lessor under the ground lease or
mortgagee or purchaser, assignee or lessee, as the case may be, whether or not
it shall have succeeded to the interests of the landlord under this Lease, be
(a) liable for any act, omission or default of any prior landlord
provided, however, that the foregoing provisions of this subsection 25.03(a)
shall not be deemed to exculpate the successor landlord from the obligation to
cure any condition in the Building which continues to give rise to a default
after the date the successor landlord acquires its interest; or
(b) subject to any offsets, claims or defenses which the Tenant
might have against any prior landlord other than the abatements provided in
Section 1.01 hereof or otherwise as expressly set forth in this Lease; or
(c) bound by any fixed annual rent or additional rent which Tenant
might have paid to any prior landlord for more than one month in advance or for
more than three months in advance where such rent payments are payable at
intervals of more than one month; or
(d) bound by any modification, amendment or abridgment of the Lease,
or any cancellation or surrender of the same, made without its prior written
approval except with respect to any cancellation or surrender of this Lease made
pursuant to any express right expressly set forth in this Lease.
25.04. If, in connection with the financing of the Building, the holder of
any mortgage shall request reasonable modifications in this Lease as a condition
of approval thereof, Tenant will not unreasonably withhold, delay or defer
making such modifications, provided that such modifications do not (i) increase
the monetary obligations of Tenant or (ii) except to a de minimis extent (A)
increase the non-monetary obligations of Tenant hereunder or (B) decrease the
rights of Tenant or the obligations of Landlord hereunder.
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25.05. Tenant agrees that, except for the first month's rent hereunder, it
will pay no rent under this Lease more than thirty (30) days in advance of its
due date, and, in the event of any act or omission by Landlord, Tenant will not
exercise any right to terminate this Lease or to remedy the default and deduct
the cost thereof from rent due hereunder until Tenant shall have given written
notice of such act or omission to the ground lessor and to the holder of any
mortgage on the fee or the ground lease who shall have furnished such lessor's
or holder's last address to Tenant, and until a reasonable period for remedying
such act or omission shall have elapsed following the giving of such notices,
during which time such lessor or holder shall have the right, but shall not be
obligated, to remedy to completion or cause to be remedied to completion such
act or omission. Tenant shall not exercise any right pursuant to this Section
26.02 if the holder of any mortgage or such aforesaid lessor commences to cure
such aforesaid act or omission within a reasonable time and diligently
prosecutes such cure thereafter.
25.06.(a) Landlord represents that (i) the only superior lease currently
affecting the Land or the Building is that certain lease dated July 1, 1964
between PARK 25TH ASSOCIATES, as landlord, and Sally Nadel, as tenant, and which
lease was assigned by Sally Nadel to 345 PARK SOUTH ASSOCIATES by assignment
dated July 1, 1964 and which lease was further assigned by 345 PARK SOUTH
ASSOCIATES to 345 PARK AVENUE SOUTH PARTNERSHIP by assignment dated June 30,
1982, and which lease was further assigned by 345 PARK AVENUE SOUTH PARTNERSHIP
to Landlord's predecessor-in-interest The Armory Building Limited Partnership,
by assignment dated May 20, 1985, as amended by a First Amendment of Lease dated
May, 1989 between Park 25th Associates, as landlord and The Armory Building
Limited Partnership, Landlord's predecessor-in-interest, as tenant (herein
called the "Ground Lease"); (ii) there are no leasehold mortgages currently
affecting Landlord's interest as tenant under the Ground Lease; and (iii) there
are no mortgages currently affecting the fee interest in the Land and Building
other than a mortgage held by the lessor under the Ground Lease. Landlord shall
use reasonable efforts to obtain a so-called non-disturbance agreement from the
lessor under the Ground Lease (in the form annexed hereto as Schedule H hereof),
and Tenant hereby agrees to pay any reasonable attorneys' fees of the lessor
under the Ground Lease actually charged to Landlord pursuant to the Ground Lease
in connection with obtaining such non-disturbance agreement. If Landlord shall
fail to obtain any such non-disturbance agreement within thirty (30) days from
the date hereof, Tenant may terminate this lease by providing notice thereof to
Landlord within fifteen (15) days after the expiration of said 30-day period and
this lease shall terminate as of the fifth (5th) Business Day following the
giving of Tenant's notice and Landlord shall return to Tenant the Security
Deposit and the first full month's rent submitted to Landlord hereunder, unless
Landlord shall have obtained and delivered to Tenant such non-disturbance
agreement within such five (5) Business Day period.
(b) With respect to future leasehold mortgages affecting Landlord's
interest in the Ground Lease and future ground and underlying leases, the
subordination of this Lease to such future leasehold mortgages and future ground
leases shall be conditioned upon the execution and delivery by
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and between Tenant and any such mortgagee or lessor of a so-called
non-disturbance agreement in a form customarily used by such mortgagee or lessor
provided same shall contain provisions no more onerous to Tenant (except to a de
minimis extent) than, and shall be as beneficial to Tenant as, the provisions of
Schedule L annexed hereto (in the case of mortgagees) or Schedule H annexed
hereto (in the case of ground lessors). Tenant agrees to execute such agreements
and return same to Landlord within twenty (20) days after Landlord's written
request therefor. If Tenant shall fail to execute, acknowledge and return any
such agreement within such twenty (20) day period, then Landlord may send a
notice to Tenant indicating that, as of the tenth (10th) day following such
second notice, this Lease shall be subordinate to such future leasehold
mortgages or future leases, as the case may be, pursuant to the terms and
conditions of such agreement, and Tenant shall be deemed to have executed and
delivered such agreement to the lessor or mortgagee requesting such execution,
notwithstanding the fact that Tenant has not, in fact, executed and delivered
such agreement. If Tenant shall fail to execute, acknowledge and return any such
agreement within such ten (10) day period then the provisions of the foregoing
sentence shall apply.
ARTICLE 26
ESTOPPEL CERTIFICATE
26.01. Each party agrees, at any time and from time to time, as requested
by the other party, upon not less than ten (10) Business Days' prior notice, to
execute and deliver to the other a statement certifying that this Lease is
unmodified and in full force and effect (or if there have been modifications
that the same is in full force as modified and stating the modifications),
certifying the dates to which the annual fixed rent and additional rent have
been paid, and stating whether or not, to the best knowledge of the signer and
without investigation, the other party is in default in performance of any of
its obligations under this Lease, and, if so, specifying each such default of
which the signer may have knowledge, it being intended that any such statement
delivered pursuant hereto may be relied upon by others with whom the party
requesting such certificate may be dealing.
ARTICLE 27
LEGAL PROCEEDINGS, WAIVER OF JURY TRIAL
27.01. Landlord and Tenant do hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other on any matters whatsoever arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the
demised premises, and/or any other claims (except claims for personal injury or
property damage), and any emergency statutory or any other statutory remedy. It
is further mutually agreed that in the event Landlord commences any summary
proceeding for non-payment of rent, Tenant will
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not interpose and does hereby waive the right to interpose any counterclaim of
whatever nature or description in any such proceeding, unless the failure to
interpose a counterclaim in such proceeding will result in a waiver thereof.
ARTICLE 28
SURRENDER OF PREMISES
28.01. Upon the expiration or other termination of the term of this Lease.
Tenant shall quit and surrender to Landlord the demised premises, broom clean,
in good order and condition, ordinary wear and tear, damage required to be
repaired by Landlord and damage by fire, the elements or other casualty and
condemnation excepted, and Tenant shall remove all of its property as and to the
extent herein provided. Tenant's obligation to observe or perform this covenant
shall survive the expiration or other termination of the term of this Lease.
ARTICLE 29
RULES AND REGULATIONS
29.01. Tenant and Tenant's servants, employees and agents shall observe
faithfully and comply with (i) the Rules and Regulations set forth in Schedule B
attached hereto and made part hereof entitled "Rules and Regulations" and such
other and further reasonable Rules and Regulations as Landlord or Landlord's
agents may from time to time adopt and (ii) the Building Rules and Regulations
for Alterations attached hereto as Schedule G and such amendments or additions
thereto as Landlord or Landlord's agents may adopt; provided that in either case
any such further Rules and Regulations or such amendments or additions to the
Building Rules and Regulations for Alterations do not conflict with Tenant's use
of the demised premises as permitted hereunder or cause (except to a de minimis
extent) (A) an increase in Tenant's obligations hereunder or (B) a decrease in
Tenant's rights or Landlord's obligations hereunder, and provided, further, that
in case of any conflict or inconsistency between the provisions of this Lease
and of any of the Rules and Regulations or Building Rules and Regulations for
Alterations as originally or as hereafter adopted, the provisions of this Lease
shall control. Reasonable advance written notice of any additional Rules and
Regulations or Building Rules and Regulations for Alterations shall be given to
Tenant. Landlord agrees not to unreasonably withhold or delay any consent or
approval required under the Rules and Regulations.
Nothing in this Section 29.01 contained shall be construed to impose upon
Landlord any duty or obligation to enforce the Rules and Regulations or the
terms, covenants or conditions in any other lease, against any other tenant of
the Building, and Landlord shall not be liable to Tenant for violation of the
same by any other tenant, its servants, employees, agents, visitors or
licensees. Landlord shall not enforce any Rule or Regulation against Tenant
which Landlord shall not then be generally enforcing against other office
tenants in the Building.
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Any dispute between Landlord and Tenant with respect to the Rules and
Regulations shall be resolved by arbitration pursuant to Article 38 hereof.
ARTICLE 30
CONSENTS AND APPROVALS
30.01. Wherever in this Lease Landlord's consent or approval is required,
if Landlord shall delay or refuse such consent or approval, Tenant in no event
shall be entitled to make, nor shall Tenant make, any claim, and Tenant hereby
waives any claim, for money damages (nor shall Tenant claim any money damages by
way of set-off, counterclaim or defense) based upon any claim or assertion by
Tenant that Landlord unreasonably withheld or unreasonably delayed its consent
or approval. Tenant's sole remedy shall be an action or proceeding to enforce
any such provision, for specific performance, injunction or declaratory
judgment. Tenant may, however, commence arbitration under Section 30.02 or
Article 38 hereof, as the case may be, for the resolution of any dispute between
Landlord and Tenant with respect to the reasonableness of Landlord's withholding
of consent in any case where Landlord has expressly agreed in this Lease not to
unreasonably withhold or delay its consent. Notwithstanding the foregoing,
Tenant may make a claim for money damages against Landlord in any instance in
which there has been a final judicial determination of a court of competent
jurisdiction that Landlord has withheld or delayed its consent maliciously or in
bad faith with respect to any consent that Landlord is asked to grant in
accordance with this Lease and which such consent Landlord has expressly agreed
in this Lease not to unreasonably withhold; provided, however, that in no event
shall Landlord be liable for consequential, special or indirect damages.
30.02. (a) If there is a dispute between Landlord and Tenant as to (i) the
reasonableness of Landlord's refusal to consent to any assignment or subletting,
or (ii) the reasonableness of Landlord's refusal to consent to any Alteration,
in either event where Landlord has expressly agreed herein not to unreasonably
withhold its consent, Tenant may, at its option, as its sole and exclusive
remedy (subject to the provisions of the last sentence of Section 30.01 hereof),
submit such dispute to arbitration in the City of New York under the Expedited
Procedures provisions of the Commercial Arbitration Rules of the American
Arbitration Association or any successor (the "AAA") (presently Rules 53 through
57 and, to the extent applicable, Section 19); provided, however, that with
respect to any such arbitration, (i) the list of arbitrators referred to in Rule
54 shall be returned within five (5) days from the date of mailing; (ii) the
parties shall notify the AAA by telephone, within four (4) days of any
objections to the arbitrator appointed and will have no right to object if the
arbitrator so appointed was on the list submitted by the MA and was not objected
to in accordance with the second paragraph of Rule 54; (iii) the Notice of
Hearing referred to in Rule 55 shall be four (4) days in advance of the hearing;
(iv) the hearing shall be held within seven (7) days after the appointment of
the arbitrator; (v) the arbitrator shall have no right to award damages; and
(vi) the decision and award of the arbitrator shall be final and conclusive on
the parties.
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(b) The arbitrators conducting any arbitration shall be bound by the
provisions of this Lease and shall not have the power to add to, subtract from,
or otherwise modify such provisions. Landlord and Tenant agree to sign all
documents and to do all other things necessary to submit any such matter to
arbitration and further agree to, and hereby do, waive any and all rights they
or either of them may at any time have to revoke their agreement hereunder to
submit to arbitration and to abide by the decision rendered thereunder. With
respect to a dispute concerning the reasonableness of Landlord's refusal to
consent to any assignment or subletting, each of the arbitrators shall have at
least ten (10) years' experience in the business of managing real estate or
acting as a real estate broker or real estate attorney dealing with first-class
office buildings located in Manhattan. With respect to a dispute concerning the
reasonableness of Landlord's refusal to give any approval of any Alteration with
respect to which Landlord expressly agreed herein to be reasonable, each of the
arbitrators shall be an architect or engineer with at least ten (10) years'
experience in designing and performing Alterations in first-class office
buildings located in Manhattan similar in size, quality and character to the
Alteration which is the subject of the dispute. Each party hereunder shall pay
its own costs, fees and expenses in connection with any arbitration or other
action or proceeding brought under this Article 30, and the expenses and fees of
the arbitrators selected shall be shared equally by Landlord and Tenant.
Notwithstanding any contrary provisions hereof (but subject to the provisions of
the last sentence of Section 30.01 hereof), if Tenant shall submit such dispute
to arbitration, then Landlord and Tenant agree that (i) the arbitrators may not
award or recommend any damages to be paid by either party, (ii) in no event
shall either party be liable for, nor be entitled to recover, any damages, and
(iii) Tenant's sole remedy arising out of such arbitrator's decision shall be
the right to enter into the proposed sublease or assignment, or proceed on the
basis that the requested approval relating to such Alteration had been granted,
as the case may be.
ARTICLE 31
NOTICES
31.01. Any notice, demand, consent, approval, disapproval, or statement
(hereinafter collectively referred to as the "Notices") required to be given by
the terms and provisions of this Lease, or by any law or governmental
regulation, either by Landlord to Tenant or by Tenant to Landlord, shall be in
writing. Unless otherwise required by such law or regulation, each Notice shall
be given, and shall be deemed to have been served and given (A) three (3)
Business Days after such Notice is mailed by registered or certified mail,
return receipt requested, deposited enclosed in a securely closed post-paid
wrapper, in a United States Government general or branch post office, or
official depository with the exclusive care and custody thereof, or (B) one (1)
Business Day after such Notice is mailed by nationally recognized overnight
courier, addressed to either party, at its address set forth on page 1 of this
Lease. After Tenant shall occupy the demised premises
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for the conduct of its business, the address of Tenant for Notices, demands,
consents, approvals or disapprovals shall be the Building, Attention: James
Finkelstein. Either party may, by notice as aforesaid, designate a different
address or addresses for Notices.
31.02. In addition to the foregoing, either Landlord or Tenant may, from
time to time, request in writing that the other party serve a copy of any Notice
on one or two other persons or entities designated in such request, such service
to be effected as provided in Section 31.01 hereof.
31.03. Pursuant to Section 31.02 hereof, a copy of each Notice to be
served upon Landlord at its address on page 1 of this Lease shall also
simultaneously be served upon Landlord at the following address: Bankers Trust
Co., 280 Park Avenue -- 23 West, New York, New York 10017, Attn: Susan Cox, Vice
President, and a copy of each Notice of default to be served upon Tenant
pursuant to Article 16 hereof shall also be served upon Shea & Gould, 1251
Avenue of the Americas, New York, New York 10020, Attn: Lawrence J. Lipson, Esq.
ARTICLE 32
NO WAIVER
32.01. No agreement to accept a surrender of this Lease shall be valid
unless in writing signed by Landlord. No employee of Landlord or of Landlord's
agents shall have any power to accept the keys of the demised premises prior to
the termination of this Lease. The delivery of keys to any employee of Landlord
or of Landlord's agent shall not operate as a termination of this Lease or a
surrender of the demised premises. In the event of Tenant at any time desiring
to have Landlord sublet the premises for Tenant's account, Landlord or
Landlord's agents are authorized to receive said keys for such purpose without
releasing Tenant from any of the obligations under this Lease. The failure of
either Landlord or Tenant to seek redress for violation of, or to insist upon
the strict performance of, any covenant or condition of this Lease or any of the
Rules and Regulations set forth herein, or hereafter adopted by Landlord, shall
not prevent a subsequent act, which would have originally constituted a
violation, from having all the force and effect of an original violation. The
payment by Tenant or the receipt by Landlord of rent with knowledge of the
breach of any covenant of this Lease shall not be deemed a waiver of such
breach. The failure of Landlord to enforce any of the Rules and Regulations set
forth herein, or hereafter adopted, against Tenant and/or any other tenant in
the Building shall not be deemed a waiver of any such Rules and Regulations,
subject to the provisions of Section 29.01 hereof. No provision of this Lease
shall be deemed to have been waived by Landlord or Tenant, unless such waiver be
in writing signed by such party. No payment by Tenant or receipt by Landlord of
a lesser amount than the monthly rent herein stipulated shall be deemed to be
other than on the account of the earliest stipulated rent, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment of rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy in this Lease provided.
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32.02. This Lease contains the entire agreement between the parties, and
any executory agreement hereafter made shall be ineffective to change, modify,
discharge or effect an abandonment of it in whole or in part unless such
executory agreement is in writing and signed by the party against whom
enforcement of the change, modification, discharge or abandonment is sought.
ARTICLE 33
CAPTIONS
33.01. The captions are inserted only as a matter of convenience and for
reference, and in no way define, limit or describe the scope of this Lease nor
the intent of any provision thereof.
ARTICLE 34
INABILITY TO PERFORM
34.01. If, by reason of (1) strike, (2) labor troubles, (3) governmental
pre-emption in connection with a national emergency, (4) any rule, order or
regulation of any governmental agency, (5) conditions of supply or demand which
are affected by war or other national, state or municipal emergency, (6) act of
God, or (7) any other cause beyond Landlord's reasonable control except
financial inability, Landlord shall be unable to fulfill its obligations under
this Lease or shall be unable to supply any service which Landlord is obligated
to supply, this Lease and Tenant's obligation to pay rent hereunder shall in no
wise be affected, impaired or excused, except as otherwise provided herein. The
reasons set forth in clauses (1) through (7) of this Section 34.01 are
hereinafter called "Force Majeure Causes".
34.02. If, by reason of (1) strike, (2) labor troubles, (3) governmental
pre-emption in connection with a national emergency, (4) any rule, order or
regulation of any governmental agency, (5) conditions of supply or demand which
are affected by war or other national, state or municipal emergency, (6) act of
God, or (7) any other cause beyond Tenant's reasonable control except financial
inability, Tenant shall be unable to fulfill its obligations to make any repairs
or alterations which Tenant is obligated to perform under this Lease, this Lease
and Landlord's obligations hereunder shall in no wise be affected, impaired or
excused, except as otherwise provided herein.
ARTICLE 35
NO REPRESENTATIONS BY LANDLORD
35.01. Landlord or Landlord's agents have made no representations or
promises with respect to the Building or demised premises except as herein
expressly set forth.
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ARTICLE 36
NAME OF BUILDING
36.01. (a) Except as otherwise expressly set forth in this Article 36,
Landlord shall have the full right at any time to name and change the name of
the Building and to change the designated address of the Building, and the
Building may be named after any person, firm, or otherwise, whether or not such
name is, or resembles, the name of a tenant of the Building.
(b) Notwithstanding the provisions of subsection 36.01(a), provided
and for so long as this Lease shall remain in full force and effect and the
Tenant named herein and/or its Affiliates or Successor shall be in actual
occupancy of no less than two (2) full floors of the Building, (i) such named
Tenant or such Affiliate or Successor which is then in occupancy of at least two
(2) full floors of the Building shall have the right to install identifying
signage on the glass transom above the 345 Park Avenue South entrance door of
the Building and/or etched or otherwise placed on the glass entrance door of
such 345 Park Avenue South entrance; provided that such signage shall contain
only such named Tenant's name or the name of its Affiliate or Successor which is
then in actual occupancy of at least two (2) full floors of the Building and of
which the principal business is the publication or production of materials
concerning the legal profession and/or the identification logo of same (and
Landlord hereby approves the following name: "The New York Law Journal and The
National Law Journal") and such named Tenant, Affiliate or Successor shall have
obtained the prior written approval of Landlord, such approval not to be
unreasonably withheld or delayed, to plans and specifications for such signage
reflecting the color, size, configuration, design and materials of such signage
and Landlord hereby approves the size, configuration and design for same annexed
hereto as Schedule J, and provided further that no other tenant identification
signage shall be installed on the glass entrance door and glass transom of the
345 Park Avenue South entrance door to the Building (Any such signage permitted
to be installed by the named Tenant, or its Affiliate or Successor may be
removed from the Building at any time at Tenant's option, and shall be removed
prior to the Expiration Date, in either case at Tenant's sole cost and expense
and Tenant shall repair any damage to the Building caused by such installation
or removal and restore same to its condition prior to such installation) and
(ii) Landlord shall not name the Building after, or give rights, to any person
or entity constituting a "Direct Competitor" as hereinafter defined, to install
its identifying signage on or above the 351 Park Avenue South entrance door to
the Building or to install identifying signage on the exterior of the Building
which is larger than that of Tenant, and (iii) Landlord shall not permit any
other tenant in the Building which occupies 105% or less of the amount of
rentable square feet of office space then-occupied by Tenant to install
indentifying signage on the exterior of the Building which is larger than that
of Tenant. For purposes hereof, "Direct Competitor" shall mean (A) American
Lawyer and American Lawyer Media Group and any subsidiary of the foregoing of
which the principal business is the
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publication of materials concerning the legal profession, and any entity, the
name of which contains the phrase "American Lawyer" or "American Lawyer Media
Group", (B) Los Angeles Daily Journal, (C) Chicago Daily Bulletin, (D) Lawyer's
Weekly USA, (E) Prentice-Hall Law & Business, (F) Matthew Bender, and (G) any
future newspaper which is competitive with The New York Law Journal or The
National Law Journal.
ARTICLE 37
RESTRICTIONS UPON USE
37.01. It is expressly understood that no portion of the demised premises
shall be used as, by or for (i) the retail activities of a bank, trust company,
savings bank, industrial bank, savings and loan association or personal loan
bank (or any branch office or public accommodation office of any of the
foregoing), or (ii) a public stenographer or typist, barber shop, beauty shop,
beauty parlor or shop, telephone or telegraph agency, telephone or secretarial
service, messenger service (except in connection with the conduct of Tenant's
business in the demised premises), travel or tourist agency, employment agency
(other than a high class executive recruitment office), public restaurant or
bar, commercial document reproduction or offset printing service (except in
connection with the conduct of Tenant's business in the demised premises),
vending machines (other than for use by Tenant's employees and business
invitees), retail, wholesale or discount shop for sale of merchandise, retail
service shop, labor union, school or classroom (other than in connection with
training of Tenant's employees), governmental or quasi-governmental bureau,
department or agency, including an autonomous governmental corporation, or a
company engaged in the business of renting office or desk space.
ARTICLE 38
ARBITRATION
38.01. In the event of any dispute between Landlord and Tenant with
respect to: (i) construction issues under Article 2 and Schedule C; (ii) the
provisions of Article 29; and (iii) in each case specified in this Lease in
which resort to arbitration shall be required or may be elected by either party
(except as otherwise provided in Section 30.02 hereof), such arbitration (unless
otherwise specifically provided in other Sections of this Lease) shall be in New
York City in accordance with the Commercial Arbitration Rules of the AAA and the
provisions of this Lease. Within ten (10) Business Days next following the
giving of any notice by Landlord or Tenant stating that it wishes such dispute
to be determined by arbitration under this Article 38, Landlord and Tenant shall
each give notice to the other setting forth the name and address of an
arbitrator designated by the party giving such notice. If either party shall
fail to give notice of such designation within said ten (10) Business Days, then
the AAA shall select the arbitrator for the party
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failing to choose. If the two arbitrators shall fail to agree upon the
designation of a third arbitrator within five (5) Business Days after the
designation of the second arbitrator then either party may apply to the AAA in
Manhattan, New York for the designation of such arbitrator. The three
arbitrators shall conduct such hearings as they deem appropriate, making their
determination in writing and giving notice to Landlord and Tenant of their
determination as soon as practicable, and if possible, within five (5) Business
Days after the designation of the third arbitrator: the concurrence of or, in
the event no two of the arbitrators shall render a concurrent determination,
then the determination of the third arbitrator designated shall be binding upon
Landlord and Tenant. Judgment upon any decision rendered in any arbitration held
pursuant to this Section 38.01 shall be final and binding upon Landlord and
Tenant, whether or not a judgment shall be entered in any court. Each party
shall pay its own counsel fees and expenses, if any, in connection with any
arbitration under this Section 38.01, including the expenses and fees of any
arbitrator selected by it in accordance with the provisions of this Section
38.01, and the parties shall share all other expenses and fees of any such
arbitration. The arbitrators shall be bound by the provisions of this Lease, and
shall not add to, subtract from or otherwise modify such provisions. Judgment
may be had on the decision and award of the arbitrators so rendered in any court
of competent jurisdiction.
38.02. If Tenant gives notice requesting arbitration as provided in
Section 38.01, Tenant shall simultaneously serve a duplicate of the notice on
each Superior Mortgagee and Superior Lessor whose name and address shall
previously have been furnished to Tenant, and such Superior Mortgagees and
Superior Lessors shall have the right to participate in such arbitration.
ARTICLE 39
INDEMNITY
39.01. Subject to the waiver provided pursuant to Section 9.08 hereof,
Tenant shall indemnify and save Landlord, its partners, directors, officers,
principals, shareholders, agents and employees (herein called the "Indemnitees")
harmless from and against (a) all claims of whatever nature against the
Indemnitees arising from any act, omission or negligence of Tenant, its
contractors, licensees, agents, servants or employees, (b) all claims against
the Indemnitees arising from any accident, injury or damage whatsoever caused to
any person or to the property of any person and occurring during the term hereof
in the demised premises, (c) all claims against the Indemnitees arising from any
accident, injury or damage occurring outside of the demised premises but
anywhere within or about the Building, where such accident, injury or damage
results or is claimed to have resulted from an act, omission or negligence of
Tenant or Tenant's contractors, licensees, agents, servants, or employees, and
(d) any breach, violation or non-performance of any covenant, condition or
agreement in this Lease set forth and contained on the part of Tenant to be
fulfilled, kept, observed and performed. This indemnity and hold harmless
agreement shall include indemnity from and against
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any and all liability, fines, suits, demands, costs and expenses of any kind or
nature (including, without limitation, reasonable attorneys' fees and
disbursements) incurred in or in connection with any such claim or proceeding
brought thereon, and the defense thereof and shall be subject to the waiver of
subrogation set forth in Section 9.08 hereof; provided, however, that Tenant
shall not be liable for any consequential, indirect or special damages by reason
of this indemnity.
39.02. Subject to the waiver provided pursuant to Section 9.08 hereof,
Landlord shall indemnify, defend and save Tenant, its partners, directors,
officers, principals, shareholders, agents and employees harmless from and
against any claims against the foregoing indemnitees arising from the negligence
or wilful misconduct of Landlord, its agents or employees. This indemnity and
hold harmless agreement shall include indemnity from and against any and all
liability, fines, suits, demands, costs and expenses of any kind or nature
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred in or in connection with any such claim or proceeding brought thereon,
and the defense thereof and shall be subject to the waiver of subrogation set
forth in Section 9.08 hereof; provided, however, that in no event shall Landlord
be liable for any consequential, indirect or special damages by reason of this
indemnity.
39.03. If any claim, action or proceeding is made or brought against
either party, which claim, action or proceeding the other party shall be
obligated to indemnify such first party against pursuant to the terms of this
Lease, then, upon demand by the indemnified party, the indemnifying party, at
its sole cost and expense, shall resist or defend such claim, action or
proceeding in the indemnified party's name, if necessary, by such attorneys as
the indemnified party shall approve, which approval shall not be unreasonably
withheld. Attorneys for the indemnifying party's insurer are hereby deemed
approved for purposes of this Section 39.03. Notwithstanding the foregoing, an
indemnified party may retain its own attorneys to defend or assist in defending
any claim, action or proceeding involving potential liability of Five Million
Dollars ($5,000,000) or more, and the indemnifying party shall pay the
reasonable fees and disbursements of such attorneys.
39.04. The provisions of this Article 39 shall survive the expiration or
earlier termination of this Lease.
ARTICLE 40
MEMORANDUM OF LEASE
40.01. Landlord and Tenant shall, at the request of the other party
execute and deliver a statutory form of memorandum of this Lease form reasonably
satisfactory to Landlord and Tenant for the purpose of recording, but said
memorandum of this Lease shall not in any circumstances be deemed to modify or
to change any of the provisions of this Lease. The filing fees and other
expenses (other than attorneys' fees of the other party) shall be borne by the
party requesting the filing of such memorandum.
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ARTICLE 41
MISCELLANEOUS
41.01. Irrespective of the place of execution or performance, this Lease
shall be governed and construed in accordance with the laws of the State of New
York.
41.02. This Lease shall be construed without regard to any presumption or
other rule requiring construction against the party causing this Lease to be
drafted.
41.03. Each covenant, agreement, obligation or other provision of this
Lease on Tenant's part to be performed shall be deemed and construed as a
separate and independent covenant of Tenant, not dependent on any other
provision of this Lease.
41.04. All terms and words used in this Lease, regardless of the number or
gender in which they are used, shall be deemed to include any other number and
any other gender as the context may require.
41.05. Time shall be of the essence with respect to the exercise of any
option granted under this Lease.
41.06. Except as otherwise provided herein whenever payment of interest is
required by the terms hereof it shall be at the Interest Rate.
41.07. Tenant represents and warrants that this lease has been duly
authorized, executed and delivered by Tenant and constitutes the legal, valid
and binding obligation of Tenant.
41.08. In the event that Tenant is in arrears in payment of fixed annual
rent or additional rent hereunder and such default remains uncured beyond the
expiration of the applicable grace period, then during the continuation of such
event of default, Tenant waives Tenant's right, if any, to designate the items
against which any payments made by Tenant are to be credited, and Tenant agrees
that Landlord may, after notice to Tenant, apply any payments made by Tenant to
any items it sees fit, irrespective of and notwithstanding any designation or
request by Tenant as to the items against which any such payments shall be
credited.
41.09. This Lease shall not be binding upon Landlord or Tenant until the
same is executed by Landlord and Tenant and an executed copy thereof has been
delivered to Tenant and to Landlord. This Lease may be executed in counterparts,
each of which shall, when executed, be deemed to be an original and all of which
shall be deemed to be one and the same instrument.
41.10. No agreement shall be effective to change, modify, waive, release,
discharge, terminate or effect an abandonment of this Lease, in whole or in
part, including, without limitation, this Section 41.10, unless such agreement
is in writing, refers expressly to this lease and is signed by the party against
whom enforcement of the change, modification, waiver, release, discharge,
termination or effectuation of the abandonment is sought.
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41.11 Except as otherwise expressly provided in this Lease, the
obligations of this Lease shall bind and benefit the successors and assigns of
the parties hereto with the same effect as if mentioned in each instance where a
party is named or referred to; provided, however, that (a) no violation of the
provisions of Article 11 hereof shall operate to vest and rights in any
successors or assignee of Tenant and (b) the provisions of this Article 41 shall
not be construed as modifying any conditions of limitations contained in Article
16 hereof.
41.12. This Lease constitutes the entire agreement between the parties
with respect to the leasing of the demised premises.
41.13. In connection with any examination by Tenant of Landlord's books
and records, Tenant agrees to treat, and to instruct its employees, accountants
and agents to treat, all information as confidential and not disclose it to any
other person except as may be required by any Legal Requirement or to a court or
an arbitrator in a dispute between Landlord and Tenant; and Tenant will confirm
or cause its agents and accountants to confirm such agreement in a separate
written agreement if requested by Landlord.
41.14. Notwithstanding anything to the contrary contained herein:
(a) in the event that this Lease shall terminate for any reason
whatsoever during the Permanent Rental Period, then Tenant shall pay to Landlord
no later than five (5) days after the occurrence of such termination (unless an
earlier date for such payment is expressly set forth in this Lease) an amount
equal to the Termination Fixed Rent as of such termination date as set forth on
Schedule E annexed hereto, subject to the provisions of subsection 41.14(b)
hereof and
(b) if, prior to March 1, 1997, Landlord shall cease to make
payments under to that certain agreement of even date herewith between Landlord
and Tenant (the "Side Agreement") of "Monthly Payments" and "Occupancy
Payments", as defined in the Side Agreement, and thereafter (i) Landlord shall
have the right to, and shall re-enter the demised premises pursuant to Article
16 or 17 hereof and (ii) this Lease shall be terminated, then, in such event,
the Termination Fixed Rent shall be deemed to be the Termination Fixed Rent as
of the date that Landlord's payments under the Side Agreement shall have so
ceased.
ARTICLE 42
SECURITY
42.01. Tenant shall deposit with Landlord either the sum of $510,417.00 or
the "Security Letter", as defined in Section 42.02 hereof in such amount, as
security for the faithful performance and observance by Tenant of the terms,
provisions, covenants and conditions of this Lease. Such security (including
without limitation any cash portion remaining after application of the proceeds
drawn down under the Security Letter) shall be deposited in a segregated
interest-bearing account at Bankers Trust Company or, upon notice to Tenant, any
money center bank and Landlord shall refund to Tenant the amount of such
interest accrued on the monies so deposited once each calendar year upon written
request from Tenant. It is agreed that in the
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event Tenant defaults in respect of any of the terms, provisions, covenants and
conditions of this Lease, including, but not limited to, the payment of fixed
annual rent and additional rent, and such default remains uncured after the
expiration of the applicable grace period set forth herein, Landlord may, during
the continuance of such event of default, use, apply or retain the whole or any
part of the security so deposited to the extent required for the payment of any
fixed annual rent and additional rent or any other sum as to which Tenant is in
default after notice and beyond applicable grace periods or for any sum which
Landlord may reasonably expend by reason of Tenant's default in respect of any
of the terms, provisions, covenants and conditions of this Lease, after notice
and beyond applicable grace periods including but not limited to, any damages
or deficiency accrued before or after summary proceedings or other re-entry by
Landlord. If and to the extent that Landlord has not applied the security in
accordance with the provisions hereof and Tenant shall have delivered to
Landlord an executed document in recordable form terminating any memorandum of
lease which Tenant shall have caused to be recorded pursuant to Article 40 of
this Lease the security shall be returned to Tenant within thirty (30) days
after the date fixed as the end of the Lease or the earlier termination thereof
and after delivery of entire possession of the demised premises to Landlord in
accordance with this Lease. In the event of a sale of the Land and Building or
leasing of the Building, Landlord shall have the right to transfer the security
to the vendee or lessee who shall be bound by the provisions hereof, and
Landlord shall upon such transfer be released by Tenant from all liability for
the return of such security; and in such event Tenant agrees to look solely to
the new landlord for the return of said security; and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new landlord. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security except in connection with an assignment of this Lease permitted
hereunder and consented to by Landlord and that neither Landlord nor its
successors or assigns shall be bound by any such assignment, encumbrance,
attempted assignment or attempted encumbrance except in connection with an
assignment of this Lease permitted hereunder and consented to by Landlord. In
the event Landlord applies or retains any portion or all of the security
deposited, Tenant shall forthwith restore the amount so applied or retained so
that at all times the amount deposited shall be $510,417.00.
42.02. In lieu of the cash security deposit provided for in Section 42.01
hereof, Tenant may at any time during the term hereof deliver to Landlord and
shall thereafter, except as otherwise provided herein or if Tenant shall, at any
time, provide a cash deposit in lieu thereof, maintain in effect at all times
during the term hereof, an irrevocable letter of credit, in form and substance
as set forth in Schedule N annexed hereto, in the amount of the security
required pursuant to this Article 42 issued by a banking corporation
satisfactory to Landlord and having its principal place of business or a duly
licensed branch or agency thereof in the State of New York. Landlord agrees that
CoreStates Bank and Credit Lyonnais S.A., New York Branch are satisfactory (such
banks and any other bank approved by Landlord are herein called individually an
"Approved Bank"). Such letter of credit shall provide that the full amount
thereof may be drawn down by Landlord upon
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the presentation to the issuing bank of Landlord's sight draft on the issuing
bank together with a certificate from an officer of Landlord certifying that
Landlord is entitled to draw down the Security Letter by reason of a default by
Tenant under this Lease, after notice and the expiration of the applicable grace
period, and such letter of credit shall have an expiration date no earlier than
the first anniversary of the date of issuance thereof and shall be automatically
renewed from year to year unless terminated by the issuer thereof by notice to
Landlord given not less than forty-five (45) days prior to the expiration
thereof. If Landlord shall give Tenant notice that either the short-term or
long-term Standard & Poor's rating of the Approved Bank, which is the issuer of
the Security Letter, has decreased below the "Minimum Standard Rating", as
hereinafter defined (together with evidence thereof), then Tenant shall, no
later than fifteen (15) days from the receipt of such notice, deliver to
Landlord a replacement letter of credit from a bank satisfactory to Landlord or
a cash security deposit in the amount required hereunder provided, however, that
if Tenant shall during such 15-day period request Landlord's approval of a
proposed bank, and Landlord shall fail to respond to Tenant's request within
three (3) Business Days after receipt of such request, such 15-day period shall
be extended on a day-for-day basis for each day beyond such 3-Business Day
period that Landlord shall fail to respond to Tenant's request for approval. For
purposes hereof, the "Minimum Standard Rating" shall mean: (i) a long-term CD
rating not below A; (ii) a short-term CD rating not below A-1; and (iii) a
senior unsecured debt rating not below A. Except as otherwise provided in this
Article 42, Tenant shall, throughout the term of this Lease deliver to Landlord,
in the event of the termination of any such letter of credit, an extension of
such letter of credit or a replacement letter of credit in lieu thereof (each
such letter of credit and such extensions or replacements thereof, as the case
may be, is hereinafter referred to as a "Security Letter") no later than
forty-five (45) days prior to the expiration date of the preceding Security
Letter. The term of each such Security Letter shall be not less than one (1)
year and shall be automatically renewable from year to year as aforesaid. If
Tenant shall fail to obtain any replacement or extension of a Security Letter
within the time limits set forth in this Section 42.02, Landlord, as its sole
remedy, may draw down the full amount of the existing Security Letter and retain
the same as security hereunder, subject to the provisions of this Section 42.02.
42.03. In the event Tenant defaults after notice and beyond applicable
grace periods in respect of any of the terms, provisions, covenants and
conditions of this Lease, including, but not limited to, the payment of fixed
annual rent and additional rent, and such default remains uncured beyond any
applicable grace period, Landlord may during the continuance of such event of
default use, apply or retain the whole or any part of the security so deposited
to the extent required for the payment of any fixed annual rent and additional
rent or any other sum as to which Tenant is in default or for any sum which
Landlord may reasonably expend by reason of Tenant's default in respect of any
of the terms, provisions, covenants, and conditions of this Lease, including but
not limited to, any damages or deficiency accrued before or after summary
proceedings or other re-entry by Landlord. To insure that
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Landlord may utilize the security represented by the Security Letter in the
manner, for the purposes, and to the extent provided in this Article 42, each
Security Letter shall provide that the full amount thereof may be drawn down by
Landlord upon the presentation to the issuing bank of Landlord's sight draft
drawn on the issuing bank together with a certificate from an officer of
Landlord certifying that Landlord is entitled to draw down the Security Letter
by reason of a default by Tenant under this Lease, after notice and the
expiration of the applicable grace period.
42.04. In the event that Tenant defaults after notice and beyond
applicable grace periods in respect of any of the terms, provisions, covenants
and conditions of the Lease and Landlord utilizes all or any part of the
security represented by the Security Letter but does not terminate this Lease as
provided in Article 16 hereof, Landlord shall, in addition to exercising its
rights as provided in Section 42.03, retain the unapplied and unused balance of
the principal amount of the Security Letter as security for the faithful
performance and observance by Tenant thereafter of the terms, provisions, and
conditions of this Lease, and may use, apply, or retain the whole or any part of
said balance to the extent required for payment of rent, additional rent, or any
other sum as to which Tenant is in default or for any sum which Landlord may
expend or be required to expend by reason of Tenant's default in respect of any
of the terms, covenants, and conditions of this Lease. In the event Landlord
applies or retains any portion or all of the security delivered hereunder,
Tenant shall forthwith restore the amount so applied or retained so that at all
times the amount deposited shall be not less than the security required by
Section 42.01.
42.05. To the extent that the Security or any portion thereof has not been
applied in accordance with this Article 42, and Tenant shall have delivered to
Landlord an executed document in recordable form terminating any memorandum of
lease which Tenant shall have caused to be recorded pursuant to Article 40 of
this Lease the security shall be returned to Tenant within thirty (30) days
after the date fixed as the end of the Lease or the earlier termination hereof
and after delivery of entire possession of the demised premises to Landlord in
accordance with this Lease. In the event of a sale of the Land and Building or
leasing of the Building, Landlord shall have the right to transfer any interest
it may have in the Security Letter to the vendee or lessee who shall be bound by
the provisions hereof and Landlord shall upon such transfer be released by
Tenant from all liability for the return of such Security Letter, provided such
vendee or lessee assumes any responsibilities of Landlord with respect to such
Security Letter and in such event Tenant agrees to look solely to the new
landlord for the return of said Security Letter; and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
Security Letter to a new landlord. Tenant further covenants that it will not
assign or encumber or attempt to assign or encumber the monies deposited herein
as security and that neither Landlord nor its successors or assigns shall be
bound by any such assignment, encumbrance, attempted assignment or attempted
encumbrance. In the event of a sale of the Building Landlord shall have the
right to require Tenant to
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deliver a replacement Security Letter naming the new landlord as beneficiary
and, if Tenant shall fail to timely deliver the same, to draw down the existing
Security Letter and retain the proceeds as security hereunder until a
replacement Security Letter is delivered.
ARTICLE 43
HOLDOVER
43.01. In the event this Lease is not renewed or extended or a new lease
is not entered into between the parties, and if Tenant shall then hold over
after the expiration of the term of this Lease, and if Landlord shall then not
proceed to remove Tenant from the demised premises in the manner permitted by
law (or shall not have given written notice to Tenant that Tenant must vacate
the demised premises) irrespective of whether or not Landlord accepts rent from
Tenant for a period beyond the Expiration Date, the parties hereby agree that
Tenant's occupancy of the demised premises after the expiration of the term
shall be under a month-to-month tenancy commencing on the first day after the
expiration of the term, which tenancy shall be upon all of the terms set forth
in this lease except Tenant shall pay on the first day of each month of the
holdover period as fixed annual rent, an amount equal to the higher of (i) an
amount equal to one hundred fifty (150%) percent of one-twelfth of the sum of
the fixed annual rent and additional rent payable by Tenant during the last year
of the term of this Lease (i.e., the year immediately prior to the holdover
period) or (ii) an amount equal to the then market rental value for the demised
premises. It is further stipulated and agreed that if Landlord shall, at any
time after the expiration of the original term or after the expiration of any
term created thereafter, proceed to remove Tenant from the demised premises as a
holdover, the fixed annual rent for the use and occupancy of the demised
premises during any holdover period shall be calculated in the same manner as
set forth above.
43.02 Notwithstanding anything to the contrary contained in this lease,
the acceptance of any rent paid by Tenant pursuant to Section 43.01 hereof shall
not preclude Landlord from commencing and prosecuting a holdover or summary
eviction proceeding, and the preceding sentence shall be deemed to be an
"agreement expressly providing otherwise" within the meaning of Section 232-c of
the Real Property Law of the State of New York.
ARTICLE 44
TENANT'S WORK; WORK FUND
44.01. Tenant hereby covenants and agrees that Tenant will, at Tenant's
own cost and expense, and in a good and workerlike manner, make and complete the
Tenant's Work, as hereinafter defined, in accordance with the final plans, as
hereinafter defined.
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Tenant, at Tenant's expense, shall prepare a final plan or final set
of plans and specifications for the initial work to be performed by Tenant in
the demised premises (which said final plan or final set of plans, as the case
may be, and specifications are hereinafter called the "final plan") which shall
contain complete information, and dimensions necessary for the construction and
finishing of the demised premises and for the engineering in connection
therewith. The final plan shall be submitted by Tenant to Landlord for
Landlord's written approval, which approval shall be given or withheld in
accordance with the provisions of Article 6 hereof. If Landlord shall fail to
respond to Tenant's written request for approval of the final plans within ten
(10) Business Days after Landlord's receipt of such request, then Landlord shall
be deemed to have granted such approval provided that Tenant's request therefor
shall have expressly referenced this Section 44.01 and the aforementioned ten
(10) Business Day period and the consequences of Landlord's failure to timely
respond. The provisions of the preceding sentence shall apply to Tenant's
request for Landlord's approval of any revisions to the final plans provided
that the ten (10) Business Day period set forth therein shall be reduced to five
(5) Business Days. Tenant shall promptly reimburse Landlord within fifteen (15)
days after demand for any reasonable out-of-pocket costs and expenses incurred
by Landlord to unrelated third parties in connection with Landlord's review of
Tenant's final plan. If Landlord shall disapprove the final plan, Landlord shall
set forth its reasons for such disapproval and itemize those portions of the
final plan so disapproved. Landlord shall not be deemed unreasonable in
withholding its consent to the extent that the final plan prepared by Tenant
pursuant hereto involves the performance of work or the installation in the
demised premises of materials or equipment which do not substantially equal or
exceed the standard of quality adopted by Landlord for the Building (herein
called "Building Standard") to the extent such standard does not exceed that
adopted by landlords of comparable office buildings in Manhattan. Landlord has
received from Tenant the following drawings: (i) Prepared by SPGA-MBA, dated
8/16/93: ML1 through 4; 7C; 7PT; 7RC; 7FP; 7F; 7DHS; 8DE; 8C; 8PT; 8RC; 8FP; 8F;
8DHS; 9DE; 9C; 9PT; 9RC; 9FP; 9F; 9DHS; B-1; D-1 through 17 (other than D-13);
S-1 and S-2; (ii) Prepared by SPGA-MBA and countersigned by Martin A. Haber
dated 8/23/93: M-1 through 5; E-1 through 12; SP-1 through 4; P-1 through 3.
Such drawings are approved by Landlord except as noted on that certain
memorandum dated September 29, 1993 from Landlord's managing agent to Landlord's
attorney, a copy of which has been previously delivered to Tenant.
In accordance with the final plan, Tenant, at Tenant's expense, will
make and complete in and to the demised premises the work and installations
(hereinafter called "Tenant's Work") specified in the final plan. Tenant agrees
that Tenant's Work will be performed using reasonable efforts to minimize
disturbance to the occupants of other parts of the Building and to the
structural and mechanical parts of the Building and Tenant will, at its own cost
and expense leave all structural and mechanical parts of the Building which
shall or may be affected by Tenant's Work in at least the same operating
condition as prior to the commencement of Tenant's Work. At any and all times
during the progress of Tenant's Work, Landlord shall be entitled to have
representatives on the site to inspect Tenant's Work provided that such access
and inspection shall not interfere with the performance of Tenant's Work and
such representatives shall have free and unrestricted access to any and every
part of the demised premises subject to the foregoing proviso in this sentence
and provided further that Landlord shall incur no liability,
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obligation or responsibility to Tenant or any third party by reason of such
access and inspection, except to the extent of Landlord's negligence or wilful
misconduct or that of its agents or employees. Tenant shall advise Landlord in
writing of Tenant's general contractor and subcontractor(s) who are to do
Tenant's Work, and same shall be subject to Landlord's prior written approval
which approval will not be unreasonably withheld or delayed; such general
contractor and subcontractors(s) shall, to the extent permitted by law, use
employees for Tenant's Work who will work harmoniously with other employees on
the job. If Landlord shall fail to respond to Tenant's written request for
approval of a contractor written (10) Business Days after Landlord's receipt of
such request, then Landlord shall be deemed to have granted such approval.
Landlord approves Meli Borrelli Associates Inc., Ostreicher Realty or OD&P
Construction to act as Tenant's construction manager or general contractor for
Tenant's Work.
Tenant shall at Tenant's sole cost and expense file all necessary
architectural plans and obtain all necessary approvals and permits in connection
with Tenant's Work being performed by it pursuant to this Article 44.
44.02. The following conditions shall also apply to Tenant's Work:
(a) intentionally omitted;
(b) Tenant, at Tenant's expense shall (i) file all required
architectural, mechanical and electrical drawings and obtain all necessary
permits, and (ii) furnish and perform all engineering and engineering drawings
in connection with Tenant's Work. Tenant shall obtain Landlord's approval of the
drawings referred to in (i) and (ii) hereof and of the engineer selected by
Tenant for engineering of Tenant's Work, which approval shall be given or
withheld in accordance with the provisions of Article 6 hereof. Landlord hereby
approves Martin A. Haber of Meli Borrelli Associates Inc., as Tenant's engineer
for Tenant's Work;
(c) all Tenant's Work shall be performed by Tenant in accordance
with the provisions of Article 6 hereof and Landlord's Building Rules and
Regulations for Alterations;
(d) Landlord agrees that there shall be no charge to Tenant for the
use of the freight elevator during Business Hours of Business Days for the
period of the construction of Tenant's Work (including, without limitation, for
the movement of construction materials to the demised premises and the removal
of construction debris) in reasonable amounts provided same shall not
unreasonably interfere with the operations of the Building and the use thereof
by other tenants in the Building) and of Tenant's initial move-in to the
demised premises provided, however, that, except as otherwise expressly agreed
in this subsection 44.02(d), Tenant's use thereof shall be governed by the
provisions of Article 21 hereof. During the period of the performance of
Tenant's Work and Tenant's initial move-in to the demised premises, Tenant shall
pay to Landlord as overtime charges for use of the freight elevators
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during non-Business Hours and on non-Business Days Landlord's actual cost to
provide same except that Tenant shall have free use of the freight elevators
during Tenant's construction and/or move-in to the demised premises for up to
thirty-two (32) overtime hours, subject to the provisions of Article 21 hereof.
Overtime charges for Tenant's use of overtime freight elevator service during
the performance of Tenant's Work and Tenant's initial move in may, at Tenant's
option, be credited against the portion of the Work Allowance allocable to the
Flexible Fund in accordance with Section 44.05 hereof.
(e) Landlord shall impose no percentage override fee on Tenant based
on the cost of Tenant's Work provided, however, that the foregoing shall not
prohibit Landlord from requiring Tenant to pay to Landlord as additional rent
hereunder Landlord's out-of-pocket costs for overtime expenses incurred by
Landlord in connection with Tenant's Work during non-Business Hours, except as
otherwise expressly provided in this Lease;
(f) All modifications to the sprinkler system existing in the
demised premises on the Commencement Date which are set forth in Tenant's final
plans as approved by Landlord shall be performed by Tenant at Tenant's expense.
Tenant will be liable for all costs in connection therewith including without
limitation the cost of system shut down during non-Business Hours and on
non-Business Days at the rate of $40.00 per hour per day;
(g) If Tenant shall install, at Tenant's cost, an internal fire
alarm system within the demised premises, same shall be included in Tenant's
final plans for Landlord's approval in accordance with this Article 44, and
Tenant shall, at Tenant's expense, wire same to a central point to be designated
by Landlord in the fire stairs of the Building between the sixth and tenth
floors, and Landlord shall, at Landlord's cost and expense, make the final
connection thereof to the Building Class E System;
(h) During the performance of Tenant's Work, Tenant shall be
permitted, at Tenant's sole cost and expense, to construct a customary
construction shed at a location within the demised premises, subject to
Landlord's prior reasonable approval of the method, design and location of same;
(i) During the performance of Tenant's Work and throughout the term
of this Lease in connection with Tenant's Alterations, subject to complying with
Legal Requirements, Tenant shall be permitted to use a reasonable portion of
shaft space which is available for use by tenants in the Building for Tenant's
communications cabling, cable TV cabling, Tenant's antenna wiring (pursuant to
Article 48 hereof) and electrical and other wiring which Tenant shall request in
writing from Landlord, subject to Landlord's approval thereof, such approval not
to be unreasonably withheld or delayed, subject to the then-current and future
anticipated needs of Landlord or of any then-current or future tenants with
respect to such additional available shaft space in the Building, all such usage
to be at no cost and expense to Landlord and in accordance with Landlord's
reasonable rules and regulations for same;
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(j) Tenant shall have the right to install an internal staircase
between any contiguous floors demised to Tenant in a location and pursuant to
plans and specifications approved by Landlord, such approval not to be
unreasonably withheld or delayed and to install a private bathroom in the
demised premises in a location and pursuant to plans and specifications approved
by Landlord, such approval not to be unreasonably withheld or delayed. Any such
internal stairways (other than the stairway to be installed by Tenant between
the seventh (7th) and eighth (8th) floors of the Building and such private
bathroom) shall constitute Specialty Alterations as to which Landlord shall have
the rights set forth in Section 6.04 hereof; and
(k) Tenant shall be permitted, without charge by Landlord during
Business Hours of Business Days, reasonable access to the sixth (6th) floor of
the Building as necessary from time to time during the performance of Tenant's
Work for installing electrical and communication wiring above the suspended
ceiling of the sixth (6th) floor and for drilling poke-throughs in the 6th floor
ceiling for electrical and communications distribution on the 7th floor to the
extent such work is approved by Landlord as part of Tenant's final plans and
provided that in the event that all or any portion of the 6th floor shall be
leased, then Tenant's rights under this paragraph (k) shall be subject to
reasonable restrictions imposed by Landlord in order to minimize interference
with the use of such leased space by the future tenant thereof, and Tenant shall
reasonably cooperate with any such future tenants in connection with performing
any such work and scheduling any such access under this paragraph (k) hereunder.
If Tenant shall require access to the 6th floor for such purpose during
non-Business Hours or on non-Business Days, Tenant shall give Landlord
reasonable prior notice and Landlord shall provide Landlord's supervisory
personnel to monitor such after-hours access at Tenant's expense, not to exceed
Landlord's Building Standard charge therefore. It is understood and agreed that
Tenant shall not be responsible for removing and/or restoring any ceiling tiles
on the 6th floor which Landlord shall cause to be taken down in connection with
any installing and/or drilling any such poke-throughs in accordance with this
subparagraph (k) but otherwise Tenant shall be liable to repair and restore any
damage to the 6th floor premises resulting from such access. Landlord agrees
that core drilling reasonably necessary for purposes of the provisions of this
subparagraph (k) shall be permitted during Business Hours of Business Days
during the performance of Tenant's Work subject to the foregoing provisions of
this paragraph (k).
44.03. It is understood that of the services to be furnished by Landlord
referred to in Article 21 hereof, Landlord shall not furnish any cleaning
services until Tenant commences occupancy of the demised premises for the
conduct of its business. Tenant shall be responsible for removal of Tenant's
refuse and rubbish during the period that Tenant's Work is in progress in the
demised premises.
44.04. Landlord shall, at Tenant's written request, cooperate in all
reasonable respects with Tenant in the performance by Tenant of Tenant's Work in
preparing the demised premises for Tenant's occupancy and Landlord shall
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instruct its employees and contractors to render such assistance and to
cooperate with Tenant's employees, representatives and contractors provided that
to the extent that Landlord shall incur any reasonable out-of-pocket expense to
unrelated third parties in so cooperating or in rendering such assistance,
Tenant shall reimburse Landlord for such expense as additional rent hereunder.
Landlord agrees to cooperate with Tenant, at no expense to Landlord, in
connection with executing all necessary permits, approvals or applications
required for the performance of Tenant's Work in accordance with the final plans
as approved by Landlord. Landlord and Tenant acknowledge and agree that Tenant's
Work and portions of Landlord's Post-Commencement Work shall be performed
concurrently in the demised premises and accordingly Landlord and Tenant hereby
agree to cooperate with each other in all reasonable respects such that the
performance simultaneously of Landlord's Post-Commencement Work and Tenant's
Work shall be coordinated in a reasonable manner.
44.05. (a) Landlord shall provide Tenant an allowance in the amount of up
to TWO MILLION FOUR HUNDRED EIGHT THOUSAND FIVE HUNDRED ($2,408,500) DOLLARS
(herein called the "Work Allowance") [calculated as ($2,385,000 ($45 prsf of the
office space) plus $23,500], which Work Allowance shall be applied against the
cost and expense of the actual construction work performed by Tenant in
connection with Tenant's Work in the Premises, provided, however, that a portion
of the Work Allowance in an amount not to exceed twenty (20%) percent of the
amount thereof may be applied by Tenant against the cost and expense of "Fees",
as hereinafter defined. In the event that the cost and expense of such actual
construction work and the Fees shall exceed the amount of the Work Allowance,
Tenant shall be entirely responsible for such excess. If Tenant does not use all
or any part of the Work Allowance for Tenant's Work and such Fees, then the Work
Allowance shall be reduced accordingly. For purposes hereof, "Fees" shall mean
costs and expenses incurred in connection with Tenant's Work on account of
architectural, engineering, design and other consultants' fees, filing fees, and
Tenant's furniture, fixtures and equipment (including communications equipment)
when and after same have been installed in the demised premises (except that
commercially reasonable deposits or downpayments for same and for other
materials used in Tenant's Work shall be collectible pursuant to this Section
44.05 as part of the Work Fund prior to installation provided the aggregate
amount of such deposits or downpayments shall not exceed $250,000) and any
payment required to be made by Tenant to Landlord for services provided under
Section 44.01 hereof. The Work Allowance shall be payable to Tenant or, at the
written direction of Tenant, to Tenant's general contractor or construction
manager, by wire transfer or by check subject to collection, at Landlord's
election, upon written requisition, in installments of no less than $200,000
each (except for the penultimate such installment, which may be less than
$200,000.00 and the last such installment which shall be in an amount not less
than $50,000), as Tenant's Work progresses, but in no event more frequently than
monthly, and in accordance with the provisions of subsection 44.05(c) hereof.
If the amount of such estimate exceeds $2,500,000, then Tenant shall
simultaneously therewith furnish to Landlord written evidence reasonably
satisfactory to Landlord of the availability of Tenant's funds sufficient to pay
for the cost of Tenant's Work in excess of the Work Allowance, Landlord may
withhold ten percent (10%)
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of the amount of each installment of the Work Fund requisitioned by Tenant
(other than the final installment) as a retainage, except that (A) no retainage
shall be withheld by Landlord on the portion of any requisition constituting
Fees, (B) Landlord may not withhold such retainage if Tenant is withholding a
retainage from the contractor to which such retainage by Landlord would
otherwise apply, and (C) upon completion of each trade, Tenant may request, and
Landlord shall pay from the Work Fund, subject to the provisions of this Section
44.05, the amount of any retainage previously withheld by Landlord in respect of
such trade. Tenant's requests for payment of installments of the Work Fund shall
(i) list separately each trade for which payment is requested, (ii) indicate
whether Tenant or Landlord is withholding a retainage in respect thereof, (iii)
indicate which portions of such request are for Fees (as to which no retainage
shall apply), and (iv) indicate which trades, if any, listed in such request
have completed their portions of Tenant's Work.
(b) At any and all times during the progress of Tenant's Work,
representatives of Landlord shall have the right of access to the demised
premises and inspection thereof provided such access and inspection shall not
interfere with the performance of Tenant's Work and shall have the right to
withhold all or any portion of the Work Allowance as shall equal the cost of
correcting any portions of Tenant's Work which shall not have been performed in
accordance with the final plans and in a good and workmanlike manner. Landlord
shall incur no liability, obligation or responsibility to Tenant or any third
party by reason of the access and inspection provided in this subsection
44.05(b).
(c) In connection with the payment of the installments of the Work
Allowance, Tenant shall prior to the payment to Tenant, or Tenant's general
contractor or construction manager, at Tenant's direction, of the installment of
the Work Allowance in question furnish to Landlord (1) invoices for the portion
of Tenant's Work or Fees, as the case may be, referenced in such requisition,
(2) copies of paid invoices for the portion of Tenant's Work or Fees, as the
case may be, referenced in the prior requisition, (3) partial lien waivers from
the contractor or contractors performing the portion of Tenant's Work
represented by such invoices releasing Tenant from liability for same, (4) a
certificate signed by Tenant's architect and an officer of Tenant certifying
that such portion of the Tenant's Work has been satisfactorily completed
substantially in accordance with the final plan, and (5) prior to the payment of
the final installment of the Work Allowance, (which shall not be less than
$50,000), all Building Department sign-offs, inspection certificates and any
permits required to be issued by any governmental entities having jurisdiction
thereover (or in the event any such sign-off, certificate or permit is
impossible to obtain by reason of the fact that there is no Certificate of
Occupancy for the Building, then a compliance certificate under New York City
Directive 14 in lieu thereof) including, without limitation, with respect to the
work to be performed by Tenant pursuant to Sections 44.06, 44.07 and 44.08
hereof.
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(d) Notwithstanding anything to the contrary in this Section 44.05,
it is understood and agreed that a portion of the Work Allowance in an amount up
to $40,000 (herein called the "Flexible Fund") shall be permitted to be
allocated by Tenant, at its sole election, to any and all costs incurred by
Tenant associated with Tenant's Work, Tenant's relocation, or Tenant's use and
occupancy of the demised premises including, without limitation, Fees; provided,
however, that no portion of the Flexible Fund used for the payment of Fees shall
be included in calculating whether Tenant has exceeded the twenty percent (20%)
limit on the amount of the Work Fund permitted to be applied to Fees pursuant to
Section 44.05(a) hereof. The entire Flexible Fund shall be payable by Landlord
to Tenant upon written requisition therefor by Tenant accompanied by invoices
and/or billings (including without limitation billings for services provided by
Landlord under this Lease for which Tenant is required hereunder to pay charges
therefor) in an amount up to the amount of the Flexible Fund, and (except with
respect to actual construction costs for portions of Tenant's Work requisitioned
by Tenant from the Flexible Fund) Tenant shall not be required to submit the
items set forth in clauses (1) through (5) of subsection 44.05 (c) hereof or any
further documentation with request thereto as a condition for Landlord's payment
thereof.
44.06. In addition to the Work Allowance, Landlord shall allow Tenant an
additional allowance of up to TWENTY THOUSAND ($20,000) DOLLARS (herein called
the "Slab Allowance") to be applied against the cost and expense incurred by
Tenant for actual construction costs to remove the existing internal stairway
between the 6th and 7th floors and to slab over the existing slab cut on the 7th
floor serving such internal stairway provided that such stairway removal and
slabover work shall be performed in accordance with Legal Requirements and with
plans approved by Landlord, such approval not to be unreasonably withheld or
delayed. The Slab Allowance shall be payable by Landlord to Tenant after the
substantial completion of such slabover work in accordance with such approved
plans and upon submission to Landlord of a requisition thereof containing an
invoice for same together with the documentation in connection with such
stairway removal and slabover work set forth in clauses (2), (3) and (4) of
subsection 44.05(c).
44.07. In addition to the Work Allowance and the Slab Allowance, Landlord
shall allow Tenant an additional allowance of up to Ten Thousand and no/l00
($10,000.00) Dollars (herein called the "Demising Wall Allowance") to be applied
against the actual cost and expense incurred by Tenant for actual construction
costs to construct a demising wall on the 9th floor separating the portion of
the demised premises located on such 9th floor from the balance of the rentable
area on such floor, as shown on the floor plan of the 9th floor annexed as
Schedule A to the Lease, provided that such work shall be performed in
accordance with Legal Requirements and with plans approved by Landlord, such
approval not to be unreasonably withheld or delayed. The Demising Wall Allowance
shall be payable by Landlord to Tenant after the substantial completion of such
work in accordance with such approved plans and upon submission to Landlord of a
requisition thereof containing an invoice for same together with the
documentation in connection with such work set forth in
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clauses (2), (3) and (4) of subsection 44.05(c).
44.08. In addition to the Work Allowance, the Slab Allowance and the
Demising Wall Allowance Landlord shall allow Tenant an additional allowance of
up to THREE HUNDRED TWENTY THOUSAND ($320,000) DOLLARS (herein called the "HVAC
Allowance") to be applied against the cost and expense incurred by Tenant to
purchase and install the Air-Cooled Units in the 7th and 8th floors in
accordance with Tenant's final plans. The HVAC Allowance shall be payable by
Landlord to Tenant after the substantial completion of such installation in
accordance with such approved plans and upon submission to Landlord of a
requisition thereof containing an invoice for same together with the
documentation in connection with such purchase and installment of the Air-Cooled
Units set forth in clauses (2), (3) and (4) of subsection 44.05(c).
ARTICLE 45
BASEMENT SPACE
45.01. Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord, for the term hereof, the portion of the Building located on the
basement floor of the Building as shown hatched on the floor plan annexed hereto
as Schedule I and which Landlord and Tenant hereby agree constitutes 880 usable
square feet (hereinafter called the "Basement Space") upon all the terms of this
Lease as modified by this Article 45. Tenant's occupancy of the Basement Space
shall be subject to all of the terms and conditions set forth in the Lease and
to the following additional terms and conditions:
(a) Tenant shall accept the Basement in its "as is" condition as of
the Commencement Date; and Landlord shall not be obligated to perform any work
or incur any expense to prepare the Basement Space for Tenant's use except that
Landlord shall perform asbestos removal in the Basement Space in accordance with
Legal Requirements in order to deliver to Tenant a New York City Buildings
Department Form ACP-5 with respect to the Basement Space based on Tenant's final
plans issued with respect to the Basement Space, within ten (10) Business Days
after Landlord shall have approved such plans, and Landlord shall provide and
install one lighting fixture in the Basement Space and Landlord shall construct
a Building Standard door and walls separating the Basement Space within
forty-five (45) days after execution of this Lease and the receipt of the
required non-disturbance agreement.
(b) Commencing on the Escalation Rent Commencement Date and for the
remainder of the term of this Lease, the fixed annual rent set forth in
subsection 1.01(b) hereof shall be increased by the annual rate of Four Thousand
Four Hundred ($4,400.00) Dollars per annum allocable to the Basement Space and,
accordingly, the monthly installments of fixed annual rent shall be increased by
the monthly amount of $366.67 per month.
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(c) Landlord shall supply electricity to the Basement Space for the
lighting fixtures therein. Tenant shall pay to Landlord additional rent for the
supply of electricity to the Basement Space for the lighting thereof at the
annual rate of Five Hundred ($500) Dollars per annum, which shall be payable in
equal monthly installments on the first day of each month in the same manner as
prescribed in Article 1 with respect to fixed annual rent from and after the
date that Landlord shall have substantially completed the demising wall and door
for the Basement Space, without regard to the abatement set forth in subsection
1.01(b) thereof. Such additional rent on account of electricity supplied to the
Basement Space shall be subject to increase from time to time in the same
percentage as any percentage increase in the rate charged to Landlord for
electricity supplied to the Building by the public utility supplying electricity
to the Building;
(d) Tenant shall make no alterations, installations, additions, or
improvements in or to the Basement Space without Landlord's prior written
consent and Landlord agrees to give or withhold such consent in accordance with
the provisions of Article 6 hereof provided that such proposed alterations or
installations in the Basement Space are of a nature which is not inconsistent
with office storage areas;
(e) Tenant shall use the Basement Space only for the purposes of
customary office storage;
(f) Tenant may not assign its rights with respect to the Basement
Space (except in connection with a permitted assignment of this lease) or
sublease the same or allow the same to be used by others (except that the entire
Basement Space may be sublet to a permitted subtenant of Tenant of no less than
22,000 rentable square feet of the demised premises) without the prior written
consent of Landlord; and
(g) Except for elevator service and electricity as hereinabove
provided, Landlord shall not be responsible for the rendition or delivery of any
services or utilities to the Basement Space whatsoever, including, without
limitation, water, heating, ventilation, air-conditioning, or cleaning.
ARTICLE 46
RIGHT OF FIRST OFFERING
46.01. For purposes of this Lease, the term "First Offering Space" shall
mean the remainder of the rentable area on the ninth (9th) floor of the Building
other than the demised premises except that the portion thereof which is
currently vacant shall not constitute First Offering Space until after such
space shall have been initially leased. For purposes hereof, the First Offering
Space shall be deemed to contain 13,174 rentable square feet.
46.02. Provided Tenant is not in default under the terms and conditions of
this Lease after notice and beyond applicable cure periods
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either as of the date of the giving of "Tenant's Acceptance Notice" or the
"First Offering Space Inclusion Date" (as such terms are hereinafter defined),
and if, at any time during the term hereof and prior to the tenth (10th)
anniversary of the Commencement Date, the First Offering Space or any portion
thereof shall become available for leasing, then Landlord, before offering such
First Offering Space to anyone other than the Current Tenant (as hereinafter
defined), and subject to the provisions of Section 46.09 hereof, shall offer to
Tenant, subject to the provisions of this Article 46, the right to include such
entire First Offering Space within the demised premises, during the period
commencing on the First Offering Space Inclusion Date and ending on the
Expiration Date for all purposes and upon all the terms and conditions of this
Lease (including the provisions of Article 3 hereof with the base factors
specified therein but excluding subsection 1.01(b) and Sections 44.05, 44.06 and
44.07 hereof) except that:
(i) the fixed annual rent with respect to the First Offering Space
shall be at the following rates during the following periods from and
after the First Offering Space Inclusion Date (it being understood and
agreed that no portion of the following fixed annual rent allocable to the
First Offering Space shall constitute Unabated Fixed Rent or Termination
Fixed Rent):
(A) at the rate of $17.50 per rentable square foot during the
periods set forth in clauses (i) and (ii) of subsection 1.01(a)
hereof;
(B) at the rate of $19.75 per rentable square foot during the period
set forth in clause (iii) of subsection 1.01(a) hereof; and
(C) at the rate of $24.00 per rentable square foot during the period
set forth in clause (iv) of subsection 1.01(a) hereof;
(ii) effective as of the First Offering Space Inclusion Date, for
purposes of calculating the additional rent payable pursuant to Article 3
allocable to the First Offering Space, Tenant's Proportionate Tax Share
and Tenant's Proportionate Operating Share attributable to the First
Offering Space shall be deemed to be the fraction, expressed as a
percentage, the numerator of which shall be the number of rentable square
feet included within the First Offering Space, and the denominator of
which shall be 258,438 and 242,638, respectively and the base years and
base factors set forth in Article 3 shall be applicable;
(iii) the security required to be maintained pursuant to Article 42
hereof shall be increased by an amount equal to the product of $20.42
times the rentable square footage of the First Offering Space;
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(iv) Landlord shall allow Tenant an allowance in an amount up to the
"First Offering Space Allowance", as hereinafter defined which shall apply
to the cost and expense of Tenant's work to prepare the First Offering
Space for Tenant's initial occupancy (hereinafter called "Tenant's
Offering Work"). The First Offering Space Allowance shall be payable in
the same manner and subject to the same requirements and conditions with
respect to Tenant's Offering Work as the Work Allowance is payable
pursuant to Section 44.05 hereof with respect to Tenant's work. The First
Offering Space Allowance shall be in the amount of $45.00 per rentable
square foot of the First Offering Space, provided, however, that in the
event that as of the First Offering Space Inclusion Date, there shall
remain less than ten (10) full years in the term of this Lease, then the
amount of such First Offering Space Allowance shall be reduced to the
product of (x) a fraction the numerator of which shall be the number of
full calendar months remaining in the term of this Lease as of the First
Offering Space Inclusion Date and the denominator of which shall be 120,
times (y) $45.00, times (z) the number of rentable square feet in the
First Offering Space;
(v) Landlord shall, at Landlord's sole cost and expense, perform the
following work in the First Offering Space in a good and workerlike manner
in accordance with all Legal Requirements: (A) demolish the entire First
Offering Space slab-to-slab and wall-to-wall (other than the sprinkler
loop and supplemental HVAC equipment, if any, located therein if Tenant
shall so request in "Tenant's Acceptance Notice", as defined in Section
46.04 hereof) and perform such asbestos removal in the demised premises in
accordance with Legal Requirements as may be required in order to deliver
to Tenant a New York City Buildings Department Form ACP-5 based on
Tenant's approved plans for Tenant's Offering Work, and deliver the First
Offering Space vacant and broom-clean, all of the foregoing items in this
clause (A) to be substantially completed within ten (10) Business Days
after the later of: forty-five (45) days after the occurrence of (1) the
First Offering Space Inclusion Date, or (2) the date that Landlord shall
have approved such plans; subject, in either case, to extension for Force
Majeure Causes; if Landlord shall fail timely to substantially complete
the work set forth in this clause A on the date herein set forth, as
extended by Force Majeure Causes, and such failure shall not be caused by
Tenant Delays and such failure shall cause an actual delay in the
performance of Tenant's Offering Work or an actual delay in the date that
Tenant is able to occupy the First Offering Space for the conduct of its
business, then for each day of such actual delay in the performance of
Tenant's Offering Work or an actual delay in the date that Tenant is able
to occupy the First Offering Space for the conduct of its business
(without double counting any delay in the performance of Tenant's Offering
Work which automatically causes an automatic delay
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in such occupancy date), the abatement period set forth in subsection
46.02(vi) hereof shall be extended on a day-for-day basis; (B) furnish,
and install in the First Offering Space such package air-conditioning
units as Landlord shall reasonably determine shall reasonably be required
for the cooling of such space (unless the First Offering Space is already
so equipped with units in operating condition) at a standard comparable to
the standard set forth in subsection 21.01(a)(ii) hereof (herein called
"Landlord's Added Units"), and such installation shall be completed within
sixty (60) days after Tenant shall commence the actual construction of
Tenant's Offering Work, subject to extension for Force Majeure Causes. In
lieu of accepting Landlord's Added Units, Tenant may designate the model
and size of such air-conditioning units to be purchased and installed by
Landlord provided and on condition that (1) Landlord shall reasonably
approve such Tenant-designated units, (2) Tenant shall make such
designation in writing in Tenant's Acceptance Notice, (3) Tenant shall pay
to Landlord upon demand as additional rent hereunder the differential
between the cost of purchasing and installing Landlord's Added Units and
the cost of purchasing and installing (including location and venting
costs) such Tenant-designated units, and (4) if such Tenant-designated
units shall require long-lead time to order or to install, then the 60-day
deadline set forth in the foregoing provisions of this subsection 46.02(v)
shall not be applicable and Landlord shall perform such work reasonably
promptly and diligently prosecute same to completion; (C) replace the
then-existing electrical panels servicing the First Offering Space with
circuit breaker panels and new disconnect switches, if such work shall not
theretofore have been performed, and (D) put all radiators in the First
Offering Space in good working order, it being understood and agreed that
Landlord shall have no obligation with respect to thermostatic valves for
such radiators. All work described in the foregoing clauses (C) and (D)
shall be performed by Landlord reasonably promptly and shall be diligently
prosecuted to completion; and
(vi) the fixed annual rent and additional rent payable pursuant to
Article 3 hereof and attributable to the First Offering Space set forth in
subsection 46.02(i) shall be abated for the one hundred eighty (180) day
period commencing on the First Offering Space Inclusion Date, provided,
however, that in the event that as of the First Offering Space Inclusion
Date there shall remain less than ten (10) full years in the term of this
Lease, then the number of days in the foregoing abatement period shall be
reduced to the product of (x) a fraction, the numerator of which shall be
the number of full calendar months remaining in the term of this Lease as
of the First Offering Space Inclusion Date, and the denominator of which
shall be 120, times (y) 180.
46.03. Landlord's offer shall be made to Tenant in a written notice
(hereinafter called the "First Offer Notice"), which notice shall specify the
First Offering Space being offered and Landlord's estimate of the date
(hereinafter called the "Estimated Inclusion Date") such space shall become
available for Tenant's occupancy. Such notice may be given at any time
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prior to the First Offering Space Inclusion Date. Except as expressly set forth
in Section 46.11 hereof, Landlord shall have no liability to Tenant if the
Estimated Inclusion Date is not accurate.
46.04. Tenant may accept the offer set forth in the First Offer Notice by
delivering to Landlord an unconditional acceptance (herein called "Tenant's
Acceptance Notice") of such offer within twenty (20) days after delivery by
Landlord of the First Offer Notice to Tenant. Such First Offering Space shall be
added to and included in the demised premises on the later to occur (herein
called the "First Offering Space Inclusion Date") of (i) the day that Tenant
exercises its option as aforesaid, or (ii) the date such First Offering Space
shall become available for Tenant's possession. Time shall be of the essence
with respect to the giving of Tenant's Acceptance Notice.
46.05. Tenant shall have the option to include either all of such First
Offering Space being offered or none at all; Tenant shall have no right to
include only a portion of any First Offering Space.
46.06. If Tenant does not accept an offer made by Landlord pursuant to the
provisions of this Article 46 with respect to such First Offering Space,
Landlord shall be under no further obligation to Tenant with respect to such
First Offering Space and Tenant shall have waived and relinquished its right to
such First Offering Space, unless such First Offering Space shall thereafter be
part of future First Offering Space which is offered as a single rental unit,
and Landlord shall at any and all times thereafter be entitled to lease such
First Offering Space to others at such rental and upon such terms and conditions
as Landlord in its sole discretion may desire whether such rental terms,
provisions and conditions are the same as those offered to Tenant or more or
less favorable, provided, however, that the provisions of Section 46.02 shall
again be applicable if such First Offering Space shall become available for
leasing after any future lessee or occupant thereof shall vacate same.
46.07. Tenant agrees to accept such First Offering Space in its condition
and state of repair existing as of the First Offering Space Inclusion Date and
understands and agrees that Landlord shall not be required to perform any work,
supply any materials or incur any expense to prepare such space for Tenant's
occupancy, except as expressly set forth in subsections 46.02(iv) and 46.02(v)
hereof. It is understood and agreed that Tenant shall have no liability to
replace lot line windows in the First Offering Space if such replacement is
required by Legal Requirements.
46.08. The termination of this Lease shall also terminate and render void
all of Tenant's options or elections under this Article 46 whether or not the
same shall have been exercised; and nothing contained in this Article 46 shall
prevent Landlord from exercising any right or action granted to or reserved by
Landlord in this Lease to terminate this Lease. None of Tenant's options or
elections set forth in this Article 46 may be severed from the Lease or
separately sold, assigned or transferred.
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46.09. Notwithstanding any provision to the contrary contained in this
Article 46, the rights granted to Tenant hereunder shall be at all times subject
to:
(a) the election of the then-current tenant, or any
subsidiary, affiliate or assignee thereof (each herein referred to as a "Current
Tenant") of the First Offering Space to extend the term of its lease or
agreement with respect thereto, regardless of whether such election is made
pursuant to any provision included within such lease or agreement, and
(b) any option or right to lease same hereafter given by
Landlord to any future lessee or occupant of any portion of the First Offering
Space which shall have previously been offered to Tenant pursuant to this
Article 46 and as to which Tenant shall not have given Landlord Tenant's
Acceptance Notice.
46.10. The provisions of this Article 46 shall be effective only if, on
the date Tenant gives Tenant's Acceptance Notice and upon the First Offering
Space Inclusion Date, the Tenant named herein and/or its Affiliates or
Successors are in actual occupancy of sixty-five (65%) percent of the demised
premises (other than the First Offering Space in question) except that Landlord
may, in its sole discretion, waive such occupancy requirement.
46.11. If any First Offering Space shall not be available for Tenant's
occupancy on the First Offering Space Inclusion Date for any reason including
the holding over of the prior tenant, then Landlord and Tenant agree that the
failure to have such First Offering Space available for occupancy by Tenant
shall in no way affect the validity of this lease or the inclusion of such First
Offering Space in the demised premises or the obligations of Landlord or Tenant
hereunder, nor shall the same be construed in any way to extend the term of this
Lease, and for the purpose of this Article 46 the First Offering Space Inclusion
Date shall be deferred to and shall be the date such First Offering Space is
available for Tenant's occupancy unleased and free of tenants or other
occupants. The provisions of this Section 46.11 are intended to constitute "an
express provision to the contrary" within the meaning of Section 223-a of the
New York Real Property Law. In the event that the First Offering Space does not
become available within thirty (30) days after the Estimated Inclusion Date
because of the holding over of the existing tenant thereof, and unless Landlord
shall, within such thirty (30) day period, enter into an agreement with such
existing tenant providing for the vacating of the First Offering Space within
ninety (90) days after the Estimated Inclusion Date, Landlord shall thereafter
commence and diligently prosecute holdover proceedings against such occupant.
Notwithstanding anything in this Section 46.11 to the contrary, if Landlord has
not made the First Offering Space available for Tenant's occupancy within nine
(9) months after the Estimated Inclusion Date, then Tenant shall, during the ten
(10) days following the expiration of the foregoing period, have the right to
elect to rescind Tenant's Acceptance Notice upon written notice to Landlord and
such election shall be effective upon the expiration of thirty (30) days after
the date of such notice, unless the First Offering Space becomes available for
Tenant's occupancy within such thirty (30) day period.
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46.12. Landlord shall, in accordance with the provisions of this Article
46, give a notice to Tenant specifying the first Offering Space Inclusion Date
and confirming the terms of the inclusion of the First Offering Space in
accordance with the terms of this Article 46. Any dispute as to Landlord's
notice shall be submitted to arbitration in accordance with the provisions of
Article 38 hereof, but pending the outcome of such arbitration, such date and
terms shall be deemed to be for all purposes of this Lease the date and terms
specified by Landlord as above provided. When the First Offering Space Inclusion
Date and terms have so been determined, the parties shall, within ten (10) days
thereafter, at either party's request therefor, execute a written agreement
confirming the First Offering Space Inclusion Date and the terms of the
inclusion of the First Offering Space. Any failure of the parties to execute
such written agreement shall not affect the validity of the First Offering Space
Inclusion Date and the terms of the inclusion of the First Offering Space as
specified and determined as aforesaid.
ARTICLE 47
ADDITIONAL RIGHT OF FIRST OFFERING
47.01. For purposes of this Lease, the term "Additional Offering Space"
shall mean the sixth (6th) and tenth (10th) floors of the Building provided,
however, that the sixth (6th) floor, which is currently vacant, shall constitute
Additional Offering Space only after it has been initially leased and thereafter
becomes available for leasing. For purposes hereof, each such floor shall be
deemed to contain 22,058 rentable square feet.
47.02. Provided Tenant is not in default under the terms and conditions of
this Lease after notice and beyond the expiration of applicable cure periods,
either as of the date of the giving of "Tenant's Additional Acceptance Notice"
or the "Additional Offering Space Inclusion Date" (as such terms are hereinafter
defined), if, at any time during the term of this Lease and prior to the tenth
(10th) anniversary of the Commencement Date, the Additional Offering Space or
any portion thereof shall become available for leasing, then Landlord, before
offering such Additional Offering Space to anyone other than the Current Tenant
(as hereinafter defined), and subject to the provisions of Section 47.11 hereof,
shall offer to Tenant, subject to the provisions of this Article 47, the right
to include such entire Additional Offering Space within the demised premises,
during the period commencing on the Additional Offering Space Inclusion Date and
ending on the Expiration Date, for all purposes and upon all the terms and
conditions of this Lease (excluding subsection 1.01(b) and Sections 44.05, 44.06
and 44.07 hereof), except that:
(i) the fixed annual rent with respect to the Additional Offering
Space shall be at the rate of 95% of the fair market rent for the
Additional Offering Space, which shall be determined by Landlord (subject
to the provisions of Section 47.07 hereof) as of
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date (hereinafter called the "Additional Offering Space Determination
Date") occurring 30 days prior to the Additional Offering Space Inclusion
Date (as such term is hereinafter defined) and shall be set forth in a
written notice to Tenant, but in no event shall such fixed annual rent
applicable to the Additional Offering Space be less than the sum (herein
called the "Additional Offering Space Escalated Rent") of:
(a) product obtained by multiplying (A) the "Applicable Fixed
Rent Rate", as hereinafter defined, times the number of
rentable square feet included within the Additional Offering
Space, plus
(b) the product obtained by multiplying (A) the monthly amount
of Tenant's Tax Payment for the last full calendar month prior
to the Additional Offering Space Inclusion Date calculated on
a rentable square foot basis, without giving effect to any
offset or abatement, times (B) twelve (12), times (C) the
number of rentable square feet included within the Additional
Offering Space, plus
(c) the product obtained by multiplying (A) the monthly amount
of Tenant's Expense Payment for the last full calendar month
prior to the Additional Offering Space Inclusion Date
calculated on a rentable square foot basis, without giving
effect to any offset or abatement, times (B) twelve (12),
times (C) the number of rentable square feet included within
the Additional Offering Space.
For purposes hereof, the "Applicable Fixed Rent Rate" shall mean the
following amounts during the following periods from and after the
Additional Offering Space Inclusion Date:
(A) at the rate of $17.50 per rentable square foot during the
periods set forth in clauses (i) and (ii) of subsection
1.01(a) hereof;
(B) at the rate of $19.75 per rentable square foot during the
period set forth in clause (iii) of subsection 1.01(a) hereof;
and
(C) at the rate of $24.00 per rentable square foot during the
period set forth in clause (iv) of subsection 1.01(a) hereof;
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It is understood and agreed that no portion of the fixed annual rent
allocable to the Additional Offering Space shall constitute Unabated Fixed
Rent or Termination Fixed Rent.
(ii) Effective as of the Additional Offering Space Inclusion Date,
for purposes of calculating the additional rent payable pursuant to
Article 3 allocable to the Additional Offering Space:
(a) Tenant's Proportionate Tax Share and Tenant's
Proportionate Operating Share attributable to the Additional
Offering Space shall be deemed to be the fraction, expressed
as a percentage, the numerator of which shall be the number of
rentable square feet included within the Additional Offering
Space, and the denominator of which shall be 258,438 and
242,638, respectively;
(b) "Base Tax" referred to in Section 3.01(a) hereof shall be
deemed to be the Taxes for the Tax Year ending on the June 30
immediately preceding the Additional Offering Space Inclusion
Date, as finally determined;
(c) The "Base Operating Amount" set forth in Section 3.01(f)
hereof, shall be deemed to be the Operating Expenses for the
calendar year immediately preceding the calendar year in which
occurs the Additional Offering Space Inclusion Date.
(iii) The security required to be maintained pursuant to Article 42
hereof shall be increased by the product of $20.42 times the rentable
square footage of the Additional Offering Space.
47.03. Landlord's offer shall be made to Tenant in a written notice
(hereinafter called the "Additional Offer Notice") which notice shall specify
(i) the Additional Offering Space being offered, (ii) Landlord's estimate of the
date (hereinafter called the "Estimated Additional Inclusion Date") such space
shall become available for Tenant's occupancy and (iii) the fixed annual rent
payable with respect to such Additional Offering Space, determined in accordance
with the provisions of Section 47.02 hereof. Such notice may be given at any
time prior to the Additional Offering Space Inclusion Date. Except as expressly
set forth in Section 47.12 hereof, Landlord shall have no liability to Tenant if
the Estimated Additional Inclusion Date is not accurate.
47.04. Tenant may accept the offer set forth in the Additional Offer
Notice by delivering to Landlord an unconditional acceptance (herein called
"Tenant's Additional Acceptance Notice") of such offer within twenty (20) days
after delivery by Landlord of the Additional Offer Notice to Tenant. Such
Additional Offering Space shall be added to and included in the demised premises
on the later to occur (herein called the "Additional
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Offering Space Inclusion Date") of (i) the day that Tenant exercises its option
as aforesaid, or (ii) the date such Additional Offering Space shall become
available for Tenant's possession. Time shall be of the essence with respect to
the giving of Tenant's Additional Acceptance Notice.
47.05. Tenant shall have the option to include either all of the
Additional Offering Space in question into the demised premises or none at all;
Tenant shall have no right to include only a portion of any such Additional
Offering Space.
47.06. If Tenant does not accept an offer made by Landlord pursuant to the
provisions of this Article 47 with respect to such Additional Offering Space,
Landlord shall be under no further obligation to Tenant with respect to such
Additional Offering Space and Tenant shall have waived and relinquished its
right to such Additional Offering Space, unless such Additional Offering Space
shall thereafter be part of a future Additional Offering Space, which is offered
as a single rental unit, and Landlord shall at any and all times thereafter be
entitled to lease such Additional Offering Space to others at such rental and
upon such terms and conditions as Landlord in its sole discretion may desire
whether such rental terms, provisions and conditions are the same as those
offered to Tenant or more or less favorable; provided, however, that the
provisions of Section 47.02 shall again be applicable if such Additional
Offering Space shall become available for leasing after any future lessee or
occupant thereof shall vacate same.
47.07. (a) In the event that Tenant disputes the amount of the fair market
rent specified in the Additional Offer Notice, then at any time on or before the
date occurring twenty (20) days after Tenant has received the Additional Offer
Notice, and provided that Tenant shall have given Tenant's Additional Acceptance
Notice, Tenant may initiate the arbitration process provided for herein by
giving notice to that effect to Landlord, and, if Tenant so initiates the
arbitration process, such notice shall specify the name and address of the
person designated to act as an arbitrator on its behalf. Within thirty (30) days
after the Landlord's receipt of notice of the designation of Tenant's
arbitrator, Landlord shall give notice to Tenant specifying the name and address
of the person designated to act as an arbitrator on its behalf. If Landlord
fails to notify Tenant of the appointment of its arbitrator within the time
above specified, then Tenant shall provide an additional notice to Landlord
requiring Landlord's appointment of an arbitrator within twenty (20) days after
Landlord's receipt thereof. If Landlord fails to notify Tenant of the
appointment of its arbitrator within the time specified by the second notice,
the appointment of the second arbitrator shall be made in the same manner as
hereinafter provided for the appointment of a third arbitrator in a case where
the two arbitrators appointed hereunder and the parties are unable to agree upon
such appointment. The two arbitrators so chosen shall meet within ten (10) days
after the second arbitrator is appointed, and shall exchange sealed envelopes
each containing such arbitrator's written determination of the fair market
rental of the space in question based on the criteria set forth. Copies of such
written determinations shall promptly be sent to both Landlord and
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Tenant. Any failure of either of such arbitrators to meet and exchange such
determinations shall be deemed acceptance of the other party's arbitrator's
determination as to fair market rental. Within twenty (20) days after the second
arbitrator is appointed, the two arbitrators shall together appoint a third
arbitrator. If said two arbitrators cannot agree upon the appointment of a third
arbitrator within such twenty (20) day period, then either party, on behalf of
both and on notice to the other, may request such appointment by the American
Arbitration Association (or any successor organization) in accordance with its
then prevailing rules. If the American Arbitration Association shall fail to
appoint said third arbitrator within thirty (30) days after such request is
made, then either party may apply, on notice to the other, to the Supreme Court,
New York County, New York (or any other court having jurisdiction and exercising
functions similar to those now exercised by the foregoing court) for the
appointment of such third arbitrator.
Such third arbitrator shall, within fifteen (15) days after his or
her appointment, determine whether the fair market rental specified by the first
arbitrator or second arbitrator in such submissions was closer to the
determination by such third arbitrator of the fair market rental of the
Additional Offering Space, and the fair market rental specified by the first
arbitrator or the second arbitrator which is closer to the determination by such
third arbitrator shall conclusively be deemed to be the fair market rental of
the Additional Offering Space, but in no event shall the fixed annual rent with
respect to the Additional Offering Space be less than the Additional Offering
Space Escalated Rent.
(b) In determining the fair market rent under this Section 47.07,
the arbitrators shall take into account all relevant factors including, without
limitation, the work required to be performed by Landlord in the Additional
Offering Space pursuant to Section 47.09 hereof. The parties acknowledge and
agree that Landlord has agreed to reduce the fixed annual rent alternative in
subsection 47.02(i) to 95% of fair market value (as opposed to 100% of fair
market value) in order to give Tenant the benefit of Landlord's cost saving in
connection with an existing lease for an existing tenant (as opposed to a new
lease with a new tenant), and, accordingly, the parties and/or the arbitrators
shall not duplicate such cost savings in connection with their determination of
fair market rent under this Article 47.
(c) Each party shall pay the fees and expenses of the one of the two
original arbitrators appointed by or for such party, and the fees and expenses
of the third arbitrator and all other expenses (not including the attorneys
fees, witness fees and similar expenses of the parties which shall be borne
separately by each of the parties) of the arbitration shall be borne by the
parties equally.
(d) Each of the arbitrators selected as herein provided shall have
at least ten (10) years experience in the leasing, operation, management or
renting of office space on behalf of landlords in Midtown Manhattan.
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(e) If Tenant fails to initiate the arbitration process within the
aforesaid twenty (20) day period, time being of the essence, then Landlord's
determination of the fixed annual rent set forth in the Additional Offer Notice
shall be conclusive. In the event Landlord notifies Tenant that the fixed annual
rent for the Additional Offering Space shall be the Additional Offering Space
Escalated Rent, then the provisions of this Section 47.07 hereof shall be
inapplicable.
(f) In the event the Tenant initiates the aforesaid arbitration
process and, as of the Additional Offering Space Inclusion Date, the amount of
the fair market rent has not been determined, Tenant shall pay the amount
determined by Landlord to be the fair market rent for the Additional Offering
Space and when the determination has actually been made, an appropriate
retroactive adjustment (with interest at the Prime Rate) shall be made as of the
Additional Offering Space Inclusion Date.
47.08. The provisions of this Article 47 shall be effective only if, on
the date on which Tenant gives Tenant's Additional Acceptance Notice and on the
date that Tenant accepts possession of the Additional Offering Space, the Tenant
named herein and/or its Affiliates or Successors are in actual occupancy of
sixty-five (65%) percent of the demised premises provided, however, that
Landlord may, in its sole discretion, waive such occupancy requirement.
47.09. Tenant agrees to accept each Additional Offering Space in its
condition and state of repair existing as of the Additional Offering Space
Inclusion Date and understands and agrees that Landlord shall not be required to
perform any work, supply any materials or incur any expense to prepare such
space for Tenant's occupancy except that Landlord shall, at Landlord's sole cost
and expense, perform the following work in the Additional Offering Space in a
good and workerlike manner in accordance with all Legal Requirements: (A)
demolish the entire Additional Offering Space slab-to-slab and wall-to-wall
(other than the sprinkler loop and supplemental HVAC equipment, if any, located
therein if Tenant shall so request in "Tenant's Additional Acceptance Notice",
as defined in Section 47.04 hereof), and perform such asbestos removal in the
demised premises in accordance with Legal Requirements as may be required in
order to deliver to Tenant a New York City Buildings Department Form ACP-5 based
on Tenant's approved plans for Tenant's initial work in the Additional Offering
Space to prepare the Additional Offering Space for Tenant's initial occupancy,
and deliver the Additional Offering Space vacant and broom-clean, all of the
foregoing items in this clause (A) to be substantially completed within ten (10)
Business Days after the later to occur of: forty-five (45) days after the
occurrence of (1) the Additional Offering Space Inclusion Date, or (2) the date
Landlord shall have approved such plans; subject, in either case, to extension
for Force Majeure Causes, if Landlord shall fail timely to substantially
complete the work set forth in this clause A on the date herein set forth, as
extended by Force Majeure Causes, and such failure shall not be caused by Tenant
Delays and such failure shall cause an actual delay in the performance of
Tenant's Offering Work or an actual delay in the date that Tenant is able to
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occupy the First Offering Space for the conduct of its business, then for each
day of such actual delay in the performance of Tenant's Offering Work or an
actual delay in the date that Tenant is able to occupy the First Offering Space
for the conduct of its business (without double counting any delay in the
performance of Tenant's Offering Work which automatically causes an automatic
delay such occupancy date), the date that rent for the Additional Offering Space
commences shall be postponed on a day-for-day basis; (B) furnish and install in
the Additional Offering Space Landlord's Added Units, and (unless the Additional
Offering Space is already so equipped with units in operating condition) such
installation shall be completed within sixty (60) days after Tenant shall
commence the actual construction of the initial work in the Additional Offering
Space to prepare same for Tenant's occupancy, subject to extension for Force
Majeure Causes. In lieu of accepting Landlord's Added Units, Tenant may
designate the model and size of such air-conditioning units to be purchased and
installed by Landlord provided and on condition that (1) Landlord shall approve
such Tenant-designated units, (2) Tenant shall make such designation in writing
in Tenant's Acceptance Notice, (3) Tenant shall pay to Landlord upon demand as
additional rent hereunder the differential between the cost of purchasing and
installing Landlord's Added Units and the cost of purchasing and installing
(including location and venting costs) such Tenant-designated units, and (4) if
such Tenant-designated units shall require long-lead time to order or to
install, then the 60-day deadline set forth in the foregoing provisions of this
subsection 47.09 shall not be applicable and Landlord shall perform such work
reasonably promptly and diligently prosecute same to completion; (C) replace the
then-existing electrical panels servicing the Additional Offering Space with
circuit breaker panels and new disconnect switches, if such work shall not
theretofore have been performed; and (D) put all radiators in the Additional
Offering Space in good working order, it being understood and agreed that
Landlord shall have no obligation with respect to thermostatic valves for such
radiators. All work described in the foregoing clauses (C) and (D) shall be
performed by Landlord reasonably promptly and shall be diligently prosecuted to
completion. It is understood and agreed that Tenant shall have no liability
arising from Legal Requirements: (i) to replace lot line windows in the
Additional Offering Space, or (ii) for compliance with the Disabilities Act in
the core toilets of the floor on which the Additional Offering Space is located,
provided that such floor is a multi-tenanted floor.
47.10. The termination of this Lease shall also terminate and render void
all of Tenant's options or elections under this Article 47 whether or not the
same shall have been exercised; and nothing contained in this Article 47 shall
prevent Landlord from exercising any right or action granted to or reserved by
Landlord in this Lease to terminate this Lease. None of Tenant's options or
elections set forth in this Article 47 may be severed from the Lease or
separately sold, assigned or transferred.
47.11. Notwithstanding any provisions to the contrary contained in this
Article 47, the rights granted to Tenant hereunder shall be at all times subject
to:
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(a) the election of the then-current tenant, or any
subsidiary, affiliate or assignee thereof (each herein referred to as a "Current
Tenant") of the Additional Offering Space to extend the term of its lease or
agreement with respect thereto, regardless of whether such election is made
pursuant to any provision included within any lease or agreement, and
(b) any option or right to lease same hereafter given by
Landlord to any future lessee or occupant of any portion of the Additional
Offering Space which shall have previously been offered to Tenant pursuant to
this Article 47 and as to which Tenant shall not have given Landlord Tenant's
Additional Acceptance Notice.
47.12. If any Additional Offering Space shall not be available for
Tenant's occupancy on the Additional Offering Space Inclusion Date for any
reason including the holding over of the prior tenant, then Landlord and Tenant
agree that the failure to have such Additional Offering Space available for
occupancy by Tenant shall in no way affect the validity of this Lease or the
inclusion of such Additional Offering Space in the demised premises or the
obligations of Landlord or Tenant hereunder, nor shall the same be construed in
any way to extend the term of this Lease, and for the purpose of this Article 47
the Additional Offering Space Inclusion Date shall be deferred to and shall be
the date such Additional Offering Space is available for Tenant's occupancy
unleased and free of tenants or other occupants. The provisions of this Section
47.12 are intended to constitute "an express provision to the contrary" within
the meaning of Section 223-a of the New York Real Property Law. In the event
that the Additional Offering Space does not become available within thirty (30)
days after the Estimated Additional Inclusion Date because of the holding over
of the existing tenant thereof, and unless Landlord shall within such thirty
(30) day period, enter into an agreement with such existing tenant providing for
the vacating of the Additional Offering Space within ninety (90) days after the
Estimated Additional Inclusion Date, Landlord shall thereafter commence and
diligently prosecute holdover proceedings against such occupant. Notwithstanding
anything in this Section 47.12 to the contrary, if Landlord has not made the
Additional Offering Space available for Tenant's occupancy within nine (9)
months after the Estimated Additional Inclusion Date, then Tenant shall, during
the ten (10) days following the expiration of the foregoing period, have the
right to elect to rescind Tenant's Additional Acceptance Notice upon written
notice to Landlord and such election shall be effective upon the expiration of
thirty (30) days after the date of such notice, unless the Additional Offering
Space becomes available for Tenant's occupancy within such thirty (30) day
period.
47.13. Landlord shall, in accordance with the provisions of this Article
47, give a notice to Tenant specifying the Additional Offering Space Date and
confirming the terms of the inclusion of the Additional Offering Space in
accordance with the terms of this Article 47. Any dispute as to Landlord's
notice shall be submitted to arbitration in accordance with the provisions of
Article 47 hereof, but pending the outcome of such arbitration,
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such date and terms shall be deemed to be for all purposes of this Lease the
date and terms specified by Landlord as above provided. When the Additional
Offering Space Date and terms have so been determined, the parties shall, within
ten (10) days thereafter, at either party's request therefor, execute a written
agreement confirming the Additional Inclusion Date and the terms of the
inclusion of the Additional Offering Space. Any failure of the parties to
execute such written agreement shall not affect the validity of the Additional
Offering Space Date and the terms of the inclusion of the Additional Offering
Space as specified and determined as aforesaid.
ARTICLE 48
TENANT'S ANTENNA
48.01. Provided that space on the rooftop of the Building shall then be
available as hereinafter more specifically set forth, Landlord agrees that,
subject to all laws, ordinances, statutes, rules and regulations of all
governmental authorities having jurisdiction thereof, and further subject to the
conditions and limitations hereinafter stipulated, during the term of this
Lease, Tenant, at Tenant's sole cost and expense, upon no less than thirty (30)
days' advance notice to Landlord ("Tenant's Antenna Notice"), may install on a
portion of the rooftop of the Building, if same shall be available, and
thereafter maintain, repair, and operate one microwave dish or one satellite
communications receiver (hereinafter referred to as the "antenna"), the
dimensions of which, together with all supporting structures and ancillary
equipment, shall not exceed 10 feet x 10 feet x 10 feet, provided and on
condition that: (i) the size and dimensions of the antenna and any reasonably
required support structures as well as the location of the portion of the
rooftop for such installation shall be subject to Landlord's prior consent,
which shall not be unreasonably withheld or delayed; (ii) the installation and
position of such antenna and reasonably required support structures shall comply
with Legal Requirements; (iii) the installation of any electrical or
communications lines ("Wiring") and related equipment in connection with the
installation and operation of the antenna, as well as the manner and location
(i.e., routing) of all Wiring and related equipment in connection therewith
shall (A) be at Tenant's sole cost and expense, (B) be subject to Landlord's
prior consent, which shall not be unreasonably withheld or delayed; and (C)
comply with Legal Requirements; and (iv) the antenna, reasonably required
support structures, Wiring and related equipment shall be maintained and kept in
repair by Tenant, at Tenant's sole cost and expense. The parties agree that
Tenant's use of the rooftop of the Building is a nonexclusive use and Landlord
may permit the use of any other portion of the roof to any other person, firm or
corporation for any use including the installation of other antennas and support
equipment. The parties also agree that Tenant's rights under this Article 48
shall be entirely conditional upon there being available at the time that Tenant
shall give the notice to Landlord required pursuant to this Section 48.01 space
available on the rooftop appropriate in Landlord's reasonable judgment for the
installation
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and operation of Tenant's antenna without any interference with any antenna or
other equipment then previously installed on such roof or as to which Landlord
shall have given, prior to the date hereof, an option for installation thereof,
it being understood and agreed that Landlord shall have no obligation to reserve
any such space for Tenant's use. Tenant's rights hereunder are subject to the
rights of other occupants of the Building or other third parties to whom
Landlord shall have given, prior to the date hereof, rights to the rooftop of
the Building.
48.02. For the purpose of installing, servicing or repairing the antenna
and related equipment, Tenant shall have access to the rooftop of the Building
upon prior reasonable request of Landlord. All access by Tenant to the roof of
the Building shall be subject to the supervision and control of Landlord and to
Landlord's reasonable safeguards for the security and protection of the
Building, the Building equipment and installations and equipment of other
tenants of the Building as may be located on the roof of the Building. Landlord
shall have the right to assign a Building representative to be present during
the duration of Tenant's access to the rooftop and Tenant shall pay the
Landlord's customary charges therefor as additional rent.
45.03. Tenant, at Tenant's sole cost and expense, agrees to promptly and
faithfully obey, observe and comply with all laws, ordinances, regulations,
requirements and rules of all duly constituted public authorities in any manner
affecting or relating to Tenant's use of said roof as to the installation,
repair, maintenance and operation of any support structures and antenna and
related equipment erected or installed by Tenant pursuant to the provisions of
this Article 48. Tenant, at Tenant's sole cost and expense, shall secure and
thereafter maintain all permits and licenses required for the installation and
operation of the antenna and any support structures and related equipment
erected or installed by Tenant pursuant to the provisions of this Article 48,
including, without limitation, any approval, license or permit required from the
Federal Communications Commission. Landlord shall reasonably cooperate with
Tenant, at Tenant's expense, in connection with obtaining any such permits or
licenses. In no event shall the maximum level of microwave emissions from the
antennas exceed an amount equal to Tenant's proportionate share of the total
microwave emissions allowable for the Building as determined by the governmental
authorities having jurisdiction thereof.
48.04. Tenant agrees that Tenant will pay for all electrical service
required for Tenant's use of the antenna and related equipment erected or
installed by Tenant pursuant to the provisions of this Article 48 in accordance
with Article 4 of this Lease and Tenant further agrees that such electric
service shall feed off the supply of electrical energy furnished to the demised
premises as provided in Article 4 of this Lease.
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PARK AVE ARMORY/NYLPC - LEASE PT II
<PAGE>
48.05. The antenna, support structures and related equipment installed by
Tenant, pursuant to the provisions of this Article 48 shall be Tenant's personal
property, and, upon the expiration of the term of this Lease, or upon its
earlier termination in any manner, shall be removed by Tenant at Tenant's sole
cost and expense. All wiring and related electrical equipment installed by
Tenant in connection with the installation and operation of the antenna shall be
Tenant's personal property. Upon the expiration of the Term of this lease or
upon its earlier termination in any manner, if Landlord so directs by written
notice to Tenant, Tenant shall promptly remove the Wiring and electrical
equipment as designated in such notice, at Tenant's sole cost and expense.
Tenant, at Tenant's sole cost and expense, shall promptly repair any and all
damage to the rooftop of the Building and to any other part of the Building
caused by or resulting from the installation, maintenance and repair, operation
or removal of the antenna, support structures, Wiring and related equipment
erected or installed by Tenant pursuant to the provisions of this Article 48 and
restore said affected areas to their condition as existed prior to the
installation of the antenna and related equipment.
48.06. Tenant agrees that Landlord shall not be required to provide any
services whatsoever to the rooftop of the Building other than reasonable access
thereto in accordance with the provisions of this Article 48.
48.07. Tenant covenants and agrees that all installations made by Tenant
on the rooftop of the Building or in any other part of the Building pursuant to
the provisions of this Article 48 shall be at the sole risk of Tenant, and
neither Landlord nor Landlord's agent or employees shall be liable for any
damage or injury thereto caused in any manner, unless the same shall proximately
result from the gross negligence or willful misconduct of Landlord, its agents
and employees and in no event shall Landlord be liable to Tenant for any
special, indirect or consequential damages in connection therewith.
48.08. Subject to the waiver of subrogation set forth in Section 9.08
hereof, Tenant will, and does hereby, indemnify and save harmless Landlord from
and against: (i) any and all claims, counsel fees, demands, damages, expenses or
losses by reason of any liens, orders, claims or charges resulting from any work
done, or materials or supplies furnished, in connection with the fabrication,
erection, installation, maintenance and operation of the antenna, support
structures, Wiring and any related equipment installed by Tenant pursuant to the
provisions of this Article 48; and (ii) any and all claims, costs, demands,
expenses, fees or suits arising out of accidents, damage, injury or loss to any
and all persons and property, or either, whomsoever or whatsoever resulting from
or arising in connection with the erection, installation, maintenance and
operation and repair of the antenna, support structures, Wiring and related
equipment installed by Tenant pursuant to the provisions of this Article 48
except to the extent caused by
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PARK AVE ARMORY/NYLPC - LEASE PT II
<PAGE>
the gross negligence or wilful misconduct of Landlord, or its agents or
employees and in no event shall Landlord be liable to Tenant for any special,
indirect or consequential damages in connection therewith. Tenant shall obtain
and thereafter maintain during the Term of this Lease insurance coverage for the
benefit of Landlord and its managing agent in such amount and of such type as
Landlord may reasonably require. Notwithstanding anything herein contained to
the contrary, Tenant shall perform the installations or exercise Tenant's rights
referred to in this Article 48 in a manner so as not to revoke, negate or in any
manner impair or limit the roof warranty or guaranty to be obtained by Landlord,
to the extent same shall be a 20-year, no dollar limit warranty with conditions
customary in the industry.
48.09. All plans and specifications of Tenant's Work and installations to
be done and made by Tenant pursuant to the provisions of this Article 48 shall
be subject to the prior approval of Landlord, such approval not to be
unreasonably withheld or delayed, and shall be further subject to inspection and
reasonable supervision by Landlord at Tenant's cost for the actual out-of-pocket
costs incurred by Landlord therefor.
48.10. Tenant covenants and agrees that the antenna, support structures,
Wiring and related electrical equipment to be installed by Tenant shall not
interfere with or adversely affect any equipment, installations, lines or
machinery of the Building or any other tenant of the Building, including,
without limitation, any other communications equipment previously installed in,
on top of or otherwise outside the Building, or access thereto for maintenance,
repair or removal. Landlord agrees that any communications equipment installed
on the roof of the Building after the installation of Tenant's antenna shall not
interfere with or adversely affect Tenant's antenna or the use and operation
thereof (except to a de minimis extent).
48.11. Tenant acknowledges being advised by Landlord that Landlord has,
and shall be, granting to third parties, various rights and licenses to utilize
various portions of the Building and rooftop thereof for the installation of
microwave dishes, satellite communications equipment, whip antennae and other
communications equipment and related equipment (hereinafter all of the foregoing
are collectively referred to as "Other Communications Equipment") and that,
inasmuch as Landlord's ability to facilitate the installation and operation of
such Other Communications Equipment will be of paramount importance to Landlord,
Landlord shall have the right, at any time and from time to time, during the
Term of this Lease, upon thirty (30) days' prior written notice to Tenant, to
relocate the Tenant's antenna, support structures and related equipment to other
areas of the Building and rooftop thereof, as Landlord in its sole discretion
may determine so as to accommodate such Other Communications Equipment on the
roof of the Building and so as to eliminate, or not to create, problems of
interference with respect to or between Other Communications Equipment now, or
in the future, installed on the roof or other areas of the Building. Such
relocation shall, to the extent practicable, be performed during hours other
than periods when Tenant is using such antenna so as to minimize any
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<PAGE>
disruption of Tenant's normal business activities and except for such downtime
such relocation shall not prevent Tenant from using its antenna for its original
intended purpose. Tenant shall cooperate with Landlord to effectuate the
relocation of Tenant's antenna, support structures and related equipment, as
shall be required by Landlord. All costs involved in such relocation shall be
borne by Landlord.
48.12. Tenant shall not be permitted to assign or transfer all or any
portion of the rights granted to Tenant pursuant to this Article 48 unless
Tenant assigns this Lease to the party to whom such rights are assigned or
transferred.
48.13. From and after the earlier of: (i) the date of installation of
Tenant's antenna, or (ii) the date occurring ninety (90) days after Landlord's
receipt of Tenant's Antenna Notice, Tenant shall pay to Landlord a fixed annual
charge with respect to the antenna at the annual rate equal to the then fair
market value thereof, and such fixed annual charge shall be payable in equal
monthly installments on the first day of each month in the same manner as
prescribed in Article 1 with respect to the fixed annual rent payable
thereunder. Landlord agrees that if Tenant shall give Tenant's Antenna Notice on
or before the first (1st) anniversary of the date of this Lease, then the fixed
annual charge due and payable pursuant to this Section 48.13 shall be at the
rate of Twelve Thousand ($12,000) Dollars per annum, as such amount shall be
subject to increase as of the third (3rd), sixth (6th), ninth (9th) and twelfth
(12) anniversaries of the Commencement Date by the same percentage increase in
the CPI as of each such anniversary date over the CPI as of the Commencement
Date.
IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this
Lease as of the day and year first above written.
LANDLORD:
PARK AVENUE SOUTH ARMORY, INC.
By: /s/ Alex Johnson
------------------------------------
Alex Johnson, Vice President
TENANT:
THE NEW YORK LAW PUBLISHING COMPANY
By: /s/ James A. Finkelstein
------------------------------------
James A. Finkelstein, President
Tenant's Tax Identification Number is 13-3273851.
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PARK AVE ARMORY/NYLPC - LEASE PT II
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On this 28th day of September, 1993, before me personally came Alex
Johnson, to me known, who; being duly sworn by me, did depose and say that he
has an address at 280 Park Avenue, 23rd Floor West, New York, New York, that he
is the Vice President of PARK AVENUE SOUTH/ARMORY, INC., a New York corporation,
the corporation mentioned in, and which executed the foregoing instrument as
Landlord; and that he signed his name thereto by order of the Board of Directors
of said corporation.
JUNE A. POLITANO
Notary Public, State of New York
No. 30-4905885
Qualified in Nassau County /s/ June A. Politano
Commission Expires 9/28/95 --------------------------
Notary Public
CORPORATE TENANT
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 29th day of September, 1993, before me personally came James
A. Finkelstein to me known, who being by me duly sworn, did say that he resides
at 74 East 79th Street, NY, NY 10021; that he is President of THE NEW YORK LAW
PUBLISHING COMPANY, the corporation described in and which executed the
foregoing instrument as Tenant; and that he signed his name thereto by order of
the board of directors of said corporation.
/s/ Joanne Cole
--------------------------
Notary Public
JOANNE COLE
NOTARY PUBLIC, State of New York
No. 31-4854454
Qualified in New York County
Commission Expires March 3, 1994
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PARK AVE ARMORY/NYLPC - LEASE PT II
<PAGE>
SCHEDULE A
[FLOOR PLAN OMITTED]
7TH FLOOR
A-1
<PAGE>
[FLOOR PLAN OMITTED]
8TH FLOOR
A-2
<PAGE>
[FLOOR PLAN OMITTED]
9TH FLOOR
A-3
<PAGE>
SCHEDULE B
RULES AND REGULATIONS
I. Tenant shall not:
1. obstruct, encumber or use, or allow or permit any of its employees,
agents, licensees or invitees to congregate in or on, the sidewalks, driveways,
entrances, passages, courts, arcades, esplanade areas, plazas, elevators,
vestibules, stairways, corridors or halls of the Building, outside of the
demised premises, or use any of them for any purposes other than for ingress and
egress to and from the demised premises;
2. attach awnings or other projections to the outside walls of the
Building or place bottles, parcels or other articles, or lettering visible from
the exterior, on the windows, windowsills or peripheral air conditioning
enclosures;
3. attach to, hang on, or use in connection with, any exterior window or
entrance door of the demised premises, any blinds, shades or screens which are
not of a quality, type, design and color, or which are not attached in a manner,
approved by Landlord;
4. place or leave any door mat or other floor covering in any area outside
of the demised premises;
5. exhibit, inscribe, paint or affix any sign, insignia, advertisement,
object or other lettering in or on any windows, doors, walls or part of the
outside or inside of the Building (exclusive of the inside of the demised
premises), or in the demised premises if visible from the outside, without
Landlord's approval, except that the name(s) of Tenant and any permitted
sublessee may be displayed on the entrance doors of the premises occupied by
each, subject to Landlord's reasonable approval of the size, color and design of
such display and, if Landlord elects to perform such work, Tenant shall pay
Landlord for the performance of such work;
6. cover or obstruct the sashes, sash doors, skylights, windows and doors
that reflect or admit light and air into the halls, passageways or other public
areas of the Building;
7. place in, sweep or permit to be swept, attach to, put in front of, or
affix to any part of the exterior of, the Building or any of its halls, doors,
windows, elevators, corridors or vestibules, outside of the demised premises,
any lettering, signs, decorations, showcases, displays, display windows,
packages, boxes or other articles;
8. except in the normal decoration of the interior of the demised
premises, mark, paint, drill into, or in any way deface, any part of the
Building or the demised premises or cut, bore or string wires therein;
9. permit or allow bicycles, vehicles, animals, fish or birds of any kind
to be brought into or kept on or about the Building or the demised premises;
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<PAGE>
10. make, permit or alloy to be made, any unseemly or disturbing noises,
whether by musical instruments, recordings, radio, talking machines, television,
whistling, singing or in any other way, which might disturb other occupants in
the Building or those having business with them or impair or interfere with the
use or enjoyment by others of neighboring buildings or premises;
11. bring into or keep on any part of the demised premises or the Building
any inflammable, combustible, radioactive or explosive fluid, chemical or
substance, other than for customary general and executive office purposes;
12. place upon any of the doors (other than closet or vault doors) or
windows in the Building any locks or bolts which shall not be operable by the
Grand Master Key for the Building, or make any changes in locks or the
mechanisms thereof which shall make such locks inoperable by said Grand Master
Key unless such change is approved by Landlord in which event Tenant shall give
Landlord duplicate keys for such locks or bolts;
13. remove, or carry into or out of the demised premises or the Building,
any safes, freight, furniture, packages, boxes, crates or any bulky or heavy
objects except during such hours and in such elevators as Landlord may
reasonably determine from time to time;
14. use any lighting in perimeter areas of the Building, other than that
which is standard for the Building or approved by Landlord, so as to permit
uniformity of appearance to those viewing the Building from the outside;
15. engage or pay any employees on the demised premises except those
actually working for the Tenant in the demised premises, or advertise for
laborers giving the demised premises as an address;
16. obtain, permit or allow in the Building the purchase, or acceptance
for use in the demised premises, by means of a service cart, vending machine or
otherwise, of any ice, drinking water, food, tobacco in any form, beverage,
towel, barbering, boot blackening, cleaning, floor polishing or other similar
items or services from any persons, except such persons, during such hours, and
at such places within the Building and under such requirements as may be
determined by Landlord with respect to the furnishing of such items and
services, provided that the charges for such items and services by such persons
are not excessive;
17. intentionally omitted;
18. close and leave the demised premises at any time without closing all
operable window and, if requested by Landlord, turning out all lights;
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<PAGE>
19. permit entrance doors to the demised premises to be left open at any
time or unlocked when the demised premises are not in use;
20. encourage canvassing, soliciting or peddling in any part of the
Building or permit or allow the same in the demised premises;
21. use, or permit or allow any of its employees, contractors, suppliers
or invitees to use, any space or part of the Building, including the passenger
elevators or public halls thereof, in the moving, delivery or receipt of safes,
freight, furniture, packages, boxes, crates, paper, office material or any other
matter or thing, any hand trucks, wagons or similar items which are not equipped
with such rubber tires, side guards and other safeguards which shall have been
approved by Landlord or use any such hand trucks, wagons or similar items in any
of the passenger elevators;
22. cause or permit any food odors or any other unusual or objectionable
odors to exist in or emanate from the demised premises or permit any cooking or
preparation of food except in areas approved by Landlord and in compliance with
local ordinances;
23. create or permit a public or private nuisance, by reason of noise,
odors and/or vibrations or otherwise;
24. throw or allow or permit to be thrown anything out of the doors,
windows or skylights or down the passageways or stairways of the Building;
25. lay vinyl asbestos tile or other similar floor covering so that the
same shall come in direct contact with the floor or in a manner or by means of
such pastes or other adhesives which shall not have been approved by Landlord,
it being understood that if linoleum or other similar floor covering is desired
to be used, an interlining of builder's deadening felt shall be first affixed to
the floor, by a paste or other material which is soluble in water, the use of
cement or other similar adhesive material being expressly prohibited;
26. use, allow or permit the passenger elevators to be used by Tenant's
working hands (persons in rough clothing handling packages, cartons and
shipments of material or mail) or persons carrying bulky packages or by persons
calling for or delivering mail or goods to or from the demised premises, and
Tenant shall cooperate with Landlord in enforcing this Rule on those making
deliveries to Tenant;
27. request any of Landlord's agents, employees or contractors to perform
any work, or do anything, outside of their regular duties, unless previously
approved by the Building manager;
28. invite to the demised premises or the Building, or permit the visit
of, persons in such numbers or under such conditions as unreasonably to
interfere with the use and enjoyment of any of the plazas, entrances, corridors,
arcades, escalators, elevators or other facilities of the Building by other
occupants thereof;
B-3
<PAGE>
29. use, permit or allow the use of any fire exits or stairways for any
purpose other than emergency use;
30. employ any firm, person or persons to move safes, machines or other
heavy objects into or out of the Building, without prior approval of Landlord of
such persons and the manner in which such items will be moved, which approval
shall not be unreasonably withheld;
31. install or use any machines or machinery of any kind whatsoever which
may disturb any persons outside of the demised premises;
32. use the water and wash closets or other plumbing fixtures for any
purpose other than those for which they were constructed, and shall not allow or
permit sweepings, rubbish, rags, or other solid substances to be thrown therein;
or
33. install any carpeting or drapes, or paneling, grounds or other
decorative wood products, in the demised premises, other than those wood
products considered furniture, which are not treated with fire-retardant
materials and, in such event, shall submit, to Landlord's reasonable
satisfaction, proof or other reasonable certification of the materials
reasonably satisfactory fire retardant characteristics.
34. smoke or carry lighted cigars or cigarettes in the elevators of the
building.
II. Tenant shall:
1. pay Landlord for any damages, costs or expenses incurred by Landlord
with respect to the breach of any of the Rules and Regulations contained in or
provided by this Lease by Tenant, or any of its servants, agents, employees,
licensees or invitees, or the misuse by Tenant, or any of the aforesaid, of any
fixture or part of the demised premises or the Building and shall cause its
servants, agents, employees, licensees and invitees to comply with the Rules and
Regulations contained in or provided for by this Lease;
2. upon the termination of this Lease, turn over to Landlord all keys;
either furnished to, or otherwise procured by, Tenant with respect to any locks
used by Tenant in the demised premises or the Building and, in the event of the
loss of any such keys, pay to Landlord the cost of procuring same;
3. subject to the provisions of Article 18 hereof, refrain from, and
immediately upon receipt of notice thereof, discontinue any violation or breach
of the Rules and Regulations contained in or provided for by this Lease;
4. request Landlord to furnish passes to persons whom Tenant desires to
have access to the demised premises during times other than Business Hours and
be responsible and liable to Landlord for all persons and acts of such persons
for whom Tenant requests such passes;
B-4
<PAGE>
5. furnish artificial light and electrical energy (unless Landlord shall
furnish electrical energy as a service included in the rent) at Tenant's expense
for the employees of the Landlord or Landlord's contractors while doing
janitorial or other cleaning services or while making repairs or Alterations in
the demised premises.
6. apply at the office of the Building's manager with respect to all
matters and requirements of Tenant which require the attention of Landlord, his
agents or any of his employees;
7. pay Landlord reasonable charges for the installation and replacement of
ceiling tiles removed for Tenant by telephone installers or others in the
demised premises and public corridors, if any;
8. except as expressly provided to the contrary in this Lease, pay
Landlord actual reasonable charges for the hiring or providing of security
guards during times when Tenant, or any subtenant of Tenant, is moving into or
out of portions of the demised premises or when significant quantities of
furniture or other materials are being brought into or removed from the demised
premises.
III. Landlord shall:
1. have the right to inspect all freight objects or bulky matter (except
printed matter) brought into the Building and to exclude from the Building all
objects and matter which violate any of the Rules and Regulations contained in
or provided for by this Lease;
2. have the right to require any person leaving the demised premises with
any package, or other object or matter, to submit a pass, listing such package
or object or matter, from Tenant;
3. in no way be liable to Tenant or any other party for damages or loss
arising from the admission, exclusion or rejection of any person or any property
to or from the demised premises or the Building under the provisions of the
Rules and Regulations contained in or provided for by this Lease;
4. have no liability or responsibility for the protection of any of
Tenant's property as a result of damage or the unauthorized removal of any such
property resulting wholly or in part from Landlord's failure to enforce, in any
particular instance, or generally, any of Landlord's rights.
5. have the right to require all persons entering or leaving the Building,
during hours other than Business Hours, to sign a register and may also exclude
from the Building, during such hours, all persons who do not present a pass to
the Building signed by Landlord;
6. furnish passes to persons for whom Tenant requests same;
7. have the right to control and operate the public portions of the
Building and the public facilities, as well as facilities furnished for the
common use of other occupants, of the Building; and
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<PAGE>
8. have the right to remove any violation of Paragraph I items 2, 3, 4, 5,
6 or 7 of these Rules and Regulations without any right of Tenant to claim any
liability against Landlord, and have the right to impose a reasonable charge
against Tenant for removing any such violation or repairing any damages
resulting therefrom.
In the event of any conflict between the provisions of the Lease and
these Rules and Regulations, the provisions of the Lease shall govern.
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<PAGE>
SCHEDULE C
LANDLORD'S POST-COMMENCEMENT WORK
Landlord, shall, at Landlord's sole cost and expense, perform the
following work ("Landlord's Post-Commencement Work") in and to the demised
premises in a good and workerlike manner in accordance with all Legal
Requirements:
1. Replace the existing electrical panels servicing the demised
premises with circuit breaker panels and new disconnect
switches, and bring up additional risers in order to provide
an aggregate 500 amps power to be terminated in Room 747 as
per Tenant's Plan 7-PT, and as set forth in Paragraphs 2 and 3
of the proposal from Cardinal Electrical Contractors Inc. to
Landlord, dated September 28, 1993, a copy of which is annexed
as an Exhibit to this Schedule C, of which 250 amps shall
satisfy Landlord's obligation to supply the Provided Capacity
set forth in clause (i) of subsection 4.01(a) hereof for the
7th floor, and the remaining 250 amps shall be for Tenant's
use. Landlord shall substantially complete the portion of
Landlord's Work set forth in this Paragraph 1 on or before the
date occurring four (4) weeks after "Tenant's Work Start
Date", defined as the date the Tenant's contractor shall
commence the actual construction of Tenant's Work (as opposed
to preliminary work such as plan filing and contract bidding).
If Landlord shall not have timely substantially completed the portion of
Landlord's Post Commencement Work set forth in the foregoing Paragraph 1 hereof
on or before the date set forth in such Paragraph 1 for such substantial
completion, as such date shall be extended for Force Majeure Causes, then
provided that (i) such failure shall not have been caused by Tenant's Delays,
and (ii) such failure shall cause an actual delay in the performance of Tenant's
Work or an actual delay in the date that Tenant is able to occupy the demised
premises for conduct of its business, then for each such day of such actual
delay in the performance of Tenant's Work or an actual delay in the date that
Tenant is able to occupy the demised premises for conduct of its business
(without double counting any delay in the performance of Tenant's Work which
automatically causes an automatic delay in such occupancy date), the Rent
Commencement Date shall be extended by one day on a day-for-day basis (without
further double counting the number of days of such extension of the Rent
Commencement Date, however, in the event that such delay in the performance of
Tenant's Work is caused by Landlord's failure to substantially complete more
than one portion of Landlord's Post-Commencement Work).
C-1
<PAGE>
2. Perform such work as may be required so that the core
bathrooms located on each floor of the demised premises shall
comply with The Americans with Disabilities Act of 1990,
Public Law 101-336, 42 U.S.C. 12101 et seq. and all other
applicable Legal Requirements. Landlord shall construct core
bathrooms on the 7th and 8th floors substantially to the
standard of the core bathroom on the 2nd floor of the
Building. Landlord shall renovate the 9th floor core bathroom
as necessary to comply with this Paragraph 2. Landlord shall
substantially complete Landlord's Work set forth in this
Paragraph 2 in the 7th floor and 8th floor bathrooms on or
before the date that Tenant completes Tenant's Work, subject
to extension by reason of Force Majeure Causes. Landlord shall
give Tenant at least three (3) Business Days prior notice of
the delivery of such 7th floor and 8th floor bathrooms and
Tenant shall inspect same during such notice period, and shall
accept same in their substantially complete condition subject
to performance of punchlist items. Landlord shall provide and
install standard locksets for such bathrooms and after
delivery of same to Tenant, Landlord shall have no further
liability to Tenant with respect to same pursuant to this
Paragraph 2. With respect to the 9th floor bathroom, Landlord
shall substantially complete the portion of Landlord's Work
set forth in this Paragraph 2 to the extent required to
provide a working bathroom on or before the date that Tenant
completes Tenant's Work and Landlord shall complete the
finishes in such 9th floor bathroom within thirty (30) days
after the completion of Tenant's Work. If Landlord does not
substantially complete Landlord's Post Commencement Work set
forth in this Paragraph 2 on or before the deadline dates set
forth herein, than Tenant and Landlord agree that as Tenant's
sole remedy therefor, Tenant shall have the right to perform
the items of such Landlord's Post-Commencement Work which were
not substantially completed with respect to which Tenant shall
have given Landlord prior notice of its intention to exercise
the self-help remedy and the name of the contractor Tenant
intends to engage for the performance of such remedy work and
Landlord shall not have reasonably objected in writing to the
use of the contractor named by Tenant in its notice to perform
such remedy work. Upon completion of such remedy of the
uncompleted work by Tenant, Tenant shall give notice thereof
to Landlord and shall submit to Landlord together with such
notice a copy of paid invoices from such contractor setting
forth the reasonable costs and expenses incurred by Tenant to
complete such remedy work and if Landlord shall not have
reimbursed Tenant the amount of such reasonable costs and
expenses with interest thereon at the Interest Rate within ten
(10) Business Days after receipt of Tenant's notice, then
Tenant shall have the right to offset such costs and expenses
with interest thereon at the Interest Rate against the
payments of fixed rent and other items of rental due hereunder
(hereinafter called the "Offset Option"), provided that the
amount of such offset shall be based on the invoices submitted
to Landlord and provided further that Tenant's notice to
Landlord shall have specifically referenced Tenant's intention
to exercise the Offset Option in the event of
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Landlord's failure to timely make the foregoing reimbursement.
Notwithstanding anything to the contrary contained herein,
Tenant shall have no right to elect the Offset Option after it
has provided Landlord with prior written notice of its
election of said Offset Option hereinbefore set forth if
within ten (10) Business Days from Landlord's receipt of such
notice, Landlord has objected to the Offset Option and
commenced the arbitration process set forth in Article 38
hereof. In the event Landlord shall dispute the Offset Option
by written notice to Tenant and shall begin the arbitration
process set forth in Article 38, Tenant shall continue to make
all rental payments required under the lease in a timely
fashion without application of the Offset Option until such
time as said arbitration is resolved in Tenant's favor, at
which time, Tenant shall have the right to exercise the Offset
Option, with interest as aforesaid.
3. Replace with new wire glass windows those lot line windows
which were not recently replaced within thirty (30) days after
the Air-Cooled Units shall have been installed and Tenant
shall have met with Landlord's managing agent to identify the
lot line windows to be replaced.
C-3
<PAGE>
Exhibit to Schedule C
[Letterhead of CARDINAL ELECTRICAL CONTRACTORS, INC.]
September 28, 1993 PROPOSAL
Montrose Realty
380 Madison Avenue
New York, NY 10017
Attn: Mr. Tom Warren
RE: 345 Park Avenue, South
Power to 7th Floor
Dear Tom:
As per your request, we are submitting our proposal for the above mentioned
project.
1) -500 Amperes to 7th floor terminating at a 600 ampere fused switch, this
riser will be a parallel set of 300 MCM with a 1/0 neutral in each set.
$ 32,500.00
-----------
2) -400 amperes to the 7th floor which will be a parallel set 4/0, 3 in each
conduit terminating at a 400 ampere switch.
$ 26,000.00
-----------
3) -100 amperes 3-phase 4-wire for lighting and power, we would use 1/0
conductors which is rated at 150 amperes and terminate at a 200 ampere
switch and fuse at 125 amperes.
$ 7,000.00
-----------
Hoping we have covered all your options.
All main switches tie ins will be coordinated with Con Edison and Building
personnel.
We will have to file Advisory Board drawings with this request.
Very truly yours,
CARDINAL ELECTRICAL CONTRACTORS, INC.
/s/ Ronald Borress
Ronald Borress
President
RB/lf
<PAGE>
SCHEDULE D
CLEANING SPECIFICATIONS
A. General Cleaning will be performed nightly, Monday through
Friday, excluding Union and/or legal Holidays.
1. All carpeting will be vacuumed once per week and carpet
swept the remaining four nights.
2. All composition floor tile will be swept and dust mopped
with a chemically treated mop for dust control.
3. All desks will be dusted.
4. All ashtrays will be emptied and cleaned.
5. Waste paper baskets will be emptied and trash removed to a
designated location on the premises. Plastic liners will be
installed weekly into all trash receptacles at the tenants' expense.
6. Wipe clean all water fountains and coolers - empty waste
water.
7. All janitor rooms will be kept clean and in an orderly
condition.
B. Lavatory service will be performed, Monday through Friday,
excluding Union and/or legal Holidays.
1. Porcelain fixtures will be scoured clean.
2. Both sides of toilet seats will be washed with a mild
germicidal solution.
3. Bright work will be dry polished.
4. Receptacles will be emptied and cleaned.
5. Mirrors will be cleaned.
6. Partitions will be wiped down as necessary.
7. Shelves will be cleaned.
8. Floors will be washed with a mild non-injurious
disinfectant.
9. Lavatory supplies to be furnished at the Tenant's expense
except on multi-tenanted floors, in which event same shall be
furnished at Landlord's expense.
D-1
<PAGE>
C. Weekly Routine
1. All chairs, tables, cabinets and allied attachments will be
dusted weekly.
2. Window sills will be dusted weekly.
3. Moldings and ledges within hands reach will be dusted
weekly.
D. Quarterly Cleaning
1. Dust while in place all pictures, frames, charts, graphs
and similar wall hangings not reached in nightly cleaning.
2. Dust all verticle surfaces and walls, partitions, doors,
door bucks and other surfaces not reached in nightly cleaning.
3. Clean all exterior windows (inside and out).
4. Dust all venetian blinds.
E. Yearly Service
1. Clean all venetian blinds.
D-2
<PAGE>
SCHEDULE E
TERMINATION FIXED RENT
- ------------------------------------------
1994 Jan $0.00
Feb $13,254.54
Mar [ILLEGIBLE]
Apr [ILLEGIBLE]
May [ILLEGIBLE]
Jun [ILLEGIBLE]
Jul [ILLEGIBLE]
Aug $91,257.86
Sep [ILLEGIBLE]
Oct [ILLEGIBLE]
Nov [ILLEGIBLE]
Dec [ILLEGIBLE]
- ------------------------------------------
1995 Jan [ILLEGIBLE]
Feb [ILLEGIBLE]
Mar [ILLEGIBLE]
Apr [ILLEGIBLE]
May [ILLEGIBLE]
Jun [ILLEGIBLE]
Jul [ILLEGIBLE]
Aug [ILLEGIBLE]
Sep [ILLEGIBLE]
Oct $204,406.00
Nov [ILLEGIBLE]
Dec $287,781.32
- ------------------------------------------
1996 Jan [ILLEGIBLE]
Feb [ILLEGIBLE]
Mar $323,904.27
Apr [ILLEGIBLE]
May [ILLEGIBLE]
Jun [ILLEGIBLE]
Jul [ILLEGIBLE]
Aug [ILLEGIBLE]
Sep [ILLEGIBLE]
Oct [ILLEGIBLE]
Nov $414,515.91
Dec $425,211.21
- ------------------------------------------
1997 Jan [ILLEGIBLE]
Feb [ILLEGIBLE]
Mar [ILLEGIBLE]
Apr [ILLEGIBLE]
May [ILLEGIBLE]
Jun $431,151.18
Jul [ILLEGIBLE]
Aug $422,782.53
Sep [ILLEGIBLE]
Oct [ILLEGIBLE]
Nov $410,020.39
Dec [ILLEGIBLE]
- ------------------------------------------
1998 Jan [ILLEGIBLE]
Feb [ILLEGIBLE]
Mar [ILLEGIBLE]
Apr [ILLEGIBLE]
May [ILLEGIBLE]
Jun [ILLEGIBLE]
Jul [ILLEGIBLE]
Aug [ILLEGIBLE]
Sep [ILLEGIBLE]
Oct $361,001.05
Nov [ILLEGIBLE]
Dec [ILLEGIBLE]
- ------------------------------------------
1999 Jan $347,002.23
Feb [ILLEGIBLE]
Mar [ILLEGIBLE]
Apr [ILLEGIBLE]
May [ILLEGIBLE]
E-1
<PAGE>
SCHEDULE E
TERMINATION FIXED RENT
Jun [ILLEGIBLE]
Jul [ILLEGIBLE]
Aug [ILLEGIBLE]
Sep [ILLEGIBLE]
Oct $303,301.90
Nov [ILLEGIBLE]
Dec [ILLEGIBLE]
- ------------------------------------------
2000 Jan [ILLEGIBLE]
Feb [ILLEGIBLE]
Mar [ILLEGIBLE]
Apr [ILLEGIBLE]
May [ILLEGIBLE]
Jun [ILLEGIBLE]
Jul [ILLEGIBLE]
Aug [ILLEGIBLE]
Sep $246,238.47
Oct [ILLEGIBLE]
Nov $235,410.37
Dec $229,942.43
- ------------------------------------------
2001 Jan [ILLEGIBLE]
Feb [ILLEGIBLE]
Mar $213,320.19
Apr $207,705.83
May $202,054.26
Jun [ILLEGIBLE]
Jul [ILLEGIBLE]
Aug [ILLEGIBLE]
Sep [ILLEGIBLE]
Oct [ILLEGIBLE]
Nov [ILLEGIBLE]
Dec [ILLEGIBLE]
- ------------------------------------------
2002 Jan [ILLEGIBLE]
Feb [ILLEGIBLE]
Mar [ILLEGIBLE]
Apr [ILLEGIBLE]
May $131,241.25
Jun [ILLEGIBLE]
Jul [ILLEGIBLE]
Aug [ILLEGIBLE]
Sep [ILLEGIBLE]
Oct [ILLEGIBLE]
Nov [ILLEGIBLE]
Dec [ILLEGIBLE]
- ------------------------------------------
2003 Jan [ILLEGIBLE]
Feb [ILLEGIBLE]
Mar [ILLEGIBLE]
Apr [ILLEGIBLE]
May [ILLEGIBLE]
Jun [ILLEGIBLE]
Jul $41,208.63
Aug [ILLEGIBLE]
Sep [ILLEGIBLE]
Oct [ILLEGIBLE]
Nov [ILLEGIBLE]
Dec [ILLEGIBLE]
- ------------------------------------------
2004 Jan $0.00
E-2
<PAGE>
SCHEDULE F
AIR-COOLED UNITS LOCATION PLAN
[FLOOR PLAN OMITTED]
8th FLOOR
F-1
<PAGE>
SCHEDULE F
AIR-COOLED UNITS LOCATION PLAN
[FLOOR PLAN OMITTED]
7th FLOOR
F-2
<PAGE>
SCHEDULE G
RULES AND REGULATIONS FOR ALTERATIONS
1. Letter of intent from tenant.
2. Three (3) complete sets of plans with specifications.
3. Building Notice application forms.
4. Approval of Landlord.
5. Insurance Certificates from General Contractor and all Subcontractors.
6. Cashier's receipt from Building Department.
7. Work permit to be posted at job site.
8. Final Approval from Building Department.
DEMOLITION
1. All demolition to be done before or after building office hours.
2. All rubbish removal before or after building hours.
3. Tenant to pay for overtime elevator service.
4. Tenant to make arrangement with Building Manager for Contractor's use of
elevator service.
5. No material or equipment to be carried under or on top of elevators.
WALLS: "MASONRY"
1. All masonry walls to have a base course of cinder blocks on cement slab.
2. All masonry walls to be from slab to arch.
3. All walls to meet Building Department requirements.
4. All walls abutting mullions to have a channel to receive blocks.
DRY WALLS
1. All dry wall partitions are to be constructed of steel studs and 5/8"
sheetrock - sheetrock to be installed vertically, penetrating ceiling,
studs to be 16" on center.
2. All walls abutting mullions to have a channel on the mullion and on the
horizontal and vertical surfaces of the periphery enclosure to receive
sheetrock. "J" molding is to be used where the sheetrock butts the
periphery enclosure or mullion surfaces.
G-1
<PAGE>
3. The installation and application of all materials for dry wall
partitioning shall be in accordance with the manufacturers instructions
and of all applicable codes.
4. Fixing of all metal studs to floor and concrete ceilings shall be done
before or after business hours.
5. Floor and ceiling runners are to be securely attached, 16" OC to concrete
arch, not to ductwork.
6. For separation of tenants' spaces and public corridors, partitions are to
be as follows, in order to derive a 2 hour rating:
2 1/2" steel studs, 16" CC, 5/8" gypsum board inside layers both sides and
2 layers of 5/8" gypsum wall board all outside, a total of 4 layers all
from the floor slab to the structural slab above.
ELECTRICAL
1. Home runs to be indicated on plans. Rigid conduit to be used throughout
3/4" minimum size, thin wall tubing permitted.
2. Fixtures to be building standard or approved by Landlord.
3. Switches and outlets
Single pole switches - Leviton #5521) or equal
3-way switches - Leviton #5523) or equal
Wall receptacles - Leviton #5014) or equal
4. All conduit to be supported by standoffs, not wired to ceiling supports.
All conduit to be concealed.
5. All electrical boxes to be 4-1/2 X 4-1/2. No gem boxes.
6. All unused conduit and wiring to be removed.
6a. No power to be taken from line side of panels -- load side only.
6b. No power to be taken from other tenant on floor.
7. All wiring to meet Building Department and Underwriters requirements. No
wire molding permitted. No surface mounted wiring on walls, floors or
ceilings. No power poles or posts.
8. All special power to be taken from main distribution board, not from
existing building panels. Approval of all electrical work to be obtained
from Building Electrical Engineer, at tenant's expense.
9. Plans with requirements shall be submitted to Landlord to determine riser
capacity.
G-2
<PAGE>
10. Tenant to pay for all electrical design and layout costs.
11. Building Mechanic to supervise all riser shutdowns.
12. All lighting fixtures shall be hung from carrying channels which will
provide bridged openings to receive fixtures.
13. The building shall be provided with "as built" drawings showing all
changes in wiring size, circuit numbering, circuit routing and all
electrical work as actually installed. Index to be revised on panels.
TELEPHONE
1. All telephone wire to be concealed in conduit or thin wall.
2. Telephone wire permitted to run loose in periphery enclosures.
3. No telephone wire to be run exposed on baseboards or walls.
4. Termination of conduit to be indicated on plans.
5. No telephone equipment of any kind shall be installed in any areas
reserved by building such as fan rooms, electric closets, halls, slop
sinks, etc.
DOORS
1. All doors to have a fire rated label in all instances where the wall in
which such door is located is required to be fire rated.
2. INTENTIONALLY OMITTED
3. All new metal doors shall be flush panels reinforced with channels at 6"
centers, insulated and with no visible seams.
4. All door frames shall have concealed reinforcement for door butts and
strike and shall be punched for silencers. Doors and door frames are to be
installed in accordance with manufacturers instructions.
HARDWARE
1. INTENTIONALLY OMITTED
2. All locks to be keyed and mastered to building setup. Two individual keys
to be supplied to building.
G-3
<PAGE>
SUPERVISION
1. General Contractor to have a Superintendent or Foreman on premises at all
times during day and after hours when work is in progress.
2. Job to be policed at all times - laborers continually keeping space
orderly. If necessary, public lobby on floor to be washed and waxed.
Sidewalk to be kept clean.
3. Contractor to be responsible for cleanliness of all parts of area
including elevator and lobbies. The building will charge tenant for any
cleaning made necessary due to construction operations.
4. Contractor to protect all periphery units and clean same at completion of
job.
5. Contractor to block off grills or ducts to keep dust from entering into
operating building air conditioning system.
EQUIPMENT
1. No equipment is to be suspended from the reinforcing rods in arch.
2. Equipment to be suspended with fish plates through slab or steel beams
depending on weight.
3. All floor loading and steel work subject to the approval of the building
structural steel engineer. Approval obtained at tenant's expense.
WOODWORK
All wood to be fireproofed (New York City Affidavit of Certification to be
furnished).
PUBLIC AREAS
All public areas to meet Building Department requirements.
AIR CONDITIONING
1. Tenant to alter existing air conditioning ductwork or system to meet
requirements of altered area.
2. System to be balanced at completion of job.
G-4
<PAGE>
3. Tenant to furnish design balancing figures to building.
4. All outside louvres to match existing. Sketches to be submitted prior to
installation.
5. No partial window louvre permitted.
6. No outside louvre or ductwork is to be installed in such a manner as to
interfere with the cleaning of windows or replacement of glass.
7. All periphery shut-off valves to be accessible at all times.
8. All unused ductwork to be removed.
9. All unused equipment, such as air handling units, air conditioning units
to be removed.
10. All ductwork shall be installed in a neat and workmanlike manner. All
ducts to be installed as high as possible. The air conditioning contractor
is to blank off all openings in the existing ductwork caused by removals.
All blank offs shall be sealed air tight, with rivets, caulking compound
and duct tape. All new ductwork is to be inspected and sealed wherever
required, in the same manner.
11. Manual volume dampers are to be installed in all branch or sub-branch
ducts and elsewhere as required for balancing and control of all duct
systems whether or not shown on drawings.
12. Duct hangers shall be attached to steel or concrete slab as required.
13. Access doors are to be provided adjacent to all fan dampers and locations
to be shown on duct work shop drawings.
14. All supplementary air-conditioning systems are to be specifically
discussed with the Landlord's representative.
15. All condensate lines are to be rigid copper tubing with an indirect drain
to waste, not into building service sinks or other sinks and not into the
building condensate system.
16. As-built duct drawings to be given to building upon the completion of job.
17. Pneumatic tubing to be copper. No plastic tubing permitted.
G-5
<PAGE>
PLUMBING
1. No water risers to be shut down during building office hours.
2. All plumbing to conform to the Code.
3. All fixtures to match existing.
4. No exposed plumbing permitted.
5. All unused fixtures and piping to be removed and all unused piping to be
capped at its respective riser.
6. No plastic pipe permitted.
7. Building mechanic to supervise all riser shutdowns.
8. All valves to have a 2" square brass tag stamped with designating No., 1"
high, filled in with black enamel, to each valve; fastened to valve
spindle with brass chain.
9. Provide lead or fiber shields between hangers and clamps for copper pipe.
10. All pipe hangers and supports shall be connected to the building
structure; no chain straps, perforated bars, wire hangers or expansion
shields permitted; no hanging from work of another trade permitted.
11. Sleeves are to be provided for each pipe passing through walls, partitions
floors and slabs.
12. All fixtures installed must have a local shutoff valve, and where two or
more fixtures are in the same area, a valve to control all fixtures as
well as a shutoff valve at the riser.
CEILINGS
1. All ceilings shall meet all New York City Building Department
requirements.
2. All ceilings to match existing unless specifically approved by Owner.
G-6
<PAGE>
3. No ceiling tiles shall be installed until the building management has had
an opportunity to inspect the areas to ascertain that all ductwork,
plumbing, electrical, etc., has been installed and further that all
fireproofing has been reinstalled on any exposed steel.
4. All ceilings are to be installed in strict accordance with the
manufacturers specifications, and all applicable Codes.
5. Access panels are to be provided wherever necessary for inspection
maintenance and/or controls relating to air-conditioning, plumbing or
other building services.
6. Carrying channels for the ceiling shall be bolted to hangers as required
but not over 4' - 0" OC and 6" of walls and partitions parallel to the
channels.
METAL AND GLASS PARTITIONS
1. All partitions to meet all N.Y. City Building Dept. requirements.
2. INTENTIONALLY OMITTED
3. All partitions to be secured to floor and to arch above. Hangers to be
independent of all other hangers.
FLOORING
INTENTIONALLY OMITTED
ELEVATOR SERVICE
Tenant to pay for all elevator service.
GENERAL
The Building Management Office will inspect the work to assure the building
requirements, quality of materials and workmanship are in conformity with
building standard.
If stand-by service is required, the Building Manager will supply necessary
staff at your expense.
G-7
<PAGE>
The Building Management reserves, for its own use, all fan rooms, electric
closets, service sinks, telephone closets (if any), public stairways, public
lobbies and service corridors. No tenant installations are to be indicated on
drawings to be within those areas without specific approval of the building. A
blanket approval of a plan is not an approval to install conduit, piping, or
ductwork through these areas. In all cases where approval is given,
installations are to be done at the times specified by the building and in a
manner specified by the building. All holes in floors, walls, or ceilings are to
be properly sealed upon the completion of a specific installation.
All contractors are to support their work by independent means. No trade to hang
off another's work.
G-8
<PAGE>
SCHEDULE H
SUBORDINATION, ATTORNMENT AND
NON-DISTURBANCE AGREEMENT
AGREEMENT dated the ___ day of ________, 1993 between PARK 25TH
ASSOCIATES, a New York limited partnership having an office at 185 Madison
Avenue, New York, New York 10016 (hereinafter called "Ground Lessor") and THE
NEW YORK LAW PUBLISHING COMPANY, a New York corporation having an office at 111
Eighth Avenue, New York, New York 10014 (hereinafter called "Space Tenant").
W I T N E S S E T H:
WHEREAS
A. Ground Lessor is the holder of the landlord's interest, and PARK AVENUE
SOUTH/ARMORY, INC. (hereinafter called "Ground Lessee") is the holder of the
tenant's interest, respectively, in, to and under that lease (hereinafter called
the "Ground Lease") described in Exhibit A annexed hereto which Ground Lease
covers the entire premises (hereinafter called the "Premises") described in
Exhibit B annexed hereto;
B. Ground Lessee, as landlord, and Space Tenant, as tenant, have or are
about to enter into a lease (hereinafter called the "Space Lease") for a portion
of the Premises;
C. A true and complete copy of the Space Lease has been delivered to
Ground Lessor the receipt of which is hereby acknowledged; and
D. Ground Lessor and Space Tenant desire to confirm their understanding
with respect to the Space Lease and the rights of Space Tenant thereunder.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, Ground Lessor and Space Tenant agree as follows:
1. If (i) the Ground Lease shall terminate or expire or be terminated
prior to the date fixed in the Space Lease for the expiration of the term of the
Space Lease by reason of surrender or default of Ground Lessee, cancellation by
agreement between Ground Lessor and Ground Lessee or for any other reasons, and
(ii) at the time of such termination or expiration Space Tenant is not in
default under the Space Lease after the giving of a notice thereof and the
expiration of any applicable grace period, then;
(a) Space Tenant shall not be named or joined as a party defendant
in any action, suit or proceeding to terminate the Ground Lease or to remove or
evict Ground Lessee from the Premises (unless Space Tenant is deemed a necessary
party by the court, in which event Space Tenant may be so named or joined but
such naming or joinder shall not otherwise be in derogation of the rights of
Space Tenant set forth in this Agreement); and
H-1
<PAGE>
(b) Space Tenant shall not be evicted from the premises demised
under the Space Lease, nor shall the leasehold estate or possession of Space
Tenant be terminated or disturbed, nor (except to the extent provided in
Paragraph 2 of this Agreement) shall any of the rights of Space Tenant be
affected in any way by reason of any default or event of default under the
Ground Lease or by the Ground Lessor in the exercise of any of its rights under
the Ground Lease or otherwise by law provided, and in any case (except to the
extent provided in Paragraph 2 hereof) the rights of Space Tenant under the
Space Lease shall not be diminished, reduced or adversely affected in any way
whatsoever by reason of any default or event of default under, or termination or
expiration of, the Ground Lease.
2. If, at any time Ground Lessor (or any person, or such persons'
successors or assigns, who acquires the interest of Ground Lessee, as landlord,
under the Space Lease through termination of the Ground Lease or otherwise)
shall succeed to the rights of Ground Lessee, as landlord, under the Space Lease
as a result of a default or event of default by Ground Lessee under the Ground
Lease or for any other reason, and if Space Tenant is not then in default under
the Space Lease after notice and beyond the time permitted therein to cure such
default then (i) the Space Lease shall not terminate, (ii) Space Tenant shall
attorn to and recognize such person so succeeding to the rights of Ground
Lessee, as landlord, under the Space Lease (herein sometimes called "Successor
Landlord") as Space Tenant's landlord under the Space Lease, upon the then
executory terms and conditions of the Space Lease and as hereinafter provided in
this Paragraph 2, and (iii) Successor Landlord shall accept such attornment and
recognize Space Tenant as Successor Landlord's tenant under the Space Lease,
upon the then executory terms and conditions of the Space Lease and as
hereinafter provided in this Paragraph 2. Upon such attornment and recognition
the Space Lease shall continue in full force and effect as, or as if it were, a
direct lease between Successor Landlord and Space Tenant upon all the then
executory terms, conditions and covenants as are set forth in the Space Lease
and which shall be applicable after such attornment and recognition, except that
Successor Landlord shall not:
(a) be liable for any act or omission of Ground Lessee, as landlord,
under the Space Lease; provided, however, that the foregoing provisions of this
subparagraph 2(a) shall not be deemed to exculpate the Successor Landlord from
the obligation to cure any condition in the Building which continues to give
rise to a default after the date the Successor Landlord acquires its interest;
(b) be obligated to repair, replace, rebuild or restore the premises
demised under the Space Lease, or any part thereof, in the event of total or
substantially total damage or destruction beyond such repair, replacement,
rebuilding or restoration as can reasonably be accomplished from the net
proceeds of insurance actually received by, or made available to, Successor
Landlord for such purposes;
(c) be obligated to repair, replace, rebuild or restore the premises
demised under the Space Lease, or any part thereof, in the event of total or
substantially total taking by governmental authority, eminent domain or
condemnation beyond such repair, replacement, rebuilding or restoration as
H-2
<PAGE>
can reasonably be accomplished from the net proceeds actually received by, or
made available to, Successor Landlord as consequential damage allocable to the
part of the premises demised under the Space Lease not taken;
(d) be subject to any offset or defense (other than actual
performance) which Space Tenant may have against the previous landlord as
landlord, under the Space Lease;
(e) be bound by any previous modification of the Space Lease unless
Ground Lessor has approved such amendment or modification in advance and by
written instrument or by any previous payment of rent or additional rent other
than the payment of the first month's rent made more than thirty (30) days prior
to its due date;
(f) be bound by any previous extension of the Space Lease (other
than extension or rights of extensions contained in the Space Lease) unless
Ground Lessor has approved such amendment or modification in advance and by
written instrument;
(g) be obligated to perform any work in the premises demised under
the Space Lease, or any part thereof, other than such work which is required to
be performed by Ground Lessee, as landlord, under the Space Lease from and after
such attornment provided, however, that Successor Landlord shall not be bound by
an obligation to complete construction of any tenant finish work or other
initial construction or initial improvement of the premises or to pay for such
work performed by Space Tenant.
In addition, in no event shall there by any personal liability under the
Space Lease on the part of Successor Landlord and Successor Landlord's liability
under the Space Lease shall be limited to the extent of the interest of
Successor Landlord in the Premises.
3. Space Tenant confirms that, subject to the provisions of this
Agreement, the Space Lease and its rights thereunder now are, and shall at all
times continue to be, subject and subordinate to the Ground Lease and to the
leasehold estate of the Ground Lessor in the Premises.
4. All notices shall be in writing and shall be deemed to have been
given when delivered personally or when deposited in the United States mail,
certified or registered, postage prepaid, addressed as follows:
To Ground Lessor:
Park 25th Associates
185 Madison Avenue
New York, New York 10016
with copies to:
H-3
<PAGE>
To Space Tenant:
A. Prior to Space Tenant's occupancy of the Premises:
THE NEW YORK LAW PUBLISHING COMPANY
111 Eighth Avenue
New York, New York 10014
Attn: James Finkelstein
B. After Space Tenant has taken occupancy of the Premises:
THE NEW YORK LAW PUBLISHING COMPANY
345 Park Avenue South
New York, New York
Attn: James Finkelstein
5. Space Tenant hereby certifies to Ground Lessor:
(a) The Space Lease has not been modified, altered or amended. There are
not other oral or written agreements between Ground Lessee, as
landlord, and Space Tenant relating to the premises demised under
the Space Lease or the Space Lease.
(b) The base rent currently payable is set forth on Schedule K of the
Space Lease, plus items of additional rent.
(c) Space Tenant has accepted possession of the premises demised under
the Space Lease and is now in possession of the same.
(d) No right of renewal or right to reduce the premises demised under
the Space Lease has been exercised.
(e) intentionally omitted;
(f) That the Space Lease is in full force and effect and Space Tenant
has not received any notice of default from the Ground Lessee, as
landlord, thereunder that has not been cured.
(f) That Space Tenant has no knowledge of any circumstances giving rise
to any right to any credit or set-off against its obligation
H-4
<PAGE>
for present or future rentals under the Space Lease, nor has Space
Tenant received any notices of any prior assignment, hypothecation
or pledge of the rents under the Space Lease.
6. The provisions of this Agreement shall be self-operative and no further
instrument shall be necessary to effect the aforementioned attornment,
recognition and subordination. Nevertheless, in confirmation thereof, Space
Tenant shall execute and deliver an appropriate certificate to confirm such
attornment, recognition or subordination upon request of Ground Lessee or any
other party to whom Space Tenant herein agrees to attorn.
7. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their successors and assigns.
PARK 25TH ASSOCIATES,
Ground Lessor
By:
-------------------------------------
, a general partner
THE NEW YORK LAW PUBLISHING COMPANY,
Space Tenant
By:
-------------------------------------
H-5
<PAGE>
COUNTY OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ___ day of _____________, 1993, before me personally came
_______________________, to me known, who, being duly sworn by me, did depose
and say that he resides at _____________________, that he is a general partner
in PARK 25TH ASSOCIATES, a New York limited partnership, the limited partnership
mentioned in, and which executed the foregoing instrument as Ground Lessor; and
that he signed his name thereto as the act and deed of said firm.
-------------------------------------
Notary Public
COUNTY OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ___ day of ___________, 1993, before me personally came
________________ to me known, who being by me duly sworn, did say that he
resides at ________________________; that he is _________________ of THE NEW
YORK LAW PUBLISHING COMPANY, the corporation described in and which executed the
foregoing instrument as Space Tenant; and that he signed his name thereto by
order of the board of directors of said corporation.
-------------------------------------
Notary Public
H-6
<PAGE>
Exhibit A
DESCRIPTION OF GROUND LEASE
Lease dated July 1, 1964 between PARK 25TH ASSOCIATES, as landlord, and
SALLY NADEL, as tenant, which Lease was recorded in the City Register's Office,
New York County, on July 8, 1964 in Liber 5285 of Conveyances, page 338, and
which lease was assigned by SALLY NADEL to 345 PARK SOUTH ASSOCIATES by
assignment dated July 1, 1964 and recorded on July 8, 1964 in said City
Register's Office in Liber 5285 of Conveyances, page 334, and which Lease was
further assigned by 345 PARK SOUTH ASSOCIATES to 345 PARK AVENUE SOUTH
PARTNERSHIP by assignment dated June 30, 1982 and recorded on June 30, 1982 in
said City Register's Office in Reel 629, page 244, and which Lease was further
assigned by 345 PARK AVENUE SOUTH PARTNERSHIP to Tenant by assignment dated May
20, 1985 and recorded on May 23, 1985 in said City Register's Office in Reel
913, page 1957, as amended by First Amendment of Lease made by and between PARK
25Th ASSOCIATES, as Landlord, and The ARMORY BUILDING LIMITED PARTNERSHIP, as
Tenant, dated as of May, 1989, covering the land, the building and improvements
thereon, located in the City, County and State of New York, commonly known by
the street address 345 Park Avenue South, and more particularly described in
Exhibit "B" annexed to this Agreement and made a part hereof.
H-7
<PAGE>
Exhibit B to
DESCRIPTION OF LAND
ALL that certain lot, piece or parcel of land, situate, lying and being in
the Borough of Manhattan, City, County and State of New York, bounded and
described as follows;
BEGINNING at the corner formed by the intersection of the easterly
side of 4th Avenue with the southerly side of 26th Street;
running thence Easterly along the southerly side of 26th Street, 120
feet;
thence Southerly parallel with 4th Avenue, 98 feet 9 inches to the
center line of the block between 25th and 26th Streets;
thence Westerly along said center line of the block, 30 feet;
thence Southerly and parallel with the easterly side of 4th Avenue,
98 feet 9 inches to the northerly side of 25th Street;
thence Westerly along the northerly side of 25th Street, 90 feet to
the easterly side of 4th Avenue;
thence Northerly along the easterly side of 4th Avenue, 197 feet 6
inches to the southerly side of 26th Street, at the point or place
of BEGINNING,
(Said 4th Avenue now being known as Park Avenue South.)
H-8
<PAGE>
SCHEDULE I
[FLOOR PLAN]
345 PARK AVE. SO
BASEMENT
ALL AREAS, CONDITIONS AND
DEMENSIONS ARE APPROXIMATE
<PAGE>
SCHEDULE J
SIGNAGE
[GRAPHIC OMITTED]
Both logos
are approxi-
mately 6" to
J-1
Not drawn to scale
<PAGE>
SCHEDULE K
- ------------------------------------------------------------
Yearly Monthly
Year Month Payment Payment
- -----------------------------------------------------------
- -----------------------------------------------------------
1994 JAN $143,244.88 $0.00
FEB $987.77
MAR $987.77
APR $987.77
MAY $987.77
JUN $987.77
JUL $987.77
AUG $987.77
SEP $987.77
OCT $987.77
NOV $67,177.48
DEC $67,177.48
- -----------------------------------------------------------
1995 JAN $880,360.89 $73,363.41
FEB $73,363.41
MAR $73,363.41
APR $73,363.41
MAY $73,363.41
JUN $73,363.41
JUL $73,363.41
AUG $73,363.41
SEP $73,363.41
OCT $73,363.41
NOV $73,363.41
DEC $73,363.41
- -----------------------------------------------------------
1996 JAN $908,842.90 $75,736.91
FEB $75,736.91
MAR $75,736.91
APR $75,736.91
MAY $75,736.91
JUN $75,736.91
JUL $75,736.91
AUG $75,736.91
SEP $75,736.91
OCT $75,736.91
NOV $75,736.91
DEC $75,736.91
- -----------------------------------------------------------
1997 JAN $928,380.65 $77,365.05
FEB $77,365.05
MAR $77,365.05
APR $77,365.05
MAY $77,365.05
JUN $77,365.05
JUL $77,365.05
AUG $77,365.05
SEP $77,365.05
OCT $77,365.05
NOV $77,365.05
DEC $77,365.05
- -----------------------------------------------------------
K-1
<PAGE>
1998 JAN $1,051,589.81 $87,632.48
FEB $87,632.48
MAR $87,632.48
APR $87,632.48
MAY $87,632.48
JUN $87,632.48
JUL $87,632.48
AUG $87,632.48
SEP $87,632.48
OCT $87,632.48
NOV $87,632.48
DEC $87,632.48
- -----------------------------------------------------------
1999 JAN $1,131,089.81 $94,257.48
FEB $94,257.48
MAR $94,257.48
APR $94,257.48
MAY $94,257.48
JUN $94,257.48
JUL $94,257.48
AUG $94,257.48
SEP $94,257.48
OCT $94,257.48
NOV $94,257.48
DEC $94,257.48
- -----------------------------------------------------------
2000 JAN $1,131,089.81 $94,257.48
FEB $94,257.48
MAR $94,257.48
APR $94,257.48
MAY $94,257.48
JUN $94,257.48
JUL $94,257.48
AUG $94,257.48
SEP $94,257.48
OCT $94,257.48
NOV $94,257.48
DEC $94,257.48
- -----------------------------------------------------------
2001 JAN $1,131,089.81 $94,257.48
FEB $94,257.48
MAR $94,257.48
APR $94,257.48
MAY $94,257.48
JUN $94,257.48
JUL $94,257.48
AUG $94,257.48
SEP $94,257.48
OCT $94,257.48
NOV $94,257.48
DEC $94,257.48
- -----------------------------------------------------------
K-2
<PAGE>
2002 JAN $1,131,089.81 $94,257.48
FEB $94,257.48
MAR $94,257.48
APR $94,257.48
MAY $94,257.48
JUN $94,257.48
JUL $94,257.48
AUG $94,257.48
SEP $94,257.48
OCT $94,257.48
NOV $94,257.48
DEC $94,257.48
- -----------------------------------------------------------
2003 JAN $1,206,173.14 $100,514.43
FEB $100,514.43
MAR $100,514.43
APR $100,514.43
MAY $100,514.43
JUN $100,514.43
JUL $100,514.43
AUG $100,514.43
SEP $100,514.43
OCT $100,514.43
NOV $100,514.43
DEC $100,514.43
- -----------------------------------------------------------
2004 JAN $1,272,000.00 $106,000.00
FEB $106,000.00
MAR $106,000.00
APR $106,000.00
MAY $106,000.00
JUN $106,000.00
JUL $106,000.00
AUG $106,000.00
SEP $106,000.00
OCT $106,000.00
NOV $106,000.00
DEC $106,000.00
- -----------------------------------------------------------
2005 JAN $1,272,000.00 $106,000.00
FEB $106,000.00
MAR $106,000.00
APR $106,000.00
MAY $106,000.00
JUN $106,000.00
JUL $106,000.00
AUG $106,000.00
SEP $106,000.00
OCT $106,000.00
NOV $106,000.00
DEC $106,000.00
- -----------------------------------------------------------
K-3
<PAGE>
2006 JAN $1,272,000.00 $106,000.00
FEB $106,000.00
MAR $106,000.00
APR $106,000.00
MAY $106,000.00
JUN $106,000.00
JUL $106,000.00
AUG $106,000.00
SEP $106,000.00
OCT $106,000.00
NOV $106,000.00
DEC $106,000.00
- -----------------------------------------------------------
2007 JAN $1,272,000.00 $106,000.00
FEB $106,000.00
MAR $106,000.00
APR $106,000.00
MAY $106,000.00
JUN $106,000.00
JUL $106,000.00
AUG $106,000.00
SEP $106,000.00
OCT $106,000.00
NOV $106,000.00
DEC $106,000.00
- -----------------------------------------------------------
2008 JAN $848,000.00 $106,000.00
FEB $106,000.00
MAR $106,000.00
APR $106,000.00
MAY $106,000.00
JUN $106,000.00
JUL $106,000.00
AUG $106,000.00
- -----------------------------------------------------------
K-4
<PAGE>
SCHEDULE L
FORM OF MORTGAGEE NON-DISTURBANCE AGREEMENT
AGREEMENT dated the __________ of day of __________, 19 __ between [Name
of Superior Mortgagee], a ___________ having an office, at _____________
(hereinafter called "Mortgagee"), and [Name of Space Tenant] a __________ having
an office at ________________ (hereinafter called "Space Tenant")
W I T N E S S E T H
WHEREAS:
A. Mortgagee has made or is about to make a certain loan secured by a
mortgage described in (Name of instrument] between Mortgagee, or mortgagee, and
[Name of leasehold owner], as mortgagor (hereinafter called "Ground Tenant"), to
be recorded in the Office of the Register of the City of New York (New York
County) (hereinafter called the "Mortgage"), covering the Ground Tenant's
leasehold interest in the land, buildings, improvements and other items of
property described therein, located in the City of New York, County of New York
and State of New York and more particularly described on Exhibit "A" annexed
hereto and made a part hereof (said leasehold interest in the land, buildings,
improvements and such other property being hereinafter referred to as the
"Premises"); and
B. Ground Tenant is the holder of the tenant's interest, in, to and under
that lease (hereinafter called the "Ground Lease") described in Exhibit B
annexed hereto which Ground Lease covers the entire Premises;
C. Ground Tenant, as landlord, and Space Tenant, as tenant, have or are
about to enter into a lease (hereinafter called the "Space Lease") for a portion
of the Premises;
D. A true complete copy of the Space Lease has been delivered to Mortgagee
the receipt of which is hereby acknowledged; and
E. Mortgagee and Space Tenant desire to confirm their understanding with
respect to the Space Lease and the rights of Space Tenant thereunder.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, Mortgagee and Space Tenant agree as follows;
1. Mortgagee agrees that provided the Space Lease is in full force
and effect and unless Space Tenant shall then be in default thereunder after
notice and beyond the time permitted therein to cure such default;
(a) Space Tenant shall not be named or joined as a party
defendant in any action, suit or proceeding to foreclosure the Mortgage or to
collect the debt secured thereby which may be instituted or taken by Mortgagee
<PAGE>
under or in connection with the Mortgage or any obligation secured thereby
unless Space Tenant is deemed a necessary party by the court, in which event
Space Tenant may be so named or joined by such naming or joinder shall not
otherwise be in derogation of the rights of Space Tenant set forth in this
Agreement; and
(b) Space Tenant shall not be evicted from the premises
demised under the Space Lease, nor shall the leasehold estate or possession of
Space Tenant be terminated or distributed, nor (except to the extent provided in
Paragraph 2 of this Agreement) shall any of the rights of Space Tenant be
affected in any way be reason of any default or event of default under the
Mortgage or by the Mortgagee in the exercise of any of its rights under the
Mortgage, the note secured thereby or otherwise by law provided, and in any case
(except to the extent provided in Paragraph 2 hereof) the rights of Space Tenant
under the Space Lease shall not be diminished, reduced or adversely affected in
any way whatsoever by reason of any default or event of default under, or
foreclosure of, the Mortgage, and Mortgagee will recognize Tenant as the direct
tenant of Mortgagee on the same terms and provisions of the Space Lease except
as modified by Paragraph 2 hereof.
2. If, at any time Mortgagee (or any person, or such persons'
successors or assigns, who acquires the interest of Ground Tenant, as landlord,
under the Space Lease through foreclosure action of the Mortgage) shall succeed
to the rights of Ground Tenant, as landlord, under the Space Lease as a result
of a default or event of default under the Mortgage or otherwise, and if Space
Tenant is not then in default under the Space Lease after notice and beyond the
time permitted therein to cure such default, then (i) the Space Lease shall not
terminate, (ii) Space Tenant shall attorn to and recognize such person so
succeeding to the rights of Ground Tenant, as landlord, under the Space Lease
(herein sometimes called "Successor Landlord") as Space Tenant's landlord under
the Space Lease, upon the then executory terms and conditions of the Space Lease
and as hereinafter provided in this Paragraph 2, and (iii) Successor Landlord
shall accept such attornment and recognize Space Tenant as Successor Landlord's
tenant under the Space Lease upon the then executory terms and conditions of the
Space Lease and as hereinafter provided in this Paragraph 2. Upon such
attornment and recognition the Space Lease shall continue in full force and
effect as, or as if it were, a direct lease between Successor Landlord and Space
Tenant upon all the then executory terms, conditions and covenants as are set
forth in the Space Lease and which shall be applicable after such attornment and
recognition, except that Successor Landlord shall not;
(a) be liable for any act or omission of Ground Tenant, as landlord,
under the Space Lease provided, however, that the foregoing provisions of this
subparagraph 2(a) shall not be deemed to exculpate the Successor Landlord from
the obligation to cure any condition in the Building which continues to give
rise to a default after the date the Successor Landlord acquires its interest;
(b) be obligated to repair, replace, rebuild or restore the premises
demised under the Space Lease, or any part thereof, in the event of total or
substantially total damage or destruction beyond such repair,
L-2
<PAGE>
replacement, rebuilding or restoration as can reasonably be accomplished from
the net proceeds of insurance actually received by, or made available to,
Successor Landlord;
(c) be obligated to repair, replace, rebuild or restore the
premises demised under the Space Lease, or any part thereof, in the event of
total or substantially total taking by governmental authority, eminent domain or
condemnation beyond such repair, replacement, rebuilding or restoration as can
reasonably be accomplished from the net proceeds actually received by, or made
available to, Successor Landlord;
(d) be subject to any offset or defense (other than actual
performance) which Space Tenant may have against the previous landlord, as
landlord, under the Space Lease;
(e) be bound by any previous modification of the Space Lease
unless Mortgagee has approved such amendment or modification in advance and by
written instrument or by any previous payment rent or additional rent made other
than the payment of the first month's rent more than thirty (30) days prior to
its due date;
(f) be bound by any previous extension of the Space Lease
(other than extensions or rights of extensions contained in the Space Lease)
unless Mortgagee has approved such amendment or modification in advance and by
written instrument;
(g) be obligated to perform any work in the premises demised
under the Space Lease, or any part thereof, other than such work which is
required to be performed by Ground Tenant, as landlord, under the Space Lease
from and after such attornment provided, however, that Successor Landlord shall
not be bound by an obligation to complete construction of any tenant finish work
or other initial construction or initial improvement of the premises or to pay
for such work performed by Space Tenant.
In addition, in no event shall there be any personal liability under the
Space Lease on the part of Successor Landlord and Successor Landlord's liability
under the Space Lease shall be limited to the extent of the interest of
Successor Landlord in the Premises.
3. Subject to the continuing effectiveness of this Agreement, Space
Tenant confirms that the Space Lease and its rights thereunder now are, and
shall at all times continue to be, subject and subordinate to (a) the lien
security title and security interest of the Mortgage and (b) any additional
financing of the Premises or portions thereof provided by Mortgagee or its
successors or assigns and the liens and security interests of the documents
evidencing and securing such additional financing, and to all the terms,
L-3
<PAGE>
conditions and provisions thereof provided, however, that the same shall be
subject to the provisions of this Agreement, to all advances made or to be made
thereunder, and to any renewals, extensions, consolidations, modifications or
replacements thereof, including any increases therein or supplements thereto.
4. All notices shall be in writing and shall be deemed to have been
given when delivered personally or when deposited in the United States mail,
certified or registered, postage prepaid, addressed as follows;
To Mortgagee:
with copies to:
To Space Tenant:
A. Prior to Space Tenant's occupancy of the Premises:
THE NEW YORK LAW PUBLISHING COMPANY
111 Eighth Avenue
New York, New York 10014
Attn: James Finkelstein
B. After Space Tenant has taken occupancy of the Premises:
THE NEW YORK LAW PUBLISHING COMPANY
345 Park Avenue South
New York, New York
Attn: James Finkelstein
5. Space Tenant hereby certifies to Mortgagee*:
(a) The Space Lease has not been modified, altered or amended.
There are not other oral or written agreements between Ground
Tenant, as landlord, and Space Tenant relating to the premises
demised under the Space Lease or the Space Lease.
(b) The base rent currently payable is $_____________________
per month, plus items of additional rent.
______________
* Space Tenant to modify as may be appropriate to reflect the state of facts
in existence as of the date of this Agreement.
L-4
<PAGE>
(c) Space Tenant has accepted possession of the premises
demised under the Space Lease and is now in possession of the same.
(d) No right of renewal or right to reduce the premises
demised under the Space Lease has been exercised.
(e) That all work to be performed by Ground Tenant, as
landlord under the Space Lease has been completed in accordance with
the terms of the Space Lease to the full satisfaction of Space
Tenant.
(f) That the Space Lease is in full force and effect and Space
Tenant has not received any notice of default from the Ground
Tenant, as landlord, thereunder that has not been cured.
(g) That Space Tenant has no knowledge of any circumstances
giving rise to any right to any credit or set-off against its
obligation for present or future rentals under the Space Lease, nor
has Space Tenant received any notices of any prior assignment,
hypothecation or pledge of the rents under the Space Lease.
6. The provisions of this Agreement shall be self-operative and no
further instrument shall be necessary to effect the aforementioned attornment,
recognition and subordination. Nevertheless, in confirmation thereof, Space
Tenant shall execute and deliver an appropriate certificate to confirm such
attornment, recognition or subordination upon request of Ground Tenant or any
other party to whom Space Tenant herein agrees to attorn.
7. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their successors and assigns.
[SIGNATURE LINES AND ACKNOWLEDGMENTS]
L-5
<PAGE>
Exhibit A to Schedule P
DESCRIPTION OF LAND
All that certain lot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:
BEGINNING at the corner formed by the intersection of the easterly
side of 4th Avenue with the southerly side of 26th Street;
running thence easterly along the southerly side of 26th Street, 120
feet;
thence Southerly parallel with 4th Avenue, 98 feet 9 inches to the
center line of the block between 25th and 26th Streets;
thence Westerly along said center line of the block, 30 feet;
thence Southerly and parallel with the easterly side of 4th Avenue,
98 feet 9 inches to the northerly side of 25th Street;
thence Westerly along the northerly side of 25th Street, 90 feet to
the easterly side of 4th Avenue;
thence Northerly along the easterly side of 4th Avenue, 197 feet 6
inches to the southerly side of 26th Street, at the point or place
of BEGINNING.
(Said 4th Avenue now being known as Park Avenue South.)
L-6
<PAGE>
SCHEDULE M
UNABATED FIXED RENT
YEAR MONTHLY AMOUNT
---- --------------
February 1994 through Calendar 1994 .............. $ 987.77 per month
Calendar 1995 ........................... $3,007.05 per month
Calendar 1996 ........................... $5,380.55 per month
Calendar 1997 ........................... $7,008.70 per month
Calendar 1998 through Calendar 2003 ..... $7,028.32 per month
<PAGE>
EXHIBIT N
CORESTATES
PHILADELPHIA NATIONAL BANK, INCORPORATED AS CORESTATES BANK, N.A.
CREDIT NO. ISSUE DATE EXPIRY DATE LETTER OF CREDIT AMOUNT
72P 24-SEP-1993 1-NOV-94 USD510,417.00
0 0 0 0
BENEFICIARY APPLICANT
PARK AVENUE SOUTH/ARMORY, INC. THE NEW YORK LAW PUBLISHING COMPANY
C/O MONTROSE REALTY CORPORATION 111 8TH AVENUE
380 MADISON AVENUE NEW YORK, NY 10011
NEW YORK, NY 10017
0 0 0 0
- --------------------------------------------------------------------------------
[ILLEGIBLE] BENEFICIARY:
HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR, AS
BENEFICIARY, [ILLEGIBLE] IS AVAILABLE BY THE FOLLOWING DOCUMENTS:
THE BENEFICIARY'S DRAFT(S) DRAWN ON US AT SIGHT, DULY ENDORSED ON THE REVERSE
SIDE THEREOF, AND BEARING THE CLAUSE: "DRAWN UNDER PHILADELPHIA NATIONAL BANK,
INCORPORATED AS CORESTATES BANK, N.A. STANDBY LETTER OF CREDIT NUMBER 512872P."
A TYPEWRITTEN STATEMENT ON THE LETTERHEAD OF AND PURPORTEDLY SIGNED BY AN
AUTHORIZED OFFICER OF PARK AVENUE SOUTH/ARMORY, INC. STATING THEREIN: "WE HEREBY
CERTIFY THAT THE NEW YORK LAW PUBLISHING COMPANY IS IN DEFAULT AFTER NOTICE AND
EXPIRATION OF APPLICABLE GRACE PERIOD UNDER THE TERMS OF THAT CERTAIN LEASE BY
AND BETWEEN PARK AVENUE SOUTH/ARMORY, INC. AS LANDLORD AND THE NEW YORK LAW
PUBLISHING COMPANY AS TENANT WITH RESPECT TO THE PREMISES LOCATED AT 345 PARK
AVENUE SOUTH, AND WE ARE ENTITLED TO DRAW UPON THIS LETTER OF CREDIT BY REASON
OF SUCH DEFAULT. THEREFORE WE DEMAND PAYMENT OF USD (SUPPLY AMOUNT) UNDER
PHILADELPHIA NATIONAL BANK, INCORPORATED AS CORESTATES BANK, N.A. STANDBY LETTER
OF CREDIT NUMBER 512872P."
THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL, AMENDMENTS, IF ANY, FOR OUR
ENDORSEMENT. (IF YOUR DEMAND REPRESENTS A PARTIAL DRAWING, WE WILL ENDORSE THE
ORIGINAL CREDIT AND RETURN SAME TO YOU FOR POSSIBLE FUTURE CLAIMS. IF, HOWEVER,
YOUR DEMAND REPRESENTS A FULL DRAWING OR IF SUCH DRAWING IS PRESENTED ON THE DAY
OF THE RELEVANT EXPIRATION DATE HEREOF, WE WILL HOLD THE ORIGINAL FOR OUR FILES
AND REMOVE SAME FROM CIRCULATION.)
SPECIAL CONDITIONS: IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT WILL BE
DEEMED TO BE AUTOMATICALLY EXTENDED, WITHOUT AMENDMENT, FOR ADDITIONAL PERIODS
OF ONE (1) YEAR FROM THE PRESENT OR ANY FUTURE EXPIRY DATE HEREOF, UNLESS AT
LEAST SIXTY (60) DAYS PRIOR TO THE THEN CURRENT EXPIRATION DATE WE NOTIFY YOU IN
WRITING, AT YOUR ADDRESS STATED ABOVE, VIA CERTIFIED OR OTHER EXPRESS MAIL OF
OUR INTENTION NOT TO SO EXTEND THIS LETTER OF CREDIT FOR ANY ADDITIONAL PERIODS.
SUCH NOTICE WILL BE DEEMED TO HAVE BEEN GIVEN WHEN SENT.
THIS LETTER OF CREDIT SETS FORTH IN FULL THE TERMS OUR UNDERTAKING AND SUCH
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED OR AMPLIFIED BY REFERENCE
TO ANY DOCUMENT OR INSTRUMENT REFERRED TO HEREIN 0R WHICH THIS LETTER OF CREDIT
IS REFERRED TO OR TO WHICH THIS LETTER OF CREDIT RELATES AND ANY SUCH REFERENCE
SHALL NOT BE DEEMED TO INCORPORATE HEREIN BY REFERENCE ANY DOCUMENT OR
INSTRUMENT.
SEE CONTINUATION
- --------------------------------------------------------------------------------
ORIGINAL
<PAGE>
CORESTATES
PHILADELPHIA NATIONAL BANK, INCORPORATED AS CORESTATES BANK, N.A.
OUR CREDIT NO. ISSUE DATE
512B72P 28-SEP-1993
REF
0 0 0 0
BENEFICIARY APPLICANT
PARK AVENUE SOUTH/ARMORY, INC. THE NEW YORK LAW PUBLISHING
C/O BANKERS TRUST COMPANY COMPANY
280 PARK AVENUE - 23 WEST 111 8TH AVENUE
NEW YORK, NY 10017-2393 NEW YORK, NY 10011
ATTN: ALEX JOHNSON, MANAGING
0 DIRECTOR 0 0 0
- -------------------------------------------------------------------------------
DEAR BENEFICIARY:
WE HEREBY AMEND OUR IRREVOCABLE STANDBY LETTER OF CREDIT AS FOLLOWS:
1) THE BENEFICIARY HEREOF MUST SHOW THEIR APPROVAL OF THIS AMENDMENT BY
SIGNING THE ATTACHED COPY OF SAME AND RETURNING SUCH SIGNED COPY TO THE
PHILADELPHIA NATIONAL BANK, INCORPORATED AS CORESTATES BANK. N.A., P.O.
BOX 13866, 330 WALNUT STREET, SEVENTH FLOOR, FIND CODE 1-9-7-1, ATTENTION:
LETTER OF CREDIT DEPARTMENT, PHILADELPHIA, P.A. 19106.
2) THE BENEFICIARY'S ADDRESS IS AMENDED TO READ AS INDICATED ABOVE.
3) REQUIRED DOCUMENT NUMBER TWO (2) IS DELETED IN ITS ENTIRETY AND REPLACED
WITH THE FOLLOWING:
QUOTE
A DATED TYPEWRITTEN STATEMENT ON THE LETTERHEAD OF AND PURPORTEDLY SIGNED
BY AN AUTHORIZED OFFICER OF PARK AVENUE SOUTH/ARMORY, INC. STATING HEREIN
EITHER:
(A) "WE HEREBY CERTIFY THAT THE TENANT IS IN DEFAULT AFTER NOTICE AND
EXPIRATION OF APPLICABLE GRACE PERIOD UNDER THE TERMS OF THAT
CERTAIN LEASE BY AND BETWEEN PARK AVENUE SOUTH/ARMORY, INC. AS
LANDLORD AND THE NEW YORK LAW PUBLISHING COMPANY AS TENANT WITH
RESPECT TO THE PREMISED LOCATED AT 345 PARK AVENUE SOUTH, AND WE ARE
ENTITLED TO DRAW UPON THIS LETTER OF CREDIT BY REASON OF SUCH
DEFAULT;
OR
(B) "WE HEREBY DRAW THE FULL AMOUNT OF THIS LETTER OF CREDIT BECAUSE
THIS LETTER OF CREDIT WILL EXPIRE WITHIN FORTY-FIVE (45) DAYS OF THE
DATE OF THIS STATEMENT:
(CHOOSE EITHER (A) OR (B) AS APPLICABLE)
WE DEMAND PAYMENT OF THE FULL AMOUNT UNDER PHILADELPHIA NATIONAL
BANK, INCORPORATED AS CORESTATES BANK, N.A. STANDBY LETTER OF CREDIT
NUMBER 512872P."
UNQUOTE
4) REQUIRED DOCUMENT NUMBER THREE (3) IS DELETED IN ITS ENTIRETY AND REPLACED
WITH THE FOLLOWING:
QUOTE
THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENTS, IF ANY, FOR
OUR ENDORSEMENT.
UNQUOTE
CONTINUED
- --------------------------------------------------------------------------------
COPY
<PAGE>
CORESTATES
PHILADELPHIA NATIONAL BANK, INCORPORATED AS CORESTATES BANK, N.A.
- --------------------------------------------------------------------------------
ATTACHED TO AND FORMING PART OF AMENDMENT TO STANDBY CREDIT NO. 512872P
DATED 28-SEP-1993.
PAGE TWO
5) SPECIAL CONDITION "A" IS DELETED IN ITS ENTIRETY AND REPLACED WITH THE
FOLLOWING:
QUOTE
IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IF WILL BE DEEMED TO BE
AUTOMATICALLY EXTENDED, WITHOUT AMENDMENT, FOR ADDITIONAL PERIODS OF ONE
(1) YEAR FROM THE PRESENT OR ANY FUTURE EXPIRY DATE HEREOF, UNLESS AT
LEAST SIXTY (60) DAYS PRIOR TO THE CURRENT EXPIRATION DATE WE NOTIFY YOU
IN WRITING, AT YOUR ADDRESS STATED ABOVE, VIA CERTIFIED OR OTHER EXPRESS
MAIL OF OUR INTENTION NOT TO SO EXTEND THIS LETTER OF CREDIT FOR ANY
ADDITIONAL PERIODS. SUCH NOTICE WILL BE DEEMED TO HAVE BEEN GIVEN WHEN
SENT. UPON RECEIPT BY YOU OF SUCH NOTICE, MAY DRAW HEREUNDER IN ACCORDANCE
WITH THE TERMS CONTAINED HEREIN.
UNQUOTE.
NOTE: DUE TO OUR RECENT CHANGE OF ADDRESS PLEASE NOTE THAT ANY AND ALL
CORRESPONDENCE RELATED TO THIS LETTER OF CREDIT SHOULD NOW BE SENT TO
PHILADELPHIA NATIONAL BANK, INCORPORATED AS CORESTATES BANK, N.A.. P.O. BOX
13866, 530 WALNUT STREET, SEVENTH FLOOR, ATTENTION LETTER OF CREDIT DEPARTMENT,
FIND CODE 1-9-7-1, PHILADELPHIA, PA, 19106.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED HEREIN THIS AMENDMENT TO THE ABOVE
LETTER OF CREDIT IS SUBJECT TO THE "UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY
CREDITS: (1983 REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION
NO. 400".
ALL INQUIRIES REGARDING THIS CREDIT SHOULD BE DIRECTED TO US AT OUR PHONE
NUMBERS (215) 973-3520; (215) 973-5981;(215) 973-8157; (215) 973-1944.
- -------------------------------
AUTHORIZED SIGNATURE
- --------------------------------------------------------------------------------
COPY
<PAGE>
CORESTATES
PHILADELPHIA NATIONAL BANK, INCORPORATED AS CORESTATES BANK, N.A.
- --------------------------------------------------------------------------------
ATTACHED TO AND FORMING PART OF TO STANDBY CREDIT NO.
512872P DATE 24-SEP-1993.
PAGE TWO
ENGAGE WITH YOU THAT ALL DOCUMENTS PRESENTED IN COMPLIANCE WITH THE TERMS OF
THIS LETTER OF CREDIT WILL BE DULY HONORED BY US IF DELIVERED TO PHILADELPHIA
NATIONAL BANK, INCORPORATED AS CORESTATES BANK, N.A., P.O. BOX 13866, 530 WALNUT
STREET, SEVENTH FLOOR, FIND CODE 1-9-7-1, ATTENTION: LETTER OF CREDIT
DEPARTMENT, PHILADELPHIA, PA. 19106 PRIOR TO 3 P.M. ON OR BEFORE THE EXPIRATION
DATE HEREOF.
EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED HEREIN THIS LETTER OF CREDIT IS
SUBJECT TO THE "UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS: (1983
REVISION), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO 400".
ALL INQUIRIES REGARDING THIS CREDIT SHOULD BE DIRECTED TO US AT OUR PHONE
NUMBERS (215) 973-3520; (215) 973-5981;(215) 973-8157; (215) 973-1944.
/s/ [ILLEGIBLE]
- ------------------------------
AUTHORIZED SIGNATURE
- --------------------------------------------------------------------------------
ORIGINAL
<PAGE>
SCHEDULE O
[FLOOR PLAN]
EVAPCO
COOLING
TOWER
<PAGE>
SCHEDULE O (CONTINUED)
[FLOOR PLAN]
EVAPCO
COOLING
TOWER
<PAGE>
Exhibit 10.2
FIRST SUPPLEMENTAL AGREEMENT
FIRST SUPPLEMENTAL AGREEMENT dated the 30th day of November 1994,
between PARK AVENUE SOUTH/ARMORY, INC., a New York corporation, having an office
at c/o Montrose Realty Corporation, 380 Madison Avenue, New York, New York
10017-2593 Attn: Thomas Warren, Vice President (hereinafter called "Landlord"),
and THE NEW YORK LAW PUBLISHING COMPANY, a New York corporation, having an
office at 345 Park Avenue South, New York, New York (hereinafter called
"Tenant").
WITNESSETH:
WHEREAS.
A. Landlord and Tenant have heretofore entered into a certain lease
dated as of September 30, 1993 (such lease as the same may hereafter be amended
is hereinafter called the "Lease"), with respect to certain space on the entire
seventh (7th) and eighth (8th) floors, a portion of the ninth (9th) floor and a
portion of the basement floor (hereinafter collectively called the "Demised
Premises") in the building (hereinafter called the "Building") known as 345 Park
Avenue South, New York, New York for a term ending on the Expiration Date, as
defined in the Lease, or on such earlier date upon which said term may expire or
be terminated pursuant to any conditions of limitation or other provisions of
the Lease or pursuant to law;
B. The parties hereto desire to modify the Lease to provide for the
inclusion therein of additional space.
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter contained, the parties hereto hereby modify said Lease as
follows:
1. Unless otherwise defined herein, all terms contained in this
First Supplemental Agreement shall, for the purposes hereof, have the same
meaning ascribed to them in the Lease.
2. Effective as of the date hereof (hereinafter called the
"Adjustment Date") and for the remainder of the term of the Lease, there shall
be added to and included in the Demised Premises the following additional space
in the Building, to wit:
The portion of the ninth (9th) floor, substantially as shown hatched
on the floor plan annexed hereto as Exhibit A (hereinafter called
the "Added Space").
Landlord does hereby lease to Tenant and Tenant does hereby hire from Landlord
the Added Space subject and subordinate to all superior leases and superior
mortgages as provided in the
<PAGE>
Lease and upon and subject to all the covenants, agreements, terms and
conditions of the Lease as supplemented by this First Supplemental Agreement.
3. Effective during the period commencing on the Adjustment Date and
ending on the Expiration Date:
(a) The annual fixed rent payable pursuant to Section 1.01 (a)
of the Lease shall be increased by the following amounts allocable to the Added
Space during the following periods:
(i) FORTY-ONE THOUSAND ONE HUNDRED TWENTY-FIVE and 50/100
($41,125.50) DOLLARS per year ($3,427.13 per month) for the
period commencing on the Adjustment Date and ending on the
last day of the month preceding the month in which occurs the
fifth (5th) anniversary of the Adjustment Date;
(ii) FORTY-FIVE THOUSAND FIVE HUNDRED SEVENTY-ONE and 50/100
($45,571.50) DOLLARS per year ($3,797.63 per month) for the
period commencing on the first (1st) day of the month in which
occurs the fifth (5th) anniversary of the Adjustment Date and
ending on the last day of the month in which occurs the tenth
(10th) anniversary of the Adjustment Date; and
(iii) FIFTY-FOUR THOUSAND FOUR HUNDRED SIXTY-THREE and 50/100
($54,463.50) DOLLARS per year ($4,538.63 per month) for the
period commencing on the first (1st) day of the month in which
occurs the tenth (10th) anniversary of the Adjustment Date and
ending on the Expiration Date.
(b) With respect to the adjustments of rent set forth in
Article 3 of the Lease (hereinafter called the "Basic Adjustments") there shall
be computed, in addition to the Basic Adjustments, adjustments of rent with
respect to increases of Taxes and Operating Expenses attributable to the Added
Space. Adjustments of rent with respect to Taxes and Operating Expenses with
respect to the Added Space will be computed in the same manner as adjustments of
rent with respect to Taxes and Operating Expenses for the purpose of the Basic
Adjustments except that for the purpose of such computations with respect to the
Added Space:
(3) The Base Tax, as defined in Section 3.01(a) of the Lease,
shall mean fifty (50%) percent of the Taxes for the Tax Years
commencing July 1, 1994 and July 1, 1995, as finally
determined.
(ii) The Base Operating Expense Amount, as defined in Section
3.01(f) of the Lease, shall be the Operating Expenses for the
calendar year 1995.
-2-
<PAGE>
(iii) Tenant's Proportionate Tax Share, as defined in Section
3.01(b) of the Lease, shall be deemed to mean .86 (.86%)
percent, calculated as the fraction, expressed as a
percentage, the numerator of which shall be 2,223, which
Landlord and Tenant agree for purposes of the Lease
constitutes the rentable square footage of the Added Space,
and the denominator of which is 258,438, which Landlord and
Tenant agree constitutes the rentable square footage of the
Building for purposes of calculating Tenant's Proportionate
Tax Share.
(iv) Tenant's Proportionate Operating Share, as defined in
Section 3.01(h) of the Lease, shall be deemed to mean .92
(.92%) percent, calculated as the fraction, expressed as a
percentage, the numerator of which is 2,223, which Landlord
and Tenant agree for purposes of the Lease constitutes the
rentable square footage of the Added Space, and the
denominator of which is 242,638, which Landlord and Tenant
agree constitutes the rentable square footage of the office
space in the Building for purposes of calculating Tenant's
Proportionate Operating Share.
(v) The term "Operating Year", as defined in Section 3.01(e)
of the Lease, shall mean the calendar year 1996 and each
succeeding year occurring during the term of the Lease.
(vi) The term "Base Year", as defined in Section 3.01(e) of
the Lease, shall mean calendar year 1995.
(c) The security deposited with Landlord pursuant to Article
42 of the Lease shall be increased by $22,800.00.
4. Tenant agrees to accept the Added Space on the Adjustment Date in
the condition in which it exists on the date hereof and understands and agrees
that no work is to be performed or materials supplied by Landlord in connection
with preparing the Added Space for Tenant's occupancy except that Landlord
shall: (a) within ten (10) Business Days after the date hereof, perform any work
necessary so that the existing perimeter radiators (other than the thermostatic
valves therefor) in the Added Space shall be in operable condition; (b) within
fifteen (15) Business Days after the date hereof replace the then-existing
electrical panels servicing the Added Space with circuit breaker panels and new
disconnect switches, if such work shall not theretofore have been performed; and
(c) within five (5) Business Days after approval by Landlord of Tenant's plans
for its initial alterations to the Added Space, Landlord shall deliver to Tenant
a New York City Form ACP-5 from the New York City Department of Environmental
Protection in connection with such plans.
5. (a) Tenant hereby covenants and agrees that Tenant shall
complete, at Tenant's own cost and expense and in a good and workerlike manner,
the installations necessary so that the Added Space shall be constructed as
office space at least to the standard of Tenant's
-3-
<PAGE>
Work (such work being herein called the "Added Space Work"). The Added Space
Work shall be performed in accordance with the provisions of Article 6 and
Sections 44.01, 44.02, 44.03 and 44.04 of the Lease as if the Added Space Work
were Tenant's Work except that (i) the following provisions shall not apply to
the Added Space Work (A) the exception clause in the penultimate sentence of
subsection 44.02(d) with respect to free use of the overtime freight elevator in
connection with the Added Space Work, (B) the last two sentences of the second
paragraph of Section 44.01, and (C) the provisions of subsections 44.02(h) and
(k); and (ii) the names "Berger Rait" and "Jack Green Associates" shall be
substituted for "Meli Borreli Associates Inc." and "Martin A. Haber of Melli
Borelli Associates," respectively.
(b) Landlord shall provide to Tenant an allowance in the
amount of up to Seventy-Seven Thousand Eight Hundred Five ($77,805) Dollars (the
"Added Space Allowance") to be applied against the cost and expense of the
actual construction work of the Added Space Work provided that a portion of such
amount not to exceed 20% thereof may be applied against the Fees, as defined in
Section 44.05 of the Lease, incurred by Tenant on account of the Added Space
Work. If the cost and expense of the Added Space Work is more than the amount of
the Added Space Allowance, then Tenant shall be responsible for the excess. If
the cost and expense of the Added Space Work shall be less than the amount of
the Added Space Allowance, then the amount thereof shall be reduced accordingly.
The provisions of Section 44.05 of the Lease shall apply to the payment of the
Added Space Allowance as if same were the Work Allowance except that (i) the
provisions of subsection 44.05(d) of the Lease shall not apply to the Added
Space Allowance and (ii) the following dollar amounts in Section 44.05 shall be
deleted and in their place shall be substituted the amounts set forth
hereinafter:
$250,000 replaced by $ 7,500
$200,000 replaced by $25,000
$ 50,000 replaced by $10,000
6. Notwithstanding the provisions of Paragraph 3(a) of this First
Supplemental Agreement, the increase in the fixed annual rent payable under the
Lease as set forth therein shall be abated during the ten (10) month period
commencing on the Adjustment Date and ending on the day preceding the 10-month
anniversary of the Adjustment Date.
7. Landlord and Tenant hereby agree to amend the Lease so that for
purposes of subsections 46.02(i) and subsection 47.02(i), the following time
periods set forth in the foregoing subsections shall have the following
meanings:
(A) The "periods set forth in clauses (i) and (ii) of
subsection 1.01(a) hereof" shall mean the period commencing on the Commencement
Date of the Lease and ending on the last day of the month preceding the month in
which occurs the fifth (5th) anniversary of the Commencement Date;
(B) The "period set forth in clause (iii) of subsection
1.01(a) hereof" shall mean the period commencing on the first day of the month
in which occurs the fifth (5th)
-4-
<PAGE>
anniversary of the Commencement Date and ending on the last day of the month
preceding the month in which occurs the tenth (10th) anniversary of the
Commencement Date; and
(C) The "period set forth in clause (iv) of Subsection 1.01(a)
hereof" shall mean the period commencing on the first day of the month in which
occurs the tenth (10th) anniversary of the Commencement Date and ending on the
Expiration Date.
8. (a) Tenant covenants, represents and warrants that Tenant has had
no dealings or communications with any broker or agent other than Galbreath
Riverbank, L.P. (which is currently representing Landlord) and Williams Real
Estate Company (hereinafter collectively called the "Brokers") in connection
with the consummation of this First Supplemental Agreement and the negotiation
thereof, and Tenant covenants and agrees to pay, hold harmless and indemnify
Landlord from and against any and all cost, expense (including reasonable
attorneys' fees and disbursements) or liability for any compensation,
commissions or charges claimed by any broker or agent, other than the Brokers in
the event of a breach of the foregoing representation.
(b) Landlord covenants and agrees to pay, hold harmless and
indemnify Tenant from and against any and all cost, expense (including
reasonable attorneys' fees and disbursements) or liability for any compensation,
commissions or charges claimed by any broker or agent, claiming to have dealt
with Landlord with respect to this First Supplemental Agreement or the
negotiation thereof.
(c) Landlord shall be responsible for any commission or fee
payable to the Brokers pursuant to separate agreements between Landlord and the
Brokers.
(d) The provisions of this Paragraph shall survive the
expiration or earlier termination of the Lease.
9. Section 31.03 of the Lease is hereby amended so that the
addressee "Shea & Gould, 1251 Avenue of the Americas, New York, New York 10020,
Attn: Lawrence J. Lipson, Esq." shall be deleted and the following substituted
therefor: "Proskauer, Rose, Goetz & Mendelsohn, 1585 Broadway, New York, New
York 10036, Attn: Lawrence J. Lipson, Esq." substituted therefor.
10. For purposes of Article 46 of the Lease, the Added Space shall
be deemed deleted from the First Offering Space and the First Offering Space
shall be deemed to contain 10,951 rentable square feet.
11. For purposes of Section 47.06 of the Lease, Landlord and Tenant
acknowledge that Landlord has made an offer to Tenant pursuant to the provisions
of Article 47 of the Lease with respect to the entire tenth (10th) floor of the
Building and that Tenant did not accept such offer.
<PAGE>
12. Except as modified by this First Supplemental Agreement, the
Lease and all covenants, agreements, terms and conditions thereof shall remain
in full force and effect and are hereby in all respects ratified and confirmed.
13. The covenants, agreements, terms and conditions contained in
this First Supplemental Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and, except as otherwise provided
in the Lease as hereby supplemented, their respective assigns.
14. This First Supplemental Agreement may not be changed or
terminated orally but only by an agreement in writing signed by the party
against which enforcement of any waiver, change, termination, modification or
discharge is sought.
IN WITNESS WHEREOF, the parties hereto have executed this First
Supplemental Agreement as of the day and year first above written.
LANDLORD:
PARK AVENUE SOUTH/ARMORY, INC.
By: /s/ A.B.V Johnson
-----------------------------------
A. B. V. Johnson, President
TENANT:
THE NEW YORK LAW PUBLISHING
COMPANY
By: /s/ James A. Finkelstein
-----------------------------------
James A. Finkelstein, President
Tenant's Tax Identification Number is
13-3273851.
-6-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 2nd day of November 1994, before me personally came
Alexander B. V. Johnson to me known, who, being duly sworn by me, did depose and
say that he has an address at 280 Park Avenue, 23rd floor West, New York, New
York, that he is the Vice President of PARK AVENUE SOUTH/ARMORY, INC., a New
York corporation, the corporation mentioned in, and which executed the foregoing
instrument as Landlord; and that he signed his name thereto by order of the
Board of Directors of said corporation.
JUNE A. POLITANO
Notary Public, State of New York
No. 30-4905885
Qualified in Nassau County
Commission Expires 9/28/95
/s/ June A. Politano
----------------------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 2nd day of November 1994, before me personally came James A.
Finkelstein to me known, who being by me duly sworn, did say that he resides at
____________; that he is President of THE NEW YORK LAW PUBLISHING COMPANY, the
corporation described in and which executed the foregoing instrument as Tenant;
and that he signed his name thereto by order of the board of directors of said
corporation.
/s/ Albert Robbins
----------------------------
Notary Public
Notary Public
ALBERT ROBBINS
Notary Public, State of New York
No. 31-5011366
Qualified in New York County
Commission Expires April 19, 1995
-7-
<PAGE>
EXHIBIT A
[Graphic Omitted}
{Floor Plan of 345 Park Avenue South, Ninth Floor
<PAGE>
[Conformed Copy with Exhibits C, D,
F and N conformed as executed]
Exhibit 10.3
- --------------------------------------------------------------------------------
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CREDIT AGREEMENT
among
AMERICAN LAWYER MEDIA HOLDINGS, INC.,
AMERICAN LAWYER MEDIA, INC.,
VARIOUS BANKS,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Issuing Bank,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent,
BANCBOSTON SECURITIES INC.,
as Syndication Agent,
and
BANCAMERICA ROBERTSON STEPHENS
and
BANCBOSTON SECURITIES INC.,
as Arrangers
----------------------------------------------
Dated as of March 25, 1998
----------------------------------------------
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<PAGE>
TABLE OF CONTENTS
<TABLE>
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ARTICLE I.
DEFINITIONS...............................................................................................1
1.01 Defined Terms........................................................................................1
1.02 Other Definitional Provisions.......................................................................24
(a) Defined Terms...............................................................................24
(b) The Agreement...............................................................................24
(c) Certain Common Terms........................................................................24
(d) Performance; Time...........................................................................25
(e) Contracts...................................................................................25
(f) Laws........................................................................................25
1.03 Accounting Principles...............................................................................25
ARTICLE II.
THE CREDIT FACILITIES....................................................................................25
2.01 Amounts and Terms of Commitments....................................................................25
2.02 Loan Accounts and Register; Notes...................................................................26
2.03 Procedure for Borrowing.............................................................................26
2.04 Conversion and Continuation Elections for Revolving Borrowings......................................27
2.05 Reduction and Termination of Commitments............................................................29
2.06 Voluntary Prepayments...............................................................................31
2.07 Mandatory Prepayments...............................................................................31
2.08 Repayment of Principal..............................................................................32
2.09 Interest............................................................................................32
2.10 Fees................................................................................................34
2.11 Computation of Fees and Interest....................................................................35
2.12 Payments by the Borrower............................................................................35
2.13 Payments by the Banks to the Administrative Agent...................................................36
2.14 Sharing of Payments, etc............................................................................37
2.15 Security and Guaranties.............................................................................38
ARTICLE III.
THE LETTERS OF CREDIT....................................................................................38
3.01 The Letter of Credit Subfacility....................................................................38
3.02 Issuance, Amendment and Renewal of Letters of Credit................................................39
3.03 Participations, Drawings and Reimbursements.........................................................41
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3.04 Repayment of Participations.........................................................................42
3.05 Role of the Issuing Bank............................................................................43
3.06 Obligations Absolute................................................................................44
3.07 Cash Collateral Pledge..............................................................................45
3.08 Letter of Credit Fees...............................................................................45
3.09 Uniform Customs and Practice........................................................................46
ARTICLE IV.
TAXES, YIELD PROTECTION AND ILLEGALITY...................................................................46
4.01 Taxes...............................................................................................46
4.02 Illegality..........................................................................................50
4.03 Increased Costs and Reduction of Return.............................................................51
4.04 Funding Losses......................................................................................51
4.05 Inability to Determine Rates........................................................................52
4.06 Increased Costs on Eurodollar Loans.................................................................52
4.07 Certificates of Banks...............................................................................53
4.08 Change of Lending Office, Replacement Bank, etc.....................................................53
4.09 Survival............................................................................................54
ARTICLE V.
CONDITIONS PRECEDENT.....................................................................................54
5.01 Conditions to Revolving Loans and Letters of Credit on the Closing Date.............................54
(a) Credit Agreement............................................................................54
(b) Resolutions; Incumbency.....................................................................54
(c) Articles of Incorporation; By-laws and Good Standing........................................55
(d) Subsidiary Guaranty.........................................................................55
(e) Pledge Agreement............................................................................55
(f) Security Agreement..........................................................................56
(g) Legal Opinions..............................................................................56
(h) Payment of Fees and Expenses................................................................56
(i) Certificates................................................................................57
(j) Solvency Certificate........................................................................57
(k) Adverse Change..............................................................................57
(l) Governmental and Third Party Approvals......................................................57
(m) Litigation..................................................................................57
(n) Shareholders Agreements, Management Agreements and Tax Sharing Agreement...................58
(o) Financial Statements........................................................................58
(p) Insurance...................................................................................58
5.02 Conditions to all Borrowings and the Issuance of any Letters of Credit..............................58
(a) Notice......................................................................................58
(b) Continuation of Representations and Warranties..............................................58
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ii
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(c) No Existing Default.........................................................................59
(d) No Material Adverse Effect..................................................................59
(e) Financial Statements........................................................................59
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES...........................................................................59
6.01 Existence and Power.................................................................................59
6.02 Authorization; No Contravention.....................................................................60
6.03 Governmental Authorization..........................................................................60
6.04 Binding Effect......................................................................................60
6.05 Litigation..........................................................................................61
6.06 No Default..........................................................................................61
6.07 ERISA Compliance....................................................................................61
6.08 Use of Proceeds; Margin Regulations.................................................................62
6.09 Title to Properties.................................................................................62
6.10 Taxes...............................................................................................62
6.11 Financial Statements................................................................................62
6.12 Securities Law, etc.; Compliance....................................................................63
6.13 Governmental Regulation.............................................................................63
6.14 Labor Controversies.................................................................................63
6.15 Subsidiaries........................................................................................63
6.16 Patents, Trademarks, etc............................................................................63
6.17 Accuracy of Information.............................................................................63
6.18 Hazardous Materials.................................................................................63
6.19 Collateral Documents................................................................................64
6.20 Solvency............................................................................................65
6.21 Representations and Warranties in the other Documents...............................................65
6.22 Capitalization......................................................................................65
6.23 Special Purpose Corporation.........................................................................66
6.24 Insurance...........................................................................................66
ARTICLE VII.
AFFIRMATIVE COVENANTS....................................................................................66
7.01 Financial Statements................................................................................66
7.02 Certificates; Other Information.....................................................................67
7.03 Notices.............................................................................................68
7.04 Books, Records and Inspections; Annual Meetings.....................................................70
7.05 Maintenance of Property; Insurance..................................................................70
7.06 Corporate Franchises................................................................................71
7.07 Compliance with Law; Contractual Obligations........................................................71
7.08 Payment of Taxes....................................................................................71
7.09 Contributions.......................................................................................71
</TABLE>
iii
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7.10 End of Fiscal Years; Fiscal Quarters................................................................72
7.11 Additional Security; Further Assurances.............................................................72
7.12 Foreign Subsidiaries Security.......................................................................72
7.13 Use of Proceeds; Margin Regulations.................................................................73
ARTICLE VIII.
NEGATIVE COVENANTS.......................................................................................73
8.01 Liens...............................................................................................74
8.02 Consolidation, Merger, Purchase or Sale of Assets, etc..............................................76
8.03 Dividends...........................................................................................78
8.04 Indebtedness........................................................................................79
8.05 Advances, Investments and Loans.....................................................................80
8.06 Transactions with Affiliates........................................................................82
8.07 Consolidated Interest Coverage Ratio................................................................83
8.08 Consolidated Fixed Charge Coverage Ratio............................................................83
8.09 Maximum Total Leverage Ratio........................................................................84
8.10 Limitation on Voluntary Payments and Modification of Certain Indebtedness;
Modifications of Certificate of Incorporation, By-Laws and Certain Other
Agreements; etc...................................................................................84
8.11 Limitation on Certain Restrictions on Subsidiaries..................................................85
8.12 Limitation on Issuance of Capital Stock.............................................................85
8.13 Business............................................................................................86
8.14 Limitation on Creation of Subsidiaries..............................................................86
ARTICLE IX
EVENT OF DEFAULT
9.01 Event of Default....................................................................................86
9.02 Remedies............................................................................................89
9.03 Rights Not Exclusive................................................................................89
</TABLE>
iv
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ARTICLE X
THE GUARANTY.............................................................................................89
10.01 Guaranty from Holdings.............................................................................90
ARTICLE XI
THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT,
THE ISSUING BANK, THE SYNDICATION AGENT AND THE ARRANGERS................................................94
11.01 Appointment and Authorization......................................................................94
11.02 Delegation of Duties...............................................................................94
11.03 Liability of Agent.................................................................................94
11.04 Reliance by Agent..................................................................................95
11.05 Notice of Default..................................................................................95
11.06 Credit Decision....................................................................................96
11.07 Indemnification....................................................................................96
11.08 Agent in Individual Capacity.......................................................................97
11.09 Successor Agent....................................................................................97
11.09 The Arrangers and the Syndication Agent............................................................97
ARTICLE XII
MISCELLANEOUS............................................................................................98
12.01 Amendments and Waivers.............................................................................98
12.02 Notices............................................................................................99
12.03 No Waiver; Cumulative Remedies....................................................................100
12.04 Costs and Expenses................................................................................100
12.05 Indemnity.........................................................................................101
12.06 Successors and Assigns............................................................................101
12.07 Assignments, Participations, etc..................................................................102
12.08 Confidentiality...................................................................................103
12.10 Notification of Addresses, Lending Offices, etc...................................................104
12.11 Counterparts......................................................................................105
12.12 Severability......................................................................................105
12.13 No Third Parties Benefited........................................................................105
12.14 Governing Law and Jurisdiction....................................................................105
12.15 Waiver of Jury Trial..............................................................................105
12.16 Domicile of Loans.................................................................................106
12.17 Domicile of Loans.................................................................................106
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SCHEDULE 1.01(a) Lending Offices
SCHEDULE 1.01(b) Revolving Commitments
SCHEDULE 1.01(c) Subsidiary Guarantors
SCHEDULE 6.07 Plans
SCHEDULE 6.15 Subsidiaries
SCHEDULE 6.24 Insurance
SCHEDULE 8.01 Existing Liens
SCHEDULE 8.04 Existing Indebtedness
SCHEDULE 8.05 Existing Investments
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B Form of Notice of Conversion/Continuation
EXHIBIT C Form of Pledge Agreement
EXHIBIT D Form of Subsidiary Guaranty
EXHIBIT E Form of Guarantor Supplement
EXHIBIT F Form of Security Agreement
EXHIBIT G Form of Total Leverage Ratio Certificate
EXHIBIT H Form of Jones, Day, Reavis & Pogue Opinion
EXHIBIT I Form of White & Case LLP Opinion
EXHIBIT J Form of Compliance Certificate
EXHIBIT K Form of Assignment and Acceptance
EXHIBIT L Form of Intercompany Note
EXHIBIT M Form of Subordination Provisions
EXHIBIT N Form of Solvency Certificate
EXHIBIT O Form of Section 4.01(f)(i) Certificate
</TABLE>
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of March 25, 1998, among AMERICAN LAWYER
MEDIA HOLDINGS, INC., a Delaware corporation ("Holdings"), AMERICAN LAWYER
MEDIA, INC., a Delaware corporation (the "Borrower"), the several lenders from
time to time party to this Agreement (the "Banks"), BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Issuing Bank, BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Administrative Agent, BANCBOSTON SECURITIES INC., as
Syndication Agent, and BANCAMERICA ROBERTSON STEPHENS and BANCBOSTON SECURITIES
INC., as Arrangers.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set forth herein,
the Banks are willing to make available to the Borrower the revolving credit
facility provided for herein;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I.
DEFINITIONS
1.01 Defined Terms. As used in this Agreement, the capitalized terms in
the preamble and the recitals hereto shall have the meanings therein given them,
and the following words and terms shall have the meanings specified below:
"Acquired Entity or Business" has the meaning specified in the
definition of "Consolidated Net Income".
"Acquisition" means the acquisition by the Borrower of all the issued
and outstanding shares of capital stock of NLP pursuant to, and in accordance
with the terms of, the Acquisition Agreement.
"Acquisition Agreement" means the Purchase Agreement, dated as of
October 23, 1997, by and among Boston Ventures Limited Partnership IV, Boston
Ventures Limited Partnership IVA, James A. Finkelstein and the Borrower.
"Acquisition Documents" means the Acquisition Agreement and all other
documentation entered into pursuant to the Acquisition Agreement.
<PAGE>
"Additional Security Documents" has the meaning specified in Section
7.11.
"Adjusted Consolidated EBITDA" means, for any period, Consolidated
EBITDA for such period, adjusted by adding thereto up to $10,000,000 of
Development Costs actually incurred by Holdings and its Subsidiaries for such
period, provided that such Development Costs shall only be added back to the
extent that (i) same reduced Consolidated Net Income for such period and (ii) as
of the last day of such period, Holdings and its Subsidiaries had unrestricted
cash and Cash Equivalents on their balance sheet in an amount equal to the
amount of such Development Costs plus $3,000,000 (net of the aggregate
outstanding principal amount of Revolving Loans as of the last day of such
period (other than Revolving Loans incurred to finance a Permitted Acquisition
and to pay the fees and expenses related thereto)).
"Adjusted Consolidated Net Income" means, for any period, Consolidated
Net Income for such period plus, without duplication, the amount of all net
non-cash charges (including, without limitation, depreciation, amortization,
deferred tax expense and non-cash interest expense, but excluding any net
non-cash charges reflected in Adjusted Consolidated Working Capital) and net
non-cash losses which were included in arriving at Consolidated Net Income for
such period less the amount of all net non-cash gains (exclusive of items
reflected in Adjusted Consolidated Working Capital) included in arriving at
Consolidated Net Income for such period.
"Adjusted Consolidated Working Capital" means, at any time,
Consolidated Current Assets (but excluding therefrom all cash and Cash
Equivalents) less Consolidated Current Liabilities at such time.
"Adjustment Date" means (A) the earlier of (x) the date which is 90
days after Holdings' fiscal quarter ending December 31, 1998 and (y) the date
which is two Business Days after Holdings has delivered a Total Leverage Ratio
Certificate to the Administrative Agent in accordance with Section 12.02 as of
the end of a fiscal quarter (the "First Adjustment Date") and (B) after the
First Adjustment Date, the earlier of (x) each date which is 45 days after the
end of a fiscal quarter of Holdings (or, in the case of the fourth fiscal
quarter of Holdings, 90 days after the end of such fiscal quarter) and (y) the
date which is two Business Days after Holdings has delivered a Total Leverage
Ratio Certificate to the Administrative Agent in accordance with Section 12.02
as of the end of a fiscal quarter.
"Administrative Agent" means Bank of America in its capacity as agent
for the Banks hereunder, and any successor agent.
"Administrative Agent's Payment Office" means the address for payments
set forth on the signature page hereto in relation to the Administrative Agent
or such other address as the Administrative Agent may from time to time specify
in accordance with Section 12.02.
"Affiliate" means, with respect to any Person, any other Person (i)
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person or (ii) that directly or indirectly owns more
than 5% of any class of the capital stock of, or equity interests in, such
Person. A Person shall be deemed to control another Person if such
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<PAGE>
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such other Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agent" means Bank of America, in its capacity as Administrative Agent
and as Collateral Agent, in each case for the Banks hereunder, and shall include
any successor to the Agent appointed pursuant to Article XI.
"Agent-Related Persons" has the meaning specified in Section 11.03.
"Aggregate Revolving Commitment" means the combined Revolving
Commitments of the Banks in the initial principal amount of $40,000,000 as such
amount may be reduced from time to time pursuant to this Agreement.
"Agreement" means this Credit Agreement as from time to time amended,
modified or supplemented.
"ALM Acquisition" means Cranberry Partners, LLC (the predecessor of
American Lawyer Media Holdings, Inc.).
"Applicable Excess Cash Flow Percentage" means 50%, provided that so
long as no Default or Event of Default then exists and the Consolidated Total
Leverage Ratio on the respective Excess Cash Flow Payment Date (before giving
effect to any such repayment on such date) is less than 5.00:1.00 as
demonstrated in the Total Leverage Ratio Certificate delivered to the
Administrative Agent in accordance with Section 12.02 at such time, then the
foregoing percentage shall instead be 25%.
"Applicable Margin" means the margin to be added to the Base Rate or
the Eurodollar Rate, as the case may be, in accordance with Section 2.09(a).
"Arranger" means each of BancAmerica Robertson Stephens and BancBoston
Securities Inc.
"Asset Sale" means the direct or indirect sale, lease (other than
operating leases entered into in the ordinary course of business), transfer,
conveyance or other disposition (including, without limitation, dispositions
pursuant to sale and leaseback transactions), in a single transaction or a
series of transactions, by Holdings or any of its Subsidiaries to any Person
(other than to Holdings or any of its Wholly-Owned Subsidiaries) of any property
or assets of Holdings or any of its Subsidiaries, other than sales of assets
pursuant to Sections 8.02(ii), (iii), (vii), (viii), (x) and (xi).
"Assignee" has the meaning specified in Section 12.07(a).
"Assignment and Acceptance" has the meaning specified in Section
12.07(a).
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<PAGE>
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external counsel and, without
duplication, the allocated cost of internal legal services and all reasonable
disbursements of internal counsel.
"Bank Affiliate" means an Affiliate of a Bank, including, in the case
of any Bank that is a fund that invests in loans, any other fund that invests in
loans and is managed or advised by the same investment advisor of such Bank or
by an Affiliate of such investment advisor.
"Bank of America" means Bank of America National Trust and
Savings Association, a national banking association, in its individual capacity.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, et seq.).
"Banks" has the meaning specified in the preamble hereto i.e. at any
time, each Bank with a Revolving Commitment or with outstanding Revolving Loans.
"Base Rate" means, for any day, the higher of (a) the Reference Rate or
(b) the Federal Funds Rate plus 1/2%, in each case as in effect for such day.
"Base Rate Loan" means each Revolving Loan that bears interest based on
the Base Rate.
"Borrower" has the meaning specified in the preamble hereto.
"Borrower Senior Note Documents" means the Borrower Senior Note
Indenture, the Borrower Senior Notes and all other documents and agreements
executed and delivered pursuant to the Borrower Senior Note Indenture.
"Borrower Senior Note Exchange Offer" means the exchange offer for the
Borrower Senior Notes pursuant to the applicable Borrower Senior Note Documents
for new Borrower Senior Notes which have been registered under the Securities
Act of 1933, as amended.
"Borrower Senior Note Indenture" means the Indenture, dated as December
22, 1997, among the Borrower, the Subsidiary Guarantors and The Bank of New
York, as trustee, as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
"Borrower Senior Notes" means the Borrower's 9-3/4% senior notes due
2007 (which term includes the senior notes of the Borrower issued as part of the
Borrower Senior Note Exchange Offer).
"Borrowing" means a borrowing hereunder consisting of Revolving Loans
made to the Borrower on the same Borrowing Date by the Banks ratably according
to their respective Revolving Commitment Percentages and in the case of
Eurodollar Loans, having the same
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<PAGE>
Interest Periods, provided that any Base Rate Loans incurred pursuant to Section
4.02 shall be considered as part of the related Borrowing of Eurodollar Loans.
"Borrowing Date" means, in relation to any Revolving Loan, the date of
the borrowing of such Revolving Loan as specified in the relevant Notice of
Borrowing.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in San Francisco, Chicago or New York City are
authorized or required by law to close and, if such term is used in relation to
any Eurodollar Loan or the Interest Period therefor, any such day on which
dealings are carried on by and between banks in Dollar deposits in the
applicable interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law (but with which a Bank
customarily complies) regarding capital adequacy of any Bank or of any
corporation controlling a Bank.
"Capital Expenditures" means, for any period and with respect to any
Person, the aggregate of all expenditures by such Person and its Subsidiaries
for the acquisition or leasing of fixed or capital assets or additions to
equipment (including replacements, capitalized repairs and improvements during
such period) which is capitalized under GAAP on a consolidated balance sheet of
such Person and its Subsidiaries.
"Capital Lease" has the meaning specified in the definition of "Capital
Lease Obligations".
"Capital Lease Obligations" means all monetary obligations of Holdings
or any of its Subsidiaries under any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capital lease ("Capital Lease").
"Cash Collateralize" means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the Administrative Agent, the Issuing
Banks and the Banks, as collateral for the Letter of Credit Obligations, cash or
deposit account balances pursuant to documentation in form and substance
reasonably satisfactory to the Administrative Agent and the Issuing Banks (which
documents are hereby consented to by the Banks). Derivatives of such term shall
have corresponding meanings. Cash collateral shall be invested in Cash
Equivalents of a tenor reasonably satisfactory to the Administrative Agent and
as instructed by the Borrower, which Cash Equivalents shall be held in the name
of the Borrower and under the control of the Administrative Agent in a manner
reasonably satisfactory to the Collateral Agent.
"Cash Equivalents" means any or all of the following: (i) obligations
of, or guaranteed as to interest and principal by, the United States Government
maturing within one year after the date on which such obligations are purchased;
(ii) marketable direct obligations issued by any State of the United States or
any political subdivision of any such State or any public instrumentality
thereof maturing within one year after the date on which such obligations
-5-
<PAGE>
are purchased and, at the time of such purchase, have one of the two highest
ratings obtainable from either Moody's or S&P; (iii) open market commercial
paper of any corporation (other than Holdings, the Borrower or any of its
Subsidiaries) incorporated under the laws of the United States or any State
thereof or the District of Columbia rated P-1 or its equivalent by Moody's or
A-1 or its equivalent or higher by S&P; (iv) time deposits or certificates of
deposit maturing within one year after the issuance thereof issued by commercial
banks organized under the laws of any country which is a member of the OECD and
having a combined capital and surplus in excess of $500,000,000 or which is a
Bank; (v) repurchase agreements with a term of not more than seven days with
respect to securities described in clause (i) above entered into with an office
of a bank or trust company meeting the criteria specified in clause (iv) above;
(vi) bankers' acceptances with maturities not exceeding one year and overnight
bank deposits in each case with an office of a bank or trust company meeting the
criteria specified in clause (iv) above; and (vii) money market, mutual or
similar funds substantially all of whose investments are comprised of the
investments described in clauses (i) through (vi) above and which have net
assets of not less than $500,000,000 and have at least one of the two highest
ratings obtainable from either Moody's or S&P.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as the same may be amended from time to time, 42
U.S.C. ss. 9601 et seq.
"Change of Control" means (a) the Permitted Holders shall cease to own
on a fully diluted basis in the aggregate at least 51% of the economic and
voting interest in Holdings' capital stock or (b) the Borrower shall cease to be
a direct Wholly-Owned Subsidiary of Holdings or (c) a "change of control" or
similar event shall occur under the Borrower Senior Note Documents or the
Holdings Senior Discount Note Documents.
"Closing Date" means the date on which all conditions precedent set
forth in Sections 5.01 and 5.02 have been satisfied or waived in accordance with
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" means all property with respect to which any security
interest has been granted (or purported to be granted) pursuant to any
Collateral Document, as well as all Obligations which have been Cash
Collateralized.
"Collateral Agent" means the Administrative Agent acting as collateral
agent for the Banks pursuant to the Collateral Documents.
"Collateral Documents" means the Pledge Agreement, the Subsidiary
Guaranty, the Security Agreement, each Additional Security Document and each
Guarantor Supplement.
-6-
<PAGE>
"Compliance Certificate" means the compliance certificate in
substantially the form of Exhibit J, to be executed by a Responsible Officer of
Holdings and delivered pursuant to Section 7.02(a).
"Consolidated Current Assets" means, at any time, the consolidated
current assets of Holdings and its Subsidiaries at such time.
"Consolidated Current Liabilities" means, at any time, the consolidated
current liabilities of Holdings and its Subsidiaries at such time, but excluding
the current portion of any Indebtedness under this Agreement and any other
long-term Indebtedness which would otherwise be included therein.
"Consolidated EBIT" means, for any period, Consolidated Net Income for
such period before Consolidated Interest Expense (calculated without regard to
the proviso contained in the definition thereof) and provision for taxes for
such period and without giving effect to (x) any extraordinary gains or losses
or (y) any gains or losses from sales of assets other than from sales of
inventory (including advertising space) sold in the ordinary course of business.
"Consolidated EBITDA" means, for any period, Consolidated EBIT for such
period, adjusted by (x) adding thereto, without duplication, the sum of (i) the
amount of all amortization of goodwill and other intangibles (including debt
issuance and other deferred financing, legal and accounting costs (including
those associated with the Transaction), depreciation and other non-cash charges
to the extent that same were deducted in arriving at Consolidated EBIT for such
period, (ii) for any Measurement Period which includes any portion of Holdings'
fiscal year 1998, up to $1,500,000 of losses in the aggregate that have been
incurred on or after January 1, 1998 and are included in such Measurement Period
to the extent relating to the on-line businesses of the Borrower or any of its
Subsidiaries existing as of January 1, 1998 and to the extent that same were
deducted in arriving at Consolidated EBIT for such period (it being understood
and agreed however, that no more than (x) $800,000 of such losses may be added
back in respect of the Measurement Period ending on June 30, 1998 and (y)
$1,200,000 of such losses may be added back in respect of the Measurement Period
ending on September 30, 1998) and (iii) for any Measurement Period which
includes any portion of Holdings' fiscal year 1997, 1998 or 1999 and in which
the Borrower or any of its Subsidiaries acquired an Acquired Entity or Business
pursuant to a Permitted Acquisition, up to $1,500,000 of losses in the aggregate
that have been incurred by all such Acquired Entities or Businesses and are
included in such Measurement Period to the extent relating to the on-line
businesses of such Acquired Entities or Businesses and to the extent that such
losses were deducted in arriving at Consolidated EBIT for such period, although
no such losses of any Acquired Entity or Business shall be added back pursuant
to this clause (iii) if the revenues generated by the on-line business of such
Acquired Entity or Business accounted for more that 20% of the aggregate
revenues of such Acquired Entity or Business for such Measurement Period and (y)
subtracting therefrom any cash expenses, cash charges or cash payments arising
from any non-cash expenses or non-cash charges that were added back to
Consolidated EBITDA pursuant to clause (x)(i) above in a previous period;
provided that, for the purposes of determining the Consolidated Total Leverage
Ratio, and subject to the further proviso below, (x) in the case of the
Measurement Period ending
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<PAGE>
on June 30, 1998, Consolidated EBITDA for such Measurement Period shall be the
sum of (A) Holdings' and its Subsidiaries' pro forma Consolidated EBITDA for the
period July 1, 1997 to December 31, 1997 less Internet Services for such period
(with such amounts to be calculated in the same manner as in the Offering
Memorandum dated December 17, 1997 relating to the Holdings Senior Discount
Notes) plus (B) the actual Consolidated EBITDA for the period January 1, 1998 to
June 30, 1998, as calculated above in this definition and (y) in the case of the
Measurement Period ending on September 30, 1998, Consolidated EBITDA for such
Measurement Period shall be the sum of (A) Holdings' and its Subsidiaries' pro
forma Consolidated EBITDA for the period September 30, 1997 to December 31, 1997
less Internet Services for such period (with such amounts to be calculated in
the same manner as in the Offering Memorandum dated December 17, 1997 relating
to the Holdings Senior Discount Notes) plus (B) the actual Consolidated EBITDA
for the period January 1, 1998 to September 30, 1998, as calculated above in
this definition, and provided, further, that the division of the Borrower
comprised of the assets of Corporate Presentations, Inc. shall be included in
the calculation of Consolidated EBITDA for the Measurement Periods ending June
30, 1998, September 30, 1998 and December 31, 1998 by taking into account the
actual EBITDA of Corporation Presentations, Inc. (calculated in a manner similar
to that set forth above but without making the adjustments described in clauses
(ii) and (iii) above) for the relevant Measurement Period ending on each such
date. Notwithstanding anything to the contrary contained above in this
definition, (x) in no event shall more than $700,000 of Internet Services (as
calculated pursuant to the Offering Memorandum referenced above) in the
aggregate be added back to Consolidated EBIT in respect of the period July 1,
1997 through December 31, 1997 and (y) in no event shall more than $300,000 of
Internet Services (as calculated pursuant to the Offering Memorandum referenced
above) in the aggregate be added back to Consolidated EBIT in respect of the
period October 1, 1997 through December 31, 1997 .
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the
ratio of (x) Adjusted Consolidated EBITDA for such period to (y) Consolidated
Fixed Charges for such period.
"Consolidated Fixed Charges" means, for any period, the sum, without
duplication, of (i) Consolidated Interest Expense for such period, (ii) the
amount of all Capital Expenditures made by Holdings and its Subsidiaries for
such period (other than (x) Capital Expenditures to the extent financed with
equity proceeds, Asset Sale proceeds, insurance proceeds or Indebtedness (other
than with Revolving Loans) and (y) Capital Expenditures made in fiscal year 1998
but only to the extent that such Capital Expenditures were financed with
internally generated funds and so as long as the amount of cash and Cash
Equivalents held by Holdings and its Subsidiaries as of the last day of such
period equals or exceeds the amount of such Capital Expenditures made by
Holdings and its Subsidiaries during fiscal year 1998 (net of the aggregate
outstanding principal amount of Revolving Loans on the last day of such period),
other than Revolving Loans incurred to finance a Permitted Acquisition and to
pay the fees and expenses related thereto), (iii) the scheduled principal amount
of all amortization payments on all Indebtedness (including, without limitation,
the principal component of all Capitalized Lease Obligations but excluding the
Refinancing) of Holdings and its Subsidiaries for such period (as determined on
the first day of such period), (iv) the amount of all cash payments made by
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<PAGE>
Holdings and its Subsidiaries in respect of taxes or tax liabilities for such
period and (v) the amount of all Development Costs incurred by Holdings and its
Subsidiaries for such period.
"Consolidated Interest Coverage Ratio" means, for any period, the ratio
of (x) Adjusted Consolidated EBITDA for such period to (y) Consolidated Interest
Expense for such period.
"Consolidated Interest Expense" means, for any period, the total
consolidated interest expense of Holdings and its Subsidiaries for such period
(calculated without regard to any limitations on the payment thereof) plus,
without duplication, that portion of Capital Lease Obligations of Holdings and
its Subsidiaries representing the interest factor for such period, provided that
(x) the amortization of debt issuance and deferred financing, legal and
accounting costs with respect to this Agreement, the Borrower Senior Notes and
the Holdings Senior Discount Notes, (y) all fees and expenses incurred in
connection with the Transaction and (z) all interest expense on the Holdings
Senior Discount Notes to the extent accrued prior to December 15, 2002, in each
case shall be excluded from Consolidated Interest Expense to the extent same
would otherwise have been included therein.
"Consolidated Net Income" means, for any period, the net income (or
loss) of Holdings and its Subsidiaries for such period, determined on a
consolidated basis (after any deduction for minority interests), provided that
(i) in determining Consolidated Net Income, the net income of any other Person
which is not a Subsidiary of Holdings or is accounted for by Holdings by the
equity method of accounting shall be included only to the extent of the payment
of cash dividends or distributions by such other Person to Holdings or a
Subsidiary thereof during such period, (ii) the net income of any Subsidiary of
the Borrower shall be excluded to the extent that the declaration or payment of
cash dividends or similar distributions by that Subsidiary of that net income is
not at the date of determination permitted by operation of its charter or any
agreement, instrument or law applicable to such Subsidiary, (iii) the net income
(or loss) of any other Person acquired by such specified Person or a Subsidiary
of such Person in a pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded, and (iv) in determining compliance
with Section 8.09 and in determining the Applicable Margin, the commitment fee
and the letter of credit fee hereunder there shall be included (to the extent
not already included) in determining Consolidated Net Income for any period the
net income (or loss) of any Person, business, property or asset acquired during
such period pursuant to a Permitted Acquisition and not subsequently sold or
otherwise disposed of by Holdings or one of its Subsidiaries during such period
(each such Person, business, property or asset acquired and not subsequently
disposed of during such period, an "Acquired Entity or Business"), in each case
based on the actual net income (or loss) of such Acquired Entity or Business for
the entire period (including the portion thereof occurring prior to such
acquisition).
"Consolidated Total Indebtedness" means, at any time, the principal
amount of all Indebtedness of Holdings and its Subsidiaries at such time
(excluding the Holdings Senior Discount Notes) determined on a consolidated
basis to the extent that such Indebtedness would be accounted for as debt on the
liability side of a balance sheet in accordance with GAAP plus, without
duplication, (i) the maximum amount available to be drawn under all letters of
credit
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<PAGE>
(including any Letters of Credit), bankers acceptances and similar obligations
issued for the account of Holdings and its Subsidiaries and all unpaid drawings
or reimbursement obligations in respect thereof, (ii) the principal amount of
all bonds issued by Holdings and its Subsidiaries in connection with workers'
compensation obligations, lease obligations, surety and similar obligations, and
(iii) the amount of all Contingent Obligations of Holdings and its Subsidiaries
determined on a consolidated basis in respect of Indebtedness of other Persons
of the type described above in this definition.
"Consolidated Total Leverage Ratio" means, at any time, the ratio of
(i) Consolidated Total Indebtedness at such time to (ii) Adjusted Consolidated
EBITDA for the Measurement Period then most recently ended.
"Contingent Obligation" means, as applied to any Person, any obligation
of such Person as a result of such Person being a general partner of the other
Person, unless the underlying obligation is expressly made non-recourse as to
such general partner, and any direct or indirect liability of that Person with
respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person, whether or not contingent,
(a) to purchase, repurchase or otherwise acquire such primary obligations or any
property constituting direct or indirect security therefor; (b) to advance or
provide funds (i) for the payment or discharge of any such primary obligation,
or (ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor; (c) to 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; or (d) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect thereof; in
each case, including arrangements wherein the rights and remedies of the holder
of the primary obligation are limited to repossession or sale of certain
property of such Person. The amount of any Contingent Obligation shall be deemed
equal to the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made (or if less, the stated or
determinable amount of such Contingent Obligation) or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect thereof.
"Continuation Date" means any date on which the Borrower elects to
continue a Eurodollar Loan as a Eurodollar Loan for a further Interest Period in
accordance with the provisions of Section 2.04.
"Contractual Obligations" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion Date" means any date on which the Borrower elects to
convert a Base Rate Loan to a Eurodollar Loan, or a Eurodollar Loan to a Base
Rate Loan, in each case in accordance with the provisions of Section 2.04.
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"Credit Party" means each of Holdings, the Borrower and each Subsidiary
Guarantor.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Development Costs" means those identifiable initial one-time start-up
costs incurred by Holdings and its Subsidiaries in connection with their
implementation (as opposed to an acquisition) of new publications such as books,
newspapers, magazines, web sites, supplements and the like and as may be
reasonably approved by Bank of America (or any successor Administrative Agent)
and the Syndication Agent.
"Disbursement Date" has the meaning specified in Section 3.03(b).
"Dividend" with respect to any Person means that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
as such or made any other distribution, payment or delivery of property or cash
to its stockholders as such, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for a consideration any shares of any class of
its capital stock outstanding on or after the Effective Date (or any options or
warrants issued by such Person with respect to its capital stock), or set aside
any funds for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for a consideration any shares of
any class of the capital stock of such Person outstanding on or after the
Closing Date (or any options or warrants issued by such Person with respect to
its capital stock). Without limiting the foregoing, "Dividends" with respect to
any Person shall also include all cash payments made or required to be made by
such Person with respect to any stock appreciation rights plans, equity
incentive or achievement plans or any similar plans or setting aside of any
funds for the foregoing purposes.
"Dollars" and "$" each mean lawful money of the United States.
"Domestic Lending Office" has the meaning provided in the definition of
"Lending Office".
"Domestic Subsidiary" means each Subsidiary of Holdings that is
incorporated under the laws of the United States or any State or territory
thereof.
"Eligible Assignee" means and includes (a) a commercial bank or (b) a
financial institution, a fund or other "accredited investor" (as defined in
Regulation D of the Securities Act) that is engaged in making, purchasing or
otherwise investing in commercial loans in the ordinary course of its business.
"Environmental Claims" means all actions, suits, proceedings or claims
by any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources
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damage, or otherwise alleging liability or responsibility for damages (punitive
or otherwise), cleanup, removal, remedial or response costs, restitution, civil
or criminal penalties, injunctive relief, or other type of relief, resulting
from or based upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from property,
whether or not owned by Holdings or any of its Subsidiaries, or (b) any other
circumstances forming the reasonable basis of any violation, or alleged
violation, of any Environmental Law.
"Environmental Law" has the meaning specified in the definition of
"Hazardous Material".
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" means each person (as defined in Section 3(9) of
ERISA) which together with Holdings or a Subsidiary of Holdings would be deemed
to be a "single employer" (i) within the meaning of Section 414(b), (c), (m) or
(o) of the Code or (ii) as a result of Holdings or a Subsidiary of Holdings
being a general partner of such person.
"Eurodollar Lending Office" has the meaning provided in the definition
of "Lending Office".
"Eurodollar Loan" means a Revolving Loan that bears interest based on
the Eurodollar Rate.
"Eurodollar Rate" means, for any Interest Period with respect to
Eurodollar Loans comprising part of the same Borrowing, the per annum rate of
interest (rounded upward to the next 1/100th of 1%) determined by the
Administrative Agent (whose determination shall be conclusive in the absence of
manifest error) as follows:
Eurodollar Rate = Eurodollar Base Rate
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded
upward to the next 1/100th of 1%) in effect on such day (whether or not
applicable to any Bank) under regulations issued from time to time by
the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as
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"Eurocurrency liabilities"). The Eurodollar Rate for any outstanding
Eurodollar Loans shall be adjusted automatically as of the effective
date of any change in the Eurodollar Reserve Percentage.
"Eurodollar Base Rate" means the interest rate per annum (rounded
upward to the next 1/16 of 1%) at which deposits in Dollars are offered by Bank
of America's applicable Lending Office to major banks in the offshore market at
or about 11:00 a.m. (New York City time), two Business Days before the first day
of the applicable Interest Period in an aggregate amount approximately equal to
the amount of the Loan made by Bank of America with respect to such Eurodollar
Loan and for a period of time comparable to the number of days in the applicable
Interest Period.
The determination of the Eurodollar Reserve Percentage and the
Eurodollar Base Rate by the Administrative Agent shall be conclusive in the
absence of manifest error.
"Event of Default" means any of the events or circumstances specified
in Section 9.01.
"Excess Cash Flow" means, for any period, the remainder of (a) the sum
of (i) Adjusted Consolidated Net Income for such period and (ii) the decrease,
if any, in Adjusted Consolidated Working Capital from the first day to the last
day of such period, minus (b) the sum of (i) the amount of all Capital
Expenditures made by Holdings and its Subsidiaries during such period (other
than Capital Expenditures to the extent financed with equity proceeds, Asset
Sale proceeds or insurance proceeds or Indebtedness (other than with Revolving
Loans), (ii) the aggregate amount of permanent principal payments of
Indebtedness for borrowed money of Holdings and its Subsidiaries during such
period (other than repayments of Revolving Loans, provided that repayments of
Revolving Loans shall be deducted in determining Excess Cash Flow if such
repayments were made as a voluntary prepayment with internally generated funds
and were accompanied by a voluntary reduction to the Aggregate Revolving
Commitment)), (iii) the amount of all Permitted Acquisitions made by Holdings
and its Subsidiaries during such period (other than Permitted Acquisitions to
the extent financed with equity proceeds, the issuance of capital stock, Asset
Sale proceeds or Indebtedness (other than with Revolving Loans) and (iv) the
increase, if any, in Adjusted Consolidated Working Capital from the first day to
the last day of such period.
"Excess Cash Payment Date" means the date occurring 90 days after the
last day of each fiscal year of Holdings (beginning with its fiscal year ending
on December 31, 1998).
"Excess Cash Payment Period" means, with respect to the repayment
required on each Excess Cash Payment Date, the immediately preceding fiscal year
of Holdings.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Investors" means U.S. Equity Partners, L.P., U.S. Equity
Partners (Offshore), L.P. and/or other Affiliates of Wasserstein.
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"Existing Letter of Credit" has the meaning specified in the definition
of Issuing Bank.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day the appropriate rate for such day is not
yet published in H.15(519), the rate for such day will be the arithmetic mean of
the rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York City time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Administrative
Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"First Adjustment Date" has the meaning specified in the definition of
the term "Adjustment Date".
"Foreign Subsidiary" means each Subsidiary of Holdings which is not a
Domestic Subsidiary.
"Form 4224" has the meaning specified in Section 4.01(f).
"Form 1001" has the meaning specified in Section 4.01(f).
"Form W-8" has the meaning specified in Section 4.01(f).
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and including, in the case of any Bank that is an insurance company, the
National Association of Insurance Commissioners.
"Guaranteed Creditors" means and includes each of the Administrative
Agent, the Collateral Agent, the Issuing Banks, the Banks and, in the case of
any Interest Rate Protection Agreements or Other Hedging Agreements, also any
Affiliate of a Bank which has entered into an Interest Rate Protection Agreement
or Other Hedging Agreement (even if such Bank subsequently ceases to be a Bank
under this Agreement for any reason).
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"Guaranteed Obligations" means (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of the principal
and interest on each note issued by, and Revolving Loans made to, the Borrower
under this Agreement and all reimbursement obligations and unpaid drawings with
respect to Letters of Credit, together with all the other obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of the Borrower to the
Banks, the Administrative Agent, the Issuing Banks and the Collateral Agent now
existing or hereafter incurred under, arising out of or in connection with this
Agreement or any other Loan Document and the due performance and compliance by
the Borrower with all the terms, conditions and agreements contained in the Loan
Documents and (ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) of the Borrower owing under any Interest Rate
Protection Agreement or Other Hedging Agreement entered into by the Borrower
with any Bank or any other Guaranteed Creditor so long as such Bank or affiliate
participates in such Interest Rate Protection Agreement or Other Hedging
Agreement, and their subsequent assigns, if any, whether now in existence or
hereafter arising, and the due performance and compliance with all terms,
conditions and agreements contained therein.
"Guarantor" means Holdings and each Subsidiary Guarantor.
"Guarantor Supplement" means a supplement to the Subsidiary Guaranty,
the Pledge Agreement and the Security Agreement substantially in the form of
Exhibit E, whereby a Subsidiary of the Borrower becomes a party to each such
Loan Document.
"Guaranty" means the guaranty of Holdings pursuant to Article X and the
Subsidiary Guaranty.
"Hazardous Material" means and includes (a) any asbestos,
urea-formaldehyde, PCBs or dioxins or other material composed of or containing
asbestos, PCBs or dioxins, (b) crude oil, any fraction thereof, and any
petroleum product, (c) any natural gas, natural gas liquids, liquefied natural
gas or other natural gas product or synthetic gas, and (d) any hazardous or
toxic waste, substance or material or pollutant or contaminant defined as such
in (or for purposes of) or that may result in the imposition of liability under
any "Environmental Law", defined as the Comprehensive Environmental Response,
Compensation and Liability Act, any so-called "Superfund", or any other
applicable Federal, state, local or other statute, law, ordinance, code, rule,
regulation, order or decree, as now or at any time hereafter in effect,
regulating, relating to, or imposing liability concerning the environment, the
impact of the environment on human health, or any hazardous or toxic waste,
substance or material or pollutant or contaminant.
"Holdings" has the meaning specified in the preamble hereto.
"Holdings Common Stock" has the meaning specified in Section 6.22.
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<PAGE>
"Holdings Senior Discount Note Documents" means the Holdings Senior
Discount Note Indenture, the Holdings Senior Discount Notes and all other
documents and agreements executed and delivered pursuant to the Holdings Senior
Discount Note Indenture.
"Holdings Senior Discount Note Exchange Offer" means the exchange offer
for the Holdings Senior Discount Notes pursuant to the applicable Holdings
Senior Discount Note Documents for new Holdings Senior Discount Notes which have
been registered under the Securities Act of 1933, as amended.
"Holdings Senior Discount Note Indenture" means the Indenture, dated as
of December 22, 1997, between Holdings and The Bank of New York, as trustee, as
amended, modified or supplemented from time to time in accordance with the terms
hereof and thereof.
"Holdings Senior Discount Notes" means Holdings 12-1/4% senior discount
notes due 2008.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
ordinary course purchase price adjustments); (c) all reimbursement or payment
obligations with respect to letters of credit or non-contingent reimbursement or
payment obligations with respect to bankers' acceptances and similar documents;
(d) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; (e) all indebtedness created or
arising under any conditional sale or other title retention agreement or sales
of accounts receivable, in any such case with respect to property acquired by
the Person (even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of such
property); (f) all Capital Lease Obligations; (g) all net obligations with
respect to Interest Rate Protection Agreements and Other Hedging Agreements; (h)
all indebtedness referred to in clauses (a) through (g) above and clause (i)
below 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
(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,
valued, in the case of Indebtedness not assumed, at the lesser of the amount of
such obligation and the fair market value of the encumbered property or asset;
and (i) all Contingent Obligations. Notwithstanding the foregoing, Indebtedness
shall not include trade payables and accrued expenses incurred by any Person in
accordance with customary practices and in the ordinary course of business of
such Person.
"Indemnified Liabilities" has the meaning provided in Section 12.05.
"Indemnified Person" has the meaning provided in Section 12.05.
"Insolvency Proceeding" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors or similar proceedings, or
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(b) any general assignment for the benefit of creditors, composition,
marshalling of assets for creditors, or other, similar arrangement in respect of
its creditors generally; in each case undertaken under U.S. Federal, State or
foreign law, including the Bankruptcy Code.
"Intercompany Loan" has the meaning provided in Section 8.05(xi).
"Intercompany Note" means a promissory note in the form of Exhibit L.
"Interest Payment Date" means, (a) with respect to any Base Rate Loan,
the last day of the last calendar month of each calendar quarter and the
Revolving Termination Date, and (b) with respect to any Eurodollar Loan, the
last day of each Interest Period applicable to such Eurodollar Loan and the date
such Eurodollar Loan is repaid or prepaid; provided, however, that if any
Interest Period for any Eurodollar Loan exceeds three months, then also the date
which falls three months after the beginning of such Interest Period and, if
applicable, at three month intervals thereafter shall also be an "Interest
Payment Date".
"Interest Period" means, in relation to any Eurodollar Loan, the period
commencing on the applicable Borrowing Date or any Conversion Date or
Continuation Date with respect thereto and ending on the date one, two, three or
six months thereafter, as selected or deemed selected by the Borrower in its
Notice of Borrowing or Notice of Conversion/Continuation, provided that:
(i) if any Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period shall
end on the immediately preceding Business Day;
(ii) any Interest Period that begins on the last 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 Interest Period) shall end on the last
Business Day of the calendar month which is one, two, three or six months, as
the case may be, after the calendar month in which such Interest Period began;
and
(iii) no Interest Period shall extend beyond the Revolving Termination
Date.
"Interest Rate Protection Agreement" means an interest rate swap, cap,
collar or similar arrangement entered into to hedge interest rate risk (and not
for speculative purposes).
"Investment" has the meaning provided in Section 8.05.
"Issuing Bank" means (i) Bank of America or any Affiliate thereof in
its capacity as issuer of one or more Letters of Credit hereunder and (ii)
BankBoston, N.A. but solely in respect of the Standby Letter of Credit in the
amount of $533,217 issued for the benefit of 345 Park Avenue South, L.L.C., and
expiring on December 1, 1998 (the "Existing Letter of Credit"). Upon the
termination of the Existing Letter of Credit and the payment of all amounts (if
any) owing in respect thereof, BankBoston, N.A. shall cease to be an Issuing
Bank hereunder.
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"Lending Office" means, with respect to any Bank, the office or offices
of such Bank specified as its "Lending Office", "Domestic Lending Office" or
"Eurodollar Lending Office", as the case may be, on Schedule 1.01(a), or such
other office or offices of the Bank as it may from time to time notify the
Borrower and the Agent.
"Letter of Credit" means any letter of credit issued by the Issuing
Bank pursuant to Article III.
"Letter of Credit Amendment Application" means an application form for
amendment of outstanding standby or commercial documentary letters of credit as
shall at any time be in use by the respective Issuing Bank, as such Issuing Bank
shall request.
"Letter of Credit Application" means an application form for issuances
of standby or commercial documentary letters of credit as shall at any time be
in use at the respective Issuing Bank, as such Issuing Bank shall request.
"Letter of Credit Borrowing" means an extension of credit resulting
from a drawing under any Letter of Credit which shall not have been reimbursed
on or before the Business Day following the respective Disbursement Date when
made nor converted into a Borrowing of Revolving Loans under Section 3.03(b).
"Letter of Credit Commitment" means the aggregate commitment of the
Issuing Banks to issue Letters of Credit, the Letter of Credit Obligations in
respect thereof not to exceed in aggregate amount on any date the lesser of (i)
the Aggregate Revolving Commitment on such date and (ii) $2,500,000.
"Letter of Credit Obligations" means at any time the sum of (a) the
aggregate undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all outstanding Letter of Credit Borrowings.
"Letter of Credit Related Documents" means the Letters of Credit, the
Letter of Credit Applications, the Letter of Credit Amendment Applications and
any other document relating to any Letter of Credit, including any of the
respective Issuing Bank's standard form documents for letter of credit
issuances.
"Level I" has the meaning specified in Section 2.09(a)(ii).
"Level II" has the meaning specified in Section 2.09(a)(ii).
"Level III" has the meaning specified in Section 2.09(a)(ii).
"Level IV" has the meaning specified in Section 2.09(a)(ii).
"Level V" has the meaning specified in Section 2.09(a)(ii).
"Level VI" has the meaning specified in Section 2.09(a)(ii).
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"Lien" means any interest in any real or personal property or fixture
which secures payment or performance of any obligation and shall include any
mortgage, lien, pledge, encumbrance, charge or other security interest of any
kind, whether arising under a Security Instrument or as a matter of law,
judicial process or otherwise, including the retained security title of a
conditional vendor or lessor.
"Loan Documents" means this Agreement (including the guaranty of
Holdings set forth in Article X), each Collateral Document and all other
agreements, instruments, notes, certificates or other documents evidencing,
guaranteeing or securing the Revolving Loans, Letter of Credit Borrowings or the
other obligations of Holdings, the Borrower or any Subsidiary Guarantor
hereunder or under any Collateral Document.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means, relative to any occurrence of whatever
nature (including any adverse determination in any litigation, arbitration or
governmental investigation or proceeding), a material adverse effect on:
(a) the operations, business, assets, properties, liabilities or
condition (financial or otherwise) of the Borrower or of Holdings and its
Subsidiaries taken as a whole; or
(b) the rights and remedies of the Administrative Agent, the Collateral
Agent and the Banks under this Agreement or under any other Loan Document.
"Measurement Period" means (i) at any time on or prior to September 30,
1998 for purposes of determining compliance with Sections 8.07 and 8.08, the
period from January 1, 1998 through the last day of Holdings' fiscal quarter
then last ended (taken as one accounting period) and (ii) at any time thereafter
and for all other purposes of this Agreement, each period of four consecutive
fiscal quarters of Holdings (taken as one accounting period).
"Moody's" means Moody's Investors Service, Inc.
"Net Debt Proceeds" means, with respect to any incurrence of
Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith)
received by the respective Person from the respective incurrence of such
Indebtedness for borrowed money.
"Net Insurance Proceeds" means, with respect to any Recovery Event, the
cash proceeds (net of reasonable costs and taxes incurred in connection with
such Recovery Event) received by the respective Person in connection with the
respective Recovery Event.
"Net Sale Proceeds" means, in connection with any Asset Sale, the cash
proceeds (including any cash payments received by way of deferred payment
pursuant to a promissory note, receivable or otherwise, but only as and when
received in cash) of such Asset Sale net of (i) reasonable transaction costs
(including any underwriting, brokerage or other customary selling
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commissions and reasonable legal, advisory and other fees and expenses,
including title and recording expenses, associated therewith actually incurred),
(ii) required debt payments (other than pursuant hereto), (iii) taxes estimated
to be paid as a result of such Asset Sale and (iv) any portion of such cash
proceeds which Holdings determines in good faith should be reserved for
post-closing adjustments or liabilities (to the extent Holdings delivers to the
Banks a certificate signed by a Responsible Officer of Holdings as to such
determination).
"NLP" means National Law Publishing Company, Inc., a Delaware
corporation.
"Notice of Borrowing" means a notice given by the Borrower to the
Administrative Agent pursuant to Section 2.03(a), in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice given by the
Borrower to the Administrative Agent pursuant to Section 2.04(b), in
substantially the form of Exhibit B.
"Obligations" means all Revolving Loans, Letter of Credit Borrowings
and other indebtedness, advances, debts, liabilities, obligations, indemnities,
expenses (including, without limitation, Attorney Costs), covenants and duties,
of any kind or nature, owing by Holdings, the Borrower or any Subsidiary
Guarantor to any Bank, the Administrative Agent, the Collateral Agent or any
Issuing Banks in connection with this Agreement or any other Loan Document, in
each case whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, and however acquired (including those
acquired by assignment) or arising and whether or not for the payment of money
or evidenced by any note, guarantee or other instrument.
"OECD" means the Organization for Economic Cooperation and Development.
"OLD ALM" means American Lawyer Media, L.P., the previous owner of the
assets acquired by Holdings in the ALM Acquisition.
"Originating Bank" has the meaning provided in Section 12.07(d).
"Other Hedging Agreement" means any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency or
commodity values.
"Other Taxes" has the meaning specified in Section 4.01(b).
"Participant" has the meaning specified in Section 12.07(d).
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Acquisition" has the meaning specified in Section 8.02(ix).
"Permitted Holders" means Wasserstein and its Affiliates.
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"Permitted Liens" has the meaning provided in Section 8.01.
"Person" means any natural person, corporation, firm, trust,
partnership, limited liability company, business trust, association, government,
governmental agency or authority, or any other entity, whether acting in an
individual, fiduciary, or other capacity.
"Plan" means any pension plan as defined in Section 3(2) of ERISA,
which is maintained or contributed to by (or to which there is an obligation to
contribute of) Holdings or a Subsidiary of Holdings or an ERISA Affiliate, and
each such plan for the five year period immediately following the latest date on
which Holdings or a Subsidiary of Holdings or an ERISA Affiliate maintained,
contributed to or had an obligation to contribute to such plan.
"Pledge Agreement" means the Pledge Agreement in the form of Exhibit C,
as amended, modified or supplemented from time to time in accordance with the
terms thereof and hereof.
"Pledged Securities" has the meaning specified in the Pledge Agreement.
"Pro Forma Balance Sheet" means the pro forma unaudited consolidated
balance sheet of Holdings and its Subsidiaries as of December 31, 1997 after
giving effect to the Transaction and the financing therefor, which pro forma
consolidated balance sheet has been prepared in accordance with GAAP.
"Projections" means the projections prepared by Holdings, dated January
30, 1998 and furnished to the Banks prior to the Closing Date.
"Qualified Holdings Preferred Stock" means any preferred stock of
Holdings so long as the terms of any such preferred stock (i) do not contain any
mandatory put, redemption, repayment, sinking fund or other similar provision,
(ii) do not require the cash payment of dividends, (iii) do not contain any
covenants, (iv) do not grant the holders thereof any voting rights except for
(x) voting rights required to be granted to such holders under applicable law
and (y) limited customary voting rights on fundamental matters such as mergers,
consolidations, sales of all or substantially all of the assets of Holdings, or
liquidations involving Holdings, and (v) are otherwise reasonably satisfactory
to Bank of America (or any successor Administrative Agent) and the Syndication
Agent.
"Recovery Event" means the receipt by Holdings or any of its
Subsidiaries of any cash insurance proceeds or condemnation awards payable by
reason of theft, loss, physical destruction, damage, taking or any other similar
event with respect to any property or assets of Holdings or any of its
Subsidiaries.
"Reference Rate" means the rate of interest publicly announced from
time to time by Bank of America in San Francisco as its "reference rate". It is
a rate set by Bank of America based upon various factors, including Bank of
America's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above or below such announced rate. Any change in the Reference Rate
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announced by Bank of America shall take effect at the opening of business on the
day specified in the public announcement of such change.
"Register" has the meaning specified in Section 2.02.
"Regulation D" means Regulation D of the Federal Reserve Board as from
time to time in effect and any successor to all or a portion thereof
establishing reserve requirements.
"Replaced Bank" has the meaning specified in Section 4.08(b).
"Replacement Bank" has the meaning specified in Section 4.08(b).
"Reportable Event" means, an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
.22, .23, .25, .27 or .28 of PBGC Regulations issued under Section 4043 of
ERISA.
"Required Banks" means Banks, the sum of whose Revolving Commitments
(or after the termination thereof, outstanding Revolving Loans and Revolving
Commitment Percentages of Letter of Credit Obligations) represent at least 51%
of the Aggregate Revolving Commitment (or after the termination thereof, the sum
of the then total outstanding Revolving Loans and the aggregate Revolving
Commitment Percentages of the total outstanding Letter of Credit Obligations at
such time).
"Requirement of Law" means, as to any Person, any law (statutory or
common, including, without limitation, any Environmental Law and ERISA), treaty,
rule or regulation or determination of a court or of a Governmental Authority,
in each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
"Responsible Officer" means, for Holdings, the Borrower or any
Subsidiary thereof, its chairman of the board, its chief executive officer, its
president, any of its executive vice presidents, its chief financial officer,
but in any event, with respect to financial matters, the president or the chief
financial officer of Holdings.
"Revolving Commitment" means, for each Bank, the amount set forth
opposite such Bank's name in Schedule 1.01(b) directly below the column entitled
"Revolving Commitment," as such amount may be modified from time to time
pursuant to the terms hereof.
"Revolving Commitment Percentage" of any Bank at any time means a
fraction (expressed as a percentage) the numerator of which is the Revolving
Commitment of such Bank at such time and the denominator of which is the
Aggregate Revolving Commitment at such time, provided that if the Revolving
Commitment Percentage of any Bank is to be determined after the Aggregate
Revolving Commitment has been terminated, then the Revolving Commitment
Percentages of the Banks shall be determined immediately prior (and without
giving effect) to such termination.
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"Revolving Loan" means a loan by a Bank to the Borrower under Section
2.01, which may be a Eurodollar Loan or a Base Rate Loan.
"Revolving Termination Date" means the earlier to occur of (a) March
31, 2003 and (b) the date on which the Revolving Commitments shall terminate in
accordance with the provisions hereof.
"S&P" means Standard & Poor's Ratings Service, a division of McGraw
Hill, Inc.
"Section 4.01(f)(i) Certificate" has the meaning specified in Section
4.01(f).
"Security Agreement" means the Security Agreement in the form of
Exhibit F, as amended, modified or supplemented from time to time in accordance
with the terms thereof and hereof.
"Security Instrument" means any security agreement, chattel mortgage,
assignment, pledge agreement, financing or similar statement or notice,
continuation statement, other agreement or instrument, or amendment or
supplement to any thereof, providing for, evidencing or perfecting any security
interest.
"Significant Subsidiary" has the meaning set forth in the Holdings
Senior Discount Note Indenture or in the Borrower Senior Note Indenture.
"Specified Default" means (i) any Default under Section 9.01(a),
9.01(f) or 9.01(g), and (ii) any Event of Default.
"Standby Letter of Credit" has the meaning specified in Section
3.01(a).
"Subsidiary" of a Person means any corporation, association,
partnership or other business entity of which more than 50% of the voting stock
or other voting equity interests (in the case of Persons other than
corporations) is owned or controlled directly or indirectly by such Person, or
one or more of the Subsidiaries of the Person, or a combination thereof.
"Subsidiary Guarantor" means each of the Domestic Subsidiaries of the
Borrower listed on Schedule 1.01(c) and each other Domestic Subsidiary of the
Borrower (and, to the extent Section 7.12 is operative, each Foreign Subsidiary
of the Borrower) that hereafter executes and delivers a Guarantor Supplement.
"Subsidiary Guaranty" means the Guaranty in the form of Exhibit E, as
amended, modified or supplemented from time to time in accordance with the terms
hereof and thereof.
"Syndication Agent" means BancBoston Securities Inc.
"Taxes" has the meaning specified in Section 4.01(a).
"Total Leverage Ratio Certificate" means a certificate duly executed by
a Responsible of Holdings, substantially in the form of Exhibit G (with such
changes thereto as
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may be agreed upon from time to time by the Administrative Agent and Holdings),
and including therein, among other things, calculations supporting the
information contained therein.
"Trade Letter of Credit" has the meaning specified in Section 3.01(a).
"Transaction" means, collectively, (i) the Acquisition and the related
refinancing of certain indebtedness of the Borrower, NLP and their Subsidiaries,
(ii) the issuance of the Borrower Senior Notes as part of the Acquisition, (iii)
the issuance of the Holdings Senior Discount Notes as part of the Acquisition,
(iv) the $73,500,000 in equity contributions received by Holdings as part of the
Acquisition and (v) the entering into of this Agreement and the occurrence of
the Closing Date.
"Transferee" has the meaning specified in Section 12.08.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the amount, if any, by
which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year, determined in accordance with
actuarial assumptions at such time consistent with Statement of Financial
Accounting Standards No. 87, exceeds the market value of the assets allocable
thereto.
"United States" and "U.S." each means the United States of America.
"Voting Stock" of any Person as of any date means the capital stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Wasserstein" means Wasserstein Perella Group Inc., a Delaware
corporation.
"WP Management" means WP Management Partners, L.L.C., a Delaware
limited liability company.
"Wholly-Owned Subsidiary" means, as to any Person, (i) any corporation
100% of whose capital stock (other than director's or other qualifying shares)
is at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries
of such Person and (ii) any partnership, association or other entity in which
such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a
100% equity interest at such time.
1.02 Other Definitional Provisions.
(a) Defined Terms. Unless otherwise specified herein or therein, all
terms defined in this Agreement shall have such defined meanings when used in
any certificate or other document made or delivered pursuant hereto. The meaning
of defined terms shall be equally applicable to the singular and plural forms of
the defined terms. Terms (including uncapitalized terms) not otherwise defined
herein and that are defined in the UCC shall have the meanings therein
described.
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<PAGE>
(b) The Agreement. The words "hereof", "herein", "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; and section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
(c) Certain Common Terms.
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
i (ii) The terms "including" or "include"
are not limiting and mean "including without limitation" or "include
without limitation".
(d) Performance; Time. Subject to the definition of
the term "Interest Period" in Section 1.01, whenever any performance obligation
hereunder shall be stated to be due or required to be satisfied on a day other
than a Business Day, such performance shall be made or satisfied on the next
succeeding Business Day. In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including"; the
words "to" and "until" each mean "to but excluding"; and the word "through"
means "to and including." If any provision of this Agreement refers to any
action taken or to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be interpreted to encompass any and all means,
direct or indirect, of taking, or not taking, such action.
(e) Contracts. Unless otherwise expressly provided
herein, references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document.
(f) Laws. References to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending or replacing such statute or regulation.
1.03 Accounting Principles. Except as provided to the contrary herein,
all accounting terms used herein shall be interpreted in accordance with GAAP.
Unless the context otherwise clearly requires, all financial computations
required under this Agreement shall be made in accordance with generally
accepted accounting principles applied in a manner consistent with those in
effect on December 31, 1997.
ARTICLE II.
THE CREDIT FACILITIES
2.01 Amounts and Terms of Commitments.
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<PAGE>
Each Bank severally agrees, on the terms and conditions
hereinafter set forth, to make Revolving Loans to the Borrower from
time to time on any Business Day during the period from the Closing
Date to the Revolving Termination Date, in an aggregate amount not to
exceed at any time outstanding the amount of such Bank's Revolving
Commitment; provided, however, that, after giving effect to any
Borrowing, the aggregate principal amount of all outstanding Revolving
Loans plus the aggregate amount of all outstanding Letter of Credit
Obligations (exclusive of unpaid drawings under any Letter of Credit
which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans), shall not
exceed the Aggregate Revolving Commitment. Within such limits, and
subject to the other terms and conditions hereof, the Borrower may
borrow Revolving Loans under this Section 2.01, prepay pursuant to
Section 2.06 or 2.07(a) and reborrow pursuant to this Section 2.01.
2.02 Loan Accounts and Register; Notes.
(a) The Revolving Loans made by, and the Revolving Commitments
of, each Bank shall be evidenced by one or more loan accounts
maintained by such Bank and the Register maintained by the
Administrative Agent in the ordinary course of business. The Register
maintained by the Administrative Agent shall, in the event of a
discrepancy between the entries in the Administrative Agent's books and
any Bank's books relating to such matters, be controlling and, absent
manifest error, shall be conclusive as to the amount of the Revolving
Loans made by the Banks to the Borrower, the interest and payments
thereon and any other amounts owing in respect of this Agreement. Any
failure to make a notation in the Register or any such loan account or
any error in doing so shall not limit or otherwise affect the
obligations of the Borrower hereunder to pay any amount owing with
respect to the Revolving Loans. The Borrower hereby designates the
Administrative Agent to serve as the Borrower's agent, solely for
purposes of this Section 2.02, to maintain a register (the "Register")
on which it will record the Revolving Commitments from time to time of
each of the Banks, the Revolving Loans made by each of the Banks and
each repayment in respect of the principal amount of the Revolving
Loans of each Bank. With respect to any Bank, the transfer of the
Revolving Commitments of such Bank and the rights to the principal of,
and interest on, any Revolving Loan made pursuant to such Revolving
Commitments shall not be effective until such transfer is recorded on
the Register maintained by the Administrative Agent with respect to
ownership of such Revolving Commitments and Revolving Loans and prior
to such recordation all amounts owing to the transferor with respect to
such Revolving Commitments and Revolving Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or
part of any Revolving Commitments and Revolving Loans shall be recorded
by the Administrative Agent on the Register only upon the acceptance by
the Administrative Agent of a properly executed and delivered
Assignment and Acceptance pursuant to Section 12.07(a). The Borrower
agrees to indemnify the Administrative Agent from and against any and
all losses, claims, damages and liabilities of whatsoever nature which
may be imposed on, asserted against or incurred by the Administrative
Agent in performing its duties under this Section 2.02.
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<PAGE>
(b) If requested by any Bank for purposes of Section 12.07(e),
the Borrower shall execute and deliver to such Bank (and deliver a copy
thereof to the Administrative Agent) one or more promissory notes
evidencing the Revolving Loans owing to such Bank pursuant to this
Agreement. Any such note shall be in a form prescribed by the Borrower
and the Administrative Agent and shall be entitled to all of the rights
and benefits of this Agreement and the other Loan Documents.
2.03 Procedure for Borrowing.
(a) Each Borrowing of Revolving Loans (other than a Borrowing
of Revolving Loans pursuant to Section 3.03(b)) shall be made upon the
Borrower's irrevocable written notice delivered to the Administrative
Agent in accordance with Section 12.02 in the form of a Notice of
Borrowing (which notice must be received by the Administrative Agent
(i) prior to 11:30 a.m. (New York City time) not less than three
Business Days prior to the requested Borrowing Date, in the case of
Eurodollar Loans and (ii) prior to 11:30 a.m. (New York City time) on
the requested Borrowing Date, in the case of Base Rate Loans,
specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum principal amount of $1,000,000 or any
multiple of $50,000 in excess thereof;
(B) the requested Borrowing Date, which shall be a
Business Day;
(C) whether the Borrowing is to be comprised of
Eurodollar Loans or Base Rate Loans; and
(D) the duration of the Interest Period, if any,
applicable to such Revolving Loans included in such notice. If
the Notice of Borrowing shall fail to specify the duration of
the Interest Period for any Borrowing comprised of Eurodollar
Loans, such Interest Period shall be one month.
(b) Upon receipt of the Notice of Borrowing, the
Administrative Agent will promptly notify each Bank of the contents
thereof and of the amount of such Bank's Revolving Commitment
Percentage of the requested Borrowing.
(c) Each Bank will make the amount of its Revolving Commitment
Percentage of each Borrowing available to the Administrative Agent for
the account of the Borrower at the Administrative Agent's Payment
Office by 2:00 p.m. (New York City time) on the Borrowing Date
requested by the Borrower in funds immediately available to the
Administrative Agent. Unless any applicable condition of Article V has
not been satisfied, the proceeds of all such Revolving Loans (other
than Revolving Loans made pursuant to Section 3.03(b)) will then be
made available to the Borrower by the Administrative Agent by wire
transfer in accordance with written instructions provided to the
Administrative Agent by the Borrower.
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<PAGE>
(d) Upon the occurrence and during the continuance of any
Specified Default, the Borrower shall not have the right to elect (and
shall not elect) to have a Revolving Loan be made as a Eurodollar Loan.
(e) After giving effect to any Borrowing, there shall not be
more than eight different Interest Periods in effect in respect of all
Revolving Loans.
2.04 Conversion and Continuation Elections for Revolving
Borrowings.
(a) The Borrower may upon irrevocable written notice to the
Administrative Agent in accordance with paragraph (b) below:
(i) elect to convert on any Business Day, any Base
Rate Loans (or any part thereof in an amount of not less than
$1,000,000 or an integral multiple of $50,000 in excess
thereof) into Eurodollar Loans;
(ii) elect to convert on the last day of the Interest
Period with respect thereto, any Eurodollar Loans (or any part
thereof in an amount of not less than $1,000,000 or an
integral multiple of $50,000 in excess thereof) into Base Rate
Loans; or
(iii) elect to continue on the last day of the
Interest Period with respect thereto, any Eurodollar Loans (or
any part thereof in an amount of not less than $1,000,000 or
an integral multiple of $50,000 in excess thereof);
provided, however, (x) that if the aggregate amount of a Borrowing
comprised of Eurodollar Loans shall have been reduced, by payment,
prepayment or conversion of part thereof to be less than $1,000,000,
the Eurodollar Loans comprising such Borrowing shall automatically
convert into Base Rate Loans, and on and after such date the right of
the Borrower to continue such Loans as, and convert such Loans into,
Eurodollar Loans shall terminate and (y) Eurodollar Loans with Interest
Periods of more than one month may not be selected until the 90th day
after the Closing Date.
(b) The Borrower shall deliver a Notice of Conversion/Continuation in
accordance with Section 12.02 to be received by the Administrative
Agent not later than (i) 11:30 a.m. (New York City time) not less than
three Business Days in advance of the Conversion Date or Continuation
Date, if the Revolving Loans are to be converted into or continued as
Eurodollar Loans and (ii) no later than 11:30 a.m. (New York City time)
on the requested Conversion Date, if the Revolving Loans are to be
converted into Base Rate Loans, specifying:
(A) the Revolving Loans to be converted or continued;
(B) the proposed Conversion Date or Continuation Date
which shall be a Business Day;
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(C) the aggregate principal amount of Revolving Loans
to be converted or continued;
(D) the nature of the proposed conversion or
continuation; and
(E) the duration of the requested Interest Period, if
applicable.
(c) If upon the expiration of any Interest Period applicable
to Eurodollar Loans, the Borrower has failed to select timely a new
Interest Period or the Borrower is not permitted to elect a new
Interest Period, such Revolving Loans shall automatically convert into
Base Rate Loans.
(d) Upon receipt of a Notice of Conversion/ Continuation, the
Administrative Agent will promptly notify each Bank of the contents
thereof, or, if no timely notice is provided by the Borrower, the
Administrative Agent will promptly notify each such Bank of the details
of any automatic conversion. All conversions and continuations shall be
made pro rata according to the respective outstanding principal amounts
of the Revolving Loans with respect to which the notice was given.
(e) Upon the occurrence and during the continuance of any
Specified Default, the Borrower shall not elect to have a Revolving
Loan converted into or continued as a Eurodollar Loan.
(f) Notwithstanding any other provision contained in this
Agreement, after giving effect to any conversion or continuation of any
Revolving Loans, there shall not be more than eight different Interest
Periods in effect in respect of all Revolving Loans.
2.05 Reduction and Termination of Commitments.
(a) The Borrower may, upon not less than three Business Days'
prior notice to the Administrative Agent, terminate the Aggregate
Revolving Commitment (including the Letter of Credit Commitment) or
permanently reduce the Aggregate Revolving Commitment (including the
Letter of Credit Commitment) by an aggregate minimum amount of
$5,000,000 or any multiple of $100,000 in excess thereof; provided,
however, that no such reduction or termination shall be permitted if
after giving effect thereto and to any prepayment of the Revolving
Loans made on the effective date thereof, (i) the then outstanding
principal amount of the Revolving Loans plus the outstanding Letter of
Credit Obligations would exceed the Aggregate Revolving Commitment then
in effect or (ii) the aggregate amount of Letter of Credit Obligations
would exceed the Letter of Credit Commitment then in effect; and,
provided further, that once reduced in accordance with this Section
2.05, the Aggregate Revolving Commitment (including the Letter of
Credit Commitment) may not be increased.
(b) The Aggregate Revolving Commitment (and the Revolving
Commitment of each Bank) shall terminate in its entirety on April 15,
1998 unless the Closing Date shall have occurred on or prior to such
date.
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<PAGE>
(c) The Aggregate Revolving Commitment (and the Revolving
Commitment of each Bank) shall terminate in its entirety on the
Revolving Termination Date.
(d) The Aggregate Revolving Commitment (and the Revolving
Commitment of each Bank) shall terminate in its entirety on the date on
which a Change of Control occurs.
(e) On each date upon which Holdings or any of its
Subsidiaries receives any proceeds from any incurrence by Holdings or
any of its Subsidiaries of Indebtedness for borrowed money (other than
Indebtedness for borrowed money permitted to be incurred under Section
8.04 as in effect on the Closing Date), the Aggregate Revolving
Commitment shall be permanently reduced by an amount equal to 100% of
the Net Debt Proceeds of the respective incurrence of Indebtedness.
Nothing in this clause (e) shall be deemed to permit the issuance of
any Indebtedness not otherwise permitted under this Agreement.
(f) On each date upon which Holdings or any of its
Subsidiaries receives any proceeds from any Asset Sale, the Aggregate
Revolving Commitment shall be permanently reduced by an amount equal to
100% of the Net Sale Proceeds from such Asset Sale, provided that with
respect to no more than $5,000,000 in the aggregate of such Net Sale
Proceeds in any fiscal year of Holdings, such Net Sale Proceeds shall
not give rise to a reduction pursuant to this clause (f) to the extent
that no Default or Event of Default then exists and Holdings has
delivered a certificate of one of its Responsible Officers to the
Administrative Agent on or prior to such date stating that such Net
Sale Proceeds shall be used to purchase replacement assets used or to
be used in the Borrower's or any of its Subsidiaries' business within
265 days following the date of such Asset Sale (which certificate shall
set forth the estimates of the proceeds to be so expended), and
provided further, that if all or any portion of such Net Sale Proceeds
are not so reinvested within such 265 day period (or such earlier date,
if any, as the Board of Directors of the Borrower determines not to so
reinvest such Net Sale Proceeds), the Aggregate Revolving Commitment
shall be permanently reduced on the last day of such period (or such
earlier date, as the case may be) by an amount equal to such remaining
portion. Nothing in this clause (f) shall be deemed to permit any Asset
Sale not otherwise permitted under this Agreement.
(g) Within 10 days following each date upon which Holdings or
any of its Subsidiaries receives any proceeds from any Recovery Event,
the Aggregate Revolving Commitment shall be permanently reduced by an
amount equal to 100% of the Net Insurance Proceeds from such Recovery
Event, provided that so long as no Default or Event of Default then
exists and such proceeds from such Recovery Event do not exceed
$2,000,000, such proceeds shall not give rise to a reduction pursuant
to this clause (g) on such date to the extent that Holdings has
delivered a certificate of one of its Responsible Officers to the
Administrative Agent on or prior to such date stating that such
proceeds shall be used to replace or restore any properties or assets
in respect of which such proceeds were paid within 265 days following
the date of receipt of such proceeds (which
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<PAGE>
certificate shall set forth the estimates of the proceeds to be so
expended), and provided further, that (i) if the amount of such
proceeds exceeds $2,000,000, then the entire amount of such proceeds
and not just the portion in excess of $2,000,000 shall be applied as
provided above in this clause (g), and (ii) if all or any portion of
such proceeds are not contractually committed to be used within 180
days after the date of receipt of such proceeds and are not actually
used within 265 days after the date of receipt of such proceeds to
effect such restoration or replacement (or such earlier date, if any,
as the Board of Directors of the Borrower determines not to so reinvest
such Net Insurance Proceeds), the Aggregate Revolving Commitment shall
be permanently reduced on the last day of such 180-day or 265-day
period, as the case may be (or such earlier date, as the case may be),
by an amount equal to such remaining portion.
(h) On each Excess Cash Payment Date, the Aggregate Revolving
Commitment shall be permanently reduced by an amount equal to the
Applicable Excess Cash Flow Percentage of the Excess Cash Flow for the
relevant Excess Cash Payment Period; provided, however, that no such
reduction pursuant to this clause (h) shall be required to the extent
that no Default or Event of Default then exists and the Consolidated
Total Leverage Ratio on such Excess Cash Payment Date (before giving
effect to any such reduction on such date) is less than 4.00:1.00 as
demonstrated in the Total Leverage Ratio Certificate delivered to the
Administrative Agent in accordance with Section 12.02 at such time.
(i) Any reduction of the Aggregate Revolving Commitment and
the Letter of Credit Commitment pursuant to this Section 2.05 shall be
applied pro rata to each Bank's Revolving Commitment in accordance with
such Bank's Revolving Commitment Percentage. The amount of any such
reduction of the Aggregate Revolving Commitment shall not be applied to
the Letter of Credit Commitment unless otherwise specified by the
Borrower or required by the definition thereof. The Administrative
Agent shall promptly notify the Banks of any reduction or termination
of the Aggregate Revolving Commitment.
2.06 Voluntary Prepayments.
(a) The Borrower may, prior to 11:30 a.m. (New York City
time), upon at least three Business Days' notice to the Administrative
Agent in the case of Eurodollar Loans, and prior to 11:30 a.m. (New
York City time), upon same day notice on any Business day in the case
of Base Rate Loans, ratably prepay Revolving Loans, in whole or in part
in amounts of $100,000 or an integral multiple of $50,000 in excess
thereof.
(b) Any notice of prepayment delivered pursuant to this
Section 2.06 shall specify the date and amount of such prepayment, the
type of Revolving Loans to be prepaid, including whether such
prepayment is of Base Rate Loans or Eurodollar Loans or any combination
thereof. Each such notice shall be irrevocable by the Borrower and the
Administrative Agent will promptly notify each Bank thereof and of such
Bank's Revolving Commitment Percentage of such prepayment. If such
notice is given by the
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Borrower, the Borrower shall make such prepayment and the payment
amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to each such date on
the amount prepaid and the amounts, if any, required pursuant to
Section 4.04; provided that interest shall be paid in connection with
any such prepayment of Base Rate Loans (other than a prepayment in
full) on the next occurring Interest Payment Date.
2.07 Mandatory Prepayments.
(a)(i) If on any date the aggregate unpaid principal amount of
outstanding Revolving Loans plus the outstanding Letter of Credit
Obligations (to the extent not Cash Collateralized pursuant to clause
(ii) below or as provided for in Section 3.07) exceeds the Aggregate
Revolving Commitment the Borrower shall immediately prepay the amount
of such excess.
(ii) If on any date the aggregate amount of all Letter of
Credit Obligations shall exceed the Letter of Credit Commitment, the
Borrower shall Cash Collateralize on such date its obligations in
respect of Letters of Credit in an amount equal to the excess of the
Letter of Credit Obligations over the Letter of Credit Commitment.
(b) The Borrower shall pay, together with each prepayment made
by the Borrower under this Section 2.07, accrued interest on the amount
prepaid and any amounts required pursuant to Section 4.04; provided
that interest shall be paid in connection with any such prepayment of
Base Rate Loans (other than a prepayment in full) on the next occurring
Interest Payment Date.
(c) Any prepayments pursuant to this Section 2.07 made on a
day other than an Interest Payment Date for any Revolving Loan shall be
applied first to any Base Rate Loans then outstanding and then to
Eurodollar Loans with the shortest Interest Periods remaining.
(d) The Borrower shall repay in full all outstanding Revolving
Loans on the date on which a Change of Control occurs.
2.08 Repayment of Principal.
The Borrower shall repay in full on the Revolving Termination Date the
aggregate principal amount of the Revolving Loans outstanding on such date.
2.09 Interest.
(a) Each Revolving Loan shall bear interest on the outstanding
principal amount thereof from the Borrowing Date applicable thereto
until it becomes due at a rate per annum equal to the Base Rate or the
Eurodollar Rate, as the case may be, plus the Applicable Margin then in
effect as set forth below:
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(i) for the period commencing on the Closing Date and ending
on the day immediately preceding the First Adjustment Date:
<TABLE>
<CAPTION>
Applicable Margin
<S> <C>
Base Rate 1.500%
Eurodollar Rate 2.500%
</TABLE>
(ii) from and after the First Adjustment
Date, for each period beginning on an Adjustment Date to the next
succeeding Adjustment Date, the rate per annum for the relevant type of
Revolving Loan set forth below opposite the Consolidated Total Leverage
Ratio determined as at the end of the last fiscal quarter ended prior
to the first day of such period:
<TABLE>
<CAPTION>
Applicable Margin
Eurodollar Base
Rate Rate
---- ----
<S> <C> <C>
Consolidated Total Leverage Ratio is less than 5.00 to 1.00 1.250% 0.250%
("Level I")
---------
Consolidated Total Leverage Ratio is less than 5.50 to 1.0 but 1.625% 0.625%
greater than or equal to 5.00 to 1.00 ("Level II")
--------
Consolidated Total Leverage Ratio is less than 6.00 to 1.00 but 1.875% 0.875%
greater than or equal to 5.50 to 1.00 ("Level III")
---------
Consolidated Total Leverage Ratio is less than 6.50 to 1.00 but 2.125% 1.125%
greater than or equal to 6.00 to 1.00 ("Level IV")
--------
Consolidated Total Leverage Ratio is less than 7.00 to 1.00 but 2.250% 1.250%
greater than or equal to 6.50 to 1.00 ("Level V")
-------
Consolidated Total Leverage Ratio is greater than or equal to 2.500% 1.500%
7.00 to 1.00 ("Level VI")
--------
</TABLE>
(iii) If by the last day for determining
any Adjustment Date, Holdings has failed to deliver a Total Leverage
Ratio Certificate as at the end of the fiscal quarter ended immediately
prior to such Adjustment Date, interest for the next succeeding period
commencing on such Adjustment Date to the next succeeding Adjustment
Date shall be computed as if the Consolidated Total Leverage Ratio were
at Level VI; provided, however, to the extent that Holdings thereafter
delivers a Total Leverage Ratio Certificate in respect of such
preceding fiscal
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quarter during such succeeding period, interest for the remainder of
such succeeding period shall be computed at the rate prescribed by
Section 2.09(a)(ii). In addition, at any time that a Specified Default
shall exist, the Applicable Margin shall be computed as if the
Consolidated Total Leverage Ratio were at Level VI.
(b) Except as provided in the last sentence of Section 2.09(a)(iii) or
in the proviso to the first sentence of Section 2.09(a)(iii), any change in the
Applicable Margin due to a change in the Consolidated Total Leverage Ratio shall
be effective on the applicable Adjustment Date and shall apply to all Revolving
Loans that are outstanding at any time during the period commencing on such
Adjustment Date and ending on the date immediately preceding the next Adjustment
Date.
(c) Interest on each Revolving Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any prepayment
of any portion of Revolving Loans (excluding Base Rate Loans) for the portion of
such Revolving Loans so prepaid and upon payment (including prepayment) of any
Revolving Loans (including Base Rate Loans) in full. In addition, interest which
accrues under Section 2.09(d) also shall be paid on demand by the Administrative
Agent or the Required Banks.
(d) If any amount of principal of or interest on any Revolving Loan, or
any other regularly scheduled amount payable hereunder or under any other Loan
Document is not paid in full when due (whether at stated maturity, by
acceleration, demand or otherwise), the Borrower shall pay interest (after as
well as before judgment) on the overdue principal amount of all outstanding
Loans at the applicable rate per annum provided in this Section 2.09 plus 2% and
on all other overdue amounts (including interest to the extent permitted by
law), at a rate per annum equal to the Base Rate plus the Applicable Margin plus
2%.
(e) Anything herein to the contrary notwithstanding, the obligations of
the Borrower hereunder shall be subject to the limitation that payments of
interest shall not be required, for any period for which interest is computed
hereunder, to the extent (but only to the extent) that contracting for or
receiving such payment by the respective Bank would be contrary to the
provisions of any law applicable to such Bank limiting the highest rate of
interest which may be lawfully contracted for, charged or received by such Bank,
and in such event the Borrower shall only pay such Bank interest at the highest
rate permitted by applicable law.
2.10 Fees. In addition to fees described in Section 3.08:
(a) Commitment Fees.
The Borrower shall pay to the Administrative Agent for the
account of each Bank a commitment fee on the daily unused portion of
such Bank's Revolving Commitment, computed on a quarterly basis in
arrears, on each Interest Payment Date for Base Rate Loans based upon
the daily utilization for the previous three month period as calculated
by the Administrative Agent, equal to (A) for the period from the
Closing Date to the First Adjustment Date, 0.50% per annum and (B) from
and after the First Adjustment Date, for each period
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commencing on an Adjustment Date to the next succeeding Adjustment
Date, the rate per annum set forth below opposite the relevant Level of
Consolidated Total Leverage Ratio determined as at the end of the last
fiscal quarter ended prior to the first day of such period:
<TABLE>
<CAPTION>
Consolidated Total Leverage Ratio
<S> <C>
Level I 0.300%
Level II 0.375%
Level III 0.450%
Level IV 0.450%
Level V 0.500%
Level VI 0.500%
</TABLE>
provided, however, that if by the last day for determining any
Adjustment Date, Holdings has failed to deliver a Total Leverage Ratio
Certificate as at the end of the fiscal quarter ended immediately prior
to such Adjustment Date, the commitment fee for the next succeeding
period beginning on such Adjustment Date to the next succeeding
Adjustment Date shall be computed as if the Consolidated Total Leverage
Ratio were at Level VI; provided further, however, to the extent that
Holdings thereafter delivers a Total Leverage Ratio Certificate in
respect of such preceding fiscal quarter during such succeeding period
the commitment fee for the remainder of such succeeding period shall be
computed at the rate prescribed in the table above in this Section
2.10(a)(i). In addition, at any time that a Specified Default shall
exist, the commitment fee shall be computed as if the Consolidated
Total Leverage Ratio were at Level VI. Such commitment fees shall be
paid in arrears on each Interest Payment Date for Base Rate Loans.
(b) Other Fees. The Borrower shall pay such
other fees as have or may be agreed between or among Holdings, the
Borrower and the Administrative Agent from time to time.
2.11 Computation of Fees and Interest.
(a) All computations of interest payable in respect of Base
Rate Loans shall be made on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed. All other computations of
fees and interest under this Agreement shall be made on the basis of a
360-day year (of 12 months with 30 days each) and actual days elapsed.
Interest and fees shall accrue during each period during which interest
or such fees are computed from the first day thereof to the last day
thereof.
(b) The Administrative Agent will promptly notify the Borrower
and the Banks of each determination of the Eurodollar Rate; provided,
however, that any failure to do so shall not relieve the Borrower of
any liability hereunder. Except as otherwise provided in the last
sentence of Section 2.09(a)(iii) or in the proviso to the first
sentence of Section 2.09(a)(iii), any change in the interest rate on a
Loan resulting from a change
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in the Applicable Margin shall become effective as of the opening of
business on the relevant Adjustment Date. The Administrative Agent will
promptly notify the Borrower and the Banks of the effective date and
the amount of each such change, provided, however, that any failure to
do so shall not relieve the Borrower of any liability hereunder.
(c) Each determination of an interest rate by the
Administrative Agent shall be conclusive and binding on the Borrower
and the Banks in the absence of manifest error.
2.12 Payments by the Borrower.
(a) All payments (including prepayments) to be made by the
Borrower on account of principal, interest, drawings under Letters of
Credit, fees and other amounts required hereunder shall be made, except
as otherwise expressly provided herein, without set-off or counterclaim
and shall, except as otherwise expressly provided with respect to
drawings under Letters of Credit and elsewhere herein, be made to the
Administrative Agent for the ratable account of the Banks entitled
thereto at the Administrative Agent's Payment Office, and shall be made
in Dollars and in immediately available funds, no later than 2:00 p.m.
(New York City time) on the date specified herein. The Administrative
Agent will promptly distribute to each Bank its share, if any, of such
principal, interest, fees or other amounts, in like funds as received.
Any payment which is received by the Administrative Agent later than
2:00 p.m. (New York City time) shall be deemed to have been received on
the immediately succeeding Business Day and any applicable interest or
fee shall continue to accrue until such payment is deemed to have been
received.
(b) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such
case be included in the computation of interest or fees, as the case
may be, subject to the provisions set forth in the definition of the
term "Interest Period" herein.
(c) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Banks hereunder that the Borrower will not make the payment in full,
the Administrative Agent may assume that the Borrower has made such
payment in full to the Administrative Agent as required hereunder on
such date in immediately available funds and the Administrative Agent
may (but shall not be so required), in reliance upon such assumption,
cause to be distributed to each Bank entitled thereto on such due date
an amount equal to the amount then due such Bank. If and to the extent
the Borrower shall not have made such payment in full to the
Administrative Agent, each such Bank shall repay to the Administrative
Agent on demand such amount distributed to such Bank, together with
interest thereon for each day from the date such amount is distributed
to such Bank until the date such Bank repays such amount to the
Administrative Agent, at the Federal Funds Rate as in effect for each
such day.
2.13 Payments by the Banks to the Administrative Agent.
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(a) Unless the Administrative Agent shall have received notice
from a Bank prior to 1:00 p.m. (New York City time) on the date of any
proposed Borrowing that such Bank will not make available to the
Administrative Agent for the account of the Borrower the amount of such
Bank's Revolving Commitment Percentage of the Revolving Loans included
in such Borrowing, the Administrative Agent may assume that each such
Bank has made such amount available to the Administrative Agent as
required hereunder on the Borrowing Date and the Administrative Agent
may (but shall not be so required), in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If
and to the extent any such Bank shall not have made its full amount
available to the Administrative Agent in immediately available funds
and the Administrative Agent in such circumstances has made available
to the Borrower such amount, such Bank shall immediately make such
amount available to the Administrative Agent, together with interest at
the Federal Funds Rate from the date of such Borrowing to the date on
which the Administrative Agent recovers such amount from such Bank or
the Borrower. A notice of the Administrative Agent submitted to any
Bank with respect to amounts owing under this Section 2.13(a) shall be
conclusive, absent manifest error. If such amount is so made available,
such payment to the Administrative Agent shall constitute such Bank's
Revolving Loan on the Borrowing Date for all purposes of this
Agreement. If such amount is not made available to the Administrative
Agent on the next Business Day following such Borrowing Date, the
Administrative Agent may notify the Borrower of such failure to fund
and, upon demand by the Administrative Agent, the Borrower shall pay
such amount to the Administrative Agent for the Administrative Agent's
account, together with interest thereon for each day elapsed since such
Borrowing Date, at a rate per annum equal to the interest rate
applicable at the time to the Revolving Loans comprising such
Borrowing.
(b) The failure of any Bank to make any Revolving Loan on any
Borrowing Date shall not relieve any other Bank of any obligation
hereunder to make a Revolving Loan on such Borrowing Date, but no Bank
shall be responsible for the failure of any other Bank to make the
Revolving Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, etc.
(a) If, other than as expressly provided elsewhere herein, any
Bank shall obtain on account of the Obligations owing to it any payment
(whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Revolving Commitment Percentage
of payments on account of the respective Obligations of the same kind
obtained by all the Banks entitled thereto, such Bank shall forthwith
(i) notify the Administrative Agent of such fact, and (ii) purchase
from the other such Banks such participations in such Obligations made
by them as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of them; provided, however, that
if all or any portion of such excess payment is thereafter recovered
from the purchasing Bank, such purchase shall to that extent be
rescinded and each other such Bank shall repay to the purchasing Bank
the purchase price paid therefor, together with
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an amount equal to such paying Bank's Revolving Commitment Percentage
(according to the proportion of (A) the amount of such paying Bank's
required repayment to (B) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The
Administrative Agent will keep records (which shall be conclusive and
binding in the absence of manifest error) of participations purchased
pursuant to this Section 2.14 and will in each case notify the Banks
following any such purchases.
(b) The Borrower agrees that any Bank so
purchasing a participation from another Bank pursuant to this Section
2.14 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off, but subject to
Section 12.09) with respect to such participation as fully as if such
Bank were the direct creditor of the Borrower in the amount of such
participation.
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2.15 Security and Guaranties.
(a) All Obligations of the Borrower, Holdings and the
Subsidiary Guarantors under this Agreement and all other Loan Documents
to which they are a party shall be secured in accordance with the
Collateral Documents.
(b) All Obligations of the Borrower under this Agreement and
all other Loan Documents to which it is a party shall be
unconditionally guaranteed by Holdings pursuant to Article X and by the
Subsidiary Guarantors pursuant to the Subsidiary Guaranty.
ARTICLE III.
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility.
(a) On the terms and conditions set forth herein, (i) each
Issuing Bank agrees, (A) from time to time, on any Business Day during
the period from the Closing Date to the date which is 30 days prior to
the Revolving Termination Date to issue (x) irrevocable sight standby
Letters of Credit (each such standby Letter of Credit, a "Standby
Letter of Credit") for the account of the Borrower and (y) irrevocable
sight commercial Letters of Credit (each such commercial Letter of
Credit, a "Trade Letter of Credit" and each such Trade Letter of Credit
and each Standby Letter of Credit, a "Letter of Credit") for the
account of the Borrower, and to amend or renew Letters of Credit
previously issued by it, in accordance with Sections 3.02(c) and
3.02(d), and (B) to honor drafts under the Letters of Credit; and (ii)
the Banks severally agree to participate in Letters of Credit issued
for the account of the Borrower; provided, however, that no Issuing
Bank shall issue any Letter of Credit if as of the date of, and after
giving effect to, the issuance of such Letter of Credit, (x) the
aggregate amount of all Letter of Credit Obligations (exclusive of
unpaid drawings under any Letter of Credit which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) plus the aggregate principal amount of
all Revolving Loans shall exceed the Aggregate Revolving Commitment, or
(y) the Letter of Credit Obligations (exclusive of unpaid drawings
under any Letter of Credit which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) shall exceed the Letter of Credit Commitment. All
Letters of Credit shall be denominated in Dollars. Notwithstanding
anything to the contrary contained herein, BankBoston, N.A. shall be
the Issuing Bank only in respect of the Existing Letter of Credit and
with the Existing Letter of Credit being deemed issued for all purposes
of this Agreement on the Closing Date.
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<PAGE>
(b) No Issuing Bank shall be under any obligation to issue any
Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority shall by its terms purport to enjoin or restrain
such Issuing Bank from issuing such Letter of Credit, or any
Requirement of Law applicable to such Issuing Bank or any
request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over such
Issuing Bank shall prohibit, or request that such Issuing Bank
refrain from, the issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon such
Issuing Bank with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which such
Issuing Bank is not otherwise compensated hereunder) not in
effect on the Closing Date or shall impose upon such Issuing
Bank any unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which such Issuing Bank in
good faith deems material to it;
(ii) such Issuing Bank has received written notice
from the Required Banks, the Administrative Agent or the
Borrower on or prior to the Business Day prior to the
requested date of issuance of such Letter of Credit, that one
or more of the applicable conditions contained in Article V is
not then satisfied;
(iii) the expiry date of any requested Letter of
Credit (x) is more than (A) in the case of Standby Letters of
Credit, one year after the date of issuance or (B) in the case
of Trade Letters of Credit, 180 days after the date of
issuance, unless (in each case) the Required Banks and such
Issuing Bank have approved such expiry date in writing or (y)
is later than the 30th day prior to the Revolving Termination
Date;
(iv) any requested Letter of Credit is not in form
and substance acceptable to such Issuing Bank, or the
issuance, of a Letter of Credit shall violate any applicable
policies of such Issuing Bank; or
(v) such Letter of Credit is in a face amount less
than $100,000.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the irrevocable
written request of the Borrower received by the respective Issuing Bank
(with a copy sent by the Borrower to the Administrative Agent) at least
five days (or such shorter time as such Issuing Bank may agree in a
particular instance in its sole discretion) prior to the proposed date
of issuance. Each such request for issuance of a Letter of Credit shall
be by facsimile, confirmed immediately in an original writing, in the
form of a Letter of Credit Application, and shall specify in form and
detail satisfactory to such Issuing Bank: (i) the proposed date of
issuance of the Letter of Credit (which shall be a Business Day); (ii)
the face amount of the Letter of Credit; (iii) the expiry date of the
Letter of Credit; (iv) the name and address of the beneficiary thereof;
(v) the documents to be presented by
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the beneficiary of the Letter of Credit in case of any drawing
thereunder; (vi) the full text of any certificate to be presented by
the beneficiary in case of any drawing thereunder; and (vii) such other
matters as the Issuing Bank may reasonably require.
(b) From time to time while a Letter of Credit is outstanding
and prior to the Revolving Termination Date, such Issuing Bank will,
upon the written request of the Borrower received by the respective
Issuing Bank (with a copy sent by the Borrower to the Administrative
Agent) at least five days (or such shorter time as such Issuing Bank
may agree in a particular instance in its sole discretion) prior to the
proposed date of amendment, amend any Letter of Credit issued by it.
Each such request for amendment of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, made in the
form of a Letter of Credit Amendment Application and shall specify in
form and detail satisfactory to such Issuing Bank: (i) the Letter of
Credit to be amended; (ii) the proposed date of amendment of the Letter
of Credit (which shall be a Business Day); (iii) the nature of the
proposed amendment; and (iv) such other matters as such Issuing Bank
may reasonably require. The respective Issuing Bank shall be under no
obligation to amend any Letter of Credit if: (A) such Issuing Bank
would have no obligation at such time to issue such Letter of Credit in
its amended form under the terms of this Agreement; or (B) the
beneficiary of any such Letter of Credit does not accept the proposed
amendment to the Letter of Credit.
(c) The Administrative Agent will promptly notify the Banks of
the issuance of any Letter of Credit.
(d) Each Issuing Bank and the Banks agree
that, while a Letter of Credit is outstanding and prior to the
Revolving Termination Date, at the option of the Borrower and upon the
written request of the Borrower received by such Issuing Bank (with a
copy sent by the Borrower to the Agent) at least five days (or such
shorter time as such Issuing Bank may agree in a particular instance in
its sole discretion) prior to the proposed date of notification of
renewal, such Issuing Bank shall be entitled to authorize the automatic
renewal of any Letter of Credit issued by it. Each such request for
renewal of a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, in the form of a Letter of Credit
Amendment Application, and shall specify in form and detail
satisfactory to such Issuing Bank: (i) the Letter of Credit to be
renewed; (ii) the proposed date of notification of renewal of the
Letter of Credit (which shall be a Business Day); (iii) the revised
expiry date of the Letter of Credit; and (iv) such other matters as
such Issuing Bank may reasonably require. No Issuing Bank shall be
under any obligation to renew any Letter of Credit if such Issuing Bank
would have no obligation at such time to issue or amend such Letter of
Credit in its renewed form under the terms of this Agreement. If any
outstanding Standby Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice
from the respective Issuing Bank that such Standby Letter of Credit
shall not be renewed, and if at the time of renewal such Issuing Bank
would be entitled to authorize the automatic renewal of such Standby
Letter of Credit in accordance with this Section 3.02(d) upon the
request of the Borrower but such Issuing Bank shall not have received
any Letter of Credit Amendment
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Application from the Borrower with respect to such renewal or other
written direction by the Borrower with respect thereto, such Issuing
Bank shall nonetheless be permitted to allow such Standby Letter of
Credit to be renewed, and the Borrower and the Banks hereby authorize
such renewal, and, accordingly, such Issuing Bank shall be deemed to
have received a Letter of Credit Amendment Application from the
Borrower requesting such renewal.
(e) This Agreement shall control in the
event of any conflict with any Letter of Credit Related Document (other
than any Letter of Credit).
(f) Each Issuing Bank will also deliver to
the Administrative Agent, concurrently or promptly following its
delivery of a Letter of Credit, or amendment to or renewal of a Letter
of Credit, to an advising bank or a beneficiary, a true and complete
copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit.
3.03 Participations, Drawings and Reimbursements.
(a) Immediately upon the issuance of each Letter of Credit,
each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the respective Issuing Bank a
participation in such Letter of Credit and each drawing thereunder in
an amount equal to the product of (i) the Revolving Commitment
Percentage of such Bank times (ii) the maximum amount available to be
drawn under such Letter of Credit and the amount of such drawing,
respectively. For purposes of Section 2.10(a), each issuance of a
Letter of Credit shall be deemed to utilize the Revolving Commitment of
each Bank by an amount equal to the amount of such participation.
(b) In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, the respective
Issuing Bank will promptly notify the Borrower. The Borrower shall
reimburse the respective Issuing Bank prior to 2:00 p.m. (New York City
time), on the Business Day immediately following each date that any
amount is paid by such Issuing Bank under any Letter of Credit (each
such date on which any amount is so paid by such Issuing Bank, a
"Disbursement Date"), in an amount equal to the amount so paid by such
Issuing Bank. In the event the Borrower shall fail to reimburse the
respective Issuing Bank for the full amount of any drawing under any
Letter of Credit by 2:00 p.m. (New York City time) on the Business Day
immediately following the respective Disbursement Date, such Issuing
Bank will promptly notify the Administrative Agent and the
Administrative Agent will promptly notify each Bank thereof, and the
Borrower shall be deemed to have requested that Revolving Loans
consisting of Base Rate Loans be made by the Banks (and hereby
irrevocably consents to such deemed request) pursuant to Section 2.01
to be disbursed on the Business Day immediately following the
respective Disbursement Date under such Letter of Credit. Any notice
given by the respective Issuing Bank or the Administrative Agent
pursuant to this Section 3.03(b) may be oral if immediately confirmed
in writing (including by
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facsimile); provided, however, that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of
such notice.
(c) Each Bank shall upon receipt of any notice pursuant to
Section 3.03(b) make available to the Administrative Agent for the
account of the respective Issuing Bank an amount in Dollars and in
immediately available funds equal to its Revolving Commitment
Percentage of the amount of the drawing, whereupon the Banks shall
(subject to Section 3.03(d)) each be deemed to have made a Revolving
Loan consisting of a Base Rate Loan to the Borrower in that amount. If
any Bank so notified shall fail to make available to the Administrative
Agent for the account of the respective Issuing Bank the amount of such
Bank's Revolving Commitment Percentage of the amount of the drawing by
no later than 2:00 p.m. (New York City time) on the Business Day
immediately following the respective Disbursement Date, then interest
shall accrue on such Bank's obligation to make such payment, from the
Business Day immediately following the respective Disbursement Date to
the date such Bank makes such payment, at a rate per annum equal to (i)
the Federal Funds Rate in effect from time to time during the period
commencing on the later of the Business Day immediately following the
respective Disbursement Date and the date such Bank receives notice of
the Disbursement Date prior to 2:00 p.m. (New York City time) on such
date and ending on the date three Business Days thereafter, and (ii)
thereafter at the Base Rate as in effect from time to time plus the
Applicable Margin for Base Rate Loans. The Administrative Agent will
promptly give notice of the occurrence of the Disbursement Date, but
failure of the Administrative Agent to give any such notice on the
Disbursement Date or in sufficient time to enable any Bank to effect
such payment on such date shall not relieve such Bank from its
obligations under this Section 3.03.
(d) With respect to any unreimbursed drawing which is not
converted into Revolving Loans consisting of Base Rate Loans to the
Borrower in whole or in part, because of the Borrower's failure to
satisfy the conditions set forth in Section 5.02 or for any other
reason, the Borrower shall be deemed to have incurred from the
respective Issuing Bank a Letter of Credit Borrowing in the amount of
such drawing, which Letter of Credit Borrowing shall be due and payable
on demand (together with interest) and shall bear interest from the
respective Disbursement Date at a rate per annum equal to the Base
Rate, plus the Applicable Margin for Base Rate Loans, plus in the case
of any Letter of Credit Borrowing outstanding after the Business Day
immediately following the respective Disbursement Date, 2% per annum,
and each Bank's payment to the respective Issuing Bank pursuant to
Section 3.03(c) shall be deemed payment in respect of its participation
in such Letter of Credit Borrowing.
(e) Each Bank's obligation in accordance with this Agreement
to make the Revolving Loans or fund its participation in any Letter of
Credit Borrowing, as contemplated by this Section 3.03, as a result of
a drawing under a Letter of Credit shall be absolute and unconditional
and without recourse to the respective Issuing Bank and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
defense or other right which such Bank may have against such Issuing
Bank, the Borrower or any
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other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse
Effect; or (iii) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
3.04 Repayment of Participations.
(a) Upon (and only upon) receipt by the Administrative Agent
for the account of the respective Issuing Bank of funds from the
Borrower (i) in reimbursement of any payment made by such Issuing Bank
under the Letter of Credit with respect to which any Bank has paid the
Administrative Agent for the account of such Issuing Bank for such
Bank's participation in the Letter of Credit pursuant to Section 3.03,
or (ii) in payment of interest on amounts described in clause (i), the
Administrative Agent will pay to each Bank, in the same funds as those
received by the Administrative Agent for the account of such Issuing
Bank, the amount of such Bank's Revolving Commitment Percentage of such
funds, and such Issuing Bank shall receive the amount of the Revolving
Commitment Percentage of such funds of any Bank that did not so pay the
Administrative Agent for the account of the Issuing Bank.
(b) If the Administrative Agent or any Issuing Bank is
required at any time to return to the Borrower, or to a trustee,
receiver, liquidator, custodian, or any similar official in any
Insolvency Proceeding, any portion of the payments made by the Borrower
to the Administrative Agent for the account of such Issuing Bank
pursuant to Section 3.04(a) in reimbursement of a payment made under
the Letter of Credit or interest or fee thereon, each Bank shall, on
demand of the Administrative Agent, forthwith return to the
Administrative Agent or such Issuing Bank the amount of its Revolving
Commitment Percentage of any amounts so returned by the Administrative
Agent or such Issuing Bank plus interest thereon from the date such
demand is made to the date such amounts are returned by such Bank to
the Administrative Agent or such Issuing Bank, at a rate per annum
equal to the Federal Funds Rate in effect from time to time.
3.05 Role of the Issuing Bank.
(a) Each Bank and the Borrower agree that, in paying any
drawing under a Letter of Credit, no Issuing Bank shall have any
responsibility to obtain any document (other than any sight draft and
certificates expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any
such document.
(b) No Issuing Bank nor any of the respective correspondents,
participants or assignees of such Issuing Bank shall be liable to any
Bank for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Required Banks; (ii) any action
taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any Letter of Credit Related Document.
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(c) The Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of
any Letter of Credit. No Issuing Bank nor any of the respective
correspondents, participants or assignees of such Issuing Bank, shall
be liable or responsible for any of the matters described in clauses
(i) through (vii) of Section 3.06; provided, however, that the Borrower
may have a claim against such Issuing Bank, and such Issuing Bank may
be liable to the Borrower, to the extent, but only to the extent, of
any direct, as opposed to consequential or exemplary, damages suffered
by the Borrower which the Borrower proves were caused by such Issuing
Bank's willful misconduct or gross negligence or such Issuing Bank's
willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a
Letter of Credit. In furtherance and not in limitation of the
foregoing: (i) each Issuing Bank may accept documents that appear on
their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary;
and (ii) such Issuing Bank shall not be responsible for the validity or
sufficiency of any instrument transferring or assigning or purporting
to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason.
3.06 Obligations Absolute. The obligations of the Borrower under this
Agreement and any Letter of Credit Related Document to reimburse the respective
Issuing Bank for a drawing under a Letter of Credit, and to repay any Letter of
Credit Borrowing and any drawing under a Letter of Credit converted into
Revolving Loans, shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and each such other
Letter of Credit Related Document under all circumstances, including the
following:
(i) any lack of validity or enforceability of this Agreement
or any Letter of Credit Related Document;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Borrower in
respect of any Letter of Credit or any other amendment or waiver of or
any consent to departure from all or any of the Letter of Credit
Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower or any Subsidiary of the Borrower may have at
any time against any beneficiary or any transferee of any Letter of
Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the respective Issuing Bank or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the Letter of Credit Related Documents or any
unrelated transaction;
(iv) any draft, demand, certificate or 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; or any loss or delay in the
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transmission or otherwise of any document required in order to make a
drawing under any Letter of Credit;
(v) any payment by the respective Issuing Bank under any
Letter of Credit against presentation of a draft or certificate that
does not strictly comply with the terms of any Letter of Credit; or any
payment made by the respective Issuing Bank under any Letter of Credit
to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the obligations of
the Borrower in respect of any Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to, or
a discharge of, the Borrower or a guarantor.
3.07 Cash Collateral Pledge. Upon (a) the request of the Administrative
Agent, (i) if any Issuing Bank has honored any full or partial drawing request
on any Letter of Credit and such drawing has resulted in a Letter of Credit
Borrowing hereunder, or (ii) if, as of the Revolving Termination Date, any
Letters of Credit may for any reason remain outstanding and partially or wholly
undrawn, or (b) the occurrence of the circumstances described in Section 2.07(a)
requiring the Borrower to Cash Collateralize Letters of Credit, then the
Borrower shall immediately Cash Collateralize the Letter of Credit Obligations
in an amount equal to such Letter of Credit Obligations (or in the case of
clause (ii) above, the excess amount required pursuant to Section 2.07(a)) and
such cash will be held as security for all Obligations of the Borrower to the
Banks hereunder in a cash collateral account to be established by the
Administrative Agent, and during the existence of an Event of Default, the
Administrative Agent may, upon the request of the Required Banks, apply such
amounts so held to the payment of such outstanding Obligations.
3.08 Letter of Credit Fees.
(a) The Borrower shall pay to the Administrative Agent for the
account of each Bank a letter of credit fee with respect to the Letters
of Credit computed on the daily maximum amount available to be drawn of
the outstanding Letters of Credit, on each Interest Payment Date for
Base Rate Loans based upon Letters of Credit outstanding for the
previous three-month period. The letter of credit fee shall be equal to
(i) for the period from the Closing Date to the First Adjustment Date,
2.500% per annum and (ii) from and after the First Adjustment Date, for
each period commencing on an Adjustment Date to the next succeeding
Adjustment Date, the rate per annum set forth below opposite the
relevant Level of Consolidated Total Leverage Ratio determined as at
the end of the last fiscal quarter ended prior to the first day of such
period:
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<TABLE>
<CAPTION>
Consolidated Total Leverage Ratio
<S> <C>
Level I 1.250%
Level II 1.625%
Level III 1.875%
Level IV 2.125%
Level V 2.250%
Level VI 2.500%
</TABLE>
provided, however, that if by the day for determining any Adjustment
Date Holdings has failed to deliver a Total Leverage Ratio Certificate
as at the end of the fiscal quarter ended immediately prior to such
Adjustment Date, the letter of credit fee for the next succeeding
period beginning on such Adjustment Date to the next succeeding
Adjustment Date shall be computed as if the Consolidated Total Leverage
Ratio were at Level VI; provided further, however, to the extent that
Holdings thereafter delivers a Total Leverage Ratio Certificate in
respect of such preceding fiscal quarter during such succeeding period,
the letter of credit fee for the remainder of such succeeding period
shall be computed at the rate prescribed in the table above in this
Section 3.08(a). In addition, at any time that a Specified Default
shall exist, the letter of credit fee shall be computed as if the
Consolidated Total Leverage Ratio were at Level VI. Such letter of
credit fee shall be due and payable in arrears on each Interest Payment
Date for Base Rate Loans.
(b) The Borrower shall pay to such Issuing Bank a letter of
credit fronting fee for each Letter of Credit issued by such Issuing
Bank equal to .15% per annum of the face amount of such Letter of
Credit. Such Letter of Credit fronting fee shall be due and payable in
arrears on each Interest Payment Date for Base Rate Loans.
(c) The Borrower shall pay to such Issuing Bank from time to
time on demand the normal issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of such Issuing
Bank relating to letters of credit as from time to time in effect.
3.09 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as most recently published by the International Chamber of
Commerce shall in all respects be deemed a part of this Article III as if
incorporated herein and (unless otherwise expressly provided in the Letters of
Credit) shall apply to the Letters of Credit.
ARTICLE IV.
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
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(a) Subject to Section 4.01(g), any and all payments made by
Holdings and the Borrower to any Bank or the Administrative Agent under
this Agreement shall be made without setoff, counterclaim or other
defense and shall be made free and clear of, and without deduction or
withholding for or on account of, any and all present or future taxes,
levies, imposts, deductions, duties, fees, assessments, charges or
withholdings or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein with respect to such payments, and all
liabilities with respect thereto, excluding, in the case of each Bank
and the Administrative Agent (except as otherwise provided in Section
4.01(c)), as the case may be, such taxes as are imposed on or measured
by such Person's net income or net profits by the jurisdiction under
the laws of which such Person is organized or has its principal office
or in which the Lending Office of such Person is located or any
political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, duties, fees, assessments or other charges,
withholdings and liabilities being hereinafter referred to as "Taxes").
(b) In addition, the Borrower and Holdings shall pay any
present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies which arise from any payment
made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) Subject to Section 4.01(g), the Borrower and Holdings
shall indemnify and hold harmless each Bank and the Administrative
Agent for (i) the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable
under Section 4.01(d) and this Section 4.01(c)) and (ii) the full
amount of all taxes imposed on or measured by the net income or net
profits of such Bank or the Administrative Agent pursuant to the laws
of the jurisdiction in which such Bank or the Administrative Agent is
organized or has its principal office or in which the Lending Office of
such Person is located or under the laws of any political subdivision
or taxing authority of any such jurisdiction in which such Bank or the
Administrative Agent is organized or has its principal office or in
which their Lending Office is located paid by such Bank or the
Administrative Agent as a result of amounts payable by the Borrower
under Section 4.01(d) and this Section 4.01(c), and any liability
(including penalties, interest, additions to tax and expenses) arising
therefrom or with respect thereto, whether or not such taxes or other
liabilities were correctly or legally asserted.
(d) If the Borrower or Holdings shall be required by law to
deduct or withhold any Taxes or Other Taxes from or in respect of any
sum payable hereunder to any Bank or the Administrative Agent, then,
subject to Section 4.01(g):
(i) the sum payable shall be increased as necessary
so that after making all required deductions (including
deductions applicable to additional sums payable under this
Section 4.01(d)) such Bank or the Administrative Agent,
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as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings
been made;
(ii) the Borrower or Holdings shall make such
deductions; and
(iii) the Borrower or Holdings shall pay the full
amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(e) Within 30 days after the date of any payment by the
Borrower or Holdings of Taxes or Other Taxes is due pursuant to
applicable law, such Person shall furnish to the Administrative Agent,
at its address referred to in Section 12.02, the original or a
certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Administrative Agent.
(f) Each Bank which is organized under the laws of a
jurisdiction outside the United States agrees that:
(i) it shall, no later than the Closing Date (or, in
the case of a Bank which becomes a party hereto pursuant to
Section 12.07 after the Closing Date, the date upon which such
Bank becomes a party hereto) (A) deliver to the Borrower and
the Administrative Agent two accurate and complete signed
originals of Internal Revenue Service Form 4224 or any
successor thereto ("Form 4224"), or two accurate and complete
signed originals of Internal Revenue Service Form 1001 or any
successor thereto ("Form 1001"), as appropriate, in each case
indicating that such Bank is on the date of delivery thereof
entitled to receive all payments under this Agreement free
from withholding of United States Federal income tax or (B) if
the Bank is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and cannot deliver either Form 1001
or 4224 pursuant to clause (A) above, deliver to the Borrower
and the Administrative Agent (x) a certificate substantially
in the form of Exhibit O (any such certificate, a "Section
4.01(f)(i) Certificate") and (y) two accurate and complete
original signed copies of Internal Revenue Service Form W-8 or
any successor thereto ("Form W-8") certifying to such Bank's
entitlement to a complete exemption from United States
withholding tax with respect to payments of interest to be
made under this Agreement;
(ii) if at any time such Bank makes any change in its
place of incorporation or fiscal residence necessitating a new
Form 4224 or Form 1001 or Form W-8 and a Section 4.01(f)(i)
Certificate, as the case may be, such Bank shall promptly
deliver to the Borrower and the Administrative Agent in
replacement for, or in addition to, the forms previously
delivered by such Bank hereunder, two accurate and complete
signed originals of Form 4224 or Form 1001 or Form W-8 and
Section 4.01(f)(i) Certificate, as appropriate, in each case
indicating that such Bank is on the date of delivery thereof
entitled to receive all payments under this Agreement free
from withholding of United States Federal income tax;
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(iii) it shall, to the extent it is legally entitled
to do so, before or promptly after such Bank makes any change
of a Lending Office or its principal office, or the occurrence
of any event (including the passing of time but excluding any
event mentioned in clause (ii) above) requiring a change in or
renewal of the most recent Form 4224 or Form 1001 or Form W-8
and a Section 4.01(f)(i) Certificate, as the case may be,
previously delivered by such Bank, deliver to the Borrower and
the Administrative Agent two accurate and complete original
signed copies of Form 4224 or Form 1001 or Form W-8 and a
Section 4.01(f)(i) Certificate, as appropriate, in replacement
for the forms previously delivered by such Bank indicating
that such Bank continues to be entitled to receive all
payments under this Agreement free from any withholding of any
United States Federal income tax;
(iv) it shall, to the extent it is legally entitled
to do so, promptly upon the Borrower's or the Administrative
Agent's reasonable request to that effect, deliver to the
Borrower or the Administrative Agent (as the case may be) such
other forms or similar documentation as may be required from
time to time by any applicable law, treaty, rule or regulation
in order to establish such Bank's complete exemption from
withholding on all payments under this Agreement; and
(v) without limiting or restricting any Bank's right
to increased amounts under Section 4.01(d) from the Borrower
and Holdings upon satisfaction of such Bank's obligations
under the provisions of this Section 4.01(f), if such Bank is
entitled to a reduction in the applicable withholding tax, the
Administrative Agent may (but shall not be obligated to)
withhold from any interest payable to such Bank an amount
equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other administrative
documentation required by clause (i) are not delivered to the
Administrative Agent, then the Administrative Agent shall
withhold from any interest payment to any Bank not providing
such forms or other documentation, an amount equivalent to the
applicable withholding tax and in addition, the Administrative
Agent shall also withhold against periodic payments other than
interest payments to the extent United States withholding tax
is not eliminated by obtaining Form 4224 or Form 1001 or Form
W-8 and a Section 4.01(f)(i) Certificate, as appropriate. The
Borrower shall indemnify and hold harmless the Administrative
Agent and each of its officers, directors, employees, counsel,
agents and attorney-in-fact, on an after tax basis, from and
against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses
or disbursements (including Attorney Costs) of any kind
whatsoever incurred as a result of or in connection with the
Administrative Agent's failure to withhold as provided
pursuant to the preceding sentence, unless such failure
constitutes gross negligence or willful misconduct of the
Administrative Agent itself as the same is determined by a
final judgment of a court of competent jurisdiction and the
obligations in this sentence shall survive payment of all
other Obligations.
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(g) Neither the Borrower nor Holdings will be required to pay
any additional amounts in respect of Taxes imposed by the United States
Federal government pursuant to Sections 4.01(c) or 4.01(d) to any Bank
if and to the extent the obligation to pay such additional amounts
would not have arisen but for a failure by such Bank to comply with its
obligations under Section 4.01(f).
(h) Each Bank agrees that it shall, at any
time upon reasonable advance request in writing by the Borrower or the
Administrative Agent, promptly deliver such certification or other
documentation as may be required under the law or regulation in any
applicable jurisdiction and which such Bank is entitled to submit to
avoid or reduce withholding taxes on amounts to be paid by the Borrower
or Holdings and received by such Bank pursuant to this Agreement or any
other Loan Document.
(i) Subject to Section 4.01(g), the Borrower and Holdings
shall pay any additional amounts and indemnify each Bank and the
Administrative Agent, to the extent required by this Section 4.01
within 30 days after receipt of written request from such Bank or the
Administrative Agent thereof accompanied by a written statement
describing in reasonable detail the Taxes or Other Taxes or other
additional amounts that are the subject of the basis for such indemnity
and the computation of the amount payable.
(j) If the Borrower or Holdings is required to pay additional
amounts to any Bank or the Administrative Agent pursuant to Section
4.01(d), then such Bank shall, upon the Borrower's request, use its
reasonable best efforts (consistent with policy considerations of such
Bank) to change the jurisdiction of its Lending Office so as to reduce
or eliminate any such additional payment which may thereafter accrue if
such change in the sole judgment of such Bank is not otherwise
disadvantageous to such Bank.
(k) Each Bank agrees that it will (i) take all reasonable
actions reasonably requested by Holdings or the Borrower (consistent
with policy considerations by such Bank) to maintain all exemptions, if
any, available to it from withholding taxes (whether available by
treaty or existing administrative waiver), and (ii) to the extent
reasonable, otherwise cooperate with Holdings or the Borrower to
minimize any amounts payable by Holdings or the Borrower under this
Section 4.01, in any case described in the preceding clauses (i) and
(ii), however, only if such action or cooperation is not
disadvantageous to such Bank in the sole judgment of such Bank.
4.02 Illegality.
(a) If any Bank shall determine that (i) the introduction of
any Requirement of Law, or any change in any Requirement of Law, or in
the interpretation or administration thereof, has made it unlawful, or
(ii) any central bank or other Governmental Authority has asserted that
it is unlawful for such Bank or its Lending Office to make a Eurodollar
Loan or to convert any Base Rate Loan to a Eurodollar Loan, then, on
notice thereof by such Bank to the Borrower through the Administrative
Agent, the obligation of such Bank to make or convert any such
Eurodollar Loans shall be suspended until such Bank
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shall have notified the Administrative Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.
(b) If a Bank shall determine that it is unlawful to maintain
any Eurodollar Loan, the Borrower shall, unless otherwise permitted
under paragraph (c) below, prepay in full all Eurodollar Loans of such
Bank then outstanding, together with interest accrued thereon, either
on the last day of the Interest Period thereof if such Bank may
lawfully continue to maintain such Eurodollar Loans to such day, or
immediately, if the Bank may not lawfully continue to maintain such
Eurodollar Loans, together with any amounts required to be paid in
connection therewith pursuant to Section 4.04.
(c) If the Borrower is required to prepay any Eurodollar Loan
immediately, then concurrently with such prepayment, the Borrower shall
borrow from the affected Bank, in the aggregate amount of such
repayment, Base Rate Loans.
(d) Before giving any notice to the Administrative Agent
pursuant to this Section 4.02, the affected Bank shall designate a
different Lending Office with respect to its Eurodollar Loans if such
designation will avoid the need for giving such notice or making such
demand and will not, in the judgment of such Bank, be illegal,
inconsistent with the policies of such Bank or otherwise
disadvantageous to such Bank.
4.03 Increased Costs and Reduction of Return.
(a) If any Bank or any Issuing Bank shall determine that, due
to either (i) the introduction of or any change in or in the
interpretation or administration of any law or regulation (other than
any law or regulation relating to taxes, including those relating to
Taxes or Other Taxes) after the Closing Date or (ii) the compliance
with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law) made
after the Closing Date, there shall be any increase in the cost to such
Bank of agreeing to make or making, funding or maintaining any
Eurodollar Loans or participating in any Letter of Credit Obligations,
or any increase in the cost to such Issuing Bank of agreeing to issue,
issuing or maintaining any Letter of Credit or of agreeing to make or
making, funding or maintaining any unpaid drawing under any Letter of
Credit, then the Borrower shall be liable for, and shall from time to
time, within ten days of demand therefor by such Bank or such Issuing
Bank, as the case may be (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account
of such Bank or such Issuing Bank, additional amounts as are sufficient
to compensate such Bank or the Issuing Bank for such increased costs.
(b) If any Bank or any Issuing Bank shall have determined that
(i) the introduction of any Capital Adequacy Regulation after the
Closing Date, (ii) any change in any Capital Adequacy Regulation after
the Closing Date, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank
or other Governmental Authority charged with the interpretation or
administration thereof after the Closing Date, or (iv) compliance by
any Bank (or its Lending Office) or any Issuing Bank, as the case may
be, or any corporation controlling such Bank or such
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Issuing Bank, as the case may be, with any Capital Adequacy Regulation
adopted after the Closing Date, affects or would affect the amount of
capital required or expected to be maintained by such Bank or such
Issuing Bank or any corporation controlling such Bank or such Issuing
Bank and (taking into consideration such Bank's, such Issuing Bank's or
such corporation's policies with respect to capital adequacy and such
Bank's, such Issuing Bank's or corporation's desired return on capital)
determines that the amount of such capital is (or is required to be)
increased as a consequence of any of its Revolving Commitment,
Revolving Loans, participations in Letters of Credit, or obligations
under this Agreement, then, within ten days of demand by such Bank or
such Issuing Bank (with a copy to the Administrative Agent), the
Borrower shall be liable for and shall immediately pay to such Bank or
such Issuing Bank, from time to time as specified by such Bank or such
Issuing Bank, additional amounts sufficient to compensate such Bank or
such Issuing Bank for such increase.
4.04 Funding Losses. The Borrower agrees to reimburse each Bank and to
hold each Bank harmless from any loss, cost or expense (other than loss of
margin) which such Bank may sustain or incur as a consequence of:
(a) any failure by the Borrower to make any payment of
principal of any Eurodollar Loan (including payments made after any
acceleration thereof) when due;
(b) any failure by the Borrower to borrow a Eurodollar Loan or
continue a Eurodollar Loan or convert a Base Rate Loan to a Eurodollar
Loan after the Borrower has given (or is deemed to have given) a Notice
of Borrowing or a Notice of Conversion/ Continuation, as the case may
be;
(c) any failure by the Borrower to make any prepayment of a
Eurodollar Loan after the Borrower has given a notice in accordance
with Section 2.06; or
(d) any payment or prepayment (including pursuant to Section
2.07, Section 2.08 or after acceleration thereof) of a Eurodollar Loan
for any reason whatsoever on a day which is not the last day of the
Interest Period with respect thereto;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain any Eurodollar Loan hereunder or from fees
payable to terminate the deposits from which such funds were obtained.
4.05 Inability to Determine Rates. Notwithstanding any provisions
herein to the contrary, if, in relation to any proposed Eurodollar Loan, (a) the
Administrative Agent shall have reasonably determined (which determination shall
be conclusive and binding upon all parties hereto) that by reason of
circumstances affecting the interbank markets adequate and fair means do not
exist for ascertaining the Eurodollar Rate to be applicable to such Eurodollar
Loan or (b) the Administrative Agent shall have received notice from the
Required Banks that LIBOR determined or to be determined for any Interest Period
will not adequately and fairly reflect the cost to such Banks (as conclusively
certified by such Banks in writing to the Administrative Agent and the Borrower)
of making or maintaining their affected Loans during such affected
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Interest Period, then, the obligation of the Banks to make, continue or maintain
Eurodollar Loans or to convert Base Rate Loans into Eurodollar Loans shall be
suspended until the Administrative Agent upon the instruction of the Required
Banks revokes such notice in writing. If, notwithstanding the provisions of this
Section 4.05, any Bank has made available to the Borrower its Commitment
Percentage of any such proposed Eurodollar Loan, then such Eurodollar Loan shall
immediately be converted into a Base Rate Loan.
4.06 Increased Costs on Eurodollar Loans. At any time that any Bank
shall incur increased costs or reductions in the amounts received or receivable
hereunder with respect to any Eurodollar Loans (other than any increased cost or
reduction in the amount received or receivable resulting from the imposition of
or a change in the rate of net income taxes or similar charges) because of (x)
any change since the date of this Agreement in any Requirement of Law or
governmental guideline, order or request (whether or not having the force of
law), or in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation, guideline, order
or request (such as, for example, but not limited to, a change in official
reserve requirements, but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of LIBOR) and/or (y)
other circumstances affecting such Bank, the interbank Eurodollar market or the
position of such Bank in such market, then the Borrower shall pay to each such
Bank, upon written demand therefor (accompanied by the written notice referred
to in Section 4.07 below), such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank in its sole discretion shall determine) as shall be required to compensate
such Bank for such increased costs or reductions in amounts received or
receivable hereunder.
4.07 Certificates of Banks. Any Bank or any Issuing Bank claiming
reimbursement or compensation pursuant to this Article IV shall deliver to the
Borrower or Holdings, as applicable (with a copy to the Administrative Agent) a
certificate setting forth in reasonable detail (including the basis therefor and
the calculation thereof) the amount payable to such Person hereunder and such
certificate shall be conclusive and binding on the Borrower or Holdings in the
absence of manifest error. In determining any amounts payable under Section
4.03(b), each Bank or each Issuing Bank, as the case may be, shall act
reasonably and in good faith and will use averaging and attribution methods
which are reasonable.
4.08 Change of Lending Office, Replacement Bank, etc.
(a) Each Bank agrees that upon the occurrence of an event
giving rise to the operation of Section 4.02, 4.03 or 4.06 with respect
to such Bank, it will if so requested by the Borrower, use reasonable
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Lending Office for any Revolving
Loans affected by such event with the object of avoiding the
consequence of the event giving rise to the operation of such section;
provided, however, that such designation would not, in the sole
judgment of such Bank, be otherwise disadvantageous to such Bank.
Nothing in this Section 4.08(a) shall affect or postpone any of the
obligations of the Borrower or the right of any Bank provided in
Section 4.02, 4.03 or 4.06.
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(b) Notwithstanding anything to the contrary contained herein
or in any other Loan Document, (x) upon the occurrence of any event
that obligates the Borrower or Holdings to pay any amount under Section
4.01 or giving rise to the operation of Section 4.02, 4.03 or 4.06 with
respect to such Bank or (y) as provided in Section 12.01(b) in the case
of certain refusals by a Bank to consent to certain proposed changes,
waivers, discharges or terminations with respect to this Agreement
which have been approved by the Required Banks, the Borrower shall have
the right, if no Default or Event of Default then exists or will exist
immediately after giving effect to the respective replacement, to
replace such Bank (the "Replaced Bank") by designating another Bank or
an Eligible Assignee (such Bank or Eligible Assignee being herein
called a "Replacement Bank") to which such Replaced Bank shall assign,
in accordance with Section 12.07 and without recourse to or warranty
by, or expense to, such Replaced Bank, any of the rights and
obligations of such Replaced Bank hereunder (except for such rights as
survive repayment of the Revolving Loans), and, upon such assignment,
such Replaced Bank shall no longer be a party hereto or have any rights
hereunder and such Replacement Bank shall succeed to the rights and
obligations of such Replaced Bank hereunder. The Borrower shall pay to
such Replaced Bank in same day funds on the date of replacement all
interest, fees and other amounts then due and owing such Replaced Bank
by the Borrower hereunder to and including the date of replacement,
including, without limitation, costs incurred under Sections 4.01,
4.02, 4.03 or 4.06.
4.09 Survival. The agreements and obligations of Holdings and the
Borrower in this Article IV shall survive the payment of all other Obligations.
ARTICLE V.
CONDITIONS PRECEDENT
5.01 Conditions to Revolving Loans and Letters of Credit on the Closing
Date. The occurrence of the Closing Date, the obligation of each Bank to make
Revolving Loans hereunder and the obligation of each Issuing Bank to issue
Letters of Credit on the Closing Date is subject to the condition that the
Administrative Agent and the Syndication Agent shall be reasonably satisfied
that the following conditions have been satisfied on or before the Closing Date
and, to the extent applicable, shall have received on or before the date for
making such Revolving Loans and/or issuing such Letters of Credit all of the
following, in form and substance reasonably satisfactory to the Administrative
Agent, the Syndication Agent and each Bank and (except for the instruments or
documents representing Pledged Securities) in sufficient copies for each Bank:
(a) Credit Agreement. This Agreement executed by the Borrower,
Holdings, the Administrative Agent, each Issuing Bank and each of the
Banks (or, in the case of any party as to which an executed counterpart
shall not have been received, receipt by the Administrative Agent in
form satisfactory to it of facsimile or other written confirmation from
such party of execution of a counterpart hereof by such party).
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(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the Board of
Directors of the Borrower approving and authorizing the
execution, delivery and performance by the Borrower of this
Agreement and the other Loan Documents to be delivered by the
Borrower, and authorizing the borrowing of the Revolving Loans
and the issuance of the Letters of Credit, certified as of the
Closing Date by the Secretary or an Assistant Secretary of the
Borrower;
(ii) Copies of the resolutions of the Board of
Directors of Holdings approving and authorizing the execution,
delivery and performance by Holdings of this Agreement
(including the guaranty of the Obligations of the Borrower)
and the other Loan Documents to be delivered by Holdings,
certified by the Secretary or an Assistant Secretary of
Holdings;
(iii) Copies of the resolutions of the Board of
Directors of each Subsidiary Guarantor approving and
authorizing the execution, delivery and performance by such
Subsidiary Guarantor of the Subsidiary Guaranty, the Pledge
Agreement, the Security Agreement and the other Loan Documents
to be delivered by such Subsidiary Guarantor, certified by the
Secretary or an Assistant Secretary of such Subsidiary
Guarantor; and
(iv) Certificates of the Secretary or Assistant
Secretary of Holdings, the Borrower and each Subsidiary
Guarantor certifying the names and true signatures of the
officers of Holdings, the Borrower and such Subsidiary
Guarantor authorized to execute, deliver and perform, as
applicable, this Agreement and all other Loan Documents,
notices, requests and other communications to be delivered
hereunder or thereunder.
(c) Articles of Incorporation; By-laws and Good Standing. Each
of the following documents:
(i) the articles or certificate of incorporation (or
equivalent organizational documents) of Holdings, the Borrower
and each Subsidiary Guarantor as in effect on the Closing
Date, certified by the Secretary of State (or similar,
applicable Governmental Authority) of the State of such Credit
Party's organization as of a recent date and by the Secretary
or Assistant Secretary of Holdings, the Borrower and such
Subsidiary Guarantor as of the Closing Date, and the bylaws
(or equivalent organizational documents) of Holdings, the
Borrower and such Subsidiary Guarantor as in effect on the
Closing Date, certified by the Secretary or Assistant
Secretary of Holdings, the Borrower and each Subsidiary
Guarantor as of the Closing Date;
(ii) a good standing certificate for Holdings, the
Borrower and each Subsidiary Guarantor from the Secretary of
State of the State of such Credit Party's organization and
each state where Holdings, the Borrower and each
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Subsidiary Guarantor is qualified to do business as a foreign
corporation as of a recent date; and
(iii) a bring-down certificate, to the extent
reasonably available, of Holdings, the Borrower and each
Subsidiary Guarantor from the Secretary of State of the State
of such Credit Party's organization, dated the Closing Date.
(d) Subsidiary Guaranty. The Subsidiary Guaranty, duly
executed by each Subsidiary Guarantor.
(e) Pledge Agreement.
(i) The Pledge Agreement, duly executed by each
Credit Party;
(ii) all certificated Pledged Securities (x) endorsed
in blank in the case of promissory notes representing Pledged
Securities and (y) together with an undated stock power
executed in blank in the case of capital stock representing
Pledged Securities; and
(iii) with respect to Pledged Securities, if any,
consisting of book-entry shares, evidence that all actions
described in the Pledge Agreement which are necessary to
create and perfect the security interests pursuant to the
Pledge Agreement in accordance with Articles 8 and 9 of the
UCC have been taken.
(f) Security Agreement.
(i) The Security Agreement, duly executed by each
Credit Party;
(ii) proper Financing Statements (Form UCC-1 or the
equivalent) fully executed for filing under the UCC or other
appropriate filing offices of each jurisdiction as may be
necessary or, in the reasonable opinion of the Administrative
Agent, desirable to perfect the security interests purported
to be created by the Security Agreement;
(iii) certified copies of Requests for Information or
Copies (Form UCC-11), or equivalent reports, listing all
effective financing statements that name any Credit Party or
any of its Subsidiaries as debtor and that are filed in the
jurisdictions referred to in clause (ii) above, together with
copies of such other financing statements that name any Credit
Party or any of its Subsidiaries as debtor (none of which
shall cover the Collateral except to the extent evidencing
Permitted Liens or in respect of which the Administrative
Agent shall have received termination statements (Form UCC-3)
or such other termination statements as shall be required by
local law fully executed for filing);
(iv) evidence of the completion of all other
recordings and filings of, or with respect to, the Security
Agreement as may be necessary or, in the reasonable
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opinion of the Administrative Agent, desirable to perfect the
security interests intended to be created by the Security
Agreement; and
(v) evidence that all other actions necessary or, in
the reasonable opinion of the Administrative Agent, desirable
to perfect and protect the security interests purported to be
created by the Security Agreement have been taken.
(g) Legal Opinions.
(i) An opinion of Jones, Day, Reavis & Pogue, counsel
to Holdings, the Borrower and the Subsidiary Guarantors,
addressed to the Administrative Agent and the Banks,
containing opinions substantially in the form of Exhibit H and
as to such other matters as the Administrative Agent may
reasonably request; and
(ii) An opinion of White & Case LLP, special counsel
to the Administrative Agent and the Banks, containing opinions
substantially in the form of Exhibit I.
(h) Payment of Fees and Expenses. Evidence that all fees,
costs and expenses (including Attorney Costs of the Administrative
Agent and the Syndication Agent) payable by the Borrower on or before
the Closing Date have been paid to the extent then invoiced.
(i) Certificates.
(i) Certificates signed by a Responsible Officer of
Holdings and the Borrower, dated the Closing Date stating
that:
(A) The representations and warranties of
Holdings and the Borrower contained in Article VI and
in the other Loan Documents to which they are a party
are true and correct in all material respects on and
as of such date, as though made on and as of such
date (except to the extent such representations and
warranties expressly relate to an earlier date, in
which case such representations and warranties shall
be true and correct in all material respects as of
such earlier date);
(B) no Default or Event of Default exists or
would result from any Borrowing on the Closing Date;
and
(C) the conditions set forth in paragraphs
(k), (l) and (m)(i) of this Section 5.01 have been
satisfied; and
(ii) Certificates signed by a Responsible Officer of
each of the Subsidiary Guarantors, dated as of the Closing
Date, stating that the representations and warranties of such
Subsidiary Guarantor contained in the
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Subsidiary Guaranty, the Pledge Agreement and the Security
Agreement are true and correct in all material respects on and
as of such date, as though made on and as of such date (except
to the extent such representations and warranties expressly
relate to an earlier date, in which case such representations
and warranties shall be true and correct in all material
respects as of such earlier date).
(j) Solvency Certificate. A solvency certificate from Mr. Anup
Bagaria, Vice President of Holdings in the form of Exhibit N.
(k) Adverse Change. Since September 30, 1997, nothing shall
have occurred (and neither the Administrative Agent, the Syndication
Agent nor the Banks shall have become aware of any facts or conditions
not previously known) which the Administrative Agent, the Syndication
Agent or the Required Banks shall reasonably determine has had, or
could reasonably be expected to have, a Material Adverse Effect.
(l) Governmental and Third Party Approvals. All governmental
and third party approvals and consents necessary in connection with
this Agreement and the other Loan Documents shall have been obtained
and be in full force and effect.
(m) Litigation. There shall be no actions, suits or
proceedings pending or threatened (i) with respect to any Loan Document
or (ii) which the Administrative Agent, the Syndication Agent or the
Required Banks shall reasonably determine could reasonably be expected
to have a Material Adverse Effect.
(n) Shareholders' Agreements, Management Agreements and Tax
Sharing Agreements.
(i) All agreements entered into by Holdings or any of
its Subsidiaries governing the terms and relative rights of
its capital stock and any agreements entered into by
shareholders relating to any such entity with respect to its
capital stock;
(ii) all tax sharing, tax allocation or similar
agreements, if any, entered into by Holdings or any of its
Subsidiaries; and
(iii) all material management and consulting
agreements entered into by Holdings or any of its
Subsidiaries.
(o) Financial Statements.
(i) The Pro Forma Balance Sheet;
(ii) the Projections;
(iii) the audited consolidated financial statements
of each of Old ALM and NLP for their 1995 and 1996 fiscal
years, (x) the unaudited consolidated financial statements
of Old ALM for the seven-month period ended July 31, 1997,
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(y) the unaudited consolidated financial statements of NLP for
the nine-month period ended September 30, 1997 and (z) the
unaudited consolidated financial statements of the Borrower
for the two-month period ended September 30, 1997; and
(iv) a draft of the audited consolidated financial
statements of Holdings for its fiscal year ended December 31,
1997.
(p) Insurance. Evidence of insurance complying with the
requirements of Section 7.05 for the business and properties of
Holdings and its Subsidiaries.
5.02 Conditions to all Borrowings and the Issuance of any Letters of
Credit. The obligation of each Bank to make any Revolving Loan hereunder and the
obligation of each Issuing Bank to issue, renew or amend any Letter of Credit is
subject to the satisfaction of the following conditions precedent on the
relevant Borrowing Date or date of issuance, as the case may be:
(a) Notice. The Administrative Agent shall have received a
Notice of Borrowing; or in the case of any issuance of any Letter of
Credit, the respective Issuing Bank and the Administrative Agent shall
have received a Letter of Credit Application, as required under Section
3.02;
(b) Continuation of Representations and Warranties. The
representations and warranties contained in Article VI and in the other
Loan Documents shall be true and correct in all material respects on
and as of such Borrowing Date or date of issuance (except to the extent
such representations and warranties expressly refer to an earlier date,
in which case they shall be true and correct in all material respects
as of such earlier date);
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Borrowing or issuance of such Letter of
Credit; and
(d) No Material Adverse Effect. Since September 30, 1997, no
events have occurred which, individually or in the aggregate, have had,
or could reasonably be expected to have, a Material Adverse Effect.
(e) Financial Statements. The Administrative Agent and the
Syndication Agent shall have received, and shall be reasonably
satisfied with, the draft of the audited consolidated financial
statements of Holdings for its fiscal year ended December 31, 1997.
Each Notice of Borrowing or Letter of Credit Application submitted by the
Borrower hereunder shall be deemed to constitute a representation and warranty
by Holdings and the Borrower hereunder, as of the date of each such notice or
application and as of the date of each Borrowing that the applicable conditions
in Section 5.01 (with respect to such credit events to occur on the
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Closing Date) and in this Section 5.02 (with respect to credit events to occur
on and after the Closing Date) are satisfied.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
Each of Holdings and the Borrower represents and warrants with respect
to itself and its Subsidiaries to the Administrative Agent, each Issuing Bank
and each Bank as of the Closing Date and as of the date of each Borrowing of
Revolving Loans or issuance, renewal or amendment of each Letter of Credit that:
6.01 Existence and Power. Each of Holdings and each of its
Subsidiaries:
(a) is a corporation, partnership or limited liability
company, as the case may be, duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization;
(b) has the power and authority and has or will have on or
prior to the date required to be obtained all governmental licenses,
authorizations, consents and approvals to execute, deliver and perform
its obligations under the Loan Documents to which it is a party and has
duly executed and delivered each such Loan Document, in each case other
than filings necessary to perfect the security interest in the
Collateral under the Security Agreement (which filings have been made
to the extent that this representation and warranty is made (or deemed
made) after 10 days after the Closing Date);
(c) is duly qualified to do business, and is licensed and in
good standing, under the laws of each jurisdiction where its ownership,
lease or operation of property or the nature or conduct of its business
requires such qualification or license except where the failure so to
qualify, either individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect; and
(d) is in compliance with all Requirements of Law, except to
the extent that the failure to do so, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
6.02 Authorization; No Contravention. The execution, delivery and
performance by each of Holdings and each of its Subsidiaries of any Loan
Document to which such Person is party have been duly authorized by all
necessary corporate, partnership or limited liability company action, as the
case may be, and do not and will not:
(a) contravene the terms of any of such Person's charter or
by-laws (or equivalent organizational documents);
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(b) conflict with or result in any breach or contravention of,
or the creation or imposition of (or the obligation to create or
impose) any Lien (except pursuant to the Collateral Documents) under,
any document evidencing any material Contractual Obligation to which
such Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject;
or
(c) violate any Requirement of Law.
6.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, Holdings or any
of its Subsidiaries of any Loan Document to which any such Person is a party, in
each case other than filings necessary to perfect the security interest in the
Collateral under the Security Agreement (which filings have been made to the
extent that this representation and warranty is made (or deemed made) after 10
days after the Closing Date).
6.04 Binding Effect. This Agreement and each other Loan Document to
which Holdings or any of its Subsidiaries is a party constitute the legal, valid
and binding obligations of Holdings and each of its Subsidiaries to the extent
such Person is a party thereto, enforceable against such Person in accordance
with their respective terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles of general
applicability.
6.05 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of Holdings or the Borrower,
threatened at law, in equity, in arbitration or before any Governmental
Authority, against Holdings or any of its Subsidiaries or any of their
respective properties or assets which:
(a) purport to affect or pertain to this Agreement or any
other Loan Document; or
(b) either individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
6.06 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by Holdings, the Borrower or any
Subsidiary Guarantor. Neither Holdings nor any of its Subsidiaries is in default
under or with respect to any Contractual Obligation in any respect which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
6.07 ERISA Compliance. Schedule 6.07 sets forth, as of the Closing
Date, each Plan; each Plan (and each related trust, insurance contract or fund)
is in substantial compliance with its terms and with all applicable laws,
including, without limitation, ERISA and the Code; each Plan (and each related
trust, if any) which is intended to be qualified under Section 401(a) of the
Code has received a determination letter from the Internal Revenue Service to
the effect that it meets the requirements of Sections 401(a) and 501(a) of the
Code; no Reportable Event
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has occurred; no Plan which is a multiemployer plan (as defined in Section
4001(a)(3) of ERISA) is insolvent or in reorganization; no Plan has an Unfunded
Current Liability that is in excess of $100,000 and the aggregate Unfunded
Current Liabilities in respect of all Plans does not exceed $1,000,000; no Plan
which is subject to Section 412 of the Code or Section 302 of ERISA has an
accumulated funding deficiency, within the meaning of such sections of the Code
or ERISA, or has applied for or received a waiver of an accumulated funding
deficiency or an extension of any amortization period, within the meaning of
Section 412 of the Code or Section 303 or 304 of ERISA; all contributions
required to be made with respect to a Plan have been timely made; neither
Holdings nor any Subsidiary of Holdings nor any ERISA Affiliate has incurred any
material liability (including any indirect, contingent or secondary liability)
to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or
4975 of the Code or expects to incur any such material liability under any of
the foregoing sections with respect to any Plan; no condition exists which
presents a material risk to Holdings or any Subsidiary of Holdings or any ERISA
Affiliate of incurring a material liability to or on account of a Plan pursuant
to the foregoing provisions of ERISA and the Code; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan which is
subject to Title IV of ERISA; no action, suit, proceeding, hearing, audit or
investigation with respect to the administration, operation or the investment of
assets of any Plan (other than routine claims for benefits) is pending, expected
or threatened; using actuarial assumptions and computation methods consistent
with Part 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of
Holdings and its Subsidiaries and its ERISA Affiliates to all Plans which are
multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the event of
a complete withdrawal therefrom, as of the close of the most recent fiscal year
of each such Plan ended prior to the Closing Date, or if later, the date of the
most recent Borrowing Date or the date of the most recent issuance of a Letter
of Credit, would not exceed $250,000; each group health plan (as defined in
Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or has
covered employees or former employees of Holdings, any Subsidiary of Holdings or
any ERISA Affiliate has at all times been operated in substantial compliance
with the provisions of Part 6 of subtitle B of Title I of ERISA and Section
4980B of the Code; no lien imposed under the Code or ERISA on the assets of
Holdings or any Subsidiary of Holdings or any ERISA Affiliate exists or is
likely to arise on account of any Plan; and Holdings and its Subsidiaries may
cease contributions to or terminate any employee benefit plan maintained by any
of them without incurring any material liability.
6.08 Use of Proceeds; Margin Regulations. The proceeds of the Revolving
Loans are intended to be and shall be used solely for the purposes set forth in
and permitted by Section 7.13.
6.09 Title to Properties. Holdings and each of its Subsidiaries have
good record and marketable title in fee simple to, or valid leasehold interests
in, all material property owned or leased by them, free and clear of all Liens
other than Permitted Liens.
6.10 Taxes. Each of Holdings and each of its Subsidiaries has filed all
federal and state income tax returns and all other material tax returns,
domestic and foreign, required to be filed by it (after giving effect to all
extensions duly obtained) and has paid all taxes and
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assessments payable by it (after giving effect to all extensions duly obtained)
which have become due, except for taxes contested in good faith and adequately
disclosed and fully provided for on the financial statements of Holdings and its
Subsidiaries in accordance with GAAP. Holdings and each of its Subsidiaries have
at all times paid, or have provided adequate reserves (in the good faith
judgment of the management of Holdings) for the payment of, all federal, state,
local and foreign income taxes applicable for all prior fiscal years and for the
current fiscal year to date. There is no material action, suit, proceeding,
investigation, audit or claim now pending or, to the best knowledge of Holdings
and the Borrower threatened, by any authority regarding any taxes relating to
Holdings or any of its Subsidiaries. Except for extensions of the time to file
tax returns that have been duly obtained, as of the Closing Date, neither
Holdings nor any of its Subsidiaries has entered into an agreement or waiver or
been requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of Holdings or any of
its Subsidiaries, or is aware of any circumstances that would cause the taxable
years or other taxable periods of Holdings or any of its Subsidiaries not to be
subject to the normally applicable statute of limitations.
6.11 Financial Statements. All balance sheets, statements of operations
and other financial data of Holdings and its Subsidiaries which have been or
shall hereafter be furnished to the Administrative Agent and the Banks for the
purposes of or in connection with this Agreement or any transaction contemplated
hereby have been prepared in accordance with GAAP and do and will present
fairly, in all material respects, the financial condition of Holdings and its
Subsidiaries as of the dates thereof and the results of their operations for the
period(s) covered thereby. The Projections which have been furnished by (or on
behalf of) Holdings pursuant to Section 5.01(o)(ii) represent management's good
faith estimates of future performance based upon historical financial
information and assumptions which management believes to be reasonable, it being
recognized that such projections are not to be viewed as facts and do not
constitute a warranty as to the future performance of Holdings or its
Subsidiaries and that actual results may vary from projected results and such
variances may be material.
6.12 Securities Law, etc.; Compliance. All transactions contemplated by
this Agreement and the other Loan Documents comply with (x) Regulations G, T, U
and X of the Federal Reserve Board and (y) all other applicable laws and any
rules and regulations thereunder.
6.13 Governmental Regulation. Neither Holdings nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940 or
a "holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a holding
company", within the meaning of the Public Utility Holding Company Act of 1935.
6.14 Labor Controversies. There are no labor controversies pending or,
to the best of Holdings' and the Borrower's knowledge, threatened against it or
any of its Subsidiaries which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
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6.15 Subsidiaries. Holdings has no Subsidiaries, except, on the Closing
Date, those Subsidiaries which are identified in Schedule 6.15 and, thereafter,
those Subsidiaries permitted to be formed or acquired in compliance with the
terms hereof.
6.16 Patents, Trademarks, etc. Each of Holdings and each of its
Subsidiaries owns (or is licensed to use) and possesses all such patents, patent
rights, trademarks, trademark rights, trade names, trade name rights, service
marks, service mark rights, copyrights, permits, licenses and authorizations as
it considers necessary for the conduct of the business of Holdings and its
Subsidiaries as now conducted without, individually or in the aggregate, any
infringement upon rights of other Persons which could reasonably be expected to
have a Material Adverse Effect.
6.17 Accuracy of Information. All factual information heretofore or
contemporaneously herewith furnished by or on behalf of Holdings or any of its
Subsidiaries in writing to the Administrative Agent or any Bank for purposes of
or in connection with this Agreement or any transaction contemplated hereby and
all other such factual information hereafter furnished by or on behalf of
Holdings or any of its Subsidiaries to the Administrative Agent or any Bank will
be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information, in the light of the
circumstances existing at the time such information was delivered, not
misleading.
6.18 Hazardous Materials. Neither Holdings nor any of its Subsidiaries
have caused or permitted any Hazardous Material to be disposed of or otherwise
released, either from, on or under any property currently or formerly legally or
beneficially owned, leased or operated by, or otherwise used by, Holdings or any
of its Subsidiaries, which, either individually or in the aggregate, has or
could reasonably be expected to have a Material Adverse Effect. No such property
has ever been used as a dump site or storage site for any Hazardous Materials or
otherwise contains or contained Hazardous Materials, which, either individually
or in the aggregate, has or could reasonably be expected to have a Material
Adverse Effect. The failure, if any, of Holdings or any of its Subsidiaries, in
connection with their current and former properties or their businesses, to be
in compliance with any Environmental Law or to obtain any permit, certificate,
license, approval and other authorization under such Environmental Laws has not
had, nor is reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect. Neither Holdings nor any of its
Subsidiaries have entered into, have agreed to or are subject to any judgment,
decree or order or other similar requirement of any Governmental Authority under
any Environmental Law, including without limitation, relating to compliance or
to investigation, cleanup, remediation or removal of Hazardous Materials, which,
either individually or in the aggregate, has or could reasonably be expected to
have a Material Adverse Effect. Neither Holdings nor any of its Subsidiaries
have contractually assumed any liabilities or obligations under any
Environmental Law which, either individually or in the aggregate, have or could
reasonably be expected to have a Material Adverse Effect. There are no facts or
circumstances which exist that could reasonably be expected to give rise to
liabilities with respect to Hazardous Materials or any Environmental Law, which,
either individually or in the aggregate, have or could reasonably be expected to
have a Material Adverse Effect.
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6.19 Collateral Documents.
(i) The provisions of the Pledge Agreement will be, on and
after the Closing Date, effective to create, in favor of the Collateral
Agent for the benefit of the Banks and the Collateral Agent, legal,
valid and enforceable security interests in all of the Collateral
described therein, and upon the taking of and continued possession of
such Collateral by the Collateral Agent on or prior to the Closing
Date, the Pledge Agreement shall constitute, as of and after the
Closing Date, a fully perfected security interest in such Collateral
superior in right to any other security interests, existing or future,
which any Person may have against such Collateral, except to the
extent, if any, otherwise provided in the Pledge Agreement; and
(ii) the provisions of the Security Agreement are effective to
create in favor of the Collateral Agent for the benefit of the Banks
and the Collateral Agent, a legal, valid and enforceable security
interest in all right, title and interest in all of the Collateral
described therein, and the Security Agreement, upon the filing of Form
UCC-1 financing statements or the appropriate equivalent (which filing,
if this representation is being made more than 10 days after the
Closing Date, has been made), create a fully perfected first priority
lien on, and security interest in, all right, title and interest in all
of the Collateral described in the Security Agreement to the extent
that such security interests can be perfected by the filing of a
financing statement under the UCC or in which a filing may be made in
the United States Patent and Trademark Office or in the United States
Copyright Office, subject to no other Liens other than Permitted Liens.
6.20 Solvency. On and as of the Closing Date and after giving effect to
all Indebtedness being incurred or assumed and Liens created by the Credit
Parties in connection therewith and on and as of each Borrowing Date and after
giving effect thereto (a) the sum of the assets, at a fair valuation on a
going-concern basis, of each of the Borrower on a stand-alone basis and of
Holdings and its Subsidiaries taken as a whole will exceed its debts; (b) each
of the Borrower on a stand-alone basis and Holdings and its Subsidiaries taken
as a whole has not incurred and does not intend to incur, and does not believe
that it will incur, debts beyond its ability to pay such debts as such debts
mature; and (c) each of the Borrower on a stand alone basis and Holdings and its
Subsidiaries taken as a whole will have sufficient capital with which to conduct
its business. For purposes of this Section 6.20, "debt" means any liability on a
claim, and "claim" means (i) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. The amount of contingent liabilities at any time shall be computed
as the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
6.21 Representations and Warranties in the other Documents. All
representations and warranties in the Acquisition Documents, in the Borrower
Senior Note Documents and in the
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Holdings Senior Discount Note Documents were true and correct in all material
respects at the time as of which such representations and warranties were made
(or deemed made).
6.22 Capitalization.
(a) On the Closing Date, the authorized capital stock of
Holdings consists of 200,000 shares of common stock, $.01 par value per
share ("Holdings Common Stock"), of which 100,000 shares issued and
outstanding. All outstanding shares of capital stock of Holdings have
been duly and validly issued and are fully paid and non-assessable.
Holdings does not have outstanding any securities convertible into or
exchangeable for its capital stock or outstanding any rights to
subscribe for or to purchase, or any options for the purchase of, or
any agreement providing for the issuance (contingent or otherwise) of,
or any calls, commitments or claims of any character relating to, its
capital stock, except (i) for options to purchase shares of Holdings'
Common Stock which may be issued from time to time to directors,
officers and employees of Holdings or any of its Subsidiaries and (ii)
as may be set forth in any of the shareholders' agreements delivered
pursuant to Section 5.01(n).
(b) On the Closing Date, the authorized capital stock of the
Borrower consists of 1,000 shares of common stock, $.01 par value per
share, all of which are issued and outstanding and owned by Holdings.
All outstanding shares of capital stock of the Borrower have been duly
and validly issued, are fully paid and nonassessable. The Borrower does
not have outstanding any securities convertible into or exchangeable
for its capital stock or outstanding any rights to subscribe for or to
purchase, or any options for the purchase of, or any agreement
providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock.
6.23 Special Purpose Corporation. Holdings engages in no significant
business activities and has no significant assets (other than the capital stock
of the Borrower, immaterial assets used for the performance of those activities
permitted to be performed by Holdings pursuant to Section 8.13(b) and any
obligations held by it to the extent permitted by Section 8.05(vi)) or material
liabilities (other than those incurred under this Agreement, under the other
Loan Documents to which it is a party and under the Holdings Senior Discount
Note Documents).
6.24 Insurance. Schedule 6.24 sets forth a true and complete listing of
all insurance maintained by Holdings and its Subsidiaries as of the Closing
Date, and with the amounts insured (and any deductibles) set forth therein.
ARTICLE VII.
AFFIRMATIVE COVENANTS
Each of Holdings and the Borrower agrees with the Administrative Agent
and each Bank that, until all Revolving Commitments and Letters of Credit have
terminated and all
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Obligations (other than indemnities for which no request for payment has been
made) have been paid and performed in full:
7.01 Financial Statements. Holdings and the Borrower shall deliver to
the Administrative Agent and each Bank in form and detail reasonably
satisfactory to the Administrative Agent and the Required Banks:
(a) as soon as available, but not later than 90 days after the
end of each fiscal year of Holdings, (i) a copy of the consolidated and
consolidating balance sheets of Holdings and its Subsidiaries as at the
end of such fiscal year and the related consolidated and consolidating
statements of income or operations, shareholders' equity and cash flows
for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, and (x) in the case of the
consolidated financial statements, certified by Arthur Andersen L.L.P.
or another nationally-recognized independent public accounting firm
reasonably acceptable to the Administrative Agent, together with a
report of such accounting firm stating that in the course of its
regular audit of the financial statements of Holdings and its
Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, such accounting firm obtained no knowledge
of any Default or Event of Default which has occurred and is continuing
or, if in the opinion of such accounting firm a Default or an Event of
Default has occurred and is continuing, a statement as to the nature
thereof, and (y) in the case of the consolidating financial statements,
certified by a Responsible Officer of Holdings as being complete and
correct and fairly presenting in all material respects, in accordance
with GAAP, the financial position and the results of operations of
Holdings and its Subsidiaries, and (ii) management's discussion and
analyses of the material operational and financial developments during
such fiscal year. The accountant's opinion referred to above shall not
be qualified or limited because of a restricted or limited examination
by such accountant of any material portion of the records of Holdings
or any of its Subsidiaries;
(b) as soon as available, but not later than 45 days after the
end of each of the first three fiscal quarters of each fiscal year of
Holdings, (i) a copy of the unaudited consolidated and consolidating
balance sheets of Holdings and its Subsidiaries as of the end of such
fiscal quarter and the related consolidated and consolidating
statements of income or operations, shareholders' equity and cash flows
for the period commencing on the first day and ending on the last day
of such fiscal quarter and for the elapsed portion of the fiscal year
ended with the last day of such fiscal quarter, and certified by a
Responsible Officer of Holdings as being complete and correct and
fairly presenting in all material respects, in accordance with GAAP
(subject to normal year-end audit adjustments and the absence of
footnote disclosure), the financial position and the results of
operations of Holdings and its Subsidiaries, and (ii) management's
discussion and analyses of the material operational and financial
developments during such fiscal quarter and for the elapsed portion of
the fiscal year ended with the last day of such fiscal quarter;
(c) as soon as available, but not later than 30 days after the
end of each fiscal month of each fiscal year of Holdings (other than
the last fiscal month of any fiscal
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quarter) a copy of the unaudited consolidated and consolidating balance
sheets of Holdings and its Subsidiaries as at the end of such fiscal
month and the related consolidated and consolidating statements of
income and cash flows for such fiscal month and for the elapsed portion
of the fiscal year ended with the last day of such fiscal month, in
each case setting forth comparative figures for the corresponding
fiscal month in the prior fiscal year and comparable budgeted figures
for such fiscal month, provided, however, monthly consolidated
financial statements only have to be delivered pursuant to this Section
7.01 (c) from and after Holdings' fiscal month ending October 31, 1998;
and
(d) as soon as available, but not later than 30 days following
the first day of each fiscal year of Holdings, a budget (including
budgeted statements of income and sources and uses of cash and balance
sheets) prepared by Holdings for each of the twelve months of such
fiscal year prepared in reasonable detail.
7.02 Certificates; Other Information. Holdings and the
Borrower shall furnish to the Administrative Agent and each Bank:
(a) concurrently with the delivery of the financial statements
referred to in Sections 7.01(a) and (b), a Compliance Certificate;
(b) to the extent not previously delivered with respect to any
Adjustment Date, concurrently with the delivery of the financial
statements referred to in Sections 7.01(a) and (b), a Total Leverage
Ratio Certificate duly executed by a Responsible Officer of Holdings;
(c) promptly after Holdings' or any of its Subsidiaries'
receipt thereof, a copy of any "management letter" received from its
certified public accountants and management's response thereto;
(d) promptly after the same are sent, copies of all financial
statements and reports which Holdings sends to its shareholders
generally; and promptly after the same are filed, copies of all
financial statements and regular, periodical or special reports which
Holdings or any of its Subsidiaries may make to, or file with, the
Securities and Exchange Commission; and
(e) promptly, such additional business, financial and other
information with respect to Holdings or any of its Subsidiaries as the
Administrative Agent or any Bank may from time to time reasonably
request.
7.03 Notices. Holdings and the Borrower shall, promptly upon (and in
any event within five days after) any Responsible Officer of Holdings or the
Borrower obtaining knowledge thereof, give notice (accompanied by a reasonably
detailed explanation with respect thereto) promptly to the Administrative Agent,
each Issuing Bank and each Bank of:
(a) the occurrence of any Default or Event of Default;
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(b) any litigation, arbitration or governmental investigation
or proceeding which has been instituted or, to the knowledge of a
Responsible Officer of Holdings or the Borrower, is threatened against
Holdings or any of its Subsidiaries or to which any of their respective
properties is subject (i) which could reasonably be expected to result
in a Material Adverse Effect or (ii) relates to this Agreement, any
other Loan Document or any of the transactions contemplated hereby;
(c) one or more of the following environmental matters, unless
such environmental matters could not, individually or when aggregated
with all other such environmental matters, be reasonably expected to
have a Material Adverse Effect:
(i) any pending or, to the knowledge of a Responsible
Officer of Holdings or the Borrower, threatened Environmental
Claim against Holdings or any of its Subsidiaries or any real
property owned, leased or operated by Holdings or any of its
Subsidiaries;
(ii) any condition or occurrence on or arising from
any real property owned, leased or operated by Holdings or any
of its Subsidiaries that (a) results in noncompliance by
Holdings or any of its Subsidiaries with any applicable
Environmental Law or (b) could be expected to form the basis
of an Environmental Claim against Holdings or any of its
Subsidiaries or any such real property;
(iii) any condition or occurrence on any real
property owned, leased or operated by Holdings or any of its
Subsidiaries that could be expected to cause such real
property to be subject to any restrictions on the ownership,
occupancy, use or transferability by Holdings or any of its
Subsidiaries of such real property under any Environmental
Law; and
(iv) the taking of any removal or remedial action in
response to the actual or alleged presence of any Hazardous
Material on any real property owned, leased or operated by
Holdings or any of its Subsidiaries as required by any
Environmental Law or any governmental or other administrative
agency; provided, that in any event Holdings shall deliver to
the Administrative Agent and each Bank all notices received by
Holdings or any of its Subsidiaries from any government or
governmental agency under, or pursuant to, CERCLA which
identify Holdings or any of its Subsidiaries as potentially
responsible parties for remediation costs or which otherwise
notify Holdings or any of its Subsidiaries of potential
liability under CERCLA; and
(d) that a Reportable Event has occurred (except to the extent that
Holdings has previously delivered to the Banks a certificate and notices (if
any) concerning such event pursuant to the next clause hereof); that a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA is subject to the advance reporting requirement of
PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof),
and an event described in subsection .62, .63, .64, .65, .66,
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.67 or .68 of PBGC Regulation Section 4043 is reasonably expected to occur with
respect to such Plan within the following 30 days; that an accumulated funding
deficiency, within the meaning of Section 412 of the Code or Section 302 of
ERISA, has been incurred or an application may be or has been made for a waiver
or modification of the minimum funding standard (including any required
installment payments) or an extension of any amortization period under Section
412 of the Code or Section 303 or 304 of ERISA with respect to a Plan; that any
contribution required to be made with respect to a Plan has not been timely
made; that a Plan has been or may be terminated, reorganized, partitioned or
declared insolvent under Title IV of ERISA; that a Plan has an Unfunded Current
Liability; that proceedings may be or have been instituted to terminate or
appoint a trustee to administer a Plan which is subject to Title IV of ERISA;
that a proceeding has been instituted pursuant to Section 515 of ERISA to
collect a delinquent contribution to a Plan; that Holdings, any Subsidiary of
Holdings or any ERISA Affiliate will or may incur any liability (including any
indirect, contingent, or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409, 502(i) or 502(l) of ERISA or with
respect to a group health plan (as defined in Section 607(1) of ERISA or Section
4980B(g)(2) of the Code) under Section 4980B of the Code; or that Holdings or
any Subsidiary of Holdings may incur any material liability pursuant to any
employee welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any Plan. Holdings will deliver to each of
the Banks copies of any records, documents or other information that must be
furnished to the PBGC with respect to any Plan pursuant to Section 4010 of
ERISA. Holdings will also deliver to each of the Banks a complete copy of the
annual report (on Internal Revenue Service Form 5500-series) of each Plan
(including, to the extent required, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and information) required to be filed with the Internal Revenue
Service. In addition to any certificates or notices delivered to the Banks
pursuant to the first sentence hereof, copies of annual reports and any records,
documents or other information required to be furnished to the PBGC, and any
material notices received by Holdings, any Subsidiary of Holdings or any ERISA
Affiliate with respect to any Plan shall be delivered to the Banks no later than
ten (10) days after the date such annual report has been filed with the Internal
Revenue Service or such records, documents and/or information has been furnished
to the PBGC or such notice has been received by Holdings, the Subsidiary or the
ERISA Affiliate, as applicable.
7.04 Books, Records and Inspections; Annual Meetings.
(a) Holdings shall, and shall cause each of
its Subsidiaries to, keep proper books of record and accounts in which
full, true and correct entries in conformity with GAAP and all
requirements of law shall be made of all dealings and transactions in
relation to its business and activities. Holdings shall, and shall
cause each of its Subsidiaries to, permit officers and designated
representatives of the Administrative
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Agent or any Bank to visit and inspect, under guidance of officers of
Holdings or such Subsidiary, any of the properties of Holdings or such
Subsidiary and, under guidance of officers of Holdings or such
Subsidiary, to examine the books of account of Holdings or such
Subsidiary and discuss the affairs, finances and accounts of Holdings
or such Subsidiary with, and be advised as to the same by, its and
their officers and independent accountants, all upon reasonable prior
notice and at such reasonable times and intervals and to such
reasonable extent as the Administrative Agent or such Bank may
reasonably request.
(b) At a date to be mutually agreed upon between the
Administrative Agent and Holdings occurring on or prior to the 120th
day after the close of each fiscal year of Holdings, Holdings shall, at
the request of the Administrative Agent, hold a meeting with all of the
Banks at which meeting shall be reviewed the financial results of
Holdings and its Subsidiaries for the previous fiscal year and the
budgets presented for the current fiscal year of Holdings.
7.05 Maintenance of Property; Insurance.
(a) Holdings shall, and shall cause each of its Subsidiaries
to, (i) keep all property necessary to the business of Holdings and its
Subsidiaries in reasonably good working order and condition, ordinary
wear and tear excepted, (ii) maintain with financially sound and
reputable insurance companies insurance on all such property in at
least such amounts and against at least such risks as is consistent and
in accordance with industry practice for companies similarly situated
owning similar properties in the same general areas in which Holdings
or any of its Subsidiaries operates, and (iii) furnish to the
Administrative Agent, on each date on which financial statements are
delivered pursuant to Section 7.01(a), full information as to the
insurance carried.
(b) Holdings shall, and shall cause each of its Subsidiaries
to, at all times keep its property insured in favor of the Collateral
Agent, and all policies or certificates of an insurance broker (or
certified copies thereof) with respect to such insurance (and any other
insurance maintained by Holdings and/or such Subsidiaries) (i) shall be
endorsed for the benefit of the Collateral Agent (including, without
limitation, by naming the Collateral Agent as loss payee and/or
additional insured), (ii) shall state that such insurance policies
shall not be cancelled without at least 30 days' prior written notice
thereof (or 10 days' prior written notice in the case of nonpayment of
premium) by the respective insurer to the Collateral Agent (or such
shorter period of time as a particular insurance company policy
generally provides) and (iii) shall be deposited with the Collateral
Agent.
(c) If Holdings or any of its Subsidiaries shall fail to
insure its property in accordance with this Section 7.05, or if
Holdings or any of its Subsidiaries shall fail to so endorse and
deposit all policies or certificates with respect thereto, the
Collateral Agent shall have the right (but shall be under no
obligation) to procure such insurance and
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Holdings and the Borrower agree to reimburse the Collateral Agent for
all reasonable costs and expenses of procuring such insurance.
7.06 Corporate Franchises. Holdings shall, and shall cause each of its
Subsidiaries to, do or cause to be done, all things necessary to preserve and
keep in full force and effect its existence and its material rights, franchises,
licenses and patents; provided, however, that nothing in this Section 7.06 shall
prevent (i) sales of assets and other transactions by Holdings or any of its
Subsidiaries in accordance with Section 8.02 or (ii) the withdrawal by Holdings
or any of its Subsidiaries of its qualification as a foreign corporation in any
jurisdiction where such withdrawal, either individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
7.07 Compliance with Law; Contractual Obligations. Holdings shall, and
shall cause each of its Subsidiaries to, comply with all Requirements of Law of
any Governmental Authority and with all Contractual Obligations, except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
7.08 Payment of Taxes. Holdings shall pay and discharge, and shall
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims for sums that have become due and payable which,
if unpaid, might become a Lien not otherwise permitted under Section 8.01(i);
provided, that neither Holdings nor any of its Subsidiaries shall be required to
pay any such tax, assessment, charge, levy or claim which is being contested in
good faith and by proper proceedings if it has maintained adequate reserves with
respect thereto in accordance with GAAP.
7.09 Contributions. Holdings shall contribute as a common equity
contribution to the capital of the Borrower upon its receipt thereof, any cash
proceeds received by Holdings after the Closing Date from any asset sale, any
incurrence of Indebtedness, any Recovery Event, any sale or issuance of its
equity, any cash capital contributions received by Holdings or any tax refund
received by Holdings.
7.10 End of Fiscal Years; Fiscal Quarters. Holdings shall, for
financial reporting purposes, cause (i) each of its, and each of its
Subsidiaries', fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Subsidiaries', fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
7.11 Additional Security; Further Assurances. (a) Holdings shall, and
shall cause each of the other Credit Parties to, grant to the Collateral Agent
security interests and mortgages in such material assets and properties of
Holdings and the other Credit Parties as are not covered by the original
Security Documents, and as may be reasonably requested from time to time by the
Administrative Agent or the Required Banks (collectively, the "Additional
Security Documents"). All such security interests and mortgages shall be granted
pursuant to documentation reasonably satisfactory in form and substance to the
Administrative Agent and shall constitute valid and enforceable perfected
security interests and mortgages superior to and
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prior to the rights of all third Persons and subject to no other Liens except
for Permitted Liens. The Additional Security Documents or instruments related
thereto shall have been duly recorded or filed in such manner and in such places
as are required by law to establish, perfect, preserve and protect the Liens in
favor of the Collateral Agent required to be granted pursuant to the Additional
Security Documents and all taxes, fees and other charges payable in connection
therewith shall have been paid in full.
(b) Holdings shall, and shall cause each of the other Credit Parties
to, at the expense of Holdings and the Borrower, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the Collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require. Furthermore, Holdings
and the Borrower will cause to be delivered to the Collateral Agent such
opinions of counsel, title insurance and other related documents as may be
reasonably requested by the Administrative Agent to assure itself that this
Section 7.11 has been complied with.
(c) Holdings and the Borrower agree that each action required above by
this Section 7.11 shall be completed as soon as possible, but in no event later
than 90 days after such action is either requested to be taken by the
Administrative Agent or the Required Banks or required to be taken by Holdings
and/or the other Credit Parties pursuant to the terms of this Section 7.11;
provided that, in no event, will Holdings or any of its Subsidiaries be required
to take any action, other than using its best efforts, to obtain consents from
third parties with respect to its compliance with this Section 7.11.
7.12 Foreign Subsidiaries Security. If following a change in the
relevant sections of the Code or the regulations, rules, rulings, notices or
other official pronouncements issued or promulgated thereunder, counsel for the
Borrower reasonably acceptable to the Administrative Agent does not within 30
days after a request from the Administrative Agent or the Required Banks deliver
evidence, in form and substance mutually satisfactory to the Administrative
Agent and the Borrower, with respect to any Foreign Subsidiary which has not
already had all of its stock pledged pursuant to the Pledge Agreement that (i) a
pledge (x) of 66-2/3% or more of the total combined voting power of all classes
of capital stock of such Foreign Subsidiary entitled to vote, and (y) of any
promissory note issued by such Foreign Subsidiary to Holdings or any of its
Domestic Subsidiaries, (ii) the entering into by such Foreign Subsidiary of a
security agreement in substantially the form of the Security Agreement and (iii)
the entering into by such Foreign Subsidiary of a guaranty in substantially the
form of the Subsidiary Guaranty, in any such case could reasonably be expected
to cause the undistributed earnings of such Foreign Subsidiary as determined for
Federal income tax purposes to be treated as a deemed dividend to such Foreign
Subsidiary's United States parent for Federal income tax purposes, then in the
case of a failure to deliver the evidence described in clause (i) above, that
portion of such Foreign Subsidiary's outstanding capital stock or any promissory
notes so issued by such Foreign Subsidiary, in each case not theretofore pledged
pursuant to the Pledge Agreement shall be pledged to the Collateral Agent for
the benefit of the Banks pursuant to the Pledge Agreement (or another pledge
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agreement in substantially similar form, if needed), and in the case of a
failure to deliver the evidence described in clause (ii) above, such Foreign
Subsidiary shall execute and deliver the Security Agreement (or another security
agreement in substantially similar form, if needed), granting the Collateral
Agent for the benefit of the Banks a security interest in all of such Foreign
Subsidiary's assets and securing the Obligations of the Borrower under the Loan
Documents and, in the event the Subsidiary Guaranty shall have been executed by
such Foreign Subsidiary, the obligations of such Foreign Subsidiary thereunder,
and in the case of a failure to deliver the evidence described in clause (iii)
above, such Foreign Subsidiary shall execute and deliver the Subsidiary Guaranty
(or another guaranty in substantially similar form, if needed), guaranteeing the
Obligations of the Borrower under the Loan Documents, in each case to the extent
that the entering into such Security Agreement or Subsidiary Guaranty is
permitted by the laws of the respective foreign jurisdiction and with all
documents delivered pursuant to this Section 7.12 to be in form and substance
reasonably satisfactory to the Administrative Agent.
7.13 Use of Proceeds; Margin Regulations.
(a) All proceeds of the Revolving Loans shall be used for the
working capital and general corporate purposes of the Borrower and its
Subsidiaries, including to make Permitted Acquisitions.
(b) Holdings and the Borrower shall ensure that no part of any
Revolving Loan or Letter of Credit will be used to purchase or carry
any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock or will violate or be inconsistent with the
provisions of Regulations G, T, U and X of the Federal Reserve Board.
ARTICLE VIII.
NEGATIVE COVENANTS
Each of Holdings and the Borrower agrees with the Administrative Agent
and each Bank that, until all Revolving Commitments and Letters of Credit have
terminated and all Obligations (other than indemnities for which no request for
payment has been made) have been paid and performed in full:
8.01 Liens. Holdings will not, and will not permit any of its
Subsidiaries to, create, incur, assume, or suffer to exist any Lien upon or with
respect to any property or assets (real or personal, tangible or intangible) of
Holdings or any of its Subsidiaries, whether now owned or hereafter acquired, or
sell any such property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets (including sales
of accounts receivable with recourse to Holdings or any of its Subsidiaries), or
assign any right to receive income or permit the filing of any financing
statement under the UCC or any other similar notice of Lien under any similar
recording or notice statute; provided that the provisions of this Section 8.01
shall not prevent the creation, incurrence, assumption or existence of the
following (Liens described below are herein referred to as "Permitted Liens"):
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(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been
established in accordance with GAAP;
(ii) Liens in respect of property or assets of Holdings or any
of its Subsidiaries imposed by law, which were incurred in the ordinary
course of business and do not secure Indebtedness for borrowed money,
such as carriers', warehousemen's, materialmen's and mechanics' liens
and other similar Liens arising in the ordinary course of business, and
(x) which do not in the aggregate materially detract from the value of
Holdings' or such Subsidiary's property or assets or materially impair
the use thereof in the operation of the business of Holdings or such
Subsidiary or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or assets subject to
any such Lien;
(iii) Liens in existence on the Closing Date which are listed,
and the property subject thereto described, in Schedule 8.01, but only
to the respective date, if any, set forth in such Schedule 8.01 for the
removal, replacement and termination of any such Liens, plus renewals,
replacements and extensions of such Liens to the extent set forth on
Schedule 8.01, provided that (x) the aggregate principal amount of the
Indebtedness, if any, secured by such Liens does not increase from that
amount outstanding at the time of any such renewal, replacement or
extension and (y) any such renewal, replacement or extension does not
encumber any additional assets or properties of Holdings or any of its
Subsidiaries;
(iv) Liens created pursuant to the Collateral Documents;
(v) licenses, sublicenses, leases or subleases granted to
other Persons not materially interfering with the conduct of the
business of Holdings or any of its Subsidiaries;
(vi) Liens upon assets of the Borrower or any of its
Subsidiaries subject to Capital Lease Obligations to the extent such
Capital Lease Obligations are permitted by Section 8.04(iv), provided
that (x) such Liens only serve to secure the payment of Indebtedness
arising under such Capital Lease Obligation and (y) the Lien
encumbering the asset giving rise to the Capital Lease Obligation does
not encumber any other asset of Holdings or any of its Subsidiaries;
(vii)Liens placed upon property acquired after the Closing
Date and used in the ordinary course of business of the Borrower or any
of its Subsidiaries at the time of the acquisition thereof by the
Borrower or any such Subsidiary or within 90 days thereafter to secure
Indebtedness incurred to pay all or a portion of the purchase price
thereof or to secure Indebtedness incurred solely for the purpose of
financing the acquisition of any such property or extensions, renewals
or replacements of any of the foregoing for the same or a lesser
amount, provided that (x) the aggregate outstanding principal amount of
all Indebtedness secured by Liens permitted by this clause (vii), when
added to the
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aggregate outstanding principal of all Indebtedness secured by Liens
permitted under clause (vi) of this Section 8.01, shall not at any time
outstanding exceed $5,000,000 and (y) in all events, the Lien
encumbering the property so acquired does not encumber any other asset
of Holdings or any of its Subsidiaries;
(viii) easements, rights-of-way, restrictions, zoning rights,
encroachments and other similar charges or encumbrances, and minor
title deficiencies, in each case not securing Indebtedness and not
materially interfering with the conduct of the business of Holdings or
any of its Subsidiaries;
(ix) Liens arising from precautionary UCC financing statement
filings regarding operating leases;
(x) statutory and common law landlords' liens under leases to
which Holdings or any of its Subsidiaries is a party;
(xi) (x) Liens (other than Liens imposed under ERISA) incurred
in the ordinary course of business in connection with workers
compensation claims, unemployment insurance and social security
benefits and (y) Liens securing the performance of bids, tenders,
leases and contracts in the ordinary course of business, statutory
obligations, surety bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money), provided
that the aggregate outstanding amount of obligations secured by Liens
permitted by this clause (xi)(y) (and the value of all cash and
property encumbered by Liens permitted pursuant to this clause (xi)(y))
shall not at any time exceed $1,000,000; and
(xii)Liens on property or assets acquired pursuant to a
Permitted Acquisition, or on property or assets of a Subsidiary of the
Borrower in existence at the time such Subsidiary is acquired pursuant
to a Permitted Acquisition, provided that (i) any Indebtedness that is
secured by such Liens is permitted to exist under Section 8.04(ix) and
(ii) such Liens are not incurred in connection with or anticipation of
such Permitted Acquisition and do not attach to any other asset of
Holdings or any of its Subsidiaries.
In connection with the granting of Liens of the type described in clauses (vi)
and (vii) of this Section 8.01 by the Borrower or any of its Subsidiaries, the
Administrative Agent and the Collateral Agent shall be authorized to take any
actions deemed appropriate by it in connection therewith (including, without
limitation, by executing appropriate lien releases or lien subordination
agreements in favor of the holder or holders of such Liens, in either case
solely with respect to the item or items of equipment or other assets subject to
such Liens).
8.02 Consolidation, Merger, Purchase or Sale of Assets, etc. Holdings
will not, and will not permit any of its Subsidiaries to, wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or consolidation,
or convey, sell, lease or otherwise dispose of all or any part of its property
or assets, or enter into any sale-leaseback transactions, or purchase or
otherwise acquire (in one or a series of related transactions) any part of the
property or assets
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(other than purchases or other acquisitions of inventory, materials and
equipment in the ordinary course of business) of any Person (or agree to do any
of the foregoing at any future time), except that:
(i) Capital Expenditures by the Borrower and its Subsidiaries
shall be permitted (although any Capital Expenditures constituting a
Permitted Acquisition shall be governed by clause (ix) of this Section
8.02 and not by this clause (i));
(ii) each of the Borrower and its Subsidiaries may make sales
of inventory in the ordinary course of business;
(iii) each of the Borrower and its Subsidiaries may sell
obsolete or worn-out equipment or materials;
(iv) each of the Borrower and its Subsidiaries may sell assets
(other than the capital stock of any Subsidiary Guarantor), so long as
(w) no Default or Event of Default then exists or would result
therefrom, (x) each such sale is in an arm's-length transaction and the
Borrower or the respective Subsidiary receives at least fair market
value (as determined in good faith by the Borrower or such Subsidiary,
as the case may be), (y) at least 85% of the total consideration
received by the Borrower or such Subsidiary is cash and is paid at the
time of the closing of such sale, and (z) the aggregate amount of the
proceeds received from all assets sold pursuant to this clause (iv)
shall not exceed $5,000,000 in any fiscal year of the Borrower;
(v) Investments may be made to the extent permitted by Section
8.05;
(vi) each of the Borrower and its Subsidiaries may lease (as
lessee) or license (as licensee) real or personal property (so long as
any such lease or license does not create a Capital Lease Obligation
except to the extent permitted by Section 8.04(iv));
(vii)each of the Borrower and its Subsidiaries may sell or
discount, in each case without recourse and in the ordinary course of
business, accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection
thereof;
(viii) each of the Borrower and its Subsidiaries may grant
licenses, sublicenses, leases or subleases to other Persons in the
ordinary course of business and not materially interfering with the
conduct of the business of the Borrower or any of its Subsidiaries;
(ix) the Borrower and its Wholly-Owned Subsidiaries may
acquire all or substantially all of the assets of any Person (or all or
substantially all of the assets of a product line or division of any
Person) or 100% (or at least 51% to the extent provided below) of the
capital stock or other equity interests of any Person (any such
acquisition permitted by this clause (ix), a "Permitted Acquisition"),
so long as (i) no Default or Event of Default then exists or would
result therefrom, (ii) each of the representations and warranties
contained in Article VI shall be true and correct in all material
respects both
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before and after giving effect to such Permitted Acquisition, (iii) any
Liens or Indebtedness assumed, incurred or issued in connection with
such acquisition are otherwise permitted under Section 8.01 or 8.04, as
the case may be, (iv) at least 10 Business Days prior to the
consummation of any Permitted Acquisition, Holdings shall have
delivered to the Administrative Agent and each of the Banks (A) a
certificate of a Responsible Officer of Holdings certifying (and
showing the calculations therefor in reasonable detail) that Holdings
would have been in compliance with the financial covenants set forth in
Sections 8.07, 8.08 and 8.09 for the Measurement Period then most
recently ended prior to the date of the consummation of such Permitted
Acquisition, in each case with such financial covenants to be
determined on a pro forma basis as if such Permitted Acquisition had
been consummated on the first day of such Measurement Period (and
assuming that any Indebtedness incurred, issued or assumed in
connection therewith had been incurred, issued or assumed on the first
day of, and had remained outstanding throughout, such Measurement
Period), it being understood, however, that with respect to any
Permitted Acquisition consummated prior to June 30, 1998, Holdings
shall be in pro forma compliance with the financial ratio levels set
forth in Sections 8.07, 8.08, and 8.09 in respect of the Measurement
Period ending on June 30, 1998 and (B) in the case of any Permitted
Acquisition in which the aggregate consideration equals or exceeds
$5,000,000, projections (in reasonable detail) prepared by a
Responsible Officer of Holdings for the period from the date of the
consummation of such Permitted Acquisition to the date which is one
year thereafter calculated after giving effect to the respective
Permitted Acquisition, demonstrating that the level of financial
performance measured by the financial covenants set forth in Sections
8.07, 8.08 and 8.09 shall be better than or equal to such level as
would be required to provide that no Default or Event of Default will
exist under such financial covenants, as compliance with such financial
covenants will be required through the date which is one year from the
date of the consummation of the respective Permitted Acquisition, (v)
the only consideration paid by the Borrower or any of its Wholly-Owned
Subsidiaries in connection with any such Permitted Acquisition consists
solely of cash (including as a result of any earnout, non-compete or
deferred compensation arrangements), Indebtedness incurred, assumed or
issued to the extent permitted by Section 8.04, Holdings Common Stock
and/or Qualified Holdings Preferred Stock, (vi) no more than $5,000,000
in the aggregate in any fiscal year of the Borrower may be expended on
Permitted Acquisitions in which the Borrower or a Wholly-Owned
Subsidiary thereof acquires less than 100% of the capital stock of any
Person and then only so long as the Borrower or such Wholly-Owned
Subsidiary controls the board of directors of such Person, (vii) the
aggregate consideration paid in connection with all Permitted
Acquisitions effected in any fiscal year of the Borrower (including,
without limitation, any earnout, non-compete or deferred compensation
arrangements, the aggregate principal amount of any Indebtedness
assumed, incurred or issued in connection therewith and the fair market
value of any Holdings Common Stock or Qualified Holdings Preferred
Stock issued in connection therewith (as determined in good faith by
Holdings)) does not exceed $10,000,000, although the Borrower or a
Wholly-Owned Subsidiary thereof also may consummate the acquisition of
Legal Communications, Ltd. in fiscal year 1998 so long as (A) the
aggregate consideration paid in connection with such Permitted
Acquisition does not exceed $21,000,000 and (B) each
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of the other conditions set forth in this Section 8.02(ix) are complied
with, and (viii) immediately after giving effect to any Permitted
Acquisition, the aggregate unutilized Revolving Commitments shall be at
least $10,000,000;
(x) any Subsidiary of the Borrower may transfer any of its
assets to the Borrower and may be merged, consolidated or liquidated
with or into the Borrower so long as the Borrower is the surviving
corporation of any such merger, consolidation or liquidation; and
(xi) any Subsidiary of the Borrower may transfer any of its
assets to a Subsidiary Guarantor and may be merged, consolidated or
liquidated with or into any Subsidiary Guarantor so long as (i) in the
case of any such merger, consolidation or liquidation, the Subsidiary
Guarantor is the surviving corporation and (ii) in addition to the
requirements of preceding clause (i), in the case of any such merger,
consolidation or liquidation involving a Wholly-Owned Subsidiary of the
Borrower, the Wholly-Owned Subsidiary is the surviving corporation of
such merger, consolidation or liquidation.
To the extent the Required Banks waive the provisions of this Section 8.02 with
respect to the sale of any Collateral, or any Collateral is sold as permitted by
this Section 8.02 (other than to Holdings or a Subsidiary thereof), such
Collateral shall be sold free and clear of the Liens created by the Collateral
Documents, and the Administrative Agent and the Collateral Agent shall be
authorized to take any actions deemed appropriate in order to effect the
foregoing.
8.03 Dividends. Holdings will not, and will not permit any of its
Subsidiaries to, authorize, declare or pay any Dividends with respect to
Holdings or any of its Subsidiaries, except that:
(i) (x) any Subsidiary of the Borrower may pay cash Dividends
to the Borrower or any Wholly-Owned Subsidiary of the Borrower and (y)
any non-Wholly-Owned Subsidiary of the Borrower may pay cash Dividends
to its shareholders generally so long as the Borrower or its respective
Subsidiary which owns the equity interest or interests in the
Subsidiary paying such Dividends receives at least its proportionate
share thereof (based upon its relative holdings of the equity interests
in the Subsidiary paying such Dividends and taking into account the
relative preferences, if any, of the various classes of equity
interests in such Subsidiary);
(ii) so long as there shall exist no Default or Event of
Default (both before and after giving effect to the payment thereof),
the Borrower may pay cash Dividends to Holdings to enable Holdings to
promptly repurchase outstanding shares of its capital stock (or options
to purchase such capital stock) held by officers or employees of
Holdings or any of its Subsidiaries following the death, disability,
retirement or termination of employment of such officers or employees,
provided that the aggregate amount of all such Dividends and
repurchases made pursuant to this clause (ii) shall not exceed $250,000
in any fiscal year of Holdings;
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(iii) the Borrower may pay cash Dividends to Holdings so long
as the proceeds thereof are promptly used by Holdings to pay operating
and corporate overhead costs and expenses in the ordinary course of
business (including, without limitation, outside directors and
professional fees, expenses and indemnities), provided that the
aggregate amount of cash Dividends paid pursuant to this clause (iii)
shall not exceed $250,000 in any fiscal year of Holdings; and
(iv) the Borrower may pay cash Dividends to Holdings in
connection with any amounts actually owing by it in respect of taxes,
provided that any refunds received by Holdings are promptly returned to
the Borrower; and
(v) the Borrower may pay cash Dividends to Holdings to enable
Holdings to make payments of liquidated damages to the holders of the
Holdings Senior Discount Notes in accordance with the terms thereof,
provided that the aggregate amount of Dividends paid pursuant to this
clause (v) shall not exceed $100,000.
8.04 Indebtedness. Holdings will not, and will not permit any of its
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Loan Documents;
(ii) existing Indebtedness (other than the Holdings Senior
Discount Notes and the Borrower Senior Notes) outstanding on the
Closing Date and listed on Schedule 8.04, without giving effect to any
subsequent extension, renewal or refinancing thereof except to the
extent set forth on Schedule 8.04, provided that the aggregate
principal amount of the Indebtedness to be extended, renewed or
refinanced does not increase from that amount outstanding at the time
of any such extension, renewal or refinancing;
(iii) Indebtedness under Interest Rate Protection Agreements
entered into with respect to other Indebtedness permitted under this
Section 8.04;
(iv) Indebtedness of the Borrower and its Subsidiaries
evidenced by Capital Lease Obligations, provided that in no event shall
the aggregate principal amount of Capital Lease Obligations permitted
by this clause (iv), when added to the aggregate principal amount of
Indebtedness outstanding under clause (v) of this Section 8.04, exceed
$5,000,000 at any time outstanding;
(v) Indebtedness subject to Liens permitted under Sections
8.01(vii);
(vi) intercompany Indebtedness among the Borrower and its
Subsidiaries to the extent permitted by Sections 8.05(xi) and
8.05(xii);
(vii) Indebtedness of the Borrower and the Subsidiary
Guarantors incurred under the Borrower Senior Note Documents in an
aggregate principal amount not to exceed $175,000,000 (which amount may
be increased to $210,000,000 so long as no
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Default or Event of Default then exists or would result therefrom) (in
each case as reduced by any repayments of principal thereof);
(viii) Indebtedness of Holdings under the Holdings Senior
Discount Note Documents in an initial aggregate principal amount not to
exceed $35,000,000, which amount may be increased to $63,275,000 solely
through accretion (as reduced by any repayments of principal thereof);
(ix) Indebtedness of a Subsidiary acquired pursuant to a
Permitted Acquisition or Indebtedness of the Borrower or a Subsidiary
thereof assumed at the time of a Permitted Acquisition of an asset
securing such Indebtedness, provided that (i) such Indebtedness was not
incurred in connection with or anticipation of such Permitted
Acquisition, (ii) such Indebtedness does not constitute debt for
borrowed money (other than in connection with industrial revenue or
industrial development bond financing), it being understood and agreed
that Capital Lease Obligations and purchase money Indebtedness shall
not constitute debt for borrowed money for purposes of this clause (ix)
and (iii) at the time of such Permitted Acquisition such Indebtedness
does not exceed 10% of the total value of the assets of the Subsidiary
so acquired, or the assets so acquired, as the case may be; and
(x) additional unsecured Indebtedness incurred by the Borrower
or any of its Subsidiaries in an aggregate principal amount not to
exceed $2,000,000 at any one time outstanding for all such Persons
taken together.
8.05 Advances, Investments and Loans. Holdings will not, and will not
permit any of its Subsidiaries to, directly or indirectly, lend money or credit
or make advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any other Person, or purchase or own a futures contract or otherwise become
liable for the purchase or sale of currency or other commodities at a future
date in the nature of a futures contract, or hold any cash or Cash Equivalents
(each of the foregoing an "Investment" and, collectively, "Investments"), except
that the following shall be permitted:
(i) the Borrower and its Subsidiaries may acquire and hold
accounts receivables owing to any of them, if created or acquired in
the ordinary course of business and payable or dischargeable in
accordance with customary trade terms of the Borrower or such
Subsidiary;
(ii) the Borrower and its Subsidiaries may acquire and hold
cash and Cash Equivalents, provided that during any time that Revolving
Loans are outstanding the aggregate amount of cash and Cash Equivalents
permitted to be held by the Borrower and its Subsidiaries shall not
exceed $5,000,000 for any period of five consecutive Business Days;
(iii)Holdings and its Subsidiaries may hold the Investments
held by them on the Closing Date and described on Schedule 8.05,
provided that any additional
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Investments made with respect thereto shall be permitted only if
independently justified under the other provisions of this Section
8.05;
(iv) the Borrower and its Subsidiaries may acquire and own
investments (including debt obligations) received in connection with
the bankruptcy or reorganization of suppliers and customers and in good
faith settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(v) the Borrower and its Subsidiaries may make loans and
advances in the ordinary course of business to their respective
officers and employees so long as the aggregate principal amount
thereof at any time outstanding (determined without regard to any
write-downs or write-offs of such loans and advances) shall not exceed
$500,000;
(vi) Holdings may acquire and hold obligations of one or more
officers or employees of Holdings or any of its Subsidiaries in
connection with such officers' or employees' acquisition of shares of
capital stock of Holdings so long as no cash is paid by Holdings or any
of its Subsidiaries to such officers or employees in connection with
the acquisition of any such obligations;
(vii) the Borrower and its Subsidiaries may acquire and hold
promissory notes issued by the purchaser of assets in connection with a
sale of such assets to the extent permitted by Section 8.02;
(viii) the Borrower and its Wholly-Owned Subsidiaries may make
Permitted Acquisitions to the extent permitted by Section 8.02(ix);
(ix) the Borrower and its Subsidiaries may enter into Interest
Rate Protection Agreements to the extent permitted by Section
8.04(iii);
(x) Holdings may make cash contributions to the capital of the
Borrower and the Borrower and the Subsidiary Guarantors may make cash
contributions to the capital of their respective Subsidiaries which are
Subsidiary Guarantors;
(xi) the Borrower and the Subsidiary Guarantors may make
intercompany loans and advances between or among one another
(collectively, "Intercompany Loans"), so long as (x) each Intercompany
Loan shall be evidenced by an Intercompany Note that is pledged to the
Collateral Agent pursuant to the Pledge Agreement and (y) each
Intercompany Loan made to the Borrower shall contain the subordination
provisions set forth in Exhibit M;
(xii) the Borrower and the Subsidiary Guarantors may make
additional loans and cash contributions to their respective
Subsidiaries which are not Subsidiary Guarantors in an aggregate amount
not to exceed $500,000 at any time outstanding (determined without
regard to any write-downs or write-offs thereof) so long as any such
loans that are made by a Credit Party are evidenced by an Intercompany
Note that is pledged pursuant to, and to the extent required by, the
Pledge Agreement; and
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(xiii) the Borrower and its Subsidiaries may make additional
Investments in an aggregate amount not to exceed $1,000,000 in any
fiscal year of the Borrower (determined without regard to any
write-downs or write-offs thereof).
8.06 Transactions with Affiliates. Holdings will not, and will not
permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of Holdings or any of its Subsidiaries, other than in the ordinary
course of business and on terms and conditions substantially as favorable to
Holdings or such Subsidiary as would reasonably be obtained by Holdings or such
Subsidiary at that time in a comparable arm's-length transaction with a Person
other than an Affiliate, except that the following in any event shall be
permitted:
(i) Dividends may be paid to the extent provided in Section
8.03;
(ii) loans may be made and other transactions may be entered
into by Holdings and its Subsidiaries to the extent permitted by
Sections 8.02, 8.04 and 8.05;
(iii) customary fees may be paid to non-officer directors of
Holdings and its Subsidiaries;
(iv) so long as no Default or Event of Default shall exist,
the Borrower may pay monitoring or management fees to WP Management or
an Affiliate thereof quarterly in arrears in an aggregate amount not to
exceed $250,000 per quarter (whether or not actually paid at the end of
such quarter or deferred and paid in any subsequent quarter, provided,
however, that in no event shall more than $500,000 be paid in any
quarter), plus the reasonable out-of-pocket expenses incurred by WP
Management or an Affiliate thereof in performing management services
for the Borrower (it being understood and agreed that the reimbursement
of such reasonable out-of-pocket expenses may be made whether or not
any Default or Event of Default exists); and
(v) so long as no Default or Event of Default shall exist, the
Borrower and its Subsidiaries may make payments to Wasserstein and its
Affiliates in respect of fees for any financial advisory, financing,
underwriting or placement services or in respect of investment banking
activities, including, without limitation, in connection with Permitted
Acquisitions and Asset Sales, so long as such payments are reasonable
and customary and are approved by a majority of the Board of Directors
of the Borrower in good faith.
8.07 Consolidated Interest Coverage Ratio. Holdings and the Borrower
will not permit the Consolidated Interest Coverage Ratio for any Measurement
Period ending on the last day of a fiscal quarter set forth below to be less
than the ratio set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Ratio
--------------------- -----
<S> <C>
June 30, 1998 1.50:1.00
</TABLE>
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<TABLE>
<CAPTION>
Fiscal Quarter Ending Ratio
--------------------- -----
<S> <C>
September 30, 1998 1.50:1.00
December 31, 1998 1.50:1.00
March 31, 1999 1.50:1.00
June 30, 1999 1.50:1.00
September 30, 1999 1.50:1.00
December 31, 1999 1.75:1.00
March 31, 2000 1.75:1.00
June 30, 2000 1.75:1.00
September 30, 2000 1.75:1.00
December 31, 2000 2.00:1.00
March 31, 2001 2.00:1.00
June 30, 2001 2.00:1.00
September 30, 2001 2.00:1.00
December 31, 2001
and the last day of each
fiscal quarter thereafter 2.25:1.00
</TABLE>
8.08 Consolidated Fixed Charge Coverage Ratio. Holdings and the
Borrower will not permit the Consolidated Fixed Charge Coverage Ratio for any
Measurement Period ending on the last day of a fiscal quarter set forth below to
be less than the ratio set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Ratio
--------------------- -----
<S> <C>
June 30, 1998 1.00:1.00
September 30, 1998 1.00:1.00
December 31, 1998 1.00:1.00
March 31, 1999 1.00:1.00
June 30, 1999 1.00:1.00
September 30, 1999 1.00:1.00
December 31, 1999 1.00:1.00
March 30, 2000 1.00:1.00
June 30, 2000 1.00:1.00
September 30, 2000 1.00:1.00
December 31, 2000
and the last day of
each fiscal quarter 1.15:1.00
</TABLE>
8.09 Maximum Total Leverage Ratio. Holdings and the Borrower will not
permit the Consolidated Total Leverage Ratio at any time during a period set
forth below to be greater than the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
</TABLE>
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<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
June 30, 1998 through and
including December 30, 1998 7.75:1.00
December 31, 1998 through and
including December 30, 1999 7.50:1.00
December 31, 1999 through and
including December 30, 2000 6.75:1.00
December 31, 2000 through and
including December 30, 2001 6.00:1.00
December 31, 2001 through and
including December 30, 2002 5.50:1.00
Thereafter 5.00:1.00
</TABLE>
8.10 Limitation on Voluntary Payments and Modification of Certain
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
Other Agreements; etc. Holdings will not, and will not permit any of its
Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for
value of (including, without limitation, by way of depositing with the
trustee with respect thereto or any other Person money or securities
before due for the purpose of paying when due) any Borrower Senior Note
or any Holdings Senior Discount Note; provided, however, from and after
April 1, 1999, the Borrower may voluntarily redeem or repurchase
outstanding Borrower Senior Notes pursuant to this clause (i) so long
as (x) no Default or Event of Default then exists or would result
therefrom, (g) no Revolving Loans are outstanding at the time of such
redemption or repurchase and immediately after giving effect thereto
and (z) no more than $10,000,000 in the aggregate is expended in
respect of such redemptions or repurchases (exclusive of amounts
representing accrued and unpaid interest).
(ii) make (or give any notice in respect of) any prepayment or
redemption of any Borrower Senior Note or any Holdings Senior Discount
Note as a result of any asset sale, change of control or similar event
(including, without limitation, by way of depositing with the trustee
with respect thereto or any other Person money or securities before due
for the purpose of paying when due any Borrower Senior Note or any
Holdings Senior Discount Note);
(iii) amend or modify, or permit the amendment or modification
of, any provision of any Borrower Senior Note Document or any Holdings
Senior Discount Note Document, other than an amendment, in form and
substance reasonably satisfactory to Bank of America (or any successor
Administrative Agent), permitting an increase in the principal amount
of the Borrower Senior Notes from $175,000,000 to up to $210,000,000;
or
(iv) amend, modify or change its certificate of incorporation
(including, without limitation, by the filing or modification of any
certificate of designation) or by-
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laws (or the equivalent organizational documents) or any agreement
entered into by it with respect to its capital stock, or enter into any
new agreement with respect to its capital stock, unless such amendment,
modification, change or other action contemplated by this clause (iv)
could not reasonably be adverse to the interests of the Banks.
8.11 Limitation on Certain Restrictions on Subsidiaries. Holdings will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
create or otherwise cause or suffer to exist or become effective any encumbrance
or restriction on the ability of any such Subsidiary to (a) pay dividends or
make any other distributions on its capital stock or any other interest or
participation in its profits owned by Holdings or any Subsidiary of Holdings, or
pay any Indebtedness owed to Holdings or any Subsidiary of Holdings, (b) make
loans or advances to Holdings or any Subsidiary of Holdings or (c) transfer any
of its properties or assets to Holdings or any Subsidiary of Holdings, except
for such encumbrances or restrictions existing under or by reason of (i)
applicable law, (ii) this Agreement and the other Loan Documents, (iii) the
Borrower Senior Note Documents, (iv) customary provisions restricting subletting
or assignment of any lease governing a leasehold interest of Holdings or any
Subsidiary of Holdings, (v) customary provisions restricting assignment of any
licensing agreement entered into by Holdings or any Subsidiary of Holdings in
the ordinary course of business, (vi) restrictions on the transfer of any asset
subject to a Lien permitted by Sections 8.01(iii), (vi), (vii) and (xii) so long
as such restrictions are not applicable to any property or any Subsidiary of
Holdings other than the specific property subject to such Lien, and (vii)
restrictions on the transfer of any asset pending the close of the sale of such
asset.
8.12 Limitation on Issuance of Capital Stock.
(a) Holdings will not, and will not permit any of its
Subsidiaries to, issue (i) any preferred stock other than Qualified
Holdings Preferred Stock issued by Holdings or (ii) any redeemable
common stock (other than common stock that is redeemable at the sole
option of Holdings or such Subsidiary).
(b) Holdings will not permit any of its Subsidiaries to issue
any capital stock (including by way of sales of treasury stock) or any
options or warrants to purchase, or securities convertible into,
capital stock, except (i) for transfers and replacements of then
outstanding shares of capital stock, (ii) for stock splits, stock
dividends and issuances which do not decrease the percentage ownership
of Holdings or any of its Subsidiaries in any class of the capital
stock of such Subsidiary, (iii) to qualify directors to the extent
required by applicable law or (iv) for issuances by newly created or
acquired Subsidiaries in accordance with the terms of this Agreement.
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8.13 Business.
(a) Holdings and its Subsidiaries will not engage in any
business other than the businesses engaged in by the Borrower and its
Subsidiaries as of the Closing Date and reasonable extensions thereof
and activities incidental thereto.
(b) Notwithstanding the foregoing or anything in this
Agreement, Holdings will not engage in any business and will not own
any significant assets or have any material liabilities other than its
ownership of the capital stock of the Borrower and having those
liabilities which it is responsible for under this Agreement, the other
Loan Documents to which it is a party and the Holdings Senior Discount
Note Documents, provided that Holdings may engage in those activities
that are incidental to (x) the maintenance of its corporate existence
in compliance with applicable law, (y) legal, tax and accounting
matters in connection with any of the foregoing activities and (z) the
entering into, and performing its obligations under, this Agreement and
the other Transaction Documents to which it is a party.
8.14 Limitation on Creation of Subsidiaries. Notwithstanding anything
to the contrary contained in this Agreement, Holdings will not, and will not
permit any of its Subsidiaries to, establish, create or acquire after the
Closing Date any Subsidiary, provided that the Borrower and its Wholly-Owned
Subsidiaries shall be permitted to establish, create and, to the extent
permitted by this Agreement, acquire Subsidiaries so long as (i) the capital
stock or other equity interests of each such new Subsidiary is pledged pursuant
to, and to the extent required by, the Pledge Agreement and the certificates (if
any) representing such stock or other equity interests, together with stock or
other powers duly executed in blank, are delivered to the Collateral Agent for
the benefit of the Banks, and (ii) each such new Domestic Subsidiary, and to the
extent required by Section 7.12, each such new Foreign Subsidiary, executes a
Guarantor Supplement. In addition, each new Domestic Subsidiary, and to the
extent required by Section 7.12, each such new Foreign Subsidiary, shall execute
and deliver, or cause to be executed and delivered, all other relevant
documentation of the type described in Article V as such new Subsidiary would
have had to deliver if such new Subsidiary were a Credit Party on the Closing
Date.
ARTICLE IX
EVENT OF DEFAULT
9.01 Event of Default. Any of the following shall constitute an "Event
of Default":
(a) Non-Payment. The Borrower fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Revolving
Loan or any amount of any Letter of Credit Obligation, or (ii) within
three Business Days after the same shall become due, any interest, fee
or any other amount payable hereunder or pursuant to any other Loan
Document; or
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(b) Representation or Warranty. Any representation or warranty
by Holdings or any of its Subsidiaries made or deemed made herein or in
any other Loan Document, or which is contained in any certificate,
document or financial or other statement furnished by Holdings or any
of its Subsidiaries at any time under this Agreement or under any other
Loan Document, shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
(c) Specific Defaults. Holdings or any of its Subsidiaries
fails to perform or observe any term, covenant or agreement contained
in Section 7.03(a), 7.10, 7.13 or Article VIII; or
(d) Other Defaults. Holdings or any of its Subsidiaries fails
to perform or observe any other term or covenant contained in this
Agreement or in any other Loan Document, and such default shall
continue unremedied for a period of 30 days after the date upon which
written notice thereof is given to the Borrower by the Administrative
Agent or any Bank; or
(e) Cross-Default. Holdings or any of its Subsidiaries (i)
fails to make any payment in respect of any Indebtedness having an
aggregate principal amount of $5,000,000 or more when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or
otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto on
the date of such failure; or (ii) fails to perform or observe any other
condition or covenant, or any other event shall occur or condition
exist, under any agreement or instrument relating to any such
Indebtedness, and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto on
the date of such failure if the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and
payable prior to its stated maturity; or
(f) Insolvency; Voluntary Proceedings. Holdings or any of its
Subsidiaries (i) generally fails to pay its debts as they become due;
(ii) commences any Insolvency Proceeding with respect to itself; or
(iii) takes any action to effectuate or authorize any of the foregoing;
or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against Holdings or any of its
Subsidiaries, or any writ, judgment, warrant of attachment, execution
or similar process, is issued or levied against a substantial part of
Holdings' or any of its Subsidiaries' properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement,
filing or levy; (ii) Holdings or any of its Subsidiaries admits the
material allegations of a petition against it in any Proceeding, or an
order for relief (or similar order under non-U.S. law) is ordered in
any Insolvency
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Proceeding; or (iii) Holdings or any of its Subsidiaries acquiesces in
the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or
business; or
(h) ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof under
Section 412 of the Code or Section 302 of ERISA or a waiver of such
standard or extension of any amortization period is sought or granted
under Section 412 of the Code or Section 303 or 304 of ERISA, a
Reportable Event shall have occurred, a contributing sponsor (as
defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV
of ERISA shall be subject to the advance reporting requirement of PBGC
Regulation Section 4043.61 (without regard to subparagraph (b)(1)
thereof) and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected
to occur with respect to such Plan within the following 30 days, any
Plan which is subject to Title IV of ERISA shall have had or is likely
to have a trustee appointed to administer such Plan, any Plan which is
subject to Title IV of ERISA is, shall have been or is likely to be
terminated or to be the subject of termination proceedings under ERISA,
any Plan shall have an Unfunded Current Liability, a contribution
required to be made with respect to a Plan has not been timely made,
Holdings or any Subsidiary of Holdings or any ERISA Affiliate has
incurred or is likely to incur any liability to or on account of a Plan
under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201,
4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code
or on account of a group health plan (as defined in Section 607(1) of
ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the
Code, or Holdings or any Subsidiary of Holdings has incurred or is
likely to incur liabilities pursuant to one or more employee welfare
benefit plans (as defined in Section 3(1) of ERISA) that provide
benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or Plans; (b) there shall result from
any such event or events the imposition of a lien, the granting of a
security interest, or a liability or a material risk of incurring a
liability; and (c) such lien, security interest or liability,
individually, and/or in the aggregate, in the opinion of the Required
Banks, has had, or could reasonably be expected to have, a Material
Adverse Effect; or
(i) Judgments. One or more judgments or decrees shall be
entered against Holdings or any of its Subsidiaries involving a
liability (not paid or not covered by a reputable and solvent insurance
company) of $5,000,000 or more for all such judgments and decrees and
all such judgments or decrees shall not have been vacated, discharged
or stayed or bonded pending appeal within 30 days from the entry
thereof; or
(j) Change of Control. Any Change of Control shall occur; or
(k) Collateral; Guaranties.
(i) Except in each case to the extent resulting from
the failure of the Collateral Agent to retain possession of
the applicable Pledged Securities, any
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Collateral Document (other than the Guaranties) shall cease to
be in full force and effect, or shall cease to give the
Collateral Agent the Liens, rights, powers and privileges
purported to be created thereby in favor of the Collateral
Agent; or
(ii) any Guaranty or any provision thereof shall
cease to be in full force and effect, or any Guarantor or any
Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under its Guaranty.
9.02 Remedies. If any Event of Default occurs and is continuing, the
Administrative Agent shall, at the request of, or may, with the consent of, the
Required Banks,
(a) declare the Revolving Commitment of each Bank and any
obligation of each Issuing Bank to issue Letters of Credit to be
terminated, whereupon all such Revolving Commitments and obligation
shall forthwith be terminated;
(b) declare the unpaid principal amount of all outstanding
Revolving Loans, all interest accrued and unpaid thereon, and all other
amounts owing or payable hereunder or under any other Loan Document to
be immediately due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by
the Borrower and Holdings;
(c) demand that the Borrower Cash Collateralize Letter of
Credit Obligations to the extent of outstanding and wholly or partially
undrawn Letters of Credit, whereupon the Borrower shall so Cash
Collateralize;
(d) exercise on behalf of itself, the Issuing Banks and the
Banks all rights and remedies available to it and the Banks under the
Loan Documents or applicable law; and
(e) apply any cash collateral as provided in Section 3.07 to
the payment of outstanding Obligations;
provided, however, that upon the occurrence of any event specified above in
paragraph (f) or (g) of Section 9.01 with respect to Holdings, the Borrower or
any Significant Subsidiary of the Borrower, the obligation of each Bank to make
Revolving Loans and any obligation of each Issuing Bank to issue Letters of
Credit shall automatically terminate, and all reimbursement obligations under
Letters of Credit and the unpaid principal amount of all outstanding Revolving
Loans and all interest and other amounts as aforesaid shall automatically become
due and payable without further act or notice by the Administrative Agent, any
Issuing Bank or any Bank, which are hereby expressly waived by the Borrower and
Holdings.
9.03 Rights Not Exclusive. The rights provided for in this Agreement
and in the other Loan Documents are cumulative and are not exclusive of any
other rights, powers, privileges or remedies provided by law or in equity, or
under any other instrument, document or agreement now existing or hereafter
arising.
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ARTICLE X
THE GUARANTY
10.01 Guaranty from Holdings.
(a) In order to induce the Banks to make Revolving Loans to
the Borrower under this Agreement and to induce the Issuing Banks to
issue Letters of Credit and to induce the Guaranteed Creditors to enter
into the Interest Rate Protection Agreements and Other Hedging
Agreements, Holdings hereby unconditionally and irrevocably guarantees
the prompt payment and performance in full by the Borrower when due
(whether at stated maturity, by acceleration or otherwise) of all
Guaranteed Obligations of the Borrower. The obligations of Holdings
hereunder are those of a primary obligor, and not merely a surety, and
are independent of the Guaranteed Obligations of the Borrower. A
separate action or actions may be brought against Holdings whether or
not an action is brought against the Borrower, any other guarantor or
other obligor in respect of the Guaranteed Obligations or whether the
Borrower, any other guarantor or any other obligor in respect of the
Guaranteed Obligations is joined in any such action or actions.
Holdings waives, to the fullest extent permitted by applicable law, the
benefit of any statute of limitation affecting its liability hereunder
and agrees that its liability hereunder shall not be subject to any
right of set-off, counterclaim or recoupment (each of which rights is
hereby waived to the fullest extent permitted by applicable law).
(b) Holdings guarantees that the obligations guaranteed by it
hereby will be paid and performed strictly in accordance with the terms
of this Agreement, the other Loan Documents and the applicable Interest
Rate Protection Agreements and Other Hedging Agreements regardless of
any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the
Administrative Agent, the Collateral Agent, the Issuing Banks, the
Banks or the other Guaranteed Creditors with respect thereto. This
guaranty is a guaranty of payment not collection. The liability of
Holdings under this guaranty shall be absolute and unconditional
irrespective of, and Holdings hereby irrevocably waives (to the fullest
extent permitted by applicable law) any defenses it may now or
hereafter have in any way relating to, any and all of the following:
(i) any lack of genuineness, validity, legality or
enforceability against the Borrower or any other guarantor of
this Agreement, any other Loan Document, any Interest Rate
Protection Agreement or Other Hedging Agreement or any
document, agreement or instrument relating hereto or any
assignment or transfer of this Agreement, any other Loan
Document or any Interest Rate Protection Agreement or Other
Hedging Agreement or any defense that the Borrower may have
with respect to its liability hereunder or thereunder;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Guaranteed Obligations, or any waiver, indulgence, compromise,
renewal, extension, amendment, modification of, or addition,
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consent, supplement to, or consent to departure from, or any
other action or inaction under or in respect of, this
Agreement, any other Loan Document, any Interest Rate
Protection Agreement or Other Hedging Agreement or any
document, instrument or agreement relating to the Guaranteed
Obligations or any other instrument or agreement referred to
herein or any assignment or transfer of this Agreement or any
Interest Rate Protection Agreement or Other Hedging Agreement;
(iii) any release or partial release of any other
guarantor or other obligor in respect of the Guaranteed
Obligations;
(iv) any exchange, impairment, release or
non-perfection of any collateral for all or any of the
Guaranteed Obligations, or any release, or amendment or waiver
of, or consent to departure from, any guaranty or security,
for any or all of the Guaranteed Obligations;
(v) any furnishing of any additional security for any
of the Guaranteed Obligations;
(vi) the liquidation, bankruptcy, insolvency or
reorganization of the Borrower, any other guarantor or other
obligor in respect of the Guaranteed Obligations or any action
taken with respect to this guaranty or otherwise by any
trustee or receiver, or by any court, in any such proceeding;
(vii) any modification or termination of any
intercreditor or subordination agreement pursuant to which the
claims of other creditors of the Borrower or any guarantor are
subordinated to those of the Banks, the Issuing Banks, the
Administrative Agent, the Collateral Agent or the other
Guaranteed Creditors; or
(viii) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable
discharge of, the Borrower or Holdings.
(c) This guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment or performance
of the Guaranteed Obligations, or any part thereof, is, upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise
pursuant to applicable law, rescinded or reduced in amount or must
otherwise be restored or returned by any of the Administrative Agent,
any Issuing Bank, any Bank, the Collateral Agent or the other
Guaranteed Creditors, all as though such payment or performance had not
been made.
(d) If an event permitting the acceleration of any of the
Guaranteed Obligations shall at any time have occurred and be
continuing and such acceleration shall at such time be prevented by
reason of the pendency against the Borrower of a case or proceeding
under any bankruptcy or insolvency law, Holdings agrees that, for
purposes of this guaranty and its obligations hereunder, the Guaranteed
Obligations shall be deemed to have been accelerated and Holdings shall
forthwith pay such Guaranteed Obligations
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(including interest which but for the filing of a petition in
bankruptcy with respect to the Borrower would accrue on such Guaranteed
Obligations, whether or not interest is an allowed claim under
applicable law), and the other obligations hereunder, forthwith upon
demand.
(e) Holdings hereby waives (i) promptness, diligence,
presentment, notice of nonperformance, protest or dishonor, notice of
acceptance and any and all other notices with respect to any of the
Guaranteed Obligations or this Agreement, any other Loan Document or
any Interest Rate Protection Agreement or Other Hedging Agreement, and
(ii) to the extent permitted by applicable law, any right to require
that any Administrative Agent, the Collateral Agent, any Issuing Bank,
any Bank or any other Guaranteed Creditor protect, secure, perfect or
insure any Lien in or any Lien on any property subject thereto or
exhaust any right or pursue any remedy or take any action against the
Borrower, any other guarantor or any other Person or any collateral or
security or to any balance of any deposit accounts or credit on the
books of the Administrative Agent, the Collateral Agent, any Issuing
Bank, any Bank or any other Guaranteed Creditor in favor of the
Borrower.
(f) Holdings expressly waives until the Guaranteed Obligations
are irrevocably paid in full in cash any and all rights of subrogation,
reimbursement, contribution and indemnity (contractual, statutory or
otherwise), including any claim or right of subrogation under the
Bankruptcy Code or any successor statute, arising from the existence or
performance of this guaranty and Holdings irrevocably waives until the
Guaranteed Obligations are irrevocably paid in full in cash any right
to enforce any remedy which the Administrative Agent, the Collateral
Agent, the Issuing Banks, the Banks or the other Guaranteed Creditors
now have or may hereafter have against the Borrower, and waives, to the
fullest extent permitted by law, until the Guaranteed Obligations are
irrevocably paid in full in cash any benefit of, and any right to
participate in, any security now or hereafter held by the
Administrative Agent, the Collateral Agent, any Issuing Bank, any Bank
or any other Guaranteed Creditor.
(g) If, in the exercise of any of its rights and remedies, the
Administrative Agent, the Collateral Agent, any Issuing Bank, any Bank
or any other Guaranteed Creditor shall forfeit any of its rights or
remedies, including its right to enter a deficiency judgment against
the Borrower or any other Person, whether because of any applicable
laws pertaining to "election of remedies" or the like, Holdings hereby
consents to such action and waives any claim based upon such action (to
the extent permitted by applicable law). Any election of remedies which
results in the denial or impairment of the right of the Administrative
Agent, the Collateral Agent, any Issuing Bank, any Bank or any other
Guaranteed Creditor to seek a deficiency judgment against any Credit
Party shall not impair Holdings' obligation to pay the full amount of
the Guaranteed Obligations.
(h) This guaranty is a continuing guaranty and shall (i)
remain in full force and effect until payment in full of the Guaranteed
Obligations and all other amounts
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payable under this guaranty and the termination of the Commitments;
(ii) be binding upon Holdings, its successors and assigns; and (iii)
inure, together with the rights and remedies hereunder, to the benefit
of the Guaranteed Creditors and their respective successors,
transferees and assigns. Without limiting the generality of the
foregoing clause (iii), any Guaranteed Creditor may, subject to the
terms of this Agreement or the applicable Interest Rate Protection
Agreement or Other Hedging Agreement, assign or otherwise transfer its
rights and obligations under this Agreement to any other Person, and
such other Person shall thereupon become vested with all the benefits
in respect hereof granted to such Bank pursuant to this guaranty or
otherwise, all as provided in, and to the extent set forth in, this
Agreement.
(i) Any obligations of the Borrower to Holdings, now or
hereafter existing, are hereby subordinated to the Guaranteed
Obligations. Such obligations of the Borrower to Holdings, if the
Administrative Agent or the Required Banks so request, shall be
enforced and amounts recovered shall be received by Holdings as trustee
for the Guaranteed Creditors and the proceeds thereof shall be paid
over to the Banks on account of the Guaranteed Obligations, but without
reducing or affecting in any manner the liability of Holdings under the
provisions of this guaranty.
(j) Upon failure of the Borrower to pay any Guaranteed
Obligation when and as the same shall become due, whether at maturity,
by acceleration or otherwise, Holdings hereby agrees immediately on
demand by any of the Guaranteed Creditors to pay or cause to be paid in
accordance with the terms hereof an amount equal to the full unpaid
amount of the Guaranteed Obligations then due in Dollars.
(k) All payments by Holdings hereunder shall be made free and
clear of, and without deduction or withholding for or on account of,
any Taxes, unless such deduction or withholding is required by law. If
Holdings shall be required by law to make any such deduction or
withholding, then Holdings shall pay such additional amounts as may be
necessary in order that the net amount received by the applicable Bank,
the Issuing Bank or the Administrative Agent, as the case may be, after
all deductions and withholdings, shall be equal to the full amount that
such Person would have received, after all deductions and withholdings,
had the Borrower discharged its obligations (including its tax gross-up
obligations) pursuant to Section 4.01.
Any amounts deducted or withheld by Holdings for or on account
of Taxes shall be paid over to the government or taxing authority
imposing such Taxes on a timely basis, and Holdings shall provide the
applicable Bank, the Issuing Bank or the Administrative Agent, as the
case may be, as soon as practicable with such tax receipts or other
official documentation (and such other certificates, receipts and other
documents as may reasonably be requested by such Person) with respect
to the payment of such Taxes as may be available.
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ARTICLE XI
THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT,
THE ISSUING BANK, THE SYNDICATION AGENT AND THE ARRANGERS
11.01 Appointment and Authorization.
(a) Each of the Banks and each of the Issuing Banks hereby
irrevocably appoints, designates and authorizes Bank of America as
Administrative Agent and as Collateral Agent (for purposes of this
Article XI, the term "Agent" shall mean Bank of America in its capacity
as Administrative Agent and as Collateral Agent) to take such action on
its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly
set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Bank or any Issuing Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent.
(b) Each Issuing Bank shall have all of the benefits and
immunities (i) provided to the Agent in this Article XI with respect to
any acts taken or omissions suffered by such Issuing Bank in connection
with Letters of Credit issued by it or proposed to be issued by it and
the Letter of Credit Applications pertaining to the Letters of Credit
as fully as if the term "Agent", as used in this Article XI, included
such Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to such Issuing
Bank.
11.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
11.03 Liability of Agent. None of the Agent, its Affiliates or any of
their officers, directors, employees, agents or attorneys-in-fact (collectively,
the "Agent-Related Persons") shall (a) be liable for any action taken or omitted
to be taken by any of them under or in connection with this Agreement or any
other Loan Document (except for their own gross negligence or willful
misconduct), or (b) be responsible in any manner to any of the Banks for any
recital, statement, representation or warranty made by Holdings, the Borrower or
any Subsidiary or Affiliate thereof, or any officer thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan
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Document, or for any failure of the Borrower, Holdings or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower, Holdings or any of
their respective Subsidiaries or Affiliates.
11.04 Reliance by Agent.
(a) The Banks agree that the Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile,
telex or telephone message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and statements
of legal counsel (including counsel to the Borrower, Holdings or any
Subsidiary Guarantor), independent accountants and other experts
selected by the Agent. The Banks agree that the Agent shall be fully
justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Banks or, as required by Section
12.01, all the Banks as it deems appropriate and, if it so requests, it
shall first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a request
or consent of the Required Banks or, as required by Section 12.01 all
the Banks, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.01 as it relates to the occurrence of the
Closing Date, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied
with each document or other matter either sent by the Agent to such
Bank for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or
satisfactory to such Bank, unless an officer of the Agent responsible
for the transactions contemplated by the Loan Documents shall have
received notice from such Bank prior to the Closing Date specifying in
reasonable detail its objection thereto and either such objection shall
not have been withdrawn by notice to the Agent to that effect or such
Bank shall not have made available to the Agent such Bank's ratable
portion of any Borrowing to be made on such date.
11.05 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Agent for the account of the Banks or the Issuing Bank, unless
the Agent shall have received written notice from a Bank or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating
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that such notice is a "notice of default". In the event that the Agent receives
such a notice, the Agent shall give notice thereof to the Banks and the Issuing
Banks. The Agent shall take such action with respect to such Default or Event of
Default as shall be requested by the Required Banks in accordance with Article
IX; provided, however, that unless and until the Agent shall have received any
such request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
11.06 Credit Decision. Each Bank expressly acknowledges that none of
the Agent-Related Persons has made any representation or warranty to it and that
no act by the Agent hereinafter taken, including any review of the affairs of
Holdings and its Subsidiaries, shall be deemed to constitute any representation
or warranty by the Agent to any Bank. Each Bank represents to the Agent that it
has, independently and without reliance upon the Agent and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of Holdings and its
Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated thereby, and made its own decision to enter into this
Agreement and extend credit to the Borrower hereunder. Each Bank also represents
that it will, independently and without reliance upon the Agent and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Holdings and its Subsidiaries. Except for notices, reports
and other documents expressly herein required to be furnished to the Banks by
the Agent, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Borrower, Holdings and their Subsidiaries which may come into the possession of
any of the Agent-Related Persons.
11.07 Indemnification. Whether or not the transactions contemplated
hereby shall be consummated, the Banks shall indemnify, upon demand, each of the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), ratably
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind whatsoever which may at any time (including at any time following the
expiration of the Letters of Credit and the repayment of the Loans and the
termination or resignation of the Agent) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement,
any other Loan Document or any document contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by any such Person under or in connection with any of the foregoing;
provided, however, that no Bank shall be liable for the payment to any of the
Agent-Related Persons of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank shall reimburse the Agent upon
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demand for its ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by the Agent in connection with the 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, any other Loan Document, or any document
contemplated by or referred to herein to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrower. Without limiting
the generality of the foregoing, if the Internal Revenue Service or any other
Governmental Authority of the United States or other jurisdiction asserts a
claim that the Agent did not properly withhold tax from amounts paid to or for
the account of any Bank (because the appropriate form was not delivered, was not
properly executed, or because such Bank failed to notify the Agent of a change
in circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify the Agent
fully for all amounts paid as a result thereof, directly or indirectly, by the
Agent as tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the Agent under this
Section 11.07, together with all costs and expenses (including Attorney Costs).
The obligation of the Banks in this Section shall survive the payment of all
Obligations hereunder.
11.08 Agent in Individual Capacity. Bank of America and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory or other business with Holdings and its Subsidiaries
and Affiliates as though Bank of America were not the Agent or an Issuing Bank
hereunder and without notice to or consent of the Banks. With respect to its
Revolving Loans and participation in Letters of Credit, Bank of America shall
have the same rights and powers under this Agreement and the other Loan
Documents as any other Bank and may exercise the same as though it were not the
Agent or an Issuing Bank, and the terms "Bank" and "Banks" shall include Bank of
America in its individual capacity.
11.09 Successor Agent. The Agent may resign as Agent upon 30 days'
notice to the Banks and the Borrower. If the Agent shall resign as Agent under
this Agreement, the Required Banks shall appoint from among the Banks a
successor agent for the Banks which successor agent shall be subject to the
approval of the Borrower if no Event of Default has occurred and is continuing,
such approval not to be unreasonably withheld or delayed. If no successor agent
is appointed prior to the effective date of the resignation of the Agent, the
Agent may appoint, after consulting with the Banks and subject to the approval
of the Borrower if no Event of Default has occurred and is continuing, such
approval not to be unreasonably withheld or delayed, a successor agent from
among the Banks or any Bank Affiliate. Any successor Agent appointed under this
Section 11.09 shall be a commercial bank organized under the laws of the United
States or any State thereof, and having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article XI and Sections 12.04 and 12.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent by
the date which is 30 days following a
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retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Banks shall perform all of the
duties of the Agent hereunder until such time, if any, as the Required Banks
appoint a successor agent as provided for above.
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11.10 The Arrangers and the Syndication Agent. Each Arranger
and the Syndication Agent, in such capacity, shall have no duties or
responsibilities, and shall incur no obligations or liabilities, under this
Agreement. Each Bank acknowledges that it has not relied, and will not rely, on
any Arranger or the Syndication Agent in deciding to enter into this Agreement.
ARTICLET XII
MISCELLANEOUS
12.01 Amendments and Waivers.
(a) No amendment or waiver of any provision of this Agreement
or any other Loan Document and no consent with respect to any departure by the
Borrower, Holdings or any Subsidiary Guarantor therefrom, shall be effective
unless the same shall be in writing and signed by the respective Credit Parties
party thereto and the Required Banks and acknowledged by the Administrative
Agent, and then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment or consent shall, unless in writing and
signed by all the Banks affected thereby and acknowledged by the Administrative
Agent, do any of the following:
(i) increase or extend any Revolving Commitment of
such Bank (or reinstate any Revolving Commitment terminated
pursuant to Section 9.02(a)) (except as provided in Section
12.07);
(ii) postpone or delay any date for any payment of
interest or fees due to the Banks (or any of them) hereunder
or under any other Loan Document or extend the Revolving
Termination Date;
(iii) reduce the principal of, or the rate of
interest specified herein on, any Revolving Loan or Letter of
Credit Borrowing (other than with respect to post-default
rates), or of any fees or other amounts payable hereunder or
under any other Loan Document or reduce the Applicable Margin
provided for herein (it being understood that any amendment or
modification to the financial definitions in this Agreement
shall not constitute a reduction in the rate of interest or
fees for the purposes of this clause (iii));
(iv) reduce the percentage of the Revolving
Commitments or of the aggregate unpaid principal amount of the
Revolving Loans which shall be required for the Banks or any
of them to take any action hereunder;
(v) amend this Section 12.01, to the extent that any
such amendment would alter any of the voting requirements set
forth in the other provisions of this Section 12.01, or amend
the definition of the term "Required Banks" or any
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provision of this Agreement expressly requiring the consent of
all the Banks in order to take or refrain from taking any
action; or
(vi) release the guaranty of Holdings under its
guaranty pursuant to Article X or discharge any Subsidiary
Guarantor from its obligations under any Subsidiary Guaranty,
or release all or substantially all of the Collateral except,
in all such cases, in accordance with the express provisions
thereof;
and, provided further, that (A) no amendment, waiver or consent shall,
unless in writing and signed by the Issuing Banks in addition to the
Required Banks or all the Banks, as the case may be, affect the rights
or duties of the Issuing Banks under this Agreement or any Letter of
Credit Related Document, and (B) no amendment, waiver or consent shall,
unless in writing and signed by the Administrative Agent in addition to
the Required Banks or all the Banks, as the case may be, affect the
rights or duties of the Administrative Agent or under this Agreement or
any other Loan Document.
(b) If, in connection with any proposed change, waiver,
discharge or any termination to any of the provisions of this Agreement
as contemplated by clauses (ii) through (vi), inclusive, of the first
proviso to Section 12.01(a), the consent of the Required Banks is
obtained but the consent of one or more other Banks whose consent is
required is not obtained, then the Borrower shall have the right, so
long as all non-consenting Banks whose individual consent is required
are treated the same, to replace each such non-consenting Bank or Banks
with one or more Replacement Banks pursuant to Section 4.08(b) so long
as at such time of such replacement, each such Replacement Bank
consents to the proposed change, waiver, discharge or termination.
12.02 Notices.
(a) All notices, requests and other communications provided
for hereunder shall be in writing (including, unless the context
expressly otherwise provides, facsimile transmission) and mailed,
transmitted by facsimile or delivered, (A) if to the Borrower,
Holdings, the Administrative Agent or any Issuing Bank, to the address
or facsimile number specified for notices on the applicable signature
page hereof; (B) if to any Bank, to the notice address of such Bank set
forth on Schedule 1.01(a); or (C) as directed to the Borrower or the
Administrative Agent, to such other address as shall be designated by
such party in a written notice to the other parties, and as directed to
each other party, at such other address as shall be designated by such
party in a written notice to the Borrower and the Administrative Agent.
(b) All such notices, requests and communications shall be
effective when delivered or transmitted by facsimile machine,
respectively, provided that any matter transmitted by the Borrower by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on the applicable signature page
hereof or on Schedule 1.01(a), and (ii) shall be followed promptly by a
hard copy original thereof; except that notices to the Administrative
Agent shall not be effective until
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actually received by the Administrative Agent, and notices pursuant to
Article III to each Issuing Bank shall not be effective until actually
received by such Issuing Bank.
(c) The Borrower acknowledges and agrees that any agreement of
the Administrative Agent, the Issuing Banks and the Banks in Articles
II and III herein to receive certain notices by telephone and facsimile
is solely for the convenience and at the request of the Borrower. The
Administrative Agent, the Issuing Banks and the Banks shall be entitled
to rely on the authority of any Person purporting to be a Person
authorized by the Borrower to give such notice and the Administrative
Agent, the Issuing Banks and the Banks shall not have any liability to
such Borrower or any other Person on account of any action taken or not
taken by the Administrative Agent, the Issuing Banks or the Banks in
reliance upon such telephonic or facsimile notice. The obligation of
the Borrower to repay the Loans and drawings under Letters of Credit
shall not be affected in any way or to any extent by any failure by the
Administrative Agent, the Issuing Banks and the Banks to receive
written confirmation of any telephonic or facsimile notice or the
receipt by the Administrative Agent, the Issuing Banks and the Banks of
a confirmation which is at variance with the terms understood by the
Administrative Agent, the Issuing Banks or the Banks to be contained in
the telephonic or facsimile notice.
12.03 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent, any Issuing
Bank or any Bank, any right, remedy, power or privilege hereunder, shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.
12.04 Costs and Expenses. The Borrower shall, whether or not
the transactions contemplated hereby shall be consummated:
(a) pay or reimburse on demand for all reasonable costs and
expenses incurred by the Administrative Agent, the Syndication Agent
and each Arranger in connection with the development, preparation,
delivery, administration, syndication of the Commitments under and
execution of, and any amendment, supplement, waiver or modification to
(in each case, whether or not consummated), this Agreement, any other
Loan Document and any other documents prepared in connection herewith
or therewith, and the consummation of the transactions contemplated
hereby and thereby, including the Attorney Costs incurred by the
Administrative Agent, the Syndication Agent or any Arranger with
respect thereto;
(b) pay or reimburse each Bank, each Issuing Bank and the
Administrative Agent on demand for all reasonable costs and expenses
incurred by them in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies (including in
connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding) under this Agreement (including
the guaranty contained in Article X), any other Loan Document, and any
such other documents,
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including Attorney Costs incurred by the Administrative Agent, any
Issuing Bank and any Bank and any cost of any consultants retained by
the Administrative Agent; and
(c) pay or reimburse the Administrative Agent and each Issuing
Bank on demand for all appraisal (including, without duplication, the
allocated cost of internal appraisal services), audit, environmental
inspection and review (including, without duplication, the allocated
cost of such internal services), search and filing costs, fees and
expenses, incurred or sustained by the Administrative Agent in
connection with the matters referred to under clause (b) of this
Section 12.04.
12.05 Indemnity. Whether or not the transactions contemplated
hereby shall be consummated, the Borrower shall pay, indemnify, and hold each
Bank, each Issuing Bank, the Administrative Agent, each Arranger, the
Syndication Agent and each of their respective officers, directors, employees,
counsel, agents and attorneys- in-fact (each, an "Indemnified Person") harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or disbursements
(including Attorney Costs) of any kind or nature whatsoever with respect to (a)
any investigation, litigation or proceeding (including any Insolvency
Proceeding) related to this Agreement or the Loan Documents or the Loans or the
Letters of Credit, or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto and (b) the actual or alleged presence of
Hazardous Materials in the air, surface water or groundwater or on the surface
or subsurface of any property owned, leased or at any time operated by Holdings
or any of its Subsidiaries, the generation, storage, transportation, handling or
disposal of Hazardous Materials at any location by Holdings or any of its
Subsidiaries, whether or not owned, leased or operated by Holdings or any of its
Subsidiaries, the noncompliance of any property owned, leased or operated by
Holdings or any of its Subsidiaries with Environmental Laws (including
applicable permits thereunder) applicable to any such property, or any
Environmental Claim asserted against Holdings, any of its Subsidiaries or any
property owned, leased or at any time operated by Holdings or any of its
Subsidiaries, (all the foregoing described in (a) and (b) above, collectively,
the "Indemnified Liabilities"); provided, however, that the Borrower shall have
no obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of such
Indemnified Person as the same is determined by a final judgment of a court of
competent jurisdiction. The obligations in this Section 12.05 shall survive
payment of all other Obligations.
12.06 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that neither the Borrower nor Holdings
may assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Administrative Agent and each Bank.
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12.07 Assignments, Participations, etc.
(a) Any Bank may, with the written consent of the Borrower,
the Administrative Agent and Bank of Americas as an Issuing Bank, which consents
shall not be unreasonably withheld or delayed, at any time assign and delegate
to one or more Eligible Assignees (provided that no written consent of the
Borrower shall be required either in connection with any assignment and
delegation by a Bank to an Eligible Assignee that is a Bank Affiliate of such
Bank or at any time that an Event of Default shall exist) (each an "Assignee")
all, or any ratable part of all, of the Revolving Loans, Revolving Commitment
and the other rights and obligations of such Bank hereunder; provided, however,
that any such assignment to an Eligible Assignee which is not a Bank or a Bank
Affiliate shall be in a minimum amount equal to the lesser of $5,000,000 or the
full amount of the assignor Bank's Revolving Loans and Revolving Commitment; and
provided, still further, that the Borrower, the Issuing Banks and the
Administrative Agent may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Borrower
and the Administrative Agent by such Bank and the Assignee; (ii) such Bank and
its Assignee shall have delivered to the Borrower and the Administrative Agent
an Assignment and Acceptance in the form of Exhibit K ("Assignment and
Acceptance"); (iii) such assignment is recorded by the Administrative Agent in
the Register pursuant to Section 2.02; and (iv) the assignor Bank or Assignee
has paid to the Agent a processing fee in the amount of $3,500; and provided,
still further, that any assignment must include an equal percentage of the
assignor Bank's Revolving Commitment and Revolving Loans.
(b) From and after the date that the Administrative Agent
notifies the assignor Bank that the requirements of paragraph (a) above are
satisfied, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents. Anything
herein to the contrary notwithstanding, any Bank assigning all of its Revolving
Loans, Revolving Commitment and other rights and obligations hereunder to an
Assignee shall continue to have the benefit of all indemnities hereunder
following such assignment.
(c) Immediately upon each Assignee's making its payment under
the Assignment and Acceptance and the recordation of same by the Administrative
Agent in the Register pursuant to Section 2.02, this Agreement, shall be deemed
to be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Aggregate Revolving
Commitment and the outstanding Revolving Loans arising therefrom.
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(d) Any Bank may at any time sell to one or more banks or
other Persons (a "Participant") participating interests in any Loans, the
Commitments of such Bank and the other interests of such Bank (the "Originating
Bank") hereunder and under the other Loan Documents; provided, however, that (i)
the Originating Bank's obligations under this Agreement shall remain unchanged,
(ii) the Originating Bank shall remain solely responsible for the performance of
such obligations, (iii) the Borrower, the Issuing Bank and the Administrative
Agent shall continue to deal solely and directly with the Originating Bank in
connection with the Originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant shall have rights to
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, provided that such Participant shall have
the right to approve any amendment, consent or waiver described in clauses (ii)
and (iii) of the first proviso to Section 12.01. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections
4.01, 4.03 and 12.05, subject to the same limitations, as though it were also a
Bank hereunder, subject to clause (f) below, and if amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the extent permitted under applicable law, be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision contained in this
Agreement or any other Loan Document to the contrary, (i) any Bank may assign
all or any portion of the Revolving Loans held by it to any Federal Reserve Bank
or the United States Treasury as collateral security pursuant to Regulation A of
the Federal Reserve Board and any Operating Circular issued by such Federal
Reserve Bank, provided that any payment in respect of such assigned Revolving
Loans made by the Borrower or Holdings to or for the account of the assigning or
pledging Bank in accordance with the terms of this Agreement shall satisfy the
Borrower's or Holdings' obligations hereunder in respect to such assigned
Revolving Loans to the extent of such payment and (ii) with the consent of the
Administrative Agent, any Bank which is a fund may pledge all or any portion of
its Revolving Loans to its trustee in support of its obligations to its trustee.
No such assignment shall release the assigning Bank from its obligations
hereunder.
(f) No Participant shall be entitled to receive any greater
payment under Sections 4.01 or 4.03 than such Originating Bank would have been
entitled to receive with respect to the rights transferred unless such transfer
is made with the Borrower's prior written consent.
12.08 Confidentiality. Each Bank agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all information provided to it by Holdings, the Borrower or any Subsidiary of
Holdings, or by the Administrative Agent on Holdings', the Borrower's or such
Subsidiary's behalf, in connection with this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information for any purpose or in any manner other than pursuant to the terms
contemplated by this Agreement;
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except to the extent such information (a) was or becomes generally available to
the public other than as a result of a disclosure by the Bank, or (b) was or
becomes available on a non-confidential basis from a source other than the
Borrower or Holdings, provided that such source is not bound by a
confidentiality agreement with the Borrower or Holdings, known to the Bank;
provided further, however, that any Bank may disclose such information (i) at
the request or pursuant to any requirement of any Governmental Authority to
which the Bank is subject or in connection with an examination of such Bank by
any such authority; (ii) pursuant to subpoena or other court process; (iii) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (iv) to the extent reasonably required in connection with
any litigation or proceeding to which the Administrative Agent, such Bank or
their respective Affiliates may be party; (v) to the extent reasonably required
in connection with the exercise of any remedy hereunder or under any other Loan
Document; and (vi) to such Bank's independent auditors, other professional
advisors and employees of such Bank's Bank Affiliates (or any Affiliate of such
Bank engaged in capital market transactions generally) retained by such Bank in
connection with this Agreement so long as such Persons agree to maintain the
confidentiality of all such information disclosed to them. Notwithstanding the
foregoing, the Borrower authorizes each Bank to disclose to any Participant or
Assignee (each, a "Transferee") and to any prospective Transferee, such
financial and other information in such Bank's possession concerning the
Borrower or its Subsidiaries or Holdings which has been delivered to the
Administrative Agent or the Banks pursuant to this Agreement or which has been
delivered to the Administrative Agent or the Banks by the Borrower or Holdings
in connection with the Banks' credit evaluation of the Borrower prior to
entering into this Agreement; provided that, unless otherwise agreed by the
Borrower or Holdings, such Transferee agrees in writing to such Bank to keep
such information confidential to the same extent required of the Banks
hereunder.
12.09 Set-off. In addition to any rights and remedies of the
Banks provided by law, if an Event of Default occurs and is continuing, each
Bank is authorized at any time and from time to time, without prior notice to
the Borrower or Holdings, any such notice being waived by the Borrower and
Holdings to the fullest extent permitted by law, to set off and apply, to the
extent permitted by applicable law, any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing to, such Bank to or for the credit or the account
of the Borrower or Holdings against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the Administrative
Agent or such Bank shall have made demand under this Agreement or any other Loan
Document and although such Obligations may be contingent or unmatured. Each Bank
agrees promptly to notify the Borrower or Holdings and the Administrative Agent
after any such set-off and application made by such Bank; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Bank under this Section 12.09 are in
addition to the other rights and remedies (including other rights of set-off)
which the Bank may have.
12.10 Notification of Addresses, Lending Offices, etc. Each
Bank shall notify the Administrative Agent in writing of any changes in the
address to which notices to the Bank should be directed, of addresses of its
Lending Office, of payment instructions in respect of all
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payments to be made to it hereunder and of such other administrative information
as the Administrative Agent shall reasonably request.
12.11 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement in any number of separate counterparts,
each of which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Administrative Agent.
12.12 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
12.13 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the parties hereto and
their permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents
(other than the Arrangers and the Syndication Agent). None of the Administrative
Agent, the Syndication Agent, any Arranger, any Issuing Bank or any Bank shall
have any obligation to any Person not a party to this Agreement or any other
Loan Document.
12.14 Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
THE PARTIES HERETO IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
PARTIES HERETO EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
12.15 Waiver of Jury Trial. THE PARTIES HERETO EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
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LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS, OR OTHERWISE. THE PARTIES HERETO EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING
THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS SECTION 12.15 AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
12.16 Domicile of Loans. Each Bank may transfer and carry its
Revolving Loans at, to or for the account of any office, Subsidiary or Affiliate
of such Bank. Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Revolving Loans pursuant to this Section 12.16 would,
at the time of such transfer, result in increased costs under Sections 4.01,
4.03 or 4.06 from those being charged by the respective Bank prior to such
transfer, then the Borrower shall not be obligated to pay such increased costs
(although the Borrower shall be obligated to pay any other increased costs of
the type described above resulting from changes after the date of the respective
transfer).
12.17 Financial Information. Notwithstanding anything to
contrary contained in Sections 5.01(o)(i) and 5.01(o)(iv), the Banks hereby
agree that the Pro Forma Balance Sheet required by Section 5.01(o)(i) and the
draft of the audited consolidated financial statements of Holdings for its
fiscal year ended December 31, 1997 required by Section 5.01(o)(iv) do not need
to be delivered on or prior to the Closing Date, but instead are required to be
delivered, (x) in the case of the Pro Forma Balance Sheet, on or prior to April
8, 1998, and (y) in the case of the draft of the audited consolidated financial
statements of Holdings for its fiscal year ended December 31, 1997, on or prior
to any Borrowing of Revolving Loans.
-109-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
AMERICAN LAWYER MEDIA HOLDINGS, INC.
By: /s/ Anup Bagaria
-------------------------------
Neme: Anup Bagaria
Title: Vice President
Address for notices:
c/o Wassertein Perella & Co., Inc.
31 West 52nd Street, 27th Floor
New York, NY 10019
Attn:. Anup Bagaria
Facsimile: (212) 969-7879
Tel: (212) 969-2609
AMERICAN LAWYER MEDIA, INC.
By: /s/ Anup Bagaria
-------------------------------
Name: Anup Bagaria
Title: Vice President
Address for notices:
c/o Wassertein Perella & Co., Inc.
31 West 52nd Street, 27th Floor
New York, NY 10019
Attn:. Anup Bagaria
Facsimile: (212) 969-7879
Tel: (212) 969-2609
-110-
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as
Administrative Agent
By /s/ Dietmar Schiel
-------------------------------
Title: Vice President
Address for Notices of
Borrowing/Conversions/
Continuations, payments,
presentments and other
administrative matters:
1850 Gateway Boulevard, 5th Floor
Concord, CA 94520
Attn: Agency Administrative
Services #5596
Josephine T. Flores,
Assistant Vice President
Facsimile: (510) 675-8500
Tel: (510) 675-8374
Address for all other notices
(including with respect to
amendments and waivers:
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn:. Agency Management Services
#108321
Dietmar Schiel, Vice
President
Facsimile: (415) 436-3425
Tel: (415) 436-2769
-111-
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as an Issuing Bank
By /s/ Andrea Katter
-------------------------------
Title: Managing Director
Address for notices:
Bank of America National Trust and
Savings Association
CBG Letters of Credit (#32054)
200 W. Jackson Blvd., 17th Floor
Chicago, IL 60606
Attn: Gail S. Miller
Facsimile: (312) 987-6828
Tel: (312) 923-5924
with a copy to:
1850 Gateway Boulevard, 5th Floor
Concord, CA 94520
Attn.: Agency Administrative
Services #5596
Josephine T. Flores,
Assistant Vice President
Facsimile: (510) 675-8500
Tel: (510) 675-8374
-112-
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By /s/ Andrea Katter
-------------------------------
Title: Managing Director
-113-
<PAGE>
BANCAMERICA ROBERTSON STEPHENS
as an Arranger
By /s/ Amy S. Trapp
-------------------------------
Title: Managing Director
-114-
<PAGE>
BANKBOSTON, N.A., as Bank and
as an Issuing Bank
By /s/ Jennifer R. Buras
-------------------------------
Title: Director
Address for notices:
100 Federal Street, 01-08-08
Boston, MA 02110
Attn: Jennifer R. Buras
Director
Facsimile: (617) 434-3401
Tel: (617) 434-5790
-115-
<PAGE>
BANCBOSTON SECURITIES INC.,
as Syndication Agent and as an Arranger
By /s/ Julia D. Van Trees
-------------------------------
Title: Managing Director
-116-
<PAGE>
Exhibit 4.1
American Lawyer Media, Inc.,
as Issuer
ALM, LLC, Counsel Connect, LLC,
ALM IP, LLC, and
ALM Counsel Connect Inc.
as Guarantors
$175,000,000
9 3/4% Senior Notes
due December 15, 2007
-------------
INDENTURE
Dated as of December 22, 1997
-------------
The Bank of New York,
as Trustee
<PAGE>
TABLE OF CONTENTS
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Article I
DEFINITIONS AND INCORPORATION
BY REFERENCE.............................................. 1
SECTION 1.01 DEFINITIONS.................................................................... 1
SECTION 1.02 OTHER DEFINITIONS.............................................................. 23
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.............................. 25
SECTION 1.04 RULES OF CONSTRUCTION.......................................................... 25
Article II
THE NOTES................................................. 26
SECTION 2.01 FORM AND DATING................................................................ 26
SECTION 2.02 EXECUTION AND AUTHENTICATION................................................... 29
SECTION 2.03 REGISTRAR AND PAYING AGENT..................................................... 30
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST............................................ 30
Section 2.05 Holder Lists................................................................... 31
SECTION 2.06 PAYMENT........................................................................ 31
SECTION 2.07 TRANSFER AND EXCHANGE.......................................................... 31
SECTION 2.08 REPLACEMENT NOTES.............................................................. 38
SECTION 2.09 OUTSTANDING NOTES.............................................................. 38
SECTION 2.10 TREASURY NOTES................................................................. 39
SECTION 2.11 TEMPORARY NOTES................................................................ 39
SECTION 2.12 CANCELLATION................................................................... 39
SECTION 2.13 DEFAULTED INTEREST............................................................. 40
SECTION 2.14 CUSIP NUMBERS.................................................................. 40
Article III
REDEMPTION AND PREPAYMENT....................................... 40
SECTION 3.01 NOTICES TO TRUSTEE............................................................. 40
SECTION 3.02 SELECTION OF NOTES TO BE REDEEMED.............................................. 41
SECTION 3.03 Notice of Redemption........................................................... 41
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION................................................. 42
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE.................................................... 42
SECTION 3.06 NOTES REDEEMED IN PART......................................................... 43
SECTION 3.07 OPTIONAL REDEMPTION............................................................ 43
SECTION 3.08 NO MANDATORY REDEMPTION........................................................ 44
Article IV
COVENANTS................................................. 44
SECTION 4.01 PAYMENT OF NOTES............................................................... 44
SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY................................................ 45
SECTION 4.03 REPORTS........................................................................ 45
SECTION 4.04 COMPLIANCE CERTIFICATE......................................................... 46
SECTION 4.05 COMPLIANCE WITH LAWS, TAXES.................................................... 47
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SECTION 4.06 STAY, EXTENSION AND USURY LAWS................................................. 48
SECTION 4.07 CHANGE OF CONTROL.............................................................. 48
SECTION 4.08 LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK.............................. 50
SECTION 4.09 LIMITATION ON RESTRICTED PAYMENTS.............................................. 55
SECTION 4.10 LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS ........................... 58
SECTION 4.11 LIMITATION ON LIENS SECURING INDEBTEDNESS ..................................... 59
SECTION 4.12 LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES.............................................. 60
SECTION 4.13 LIMITATION ON TRANSACTIONS WITH AFFILIATES..................................... 61
SECTION 4.14 FUTURE GUARANTORS.............................................................. 61
SECTION 4.15 LIMITATION ON LINES OF BUSINESS................................................ 62
SECTION 4.16 CORPORATE EXISTENCE............................................................ 62
SECTION 4.17 LIMITATIONS ON STATUS AS INVESTMENT COMPANY.................................... 62
SECTION 4.18 DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES........................ 62
SECTION 4.19 TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE COMPANY........................ 63
Article V
SUCCESSORS............................................... 63
SECTION 5.01 MERGER, SALE OR CONSOLIDATION ................................................. 63
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED.............................................. 64
Article VI
DEFAULTS AND REMEDIES.......................................... 65
SECTION 6.01 EVENTS OF DEFAULT.............................................................. 65
SECTION 6.02 ACCELERATION................................................................... 66
SECTION 6.03 OTHER REMEDIES................................................................. 66
SECTION 6.04 WAIVER OF PAST DEFAULTS ....................................................... 67
SECTION 6.05 CONTROL BY MAJORITY............................................................ 67
SECTION 6.06 LIMITATION ON SUITS ........................................................... 67
SECTION 6.07 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT ................................. 68
SECTION 6.08 COLLECTION SUIT BY TRUSTEE..................................................... 68
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM............................................... 69
SECTION 6.10 PRIORITIES..................................................................... 69
SECTION 6.11 UNDERTAKING FOR COSTS.......................................................... 70
Article VII
TRUSTEE................................................. 70
SECTION 7.01 DUTIES OF TRUSTEE.............................................................. 70
SECTION 7.02 RIGHTS OF TRUSTEE ............................................................. 71
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE .................................................. 73
SECTION 7.04 TRUSTEE'S DISCLAIMER .......................................................... 73
SECTION 7.05 NOTICE OF DEFAULTS............................................................. 73
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES..................................... 73
SECTION 7.07 COMPENSATION AND INDEMNITY..................................................... 74
SECTION 7.08 REPLACEMENT OF TRUSTEE ........................................................ 75
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ii
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SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC............................................... 76
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.................................................. 76
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.............................. 77
Article VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE.............................. 77
SECTION 8.01 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE....................... 77
SECTION 8.02 LEGAL DEFEASANCE AND DISCHARGE................................................. 77
SECTION 8.03 COVENANT DEFEASANCE............................................................ 78
SECTION 8.04 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE..................................... 78
SECTION 8.05 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.......................................... 80
SECTION 8.06 REPAYMENT TO COMPANY........................................................... 81
SECTION 8.07 REINSTATEMENT.................................................................. 81
Article IX
AMENDMENT, SUPPLEMENT AND WAIVER.................................... 82
SECTION 9.01 WITHOUT CONSENT OF HOLDERS OF NOTES............................................ 82
SECTION 9.02 WITH CONSENT OF HOLDERS OF NOTES............................................... 83
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT............................................ 85
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS.............................................. 85
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES............................................... 85
SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS, ETC................................................ 85
Article X
SUBSIDIARY GUARANTEES......................................... 86
SECTION 10.01 SUBSIDIARY GUARANTEES.......................................................... 86
SECTION 10.02 EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES................................ 87
SECTION 10.03 GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS............................. 88
SECTION 10.04 RELEASE OF GUARANTORS.......................................................... 89
SECTION 10.05 LIMITATION OF GUARANTOR'S LIABILITY............................................ 90
SECTION 10.06 APPLICATION OF CERTAIN TERMS AND PROVISIONS TO THE
GUARANTOR...................................................................... 90
SECTION 10.07 ADDITIONAL GUARANTORS.......................................................... 91
Article XI
MISCELLANEOUS.............................................. 92
SECTION 11.01 TRUST INDENTURE ACT CONTROLS................................................... 92
SECTION 11.02 NOTICES........................................................................ 92
SECTION 11.03 COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF
NOTES ......................................................................... 93
SECTION 11.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT............................. 93
SECTION 11.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.................................. 94
SECTION 11.06 RULES BY TRUSTEE AND AGENTS ................................................... 94
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iii
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SECTION 11.07 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS............................................................... 94
SECTION 11.08 GOVERNING LAW ................................................................. 94
SECTION 11.09 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS ................................. 95
SECTION 11.10 SUCCESSORS .................................................................... 95
SECTION 11.11 SEVERABILITY .................................................................. 95
SECTION 11.12 COUNTERPART ORIGINALS.......................................................... 95
SECTION 11.13 TABLE OF CONTENTS, HEADINGS, ETC............................................... 95
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EXHIBIT A SERIES A NOTE A - 1
EXHIBIT B SERIES B NOTE B - 1
EXHIBIT C FORM OF CERTIFICATE OF TRANSFER FROM U.S. GLOBAL NOTE OR C - 1
IAI GLOBAL NOTE TO REGULATION S TEMPORARY GLOBAL NOTE
EXHIBIT D FORM OF CERTIFICATE OF TRANSFER FROM REGULATION S TEMPORARY D - 1
GLOBAL NOTE TO U.S. GLOBAL NOTE OR IAI GLOBAL NOTE
EXHIBIT E FORM OF CERTIFICATE OF TRANSFER FROM GLOBAL NOTE OR E - 1
TRANSFER RESTRICTED SECURITY TO TRANSFER RESTRICTED
SECURITY
EXHIBIT F FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE F - 1
EXHIBIT G FORM OF CERTIFICATE OF TRANSFERS OF REGULATION S TEMPORARY G - 1
GLOBAL NOTE FOR REGULATION S PERMANENT GLOBAL NOTE
EXHIBIT H FORM OF CERTIFICATE OF TRANSFERS OF REGULATION S TEMPORARY H - 1
GLOBAL NOTE FOR REGULATION S PERMANENT GLOBAL NOTE
EXHIBIT I FORM OF CERTIFICATE OF TRANSFERS OF REGULATION S PERMANENT I - 1
GLOBAL NOTE FOR TRANSFER RESTRICTED SECURITIES
EXHIBIT J RESTRICTED SUBSIDIARY GUARANTEE J - 1
EXHIBIT K FORM OF SUPPLEMENTAL INDENTURE K - 1
</TABLE>
v
<PAGE>
INDENTURE dated as of December 22, 1997, among American Lawyer
Media, Inc., a Delaware corporation (the "Company"), ALM, LLC, Counsel Connect
LLC, ALM IP, LLC and ALM Counsel Connect Inc. (the "Guarantors"), and The Bank
of New York, a New York banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of each other and
for the equal and ratable benefit of the Holders of the 9 3/4% Series A Senior
Notes due 2007 (the " Series A Notes") and the 9 3/4% Series B Senior Notes due
2007 (the "Series B Notes") together with the Series A Notes (the "Notes"):
Article
I
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01 DEFINITIONS
"Acquired Indebtedness" means Indebtedness of any Person
existing at the time such Person becomes a Restricted Subsidiary of the Company,
including by designation, or is merged or consolidated into or with the Company
or one of its Restricted Subsidiaries or is assumed by the Company or a
Restricted Subsidiary in connection with the acquisition of assets from such
Person.
"Acquisition" means the purchase or other acquisition of any
Person or all or substantially all the assets of any Person by any other Person
or any division or line of business of such Person, whether by purchase, merger,
consolidation, or other transfer, and whether or not for consideration.
"Acquisition Transactions" means the Acquisition of National
Law Publishing Company, Inc. by the Company, including the related financing
transactions.
"Adjusted Consolidated Net Income" means, with respect to any
Person, for any period, the Consolidated Net Income of such Person for such
period plus any non-cash charges for such period relating to the amortization of
goodwill or other intangibles or any other purchase accounting adjustment
resulting from any acquisition.
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For purposes of this definition, the term
"control" means the power to direct the management and policies of a Person,
directly or through one or more intermediaries, whether through the ownership of
voting securities, by contract, or otherwise, provided,
<PAGE>
that with respect to ownership interest in the Company and its Subsidiaries, a
Beneficial Owner of 10% or more of the total voting power normally entitled to
vote in the election of directors, managers or trustees, as applicable, shall
for such purposes be deemed to constitute control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"ALM" means American Lawyer Media, Inc. and its subsidiaries
(and its predecessor, ALM Holdings, LLC) since the ALM Acquisition.
"ALM Acquisition" means the acquisition by ALM of
substantially all of the assets and certain liabilities related to American
Lawyer Media L.P. on August 27, 1997.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Bankruptcy Law" means title 11, U.S. Code, as amended, or any
similar federal or state law for the relief of debtors.
"Beneficial Owner" or "beneficial owner" for purposes of the
definitions of "Change of Control" and "Affiliate" has the meaning attributed to
it in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue
Date), whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares or other Equity Interests that any such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time.
"Board of Directors" means, with respect to any Person, the
board of directors (or, in the case of a partnership, limited liability company
or similar entity, the management committee or other body exercising
substantially similar functions) of such Person or any committee of the Board of
Directors of such Person authorized, with respect to any particular matter, to
exercise the power of the board of directors or similar body of such Person.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and to
be in full force and effect on the date of such certification, and delivered to
the Trustee.
2
<PAGE>
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York, New
York, are authorized or obligated by law or executive order to close.
"Capital Stock" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of common stock and preferred stock of such Person and (b) with
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the U.S. Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (b)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having at least the second highest
rating obtainable from either Standard & Poor's Rating Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (c) commercial paper maturing no more than
one year from the date of creation thereof and, at the time of acquisition,
having at least the second highest rating obtainable from either S&P or Moody's;
(d) certificates of deposit or bankers' acceptances maturing within one year
from the date of acquisition thereof issued by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia having at the date of acquisition combined capital and
surplus of not less than $500.0 million; (e) shares of any money market mutual
fund that (i) has its assets invested continuously in the types of investments
referred to in clauses (a) and (b) above, (ii) has net assets of not less than
$500.0 million and (iii) has at least the second highest rating obtainable from
either S&P or Moody's; and (f) repurchase agreements with respect to, and which
are fully secured by a perfected security interest in, obligations of a type
described in clause (a) or clause (b) above and are with any commercial bank
described in clause (d) above.
"Change of Control" means (a) any merger or consolidation of
the Company with or into any Person or any sale, transfer or other conveyance,
whether direct or indirect, of all or substantially all of the assets of the
Company, on a consolidated basis,
3
<PAGE>
in one transaction or a series of related transactions, if, immediately after
giving effect to such transaction(s), any "person" or "group" (as such terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable), other than a Permitted Transferee, is or becomes the
"beneficial owner" (as defined in Rules 13(d) and 14(d) of the Exchange Act),
directly or indirectly, of more than 50% of the total voting power in the
aggregate normally entitled to vote in the election of members of the board of
directors, managers, or trustees, as applicable, of the transferee(s) or
surviving entity or entities, (b) any "person" or "group" (as such terms are
used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or
not applicable), other than a Permitted Transferee, is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the total voting
power in the aggregate of all classes of Equity Interests of the Company then
outstanding normally entitled to vote in elections of members of the board of
directors, managers, or trustees, as applicable, or (c) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the Board of Directors of the Company (together
with any new directors whose election by such Board of Directors or whose
nomination for election by the Holders of Equity Interests of the Company was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
"Consolidated EBITDA" means, with respect to any Person, for
any period, the Adjusted Consolidated Net Income of such Person for such period
adjusted to add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (a) consolidated
income tax expense, (b) consolidated depreciation and amortization expense,
provided that consolidated depreciation and amortization of a Subsidiary that is
a less than wholly owned subsidiary shall only be added to the extent of the
equity interest of such Person in such Subsidiary, (c) Consolidated Fixed
Charges, and (d) all other expenses reducing Consolidated Net Income for such
period that do not represent cash disbursements for such period (excluding any
expense to the extent it represents an accrual of or reserve for cash
disbursements for any subsequent period prior to the Stated Maturity of the
Notes) less, to the extent included in the calculation of Consolidated Net
Income, the amount of all cash payments made by such Person or any of its
Subsidiaries during such period to the extent such payments relate to non-cash
charges that were added back in determining Consolidated EBITDA for such period
or any prior period, provided that with respect to the Company each of the
foregoing items shall be determined on a consolidated basis with respect to the
Company and its Restricted Subsidiaries only.
"Consolidated Fixed Charges" with respect to any Person means,
for any period, the aggregate amount (without duplication and determined in each
case in
4
<PAGE>
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to Capitalized Lease Obligations) of such Person
and its Consolidated Subsidiaries during such period, including (i) original
issue discount and non-cash interest payments or accruals on any Indebtedness,
(ii) the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap or
Hedging Obligations, in each case to the extent attributable to such period, and
(b) the amount of dividends accrued or payable (or guaranteed) by such person or
any of its Consolidated Subsidiaries in respect of preferred Equity Interests
(other than by Subsidiaries of such Person to such Person or such Person's
wholly owned subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined in good faith by the Company to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with GAAP and (y)
interest expense attributable to any Indebtedness represented by the guarantee
by such Person or a Subsidiary of such Person of an obligation of another person
shall be deemed to be the interest expense attributable to the Indebtedness
guaranteed.
"Consolidated Net Income" means, with respect to any Person,
for any period, the net income (or loss) of such Person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) all gains (but not losses)
which are either extraordinary (as determined in accordance with GAAP) or are
nonrecurring (including any gain from the sale or other disposition of assets
outside the ordinary course of business or from the issuance or sale of any
capital stock), (b) the net income, if positive, of any Person, other than a
Restricted Subsidiary, in which such Person or any of its Consolidated
Subsidiaries has an interest, except to the extent of the amount of any
dividends or distributions actually paid in cash to such Person or a Restricted
Subsidiary of such Person during such period, but in any case not in excess of
such Person's pro rata share of such Person's net income for such period, (c)
the net income or loss of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition, and (d) the
net income, if positive, of any of such Person's Consolidated Subsidiaries to
the extent that the declaration or payment of dividends or similar distributions
is not at the time permitted by operation of the terms of its charter or bylaws
or any other agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Consolidated Subsidiary.
"Consolidated Net Worth" means, with respect to any Person at
any date means the aggregate consolidated stockholders' equity of such Person
(plus amounts of
5
<PAGE>
equity attributable to preferred stock) and its Consolidated Subsidiaries, as
would be shown on the consolidated balance sheet of such Person prepared in
accordance with GAAP, adjusted to exclude (to the extent included in calculating
such equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Equity Interests or treasury stock of such Person and its
Consolidated Subsidiaries, (b) all upward revaluations and other write-ups in
the book value of any asset of such Person or a Consolidated Subsidiary of such
Person subsequent to the Issue Date, and (c) all investments in subsidiaries
that are not Consolidated Subsidiaries and in Persons that are not Subsidiaries.
"Consolidated Subsidiary" means, for any Person, each
subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which are consolidated for financial
statement reporting purposes with the financial statements of such Person in
accordance with GAAP.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 11.02 hereof or such other address
as to which the Trustee may give written notice to the Company.
"Credit Agreement" means an agreement by and among the Company
(which term, for purposes of this definition only shall also include any of the
Company's Affiliates that shall be a party thereto), and the lenders, arrangers
and syndication agents from time to time party thereto providing for a senior
revolving credit facility or similar facility, as such Credit Agreement and/or
related documents may be amended, restated, supplemented, renewed, replaced,
refinanced, restructured or otherwise modified from time to time whether or not
with the same agent, trustee, representative lenders or holders, provided, that
such Credit Agreement may be secured. Without limiting the generality of the
foregoing, the term "Credit Agreement" shall include any amendment, amendment
and restatement, renewal, extension, restructuring, supplement or modification
to any such Credit Agreement and all refundings, refinancings and replacements
thereof, including any agreement (a) extending the maturity of any Indebtedness
incurred thereunder or contemplated thereby, (b) adding or deleting borrowers or
guarantors thereunder, so long as borrowers and guarantors include one or more
of the Company and its Subsidiaries and their respective successors and assigns,
(c) increasing the amount of Indebtedness incurred thereunder or available to be
borrowed thereunder or (d) otherwise altering the terms and conditions thereof
in a manner not prohibited by the terms of this Indenture.
"Custodian" means any receiver, trustee, assignee liquidator
or similar official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
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"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depository with respect to the Notes, until a successor shall have
been appointed and become such Depository pursuant to the applicable provision
of this Indenture, and, thereafter, "Depository" shall mean or include such
successor.
"Determined Fair Market Value" shall mean Fair Market Value as
determined by the Board of Directors, except that with respect to the evaluation
of any Person, business, property, asset or transaction, or series or group
thereof, involving more than $5.0 million, Determined Fair Market Value shall be
determined by a Third Party Evaluator.
"Direct Participants" means participating organizations in
DTC, including securities brokers and dealers (including the Initial
Purchasers), banks, trust companies, clearing corporations and certain other
organizations, including Euroclear and CEDEL.
"Discount Notes" means the 12.25% Senior Discount Notes due
2008 issued by Holdings.
"Disqualified Equity Interests" means (a) except as set forth
in (b), with respect to any Person, Equity Interests of such Person that, by
their terms, or by the terms of any agreement or instrument pursuant to which
such Equity Interests are issued, or by the terms of any security into which
such Equity Interests are convertible, exercisable or exchangeable, are, or upon
the happening of an event or the passage of time or both would be, required to
be redeemed or repurchased (including at the option of the Holder thereof) by
such Person or any of its Restricted Subsidiaries, in whole or in part, on or
prior to the Stated Maturity of the Notes and (b) with respect to any Restricted
Subsidiary of such Person (including with respect to any Restricted Subsidiary
of the Company), any Equity Interests other than any common equity with no
preference, privileges, or redemption or repayment provisions.
"Equity Interest" of any Person means any shares, interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any capital stock issued by, or
partnership or membership interests in, such Person.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Exchange Offer" means the offer that may be made by the
Company pursuant to the Registration Rights Agreement to exchange Series B Notes
for Series A Notes.
"Exempted Affiliate Transaction" means (a) transactions with
any officer, director, partner or managing member in his or her capacity as
such, entered into in the ordinary course of business, including without
limitation customary employee, director or manager compensation or
indemnification arrangements approved by the Board of Directors of the Company,
(b) Permitted Investments and transactions otherwise permitted under Section
4.09 hereof, and (c) transactions solely between the Company and any of its
Restricted Subsidiaries or solely among Restricted Subsidiaries of the Company.
"Existing Indebtedness" means the Indebtedness of the Company
and its Subsidiaries (other than Indebtedness, if any, under the Credit
Agreement) in existence on the date of this Indenture until such amounts are
repaid.
"Fair Market Value" means, with respect to any Person,
business, asset, property or transaction, the price that could be negotiated in
an arm's length, free market transaction, between a willing seller and a willing
and able buyer, neither of whom is under undue pressure or compulsion to
complete the transaction.
"40-day Restricted Period" means the 40-day period commencing
on the day after the later of the Offering and the original Issue Date, as
defined in Regulation S of the Securities Act.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession in the United States, which are in effect on the
date of this Indenture. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of the Indenture shall be
made without giving effect to depreciation, amortization or other expenses
recorded as a result of the application of purchase accounting in accordance
with Accounting Principles Board Option Nos. 16 and 17.
"Global Notes Legend" means the legend set forth in Exhibits A
and B to be placed on all Notes issued under this Indenture except as otherwise
permitted by the provisions of Section 2.07 hereof.
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"Guarantee" means a guarantee or other credit support (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner (including, without
limitation, letters of credit and reimbursement agreements in respect thereof),
of all or any part of any Indebtedness.
"Guarantors" means each of the Company's present and future
Restricted Subsidiaries, which have guaranteed the Notes in accordance with this
Indenture.
"Holder" means a Person in whose name a Note is registered on
the Registrar's books.
"Holdings" means American Lawyer Media Holdings, Inc.
"IAI" means an institutional "accredited investor" as defined
in Rule 501(a)(1), (2) (3) or (7) of the Securities Act.
"Indebtedness" of any Person means, without duplication, (a)
all liabilities and obligations, contingent or otherwise, of such Person, to the
extent such liabilities and obligations would appear as a liability upon the
consolidated balance sheet of such person in accordance with GAAP, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except those incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors; (b) all liabilities
and obligations, contingent or otherwise, of such Person (i) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks, (ii)
relating to any Capitalized Lease Obligation, or (iii) evidenced by a letter of
credit or a reimbursement obligation of such Person with respect to any letter
of credit other than trade letters of credit, to the extent not issued pursuant
to any Credit Agreement or any Refinancing Indebtedness in respect thereof, but
only to the extent such letters of credit are drawn upon and not paid or
reimbursed by such Person within 30 days of incurrence; (c) all net obligations
of such Person under Interest Swap or Hedging Obligations; (d) all liabilities
and obligations of others of the kind described in the preceding clause (a), (b)
or (c) that such Person has guaranteed or that is otherwise its legal liability
or which are secured by any assets or property of such person and all
obligations to purchase, redeem or acquire any Equity Interests; (e) any and all
refinancings and refundings (whether direct or indirect) of, or amendments,
modifications or supplements to (in any such case, which increases the principal
amount of Indebtedness thereunder or the assets covered by any associated Lien),
any liability of the kind described in any of the preceding clauses (a), (b),
(c) or (d), or this clause (e), whether or not between or among the same
parties; and (f) all Disqualified Equity Interests of such
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<PAGE>
Person (measured at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued and unpaid dividends) but only to the extent that
such obligations arise on or prior to the Stated Maturity of the Notes. For
purposes hereof, the "maximum fixed repurchase price" of any Disqualified Equity
Interests which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Disqualified Equity Interests as if such
Disqualified Equity Interests were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the Fair Market Value of such Disqualified Equity
Interests, such Fair Market Value to be determined in good faith by the Board of
Directors (or managing general partner) of the issuer of such Disqualified
Equity Interests.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Indirect Participants" means, in relation to DTC, entities
other than Direct Participants that have access to DTC's book entry system by
clearing through or maintaining a direct or indirect, custodial relationship
with a Direct Participant.
"Initial Purchasers" means Wasserstein Perella Securities,
Inc., BancAmerica Robertson Stephens and BancBoston Securities Inc. as the
initial purchasers under the purchase agreement between the Initial Purchasers,
the Company and certain Guarantors, dated December 17, 1997.
"Interest Payment Date" means the date upon which interest
payments on the Notes shall be made, as set forth in Exhibit A and Exhibit B
hereto.
"Interest Swap or Hedging Obligation" means any obligation of
any Person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such Person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Investment" by any Person in any other Person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership, membership
or other ownership interests or other securities, including any options or
warrants, of such other Person or any agreement
10
<PAGE>
to make any such acquisition; (b) the making by such Person of any deposit with,
or advance, loan or other extension of credit to, such other Person (including
the purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) or any commitment to make any such advance, loan or extension (but
excluding accounts receivable, trade credit, endorsements for collection or
deposits arising in the ordinary course of business); (c) other than guarantees
of Indebtedness to the extent permitted by Section 4.10, the entering into by
such Person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of such other
Person; (d) the making of any capital contribution by such person to such other
Person; and (e) the designation by the Board of Directors of the Company of any
Person (including without limitation a Restricted Subsidiary) to be an
Unrestricted Subsidiary. The Company shall be deemed to make an Investment in an
amount equal to the Determined Fair Market Value of the net assets of any
Restricted Subsidiary (or, if neither the Company nor any of its Restricted
Subsidiaries has theretofore made an Investment in such Subsidiary, in an amount
equal to the Investments being made), at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, and any property
transferred to an Unrestricted Subsidiary from the Company or a Restricted
Subsidiary of the Company shall be deemed an Investment valued at its Determined
Fair Market Value at the time of such transfer.
"Issue Date" means the date of first issuance of the Notes
under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Make-Whole Premium" means, with respect to a Note at any
time, the greater of (x) 9.75% of the principal amount of such Note and (y) the
excess of (i) the present value at such time, discounted from the first date on
which such Note could be redeemed at the option of the Company pursuant to the
provisions of paragraph (a) of
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Section 3.07 of this Indenture, of the principal amount at maturity of such Note
plus the amount of premium that would be due on such Note were it to be redeemed
on the first date on which such Note could be redeemed at the option of the
Company pursuant to the provisions of paragraph (a) of Section 3.07 of this
Indenture, computed using a discount rate equal to the Treasury Rate plus 50
basis points, over (ii) the then outstanding principal amount of such Note.
"Net Cash Proceeds" means the aggregate amount of cash or Cash
Equivalents received by the Company in the case of a sale of Qualified Equity
Interests and by the Company and its Restricted Subsidiaries in respect of an
Asset Sale plus, in the case of an issuance of Qualified Equity Interests upon
any exercise, exchange or conversion of securities (including options, warrants,
rights and convertible or exchangeable debt) of the Company that were issued for
cash on or after the Issue Date, the amount of cash originally received by the
Company upon the issuance of such securities (including options, warrants,
rights and convertible or exchangeable debt) less, in each case, the sum of all
payments, fees, commissions and (in the case of Asset Sales, reasonable and
customary) expenses (including, without limitation, the fees and expenses of
legal counsel and investment banking fees and expenses) incurred in connection
with such Asset Sale or sale of Qualified Equity Interests, and, in the case of
an Asset Sale only, less (a) the amount (estimated reasonably and in good faith
by the Company) of income, franchise, sales and other applicable taxes required
to be paid by the Company or any of its Subsidiaries in connection with such
Asset Sale and (b) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Company or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale.
"Non-Recourse Debt" means Indebtedness (a) as to which neither
the Company nor any of its Restricted Subsidiaries (i) provide credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (ii) is directly or indirectly liable (as a guarantor
or otherwise) or (iii) constitutes the lender, (b) no default with respect to
which (including any rights that the Holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any Holder of any other Indebtedness (other than
the Notes) of the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (c) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
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"Non-U.S. Person" means a Person other than a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect
to the Global Notes, or any successor entity thereto.
"Obligations" means any principal, premium, interest,
penalties, fees, indemnifications, reimbursement obligations, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, any Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf
of the Company by at least one Officer of the Company.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Parent" means Holdings or its successor.
"Permitted Indebtedness" means any of the following:
(a) Indebtedness of the Company and its Restricted Subsidiaries, as
applicable, evidenced by the Notes and the Guarantees up to the amounts
specified herein as of the date thereof;
(b) Refinancing Indebtedness incurred by the Company or a Restricted
Subsidiary, as applicable, with respect to any Indebtedness described in clause
(a), (c), (f), (g) or (h) of this definition or incurred under the first
paragraph of Section 4.10 hereof or which is Existing Indebtedness (after giving
effect to the Transactions), provided that (i) any such Refinancing Indebtedness
that is secured refinances only other Indebtedness that is similarly secured and
(ii) such secured Refinancing Indebtedness, to the extent secured, is secured
only by the assets that secured the Indebtedness so refinanced;
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(c) Indebtedness of the Company and its Restricted Subsidiaries solely
in respect of bankers acceptances, letters of credit and performance or surety
bonds (to the extent that such incurrence does not result in the incurrence of
any obligation to repay any obligation relating to borrowed money of others),
all in the ordinary course of business in accordance with customary industry
practices, in amounts and for the purposes customary in the Company's industry;
provided, that the aggregate principal amount of such Indebtedness at any one
time outstanding (including any Refinancing Indebtedness in respect thereof)
shall not exceed $2.5 million;
(d) Indebtedness of the Company to any Restricted Subsidiary, and
Indebtedness of any Restricted Subsidiary to any other Restricted Subsidiary or
to the Company; provided, that (i) in the case of Indebtedness of the Company,
the Company's Obligations under such Indebtedness shall be unsecured and,
whether or not expressly so stated in writing, shall be deemed to be
subordinated in all respects to the Company's Obligations under the Notes and
this Indenture and (ii) the date of any event that causes such Restricted
Subsidiary no longer to be a Restricted Subsidiary shall be considered the
Incurrence Date of the Obligations in respect of such Indebtedness;
(e) Guarantees by the Company or any Restricted Subsidiary of
Indebtedness of the Company or another Restricted Subsidiary, and Guarantees by
the Company of any Indebtedness of any Restricted Subsidiary, in each case that
is otherwise permitted to be incurred pursuant to this Indenture;
(f) Purchase Money Indebtedness incurred by the Company and its
Restricted Subsidiaries on or after the Issue Date, provided, that (i) the
aggregate principal amount of such Indebtedness incurred on or after the Issue
Date and outstanding at any time pursuant to this paragraph (f) (including any
Refinancing Indebtedness with respect to such Indebtedness) shall not exceed
$2.0 million, and (ii) in each case, such Indebtedness shall not constitute more
than 100% of the cost (determined in accordance with GAAP) to the Company or
such Restricted Subsidiary, as applicable, of the property so purchased or
leased;
(g) provided that no Event of Default shall have occurred and be
continuing, unsecured Indebtedness of the Company and its Restricted
Subsidiaries (in addition to Indebtedness permitted by any other clause of this
definition) in an aggregate principal amount outstanding at any time (including
any Refinancing Indebtedness in respect thereof) of up to $5.0 million (which,
if such Indebtedness is incurred under a Credit Agreement, may be secured
Indebtedness);
(h) Indebtedness of the Company and its Restricted Subsidiaries
pursuant to a Credit Agreement up to an aggregate principal amount outstanding
at any time (including
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any Refinancing Indebtedness with respect to such Indebtedness) of $40.0
million, minus the amount of any such Indebtedness (i) retired with the Net Cash
Proceeds from any Asset Sale (as defined in Section 4.08 hereof) and applied to
permanently reduce the outstanding amounts or the commitments with respect to
such Indebtedness pursuant to clause (a)(ii)(B) of the first paragraph of
Section 4.08 hereof, or (ii) assumed by a transferee in an Asset Sale;
(i) Indebtedness arising from agreements of the Company or a Restricted
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary; provided, however, that the
maximum assumable liability in respect of all such Indebtedness shall at no time
exceed 25% of the gross proceeds (with proceeds other than cash or Cash
Equivalents being valued at the Determined Fair Market Value thereof by the
Board of Directors of the Company at the time received and without giving effect
to any subsequent changes in value) actually received by the Company and its
Restricted Subsidiaries in connection with such disposition; and
(j) Interest Swap or Hedging Obligations of the Company covering
Indebtedness of the Company or any of its Restricted Subsidiaries otherwise
permitted under this Indenture and Interest Swap or Hedging Obligations of any
Restricted Subsidiary of the Company covering Indebtedness of such Restricted
Subsidiary otherwise permitted under this Indenture; provided, however, that
such Interest Swap or Hedging Obligations are entered into to protect the
Company and its Restricted Subsidiaries from fluctuations in interest rates on
Indebtedness incurred in accordance with the Indenture to the extent the
notional principal amount of such Interest Swap or Hedging Obligations does not
exceed the principal amount of the Indebtedness to which such Interest Swap or
Hedging Obligations relate.
"Permitted Investment" means Investments in (a) any of the
Notes; (b) Cash Equivalents; (c) intercompany indebtedness to the extent
permitted under clause (d) of the definition of "Permitted Indebtedness"; (d)
any Investments in the Company or any Restricted Subsidiary by the Company or
another Restricted Subsidiary, as applicable; (e) Investments by the Company or
any Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (i) such Person becomes a Restricted Subsidiary of the Company or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Restricted Subsidiary of the Company, (f) Investments in
existence on the Issue Date, (g) loans and advances to employees of the Company
or any of its Subsidiaries in the ordinary course of business and on terms
consistent with the Company's practices in effect prior to the Issue Date,
including travel, moving and other like advances, (h) stock, obligations or
securities received in the ordinary course of business in settlement of debts
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owing to the Company or a Subsidiary thereof as a result of foreclosure,
perfection, enforcement of any Lien or in a bankruptcy proceeding; (i)
Investments in Persons to the extent any such Investment represents the non-cash
consideration otherwise permitted under the terms of the Indenture to be
received by the Company or its Restricted Subsidiaries in connection with an
Asset Sale; (j) Interest Swap or Hedging Obligations to the extent permitted
under the definition of "Permitted Indebtedness" in this Indenture; (k) any
issuance of Equity Interests of the Company or any Restricted Subsidiary in
exchange for Equity Interests, property or assets of another Person; provided
that the transactions underlying the issuance or exchange of such Equity
Interests are otherwise permitted by this Indenture, (l) Investments consisting
of the licensing or contribution of intellectual property pursuant to joint
marketing arrangements with other Persons; (m) Investments consisting of
purchases and acquisitions of inventory, supplies, materials and equipment or
licenses or leases of intellectual property, in any case, in the ordinary course
of business, and (n) additional Investments in an aggregate amount not exceeding
$1.0 million at any one time outstanding.
"Permitted Lien" means (a) Liens existing on the Issue Date;
(b) Liens imposed by governmental authorities for taxes, assessments or other
charges not yet subject to penalty or which are being contested in good faith
and by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business,
provided that (i) the underlying obligations are not overdue for a period of
more than 30 days or (ii) such Liens are being contested in good faith and by
appropriate proceedings and adequate reserves with respect thereto are
maintained on the books of the Company or its Restricted Subsidiary, as the case
may be, in accordance with GAAP; (d) Liens securing the performance of bids,
trade contracts (other than borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (e) easements,
rights-of-way, zoning, similar restrictions and other similar encumbrances or
title defects which, singly or in the aggregate, do not in any case materially
detract from the value of the property subject thereto (as such property is used
by the Company or any of its Restricted Subsidiaries) or interfere with the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries; (f) Liens arising by operation of law in connection with
judgments, but only to the extent, for an amount and for a period not resulting
in an Event of Default with respect thereto; (g) pledges or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security legislation; (h) Liens
securing the Notes; (i) Liens securing Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or is merged with or into the
Company or a Restricted Subsidiary or Liens securing Indebtedness incurred in
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connection with an Acquisition, provided that such Liens were in existence prior
to the date of such Acquisition, merger or consolidation, were not incurred in
anticipation thereof, and do not extend to any other assets; (j) Liens arising
from Purchase Money Indebtedness permitted to be incurred pursuant to clause (f)
of the definition of "Permitted Indebtedness," provided, such Liens relate
solely to the property which is subject to such Purchase Money Indebtedness; (k)
leases or subleases granted to other persons in the ordinary course of business
not materially interfering with the conduct of the business of the Company or
any of its Restricted Subsidiaries or materially detracting from the value of
the relative assets of the Company or any Restricted Subsidiary; (l) Liens
arising from precautionary Uniform Commercial Code financing statement filings
regarding operating leases entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business; (m) Liens securing Refinancing
Indebtedness incurred to refinance any Indebtedness that was previously so
secured in a manner no more adverse to the Holders of the Notes in any material
respect than the terms of the Liens securing such refinanced Indebtedness
provided that the Indebtedness secured is not increased and the lien is not
extended to any additional assets or property that would not have been security
for the Indebtedness refinanced; (n) Liens arising under options or agreements
to sell assets; (o) other Liens securing obligations incurred in the ordinary
course of business, which obligations do not exceed $1.0 million in the
aggregate at any one time outstanding; (p) Liens securing Interest Rate Swap or
Hedging Obligations; (q) Liens on any property or assets of a Restricted
Subsidiary granted in favor of the Company or any Wholly-Owned Restricted
Subsidiary; (r) Liens securing the Obligations under a Credit Agreement,
including revolving credit Indebtedness of up to $40.0 million and (s) any
extension, renewal or replacement, in whole or in part, of any Lien described in
the foregoing clauses (a) through (r); provided, that any such extension,
renewal or replacement shall not extend to any additional property or assets.
"Permitted Transferee" means Holdings, U.S. Equity Partners,
L.P. and U.S. Equity Partners (Offshore), L.P. or any of their respective
Affiliates or successors. The term "Permitted Transferee" shall be deemed to
include any other Holder or Holders of Equity Interests of the Company having
ordinary voting power if Wasserstein Perella & Co., or any Affiliate thereof,
shall hold the irrevocable general proxy of each such Holder in respect of the
shares held by such Holder.
"Person" means any individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental agency or
political subdivision thereof.
"Preferred Equity Interest" of any Person means any Equity
Interest of such Person that has preferential rights to any other Equity
Interest of such Person with respect to dividends or redemptions or upon
liquidation.
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"Public Equity Offering" means a public offering by the
Company or Holdings of shares of its common stock (however designated and
whether voting or non-voting) and any and all rights, warrants or options to
acquire such Qualified Equity Interests; provided, however, that in connection
with any such Public Equity Offering by Holdings the net proceeds of such Public
Equity Offering are contributed to the Company as equity.
"Purchase Agreement" means the purchase agreement dated as of
December 17, 1997 between the Initial Purchasers, the Company and certain
Guarantors.
"Purchase Money Indebtedness" of any Person means any
Indebtedness of such Person to any seller or other Person incurred solely to
finance the acquisition (including in the case of a Capitalized Lease
Obligation, the lease) or construction of any real or personal tangible property
which, in the reasonable good faith judgment of the Board of Directors of the
Company, is directly related to a Related Business of the Company and which is
incurred concurrently with such acquisition and is secured only by the assets so
financed.
"QIB" means a Qualified Institutional Buyer as defined in Rule
144A of the Securities Act.
"Qualified Equity Interests" means any Equity Interests of the
Company that are not Disqualified Equity Interests.
"Qualified Exchange" means any legal defeasance, redemption,
retirement, repurchase or other acquisition of Equity Interests or Indebtedness
of the Company issued on or after the Issue Date with the Net Cash Proceeds
received by the Company from the substantially concurrent sale of Qualified
Equity Interests or any exchange of Qualified Equity Interests for any Equity
Interests or Indebtedness of the Company issued on or after the Issue Date.
"Record Date" means June 1 and December 1 of each year.
"Refinancing Indebtedness" means Indebtedness (a) issued in
exchange for, or the proceeds from the issuance and sale of which are used
substantially concurrently to repay, redeem, defease, refund, refinance,
discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness in a principal amount or having a liquidation preference not to
exceed (after deduction of reasonable and customary fees and expenses incurred
in connection with the Refinancing) the lesser of (i) the principal amount or
liquidation preference of the
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Indebtedness so refinanced (including premiums, if any, and fees in connection
therewith) and (ii) if such Indebtedness being Refinanced was issued with an
original issue discount, the accreted value thereof (as determined in accordance
with GAAP) at the time of such Refinancing; provided, that (A) such Refinancing
Indebtedness shall (I) not have a Weighted Average Life to Maturity shorter than
that of the Indebtedness to be so refinanced at the time of such Refinancing and
(II) in all respects, be no less subordinated or junior, if applicable, to the
rights of Holders of the Notes than was the Indebtedness to be refinanced, (B)
such Refinancing Indebtedness shall have no installment of principal (or
mandatory redemption payment) scheduled to come due earlier than the scheduled
maturity of any installment of principal of the Indebtedness to be so refinanced
which was scheduled to come due prior to the Stated Maturity, and (C) such
Refinancing Indebtedness shall be secured (if secured) in a manner no more
adverse to the Holders of the Notes than the terms of the Liens (if any)
securing such refinanced Indebtedness, including, without limitation, the amount
of Indebtedness secured shall not be increased.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Company and
the other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Related Business" means the business conducted (or proposed
to be conducted) by the Company and its Subsidiaries as of the Issue Date and
any and all businesses that in the good faith judgment of the Board of Directors
of the Company are reasonably related businesses.
"Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than investments in Cash Equivalents and
other Permitted Investments; provided, however, that a merger of another Person
with or into the Company or a Restricted Subsidiary otherwise permitted in
accordance with the terms of this Indenture shall not be deemed to be a
Restricted Investment so long as the surviving entity is the Company or a direct
wholly owned Restricted Subsidiary.
"Restricted Payment" means, with respect to any Person, (a)
the declaration or payment of any dividend or other distribution in respect of
Equity Interests
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of such Person or any parent or Subsidiary of such Person, (b) any payment on
account of the purchase, redemption or other acquisition or retirement for value
of Equity Interests of such Person or any Subsidiary or parent of such Person,
(c) other than with the proceeds from the substantially concurrent sale of, or
in exchange for, Refinancing Indebtedness, any purchase, redemption, or other
acquisition or retirement for value of, any payment in respect of any amendment
of the terms of or any defeasance of, any Subordinated Indebtedness, directly or
indirectly, by such Person or a parent or Subsidiary of such Person prior to the
scheduled maturity, any scheduled repayment of principal, or scheduled sinking
fund payment, as the case may be, of such Indebtedness and (d) any Restricted
Investment by such Person; provided, however, that the term "Restricted Payment"
does not include (i) any dividend, distribution or other payment on or with
respect to Equity Interests of an issuer to the extent payable solely in shares
of Qualified Equity Interests of such issuer; and (ii) any dividend,
distribution or other payment to the Company or to any Restricted Subsidiary, by
any Restricted Subsidiary; and (iii) dividends or distributions by a Restricted
Subsidiary of the Company, provided that to the extent that a portion of such
dividend or distribution is paid to a holder of Equity Interests of such
Restricted Subsidiary other than a Company or a Restricted Subsidiary, such
portion of such dividend or distribution is not greater than such holders pro
rata aggregate common equity in such Restricted Subsidiary.
"Restricted Securities Legend" means the legend set forth in
Exhibit A and Exhibit B to be placed on all Series A Notes issued under this
Indenture.
"Restricted Subsidiary" means a Subsidiary of the Company
other than an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Subsidiary" shall have the meaning provided under
Regulation S-X of the Securities Act, as in effect on the Issue Date.
"Shelf Registration Statement" means the shelf registration
statement filed under Rule 415 of the Securities Act pursuant to the
Registration Rights Agreement.
"Stated Maturity," when used with respect to any Note, means
December 15, 2007.
"Subordinated Indebtedness" means Indebtedness of the Company
or a Restricted Subsidiary that is expressly subordinated in right of payment by
its terms or the
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terms of any document or instrument or instrument relating thereto to the Notes
or such Guarantee, as applicable.
"Subsidiary," with respect to any Person, means (a) a
corporation a majority of whose Equity Interests with voting power, under
ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by such Person, by such Person and one or more Subsidiaries of
such Person or by one or more Subsidiaries of such Person, (b) any other Person
(other than a corporation) in which such Person, one or more Subsidiaries of
such Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has at least
majority ownership interest, or (c) a partnership in which such Person or a
Subsidiary of such Person is, at the time, a general partner and in which such
Person, directly or indirectly, at the date of determination thereof has at
least a majority ownership interest. Unless the context requires otherwise,
Subsidiary means each direct and indirect Subsidiary of the Company.
"Subsidiary Guarantees" means the Subsidiary Guarantees of the
Guarantors in the form set forth as Exhibit J hereto.
"Third-Party Evaluator" shall mean an investment banking firm
of national reputation that is not an Affiliate of the Company or a Subsidiary;
provided, that if the subject matter, type or scope of the evaluation is outside
the scope of evaluation customarily done by investment banking firms, then such
Third-Party Evaluator shall be an accounting firm or appraisal or valuation firm
of national reputation that is not an Affiliate of, and is otherwise independent
of, the Company and its Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 as in effect on
the date on which this Indenture is qualified under the TIA.
"Transactions" means the Offering, the acquisition by the
Company of National Law Publishing Company, Inc. pursuant to the Stock Purchase
Agreement dated as of October 23, 1997, the contribution of an aggregate of
$108.5 million to the equity capital of the Company by Holdings, and the
repayment of a $31.5 million secured promissory note by ALM to the former owner
of American Lawyer Media, L.P. and a $32.0 million equity bridge note by ALM to
an affiliate of Wasserstein Perella Group, Inc.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least five Business Days prior
to the date fixed for repayment (or, if such Statistical Release is no longer
published, any publicly available source or similar market data)) most nearly
equal to the then remaining Weighted Average Life to Maturity of the
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Notes (calculated as if the first date on which the Notes can be redeemed at the
option of the Company pursuant to paragraph (a) of Section 3.07 hereof were the
final maturity of the Notes); provided, however, that if such Weighted Average
Life to Maturity of the Notes is not equal to the constant maturity of a United
States Treasury security for which a weekly average yield is given, the Treasury
Rate shall be obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of United States Treasury
securities for which such yields are given, except that if such Weighted Average
Life to Maturity of the Notes is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
"Trustee" means the party named as such in the preamble until
a successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means any Subsidiary of the Company
that does not own any Capital Stock of, or own or hold any Lien on any property
of, the Company or any other Restricted Subsidiary of the Company and that, at
the time of determination, shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company); provided, that such Subsidiary (a) shall
not engage, to any substantial extent, in any line or lines of business activity
other than a Related Business, (b) has no Indebtedness other than Non-Recourse
Debt, (c) is a Person with respect to which neither the Company nor any of the
Subsidiaries has any direct or indirect obligation to subscribe for additional
Equity Interests or maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified level of operating results; and (d)
has not guaranteed or otherwise directly or indirectly provided credit support
for any Indebtedness of the Company or any of its Restricted Subsidiaries.
"U.S. Government Obligations" means direct noncallable
obligations of, or noncallable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged.
"U.S. Person" means (a) any individual resident in the United
States, (b) any partnership or corporation organized or incorporated under the
laws of the United States, (c) any estate of which an executor or administrator
is a U.S. Person (other than an estate governed by foreign law and of which at
least one executor or administrator is a non-U.S. Person who has sole or shared
investment discretion with respect to its assets),
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(d) any trust of which any trustee is a U.S. Person (other than a trust of which
at least one trustee is a non-U.S. Person who has sole or shared investment
discretion with respect to its assets and no beneficiary of the trust (and no
settler, if the trust is revocable) is a U.S. Person), (e) any agency or branch
of a foreign entity located in the United States, (f) any non-discretionary or
similar account (other than an estate or trust) held by a dealer or other
fiduciary for the benefit or account of a U.S. Person, (g) any discretionary or
similar account (other than an estate or trust) held by a dealer or other
fiduciary organized, incorporated or (if an individual) resident in the United
States (other than such an account held for the benefit or account of a non-U.S.
Person), (h) any partnership or corporation organized or incorporated under the
laws of a foreign jurisdiction and formed by a U.S. Person principally for the
purpose of investing in securities not registered under the Securities Act
(unless it is organized or incorporated and owned, by "accredited investors"
within the meaning of Rule 501(a) under the Securities Act who are not natural
persons, estates or trusts); provided, however, that the term "U.S. Person"
shall not include (i) a branch or agency of a U.S. Person that is located and
operating outside the United States for valid business purposes as a locally
regulated branch or agency engaged in the banking or insurance business, (ii)
any employee benefit plan established and administered in accordance with the
law, customary practices and documentation of a foreign country and (iii) the
international organizations set forth in Section 902(o)(vii) of Regulation S
under the Securities Act and any other similar international organizations, and
their agencies, affiliates and pension plans.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly-Owned Restricted Subsidiary" means a Restricted
Subsidiary all the Equity Interests of which are owned by the Company or one or
more Wholly-Owned Restricted Subsidiaries of the Company (other than directors'
qualifying shares and nominal amounts required to be held by foreign nationals
under applicable law).
SECTION 1.02 OTHER DEFINITIONS
<TABLE>
<CAPTION>
Defined in
Term Section
---- --------
<S> <C>
"Acceleration Notice" 6.02
"Additional Guarantee" 10.07
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Defined in
Term Section
---- --------
<S> <C>
"Additional Guarantor" 10.07
"Affiliate Transaction" 4.14
"Asset Sale" 4.08
"Asset Sale Offer" 4.08
"Asset Sale Offer Amount" 4.08
"Asset Sale Offer Period" 4.08
"Asset Sale Offer Price" 4.08
"Asset Sale Purchase Date" 4.08
"Benefitted Party" 11.01
"Calculation Date" 1.01
"Cedel" 2.01
"Change of Control Offer" 4.07
"Change of Control Offer Period" 4.07
"Change of Control Payment" 4.07
"Change of Control Purchase Date" 4.07
"Change of Control Purchase Price" 4.07
"Company" Preamble
"Covenant Defeasance" 8.03
"DTC" 2.03
"Euroclear" 2.01
"Event of Default" 6.01
"Excess Proceeds" 4.08
"Global Notes" 2.01
"IAI Global Note" 2.01
"Incurrence Date" 4.10
"Institutional Accredited Investors" 2.06
"Legal Defeasance" 8.02
"Moody's" 1.01
"Notes" preamble
"Offer Amount" 4.08
"Offer Period" 4.08
"Paying Agent" 2.03
"Payment Default" 6.01
"Payment Notice" 10.03
</TABLE>
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<TABLE>
<CAPTION>
Defined in
Term Section
---- --------
<S> <C>
"Purchase Date" 4.08
"Refinancing" 1.01
"Registrar" 2.03
"Regulation S" 2.01
"Regulation S Permanent Global Note" 2.07
"Regulation S Temporary Global Note" 2.01
"Restricted Payments" 4.09
"Rule 144A" 2.01
"S&P" 1.01
"Securities Act" 2.06
"Series A Notes" preamble
"Series B Notes" preamble
"U.S. Global Note" 2.01
</TABLE>
SECTION 1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Notes means the Company and any successor
obligor upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
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SECTION 1.04 RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute,
replacement of successor sections or rules adopted by
the SEC from time to time.
Article II
THE NOTES
SECTION 2.01 FORM AND DATING
(a) The Series A Notes and the Trustee's certificate of
authentication thereon shall be substantially in the form of Exhibit A hereto,
which is hereby incorporated in and expressly made a part of this Indenture. The
Series B Notes and the Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibit B hereto, which is hereby incorporated in
and expressly made a part of this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Company). The Company shall
furnish any such legend not contained in Exhibit A or Exhibit B to the Trustee
in writing. Each Note shall be dated the date of its authentication. The terms
and provisions contained in the Notes shall constitute, and are hereby expressly
made, a part of this Indenture and the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
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(b) Global Notes. The Series A Notes are being offered and
sold by the Company pursuant to the Purchase Agreement.
The Series A Notes offered and sold in reliance on Rule 144A
under the Securities Act ("Rule 144A") to QIBs, or offered and sold to IAIs,
both as provided in the Purchase Agreement, will be issued in denominations of
$1,000 and integral multiples thereof on the Issue Date initially in the form of
one or more permanent global Notes in definitive, fully registered form without
interest coupons with the Global Notes Legend and the Restricted Securities
Legend set forth in Exhibit A hereto (each, respectively, a "U.S. Global Note"
or an "IAI Global Note") which shall be deposited on behalf of the purchasers of
the Series A Notes represented thereby with the Trustee, at its New York office,
as custodian for the Depositary, initially The Depository Trust Company ("DTC"),
duly executed by the Company and authenticated by the Trustee as hereinafter
provided, and registered in the name of DTC or its nominee, in each case for
credit to the accounts of DTC's Direct Participants and Indirect Participants.
The aggregate principal amount of the U.S. Global Note or the IAI Global Note,
as the case may be, may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depositary
or its nominee, in connection with the transfer or exchange of interests, as
hereinafter provided.
The Series A Notes offered and sold in offshore transactions
in reliance on Regulation S under the Securities Act ("Regulation S"), as
provided in the Purchase Agreement, will be issued in denominations of $1,000
and integral multiples thereof on the Issue Date initially in the form of a
single, temporary, global Note in definitive, fully registered form without
interest coupons with the Global Notes Legend and Restricted Securities Legend
set forth in Exhibit A hereto (the "Regulation S Temporary Global Note"). The
Regulation S Temporary Global Note will be deposited on behalf of the purchasers
of the Series A Notes represented thereby with the Trustee, at its New York
office, as custodian for the Depositary, initially DTC, and registered in the
name of a nominee of DTC for credit to the accounts of Indirect Participants at
the Euroclear System ("Euroclear") and Cedel Bank, societe anonyme ("CEDEL"),
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Regulation S Temporary Global
Note may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee, as the case may be, in
connection with the transfer of interests as hereinafter provided.
The Applicable Procedures shall apply to interests in the
Regulation S Temporary Global Note and the Regulation S Permanent Global Note
(as defined herein) that are held by the Holders through Euroclear or Cedel.
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<PAGE>
Upon consummation of the Exchange Offer, the Series B Notes
may be issued in the form of one or more permanent Global Notes in definitive,
fully registered form without interest coupons with the Global Notes Legend but
not the Restricted Securities Legend set forth in Exhibit A hereto, registered
in the name of the Depositary or a nominee of the Depositary, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of such Global Notes may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depositary or its nominee, in connection with the transfer or exchange of
interests, as hereinafter provided.
(c) Certificated Notes. In addition to the provisions of
Section 2.11, entitlement holders with security entitlements in Global Notes
may, upon request to the Trustee, receive a certificated Series A Note, which
certificated Series A Note shall bear the Restricted Securities Legend set forth
in Exhibit A hereto.
After a transfer of any Series A Notes during the period of
the effectiveness of a Shelf Registration Statement with respect to the Series A
Notes, all requirements for Restricted Securities Legends on such Series A Note
will cease to apply, and a certificated Series A Note without a Restricted
Securities Legend will be available to the holder of such Series A Notes. Upon
the consummation of an Exchange Offer with respect to the Series A Notes
pursuant to which holders of Series A Notes are offered Series B Notes in
exchange for their Series A Notes, certificated Series A Notes with the
Restricted Securities Legend set forth in Exhibit A hereto will be available to
holders of such Series A Notes that do not exchange their Series A Notes, and
Series B Notes in certificated form without the Restricted Securities Legend set
forth in Exhibit A hereto will be available to holders that exchange such Series
A Notes in such Exchange Offer.
(d) Each Global Note shall represent such of the outstanding
Notes as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Notes from time to time endorsed
thereon and that the aggregate amount of outstanding Notes represented thereby
may from time to time be reduced or increased, as appropriate, to reflect
exchanges, redemptions and transfers of interest. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.07 hereof.
Except as set forth in Section 2.07 hereof, the Global Notes
may be transferred, in whole and not in part, only to another nominee of the
Depositary or to a successor of the Depositary or its nominee.
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(e) Book-Entry Provisions. This Section 2.01(e) shall apply
only to the Regulation S Temporary Global Note, the U.S. Global Note, the IAI
Global Note, the Regulation S Permanent Global Note and the Series B Notes
issued in the form of one or more permanent Global Notes (collectively, the
"Global Notes") deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.01(e), authenticate and make available for delivery
initially one or more Global Notes that (i) shall be registered in the name of
the Depositary or the nominee of the Depositary for such Global Note or Global
Notes or the nominee of such Depositary and (ii) shall be delivered by the
Trustee to the Depositary or pursuant to the Depositary's instructions or held
by the Trustee as custodian for the Depositary.
Direct Participants and Indirect Participants shall have no
rights either under this Indenture with respect to any Global Note held on their
behalf by the Depositary or by the Trustee as custodian for the Depositary or
under such Global Note, and the Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Direct and Indirect Participants, the operation of customary
practices of such Depositary governing the exercise of the rights of an
entitlement holder with a security entitlement in any Global Note.
SECTION 2.02 EXECUTION AND AUTHENTICATION
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by two Officers, authenticate (1) Series A Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Series A Notes, and (2)
Series B Notes for issue only
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<PAGE>
in an Exchange Offer, pursuant to the Registration Rights Agreement in exchange
for Series A Notes of a like principal amount. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided in
Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.03 REGISTRAR AND PAYING AGENT
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall
promptly notify the Trustee in writing of the name and address of any Agent not
a party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Company
or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints DTC to act as Depositary with
respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
SECTION 2.04 PAYING AGENT TO HOLD MONEY IN TRUST
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company
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<PAGE>
or a Subsidiary of the Company) shall have no further liability for the money.
If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold
in a separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05 HOLDER LISTS
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least five Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders of Notes and the Company shall otherwise comply with TIA Section 312(a)
SECTION 2.06 PAYMENT
The Company and the Trustee will treat the persons in whose
names the Notes are registered (including Notes represented by Global Notes) as
the owners thereof for the purpose of receiving payments and for any and all
other purposes whatsoever. Payments in respect of the principal, premium,
Liquidated Damages, if any, and interest on Global Notes registered in the name
of DTC or its nominee will be payable by the Trustee to DTC or its nominee as
the registered holder under this Indenture. Consequently, neither the Company,
the Trustee nor any agent of the Company or the Trustee has or will have any
responsibility or liability for (i) any aspect of DTC's records or any Direct
Participant's or Indirect Participant's records relating to or payments made on
account of beneficial ownership interests in the Global Notes or for
maintaining, supervising or reviewing any of DTC's records or any Direct
Participant's or Indirect Participant's records relating to the beneficial
ownership interests in any Global Note or (ii) any other matter relating to the
actions and practices of DTC or any of its Direct Participants or Indirect
Participants.
SECTION 2.07 TRANSFER AND EXCHANGE
When Notes are presented to the Registrar or a co-registrar
with a request to register a transfer or to exchange them for an equal principal
amount of Notes of other denominations, the Registrar shall register the
transfer or make the exchange if its requirements for such transactions are met;
provided, that any Notes presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar
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or co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing. To permit registration of transfers and exchanges, the
Company shall issue and the Trustee shall authenticate Notes at the Registrar's
request. No service charge shall be made for any registration of transfer or
exchange (except as otherwise expressly permitted herein), but the Company may
require payment of a sum sufficient to cover any transfer tax, fee, assessment
or similar governmental charge payable in connection therewith (other than any
such transfer tax or similar governmental charge payable upon exchanges pursuant
to Sections 2.11, 3.06 or 9.05 hereof).
The Company shall not be required (i) to issue, register the
transfer of or exchange Notes during a period beginning at the opening of
business 15 days before the day of any selection of Notes for redemption under
Section 3.02 hereof and ending at the close of business on the day of selection,
or (ii) to register the transfer, or exchange, or any Note so selected for
redemption in whole or in part, except the unredeemed portion of any Note being
redeemed in part.
(a) Notwithstanding any provision to the contrary herein, so
long as a Global Note remains outstanding and is held by or on behalf
of the Depositary, transfers of a Global Note, in whole or in part, or
of any security entitlement therein, shall only be made in accordance
with Section 2.01(e) and this Section 2.07(a); provided, however, that
security entitlements with respect to a Global Note may be created in
the form of, or transferred to other entitlement holders who take
delivery thereof in the form of a security entitlement in the same
global Note in accordance with the transfer restrictions set forth in
the Restricted Securities Legend and under the heading "Notice to
Investors" in the Company's Offering Memorandum dated December 17,
1997. Furthermore, notwithstanding any provision herein to the
contrary, transfers by an IAI (x) which is not a QIB and (y) is an
initial investor in the Series A Notes, cannot be made to an IAI that
is not a QIB.
(i) Except for transfers or exchanges made in accordance with
clauses (ii) through (iv) of this Section 2.07(a), transfers
of a Global Note shall be limited to transfers of such Global
Note in whole, but not in part, to nominees of the Depositary
or to a successor of the Depositary or such successor's
nominee.
(ii) U.S. Global Note or IAI Global Note to Regulation S
Temporary Global Note. If an entitlement holder with a
security entitlement in the U.S. Global Note or the IAI Global
Note deposited with the Depositary or the Trustee as custodian
for the Depositary, wishes at any time to transfer its
security entitlement in such U.S. Global Note or such IAI
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Global Note, as the case may be, to a person who is required
to take delivery thereof in the form of a security entitlement
in the Regulation S Temporary Global Note, such owner may,
subject to the rules and procedures of the Depositary,
exchange or cause the exchange of such security entitlement
for an equivalent security entitlement in the Regulation S
Temporary Global Note. Upon receipt by the Trustee, as
Registrar, at its office in The City of New York of (1)
instructions given in accordance with the Depositary's
procedures from a Direct Participant or an Indirect
Participant directing the Trustee to create or cause to be
created a security entitlement in the Regulation S Temporary
Global Note in an amount equal to the security entitlement in
the U.S. Global Note or in the IAI Global Note, as the case
may be, to be exchanged, (2) a written order given in
accordance with the Depositary's procedures containing
information regarding the participant account of the
Depositary and the Euroclear or Cedel account to be credited
with such increase and (3) a certificate in the form of
Exhibit C attached hereto given by the holder of such security
entitlement, then the Trustee, as Registrar, shall instruct
the Depositary to reduce or cause to be reduced the principal
amount of the U.S. Global Note or the IAI Global Note, as the
case may be, and to increase or cause to be increased the
principal amount of the Regulation S Temporary Global Note by
the aggregate principal amount of the security entitlement in
the U.S. Global Note or the IAI Global Note, as the case may
be, equal to the security entitlement in the Regulation S
Temporary Global Note to be exchanged or transferred, to
create or cause to be credited to the account of the person
specified in such instructions a security entitlement in the
Regulation S Temporary Global Note equal to the reduction in
the principal amount of the U.S. Global Note or the IAI Global
Note, as the case may be, and to debit or cause to be debited
from the account of the person making such exchange or
transfer the security entitlement in the U.S. Global Note or
the IAI Global Note as the case may be, that is being
exchanged or transferred.
(iii) Regulation S Temporary Global Note to U.S. Global Note
or IAI Global Note. If an entitlement holder with a security
entitlement in the Regulation S Temporary Global Note
deposited with the Depositary or with the Trustee as custodian
for the Depositary wishes at any time to transfer its security
entitlement in such Regulation S Temporary Global Note to a
person who is required to take delivery thereof in the form of
a security entitlement in the U.S. Global Note or, subject to
Section 2.07(a)(vii), in the IAI Global Note, such holder may,
subject to the rules and procedures of Euroclear or Cedel, as
the case may be, and the
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Depositary, exchange or cause the exchange of such interest
for an equivalent security entitlement in the U.S. Global Note
or in the IAI Global Note, as the case may be. Upon receipt by
the Trustee, as Registrar at its office in The City of New
York of (1) instructions from Euroclear or Cedel, if
applicable, and the Depositary, directing the Trustee, as
Registrar, to create or cause to be created a security
entitlement in the U.S. Global Notes or in the IAI Global
Note, as the case may be, equal to the security entitlement in
the Regulation S Temporary Global Note to be exchanged or
transferred, such instructions to contain information
regarding the participant account with the Depositary to be
credited with such increase, (2) a written order given in
accordance with the Depositary's procedures containing
information regarding the participant account of the
Depositary and (3) a certificate in the form of Exhibit D
attached hereto given by the owner of such beneficial
interest, then Euroclear or Cedel or the Trustee, as
Registrar, as the case may be, will instruct the Depositary to
reduce or cause to be reduced the Regulation S Temporary
Global Note and to increase or cause to be increased the
principal amount of the U.S. Global Note or of the IAI Global
Note, as the case may be, by the aggregate principal amount of
the security entitlement in the Regulation S Temporary Global
Note to be exchanged or transferred and the Trustee, as
Registrar, shall instruct the Depositary, concurrently with
such reduction, to create or cause to be created to the
account of the person specified in such instructions a
security entitlement in the U.S. Global Note or in the IAI
Global Note, as the case may be, equal to the reduction in the
principal amount of the Regulation S Temporary Global Note and
to debit or cause to be debited from the account of the person
making such exchange or transfer the security entitlement in
the Regulation S Temporary Global Note that is being exchanged
or transferred.
(iv) Global Note to Transfer Restricted Security. If an
entitlement holder with a security entitlement in a Global
Note deposited with the Depositary or with the Trustee as
custodian for the Depositary wishes at any time to transfer
its security entitlement in such Global Note to a person who
is required to take delivery thereof in the form of a Transfer
Restricted Security, such owner may, subject to the rules and
procedures of Euroclear or Cedel, if applicable, and the
Depositary, cause the exchange of such security entitlement
for one or more Transfer Restricted Securities of any
authorized denomination or denominations and of the same
aggregate principal amount. Upon receipt by the Trustee, as
Registrar, at its office in The City of New York of (1)
instructions from Euroclear
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<PAGE>
or Cedel, if applicable, and the Depositary directing the
Trustee, as Registrar, to authenticate and deliver one or more
Transfer Restricted Securities of the same aggregate principal
amount as the security entitlement in the Global Note to be
exchanged, such instructions to contain the name or names of
the designated transferee or transferees, the authorized
denomination or denominations of the Transfer Restricted
Securities to be so issued and appropriate delivery
instructions, (2) a certificate in the form of Exhibit E
attached hereto given by the entitlement holder of such
security entitlement to the effect set forth therein, (3) a
certificate in the form of Exhibit F attached hereto given by
the person acquiring the Transfer Restricted Securities for
which such security entitlement is being exchanged, to the
effect set forth therein, and (4) such other certifications,
legal opinions or other information as the Company may
reasonably require to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act, then
Euroclear or Cedel, if applicable, or the Trustee, as
Registrar, as the case may be, will instruct the Depositary to
reduce or cause to be reduced such Global Note by the
aggregate principal amount of the security entitlement therein
to be exchanged and to debit or cause to be debited from the
account of the person making such transfer the security
entitlement in the Global Note that is being transferred, and
concurrently with such reduction and debit the Company shall
execute, and the Trustee shall authenticate and make available
for delivery, one or more Transfer Restricted Securities of
the same aggregate principal amount in accordance with the
instructions referred to above.
(v) Transfer Restricted Security to Transfer Restricted
Security. If a holder of a Transfer Restricted Security wishes
at any time to transfer such Transfer Restricted Security to a
person who is required to take delivery thereof in the form of
a Transfer Restricted Security, such holder may, subject to
the restrictions on transfer set forth herein and in such
Transfer Restricted Security, cause the exchange of such
Transfer Restricted Security for one or more Transfer
Restricted Securities of any authorized denomination or
denominations and of the same aggregate principal amount. Upon
receipt by the Trustee, as Registrar, at its office in The
City of New York of (1) such Transfer Restricted Security,
duly endorsed as provided herein, (2) instructions from such
holder directing the Trustee, as Registrar, to authenticate
and make available for delivery one or more Transfer
Restricted Securities of the same aggregate principal amount
as the Transfer Restricted Security to be exchanged such
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<PAGE>
instructions to contain the name or authorized denomination or
denominations of the Transfer Restricted Securities to be so
issued and appropriate delivery instructions, (3) a
certificate from the holder of the Restricted Security to be
exchanged in the form of Exhibit E attached hereto, (4) a
certificate in the form of Exhibit F attached hereto given by
the person acquiring the Transfer Restricted Securities for
which such Transfer Restricted Security is being exchanged, to
the effect set forth therein, and (5) such other
certifications, legal opinions or other information as the
Company may reasonably require to confirm that such transfer
is being made pursuant to an exemption from, or in a
transaction not subject to the registration requirements of
the Securities Act, then the Trustee, as Registrar, shall
cancel or cause to be cancelled such Transfer Restricted
Security and concurrently therewith, the Company shall
execute, and the Trustee shall authenticate and make available
for delivery, one or more Transfer Restricted Securities of
the same aggregate principal amount at maturity, in accordance
with the instructions referred to above.
(vi) Other Exchanges. In the event that a security entitlement
with respect to a Global Note is exchanged for Notes in
definitive registered form pursuant to Section 2.11 prior to
the effectiveness of a Shelf Registration Statement with
respect to such Notes, such Notes may be exchanged only in
accordance with such procedures as are substantially
consistent with the provisions of clauses (ii) through (v)
above (including the certification requirements intended to
ensure that such transfer comply with Rule 144A, Rule 144,
Rule 501(a)(1), (2), (3) or (7) of Regulation D, or Regulation
S of the Securities Act, as the case may be) and such other
procedures as may from time to time to adopted by the Company.
(vii) Restricted Period. Prior to the termination of the
40-day Restricted Period with respect to the issuance of the
Notes, transfers of security entitlements in the Regulation S
Temporary Global Note to U.S. Persons shall be limited to
transfers to QIBs made pursuant to the provisions of Sections
2.07(a)(iii). The Company shall advise the Trustee as to the
termination of the restricted period and the Trustee may rely
conclusively thereon.
(viii) Regulation S Temporary Global Note to Regulation S
Permanent Global Note. Following the termination of the 40-day
Restricted Period with respect to the issuance of the Notes,
security entitlements in the Regulation S Temporary Global
Note shall be exchanged for security entitlements in a Global
Note in definitive, fully registered from without
36
<PAGE>
interest coupons, with the Global Notes Legend set forth in
Exhibit A hereto, but without the Restricted Securities Legend
as set forth therein (a "Regulation S Permanent Global Note"),
pursuant to the rules and procedures of the Depositary;
provided, however, that prior to (i) the payment of interest
or principal with respect to a holder's security entitlement
in the Regulation S Temporary Global Note and (ii) any
exchange of such security entitlement for a security
entitlement in the Regulation S Permanent Global Note,
Euroclear or Cedel shall receive a certificate substantially
in the form of Exhibit G hereto from the entitlement holder of
such security entitlement and Euroclear and Cedel shall
deliver a certificate substantially in the form of Exhibit H
hereto to the Trustee (or the paying agent if different from
the Trustee). Upon proper presentment to the Trustee of a
certificate substantially in the form of Exhibit I hereto and
subject to the rules and procedures of DTC or its direct or
indirect participants, including Euroclear and Cedel, a
security entitlement in a Regulation S Permanent Global Note
may be exchanged for a certificated Note that is free from any
restriction on transfer (other than such as are solely
attributable to any holder's status).
(b) Except in connection with an Exchange Offer or a Shelf
Registration Statement contemplated by and in accordance with the terms
of the Registration Rights Agreement, if Series A Notes are issued upon
the transfer, exchange or replacement of Series A Notes bearing the
Restricted Securities Legend set forth in Exhibit A hereto, or if a
request is made to remove such Restricted Securities Legend on Series A
Notes, the Series A notes so issued shall bear the Restricted
Securities Legend, or the Restricted Securities Legend shall not be
removed, as the case may be, unless there is delivered to the Company
such satisfactory evidence, which may include an opinion of counsel
licensed to practice law in the State of New York, as may be reasonably
required by the Company, that neither the legend nor the restrictions
on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A, Rule 144, Rule
501(a)(1), (2), (3) or (7) of Regulation D or Regulation S under the
Securities Act or, with respect to Transfer Restricted Securities, that
such Notes are not "restricted" within the meaning of Rule 144 under
the Securities Act. Upon provision of such satisfactory evidence, the
Trustee, at the direction of the Company, shall authenticate and make
available for delivery Series A Notes that do not bear the legend.
(c) Neither the Company nor the Trustee shall have any
responsibility for any actions taken or not taken by the Depositary and
the Company shall have
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no responsibility for any actions taken or not taken by the Trustee as
agent or custodian of the Depositary.
SECTION 2.08 REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon the written order of the Company signed by two Officers of the Company,
shall authenticate a replacement Note if the Trustee's requirements and the
requirements of Section 8-405 of the Uniform Commercial Code are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Company may
charge the Holder for the Company's expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
SECTION 2.09 OUTSTANDING NOTES
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in this
Section, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.08 hereof, it
ceases to be outstanding unless the Trustee and the Company receives proof
satisfactory to them that the replaced Note is held by a protected purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds in trust, in accordance with the provisions
of this Indenture, on a redemption date or maturity date, money sufficient to
pay all principal and interest payable on that date with respect to the Notes
(or portions thereof) to be redeemed or maturing,
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as the case may be, then on and after that date such Notes (or portions thereof)
cease to be outstanding and interest on them ceases to accrue.
SECTION 2.10 TREASURY NOTES
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, notice, waiver or consent,
Notes owned by the Company or an Affiliate of the Company shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, notice, waiver or
consent, only Notes that a Responsible Officer of the Trustee actually knows are
so owned shall be so considered.
SECTION 2.11 TEMPORARY NOTES
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon a written order
of the Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Until such exchange, holders of temporary Notes shall be
entitled to all of the benefits of this Indenture.
SECTION 2.12 CANCELLATION
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act) unless the Company directs the Trustee to deliver such cancelled Notes to
the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.13 DEFAULTED INTEREST
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date,
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in each case at the rate provided in the Notes and in Section 4.01 hereof. The
Company shall promptly notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment.
The Company shall fix or cause to be fixed each such special record date and
payment date, provided that no such special record date shall be less than 10
days prior to the related payment date for such defaulted interest. At least 15
days before the special record date, the Company (or, upon the written request
of the Company, the Trustee in the name and at the expense of the Company) shall
mail or cause to be mailed to Holders a notice that states the special record
date, the related payment date, the amount of such defaulted interest and
interest payable on such defaulted interest, if any, to be paid.
SECTION 2.14 CUSIP NUMBERS
The Company in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
Article III
REDEMPTION AND PREPAYMENT
SECTION 3.01 NOTICES TO TRUSTEE
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days (unless a shorter period is acceptable to the Trustee) but not
more than 60 days before a redemption date, an Officers' Certificate setting
forth (a) the clause of this Indenture pursuant to which the redemption shall
occur, (b) the redemption date, (c) the principal amount of Notes to be redeemed
and (d) the redemption price.
SECTION 3.02 SELECTION OF NOTES TO BE REDEEMED
If fewer than all of the Notes are to be redeemed at any time,
the Trustee shall select the Notes to be redeemed among the Holders of the Notes
in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not so
listed, on a pro rata basis, by lot or in accordance
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with any other method the Trustee considers fair and appropriate. In the event
of partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding Notes not
previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or integral multiples
of $1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not an integral
multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
SECTION 3.03 NOTICE OF REDEMPTION
Subject to the provisions of Section 3.07 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes (including applicable
CUSIP numbers) to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment
or the Paying Agent is prohibited from making such payments pursuant to the
terms of this
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Indenture, interest on Notes (or portions thereof) called for redemption ceases
to accrue on and after the redemption date;
(g) the paragraph of the Notes and/or the Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP or ISIN number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to a Responsible Officer of the Trustee, at least
45 days (unless a shorter period is acceptable to the Trustee) prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04 EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price stated in the notice. Failure to
give notice or any defect in the notice to any Holder shall not affect the
validity of the notice to any other Holder.
SECTION 3.05 DEPOSIT OF REDEMPTION PRICE
At least one Business Day prior to the redemption date, the
Company shall deposit with the Trustee or with the Paying Agent money sufficient
to pay the redemption price of and accrued interest on all Notes to be redeemed
on that date other than Notes or portions of Notes called for redemption which
have been delivered by the Company to the Trustee for cancellation. The Trustee
or the Paying Agent shall promptly return to the Company any money deposited
with the Trustee or the Paying Agent by the Company in excess of the amounts
necessary to pay the redemption price of, and accrued interest on, all Notes to
be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender
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for redemption because of the failure of the Company to comply with the
preceding paragraph, interest shall be paid on the unpaid principal, from the
redemption date until such principal is paid, and to the extent lawful on any
interest not paid on such unpaid principal, in each case at the rate provided in
the Notes and in Section 4.01 hereof.
SECTION 3.06 NOTES REDEEMED IN PART
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07 OPTIONAL REDEMPTION
(a) Except as set forth in paragraphs (b) and (c) of this
Section 3.07, the Company shall not have the option to redeem the Notes prior to
December 15, 2002. Thereafter, the Company shall have the option to redeem the
Notes, in whole or in part, upon not less than 30 days' nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon (and Liquidated
Damages, if any) thereon to the applicable redemption date if redeemed during
the twelve-month period beginning on December 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
----- ----------
<S> <C>
2002....................................... 104.875%
2003....................................... 103.250%
2004....................................... 101.625%
2005 and thereafter........................ 100.000%
</TABLE>
(b) Notwithstanding the provisions of paragraph (a) of this
Section 3.07, at any time or from time to time on or prior to December 15, 2000,
the Company may (but shall not have the obligation to) redeem in the aggregate
up to 35% of the aggregate principal amount of the Notes originally outstanding,
at a redemption price of 109.75% of the aggregate principal amount so redeemed,
together with accrued and unpaid interest (and Liquidated Damages, if any) to
the date of redemption out of the Net Cash Proceeds of one or more Public Equity
Offerings; provided however, that immediately following
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such redemption not less than $113.8 million aggregate principal amount of the
Notes remains outstanding, and provided further, that such redemption shall
occur within 90 days of the closing of such Public Equity Offering.
(c) Notwithstanding the provisions of paragraph (a) of this
Section 3.07, the Notes will also be subject to redemption at any time or from
time to time prior to December 15, 2002 upon not less than 10 nor more than 20
days' notice to each Holder of Notes redeemed, at the option of the Company, in
whole or in part, in integral multiples of $1,000, at a redemption price equal
to 100% of the principal amount thereof plus the applicable Make-Whole Premium
plus accrued and unpaid interest (and Liquidated Damages, if any) to but
excluding the redemption date.
SECTION 3.08 NO MANDATORY REDEMPTION
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
Article IV
COVENANTS
SECTION 4.01 PAYMENT OF NOTES
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated for
and sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable interest rate on the
Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.
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To the extent any payment on the Notes, whether by or on
behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise, is declared to be fraudulent or preferential, set aside or
required to be paid to a trustee, receiver or other similar party under any
bankruptcy, insolvency, receivership or similar law, then if such payment is
recovered by, or paid over to, such trustee, receiver or other similar party,
the Notes or part thereof originally intended to be satisfied by such payment
shall be deemed to be reinstated and outstanding as if such payment had not
occurred.
SECTION 4.02 MAINTENANCE OF OFFICE OR AGENCY
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03 hereof.
SECTION 4.03 REPORTS
(a) Whether or not required by the rules and regulations of
the SEC, so long as any Notes are outstanding, the Company shall furnish to all
Holders, the Trustee and to prospective purchasers of Notes identified to the
Company by an Initial Purchaser, within 15 days after it is or would have been
(if it were subject to such reporting obligations) required to file with the SEC
(i) all quarterly and annual financial statements substantially equivalent to
financial statements that would have been required to be
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included in reports filed with the SEC on Forms 10-Q and 10-K if the Company
were required to file such forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent public accountants and (ii) all current reports that would be
required to be filed with the SEC on Form 8-K if the Company were required to
file such reports. In addition, whether or not required by the rules and
regulations of the SEC, at any time after the effectiveness of a registration
statement with respect to the Exchange Offer, the Company shall file a copy of
all such information with the SEC for public availability (unless the SEC will
not accept such a filing) and shall promptly make such information available to
all securities analysts and prospective investors upon request.
(b) For so long as any Transfer Restricted Securities remain
outstanding, the Company and the Guarantors shall furnish to all Holders and to
securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
(c) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.04 COMPLIANCE CERTIFICATE
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Restricted Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every section contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
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(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03(a) hereof shall
be accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article IV or Article V hereof or, if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to a Responsible Officer of the Trustee, forthwith upon any
Officer becoming aware of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default and what action the
Company is taking or proposes to take with respect thereto.
SECTION 4.05 COMPLIANCE WITH LAWS, TAXES
The Company shall comply with, and shall cause each of its
Restricted Subsidiaries to comply with all statutes, laws, ordinances, or
government rules and regulations to which it is subject, the non-compliance with
which would materially affect the business, prospects, earnings, properties,
assets or condition, financial or otherwise, of the Company and its Restricted
Subsidiaries taken as a whole.
The Company shall pay, and shall cause each of its Restricted
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
SECTION 4.06 STAY, EXTENSION AND USURY LAWS
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
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SECTION 4.07 CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder shall
have the right, at such Holder's option, pursuant to an offer (subject only to
conditions required by applicable law, if any) by the Company (the "Change of
Control Offer"), to require the Company to repurchase all or any part of such
Holder's Notes (provided, that the principal amount of such Notes must be $1,000
or an integral multiple thereof) on a date (the "Change of Control Purchase
Date") that is no later than 60 Business Days after the date of occurrence of
such Change of Control, at a cash price equal to 101% of the principal amount
thereof (the "Change of Control Purchase Price"), together with accrued and
unpaid interest (and Liquidated Damages, if any) to the Change of Control
Purchase Date. The Change of Control Offer shall be made within 30 Business Days
following a Change of Control by mailing a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes pursuant to the procedures required by this Indenture. The
Change of Control Offer shall remain open for at least 20 Business Days
following the mailing of such Change of Control Offer but in no event longer
than 30 Business Days, unless required by law (the "Change of Control Offer
Period"). Upon expiration of the Change of Control Offer Period, the Company
promptly shall purchase all Notes properly tendered in response to the Change of
Control Offer. The Company shall comply with the requirements of Regulation 14E
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control. To the extent that
the provisions of any such securities laws or regulations conflict with the
provisions of this paragraph, compliance by the Company or any of the Guarantors
with such laws and regulations shall not in and of itself cause a breach of its
obligations under such covenant.
On or before the Change of Control Purchase Date, the Company
shall, to the extent lawful (a) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (b) deposit with the
Paying Agent cash sufficient to pay the Change of Control Purchase Price
(together with accrued and unpaid interest and Liquidated Damages, if any), of
all Notes so tendered and (c) deliver or cause to be delivered to the Trustee
Notes so accepted together with an Officers' Certificate listing the Notes or
portions thereof being purchased by the Company. The Paying Agent shall promptly
pay the Holders of Notes so accepted an amount equal to the Change of Control
Purchase Price (together with accrued and unpaid interest and Liquidated
Damages, if any), and the Trustee shall promptly authenticate and deliver to
such Holders a new Note equal in principal amount to any unpurchased portion of
the Note surrendered; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. Any Notes not so accepted will
be delivered promptly by the Company to the
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Holder thereof. The Company will publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Purchase
Date.
If the Change of Control Purchase Date hereunder is on or
after an interest payment Record Date and on or before the associated Interest
Payment Date, any accrued and unpaid interest (and Liquidated Damages, if any,
due on such Interest Payment Date) will be paid to the person in whose name a
Note is registered at the close of business on such Record Date, and such
accrued and unpaid interest (and Liquidated Damages, if applicable) will not be
payable to Holders who tender the Notes pursuant to the Change of Control Offer.
The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
SECTION 4.08 LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK
The Company shall not, and shall not permit any Restricted
Subsidiary to, in one or a series of related transactions, convey, sell,
transfer, assign or otherwise dispose of, directly or indirectly, any of its
property, business or assets, including by merger or consolidation (in the case
of a Restricted Subsidiary of the Company), and including any sale or other
transfer or issuance of any Capital Stock of any Restricted Subsidiary, whether
by the Company or a Restricted Subsidiary of either or through the issuance,
sale or transfer of Capital Stock by a Restricted Subsidiary, and including any
sale and leaseback transaction (any of the foregoing, an "Asset Sale"), unless:
(a)(i) within 270 days after the date of such Asset Sale, the Net Cash
Proceeds therefrom (the "Asset Sale Offer Amount") are applied to the optional
redemption of the Notes in accordance with the terms of this Indenture or any
other Indebtedness of the Company ranking on a parity with the Notes from time
to time outstanding with similar provisions requiring the Company to make an
offer to purchase or to redeem such Indebtedness with the proceeds of asset
sales, pro rata in proportion to the respective principal amounts (or accreted
values in the case of Indebtedness issued with an original issue discount) of
the Notes and such other Indebtedness then outstanding, or to the repurchase of
the Notes and such other Indebtedness pursuant to a cash offer (subject only to
conditions required by applicable law, if any) (pro rata in proportion to the
respective principal amounts (or accreted values in the case of
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Indebtedness issued with an original issue discount) of the Notes and such other
Indebtedness then outstanding) (the "Asset Sale Offer") at a purchase price of
100% of principal amount (or accreted value in the case of Indebtedness issued
with an original issue discount) (the "Asset Sale Offer Price") together with
accrued and unpaid interest and Liquidated Damages, if any, to the date of
payment or (ii) within 270 days following such Asset Sale, the Asset Sale Offer
Amount is (A) invested (or committed, pursuant to a binding commitment subject
only to reasonable, customary closing conditions, to be invested, and in fact is
so invested, within an additional 90 days) in a Person, business, assets or
property which in the good faith reasonable judgment of the Board of Directors
will constitute or be a part of a Related Business of the Company or such
Restricted Subsidiary (if it continues to be a Subsidiary) immediately following
such transaction or (B) used to retire or repay Indebtedness of the Company
and/or any Restricted Subsidiary that ranks pari passu with the Notes and/or the
Guarantees or to permanently reduce the amount of such Indebtedness (provided
that in the case of a revolving credit arrangement or similar arrangement that
makes credit available, such commitment is permanently reduced by such amount).
(b) with respect to any Asset Sale or related series of Asset Sales
involving securities, property or assets with an aggregate Determined Fair
Market Value in excess of $500,000, at least 75% of the consideration for such
Asset Sale or series of related Asset Sales consists of (x) cash or Cash
Equivalents or (y) property or assets usable by the Company or any Restricted
Subsidiary in the ordinary course of conduct of a Related Business; provided,
that if the Fair Market Value of property or assets of the kind specified in
this subclause (y) exceeds $5.0 million, then the Fair Market Value thereof
shall be determined by a Third Party Evaluator; and provided, further, that the
principal amount of the following shall be deemed to be cash for purposes of
this clause (b): (i) any Indebtedness (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet or in the notes thereto) of
the Company or any Restricted Subsidiary that is assumed or forgiven by the
transferee of any such assets and (ii) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash within 30 days of the closing of such Asset Sale (but in the case of this
subclause (ii), only to the extent of the cash received),
(c) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on a pro forma
basis, to, such Asset Sale, and
(d) the Board of Directors of the Company determines in good faith that
the Company or such Restricted Subsidiary, as applicable, receives at least
Determined Fair Market Value for such Asset Sale.
An acquisition of Notes pursuant to an Asset Sale Offer may be
deferred until the accumulated Net Cash Proceeds from Asset Sales not applied to
the uses set forth
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above (the "Excess Proceeds") exceeds $5.0 million. Each Asset Sale Offer shall
remain open for 20 Business Days following its commencement but in no event
longer than 30 Business Days, except to the extent that a longer period is
required by applicable law (the "Asset Sale Offer Period"). Not later than five
Business Days after the termination of the Asset Sale Offer Period (the "Asset
Sale Purchase Date"), the Company shall apply the Asset Sale Offer Amount plus
an amount equal to accrued and unpaid interest and Liquidated Damages, if any,
to the purchase of all Notes or any other Indebtedness properly tendered (on a
pro rata basis if the Asset Sale Offer Amount is insufficient to purchase all
Notes and any other Indebtedness so tendered) at the Asset Sale Offer Price
(together with accrued and unpaid interest and Liquidated Damages, if any).
Payment for any Notes so purchased shall be made in the same manner as interest
payments are made.
If the payment date in connection with an Asset Sale Offer
hereunder is on or after an interest payment Record Date and on or before the
associated Interest Payment Date, any accrued and unpaid interest (and
Liquidated Damages, if any, due on such Interest Payment Date) will be paid to
the Person in whose name a Note is registered at the close of business on such
Record Date, and such interest (or Liquidated Damages, if applicable) will not
be payable to Holders who tender Notes pursuant to such Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 4.08 and the length of time the Asset Sale Offer shall remain
open;
(b) the Asset Sale Offer Amount, the Asset Sale Offer Price
and the Asset Sale Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrete or accrue interest after the Asset Sale Purchase Date;
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(e) that Holders electing to have a Note purchased pursuant to
an Asset Sale Offer may only elect to have all of such Note purchased
and may not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, or transfer by book-entry transfer, to the Company,
a depositary, if appointed by the Company, or a paying agent at the
address specified in the notice at least three days before the Asset
Sale Purchase Date;
(g) that Holders shall be entitled to withdraw their election
if the Company, the depositary or the paying agent, as the case may be,
receives, not later than the expiration of the Asset Sale Offer Period,
a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Holder is withdrawing
his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Asset Sale Offer Amount, the Company
shall select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000, or integral multiples thereof, shall
be purchased); and
(i) that Holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry
transfer).
On or before the Asset Sale Purchase Date, the Company shall,
to the extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Asset Sale Offer Amount of Notes or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Asset Sale Offer Amount
has been tendered, all Notes tendered, and shall promptly deliver to the Trustee
an Officers' Certificate stating that such Notes or portions thereof were
accepted for payment by the Company in accordance with the terms of this Section
4.08. The Company, the depository or the paying agent, as the case may be, shall
promptly (but in any case not later than five days after the Change of Control
Purchase Date) mail or deliver to each tendering Holder an amount equal to the
purchase price of the Notes tendered by such Holder and accepted by the Company
for purchase, and the Company shall promptly issue a new Note, and the Trustee,
upon written request from the Company shall authenticate and mail or deliver
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Note surrendered. Any
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Note not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company shall publicly announce the results of the Asset
Sale Offer on the Change of Control Purchase Date.
To the extent that the aggregate amount of Notes and such
other Indebtedness tendered pursuant to an Asset Sale Offer is less than the
Asset Sale Offer Amount, the Company may use any remaining Net Cash Proceeds for
general corporate purposes as otherwise permitted by the Indenture, and
following each Asset Sale Offer the Excess Proceeds amount shall be reset to
zero. If required by applicable law, the Asset Sale Offer Period may be extended
as so required; however, if so extended it shall nevertheless constitute an
Event of Default if within 60 Business Days of its commencement the Asset Sale
Offer is not consummated or the properly tendered Notes are not purchased
pursuant thereto.
The Company may apply as a credit in satisfaction of all or
any part of the Company's obligation to make an Asset Sale Offer the aggregate
principal amount of Notes purchased by the Company in open-market transactions
(i.e., excluding Notes optionally redeemed, or required to be purchased by the
Company, pursuant to the terms of this Indenture) within the previous 270 days
immediately preceding the close of the Asset Sale Offer Period and delivered to
the Trustee for cancellation.
Notwithstanding the foregoing provisions of the prior
paragraphs:
(a) the Company and its Restricted Subsidiaries may, in the
ordinary course of business, convey, sell, transfer, assign or
otherwise dispose of inventory, other personal property and services in
the ordinary course of business;
(b) the Company and its Restricted Subsidiaries may convey,
sell, transfer, assign or otherwise dispose of assets pursuant to and
in accordance with Sections 4.09 and 5.01;
(c) the Company and its Restricted Subsidiaries may sell or
dispose of damaged, worn out or other obsolete property in the ordinary
course of business so long as such property is no longer necessary for
the proper conduct of the business of the Company or such Restricted
Subsidiary, as applicable;
(d) the Company and its Restricted Subsidiaries may convey,
sell, transfer, assign or otherwise dispose of assets to the Company or
any of its Restricted Subsidiaries;
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(e) the Company and its Restricted Subsidiaries may surrender
or waive contract rights or the settlement, release or surrender of
contract, tort or other claims of any kind;
(f) the Company and its Restricted Subsidiaries may grant
Liens not prohibited by the Indenture;
(g) the Company and its Restricted Subsidiaries may engage in
any transaction or series of related transactions that would otherwise
be an Asset Sale where the Determined Fair Market Value of the assets,
sold, leased, conveyed or otherwise disposed of was less than $500,000;
and
(h) the Company and its Restricted Subsidiaries may sell or
discount, in each case without recourse (other than recourse for a
breach of a representation or warranty), accounts receivable arising in
the ordinary course of business, but only in connection with the
collection or compromise thereof.
In addition to the foregoing, the Company will not, and will
not permit any Restricted Subsidiary to, directly or indirectly make any Asset
Sale of any of the Equity Interests of any Restricted Subsidiary except pursuant
to an Asset Sale of all the Equity Interests of such Restricted Subsidiary.
Any Asset Sale Offer shall be made in compliance with all
applicable laws, rules, and regulations, including, if applicable, Regulation
14E of the Exchange Act and the rules and regulations thereunder and all other
applicable Federal and state securities laws. To the extent that the provisions
of any securities laws or regulations conflict with the provisions of this
section, compliance by the Company or any of its subsidiaries with such laws and
regulations shall not in and of itself cause a breach of its obligations under
such section.
SECTION 4.09 LIMITATION ON RESTRICTED PAYMENTS
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, make any Restricted Payment if, after
giving effect to such Restricted Payment on a pro forma basis, (a) a Default or
an Event of Default shall have occurred and be continuing, (b) the Company is
not permitted to incur at least $1.00 of additional Indebtedness pursuant to
clause (a) of the first paragraph of Section 4.10 hereof, (c) the aggregate
amount of all Restricted Payments made by the Company and its Restricted
Subsidiaries, including after giving effect to such proposed Restricted Payment,
from and after the Issue Date, would exceed the sum of (i) 50% of the aggregate
Adjusted Consolidated Net Income of the Company for the period (taken as one
accounting period),
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commencing January 1, 1998, to and including the last day of the fiscal quarter
ended immediately prior to the date of each such calculation (or, in the event
Adjusted Consolidated Net Income for such period is a deficit, then minus 100%
of such deficit), plus (ii) the aggregate Net Cash Proceeds received by the
Company from the sale of its Qualified Equity Interests (other than (A) to a
Subsidiary of the Company and (B) to the extent applied in connection with a
Qualified Exchange), after the Issue Date, plus (iii) 100% of the aggregate
amount of cash and the Determined Fair Market Value of property other than cash
contributed to the capital of the Company following the Issue Date, plus (iv)
the amount by which Indebtedness of the Company or any Restricted Subsidiary is
reduced on the Company's balance sheet upon the conversion or exchange (other
than by a Subsidiary) subsequent to the Issue Date of any Indebtedness of the
Company or a Restricted Subsidiary convertible or exchangeable for Qualified
Equity Interests of the Company (less the amount of any cash or other property
(other than such Qualified Equity Interest) distributed by the Company or any
Restricted Subsidiary upon such conversion or exchange), plus (v) to the extent
that any Restricted Investment that was made after the Issue Date is sold for
cash, or otherwise liquidated or repaid for cash, the amount of the cash return
of capital with respect to such Restricted Investment (less any taxes and
transaction costs associated with such sale or liquidation), plus (vi) in case
any Unrestricted Subsidiary has been redesignated a Restricted Subsidiary or has
been merged, consolidated or amalgamated with or into, transfers or conveys
assets to, or is liquidated into, the Company or a Restricted Subsidiary, the
Determined Fair Market Value of the Investment of the Company or a Restricted
Subsidiary, as the case may be, in such Unrestricted Subsidiary at the time of
such redesignation, combination or transfer (or of the assets transferred or
conveyed, as applicable), after deducting any Indebtedness associated with the
Unrestricted Subsidiary so designated or combined or with the assets so
transferred or conveyed.
The provisions of the immediately preceding paragraph will not
prohibit (a) a Qualified Exchange or (b) the payment of any dividend on
Qualified Equity Interests within 60 days after the date of its declaration if
such dividend could have been made on the date of such declaration in compliance
with the foregoing provisions. In addition, clauses (b) and (c) of the
immediately preceding paragraph will not prohibit (a) repurchases of Equity
Interests of Holdings or the Company (or the payment of dividends to Holdings to
be applied to such repurchases) from officers or employees of Holdings or its
Subsidiaries upon death, disability or termination of employment in an aggregate
amount with respect to all officers and employees not to exceed $250,000 per
year or $2.0 million in the aggregate on and after the Issue Date, and
repurchases of Equity Interests deemed to occur upon exercise of stock options
if such Equity Interests represent a portion of the exercise price of such
options; (b) dividends or other Restricted Payments to Holdings, which do not in
the aggregate exceed (i) the actual amount used by Holdings to pay legal fees
and expenses, audit expenses, SEC filing fees, corporate
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franchise or similar taxes plus (ii) the actual amount used by Holdings to pay
directors' fees, employee costs and miscellaneous administrative expenses,
provided that the aggregate amount expended in any calendar year for the
purposes set forth in this subclause (ii) shall not exceed $250,000, plus (iii)
payments to Holdings to permit Holdings to pay federal, state, local or foreign
tax liabilities, not to exceed with respect to any calendar year the amount of
all such tax liabilities that would otherwise by payable by the Company and its
Subsidiaries to the appropriate taxing authorities if they filed separate tax
returns for such calendar year, but only to the extent that Holdings has an
obligation to pay such tax liabilities relating to the assets, operations or
capital of the Company and its Subsidiaries, provided, however, that (x) in
determining the amount of any such tax payment that is permitted to be paid by
the Company and its Subsidiaries in respect of their federal income tax
liability, such payment shall be determined on the basis of assuming that the
Company is the parent company of an affiliated group filing a consolidated
federal income tax return and that Holdings and each such Subsidiary is a member
of such affiliated group and (y) any payments made pursuant to this subclause
(iii) shall either be used by Holdings to pay such tax liabilities within 90
days of Holdings' receipt of such payment or refunded to the payee; and
provided, further, that the amount of all payments made pursuant to this clause
(b) shall be excluded from the calculation of the amount available for
Restricted Payments pursuant to the preceding paragraph; (c) distributions not
to exceed $100,000 in the aggregate to Holdings to make payments of Liquidated
Damages to the Holders of Holdings Discount Notes as may be required under the
registration rights agreement relating to the Holdings Discount Notes, (d) the
purchase or redemption of any Indebtedness from the Net Cash Proceeds of any
Asset Sale to the extent permitted by Section 4.08 of this Indenture; (e) the
purchase or redemption of any Subordinated Indebtedness following a Change of
Control pursuant to provisions of such Subordinated Indebtedness substantially
similar to those described under Section 4.07 after the Company shall have
complied with the provisions under such Section, including the payment of the
applicable Change of Control Purchase Price, (f) the payment by the Company or
any Restricted Subsidiary of monitoring fees paid to WP Management Partners, LLC
or an Affiliate not in excess of $1.0 million in respect of any year, whether or
not actually paid in such year or deferred and paid in any subsequent year;
provided that the obligation to pay any such fees shall be subordinated to the
Notes, (g) payments by the Company or any of its Restricted Subsidiaries to
Wasserstein Perella & Co. or an Affiliate made for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities, including, without limitation, in connection with
acquisitions or divestitures which payments are approved by a majority of the
Board of Directors of the Company in good faith, and (h) Investments in
Unrestricted Subsidiaries, partnerships or joint ventures involving the Company
or any of its Restricted Subsidiaries, if the amount of such Investment (after
taking into account the amount of all other Investments made pursuant to this
clause (h), less any return of capital realized or any repayment of principal
received on such Investments, or any release or other
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cancellation of any guarantee constituting such Investment, which has not at
such time been reinvested in Investments made pursuant to this clause (h), does
not exceed $5.0 million, provided, that the aggregate amount of all such
Investments in Unrestricted Subsidiaries shall not exceed $5.0 million at any
one time outstanding. The full amount of any Restricted Payment made pursuant to
clauses (a), (d), (e) and (h) of the immediately preceding sentence, however,
will be deducted in the calculation of the aggregate amount of Restricted
Payments available to be made referred to in clause (c) of the immediately
preceding paragraph.
For purposes of this Section, the amount of any Restricted
Payment, if other than in cash, shall be the Determined Fair Market Value
thereof; provided, that in the case of a Restricted Payment consisting of a
Restricted Investment arising as the result of the designation of a Restricted
Subsidiary as an Unrestricted Subsidiary, the amount of the Investment in such
Unrestricted Subsidiary resulting therefrom shall, if greater than $5.0 million,
be determined by the opinion of a Third-Party Evaluator. Not later than the date
of making any Restricted Payment, the Company shall deliver to the Trustee an
Officer's Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculation required by this Section 4.09
were computed, which calculations may be based upon the Company's latest
available financial statements.
SECTION 4.10 LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS
Except as set forth in this Section, the Company shall not,
and shall not permit any Restricted Subsidiary to, directly or indirectly,
issue, assume, guarantee, incur, become directly or indirectly liable with
respect to (including as a result of an acquisition), or otherwise become
responsible for, contingently or otherwise (individually and collectively, to
"incur" or, as appropriate, an "incurrence"), any Indebtedness (including
Acquired Indebtedness), other than Permitted Indebtedness, unless (a) after
giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds thereof, the ratio of the total Indebtedness of the
Company and its Restricted Subsidiaries (excluding any Indebtedness owed to a
Restricted Subsidiary by any other Restricted Subsidiary or the Company and any
Indebtedness owed to the Company by any Restricted Subsidiary) to the Company's
Consolidated EBITDA (determined on a pro forma basis for the last four fiscal
quarters of the Company for which financial statements are available at the date
of determination) is less than (i) 6.5 to 1 if the Indebtedness is incurred
prior to December 15, 1999 and (ii) 6.0 to 1 if the Indebtedness is incurred on
or after December 15, 1999, and (b) no Default or Event of Default shall have
occurred and be continuing at the time of the incurrences of such Indebtedness
(the "Incurrence Date") or as a consequence of the incurrence of such
Indebtedness.
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In determining the ratio of total Indebtedness to Consolidated
EBITDA for purposes of the immediately preceding sentence, (a) if the
Indebtedness which is the subject of a determination under this provision is
Acquired Indebtedness, or Indebtedness incurred in connection with the
simultaneous acquisition of any Person, business, property or assets, then such
ratio shall be determined by giving effect to (on a pro forma basis, as if the
transaction had occurred at the beginning of the four-quarter period) both the
incurrence or assumption of such Acquired Indebtedness or such other
Indebtedness by the Company or any Restricted Subsidiary (together with any
other Acquired Indebtedness or other Indebtedness incurred or assumed by the
Company or any Restricted Subsidiary in connection with acquisitions consummated
by the Company or any Restricted Subsidiary during such four-quarter period) and
the inclusion in the Company's Consolidated EBITDA of the Consolidated EBITDA of
the acquired Person, business, property or assets and any pro forma expense and
cost reductions calculated on a basis consistent with Regulation S-X under the
Securities Act as in effect and as applied as of the Issue Date (together with
the Consolidated EBITDA of, and pro forma expense and cost reductions relating
to, any other Person, business, property or assets acquired or disposed of by
the Company or any Restricted Subsidiary during such four-quarter period) and
(b) if since the end of such four-quarter period any Indebtedness of the Company
or any Restricted Subsidiary has been repaid, repurchased, defeased or otherwise
discharged (other than Indebtedness under a revolving credit or similar
arrangement unless such revolving credit Indebtedness has been permanently
repaid and has not been replaced), Indebtedness as of the end of such
four-quarter period shall be calculated after giving effect on a pro forma basis
as if such Indebtedness had been repaid, repurchased, defeased or otherwise
discharged as of the beginning of such four-quarter period.
Indebtedness of any Person which is outstanding at the time
such Person becomes a Restricted Subsidiary of the Company (including upon
designation of any subsidiary or other Person as a Restricted Subsidiary) or is
merged with or into or consolidated with the Company or a Restricted Subsidiary
of the Company shall be deemed to have been incurred at the time such Person
becomes such a Restricted Subsidiary of the Company or is merged with or into or
consolidated with the Company or a Restricted Subsidiary of the Company, as
applicable.
SECTION 4.11 LIMITATION ON LIENS SECURING INDEBTEDNESS
The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Lien of any kind, other than Permitted Liens, upon any of their respective
assets, now owned or acquired on or after the date of this Indenture, or upon
any income or profits therefrom unless the Company provides, and causes its
Restricted Subsidiaries to provide, concurrently therewith, that the Notes are
equally and ratably so secured, provided that, if such
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Indebtedness is Subordinated Indebtedness, the Lien securing such Subordinated
Indebtedness shall be expressly subordinate and junior to the Lien securing the
Notes.
SECTION 4.12 LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, assume or suffer to exist any
consensual restriction on the ability of any Restricted Subsidiary to pay
dividends or make other distributions to or on behalf of, or to pay any
obligation to or on behalf of, or otherwise to transfer assets or property to or
on behalf of, or make or pay loans or advances to or on behalf of, the Company
or any Restricted Subsidiary, except (a) restrictions imposed by the Notes or
this Indenture, (b) restrictions imposed by other Indebtedness of the Company
(which may also be guaranteed by the Guarantors) ranking pari passu with the
Notes or the Guarantees, as applicable, provided such restrictions are no more
restrictive than those imposed by this Indenture and the Notes, (c) restrictions
imposed by applicable law, (d) existing restrictions under Indebtedness
outstanding on the Issue Date, (e) restrictions pursuant to a Credit Agreement
or any amendment thereto, or any Refinancing Indebtedness in respect thereof
(provided any restrictions or requirements of any such amendment or Refinancing
Indebtedness are no more restrictive than those imposed by such Credit Agreement
as of the first date after the Issue Date that such Credit Agreement is in
place), (f) restrictions under any Acquired Indebtedness not incurred in
violation of this Indenture or any agreement relating to any Person, property,
asset, or business acquired by the Company or any Restricted Subsidiary, which
restrictions in each case existed at the time of acquisition, were not put in
place in connection with or in anticipation of such acquisition and are not
applicable to any Person, property, asset or business other than the Person,
property, asset or business acquired, (g) restrictions solely with respect to a
Restricted Subsidiary of the Company imposed pursuant to a binding agreement
which has been entered into for the sale or disposition of all or substantially
all of the Equity Interests or assets of such Restricted Subsidiary, provided
such restrictions apply solely to the Equity Interests or assets of such
Restricted Subsidiary which are being sold, (h) restrictions on transfer
contained in Purchase Money Indebtedness incurred pursuant to paragraph (f) of
the definition of "Permitted Indebtedness" provided such restrictions relate
only to the transfer of the property acquired with the proceeds or otherwise
secured by such Purchase Money Indebtedness, and (i) in connection with and
pursuant to permitted Refinancings, replacements or restrictions imposed
pursuant to clauses (a), (b), (d), (e), (f) or (h) of this Section 4.12 that are
not more restrictive than those being replaced and do not apply to any other
person or assets than those that would have been covered by the restrictions in
the Indebtedness so refinanced. Notwithstanding the foregoing, neither (a)
customary provisions restricting subletting or assignment of any lease or other
contract entered into in the ordinary course of business, consistent with
industry practice, nor (b) Liens
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permitted under the terms of this Indenture on assets securing indebtedness
under a Credit Agreement or Purchase Money Indebtedness incurred in accordance
with Section 4.10 hereof shall in and of themselves be considered a restriction
on the ability of the applicable Restricted Subsidiary to transfer such
agreement or assets, as the case may be.
SECTION 4.13 LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Company shall not and shall not permit any of its
Restricted Subsidiaries on or after the Issue Date to enter into or suffer to
exist any contract, agreement, arrangement or transaction with any Affiliate (an
"Affiliate Transaction"), or any series of related Affiliate Transactions (other
than Exempted Affiliate Transactions), (a) unless it is determined that the
terms of such Affiliate Transaction are fair and reasonable to the Company, and
no less favorable to the Company than could have been obtained in an arm's
length transaction with a non-Affiliate, (b) if involving consideration to
either party in excess of $1.0 million, unless such Affiliate Transaction(s) is
evidenced by an Officers' Certificate addressed and delivered to the Trustee
certifying that such Affiliate Transaction (or Transactions) has been approved
by a resolution of the Board of Directors and (c) if involving consideration to
either party in excess of $5.0 million, unless in addition the Company, prior to
the consummation thereof, obtains a written favorable opinion as to the fairness
of such transaction to the Company from a financial point of view from a Third
Party Evaluator.
SECTION 4.14 FUTURE GUARANTORS
All Subsidiaries of the Company (other than Unrestricted
Subsidiaries) substantially all of whose assets are located in the United States
or that conduct substantially all of their business in the United States shall
be Guarantors. In addition, the Company will not, and will not permit any
Restricted Subsidiary to, make any Investment in any Subsidiary that is not a
Guarantor, unless either (i) such Investment is permitted by Section 4.09 or
(ii) such Subsidiary executes a Subsidiary Guarantee substantially in the form
of Exhibit J hereto and delivers an opinion of counsel in accordance with the
provisions of this Indenture. Notwithstanding anything herein or in this
Indenture to the contrary, if any Subsidiary of this Company that is not a
Guarantor guarantees any other Indebtedness of the Company or any Subsidiary of
the Company that is a Guarantor, or the Company or a Subsidiary of the Company
pledges more than 65% of the capital stock of such Subsidiary to a United States
lender, then such Subsidiary must become a Guarantor.
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SECTION 4.15 LIMITATION ON LINES OF BUSINESS
Neither the Company nor any Restricted Subsidiary shall
directly or indirectly engage to any substantial extent in any line or lines of
business activity other than that which, in the reasonable good faith judgment
of the Board of Directors of the Company, is a Related Business.
SECTION 4.16 CORPORATE EXISTENCE
Subject to Section 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Restricted Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Restricted Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of the Company and its Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any of its Restricted Subsidiaries, if the Board of Directors
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Restricted Subsidiaries, taken as
a whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Notes.
SECTION 4.17 LIMITATION ON STATUS AS INVESTMENT COMPANY
The Company and its Subsidiaries shall not take any action or
conduct their business and operations in such a way as would cause them to be
required to register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or would otherwise cause them to
become subject to regulation under the Investment Company Act.
SECTION 4.18 DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors of the Company may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary, provided, that (a) no
Default or Event of Default is existing or will occur as a consequence thereof,
(b) immediately after giving effect to such designation, on a pro forma basis,
the Company could incur at least $1.00 of additional Indebtedness pursuant to
clause (a) of the first paragraph of Section 4.10 hereof and (c) the amount of
the Investment in such Unrestricted Subsidiary (as determined pursuant to the
definition of "Investment" above) is permitted to be made under Section 4.09
hereof. Each such designation shall be evidenced by filing with the Trustee a
certified copy of the resolution giving effect to such designation and an
Officers' Certificate
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certifying that such designation complied with the foregoing conditions. If, at
any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted nor incurred
as of such date under Section 4.10 hereof, the Company shall be in default of
such Section 4.10). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (a) such
Indebtedness is permitted under Section 4.10 hereof and (b) no Default or Event
of Default would be in existence following such designation.
SECTION 4.19 TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE COMPANY
Any application by the Trustee for written instructions from
the Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
3 (three) business days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to any earlier date) unless prior to taking any such action (or the
effective date in the case of an omission), the Trustee shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
Article V
SUCCESSORS
SECTION 5.01 MERGER, SALE OR CONSOLIDATION
The Company will not in a single transaction or series of
related transactions consolidate with or merge with or into (whether or not the
Company is the surviving corporation) another person or, directly or indirectly,
sell, lease, convey or transfer all or substantially all of its assets (computed
on a consolidated basis), to another Person or group of Affiliated Persons or
adopt a plan of liquidation, unless (a) either (i) the Company is the continuing
entity or (ii) the resulting, surviving or transferee entity or, in the case of
a plan of liquidation, the entity which receives the greatest value from such
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plan of liquidation, is a corporation organized under the laws of the United
States, any state thereof or the District of Columbia and expressly assumes by
supplemental indenture all of the obligations of the Company in connection with
the Notes and this Indenture; (b) no Default or Event of Default shall exist or
shall occur immediately after giving effect on a pro forma basis to such
transaction; (c) immediately after giving effect to such transaction on a pro
forma basis, the Consolidated Net Worth of the consolidated surviving or
transferee entity or, in the case of a plan of liquidation, the entity which
receives the greatest value from such plan of liquidation, is at least equal to
the Consolidated Net Worth of the Company immediately prior to such transaction;
and (d) unless such transaction is solely the merger of the Company and one of
its previously existing Wholly Owned Restricted Subsidiaries which is also a
Guarantor and which transaction is not in connection with any other transaction
immediately after giving effect to such transaction on a pro forma basis, the
consolidated resulting, surviving or transferee entity or, in the case of a plan
of liquidation, the entity which receives the greatest value from such plan of
liquidation, would immediately thereafter be permitted to incur at least $1.00
of additional Indebtedness pursuant to clause (a) of the first paragraph of
Section 4.10 hereof.
SECTION 5.02 SUCCESSOR CORPORATION SUBSTITUTED
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company or consummation of a plan of
liquidation in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into which the Company is merged or to which
such transfer is made or, in the case of a plan of liquidation, the entity which
receives the greatest value from such plan of liquidation shall succeed to and
(except in the case of a lease) be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
successor corporation had been named therein as the Company, and (except in the
case of a lease) the Company shall be released from the obligations under the
Notes and this Indenture except with respect to any obligations that arise from,
or are related to, such transaction.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise) of all or substantially all of the properties and
assets of one or more Restricted Subsidiaries, the Company's interest in which
constitutes all or substantially all of the properties and assets of the Company
shall be deemed to be the transfer of all or substantially all of the properties
and assets of the Company.
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Article VI
DEFAULTS AND REMEDIES
SECTION 6.01 EVENTS OF DEFAULT
An "Event of Default" means:
(1) failure to pay any installment of interest (or Liquidated
Damages, if any) on the Notes as and when the same becomes due and
payable and the continuance of any such failure for 30 days;
(2) failure to pay all or any part of the principal, or
premium, if any, on the Notes when and as the same becomes due and
payable at maturity, redemption, by acceleration or otherwise,
including, without limitation, payment of the Change of Control
Purchase Price or the Asset Sale Offer Price, or otherwise;
(3) the failure by either of the Company or any Restricted
Subsidiary to observe or perform any other covenant or agreement
contained in the Notes or this Indenture and the continuance of such
failure for a period of 45 days after written notice is given to the
Company by the Trustee or to the Company and the Trustee by the Holders
of at least 25% in aggregate principal amount of the Notes outstanding
specifying the default and demanding that same be remedied;
(4) the Company or any of its Significant Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law: commences a
voluntary case; consents to the entry of an order for relief against it
in an involuntary case; consents to the appointment of a Custodian of
it or for all or substantially all of its property; makes a general
assignment for the benefit of its creditors; or generally is not paying
its debts as they become due; or, a court of competent jurisdiction
enters an order or decree under any Bankruptcy Law that is for relief
against the Company or any Significant Subsidiary in an involuntary
case, appoints a Custodian of the Company or any Significant Subsidiary
or for all or substantially all of the property of the Company or any
Significant Subsidiary, or orders the liquidation of the Company or any
Significant Subsidiary and the order or decree remains unstayed and in
effect for 60 consecutive days;
(5) a default in Indebtedness of the Company or any of its
Restricted Subsidiaries with an aggregate principal amount in excess of
$5.0 million (i) resulting from the failure to pay principal at final
maturity or (ii) as a result of
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which the maturity of such Indebtedness has been accelerated prior to
its stated maturity; and
(6) final unsatisfied judgments not covered by insurance
aggregating in excess of $5.0 million, at any one time rendered against
the Company or any of its Significant Subsidiaries and not stayed,
bonded or discharged within 60 days.
SECTION 6.02 ACCELERATION
If an Event of Default occurs and is continuing (other than an
Event of Default specified in clause (4) of Section 6.01), then in every such
case, unless the principal of all of the Notes shall have already become due and
payable, either the Trustee or the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding, by notice in writing to the
Company (and to the Trustee if given by Holders) (an "Acceleration Notice"), may
declare all principal, determined as set forth below, premium, if any, and
accrued and unpaid interest (and Liquidated Damages, if any) thereon to be due
and payable immediately. If an Event of Default specified in clause (4) above
occurs with respect to the Company or any Significant Subsidiary, all principal
of, premium, if any, and accrued and unpaid interest (and Liquidated Damages, if
any) on all the outstanding Notes will be immediately due and payable without
any declaration or other act on the part of Trustee or the Holders. The Holders
of a majority in aggregate principal amount of the then outstanding Notes are
authorized to rescind any such acceleration by written notice to the Trustee if
all existing Events of Default (other than (a) the non-payment of the principal
of, premium, if any, and accrued and unpaid interest and Liquidated Damages, if
any, on the Notes which have become due solely by such acceleration, (b) with
respect to defaults with respect to any provision requiring a supermajority
approval to amend, which default may only be waived by such a supermajority and
(c) with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of each outstanding Note affected)
have been cured or waived as provided in this Indenture.
SECTION 6.03 OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event
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of Default shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. All remedies are cumulative to the extent
permitted by law.
SECTION 6.04 WAIVER OF PAST DEFAULTS
Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05 CONTROL BY MAJORITY
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in liability.
SECTION 6.06 LIMITATION ON SUITS
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
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(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in aggregate
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Note, on or after the respective
due dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.08 COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.01 occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09 TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making
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of such payments directly to the Holders, to pay to the Trustee any amount due
to it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10 PRIORITIES
If the Trustee collects any money pursuant to this Section, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11 UNDERTAKING FOR COSTS
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs,
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including reasonable attorneys' fees and expenses, against any party litigant in
the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section does not apply to a suit by
the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a
suit by Holders of more than 10% in principal amount of the then outstanding
Notes.
Article VII
TRUSTEE
SECTION 7.01 DUTIES OF TRUSTEE
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture, and use the
same degree of care and skill in its exercise, as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in
this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the
case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture but need not
confirm or investigate the accuracy of mathematical
calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
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(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in
accordance with a direction received by it pursuant
to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability. The Trustee
shall be under no obligation to exercise any of its rights and powers under this
Indenture at the request, order or direction of any of the Holders unless such
Holders shall have offered to the Trustee reasonable security or indemnity
satisfactory to it against any loss, liability or expense that might be incurred
by the Trustee in compliance with such request, order or direction.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02 RIGHTS OF TRUSTEE
(a) The Trustee may conclusively rely upon any document, whether in its
original or facsimile form, believed by it to be genuine and to have been signed
or presented by the proper Person. The Trustee need not investigate any fact or
matter stated in any such document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice or opinion of such counsel with respect
to legal matters relating in any way to this Indenture and the Notes shall be
full and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
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(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture provided, however, that the Trustee's
conduct does not constitute wilful misconduct, negligence or bad faith.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) Except with respect to Section 4.01 herein, the Trustee shall have
no duty to inquire as to the performance of the Company's covenants in Section 4
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.01(1), 6.01(2) and 4.01 or (ii) any Default or Event of Default of
which a Responsible Officer of the Trustee shall have received written
notification at the Corporate Trust office of the Trustee and such notice
references the Notes and this Indenture or obtained actual knowledge.
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, the Trustee must comply with Sections 7.10 and 7.11 of this
Indenture. In addition, if the Trustee has any conflicting interest within the
meaning of Section 3.10 of the TIA it must eliminate such conflict within 90
days, or resign. Any Agent may do the same with like rights and duties.
SECTION 7.04 TRUSTEE'S DISCLAIMER
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
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SECTION 7.05 NOTICE OF DEFAULTS
If a Default or Event of Default occurs and is continuing and
if it is actually known to a Responsible Officer of the Trustee, the Trustee
shall mail to each Holder of Notes a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or interest on any Note,
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES
As promptly as practicable after each May 15 beginning with
the May 15 following the date of the Indenture and for so long as the Notes
remain outstanding, and in any event prior to July 15 in each year, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA Section 313(a) (but if no event described in TIA
Section 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
Section 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA Section 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Notes are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee whenever the Notes become
listed on any stock exchange or delisted therefrom.
SECTION 7.07 COMPENSATION AND INDEMNITY
The Company shall pay to the Trustee such reasonable
compensation, as the Company and the Trustee shall from time to time agree in
writing, for its acceptance of this Indenture and its performance of services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. Except as otherwise provided
herein, in addition to compensating the Trustee for its services, the Company
shall reimburse the Trustee promptly upon request for all reasonable
out-of-pocket expenses incurred or made by it in accordance with any provision
of this Indenture (except any such expenses as may be attributable to the
Trustee's negligence or bad faith). Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
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The Company shall indemnify each of the Trustee and any
predecessor Trustee against any and all losses, liabilities or expenses
(including taxes other than taxes based upon the income of the Trustee) incurred
by it in connection with the acceptance or administration of its duties under
this Indenture, including the costs and expenses of enforcing this Indenture
against the Company (including this Section 7.07) and defending itself against
any claim (whether asserted by the Company or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or expense may
be attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel of its selection
and the Company shall pay the reasonable fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any loss, liability
or expense incurred by the Trustee through the Trustee's own wilful misconduct,
negligence or bad faith. In addition, the Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 6.01(4) hereof, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of administration
under the Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
SECTION 7.08 REPLACEMENT OF TRUSTEE
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
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The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders constituting a majority in principal amount of the then outstanding
Notes may remove the Trustee by so notifying the Trustee and the Company in
writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a receiver or other public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may, at the expense of the Company, appoint a successor Trustee to replace
the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders owning at least 10% in aggregate principal amount of the
then outstanding Notes may, at the expense of the Company, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee (including its agents and counsel) hereunder have been paid
and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding
replacement of
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the Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation without any further act shall be the successor Trustee.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION
The Trustee shall at all times satisfy the requirements and
comply with Sections 3.10(a) and (b) of the TIA. Each successor Trustee shall be
a corporation organized and doing business under the laws of the United States
of America, any state thereof or the District of Columbia that is authorized
under such laws to exercise corporate trustee power, that is subject to
supervision or examination by Federal or state authorities and that has a
combined capital and surplus of at least $50.0 million as set forth in its most
recent published annual report of condition, subject to supervision or
examination by Federal or state authority; provided, however, that if Section
310(a) of the Trust Indenture Act or the rules and regulations of the Commission
under the Trust Indenture Act at any time permit a corporation organized and
doing business under the laws of any other jurisdiction to serve as trustee of
an indenture qualified under the Trust Indenture Act, this Section 7.10 shall be
automatically deemed amended to permit a corporation organized and doing
business under the laws of any such jurisdiction to serve as Trustee hereunder.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
Neither the Company nor any Person directly or indirectly controlling,
controlled by or under common control with the Company may serve as Trustee. If
at any time the Trustee with respect to any series of Securities shall cease to
be eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to and comply with TIA Section 311 to
the extent required thereby.
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Article VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
SECTION 8.02 LEGAL DEFEASANCE AND DISCHARGE
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company and the Guarantors shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be deemed to have been discharged from their obligations with respect to all
outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive solely from the trust fund described
in Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest and Liquidated
Damages, if any, on such Notes when such payments are due, (b) the Company's
obligations with respect to such Notes under Article 2 and Section 4.02 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Company's obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.
SECTION 8.03 COVENANT DEFEASANCE
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.07, 4.08, 4.09,
4.10, 4.11, 4.12, 4.13 and 4.14 hereof with respect to the outstanding Notes on
and after the date the conditions set forth below
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are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Company may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(5) through 6.01(7) hereof shall not constitute Events of Default.
SECTION 8.04 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, U.S.
Government Obligations, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if
any, and interest and Liquidated Damages, if any, on the outstanding
Notes on the stated maturity or on the applicable redemption date, as
the case may be and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date of this Indenture, there
has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as
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a result of such Legal Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders
of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(d) no Event of Default or Default shall have occurred and be
continuing on the date of such deposit (other than an Event of Default
or Default resulting from the incurrence of Indebtedness all or a
portion of the proceeds of which will be used to defease the Notes
pursuant to this Article 8 concurrently with such incurrence);
(e) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any other
material agreement or instrument (other than this Indenture) to which
the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the
Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company;
(g) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for, in the case of the Officer's Certificate, (a)
through (g) and, in the case of the Opinion of Counsel, clauses (a)
(with respect to the validity and perfection of the security interest),
(b), (c) and (e) of this paragraph relating to the Legal Defeasance or
the Covenant Defeasance, as applicable, have been complied with.
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SECTION 8.05 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS
Subject to Section 8.06 hereof, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or U.S.
Government Obligations deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or U.S. Government Obligations held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06 REPAYMENT TO COMPANY
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, Liquidated Damages or interest on any Note and remaining unclaimed for
two years after such principal, and premium, if any, or interest has become due
and payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a secured creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in The New York Times and The Wall Street Journal (national
edition),
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notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 8.07 REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any United
States dollars or U.S. Government Obligations in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
Article IX
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01 WITHOUT CONSENT OF HOLDERS OF NOTES
Notwithstanding Section 9.02 of this Indenture, the Company
and the Trustee may amend or supplement this Indenture or the Notes without the
consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes in the case of a merger or consolidation pursuant to
Section 5 hereof;
(d) to provide for additional Guarantors as set forth in Section 4.15;
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(e) to make any change that would provide any additional rights or
benefits to the Holders of the Notes (including the addition of any Subsidiary
Guarantors) or that does not adversely affect the legal rights hereunder of any
Holder of the Note; or
(f) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02 WITH CONSENT OF HOLDERS OF NOTES
Except as provided below in this Section 9.02, the Company,
the Guarantors and the Trustee may amend or supplement this Indenture and/or the
Notes may be amended or supplemented with the consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture or the Notes may be waived with the consent
of the Holders of a majority in aggregate principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for the Notes); provided, that no such amendment or supplement
may, without the consent of Holders of at least 66 2/3% in aggregate principal
amount of Notes at the time outstanding, modify the provisions of Section 4.07
hereof.
Upon the request of the Company accompanied by a Board
Resolution authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which
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case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver may not (with respect to any Notes
held by a non-consenting Holder):
(a) reduce the aggregate principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the Stated Maturity of any Note,
extend the time for payment or alter or waive any of the provisions
with respect to the redemption of the Notes, except as provided above
with respect to Sections 4.07 and 4.08 hereof;
(c) reduce the rate of or change the time or place or manner of payment
for payment of interest, including default interest, or premium on any
Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the
payment default that resulted from such acceleration);
(e) impair the right to institute suit for the enforcement or payment
of premium or interest payable on or after the Stated Maturity of any
Note (or, in the case of redemption at the option of the Company, on or
after the Redemption Date);
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(f) reduce the Change of Control Purchase Price or the Asset Sale Offer
Price or alter the provisions regarding the right of the Company to
redeem the Notes in a manner adverse to the Holders;
(g) make any Note payable in money other than that stated in the Notes;
(h) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or interest on the Notes; or
(i) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions of this Section 9.02.
In connection with any amendment, supplement or waiver under
this Article IX, the Company may, but shall not be obligated to, offer to any
Holder who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 9.03 COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment or supplement to this Indenture or the Notes
shall be set forth in an amended or supplemental Indenture that complies with
the TIA as then in effect.
SECTION 9.04 REVOCATION AND EFFECT OF CONSENTS
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05 NOTATION ON OR EXCHANGE OF NOTES
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall authenticate
new Notes that reflect the amendment, supplement or waiver.
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Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article IX if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officer's Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
Article X
SUBSIDIARY GUARANTEES
SECTION 10.01 SUBSIDIARY GUARANTEES
Subject to the provisions of this Article X, each Guarantor,
jointly and severally, hereby unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, that: (a) the principal of, and premium, if any, and
interest on the Notes will be duly and punctually paid in full when due, whether
at maturity, by acceleration or otherwise, and interest on overdue principal,
and premium, if any, and (to the extent permitted by law) interest on any
interest, if any, on the Notes and all other obligations of the Company to the
Holders or the Trustee hereunder or under the Notes (including fees, expenses or
other) will be promptly paid in full or performed, all in accordance with the
terms hereof; and (b) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise. Failing
payment when due of any amount so guaranteed or failing performance of any other
obligation of the Company to the Holders, for whatever reason, each Guarantor
will be obligated to pay, or to perform or to cause the performance of, the same
immediately. An Event of Default under this Indenture or the Notes shall
constitute an event of default under this Subsidiary Guarantee, and shall
entitle the Holders of Notes to accelerate the obligations of each Guarantor
hereunder in the same manner and to the same extent as the obligations of the
Company. Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the
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same, any waiver or consent by any Holder of the Notes with respect to any
thereof, the entry of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a Guarantor. Each Guarantor hereby waives and
relinquishes: (a) any right to require the Trustee, the Holders or the Company
(each, a "Benefitted Party") to proceed against the Company or any other Person
or to proceed against or exhaust any security held by a Benefitted Party at any
time or to pursue any other remedy in any secured party's power before
proceeding against the Guarantors; (b) any defense that may arise by reason of
the incapacity, lack of authority, death or disability of any other Person or
Persons or the failure of a Benefitted Party to file or enforce a claim against
the estate (in administration, bankruptcy or any other proceeding) of any other
Person or Persons; (c) demand, protest and notice of any kind (except as
expressly required by this Indenture), including but not limited to notice of
the existence, creation or incurring of any new or additional Indebtedness or
obligation or of any action or non-action on the part of the Guarantors, the
Company any Benefitted Party, any creditor of the Guarantors, the Company or on
the part of any other Person whomsoever in connection with any obligations the
performance of which are hereby guaranteed; (d) any defense based upon an
election of remedies by a Benefitted Party, including but not limited to an
election to proceed against the Guarantors for reimbursement; (e) any defense
based upon any statute or rule of law which provides that the obligation of a
surety must be neither larger in amount nor in other respects more burdensome
than that of the principal; (f) any defense arising because of a Benefitted
Party's election, in any proceeding instituted under the Bankruptcy Law, of the
application of Section 1111(b)(2) of the Bankruptcy Code; and (g) any defense
based on any borrowing or grant of a security interest under Section 364 of the
Bankruptcy Code. The Guarantors hereby covenant that the Subsidiary Guarantees
will not be discharged except by payment in full of all principal, premium, if
any, and interest on the Notes and all other costs provided for under this
Indenture, or as provided in Section 8.01.
If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or the Guarantors, or any trustee or
similar official acting in relation to either the Company or the Guarantors, any
amount paid by the Company or the Guarantors to the Trustee or such Holder, the
Subsidiary Guarantees, to the extent theretofore discharged, shall be reinstated
in full force and effect. Each of the Guarantors agrees that it will not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Guarantor agrees that, as between it, on the one hand,
and the Holders of Notes and the Trustee, on the other hand, (x) the maturity of
the obligations guaranteed hereby may be accelerated as provided in Article VI
hereof for the purposes hereof, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article VI hereof, such obligations (whether
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or not due and payable) shall forthwith become due and payable by such Guarantor
for the purpose of the Subsidiary Guarantees.
SECTION 10.02 EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES
To evidence the Subsidiary Guarantees set forth in Section
10.01 hereof, each of the Guarantors agrees that a notation of the Subsidiary
Guarantees substantially in the form included in Exhibit J hereto shall be
endorsed on each Note authenticated and delivered by the Trustee and that this
Indenture shall be executed on behalf of each of the Guarantors by the Chairman
of the Board, any Vice Chairman, the President or one of the Vice Presidents
each of of the Guarantors, under a facsimile of its seal reproduced on this
Indenture and attested to by an Officer other than the Officer executing this
Indenture.
Each of the Guarantors agree that the Subsidiary Guarantees
set forth in this Article X will remain in full force and effect and apply to
all the Notes notwithstanding any failure to endorse on each Note a notation of
the Subsidiary Guarantees.
If an Officer whose facsimile signature is on a Note no longer
holds that office at the time the Trustee authenticates the Note on which the
Subsidiary Guarantees are endorsed, the Subsidiary Guarantees shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantees set forth in this Indenture on behalf of the Guarantors.
SECTION 10.03 GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Nothing contained in this Indenture or in the Notes shall prevent
any consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or shall prevent the transfer of all or substantially all of the
assets of a Guarantor to the Company or another Guarantor. Upon any such
consolidation, merger, transfer or sale, the Subsidiary Guarantee of such
Guarantor shall no longer have any force or effect.
(b) Except as set forth in Article IV, nothing contained in this
Indenture or in any of the Notes shall prevent any consolidation or merger of a
Guarantor with or into a corporation or corporations other than the Company or
another Guarantor (whether or not affiliated with the Guarantor), or successive
consolidations or mergers in which such a Guarantor or its successor or
successors shall be a party or parties, or shall prevent the transfer of all or
substantially all of the assets of such a Guarantor, to a corporation other than
the Company or another Guarantor (whether or not affiliated with such Guarantor)
authorized to acquire and operate the same; provided, however, that, except as
provided
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in Section 10.04 hereof, each such Guarantor hereby covenants and agrees that,
upon any such consolidation, merger or transfer, the Subsidiary Guarantee
endorsed on the Notes, and the due and punctual performance and observance of
all of the covenants and conditions of this Indenture to be performed by such
Guarantor, shall be expressly assumed (in the event that the Guarantor is not
the surviving corporation in the merger), by a supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee, by
the corporation formed by such consolidation, or into which such Guarantor shall
have been merged, or by the corporation which shall have acquired such property.
In case of any such consolidation, merger or transfer of assets and upon the
assumption by the successor corporation, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by such Guarantor, such successor corporation shall succeed to and be
substituted for such Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Subsidiary Guarantees to be endorsed upon all of the
Notes issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee. All the Subsidiary Guarantees so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Subsidiary Guarantees theretofore and thereafter issued in accordance
with the terms of this Indenture as though all of such Subsidiary Guarantees had
been issued at the date of the execution hereof.
(c) The Trustee, subject to the provisions of Section 10.04 hereof,
shall be entitled to receive an Officers' Certificate and an Opinion of Counsel
as conclusive evidence that any such consolidation, merger, sale or conveyance,
and any such assumption of Obligations, comply with the provisions of this
Section 10.03. Such certificate and opinion shall comply with the provisions of
Section 10.05.
SECTION 10.04 RELEASE OF GUARANTORS
Upon the occurrence of any of the following events:
(a) the sale or disposition (whether by merger, stock
purchase, asset sale or otherwise) of all of the
Capital Stock or other Equity Interests of a
Guarantor or all of or substantially all of its
assets, in either case, to an entity which is not a
Guarantor (in compliance with the terms hereof);
(b) the designation of a Restricted Subsidiary to become
an Unrestricted Subsidiary, which transaction is
otherwise in compliance
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with this Indenture (including, without limitation,
the provisions of Section 4.08 hereof); or
(c) the release of a Guarantor from its obligations under
any Credit Agreement by the lenders thereunder;
then such Guarantor (or, if clause (a) of this paragraph applies, the
corporation acquiring such property) shall be released from and relieved of its
obligations under its Subsidiary Guarantee or Section 10.03 hereof as the case
may be; provided that in the event of an Asset Sale, the Net Proceeds from such
sale or other disposition are treated in accordance with the provisions of
Section 4.08 hereof; and provided further that any such termination shall occur
only to the extent that all obligations of such Guarantor under all of its
guarantees of, and under all of its pledges of assets or other security
interests which secure, any indebtedness of the Company or any other Subsidiary
of the Company shall also terminate upon such release, sale or transfer.
Upon delivery by the Company to the Trustee of an Officer's
Certificate and Opinion of Counsel, and to the effect that such sale or other
disposition was made by the Company in accordance with the provisions of this
Indenture, including without limitation Section 4.08 hereof, the Trustee shall
execute any documents reasonably required in order to evidence the release of
any such Guarantor from its obligations under its Subsidiary Guarantee. Any
Guarantor not released from its obligations under its Subsidiary Guarantee shall
remain liable for the full amount of principal of and interest on the Notes and
for the other obligations of any Guarantor under this Indenture as provided in
this Article X.
SECTION 10.05 LIMITATION OF GUARANTOR'S LIABILITY
Each Guarantor, and by its acceptance hereof each Holder,
hereby confirms that it is the intention of all such parties that the guarantee
by such Guarantor pursuant to its Subsidiary Guarantee not constitute a
fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law. To effectuate the foregoing intention, the Holders
and such Guarantor hereby irrevocably agree that the obligations of such
Guarantor under this Article X shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Section 10, result in the obligations of such Guarantor
under the Subsidiary Guarantee of such Guarantor not constituting a fraudulent
transfer or conveyance.
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SECTION 10.06 APPLICATION OF CERTAIN TERMS AND PROVISIONS TO THE GUARANTOR
(a) For purposes of any provision of this Indenture which provides for
the delivery by any Guarantor of an Officers' Certificate and/or an Opinion of
Counsel, the definitions of such terms in Section 1.01 shall apply to such
Guarantor as if references therein to the Company were references to such
Guarantor.
(b) Any request, direction, order or demand which by any provision of
this Indenture is to be made by any Guarantor, shall be sufficient if evidenced
as described in Section 10.02 as if references therein to the Company were
references to such Guarantor.
(c) Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the holders of
Notes to or on any Guarantor may be given or served as described in Section
10.02 as if references therein to Company were references to such Guarantor.
(d) Upon any demand, request or application by any Guarantor to the
Trustee to take any action under this Indenture, such Guarantor shall furnish to
the Trustee such certificates and opinions as are required in Section 10.04
hereof as if all references therein to the Company were references to such
Guarantor.
SECTION 10.07 ADDITIONAL GUARANTORS
In the event that any Unrestricted Subsidiary of the Company
shall be designated by the Board of Directors of the Company as a Restricted
Subsidiary pursuant to Section 4.18, the Company shall cause such Restricted
Subsidiary to deliver to the Trustee a supplemental Subsidiary Guarantee, in
substantially the form of Exhibit F hereto, pursuant to which such Restricted
Subsidiary (the "Additional Guarantor") shall jointly and severally with each of
the existing Guarantors guarantee the Company's obligations under this Indenture
and the Notes (the "Additional Guarantee").
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Article XI
MISCELLANEOUS
SECTION 11.01 TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control.
SECTION 11.02 NOTICES
Any notice or communication by the Company or the Trustee to
the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telecopier
or overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
American Lawyer Media, Inc.
600 Third Avenue
New York, New York 10016
Telephone No.: (212) 973-2800
Fax No.: (212) 973 2889
Attention: Randall J. Weisenburger
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Telephone No.: (212) 815-5835
Fax No.: (212) 815-5505
Attention: Corporate Trust Trustee Administration
The Company or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
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Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03 COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
SECTION 11.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 11.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 11.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
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(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 11.06 RULES BY TRUSTEE AND AGENTS
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
SECTION 11.07 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS
No past, present or future director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Notes, this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
SECTION 11.08 GOVERNING LAW
THE INTERNAL LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF SHALL GOVERN AND BE USED TO CONSTRUE THIS
INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
SECTION 11.09 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
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This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 11.10 SUCCESSORS
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 11.11 SEVERABILITY
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 11.12 COUNTERPART ORIGINALS
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 11.13 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of
the Sections and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following pages]
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SIGNATURES
Dated as of December 22, 1997 AMERICAN LAWYER MEDIA, INC.
By:
-----------------------------------------
Name:
-----------------------------
Title:
----------------------------
Attest:
- ---------------------------- (SEAL)
Name:
Title: Secretary
Dated as of December 22, 1997 ALM, LLC
By:
---------------------------------------
Name:
-----------------------------
Title:
----------------------------
Attest:
- ---------------------------- (SEAL)
Name:
Title: Secretary
<PAGE>
Dated as of December 22, 1997 COUNSEL CONNECT, LLC
By:
---------------------------------------
Name:
-----------------------------
Title:
----------------------------
Attest:
- ---------------------------- (SEAL)
Name:
Title: Secretary
Dated as of December 22, 1997 ALM IP, LLC
By:
---------------------------------------
Name:
-----------------------------
Title:
----------------------------
Attest:
- ---------------------------- (SEAL)
Name:
Title: Secretary
<PAGE>
Dated as of December 22, 1997 ALM COUNSEL CONNECT, INC.
By:
---------------------------------------
Name:
-----------------------------
Title:
----------------------------
Attest:
- ---------------------------- (SEAL)
Name:
Title: Secretary
Dated as of December 22, 1997 THE BANK OF NEW YORK
By:
---------------------------------------
Name:
-----------------------------
Title:
----------------------------
Attest:
- ----------------------------
Name:
Title:
<PAGE>
EXHIBIT A
[FORM OF FACE OF SERIES A NOTE]
[Global Notes Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND AN PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC). ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THE NOTES (OR THEIR PREDECESSORS) EVIDENCED HEREBY WERE ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE NOTES EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTES EVIDENCED
HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING
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<PAGE>
ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE NOTES EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH NOTES MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE
UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) TO A LIMITED NUMBER OF OTHER INSTITUTIONAL "ACCREDITED INVESTORS"
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
("INSTITUTIONAL ACCREDITED INVESTORS"), (c) (IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (d) OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE NOTES EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH IN (A) ABOVE.
A-2
<PAGE>
CUSIP No. [ ]/ISIN No.[ ]
9 3/4% Series A Senior Notes due 2007
No. $175,000,000
AMERICAN LAWYER MEDIA, INC., a Delaware corporation,
promises to pay to
or registered assigns,
the principal sum of
Dollars [or such other amount as is indicated on Schedule A hereof]* on December
15, 2007
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Dated: December 22, 1997
AMERICAN LAWYER MEDIA, INC.
By:
-------------------------------------------
Name:
-------------------------------
Title:
-------------------------------
By:
-------------------------------------------
Name:
-------------------------------
Title:
-------------------------------
(SEAL)
A-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 9 3/4% Senior
Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK, as Trustee
By:
- ---------------------------------
Authorized Signatory
- ------------------------
* Applicable to Global Notes only.
A-4
<PAGE>
(Form of Reverse of Series A Note)
AMERICAN LAWYER MEDIA, INC.
9 3/4% Senior Notes due 2007
Capitalized terms used herein shall have the meanings assigned to them
in this Indenture referred to below unless otherwise indicated.
1. Interest. American Lawyer Media, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
9 3/4% per annum from December 22, 1997 until maturity and shall pay the
Liquidated Damages, if any, payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on June 15 and December 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a Record Date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be June 15, 1998. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Liquidated Damages. The Holder of this Note is entitled to the
benefits of the Registration Rights Agreement relating to the Notes dated
December 22, 1997, between the Company, the Guarantors and the Initial
Purchasers.
The Registration Rights agreement will provide that (i) if the Company
fails to file an Exchange Offer Registration Statement (as defined in the
Registration Rights Agreement) with the SEC on or prior to the 120th day after
the Closing Date, (ii) if the Exchange Offer Registration Statement is not
declared effective by the SEC on or prior to the 180th day after the Closing
Date, (iii) the Exchange Offer (as defined in the Registration Rights Agreement)
is not consummated on or before the 30th business day after the Exchange Offer
Registration Statement is declared effective (iv) if obligated to file the Shelf
Registration Statement (as
A-5
<PAGE>
defined in the Registration Rights Agreement) and the Company fails to file the
Shelf Registration Statement with the SEC on or prior to the 30th day after the
obligation to file arises, or (v) if obligated to file a Shelf Registration
Statement and the Shelf Registration Statement is not declared effective on or
prior to the 90th day after the obligation to file arises, or (vi) if the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
the case may be, is declared effective but thereafter ceases to be effective or
useable in connection with resales of the Transfer Restricted Securities, such
time of non-effectiveness or non-useability (each, a "Registration Default"),
the Company and the Guarantors agree to pay to each Holder of Transfer
Restricted Securities affected thereby liquidated damages ("Liquidated Damages")
in an amount equal to $0.10 per week per $1,000 in principal amount of Transfer
Restricted Securities held by the Holder for each week or portion thereof that
the Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default. The amount of the
Liquidated Damages shall increase by an additional $0.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $0.25 per week, per $1,000 in
principal amount of Transfer Restricted Securities. The Company and the
Guarantors shall not be required to pay Liquidated Damages for more than one
Registration Default at any given time. Following the cure of all Registration
Defaults, the accrual of Liquidated Damages will cease.
All accrued Liquidated Damages shall be paid by the Company and the
Guarantors to the Holders entitled thereto in the same manner as interest
payments on the Notes on semi-annual damages payment dates which correspond to
interest payment dates for the Notes.
3. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on the June 1 or
December 1 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium, interest and
Liquidated Damages, if any, at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages, if any, may
be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and provided that payment by wire transfer of immediately
available funds will be required with respect to principal of and interest,
premium and Liquidated Damages, if any, on all Global Notes and all other Notes
the Holders of which shall have provided wire transfer instructions to the
Company or the Paying Agent. Such payment shall be
A-6
<PAGE>
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
4. Paying Agent and Registrar. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
5. Indenture. The Company issued the Notes under an Indenture dated as
of December 22, 1997 ("Indenture") by and among the Company, ALM, LLC, Counsel
Connect, LLC, ALM IP, LLC, ALM Counsel Connect, Inc. (collectively, the
"Guarantors") and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. The Notes are unsecured obligations
of the Company limited to $175,000,000 in aggregate principal amount.
6. Optional Redemption.
(a) Except as set forth in clauses (b) and (c) of this Section
of the Note, the Company shall not have the option to redeem the Notes prior to
December 15, 2002 except as provided below. Thereafter, the Company shall have
the option to redeem the Notes, in whole or in part, upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest (and
Liquidated Damages, if any,) thereon to the applicable redemption date if
redeemed during the twelve-month period beginning on December 15 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
----- ----------
<S> <C>
2002...................................... 104.875%
2003...................................... 103.250%
2004...................................... 101.625%
2005 and thereafter....................... 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this
Section of the Note, at any time or from time to time on or prior to December
15, 2000, the Company may (but shall not have the obligation to) redeem in the
aggregate up to
A-7
<PAGE>
35% of the aggregate principal amount of the Notes originally outstanding, at a
redemption price of 109.75% of the aggregate principal amount so redeemed,
together with accrued and unpaid interest (and Liquidated Damages, if any) to
the date of redemption out of the Net Cash Proceeds of one or more Public Equity
Offerings; provided however, that immediately following such redemption not less
than $113.8 million aggregate principal amount of the Notes remains outstanding,
and provided further, that such redemption shall occur within 90 days of the
closing of such Public Equity Offering.
(c) Notwithstanding the provisions of clause (a) of this
Section of the Note, the Notes will also be subject to redemption, at any time
prior to December 15, 2002 upon not less than 10 nor more than 20 days' notice
to each Holder of Notes redeemed, at the option of the Company, in whole or in
part, in integral multiples of $1,000 at a redemption price equal to 100% of the
principal amount thereof plus the applicable Make-Whole Premium plus accrued and
unpaid interest (and Liquidated Damages, if any) to but excluding the Redemption
Date.
7. Mandatory Redemption.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
8. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, each Holder shall have
the right, at such Holder's option, pursuant to an offer (subject only to
conditions required by applicable law, if any) by the Company (the "Change of
Control Offer"), to require the Company to repurchase all or any part of such
Holder's Notes (provided, that the principal amount of such Notes must be $1,000
or an integral multiple thereof) on a date (the "Change of Control Purchase
Date") that is no later than 60 Business Days after the date of occurrence of
such Change of Control, at a cash price equal to 101% of the principal amount
thereof (the "Change of Control Purchase Price"), together with accrued and
unpaid interest (and Liquidated Damages, if any) to the Change of Control
Purchase Date. The Change of Control Offer shall be made within 30 Business Days
following a Change of Control by mailing a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes pursuant to the procedures required by this Indenture. The
Change of Control Offer shall remain open for at least 20 Business Days
following the mailing of such Change of Control Offer but in no event longer
than 30 Business Days, unless required by law (the "Change of Control Offer
Period"). Upon expiration of the Change of Control Offer Period, the Company
promptly shall purchase all Notes properly tendered in response to the Change of
Control Offer.
A-8
<PAGE>
The Company shall comply with the requirements of Regulation 14E under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control. To the extent that
the provisions of any such securities laws or regulations conflict with the
provisions of this paragraph, compliance by the Company or any of the Guarantors
with such laws and regulations shall not in and of itself cause a breach of its
obligations under such covenant.
On or before the Change of Control Purchase Date, the Company
shall, to the extent lawful (a) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (b) deposit with the
Paying Agent an amount equal to the Change of Control Purchase Price (together
with accrued and unpaid interest and Liquidated Damages, if any), of all Notes
so tendered and (c) deliver or cause to be delivered to the Trustee Notes so
accepted together with an Officers' Certificate listing the Notes or portions
thereof being purchased by the Company. The Paying Agent shall promptly pay the
Holders of Notes so accepted an amount equal to the Change of Control Purchase
Price (together with accrued and unpaid interest and Liquidated Damages, if
any), and the Trustee shall promptly authenticate and deliver to such Holders a
new Note equal in principal amount to any unpurchased portion of the Note
surrendered; provided that each such new Note will be in a principal amount of
$1,000 or an integral multiple thereof. Any Notes not so accepted will be
delivered promptly by the Company to the Holder thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date.
If the Change of Control Purchase Date hereunder is on or
after an interest payment Record Date and on or before the associated Interest
Payment Date, any accrued and unpaid interest (and Liquidated Damages, if any,
due on such Interest Payment Date) will be paid to the person in whose name a
Note is registered at the close of business on such Record Date, and such
accrued and unpaid interest (and Liquidated Damages, if applicable) will not be
payable to Holders who tender the Notes pursuant to the Change of Control Offer.
The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
A-9
<PAGE>
(b) The Company shall not, and shall not permit any Restricted
Subsidiary to, in one or a series of related transactions, convey, sell,
transfer, assign or otherwise dispose of, directly or indirectly, any of its
property, business or assets, including by merger or consolidation (in the case
of a Restricted Subsidiary of the Company), and including any sale or other
transfer or issuance of any Capital Stock of any Restricted Subsidiary, whether
by the Company or a Restricted Subsidiary of either or through the issuance,
sale or transfer of Capital Stock by a Restricted Subsidiary, and including any
sale and leaseback transaction (any of the foregoing, an "Asset Sale"), unless:
(i) within 270 days after the date of such Asset Sale, the Net
Cash Proceeds therefrom (the "Asset Sale Offer Amount") are applied to
the optional redemption of the Notes in accordance with the terms of
this Indenture or any other Indebtedness of the Company ranking on a
parity with the Notes from time to time outstanding with similar
provisions requiring the Company to make an offer to purchase or to
redeem such Indebtedness with the proceeds of asset sales, pro rata in
proportion to the respective principal amounts (or accreted values in
the case of Indebtedness issued with an original issue discount) of the
Notes and such other Indebtedness then outstanding, or to the
repurchase of the Notes and such other Indebtedness pursuant to a cash
offer (subject only to conditions required by applicable law, if any)
(pro rata in proportion to the respective principal amounts (or
accreted values in the case of Indebtedness issued with an original
issue discount) of the Notes and such other Indebtedness then
outstanding) (the "Asset Sale Offer") at a purchase price of 100% of
principal amount (or accreted value in the case of Indebtedness issued
with an original issue discount) (the "Asset Sale Offer Price")
together with accrued and unpaid interest and Liquidated Damages, if
any, to the date of payment, or (ii) within 270 days following such
Asset Sale, the Asset Sale Offer Amount is (A) invested (or committed,
pursuant to a binding commitment subject only to reasonable, customary
closing conditions, to be invested, and in fact is so invested, within
an additional 90 days) in a Person, business, assets or property which
in the good faith reasonable judgment of the Board of Directors will
constitute or be a part of a Related Business of the Company or such
Restricted Subsidiary (if it continues to be a Subsidiary) immediately
following such transaction or (B) used to retire or repay Indebtedness
of the Company and/or any Restricted Subsidiary that ranks senior to or
pari passu with the Notes and/or the Guarantees or to permanently
reduce the amount of such Indebtedness (provided that, in the case of a
revolving credit arrangement or similar arrangement that makes credit
available, such commitment is permanently reduced by such amount).
A-10
<PAGE>
(ii) with respect to any Asset Sale or related series of Asset
Sales involving securities, property or assets with an aggregate
Determined Fair Market Value in excess of $500,000, at least 75% of the
consideration for such Asset Sale or series of related Asset Sales
consists of (x) cash or Cash Equivalents or (y) property or services
usable by the Company or any Restricted Subsidiary in the ordinary
course of conduct of a Related Business; provided, that if the
Determined Fair Market Value of property or assets of the kind
specified in this subclause (y) exceeds $5.0 million, then the
Determined Fair Market Value thereof shall be determined by a Third
Party Evaluator; and provided, further, that the principal amount of
the following shall be deemed to be cash for purposes of this clause
(b): (i) any Indebtedness (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto) of the
Company or any Restricted Subsidiary that is assumed or forgiven by the
transferee of any such assets and (ii) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary
from such transferee that are converted by the Company or such
Restricted Subsidiary into cash within 30 days of the closing of such
Asset Sale (but in the case of this subclause (ii), only to the extent
of the cash received),
(c) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on a pro forma
basis, to, such Asset Sale, and
(d) the Board of Directors of the Company determines in good faith that
the Company or such Restricted Subsidiary, as applicable, receives at least
Determined Fair Market Value for such Asset Sale.
An acquisition of Notes pursuant to an Asset Sale Offer may be
deferred until the accumulated Net Cash Proceeds from Asset Sales not applied to
the uses set forth above (the "Excess Proceeds") exceeds $5.0 million and that
each Asset Sale Offer shall remain open for 20 Business Days following its
commencement but in no event longer than 30 Business Days, except to the extent
that a longer period is required by applicable law (the "Asset Sale Offer
Period"). Not later than five Business Days after the termination of the Asset
Sale Offer Period (the "Asset Sale Purchase Date") the Company shall apply the
Asset Sale Offer Amount plus an amount equal to accrued and unpaid interest and
Liquidated Damages, if any, to the purchase of all Notes or any other
Indebtedness properly tendered (on a pro rata basis if the Asset Sale Offer
Amount is insufficient to purchase all Notes and any other Indebtedness so
tendered) at the Asset Sale Offer Price (together with accrued and unpaid
interest and Liquidated Damages, if any). Payment for any Notes so purchased
shall be made in the same manner as interest payments are made.
A-11
<PAGE>
If the payment date in connection with an Asset Sale Offer
hereunder is on or after an interest payment Record Date and on or before the
associated Interest Payment Date, any accrued and unpaid interest (and
Liquidated Damages, if any, due on such Interest Payment Date) will be paid to
the person in whose name a Note is registered at the close of business on such
Record Date, and such interest (or Liquidated Damages, if applicable) will not
be payable to Holders who tender Notes pursuant to such Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of a majority in aggregate principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in aggregate principal amount of the then outstanding Notes. Without
the consent of any Holder of a Note, the Indenture or the Notes may be amended
or supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes (including the
addition of any Guarantors) or that does not adversely affect the legal rights
under the Indenture of any such
A-12
<PAGE>
Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
12. Defaults. An "Event of Default" means: (1) failure to pay any
installment of interest (or Liquidated Damages, if any) on the Notes as and when
the same becomes due and payable and the continuance of any such failure for 30
days; (2) failure to pay all or any part of the principal, or premium, if any,
on the Notes when and as the same becomes due and payable at maturity,
redemption, by acceleration or otherwise, including, without limitation, payment
of the Change of Control Purchase Price or the Asset Sale Offer Price, or
otherwise; (3) the failure by either of the Company or any Restricted Subsidiary
to observe or perform any other covenant or agreement contained in the Notes or
this Indenture and the continuance of such failure for a period of 45 days after
written notice is given to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
Notes outstanding specifying the default and demanding that same be remedied;
(4) the Company or any of its Significant Subsidiaries pursuant to or within the
meaning of any Bankruptcy Law commences a voluntary case; consents to the entry
of an order for relief against it in an involuntary case; consents to the
appointment of a Custodian of it or for all or substantially all of its
property; makes a general assignment for the benefit of its creditors; or
generally is not paying its debts as they become due; or, a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that is for
relief against the Company or any Restricted Subsidiary in an involuntary case,
appoints a Custodian of the Company or any Significant Subsidiary or for all or
substantially all of the property of the Company or any Significant Subsidiary,
or orders the liquidation of the Company or any Significant Subsidiary and the
order or decree remains unstayed and in effect for 60 consecutive days; (5) a
default in Indebtedness of the Company or any of its Restricted Subsidiaries
with an aggregate principal amount in excess of $5.0 million (i) resulting from
the failure to pay principal at final maturity or (ii) as a result of which the
maturity of such Indebtedness has been accelerated prior to its stated maturity;
and (6) final unsatisfied judgments not covered by insurance aggregating in
excess of $5.0 million, at any one time rendered against the Company or any of
its Significant Subsidiaries and not stayed, bonded or discharged within 60
days.
An Event of Default shall not be deemed to have occurred under clause
(3), (5) or (6) until the Trustee shall have received written notice from the
Company or any of the Holders or unless a Responsible Officer shall have
knowledge of such Event of Default.
13. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Company and its Restricted Subsidiaries to, among other
things, engage in certain transactions with Affiliates, incur additional
indebtedness and
A-13
<PAGE>
make payments in respect of Equity Interests. The limitations are subject to a
number of important qualifications and limitations.
14. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
15. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
16. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
American Lawyer Media, Inc.
600 Third Avenue
New York, NY 10016
Telephone No.: (212) 973-2800
Fax No.: (212) 973 2889
Attention: Randall J. Weisenburger
A-14
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's Social Security or tax I.D. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
Your Signature:
-----------------------------------
(Sign exactly as your name appears on the face of this Note)
Date:
----------------------------
By:
----------------------------------
Notice: To be executed by an executive officer
Signature Guarantee:*
-----------------------
- ----------------------
* Signature must be guaranteed.
A-15
<PAGE>
In connection with any transfer of any of the Notes evidenced by this
certificate occurring prior to the date that is two years after the later of the
date of original issuance of such Notes and the last date, if any, on which such
Notes were owned by the Company or any Affiliate of the Company, the undersigned
confirms that such Notes are being transferred
CHECK ONE BOX BELOW
(1) / / to the Company; or
(2) / / pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(3) / / pursuant to and in compliance with Regulation S under
the Securities Act of 1933; or
(4) / / to an institutional "accredited investor" (as defined
in Schedule 501(a)(1), (2), (3) or (7) under the Securities
Act of 1933) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(5) / / pursuant to another available exemption from the
registration requirements of the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the
name of any person other than the registered holder thereof,
provided, however, that if box (3), (4) or (5) is checked, the
Trustee may require, prior to registering any such transfer of
the Notes such legal opinions, certifications and other
information as the Company has reasonably requested to confirm
that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the
exemption provided by Rule 144 under such Act.
----------------------------
Signature
Signature Guarantee *
- ---------------------- ----------------------------
Signature must be guaranteed Signature
- ---------------------
* Signature must be guaranteed.
A-16
<PAGE>
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it (a) is
purchasing this Discount Note for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such account
is a "qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, (b) is aware that the sale to it is being made in
reliance on Rule 144A, (c) acknowledges (i) it has been afforded an opportunity
to request from Holdings and to review, and has received, all additional
information considered by such person to be necessary to verify the accuracy of
or to supplement the information in the Offering Memorandum it has not relied on
the Initial Purchasers or any person affiliated with the Initial Purchasers in
connection with its investigation of the accuracy of such information or its
investment decision, and (iii) no person has been authorized to give information
or to make any representation concerning Holdings or the Discount Notes other
than as contained in the Offering Memorandum and information given by officers
and employees of Holdings in connection with such person's examination of
Holdings and the terms of the Offering and, if given or made, such other
representation should not be relied upon as having been authorized by Holdings
or the Initial Purchasers and (d) is aware that the transferor is relying upon
the undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date:
--------------------------
NOTICE: To be executed by an executive officer
- -------------------------
A-17
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.07 or 4.08 of the Indenture, check the box below:
|_| Section 4.07 |_| Section 4.08
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.07 or Section 4.08 of the Indenture, state the
amount you elect to have purchased: $_______
Date: Your Signature:
----------------- --------------------------------
(Sign exactly as your name appears on the Note)
By:
--------------------------------
Notice: To be executed by an executive officer
Tax Identification No.:
------------------------
Signature Guarantee:*
--------------------------
- -----------------------
* Signature must be guaranteed.
A-18
<PAGE>
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT*
The following increases or decreases in the principal amount of this
Global Note have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Date of Exchange Amount of Amount of of this Global authorized
or Transfer decrease in increase in Note following signatory of Trustee
Principal Amount Principal Amount such decrease or or Note Custodian
of this Global of this Global increase
Note Note
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------------
* To be attached only to Global Notes.
A-19
<PAGE>
EXHIBIT B
[FORM OF FACE OF SERIES B NOTE]
[Global Notes Legend, if applicable]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
B-1
<PAGE>
CUSIP No. [ ]/ISIN No. [ ]
9 3/4% Series B Senior Note due 2007
No. $
AMERICAN LAWYER MEDIA, INC., a Delaware corporation
promises to pay to
or registered assigns,
the principal sum of
Dollars [(or such other amount as is indicated on Schedule A
hereof)]* on December 15, 2007.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
Dated: December 22, 1997
AMERICAN LAWYER MEDIA, INC.
By:
--------------------------------
Name:
-------------------------
Title:
-------------------------
By:
--------------------------------
Name:
-------------------------
Title:
-------------------------
(SEAL)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 9 3/4% Senior
Notes referred to in the
within-mentioned Indenture:
THE BANK OF NEW YORK, as Trustee
By:
-----------------------------
Authorized Officer
- -------------------------
* Applicable to Global Notes only
B-2
<PAGE>
(Form of Reverse of Series B Note)
AMERICAN LAWYER MEDIA, INC.
9 3/4% Senior Notes due 2007
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. American Lawyer Media, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
9 3/4% per annum from December 22 until maturity and shall pay the Liquidated
Damages, if any, payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on June 15 and December 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be June 15, 1998. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on the June 1 or
December 1 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium, interest and
Liquidated Damages, if any, at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages, if any, may
be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and provided that payment by wire transfer of immediately
available funds will be required with respect to principal of
B-3
<PAGE>
and interest, premium and Liquidated Damages, if any, on all Global Notes and
all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as
of December 22, 1997 ("Indenture") by and among the Company, ALM, LLC, Counsel
Connect, LLC, ALM IP, LLC, ALM Counsel Connect, Inc. (collectively, the
"Guarantors") and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. The Notes are unsecured obligations
of the Company limited to $175,000,000 in aggregate principal amount.
5. Optional Redemption.
(a) Except as set forth in clauses (b) and (c) of this Section
of the Note, the Company shall not have the option to redeem the Notes prior to
December 15, 2002. Thereafter, the Company shall have the option to redeem the
Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice,
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest (and Liquidated Damages, if any,)
thereon to the applicable redemption date if redeemed during the twelve-month
period beginning on December 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
----- ----------
<S> <C>
2002...................................... 104.875%
2003...................................... 103.250%
2004...................................... 101.625%
2005 and thereafter....................... 100.000%
</TABLE>
B-4
<PAGE>
(b) Notwithstanding the provisions of clause (a) of this
Section of the Note, at any time or from time to time on or prior to December
15, 2000, the Company may (but shall not have the obligation to) redeem in the
aggregate up to 35% of the aggregate principal amount of the Notes originally
outstanding, at a redemption price of 109.75% of the aggregate principal amount
so redeemed, together with accrued and unpaid interest (and Liquidated Damages,
if any) to the date of redemption out of the Net Cash Proceeds of one or more
Public Equity Offerings; provided however, that immediately following such
redemption not less than $113.8 million aggregate principal amount of the Notes
remains outstanding, and provided further, that such redemption shall occur
within 90 days of the closing of such Public Equity Offering.
(c) Notwithstanding the provisions of clause (a) of this
Section of the Note, the Notes will also be subject to redemption at any time
prior to December 15, 2002 upon not less than 10 nor more than 20 days' notice
to each Holder of Notes redeemed, at the option of the Company, in whole or in
part, in integral multiples of $1,000, at a redemption price equal to 100% of
the principal amount thereof plus the applicable Make-Whole Premium at the time
plus accrued and unpaid interest (and Liquidated Damages, if any) to but
excluding the Redemption Date.
6. Mandatory Redemption.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
7. Repurchase at Option of Holder.
(a) Upon the occurrence of a Change of Control, each Holder
shall have the right, at such Holder's option, pursuant to an offer (subject
only to conditions required by applicable law, if any) by the Company (the
"Change of Control Offer"), to require the Company to repurchase all or any part
of such Holder's Notes (provided, that the principal amount of such Notes must
be $1,000 or an integral multiple thereof) on a date (the "Change of Control
Purchase Date") that is no later than 60 Business Days after the date of
occurrence of such Change of Control, at a cash price equal to 101% of the
principal amount thereof (the "Change of Control Purchase Price"), together with
accrued and unpaid interest (and Liquidated Damages, if any) to the Change of
Control Purchase Date. The Change of Control Offer shall be made within 30
Business Days following a Change of Control by mailing a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase Notes pursuant to the procedures required by this
Indenture. The Change of Control Offer shall remain open for at least 20
Business Days following the
B-5
<PAGE>
mailing of such Change of Control Offer but in no event longer than 30 Business
Days, unless required by law (the "Change of Control Offer Period"). Upon
expiration of the Change of Control Offer Period, the Company promptly shall
purchase all Notes properly tendered in response to the Change of Control Offer.
The Company shall comply with the requirements of Regulation 14E under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control. To the extent that
the provisions of any such securities laws or regulations conflict with the
provisions of this paragraph, compliance by the Company or any of the Guarantors
with such laws and regulations shall not in and of itself cause a breach of its
obligations under such covenant.
On or before the Change of Control Purchase Date, the Company
shall, to the extent lawful (a) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (b) deposit with the
Paying Agent an amount equal to the Change of Control Purchase Price (together
with accrued and unpaid interest and Liquidated Damages, if any), of all Notes
so tendered and (c) deliver or cause to be delivered to the Trustee Notes so
accepted together with an Officers' Certificate listing the Notes or portions
thereof being purchased by the Company. The Paying Agent shall promptly pay the
Holders of Notes so accepted an amount equal to the Change of Control Purchase
Price (together with accrued and unpaid interest and Liquidated Damages, if
any), and the Trustee shall promptly authenticate and deliver to such Holders a
new Note equal in principal amount to any unpurchased portion of the Note
surrendered; provided that each such new Note will be in a principal amount of
$1,000 or an integral multiple thereof. Any Notes not so accepted will be
delivered promptly by the Company to the Holder thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Purchase Date.
Prior to the commencement of a Change of Control Offer, but in
any event within 30 days following any Change of Control, the Company will(a)(i)
repay in full and terminate all commitments under Indebtedness under the Credit
Agreement, pro rata in accordance with the principal amounts then outstanding
under the Notes and the Credit Agreement, respectively, or (ii) offer to repay
in full and terminate all commitments under all Indebtedness under the Credit
Agreement and repay the Indebtedness owed to each lender which has accepted such
offer in full, pro rata in accordance with the principal amounts then
outstanding under the Notes and the Credit Agreement, respectively, or (b)
obtain the requisite consents under the Credit Agreement and all such other
Senior Debt to permit the repurchase of the Notes as provided herein. The
Company's failure
B-6
<PAGE>
to comply with the preceding sentence shall constitute an Event of Default
described in clause (c) and not in clause (b) under Section 6.01 of the
Indenture.
If the Change of Control Purchase Date hereunder is on or
after an interest payment Record Date and on or before the associated Interest
Payment Date, any accrued and unpaid interest (and Liquidated Damages, if any,
due on such Interest Payment Date) will be paid to the person in whose name a
Note is registered at the close of business on such Record Date, and such
accrued and unpaid interest (and Liquidated Damages, if applicable) will not be
payable to Holders who tender the Notes pursuant to the Change of Control Offer.
The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
(b) The Company shall not, and shall not permit any Restricted
Subsidiary to, in one or a series of related transactions, convey, sell,
transfer, assign or otherwise dispose of, directly or indirectly, any of its
property, business or assets, including by merger or consolidation (in the case
of a Restricted Subsidiary of the Company), and including any sale or other
transfer or issuance of any Capital Stock of any Restricted Subsidiary, whether
by the Company or a Restricted Subsidiary of either or through the issuance,
sale or transfer of Capital Stock by a Restricted Subsidiary, and including any
sale and leaseback transaction (any of the foregoing, an "Asset Sale"), unless:
(i) within 270 days after the date of such Asset Sale, the Net
Cash Proceeds therefrom (the "Asset Sale Offer Amount") are applied to
the optional redemption of the Notes in accordance with the terms of
this Indenture or any other Indebtedness of the Company ranking on a
parity with the Notes from time to time outstanding with similar
provisions requiring the Company to make an offer to purchase or to
redeem such Indebtedness with the proceeds of asset sales, pro rata in
proportion to the respective principal amounts (or accreted values in
the case of Indebtedness issued with an original issue discount) of the
Notes and such other Indebtedness then outstanding, or to the
repurchase of the Notes and such other Indebtedness pursuant to a cash
offer (subject only to conditions required by applicable law, if any)
(pro rata in proportion to the respective principal amounts (or
accreted values in the case of Indebtedness issued with an original
issue discount) of the Notes and such other Indebtedness then
outstanding) (the "Asset Sale Offer") at a purchase price of 100% of
B-7
<PAGE>
principal amount (or accreted value in the case of Indebtedness issued
with an original issue discount) (the "Asset Sale Offer Price")
together with accrued and unpaid interest and Liquidated Damages, if
any, to the date of payment, or (ii) within 270 days following such
Asset Sale, the Asset Sale Offer Amount is (A) invested (or committed,
pursuant to a binding commitment subject only to reasonable, customary
closing conditions, to be invested, and in fact is so invested, within
an additional 90 days) in a Person, business, assets or property which
in the good faith reasonable judgment of the Board of Directors will
constitute or be a part of a Related Business of the Company or such
Restricted Subsidiary (if it continues to be a Subsidiary) immediately
following such transaction or (B) used to retire or repay Indebtedness
of the Company and/or any Restricted Subsidiary that ranks senior to or
pari passu with the Notes and/or the Guarantees or to permanently
reduce the amount of such Indebtedness (provided that, in the case of a
revolving credit arrangement or similar arrangement that makes credit
available, such commitment is permanently reduced by such amount).
(ii) with respect to any Asset Sale or related series of Asset
Sales involving securities, property or assets with an aggregate
Determined Fair Market Value in excess of $500,000, at least 75% of the
consideration for such Asset Sale or series of related Asset Sales
consists of (x) cash or Cash Equivalents or (y) property or services
usable by the Company or any Restricted Subsidiary in the ordinary
course of conduct of a Related Business; provided, that if the
Determined Fair Market Value of property or assets of the kind
specified in this subclause (y) exceeds $5.0 million, then the
Determined Fair Market Value thereof shall be determined by a Third
Party Evaluator; and provided, further, that the principal amount of
the following shall be deemed to be cash for purposes of this clause
(b): (i) any Indebtedness (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto) of the
Company or any Restricted Subsidiary that is assumed or forgiven by the
transferee of any such assets and (ii) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary
from such transferee that are converted by the Company or such
Restricted Subsidiary into cash within 30 days of the closing of such
Asset Sale (but in the case of this subclause (ii), only to the extent
of the cash received),
(c) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on a pro forma
basis, to, such Asset Sale, and
B-8
<PAGE>
(d) the Board of Directors of the Company determines in good
faith that the Company or such Restricted Subsidiary, as applicable, receives at
least Determined Fair Market Value for such Asset Sale.
An acquisition of Notes pursuant to an Asset Sale Offer may be
deferred until the accumulated Net Cash Proceeds from Asset Sales not applied to
the uses set forth above (the "Excess Proceeds") exceeds $5.0 million and that
each Asset Sale Offer shall remain open for 20 Business Days following its
commencement but in no event longer than 30 Business Days, except to the extent
that a longer period is required by applicable law (the "Asset Sale Offer
Period"). Not later than five Business Days after the termination of the Asset
Sale Offer Period (the "Asset Sale Purchase Date"), the Company shall apply the
Asset Sale Offer Amount plus an amount equal to accrued and unpaid interest and
Liquidated Damages, if any, to the purchase of all Notes or any other
Indebtedness properly tendered (on a pro rata basis if the Asset Sale Offer
Amount is insufficient to purchase all Notes and any other Indebtedness so
tendered) at the Asset Sale Offer Price (together with accrued and unpaid
interest and Liquidated Damages, if any). Payment for any Notes so purchased
shall be made in the same manner as interest payments are made.
If the payment date in connection with an Asset Sale Offer
hereunder is on or after an interest payment Record Date and on or before the
associated Interest Payment Date, any accrued and unpaid interest (and
Liquidated Damages, if any, due on such Interest Payment Date) will be paid to
the person in whose name a Note is registered at the close of business on such
Record Date, and such interest (or Liquidated Damages, if applicable) will not
be payable to Holders who tender Notes pursuant to such Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders.
8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
B-9
<PAGE>
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of a majority in aggregate principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in aggregate principal amount of the then outstanding Notes. Without
the consent of any Holder of a Note, the Indenture or the Notes may be amended
or supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes (including the
addition of any Guarantors) or that does not adversely affect the legal rights
under the Indenture of any such Holder, or to comply with the requirements of
the SEC in order to effect or maintain the qualification of the Indenture under
the Trust Indenture Act.
11. Defaults. An "Event of Default" means: (1) failure to pay any
installment of interest (or Liquidated Damages, if any) on the Notes as and when
the same becomes due and payable and the continuance of any such failure for 30
days; (2) failure to pay all or any part of the principal, or premium, if any,
on the Notes when and as the same becomes due and payable at maturity,
redemption, by acceleration or otherwise, including, without limitation, payment
of the Change of Control Purchase Price or the Asset Sale Offer Price, or
otherwise; (3) the failure by either of the Company or any Restricted Subsidiary
to observe or perform any other covenant or agreement contained in the Notes or
this Indenture and the continuance of such failure for a period of 45 days after
written notice is given to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
Notes outstanding specifying the default and demanding that same be remedied;
(4) the Company or any of its Significant Subsidiaries pursuant to or within the
meaning of any Bankruptcy Law commences a voluntary case; consents to the entry
of an order for relief against it in an involuntary case; consents to the
appointment of a Custodian of it or for all or substantially all of its
property; makes a general assignment for the benefit of its creditors; or
generally is not paying its debts as they become due; or, a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that is for
relief against the Company or any Restricted Subsidiary in an involuntary
B-10
<PAGE>
case, appoints a Custodian of the Company or any Significant Subsidiary or for
all or substantially all of the property of the Company or any Significant
Subsidiary, or orders the liquidation of the Company or any Significant
Subsidiary and the order or decree remains unstayed and in effect for 60
consecutive days; (5) a default in Indebtedness of the Company or any of its
Restricted Subsidiaries with an aggregate principal amount in excess of $5.0
million (i) resulting from the failure to pay principal at final maturity or
(ii) as a result of which the maturity of such Indebtedness has been accelerated
prior to its stated maturity; and (6) final unsatisfied judgments not covered by
insurance aggregating in excess of $5.0 million, at any one time rendered
against the Company or any of its Significant Subsidiaries and not stayed,
bonded or discharged within 60 days.
An Event of Default shall not be deemed to have occurred under clause
(3), (5) or (6) until the Trustee shall have received written notice from the
Company or any of the Holders or unless a Responsible Officer shall have
knowledge of such Event of Default.
12. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Company, and its Restricted Subsidiaries to, among other
things, engage in certain transactions with Affiliates, incur additional
indebtedness and make payments in respect of Equity Interests. The limitations
are subject to a number of important qualifications and limitations.
13. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
B-11
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
American Lawyer Media, Inc.
600 Third Avenue
New York, NY 10016
Telephone No.: (212) 973-2800
Fax No.: (212) 973 2889
Attention: Randall J. Weisenburger
B-12
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's Social Security or tax I.D. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_______________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
Your Signature:
----------------------------------------------
(Sign exactly as your name appears on the face of this Note)
Date:
---------------------------
By:
--------------------------------------------------
Notice: To be executed by an executive officer
Signature Guarantee:*
------------------------------------
- -----------------------
* Signature must be guaranteed.
B-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.07 or 4.08 of the Indenture, check the box below:
/ / Section 4.07 / / Section 4.08
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.07 or Section 4.08 of the Indenture, state the
amount you elect to have purchased: $_______
Date: Your Signature:
----------------- ----------------------------------
(Sign exactly as your name appears on the Note)
By:
------------------------------
Notice: To be executed by an executive officer
Tax Identification No.:
--------------------------
Signature Guarantee:*
----------------------------
- -----------------------
* Signature must be guaranteed.
B-14
<PAGE>
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT*
The following increases or decrease in the principal amount of this
Global Note have been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Date of Exchange Amount of Amount of of this Global authorized
or Transfer decrease in increase in Note following signatory of Trustee
Principal Amount Principal Amount such decrease or or Note Custodian
of this Global of this Global increase
Note Note
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------------
* To be attached only to Global Notes
B-15
<PAGE>
EXHIBIT C
FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM
U.S. GLOBAL NOTE OR IAI GLOBAL NOTE
TO REGULATION S TEMPORARY GLOBAL NOTE
(Transfers pursuant to Section 2.07(a)(ii) of the Indenture)
The Bank of New York, as Trustee
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration
Re: American Lawyer Media, Inc.
9 3/4% Senior Notes Due 2007 (the "Notes")
Reference is hereby made to the Indenture dated as of December
22, 1997 (the "Indenture") between American Lawyer Media, Inc., as Issuer, ALM
LLC, Counsel Connect LLC, ALM IP, LLC and ALM Counsel Connect Inc. (the
"Guarantors") and The Bank of New York, as Trustee.
This letter relates to U.S. $175,000,000 aggregate principal
amount of Senior Notes which are held in the form of the [Rule 144A Global Note
(CUSIP No. 027126AA9)] [IAI Global Note (CUSIP No. 027126AB7)] with the
Depositary in the name of [name of transferor] (the "Transferor") to effect the
transfer of the Notes in exchange for an equivalent security entitlement in the
Regulation S Temporary Global Note.
In connection with such request, the Transferor does hereby
certify that such transfer has been effected In accordance with the transfer
restrictions set forth in the Notes and (i) with respect to transfers made in
reliance on Regulation S, does hereby certify that:
(1) the offer of the Notes was not made to a person in the
United States:
(2) the transaction was executed in on or through the
facilities of a designated offshore securities market and neither the
Transferor nor any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the United States:
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable, and
C-1
<PAGE>
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the United States Securities Act of
1933, as amended (the "Securities Act"):
(ii) with respect to transfers made in reliance on Rule 144 does hereby certify
that the Notes are being transferred in a transaction permitted by Rule 144
under the Securities Act; (iii) with respect to transfers made in reliance on
Rule 144, does hereby certify that such Notes are being transferred in
accordance with Rule 144A under the Securities Act to a transferee that the
Transferor reasonably believes is purchasing the Notes for its own account or an
account with respect to which the transferee exercises sole investment
discretion and the transferee and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A, in a transaction meeting the
requirements of Rule 144A and in accordance with applicable securities laws of
any state of the United States or any other jurisdiction; and (iv) with respect
to transfers made in reliance on Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act does hereby certify that such Notes are being
transferred to a transferee that the Transferor reasonably believes is
purchasing the Notes for its own account or an account as to which the
transferee exercises sole investment discretion and the transferee and any such
account is an institutional "accredited investor" within the meaning of Rule
501(a)(1,) (2), (3) or (7) of Regulation D under the Securities Act and in
accordance with applicable securities laws of any state, of the United States or
any other jurisdiction.
In addition, if the sale is made during a restricted period
and the provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1) of Regulation S
are applicable thereto, we confirm that such sale has been made in accordance
with the applicable provisions of Rule 903(c)(2) or (3) or Rule 904(c)(1), as
the case may be.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Capitalized terms used in this
certificate and not otherwise defined in the Indenture have the meanings set
forth in Regulation S.
[Name of Transferor]
By:
-------------------
Name:
Title:
Date:
cc: American Lawyer Media, Inc.
600 Third Avenue
New York, New York 10016
C-2
<PAGE>
Attn: Randall J. Weisenburger
C-3
<PAGE>
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM REGULATION S TEMPORARY GLOBAL NOTE
TO U.S. GLOBAL NOTE OR IAI GLOBAL NOTE
(Transfers pursuant to Section 2.07(a)(iii) of the Indenture)
The Bank of New York, as Trustee
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration
Re: American Lawyer Media, Inc.
9 3/4% Senior Notes Due 2007 (the "Notes")
Reference is hereby made to the Indenture dated as of December
22, 1997 (the "Indenture") between American Lawyer Media, Inc., as Issuer, ALM
LLC, Counsel Connect LLC, ALM IP, LLC and ALM Counsel Connect Inc. (the
"Guarantors") and The Bank of New York, as Trustee. Capitalized terms used but
not defined herein shall have the respective meanings given them in the
Indenture.
This letter relates to U.S. $175,000,000 aggregate principal
amount of Notes which are held in the form of the Regulation S Temporary Global
Note (ISIN No. U0268EAA1) with the Depositary in the name of [name of
transferor] (the "Transferor") to effect the transfer of the Notes in exchange
for an equivalent security entitlement in the [Rule 144A/IAI] Global Note.
In connection with such request, and in respect of such Notes
the Transferor does hereby certify that such Notes are being transferred in
accordance with (i) the transfer restrictions set forth in the Notes and (ii)
[Rule 144A under the United States Securities Act of 1933, as amended, to a
transferee that the Transferor reasonable believes is purchasing the Notes for
its own account or an account with respect to which the transferee exercises
sole investment discretion and the transferee and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in a
transaction meeting the requirements of Rule 144A and] [to a transferee that the
Transferor reasonable believes is purchasing the Notes for its own account or an
account as to which the transferee exercises sole investment discretion and the
transferee and any such account is an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D and] in
accordance with applicable securities laws of any state of the United States or
any other jurisdiction.
D-1
<PAGE>
[Name of Transferor],
By:
--------------------
Name:
Title:
Dated:
cc: American Lawyer Media, Inc.
600 Third Avenue
New York, New York 10016
Attn: Randall J. Weisenburger
D-2
<PAGE>
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL NOTE OR TRANSFER RESTRICTED SECURITY
TO TRANSFER RESTRICTED SECURITY
(Transfers pursuant to Section 2.07(a)(iv) or Section 2.07(a)(v) of the
Indenture)
The Bank of New York, as Trustee
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration
Re: American Lawyer Media, Inc.
9 3/4% Senior Notes Due 2007 (the "Notes")
Reference is hereby made to the Indenture dated as of December
22, 1997 (the "Indenture") between American Lawyer Media, Inc., as Issuer, ALM
LLC, Counsel Connect LLC, ALM IP, LLC and ALM Counsel Connect Inc. (the
"Guarantors") and The Bank of New York, as Trustee. Capitalized terms used but
not defined herein shall have the respective meanings given them in the
Indenture.
This letter relates to U.S. $175,000,000 aggregate principal
amount of Notes which are held [in the form of the [U.S./IAI/Regulation S]
[Global] [Transfer Restricted] Security (CUSIP Nos. [027126AA9],[027126AB7],
[U0268EAA1]/ISIN No. [US027126AA91]) with the Depositary*] in the name of
[name of transferor] (the "Transferor") to effect the transfer of the Notes.
In connection with such request, and in respect of such Notes,
the Transferor does hereby certify that such Notes are being transferred (i) in
accordance with the transfer restrictions set forth in the Notes and (ii) to a
transferee that the Transferor reasonably, believes is an institutional
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the United States Securities Act of 1933, as amended) and is
acquiring at least $100,000 principal amount of Notes for its own account or for
one or more accounts as to which the transferee exercises sole investment
discretion and (iii) in accordance with applicable securities laws of any state
of the United States or any other jurisdiction.
- ----------------------
* Insert, if appropriate.
E-1
<PAGE>
[Name of Transferor]
By:
-----------------------
Name:
Title:
Dated:
cc: American Lawyer Media, Inc.
600 Third Avenue
New York, New York 10016
Attn: Randall J. Weisenburger
E-2
<PAGE>
EXHIBIT F
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
(Transfers pursuant to Section 2.07(a)(iv) or Section 2.07(a)(v))
The Bank of New York, as Trustee
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration Department
Re: American Lawyer Media, Inc.
9 3/4% Senior Notes Due 2007 (the "Notes")
Reference is hereby made to the Indenture dated as of December
22, 1997 (the "Indenture") between American Lawyer Media, Inc., as Issuer, ALM
LLC, Counsel Connect LLC, ALM IP, LLC and ALM Counsel Connect Inc. (the
"Guarantors") and The Bank of New York, as Trustee. Capitalized terms used but
not defined herein shall have the respective meanings given them in the
Indenture.
This letter relates to U.S. $175,000,000 aggregate principal
amount of Notes which are held in the form of the [U.S./IAI/Regulation S]
[Transfer Restricted] [Global] [Note] [Securities] (CUSIP Nos.[027126AA9],
[027126AB7], [U0268EAA1]/ ISIN No. [US027126AA91]) with the Depositary]* in the
name of [name of transferor] (the "Transferor") to effect the transfer of the
Notes to the undersigned.
In connection with such request, and in respect of such Notes
we confirm that:
1. We understand that the Notes were originally offered in a
transaction not involving any public offering in the United States
within the meaning of the United States Securities Act of 1933, as
amended (the "Securities Act"), that the Notes have not been registered
under the Securities Act and that (A) the Notes may be offered, resold,
pledged or otherwise transferred only (i) to a person who the seller
reasonably believes is a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in a transaction meeting the
requirements of Rule 144A, in a transaction meeting the requirements of
Rule 144 under the Securities Act, to a person who the seller
reasonably believes is an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act), outside the United States in a transaction meeting the
requirements of Rule 903 or 904 of Regulation S under the Securities
- -----------------------------
* Insert and modify, if appropriate.
F-1
<PAGE>
Act or in accordance with another exemption from the registration
requirements of the Securities Act (and based upon an opinion of
counsel if the Company so requests), (ii) to the Company or (iii)
pursuant to an effective registration statement, and, in each case, in
accordance with any applicable securities laws of any state of the
United States or any other applicable jurisdiction and (B) the
purchaser will, and each subsequent holder is required to, notify, any
subsequent purchaser from it of the resale restrictions set forth in
(A) above.
2. We are a corporation, partnership or other entity having
such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of an investment in the
Notes, and we are (or any account for which we are purchasing under
paragraph 4 below is) an institutional "accredited investor" as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, able to
bear the economic risk of our proposed investment in the Securities.
3 . We are acquiring the Notes for our own account (or for
accounts as to which we exercise sole investment discretion and have
authority to make, and do make, the statements contained in this
letter) and not with a view to any distribution of the Notes, subject,
nevertheless, to the understanding that the disposition of our property
shall at all times be and remain within our control.
4. We are, and each account (if any) for which we are
purchasing Notes is, purchasing Notes having an aggregate principal
amount of not less than $100.000.
5 . We understand that (a) the Notes will be delivered to us
in registered form only and that the certificate delivered to us in
respect of the Notes will bear a legend substantially to the following
effect:
F-2
<PAGE>
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE 'SECURITIES ACT'). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE THIRD ANNIVERSARY OF THE
ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ('RULE 144A'), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY). (3) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS
INDICATED BY (THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER
ON THE REVERSE OF THIS SECURITY), AND, IF SUCH TRANSFER IS BEING EFFECTED BY
CERTAIN
and (b) such certificates will be reissued without the foregoing legend
only in accordance with the terms of the Indenture.
6. We agree that in the event that at some future
time we wish to dispose of any of the Notes, we will not do so unless:
(a) the Notes are sold to the Company or any
Subsidiary thereof;
(b) the Notes are sold to a qualified
institutional buyer in compliance with Rule 144A under the Securities
Act;
(c) the Notes are sold to an institutional
accredited investor, as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act, acquiring at least $100,000 principal amount
of the Notes that, prior to such transfer, furnishes to the Trustee a
signed letter containing certain representations and agreements
relating to the restrictions on transfer of the Notes (the form of
which letter can be obtained from such Trustee);
(d) the Notes are sold outside the United
States in compliance with Rule 903 or Rule 904 under the Securities
Act;
(e) the Notes are sold by us pursuant to
Rule 144 under the Securities Act; or
F-3
<PAGE>
(f) the Notes are sold pursuant to an
effective registration statement under the Securities Act.
Very truly yours,
[PURCHASER]
By:
------------------------
Name:
Title:
Dated:
cc: American Lawyer Media, Inc.
600 Third Avenue
New York, New York 10016
Attn: Randall J. Weisenburger
F-4
<PAGE>
EXHIBIT G
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S TEMPORARY GLOBAL NOTE
FOR REGULATION S PERMANENT GLOBAL NOTE
(Transfers pursuant to Section 2.07(a)(viii))
(Transferor)
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, BRUSSELS OFFICE AS
OPERATOR OF THE EUROCLEAR SYSTEM]
[CEDEL BANK, SOCIETE ANONYME]
Re: American Lawyer Media, Inc.
9 3/4% Senior Notes Due 2007 (the "Notes")
Reference is hereby made to the Indenture dated as of December
22, 1997 (the "Indenture") between American Lawyer Media, Inc., as Issuer, ALM
LLC, Counsel Connect LLC, ALM IP, LLC and ALM Counsel Connect Inc. (the
"Guarantors") and The Bank of New York, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given them in the Indenture.
This certificate relates to U.S. $175,000,000 aggregate
principal amount of Notes which are held in the form of the Regulation S
Temporary Global Note (ISIN No. US027126AA91) with the Depositary in the name
[name of transferor] (the "Transferor") to effect the transfer of the security
entitlement in such Regulation S Temporary Global Note for a security
entitlement in an equivalent aggregate principal amount of the Regulation S
Permanent Global Note.
In connection with such request, and in respect of such Notes,
we confirm that:
1. We are either not a U.S. person (as defined below) or we
have purchased our security entitlement in the above referenced
Regulation S Temporary Global Note in a transaction that is exempt from
the registration requirements under the Securities Act.
2. We are delivering this certificate in connection with
obtaining a security entitlement in the Regulation S Permanent Global
Note in exchange for our security entitlement in the Regulation S
Temporary Global Note.
For purposes of this certificate. "U.S. person" means (i) any
individual resident in the United States, (ii) any partnership or corporation
organized or incorporated under the laws of the United States. (iii) any estate
of which an executor or administrator
G-1
<PAGE>
is a U.S. person (other than an estate governed by foreign law and of which at
least one executor or administrator is a non-U.S. person who has sole or shared
investment discretion with respect to its assets), (iv) any trust of which any
trustee is a U.S. person (other than a trust of which at least one trustee is a
non-U.S. person who has sole or shared investment discretion with respect to its
assets and no beneficiary of the trust (and no settlor if the trust is
revocable) is a U.S. person), (v) any agency or branch of a foreign entity
located in the United States, (vi) any non-discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person, (vii) any discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary organized,
incorporated or (if an individual) resident in the United States (other than
such an account held for the benefit or account of a non-U.S. person), (viii)
any partnership or corporation organized or incorporated under the laws of a
foreign jurisdiction and formed by a U.S. person principally for the purpose of
investing in securities not registered under the Securities Act (unless it is
organized or incorporated, and owned, by accredited investors within the meaning
of Rule 501 (a) under the Securities Act who are not natural persons, estates or
trusts); provided, however, that the term "U.S. person" shall not include (A) a
branch or agency of a U.S. person that is located and operating outside the
United States for valid business purposes as a locally regulated branch or
agency engaged in the banking or insurance business, (B) any employee benefit
plan established and administered in accordance with the law, customary
practices and documentation of a foreign country and (C) the international
organizations set forth in Section 902(o)(7) of Regulation S under the
Securities Act and any other similar international organizations, and their
agencies, affiliates and pension plans.
We irrevocably authorize you to produce this certificate or a
copy hereof to any interested party in any administrative or other proceedings
with respect to the matters covered by this certificate.
Very truly yours,
[TRANSFEROR]
By:
---------------------------
Name:
Title:
To be completed by the
account holder as, or as
agent for, the beneficial
owner(s) of the Notes to
which this certificate
relates.
Dated:
cc: American Lawyer Media, Inc.
600 Third Avenue
G-2
<PAGE>
New York, New York 10016
Attn: Randall J. Weisenburger
G-3
<PAGE>
EXHIBIT H
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S TEMPORARY GLOBAL NOTE
FOR REGULATION S PERMANENT GLOBAL NOTE
(Transfers pursuant to Section 2.07(a)(viii))
(Euroclear or Cedel)
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration Department
Re: American Lawyer Media, Inc.
9 3/4% Senior Notes Due 2007 (the "Notes")
Reference is hereby made to the Indenture dated as of December
22, 1997 (the "Indenture") between American Lawyer Media, Inc., as Issuer, ALM
LLC, Counsel Connect LLC, ALM IP, LLC and ALM Counsel Connect Inc. (the
"Guarantors") and The Bank of New York, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given them in the Indenture.
This certificate relates to U.S. $175,000,000 aggregate
principal amount of Notes which are held in the form of the Regulation S
Temporary Global Note (ISIN No. US027126AA91) with the Depositary to effect the
transfer of the security entitlement in such Regulation S Temporary Global Note
for a security entitlement in an equivalent aggregate principal amount of the
Regulation S Permanent Global Note.
In connection with such request, this is to certify that,
based solely on certificates we have received in writing, by tested telex or by
electronic transmission from member organizations appearing in our records as
persons being entitled to a portion of the principal amount of the Regulation S
Temporary Global Note set forth above (our "Member Organizations") substantially
to the effect set forth in the Indenture, U.S. $[ ] aggregate principal amount
of the Notes is owned by persons that are not citizens or residents of the
United States, domestic partnerships, domestic corporations or any estate or
trust the income of which is subject to United States federal income taxation
regardless of its source or any other person deemed a "U.S. person" under
Regulation S under the Securities Act of 1993, as amended.
We further certify (i) that we are not making available
herewith for exchange (or if relevant, exercise of any rights of collection of
any interest) any portion of the Regulation S Global Note excepted in such
certificates and (ii) that, as of the date hereof, we have not received any
notification from any of our Member Organizations to
H-1
<PAGE>
the effect that the statements made by such Member Organizations with respect to
any portion of the part submitted herewith for exchange (or, if relevant,
exercise of any rights of collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
We understand that this certificate is required in
connection with certain laws, and, if applicable, certain securities laws of
the United States. In connection therewith, if administrative or legal
proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certification to any interested party in such proceedings.
Very truly yours,
[MORGAN GUARANTY
TRUST COMPANY OF NEW
YORK, BRUSSELS OFFICE
AS OPERATOR OF THE
EUROCLEAR SYSTEM]
[CEDEL BANK, SOCIETE
ANONYME]
By:
------------------
Name:
Title:
Dated:
cc: American Lawyer Media, Inc.
600 Third Avenue
New York, New York 10016
Attn: Randall J. Weisenburger
H-2
<PAGE>
EXHIBIT I
FORM OF CERTIFICATE FOR TRANSFERS OF
REGULATION S PERMANENT GLOBAL NOTE FOR
TRANSFER RESTRICTED SECURITIES
(Transfers pursuant to Section 2.07(a)(viii))
(Transferor)
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attn: Corporate Trustee
Administration Department
Re: American Lawyer Media, Inc.
9 3/4% Senior Notes Due 2007 (the "Notes")
Reference is hereby made to the Indenture dated as of December
22, 1997 (the "Indenture") between American Lawyer Media, Inc., as Issuer, ALM
LLC, Counsel Connect LLC, ALM IP, LLC and ALM Counsel Connect Inc. (the
"Guarantors") and The Bank of New York, as Trustee. Capitalized terms used but
not defined herein shall have the respective meanings given them in the
Indenture.
This certificate relates to U.S. $175,000,000 aggregate
principal amount of Notes which are held in the form of the Regulation S
Permanent Global Note (ISIN No. US02712AA91) with the Depositary in the name of
[name of transferor] (the "Transferor") to effect the transfer of the security
entitlement in such Regulation S Permanent Global Note for a security
entitlement in an equivalent aggregate principal amount of Transfer Restricted
Securities.
In connection with such request, and in respect of such Notes,
we confirm that:
1 We are either not a U.S. person (as defined below) or we
have purchased our security entitlement in the above referenced
Regulation S Permanent Global Note in a transaction that is exempt from
the registration requirements under the Securities Act.
2. We are delivering this certificate in connection with
obtaining a security entitlement in Transfer Restricted Securities in
exchange for our security entitlement in the Regulation S Permanent
Global Note.
For purposes of this certificate, "U.S. person" means (i) any
individual resident in the United States, (ii) any partnership or corporation
organized or incorporated under the laws of the United States, (iii) any estate
of which an executor
I-1
<PAGE>
or administrator is a U.S. person (other than an estate governed by foreign law
and of which at least one executor or administrator is a non-U.S. person who has
sole or shared investment discretion with respect to its assets), (iv) any trust
of which any trustee is a U.S. person (other than a trust of which at least one
trustee is a non-U.S. person who has sole or shared investment discretion with
respect to its assets and no beneficiary of the trust (and no settlor if the
trust is revocable) is a U.S. person), (v) any agency or branch of a foreign
entity located in the United States, (vi) any discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary for the
benefit or account of a U.S. person, (vii) any discretionary or similar account
(other than an estate or trust) held by a dealer or other fiduciary organized,
incorporated or (if an individual) resident in the United States (other than
such an account held for the benefit or account of a non-U.S. person), (viii)
any partnership or corporation organized or incorporated under the laws of a
foreign jurisdiction and formed by a U.S. person principally for the purpose of
investing in securities not registered under the Securities Act (unless it is
organized or incorporated, and owned, by accredited investors within the meaning
of Rule 501 (a) under the Securities Act who are not natural persons, estates or
trusts); provided, however, that the term "U.S. person" shall not include (A) a
branch or agency of a U.S. person that is located and operating outside the
United States for valid business purposes as a locally regulated branch or
agency engaged in the banking or insurance business, (B) any employee benefit
plan established and administered in accordance with the law, customary
practices and documentation of a foreign country and (C) the international
organizations set forth in Section 902(o)(7) of Regulation S under the
Securities Act and any other similar international organizations, and their
agencies, affiliates and pension plans.
We irrevocably authorize you to produce this certificate or a
copy hereof to any interested party in any administrative or other proceedings
with respect to the matters covered by this certificate.
Very truly yours,
[TRANSFEROR]
By:
--------------------------
Name:
Title:
To be completed by the account
holder as, or as agent for, the
beneficial owner(s) of the Notes
to which this certificate
relates.
Dated:
cc: American Lawyer Media, Inc.
600 Third Avenue
I-2
<PAGE>
New York, New York 10016
Attn: Randall J. Weisenburger
I-3
<PAGE>
EXHIBIT J
RESTRICTED SUBSIDIARY GUARANTEE
Every Guarantor listed below (hereinafter referred to as the
"Guarantors," ) which term includes any successor or assign under the Indenture
by and among American Lawyer Media, Inc., a Delaware corporation (the
"Company"), the Guarantors party thereto and The Bank of New York, as trustee
(the "Indenture") and any additional Guarantors), has irrevocably and
unconditionally guaranteed (i) the due and punctual payment of the principal of,
premium, if any, and interest on the 9 3/4% Senior Notes due 2007 (the "Notes")
of the Company, whether at stated maturity, by acceleration or otherwise, the
due and punctual payment of interest on the overdue principal, and premium if
any, and (to the extent permitted by law) interest on any interest, if any, on
the Notes, and the due and punctual performance of all other obligations of the
Company, to the Holders or the Trustee all in accordance with the terms set
forth in Article X of the Indenture, (ii) the payment of Liquidated Damages (as
defined in the Registration Rights Agreement dated December 22, 1997 between the
Company, the Guarantors and the Initial Purchasers), if any, as required by
Section 5 of the Registration Rights Agreement),(iii) in case of any extension
of time of payment or renewal of any Notes or any such other obligations, that
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise, and (iv) the payment of any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Subsidiary Guarantee.
The obligations of each Guarantor to the Holder and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article X of the Indenture and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee.
No stockholder, officer, director or incorporator, as such,
past, present or future of each Guarantor shall have any liability under this
Subsidiary Guarantee by reason of his or its status as such stockholder,
officer, director or incorporator.
This is a continuing Subsidiary Guarantee and shall remain in
full force and effect and shall be binding upon each Guarantor and its
successors and assigns until full and final payment of all of the Company's
obligations under the Notes and Indenture and shall inure to the benefit of the
successors and assigns of the Trustee and the Holders, and, in the event of any
transfer or assignment of rights by any Holder or the Trustee, the rights and
privileges herein conferred upon that party shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. This is a Subsidiary Guarantee of payment and not of collectibility.
This Subsidiary Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
J-1
<PAGE>
The Obligations of each Guarantor under its Subsidiary
Guarantee shall be limited to the extent necessary to insure that it does not
constitute a fraudulent conveyance under applicable law.
THE TERMS OF ARTICLE X OF THE INDENTURE ARE INCORPORATED
HEREIN BY REFERENCE.
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
Guarantor:
By:
------------------------
Name:
Title:
J-2
<PAGE>
EXHIBIT K
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated
as of _________, __ between __________ (the "Additional Guarantor"), American
Lawyer Media, Inc., a Delaware corporation (the "Company"), ALM LLC, Counsel
Connect LLC, ALM IP, LLC and ALM Counsel Connect Inc. (the "Guarantors") and The
Bank of New York, a New York banking corporation, as trustee under the indenture
referred to below (the "Trustee").
WITNESSETH
WHEREAS, the Company and the Guarantors have heretofore
executed and delivered to the Trustee an indenture (the "Indenture"), dated
as of December 22, 1997, providing for the issuance of an aggregate principal
amount of $175,000,000 of 9 3/4% Series A and Series B Senior Notes due 2007
(the "Notes");
WHEREAS, Section 4.15 of the Indenture provides that under
certain circumstances the Company and the Guarantors are required to cause the
Additional Guarantor to execute and deliver to the Trustee a supplemental
indenture pursuant to which the Additional Guarantor shall unconditionally
guarantee all of the Company's Obligations under the Indenture and the Notes
pursuant to a guarantee (the "Additional Guarantee") on the terms and conditions
of the Guarantee by the Guarantors in Article X of the Indenture and on the
other terms and conditions set forth herein; and
WHEREAS, pursuant to Section 9.01(e) of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto mutually covenant and agree for the equal and
ratable benefit of the holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Additional Guarantor hereby
agrees, jointly and severally with all other guarantors, to guarantee the
Company's Obligations under the Indenture and the Notes on the terms and subject
to the conditions set forth herein and in Article X of the Indenture (including
the obligation to pay Liquidated Damages under the provisions of the
Registration Rights Agreement) and to be bound by all other applicable
provisions of the Indenture. Pursuant to Section 10.02 of the Indenture, the
K-1
<PAGE>
Additional Guarantor agrees that the Subsidiary Guarantees set forth in Article
X of the Indenture, as supplemented by its agreement to guarantee contained
herein, shall remain in full force and effect and apply to all of the Notes
notwithstanding any failure by the Additional Guarantor to endorse on such Note
a notation of the Subsidiary Guarantee.
3. RELEASE OF ADDITIONAL GUARANTOR. In the event that the
holders of the Company's Other Indebtedness which is guaranteed by the
Additional Guarantor release the Additional Guarantor from its guarantee in
respect of such Other Indebtedness, except a discharge or release by or as a
result of any payment under the guarantee of such Other Indebtedness by the
Additional Guarantor, the Additional Guarantor shall be automatically and
unconditionally released and discharged from its obligations under this
Additional Guarantee; provided however, if, after such release, any guarantee
under such Other Indebtedness is subsequently reincurred or reinstated, then
such Additional Guarantor reincurring or reinstating such guarantee under such
Other Indebtedness shall execute and reinstate its Additional Guarantee
hereunder.
Upon receipt of an Officers' Certificate, the Trustee shall
execute any documents reasonably requested by the Company, the Guarantors or the
Additional Guarantor in order to evidence the release of such Additional
Guarantor from its obligations under the Additional Guarantee.
4. NO RECOURSE AGAINST OTHERS. No direct or indirect
stockholder, employee, officer or director, as such, past, present or future of
the Company, the Guarantors or the Additional Guarantor or any successor entity
shall have any personal liability for any Obligations of the Company, the
Guarantors or the Additional Guarantor or any successor entity under the
Additional Guarantee, by reason of his or its status as such stockholder,
employee, officer or director.
Each Holder by accepting a Note waives and releases all such liability,
and such waiver and release is part of the consideration for the issuance of the
Notes.
5. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.
6. COUNTERPARTS. This Supplemental Indenture may be executed
in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
7. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
K-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
[ADDITIONAL GUARANTOR]
By:
--------------------------------
Name:
Title:
Attest:
- ----------------------------- (SEAL)
Name:
Title:
AMERICAN LAWYER MEDIA, INC.
By:
--------------------------------
Name:
Title:
Attest:
- ----------------------------- (SEAL)
Name:
Title:
K-3
<PAGE>
ALM LLC
By:
--------------------------------
Name:
Title:
Attest:
- ----------------------------- (SEAL)
Name:
Title:
COUNSEL CONNECT LLC
By:
--------------------------------
Name:
Title:
Attest:
- ----------------------------- (SEAL)
Name:
Title:
K-4
<PAGE>
ALM IP, LLC
By:
-----------------------------
Name:
Title:
Attest:
- ---------------------------- (SEAL)
Name:
Title:
K-5
<PAGE>
ALM COUNSEL CONNECT INC.
By:
--------------------------------
Name:
Title:
Attest:
- ------------------------------- (SEAL)
Name:
Title:
K-6
<PAGE>
THE BANK OF NEW YORK,
as Trustee
By:
--------------------------------
Name:
Title:
Attest:
- ------------------------------- (SEAL)
Name:
Title:
K-7
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (this "AGREEMENT") is entered into as of February
9, 1998 by and between American Lawyer Media, Inc., a Delaware corporation (the
"COMPANY"), and William L. Pollak, an individual residing at 20 Garden Ridge,
Chappaqua, New York 10514 ("EXECUTIVE").
RECITALS:
The Company desires to be assured of the services of Executive by
employing Executive in the capacity and on the terms set forth below and
Executive desires to commit himself to serve the Company on the terms herein
provided.
In consideration of the foregoing and the covenants contained herein,
the Company desires to retain the services of Executive and to secure the
benefit of Executive's experience and ability and Executive desires to provide
services to the Company.
1. EMPLOYMENT PERIOD. Executive's employment hereunder shall be
effective on March 9, 1998 (the "COMMENCEMENT DATE"), and shall terminate on the
fifth anniversary thereof (the "TERM"), unless sooner terminated in accordance
with Section 9. The period during which Executive is employed under this
Agreement shall be referred to herein as the "EMPLOYMENT PERIOD." The date on
which this Agreement terminates pursuant to Sections 1 or 9 shall be referred to
herein as the "TERMINATION DATE."
2. DUTIES DURING EMPLOYMENT PERIOD. Executive will be the
president and chief executive officer of the Company and will have the
customary duties of a president and chief executive officer relating to the
Company and its Affiliates as assigned to him from time to time by the Company's
Board of Directors.
3. EXECUTIVE'S DUTIES DURING EMPLOYMENT PERIOD. Executive will
devote substantially all of his energies, interest, abilities and productive
time during customary business hours to the business of the Company and its
subsidiaries and, absent the approval of the Board of Directors, Executive shall
not be actively engaged in any business activity other than that required of him
in connection with his duties described in Section 2. Executive will not,
without the Company's prior written consent, render to any other Person services
that are inconsistent with the performance of his duties hereunder.
4. INTELLECTUAL PROPERTY.
(a) If at any time during the Employment Period, Executive, whether
alone or with any other Person, makes, discovers or produces any invention,
process, development or design which relates to, or affects or, in the
reasonable opinion of the Board of Directors of the Company is capable of being
used or adapted for use in or in connection with, the business or any product,
process or intellectual property right of the Company or any Affiliate; (i) the
invention, process, development or design will be the absolute property of the
Company (except to the extent, if any, provided otherwise by United States law
and any other applicable jurisdictions' laws
<PAGE>
governing the protection of intellectual property) and (ii) Executive will
immediately disclose such invention, process, development or design to the
Company in writing.
(b) Executive will, if and when required to do so by the Company
(whether during the Employment Period or afterwards) and at the Company's
expense: (i) apply, or join with the Company in applying, for protection in any
part of the world for any invention, process, development or design to which
Section 4(a) applies; (ii) execute or procure to be executed all instruments,
and do or procure to be done all things, which are necessary for vesting such
protection in the name of the Company or any nominee of the Company, or
subsequently for renewing and maintaining the same in the name of the Company or
its nominees; and (iii) assist in defending any proceedings relating to, or to
any application for, such patents or other protection.
(c) Executive irrevocably appoints the Company as his attorney in his
name (with full power of substitution or resubstitution) and on his behalf to
execute all documents, and do all things, required in order to give full effect
to the provisions of this Section 4. The Company will promptly provide
Executive with copies of all documents so executed.
5. CONFIDENTIALITY; COVENANT NOT TO COMPETE. The parties acknowledge
that the Company and its Affiliates have developed and will continue to develop
valuable proprietary information, including, but not limited to, client lists
and marketing strategies and has devoted significant time, effort and money to
identifying and attracting new clients and expanding into new markets. In
addition, the parties acknowledge that the Company's and its Affiliates'
reputations for quality and service has earned the Company and its Affiliates
valuable good will and that the Company's and its Affiliates' recruitment and
training of high quality reporting, editorial, sales, marketing and operations
personnel is a significant factor in its success. The parties further
acknowledge that (i) unauthorized disclosure or use of any of the proprietary
information of the Company or any Affiliate, (ii) any attempt to interfere with
a business relationship between the Company or any Affiliate, on the one hand,
and any clients thereof, on the other hand, (iii) any attempt to thwart,
interrupt or prevent the progress of the marketing strategies of the Company or
any Affiliate, (iv) any attempt to solicit employees of the Company or any
Affiliate, or (v) any attempt to malign or impugn the reputation and good will
of the Company or any Affiliate would cause irreparable harm to the Company and
its Affiliates. For these reasons, the parties agree that:
(a) During the Employment Period and for an indefinite period
thereafter, Executive will not use or disclose any confidential information
relating to the business or affairs or products of or services provided by the
Company, any Affiliate or any Person having dealings therewith, or permit or
encourage the use of such confidential information by another, unless such
information, at the time of disclosure, is generally available to the public
(other than as a result of disclosure by Executive or another Person who is
under an obligation not to disclose such information), it being understood that
Executive will have the burden of proving that such information was generally
available to the public;
(b) During the Employment Period and at any time prior to the second
anniversary of the Termination Date (the "COVENANT PERIOD"), Executive will not
promote, participate, engage or have any other interest (whether Executive is
acting as owner, partner,
2
<PAGE>
stockholder, employee, broker, agent, principal, trustee, corporate officer,
director, consultant or in any other capacity) in any business which is
competitive with any product or service offered by the Company or any Affiliate
currently or at any time during the Term relating to or involving the law or
aimed primarily at the legal community in any jurisdiction (including, but not
limited to, those products and services described in the Company's Offering
Memorandum relating to its $175,000,000 93/4% Senior Notes due 2007, dated
December 17, 1997, (the "OFFERING MEMORANDUM") ); provided, however, that this
Agreement will not prevent Executive from holding for investment up to 2% of any
class of stock or other securities of a publicly held company;
(c) During the Employment Period and at any time prior to the
expiration of the Covenant Period, Executive will not directly or indirectly
solicit, canvass or approach any Person who, to the knowledge of Executive after
due inquiry, was provided with products or services by the Company or any
Affiliate at any time during the two year period before the Termination Date or
prior to the expiration of the Covenant Period, to offer that Person products or
services similar to or derivative of products or services relating to or
involving the law or aimed primarily at the legal community in any jurisdiction,
currently provided or previously provided at any time within the two year period
preceding the Termination Date or prior to the expiration of the Covenant
Period, in each case, by the Company or any Affiliate (including, but not
limited to, those products and services described in the Offering Memorandum) ;
(d) During the Employment Period and at any time prior to the
expiration of the Covenant Period, Executive will not directly or indirectly
solicit, canvass or approach any Person who, to the knowledge of Executive,
provided products or services to the Company or any Affiliate at any time during
the two years before the Termination Date or prior to the expiration of the
Covenant Period, to endeavor to cause such Person to cease providing products or
services to the Company or any Affiliate;
(e) During the Employment Period and at any time prior to the
expiration of the Covenant Period, Executive will not directly or indirectly
employ, solicit or entice away any Board of Directors member, director, officer
or employee of the Company or any Affiliate; and
(f) During the Employment Period and for an indefinite period
thereafter, Executive will not use the name of the Company or of any Affiliate
in the conduct of any business activities or for Executive's personal use
(except, for Executive's use on his resume) without the prior written consent of
the Company, as applicable, except as necessary to perform his employment
functions during the Employment Period.
The restrictions in this Section 5 are separate and severable and, if any
restriction is unenforceable in whole or in part, for any reason, such
unenforceability shall not affect the enforceability of the remaining
restrictions or, in the case of restrictions unenforceable in part, the
remainder of that restriction. The parties agree that Executive's compliance
with the terms and conditions set forth in this Section 5 is a material
inducement to the Company's entry and performance of this Agreement, including,
but not limited to, the payment by the Company of the Bonus (as defined in
Section 6(b).
3
<PAGE>
6. COMPENSATION.
(a) SALARY. The Company shall pay to Executive an annual salary of
(i) $400,000 during the first year of the Employment Period, (ii) $420,000
during the second year of the Employment Period, (iii) $440,000 during the third
year of the Employment Period, (iv) $460,000 during the year of the Employment
Period and (v) $480,000 during the fifth year of the Employment Period (each
such annual salary, the "SALARY"). Such Salary shall be payable during the
applicable year semi-monthly in 24 installments.
(b) BONUS. In addition to his Salary, (i) the Company will pay
Executive a bonus of $400,000 within 30 calendar days after the end of the first
year of the Employment Period and (ii) Executive will be entitled to a bonus of
not less than 50% and not more than 150% of his Salary (such amount over 50% of
Executive's Salary, the "PERFORMANCE BONUS") in each of the second, third,
fourth and fifth years of the Employment Period payable within 30 calendar days
after the end of each such year (the aggregate amount of each such annual bonus
referred to in clauses (i) and (ii) of this Section 6(b), the "BONUS"). The
amount of the Performance Bonus payable in each year will be (x) determined in
the sole discretion of the Board of Directors based on actual annualized
earnings before interest, taxes, depreciation and amortization relative to
predetermined target levels and (y) allocated in the sole discretion of the
Board of Directors between short-term and long-term bonus pools.
7. BENEFITS.
(a) BENEFITS. Executive shall be entitled to participate in such
then-available insurance programs, equity-based plans and other benefits as the
Company regularly provides to its other senior executive officers; provided,
however, that nothing contained herein shall preclude the Company from amending
or terminating any particular employment benefit plans. Notwithstanding the
foregoing, Executive will not be entitled to participate in any severance pay
plan of the Company, other than as set forth in Section 9.
(b) VACATION. Executive shall be entitled to five weeks of vacation
time each calendar year, to be pro-rated monthly for partial calendar years,
during the term of Executive's employment hereunder.
(c) EXPENSES. Subject to compliance with the Company's normal and
customary policies regarding substantiation and verification of business
expenses, Executive is authorized to incur on behalf of the Company and the
Company shall pay, or reimburse Executive for, all customary and reasonable
expenses incurred in connection with the performance of duties hereunder or for
promoting, pursuing or otherwise furthering the business of the Company, or any
of its subsidiaries, including, but not limited to, expenses for travel,
entertainment and similar items. Executive shall also be entitled to
reimbursement for, or the Company will pay directly, the reasonable costs
(including, but not limited to, lease or note payments, insurance and
maintenance) of an automobile used by Executive in connection with the business
of the Company and a parking space reasonably proximate to the Company's
headquarters in New York City, subject to compliance by Executive with the
Company's normal and customary policies regarding substantiation and
verification of business expenses.
4
<PAGE>
(d) AMERICAN LAWYER MEDIA HOLDINGS, INC. OPTIONS. The parties
understand that American Lawyer Media Holdings, Inc. ("HOLDINGS") will adopt a
stock option plan providing for the grant of options ("OPTIONS") to certain
employees of one or more Affiliates of Holdings, including, but not limited to,
Executive, to purchase the number of shares of common stock, par value $.01 per
share, of Holdings ("COMMON STOCK"). Executive shall have the right to purchase
a number of such shares of capital stock equal to 1% of the issued and
outstanding Common Stock (based on stockholders equity of Holdings equal to $90
million represented by an aggregate of 100,000 issued and outstanding shares of
Common Stock) on the terms set forth in the stock option award agreement (the
"OPTION STOCK") to be delivered by the Company to Executive (the "AWARD
AGREEMENT"). The parties understand and agree that Executive's Option Stock and
rights to purchase the same will be diluted by incremental equity capital (over
the above-referenced $90 million) raised by, or otherwise contributed to,
Holdings through an offering of capital stock or otherwise but will not be
diluted by stock splits or capital restructuring transactions similar to stock
splits not involving incremental equity capital. The parties agree that the
Award Agreement will contain (i) an exercise price per share of Option Stock of
$900 (constituting the price per share at which shares of Common Stock were
issued on December 22, 1997), (ii) a vesting schedule providing for the vesting
of 25% of the shares of Option Stock on the last day of each year of the
Employment Term commencing with the second year of the Employment Term, such
vesting schedule to be accelerated upon a change of control of Holdings (the
term, "change of control," to be defined in the Award Agreement to include the
reduction, in any transaction or series of transactions, of the percentage of
the issued and outstanding shares of Common Stock held, directly or indirectly,
by Wasserstein & Co, Inc. and its affiliates to not less than 20% of the then
issued and outstanding shares of Common Stock); (iii) reasonable periods of
exercisability after the vesting of Options granted to Executive and a provision
to the effect that the exercise price thereof may be paid on a net or "cashless
exercise" basis on customary terms and conditions; (iv) a provision to the
effect that if Executive's employment hereunder is terminated pursuant to
Section 9(a) at any time during the Employment Period, the percentage of shares
of Option Stock that would have vested at the end of the year in which
Executive's employment hereunder was so terminated will be immediately vested
upon such termination; and (v) a provision to the effect that if Executive's
employment hereunder is terminated pursuant to Section 9(b), death or
Disability, at any time during the Employment Period, Executive will be entitled
to exercise Options then vested within 30 days after such termination pursuant
to Section 9(b) or within six months after such termination by reason of death
or Disability, as applicable, and otherwise in accordance with the terms and
conditions contained in the Award Agreement. Other than as described in clauses
(i), (ii) (iii), (iv) and (v) of this Section 7(d), the terms and conditions set
forth in the Award Agreement will be determined by the Board of Directors (or a
duly appointed committee thereof).
(e) THE NEW YORK TIMES OPTIONS. The Company will pay to Executive,
in accordance with SCHEDULE 1 attached hereto, the amounts set forth on the line
on SCHEDULE 1 entitled "Total Payment Due under Section 7(e)" on the dates set
forth on the line entitled "Payment Date under Section 7(e)." The obligations of
the Company contained in the immediately preceding sentence will terminate with
respect to any remaining payment set forth on SCHEDULE 1 upon the termination of
Executive's employment hereunder by the Company pursuant to Section 9(c) or by
Executive pursuant to Section 9(b). The obligations of the Company under this
Section 7(e) are subject to the accuracy of SCHEDULE 1 attached hereto relative
to the documents
5
<PAGE>
referred to in Section 15(b) and, to the extent of any inaccuracy thereof
(without reference to materiality), the amounts and payment dates set forth in
SCHEDULE 1 will be reduced accordingly.
8. DEDUCTIONS AND WITHHOLDINGS. All amounts payable or which become
payable hereunder shall be subject to any deductions and withholdings required
by law.
9. TERMINATION.
(a) TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY EXECUTIVE WITH
GOOD REASON. The Company, solely and exclusively by Action of the Board of
Directors (as defined below), may terminate Executive's employment hereunder
without Cause (as defined below) at any time, upon 30 calendar days' written
notice to Executive, and Executive may terminate his employment hereunder with
Good Reason (as defined below) at any time, upon 30 calendar days' written
notice to the Company. In the event Executive is terminated by the Company
without Cause or Executive terminates his employment with Good Reason as
aforesaid, the Company shall pay to Executive, subject to Executive's compliance
with Section 5, an amount equal to the total value of (i) Executive's Salary
through the Termination Date, to the extent accrued on the books and records of
the Company and unpaid at the Termination Date together with business expenses
incurred prior to the Termination Date on a basis consistent with Section 7(c),
but unreimbursed prior to the Termination Date; (ii) Executive's Salary for one
year commencing on the Termination Date, as such Salary was in effect
immediately prior to the Termination Date (amounts referred to in clauses (i)
and (ii) of this Section 9(a), collectively, the "SALARY SEVERANCE PAYMENT");
and (iii) the unpaid Bonus (including the portion of the unpaid Bonus prorated
on the basis of the number of days Executive was employed during the year
(commencing March 9) in which the Termination Date occurred) (the "BONUS
SEVERANCE PAYMENT"). The Salary Severance Payment shall be paid to Executive in
accordance with Section 6(a). The Bonus Severance Payment shall be paid to
Executive within 30 days after the Termination Date, with respect to that
portion of the Bonus Severance Payment not constituting Performance Bonus and
promptly after the determination of the Performance Bonus, in the case of Bonus
Severance Payment constituting Performance Bonus. Without limiting the
obligations of the Company under Section 7(e), the payments to be made in
accordance with this Section 9(a) shall constitute liquidated damages payable as
a result of the termination of Executive's employment by the Company without
Cause or Executive's termination of his employment for Good Reason. In
addition, in the event Executive is terminated by the Company without Cause or
Executive terminates his employment hereunder with Good Reason, the Company
shall pay to Executive all unreimbursed expenses incurred in accordance with
this Agreement, which payments shall become due and payable within 30 calendar
days of the Termination Date.
(b) TERMINATION BY EXECUTIVE WITHOUT GOOD REASON. Executive may
terminate his employment hereunder for other than Good Reason, provided that
Executive first gives to the Company a written notice of intent to terminate at
least 30 calendar days prior to the Termination Date. In the event Executive
terminates his employment without Good Reason, the Company shall pay to
Executive Salary through the Termination Date to the extent accrued on the books
and records of the Company and unpaid at the Termination Date together with
business expenses incurred prior to the Termination Date on a basis consistent
with Section 7(c), but unreimbursed prior to the Termination Date and the Bonus
Severance Payment. All other rights
6
<PAGE>
of Executive under this Agreement, except to the extent contemplated to survive
under Section 7(d), shall terminate on the Termination Date.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company, solely and
exclusively by Action of the Board of Directors shall have the right to
terminate Executive's employment hereunder for Cause upon written notice to
Executive. In the event Executive's employment is terminated by Action of the
Board of Directors for Cause, Executive shall be entitled to receive his unpaid
Salary and unreimbursed business expenses through the Termination Date to the
extent then accrued on the books and records of the Company and, if such
termination occurs by reason of death or Disability, the Bonus Severance
Payment. All other rights of Executive under this Agreement, except to the
extent contemplated to survive under Section 7(d), shall terminate on the
Termination Date.
(d) Notwithstanding any provision of this Agreement to the contrary,
if any amount or benefit to be paid or provided under this Agreement would be an
"excess parachute payment," within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "CODE"), or any successor provision
thereto, but for the application of this sentence, then the payments and
benefits to be paid or provided under this Agreement will be reduced to the
minimum extent necessary (but in no event to less than zero) so that no portion
of any such payment or benefit, as so reduced, constitutes an "excess parachute
payment"; provided, however, that the foregoing reduction will be made only if
and to the extent that such reduction would result in an increase in the
aggregate payment and benefits to be provided, determined on an after-tax basis
(taking into account the excise tax imposed pursuant to Section 4999 of the
Code, or any successor provision thereto, any tax imposed by any comparable
provision of state law, and any applicable federal, state and local income
taxes). The determination of whether any reduction in such payments or benefits
to be provided under this Agreement or otherwise is required pursuant to the
preceding sentence will be made at the expense of the Company, and if requested
by Executive or the Company, by the Company's independent accountants. The fact
that Executive's right to payments or benefits may be reduced by reason of the
limitations contained herein will not of itself limit or otherwise affect any
other rights of Executive other than pursuant to this Agreement.
10. DEFINITIONS. For purposes of this Agreement, the following
definitions shall be applicable to the terms set forth below:
"ACTION OF THE BOARD OF DIRECTORS" means a motion, resolution or
action approved by the affirmative vote of a majority of the members of the
Board of Directors at a duly called meeting thereof.
"AFFILIATE" means American Lawyer Media Holdings, Inc. ("Holdings")
and any other Person directly or indirectly controlled by Holdings or the
Company as of the date of this Agreement or at any time during the Term;
"CONTROL", when used with respect to any Person means the possession, directly
or indirectly of the power to direct or cause the direction of the management
and the policies of any such Person, whether through the ownership of voting
securities, by contract or otherwise; and the terms "CONTROLLED" and
"CONTROLLING" have the meanings correlative to the foregoing.
7
<PAGE>
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"CAUSE" means (i) Executive's Disability; (ii) the willful and
continued failure by Executive substantially to perform his duties hereunder
(other than such failure resulting from Executive's incapacity due to physical
or mental illness); (iii) the indictment or conviction of Executive of any
felony, (iv) fraud, embezzlement or misappropriation by Executive relating to
the Company or any of its Affiliates or their respective funds, properties,
opportunities or other assets, (v) the commission of a crime by Executive
involving moral turpitude, (vi) Executive acting in a manner or making any
statements, in either case, intentionally which the Company reasonably
determines to be detrimental or damaging to the reputation, operations,
prospects or business relations of the Company or any of its Affiliates, (vii) a
breach by Executive of any of the terms of Section 5 of this Agreement, or
(viii) the violation by Executive of any written Company policy and, in the case
of this clause (viii), Executive shall not have cured any such violation
(capable of being cured) within 30 days after written notice thereof has been
given to Executive by the Company.
"DISABILITY" means the death of Executive or a physical or mental
incapacity as a result of which Executive becomes unable to continue the proper
performance of his duties hereunder for 120 or more business days in any 12
month period or upon the determination by a medical doctor reasonably acceptable
to the Company's Board of Directors that Executive will be unable to return to
work and perform his duties on a full-time basis within 120 business days
following the date of such determination on account of mental or physical
incapacity. In the event Executive's employment is terminated for Cause because
of Executive's Disability, Executive or, in the event of Executive's death, the
Person Executive has designated in writing, shall be entitled to receive any
disability payments provided by the Company's insurance plans.
"GOOD REASON" means the failure of the Company to comply with any
material provision of this Agreement (including, but not limited to Section 2),
and the Company has not cured such failure within 30 calendar days after written
notice of such noncompliance has been given by Executive to the Company, or if
such failure is not capable of being cured in such time, a cure shall not have
been diligently initiated by the Company within such 30 calendar day period and
the Company shall not have cured such failure within 60 calendar days
thereafter.
"PERSON" means any individual, corporation, partnership, trust,
association or other entity or organization, including, but not limited to, a
government or political subdivision or any agency or instrumentality thereof.
11. NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be deemed to be properly given when
personally delivered in writing to the person being served or the designated
officer of the corporate party being served; deposited in the United States
mail, first class, registered or certified with return receipt requested,
postage prepaid and addressed as specified below to the person otherwise
designated, on the date of receipt, refusal or non-delivery indicated on the
return receipt; communicated to a public telegraph company for transmittal; or
sent by telecopier; and addressed to the Company or Executive at the following
addresses:
8
<PAGE>
To the Company: American Lawyer Media, Inc.
c/o Wasserstein, Perella & Co., Inc.
31 West 52nd Street
New York, New York 10019
Attention: Anup Bagaria, Vice President
Telecopier: (212) 969-7879
Phone: (212) 969-2609
Copy to: Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Robert A. Profusek
Telecopier: (212) 755-7306
Phone: (212) 326-3800
To Executive: William L. Pollak
20 Garden Ridge
Chappaqua, New York 10514
Phone: 914-238-4179
Copy to: George Sheanshang, Esq.
130 West 57th Street, #5B
New York, New York 10019
Each party may change its address by written notice in accordance with this
Section 11.
12. BENEFIT OF AGREEMENT. This Agreement shall inure to the benefit
of the parties and any Affiliates and shall be binding upon the parties and
their respective executors, administrators, successors and assigns; provided,
however, that Executive may not assign any of his rights or duties hereunder
except upon the prior written consent of the Company which consent may be
withheld by the Company in its sole discretion.
13. APPLICABLE LAW; VENUE; JURISDICTION. This Agreement is made and
is to be governed by and construed under the internal laws of New York without
regard to principles of conflict of laws. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in any court of competent jurisdiction in the Borough of Manhattan or
the United States District Court for the Southern District of New York and each
of the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that
9
<PAGE>
service of process on such party as provided in Section 13 will be deemed
effective service of process on such party.
14. WAIVER OF BREACH. A waiver by either party of any breach of the
provisions of this Agreement by the other party, or, in any particular instance
or series of instances, of any term or condition of this Agreement, shall not
constitute or be deemed a waiver of such breach or of any such term or condition
in any other instance nor shall any waiver constitute a continuing waiver
hereunder. No waiver shall be binding unless executed in writing by the party
making the waiver.
15. WARRANTIES; COVENANTS. (a) As an inducement to the Company to
enter into this Agreement, Executive represents and warrants as follows: (i) he
is not a party to any other agreement or obligation for personal services; (ii)
there exist no impediments or restraints, contractual or otherwise on
Executive's power, right or ability to enter into this Agreement and to perform
his duties and obligations hereunder; and (iii) the performance of his
obligations under this Agreement do not and will not violate or conflict with
any agreement relating to confidentiality, non-competition or exclusive
employment to which Executive is or was subject. As an inducement to Executive
to enter into this Agreement, the Company represents and warrants as follows:
(i) there exist no impediments or restraints, contractual or otherwise on the
Company's power, right or ability to enter into this Agreement and to perform
its duties and obligations hereunder and (ii) it has delivered to Executive a
true and complete copy of the Offering Memorandum.
(b) Executive will use reasonable efforts to provide the Company with
an accurate and complete copy of the document(s) containing the vesting schedule
and other material terms of the options to purchase shares of capital stock of
the New York Times Company which have been granted to Executive.
16. AMENDMENT; TERMINATION. The provisions of this Agreement may be
amended, modified, supplemented, or otherwise altered only by an agreement, in
writing, executed by the Company and Executive. Except as provided in Section 9
hereof, this Agreement may not be terminated other than by an agreement in
writing, executed by the Company and Executive.
17. ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief that may be granted.
18. CAPTIONS AND SECTION HEADINGS. Captions and Section headings
used herein are for convenience only and are not a part of this Agreement and
shall not be used in construing it. References to Sections are to Sections in
this Agreement.
19. SEVERABILITY. The provisions of this Agreement are severable. If
any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the
10
<PAGE>
remaining provisions or enforceable parts thereof shall not be affected thereby
and shall be enforced to the fullest extent permitted by law. In addition,
should any provision or any portion thereof ever be adjudicated by a court of
competent jurisdiction to exceed the time or other limitation permitted by
applicable law as determined by such court in such action, then such provisions
shall be decreased, performed to the maximum time or other limitations
prescribed by applicable law, the parties acknowledging their desire that in
such event such action be taken.
20. ENTIRE AGREEMENT. This Agreement contains the entire agreement
of the Company and Executive, and supersedes any and all other agreements,
either oral or in writing, between the Company, its predecessors or
subsidiaries, and Executive with respect to the employment of Executive by the
Company. Each party to this Agreement acknowledges that no representations,
inducements, promises or agreements, oral or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement or promise with respect to the subject
matter hereof not contained in this Agreement shall be valid or binding.
21. INJUNCTIVE RELIEF. Executive and the Company (a) intend that the
provisions of Section 5 be and become valid and enforceable, (b) acknowledge and
agree that the provisions of Section 5 are reasonably necessary to protect the
legitimate interests of the Company, its Affiliates and their businesses and (c)
that any violation of Section 5 will result in irreparable injury to the Company
and its Affiliates, the exact amount of which will be difficult to ascertain and
the remedies at law for which will not be reasonable or adequate compensation to
the Company and its Affiliates for such a violation. Accordingly, Executive
agrees that if he violates any of the provisions of Section 5 in addition to any
other remedy available at law or in equity, the Company shall be entitled to
specific performance or injunctive relief without posting a bond, or other
security, and without the necessity of proving actual damages.
22. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
23. REPRESENTATION BY COUNSEL; MUTUAL NEGOTIATION. Each party has
had the opportunity to be represented by counsel of its choice in negotiating
this Agreement. This Agreement shall therefore be deemed to have been
negotiated and prepared at the joint request and direction of the parties, at
arm's length, with the advice and participation of counsel, and shall be
interpreted in accordance with its terms and without favor to any party.
24. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which together
shall constitute one and the same instrument.
11
<PAGE>
The parties have executed this Agreement as of the date first written
above.
EXECUTIVE AMERICAN LAWYER MEDIA, INC.
By: /s/ William Pollak By: /s/ Anup Bagaria
------------------------- -------------------------
William Pollak Name: Anup Bagaria
Title: Vice President
12
<PAGE>
EXHIBIT 12.1
AMERICAN LAWYER MEDIA, L.P. AND AMERICAN
LAWYER MEDIA HOLDINGS, INC.
STATEMENT OF COMPUTATION OF EARNINGS TO COMBINED
FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
AMERICAN
LAWYER MEDIA
HOLDINGS,
INC.
SEVEN MONTHS FIVE MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED COMBINED
------------------------------------------ JULY 31, DECEMBER 31, DECEMBER 31,
1993(A) 1994(A) 1995(A) 1996(A) 1997(A) 1997(A) 1997(A)
--------- --------- --------- --------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Loss from continuing
operations before income
taxes.................... $ (6,591) $ (10,156) $ (10,451) $ (8,360) $ (3,042) $ (7,711) $ (10,753)
--------- --------- --------- --------- ------------- ------------- ------------
Fixed charges:
Interest expense........... 478 667 1,384 1,972 1,420 2,534 3,954
Amortization of deferred
financing cost........... -- -- -- -- -- -- --
Rent expense(b)............ 487 432 575 586 349 261 610
--------- --------- --------- --------- ------------- ------------- ------------
Total fixed charges........ $ 965 $ 1,099 $ 1,959 $ 2,558 $ 1,769 $ 2,795 $ 4,564
--------- --------- --------- --------- ------------- ------------- ------------
Earnings................... $ (5,626) $ (9,057) $ (8,492) $ (5,802) $ (1,273) $ (4,916) $ (6,189)
--------- --------- --------- --------- ------------- ------------- ------------
--------- --------- --------- --------- ------------- ------------- ------------
Ratio of earnings to fixed
charges.................. (c) (c) (c) (c) (c) (c) (c)
</TABLE>
(a) Historical information is for American Lawyer Media, L.P. for the years
ended December 31, 1993, 1994, 1995, 1996 and the seven months ended July
31, 1997, and for American Lawyer Media Holdings, Inc. for the five months
ended December 31, 1997. The combined period ended December 31, 1997
represents the combined results of American Lawyer Media, L.P. for the seven
months ended July 31, 1997 and American Lawyer Media Holdings, Inc. for the
five months ended December 31, 1997.
(b) Represents one-third of rent expense which is deemed to be equivalent to an
interest factor.
(c) Earnings were inadequate to cover combined fixed charges by $6,591, $10,156,
$10,451, $8,360, $3,042, $7,711 and $10,753 for the years ended December 31,
1993, 1994, 1995, 1996, the seven months ended July 31, 1997, the five
months ended December 31, 1997 and the combined period ended December 31,
1997, respectively.
<PAGE>
EXHIBIT 21.1
LIST OF SUBSIDIARIES OF AMERICAN LAWYER MEDIA, INC.
American Lawyer Media, Inc.
ALM Counsel Connect Inc.
ALM IP, LLC
ALM, LLC
Counsel Connect
Counsel Connect, LLC
Law Journal Extra, Inc.
LegalTech, LLC
National Law Publishing Company, Inc.
The New York Law Publishing Company
NLP IP Company
PPC Publishing Corporation
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To American Lawyer Media Holdings, Inc.:
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made part of this
registration statement.
ARTHUR ANDERSEN LLP
New York, New York
April 14, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders of
National Law Publishing Company, Inc.
New York, New York
We hereby consent to the use in the Prospectus, of American Lawyer Media
Holdings, Inc., constituting a part of this Registration Statement, of our
report dated February 19, 1997 (except as to Note 7 which date is March 27,
1997) relating to the consolidated financial statements of National Law
Publishing Company, Inc., which is contained in that Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
LESLIE SUFRIN AND COMPANY, P.C.
April 14, 1998
<PAGE>
Exhibit 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) |__|
______________________
THE BANK OF NEW YORK
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
NEW YORK 13-5160382
(STATE OF INCORPORATION (I.R.S. EMPLOYER
IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
48 WALL STREET, NEW YORK, N.Y. 10286
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
______________________
AMERICAN LAWYER MEDIA HOLDINGS, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3980412
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
AMERICAN LAWYER MEDIA HOLDINGS, INC.
345 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10010
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
______________________
12 1/4% SENIOR DISCOUNT NOTES DUE 2008, SERIES B
(TITLE OF THE INDENTURE SECURITIES)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
- --------------------------------------------------------------------------------
NAME ADDRESS
- --------------------------------------------------------------------------------
SUPERINTENDENT OF BANKS OF THE STATE OF 2 RECTOR STREET, NEW YORK,
NEW YORK N.Y. 10006, AND ALBANY, N.Y.
12203
FEDERAL RESERVE BANK OF NEW YORK 33 LIBERTY PLAZA, NEW YORK,
N.Y. 10045
FEDERAL DEPOSIT INSURANCE CORPORATION WASHINGTON, D.C. 20429
NEW YORK CLEARING HOUSE ASSOCIATION NEW YORK, NEW YORK 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
YES.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
NONE.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A COPY OF THE ORGANIZATION CERTIFICATE OF THE BANK OF NEW YORK
(FORMERLY IRVING TRUST COMPANY) AS NOW IN EFFECT, WHICH CONTAINS THE
AUTHORITY TO COMMENCE BUSINESS AND A GRANT OF POWERS TO EXERCISE
CORPORATE TRUST POWERS. (EXHIBIT 1 TO AMENDMENT NO. 1 TO FORM T-1
FILED WITH REGISTRATION STATEMENT NO. 33-6215, EXHIBITS 1A AND 1B TO
FORM T-1 FILED WITH REGISTRATION STATEMENT NO. 33-21672 AND EXHIBIT 1
TO FORM T-1 FILED WITH REGISTRATION STATEMENT NO. 33-29637.)
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE. (EXHIBIT 4 TO FORM T-1
FILED WITH REGISTRATION STATEMENT NO. 33-31019.)
6. THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(B) OF THE ACT.
(EXHIBIT 6 TO FORM T-1 FILED WITH REGISTRATION STATEMENT NO.
33-44051.)
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR TO THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE ACT, THE TRUSTEE, THE BANK OF NEW YORK,
A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF NEW YORK,
HAS DULY CAUSED THIS STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ALL IN THE CITY OF NEW YORK, AND STATE
OF NEW YORK, ON THE 3RD DAY OF APRIL 1998.
THE BANK OF NEW YORK
BY: /s/ James W.P. Hall
-------------------------------
NAME: JAMES W.P. HALL
TITLE: VICE PRESIDENT
<PAGE>
Consolidated Report of Condition of
THE BANK OF NEW YORK Exhibit 7
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $5,004,638
Interest-bearing balances .......... 1,271,514
Securities:
Held-to-maturity securities ........ 1,105,782
Available-for-sale securities ...... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell...... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................34,916,196
LESS: Allowance for loan and
lease losses ..............581,177
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,334,590
Assets held in trading accounts ...... 2,035,284
Premises and fixed assets (including
capitalized leases) ................ 671,664
Other real estate owned .............. 13,306
Investments in unconsolidated
subsidiaries and associated
companies .......................... 210,685
Customers' liability to this bank on
acceptances outstanding ............ 1,463,446
Intangible assets .................... 753,190
Other assets ......................... 1,784,796
Total assets ......................... $57,536,995
LIABILITIES
Deposits:
In domestic offices ................ $27,270,824
Noninterest-bearing ......12,160,977
Interest-bearing .........15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 14,687,806
Noninterest-bearing .........657,479
Interest-bearing .........14,030,327
Federal funds purchased and Securities
sold under agreements to repurchase. 1,946,099
Demand notes issued to the U.S.
Treasury ........................... 283,793
Trading liabilities .................. 1,553,539
Other borrowed money:
With remaining maturity of one year
or less .......................... 2,245,014
With remaining maturity of more than
one year through three years.......... 0
With remaining maturity of more than
three years ...................... 45,664
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,473,588
Subordinated notes and debentures .... 1,018,940
Other liabilities .................... 2,193,031
Total liabilities .................... 52,718,298
EQUITY CAPITAL
Common stock ........................ 1,135,284
Surplus ............................. 731,319
Undivided profits and capital
reserves .......................... 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 25,428
Cumulative foreign currency transla-
tion adjustments .................. ( 16,342)
Total equity capital ................ 4,818,697
Total liabilities and equity
capital ........................... $57,536,995
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot
Thomas A. Renyi
Alan R. Griffith Directors
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM S-4
FILING AT DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS. (In Thousands)
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> AUG-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 9,442
<SECURITIES> 0
<RECEIVABLES> 15,796
<ALLOWANCES> 3,236
<INVENTORY> 1,482
<CURRENT-ASSETS> 26,200
<PP&E> 6,243
<DEPRECIATION> 613
<TOTAL-ASSETS> 365,528
<CURRENT-LIABILITIES> 33,155
<BONDS> 210,119
0
0
<COMMON> 1
<OTHER-SE> 67,288
<TOTAL-LIABILITY-AND-EQUITY> 365,528
<SALES> 22,852
<TOTAL-REVENUES> 22,852
<CGS> 9,089
<TOTAL-COSTS> 28,029
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,534
<INCOME-PRETAX> (7,711)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,711)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,711)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE
12 1/4% SENIOR DISCOUNT NOTES DUE 2008, SERIES B
FOR ANY AND ALL OUTSTANDING
12 1/4% SENIOR DISCOUNT NOTES DUE 2008
OF
AMERICAN LAWYER MEDIA HOLDINGS, INC.
PURSUANT TO THE PROSPECTUS DATED , 1998
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1998 UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN AT ANY
TIME PRIOR TO THE EXPIRATION DATE.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
BY REGISTERED OR CERTIFIED MAIL: FACSIMILE TRANSMISSION NUMBER: BY HAND OR OVERNIGHT DELIVERY:
(Eligible Institutions Only)
(212) 815-6339
The Bank of New York The Bank of New York
101 Barclay Street, Floor 7E 101 Barclay Street
New York, New York 10286 Confirm by Telephone: Corporate Trust Services Window
Attn.: Reorganization Section or For Information Call: Ground Level
(212) 815-5788 New York, New York 10286
Attn: Reorganization Section--
Floor 7E
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges that he or she has received the Prospectus
dated , 1998 (as amended or supplemented from time to time, the
"Prospectus") of American Lawyer Media Holdings, Inc. , a Delaware corporation
("Holdings"), and this Letter of Transmittal (as amended or supplemented from
time to time, the "Letter of Transmittal"), which together constitute the offer
of Holdings (the "Exchange Offer") to exchange $1,000 principal amount of its
12 1/4% Senior Discount Notes due 2008, Series B (the "Exchange Discount
Notes"), registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a registration statement of which the Prospectus
is a part, for each $1,000 principal amount at maturity of its outstanding
12 1/4% Senior Discount Notes due 2008 (the "Old Discount Notes"), of which
$63,275,000 aggregate principal amount at maturity is outstanding. The form and
terms of the Exchange Discount Notes are the same as the form and terms of the
Old Discount Notes except that (i) the Exchange Discount Notes bear a Series B
designation, (ii) the Exchange Discount Notes will be registered under the
Securities Act and do not bear legends restricting the transfer thereof and
(iii) holders of the Exchange Discount Notes will not be entitled to the rights
of holders of Old Discount Notes under the Registration Rights Agreement (as
defined in the Prospectus). The Exchange Discount Notes will evidence the same
debt as the Old Discount Notes (which they replace) and will be issued under and
be entitled to the benefits of the Indenture dated as of December 22, 1997 (the
"Indenture") by and among Holdings, as issuer, and The Bank of New York, as
trustee. The Old Discount Notes and the Exchange Discount Notes are sometimes
referred to herein collectively as the "Discount Notes." See "The Exchange
Offer" and "Description of the Discount Notes" in the Prospectus.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein have the meanings given to
such terms in the Prospectus.
<PAGE>
This Letter of Transmittal is to be completed by holders of Old Discount
Notes either if Old Discount Notes are to be forwarded herewith or if tenders of
Old Discount Notes are to be made by book-entry transfer to an account
maintained by The Bank of New York (the "Exchange Agent") at The Depository
Trust Company (the "Book-Entry Transfer Facility" or "DTC") pursuant to the
procedures set forth in the Prospectus under "The Exchange Offer-- Procedures
for Tendering." Delivery of this Letter of Transmittal and any other required
documents should be made to the Exchange Agent.
Holders who wish to tender their Old Discount Notes and (i) whose Old
Discount Notes are not immediately available, (ii) who cannot deliver their Old
Discount Notes, this Letter of Transmittal, or any other required documents to
the Exchange Agent or (iii) who cannot complete the procedures for book-entry
transfer prior to the Expiration Date may effect a tender of such Notes in
accordance with the guaranteed delivery procedures set forth in the Prospectus
under "The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
The undersigned has completed the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
List below the Old Discount Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, the certificate numbers and
principal amount of Old Discount Notes should be listed on a separate schedule
affixed hereto.
<TABLE>
<CAPTION>
DESCRIPTION OF OLD
DISCOUNT NOTES (1) (2) (3)
AGGREGATE PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) PRINCIPAL OF OLD DISCOUNT
OF REGISTERED HOLDER(S) AMOUNT OF NOTES
(PLEASE FILL IN, IF CERTIFICATE OLD DISCOUNT TENDERED
BLANK) NUMBER(S)* NOTES (IF LESS THAN ALL)**
<S> <C> <C> <C>
--------- ------------ ---------------------
--------- ------------ ---------------------
--------- ------------ ---------------------
--------- ------------ ---------------------
--------- ------------ ---------------------
</TABLE>
* Need not be completed if Old Discount Notes are being tendered by book-entry
holders.
** Old Discount Notes may be tendered in whole or in part in integral multiples
of $1,000, provided that if any Old Discount Notes are tendered for exchange
in part, the untendered principal amount thereof must be any integral
multiple of $1,000. See instruction 3. Unless this column is completed, a
holder will be deemed to have tendered the full aggregate principal amount
of the Old Discount Notes represented by the Old Discount Notes indicated in
column 2.
2
<PAGE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS(1) ONLY)
/ / CHECK HERE IF TENDERED OLD DISCOUNT NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution __________________________________________
Account Number _____________________________________________________
Transaction Code Number _____________________________________________
/ / CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD DISCOUNT NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s) ______________________________________________
Window Ticket Number (if any) ______________________________________________
Name of Eligible Institution that Guaranteed Delivery ______________________
Date of Execution of Notice of Guaranteed Delivery _________________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution __________________________________________
Account Number _____________________________________________________
Transaction Code Number _____________________________________________
/ / CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD DISCOUNT
NOTES ARE TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER SET FORTH ABOVE
/ / CHECK HERE IF YOU ARE A BROKER-DEALER THAT ACQUIRED THE OLD DISCOUNT NOTES
FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES
AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF
ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
------------------------------------------------------------------------------
Address:
------------------------------------------------------------------------------
- ------------------------
(1) The first paragraph of Instruction 4 contains the definition of an
"Eligible Institution."
3
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to Holdings the aggregate principal amount of Old
Discount Notes indicated above in exchange for a like aggregate principal amount
of Exchange Discount Notes. Subject to, and effective upon, the acceptance for
exchange of the Old Discount Notes tendered hereby, the undersigned hereby
exchanges, assigns and transfers to, or upon the order of, Holdings all right,
title and interest in and to such Old Discount Notes.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent its agent and attorney-in-fact (with full knowledge that the Exchange
Agent also acts as the agent of Holdings) with respect to the tendered Old
Discount Notes with the full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), subject to the
right of withdrawal described in the Prospectus, to (i) deliver certificates for
such Old Discount Notes to Holdings and deliver all accompanying evidences of
transfer and authenticity to, or upon the order of, Holdings and (ii) present
such Old Discount Notes for transfer on the books of Holdings and (iii) receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Old Discount Notes, all in accordance with the terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, assign and transfer the Old Discount
Notes tendered hereby and that, when the same are accepted for exchange,
Holdings will acquire good and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claims or proxies. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Exchange Agent or Holdings to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Discount
Notes tendered hereby, and the undersigned will comply with its obligations
under the Registration Rights Agreement. The undersigned has read and agreed to
all of the terms of the Exchange Offer.
The undersigned agrees that acceptance of any tendered Old Discount Notes by
Holdings and the issuance of Exchange Discount Notes in exchange therefor will
constitute performance in full by Holdings of its obligations under the
Registration Rights Agreement and that Holdings will have no further obligations
or liabilities thereunder (except in limited circumstances).
The name(s) and address(es) of the registered holders of the Old Discount
Notes tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Old Discount Notes. The Certificate number(s) and
the Old Discount Notes that the undersigned wishes to tender should be indicated
in the appropriate boxes above.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance upon interpretations by the staff of the Securities and Exchange
Commission (the A Commission@) set forth in certain no-action letters issued to
third parties in similar transactions. On the basis thereof, the Exchange
Discount Notes issued pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by any holder thereof (other than any such
holder that is (i) an A affiliate @ of Holdings within the meaning of Rule 405
under the Securities Act, or (ii) a broker-dealer that acquired the Old Discount
Notes in a transaction other than part of its market-making or other trading
activities) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such Exchange Discount Notes
are acquired in the ordinary course of such holder's business and such holder
has no arrangement or understanding with any person to participate in the
distribution of such Exchange Discount Notes. However, the Commission has not
considered the Exchange Offer in the context of a no-action letter and there can
be no assurance that the staff of the Commission would make a similar
determination with respect to the Exchange Offer as in such other circumstances.
4
<PAGE>
The undersigned represents that the Exchange Discount Notes are to be
acquired by the undersigned in the ordinary course of business, (ii) the
undersigned is not engaging and does not intend to engage, in distribution of
the Exchange Discount Notes, (iii) the undersigned has no arrangement or
understanding with any person to participate in the distribution of the Exchange
Discount Notes, (iv) the undersigned is not an "affiliate" of Holdings within
the meaning of Rule 405 under the Securities Act, and (v)the undersigned
acknowledges that if the undersigned participates in the Exchange Offer for the
purpose of distributing the Exchange Discount Notes it must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the Exchange Discount Notes and cannot rely on the
no-action letters referred to above.
The Company has agreed that, subject to the provisions of the Registration
Rights Agreement, the Prospectus may be used by a Participating Broker-Dealer
(as defined below) in connection with resales of Exchange Discount Notes
received in exchange for Old Discount Notes, where such Old Discount Notes were
acquired by such Participating Broker-Dealer for its own account as a result of
market-making activities or other trading activities, for a period ending 90
days after the date of the Prospectus or, if earlier, when all such Exchange
Discount Notes have been disposed of by such Participating Broker-Dealer.
Each broker-dealer (a "Participating Broker-Dealer") that receives Exchange
Discount Notes for its own account pursuant to the Exchange Offer acknowledges
that it will deliver a prospectus in connection with any resale of such Exchange
Discount Notes. This Letter of Transmittal states that by so acknowledging and
by delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act. The
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Exchange Discount
Notes received in exchange for Old Discount Notes where such Old Discount Notes
were acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities. Holdings has agreed that, for a period
of 180 days after the Expiration Date, it will make this Prospectus available to
any Participating Broker-Dealer for use in connection with any such resale. See
"Plan of Distribution" in the Prospectus.
The undersigned understands that tenders of the Old Discount Notes pursuant
to any one of the procedures described under "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto and the acceptance
thereof by Holdings will constitute agreement between the undersigned and
Holdings in accordance with the terms and subject to the conditions set forth
herein and in the Prospectus.
The undersigned recognizes that under certain circumstances set forth in the
Prospectus under "The Exchange Offer -- Conditions" Holdings will not be
required to accept for exchange any of the Old Discount Notes tendered. Old
Discount Notes not accepted for exchange or withdrawn will be returned to the
undersigned at the address set forth below unless otherwise indicated in the box
entitled "Special Delivery Instructions" below (or, in the case of Old Discount
Notes tendered by book-entry transfer, credited to an account maintained by the
tendering holder at DTC).
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Discount
Notes (and, if applicable, any substitute certificates representing Old Discount
Notes not exchanged or not accepted for exchange) be issued in the name(s) of
the undersigned and be delivered to the undersigned at the address, or, in the
case of book-entry transfer of Old Discount Notes, be credited to the account at
DTC shown above in the box entitled "Description of Old Discount Notes."
The Old Discount Notes that are tendered in the Exchange Offer will accrete
at a rate of 12 1/4, compounded semi-annually, to but excluding the date of
issuance of the Exchange Discount Notes. Any Old Discount Notes not tendered or
accepted for exchange will continue to accrete in accordance with their terms
and will cease to accrete upon cancellation of the Old Discount Notes and
issuance of the Exchange Discount Notes. From and after the date of issuance of
the Exchange Discount Notes, the Exchange Discount Notes shall accrete at the
rate of 12 1/4% per annum, but no cash interest will accrue or be payable in
respect of the Exchange Discount Notes prior to December 15, 2002. Thereafter,
cash interest on the Exchange Discount Notes will be payable until maturity at a
rate of 12 1/4% per annum, semi-annually in arrears, on each June 15 and
December 15, commencing June 15, 2003.
5
<PAGE>
The undersigned will, upon request, execute and deliver any additional
documents deemed by Holdings to be necessary or desirable to complete the sale,
assignment and transfer of the Old Discount Notes tendered hereby. All authority
herein conferred or agreed to be conferred in this Letter of Transmittal shall
survive the death or incapacity of the undersigned and any obligation of the
undersigned hereunder shall be binding upon the heirs, executors,
administrators, personal representatives, trustees in bankruptcy, legal
representatives, successors and assigns of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in the Prospectus and
in the instructions contained in this Letter of Transmittal.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD DISCOUNT
NOTES" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL AND DELIVERING SUCH OLD
DISCOUNT NOTES AND THIS LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT, WILL BE
DEEMED TO HAVE TENDERED THE OLD DISCOUNT NOTES AS SET FORTH IN SUCH BOX ABOVE.
6
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete accompanying Substitute Form W-9)
<TABLE>
<S> <C>
X Date:, 1998
X Date:, 1998
Signature(s) of Owner
</TABLE>
The above lines must be signed by the registered holder(s) exactly as their
name(s) appear(s) on the Old Discount Notes, or by person(s) authorized to
become registered holder(s) by a properly completed bond power from the
registered holder(s), a copy of which must be transmitted with this Letter of
Transmittal. If Old Discount Notes to which this Letter of Transmittal relate
are held of record by two or more joint holders, then all such holders must sign
this. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, then please set forth full title. See Instruction 4.
Name(s):____________________________________________________________________
____________________________________________________________________________
(Please Type or Print)
Capacity:___________________________________________________________________
Address:____________________________________________________________________
____________________________________________________________________________
(Including Zip Code)
Area Code and Telephone Number:_____________________________________________
Tax Identification or
Social Security Number(s):__________________________________________________
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 4)
Signatures Guaranteed
by an Eligible Institution:_________________________________________________
(Authorized Signature)
____________________________________________________________________________
(Title)
____________________________________________________________________________
(Name of Firm)
____________________________________________________________________________
(Address and Telephone Number)
Dated: , 1998
7
<PAGE>
- ------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if certificates for Old Discount Notes not
exchanged and/or Exchange Discount Notes are to be issued in the name of and
sent to someone other than the person or persons whose signature(s)
appear(s) on this Letter of Transmittal above.
Issue Exchange Discount Notes and/or Old Discount Notes to:
Name(s): ___________________________________________________________________
(Please Type or Print)
__________________________________________________________________________
(Please Type or Print)
Address: ___________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(Zip Code)
Telephone Number: __________________________________________________________
Tax Identification or
Social Security Number(s): _________________________________________________
(Complete Substitute Form W-9)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if certificates for Old Discount Notes not
exchanged and/or Exchange Discount Notes are to be sent to someone other
than the person or persons whose signature(s) appear(s) on this Letter of
Transmittal above or to such person or persons at an address other than
shown in the box above entitled "Description of Old Discount Notes."
Deliver Exchange Discount Notes and/or Old Discount Notes to:
Name(s): ___________________________________________________________________
(Please Type or Print)
__________________________________________________________________________
(Please Type or Print)
Address: ___________________________________________________________________
____________________________________________________________________________
(Zip Code)
Telephone Number: __________________________________________________________
Tax Identification or
Social Security Number(s): _________________________________________________
- ------------------------------------------
IMPORTANT: UNLESS GUARANTEED DELIVERY PROCEDURES ARE COMPLIED WITH, THIS
LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (OR, IN THE CASE OF A BOOK-ENTRY
TRANSFER, AN AGENT'S MESSAGE) (TOGETHER WITH THE CERTIFICATE(S) FOR OLD DISCOUNT
NOTES AND ANY OTHER DOCUMENTS REQUIRED) MUST BE RECEIVED BY THE EXCHANGE AGENT
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
8
<PAGE>
INSTRUCTIONS TO REGISTERED HOLDER AND/OR BOOK-ENTRY
TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. PROCEDURES FOR TENDERING.
Only a holder of Old Discount Notes may tender such Old Discount Notes in
the Exchange Offer. To tender in the Exchange Offer, a holder must complete,
sign and date this Letter of Transmittal, or a facsimile thereof, have the
signatures thereon guaranteed if required by this Letter of Transmittal or
transmit an Agent's Message in connection with a book-entry transfer, and mail
or otherwise deliver this Letter of Transmittal or a facsimile thereof or
Agent's Message, together with the Old Discount Notes and any other required
documents, to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date. To be tendered effectively, the Old Discount Notes, this Letter
of Transmittal or Agent's Message and other required documents must be completed
and received by the Exchange Agent at the address set above prior to 5:00 p.m.,
New York City time, on the Expiration Date. Delivery of the Old Discount Notes
may be made by book-entry transfer in accordance with the procedures described
below. Confirmation of such book-entry transfer must be received by the Exchange
Agent prior to the Expiration Date.
The term "Agent's Message" means a message, transmitted by a book-entry
transfer facility to, and received by, the Exchange Agent forming a part of a
confirmation of a book-entry, which states that such book-entry transfer
facility has received an express acknowledgment from the participant in such
book-entry transfer facility tendering the Old Discount Notes that such
participant has received and agrees: (i) to participate in the Automated Tender
Option Program ("ATOP"); (ii) to be bound by the terms of this Letter of
Transmittal; and (iii) that Holdings may enforce such agreement against such
participant.
By executing this Letter of Transmittal or Agent's Message, each holder will
make to Holdings the representations set forth above in the Prospectus in the
second paragraph under the heading "The Exchange Offer--Resale of the Exchange
Discount Notes."
The Company shall be deemed to have accepted validly tendered Old Discount
Notes when, as and if Holdings has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of the receiving the Exchange Discount Notes from Holdings.
The tender by a holder and the acceptance thereof by Holdings will
constitute agreement between such holder and Holdings in accordance with the
terms and subject to the conditions set forth in the Prospectus and in this
Letter of Transmittal.
THE METHOD OF DELIVERY OF OLD DISCOUNT NOTES AND THIS LETTER OF TRANSMITTAL
OR AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT
THE ELECTION AND SOLE RISK OF THE HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY CONFIRMED BY THE EXCHANGE AGENT. AS AN ALTERNATIVE TO DELIVERY BY
MAIL, HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD DISCOUNT NOTES
SHOULD BE SENT TO HOLDINGS. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Discount Notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf.
9
<PAGE>
Although delivery of the Old Discount Notes may be effected through
book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer
Facility, unless an Agent's Message is received by the Exchange Agent in
compliance with ATOP, an appropriate Letter of Transmittal properly completed
and duly executed with any required signature guarantee and all other required
documents must in each case be transmitted to and received or confirmed by the
Exchange Agent at its address set forth below on or prior to the Expiration
Date, or, if the guaranteed delivery procedures described below are complied
with, within the time period provided under such procedures. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Discount Notes and withdrawal of tendered
Old Discount Notes will be determined by Holdings in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all Old Discount Notes not properly tendered or any Old
Discount Notes Holdings' acceptance of which would, in the opinion of counsel
for Holdings, be unlawful. The Company also reserves the right in its sole
discretion to waive any defects, irregularities or conditions of tender as to
particular Old Discount Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in this Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Discount Notes must
be cured within such time as Holdings shall determine.
Although Holdings intends to notify holders of defects or irregularities
with respect to tenders of Old Discount Notes, neither Holdings, the Exchange
Agent nor any person shall incur any liability for failure to give such
notification. Tender of Old Discount Notes will not be deemed to have been made
until such defects or irregularities have been cured or waived. Any Old Discount
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in this Letter of Transmittal, as soon as practicable following the
Expiration Date.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Old Discount Notes and (i) whose Old
Discount Notes are not immediately available, (ii) who cannot deliver their Old
Discount Notes, this Letter of Transmittal or any other required documents to
the Exchange Agent or (iii) who cannot complete the procedures for book-entry
transfer, prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent received from such Eligible
Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) setting forth
the name and address of the holder, the certificate number(s) of the such
Old Discount Notes and the principal amount of Old Discount Notes tendered,
stating that the tender is being made thereby and guaranteeing that, within
five New York Stock Exchange trading days after the Expiration Date, this
Letter of Transmittal (or facsimile hereof) (or, in the case of a book-entry
transfer, an Agent's Message) together with the certificate(s) representing
the Old Discount Notes (or a confirmation of book-entry transfer of such
Notes into the Exchange Agent's account at the Book-Entry Transfer
Facility), and any other documents required by this Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
(c) the certificate(s) representing all tendered Old Discount Notes in proper
form for transfer (or a confirmation of a book-entry transfer of such Old
Discount Notes into the Exchange Agent's account at the Book Entry Transfer
Facility), together with this Letter of Transmittal (of facsimile hereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message) and all other
documents required by the Letter of Transmittal are received by the Exchange
Agent within five New York Stock Exchange trading days after the Expiration
Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Discount Notes according to the
guaranteed delivery procedures set forth above.
10
<PAGE>
3. PARTIAL TENDERS AND WITHDRAWAL RIGHTS.
The Company will issue $1,000 principal amount of Exchange Discount Notes in
exchange for each $1,000 principal amount of outstanding Old Discount Notes
accepted in the Exchange Offer. Holders may tender some or all of their Old
Discount Notes pursuant to the Exchange Offer. However, Old Discount Notes may
be tendered only in integral multiples of $1,000. If less than all the Old
Discount Notes evidenced by any Certificate submitted are to be tendered, fill
in the principal amount of Old Discount Notes which are to be tendered in the
box entitled "Principal Amount of Old Discount Notes Tendered (if less than
all)." In such case, new certificate(s) for the remainder of the Old Discount
Notes that were evidenced by your old certificate(s) will only be sent to the
holder of the Old Discount Notes (or, in the case of Old Discount Notes tendered
pursuant to book-entry transfer, will only be credited to the account at DTC
maintained by the holder of the Old Discount Notes) promptly after the
Expiration Date. All Old Discount Notes represented by certificates or subject
to a Book-Entry Confirmation delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
Except as otherwise provided in the Prospectus, tenders of Old Discount
Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the Expiration Date.
To withdraw a tender of Old Discount Notes in the Exchange Offer, a
telegram, telex, letter or facsimile transmission notice of withdrawal must be
received by the Exchange Agent at its address set forth herein prior to 5:00
p.m., New York City time, on the Expiration Date. Any such notice of withdrawal
must (i) specify the name of the person having deposited the Old Discount Notes
to be withdrawn (the "Depositor"), (ii) identify the Old Discount Notes to be
withdrawn (including the certificate number(s) and principal amount of such Old
Discount Notes, or, in the case of Old Discount Notes transferred by book-entry
transfer, the name and number of the account at the Book-Entry Transfer Facility
to be credited), (iii) be signed by the holder in the same manner as the
original signature on this Letter of Transmittal by which such Old Discount
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee with respect
to the Old Discount Notes register the transfer of such Old Discount Notes into
the name of the person withdrawing the tender and (iv) specify the name in which
any such Old Discount Notes are to be registered, if different from that of the
Depositor. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by Holdings, whose
determination shall be final and binding on all parties. Any Old Discount Notes
so withdrawn will be deemed not to have been validly tendered for purposes of
the Exchange Offer and no Exchange Discount Notes will be issued with respect
thereto unless the Old Discount Notes so withdrawn are validly retendered. Any
Old Discount Notes which have been tendered but which are not accepted for
exchange will be returned to the holder thereof without cost to such holder as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Discount Notes may be retendered by
following one of the procedures described above under "Procedures for Tendering"
at any time prior to the Expiration Date.
4. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES.
Signatures on this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Discount Notes tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on this Letter of Transmittal
or (ii) for the account of an Eligible Institution. In the event that signatures
on a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an "Eligible Institution").
If this Letter of Transmittal is signed by a person other than the
registered holder of any Old Discount Notes listed herein, such Old Discount
Notes must be endorsed or accompanied by a properly completed bond power, signed
by such registered holder as such registered holder's name appears on such Old
Discount Notes with the signature thereon guaranteed by an Eligible Institution.
11
<PAGE>
If this Letter of Transmittal or any Old Discount Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to Holdings of their authority to so act must be submitted with
this Letter of Transmittal.
5. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Old Discount Notes should indicate in the applicable
box the name and address or account at DTC to which Exchange Discount Notes
issued pursuant to the Exchange Offer and/or substitute Old Discount Notes for
principal amounts not tendered or not accepted for exchange are to be issued,
sent or deposited if different from the name and address or account of the
person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification or social Security number of the
person named must also be indicated. If no such instructions are given, any
Exchange Discount Notes will be issued in the name of, and delivered to, the
name and address (or account at DTC, in the case of any tender by book-entry
transfer) of the person signing this Letter of Transmittal, and any Old Discount
Notes not accepted for exchange will be returned to the name and address (or
account at DTC, in the case of any tender by book-entry transfer) of the person
signing this Letter of Transmittal.
6. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9.
Under the federal income tax laws, payments that may be made by Holdings on
account of Exchange Discount Notes issued pursuant to the Exchange Offer may be
subject to backup withholding at the rate of 31%. In order to avoid such backup
withholding, each tendering holder should complete and sign the Substitute Form
W-9 included in this Letter of Transmittal and either (a) provide the correct
taxpayer identification number ("TIN") and certify, under penalties of perjury,
that the TIN provided is correct and that (i) the holder has not been notified
by the Internal Revenue Service (the "IRS") that the holder is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the IRS has notified the holder that the holder is no longer subject to backup
withholding; or (b) provide an adequate basis for exemption. If the tendering
holder has not been issued a TIN and has applied for one, or intends to apply
for one in the near future, such holder should write "Applied For" in the space
provided for the TIN in Part I of the Substitute Form W-9, sign and date the
Substitute Form W-9 and sign the Certificate of Payee Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I, Holdings (or the
Paying Agent under the Indenture governing the Exchange Discount Notes) will
retain 31% of payments made to the tendering holder during the 60-day period
following the date of the Substitute Form W-9. If the holder furnishes the
Exchange Agent or Holdings with its TIN within 60-days after the date of the
Substitute Form W-9, Holdings (or the Paying Agent) will remit such amounts
retained during the 60-day period to the holder and no further amounts shall be
retained or withheld from payments made to the holder thereafter. If, however,
the holder has not provided the Exchange Agent or Holdings with its TIN within
such 60-day period, Holdings (or the Paying Agent) will remit such previously
retained amounts to the IRS as backup withholding. In general, if a holder is an
individual, the taxpayer identification number is the Social Security Number of
such individual. If the Exchange Agent or Holdings is not provided with the
correct taxpayer identification number, the holder may be subject to a $50
penalty imposed by the IRS. Certain holders (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. In order for a foreign individual to
qualify as an exempt recipient, such holder must submit a statement (generally,
IRS Form W-8), signed under penalties of perjury, attesting to that individual's
exempt status. Such statements can be obtained from the Exchange Agent. For
further information concerning backup withholding and instructions for
completing the Substitute Form W-9 (including how to obtain a taxpayer
identification number if you do not have one and how to complete the Substitute
Form W-9 if Old Discount Notes are registered in more than one name), consult
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute From W-9.
12
<PAGE>
Failure to complete the Substitute Form W-9 will not, by itself, cause Old
Discount Notes to be deemed invalidly tendered, but may require Holdings (or the
Paying Agent) to withhold 31% of the amount of any payments made on account of
the Exchange Discount Notes. Backup withholding is not an additional federal
income tax. Rather, the federal income tax liability of a person subject to
backup withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
7. TRANSFER TAXES.
Holders who tender Old Discount Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to this Instruction 7,
transfer taxes with respect to the exchange of Old Discount Notes pursuant to
the Exchange Offer. The Company will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the Exchange Offer.
See "The Exchange Offer--Fees and Expenses" in the Prospectus. If, however,
Exchange Discount Notes and/or substitute Old Discount Notes not exchanged are
to be delivered to, or are to be registered or issued in the name of, any person
other than the registered holder of the Old Discount Notes tendered herewith, or
if tendered Old Discount Notes are registered in the name of any person other
than the person signing this Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the transfer of Old Discount Notes to Holdings
or its order pursuant to the Exchange Offer, the amount of any such transfer
taxes (whether imposed on the registered holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
8. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive, in whole or in part, any
of the conditions to the Exchange Offer set forth in the Prospectus.
9. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders of Old Discount
Notes or transmittals of this Letter of Transmittal will be accepted. All
tendering holders of Old Discount Notes, by execution of this Letter of
Transmittal, shall waive any right to receive notice of the acceptance of their
Old Discount Notes for exchange.
Neither Holdings, the Exchange Agent nor any other person is obligated to
give notice of defects or irregularities in any tender, nor shall any of them
incur any liability for failure to give any such notice.
10. INADEQUATE SPACE.
If the space provided herein is inadequate, the aggregate principal amount
of Old Discount Notes being tendered and the certificate number or numbers (if
applicable) should be listed on a separate schedule attached hereto and
separately signed by all parties required to sign this Letter of Transmittal.
11. MUTILATED, LOST, STOLEN OR DESTROYED OLD DISCOUNT NOTES.
If any certificate has been lost, mutilated, destroyed or stolen, the holder
should promptly notify The Bank of New York at 101 Barclay Street (7 East), New
York, New York 10286, telephone (212) 815-2742. The holder will then be
instructed as to the steps that must be taken to replace the certificate. This
Letter of Transmittal and related documents cannot be processed until the Old
Discount Notes have been replaced.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number indicated
above.
13
<PAGE>
13. VALIDITY OF TENDERS.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Old Discount Notes will be determined by
Holdings, in its sole discretion, which determination will be final and binding.
The Company reserves the right to reject any and all Old Discount Notes not
validly tendered or any Old Discount Notes, Holdings' acceptance of which may,
in the opinion of Holdings or counsel to Holdings, be unlawful. The Company also
reserves the right to waive any conditions of the Exchange Offer or defects or
irregularities in tenders of Old Discount Notes as to any ineligibility of any
holder who seeks to tender Old Discount Notes in the Exchange Offer, whether or
not similar conditions or irregularities are waived in the case of other
holders. The interpretation of the terms and conditions of the Exchange Offer
(including this Letter of Transmittal and the instructions hereto) by Holdings
shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Discount Notes must be cured
within such time as Holdings shall determine. The Company will use reasonable
efforts to give notification of defects or irregularities with respect to
tenders of Old Discount Notes, but neither Holdings nor the Exchange Agent shall
incur any liability for failure to give such notification.
14. ACCEPTANCE OF TENDERED OLD DISCOUNT NOTES AND ISSUANCE OF EXCHANGE
DISCOUNT NOTES; RETURN OF OLD DISCOUNT NOTES.
Subject to the terms and conditions of the Exchange Offer, Holdings will
accept for exchange all validly tendered Old Discount Notes as soon as
practicable after the Expiration Date and will issue Exchange Discount Notes
therefor as soon as practicable thereafter. For purposes of the Exchange Offer,
Holdings shall be deemed to have accepted tendered Old Discount Notes when, as
and if Holdings has given written and oral notice thereof to the Exchange Agent.
If any tendered Old Discount Notes are not exchanged pursuant to the Exchange
Offer for any reason, such unexchanged Old Discount Notes will be returned,
without expense, to the name and address shown above or, if Old Discount Notes
have been tendered by book-entry transfer, to the account at DTC shown above, or
at a different address or account at DTC as may be indicated under "Special
Delivery Instructions."
14
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 6)
PAYOR'S NAME: ________________________
<TABLE>
<S> <C> <C>
SUBSTITUTE Part I--Taxpayer Identification
FORM W-9 Number Social Security Number
Department of the Treasury Enter your taxpayer identification OR
Internal Revenue Service number in the appropriate box. For
most individuals, this is your Employer Identification Number
social Security number. If you do
not have a number, see how to obtain
a "TIN" in the enclosed Guidelines.
NOTE: If the account is in more than
one name, see the chart on page 2 of
the enclosed Guidelines to determine
what number to give.
Payor's Request for Taxpayer Part II--For Payees Exempt from Backup Withholding (see enclosed
Identification Number (TIN) Guidelines)
and Certification
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
(2) I am no subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to report all interest or
dividends or the IRS has notified me that I am no longer subject to
backup withholding.
SIGNATUREDATE
Certificate Guidelines--You must cross out Item (2) of the above certification if you have been notified by the
IRS that you are subject to backup withholding because of underreporting of interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject to backup withholding, you received
another notification from the IRS that you are no longer subject to backup withholding, do not cross out Item
(2).
</TABLE>
CERTIFICATION OF PAYEE AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification Number
has not been issued to me and that I mailed or delivered an application to
receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a Taxpayer Identification Number to the payor, 31% of all payments made
to me on account of the Exchange Discount Notes shall be retained until I
provide a Taxpayer Identification Number to the payor and that, if I do not
provide my Taxpayer Identification Number within 60 days, such retained amounts
shall be remitted to the Internal Revenue Service as a backup withholding and
31% of all reportable payments made to me thereafter will be withheld and
remitted to the Internal Revenue Service until I provide a Taxpayer
Identification Number.
SIGNATURE _________________________________________DATE ____________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU ON ACCOUNT OF THE EXCHANGE
DISCOUNT NOTES. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
15
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF ANY AND ALL OUTSTANDING
12 1/4% SENIOR DISCOUNT NOTES DUE 2008
IN EXCHANGE FOR
12 1/4% SENIOR DISCOUNT NOTES DUE 2008, SERIES B
OF
AMERICAN LAWYER MEDIA HOLDINGS, INC.
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used by registered holders of outstanding 12 1/4% Senior Discount
Notes due 2008 (the "Old Discount Notes") of American Lawyer Media Holdings,
Inc., a Delaware corporation ("Holdings"), who wish to tender their Old Discount
Notes for an equal principal amount of new 12 1/4% Senior Discount Notes of
Holdings due 2008 (the "Exchange Discount Notes") that have been registered
under the Securities Act of 1933, as amended and (i) whose Old Discount Notes
are not immediately available, (ii) who cannot deliver their Old Discount Notes,
the duly completed and executed Letter of Transmittal or any other required
documents to The Bank of New York, as exchange agent (the "Exchange Agent"), or
(iii) who cannot complete the procedures for book-entry transfer prior to 5:00
P.M., New York City time on the Expiration Date.
This Notice of Guaranteed Delivery may be delivered by facsimile
transmission, mail or hand delivery (receipt confirmed by telephone and an
original delivered by guaranteed overnight delivery), to the Exchange Agent. See
"The Exchange Offer -- Guaranteed Delivery Procedures" in the Prospectus.
Holdings has the right to reject a tender of Old Discount Notes made pursuant to
the guaranteed delivery procedures unless the registered holder using the
guaranteed delivery procedure submits either (a) the Old Discount Notes tendered
thereby, in proper form for transfer, or (b) confirmation of book-entry transfer
set forth in the Prospectus, in either case together with one or more properly
completed and duly executed Letter(s) of Transmittal (or facsimile thereof) (or,
in the case of a book-entry transfer, an Agent's Message) and any other
documents required by the Letter of Transmittal within five New York Stock
Exchange trading days after the Expiration Date.
Capitalized terms used but not defined herein have the meanings given to
such terms in the Prospectus dated , 1998, as the same may be amended
or supplemented from time to time (the "Prospectus").
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
BY REGISTERED OR CERTIFIED BY HAND OR OVERNIGHT
MAIL FACSIMILE TRANSMISSIONS: DELIVERY
<S> <C> <C>
(Eligible Institutions Only)
The Bank of New York (212) 815-6339 The Bank of New York
101 Barclay Street CONFIRM BY TELEPHONE 101 Barclay Street
New York, NY 10286 OR FOR INFORMATION CALL: Corporate Trust Services
Attn: Corporate Trust (212) 815-5788 Window
Operations Ground Level
New York, NY 10286
Attn: Reorganization Section
Floor 7E
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE VALID
DELIVERY.
<PAGE>
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
Upon the terms and subject to the conditions set forth in the Prospectus and
the related Letter of Transmittal (which together constitute the "Exchange
Offer"), receipt of which is hereby acknowledged, the undersigned hereby tenders
to Holdings the aggregate principal amount of the Old Discount Notes set forth
below, pursuant to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures" and in instruction 2 to the Letter of Transmittal.
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<S> <C> <C> <C>
Name and address of
registered holder as Certificate Principal Amount
it appears on the Number(s) of Old Aggregate Principal of
Old Discount Notes Discount Notes Amount Represented by Old Old Discount Notes
(Please print) Tendered Discount Notes* Tendered
- ---------------------- -------------------- ------------------------- ------------------
- ---------------------- -------------------- ------------------------- ------------------
- ---------------------- -------------------- ------------------------- ------------------
- ---------------------- -------------------- ------------------------- ------------------
- ---------------------- -------------------- ------------------------- ------------------
- ---------------------- -------------------- ------------------------- ------------------
</TABLE>
* Must be in denominations of a principal amount of U.S. $1,000 and integral
multiples thereof.
If the Old Discount Notes will be tendered by book-entry transfer, provide the
following information:
DTC Account Number:____________________________
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
<PAGE>
PLEASE SIGN HERE
<TABLE>
<S> <C>
X Date: , 1998
X Date: , 1998
Signature(s) of Owner(s)
or Authorized Signatory
</TABLE>
Area Code and Telephone Number:____________________________
Must be signed by the holder(s) of the Old Discount Notes as their name(s)
appear(s) on certificates of the Old Discount Notes or on a security position
listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed Delivery.
If a signature or signatures on the previous page is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer or other person acting in a
fiduciary or representative capacity, such person must set forth his or her full
title below.
Please print name(s) and address(es)
<TABLE>
<S> <C>
Names(s): ------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Capacity: ------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Address(es): ------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING GUARANTEE MUST BE COMPLETED
<PAGE>
THIS GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(Not To Be Used For Signature Guarantee)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," hereby guarantees to deliver to the Exchange Agent, at one of its
addresses set forth above, either (a) the Old Discount Notes tendered hereby, in
proper form for transfer, or (b) confirmation of the book-entry transfer of such
Old Discount Notes into the Exchange Agent's account at The Depositary Trust
Company maintained for such purpose, pursuant to the procedures for book-entry
transfer set forth in the Prospectus, in either case together with one or more
properly completed and duly executed Letter(s) of Transmittal (or facsimile
thereof) (or, in the case of a book-entry transfer, an Agent's message) and any
other documents required by the Letter of Transmittal within five New York Stock
Exchange trading days after the Expiration Date.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Old Discount Notes tendered hereby to the Exchange Agent
within the time period set forth above and that failure to do so could result in
a financial loss to the undersigned.
<TABLE>
<S> <C>
Name of Firm: -------------------------------------------
(Authorized Signature)
Address: Title:
------------------------------------------- Name:
(zip code) (Please type or print)
Area Code and
Telephone Number: Date:
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR OLD DISCOUNT NOTES WITH THIS FORM.
CERTIFICATES FOR OLD DISCOUNT NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
<PAGE>
EXHIBIT 99.3
OFFER TO EXCHANGE
12 1/4% SENIOR DISCOUNT NOTES DUE 2008 SERIES B
FOR ANY AND ALL OUTSTANDING
12 1/4% SENIOR DISCOUNT NOTES DUE 2008
OF
AMERICAN LAWYER MEDIA HOLDINGS, INC.
To The Depository Trust Company Participants:
We are enclosing herewith the materials listed below relating to the offer
by American Lawyer Media Holdings, Inc. a Delaware corporation ("Holdings") to
exchange up to $63,275,000 aggregate principal amount of its 12 1/4% Senior
Discount Notes due 2008, Series B (the "Exchange Discount Notes"), pursuant to
an offering registered under the Securities Act of 1933, as amended (the
"Securities Act"), for an equal principal amount of 12 1/4% Senior Discount
Notes Due 2008 (the "Old Discount Notes") upon the terms and subject to the
conditions set forth in the Prospectus dated , 1998 (as amended or
supplemented from time to time, the "Prospectus") of Holdings and the related
Letter of Transmittal (as amended or supplemented from time to time the "Letter
of Transmittal"), which together constitute Holdings' offer (the "Exchange
Offer"). Capitalized terms not defined herein have the meanings given to such
terms in the Prospectus.
Enclosed herewith are copies of the following documents;
1. Prospectus dated , 1998;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instructions to Registered Holder and/or Book-Entry Transfer Participant
from Beneficial Owner; and
5. Letter which may be sent to your clients for whose account you hold Old
Notes in your name or in the name of your nominee, to accompany the
instruction form referred to above, for obtaining such client's
instruction with regard to the Exchange Offer.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE EXCHANGE
OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS
EXTENDED.
The Exchange Offer is not conditioned upon any minimum number of Old
Discount Notes being tendered.
To tender in the Exchange Offer, a holder (a "Holder") must transmit an
Agent's Message in connection with a book-entry transfer and mail or otherwise
deliver Agent's Message, together any other required documents, to The Bank of
New York (the "Exchange Agent") prior to 5:00 p.m., New York City time, on the
Expiration Date. To be tendered effectively, the Agent's Message and other
required documents must be completed and received by the Exchange Agent at the
address set forth in the Letter of Transmittal prior to 5:00 p.m., New York City
time, on the Expiration Date. Confirmation of book-entry transfer must be
received by the Exchange Agent prior to the Expiration Date.
The term "Agent's Message" means a message, transmitted by a book-entry
transfer facility to, and received by, the Exchange Agent forming a part of a
confirmation of a book-entry, which states that such book-entry transfer
facility has received an express acknowledgment from the participant in such
book-entry transfer facility tendering the Old Discount Notes that such
participant has received and agrees: (i) to participate in the Automated Tender
Option Program ("ATOP"); (ii) to be bound by the terms of the Letter of
Transmittal; and (iii) that the Company may enforce such agreement against such
participant.
<PAGE>
Pursuant to the Letter of Transmittal, each Holder will represent to
Holdings that (i) the Exchange Discount Notes are to be acquired by the Holder
or the person receiving such Exchange Discount Notes, whether or not such person
is the Holder, in the ordinary course of business, (ii) the Holder or any such
other person (other than a broker-dealer referred to in the next sentence) is
not engaging and does not intend to engage, in distribution of the Exchange
Discount Notes, (iii) the Holder or any such other person has no arrangement or
understanding with any person to participate in the distribution of the Exchange
Discount Notes, (iv) neither the Holder nor any such other person is an
"affiliate" of Holdings within the meaning of Rule 405 under the Securities Act,
and (v) the Holder or any such other person acknowledges that if such Holder or
any other person participates in the Exchange Offer for the purpose of
distributing the Exchange Discount Notes it must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale of the Exchange Discount Notes and cannot rely on those no-action
letters. Each Participating Broker-Dealer that receives Exchange Discount Notes
for its own account in exchange for Old Discount Notes must acknowledge that it
(i) acquired the Old Discount Notes for its own account as a result of
market-making activities or other trading activities, (ii) has not entered into
any arrangement or understanding with Holdings or any "affiliate" of Holdings
(within the meaning of the Rule 405 under the Securities Act) to distribute the
Exchange Discount Notes to be received in the Exchange Offer and (iii) will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Discount Notes.
The enclosed Instruction to the Book-Entry Transfer Participant contains an
authorization by the beneficial owners of the Old Discount Notes for you to make
the foregoing representations.
Holdings will not pay any fee or commission to any broker or dealer or to
any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Discount Notes pursuant to the Exchange Offer.
Holdings will pay or cause to be paid any transfer taxes payable on the transfer
of Old Discount Notes to it, except as otherwise provided in Instruction 7 of
the enclosed Letter of Transmittal.
Additional copies of the enclosed material may be obtain from The Bank of
New York, 101 Barclay Street, (7 East), New York, NY 10286, Attention:
Reorganization Section.
<TABLE>
<S> <C> <C>
Very truly yours,
American Lawyer Media Holdings, Inc.
By:
-----------------------------------------
Anup Bagaria
VICE PRESIDENT AND SECRETARY
</TABLE>
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF AMERICAN LAWYER MEDIA, INC. OR THE BANK OF NEW YORK OR AUTHORIZE
YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN CONNECTION WITH
THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
<PAGE>
EXHIBIT 99.4
OFFER TO EXCHANGE
12 1/4% SENIOR DISCOUNT NOTES DUE 2008, SERIES B
FOR ANY AND ALL OUTSTANDING
12 1/4% SENIOR DISCOUNT NOTES DUE 2008
OF
AMERICAN LAWYER MEDIA HOLDINGS, INC.
To Our Clients:
We are enclosing herewith a Prospectus dated , 1998 (as
amended and supplemented from time to time, the "Prospectus") of American Lawyer
Media Holdings, Inc., a Delaware corporation ("Holdings"), and the related
Letter of Transmittal (as amended and supplemented from time to time, the
"Letter of Transmittal") which together constitute the offer of Holdings (the
"Exchange Offer") to exchange $1,000 principal amount of its 12 1/4% Senior
Discount Notes due 2008, Series B (the "Exchange Discount Notes"), registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a registration statement of which the Prospectus is a part, for each $1,000
principal amount at maturity of its outstanding 12 1/4% Senior Discount Notes
due 2008 (the "Old Discount Notes"), of which $63,275,000 aggregate principal
amount at maturity is outstanding as of the date hereof. Capitalized terms not
defined herein have the meanings given to such terms in the Prospectus.
PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1998, UNLESS EXTENDED.
The Exchange Offer is not conditioned upon any minimum number of Old
Discount Notes being tendered.
We are the participants in the book-entry transfer facility of Old Discount
Notes held by us for your account. A tender of such Old Discount Notes can be
made only by us as the participant in the book-entry transfer facility and
pursuant to your instructions. The Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender Old Discount Notes
held by us for your account.
We request instructions as to whether you wish to tender any or all of the
Old Discount Notes held by us for your account pursuant to the terms and
conditions of the Exchange Offer. We also request that you confirm that we may
on your behalf make the representations contained in the Letter of Transmittal
that are to be made with respect to you as beneficial owner.
Pursuant to the Letter of Transmittal, each Holder will represent to
Holdings that (i) the Exchange Discount Notes are to be acquired by the Holder
or the person receiving such Exchange Discount Notes, whether or not such person
is the Holder, in the ordinary course of business, (ii) the Holder or any such
other person (other than a broker-dealer referred to in the next sentence) is
not engaging and does not intend to engage, in distribution of the Exchange
Discount Notes, (iii) the Holder or any such other person has no arrangement or
understanding with any person to participate in the distribution of the Exchange
Discount Notes, (iv) neither the Holder nor any such other person is an
"affiliate" of Holdings within the meaning of Rule 405 under the Securities Act,
and (v) the Holder or any such other person acknowledges that if such Holder or
any other person participates in the Exchange Offer for the purpose of
distributing the Exchange Discount Notes it must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale of the Exchange Discount Notes and cannot rely on those no-action
letters.
Each Participating Broker-Dealer that receives Exchange Discount Notes for
its own account in exchange for Old Discount Notes must acknowledge that it (i)
acquired the Old Discount Notes for its own account as a result of market-making
activities or other trading activities, (ii) has not entered into any
arrangement or understanding with Holdings or any "affiliate" of Holdings
(within the meaning of the Rule 405 under the Securities Act) to distribute the
Exchange Discount Notes to be received in the Exchange Offer and (iii) will
deliver a prospectus meeting the requirements of the Securities Act in
<PAGE>
connection with any resale of such Exchange Discount Notes. By acknowledging
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such Exchange Discount Notes, such
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Very truly yours,
<PAGE>
INSTRUCTION TO
BOOK-ENTRY TRANSFER PARTICIPANT FROM OWNER
OF
AMERICAN LAWYER MEDIA HOLDINGS, INC.
12 1/4% SENIOR DISCOUNT NOTES DUE 2008
To Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated ,
1998 (the "Prospectus") of American Lawyer Media Holdings, Inc. ("Holdings") and
a related Letter of Transmittal (which together constitute the "Exchange
Offer"). Capitalized terms not defined herein have the meanings given to such
terms in the Prospectus.
This will instruct you, the book-entry transfer facility participant, as to
the action to be taken by you relating to the Exchange Offer with respect to the
Old Discount Notes held by you for the account of the undersigned.
The aggregate face amount of the Old Discount Notes held by you for the
account of the undersigned is (fill in amount):
$_________ of the 12 1/4% Senior Discount Notes Due 2008.
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate statement):
A. _________ To TENDER the following Old Discount Notes held by you for the
account of the undersigned (insert principal amount of Old Discount Notes
to be tendered):
$_________(1) of the 12 1/4% Senior Notes Due 2008, and not to tender
other Old Discount Notes, if any, held by you for the account of the
undersigned;
OR
B. _________ NOT to tender any Old Discount Notes held by you for the
account of the undersigned.
If the undersigned instructs you to tender the Old Discount Notes held by
you for the account of the undersigned, it is understood that you are authorized
to make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representations and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that
Pursuant to the Letter of Transmittal, each Holder will represent to Holdings
that (i) the Exchange Discount Notes are to be acquired by the Holder or the
person receiving such Exchange Discount Notes, whether or not such person is the
Holder, in the ordinary course of business, (ii) the Holder or any such other
person (other than a broker-dealer referred to in the next sentence) is not
engaging and does not intend to engage, in distribution of the Exchange Discount
Notes, (iii) the Holder or any such other person has no arrangement or
understanding with any person to participate in the distribution of the Exchange
Discount Notes, (iv) neither the Holder nor any such other person is an
"affiliate" of Holdings within the meaning of Rule 405 under the Securities Act,
and (v) the Holder or any such other person acknowledges that if such Holder or
any other person participates in the Exchange Offer for the purpose of
distributing the Exchange Discount Notes it must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale of the Exchange Discount Notes and cannot rely on those no-action
letters.
- ------------------------
(1) Must be in integral multiples of $1,000.
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<PAGE>
Each Participating Broker-Dealer that receives Exchange Discount Notes for
its own account in exchange for Old Discount Notes must acknowledge that it (i)
acquired the Old Discount Notes for its own account as a result of market-making
activities or other trading activities, (ii) has not entered into any
arrangement or understanding with Holdings or any "affiliate" of Holdings
(within the meaning of the Rule 405 under the Securities Act) to distribute the
Exchange Discount Notes to be received in the Exchange Offer and (iii) will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Discount Notes. By acknowledging
that it will deliver and by delivering a prospectus meeting the requirements of
the Securities Act in connection with any resale of such Exchange Discount
Notes, the undersigned will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act.
SIGN HERE
Name of beneficial owner(s): ___________________________________________________
Signature(s): __________________________________________________________________
Name(s) (please print): ________________________________________________________
Address: _______________________________________________________________________
(zip code)
Telephone Number: ______________________________________________________________
(area code)
Taxpayer identification or Social Security Number:
________________________________________________________________________________
Date: __________________________________________________________________________
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