<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 4, 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
----------------
INTEREP NATIONAL RADIO SALES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
NEW YORK 7313 13-1865151
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
100 PARK AVENUE
NEW YORK, NY 10017
(212) 916-0700
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
RALPH C. GUILD
INTEREP NATIONAL RADIO SALES, INC.
100 PARK AVENUE
NEW YORK, NY 10017
(212) 916-0700
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
----------------
COPIES TO:
WILLIAM J. MCENTEE, JR. LAURENCE S. MARKOWITZ, ESQ.
INTEREP NATIONAL RADIO SALES, INC. CHRISTY & VIENER
2090 PALM BEACH LAKES BLVD. 620 FIFTH AVENUE
SUITE 300 NEW YORK, NEW YORK 10020
WEST PALM BEACH, FL 33409 (212) 632-5500
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
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 of 1933, as amended (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(d)
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. [_]
----------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER NOTE PRICE(1) FEE(1)
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<S> <C> <C> <C> <C>
10% Senior Subordinated
Notes Due 2008, Series
B..................... $100,000,000 $1,000.00 $100,000,000 $29,500
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Guarantees of 10% Senior
Subordinated Notes Due
2008, Series B(2)..... N/A N/A N/A N/A
</TABLE>
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(1) The registration fee has been calculated pursuant to Rule 457(a) and Rule
457(f)(2) under the Securities Act. The Proposed Maximum Aggregate
Offering Price is estimated solely for the purpose of calculating the
registration fee.
(2) Guarantees of the 10% Senior Subordinated Notes due 2008, Series B to be
issued by subsidiaries of the Registrant. Pursuant to Rule 457(n), no
additional registration fee is being paid in respect of the guarantees.
The guarantees are not traded separately.
----------------
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 OR UNTIL THE 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>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THIS PROSPECTUS AND THE INFORMATION CONTAINED HEREIN ARE SUBJECT TO CHANGE, +
+COMPLETION OR AMENDMENT WITHOUT NOTICE. A REGISTRATION STATEMENT RELATING TO +
+THESE SECURITIES HAS BEEN FILED WITH THE 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 JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR +
+SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE +
+SECURITIES LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 4, 1998
PRELIMINARY PROSPECTUS
INTEREP NATIONAL RADIO SALES, INC.
OFFER TO EXCHANGE
UP TO $100,000,000 OF
10% SENIOR SUBORDINATED NOTES DUE 2008, SERIES B
FOR ANY AND ALL OF THE OUTSTANDING
10% SENIOR SUBORDINATED NOTES DUE 2008, SERIES A
OF
INTEREP NATIONAL RADIO SALES, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1998, UNLESS EXTENDED.
Interep National Radio Sales, Inc., a New York corporation ("Interep" or the
"Company"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying letter of transmittal (the
"Letter of Transmittal" and, together with this Prospectus, the "Exchange
Offer"), to exchange an aggregate of up to $100.0 million principal amount of
10% Senior Subordinated Notes due 2008, Series B (the "Exchange Notes"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for an identical face amount of the issued and outstanding
10% Senior Subordinated Notes due 2008 (referred to individually as the "144A
Notes" and "Reg S Notes"; collectively as the "Series A Notes"; and, together
with the Exchange Notes, the "Notes") of the Company from the Holders (as
defined herein) thereof in integral multiples of $1,000 principal amount. The
Series A Notes were issued on July 2, 1998 (the "Offering") by the Company. As
of the date of this Prospectus, there are $100.0 million in aggregate principal
amount of the Series A Notes outstanding. The terms of the Exchange Notes are
identical in all material respects to the Series A Notes, except that the
Exchange Notes will have been registered under the Securities Act, and
therefore will not bear legends restricting their transfer described in the
Registration Rights Agreement (as defined herein), the provisions of which
generally will terminate as to all of the Notes upon the consummation of the
Exchange Offer. The Exchange Notes will be obligations of the Company
evidencing the same indebtedness as the Series A Notes and will be entitled to
the benefits of the same Indenture (as defined herein). See "The Exchange
Offer."
Interest on the Exchange Notes will be payable semi-annually in arrears on
July 1 and January 1 of each year, commencing on January 1, 1999. The Exchange
Notes will mature on July 1, 2008. The Exchange Notes are redeemable at any
time on or after July 1, 2003 at the option of the Company, in whole or in
part, at the redemption prices set forth herein, together with accrued and
unpaid interest and Liquidated Damages (as defined), if any, thereon to the
redemption date. In addition, at any time prior to July 1, 2001, the Company
may redeem up to 30% of the aggregate principal amount of the Notes originally
issued under the Indenture (as defined) at a redemption price equal to 110.000%
of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date, with the net cash
proceeds of one or more Equity Offerings (as defined); provided that at least
70% of the aggregate principal amount of the Notes originally issued under the
Indenture remains outstanding immediately after giving effect to such
redemption. Upon the occurrence of a Change of Control (as defined herein),
each holder of the Exchange Notes may require the Company to purchase all or a
portion of such holder's Exchange Notes at a purchase price equal to 101% of
the principal amount thereof, together with accrued and unpaid interest and
Liquidated Damages, if any, thereon to the repurchase date. See "Risk Factors--
Change of Control" and "Description of Exchange Notes."
The Exchange Notes will be general unsecured obligations of the Company and,
as such, will be subordinated in right of payment to all existing and future
Senior Indebtedness (as defined) of the Company and senior to or pari passu
with all other indebtedness of the Company. As of March 31, 1998, after giving
pro forma effect to the Financing Transactions (as defined), the Company would
have had approximately $0.4 million of Senior Indebtedness outstanding. In
addition, the Company would have had a $10.0 million New Credit Facility (as
defined). The Exchange Notes will be fully and unconditionally guaranteed (the
"Subsidiary Guarantees") by all of the Company's future and existing Restricted
Subsidiaries (as defined) (the "Guarantors") on a joint and several basis. The
Subsidiary Guarantees will be general unsecured obligations of the Guarantors
and will be subordinated in right of payment to all existing and future Senior
Indebtedness and senior to or pari passu with all other indebtedness of such
Guarantor. See "Description of Exchange Notes--Subsidiary Guarantees."
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION AND CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE>
The Company will accept for exchange any and all validly tendered Series A
Notes on or prior to the Expiration Date (as defined herein). Tenders of
Series A Notes may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date; otherwise such tenders are irrevocable. The
Exchange Offer is not conditioned upon any minimum principal amount of Series
A Notes being tendered for exchange. The Series A Notes may be tendered only
in integral multiples of $1,000. For certain conditions to the Exchange Offer,
see "The Exchange Offer."
The Series A Notes were offered and sold on July 2, 1998 in a transaction
not registered under the Securities Act in reliance upon an exemption from the
registration requirements thereof. In general, the Series A Notes may not be
offered or sold unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act.
The Exchange Notes are being offered hereby in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement. The
Company has agreed to pay the expenses of the Exchange Offer. Based on
interpretations by the staff of the Commission set forth in no-action letters
issued to third parties, the Company believes that the Exchange Notes issued
pursuant to the Exchange Offer in exchange for Series A Notes may be offered
for resale, resold or otherwise transferred by any person in whose name Series
A Notes are registered on the books of the Company or any other person who has
obtained a properly completed bond power from the registered holder (a
"Holder") thereof (other than any such Holder that is (i) an "affiliate" of
the Company within the meaning of Rule 405 promulgated under the Securities
Act, (ii) a broker-dealer which acquired the Series A Notes directly from the
Company or (iii) a broker-dealer who acquired the Series A Notes as a result
of market making or other trading activities) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such Exchange Notes are acquired in the ordinary course of such
Holder's business and such Holder does not intend to participate and has no
arrangement or understanding with any person to participate in the
distribution of such Exchange Notes. In some cases, certain broker-dealers may
be required to deliver a prospectus in connection with the resale of such
Exchange Notes.
Any beneficial owner of Series A Notes whose Series A Notes are registered
in the name of a broker, commercial bank, trust company or other nominee and
who wishes to participate in the Exchange Offer should contact such registered
Holder promptly and instruct such Holder to tender the Series A Notes on such
beneficial owner's behalf. See "The Exchange Offer--Procedures for Tendering."
This Prospectus, as it may be amended or supplemented from time to time, may
be used by a broker-dealer in connection with any resale of Exchange Notes
received in exchange for such Series A Notes where such Series A Notes were
acquired by such broker-dealer for its own account as a result of market-
making activities or other trading activities (other than Series A Notes
acquired directly from the Company). The Company has agreed that it will make
this Prospectus available to any broker-dealer for use in connection with any
such resale.
The Series A Notes are eligible for trading in the Private Offerings,
Resales and Trading through Automatic Linkages Market (the "PORTAL" market) of
the National Association of Securities Dealers, Inc. Prior to this Exchange
Offer, there has been no public market for the Exchange Notes. If a market for
the Exchange Notes should develop, the Exchange Notes could trade at a
discount from their principal amount. The Company does not intend to list the
Exchange Notes on any securities exchange nor does the Company intend to apply
for quotation of the Exchange Notes on The Nasdaq National Market or other
quotation system. BancBoston Securities Inc. and Loewenbaum & Company
Incorporated (together with SPP Hambro & Co., LLC "the Initial Purchasers")
have indicated to the Company that they intend to make a market in the Notes,
but are not obligated to do so and such market-making activities may be
discontinued at any time without notice. As a result, no assurance can be
given that an active trading market for the Exchange Notes will develop.
The Exchange Notes issued pursuant to this Exchange Offer will be issued in
the form of a Global Exchange Note (as defined herein), which will be
deposited with, or on behalf of, The Depository Trust Company (the
"Depository" or "DTC") and registered in its name or in the name of Cede &
Co., its nominee. Beneficial interests in the Global Exchange Note
representing the Exchange Notes will be shown on, and transfers thereof
i
<PAGE>
will be effected through, records maintained by DTC and its participants.
Notwithstanding the foregoing, Series A Notes held in certificated form will
be exchanged solely for Certificated Exchange Notes (as defined herein). After
the initial issuance of the Global Exchange Note, Certificated Exchange Notes
will be issued in exchange for the Global Exchange Note only on the terms set
forth in the Indenture. See "Description of the Exchange Notes--Book-Entry,
Delivery and Form."
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACT, INCLUDED IN THIS
PROSPECTUS, INCLUDING WITHOUT LIMITATION THE STATEMENTS UNDER "SUMMARY,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND "BUSINESS," ARE, OR MAY BE, FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). WITHOUT
LIMITING THE FOREGOING, THE WORDS "BELIEVES," "ANTICIPATES," "PLANS,"
"INTENDS," "EXPECTS," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. VARIOUS ECONOMIC AND COMPETITIVE FACTORS COULD
CAUSE ACTUAL RESULTS OR EVENTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN
SUCH FORWARD-LOOKING STATEMENTS, INCLUDING WITHOUT LIMITATION, THE COMPANY'S
DEGREE OF LEVERAGE, THE COMPANY'S DEPENDENCE ON MAJOR CUSTOMERS AND KEY
PERSONNEL, COMPETITION, AND THE OTHER FACTORS DISCUSSED IN THIS PROSPECTUS
WITH RESPECT TO THE COMPANY'S BUSINESS, INCLUDING THOSE SET FORTH UNDER "RISK
FACTORS." ACCORDINGLY, SUCH FORWARD-LOOKING STATEMENTS DO NOT PURPORT TO BE
PREDICTIONS OF FUTURE EVENTS OR CIRCUMSTANCES AND MAY NOT BE REALIZED. THE
COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO RELEASE PUBLICLY
ANY UPDATES OR ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR
ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY STATEMENT IS
BASED.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement," which term shall include all amendments,
exhibits, annexes and schedules thereto) pursuant to the Securities Act, and
the rules and regulations promulgated thereunder, covering the Exchange Notes
being offered hereby. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission and to which
reference is hereby made. 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 Registration Statement, reference is made
to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such
reference.
For further information with respect to the Company and the Notes, reference
is made to such Registration Statement. A copy of the Registration Statement
can be inspected and copied at the public reference facilities maintained by
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.
Washington, D.C. 20549, and at the Regional Offices of the Commission at 7
World Trade Center, 13th Floor, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511. Copies of such materials can be obtained from the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
at prescribed rates. The Commission maintains an Internet 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.
ii
<PAGE>
While any Series A Notes remain outstanding, the Company will make
available, upon request, to any Holder and any prospective purchaser of Series
A Notes the information required pursuant to Rule 144A(d)(4) under the
Securities Act during any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act. Any such request should be directed
to the Company at 100 Park Avenue, New York, New York 10017, Attention: Chief
Financial Officer (telephone number (212) 916-0700).
Upon completion of the Exchange Offer, the Company will become subject to
the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith, will file reports
and other information with the Securities and Exchange Commission.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF
TRANSMITTAL DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE EXCHANGE NOTES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS 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.
iii
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Market and market share data used throughout this
Prospectus have been generated internally by the Company or obtained from
independent market research companies and industry publications. Independent
market research companies and industry publications generally indicate that the
information provided by them or contained therein has been obtained from
sources believed to be reliable, but that the accuracy and completeness of such
information is not guaranteed. The Company has not independently verified such
information. Similarly, while the Company believes that the data it has
generated internally is reliable, such data have not been verified by any
independent source. Unless otherwise specified, all market share data contained
in this Prospectus are estimates by the Company. All market share data is
presented on an as adjusted basis for 1997 giving effect to the entry by the
Company into certain representation contracts and the termination of certain
other representation contracts as of January 1, 1997. See "Business--Recent
Developments." Unless the context otherwise requires, references in this
Prospectus to "Interep" or the "Company," are to Interep National Radio Sales,
Inc. and its subsidiaries.
THE COMPANY
Interep is the largest independent national spot radio advertising
representation firm ("rep firm") in the United States. The Company is the
exclusive rep firm for over 1,900 radio stations, including, among others, all
of the radio stations owned or operated by the Radio Group of CBS Corporation
("CBS"), Clear Channel Communications, Inc. ("Clear Channel") and the ABC Radio
Division of ABC, Inc. ("ABC"). The Company serves radio stations in all 50
states and in 97 of the top 100 radio markets. The Company's client radio
stations are diversified across all formats, including country, rock, sports,
Hispanic, classical, urban, news and talk. Interep has built strong
relationships with its clients, some of which date back 40 years. The Company
represents its clients pursuant to exclusive representation contracts, with
remaining terms ranging from 2 months to 11 years.
The Company's commission revenue and EBITDA for the 12 months ended March 31,
1998 were $88.0 million and $13.7 million, respectively. The Company estimates
that its Adjusted EBITDA (as defined) for the 12 months ended March 31, 1998
would have been approximately $16.5 million, after giving effect to the entry
by the Company into certain representation contracts and the termination of
certain representation contracts, in each case as of April 1, 1997. Further,
giving effect to such new business and terminations as of January 1, 1997, the
Company estimates that it would have had a 1997 national spot radio market
share in excess of 50% (based on national spot radio advertising station gross
billings). The Company's commission revenues and EBITDA grew at a compound
annual growth rate of 10.0% and 21.5%, respectively from 1993 to 1997. See
"Business--Recent Developments."
Interep has become the national spot radio industry leader through strategic
alignments with growing radio groups, acquiring new clients, acquiring other
rep firms and by increasing client advertising revenues. The Company's growth
has occurred during a period of significant consolidation in the radio
broadcast industry fostered by deregulation. The Company has strategically
aligned itself with radio station groups that it believes are well-positioned
to capitalize on this consolidation, such as Clear Channel, which acquired the
radio station assets of Paxson Communications Corp., Sinclair Communications,
Inc. ("Sinclair"), which acquired the radio station assets of Heritage Media
Group, Inc. ("Heritage") and CBS, which recently acquired the radio station
assets of American Radio Systems Corporation ("ARS"). In addition, the Company
has been a leader in the consolidation of the radio representation business.
Consolidation in the representation business has reflected the competitive
pressures on smaller radio rep firms and the decision by an increasing number
of radio station groups to take advantage of the national presence and
comprehensive services offered by large radio rep firms such as the Company.
1
<PAGE>
Total national spot radio gross billings were approximately $1.6 billion in
1997 and grew at a compound annual growth rate of 9.1% from 1993 to 1997.
National spot advertising is commercial air time sold by radio stations to
advertisers located outside of their local markets and typically represents
approximately 20% of a radio station's revenue. Radio stations typically retain
rep firms like Interep on an exclusive basis to sell commercial air time to
national and regional advertisers and sell air time to local advertisers
through in-house sales forces.
Interep was founded in 1953 and has been owned primarily by its Chief
Executive Officer, Ralph C. Guild, and its management and employees since 1975.
Since consummation of the Offering, Interep has been owned entirely by Mr.
Guild and the Company's management and employees. Its principal executive
offices are located at 100 Park Avenue, New York, New York 10017. The Company's
telephone number is (212) 916-0700, and its internet address is
www.interep.com.
COMPETITIVE STRENGTHS
The Company believes the following factors contribute to its leading position
and provide the foundation for further growth:
LEADING MARKET SHARE AND SIGNIFICANT CLIENTS. Interep is the leading
independent national spot radio advertising rep firm and represents over 1,900
radio stations including key radio station groups such as ABC, CBS, Clear
Channel, Emmis Broadcasting Corporation ("Emmis"), Entertainment Communications
Inc. (also known as "Entercom"), Sinclair, Spanish Broadcasting Systems ("SBS")
and Susquehanna Radio Corp. ("Susquehanna"). The Company believes that its
market share and leadership enhance its value to advertisers and allow it to
package radio stations creatively to meet advertisers' special needs, thereby
increasing its ability to sell air time for clients.
STRONG RELATIONSHIPS WITH ADVERTISERS; NATIONAL PRESENCE. Strong
relationships with advertisers, advertising agencies and media buying services
enable the Company to promote its client stations. Interep's sales force,
strategically located in 15 cities across the United States, provides effective
coverage of major media buying centers. The Company works closely with
advertisers to help them develop and refine radio advertising strategies and to
support their purchases of advertising time on the Company's client stations.
HIGHLY MOTIVATED AND SKILLED SALES FORCE. The Company has developed a highly
skilled, professional sales force. Through its Employee Stock Ownership Plan
(the "ESOP") and Stock Growth Plan (the "Stock Growth Plan"), Interep is
entirely employee-owned. This alignment of the interests of the Company and its
employees is an integral part of the Company's strategy. Moreover, through
incentive programs and the in-house training programs of the Interep Radio
University, the Company's sales force is motivated to adopt a team-oriented
approach to marketing and fulfilling client needs.
EXPERIENCED SENIOR MANAGEMENT TEAM. The Company has an experienced and
entrepreneurial management team, headed by Interep's Chief Executive Officer,
Ralph C. Guild, who is recognized as a leader and innovator in the radio
representation business. The Company's senior sales managers have an average of
over 21 years of industry experience and significant equity ownership in the
Company. The Company's executive officers include Marc G. Guild, President,
Marketing Division, William J. McEntee, Jr., Chief Financial Officer, Stewart
Yaguda, President of Radio 2000(R), and Charles Parra, Chief Information
Officer. See "Business--The Company's Organization."
INDEPENDENCE AND RADIO INDUSTRY FOCUS. Interep is owned entirely by its
employees and is focused exclusively on representing radio stations. The
Company's only significant competitor, by comparison, is owned by a radio
station group which competes with other radio stations and also represents
television stations and cable
2
<PAGE>
television systems. The Company believes that its independence and radio
industry focus provide significant competitive advantages.
SOPHISTICATED SALES SUPPORT. Over 85% of Interep's employees are in sales-
related positions. The Company supports its sales force with sophisticated
media research, including a proprietary national database. This database
enables the Company to profile for advertisers the salient characteristics of
the audiences of the Company's client stations to assist advertisers in
reaching their target audiences. Interep has also enhanced the level of its
services to clients and advertisers alike through the growing use of
technology, such as networked and mobile computing and computerized databases
with remote client access.
OPERATING STRATEGY
The Company's objectives are to continue to enhance its position as the
leading national spot radio advertising rep firm in the United States and to
increase revenue and EBITDA. The Company's strategy to attain these goals
includes the following:
SUPERIOR CLIENT SERVICE. The Company believes it has attained the leading
position in its industry by consistently providing superior services to its
clients with innovative features that differentiate it from its competitors.
For example, Interep pioneered the use of dedicated rep firms, such as ABC
Radio Sales, CBS Radio Sales and Clear Channel Radio Sales, for the
representation of individual radio station groups. These dedicated rep firms
allow a client to benefit from the comprehensive services offered by the
Company while still projecting its corporate identity to advertisers. The
Company also provides wide-ranging market research, sales planning and selling
strategy consulting services to its clients. The Company has enhanced the level
of its services to clients and advertisers alike through the growing use of
technology, such as networked and mobile computing. The Company has recently
opened its internet website, where clients and advertisers, on a secure basis,
can access market research. Interep provides superior service by motivating its
employees through incentives, including equity ownership and extensive in-house
training. The Company intends to continue to develop innovative services and
strategies in order to generate additional revenues.
PROMOTION OF RADIO. Interep believes that radio advertising expenditures are
not commensurate with consumer exposure time to radio and that this provides an
opportunity for future growth. The Company uses its proprietary database of
demographic and socioeconomic profiles of radio audiences in promoting the use
of radio for advertising. In 1991, Interep introduced its Radio 2000 program to
promote the ongoing growth of radio advertising by focusing on advertisers who
do not use radio advertising or who underutilize this medium. The Radio 2000
sales force works with these advertisers to demonstrate how radio can help them
achieve their goals and create marketing opportunities. The Company believes
that Radio 2000 has contributed to the growth of radio advertising revenues in
the aggregate and, by virtue of Interep's leading market position, its own
growth.
EXPANDING MARKET SHARE. Interep will seek to continue to expand its market
share by (i) developing new clients, (ii) packaging and marketing portfolios of
client stations as "unwired networks" of unaffiliated stations grouped together
to meet advertisers' particular needs and (iii) developing innovative sales
programs. The Company seeks to represent station groups that are acquirers of
additional radio stations, such as CBS, Clear Channel, Sinclair and ABC, in
order to accelerate the growth of its client base. The Company promotes unwired
networks of its client stations to radio advertisers and advertising agencies
to enable advertisers to place advertisements efficiently on as few as two
stations or as many as all stations represented by Interep to target specific
groups or markets. The Company believes that its innovations, such as Radio
2000 and dedicated rep firms, will continue to contribute to its growth.
3
<PAGE>
RECENT DEVELOPMENTS
On April 29, 1998, the Company entered into a National Radio Sales Master
Representation Agreement with ABC, Inc. (the "ABC Agreement"). Under the ABC
Agreement, as of June 1, 1998, Interep became the exclusive national spot radio
rep firm for the 23 radio stations of ABC (all of which are in the top 15 radio
markets), as well any radio stations acquired by that division in the future
(subject to the Company arranging for the buyout of predecessor rep firms, if
necessary). In order to service the ABC stations, the Company has established a
dedicated rep firm named ABC Radio Sales.
Giving effect as of April 1, 1997 to this new representation as well as to
other significant representation contracts which Interep entered during the
remainder of 1997 due to radio station acquisitions by Clear Channel, SBS and
Emmis and the termination of the Company's representation contract with SFX
Broadcasting, Inc. ("SFX") (when it was acquired by an affiliate of the
Company's competitor), the Company's Adjusted EBITDA for the twelve months
ended March 31, 1998 would have been $16.5 million. See "Risk Factors--New
Representation Contracts" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."
The Company's Adjusted EBITDA set forth in the prior sentence does not give
effect to the recent acquisitions by CBS of certain radio stations of ARS and
by Sinclair of certain radio stations of Heritage. There can be no assurance
that the Company will enter into representation agreements with respect to any
of these stations or as to the terms of any such agreements.
THE FINANCING TRANSACTIONS
The Offering was a part of a series of transactions (the "Financing
Transactions") to refinance existing indebtedness, redeem preferred stock and
associated shares of common stock, increase the availability of funds for
working capital and general corporate purposes (including funds to acquire
representation contracts) and to enhance the Company's operating and financial
flexibility. The Financing Transactions included (i) the Offering and the sale
of the Notes, (ii) the repayment of all outstanding obligations ($47.0 million
as of May 31, 1998) under the Company's then current $55.0 million revolving
credit facility (the "Old Credit Facility") and the establishment of a new
credit facility (the "New Credit Facility") providing for working capital loans
of up to $10.0 million, subject to the achievement of certain financial ratios
and compliance with certain other covenants, (iii) the repurchase of all of the
Company's outstanding shares of its Series A Preferred Stock (the "Series A
Preferred Stock"), at face value plus accrued dividends, and certain associated
shares of the Company's Common Stock (the "Common Stock") held by Providence
Media Partners, L.P. ("Providence"), for a total purchase price of $14.1
million, and (iv) the repurchase of all of the Company's outstanding shares of
its Series B Preferred Stock (the "Series B Preferred Stock"), at face value
plus accrued dividends, and certain associated shares of Common Stock, from
certain members of management, for a total purchase price of $2.6 million.
Giving pro forma effect to the Financing Transactions as of March 31, 1998, the
Company would have had an additional $36.8 million of cash available for
working capital and general corporate purposes, primarily for the acquisition
of representation contracts, plus the $10.0 million New Credit Facility.
Following the Financing Transactions, the Company became owned entirely by Mr.
Guild and the Company's management and employees, and there is currently no
outstanding preferred stock.
4
<PAGE>
THE SERIES A OFFERING
The Series A Notes.......... The Series A Notes were sold by the Company in
the Offering on June 29, 1998, and were
subsequently resold to (i) Qualified
Institutional Buyers (as defined herein) pursuant
to Rule 144A under the Securities Act, and (ii)
outside the United States in reliance on
Regulation S under the Securities Act in a manner
exempt from registration under the Securities
Act.
Registration Rights
Agreement.................. In connection with the Offering, the Company
entered into the Registration Rights Agreement,
which grants Holders of the Series A Notes
certain exchange and registration rights. The
Exchange Offer is intended to satisfy such
exchange and registration rights, which generally
terminate upon the consummation of the Exchange
Offer.
THE EXCHANGE OFFER
Securities Offered.......... $100.0 million in aggregate principal amount of
10% Senior Subordinated Notes due 2008, Series B.
The Exchange Offer.......... $1,000 principal amount of the Exchange Notes in
exchange for each $1,000 principal amount of
Series A Notes. As of the date hereof, $100.0
million in aggregate principal amount of Series A
Notes are outstanding. The Company will issue the
Exchange Notes to Holders on or promptly after
the Expiration Date. The terms of the Exchange
Notes are substantially identical in all material
respects (including principal amount, interest
rate and maturity) to the terms of the Series A
Notes for which they may be exchanged pursuant to
the Exchange Offer, except that the Exchange
Notes are freely transferable by holders thereof
(other than as provided herein), and are not
subject to any covenant regarding registration
under the Securities Act. See "The Exchange
Offer." Other than compliance with applicable
federal and state securities laws, including the
requirement that the Registration Statement be
declared effective by the Commission, there are
no material federal or state regulatory
requirements to be complied with in connection
with the Exchange Offer.
Interest Payments........... The Exchange Notes will bear interest from June
29, 1998, the date of consummation of the
issuance of the Series A Notes, or the most
recent interest payment date to which interest on
such Series A Notes has been paid, whichever is
later. Accordingly, Holders of Series A Notes
that are accepted for exchange will not receive
interest on such Series A Notes that is accrued
but unpaid at the time of tender, but such
interest will be payable on the first interest
payment date after the Expiration Date.
Minimum Condition........... The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Series A
Notes being tendered for exchange.
5
<PAGE>
Expiration Date............. 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.
Exchange Date............... The date of acceptance for exchange of the Series
A Notes will be the first business day following
the Expiration Date.
Withdrawal Rights........... Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the Expiration
Date by providing the Exchange Agent (as defined)
with a written or facsimile transmission of a
notice of withdrawal. See "The Exchange Offer--
Withdrawal of Tenders." The Company will
determine if a withdrawal is effective. Any
Series A Notes withdrawn will be deemed not to
have been validly tendered for purposes of the
Exchange Offer. Properly withdrawn Series A Notes
may be retendered. See "The Exchange Offer--
Withdrawal of Tenders."
Acceptance Of Series A
Notes and Delivery of
Exchange Offer Notes....... The Company will accept for exchange any and all
Series A Notes that are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date.
See "The Exchange Offer--Terms of the Exchange
Offer."
Conditions To The Exchange
Offer...................... The Exchange Offer is subject to certain
customary conditions, which may be waived by the
Company. See "The Exchange Offer--Conditions."
Procedures For Tendering
Series A Notes............. To tender pursuant to the Exchange Offer, a
Holder must complete, sign and date the
accompanying Letter of Transmittal, or a
facsimile thereof, have the signatures therein
guaranteed if required by instruction 4 of the
Letter of Transmittal and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, or an Agent's message (as defined
below) in the case of a book-entry transfer,
together with the Series A Notes and any other
required documentation to the Exchange Agent (as
defined herein) at the address set forth herein
prior to 5:00 p.m., New York City time, on the
Expiration Date. See "The Exchange Offer--
Procedures for Tendering" and "Plan of
Distribution." By executing the Letter of
Transmittal, each Holder will represent to the
Company that, among other things, the Holder or
the person receiving such Exchange Notes, whether
or not such person is the Holder, is acquiring
the Exchange Notes in the ordinary course of
business and that neither the Holder nor any such
other person intends to participate or has any
arrangement or understanding with any person to
participate in the distribution of such Exchange
Notes. In lieu of physical delivery of the
certificates representing Series A Notes,
tendering Holders may transfer Series A Notes
pursuant to the procedure for book-
6
<PAGE>
entry transfer as set forth under "The Exchange
Offer--Procedures for Tendering."
Special Procedures For
Beneficial Owners.......... Any beneficial owner whose Series A Notes are
registered in the name of a broker, commercial
bank, trust company or other nominee and who
wishes to tender in the Exchange Offer 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 beneficial owner's
own behalf, such beneficial owner must, prior to
completing and executing the Letter of
Transmittal and delivering the Series A Notes,
either make appropriate arrangements to register
ownership of the Series A Notes in such
beneficial owner's name or obtain a properly
completed bond power from the registered holder.
The transfer of registered ownership may take
considerable time. See "The Exchange Offer--
Procedures for Tendering."
Guaranteed Delivery
Procedures................. Holders of Series A Notes who wish to tender
their Series A Notes and whose Series A Notes are
not immediately available or who cannot deliver
their Series A Notes, the Letter of Transmittal
or any other documents required by the Letter of
Transmittal to the Exchange Agent (or comply with
the requirements for book-entry transfer) prior
to the Expiration Date must tender their Series A
Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures."
Federal Income Tax
Consequences............... The issuance of the Exchange Notes to Holders
pursuant to the terms set forth in this
Prospectus will not constitute an exchange for
federal income tax purposes. Consequently, no
gain or loss would be recognized by Holders upon
receipt of the Exchange Notes. See "The Exchange
Offer--Certain Federal Income Tax Consequences of
the Exchange Offer."
Use Of Proceeds............. There will be no proceeds to the Company from the
exchange of Series A Notes pursuant to the
Exchange Offer.
Exchange Agent.............. U.S. Bank Trust National Association as agent for
Summit Bank is serving as exchange agent (the
"Exchange Agent") in connection with the Exchange
Offer. See "The Exchange Offer--Exchange Agent."
7
<PAGE>
SUMMARY OF TERMS OF THE EXCHANGE NOTES
The form and terms of the Exchange Notes are the same as the form and terms
of the Series A Notes (which they replace) except that (i) the Exchange Notes
have been registered under the Securities Act and, therefore, will not bear
legends restricting the transfer thereof and (ii) the holders of Exchange Notes
generally will not be entitled to further registration rights under the
Registration Rights Agreement, which rights generally will be satisfied when
the Exchange Offer is consummated. The Exchange Notes will evidence the same
debt as the Series A Notes and will be entitled to the benefits of the
indenture pursuant to which the Series A Notes were issued (the "Indenture").
See "Description of Exchange Notes."
Company..................... Interep National Radio Sales, Inc.
Securities Offered.......... $100.0 million aggregate principal amount of 10%
Senior Subordinated Notes due 2008, Series B.
Maturity.................... July 1, 2008.
Interest Payment Dates...... The Exchange Notes will bear interest at the rate
of 10% per annum, payable semiannually in arrears
on January 1 and July 1 of each year, commencing
on January 1, 1999.
Subsidiary Guarantees....... The Exchange Notes will be fully and
unconditionally guaranteed by all of the
Company's existing and future Restricted
Subsidiaries (the "Guarantors") on a joint and
several basis.
Ranking..................... The Exchange Notes and the Subsidiary Guarantees
will be general unsecured obligations of the
Company and the Guarantors, respectively, and
will be subordinated in right of payment to all
existing and future Senior Indebtedness of the
Company and the Guarantors, respectively, and
senior to or pari passu with all other
Indebtedness of the Company or the Guarantors, as
applicable. As of March 31, 1998, after giving
pro forma effect to the Financing Transactions,
the Company and the Subsidiary Guarantors would
have had approximately $0.4 million of Senior
Indebtedness attributable to capital leases
outstanding. In addition, the Company would have
had $10.0 million available under the New Credit
Facility, subject to the achievement of certain
financial ratios and compliance with certain
other covenants. See "Risk Factors--
Subordination."
Optional Redemption......... Except as set forth below, the Exchange Notes
will not be redeemable at the option of the
Company prior to July 1, 2003. Thereafter, the
Exchange Notes will be subject to redemption at
any time at the option of the Company, in whole
or in part, at the redemption prices set forth
herein, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the
redemption date. In addition, at any time and
from time to time prior to July 1, 2001, the
Company may redeem up to an aggregate of 30% in
principal amount of Exchange Notes originally
issued under the Indenture at a redemption price
equal to 110.000% of the principal amount
thereof, plus accrued and unpaid interest and
Liquidated Damages,
8
<PAGE>
if any, thereon to the redemption date, with the
net cash proceeds of one or more Equity Offerings
(as defined); provided that at least 70% of the
aggregate principal amount of Exchange Notes
originally issued under the Indenture remains
outstanding immediately after giving effect to
such redemption.
Change of Control........... In the event of a Change of Control, the Company
will be required to make an offer to each holder
of Exchange Notes to repurchase all or any part
of such holder's Exchange Notes at a repurchase
price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the
repurchase date.
Covenants................... The Indenture contains certain covenants that,
among other things, limit the ability of the
Company and its Restricted Subsidiaries to incur
additional Indebtedness, pay dividends,
repurchase Equity Interests (as defined) or make
other Restricted Payments (as defined), create
Liens (as defined), enter into transactions with
Affiliates (as defined), sell assets or enter
into certain mergers and consolidations. See
"Description of Exchange Notes."
Registration Rights......... The Registration Rights Agreement provides that
if (i) the Company is not permitted to consummate
the Exchange Offer because the Exchange Offer is
not permitted by applicable law or Commission
policy or (ii) in certain circumstances, a Holder
notifies the Company within 20 days following
consummation of the Exchange Offer (a) that it is
prohibited by law or Commission policy from
participating in the Exchange Offer or (b) that
it may not resell the Exchange Notes (including
the Exchange Note Guarantees) 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 or (c) that it is a broker-dealer
and owns Series A Notes acquired directly from
the Company or an affiliate of the Company, the
Company will file with the Commission a shelf
registration statement (the "Shelf Registration
Statement") to cover resales of the Series A
Notes by the Holders thereof who satisfy certain
conditions relating to the provision of
information in connection with the Shelf
Registration Statement. If the Company and the
Guarantors do not comply with their obligations
under the Registration Rights Agreement, they
will be required to pay specified Liquidated
Damages to the holders of the Notes under certain
circumstances. See "Description of Exchange
Notes--Registration Rights; Liquidated Damages."
Lack Of Prior Market For
The Exchange Notes......... The Exchange Notes will be a new class of
securities for which there is currently no
established trading market. The Company does not
intend to apply for listing of the Exchange Notes
on any national securities exchange or for
quotation of the Exchange Notes on any automated
dealer quotation system. The Company has been
advised
9
<PAGE>
by BancBoston Securities Inc. and Loewenbaum &
Company Incorporated that they presently intend
to make a market in the Exchange Notes, although
they are under no obligation to do so and may
discontinue any market-making activities at any
time without notice. Accordingly, no assurance
can be given as to the liquidity of the trading
market for the Exchange Notes or that an active
public market for the Exchange Notes will
develop. If an active trading market for the
Exchange Notes does not develop, the market price
and liquidity of the Exchange Notes may be
adversely affected. If the Exchange Notes are
traded, they may trade at a discount from their
initial offering price, depending on prevailing
interest rates, the market for similar
securities, the performance of the Company and
certain other factors. See "Risk Factors--Absence
of Public Market for the Exchange Notes;
Restrictions on Transfer."
RISK FACTORS
Prospective purchasers of the Exchange Notes should carefully consider the
matters set forth under "Risk Factors," as well as the other information and
financial statements and data included in this Prospectus, prior to making an
investment in the Exchange Notes.
10
<PAGE>
SUMMARY FINANCIAL DATA
The following table sets forth summary historical consolidated data and
summary unaudited pro forma consolidated data for the Company. The summary
historical consolidated financial data for the years ended December 31, 1995,
1996 and 1997 was derived from audited consolidated financial statements of the
Company. The summary historical consolidated financial data for the three month
periods ended March 31, 1997 and 1998 and as of March 31, 1998 was derived from
the unaudited consolidated financial statements of the Company. In the opinion
of management, such interim financial statements reflect all adjustments
(consisting only of normal recurring adjustments) necessary to fairly present
the information presented for such periods. Due to the seasonal nature of the
Company's business, the results of operations for the three months ended March
31, 1998 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1998. The unaudited pro forma financial data for
the twelve months ended March 31, 1998 has been derived from the unaudited pro
forma condensed consolidated financial statements and gives effect to the
Financing Transactions as if they had occurred on April 1, 1997 and the
unaudited pro forma balance sheet data as of March 31, 1998 gives effect to the
Financing Transactions as if they had occurred on March 31, 1998. See "--The
Financing Transactions." The unaudited pro forma financial data does not
purport to represent what the Company's financial position or results of
operations actually would have been had the Financing Transactions been
completed as of the date or at the beginning of the period indicated. The
summary historical and unaudited pro forma financial data should be read in
conjunction with the Company's audited consolidated financial statements and
notes thereto, the unaudited pro forma condensed consolidated financial
statements and notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," all of which are included in
this Prospectus.
<TABLE>
<CAPTION>
PRO FORMA
12 MONTHS
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, ENDED MARCH 31, MARCH 31,
------------------------- ---------------- ---------
1995 1996 1997 1997 1998 1998
------- ------- ------- ------- ------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Commission revenue...... $70,306 $72,858 $87,096 $15,029 $15,898 $87,965
Operating expenses:
Selling expenses....... 48,240 53,251 63,135 13,980 13,836 62,991
General and
administrative
expenses.............. 13,595 9,626 12,541 2,545 2,597 12,593
Depreciation and
amortization(1)....... 4,694 8,187 14,983 322 2,715 17,707
Operating income
(loss)................. 3,777 1,794 (3,563) (1,818) (3,250) (5,326)
Interest expense,
net(2)................. 3,385 3,911 3,779 831 1,005 10,000
OTHER FINANCIAL DATA:
EBITDA(3)............... $ 8,471 $ 9,981 $12,770 $(1,496) $ (535) $13,731
EBITDA margin........... 12.0% 13.7% 14.7% -- -- 15.6%
Payments (receipts) for
representation
contracts, net(4)...... 5,712 3,080 13,371 117 (7,150) 6,104
ADJUSTED CREDIT DATA:
Adjusted EBITDA(5)...... $16,508
Adjusted EBITDA margin.. 18.2%
Ratio of Adjusted EBITDA
to interest expense,
net.................... 1.7x
Ratio of long-term debt
to Adjusted EBITDA..... 6.1x
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, 1998
--------------------
HISTORICAL PRO FORMA
---------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 4,441 $ 41,242
Total assets.............................................. 145,141 185,267
Long-term debt (including current portion)................ 42,884 100,384
Redeemable preferred stock................................ 7,389 --
Redeemable common stock................................... 4,522 --
Shareholders' deficit..................................... (33,098) (38,561)
</TABLE>
11
<PAGE>
- --------
(1) Includes amortization of contract acquisition costs and contract
disposition revenue, net.
(2) Interest expense is shown net of interest income of $109, $138, $109, $11,
$12 and $110 during the years ended December 31, 1995, 1996, 1997 and three
months ended March 31, 1997 and 1998 and the pro forma twelve months ended
March 31, 1998, respectively.
(3) EBITDA is defined as operating income, plus depreciation, amortization and
expenses related to the relocation of the back office operations from New
York City to Florida. EBITDA does not represent net income or cash flows
from operations, as these terms are defined under generally accepted
accounting principles, and should not be considered as an alternative to
net income as an indicator of the Company's operating performance or to
cash flows as a measure of liquidity. The Company has included EBITDA
information because it understands that such information is used by certain
investors as one measure of an issuer's historical ability to service debt.
(4) Payments for representation contracts, net, consists of the excess of
payments made by the Company for the acquisition of representation
contracts over receipts for terminated contracts. For the year ended
December 31, 1995, payments for representation contracts includes $3,510
for the acquisition of a rep firm.
(5) Adjusted EBITDA means EBITDA, giving effect as of April 1, 1997 to the ABC
Agreement and the other significant representation contracts which became
effective during the remainder of 1997 and in 1998 due to radio stations
acquisitions by Clear Channel, SBS and Emmis, and the termination of the
Company's representation contract with SFX (when it was acquired by an
affiliate of the Company's competitor). See "Business--Recent Developments"
and "Risk Factors--New Representation Contracts."
12
<PAGE>
RISK FACTORS
Prospective purchasers of Exchange Notes should carefully consider the
following factors in addition to the other information contained herein in
evaluating the Company before purchasing the Exchange Notes offered hereby.
SIGNIFICANT LEVERAGE; LIQUIDITY, CAPITAL REQUIREMENTS
The Company is highly leveraged. On March 31, 1998, after giving pro forma
effect to the Financing Transactions, the Company would have had approximately
$100.4 million of Indebtedness outstanding, $185.3 million of total assets,
$93.7 million of total tangible assets and shareholders' deficit of $38.6
million. Also, after giving pro forma effect to the Financing Transactions,
the Company's earnings would have been insufficient to cover its fixed charges
by $13.6 million and $5.8 million for fiscal 1997 and for the three months
ending March 31, 1998, respectively.
The degree to which the Company will be leveraged following the Financing
Transactions could have important consequences to holders of the Exchange
Notes, including, but not limited to: (i) making it more difficult for the
Company to satisfy its obligations with respect to the Exchange Notes, (ii)
increasing the Company's vulnerability to general adverse economic and
industry conditions, (iii) limiting the Company's ability to obtain additional
financing to fund future working capital (including funds to acquire
representation contracts), capital expenditures and other general corporate
requirements, (iv) requiring the dedication of a substantial portion of the
Company's cash flow from operations to the payment of principal of, and
interest on, its indebtedness, thereby reducing the availability of such cash
flow to fund working capital, capital expenditures or other general corporate
purposes, (v) limiting the Company's flexibility in planning for, or reacting
to, changes in its business and the industry and (vi) placing the Company at a
competitive disadvantage to less leveraged competitors. In addition, the
Indenture and the New Credit Facility contain financial and other restrictive
covenants that limit the ability of the Company to, among other things, borrow
additional funds. Failure by the Company to comply with such covenants could
result in an event of default which, if not cured or waived, could have a
material adverse effect on the Company. In addition, the degree to which the
Company is leveraged could prevent it from repurchasing all of the Exchange
Notes tendered to it upon the occurrence of a Change of Control. See
"Description of Exchange Notes--Repurchase at the Option of Holders--Change of
Control" and "Description of New Credit Facility."
The Company believes that it will generate sufficient cash flow to fund its
operations and required representation contract buyout payments and make
required payments of principal and interest under the New Credit Facility and
interest on the Exchange Notes. The Company may not, however, generate
sufficient cash flow for these purposes or to repay the Exchange Notes at
maturity. The Company's ability to fund its operations and required contract
buyout payments and to make scheduled principal and interest payments will
depend on its future performance, which, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond its control. The Company may also need to refinance
all or a portion of the Exchange Notes on or prior to maturity. There can be
no assurance that the Company will be able to effect any such refinancing on
commercially reasonable terms or at all. See "Capitalization," "Description of
New Credit Facility," "Description of Exchange Notes," "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."
SUBORDINATION
The Exchange Notes will be subordinated in right of payment to all current
and future Senior Indebtedness of the Company and the Guarantors. However, the
Indenture provides that the Company does not, and will not permit any of the
Guarantors to, incur or otherwise become liable for any indebtedness that is
subordinate or junior in right of payment to any Senior Indebtedness and
senior in any respect in right of payment to the Exchange Notes or any of the
Subsidiary Guarantees. On any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar
13
<PAGE>
proceeding relating to the Company or its property, the holders of Senior
Indebtedness will be entitled to be paid in full before any payment may be
made with respect to the Exchange Notes. In addition, the subordination
provisions of the Indenture will provide that payments with respect to the
Exchange Notes will be blocked in the event of a payment default on certain
Senior Indebtedness and may be blocked for up to 179 days each year in the
event of certain non-payment defaults on certain Senior Indebtedness. In the
event of a bankruptcy, liquidation or reorganization of the Company, holders
of the Exchange Notes will participate ratably with all holders of
subordinated indebtedness of the Company that is deemed to be of the same
class as the Exchange Notes, and potentially with all other general creditors
of the Company, based on the respective amounts owed to each holder or
creditor, in the remaining assets of the Company. In any of the foregoing
events, there can be no assurance that there would be sufficient assets to pay
amounts due on the Exchange Notes. As a result, holders of Exchange Notes may
receive less, ratably, than the holders of Senior Indebtedness.
As of March 31, 1998, after giving pro forma effect to the Financing
Transactions, the aggregate amount of Senior Indebtedness of the Company and
the Guarantors would have been $0.4 million attributable to capital leases,
and $10.0 million available under the New Credit Facility, subject to the
achievement of certain financial ratios and compliance with certain other
covenants. The Indenture permits the incurrence of substantial additional
indebtedness, including Senior Indebtedness, by the Company and the Guarantors
in the future.
LIMITATIONS IMPOSED BY CERTAIN INDEBTEDNESS
The Indenture and the New Credit Facility contain significant covenants that
limit the Company's and its subsidiaries' ability to engage in various
transactions and, in the case of the New Credit Facility, require satisfaction
of specified financial performance criteria. In addition, under each of the
foregoing documents, the occurrence of certain events (including, without
limitation, failure to comply with the foregoing covenants, material
inaccuracies of representations and warranties, certain defaults under or
acceleration of other indebtedness and events of bankruptcy or insolvency)
would, in certain cases after notice and grace periods, constitute an event of
default permitting acceleration of the indebtedness covered by such documents.
The limitations imposed by the documents governing the outstanding
indebtedness of the Company and its subsidiaries are substantial, and failure
to comply with them could have a material adverse effect on the Company and
its subsidiaries. See "Description of Exchange Notes" and "Description of New
Credit Facility."
HISTORY OF NET LOSSES; SHAREHOLDERS' DEFICIT
The Company has historically experienced net losses, principally as a result
of depreciation and amortization charges relating to the acquisition of radio
station representation contracts, significant interest charges and certain
non-recurring expenses. For the years ended December 31, 1997 and 1996, the
Company had net losses of $7.8 million and $2.5 million, respectively. For the
year ended December 31, 1995, the Company had net income of $0.1 million. For
the three months ended March 31, 1998, the Company had a net loss of $4.3
million. At March 31, 1998, the Company had a shareholders' deficit of $33.1
million. The acquisition of radio station representation contracts is an
integral part of the Company's operating strategy, and the Company expects
that amortization charges relating to past and future acquisitions of radio
station representation contracts will continue to have a significant adverse
effect on the Company's reported net income or loss.
DEPENDENCE ON MAINTENANCE AND BUYOUTS OF REPRESENTATION CONTRACTS; COMPETITION
The Company's success depends on its ability to maintain and enter into new
representation contracts with radio stations. Client representation contracts
may be terminated prior to their stated expirations subject, in most cases, to
the payment of buyout amounts or termination payments as provided in such
contracts. The change of ownership of a client station frequently results in a
change of representation firm. The pace of consolidation in the radio industry
has increased as a result of the Telecommunications Act of 1996, resulting in
larger station groups. In addition, the recent increase in the number of
ownership changes of radio stations has increased the frequency of the
termination or buyout of representation contracts. Further, as station groups
have become larger, they have gained bargaining power with representation
firms over rates and terms. As a result, the Company
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continually competes for both the acquisition of new client stations as well
as the maintenance of existing relationships. See "Business--Industry
Overview--Representation Contracts." Due to the intense competition and
volatility of the business, there can be no assurance that the Company will
continue to acquire new contracts or that it will be able to maintain its
existing representation contracts under their existing terms, if at all. The
failure of the Company to acquire and maintain client representation contracts
or to maintain the level of its commission rates would likely have an adverse
effect on the Company's results of operations. In addition, the Company
competes not only with other national representation firms but also with
national radio networks, syndicators and other brokers of radio advertising.
There can be no assurance that the Company's business will not be materially
adversely affected by increased competition in the markets in which it
operates. Further, other media compete with radio for advertising and
promotion expenditures. These competing media include broadcast television and
cable television, print media and outdoor advertising, among others. In
addition, technological innovation and the resulting proliferation of
advertising alternatives have created and will continue to create other types
of competition for radio stations and, as a consequence, for representation
firms. See "Business--Competition."
NEW REPRESENTATION CONTRACTS
On April 29, 1998, the Company entered into the ABC Agreement and, effective
June 1, 1998, became the exclusive national rep firm for all 23 of ABC's radio
stations. The Company estimates that its EBITDA for the 12 months ended March
31, 1998, adjusted to give effect to such new representation contracts and the
termination of certain other representation contracts, in each case effective
April 1, 1997, would have increased by approximately $2.8 million for a total
Adjusted EBITDA of approximately $16.5 million. This estimate is based on the
Company's estimates of such radio stations' 1997 advertising revenues and the
application of the Company's commission rate structures. There can be no
assurance that such radio stations would have contributed similar EBITDA had
they been represented by the Company in 1997. Further, there can be no
assurance as to any future level of the Company's commission revenues or
EBITDA or as to future commission revenues from any existing or newly-acquired
representation contracts, nor can there be any assurance that the Company will
acquire additional representation contracts or retain existing representation
contracts.
DEPENDENCE ON DEMAND FOR ADVERTISING
The Company's business is dependent on the level of demand for radio
advertising time, which in turn depends on general and regional economic
conditions, which are outside of the Company's control. In particular, the
financial performance of the Company will depend in part on the radio
broadcasting industry maintaining or increasing its current level of national
advertising revenues. Any significant decline in national spot radio
advertising billings could have a material adverse effect on the Company.
While total expenditures for national spot radio advertising have generally
increased over time, the rate of growth of such expenditures tends to decrease
in times of economic downturn, and gross expenditures may actually decline, as
they did in the recessionary years of 1991 and 1992. Accordingly, there can be
no assurance as to the future levels of radio advertising or national spot
radio advertising expenditures.
DEPENDENCE ON KEY PERSONNEL
The Company believes that, to a great extent, the success of the Company has
been attributable to Ralph C. Guild, Chairman of the Board and Chief Executive
Officer of the Company, who has been employed by the Company for 41 years. In
addition, the Company is dependent on the efforts of Marc G. Guild, President,
Marketing Division of the Company, who has been employed by the Company since
1974. The loss of the services of one or both of these individuals could
materially and adversely affect the business of the Company and its future
prospects and may, in the case of Ralph Guild and under certain circumstances,
give some stations the right to terminate their representation contracts. The
Company has a key man insurance policy on the life of Ralph Guild in the
amount of $2.5 million. In addition, a limited number of the Company's
representation contracts, including contracts with ABC and CBS, are
conditioned upon the continued employment of certain key executives.
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REPURCHASE OBLIGATIONS UNDER EMPLOYEE BENEFIT PLANS
Under the terms governing the ESOP and the Stock Growth Plan, the Company is
responsible for funding cash distributions to participating employees whose
employment terminates. Such distributions are normally made in quarterly
installments over a period of time ranging up to five years, depending on the
size of a participant's account. Depending on the number of employees whose
employment terminates during any period, the size of their accounts under
these plans and the liquidity of the assets of such plans, such funding
obligations could from time to time be substantial enough to have a material
adverse effect on the Company's cash flow and liquidity. The Indenture
restricts the Company's ability to meet any such funding obligations. The
ESOP's liquidity needs have in recent years been met by purchases of stock
from the ESOP by the Stock Growth Plan. There can be no assurance that such
payments will be sufficient in the future. The failure by the Company to meet
its funding obligations could adversely affect the tax-qualified status of the
ESOP, which could have a material adverse effect on the Company. See
"Description of Exchange Notes--Certain Covenants--Restricted Payments" and
"Management--Executive Compensation."
RELIANCE ON KEY CUSTOMERS
Consolidation in the radio industry has resulted in representation firms
competing for fewer larger station groups. Certain of the Company's customers
are material to its business and operations. For the year ended December 31,
1997, CBS accounted for 28.3% of the total commission revenues of the Company.
No other station or station group accounted for more than 10% of such
commission revenues. The loss of, or a significant reduction in, revenues from
CBS or other material customers could have a material adverse impact on the
Company's business, financial condition or results of operations. See
"Business--The Company's Clients."
CHANGES IN RADIO INDUSTRY REGULATIONS AND OWNERSHIP OF CLIENT STATIONS
The radio industry is subject to regulation by the Federal Communications
Commission (the "FCC") under the Communications Act of 1934 (the
"Communications Act"). The Telecommunications Act of 1996 amended the
Communications Act in several key respects. It required the FCC to revise its
ownership rules for radio stations to remove the national limit on the number
of stations that any one single entity may own, or in which it could have an
attributable interest, and to increase the number of stations that an entity
may own, or in which it may have an attributable interest, in a local market.
The FCC implemented these directives in March 1996 by revising its multiple
ownership rules for radio stations. There is now no limit on the number of
radio stations one entity may own, operate or control nationally. As to local
market restrictions, in most circumstances, the revised rules permit an entity
to own, or hold an attributable interest in, a maximum of between five and
eight stations (a maximum of between three and five of which may be in the
same service (e.g., AM or FM)) in the same market, depending on the size of
the market (as determined in accordance with FCC regulations). The revised
rules have led to significant growth in the concentration of ownership of
radio stations among fewer owners.
These changes have had the effect of increasing the level and frequency of
buyouts of representation contracts, which has resulted in and may, in the
future, result in the Company losing clients as well as gaining clients. In
addition, as ownership groups become large enough, it is possible that this
consolidation may result in more station groups forming in-house media
representation units and foregoing the services provided by independent media
representation firms such as the Company. Moreover, even if such groups
continue to use the services of the Company, the level of commission rates
that the Company is able to charge may be adversely affected.
In addition, the United States Congress and the FCC regularly have under
consideration, and may adopt in the future, new laws, regulations and policies
regarding a wide variety of matters (including technological changes) that
could affect the operations and ownership of the Company's clients and, as a
result, the Company's business. In particular, in March 1998, the FCC issued a
Notice of Inquiry soliciting comment on the effect of the revised rules on
competition in radio. The Company is unable to predict if or when such laws,
regulations or
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policies might be adopted and implemented and, if implemented, the effect they
will have on the radio representation industry or the future results of the
Company's operations.
Notwithstanding these considerations, the Company believes that it is also
possible that larger station groups may be more likely than single station
owners to pursue national spot advertising and to do so through rep firms. As
individual stations become acquired by large station groups, additional
commercial inventory would likely become available for a national spot rep
firm to sell. The Company believes that, to date, it has benefitted from this
concentration among broadcasters, in part because of a parallel concentration
within the radio representation industry. There were 16 major national spot
radio representation firms in 1980, and there are currently only two.
FRAUDULENT CONVEYANCE CONSIDERATIONS
A substantial portion of the proceeds from the sale of the Notes was used to
refinance then outstanding indebtedness and to redeem preferred stock and
associated shares of common stock. Under relevant federal and state fraudulent
conveyance statutes, if a court in a bankruptcy, reorganization or
rehabilitation case or similar proceeding or a lawsuit by or on behalf of
unpaid creditors of the Company were to find that, at the time the Notes were
issued, (i) the Company issued the Notes with the intent of hindering,
delaying or defrauding current or future creditors or (ii) the Company
received less than reasonably equivalent value or fair consideration for
issuing the Notes and the Company (A) was insolvent or was rendered insolvent
by reason of the Financing Transactions or such related transactions, (B) was
engaged, or about to engage, in a business or transaction for which its assets
constituted unreasonably small capital, (C) intended to incur, or believed
that it would incur, debts beyond its ability to pay as such debts matured (as
all of the following terms are defined in or interpreted under such fraudulent
conveyance statutes) or (D) was a defendant in an action for money damages, or
had a judgment for money damages docketed against it (if, in either case,
after final judgment, the judgment is unsatisfied), such court could avoid or
subordinate the Exchange Notes issued in exchange for the Notes to presently
existing and future indebtedness of the Company and take other action
detrimental to the rights of the holders of the Exchange Notes, including,
under the certain circumstances, invalidating the Exchange Notes.
The Company's obligations under the Exchange Notes will be guaranteed by all
of its subsidiaries. In connection with the Financing Transactions, the
Guarantors incurred substantial indebtedness, including the indebtedness under
the Guarantors' guarantees of the Notes and guarantee of the obligations under
the New Credit Facility. If, under relevant federal and state fraudulent
conveyance statutes in a bankruptcy, reorganization or rehabilitation case or
similar proceeding or a lawsuit by or on behalf of unpaid creditors of the
Company or the Guarantors, a court were to find that, at the time such
guarantees were issued, (i) the Guarantors issued such guarantees with the
intent of hindering, delaying or defrauding current or future creditors or
(ii) the Guarantors received less than reasonably equivalent value or fair
consideration for issuing such guarantees and a Guarantor (A) was insolvent or
was rendered insolvent by reason of the Financing Transactions and/or such
related transactions, (B) was engaged, or about to engage, in a business or
transaction for which its assets constituted unreasonably small capital, (C)
intended to incur, or believed that it would incur, debts beyond its ability
to pay as such debts matured (as all of the following terms are defined in or
interpreted under such fraudulent conveyance statutes) or (D) was a defendant
in an action for money damages, or had a judgment for money damages docketed
against it (if, in either case, after final judgment, the judgment is
unsatisfied), such court could avoid or subordinate the Subsidiary Guarantees
issued in exchange for the original guarantees to presently existing and
future indebtedness of the Guarantors and take other action detrimental to the
rights of the holders of the Exchange Notes and the Subsidiary Guarantees,
including, under certain circumstances, invalidating the Subsidiary
Guarantees. Among other things, a legal challenge of a Subsidiary Guarantee on
fraudulent conveyance grounds may focus on the benefits, if any, realized by
such Guarantor as a result of the issuance by the Company of the Exchange
Notes. To the extent the Subsidiary Guarantee is voided as a fraudulent
conveyance or held unenforceable for any other reason, the holders of the
Exchange Notes would cease to have any claim in respect of such Guarantor and
would be creditors solely of the Company.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or local law that is being applied in any such
proceeding. Generally, however, the Company or the
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Guarantors would be considered insolvent if, at the time it incurred the
indebtedness constituting the Notes or the original guarantees, either (i) the
fair market value (or fair saleable value) of its assets was less than the
amount required to pay its total existing debts and liabilities (including the
probable liability on contingent liabilities) as they become absolute and
matured or (ii) it was incurring debts beyond its ability to pay as such debts
mature.
The Company's Board of Directors and management believe that at the time of
the issuance of the Notes and the original guarantees, as well as at the time
of issuance of the Exchange Notes and the Subsidiary Guarantees, the Company
and the Guarantors (i)(A) were and will be neither insolvent nor rendered
insolvent thereby, (B) had and will have sufficient capital to operate their
respective businesses effectively and (C) were and will be incurring debts
within their respective abilities to pay as the same mature or become due and
(ii) had and will have sufficient resources to satisfy any probable money
judgment against them in any pending action. There can be no assurance,
however, that such beliefs will prove to be correct or that a court passing on
such questions would reach the same conclusions.
CHANGE OF CONTROL
The New Credit Facility prohibits the Company from purchasing any of the
Exchange Notes and also provides that certain change of control events with
respect to the Company would constitute a default under the New Credit
Facility. Any future credit agreements or other agreements relating to
indebtedness to which the Company becomes a party may contain similar
restrictions and provisions. In the event a Change of Control (as defined in
the Indenture) occurs at a time when the Company is prohibited from purchasing
the Exchange Notes, the Company could seek the consent of its lenders to the
purchase of the Exchange Notes or could attempt to refinance the borrowings
that contain such prohibition. If the Company does not obtain such a consent
or repay such borrowings, the Company will remain prohibited from purchasing
the Exchange Notes by the relevant Senior Indebtedness agreements. In such
case, the Company's failure to purchase the tendered Exchange Notes would
constitute an Event of Default under the Indenture which would, in turn,
constitute a default under the New Credit Facility and/or other Senior
Indebtedness. In such circumstances, the subordination provisions in the
Indenture would then restrict interest payments to the holders of the Exchange
Notes. Furthermore, no assurance can be given that the Company will have
sufficient resources to satisfy its repurchase obligation with respect to the
Exchange Notes following a Change of Control. See "Description of Exchange
Notes."
ABSENCE OF PUBLIC MARKET FOR THE EXCHANGE NOTES; RESTRICTIONS ON TRANSFER
The Exchange Notes are being offered to the holders of the Series A Notes.
The Series A Notes were offered and sold in June 1998 (i) to "Qualified
Institutional Buyers" (as defined in Rule 144A under the Securities Act) and
(ii) outside the United States in reliance on Regulation S under the
Securities Act and are eligible for trading in the PORTAL market.
The Exchange Notes will be a new class of securities for which there
currently is no established trading market. Although the Exchange Notes will
generally be permitted to be resold or otherwise transferred by non-affiliates
of the Company without compliance with the registration requirements under the
Securities Act, the Company does not intend to apply for listing of the
Exchange Notes on any national securities exchange or for quotation of the
Exchange Notes on any automated dealer quotation system. Although BancBoston
Securities Inc. and Loewenbaum & Company Incorporated have informed the
Company that they currently intend to make a market in the Exchange Notes,
they are not obligated to do so, and any such market-making may be
discontinued at any time without notice. The liquidity of any market for the
Exchange Notes will depend upon the number of holders of the Exchange Notes,
the interest of securities dealers in making a market in the Exchange Notes
and other factors. Accordingly, there can be no assurance as to the
development or liquidity of any market for the Exchange Notes. If an active
trading market for the Exchange Notes does not develop, the market price and
liquidity of the Exchange Notes may be adversely affected. If the Exchange
Notes are traded, they may trade at a discount from their initial offering
price, depending upon prevailing interest rates, the market for similar
securities, the performance of the Company and certain other factors. The
liquidity of, and trading
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markets for, the Exchange Notes may also be adversely affected by general
declines in the market for non-investment grade debt. Such declines may
adversely affect the liquidity of, and trading markets for, the Exchange Notes
independent of the financial performance of, or prospects for, the Company.
RESTRICTIONS ON TRANSFER
The Series A Notes were offered and sold by the Company in a private
offering exempt from registration pursuant to the Securities Act and have been
resold pursuant to Rule 144A and Regulation S and other exemptions under the
Securities Act. As a result, the Series A Notes may not be reoffered or resold
by purchasers except pursuant to an effective registration statement under the
Securities Act or pursuant to an applicable exemption from such registration,
and the Series A Notes are legended to restrict transfer as aforesaid. Each
Holder (other than any Holder who is an affiliate or promoter of the Company)
who duly exchanges Series A Notes for Exchange Notes in the Exchange Offer
will receive Exchange Notes that are freely transferable under the Securities
Act. Holders who participate in the Exchange Offer should be aware, however,
that if they accept the Exchange Offer for the purpose of engaging in a
distribution, the Exchange Notes may not be publicly reoffered or resold
without complying with the registration and prospectus delivery requirements
of the Securities Act. As a result, each Holder accepting the Exchange Offer
will be deemed to have represented, by its acceptance of the Exchange Offer,
that it acquired the Exchange Notes in the ordinary course of business and
that it is not engaged in, and does not intend to engage in, a distribution of
the Exchange Notes. If existing Commission interpretations permitting free
transferability of the Exchange Notes following the Exchange Offer are changed
prior to consummation of the Exchange Offer, the Company will use its best
efforts to register the Series A Notes for resale under the Securities Act.
See "Summary--The Exchange Offer" and "Description of the Exchange Notes--
Registration Rights; Liquidated Damages."
The Series A Notes currently may be sold pursuant to the restrictions set
forth in Rule 144A, Rule 501(a) (1), (2), (3) or (7) or Regulation S under the
Securities Act or pursuant to another available exemption under the Securities
Act without registration under the Securities Act. To the extent that Series A
Notes are tendered and accepted in the Exchange Offer, the trading market for
the untendered and tendered but unaccepted Series A Notes could be adversely
affected.
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Notes for Series A Notes pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of such
Series A Notes, a properly completed, duly executed Letter of Transmittal and
all other required documents. Therefore, Holders desiring to tender their
Series A Notes in exchange for Exchange Notes should allow for sufficient-time
to ensure timely delivery. The Company is under no duty to give notification
of defects or irregularities with respect to the tenders of Series A Notes for
exchange. Any Series A 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, the registration rights under the
Registration Rights Agreement generally will terminate. In addition, any
Holder who tenders pursuant to the Exchange Offer for the purpose of
participating in a distribution of the Exchange 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. Each broker-dealer that receives Exchange Notes
for its own account in exchange for Series A Notes, where such Series A 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 Notes. See "The Exchange
Offer."
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THE EXCHANGE OFFER
The following discussion sets forth or summarizes what the Company believes
are the material terms of the Exchange Offer, including those set forth in the
Letter of Transmittal distributed with this Prospectus. This summary is
qualified in its entirety by reference to the full text of the documents
underlying the Exchange Offer, copies of which are filed as exhibits to the
Registration Statement of which this Prospectus is a part, and are
incorporated by reference herein.
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Series A Notes pursuant to the Purchase
Agreement, dated June 29, 1998 (the "Purchase Agreement"), among the Company,
the Guarantors and the Initial Purchasers, the Initial Purchasers became
entitled to the benefits of the Registration Rights Agreement, dated as of
July 2, 1998, among the Company, the Guarantors and the Initial Purchasers
(the "Registration Rights Agreement").
Under the Registration Rights Agreement, the Company and the Guarantors
agreed to (a) file a registration statement in connection with a registered
exchange offer within 60 days after July 2, 1998, the date the Series A Notes
were issued (the "Issue Date"), (b) use best efforts to cause such
registration statement to become effective under the Securities Act within 120
days of the Issue Date, (c) use best efforts to keep such registration
statement effective until the closing of the Exchange Offer and (d) use best
efforts to cause such registered Exchange Offer to be consummated within 30
days after the effective date of such registration statement. Subject to
limited exceptions, the Exchange Offer being made hereby, if commenced and
consummated within such applicable time periods, will satisfy those
requirements under the Registration Rights Agreement. In such event, the
Series A Notes which are not properly tendered for exchange would remain
outstanding and would continue to accrue interest, but would not retain any
rights under the Registration Rights Agreement. Holders of Series A Notes
seeking liquidity in their investment would have to rely on exemptions to
registration requirements under the securities laws, including the Securities
Act. A copy of the Registration Rights Agreement has been filed as an exhibit
to the Registration Statement of which this Prospectus is a part. The term
"Holder" with respect to the Exchange Offer means any person in whose name the
Series A Notes are registered on the books of the Company or any other person
who has obtained a properly completed bond power from the registered holder.
Because the Exchange Offer is for any and all Series A Notes, the principal
amount of Series A Notes tendered and exchanged in the Exchange Offer will
reduce the principal amount of Series A Notes outstanding. Following the
consummation of the Exchange Offer, Holders who did not tender their Series A
Notes generally will not have any further registration rights under the
Registration Rights Agreement, and such Series A Notes will continue to be
subject to certain restrictions on transfer. Accordingly, the liquidity of the
market, if any, for such Series A Notes could be adversely affected. The
Series A Notes are currently eligible for sale pursuant to Rule 144A, Rule
501(a) (1), (2), (3) or (7) or Regulation S through the PORTAL Market. Because
the Company anticipates that most Holders of Series A Notes will elect to
exchange such Series A Notes for Exchange Notes due to the absence of
restrictions on the resale of Exchange Notes under the Securities Act, the
Company anticipates that the liquidity of any market for any Series A Notes
remaining after the consummation of the Exchange Offer may be substantially
limited. See "Description of Exchange Notes--Registration Rights; Liquidated
Damages" and "Risk Factors--Absence of Public Market for the Exchange Notes;
Restrictions or Transfer."
TERMS OF THE EXCHANGE OFFER
Upon the terms and conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal, the Company will accept all Series A Notes
properly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of
Exchange Notes in exchange for each $1,000 principal amount of outstanding
Series A Notes accepted in the Exchange Offer. Holders may tender some or all
of their Series A Notes pursuant to the Exchange Offer.
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The form and terms of the Exchange Notes are the same as the form and terms
of the Series A Notes except that (i) the Exchange Notes have been registered
under the Securities Act and thus will not bear legends restricting the
transfer thereof and (ii) the holders of Exchange Notes generally will not be
entitled to certain rights under the Registration Rights Agreement, which
rights generally will terminate upon consummation of the Exchange Offer. The
Exchange Notes will evidence the same debt as the Series A Notes and will be
entitled to the benefits of the Indenture.
Holders of Series A Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer.
The Company shall be deemed to have accepted validly tendered Series A Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering Holders
of Series A Notes for the purpose of receiving the Exchange Notes from the
Company and delivering Exchange Notes to such Holders.
If any tendered Series A Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein, the
certificate for any such unaccepted Series A Notes will be returned, without
expense, to the tendering Holder thereof as promptly as practicable after the
Expiration Date.
Holders of Series A Notes who tender pursuant to the Exchange Offer will not
be required to pay brokerage commissions or fees or, subject to the
instructions in the Transmittal Letter, transfer taxes with respect to the
exchange of Series A Notes pursuant to the Exchange Offer. The Company will
pay all charges and expenses, other than certain applicable taxes, in
connection with the Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Exchange Offer shall remain open for acceptance for a period of not less
than 20 business days (the "Exchange Period") . The Expiration Date will be
5:00 p.m., New York City time, on , 1998, unless the Company, in its
sole discretion, extends the Exchange Offer, in which case the Expiration Date
will be the latest business day to which the Exchange Offer is extended.
In order to extend the Expiration Date, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the record
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. Such
announcement may state that the Company is extending the Exchange Offer for a
specified period of time.
The Company reserves the right (i) to delay accepting any Series A Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and not accept
Series A Notes not previously accepted if any of the conditions set forth
below under "Conditions" shall have occurred and shall not have been waived by
the Company, by giving oral or written notices 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. If the Exchange Offer is amended in a manner determined by the
Company to constitute a material change, the Company will promptly disclose
such amendment in a manner reasonably calculated to inform the Holders of such
amendment, and the Company will extend the Exchange Offer for a period of five
to ten business days, depending upon the significance of the amendment and the
manner of disclosure to Holders, if the Exchange Offer would otherwise expire
during such five-to-ten business day period.
Without limiting the manner in which the Company may choose to make public
announcement of any extension, amendment or termination of the Exchange Offer,
the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely
release to the Dow Jones News Service or other comparable service.
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INTEREST ON THE EXCHANGE NOTES
Interest on the Exchange Notes is payable semi-annually in arrears on
January 1 and July 1 of each year at the rate of 10% per annum. The Exchange
Notes will bear interest from July 2, 1998, the date of issuance of the Series
A Notes, or the most recent interest payment date to which interest on such
Series A Notes has been paid, whichever is later. Accordingly, Holders of
Series A Notes that are accepted for exchange will not receive interest that
is accrued but unpaid on the Series A Notes at the time of tender, but such
interest will be payable in respect of the Exchange Notes delivered in
exchange for such Series A Notes on the first interest payment date after the
Expiration Date.
PROCEDURES FOR TENDERING
Only a Holder of Series A Notes may tender Series A Notes pursuant to the
Exchange Offer. To tender pursuant to the Exchange Offer, a Holder must
complete, sign and date the Letter of Transmittal, or a facsimile thereof,
have the signatures thereon guaranteed if required by instruction 4 of the
Letter of Transmittal, and mail or otherwise deliver such Letter of
Transmittal or such facsimile, or an Agent's Message (as defined below) in the
case of a book- entry transfer, together with the Series A Notes and any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. Delivery of the Series A 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 the Book-Entry Transfer Facility to, and received by,
the Depositary and forming a part of a Book-Entry Confirmation, which states
that such Book-Entry Transfer Facility has received an express acknowledgment
from the participant in such Book-Entry Transfer Facility tendering the Notes
which are the subject of such Book-Entry Confirmation, that such participant
has received and agrees to be bound by the terms of the Letter of Transmittal,
and that the Company may enforce such agreement against such participant.
The tender by a Holder of Series A Notes and the acceptance thereof by the
Company will constitute an agreement between such Holder and the Company in
accordance with the terms and subject to the conditions set forth in the
Letter of Transmittal.
Holders of the Series A Notes that are tendering by book-entry transfer to
the Exchange Agent's account at the Depository Trust Company ("DTC") can
execute the tender through the DTC Automated Tender Offer Program ("ATOP") for
which the transaction will be eligible. DTC participants should transmit their
acceptance to DTC, which will verify the acceptance and execute a book-entry
delivery to the Exchange Agent's account at DTC. DTC will then send an Agent's
Message to the Exchange Agent for its acceptance. DTC participants may also
accept the Exchange Offer by submitting a notice of guaranteed delivery
through ATOP.
THE METHOD OF DELIVERY OF SERIES A NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR SERIES A NOTES SHOULD BE SENT TO THE
COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT SUCH TENDER FOR SUCH HOLDERS.
Any beneficial Holder whose Series A Notes are registered in the name of
such Holder's 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 his behalf. If such beneficial
Holder wishes to tender on such beneficial Holder's behalf, such beneficial
Holder must, prior to completing and executing the Letter of Transmittal and
delivering his Series A Notes, either make appropriate arrangements to
register ownership of the Series A Notes in such Holder's name or obtain a
properly completed bond power from the registered holder. The transfer of
record ownership may take considerable time.
22
<PAGE>
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Exchange Act (an "Eligible Institution") unless the
Series A 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 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 guarantees must be by an Eligible
Institution.
If the Letter of Transmittal is signed by a person other than the registered
Holder of any Series A Notes listed therein, such Series A Notes must be
endorsed or accompanied by appropriate bond powers and a proxy which
authorizes such person to tender the Series A Notes on behalf of the
registered Holder, in each case signed as the name of the registered Holder or
Holders appears on the Series A Notes with the signature thereon guaranteed by
an Eligible Institution.
If the Letter of Transmittal or any Series A 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 unless waived by the
Company, provide evidence satisfactory to the Company of their authority to so
act must be submitted with the Letter of Transmittal.
The Company understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the
Series A Notes at the DTC for the purpose of facilitating the Exchange Offer,
and subject to the establishment thereof, any financial institution that is a
participant in the DTC may make book-entry delivery of the Series A Notes by
causing the DTC to transfer such Series A Notes into the Exchange Agent's
account with respect to the Series A Notes in accordance with the DTC's
procedures for such transfers. Although delivery of the Series A Notes may be
effected through book-entry transfer into the Exchange Agent's account at the
DTC, a 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 DTC
does not constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Series A Notes and withdrawal of tendered
Series A Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Series A Notes not properly tendered or any Series
A Notes the Company's acceptance of which would, in the opinion of counsel for
the Company, be unlawful. The Company also reserves the right to waive any
irregularities or conditions of tender as to particular Series A Notes. The
Company's 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 Series A Notes must be cured within such time as
the Company determines. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Series A Notes, nor shall any of
them incur any liability for failure to give such notification. Tenders of
Series A Notes will not be deemed to have been made until such irregularities
have been cured or waived. Any Series A 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 without cost to such Holder by
the Exchange Agent to the tendering Holders of Series A Notes, 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 Series A Notes and (i) whose Series A Notes
are not immediately available or (ii) who cannot deliver their Series A Notes,
the Letter of Transmittal or any other required documents to the
23
<PAGE>
Exchange Agent (or comply with the procedures for book-entry transfer) prior
to the Expiration Date, may effect a tender if:
(i) the tender is made through an Eligible Institution;
(ii) prior to the Expiration Date, the Exchange Agent receives 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 of the Series A Notes, the
certificate or registration number or numbers of such Series A Notes and
the principal amount of Series A Notes tendered, stating that the tender is
being made thereby, and guaranteeing that, within three business days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with the certificate(s) representing the Series A Notes to be
tendered in proper form for transfer (or a confirmation of book-entry
transfer of such Series A Notes into the Exchange Agent's account at the
Depository) and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
(iii) such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing all
tendered Series A Notes in proper form for transfer (or a confirmation of
book-entry transfer of such Series A Notes into the Exchange Agent's
account at the Depository) and all other documents required by the Letter
of Transmittal are received by the Exchange Agent within three business
days after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Series A 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 Series A Notes, a written or facsimile transmission
notice of withdrawal must be received by the Exchange Agent at the 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 Series A Notes to be withdrawn (the "Depositor"), (ii) identify
the Series A Notes to be withdrawn (including the certificate or registration
number(s) and principal amount of such Series A Notes, or, in the case of
notes transferred by book-entry transfer, the name and number of the account
at the DTC to be credited), (iii) be signed by the Depositor in the same
manner as the original signature on the Letter of Transmittal by which such
Series A Notes were tendered (including any required signature guarantees) or
be accompanied by documents of transfer sufficient to have the Trustee (as
defined herein) with respect to the Series A Notes register the transfer of
such Series A Notes into the name of the Depositor withdrawing the tender,
(iv) specify the name in which any such Series A Notes are to be registered,
if different from that of the Depositor and (v) include a statement that such
Holder is withdrawing such Holder's election to have such Series A Notes
exchanged. All questions as to the validity, form and eligibility (including
time of receipt) of such withdrawal notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Series A
Notes withdrawn will be deemed not to have been validly tendered for purposes
of the Exchange Offer, and no Exchange Notes will be issued with respect
thereto unless the Series A Notes so withdrawn are validly retendered. Any
Series A Notes which have been tendered but which are not accepted for payment
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 Series A Notes may be retendered by
following one of the procedures described under "Procedures for Tendering" at
any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or to exchange Exchange Notes for, any
Series A Notes, and may terminate or amend the Exchange Offer as provided
herein before the acceptance of such Series A Notes, if:
(i) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the reasonable
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
24
<PAGE>
(ii) any governmental approval has not been obtained, which approval the
Company shall, in its reasonable judgment, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable judgment that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Series
A Notes and return all tendered Series A Notes to the tendering Holders, (ii)
extend the Exchange Offer and retain all Series A Notes tendered prior to the
expiration of the Exchange Offer subject, however, to the rights of Holders to
withdraw such Series A Notes (see "--Withdrawal of Tenders") or (iii) waive
such unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Series A Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered Holders, and, depending upon the significance of
the waiver and the manner of disclosure to the registered Holders, the Company
will extend the Exchange Offer for a period of five to ten business days if
the Exchange Offer would otherwise expire during such five to ten business-day
period.
EXCHANGE AGENT
U.S. Bank Trust National Association as agent for Summit Bank has been
appointed as Exchange Agent for the Exchange Offer. Questions and requests for
assistance and requests for additional copies of this Prospectus or of the
Letter of Transmittal should be directed to the Exchange Agent addressed as
follows:
By Mail Facsimile Transmission By Hand:
(registered or certified (for eligible U.S. Bank Trust
mail recommended): institutions only): National Association
(612) 244-1537 Attn: Fourth Floor
U.S. Bank Trust National Specialized Finance - Bond Drop Window
Association 180 East Fifth Street
P.O. Box 64485 To Confirm by Telephone St. Paul, Minnesota 55101
St. Paul, Minnesota or for Information Call:
55164-9549 (651) 244-1197 By Overnight Courier:
U.S. Bank Trust National
Association
Attn: Specialized Finance
180 East Fifth Street
St. Paul, Minnesota 55101
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. Additional solicitations may be made,
however, by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company, however,
will pay the Exchange Agent reasonable and customary fees for their services
and will reimburse the Exchange Agent for their reasonable out-of-pocket
expenses in connection therewith and pay other registration expenses,
including fees and expenses of the Trustee, filing fees, blue sky fees and
printing and distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Series A Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or Series A 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 person signing
the Letter of Transmittal, or if a transfer tax is imposed for
25
<PAGE>
any reason other than the exchange of Series A Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other person) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Series
A Notes, which is the aggregate principal amount of the Series A Notes, as
reflected in the Company's accounting records on the date of exchange.
Accordingly, no gain or loss for accounting purposes will be recognized in
connection with the Exchange Offer. The cost of the Exchange Offer will be
deferred and amortized over the term of the Exchange Notes.
RESALE OF THE EXCHANGE NOTES
Under existing Commission interpretations, the Exchange Notes will, in
general, be freely transferable after the Exchange Offer by any holder (other
than any such holder which is an "affiliate" of the Company within the meaning
of Rule 405 of the Securities Act) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that the
Exchange Notes acquired pursuant to the Exchange Offer are obtained in the
ordinary course of such holder's business, and such holder does not intend to
participate, and has no arrangement or understanding to participate, in the
distribution of such Exchange Notes.
Any holder who tenders pursuant to the Exchange Offer with the intention to
participate, or for the purpose of participating, in a distribution of the
Exchange Notes may not rely on the position of the Staff of the Commission
enunciated in Exxon Capital Holdings Corporation (available May 13, 1988) or
Morgan Stanley & Co., Incorporated (available June 5, 1991) or similar
interpretive letters, but rather must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. In addition, any such resale transaction should
be covered by an effective registration statement containing the selling
security holders information required by Item 507 of Regulation S-K of the
Securities Act.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Series A Notes acquired by such broker-dealer as a result of
market-making activities or other trading activities, may be a statutory
underwriter and must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Company has agreed, if
requested, for a period of one year from the date hereof, to make available a
prospectus meeting the requirements of the Securities Act to any such broker-
dealer for use in connection with any resale of any Exchange Notes acquired in
the Exchange Offer. A broker-dealer which delivers such a prospectus to
purchasers in connection with such resales will be subject to certain of the
civil liability provisions under the Securities Act and will be bound by the
provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations).
By tendering pursuant to the Exchange Offer, each Holder will represent to
the Company, among other things, that (i) the Exchange Notes acquired are
being obtained in the ordinary course of its business, (ii) neither the holder
nor any such other person has an arrangement or understanding with any person
to participate in the distribution of the Exchange Notes, and (iii) the holder
and any such other person acknowledge that if they participate in the Exchange
Offer for the purpose of distributing the Exchange Notes (a) they must, in the
absence of an exemption therefrom, comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale of
the Exchange Notes and cannot rely on the no-action letters referenced above
and (b) failure to comply with such requirements in such instance could result
in such holder incurring liability under the Securities Act for which such
holder is not indemnified by the Company. Further, by tendering in the
Exchange Offer, each holder that may be deemed an "affiliate" (as defined in
Rule 405 of the Securities Act) of the Company will represent to the Company
that such holder understands and acknowledges that the Exchange Notes may not
be offered for resale, resold or otherwise transferred by that Holder without
registration under the Securities Act or an exemption therefrom.
26
<PAGE>
As set forth above, affiliates of the Company are not entitled to rely on
the foregoing interpretations of the Staff of the Commission with respect to
resales of the Exchange Notes without compliance with the registration and
prospectus delivery requirements of the Securities Act.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, the Company will have
fulfilled one of its obligations under the Registration Rights Agreement, and
Holders of Series A Notes who do not tender their Series A Notes generally
will not have any further registration rights under the Registration Rights
Agreement or otherwise. Accordingly, any Holder that does not exchange such
Holder's Series A Notes for Exchange Notes will continue to hold the
untendered Series A Notes and will be entitled to all the rights and
limitations applicable thereto under the Indenture, except to the extent that
such rights or limitations, by their terms, terminate or cease to have further
effectiveness as a result of the Exchange Offer.
The Series A Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Series A
Notes may be resold only (i) to the Company (upon redemption thereof or
otherwise), (ii) pursuant to an effective registration statement under the
Securities Act, (iii) so long as the 144A Notes are eligible for resale
pursuant to Rule 144A under the Securities Act, to a Qualified Institutional
Buyer in a transaction meeting the requirements of Rule 144A, (iv) outside the
United States to a foreign person pursuant to the exemption from the
registration requirements of the Securities Act provided by Regulation S
thereunder, (v) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 thereunder (if available) or Rule 501 (a)
(1), (2), (3) or (7) or (vi) to an Accredited Investor in a transaction exempt
from the registration requirements of the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United
States or other applicable jurisdiction. See "Risk Factors--Restrictions on
Transfer."
OTHER
Participation in the Exchange Offer is voluntary, and Holders should
carefully consider whether to accept. Holders are urged to consult their
financial and tax advisors in making their own decision on what action to
take.
The Company may in the future seek to acquire untendered Series A Notes, to
the extent permitted by applicable law, in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. The Company has
no present plans to acquire any Series A Notes that are not tendered in the
Exchange Offer or to file a registration statement to permit resales of any
untendered Series A Notes.
In any state where the Exchange Offer does not fall under a statutory
exemption to the blue sky rules, the Company has filed the appropriate
registrations and notices, and has made the appropriate requests, to permit
the Exchange Offer to be made in such state.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), existing and proposed Treasury
Department regulations (the "Regulations") and existing administrative
interpretations and court decisions. There can be no assurance that the
Internal Revenue Service (the "IRS") will not take a contrary view, and no
ruling from the IRS 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 could affect the tax
consequences to Holders. Certain Holders of the Series A Notes (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. Each
Holder of Series A Notes should consult his, her or its own tax advisor as to
the particular tax consequences of exchanging such Holder's Series A Notes for
Exchange Notes, including the applicability and effect of any state, local or
foreign tax laws.
27
<PAGE>
The issuance of the Exchange Notes to Holders of the Series A Notes pursuant
to the terms set forth in this Prospectus will not constitute an exchange for
United States federal income tax purposes because such exchange does not
represent a significant modification of the debt instruments. Consequently, no
gain or loss would be recognized by Holders of the Series A Notes upon receipt
of the Exchange Notes, and ownership of the Exchange Notes will be considered
a continuation of ownership of the Series A Notes. For purposes of determining
gain or loss upon the subsequent sale or exchange of the Exchange Notes, a
Holder's basis in the Exchange Notes should be the same as such Holder's basis
in the Series A Notes exchanged therefor. A Holder's holding period for the
Exchange Notes should include the Holder's holding period for the Series A
Notes exchanged therefor. The issue price, original issue discount inclusion
and other tax characteristics of the Exchange Notes should be identical to the
issue price, original issue discount inclusion and other tax characteristics
of the Series A Notes exchanged therefor.
See also "Certain United States Federal Tax Considerations for Non-United
States Holders."
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes. In consideration for issuing the Exchange Notes as
contemplated in this Prospectus, the Company will receive in exchange Notes in
like principal amount, which will be canceled and as such will not result in
any increase in indebtedness of the Company.
The net proceeds to the Company from the Offering were approximately $96.0
million after deducting commissions and other expenses payable by the Company.
The Company applied the largest portion of the net proceeds of the Offering to
fund the Financing Transactions, and the balance will be used for working
capital, primarily for the acquisition of additional representation contracts,
and general corporate purposes.
The Financing Transactions included (i) the Offering and the sale of the
Notes, (ii) the repayment of all outstanding obligations under the Old Credit
Facility ($47.0 million outstanding as of May 31, 1998) and the establishment
of the New Credit Facility providing for working capital loans of up to $10.0
million, subject to the fulfillment of certain financial ratios and compliance
with certain other covenants, (iii) the repurchase of all of the Company's
outstanding shares of its Series A Preferred Stock, at face value plus accrued
dividends, and certain associated shares of its Common Stock held by
Providence, for a total purchase price of $14.1 million, and (iv) the
repurchase of all of the Company's outstanding shares of its Series B
Preferred Stock, at face value plus accrued dividends, and certain associated
shares of Common Stock, from certain members of management, for a total
purchase price of $2.6 million. Giving pro forma effect to the Financing
Transactions as of March 31, 1998, the Company would have had an additional
$36.8 million of cash available for working capital and general corporate
purposes, primarily for the acquisition of representation contracts, plus the
$10.0 million New Credit Facility. As a result of the Financing Transactions,
the Company is owned by Mr. Guild and the Company's management and employees,
and there is no outstanding preferred stock.
The Old Credit Facility bore interest at various rates (8.8% per annum on a
weighted average basis at December 31, 1997) and was scheduled to mature at
various times through December 31, 2003. The Series A Preferred Stock and the
Series B Preferred Stock accrued dividends at the rate of 10.0% per annum,
which were payable by the Company in cash or in kind in the form of additional
shares of such preferred stock with a face value equal to the cash amount of
the accrued dividend. The Company paid all dividends on the Series A Preferred
Stock and the Series B Preferred Stock in kind. Providence had the right to
require the Company to repurchase all of the Series A Preferred Stock and the
57,117 shares of the Company's Common Stock held by Providence on May 1, 1999.
The Series B Preferred Stock was mandatorily redeemable on the earlier of the
date on which all of the Series A Preferred Stock is redeemed or November 1,
2003. See "Certain Transactions and Relationships."
28
<PAGE>
CAPITALIZATION
The following table sets forth the historical consolidated capitalization of
the Company at March 31, 1998, and such capitalization on a pro forma basis as
if the Financing Transactions occurred on that date. The table should be read
in conjunction with "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements, including the notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT MARCH 31, 1998
UNAUDITED
--------------------
PRO
ACTUAL FORMA
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................. $ 4,441 $ 41,242
======== ========
Long-term debt (including current portion):
Old Credit Facility..................................... $ 42,500(1) $ --
New Credit Facility(2).................................. -- --
Notes offered hereby.................................... -- 100,000
Capitalized lease obligations........................... 384 384
-------- --------
Total long-term debt (including current portion)...... 42,884 100,384
-------- --------
Redeemable securities
Series A preferred stock................................ 6,589 --
Series B preferred stock................................ 800 --
Common stock subject to redemption...................... 4,522 --
-------- --------
Total redeemable securities........................... 11,911 --
-------- --------
Shareholders' deficit
Common stock............................................ 14 14
Additional paid-in-capital.............................. 228 --
Accumulated deficit..................................... (31,142) (36,377)
Treasury stock.......................................... (2,198) (2,198)
-------- --------
Total shareholders' deficit........................... (33,098) (38,561)
-------- --------
Total capitalization.................................. $ 21,697 $ 61,823
======== ========
</TABLE>
- --------
(1) As of May 31, 1998, the aggregate indebtedness outstanding under the Old
Credit Facility was $47.0 million.
(2) The New Credit Facility provides for up to $10.0 million in borrowing
availability.
29
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected consolidated financial data of the
Company as of and for the years ended December 31, 1993, 1994, 1995, 1996 and
1997 was derived from audited consolidated financial statements of the
Company. The summary historical consolidated financial data as of and for the
three months ended March 31, 1997 and 1998 was derived from the unaudited
consolidated financial statements of the Company. In the opinion of
management, such interim financial statements reflect all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the information presented for such periods. Due to the seasonal nature of the
Company's business, the results of operations for the three months ended March
31, 1998 are not necessarily indicative of the results that may be expected
for the year ending December 31, 1998. The following data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's Consolidated Financial Statements
and the notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------- ----------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Commission revenue...... $59,505 $66,559 $70,306 $72,858 $87,096 $15,029 $15,898
Operating expenses:
Selling expenses...... 43,330 47,130 48,240 53,251 63,135 13,980 13,836
General and
administrative
expenses............. 10,315 11,186 13,595 9,626 12,541 2,545 2,597
Depreciation and
amortization(1)...... 4,100 5,030 4,694 8,187 14,983 322 2,715
------- ------- ------- ------- ------- ------- -------
Total operating
expenses........... 57,745 63,346 66,529 71,064 90,659 16,847 19,148
------- ------- ------- ------- ------- ------- -------
Operating income
(loss)................. 1,760 3,213 3,777 1,794 (3,563) (1,818) (3,250)
Interest expense,
net(2)................. 3,006 3,280 3,385 3,911 3,779 831 1,005
------- ------- ------- ------- ------- ------- -------
Income (loss) before
provision for income
taxes.................. (1,246) (67) 392 (2,117) (7,342) (2,649) (4,255)
Provision for income
taxes.................. 327 422 320 400 412 131 49
------- ------- ------- ------- ------- ------- -------
Net income (loss)....... (1,573) (489) 72 (2,517) (7,754) (2,780) (4,304)
------- ------- ------- ------- ------- ------- -------
Preferred stock dividend
requirements........... 138 903 1,159 1,364 1,590 398 465
------- ------- ------- ------- ------- ------- -------
Net loss applicable to
common shareholders.... $(1,711) $(1,392) $(1,087) $(3,881) $(9,344) $(3,178) $(4,769)
======= ======= ======= ======= ======= ======= =======
Other Financial Data:
EBITDA(3)............... $ 5,860 $ 8,243 $ 8,471 $ 9,981 $12,770 $(1,496) $ (535)
EBITDA margin........... 9.8% 12.4% 12.0% 13.7% 14.7% -- --
Capital expenditures.... 1,745 1,283 1,689 1,021 792 101 177
Ratio of earnings to
fixed charges(4)....... -- -- 1.06x -- -- -- --
Payments (receipts) for
station representation
contracts, net(5)...... (226) 3,322 5,712 3,080 13,371 117 (7,150)
Balance Sheet Data (at
end of period):
Cash and cash
equivalents............ $ 1,852 $ 5,208 $ 1,752 $ 2,653 $ 1,419 $ 793 $ 4,441
Total assets............ 41,934 56,375 77,069 94,185 141,212 98,251 145,141
Long-term debt
(including current
portion)............... 24,135 24,227 35,221 34,235 44,425 33,955 42,884
Redeemable preferred
stock.................. 1,636 2,639 3,970 5,334 6,924 5,732 7,389
Redeemable common
stock.................. 3,502 3,678 4,132 4,662 4,522 4,662 4,522
Shareholders' deficit... (9,172) (11,685) (12,652) (18,407) (28,073) (21,384) (33,098)
</TABLE>
30
<PAGE>
- --------
(1) Includes amortization of contract acquisition costs and contract
disposition revenue, net.
(2) Interest expense is shown net of interest income of $185, $99, $109, $138,
$109, $11 and $12 during the years ended December 31, 1993, 1994, 1995,
1996 and 1997 and the three months ended March 31, 1997 and 1998,
respectively.
(3) EBITDA is defined as operating income, plus depreciation, amortization and
expenses related to the relocation of the back office operations from New
York City to Florida. EBITDA does not represent net income or cash flows
from operations, as these terms are defined under generally accepted
accounting principles and should not be considered as an alternative to
net income as an indicator of the Company's operating performance or to
cash flows as a measure of liquidity. The Company has included EBITDA
herein because it understands that such information is used by certain
investors as one measure of an issuer's historical ability to service
debt.
(4) The ratio of earnings to fixed charges is computed by dividing pretax
income from operations before fixed charges by interest expense and the
imputed interest factor of rent expense. Earnings were insufficient to
cover fixed charges (i) for the years ended December 31, 1993, 1994, 1996
and 1997 by $1,431, $166, $2,255 and $7,451 respectively, and (ii) for the
three months ended March 31, 1997 and 1998 by $2,660 and $4,267,
respectively.
(5) Payments for station representation contracts, net, consists of the excess
of payments made by the Company for the acquisition of representation
contracts over receipts for terminated contracts. For the year ended
December 31, 1995, payments for representation contracts includes $3,510
for the acquisition of a rep firm.
31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion is based upon and should be read in conjunction
with "Selected Consolidated Financial Data" and the Consolidated Financial
Statements, including the notes thereto, included elsewhere in this
Prospectus.
Certain statements contained in this Prospectus, including without
limitation, statements containing the words "believes," "anticipates,"
"intends," "expects" and words of similar import, constitute "forward-looking
statements." Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company or industry results to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: general economic and business conditions, both domestic and
foreign; industry capacity; demographic changes; existing government
regulations and changes in, or the failure to comply with, government
regulations; liability and other claims asserted against the Company;
competition; the loss of any significant customers; changes in operating
strategy or development plans; the ability to attract and retain qualified
personnel; the significant indebtedness of the Company after the Financing
Transactions; and other factors referenced in this Prospectus. Certain of
these factors are discussed in more detail elsewhere in this Prospectus,
including, without limitation, under the captions "Summary," "Risk Factors"
and "Business." Given these uncertainties, prospective investors are cautioned
not to place undue reliance on such forward-looking statements. The Company
disclaims any obligation to update any such factors or to publicly announce
the result of any revisions to any of the forward-looking statements contained
herein to reflect future events or developments.
GENERAL
The Company derives substantially all of its revenues from commissions
generated by sales of national spot radio advertising air time on behalf of
radio stations represented by the Company. Generally, national spot
advertising time is purchased by advertising agencies or media buying services
retained by advertisers to create advertising campaigns and to place
advertising with radio stations and other media. The Company receives
commissions from its client radio stations based on the national spot radio
advertising billings of the station, net of the standard advertising agency
and media buying services commissions (typically 15%). The commission rates
are negotiated and set forth in a client's representation contract. Since
commissions are based on the price paid to the radio station for spots, the
Company's revenue base is constantly adjusted for inflation.
The Company's operating results generally are dependent on (i) increases and
decreases in the size of the total national spot radio advertising market,
(ii) changes in the Company's share of this market due to, among other things,
acquisitions and terminations of representation contracts and (iii) the
Company's operating expense levels. The effect of these factors on the
Company's financial condition and results of operations has varied from period
to period.
Total United States national spot radio advertising annual revenues have
grown from approximately $1.1 billion to approximately $1.6 billion during the
five-year period ended December 31, 1997. The performance of the national spot
radio advertising market is influenced by a number of factors, including, but
not limited to, general economic conditions, consumer attitudes and spending
patterns, the share of total advertising spent on radio and the share of total
radio advertising represented by national spot radio.
The Company's share of the national spot advertising market increases or
decreases as a result of the amount of national spot advertising broadcast on
the Company's client stations. Additionally, the Company's revenue increases
as the Company enters into representation contracts with new client stations.
Conversely, the loss of client stations to competing rep firms will adversely
impact revenue. The Company's ability to attract new clients while retaining
existing clients significantly affects its market share. In recent years, the
Company has spent a significant amount of its resources acquiring
representation contracts. The decision to acquire a representation
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contract is based on the market share opportunity presented and an analysis of
the costs and net benefits to be derived. The Company continuously seeks
opportunities to acquire additional representation contracts on attractive
terms, while maintaining its current clients. In addition, the recent
consolidation of ownership in the radio broadcast industry has increased the
frequency of the acquisition and termination of representation contracts. The
Company's ability to acquire and maintain representation contracts has had and
will continue to have a significant impact on its revenues and cash flows.
The Company's selling and corporate expense levels are dependent on
management decisions regarding operating and staffing levels and on inflation.
Selling expenses represent all costs associated with the Company's marketing,
sales and sales support functions. Corporate expenses include items such as
corporate management, corporate communications, financial services,
advertising and promotion expenses and employee benefit plan contributions.
The Company's business normally follows the pattern of advertising
expenditures in general and is seasonal to the extent that radio and
television advertising spending increases during the fourth calendar quarter
in connection with the Christmas season and tends to be relatively weaker
during the first calendar quarter. Radio advertising generally increases
during the second and third quarters due to holiday-related advertising,
school vacations and back-to-school sales. In addition, radio also tends to
experience increases in the amount of advertising revenues as a result of
special events such as Presidential election campaigns. Furthermore, the level
of advertising revenues of radio stations, and therefore the level of revenues
of the Company, is susceptible to prevailing general and local economic
conditions and the corresponding increases or decreases in the budgets of
advertisers, as well as market conditions and trends affecting advertising
expenditures in specific industries.
RESULTS OF OPERATIONS
The following table presents operating data of the Company, expressed as a
percentage of total commission revenues for the periods indicated:
<TABLE>
<CAPTION>
THREE
MONTHS
YEAR ENDED ENDED MARCH
DECEMBER 31, 31,
------------------- ------------
1995 1996 1997 1997 1998
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Commission revenue......................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses, excluding depreciation
and amortization.......................... 88.0 86.3 86.9 110.0 103.4
Depreciation and amortization.............. 6.7 11.2 17.2 2.1 17.1
Operating income (loss).................... 5.4 2.5 (4.1) (12.1) (20.4)
Interest expense, net...................... 4.8 5.4 4.3 5.5 6.3
Income (loss) before provision for income
taxes..................................... 0.6 (2.9) (8.4) (17.6) (26.8)
OTHER DATA:
EBITDA..................................... 12.0% 13.7% 14.7% -- --
</TABLE>
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31,
1997
COMMISSION REVENUE. Traditionally the first calendar quarter of the year is
the weakest, with only about 17.3% of annual revenues recognized during this
period. Commission revenue increased $0.9 million, or 5.8%, to $15.9 million
for the first quarter of 1998 as compared with the first quarter of 1997. The
increase was primarily attributable to the addition of new representation
contracts with (i) CBS stations and Jefferson-Pilot Corp. stations previously
represented by a subsidiary of CBS, Inc. during the first quarter of 1997,
(ii) stations owned by Susquehanna during the second quarter of 1997 and (iii)
radio stations acquired by Clear Channel during the fourth quarter of 1997,
including stations formerly owned by Paxson Communications Corp., partially
offset by the loss of the Company's representation contract with SFX (which
was acquired by an affiliate of a competitor of the Company).
33
<PAGE>
OPERATING EXPENSES EXCLUDING DEPRECIATION AND AMORTIZATION. Operating
expenses, excluding depreciation and amortization, exceeded revenue in the
first quarter due to the Company's fixed costs and the seasonal depression of
commission revenue noted above. Nevertheless, operating expenses, excluding
depreciation and amortization, decreased $0.1 million in the first quarter of
1998 to $16.4 million from $16.5 million during the first quarter of 1997.
This decrease was primarily the result of cost savings realized from the
relocation of the accounting and finance functions from New York to Florida
(see "Certain Relationships and Transactions"), offset in part by the
increased variable costs attributable to the increased revenues of the Company
discussed above. Operating expenses, excluding depreciation and amortization,
as a percentage of revenue decreased by 6.6% from the first quarter of 1997.
EBITDA. The Company's EBITDA for the first quarter of 1998 increased by $1.0
million in 1998 to ($0.5) million compared to ($1.5) million for the first
quarter of 1997, as a result of the factors discussed above.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased by
$2.4 million in the first quarter of 1998 to $2.7 million. This increase was
due to the amortization of new station representation contracts offset in part
by the loss of the SFX representation contract.
OPERATING INCOME. Operating income declined by $1.4 million in the first
quarter of 1998 compared with the first quarter of 1997 as a result of
increased depreciation and amortization partially offset by the increased
revenue and lower operating expenses discussed above.
INTEREST EXPENSE, NET. Interest expense, net increased approximately $0.2
million from $0.8 million in the first quarter of 1997 to $1.0 million in the
first quarter of 1998 due to increased borrowings to fund the representation
contract buyouts discussed above.
LOSS BEFORE PROVISION FOR INCOME TAXES. Loss before provision for income
taxes increased by $1.6 million for the reasons discussed above.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
COMMISSION REVENUES. Commission revenue increased $14.2 million, or 20.0%,
to $87.1 million for 1997 from $72.9 million for 1996. The increase was
primarily attributable to the addition during 1997 of new representation
contracts with: (i) CBS stations and Jefferson-Pilot Corp. stations previously
represented by a subsidiary of CBS, Inc.; (ii) stations owned by Susquehanna;
and (iii) radio stations acquired by Clear Channel, including stations
formerly owned by Paxson Communications Corp.
OPERATING EXPENSES EXCLUDING DEPRECIATION AND AMORTIZATION. Operating
expenses in 1997, excluding depreciation and amortization, increased $12.8
million to $75.7 million from $62.9 million in 1996. This increase was
primarily attributable to the expense associated with servicing new
representation contracts and one-time costs (including moving, severance
compensation and training) incurred in out-sourcing the Company's accounting
and financial functions. Operating expenses excluding depreciation and
amortization as a percentage of revenue increased to 86.9% in 1997 from 86.3%
in 1996. Excluding $1.4 million of relocation costs, however, operating
expenses as a percentage of revenue declined from 86.3% in 1996 to 85.3% in
1997.
EBITDA. For the reasons discussed above, EBITDA was $12.8 million in 1997, a
$2.8 million increase over 1996. EBITDA increased to 14.7% in 1997 of revenue
from 13.7% in 1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased by
$6.8 million in 1997 to $15.0 million from $8.2 million in 1996. This increase
was due to the amortization of new representation contracts.
OPERATING INCOME. The reduction of $5.4 million in operating income from
1997 to 1996 was primarily attributable to the increased depreciation and
amortization in connection with new representation contracts.
34
<PAGE>
INTEREST EXPENSE, NET. Interest expense, net declined approximately $0.1
million from $3.9 million in 1996 to $3.8 million in 1997 due to slightly
lower average borrowings for the year.
LOSS BEFORE PROVISION FOR INCOME TAXES. Loss before provision for income
taxes increased in 1997 by $5.2 million from 1996 for the reasons discussed
above.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
COMMISSION REVENUE. Commission revenue increased 3.6%, or $2.6 million, to
$72.9 million for 1996 from $70.3 million for 1995. This net increase was
attributable to the general increase in national spot advertising and the
addition of representation contracts with respect to Clear Channel stations
entered into by the Company during 1996 which was partially offset by the
termination of the Company's representation contract with Shamrock
Broadcasting Inc. earlier in the year.
OPERATING EXPENSES EXCLUDING DEPRECIATION AND AMORTIZATION. Operating
expenses in 1996, excluding depreciation and amortization, increased $1.1
million to $62.9 million from $61.8 million in 1995. This increase was
primarily the result of the increased costs attributable to the addition of
the representation contracts described above. Operating expenses excluding
depreciation and amortization as a percentage of revenue decreased to 86.3%
from 88.0%.
EBITDA. For the reasons discussed above, EBITDA increased to $10.0 million
in 1996, a $1.5 million increase over 1995. EBITDA increased to 13.7% of
revenue in 1996 from 12.0% in 1995.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased by
$3.5 million in 1996 to $8.2 million from $4.7 million in 1995. This increase
was due to the amortization of the new station representation contracts
discussed above.
OPERATING INCOME. The reduction of $2.0 million in operating income was
primarily attributable to increased depreciation and amortization in
connection with the new representation contracts discussed above.
INTEREST EXPENSE, NET. Interest expense, net increased $0.5 million to $3.9
million in 1996 from $3.4 million in 1995 due to higher borrowings partially
offset by lower interest rates.
LOSS BEFORE PROVISION FOR INCOME TAXES. Loss before provision for income
taxes increased in 1996 by $2.5 million from 1995 for the reasons enumerated
above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements have been primarily funded by cash provided
from operations and bank debt. Cash used in operating activities for the first
quarter 1998 increased by $0.8 million to $2.2 million primarily as the result
of a reduction in payables. Operating activities in 1997 provided cash of $3.2
million as compared with $7.6 million in 1996. This $4.4 million decrease in
cash was primarily attributable to an increase in receivables resulting from
the higher revenue generated during the fourth quarter of 1997.
Net cash provided by investing activities during the first quarter of 1998,
is attributable to receipts for representation contracts which exceeded
payments by approximately $7.2 million, primarily due to the acquisition of
the SFX radio properties by an affiliate of a competing rep firm. Net cash
used in investing activities during 1997 was $14.2 million compared to $4.1
million in 1996. This increase of $10.1 million was primarily attributable to
net buyout payments associated with new representation contacts entered in
1997.
Following industry practice, the Company acts as the exclusive national rep
firm for each of its client radio stations pursuant to a written contract. If
a station terminates its contract prior to the scheduled termination date, the
station is obligated to pay the Company, as required by the contract or in
accordance with industry practice, an amount approximately equal to the
commissions the Company would have earned during the unexpired term
35
<PAGE>
of the canceled contract, plus an additional two months of "spill over"
commissions (representing commissions earned on advertising placed or
committed to prior to the contract termination but broadcast thereafter). In
practice, these amounts are usually paid by the successor rep firm which signs
a new contract with the station and assumes the responsibility for payment to
the former rep firm. Such payments, or buyouts, are usually made in equal
monthly installments over a period consisting of one-half the number of months
remaining under the terminated contract. For example, if the Company acquires
the representation contract of a station which is terminating its contract
with a competing rep firm with a remaining unexpired term of 12 months, the
total buyout obligation would be 14 months of commissions payable in seven
equal monthly installments. The Company amortizes the cost of any buyouts
incurred in connection with its entry into a representation contract with a
new client station in equal monthly installments over the life of the new
contract. The Company records in income as a reduction to amortization the
proceeds received as a result of buyouts by competitors of terminated
contracts with former radio station clients in equal monthly installments over
the remaining life of the terminated contract. As a result, the Company's
operating income can be significantly affected, negatively or positively, by
the acquisition or loss of client stations. During the three years ended
December 31, 1997, 1996 and 1995, the Company's net payments to acquire new
representation contracts (including the acquisition of a rep firm) were $13.4
million, $3.1 million and $5.7 million, respectively. As of March 31, 1998,
giving effect to the Company's entry into the ABC Agreement as of such date,
the Company had assets associated with representation contract buyouts of
approximately $27.1 million and liabilities associated with representation
contract buyouts of approximately $47.0 million.
Capital expenditures of $0.2 million, $0.1 million, $0.8 million and $1.0
million for the first quarters of 1998 and 1997, and the 1997 and 1996 years,
respectively, were primarily for computer equipment and upgrades.
Overall cash used in financing activities increased by $1.8 million and $0.3
million during the first quarter 1998 and 1997, respectively. These increases
are a result of cash applied to reduce debt. Cash provided from financing
activities during 1997 aggregated $9.7 million primarily from increased
borrowings during the fourth quarter. Overall cash used for financing
activities of $2.6 million during 1996 was due to net debt repayments of $0.5
million and treasury stock purchases of $1.3 million.
During 1997 the Company entered into the Old Credit Facility Agreement which
provided for up to $55.0 million of borrowings, subject to the fulfillment of
certain financial ratios and compliance with certain other covenants and was
scheduled to mature on December 31, 2003. Fleet National Bank was the agent
for the lenders. The Old Credit Facility provided for mandatory reductions in
the lenders loan commitments on a quarterly basis, commencing October 1, 1998.
Interest was payable on borrowings at various rates, as selected by the
Company, based on either a "Base Rate" or a "Eurodollar Rate" (each as defined
in the Old Credit Facility), plus a margin ranging from 5/8% to 2 5/8%,
depending on the selected rate and the Company's "Total Leverage" (as defined
in the Old Credit Facility). At March 31, 1998, $42.5 million in borrowings
were outstanding under the Old Credit Facility. The proceeds of the Offering
were used, in part, to repay the Old Credit Facility.
As part of the Financing Transactions, on July 2, 1998, the Company has
entered into a $10.0 million revolving credit facility (the "New Credit
Facility") with BankBoston, N.A. ("BankBoston") and Summit Bank ("Summit").
The term of the New Credit Facility is six years. The lenders under the New
Credit Facility are BankBoston, Summit and any other lenders reasonably
acceptable to the Company, with BankBoston acting as administrative agent. The
Company's and the Subsidiary Guarantors' obligations under the New Credit
Facility are secured by a first priority perfected lien on all property and
assets, tangible and intangible, of the Company and the Guarantors, including
a pledge by the Company of all capital stock and membership interests held by
it in the Guarantors. See "Description of New Credit Facility."
The Company believes that it will generate sufficient cash flow to fund its
operations and required representation contract buyout payments and make
required payments of principal and interest under the New Credit Facility and
interest on the Notes. The Company may not, however, generate sufficient cash
flow for these purposes or to repay the Notes at maturity. The Company's
ability to fund its operations and required contract
36
<PAGE>
buyout payments and to make scheduled principal and interest payments will
depend on its future performance, which, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond its control. The Company may also need to refinance
all or a portion of the Notes on or prior to maturity. There can be no
assurance that the Company will be able to effect any such refinancing on
commercially reasonable terms or at all.
YEAR 2000 COMPLIANT INFORMATION SYSTEMS
Many computer systems experience problems handling dates beyond the year
1999. Therefore, some computer hardware and software will need to be modified
prior to the year 2000 in order to remain functional. The Company currently
utilizes software systems developed by third parties or which the Company
developed using third party software development tools. These third parties
have advised the Company that such systems are Year 2000 compliant or, in some
cases, will be made Year 2000 compliant through the installation of software
patches or upgrades. The Company expects to implement successfully all
necessary programming changes needed to address Year 2000 issues on or about
the end of 1998 and does not believe that the related cost will have a
material adverse effect on the Company. There can be no assurance, however,
that there will not be a delay in, or increased costs associated with, the
implementation of such changes, and any inability to implement such changes
could have a material adverse effect on the Company.
37
<PAGE>
BUSINESS
GENERAL
Interep is the largest independent national spot radio advertising rep firm
in the United States. The Company is the exclusive rep firm for over 1,900
radio stations, including, among others, all of the radio stations owned or
operated by CBS, Clear Channel and ABC. The Company serves radio stations in
all 50 states and in 97 of the top 100 radio markets. The Company's client
radio stations are diversified across all formats, including country, rock,
sports, Hispanic, classical, urban, news and talk. Interep has built strong
relationships with its clients, some of which date back 40 years. The Company
represents its clients pursuant to exclusive representation contracts, with
remaining terms ranging from 2 months to 11 years.
The Company's commission revenue and EBITDA for the 12 months ended March
31, 1998 were $88.0 million and $13.7 million, respectively. The Company
estimates that its Adjusted EBITDA for the 12 months ended March 31, 1998
would have been approximately $16.5 million after giving effect to the entry
by the Company into certain representation contracts and the termination of
certain representation contracts, in each case as of April 1, 1997. Further,
giving effect to such new business and terminations as of January 1, 1997, the
Company estimates that it would have had a 1997 market share in excess of 50%
(based on national spot radio advertising station gross billings). The
Company's commission revenues and EBITDA grew at a compound annual growth rate
of 10.0% and 21.5%, respectively from 1993 to 1997.
Interep has become the national spot radio industry leader through strategic
alignments with growing radio groups, acquiring new clients, acquiring other
rep firms and by increasing client advertising revenues. The Company's growth
has occurred during a period of significant consolidation in the radio
broadcast industry fostered by deregulation. The Company has strategically
aligned itself with radio station groups that it believes are well-positioned
to capitalize on this consolidation, such as Clear Channel, which acquired the
radio station assets of Paxson Communications Corp., Sinclair, which acquired
the radio station assets of Heritage and CBS, which recently acquired the
radio station assets of ARS. In addition, the Company has been a leader in the
consolidation of the radio representation business. Consolidation in the
representation business has reflected the competitive pressures on smaller
radio rep firms and the decision by an increasing number of radio station
groups to take advantage of the national presence and comprehensive services
offered by large radio rep firms such as the Company.
Total national spot radio gross billings were approximately $1.6 billion in
1997 and grew at a compound annual growth rate of 9.1% from 1993 to 1997.
National spot advertising is commercial air time sold by radio stations to
advertisers located outside of their local markets and typically represents
approximately 20% of a radio station's revenue. Radio stations typically
retain rep firms like Interep on an exclusive basis to sell commercial air
time to national and regional advertisers, and sell air time to local
advertisers through in-house sales forces.
Interep was founded in 1953 and has been owned primarily by its Chief
Executive Officer, Ralph C. Guild, and its management and employees since
1975. Since consummation of the Offering, Interep has been owned entirely by
Mr. Guild and the Company's management and employees. Its principal executive
offices are located at 100 Park Avenue, New York, New York 10017. The
Company's telephone number is (212) 916-0700 and its internet address is
www.interep.com.
COMPETITIVE STRENGTHS
The Company believes the following factors contribute to its leading
position and provide the foundation for further growth:
LEADING MARKET SHARE AND SIGNIFICANT CLIENTS. Interep is the leading
independent national spot radio advertising rep firm and represents over 1,900
radio stations including key radio station groups such as ABC, CBS, Clear
Channel, Emmis, Entercom, Sinclair, SBS and Susquehanna. The Company believes
that its market
38
<PAGE>
size and leadership enhances its value to advertisers and allows it to package
radio stations creatively to meet advertisers' special needs, thereby
increasing its ability to sell air time for clients.
STRONG RELATIONSHIPS WITH ADVERTISERS; NATIONAL PRESENCE. Strong
relationships with advertisers, advertising agencies and media buying services
enable the Company to promote its client stations. Interep's sales force,
strategically located in 15 cities across the United States, provides
effective coverage of major media buying centers. The Company works closely
with advertisers to help them develop and refine radio advertising strategies
and to support their purchases of advertising time on the Company's client
stations.
HIGHLY MOTIVATED AND SKILLED SALES FORCE. The Company has developed a highly
skilled, professional sales force. Through its ESOP and its Stock Growth Plan,
Interep is owned primarily by its management and employees, and after
application of the proceeds of the Offering, will be entirely employee-owned.
This alignment of the interests of the Company and its employees is an
integral part of the Company's strategy. Moreover, through incentive programs
and the in-house training programs of the Interep Radio University, the
Company's sales force is motivated to adopt a team-oriented approach to
marketing and fulfilling client needs.
EXPERIENCED SENIOR MANAGEMENT TEAM. The Company has an experienced and
entrepreneurial management team, headed by the Interep's Chief Executive
Officer, Ralph C. Guild, who is recognized as a leader and innovator in the
radio representation business. The Company's senior sales managers have an
average of over 21 years of industry experience and significant equity
ownership in the Company. The Company's executive officers include Marc G.
Guild, President, Marketing Division, William J. McEntee, Jr., Chief Financial
Officer, Stewart Yaguda, President of Radio 2000, and Charles Parra, Chief
Information Officer.
INDEPENDENCE AND RADIO INDUSTRY FOCUS. Interep is owned primarily by its
employees and is focused exclusively on representing radio stations. The
Company's only significant competitor, by comparison, is owned by a radio
station group which competes with other radio stations and also represents
television stations and cable television systems. The Company believes that
its independence and radio industry focus provide significant competitive
advantages.
SOPHISTICATED SALES SUPPORT. Over 85% of Interep's employees are in sales-
related positions. The Company supports this sales force with sophisticated
media research, including a proprietary national database. This database
enables the Company to profile for advertisers the salient characteristics of
the audiences of the Company's client stations to assist advertisers in
reaching their target audiences. Interep has also enhanced the level of its
services to clients and advertisers alike through the growing use of
technology, such as networked and mobile computing and computerized databases
with remote client access.
OPERATING STRATEGY
The Company's objectives are to continue to enhance its position as the
leading national spot radio advertising rep firm in the United States and to
increase revenue and EBITDA. The Company's strategy to attain these goals
includes the following:
SUPERIOR CLIENT SERVICE. The Company believes it has attained the leading
position in its industry by consistently providing superior services to its
clients with innovative features that differentiate it from its competitors.
For example, Interep pioneered the use of dedicated rep firms, such as ABC
Radio Sales, CBS Radio Sales and Clear Channel Radio Sales, for the
representation of individual radio station groups, which allows a client to
benefit from the comprehensive services offered by the Company while still
projecting its corporate identity to advertisers. The Company also provides
wide-ranging market research, sales planning and selling strategy consulting
services to its clients. The Company has enhanced the level of its services to
clients and advertisers alike through the growing use of technology, such as
networked and mobile computing. The Company has recently opened its internet
website, where clients and advertisers, on a secure basis, can access market
research. Interep provides superior service by motivating its employees
through incentives, including
39
<PAGE>
equity ownership and extensive in-house training. The Company intends to
continue to develop innovative services and strategies in order to generate
additional revenues.
PROMOTION OF RADIO. Interep believes that radio advertising expenditures are
not commensurate with consumer exposure time to radio and that this provides
an opportunity for future growth. The Company uses its proprietary database of
demographic and socioeconomic profiles of radio audiences in promoting the use
of radio for advertising. In 1991, Interep introduced its Radio 2000 program
to promote the ongoing growth of radio advertising by focusing on advertisers
who do not use radio advertising or who are underutilizing the medium. The
Radio 2000 sales force works with these advertisers to demonstrate how radio
can help them achieve their goals and create marketing opportunities. The
Company believes that Radio 2000 has contributed to the growth of radio
advertising revenues in the aggregate and, by virtue of Interep's leading
market position, its own growth.
EXPANDING MARKET SHARE. Interep will seek to continue to expand its market
share by (i) developing new clients, (ii) packaging and marketing portfolios
of client stations as "unwired networks" of unaffiliated stations grouped
together to meet advertisers' particular needs and (iii) developing innovative
sales programs. The Company seeks to represent station groups that are
acquirers of additional radio stations, such as CBS, Clear Channel, Sinclair
and ABC, in order to accelerate the growth of its client base. The Company
promotes unwired networks of its client stations to radio advertisers and
advertising agencies to enable advertisers to place advertisements efficiently
on as few as two stations or as many as all stations represented by Interep to
target specific groups or markets. The Company believes that its innovations,
such as Radio 2000 and dedicated rep firms, will continue to contribute to its
growth.
INDUSTRY OVERVIEW
THE RADIO REPRESENTATION BUSINESS. Radio stations generally retain national
rep firms, such as the Company, on an exclusive basis, to sell national spot
commercial air time to advertisers located outside of the stations' local
markets. Sales of air time to local advertisers are usually handled by a
station's own sales force. National spot radio advertising is so named because
it is placed or "spotted" in one or more broadcast markets, in contrast to
network advertising, which is broadcast simultaneously throughout the United
States on network-affiliated stations. Although it varies by station, national
spot radio advertising is believed to typically account for approximately 20%
of a radio station's revenue. Generally, national spot radio advertising time
is purchased by advertising agencies or media buying services hired by
advertisers to place advertising.
The Company believes that a product or service can be advertised efficiently
through spot purchases of radio air time. Because of its national presence,
large market share, established relationships with advertising agencies and
media buying services and extensive marketing resources, the Company can sell
national spot air time more effectively than its client stations could on
their own. A rep firm seeks to promote the interests of each individual radio
station client that it represents to facilitate the purchase of national spot
air time on that station. This is accomplished, in part, by identifying
advertiser needs and matching those needs with the demographic profile and
other relevant characteristics typical of the particular station's audience.
According to an independent industry report, total U.S. radio advertising
revenues were $13.2 billion in 1997 and grew at a compound annual growth rate
of 8.8% from 1993 to 1997. The radio advertising market is divided into two
parts: (i) local advertising, which is sold by each radio station's own sales
force ($10.3 billion in 1997) and (ii) national advertising, which includes
network and national spot advertising ($2.9 billion in 1997).
The Company believes that the growth in national advertising is due in part
to an overall increase in U.S. advertising expenditures and in part to the
Company's efforts to promote radio as a low-cost and effective advertising
medium. The ability to target specific groups is important because an
advertiser's given product may appeal to a specific socioeconomic or
demographic group, and different radio programming formats are usually
designed to appeal to specific audiences. There are approximately two dozen
major radio programming formats in the United States, including country, rock,
sports, Hispanic, classical, urban, news and talk. Within each format there
are sub-formats that tend to attract an audience with similar characteristics
and the differences
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<PAGE>
between the audiences can be significant. Where research can show a
correlation between the target market for an advertiser's product and the
audience attracted to a particular radio programming format, the Company
believes that it can demonstrate to advertisers that radio can be a highly
effective advertising medium.
REPRESENTATION CONTRACTS. Rep firms generate revenues by earning commissions
on the sale of advertising time on client stations. Revenues are based on
radio station "net billings," that is, gross advertising billings less
customary advertising agency and media buying service commissions (which are
typically 15% in the aggregate). The Company's representation contracts are
exclusive and generally provide for an initial term ranging in duration from 3
years to 8 years followed by an evergreen period. During the evergreen period,
the contract term continues unless and until notice of cancellation is given
in accordance with the provisions of the contract, typically involving at
least 12 months' notice.
Representation contracts generally provide for termination payments to be
made to a rep firm if the client terminates the contract without cause. The
amount of such damages is typically equal to the estimated commissions that
would have been payable to the rep firm during the remaining portion of the
initial term and the evergreen period, plus two months. For example, if a
contract with an initial term of five years and a one-year evergreen period is
canceled after three years, the Company would be compensated in an amount
equal to 38 months of commissions (that is, 24 months for the remaining term,
12 months for the evergreen notice period, plus two months). It is customary
in the industry for the successor rep firm to make this payment. The Company
generally amortizes the cost of acquiring a new representation contract over
the initial term of such contract, although contracts are expected to provide
significantly longer-term revenue beyond this initial period. The Company also
amortizes the income associated with the buyout by another rep firm of an
existing client's contract over the remaining life of such contract. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--General."
THE COMPANY'S ORGANIZATION
The Company is organized into seven rep firms and five geographic regions.
The rep firms focus on servicing client stations while the regional offices
coordinate selling efforts to advertisers. Some of the rep firms, such as
McGavren Guild, Allied Radio Partners and D&R Radio, have long histories and
are the product of mergers or consolidations of two or more smaller rep firms.
Others, such as CBS Radio Sales, Clear Channel Radio Sales and ABC Radio
Sales, were recently established for the purpose of representing a single
station group as a dedicated unit. The Company's rep firms are:
<TABLE>
<CAPTION>
NUMBER OF YEAR
STATIONS ACQUIRED
NAME REPRESENTED OR FORMED
---- ----------- ---------
<S> <C> <C>
McGavren Guild....................................... 604 1953
D&R Radio............................................ 245 1981
CBS Radio Sales...................................... 92 1997
Allied Radio Partners................................ 684 1977
Clear Channel Radio Sales............................ 191 1996
Caballero Spanish Media.............................. 141 1995
ABC Radio Sales...................................... 23 1998
</TABLE>
The rep firms operate through the Company's 15 strategically-located offices
in Atlanta, Boston, Chicago, Dallas, Detroit, Los Angeles, Miami, Minneapolis,
New York, Philadelphia, Portland, St. Louis, San Antonio, San Francisco and
Seattle.
The Company believes that its clients are best served by having its rep
firms collaborate on the marketing of radio to advertisers and advertising
agencies. Once advertisers or agencies decide to use radio, each firm is
responsible for selling the strengths of their client stations. The presidents
of the rep firms, as well as the senior management of the Company, concentrate
on expanding the Company's market share by developing new clients and
maintaining service relationships with existing clients. The activities of the
rep firms' respective marketing
41
<PAGE>
and sales forces are coordinated through the Company's regional executives,
working with the rep firm presidents. The regional executives are responsible
for the overall sales effort to advertisers and for managing the Company's
relationships with advertisers within their regions. Between the rep firm
presidents and the regional executives, relationships with radio station and
advertising agencies are closely coordinated. Senior management of the Company
is responsible for planning firm-wide strategy, establishing policies and
procedures, operating the Radio 2000 program and providing research and
technology resources and financial and accounting services for all of the rep
firms and offices. The Company employs marketing, research and sales support
personnel to facilitate its overall sales efforts on behalf of its client
stations as well as employees in the information services, corporate
communications, administrative and financial areas.
THE COMPANY'S CLIENTS
The Company represents many of the largest and most successful radio station
groups in the United States. The 15 largest U.S. radio markets, measured by
gross billings, accounted for 55% of all spot radio advertising in 1997. On an
as adjusted basis, giving effect as of April 1, 1997 to the client
acquisitions described in "Recent Developments" below, the Company's 1997
market share in these markets would have been over 60%. The Company represents
over 1,900 radio stations. For the year ended December 31, 1997, CBS accounted
for 28.3% of the total commission revenues of the Company. No other station or
station group accounted for more than 10% of such commission revenues. The
Company's clients include the following prominent radio broadcast companies:
ABC Cumulus Mondosphere Broadcasting
Alexander Broadcasting Curtis Media Group Mt. Wilson Broadcasting
Co. Emmis MyStar Communications
Barnstable Broadcasting Entercom New Century
Beasley Broadcast Group Excl Communications Paul Communications,
Bloomington Broadcast Goodrich Broadcasting Inc.
Blue Chip Broadcasting Inc. Pilot Communications
Group Co. Great Empire Radio One
Buckley Broadcasting Broadcasting Saga Communications
Caribou Communications Greater Media Sinclair
Carter Broadcasting Hall Communications SBS
Corp. Hearst Broadcasting Susquehanna
CBS Group Wicks Broadcast Group
Citadel Communications Inner City Broadcasting Z-Spanish Radio Network,
Corp. Corp. Inc.
Clear Channel Jefferson-Pilot Corp. Zapis Communications
Connoisseur Lotus Communications
Communications Corp. Corp.
McDonald Broadcasting
Co.
The Company will attempt to expand its market share by increasing its
representation of stations in the top 100 radio markets, where the Company
already has a significant presence, and by selectively expanding into smaller
markets where appropriate.
RECENT DEVELOPMENTS
On April 29, 1998, the Company entered into the ABC Agreement. Under this
agreement, as of June 1, 1998, Interep became the exclusive national spot
radio rep firm for the 23 radio stations (all of which are in the top 15 radio
markets) of ABC (as defined), as well any radio stations acquired by that
division in the future (subject to the Company arranging for the buyout of the
predecessor rep firm, if necessary). In order to service the ABC stations, the
Company established ABC Radio Sales. The ABC Agreement has a term of eight
years. ABC has the option to renew the term for an additional eight years. ABC
would have the right to terminate the ABC Agreement if majority control of the
Company was obtained by a competitor of ABC or a competitor of Interep or if
changes occurred in the senior management of ABC Radio Sales which were not
acceptable to ABC.
Giving effect as of April 1, 1997 to this new representation as well as to
other significant representation contracts which became effective during the
remainder of 1997 as a result of radio station acquisitions by Clear
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<PAGE>
Channel, SBS and Emmis and the termination of the Company's representation
contract with SFX (when it was acquired by an affiliate of the Company's
competitor), the Company's Adjusted EBITDA for the twelve months ended March
31, 1998 would have been $16.5 million. See "Risk Factors--New Representation
Contracts" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
The Company's Adjusted EBITDA set forth in the prior sentence does not give
effect to the recent acquisitions by CBS of certain radio stations of ARS and
by Sinclair of certain radio stations of Heritage. There can be no assurance
that the Company will enter into representation agreements with respect to any
of these stations or as to the terms of any such agreements.
SALES SUPPORT
Interep's sales force is strategically located in 15 cities across the
United States to provide effective coverage of the major media buying centers.
In order to sell air time for its clients, the Company has established strong
relationships with advertisers, advertising agencies and media buying
services. The Company has also implemented the Radio 2000 program and
established a sales force of Radio Marketing Specialists dedicated to the
promotion of radio advertising for this purpose. These specialists assist
advertisers, through their advertising agencies or media buying services, in
developing effective radio advertising strategies with the objective of
influencing and facilitating their purchases of radio advertising air time.
The Company supports its sales efforts with sophisticated media research,
using a proprietary database of demographic and socioeconomic profiles of
every major U.S. radio market to help advertisers refine their radio
advertising strategies. This database is compiled from a wide array of
industry information and data services (e.g., The Arbitron Company,
Scarborough, AdSpender, and Simmons Market Research). The Company provides
advertisers with profiles of the audiences of the Company's client stations in
specific geographic areas, and, by showing correlations between buying
patterns for various products and services and specific demographic and
socioeconomic characteristics, helps advertisers reach their target audiences.
The information may also be used to recommend specific promotions, the
appropriate blending of media for an advertising campaign or the most
effective programming vehicles for a particular advertising campaign. In this
way, the Company's sales force helps advertisers plan radio advertising
schedules using selected stations represented by the Company. The Company also
provides sales promotion support through concept development and sales
promotion programs. These programs blend advertising support, merchandising
and sales incentive programs to enable the Company to suggest promotional
campaigns, including partnerships with other advertising media.
The Company believes that the overall demand for national radio advertising
is enhanced by its packaging and selling of advertising time on various
"unwired networks," which are unaffiliated groups of client stations grouped
together to meet advertisers' particular needs. By placing advertising with
these networks, an advertiser can reach a large, targeted audience more
efficiently than if it were to place advertising with many stations one at a
time. Due to the Company's leading market share and diverse client station
base, it is well-positioned to offer unwired networks. An advertising agency
or media buying service derives additional benefits from the Company's unwired
networks as the Company often performs research, scheduling, billing, payment
and pre-analysis and post-analysis functions relating to the advertising time
purchase.
The Company has an extensive computer network with over 600 computer
terminals. Each employee has his or her own desktop or mobile computer
equipped with e-mail and internet capability linked directly to many client
stations and advertising agencies.
EMPLOYEE MOTIVATION AND TRAINING
The Company believes one of its competitive advantages is derived from the
in-house training of its work force through a program called the Interep Radio
University. This program was established to help ensure the
43
<PAGE>
continuing effectiveness of the Company's staff. The Company requires most of
its professional employees to spend approximately two weeks each year in the
Company's in-house training programs, which use its own personnel as well as
instructors from some of the leading marketing and management education
programs in the United States, including Harvard Business School and The
Wharton School.
Since 1975, the Company has been owned primarily by its management and
employees directly and indirectly through the ESOP and the Stock Growth Plan.
After consummation of the Offering, Interep became owned entirely by Mr. Guild
and the Company's management and employees. The Company believes that employee
ownership, together with its commitment to intensive employee training and
continuing employee education, have resulted in a highly motivated, team-
oriented and well-trained workforce.
COMPETITION
The Company's success depends on its ability to acquire and retain
representation contracts with radio stations. The media representation
business is highly competitive, both in terms of competition for clients and
to sell air time to advertisers. The Company competes not only with other
independent and network media representatives but also with direct national
advertising. The Company also competes on behalf of its clients for
advertising dollars with other media such as broadcast and cable television,
newspapers, magazines, outdoor and transit advertising, Internet advertising,
point-of-sale advertising and yellow pages directories. Certain of the
Company's competitors have greater financial and marketing resources than does
the Company, and such resources may provide them with a competitive advantage
in competing for client stations.
The Company's only significant competitor in the national spot radio
representative industry is Katz Media Group, Inc., a subsidiary of a major
radio station group owner. By comparison, Interep is independent and, on
consummation of the Financing Transactions, will be owned 100% by its
employees. Further, Interep is the only national firm which is dedicated
solely to the representation of radio stations. Management believes that the
Company's independence and dedication to radio provide it with a competitive
advantage.
The Company believes that its ability to compete successfully is based on
its ability to acquire and retain representation contracts, the number of
stations and the inventory of air time it represents, its ability to offer
unwired networks, its strong relationships with advertisers, its research and
marketing services to clients and advertisers, its use of technology, the
experience of its management and the training and motivation of its sales
personnel. The Company believes that it competes effectively, in part, through
its employees' knowledge of, and experience in, the Company's business and
industry and their long standing relationships with clients.
EMPLOYEES
As of March 31, 1998, the Company employed approximately 600 employees, of
which approximately 570 sales-related personnel. None of the Company's
employees are represented by a union. The Company believes that its relations
with its employees are excellent.
PROPERTIES
The Company leases approximately 145,000 square feet of office space in 16
cities throughout the United States. The Company's principal executive offices
are located at 100 Park Avenue, New York, New York, where the Company occupies
66,700 square feet under a lease which expires in March 2005. The Company
believes that its office premises are adequate for its foreseeable needs.
LITIGATION
The Company from time to time is involved in litigation incidental to the
conduct of its business. The Company is not a party to any lawsuit or
proceeding which, in the opinion of management, is likely to have a material
adverse effect on the Company.
44
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the directors
and the executive officers (the "Executive Officers") of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Ralph C. Guild.......... 69 Chairman of the Board and Chief Executive Officer; Director
Marc G. Guild........... 47 President, Marketing Division; Director
William J. McEntee, Jr.. 55 Vice President and Chief Financial Officer
Stewart Yaguda.......... 42 President, Radio 2000
Charles Parra........... 34 Chief Information Officer
Leslie D. Goldberg...... 55 Director
Jerome S. Traum......... 62 Director
</TABLE>
All directors are elected, and all Executive Officers are appointed, for
terms of one year.
Ralph C. Guild has been Chairman of the Board and Chief Executive Officer of
the Company since 1986, and has served as a director of the Company since
1967. He has been employed by the Company or its predecessors since 1957 in
various capacities. In November 1991, Mr. Guild became one of the first
inductees into the Broadcasting Hall of Fame. Mr. Guild serves on the Boards
of Trustees of the Museum of Television & Radio, the Center for Communications
and the University of the Pacific. In April 1998, Mr. Guild received the
Golden Mike Award from the Broadcasters Foundation for outstanding
contributions to the radio industry.
Marc G. Guild has been President, Marketing Division, of the Company since
November 1989, and has served as a director of the Company since 1989. He was
Executive Vice President of Network Sales/Operations of the Company from 1986
to 1989. Mr. Guild has been employed by the Company or its predecessors since
1975 in various capacities. As President, Marketing Division of the Company,
Mr. Guild plays a key role in the Company's sales and marketing programs, the
Interep Radio University and the Company's research and technology divisions
and also oversees the Company's regional executives. Mr. Guild serves on the
Board of Directors of the International Radio and Television Foundation. Marc
Guild is the son of Ralph Guild.
William J. McEntee, Jr. has been Vice President and Chief Financial Officer
of the Company since March 1997. Mr. McEntee serves in such positions pursuant
to a Services Agreement between the Company and Media Financial Services, Inc.
See "Certain Transactions and Relationships." Mr. McEntee was Chief Financial
Officer at Sudbrink Broadcasting in West Palm Beach, Florida, from 1971
through 1994. Mr. McEntee owned and managed WCEE-TV in Mt. Vernon, Illinois
from 1994 until selling the station in 1996. Mr. McEntee currently owns WIOJ-
AM in Jacksonville, Florida. He is a certified public accountant and formerly
served as an audit manager for Arthur Andersen & Co.
Stewart Yaguda has been President of the Company's Radio 2000 Program since
April 1992. Mr. Yaguda was a director of marketing for Ciba-Geigy, an
international pharmaceuticals company, from 1985 to 1992, where he was
responsible for a marketing budget of over $30 million for certain over-the-
counter drugs. From 1981 to 1985, he was a product manager at Nabisco Brands.
As President of the Company's Radio 2000 Program, Mr. Yaguda is responsible
for attracting new advertisers to radio and expanding the advertising budgets
of existing radio advertisers. He holds an M.B.A. from New York University.
Charles Parra has been Chief Information Officer of the Company since
September 1997. From July 1995 to August 1997, he was the Company's Director
of Information Technology. Mr. Parra was a project manager for the information
systems group at Russell Reynolds Associates, a New York-based executive
search firm, from 1993 through 1995. From 1990 to 1993, Mr. Parra was a
technical specialist for Sharp Electronics.
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<PAGE>
Leslie D. Goldberg served as President of the Company from August 1986 to
the end of 1995, and has served as a director of the Company since 1986. He
has been employed by the Company since 1968 in various capacities. Mr.
Goldberg serves on the Board of Directors of the Radio Advertising Bureau.
Jerome S. Traum has served as a director of the Company since 1994. Mr.
Traum has been a partner with the New York law firm of Moses & Singer since
June 1995. Before that, he was of counsel to the New York law firm of
Proskauer Rose Goetz & Mendelsohn, beginning in 1991. Previously, he was a
general partner of The Blackstone Group, an investment banking firm.
DIRECTOR COMPENSATION
Directors do not receive compensation for their services as directors, but
are reimbursed for any reasonable out-of-pocket expenses incurred in
connection with attending meetings of the Board of Directors.
EXECUTIVE COMPENSATION
The following table shows compensation for services rendered in all
capacities to the Company for the year ended December 31, 1997 by the
"Executive Officers," that is, the Chief Executive Officer and the Company's
four most highly compensated executive officers other than the Chief Executive
Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ --------------------- -------
SECURITIES
RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) SARS (#) PAYOUTS COMPENSATION(1)
------------------ ---- -------- -------- ------------ ---------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ralph C. Guild.......... 1997 $905,738 -- $104,583(2) -- -- -- $19,262
Chairman of the Board
and Chief Executive
Officer
Marc G. Guild........... 1997 300,738 $270,000 -- -- -- -- 19,262
President, Marketing
Division
William J. McEntee,
Jr. ................... 1997 98,383 -- -- -- -- -- 1,617
Vice President and
Chief Financial
Officer(3)
Stewart Yaguda.......... 1997 120,738 100,000 27,500(4) -- -- -- 19,262
President, Radio
2000 Division
Charles Parra........... 1997 110,041 18,000 -- -- -- -- 9,959
Chief Information
Officer
</TABLE>
- --------
(1) Includes amounts contributed by the Company on behalf of Messrs. Ralph
Guild, Marc Guild, William McEntee, Stewart Yaguda and Charles Parra to
the Stock Growth Plan of $14,512, $14,512, $1,617, $14,512 and $8,974,
respectively and to the 401(k) Plan of $4,750, $4,750, $0, $4,750 and
$985, respectively.
(2) Represents payments under a supplemental income agreement. See "--
Employment Contracts."
(3) Mr. McEntee serves in such capacities pursuant to a Services Agreement
between the Company and Media Financial Services, Inc. See "Certain
Transactions and Relationships." Mr. McEntee began his employment with the
Company on March 1, 1997.
(4) Represents contributions to a compensation deferral arrangement.
46
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The following table sets forth, as to each Executive Officer who holds
options, the status of their options at the end of fiscal 1997. No options
were exercised by any of them during fiscal 1997.
<TABLE>
<CAPTION>
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS/ OPTIONS/SARs AT
NUMBER OF SARs AT FISCAL YEAR END FISCAL YEAR END ($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED($) EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE
---- --------------- ----------- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Ralph C. Guild.......... -- -- 30,000 -- 30,000 --
Marc G. Guild........... -- -- 5,000 -- 5,000 --
William J. McEntee, Jr.. -- -- -- -- -- --
Stewart Yaguda.......... -- -- -- -- -- --
Charles Parra........... -- -- -- -- -- --
</TABLE>
- --------
(1) Fair market value of the Common Stock as of September 30, 1997 ($87.86 per
share), as determined by an independent appraisal, minus exercise price
multiplied by the number of shares subject to the option. In determining
the fair market value of the Common Stock, for which no trading market
existed, the Board of Directors relied on an independent appraisal.
Employee Stock Ownership Plan
The Company established the ESOP in 1975 to provide participating employees
with a stock ownership interest in the Company. The ESOP is a stock bonus plan
qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and is also an employee stock ownership plan under
Section 4975(e)(7) of the Code. The assets of the ESOP are held in trust and
are invested primarily in the Common Stock. The trustees of the ESOP are
appointed by the Board of Directors of the Company and are responsible for the
administration of the ESOP and the investment of its assets. The current
trustees are Ralph Guild, Leslie D. Goldberg and Marc Guild.
Each employee of the Company becomes eligible to participate in the ESOP
following completion of one year of service, with a minimum of 1,000 hours of
service to the Company. As of December 31, 1997, the ESOP had 400
participants. ESOP participation is mandatory and non-contributory for all
eligible employees. Individual accounts are maintained under the ESOP for each
participant. A participant becomes fully vested in his or her account in
stages over five years of service to the Company or earlier, without regard to
years of credited service, on the occurrence of total and permanent
disability, death or attainment of the later of age 65 or the fifth
anniversary of his or her participation in the ESOP. In the event of
termination of the employment of a participant who is not fully vested, any
non-vested portion of his or her account will be forfeited and reallocated
among the remaining participants' accounts.
The Company may make annual contributions to the ESOP, in the form of cash
or shares of Common Stock, in such amounts as may be determined by its Board
of Directors, subject to certain limitations imposed by the Code. Company
contributions for each plan year are allocated to the participants' accounts
based on the relative total compensation of each participant, subject to
certain limitations under the Code. The Company has made, however, no
contributions to the ESOP since 1994. The Company made loans to the ESOP of
$1.3 million, $1.9 million and $2.9 million in 1995, 1996 and 1997,
respectively, to fund distributions of the Common Stock from the ESOP in
connection with the termination of employment of certain participants. As of
December 31, 1997, $182,000 of such indebtedness remained outstanding. See
"Risk Factors--Repurchase Obligation Under Employee Benefit Plan" and
"Description of Exchange Notes--Certain Covenants--Restricted Payments."
The ESOP provides that the trustees will generally determine the manner in
which shares of Common Stock owned by the ESOP are voted. With respect,
however, to voting in connection with certain significant matters specified in
the Code, such as mergers, recapitalizations, or a liquidation, dissolution or
sale of all or substantially all of the assets of the Company, each
participant has the right to direct the trustees as to the voting of the
shares of Common Stock allocated to his or her account. Allocated shares for
which no directions are received in these
47
<PAGE>
circumstances will be voted by the trustees as they deem to be in the best
interests of the ESOP and its participants.
Following a participant's termination of service, distribution of the vested
amount in his or her account will generally be made in cash. Cash
distributions will be based on the fair market value of the Common Stock,
determined by the ESOP's independent appraiser as of the December 31 preceding
the participant's termination. Distributions will normally be made in equal
quarterly installments over a period of time ranging up to five years,
depending on the size of the participant's account. Pending the final date of
distribution, a participant's account balance will be credited with interest
at rates based on U.S. Treasury Bill rates.
STOCK GROWTH PLAN
The Board of Directors established the Stock Growth Plan, effective as of
January 1, 1995, to provide participating employees with a stock ownership
interest in the Company. The Stock Growth Plan is a stock bonus plan qualified
under Section 401(a) of the Code. The assets of the Stock Growth Plan are
invested primarily in Common Stock and are held in trust. The trustees of the
Stock Growth Plan are appointed by the Board of Directors and are responsible
for the administration of the Stock Growth Plan and the investment of its
assets. The current trustees are Ralph Guild, Leslie D. Goldberg and Marc
Guild.
Each employee of the Company who is regularly scheduled to work at least 20
hours per week is eligible to participate in the Stock Growth Plan as of his
or her date of hire. As of June 1, 1998, the Stock Growth Plan had 555
participants. Participation in the Stock Growth Plan is mandatory for all
eligible employees. All Stock Growth Plan participants are at all times fully
vested in their accounts without regard to age or years of service.
The Company makes regular payments to the Stock Growth Plan following each
payroll period, primarily in the form of cash (although payments in the form
of shares of Common Stock are permitted under the provisions of the Stock
Growth Plan) in such amounts as may be determined by the Board of Directors,
subject to certain limitations imposed by the Code. Such cash payments have
been used, and are intended to be used, for the foreseeable future, primarily
to purchase shares of Common Stock from the ESOP. These purchases are designed
to fulfill the Stock Growth Plan's purpose of investing in the Company, while
providing increased liquidity for the ESOP. Individual accounts are maintained
under the Stock Growth Plan for each participant. Payments for each plan year
are allocated to the participants' accounts based on the relative total
compensation of each participant, subject to certain limitations under the
Code and by taking into account benefits available under the Social Security
Act.
The Stock Growth Plan provides that the trustees will generally determine
the manner in which the shares of Common Stock owned by the Stock Growth Plan
are voted. With respect to voting in connection with certain significant
matters specified in the Code, such as mergers, recapitalizations, or a
liquidation, dissolution or sale of all or substantially all of the assets of
the Company, each participant has the right to direct the trustees as to the
voting of the shares of Common Stock allocated to his or her account.
Allocated shares for which no directions are received in these circumstances
will be voted by the trustees as they deem to be in the best interests of the
ESOP and its participants.
Following a participant's termination of service, distribution of his or her
account will be made in four annual installments, with the first installment
to occur as soon as practicable after termination of employment. If a
participant's benefit does not exceed $3,500, the distribution will be made in
a single lump sum as soon as practicable following termination of service.
Distributions will normally be made in cash.
COMPENSATION DEFERRAL PLAN
The Company maintains the Compensation Deferral Plan, which was adopted by
the Board of Directors effective as of January 1, 1994, for the purpose of
providing deferred compensation to a select group of executive employees. The
Compensation Deferral Plan is an unfunded "top hat" plan that is subject to
Title I of the
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Employee Retirement Income Security Act of 1974, as amended ("ERISA"), but is
exempt from Parts 2, 3 and 4 of Title I(B) of ERISA.
Although the Compensation Deferral Plan is an unfunded plan for purposes of
Title I of ERISA, assets have been set aside in an irrevocable trust pursuant
to a trust agreement between the Company and Ralph Guild and Stewart Yaguda,
as trustees. The trust is intended to be a grantor trust, of which the Company
is the grantor, within the meaning of Section 671 of the Code. The trustees of
the Compensation Deferral Plan are responsible for the administration of the
trust and the investment of trust assets. Following the Offering, the trust
assets will consist of the cash proceeds of the redemption of the Series B
Preferred Stock and the associated shares of the Common Stock formerly held by
the Compensation Deferral Plan. See "Certain Transactions and Relationships."
The Compensation Deferral Plan is administered and interpreted by the
Company's Board of Directors and highly compensated employees of the Company.
As of June 1, 1998, the Compensation Deferral Plan had 15 participants, each
of whom is or was a member of senior management or a highly compensated
employee. All participants are at all times fully vested in their Compensation
Deferral Plan accounts without regard to their age or years of service.
During 1994 and 1995, each plan participant deferred the receipt of a
portion of the compensation otherwise payable to them for such periods. The
Company then contributed to the Compensation Deferral Plan trust shares of the
Series B Preferred Stock and the Common Stock. Each participant's account was
credited with an initial balance of the Series B Preferred Stock (valued at
$1,000 per share) equal in value to the amount deferred by the participant,
plus 11.2875 shares of Common Stock for each share of the Series B Preferred
Stock so credited. The Company does not contemplate making any further
contributions to the Compensation Deferral Plan.
In connection with the Financing Transactions, the cash proceeds of the
redemption of the shares of the Series B Preferred Stock and the associated
shares of the Common Stock were allocated among the plan participants strictly
in accordance with the shares allocated to their account as of the date of
redemption. The cash assets of the Compensation Deferral Plan allocable to any
participant will be distributed to such participant on the earlier to occur of
the participant's termination of employment with the Company or the
termination of the Compensation Deferral Plan.
401(k) PLAN
The Company maintains the 401(k) Plan, which allows employees to save a
portion of their salaries on a tax-deferred basis pursuant to the provisions
of Section 401(k) of the Code. Each employee of the Company becomes eligible
to participate in the 401(k) Plan on the first day of the month following the
date he or she completes one year of service. As of December 31, 1997, the
401(k) Plan had 560 participants. The assets of the 401(k) Plan are held in
trust. The trustee of the 401(k) Plan is appointed by the Board of Directors
of the Company, and the current trustee is Fidelity Management Trust Company.
Each eligible employee may make a pre-tax contribution from salary in an
amount not greater than 15% of his or her respective total compensation during
each calendar year under the 401(k) Plan. For 1998, the limit under the Code
for pre-tax contributions is $10,000.
Each year, the Company contributes, for each participant who makes a pre-tax
contribution, a matching contribution on the first 6% of such participant's
compensation ("Matching Contribution") in an amount equal to a percentage of
such participant's pre-tax contribution. Such percentages are determined
annually by the Board of Directors, and the percentage for 1997 was 50%. The
Company may also make discretionary contributions to be allocated among all
participants in proportion to their relative total compensation. In order to
share in the allocation of matching contributions and discretionary
contributions, a participant must be employed on the last day of the calendar
year (and, for discretionary contributions, complete at least 1,000 hours of
service), unless such employee terminated employment during the year as a
result of such employee's retirement, death or
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disability. In any year, combined Company and employee contributions (when
aggregated with contributions to the ESOP and the Stock Growth Plan) allocated
to a participant are not permitted to exceed the lesser of $30,000 or 25% of a
participant's total taxable compensation for the year. The portion of a
participant's account balance attributable to pre-tax contributions is at all
times 100% vested and non-forfeitable, while the portion attributable to
contributions made by the Company vests in 20% increments on the completion of
each year of service with the Company. Participants direct the investment of
their accounts. The 401(k) Plan currently offers participants the choice of
four mutual funds provided through Fidelity Investments.
A 401(k) participant's account will be distributed to such participant
following separation from service, attainment of retirement age, death or
disability. In addition, upon attaining age 59 1/2, a participant may elect to
withdraw the balance in such participant's account. Prior to the occurrence of
any of the foregoing events, a participant may apply for a hardship withdrawal
of his or her pre-tax contributions in certain circumstances. Subject to
certain dollar limitations imposed by the 401(k) Plan and federal law, a
participant is also permitted to borrow from the 401(k) Plan.
EMPLOYMENT CONTRACTS
Ralph Guild is employed as Chairman of the Board and Chief Executive Officer
of the Company under an employment agreement with the Company entered in 1995.
The term of this agreement runs through May 31, 2001 and is automatically
extended for an additional year each June 1 unless either the Company or Mr.
Guild notifies the other on or before May 1 of the same year of its or his
election not to extend the agreement. Under the agreement, Mr. Guild receives
a base salary of not less than $925,000 per year, plus any bonuses, incentive
or other types of additional compensation which the Board of Directors
determines to pay. Further, Mr. Guild is entitled, annually, to receive
incentive compensation based on increases in the Company's EBITDA. If EBITDA
for the year in question is greater than the EBITDA for the previous year, Mr.
Guild will be entitled to a bonus equal to a percentage of his base salary
equal to two times the percentage increase of EBITDA for such year over the
higher of EBITDA for the prior year and the highest EBITDA for any prior year
back to 1994. If the Company elects not to extend the term of the agreement,
the Company will retain Mr. Guild as a consultant for two years after the end
of the term of the agreement at a fee equal to his base salary in effect at
such time.
The agreement provides for continued payment of Mr. Guild's base salary
through the balance of its term, plus two years, if (i) Mr. Guild terminates
his employment with the Company by reason of the Company's material breach of
the agreement, (ii) Mr. Guild is not re-appointed as Chairman of the Board and
Chief Executive Officer of the Company or ceases to be elected as a director
of the Company, other than by his own choice or for reasons justifying his
termination of employment by the Company for cause, or (iii) there is a change
in control of the Board of Directors of the Company. Mr. Guild may not compete
with the Company during the term of the employment agreement and for any
period during which he is receiving compensation thereunder. The employment
agreement also provides (i) in the case of Mr. Guild's permanent disability,
for payments to Mr. Guild equal to 75% of his then current salary, less any
income disability benefits to which Mr. Guild may be entitled, for the balance
of his employment term and (ii) in the case of Mr. Guild's death, for a death
benefit equal, on the request of Mr. Guild's estate or his designated
beneficiary, to either the present value at the time of his death of the
entire amount of the salary that would have been payable to him for the
balance of his employment term or the payment of his then current salary over
the balance of his employment term.
Mr. Guild also has a supplemental income agreement pursuant to which the
Company pays him $104,583 per year, payable in monthly installments, through
2008. The Company maintains a whole life insurance policy on Mr. Guild for the
purpose of funding the supplemental income agreement.
Marc Guild is employed as President, Marketing Division of the Company under
an employment agreement entered in 1991. The term of this agreement runs
through January 1, 2001 and is automatically extended for an additional year
each January 1 unless either the Company or Mr. Guild notifies the other on or
before December 1 of the preceding year of its or his election not to extend
the agreement. Under the agreement, Mr. Guild receives a base annual salary of
$320,000 and an incentive amount of $80,000 per year, which is payable
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by the Company only if it achieves certain financial or other goals set by the
Company and Mr. Guild at the beginning of each year. The agreement provides
for continued payments of base salary through the balance of its term if
(i) there is a change in control of the Company, (ii) Mr. Guild is not re-
appointed to his office with the Company or ceases to be a director of the
Company, other than by reason of his own choice or the termination of his
employment for cause by the Company or (iii) Mr. Guild's termination of his
employment by reason of a material breach by the Company of the agreement. The
agreement also provides (i) in the case of Mr. Guild's permanent disability,
for payments to him equal to 75% of his then current salary, less any income
disability benefits that he may receive or to which he may be entitled, for
the duration of the term of the agreement and (ii) in the case of Mr. Guild's
death, for a death benefit equal to the present value at the time of death of
the entire amount of the salary that would have been payable to Mr. Guild for
the balance of his employment term or the payment of his then current salary
over the balance of his employment term.
INDEMNIFICATION AGREEMENTS
The Company is a party to an indemnity agreement with each of its directors
and certain of its executive officers which provides that the indemnitee will
be entitled to receive indemnification, which may include advancement of
expenses, to the full extent permitted by law for all expenses, judgments,
fines, penalties and settlement payments incurred by the indemnitee in actions
brought against him or her in connection with any act taken in the
indemnitee's capacity as a director or executive officer of the Company. Under
these agreements, an indemnitee's entitlement to indemnification in a
particular case will be made by a majority of the disinterested members of the
Board of Directors, if such members constitute a quorum of the full Board and,
if they do not, by independent legal counsel selected by the Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the fiscal year ended December 31, 1997, the entire Board of Directors
determined executive officer compensation. Two members of the Board of
Directors, Ralph Guild and Marc Guild, are officers of the Company, and have
participated in certain transactions with the Company during fiscal 1997.
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PRINCIPAL SHAREHOLDERS
The following table sets forth, as of July 31, 1998, as adjusted to give
effect to the Financing Transactions (see "Certain Transactions and
Relationships"), information concerning the beneficial ownership of the Common
Stock by (i) each person known to the Company to own beneficially more than 5%
of the Common Stock, (ii) each director of the Company, (iii) each of the
Executive Officers and (iv) all directors and Executive Officers of the
Company as a group. As of July 31, 1998, as so adjusted, there were 285,421
shares of Common Stock outstanding and 106,245 shares held in treasury.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME BENEFICIALLY OWNED(1) PERCENT
- ---- --------------------- -------
<S> <C> <C>
ESOP(1)......................................... 199,018 69.7%
Stock Growth Plan(1)............................ 55,654 19.5
Ralph C. Guild(2),(3), (5)...................... 73,680 25.8
Marc G. Guild(2), (4), (5)...................... 14,042 4.9
William J. McEntee, Jr.(5)...................... 46 *
Stewart Yaguda.................................. 848 *
Charles Parra................................... 226 *
Leslie D. Goldberg.............................. -- --
Jerome S. Traum................................. -- --
All Directors and Executive Officers as a Group
(8 Persons).................................... 88,842 31.1
</TABLE>
- --------
* Less than 1%
(1) The shares shown in this table as being owned beneficially by Messrs.
Ralph Guild, Marc Guild, McEntee, Yaguda and Parra and by all directors
and executive officers as a group include shares owned by the ESOP and the
Stock Growth Plan and allocated to plan accounts maintained for such
persons. At May 31, 1998, the combined number of shares allocated by such
plans to such persons and all directors and executive officers as a group
was as follows: Ralph Guild, 35,525 shares, Marc Guild, 6,012 shares,
William J. McEntee, Jr., 46 shares, Stewart Yaguda, 848 shares, Charles
Parra, 226 shares, and all directors and executive officers as a group,
42,657 shares. ESOP and Stock Growth Plan participants have the right to
direct the votes of the shares allocated to them with respect to certain
significant matters submitted to a vote of the Company's shareholders,
although the trustees of the ESOP and Stock Growth Plan have the authority
to vote all shares held by such plans in their discretion with regard to
all other matters, including the election of directors. Messrs. Ralph
Guild, Goldberg and Marc Guild are the sole trustees of the ESOP and the
Stock Growth Plan. See "Management--Executive Compensation."
(2) Ralph Guild and Marc Guild are father and son and each disclaims
beneficial ownership of the other's holdings.
(3) Includes options granted to Ralph Guild in 1988 to purchase up to 10,000
shares of the Common Stock at an option price of $32.62 per share, in 1991
to purchase 10,000 shares at an option price of $57.91, and in 1995 to
purchase 10,000 shares at an option price of $81.63, such prices in each
case being the value per share on the date of grant as established by an
independent appraiser. All of these options expire on December 29, 2005
and are currently fully exercisable.
(4) Includes options to purchase 5,000 shares of Common Stock at the
appraisal-based option price of $57.91 per share, all of which are fully
exercisable. These options expire on December 31, 2005.
(5) Does not include options to purchase 30,000, 5,000 and 5,000 shares of
Common Stock granted in June 1998 to Ralph Guild, Marc Guild and Mr.
McEntee, respectively, which options will not be exercisable until
December 1998 and which will expire in June 2008. The exercise price per
share of such options will be equal to the value per share as of December
31, 1997, to be established by an independent appraiser.
The address for the ESOP, the Stock Growth Plan and Messrs. Marc Guild,
Yaguda and Parra is Interep National Radio Sales, Inc., 100 Park Avenue, New
York, New York 10017. Ralph Guild's address is 10 South
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Lake Trail, Palm Beach, Florida 33480. Mr. Goldberg's address is 200 Keller
Lane, North Salem, New York 10560. Mr. McEntee's address is 2090 Palm Beach
Lakes Boulevard, West Palm Beach, Florida 33409, Mr. Salem's address is 901
Fleet Center, 50 Kennedy Plaza, Providence, Rhode Island 02903, and Mr.
Traum's address is Moses & Singer, 1301 Avenue of the Americas, New York, New
York 10019.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
In November 1993, Providence purchased 5,000 shares of the Series A
Preferred Stock and 57,117 shares of the Common Stock for an aggregate
purchase price of $5.0 million. In connection with this transaction, the
Company and Providence entered into a Securities Purchase Agreement and
Providence, the Company, and the Company's principal shareholders entered into
a Shareholders' Agreement.
The Securities Purchase Agreement contained, among other things, a number of
restrictions on the Company's ability to pay dividends, make distributions or
redemptions or engage in significant mergers, acquisitions, asset dispositions
or similar transactions. Under the Shareholders' Agreement, Providence had
certain preemptive rights and "tag-along" rights entitling Providence to
participate on a proportional basis in any sales of Common Stock by other
principal shareholders, the right to designate one member of the Company's
Board of Directors and the right to require the Company to repurchase from
Providence the Series A Preferred Stock (at face value) and all shares of
Common Stock (at fair market value) held by Providence in May 1999 or earlier
in the case of certain events. As the Company applied a portion of the net
proceeds of the Offering to the redemption of all of the shares of the Series
A Preferred Stock and the Common Stock held by Providence on consummation of
the Offering, these restrictions and rights ceased to be effective on the
closing of the Offering.
On consummation of the Offering, the Company redeemed all of the shares of
the Series A Preferred Stock owned by Providence (including the 5,000 shares
issued to Providence in 1993 and 2,813 shares issued or issuable to Providence
as stock dividends from time to time thereafter through the date of redemption
in lieu of cash dividends) at their face value of $7.8 million, and all of the
57,117 shares of the Common Stock and options to acquire an additional 3,183
shares of Common Stock owned by Providence for an additional $6.3 million, for
a total redemption price of $14.1 million.
On consummation of the Offering, the Company also redeemed all of the 1,389
shares of the Series B Preferred Stock and the 11,150 shares of the Common
Stock held by the Compensation Deferral Plan for an aggregate redemption price
of $2.6 million, of which $1.4 million was attributable to the face value of
the shares of the Series B Preferred Stock and the balance was attributable to
such shares of the Common Stock. Following such redemption, the Compensation
Deferral Plan was terminated and cash distributions were made to its 15
participants out of the proceeds of the redemption, including $1.1 million to
Ralph Guild, $0.1 million to Marc Guild and $0.1 million to Mr. Yaguda.
Paul J. Salem, who served as Providence's designee to the Board of Directors
since late 1993, resigned his position effective upon the consummation of the
Financing Transactions.
Pursuant to a Services Agreement (the "Services Agreement") between the
Company and Media Financial Services, Inc. ("Media"), the Company retained
Media, for a five-year term commencing June 1, 1997, to provide certain
financial and accounting services for the Company and its subsidiaries,
including the preparation of monthly, quarterly and annual financial
statements, the preparation and filing of all required federal, state and
local tax returns and all billing, accounts receivable, accounts payable and
collections functions. Media currently employs 36 full-time employees. Under
the Services Agreement, Mr. McEntee, who is the President of Media, is in
charge of all services rendered by Media to the Company and, pursuant to the
Services Agreement, serves as Vice President and Chief Financial Officer of
the Company for an annual salary of $120,000. For its services, Media will be
paid an annual fee of $2.5 million in years one and two, $2.6 million in year
three, $2.7 million in year four and $2.9 million in year five of the Services
Agreement.
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Since December 1979, the Company has leased from a trust, of which Ralph
Guild is the income beneficiary and Marc Guild is the trustee, a building
which is used from time to time by the Company for training sessions and
management meetings. The current lease expires on December 31, 2004 and
provides for a base annual rental which is adjusted each year to reflect
inflation and actual usage. In each of 1995, 1996 and 1997 total lease expense
was $74,000. The Company believes that this rental is substantially below the
current fair market rental value of this property. The Company believes the
terms of the building lease arrangement are at least comparable to, if not
more favorable to the Company than, the terms which would have been obtained
in transactions with unrelated parties. The Company intends to continue these
or other arrangements in the future as long as it believes each transaction is
more beneficial to the Company than using an unrelated provider.
Mr. Guild is indebted to the Company in the amount of $170,000 pursuant to a
promissory note in the original principal amount of $389,000. The note bears
interest at a variable rate equal to the lowest rate permitted for federal
income tax purposes and is payable in annual installments of principal and
interest through December 31, 1999. In June 1997, Mr. Guild loaned the Company
$2.0 million, which was repaid in full, together with interest, in December
1997.
In December 1995, Leslie D. Goldberg resigned his positions as President and
Chief Operating Officer of the Company. Pursuant to an agreement entered by
the Company and Mr. Goldberg at such time, Mr. Goldberg received severance
payments in 1997 of $565,700 and in January and February 1998 totalling
$94,283 in consideration in part of consulting services rendered by Mr.
Goldberg and his non-competition covenant in favor of the Company. The
Company's obligation to make severance payments to Mr. Goldberg expired after
February 1998.
In June 1998, the Company, at the suggestion of the Initial Purchasers,
disposed of its non-radio rep firm subsidiary, Corporate Family Network, Inc.
("CFN"). The results of operations of CFN had resulted in immaterial losses
since its inception. The Company sold CFN to Ralph C. Guild for a purchase
price of $200,000, which was the Company's estimate of the net fair market
value of CFN, payable $50,000 in cash and $150,000 by execution and delivery
by Mr. Guild of his promissory note payable to the Company in three annual
installments of $50,000 each and bearing interest at a fluctuating rate equal
to the prime rate of BancBoston, N.A., plus one percent.
DESCRIPTION OF NEW CREDIT FACILITY
As part of the Financing Transactions, on July 2, 1998, the Company and the
Guarantors entered into the New Credit Facility with BankBoston and Summit,
pursuant to which BankBoston and Summit have agreed to provide the Company and
the Guarantors with a $10.0 million revolving credit facility. The term of the
New Credit Facility is six years. The lenders under the New Credit Facility
are BankBoston, Summit and any other lenders reasonably acceptable to the
Company, with BankBoston acting as administrative agent.
Interest is payable on borrowings under the New Credit Facility at rates
based on either a "Base Rate" or "LIBOR," as selected by the Company plus a
margin ranging from 5/8% to 2 7/8%, depending on (i) whether the selected rate
is "Base Rate" or "LIBOR," and (ii) the Company's ratio of total debt to
EBITDA on a trailing four quarter basis.
The Company and the Guarantors pay a commitment fee under the New Credit
Facility calculated at a rate ranging from 3/8% to 1/2% per annum (depending
on the Company's ratio of total debt to EBITDA) on the daily average unused
commitment under the New Credit Facility. Such fee will be payable quarterly
in arrears and upon termination of the New Credit Facility (whether at stated
maturity or otherwise).
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The Company's and the Guarantors' obligations under the New Credit Facility
are secured by a first priority perfected lien on all property and assets,
tangible and intangible, of the Company and the Guarantors, including a pledge
by the Company of all capital stock and membership interests held by it in the
Guarantors.
The New Credit Facility contains customary covenants and restrictions on the
Company's and the Guarantors' ability to engage in certain activities,
including, but not limited to (i) limitations on the incurrence of liens,
indebtedness and guarantees, (ii) restrictions on investments, acquisitions,
dividends, capital expenditures, transactions with affiliates and the
Company's or the Guarantors' engaging in lines of business other than the
radio representation business and (iii) certain financial covenants including,
but not limited to, those governing maximum permitted leverage, minimum
interest coverage and minimum fixed charge coverage.
DESCRIPTION OF EXCHANGE NOTES
GENERAL
The Exchange Notes will be issued pursuant to an Indenture (the "Indenture")
among the Company, the Guarantors and Summit Bank, as trustee (the "Trustee").
The terms of the Exchange Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939 (the "Trust Indenture Act"). The Exchange Notes are subject to all such
terms, and Holders of Exchange Notes are referred to the Indenture and the
Trust Indenture Act for a statement thereof. The following summary of the
material provisions of the Indenture does not purport to be complete and is
qualified in its entirety by reference to the Indenture, including the
definitions therein of certain terms used below. Copies of the Indenture are
available as set forth below under "--Additional Information." The definitions
of certain terms used in the following summary are set forth below under "--
Certain Definitions." For purposes of this summary, the term "Company" refers
only to Interep National Radio Sales, Inc. and not to any of its Subsidiaries.
The Exchange Notes will be general unsecured obligations of the Company and
will be subordinated in right of payment to all current and future Senior
Indebtedness of the Company, including all Senior Indebtedness under the New
Credit Facility, and will rank pari passu or senior in right of payment with
all existing and future subordinated indebtedness of the Company. As of March
31, 1998, on a pro forma basis after giving effect to the Financing
Transactions, the aggregate principal amount of Senior Indebtedness (excluding
trade payables) of the Company would have been approximately $0.4 million. The
Indenture will permit additional borrowings, including borrowings under the
New Credit Facility, in the future. See "Risk Factors--Subordination."
As of the date of this Prospectus, all of the Company's Subsidiaries will be
Restricted Subsidiaries. However, under certain circumstances, the Company
will be able to designate current of future Subsidiaries as Unrestricted
Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Exchange Notes will be limited in aggregate principal amount to $100.0
million and will mature on July 1, 2008. Interest on the Exchange Notes will
accrue at the rate of 10% per annum and will be payable semi-annually in
arrears on January 1 and July 1, commencing on January 1, 1999, to Holders of
record on the immediately preceding December 15 and June 15. Additional
Exchange Notes may be issued from time to time after the Offering, subject to
the provisions of the Indenture described below under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock."
Interest on the Exchange 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
original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. Principal, premium, if any, and interest
and Liquidated Damages on the Exchange Notes will be payable at the office or
agency of the Company maintained for such purpose within the City and State of
New York or, at the option of the Company, payment of interest and Liquidated
Damages may be made by check mailed to the
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Holders of the Exchange Notes at their respective addresses set forth in the
register of Holders of Exchange Notes; provided that all payments of
principal, premium, interest and Liquidated Damages with respect to Exchange
Notes the Holders of which have given wire transfer instructions to the
Company will be required to be made by wire transfer of immediately available
funds to the accounts specified by the Holders thereof. Until otherwise
designated by the Company, the Company's office or agency in New York will be
the office of the Trustee maintained for such purpose. The Exchange Notes will
be issued in denominations of $1,000 and integral multiples thereof.
SUBORDINATION
The payment of principal of, premium, if any, Liquidated Damages, if any,
and interest on the Exchange Notes will be subordinated in right of payment,
as set forth in the Indenture, to the prior payment in full of all Senior
Indebtedness, whether outstanding on the date of the Indenture or thereafter
incurred.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshaling of the Company's
assets and liabilities, the holders of Senior Indebtedness will be entitled to
receive payment in full of all Obligations due in respect of such Senior
Indebtedness (including interest after the commencement of any such proceeding
at the rate specified in the applicable Senior Indebtedness) before the
Holders of Exchange Notes will be entitled to receive any payment with respect
to the Exchange Notes, and until all Obligations with respect to Senior
Indebtedness are paid in full, any distribution to which the Holders of
Exchange Notes would be entitled shall be made to the holders of Senior
Indebtedness (except that Holders of Exchange Notes may receive and retain
Permitted Junior Securities and payments made from the trust described under
"--Legal Defeasance and Covenant Defeasance").
The Company also may not make any payment upon or in respect of the Exchange
Notes (except in Permitted Junior Securities or from the trust described under
"--Legal Defeasance and Covenant Defeasance") if (i) a default in the payment
of the principal of, premium, if any, or interest on Designated Senior
Indebtedness occurs and is continuing beyond any applicable period of grace or
(ii) any other default occurs and is continuing with respect to Designated
Senior Indebtedness that permits holders of the Designated Senior Indebtedness
as to which such default relates to accelerate its maturity and the Trustee
receives a notice of such default (a "Payment Blockage Notice") from the
Company or the holders of any Designated Senior Indebtedness. Payments on the
Exchange Notes may and shall be resumed (a) in the case of a payment default,
upon the date on which such default is cured or waived and (b) in case of a
nonpayment default, the earlier of the date on which such nonpayment default
is cured or waived or 179 days after the date on which the applicable Payment
Blockage Notice is received, unless the maturity of any Designated Senior
Indebtedness has been accelerated. No new period of payment blockage may be
commenced unless and until (i) 360 days have elapsed since the effectiveness
of the immediately prior Payment Blockage Notice and (ii) all scheduled
payments of principal, premium, if any, and interest on the Exchange Notes
that have come due have been paid in full in cash. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a subsequent Payment
Blockage Notice unless such default shall have been waived for a period of not
less than 90 days.
The Indenture further requires that the Company promptly notify holders of
Senior Indebtedness if payment of the Exchange Notes is accelerated because of
an Event of Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, Holders of Exchange Notes may recover less
ratably than creditors of the Company who are holders of Senior Indebtedness.
On a pro forma basis, after giving effect to the Financing Transactions, the
principal amount of Senior Indebtedness outstanding at March 31, 1998 would
have been approximately $0.4 million. The Indenture will limit, subject to
certain financial tests, the amount of additional Indebtedness, including
Senior Indebtedness, that the Company and its subsidiaries can incur. See "--
Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock."
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SUBSIDIARY GUARANTEES
The Company's payment obligations under the Exchange Notes will be fully and
unconditionally, jointly and severally guaranteed (the "Subsidiary
Guarantees") by the Guarantors. The Subsidiary Guarantees will be subordinated
in right of payment to all existing and future Senior Indebtedness of the
Guarantors, including all of the obligations of the Guarantors under the New
Credit Facility, and will rank pari passu or senior in right or payment with
any subordinated Indebtedness of the Guarantors. The obligations of each
Guarantor under its Subsidiary Guarantee will be limited so as not to
constitute a fraudulent conveyance under applicable law. See, however, "Risk
Factors--Fraudulent Conveyance Considerations."
The Indenture provides that no Guarantor may consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person), another
corporation, Person or entity whether or not affiliated with such Guarantor
unless (i) subject to the provisions of the following paragraph, the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) assumes all the obligations of such Guarantor pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Exchange Notes, the Indenture and (ii) immediately after
giving effect to such transaction, no Default or Event of Default exists.
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of any
Guarantor, then such Guarantor (in the event of a sale or other disposition,
by way of such a merger, consolidation or otherwise, of all of the capital
stock of such Guarantor) or the corporation acquiring the property (in the
event of a sale or other disposition of all of the assets of such Guarantor)
will be released and relieved of any obligations under its Subsidiary
Guarantee; provided that the Net Proceeds of such sale or other disposition
are applied in accordance with the applicable provisions of the Indenture. See
"--Repurchase at Option of Holders--Asset Sales."
OPTIONAL REDEMPTION
The Exchange Notes will not be redeemable at the Company's option prior to
July 1, 2003. Thereafter, the Exchange Notes will be subject to redemption at
any time at the option of the Company, 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 thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on July 1 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003............................................................ 105.000%
2004............................................................ 103.333%
2005............................................................ 101.667%
2006 and thereafter............................................. 100.000%
</TABLE>
Notwithstanding the foregoing, during the first 36 months after the date of
this Prospectus, the Company may on any one or more occasions redeem up to 30%
of the aggregate principal amount of Exchange Notes originally issued under
the Indenture at a redemption price of 110.000% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the redemption date, with the net cash proceeds of an offering of
common stock of the Company; provided that at least 70% of the aggregate
principal amount of Notes originally issued under the Indenture remain
outstanding immediately after the occurrence of such redemption (excluding
Notes held by the Company and its Subsidiaries); and provided, further, that
such redemption shall occur within 45 days of the date of the closing of such
offering.
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SELECTION AND NOTICE
If less than all of the Exchange Notes are to be redeemed at any time,
selection of Exchange 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 Exchange Notes are listed, or, if the Exchange
Notes are not so listed, on a pro rata basis, by lot or by such method as the
Trustee shall deem fair and appropriate; provided that no Exchange 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 Exchange Notes to be redeemed at its
registered address. Notices of redemption may not be conditional. If any
Exchange Note is to be redeemed in part only, the notice of redemption that
relates to such Exchange Note shall state the portion of the principal amount
thereof to be redeemed. A new Exchange 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 Exchange Note. Exchange Notes called for
redemption become due on the date fixed for redemption. On and after the
redemption date, interest ceases to accrue on Exchange Notes or portions of
them called for redemption.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Exchange Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Exchange Notes
will have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Exchange
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to
the date of purchase (the "Change of Control Payment"). Within ten days
following any Change of Control, the Company will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Exchange Notes on the date specified in
such notice, which date shall be no earlier than 30 days and no later than 60
days from the date such notice is mailed (the "Change of Control Payment
Date"), pursuant to the procedures required by the Indenture and described in
such notice. The Company will 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 Exchange Notes as a result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Exchange Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all
Exchange Notes or portions thereof so tendered and (3) deliver or cause to be
delivered to the Trustee the Exchange Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Exchange Notes
or portions thereof being purchased by the Company. The Paying Agent will
promptly mail to each Holder of Exchange Notes so tendered the Change of
Control Payment for such Exchange Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book-entry) to each
Holder a new Exchange Note equal in principal amount to any unpurchased
portion of the Exchange Notes surrendered, if any; provided that each such new
Exchange Note will be in a principal amount of $1,000 or an integral multiple
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 Payment
Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Exchange Notes to require
that the Company repurchase or redeem the Exchange Notes in the event of a
takeover, recapitalization or similar transaction.
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The New Credit Facility, contains prohibitions of certain events that would
constitute a Change of Control. In addition, the exercise by the Holders of
Exchange Notes of their right to require the Company to repurchase the
Exchange Notes could cause a default under the New Credit Facility, even if
the Change of Control itself does not, due to the financial effect of such
repurchases on the Company. Finally, the Company's ability to pay cash to the
Holders of Exchange Notes upon a repurchase may be limited by the Company's
then existing financial resources. See "Risk Factors--Change of Control."
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 the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Exchange Notes validly tendered and not withdrawn
under such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
transfer, conveyance or other disposition of "all or substantially all" of the
assets of the Company and its Restricted Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Exchange Notes
to require the Company to repurchase such Exchange Notes as a result of a
sale, lease, transfer, conveyance or other disposition of less than all of the
assets of the Company and its Subsidiaries taken as a whole to another Person
or group may be uncertain.
ASSET SALES
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee in the event of an Asset Sale
(whether pursuant to a single transaction or a series of related transactions)
that has fair market value or involves Net Proceeds in excess of $5.0 million)
of the assets or Equity Interests issued or sold or otherwise disposed of and
(ii) at least 80% of the consideration therefor received by the Company or
such Restricted Subsidiary is in the form of cash; provided that the amount of
(x) any liabilities (as shown on the Company's or such Restricted Subsidiary's
most recent balance sheet) of the Company or any Restricted Subsidiary (other
than contingent liabilities and liabilities that are by their terms
subordinated to the Exchange Notes or any guarantee thereof) that are assumed
by the transferee of any such assets pursuant to a customary novation
agreement that releases the Company or such Restricted Subsidiary from further
liability and (y) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
contemporaneously (subject to ordinary settlement periods) converted by the
Company or such Subsidiary into cash (to the extent of the cash received),
shall be deemed to be cash for purposes of this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset Sale
(360 days in the case of Net Proceeds that are comprised solely of Buy Out
Proceeds), the Company may apply such Net Proceeds (a) to repay Indebtedness
under the New Credit Facility, (b) to acquire all or substantially all of the
assets of, or a majority of the Voting Stock of, another Permitted Business,
(c) to make capital expenditures, (d) to acquire other long-term assets that
are used or useful in a Permitted Business, including Media Representation
Contracts, or (e) to pay Buy Out Proceeds Amounts in connection with Contract
Buy Outs. Pending the final application of any such Net Proceeds, the Company
may temporarily reduce revolving credit borrowings or otherwise invest such
Net Proceeds in any manner that is not prohibited by the Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million,
the Company will be required to make an offer to all Holders of Exchange Notes
and all holders of other Indebtedness that is pari passu with the Exchange
Notes containing provisions similar to those set forth in the Indenture with
respect to offers to purchase or redeem with the proceeds of sales of assets
(an "Asset Sale Offer") to purchase the maximum principal amount of Exchange
Notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof
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plus accrued and unpaid interest and Liquidated Damages thereon, if any, to
the date of purchase, in accordance with the procedures set forth in the
Indenture and such other pari passu Indebtedness. To the extent that any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Company
may use such Excess Proceeds for any purpose not otherwise prohibited by the
Indenture. If the aggregate principal amount of Exchange Notes and such other
pari passu Indebtedness tendered into such Asset Sale Offer surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall
select the Exchange Notes and such other pari passu Indebtedness to be
purchased on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
or any of its Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation
involving the Company or any of its Restricted Subsidiaries) or to the direct
or indirect holders of the Company's or any of its Restricted Subsidiaries'
Equity Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or to the Company or a Restricted Subsidiary of the Company); (ii)
purchase, redeem or otherwise acquire or retire for value (including, without
limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company or any direct or indirect parent
of the Company or other Affiliate of the Company (other than any such Equity
Interests owned by the Company or any Restricted Subsidiary of the Company);
(iii) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated to
the Exchange Notes, except a payment of interest or principal at Stated
Maturity; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock;" and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of the Indenture (excluding Restricted Payments
permitted by clauses (ii), (iii) and (iv) of the next succeeding
paragraph), is less than the sum, without duplication, of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Company since
the date of the Indenture as a contribution to its common equity capital or
from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale of Disqualified Stock or debt
securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company), plus
(iii) to the extent that any Restricted Investment that was made after the
date of the Indenture is sold for cash or otherwise liquidated or repaid
for cash, the lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment.
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The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the
Company in exchange for, or out of the net cash proceeds of the substantially
concurrent sale (other than to a Restricted Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c) (ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness; (iv) the payment of any dividend by a Restricted
Subsidiary of the Company to the holders of its Equity Interests on a pro rata
basis; (v) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary of
the Company held by (A) any employee, director or consultant of the Company
(or any of its Restricted Subsidiaries) pursuant to any employee, director or
consultant equity subscription agreement or stock option agreement or (B) any
Employee Stock Ownership Plan (or related trust) of the Company; provided that
the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $750,000 in any twelve-month period
and (vi) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interest of the Company or any Restricted Subsidiary of
the Company held by any Employee Stock Ownership Plan (or related trust) of
the Company necessary in order for any such Employee Stock Ownership Plan (or
related trust) of the Company to constitute a qualified plan or trust under
Sections 401(a) and 501(a), respectively of the Code; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests (excluding any Equity Interests repurchased, redeemed,
acquired or retired pursuant to clause (v) hereof) since the date of the
Indenture shall not exceed $2.5 million. See "Risk Factors--Repurchase
Obligations Under Employee Benefit Plans" and "Management--Executive
Compensation."
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. In the
event of any such designation, all outstanding Investments owned by the
Company and its Restricted Subsidiaries in the Subsidiary so designated will
be deemed to be an Investment made as of the time of such designation and will
reduce the amount available for Restricted Payments under the first paragraph
of this covenant or Permitted Investments, as applicable. All such outstanding
Investments will be deemed to constitute Restricted Investments in an amount
equal to the fair market value of such Investments at the time of such
designation. Such designation will only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by
this covenant shall be determined by the Board of Directors whose resolution
with respect thereto shall be delivered to the Trustee, such determination to
be based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if such fair market value exceeds
$5.0 million. Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which
the calculations required by the covenant "Restricted Payments" were computed,
together with a copy of any fairness opinion or appraisal required by the
Indenture. Contributions by employees to the Stock Growth Plan, as in effect
on the Issue Date, and, if such plan is not a Restricted Subsidiary, payments
by such Plan to purchase Equity Interests of the Company, in each case, in the
ordinary course of business on a basis consistent with past practices, shall
not constitute "Restricted Payments."
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INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Indenture provides that the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company and the Guarantors may incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock
if the Fixed Charge Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock is issued would have been at least 2.0 to
1, determined on a pro forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been incurred,
or the Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply to the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company of Indebtedness under the New Credit
Facility; provided that the aggregate principal amount of all Indebtedness
outstanding under the New Credit Facility after giving effect to such
incurrence does not exceed an amount equal to $10.0 million less the
aggregate amount of all Net Proceeds of Asset Sales that have been applied
since the date of the Indenture to repay Indebtedness pursuant to the
covenant described above under the caption "--Repurchase at the Option of
Holders--Asset Sales;"
(ii) the incurrence by the Company of Indebtedness represented by Capital
Lease Obligations, mortgage financings or purchase money obligations, in
each case incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property, plant or
equipment used in the business of the Company, in an aggregate principal
amount not to exceed $2.5 million at any time outstanding;
(iii) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
(iv) the incurrence by the Company up to $100.0 million of Indebtedness
represented by the Notes and the Exchange Notes;
(v) the guarantee by the Company or any of the Guarantors of Indebtedness
that was permitted to be incurred by another provision of this covenant;
(vi) the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Company and any of its
Wholly Owned Restricted Subsidiaries; provided, however, that (i) if the
Company is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Exchange Notes and (ii)(A) any subsequent issuance or
transfer of Equity Interests that results in any such Indebtedness being
held by a Person other than the Company or a Restricted Subsidiary thereof
and (B) any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Wholly Owned Restricted Subsidiary
thereof shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Restricted Subsidiary, as the case may
be, that was not permitted by this clause (vi);
(vii) the incurrence by the Company of Hedging Obligations that are
incurred for the purpose of fixing or hedging interest rate risk with
respect to any floating rate Indebtedness that is permitted by the terms of
this Indenture to be outstanding; provided, that the agreement, indenture
or other documents governing such Indebtedness require such fixing or
hedging of interest rate risk;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness) that was permitted by the Indenture
to be incurred under the first paragraph hereof or clauses (iii), (iv),
(viii) and (x) of this paragraph;
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(ix) the incurrence by the Company of Indebtedness with respect to
performance, surety and appeal bonds in the ordinary course of business;
(x) the incurrence by the Company's Unrestricted Subsidiaries of Non-
Recourse Debt, provided, however, that if any such Indebtedness ceases to
be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (x); and
(xi) the incurrence by the Company of additional Indebtedness in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause (xi), not to exceed $5.0 million.
The Indenture also provides that the Company will not incur any Indebtedness
(including Permitted Debt) that is contractually subordinated in right of
payment to any other Indebtedness of the Company unless such Indebtedness is
also contractually subordinated in right of payment to the Exchange Notes on
substantially identical terms; provided, however, that no Indebtedness of the
Company shall be deemed to be contractually subordinated in right of payment
to any other Indebtedness of the Company solely by virtue of being unsecured.
For purposes of determining compliance with this covenant, in the event that
an item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xi) above as of
the date of incurrence thereof, or is entitled to be incurred pursuant to the
first paragraph of this covenant as of the date of incurrence thereof, the
Company shall, in its sole discretion, classify such item of Indebtedness on
the date of its incurrence in any manner that complies with this covenant.
Accrual of interest, accretion or amortization of original issue discount, the
payment of interest on any Indebtedness in the form of additional Indebtedness
with the same terms and the payment of dividends on Disqualified Stock in the
form of additional shares of the same class of Disqualified Stock will not be
deemed to be an incurrence of Indebtedness or an issuance of Disqualified
Stock for purposes of this covenant; provided, in each such case, that the
amount thereof is included in Fixed Charges of the Company as accrued.
LIENS
The Indenture provides that the Company will not and will not permit any of
its Restricted Subsidiaries to, create, incur, assume or otherwise cause or
suffer to exist or become effective any Lien of any kind (other than Permitted
Liens) upon any of their property or assets, now owned or hereafter acquired,
unless all payments due under the Indenture and the Exchange Notes are secured
on an equal and ratable basis with the obligations so secured until such time
as such obligations are no longer secured by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any of
its Restricted 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 Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1)
on its Capital Stock or (2) with respect to any other interest or
participation in, or measured by, its profits, or (b) pay any indebtedness
owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or
advances to the Company or any of its Restricted Subsidiaries or (iii)
transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries. However, the foregoing restrictions will not apply to
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the date of the Indenture, (b) the New Credit
Facility as in effect as of the date of the Indenture, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive, taken as a whole, with
respect to such dividend and other payment restrictions than those contained
in the New Credit Facility as in effect on the date of the Indenture, (c) the
Indenture, the Exchange Notes and the Subsidiary Guarantees,
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(d) applicable law, (e) any instrument governing Indebtedness or Capital Stock
of a Person acquired by the Company or any of its Restricted Subsidiaries as
in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or
the property or assets of the Person, so acquired, provided that, in the case
of Indebtedness, such Indebtedness was permitted by the terms of the Indenture
to be incurred, (f) customary non-assignment provisions in leases entered into
in the ordinary course of business and consistent with past practices, (g)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii)
above on the property so acquired, (h) any agreement for the sale or other
disposition of a Restricted Subsidiary that restricts distributions by that
Restricted Subsidiary pending its sale or other disposition, (i) Liens
securing Indebtedness otherwise permitted to be incurred pursuant to the
provisions of the covenant described above under the caption "--Liens" that
limit the right of the Company or any of its Restricted Subsidiaries to
dispose of the assets subject to such Lien, (j) provisions with respect to the
disposition or distribution of assets or property in joint venture agreements
and other similar agreements entered into in the ordinary course of business
and (k) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Indenture provides that the Company may not, directly or indirectly,
consolidate or merge with or into (whether or not the Company is the surviving
corporation), or sell, assign, transfer, convey or otherwise dispose of all or
substantially all of its properties or assets, in one or more related
transactions, to another Person unless (i) the Company is the surviving
corporation or the Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale, assignment,
transfer, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) the Person formed by or
surviving any such consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, conveyance or other
disposition shall have been made assumes all the obligations of the Company
under the Registration Rights Agreement, the Exchange Notes and the Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) except in the case of a merger of the Company with or
into a Wholly Owned Restricted Subsidiary of the Company, the Company or the
Person formed by or surviving any such consolidation or merger (if other than
the Company), or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated
Net Worth of the Company immediately preceding the transaction and (B) will,
immediately after such transaction after giving pro forma effect thereto and
any related financing transactions as if the same had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of the covenant described above
under the caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock." The Indenture also provides that the Company may not, directly or
indirectly, lease all or substantially all of its properties or assets, in one
or more related transactions, to any other Person. The provisions of this
covenant is not be applicable to a sale, assignment, transfer, conveyance or
other disposition of assets between or among the Company and any of the
Guarantors.
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company or
such Restricted Subsidiary with an unrelated Person and (ii) the Company
delivers to the Trustee
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(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing. Notwithstanding the foregoing, the following items shall
not be deemed to be Affiliate Transactions: (i) any employment agreement
entered into by the Company or any of its Restricted Subsidiaries in the
ordinary course of business and consistent with the past practice of the
Company or such Restricted Subsidiary, (ii) transactions between or among the
Company and/or its Restricted Subsidiaries, (iii) payment of reasonable
directors fees to Persons who are not otherwise Affiliates of the Company,
(iv) any sale or other issuance of Equity Interests (other than Disqualified
Stock) of the Company, (v) Restricted Payments that are permitted by the
provisions of the Indenture described above under the caption "--Restricted
Payments," (vi) the application of the proceeds from the sale of the Notes as
described in the final offering memorandum, dated June 29, 1998 pertaining
thereto, (vii) the performance of the Services Agreement between the Company
and Media Financial Services, Inc. as in effect on the date of the Indenture,
(viii) the performance of the lease of the real property located in Tuxedo
Park, New York, between the Company and The Tuxedo Park Executive Conference
Center Proprietorship as in effect on the date of the Indenture and (ix)
payments in respect of the promissory note from Mr. Ralph C. Guild payable to
the Company in the original aggregate principal amount of $389,000 as in
effect on the date of the Indenture.
ADDITIONAL SUBSIDIARY GUARANTEES
The Indenture provides that if the Company or any of its Restricted
Subsidiaries shall acquire or create another Subsidiary after the date of the
Indenture, then such newly acquired or created Subsidiary shall become a
Guarantor and execute a supplemental indenture and deliver an Opinion of
Counsel, in accordance with the terms of the Indenture; provided, that all
Subsidiaries that have properly been designated as Unrestricted Subsidiaries
in accordance with the Indenture (i) shall not be subject to the requirements
of this covenant and (ii) shall be released from Obligations under any
Subsidiary Guarantee, in each case for so long as they continue to constitute
Unrestricted Subsidiaries.
BUSINESS ACTIVITIES
The Company will not, and will not permit any Subsidiary to, engage in any
business other than Permitted Businesses, except to such extent as would not
be material to the Company and its Subsidiaries taken as a whole.
PAYMENTS FOR CONSENT
The Indenture provides that neither the Company nor any of its Subsidiaries
will, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder of any Exchange
Notes for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture or the Exchange Notes unless such
consideration is offered to be paid and is paid to all Holders of the Exchange
Notes in connection with such consent, waiver or agreement.
NO SENIOR SUBORDINATED DEBT
The Indenture provides that (i) the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Indebtedness and
senior in any respect in right of payment to the Exchange Notes, and (ii) no
Guarantor will incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment
to any Indebtedness of such Guarantor and senior in any respect in right of
payment to the Subsidiary Guarantee of such Guarantor.
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REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Exchange Notes are outstanding,
the Company will furnish to the Holders of Exchange Notes (i) all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission on Forms 10-Q (commencing with the fiscal quarter
ending June 30, 1998) 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" that describes the financial condition
and results of operations of the Company and its consolidated Subsidiaries
(showing in reasonable detail, either on the face of the financial statements
or in the footnotes thereto and in Management's Discussion and Analysis of
Financial Condition and Results of Operations, the financial condition and
results of operations of the Company and its Restricted Subsidiaries separate
from the financial condition and results of operations of the Unrestricted
Subsidiaries of the Company) and, with respect to the annual information only,
a report thereon by the Company's certified independent accountants and (ii)
all current reports that would be required to be filed with the Commission on
Form 8-K if the Company were required to file such reports, in each case
within the time periods specified in the Commission's rules and regulations.
In addition, following the consummation of the exchange offer contemplated by
the Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available
to securities analysts and prospective investors upon request. In addition,
the Company and the Subsidiary Guarantors have agreed that, for so long as any
Exchange Notes remain outstanding, they will furnish to the 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.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Exchange Notes; (ii) default in
payment when due of the principal of or premium, if any, on the Exchange
Notes; (iii) failure by the Company or any of its Subsidiaries to comply with
the provisions described under the captions "--Repurchase at the Option of
Holders--Change of Control," "--Repurchase at the Option of Holders--Asset
Sales," "--Certain Covenants--Restricted Payments" or "--Certain Covenants--
Incurrence of Indebtedness and Issuance of Preferred Stock;" (iv) failure by
the Company or any of its Subsidiaries for 60 days after notice to comply with
any of its other agreements in the Indenture or the Exchange Notes; (v)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5.0 million or more; (vi) failure
by the Company or any of its Subsidiaries to pay final judgments aggregating
in excess of $5.0 million, which judgments are not paid, discharged or stayed
for a period of 60 days; (vii) except as permitted by the Indenture, any
Subsidiary Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any Guarantor,
shall deny or disaffirm its obligations under its Subsidiary Guarantee and
(viii) certain events of bankruptcy or insolvency with respect to the Company
or any of its Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Exchange Notes may
declare all the Exchange Notes to be due and payable
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immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company, any Significant Subsidiary or any group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Exchange
Notes will become due and payable without further action or notice. Holders of
the Exchange Notes may not enforce the Indenture or the Exchange Notes except
as provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Exchange Notes may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders of the Exchange Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have
had to pay if the Company then had elected to redeem the Exchange Notes
pursuant to the optional redemption provisions of the Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Exchange Notes. If an Event of
Default occurs prior to July 1, 2003 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the
intention of avoiding the prohibition on redemption of the Exchange Notes
prior to July 1, 2003, then the premium specified in the Indenture shall also
become immediately due and payable to the extent permitted by law upon the
acceleration of the Exchange Notes.
The Holders of a majority in aggregate principal amount of the Exchange
Notes then outstanding by notice to the Trustee may on behalf of the Holders
of all of the Exchange Notes waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event
of Default in the payment of interest on, or the principal of, the Exchange
Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or such Guarantor under the Exchange Notes, any Guarantee thereof, the
Indenture, or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Exchange Notes by accepting an
Exchange Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Exchange Notes. Such waiver
may not be effective to waive liabilities under the federal securities laws
and it is the view of the Commission that such a waiver is against public
policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Exchange Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Exchange
Notes to receive payments in respect of the principal of, premium, if any, and
interest and Liquidated Damages on such Exchange Notes when such payments are
due from the trust referred to below, (ii) the Company's obligations with
respect to the Exchange Notes concerning issuing temporary Exchange Notes,
registration of Exchange Notes, mutilated, destroyed, lost or stolen Exchange
Notes and the maintenance of an office or agency for payment and money for
security payments held in trust, (iii) the rights, powers, trusts, duties and
immunities of the Trustee, and the Company's obligations in connection
therewith and (iv) the Legal Defeasance provisions of the Indenture. In
addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain 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 Exchange Notes. In the event Covenant Defeasance
occurs,
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certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Exchange Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Exchange Notes, cash in U.S. dollars, non-callable
Government Securities, 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 on the outstanding Exchange Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Company must
specify whether the Exchange Notes are being defeased to maturity or to a
particular redemption date; (ii) in the case of Legal Defeasance, 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 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 of the
outstanding Exchange 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;
(iii) in the case of Covenant Defeasance, 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 Exchange 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; (iv) no Default or
Event of Default shall have occurred and be continuing on the date of such
deposit (other than a Default or Event of Default resulting from the borrowing
of funds to be applied to such deposit) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit; (v) such Legal Defeasance or
Covenant Defeasance will not result in a breach or violation of, or constitute
a default under any material agreement or instrument (other than the
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; (vi) the Company must
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; (vii) the Company must deliver to
the Trustee an Officers' Certificate stating that the deposit was not made by
the Company with the intent of preferring the Holders of Exchange Notes over
the other creditors of the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others; and (viii) the
Company must deliver to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that all conditions precedent provided for relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange the Exchange Notes in accordance with 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 is not required to transfer or
exchange any Exchange Note selected for redemption. Also, the Company is not
required to transfer or exchange any Exchange Note for a period of 15 days
before a selection of Exchange Notes to be redeemed.
The registered Holder of an Exchange Note will be treated as the owner of it
for all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture, the
Exchange Notes and the Subsidiary Guarantees may be amended or supplemented
with the consent of the Holders of at least a majority
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in principal amount of the Exchange Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender
offer or exchange offer for, Exchange Notes), and any existing default or
compliance with any provision of the Indenture or the Exchange Notes may be
waived with the consent of the Holders of a majority in principal amount of
the then outstanding Exchange Notes (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Exchange Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Exchange Notes held by a non-consenting Holder): (i)
reduce the principal amount of Exchange Notes whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Exchange Note or alter the provisions with respect to
the redemption of the Exchange Notes (other than provisions relating to the
covenants described above under the caption "--Repurchase at the Option of
Holders"), (iii) reduce the rate of or change the time for payment of interest
on any Exchange Note, (iv) waive a Default or Event of Default in the payment
of principal of or premium, if any, or interest on the Exchange Notes (except
a rescission of acceleration of the Exchange Notes by the Holders of at least
a majority in aggregate principal amount of the Exchange Notes and a waiver of
the payment default that resulted from such acceleration), (v) make any
Exchange Note payable in money other than that stated in the Exchange Notes,
(vi) make any change in the provisions of the Indenture relating to waivers of
past Defaults or the rights of Holders of Exchange Notes to receive payments
of principal of or premium, if any, or interest on the Exchange Notes, (vii)
waive a redemption payment with respect to any Exchange Note (other than a
payment required by one of the covenants described above under the caption "--
Repurchase at the Option of Holders"), (viii) release any Guarantor from its
Obligations under its Subsidiary Guarantee or the Indenture, except in
accordance with the terms of the Indenture or (ix) make any change in the
foregoing amendment and waiver provisions. In addition, any amendment to the
provisions of Article 10 of the Indenture (which relate to subordination) will
require the consent of the Holders of at least 75% in aggregate principal
amount of the Exchange Notes then outstanding if such amendment would
adversely affect the rights of Holders of Exchange Notes.
Notwithstanding the foregoing, without the consent of any Holder of Exchange
Notes, the Company and the Trustee may amend or supplement the Indenture or
the Exchange Notes to cure any ambiguity, defect or inconsistency, to provide
for uncertificated Exchange Notes in addition to or in place of certificated
Exchange Notes, to provide for the assumption of the Company's obligations to
Holders of Exchange Notes in the case of a merger or consolidation or sale of
all or substantially all of the Company's assets, to make any change that
would provide any additional rights or benefits to the Holders of Exchange
Notes or that does not adversely affect the legal rights under the Indenture
of any such Holder, or to comply with requirements of the Commission in order
to effect or maintain the qualification of the Indenture under the Trust
Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Exchange Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required,
in the exercise of its power, to use the degree of care of a prudent man in
the conduct of his own affairs. Subject to such provisions, the Trustee will
be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder of Exchange Notes, unless such Holder
shall have offered to the Trustee security and indemnity satisfactory to it
against any loss, liability or expense.
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ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to Interep National
Radio Sales, Inc., 100 Park Avenue, New York, New York 10017, Attention: Chief
Financial Officer.
BOOK-ENTRY, DELIVERY AND FORM
The certificates representing the Exchange Notes will be issued in fully
registered global form in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof. Except as described in the next
paragraph, the Exchange Notes initially will be represented by a single,
permanent global Exchange Note, in definitive, fully registered form without
interest coupons (the "Global Exchange Note") and will be deposited with the
Trustee as custodian for DTC and registered in the name of Cede & Co. or such
other nominee as DTC may designate. The Global Exchange Note (and any Exchange
Notes issued in exchange therefor) will be subject to certain restrictions on
transfer set forth therein and in the Indenture and will bear the respective
legends regarding such restrictions.
Holders of Exchange Notes who elect to take physical delivery of their
certificates instead of holding their interest through the Global Exchange
Note (collectively referred to herein as the "Non-Global Holders") will be
issued in registered form a certificated Exchange Note ("Certificated Exchange
Note"). Upon the transfer of any Certificated Exchange Note initially issued
to a Non-Global Holder, such Certificated Exchange Note will, unless the
transferee requests otherwise or the Global Exchange Note has previously been
exchanged in whole for Certificated Exchange Notes, be exchanged for an
interest in the Global Exchange Note.
The following description of the operations and procedures of DTC, Euroclear
and Cedel are provided solely as a matter of convenience. These operations and
procedures are solely within the control of the respective settlement systems
and are subject to changes by them from time to time. The Company takes no
responsibility for these operations and procedures and urges investors to
contact the system or their participants directly to discuss these matters.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Depositary's Participants include securities brokers and
dealers (including the Initial Purchasers), banks and trust companies,
clearing corporations and certain other organizations. Access to the
Depositary's system is also available to other entities such as banks,
brokers, dealers and trust companies (collectively, the "Indirect
Participants" or the "Depositary's Indirect Participants") that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only thorough the Depositary's
Participants or the Depositary's Indirect Participants.
The Company expects that, pursuant to procedures established by the
Depositary, (i) upon deposit of the Global Exchange Notes, the Depositary will
credit the accounts of Participants designated by the Initial Purchasers with
portions of the principal amount of the Global Exchange Notes and (ii)
ownership of the Exchange Notes evidenced by the Global Exchange Notes will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by the Depositary (with respect to the interests of the
Depositary's Participants), the Depositary's Participants and the Depositary's
Indirect Participants. Prospective purchasers are advised that the laws of
some states require that certain persons take physical delivery in definitive
form of securities that they own. Consequently, the ability to transfer
Exchange Notes evidenced by the Global Exchange Notes will be limited to such
extent.
So long as the Global Exchange Note Holder is the registered owner of any
Exchange Notes, the Global Exchange Note Holder will be considered the sole
Holder under the Indenture of any Exchange Notes evidenced
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by the Global Exchange Notes. Beneficial owners of Exchange Notes evidenced by
the Global Exchange Notes will not be considered the owners or Holders thereof
under the Indenture for any purpose, including with respect to the giving of
any directions, instructions or approvals to the Trustee thereunder. Neither
the Company nor the Trustee will have any responsibility or liability for any
aspect of the records of the Depositary or for maintaining, supervising or
reviewing any records of the Depositary relating to the Exchange Notes.
Payments in respect of the principal of and premium, interest and Liquidated
Damages, if any, on any Exchange Notes registered in the name of the Global
Exchange Note Holder on the applicable record date will be payable by the
Trustee to or at the direction of the Global Exchange Note Holder in its
capacity as the registered Holder under the Indenture. Under the terms of the
Indenture, the Company and the Trustee may treat the persons in whose names
Exchange Notes, including the Global Exchange Notes, are registered as the
owners thereof for the purpose of receiving such payments. Consequently,
neither the Company nor the Trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of Exchange
Notes. The Company believes, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants
with such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of the
Depositary. Payments by the Depositary's Participants and the Depositary's
Indirect Participants to the beneficial owners of Exchange Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
ADDITIONAL INFORMATION CONCERNING EUROCLEAR AND CEDEL BANK
Euroclear and Cedel Bank hold securities for participating organizations and
facilitate the clearance and settlement of securities transactions between
their respective participants through electronic book-entry changes in
accounts of such participants. Euroclear and Cedel Bank provide to their
participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Euroclear and Cedel Bank interface with domestic
securities markets. Euroclear and Cedel Bank participants are financial
institutions such as underwriters, securities brokers and dealers, banks,
trust companies and certain other organizations. Indirect access to Euroclear
and Cedel Bank is also available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodian relationship with a
Euroclear or Cedel Bank participant, either directly or indirectly. The
Company will have no direct control over the clearance and settlement of such
transactions.
When beneficial interests are to be transferred from the account of a
Participant (other than Morgan Guaranty Trust Company of New York and
Citibank, N.A., as depositaries for Euroclear and Cedel Bank, respectively) to
the account of a Euroclear participant or a Cedel Bank participant, the
purchaser must send instructions to Euroclear or Cedel Bank through a
participant at least one business day prior to settlement. Euroclear or Cedel
Bank, as the case may be, will instruct Morgan Guaranty Trust Company of New
York or Citibank, N.A. to receive the beneficial interests against payment.
Payment will include interest attributable to the beneficial interest from and
including the last payment date to and excluding the settlement date, on the
basis of a calendar year consisting of twelve 30-day calendar months. For
transactions settling on the 31st day of the month, payment will include
interest accrued to and excluding the first day of the following month.
Payment will then be made by Morgan Guaranty Trust Company of New York or
Citibank, N.A., as the case may be, to the Participant's account against
delivery of the beneficial interests. After settlement has been completed, the
beneficial interests will be credited to the respective clearing systems and
by the clearing system, in accordance with its usual procedures, to the
Euroclear participants' or Cedel Bank participants' account. Credit for the
beneficial interests will appear on the next business day (European time) and
the cash debit will be back-valued to, and interest attributable to the
beneficial interests will accrue from, the value date (which would be the
preceding business day when settlement occurs in New York). If settlement is
not completed on the intended value date (i.e., the trade fails), the
Euroclear or Cedel Bank cash debit will instead be valued as of the actual
settlement date.
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Euroclear participants and Cedel Bank participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Euroclear or Cedel Bank. Under
this approach, they may take on credit exposure to Euroclear or Cedel Bank
until the beneficial interests are credited to their accounts one day later.
Finally, day traders that use Euroclear or Cedel Bank and that purchase
beneficial interests from Participants for credit to Euroclear participants or
Cedel Bank participants should note that these trades would automatically fall
on the sale side unless affirmative action were taken to avoid these potential
problems.
Due to time zone differences in their favor, Euroclear participants and
Cedel Bank participants may employ their customary procedures for transactions
in which beneficial interests are to be transferred by the respective clearing
system, through Morgan Guaranty Trust Company of New York or Citibank, N.A.,
to another Participant. The seller must send instructions to Euroclear or
Cedel Bank through a participant at least one business day prior to
settlement. In these cases, Euroclear or Cedel Bank will instruct Morgan
Guaranty Trust Company of New York or Citibank, N.A., as the case may be, to
credit the beneficial interests to the Participant's account against payment.
Payment will include interest attributable to the beneficial interest from and
including the last payment date to and excluding the settlement date on the
basis of a calendar year consisting of twelve 30-day calendar months. For
transactions settling on the 31st day of the month, payment will include
interest accrued to and excluding the first day of the following month. The
payment will then be reflected in the account of the Euroclear participant or
Cedel Bank participant the following business day, and receipt of the cash
proceeds in the Euroclear or Cedel Bank participant's account will be back-
valued to the value date (which would be the preceding business day, when
settlement occurs in New York). If the Euroclear participant or Cedel Bank
participant has a line of credit with its representative clearing system and
elects to draw on such line of credit in anticipation of receipt of the sale
proceeds in its account, the back-valuation may substantially reduce or offset
any overdraft charges incurred over that one-day period. If settlement is not
completed on the intended value date (i.e., if trade fails), receipt of the
cash proceeds in the Euroclear or Cedel Bank participant's account would
instead be valued as of the actual settlement date.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in a
Global Exchange Note may, upon request, exchange such beneficial interest for
Exchange Notes in the form of Certificated Securities. Upon any such issuance,
the Trustee is required to register such Certificated Securities in the name
of, and cause the same to be delivered to, such person or persons (or the
nominee of any thereof). In addition, if (i) the Company notifies the Trustee
in writing that the Depositary is no longer willing or able to act as a
depositary and the Company is unable to locate a qualified successor within 90
days or (ii) the Company, at its option, notifies the Trustee in writing that
it elects to cause the issuance of Exchange Notes in the form of Certificated
Securities under the Indenture, then, upon surrender by the Global Exchange
Note Holder of the Global Exchange Notes, Exchange Notes in such form will be
issued to each person that the Global Exchange Note Holder and the Depositary
identify as being the beneficial owner of the related Exchange Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Exchange Note Holder or the Depositary in identifying the beneficial
owners of Exchange Notes and the Company and the Trustee may conclusively rely
on, and will be protected in relying on, instructions from the Global Exchange
Note Holder or the Depositary for all purposes.
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Exchange Notes
represented by the Global Exchange Notes (including principal, premium
interest and Liquidated Damages, if any) be made by wire transfer of
immediately available funds to the accounts specified by the Global Exchange
Note Holder. With respect to Certificated Securities, the Company will make
all payments of principal, premium, interest and Liquidated
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Damages, if any, by wire transfer of immediately available funds to the
accounts specified by the Holders thereof or, if no such account is specified,
by mailing a check to each such Holder's registered address.
The Exchange Notes represented by the Global Exchange Notes are expected to
be eligible to trade in the PORTAL market and to trade in the Depositary's
Same-Day Funds Settlement System, and any permitted secondary market trading
activity in such Exchange Notes will, therefore, be required by the Depositary
to be settled in immediately available funds. The Company expects that
secondary trading in the Certificated Securities will also be settled in
immediately available funds, although such settlement will not be within the
Company's control.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchasers entered into the Registration Rights
Agreement dated as of July 2, 1998. Pursuant to the Registration Rights
Agreement, the Company agreed to file with the Commission the Exchange Offer
Registration Statement on the appropriate form under the Securities Act with
respect to the Exchange Notes. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company will offer to the Holders of Transfer
Restricted Securities pursuant to the Exchange Offer who are able to make
certain representations the opportunity to exchange their Transfer Restricted
Securities for Exchange Notes. If (i) the Company is not required to file the
Exchange Offer Registration Statement or permitted to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy or (ii) any Holder of Transfer Restricted Securities
notifies the Company prior to the 20th day following consummation of the
Exchange Offer that (A) it is prohibited by law or Commission policy from
participating in the Exchange Offer or (B) that it may not resell the Exchange
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 or (C) that it is a
broker-dealer and owns Notes acquired directly from the Company or an
affiliate of the Company, the Company will file with the Commission a Shelf
Registration Statement to cover resales of the Series A Notes by the Holders
thereof who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. The Company
will use its best efforts to cause the applicable registration statement to be
declared effective as promptly as possible by the Commission. For purposes of
the foregoing, "Transfer Restricted Securities" means each Series A Note until
(i) the date on which such Series A Note has been exchanged by a person other
than a broker-dealer for an Exchange Note in the Exchange Offer, (ii)
following the exchange by a broker-dealer in the Exchange Offer of a Series A
Note for an Exchange Note, the date on which such Exchange Note is sold to a
purchaser who receives from such broker-dealer on or prior to the date of such
sale a copy of the prospectus contained in the Exchange Offer Registration
Statement, (iii) the date on which such Series A Note has been effectively
registered under the Securities Act and disposed of in accordance with the
Shelf Registration Statement or (iv) the date on which such Series A Note is
distributed to the public pursuant to Rule 144 under the Act.
The Registration Rights Agreement provides that (i) the Company will file an
Exchange Offer Registration Statement with the Commission on or prior to 60
days after the Closing Date, (ii) the Company will use its best efforts to
have the Exchange Offer Registration Statement declared effective by the
Commission on or prior to 120 days after the Closing Date, (iii) unless the
Exchange Offer would not be permitted by applicable law or Commission policy,
the Company will commence the Exchange Offer and use its best efforts to issue
on or prior to 30 business days after the date on which the Exchange Offer
Registration Statement was declared effective by the Commission, Exchange
Notes in exchange for all Series A Notes tendered prior thereto in the
Exchange Offer and (iv) if obligated to file the Shelf Registration Statement,
the Company will use its best efforts to file the Shelf Registration Statement
with the Commission on or prior to 60 days after such filing obligation arises
and to cause the Shelf Registration to be declared effective by the Commission
on or prior to 120 days after such obligation arises. If (a) the Company fails
to file any of the Registration Statements required by the Registration Rights
Agreement on or before the date specified for such filing, (b) any of such
Registration Statements is not declared effective by the Commission on or
prior to the date specified for such effectiveness (the "Effectiveness Target
Date"), or (c) the Company fails to consummate the Exchange Offer within 30
business days of the
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Effectiveness Target Date with respect to the Exchange Offer Registration
Statement, or (d) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted
Securities during the periods specified in the Registration Rights Agreement
(each such event referred to in clauses (a) through (d) above a "Registration
Default"), then the Company will pay Liquidated Damages to each Holder of
Series A Notes, with respect to the first 90-day period immediately following
the occurrence of the first Registration Default in an amount equal to $0.05
per week per $1,000 principal amount of Series A Notes held by such Holder.
The amount of the Liquidated Damages will increase by an additional $0.05 per
week per $1,000 principal amount of Series A Notes with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up
to a maximum amount of Liquidated Damages for all Registration Defaults of
$0.50 per week per $1,000 principal amount of Series A Notes. All accrued
Liquidated Damages will be paid by the Company on each Damages Payment Date to
the Global Note Holder by wire transfer of immediately available funds or by
federal funds check and to Holders of Certificated Securities by wire transfer
to the accounts specified by them or by mailing checks to their registered
addresses if no such accounts have been specified. Following the cure of all
Registration Defaults, the accrual of Liquidated Damages will cease.
Holders of Series A Notes will be required to make certain representations
to the Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver certain
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
Notes included in the Shelf Registration Statement and benefit from the
provisions regarding Liquidated Damages set forth above. Holders of Notes will
also be required to suspend their use of the prospectus included in the Shelf
Registration Statement under certain circumstances upon receipt of written
notice to that effect from the Company.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales of inventory in the ordinary course of business
consistent with past practices and other than any Contract Buy Out (provided
that the sale, conveyance or other disposition of all or substantially all of
the assets of the Company and its Restricted Subsidiaries taken as a whole
will be governed by the provisions of the Indenture described above under the
caption "--Repurchase at the Option of Holder--Change of Control" and/or the
provisions described above under the caption "--Certain Covenants--Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant), and (ii) the issue by any Restricted Subsidiary of the Company of
any Equity Interests of such
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Restricted Subsidiary and the sale by the Company or any of its Restricted
Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in the
case of either clause (i) or (ii), whether in a single transaction or a series
of related transactions (a) that have a fair market value in excess of $1.0
million or (b) for net proceeds in excess of $1.0 million; provided that with
respect to Contract Buy Outs of Media Representation Contracts of the Company
and its Restricted Subsidiaries, if, as of any Buy Out Determination Date
after the Date of the Indenture, the Buy Out Proceeds Amount exceeds $6.0
million, the Buy Out Proceeds Amount will be deemed to be Net Proceeds with
respect to an Asset Sale as of such Date and shall be applied in accordance
with the second paragraph of the covenant entitled "Repurchase at the Option
of Holders-Asset Sales." Notwithstanding the foregoing, the following items
shall not be deemed to be Asset Sales: (i) a transfer of assets by the Company
to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Subsidiary to the
Company or to another Wholly Owned Subsidiary, (ii) an issuance of Equity
Interests by a Wholly Owned Restricted Subsidiary to the Company or to another
Wholly Owned Restricted Subsidiary, and (iii) a Restricted Payment that is
permitted by the covenant described above under the caption "--Certain
Covenants--Restricted Payments."
"Buy Out Proceeds Amount" means an amount equal to (a) the aggregate amount
of cash consideration actually received by the Company and its Restricted
Subsidiaries in connection with Contract Buy Outs during a fiscal year
(whether or not a Contract Buy Out pursuant to which any such consideration
was received occurred during such fiscal year), minus (b) the aggregate amount
of cash consideration actually paid by the Company and its Restricted
Subsidiaries in connection with Contract Buy Outs during a fiscal year
(whether or not a Contract Buy Out pursuant to which any such consideration
was paid occurred during such fiscal year). Immediately following each But Out
Proceeds Determination Date, the Buy Out Proceeds Amount will be reset at
zero.
"Buy Out Proceeds Determination Date" means the last day of each fiscal year
of the Company.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight bank deposits, in each case with any lender
party to the New Credit Facility or with any domestic commercial bank having
capital and surplus in excess of $500 million and a Thompson Bank Watch Rating
of "B" or better, (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses (ii)
and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having
the highest rating obtainable from Moody's Investors Service, Inc. or Standard
& Poor's Corporation and in each case maturing within six months after the
date of acquisition and (vi) money market funds at least 95% of the assets of
which constitute Cash Equivalents of the kinds described in clauses (i)--(v)
of this definition.
"Change of Control" means the occurrence of any of the following: (i) the
sale, transfer, conveyance or other disposition (other than by way of merger
or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than a Principal or a Related Party of a
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Principal (as defined below), (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than the
Principals and their Related Parties, becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except
that in calculating the beneficial ownership of any particular "person," such
"person" shall be deemed to have beneficial ownership of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 35% of the Voting Stock of
the Company (measured by voting power rather than number of shares), (iv) the
consummation of the first transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as defined
above) becomes the "beneficial owner" (as defined above), directly or
indirectly, of more of the Voting Stock of the Company (measured by voting
power rather than number of shares) than is at the time "beneficially owned"
(as defined above) by the Principals and their Related Parties in the
aggregate or (v) the first day on which a majority of the members of the Board
of Directors of the Company are not Continuing Directors.
"Closing Date" means the date of the closing of the sale of the Series A
Notes.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with
an Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income, plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was deducted in computing such
Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or
accrued and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net
payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that
was paid in a prior period) of such Person and its Restricted Subsidiaries for
such period to the extent that such depreciation, amortization and other non-
cash expenses were deducted in computing such Consolidated Net Income, minus
(v) non-cash items increasing such Consolidated Net Income for such period
(other than items that were accrued in the ordinary course of business), in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or
profits of, and the depreciation and amortization and other non-cash expenses
of, a Subsidiary of the Company shall be added to Consolidated Net Income to
compute Consolidated Cash Flow of the Company only to the extent that a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Subsidiary without prior governmental
approval (that has not been obtained), and without direct or indirect
restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof that is a Guarantor, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that
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the declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been obtained)
or, directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded, (iv)
the cumulative effect of a change in accounting principles shall be excluded;
and (v) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Company or one of its
Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the date of the
Indenture in the book value of any asset owned by such Person or a
consolidated Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except,
in each case, Permitted Investments), and (z) all unamortized debt discount
and expense and unamortized deferred charges as of such date, all of the
foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Contract Buy Out" means the involuntary disposition or termination
(including, without limitation, pursuant to a buy out) by a media client of a
Media Representation Contract.
"Credit Facilities" means, with respect to the Company, one or more debt
facilities (including, without limitation, the New Credit Facility) or
commercial paper facilities, in each case with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables
financing (including through the sale of receivables to such lenders or to
special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in part from
time to time. Indebtedness under Credit Facilities outstanding on the date on
which Notes are first issued and authenticated under the Indenture shall be
deemed to have been incurred on such date in reliance on the exception
provided by clause (i) of the definition of Permitted Debt.
"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.
"Designated Senior Indebtedness" means (i) any Indebtedness outstanding
under the New Credit Facility and (ii) any other Senior Indebtedness permitted
under the Indenture the principal amount of which is $25.0 million or more and
that has been designated by the Company as "Designated Senior Indebtedness."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the
Holder thereof, in whole or in part, on or prior to the date that is 91 days
after the date on which the Notes mature; provided, however, that any Capital
Stock that would constitute Disqualified Stock solely because the holders
thereof have the right to require the Company to repurchase such Capital Stock
upon the occurrence of a Change of Control or an Asset Sale shall not
constitute Disqualified Stock
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if the terms of such Capital Stock provide that the Company may not repurchase
or redeem any such Capital Stock pursuant to such provisions unless such
repurchase or redemption complies with the covenant described above under the
caption "--Certain Covenants--Restricted Payments."
"Employee Stock Ownership Plan" means an employee stock ownership plan that
constitutes a qualified plan or trust, under Sections 401(a) and 501(a),
respectively of the Code and meets the requirements of Section 4975(e)(7) of
the Code.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of the Company and its Restricted
Subsidiaries (other than Indebtedness under the New Credit Facility) in
existence on the date of the Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person
and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations) and (ii) the consolidated interest of such Person and its
Restricted Subsidiaries that was capitalized during such period, and (iii) any
interest expense on Indebtedness of another Person that is Guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries (whether or not such
Guarantee or Lien is called upon) and (iv) the product of (a) all dividend
payments, whether or not in cash, on any series of preferred stock of such
Person or any of its Restricted Subsidiaries, other than dividend payments on
Equity Interests payable solely in Equity Interests of the Company (other than
Disqualified Stock) or to the Company or a Restricted Subsidiary of the
Company, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiary for such period to the Fixed Charges of such Person and
its Restricted Subsidiary for such period. In the event that the referent
Person or any of its Restricted Subsidiaries incurs, assumes, Subsidiary
Guarantees or redeems any Indebtedness (other than revolving credit
borrowings) or issues or redeems preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation
of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the
Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to
such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that
have been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date shall be deemed to
have occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated without
giving effect to clause (iii) of the proviso set forth in the definition of
Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded,
and (iii) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of
the referent Person or any of its Restricted Subsidiaries following the
Calculation Date.
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"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, which are in effect on the date of the Indenture.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Guarantors" means each of (i) McGavren Guild, Inc., D&R Radio, Inc., CBS
Radio Sales, Inc., Allied Radio Partners, Inc., Clear Channel Radio Sales, LLC
and Caballero Spanish Media LLC and (ii) any other subsidiary that executes a
Subsidiary Guarantee in accordance with the provisions of the Indenture, and
their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced
by bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable
or Media Representation Contract buyouts payable incurred in the ordinary
course of business and consistent with past practices, if and to the extent
any of the foregoing (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, as well as all Indebtedness of others secured by a Lien
on any asset of such Person (whether or not such Indebtedness is assumed by
such Person) and, to the extent not otherwise included, the Guarantee by such
Person of any indebtedness of any other Person. The amount of any Indebtedness
outstanding as of any date shall be (i) the accreted value thereof, in the
case of any Indebtedness issued with original issue discount, and (ii) the
principal amount thereof, together with any interest thereon that is more than
30 days past due, in the case of any other Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Subsidiary of the Company sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company shall be deemed to have made
an Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such Subsidiary not sold or disposed
of in an amount determined as provided in the final paragraph of the covenant
described above under the caption "--Certain Covenants--Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
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"Media Representation Contract" means any contract between a media
representation firm and a media client providing for media representation
services.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any
of its Restricted Subsidiaries and (ii) any extraordinary gain (but not loss),
together with any related provision for taxes on such extraordinary gain (but
not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of
any non-cash consideration received in any Asset Sale), net of the direct
costs relating to such Asset Sale (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied
to the repayment of Indebtedness (other than Indebtedness under the New Credit
Facility) secured by a Lien on the asset or assets that were the subject of
such Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"New Credit Facility" means that certain Credit Facility, dated as of July
2, 1998, by and among the Company, the Guarantors and BankBoston, N.A. and
Summit Bank providing for up to $10.0 million of borrowings, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (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 Notes being offered hereby) 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
(iii) 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.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Business" means the business of providing media representation
and media services and the sale of advertising and any other activities that
are reasonably incidental, similar or related thereto.
"Permitted Investments" means (a) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company that is a Guarantor; (b) any
Investment in Cash Equivalents; (c) any Investment by the Company or any
Subsidiary of the Company in a Person, if as a result of such Investment (i)
such Person becomes a Wholly Owned Restricted Subsidiary of the Company and a
Guarantor 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 Wholly Owned Restricted Subsidiary of the
Company that is a Guarantor; (d) any Investment made as a result of the
receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with the covenant described above under the caption "--
Repurchase at the Option of Holders--Asset Sales;" (e) any acquisition of
assets solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Company; and (f) other Investments in any Person
having an aggregate fair
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market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (f) that are at the time
outstanding, not to exceed $5.0 million.
"Permitted Junior Securities" means Equity Interests in the Company or any
Guarantor or debt securities that are subordinated to all Senior Indebtedness
(and any debt securities issued in exchange for Senior Indebtedness) to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Indebtedness pursuant to Article 10 of the Indenture.
"Permitted Liens" means (i) Liens on the assets of the Company and its
Subsidiaries securing Indebtedness under the New Credit Facility that was
permitted by the terms of the Indenture to be incurred; (ii) Liens in favor of
the Company; (iii) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company or any
Subsidiary of the Company; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (ii) of the second paragraph of the covenant
entitled "Incurrence of Indebtedness and Issuance of Preferred Stock" covering
only the assets acquired with such indebtedness, (vii) Liens existing on the
date of the Indenture; (viii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded, provided that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor; (ix) Liens
incurred in the ordinary course of business of the Company or any Subsidiary
of the Company with respect to obligations that do not exceed $5.0 million at
any one time outstanding and that (a) are not incurred in connection with the
borrowing of money or the obtaining of advances or credit (other than trade
credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Company or such Subsidiary and (x)
Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of
Unrestricted Subsidiaries.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal
amount (or accreted value, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount of (or accreted value, if
applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either
by the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Principal" means Ralph C. Guild.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any
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trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (A).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Senior Indebtedness" means (i) all Indebtedness outstanding under the New
Credit Facility and all Hedging Obligations with respect thereto, (ii) any
other Indebtedness permitted to be incurred by the Company under the terms of
the Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes and (iii) all Obligations with respect to the foregoing.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
will not include (w) any liability for federal, state, local or other taxes
owed or owing by the Company, (x) any Indebtedness of the Company to any of
its Subsidiaries or other Affiliates, (y) any trade payables or (z) any
Indebtedness that is incurred in violation of the Indenture.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
"Stock Growth Plan" means the Stock Growth Plan of the Company qualified
under Section 401(a) of the Code.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to
a Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (c) is a Person with respect to
which neither the Company nor any of its Restricted Subsidiaries has any
direct or indirect obligation (x) to subscribe for additional Equity Interests
or (y) to maintain or preserve such Person's financial condition or to cause
such Person to achieve any specified levels of operating results; (d) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has
at least one director on its board of directors that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying
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that such designation complied with the foregoing conditions and was permitted
by the covenant described above under the caption "Certain Covenants--
Restricted Payments." 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 the Company as of such date (and, if
such Indebtedness is not permitted to be incurred as of such date under the
covenant described under the caption "Incurrence of Indebtedness and Issuance
of Preferred Stock," the Company shall be in default of such covenant). 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 (i) such Indebtedness is
permitted under the covenant described under the caption "Certain Covenants--
Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a
pro forma basis as if such designation had occurred at the beginning of the
reference period, and (ii) no Default or Event of Default would be in
existence following such designation.
"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.
"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" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall
at the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the acquisition, ownership and
disposition of Exchange Notes by an initial beneficial owner of Exchange Notes
that, for United States federal income tax purposes, is not a "United States
person" (a "Non-United States Holder"). This discussion is based upon the
United States federal tax law now in effect, which is subject to change,
possibly retroactively. For purposes of this discussion, a "United States
person" means a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in the United States or under
the laws of the United States or of any political subdivision thereof, an
estate whose income is includible in gross income for United States federal
income tax purposes regardless of its source or a trust, if a United States
court is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. The tax treatment of the holders of the
Exchange Notes may vary depending upon their particular situations. United
States persons acquiring the Exchange Notes are subject to different rules
than those discussed below. In addition, certain other holders (including
insurance companies, tax exempt organizations, financial institutions and
broker-dealers) may be subject to special rules not discussed below.
Prospective investors are urged to consult their tax advisors regarding the
United States federal tax consequences of acquiring, holding and disposing of
Exchange Notes, as well as any tax consequences that may arise under the laws
of any foreign, state, local or other taxing jurisdiction.
INTEREST
Interest paid by the Company to a Non-United States Holder will not be
subject to United States federal income or withholding tax if such interest is
not effectively connected with the conduct of a trade or business within the
United States by such Non-United States Holder and such Non-United States
Holder (i) does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company; (ii) is not a
controlled foreign corporation with respect to which the Company is a "related
person" within the meaning of the United States Internal Revenue Code of 1986,
as amended (the "Code"), and (iii) certifies, under penalties of perjury, that
such holder is not a United States person and provides such holder's name and
address.
Interest paid to a Non-United States Holder that is effectively connected
with a United States trade or business conducted by such Non-United States
Holder is taxed at the graduated rates applicable to United States citizens,
resident aliens and domestic corporations, and is not subject to withholding
tax if the Non-United States Holder gives an appropriate statement to the
Company or its paying agent in advance of the interest payment. In addition to
the graduated tax, effectively connected interest received by a Non-United
States Holder that is a corporation may also be subject to an additional
branch profits tax at a rate of 30% (or such lower rate as may be specified by
an applicable income tax treaty).
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
federal income tax on gain recognized on a sale, redemption or other
disposition of a Note unless (i) the gain is effectively connected with the
conduct of a trade or business within the United States by the Non-United
States Holder or (ii) in the case of a Non-United States Holder who is a
nonresident alien individual and holds the Note as a capital asset, such
holder is present in the United States for 183 or more days in the taxable
year and certain other requirements are met.
If a Non-United States Holder falls under clause (i) in the preceding
paragraph, the holder will be taxed on the net gain derived from the sale
under the graduated United States federal income tax rates that are applicable
to United States citizens, resident aliens and domestic corporations, as the
case may be, and may be subject to withholding under certain circumstances
(and, with respect to corporate Non-United States Holders may also be subject
to the branch profits tax described above.) If an individual Non-United States
Holder falls under
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clause (ii) in the preceding paragraphs, the holder generally will be subject
to United States federal income tax at a rate of 30% on the amount by which
the gain derived from the sale from sources within the United States were to
exceed such holder's capital losses allocable to sources within the United
States for the taxable year of the sale.
FEDERAL ESTATE TAXES
If interest on the Exchange Notes is exempt from withholding of United
States federal income tax under the rules described above, the Exchange Notes
will not be included in the estate of a deceased Non-United States Holder for
United States federal estate tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The Company must report annually to the IRS and to each Non-United States
Holder any interest that is subject to withholding, or that is exempt from
United States withholding pursuant to a tax treaty, or interest that is exempt
from United States tax under the portfolio interest exception. Copies of these
information returns may also be made available under the provisions of a
specific treaty or agreement to tax authorities of the country in which the
Non-United States Holder resides.
Treasury Regulations provide that backup withholding and additional
information reporting will not apply to payments of principal on the Exchange
Notes by the Company to a Non-United States Holder if the holder certifies as
to its Non-United States status under penalties of perjury or otherwise
establishes an exemption (provided that neither the Company nor its Paying
Agent has actual knowledge that the holder is a United States person or that
the conditions of any other exemption are not, in fact, satisfied).
The payment of the proceeds from the disposition of Exchange Notes to or
through the United States office of any broker, United States or foreign, will
be subject to information reporting and possible backup withholding at a rate
of 31%, unless the owner certifies as to its status as a Non-United States
Holder under penalties of perjury or otherwise establishes an exemption,
provided that the broker does not have actual knowledge that the holder is a
United States person or that the conditions of any other exemption are not, in
fact, satisfied. The payment of the proceeds from the disposition of an
Exchange Note to or through a non-United States office of a non-United States
broker that is not a United States related person will not be subject to
information reporting or backup withholding. In the case of the payment of
proceeds from the disposition of an Exchange Note to or through a non-United
States office of a broker that is either a United States person or a United
States related person, information reporting is required on the payment unless
the broker has documentary evidence in its files that the owner is a Non-
United States Holder and the broker has no actual knowledge to the contrary.
Backup withholding will not apply to payments made through foreign offices of
a broker that is not a United States person or a United States related person
(absent actual knowledge that the payee is a United States person). For
purposes of this paragraph, a "United States related person" is (i) a
"controlled foreign corporation" for United States federal income tax
purposes, (ii) a foreign person 50% or more of whose gross income from all
sources for the three-year period ending with the close of its taxable year
preceding the payment (or for such part of the period that the broker has been
in existence) is derived from activities that are effectively connected with
the conduct of a United States trade or business or (iii) with respect to
payments made after December 31, 1999, a foreign partnership that, at any time
during its taxable year, is 50% or more (by income or capital interest) owned
by United States persons or is engaged in the conduct of a United States trade
or business. Recently adopted Treasury Regulations provide certain
presumptions under which a Non-United States Holder will be subject to backup
withholding and information reporting unless the Non-United States Holder
provides a certification as to its Non-United States Holder status.
Any amounts withheld under the backup withholding rules from a payment to a
Non-United States Holder will be allowed as a refund or a credit against such
Non-United States Holder's United States federal income tax liability provided
that the requisite procedures are followed.
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PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange 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 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 resales of Exchange
Notes received in exchange for Series A Notes where such Series A Notes were
acquired as a result of market-making activities or other trading activities.
The Company has agreed that it will make this Prospectus, as amended or
supplemented, available to any Participating Broker-Dealer for use in
connection with any such resale, and Participating Broker-Dealers shall be
authorized to deliver this Prospectus in connection with the sale or transfer
of the Exchange Notes. In addition, until , 1998 (90 days after the date
of this Prospectus), all dealers effecting transactions in the Exchange Notes
may be required to deliver a prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker-Dealers, Exchange 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 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 at 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 that resells the Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer. Any broker or dealer that participates
in a distribution of such Exchange Notes may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange 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 is an "underwriter" within the meaning of the Securities Act.
The Company will promptly send additional copies of this Prospectus and any
amendment or supplement of this Prospectus to any Participating Broker-Dealer
that requests such documents in the Letter of Transmittal. See "The Exchange
Offer."
LEGAL MATTERS
The validity of certain legal matters will be passed upon on behalf of the
Company by Christy & Viener, New York, New York.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1997 and
1996, and the consolidated statements of operations and shareholders' deficit
and cash flows for each of the three years in the period ended December 31,
1997 included in this Prospectus and elsewhere in the Registration Statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
86
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants................................. F-2
Consolidated Balance Sheets as of December 31, 1997 and 1996............. F-3
Consolidated Statements of Operations for the Years Ended December 31,
1997, 1996 and 1995..................................................... F-4
Consolidated Statements of Shareholders' Deficit for the Years Ended
December 31, 1997, 1996 and 1995........................................ F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1997, 1996 and 1995..................................................... F-6
Notes to Consolidated Financial Statements............................... F-7
Consolidated Balance Sheet as of March 31, 1998 (unaudited).............. F-20
Consolidated Statements of Operations for the Three Months Ended March
31, 1998 and 1997 (unaudited)........................................... F-21
Consolidated Statement of Shareholders' Deficit for the Three Months
Ended March 31, 1998 (unaudited)........................................ F-22
Consolidated Statements of Cash Flows for the Three Months Ended March
31, 1998 and 1997 (unaudited)........................................... F-23
Notes to Unaudited Interim Consolidated Financial Statements............. F-24
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Interep National Radio Sales, Inc.:
We have audited the accompanying consolidated balance sheets of Interep
National Radio Sales, Inc. (a New York corporation) and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, shareholders' deficit and cash flows for each of the three years
in the period ended December 31, 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 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 Interep National Radio
Sales, Inc. and subsidiaries as of December 31, 1997 and 1996, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
New York, New York
April 24, 1998
F-2
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................ $ 1,419 $ 2,653
Receivables, less allowance for doubtful accounts of
$1,220 and $982 in 1997 and 1996, respectively.......... 42,324 38,132
Current portion of deferred representation contract
costs................................................... 38,698 22,753
Prepaid expenses and other current assets................ 678 1,059
-------- --------
Total current assets................................... 83,119 64,597
-------- --------
Fixed assets, net.......................................... 4,335 4,216
Deferred costs on representation contract purchases........ 36,270 12,290
Station contract rights, net............................... 2,922 3,618
Other assets............................................... 14,566 9,464
-------- --------
Total assets........................................... $141,212 $ 94,185
======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES AND DEFERRED INCOME:
Current portion of long-term debt........................ $ 291 $ 4,200
Accounts payable and accrued expenses.................... 45,044 38,049
Accrued employee-related liabilities..................... 4,586 2,129
Deferred income.......................................... 15,998 18,986
-------- --------
Total current liabilities and deferred income.......... 65,919 63,364
-------- --------
Long-term debt............................................. 44,134 30,035
-------- --------
Other noncurrent liabilities............................... 47,786 9,197
-------- --------
Commitments and contingencies
Common and preferred stock subject to redemption:
Series A cumulative redeemable preferred stock, $.01 par
value--subject to mandatory redemption, 25,000 shares
authorized, 7,441 and 6,765 issued and outstanding in
1997 and 1996, respectively (redemption value of $7,441
and $6,765 in 1997 and 1996, respectively).............. 6,174 4,763
Series B cumulative redeemable preferred stock, $.01 par
value--5,000 shares authorized, 1,323 and 1,202 issued
and outstanding in 1997 and 1996, respectively
(redemption value of $1,323 and $1,202 in 1997 and 1996,
respectively)........................................... 750 571
Common stock subject to redemption--57,117 shares issued
and outstanding (stated at redemption value)............ 4,522 4,662
-------- --------
Total common and preferred stock subject to
redemption............................................ 11,446 9,996
======== ========
SHAREHOLDERS' DEFICIT:
Common stock, $.04 par value--1,000,000 shares
authorized, 334,549 shares issued excluding common stock
subject to redemption................................... 14 13
Additional paid-in-capital............................... 228 485
Accumulated deficit...................................... (26,373) (17,169)
Treasury stock, at cost--34,955 and 22,309 shares in 1997
and 1996, respectively.................................. (1,942) (1,736)
-------- --------
Total shareholders' deficit............................ (28,073) (18,407)
-------- --------
Total liabilities and shareholders' deficit............ $141,212 $ 94,185
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Commission revenues.................................. $87,096 $72,858 $70,306
------- ------- -------
Operating expenses:
Selling expenses................................... 63,135 53,251 48,240
General and administrative expenses................ 12,541 9,626 13,595
Depreciation and amortization expense.............. 14,983 8,187 4,694
------- ------- -------
Total operating expenses......................... 90,659 71,064 66,529
------- ------- -------
Operating income (loss)............................ (3,563) 1,794 3,777
Interest expense, net................................ 3,779 3,911 3,385
------- ------- -------
Income (loss) before provision for income taxes.... (7,342) (2,117) 392
Provision for income taxes........................... 412 400 320
------- ------- -------
Net income (loss).................................. (7,754) (2,517) 72
Preferred stock dividends requirements............... 1,590 1,364 1,159
------- ------- -------
Net loss applicable to common shareholders....... $(9,344) $(3,881) $(1,087)
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
(IN THOUSANDS EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY STOCK
-------------- PAID-IN ACCUMULATED ---------------
SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT
------- ------ ---------- ----------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1,
1995................... 323,549 $ 13 $ 485 $(11,217) 15,004 $ 966
Net income.............. -- -- -- 72 -- --
Treasury stock
purchases.............. -- -- -- -- 142 10
Accretion of preferred
stock.................. -- -- -- (512) -- --
Other issuances and
sales.................. -- -- -- -- (11,233) (584)
Accrued dividends in-
kind on preferred
stock.................. -- -- -- (647) -- --
Revaluation of common
stock subject to
redemption............. -- -- -- (454) -- --
------- ---- ----- -------- ------- ------
BALANCE, DECEMBER 31,
1995................... 323,549 13 485 (12,758) 3,913 392
Net loss................ -- -- -- (2,517) -- --
Treasury stock
purchases.............. -- -- -- -- 18,396 1,344
Accretion of preferred
stock.................. -- -- -- (640) -- --
Accrued dividends in-
kind on preferred
stock.................. -- -- -- (724) -- --
Revaluation of common
stock subject to
redemption............. -- -- -- (530) -- --
------- ---- ----- -------- ------- ------
BALANCE, DECEMBER 31,
1996................... 323,549 13 485 (17,169) 22,309 1,736
Net loss................ -- -- -- (7,754) -- --
Treasury stock
purchases.............. -- -- -- -- 12,646 206
Accretion of preferred
stock.................. -- -- -- (793) -- --
Accrued dividends in-
kind on preferred
stock.................. -- -- -- (797) -- --
Revaluation of common
stock subject to
redemption............. -- -- -- 140 -- --
Exercise of stock
options................ 11,000 1 (257) -- -- --
------- ---- ----- -------- ------- ------
BALANCE, DECEMBER 31,
1997................... 334,549 $ 14 $ 228 $(26,373) 34,955 $1,942
======= ==== ===== ======== ======= ======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------------
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................ $ (7,754) $(2,517) $ 72
Depreciation and amortization.................... 14,983 8,187 4,694
Changes in assets and liabilities--
Receivables.................................... (4,487) (1,450) (5,328)
Prepaid expenses and other current assets...... 243 654 (680)
Other noncurrent assets........................ 954 (5,211) (5,626)
Accounts payable and accrued expenses.......... (796) 9,502 5,903
Accrued employee-related liabilities........... 2,457 (383) (1,385)
Other noncurrent liabilities................... (2,399) (1,147) (2,720)
-------- ------- -------
Net cash provided by (used in) operating
activities.................................. 3,201 7,635 (5,070)
-------- ------- -------
Cash flows from investing activities:
Net additions to fixed assets.................... (792) (1,021) (1,689)
Businesses purchased............................. -- -- (3,510)
Net purchases of station representation
contracts....................................... (13,371) (3,080) (2,202)
-------- ------- -------
Net cash used in investing activities........ (14,163) (4,101) (7,401)
-------- ------- -------
Cash flows from financing activities:
Debt repayments.................................. (6,100) (1,820) --
Borrowings in accordance with credit agreement,
net............................................. 16,519 1,341 9,076
Sales and issuances of stock, net of issuance
costs........................................... (256) -- 747
Purchases of treasury stock...................... (206) (1,344) (314)
Other, net....................................... (229) (810) (494)
-------- ------- -------
Net cash provided by (used in) financing
activities.................................. 9,728 (2,633) 9,015
-------- ------- -------
Net increase (decrease) in cash and cash
equivalents................................. (1,234) 901 (3,456)
Cash and cash equivalents, beginning of period..... 2,653 1,752 5,208
-------- ------- -------
Cash and cash equivalents, end of period........... $ 1,419 $ 2,653 $ 1,752
======== ======= =======
Supplemental disclosures of cash flow information:
Interest paid.................................... $ 3,220 $ 3,274 $ 2,995
Income taxes paid, net........................... 235 628 1,670
Details of businesses purchased:
Fair value of assets acquired.................... $ 8,791
Less--Liabilities assumed........................ 5,281
-------
Cash paid for businesses purchased............... $ 3,510
=======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT SHARE INFORMATION)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Interep
National Radio Sales, Inc. ("Interep"), together with its subsidiaries
(collectively, the "Company"). All significant intercompany transactions and
balances have been eliminated.
Revenue Recognition
The Company is a national representation ("rep") firm serving radio
broadcast clients throughout the United States. Commission revenue is derived
from sales of advertising time for radio stations under representation
contracts. Commissions and fees are recognized in the month the advertisement
is broadcast. In connection with its unwired network business, the Company
collects fees for unwired network radio advertising and, after deducting its
commissions, remits the fees to the respective radio stations. Since it is
common practice in the industry for rep companies not to pay a station until
the corresponding receivable is paid, and since the receivable and payable are
equal, except for the commissions, fees payable to stations have been offset
against the related receivable from advertising agencies in the accompanying
consolidated balance sheets.
In accordance with industry practice, commissions are recognized based on
the standard broadcast calendar that ends on the last Sunday in each reporting
period. The broadcast calendar for the calendar years ended December 31, 1997
and 1996 had 52 weeks. The broadcast calendar for the calendar year ended
December 31, 1995 had 53 weeks.
Representation Contract Buyout Income and Expense
The Company's station representation contracts usually renew automatically
from year to year unless either party provides written notice of termination
at least twelve months prior to the next automatic renewal date. In accordance
with industry practice, in lieu of termination, an arrangement is normally
made for the purchase of such contracts by a successor representative firm.
The purchase price paid by the successor representation firm is generally
based upon the historic commission income projected over the remaining
contract period plus two months (the "Buyout Period").
Income resulting from the disposition of station representation contracts
and costs of obtaining station representation contracts are deferred and
amortized over the Buyout Period. Such amortization is included in the
accompanying consolidated statements of operations as a component of
depreciation and amortization expense. Amounts which are to be amortized
during the next year are included as current assets or current liabilities in
the accompanying consolidated balance sheets.
In addition, costs incurred as a result of commission rate reductions are
deferred and amortized over the remaining life of the existing representation
agreement. Such amortization is included in the accompanying consolidated
statements of operations as a component of depreciation and amortization
expense.
Fixed Assets, net
Furniture, fixtures and equipment are recorded at cost and are depreciated
over three to ten-year lives, and leasehold improvements are amortized over
the shorter of the lives of the leases or assets, all on a straight-line
basis.
F-7
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
Depreciation and Amortization Expense
A summary of depreciation and amortization expense for the years ended
December 31, 1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------ ------
<S> <C> <C> <C>
Depreciation and amortization of office facilities... $ 1,587 $1,796 $1,817
Amortization of intangible assets.................... 2,764 2,630 892
Representation contract buyout amortization, net..... 10,632 3,761 1,985
------- ------ ------
$14,983 $8,187 $4,694
======= ====== ======
</TABLE>
Cash and Cash Equivalents
Cash equivalents consist of cash in excess of daily requirements which are
invested in overnight deposits.
Station Contract Rights, Net
Station contract rights consist of costs of purchased businesses in excess
of net tangible assets acquired and are stated at cost less accumulated
amortization. These costs are being amortized using the straight-line method
over 5 years. Amortization expense for 1997, 1996 and 1995 was $978, $1,206
and $496, respectively, and is included in the above table.
Recoverability of goodwill and intangible assets is assessed regularly (at
least annually) and impairments, if any, are recognized in operating results
if a permanent diminution in value were to occur based upon an undiscounted
cash flow analysis. The Company has determined that no such impairment exists.
Income Taxes
Income taxes are recognized during the year in which transactions enter into
the determination of financial statement income, with deferred taxes being
provided for temporary differences between amounts of assets and liabilities
recorded for tax and financial reporting purposes.
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.
2. FIXED ASSETS
Fixed assets are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1996
-------- --------
<S> <C> <C>
Furniture and equipment.................................. $ 10,145 $ 9,451
Leasehold improvements................................... 5,778 5,191
Equipment held under lease............................... 3,461 3,036
-------- --------
19,384 17,678
Less--Accumulated depreciation and amortization.......... (15,049) (13,462)
-------- --------
Fixed assets, net...................................... $ 4,335 $ 4,216
======== ========
</TABLE>
F-8
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
3. ACQUISITIONS
In May 1995, the Company acquired the station representation agreements and
certain other assets of Concert Music Broadcasting, Inc., which specializes in
the representation of classical music radio stations, for approximately
$1,500,000.
In 1991, the Company exchanged 2.7% of the outstanding stock of one of its
subsidiaries, McGavren Guild, Inc. ("McGavren Guild"), for a 19.8% interest in
Caballero Spanish Media, Inc. ("Caballero"). Concurrent with the original
exchange, the Company entered into an arrangement with Caballero whereby the
Company would provide representation in certain cities for Caballero's clients
in return for a portion of the commission revenues, after deducting selling
expenses. In 1995 prior to the acquisition, shared revenues approximated
selling and other expenses. Income attributable to the minority interest in
McGavren Guild, Inc. was not material. In September 1995, the Company acquired
the station representation agreements and certain other assets of Caballero
for approximately $6,300,000. In connection with the acquisition, the Company
also exchanged its 19.8% interest in Caballero for the 2.7% interest in
McGavren Guild owned by Caballero.
The acquisitions have been accounted for using the purchase method of
accounting. The consolidated statements of operations include the operations
of the acquired businesses since their respective date of acquisition.
4. ACCOUNTS PAYABLE
The Company utilizes a cash management system whereby repayments of the
revolving credit note (Note 8) and overnight investments are determined daily.
Included in accounts payable are $5,580 and $5,955 of book overdrafts as of
December 31, 1997 and 1996, respectively, which result from this cash
management program.
5. EMPLOYEE STOCK PLANS
Employee Stock Ownership Plan
Under the terms of the Company's nonleveraged Employee Stock Ownership Plan
("ESOP") and Trust ("ESOT"), the Company may make annual contributions to the
ESOT in the form of either cash or common stock of the Company for the benefit
of eligible employees. In lieu of contributions, the Company may repurchase
shares of common stock from the ESOP or advance money to the plan from time to
time. The amount of annual funding is at the discretion of the Board of
Directors of the Company except that the minimum amount must be sufficient to
enable the ESOT to meet its current obligations. No cash contributions were
made by the Company in 1997 and 1996. In lieu of contributions during 1997 and
1996, the Company loaned money to the ESOP. At December 31, 1997 and 1996,
$182 and $255, respectively, of this advance remained outstanding and is
included in receivables in the accompanying consolidated balance sheets. The
ESOP intends to repay the Company through the proceeds of the sale of company
stock to the Interep Radio Store Stock Growth Plan (the "Stock Growth Plan").
Substantially all assets of the ESOT consist of common shares of the Company,
and the ESOT currently has no alternative method to fund its payment to
participants except through Company funding (see the Stock Growth Plan below).
Pursuant to the ESOP, as amended, employees of the Company and each of its
subsidiaries are eligible to participate, subject to certain uniform
requirements. Upon leaving the Company, employees may sell the shares back to
the ESOT at the then fair market value of the Company's common stock; related
distributions are made in quarterly installments over a period not to exceed
five years, depending upon the former employee's total account balance. The
portion of the vested liability relating to terminated employees as of
December 31, 1996
F-9
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
was $4,506 and is payable over a one to five-year period. As discussed in Note
9, the independent appraisal as of December 31, 1997 has not yet been
completed.
The Company has purchased life insurance policies on certain of its
executives for which Interep is the beneficiary. Proceeds from these policies
will be used to partially fund payments under the ESOP for these executives.
Such policies had a cash surrender value of $2,405 and $1,937 as of December
31, 1997 and 1996, respectively, with no offsetting loans.
As of December 31, 1997 and 1996, the Company's ESOP owned 223,363 and
220,027 shares, respectively, representing approximately 67% and 66%,
respectively, of the Company's total shares outstanding, before consideration
of common stock equivalents.
Stock Growth Plan
On January 1, 1995, the Company established the Stock Growth Plan, a
qualified stock bonus plan through which a portion of qualified employee
compensation is allocated to the plan. Contributions to the Stock Growth Plan
are used to repurchase shares of Interep common stock from the ESOP, the
Interep Radio Store Wealth Attainment Plan (the "401(k) Plan") and shares held
by terminated employees. Distributions to participants will be made in cash
upon termination of employment over a period not to exceed three years. The
Stock Growth Plan purchased 24,345, 22,839 and 13,687 shares from the ESOP in
1997, 1996 and 1995, respectively. No contributions were made by the Company
to the Stock Growth Plan in 1997, 1996 or 1995.
Stock Options
A summary of the stock options outstanding during the years ended December
31, 1997, 1996 and 1995 is set forth below:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED
SHARES SUBJECT AVERAGE
TO OPTION EXERCISE PRICE
-------------- --------------
<S> <C> <C>
Outstanding at December 31, 1994.............. 46,000 $52.41
Granted during 1995......................... 23,183 81.63
------- ------
Outstanding at December 31, 1995.............. 69,183 62.20
Exercised during 1996....................... (10,000) 57.91
------- ------
Outstanding at December 31, 1996.............. 59,183 62.93
Exercised during 1997....................... (11,000) 57.91
------- ------
Outstanding at December 31, 1997.............. 48,183 64.07
------- ------
Options exercisable at December 31, 1997...... 48,183 64.07
------- ------
</TABLE>
F-10
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
The following table summarizes information regarding the stock options
outstanding at December 31, 1997, pursuant to the terms of the Plan:
OPTIONS OUTSTANDING AND EXERCISABLE
<TABLE>
<CAPTION>
REMAINING
AT DECEMBER 31, 1997 EXERCISE PRICE CONTRACTUAL LIFE
-------------------- -------------- ----------------
<S> <C> <C>
10,000..................................... $32.62 8 Years
15,000..................................... 57.91 8 Years
23,183..................................... 81.63 8 Years
------
48,183
======
</TABLE>
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 123, "Accounting for Stock-Based Compensation." The Company
adopted the disclosure provisions of FASB Statement No. 123 in 1996, but opted
to remain under the expense recognition provisions of Accounting Principles
Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," in
accounting for stock option plans. Had compensation expense for stock options
granted under the Plan been determined based on fair value at the grant dates
consistent with the disclosure method required in accordance with FASB
Statement No. 123, there would have been no impact on 1997 or 1996 reported
results as all options granted in previous years vested 100% on the grant
dates, and no options were granted in 1997 or 1996. The Company's net income
for 1995 would have been decreased to the pro forma amounts shown below:
<TABLE>
<S> <C>
Net income (loss):
As reported.......................................................... $ 72
Pro forma............................................................ (760)
</TABLE>
The weighted average fair value of options granted in 1995 was estimated as
of the date of grant using the Black-Scholes stock option pricing model, based
on the following weighted average assumptions: risk free interest rate of
5.79% and expected term of 10 years. All options granted in 1995 vested 100%
on the grant dates.
6. EMPLOYEE BENEFIT PLANS
Managers' Incentive Compensation Plans
The Company maintains various managers' incentive compensation plans for
substantially all managerial employees. The plans provide for incentives to be
earned based on attainment of threshold operating profit and market share
goals established each year, as defined. The Company provided approximately
$4,551, $3,030 and $2,639 for such compensation during 1997, 1996 and 1995,
respectively.
401(k) Plan
The Company has a defined contribution plan, the 401(k) Plan, which covers
substantially all employees who have completed one year of service with the
Company. Under the terms of the 401(k) Plan, the Company may contribute a
matching contribution percentage determined by, and at the discretion of, the
Board of Directors but not in excess of the maximum amount deductible for
federal income tax purposes. Company contributions vest to the employees at
20% per year over a five-year period. The Company provided $728, $641 and $285
in
F-11
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
the form of cash in 1997, 1996 and 1995, respectively, and $250 in the form of
common stock (representing 3,780 shares) in 1995.
As of December 31, 1996, the 401(k) Plan owned 21,029 shares, representing
approximately 6% of the Company's total shares outstanding, before
consideration of common stock equivalents. Upon termination of employment,
individual shares are repurchased by the Company to fund that portion of the
individual's account balance attributable to Interep common stock. The 401(k)
Plan currently has no alternative method to fund the repurchase of Company
common stock except through Company funding (see the Stock Growth Plan in Note
5). During 1996 and 1995, the Company repurchased 3,948 and 2,033 shares,
respectively, from the 401(k) Plan relating to terminated employees. During
1997, the ESOP purchased all remaining shares held by the 401(k) Plan.
Deferred Compensation Plans
Certain of Interep's subsidiaries maintain deferred compensation plans which
cover employees selected at the discretion of management. Participants are
entitled to deferred compensation and other benefits under these plans. Under
certain of these plans, the subsidiaries have agreed to repurchase shares
("phantom stock") held by employees based upon the appreciation in value (as
defined) of each subsidiary. In 1997, 1996 and 1995, the Company provided
compensation expense (income) of $14, $14 and $(278) related to these plans.
All amounts due under these plans were fully vested as of December 31, 1997;
however, they remain subject to further appreciation/depreciation upon changes
in value (as defined).
In 1994, the Company established a compensation deferral plan for key
executives. Participants made a one-time election to defer certain of their
compensation and have such amounts contributed to a tax-deferred trust in the
form of Series B Cumulative Redeemable Preferred Stock (the "Series B
Preferred Stock") and Interep common stock. As of December 31, 1995, 11,263
shares of common stock (fair market value of $725) and 998 shares of Series B
Preferred Stock were held by the trust. No contributions were made in 1997 or
1996. In the accompanying consolidated financial statements, the amounts
allocated to the Series B Preferred Stock and common stock were determined
based on the relative fair values of each class of stock to the total amount
contributed to the trust. Distribution to participants out of the trust are
made in cash upon termination as follows: for shares of common stock,
depending on the total fair market value of such common stock in a
participant's account, over a period up to five years and, with respect to
shares of the Series B Preferred Stock, at the later of the participant's
termination of employment or when the Company redeems such Series B Preferred
Stock (see Note 9). All amounts under these plans are fully vested.
Supplemental Retirement Benefits
The Company has agreements with several of its employees to provide
supplemental retirement benefits. The benefits under these plans were fully
vested as of December 31, 1997. The Company provided $262, $476 and $263 in
1997, 1996 and 1995, respectively, for these plans which principally
represented interest on the vested benefits.
The Company has life insurance policies on certain of its executives for
which Interep is the beneficiary. Proceeds from these policies will be used to
partially fund certain of the retirement benefits under these supplemental
agreements. Such policies had cash surrender values of $1,115 and $1,022 as of
December 31, 1997 and 1996, respectively, and offsetting loans of $673 and
$617, respectively.
F-12
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
7. INCOME TAXES
Interep and its subsidiaries file a consolidated federal tax return.
However, for state tax purposes, separate tax returns are filed in various
jurisdictions where losses on certain subsidiaries are not available to offset
income on other subsidiaries, and tax benefits on such losses may not be
realized. As a result, the consolidated tax provisions are determined
considering this tax reporting structure and may not fluctuate directly with
consolidated pretax income.
Components of the provisions for income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Current:
Federal........................................ $ (2,310) $ (2,070) $ 458
State.......................................... 412 400 320
Deferred......................................... 2,310 2,070 (458)
-------- -------- ------
Total provision................................ $ 412 $ 400 $ 320
======== ======== ======
</TABLE>
A reconciliation of the U.S. federal statutory tax rate to the effective tax
rate on the income (loss) before income taxes for the periods ended December
31, 1997, 1996 and 1995, is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -----
<S> <C> <C> <C>
Provision computed at the federal statutory rate
of 34%........................................... $(2,496) $ (691) $ 166
State and local taxes, net of federal income tax
benefit.......................................... 272 264 211
Nondeductible travel and entertainment expense.... 249 298 309
Nondeductible insurance premiums.................. 45 (23) 102
Tax net operating loss carryforwards.............. (2,310) (2,070) (420)
Valuation allowance............................... 3,123 3,612 (269)
Other............................................. 1,529 (990) 221
------- ------- -----
Total........................................... $ 412 $ 400 $ 320
======= ======= =====
</TABLE>
Generally accepted accounting principles require the recognition of deferred
tax assets and liabilities for both the expected future tax impact of
temporary differences arising from assets and liabilities whose tax bases are
different from financial statement amounts, and for the expected future tax
benefit to be derived from tax loss and other carryforwards. A valuation
allowance is required to be established if it is more likely than not that all
or a portion of deferred tax assets will not be realized. Realization of the
future tax benefits is dependent on the Company's ability to generate taxable
income within the carryforward period and the periods in which net temporary
differences reverse.
F-13
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
Temporary differences and carryforwards which gave rise to deferred tax
assets and liabilities and the related valuation allowance at December 31,
1997 and 1996, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1997 1996
------- -------
<S> <C> <C>
Deferred tax assets:
Depreciation and amortization............................ $ 1,349 $ 519
Deferred income on sale of contracts..................... 4,159 3,100
Accruals not currently deductible for tax purposes....... 2,603 3,372
Consolidated net operating loss carryforward............. 2,310 2,070
Other.................................................... 593 1,081
------- -------
11,014 10,142
------- -------
Deferred tax liabilities:
Unamortized representation contracts..................... 1,280 3,531
Valuation allowance........................................ (9,734) (6,611)
------- -------
Net deferred tax asset................................... $ -- $ --
======= =======
</TABLE>
The amount of net deferred tax assets recorded in prior years was limited to
the extent of then available carryback of losses. As of December 31, 1997 and
1996, the Company has a refund receivable of $110 and $620, respectively.
Future utilizations of tax loss carryforwards are subject to Internal Revenue
Service examination and there is no assurance that the entire amount would be
sustained.
8. LONG-TERM DEBT
Long-term debt at December 31, 1997 and 1996, includes the following:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Borrowings under term loan(a)............................... $ -- $26,180
Borrowings under revolving credit facility(a)............... 44,000 7,401
------- -------
44,000 33,581
Capitalized lease obligations(b)............................ 425 654
------- -------
44,425 34,235
Less--Current portion....................................... 291 4,200
------- -------
$44,134 $30,035
======= =======
</TABLE>
(a) In 1997, the Company entered into an Amended and Restated Revolving Line
of Credit Agreement (the "Credit Agreement") which provides for borrowings of
up to $55,000. The Credit Agreement replaces the 1995 secured senior financing
facility. Unamortized debt issue costs relating to the 1995 secured senior
financing facility of $186 were written off in conjunction with the
refinancing. The outstanding borrowings under the Credit Agreement bear
interest, payable quarterly, at .625% to 1.625% above the bank's base rate or
1.625% to 2.625% above the bank's Eurodollar rate, at the option of the
Company. A commitment fee of .5% per annum is payable on any unused portion of
the revolving credit agreement.
The Credit Agreement requires the Company to maintain certain financial
ratios and includes other restrictions relating to additional indebtedness,
guarantees, liens, leases, investments, capital expenditures, mergers,
consolidations and sales of assets. Dividends or distributions of any kind by
Interep or any of its
F-14
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
subsidiaries are prohibited except that a subsidiary may make a dividend or
distribution to its immediate parent, Interep may purchase shares of the
Company's stock from terminated employees and Interep may make "payment in
kind" distributions to the holders of Series A Cumulative Redeemable Preferred
Stock (the "Series A Preferred Stock") and Series B Preferred Stock (see Note
9).
The weighted average interest rate charged to the Company under the
revolving credit facilities was 8.8% in both 1997 and 1996 and 9.9% in 1995.
The "Borrowings in accordance with credit agreement, net" on the
consolidated statements of cash flows were net of repayments under the
revolving credit facility of $4,100 and $1,550 in 1996 and 1995, respectively.
The Credit Agreement requires scheduled reductions on a quarterly basis
beginning October 1, 1998, resulting in maximum allowed borrowings as follows:
<TABLE>
<S> <C>
December 31:
1998............................................................... $53,625
1999............................................................... 45,705
2000............................................................... 36,190
2001............................................................... 25,318
2002............................................................... 13,748
2003............................................................... --
</TABLE>
Total borrowings are classified as long-term on the consolidated balance
sheets as of December 31, 1997 as they are less than the maximum allowed at
December 31, 1998.
(b) Certain of the Company's office furniture and equipment is rented under
lease arrangements expiring between 1998 and 2000. Such leases have been
capitalized, and the discounted obligations have been reflected as liabilities
in the accompanying consolidated balance sheets. Future payments under these
leases are as follows:
<TABLE>
<S> <C>
1998................................................................... $456
1999................................................................... 197
2000................................................................... 13
Thereafter............................................................. --
----
666
Less--Amount representing interest..................................... 241
----
Present value of net minimum lease payments............................ $425
====
</TABLE>
9. COMMON AND PREFERRED STOCK SUBJECT TO REDEMPTION
Series A Preferred Stock accrues dividends at 10% per annum on the sum of
all issued shares plus accumulated and unpaid dividends thereon. On the
occurrence of certain events, as defined in the Company's Certificate of
Amendment of the Certificate of Incorporation, the dividend rate will increase
to 15% per annum and will decrease back to 10% per annum once these events
have been cured. Dividends, in the form of cash or additional shares of Series
A Preferred Stock (valued at $1,000 per share), are payable annually. Series A
Preferred Stock shares outstanding on October 31, 2003 must be redeemed in
whole by the Company, inclusive of accrued or unpaid dividends. Series A
Preferred Stock is redeemable at the option of the holder on the earlier of
the sale of the Company, May 1, 1999, or certain events, as defined, or at the
option of the Company subject to the provisions of applicable corporate law.
F-15
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
The Securities Purchase Agreement includes certain restrictions relating to
the Company's ability to issue additional equity, incur additional
indebtedness, pay dividends and sell assets. Furthermore, the Securities
Purchase Agreement allows the holders to require the Company to redeem the
shares of both the Series A Preferred Stock and common stock on the earliest
of the payment in full of all Senior Indebtedness (Note 8), May 1, 1999, sale
of the corporation, or certain other events as defined in the Securities
Purchase Agreement. The redemption value of the Series A Preferred Stock shall
be equal to the sum of $1,000 per share plus all dividends accrued and unpaid
thereon to the date of the redemption notice. Accordingly, the value of Series
A Preferred Stock is being accreted using the effective interest rate method
to achieve the redemption value at May 1, 1999. The redemption value of the
common stock at that date would be equal to the then appraised market value of
the common stock. At December 31, 1997, the common stock subject to redemption
is valued at the latest available appraised value and will be adjusted each
year. The adjustment for revaluation of common stock subject to redemption was
$(140), $530 and $454 in 1997, 1996 and 1995, respectively.
Series B Preferred Stock accrues dividends at 10% per annum on the sum of
all issued shares, plus accumulated and unpaid dividends thereon. In the event
of liquidation of the Company, Series B Preferred Stock shares are subordinate
to the Company's debt and Series A Preferred Stock. Dividends, in the form of
cash or additional shares of Series B Preferred Stock (valued at $1,000 per
share), are payable annually. Series B Preferred Stock may be redeemed at the
option of the Company or the holders of a majority of the then outstanding
Series B Preferred Stock on the later of the redemption of all outstanding
Series A Preferred Stock or November 1, 2003.
The redemption value of the Series B Preferred Stock shall be equal to the
sum of $1,000 per share plus all dividends accrued and unpaid thereon to the
date of the redemption notice. Accordingly, the Series B Preferred Stock is
being accreted using the effective interest method to achieve the redemption
value at November 1, 2003.
Accretion of the Series A Preferred Stock in 1997, 1996 and 1995 was $735,
$590 and $474, respectively. Accretion of the Series B Preferred Stock in
1997, 1996 and 1995 was $58, $50 and $38, respectively. Dividends-in-kind on
the Series A Preferred Stock in 1997, 1996 and 1995 were $676, $615 and $559,
respectively (consisting of 676, 615 and 559 shares, respectively). Dividends-
in-kind on the Series B Preferred Stock for 1997, 1996 and 1995 were $121,
$109 and $88, respectively (consisting of 121, 109 and 88 shares,
respectively).
The Company has traditionally repurchased the shares of its common stock
held by departing employees outside the ESOP at a price equal to the then
independently appraised value. The purchase price is payable in quarterly
installments, including interest at rates prevailing for U.S. Treasury
securities, over a one to five-year period depending upon the total value of
the shares. During 1997, 1996 and 1995, in connection with employee
terminations, the Company repurchased 12,646, 18,396 and 142 shares of common
stock, respectively, at a price equal to the then fair market value of the
shares. The independent appraisal as of December 31, 1996 and 1995 was $79.17
and $81.63, respectively.
10. RELATED PARTY TRANSACTIONS
In connection with the 1988 repayment of certain promissory notes to one of
the Company's executives, the Company issued to the executive options to
purchase up to 10,000 shares of the common stock of the Company at an option
price of $32.62 per share. Effective January 1991, as part of the executive's
1991 Amended and Restated Employment Agreement, options to purchase an
additional 10,000 shares of the Company's stock were granted at an option
price of $57.91 per share and an expiration date in 2001. Effective June 18,
1993, in connection with an amendment to the executive's 1991 Amended and
Restated Employment Agreement, the expiration date of the options at $32.62
per share was extended until January 1, 1997. The option prices
F-16
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
represented the fair market value at the date of grant as determined by an
independent appraisal. In December 1995, by a Unanimous Written Consent of the
Board of Directors, the expiration date of all the executive's outstanding
options was extended until December 31, 2005.
Since December 1979, the Company has leased from a trust, of which one of
its executives is an income beneficiary and one of its executives is the
trustee, a building which is used by the Company for training sessions and
management meetings. The current lease expires on December 31, 1999 and
provides for a base annual rental which is adjusted each year to reflect
inflation and actual usage. Total lease expense was $74 in 1997, 1996 and
1995.
At December 31, 1997 and 1996, an executive was indebted to Interep in the
total amount of $170 and $222, respectively (including accrued interest),
which is evidenced by a promissory note payable to Interep. This note bears
variable interest at the lowest rate permitted for federal income tax
purposes, which was 5.68% and 5.75% at December 31, 1997 and 1996,
respectively, and is due in equal annual installments of principal and
interest through December 31, 1999.
From June 1997 to December 1997, Interep was indebted to an executive of the
Company for amounts up to $2,000 plus interest. The interest expense incurred
is included in the consolidated statements of operations.
In 1997, the Company entered into an agreement with Media Financial
Services, an affiliate of one of the Company's executives, whereby Media
Financial Services provides financial and accounting services to the Company.
The fee for these services amounted to approximately $1,435 in 1997.
The Company believes the terms of the arrangements relating to the building
rental, indebtedness and accounting services are at least comparable to, if
not more favorable for the Company, than the terms which would have been
obtained in transactions with unrelated parties.
11. COMMITMENTS AND CONTINGENCIES
At December 31, 1997, the Company was committed under operating leases,
principally for office space, which expire at various dates through 2009.
Certain leases are subject to rent reviews and require payment of expenses
under escalation clauses. Rent expense was $4,266, $4,145 and $4,068 in 1997,
1996 and 1995, respectively. The noncash portion of rent expense was $85, $89
and $26 for 1997, 1996 and 1995, respectively. Future minimum rental
commitments under noncancellable leases are as follows:
<TABLE>
<S> <C>
1998................................................................. $ 4,040
1999................................................................. 3,843
2000................................................................. 3,538
2001................................................................. 3,475
2002................................................................. 3,407
Thereafter........................................................... 10,011
</TABLE>
The Company has employment agreements with certain of its officers and
employees for terms ranging from three to six years with annual compensation
aggregating approximately $1,643. These agreements include escalation clauses
(as defined) and provide for certain additional bonus and incentive
compensation.
The Company may be involved in various legal actions from time to time
arising in the normal course of business. In the opinion of management, there
are no matters outstanding that would have a material adverse effect on the
consolidated financial position or results of operations of the Company.
F-17
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
12. SUPPLEMENTAL INFORMATION
Interest expense is shown net of interest income of $109, $138 and $109 in
1997, 1996 and 1995, respectively.
One broadcast group (a different group in each year) contributed
approximately 28.7%, 13.1% and 12.8% of the Company's total revenues in 1997,
1996 and 1995, respectively. No other client group contributed revenues in
excess of 10% in 1997, 1996 or 1995.
In 1997 and 1996, contract buyout receivables from one group of radio rep
firms represented $17,425 and $11,197, respectively, of the Company's total
contract buyout receivables.
In 1997, the Company relocated its accounting department from New York to
Florida. Severance and relocation costs in connection with this move totaled
$1,350.
The following amounts are included under the receivables caption at December
31, 1997 and 1996, on the accompanying consolidated balance sheets:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Trade accounts receivable, net............................. $31,196 $25,923
Representation contract buyouts and other accounts
receivable................................................ 11,128 12,209
------- -------
Total.................................................... $42,324 $38,132
======= =======
</TABLE>
The following amounts are included under the accounts payable and accrued
liabilities caption at December 31, 1997 and 1996, on the accompanying
consolidated balance sheets:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Accounts payable and accrued expenses....................... $24,853 $25,650
Representation contract buyouts payable..................... 20,191 12,399
------- -------
Total..................................................... $45,044 $38,049
======= =======
</TABLE>
The following amounts are included under the other noncurrent liabilities
caption at December 31, 1997 and 1996, on the accompanying consolidated
balance sheets:
<TABLE>
<CAPTION>
1997 1996
------- ------
<S> <C> <C>
Deferred income.............................................. $17,767 $ --
Representation contract buyouts payable...................... 23,221 --
Other........................................................ 6,798 9,197
------- ------
Total...................................................... $47,786 $9,197
======= ======
</TABLE>
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." The estimated fair
value amounts have been determined by the Company using available market
information and appropriate valuation methodologies. However, considerable
judgment is necessarily required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are not
necessarily indicative of
F-18
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
the amounts that the Company could realize in a current market exchange. The
use of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------
CARRYING ESTIMATED
AMOUNT FAIR VALUE
-------- ----------
<S> <C> <C>
Assets:
Cash and cash equivalents.............................. $ 1,419 $ 1,419
Liabilities:
Long-term debt......................................... 44,134 44,134
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
Cash and Cash Equivalents
The carrying amount approximates fair value because of the short maturity of
those instruments.
Long-Term Debt
The fair value of long-term debt is estimated based on financial instruments
or financial instruments with similar terms, credit characteristics and
expected maturities.
The fair value estimates presented herein are based on pertinent information
available to the Company as of December 31, 1997. Although the Company is not
aware of any factors that would significantly affect the estimated fair value
amounts, such amounts have not been comprehensively reevaluated for purposes
of these financial statements since that date, and current estimates of fair
value may differ significantly from the amounts presented herein.
F-19
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE INFORMATION)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1998
---------
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................................... $ 4,441
Receivables, less allowance for doubtful accounts of $1,220........ 48,532
Current portion of deferred representation contract costs.......... 38,291
Prepaid expenses and other current assets.......................... 932
--------
Total current assets............................................. 92,196
--------
Fixed assets, net.................................................... 3,883
Deferred costs on representation contract purchases.................. 31,280
Station contract rights, net......................................... 2,809
Other assets......................................................... 14,973
--------
Total assets..................................................... $145,141
========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES AND DEFERRED INCOME:
Current portion of long-term debt.................................. $ 291
Accounts payable and accrued expenses.............................. 37,991
Accrued employee-related liabilities............................... 2,780
Deferred income.................................................... 13,973
--------
Total current liabilities and deferred income.................... 55,035
--------
Long-term debt....................................................... 42,593
--------
Other noncurrent liabilities......................................... 68,700
--------
Commitments and contingencies
Common and preferred stock subject to redemption:
Series A cumulative redeemable preferred stock, $.01 par value--
subject to mandatory redemption, 25,000 shares authorized, 7,627
issued and outstanding (redemption value of $7,627)............... 6,589
Series B cumulative redeemable preferred stock, $.01 par value--
5,000 shares authorized, 1,356 issued and outstanding (redemption
value of $1,356).................................................. 800
Common stock subject to redemption--57,117 shares issued and
outstanding (stated at redemption value).......................... 4,522
--------
Total common and preferred stock subject to redemption........... 11,911
--------
SHAREHOLDERS' DEFICIT:
Common stock, $.04 par value--1,000,000 shares authorized, 334,549
shares issued excluding common stock subject to redemption........ 14
Additional paid-in-capital......................................... 228
Accumulated deficit................................................ (31,142)
Treasury stock, at cost--37,896 shares............................. (2,198)
--------
Total shareholders' deficit...................................... (33,098)
--------
Total liabilities and shareholders' deficit...................... $145,141
========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheet.
F-20
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
----------------------
1998 1997
---------- ----------
<S> <C> <C>
Commission revenues.................................... $ 15,898 $ 15,029
---------- ----------
Operating expenses:
Selling expenses..................................... 13,836 13,980
General and administrative expenses.................. 2,597 2,545
Depreciation and amortization expense................ 2,715 322
---------- ----------
Total operating expenses........................... 19,148 16,847
---------- ----------
Operating loss..................................... (3,250) (1,818)
Interest expense, net.................................. 1,005 831
---------- ----------
Loss before provision for income taxes............... (4,255) (2,649)
Provision for income taxes............................. 49 131
---------- ----------
Net loss........................................... (4,304) (2,780)
Preferred stock dividends requirements................. 465 398
---------- ----------
Net loss applicable to common shareholders......... $ (4,769) $ (3,178)
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-21
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
(IN THOUSANDS EXCEPT SHARE INFORMATION)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TREASURY STOCK
-------------- PAID-IN ACCUMULATED ---------------
SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT
------- ------ ---------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1,
1998................... 334,549 $ 14 $228 $(26,373) 34,955 $1,942
Net loss................ -- -- -- (4,304) -- --
Treasury stock
purchases.............. -- -- -- -- 2,941 256
Accretion of preferred
stock.................. -- -- -- (246) -- --
Accrued dividends in-
kind on preferred
stock.................. -- -- -- (219) -- --
------- ---- ---- -------- ------- -------
BALANCE, MARCH 31,
1998................... 334,549 $ 14 $228 $(31,142) 37,896 $ 2,198
======= ==== ==== ======== ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-22
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS
ENDED MARCH 31,
----------------
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(4,304) $(2,780)
Depreciation and amortization............................. 2,715 322
Changes in assets and liabilities--
Receivables............................................. 3,453 32
Prepaid expenses and other current assets............... (254) (102)
Other noncurrent assets................................. (107) (275)
Accounts payable and accrued expenses................... (2,120) 2,606
Accrued employee-related liabilities.................... (1,806) (1,171)
Other noncurrent liabilities............................ 267 6
------- -------
Net cash used in operating activities................. (2,156) (1,362)
------- -------
Cash flows from investing activities:
Net additions to fixed assets............................. (177) (101)
Businesses purchased...................................... -- --
Net receipts from or (purchases of) station representation
contracts.................................................. 7,150 (117)
------- -------
Net cash provided by (used in) investing activities... 6,973 (218)
------- -------
Cash flows from financing activities:
Debt repayments........................................... (7,250) (280)
Borrowings in accordance with credit agreement, net....... 5,725 --
Sales and issuances of stock, net of issuance costs....... -- --
Purchases of treasury stock............................... (256) --
Other, net................................................ (14) --
------- -------
Net cash used in financing activities................. (1,795) (280)
------- -------
Net increase (decrease) in cash and cash equivalents.. 3,022 (1,860)
Cash and cash equivalents, beginning of period.............. 1,419 2,653
------- -------
Cash and cash equivalents, end of period.................... $ 4,441 $ 793
======= =======
Supplemental disclosures of cash flow information:
Interest paid............................................. $ 904 $ 730
Income taxes paid, net.................................... 49 131
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-23
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Interep
National Radio Sales, Inc. ("Interep"), together with its subsidiaries
(collectively, the "Company") and have been prepared in accordance with the
rules and regulations of the Securities and Exchange Commission. Accordingly,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. All significant intercompany
transactions and balances have been eliminated.
The consolidated financial statements as of March 31, 1998 and 1997 are
unaudited; however, in the opinion of management, such statements include all
adjustments necessary for a fair presentation of the results for the periods
presented. The interim financial statements should be read in conjunction with
the audited financial statements and notes thereto included in the Company's
Consolidated Financial Statements for the year ended December 31, 1997, which
are available upon request of the Company. Due to the seasonal nature of the
Company's business, the results of operations for the interim periods are not
necessarily indicative of the results that might be expected for future
interim periods or for the full year ended December 31, 1998.
REVENUE RECOGNITION
The Company is a national representation ("rep") firm serving radio
broadcast clients throughout the United States. Commission revenue is derived
from sales of advertising time for radio stations under representation
contracts. Commissions and fees are recognized in the month the advertisement
is broadcast. In connection with its unwired network business, the Company
collects fees for unwired network radio advertising and, after deducting its
commissions, remits the fees to the respective radio stations. Since it is
common practice in the industry for rep companies not to pay a station until
the corresponding receivable is paid, and since the receivable and payable are
equal, except for the commissions, fees payable to stations have been offset
against the related receivable from advertising agencies in the accompanying
consolidated balance sheets.
REPRESENTATION CONTRACT BUYOUT INCOME AND EXPENSE
The Company's station representation contracts usually renew automatically
from year to year unless either party provides written notice of termination
at least twelve months prior to the next automatic renewal date. In accordance
with industry practice, in lieu of termination, an arrangement is normally
made for the purchase of such contracts by a successor representative firm.
The purchase price paid by the successor representation firm is generally
based upon the historic commission income projected over the remaining
contract period plus two months (the "Buyout Period").
Income resulting from the disposition of station representation contracts
and costs of obtaining station representation contracts are deferred and
amortized over the Buyout Period. Such amortization is included in the
accompanying consolidated statements of operations as a component of
depreciation and amortization expense. Amounts which are to be amortized
during the next year are included as current assets or current liabilities in
the accompanying consolidated balance sheets.
In addition, costs incurred as a result of commission rate reductions are
deferred and amortized over the remaining life of the existing representation
agreement. Such amortization is included in the accompanying consolidated
statements of operations as a component of depreciation and amortization
expense.
F-24
<PAGE>
INTEREP NATIONAL RADIO SALES, INC.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)
2. SUBSEQUENT EVENT--FINANCING TRANSACTION
On July 2, 1998, the Company issued (the "Offering") $100,000,000 aggregate
principal amount of 10.0% Senior Subordinated Notes (the "Notes") due on July
1, 2008. The Notes are general unsecured obligations of the Company, and the
indenture agreement for the Notes stipulates, among other things, restrictions
on incurrence of additional indebtedness, payment of dividends, repurchase of
equity interests (as defined), create liens (as defined), enter into
transactions with affiliates (as defined), sell assets or enter into certain
mergers and consolidations. The Notes bear interest at the rate of 10.0% per
annum, payable semiannually in arrears on January 1 and July 1 of each year,
commencing on January 1, 1999. The Notes are subject to redemption at the
option of the Company, in whole or in part, at any time after July 1, 2003. In
addition, at any time and from time to time prior to July 1, 2001, the Company
may redeem up to an aggregate of 30% in principal amount of Notes originally
issued under the indenture agreement at a redemption price equal to 110.00% of
the principal amount thereof, plus accrued and unpaid interest and liquidated
damages, if any, with the net cash proceeds of one or more equity offerings
(as defined).
A portion of the net proceeds of the Offering were used to refinance bank
indebtedness and to redeem all of the outstanding shares of Series A and
Series B cumulative redeemable preferred stock and all of the outstanding
shares of the common stock subject to redemption.
As part of the Financing Transactions, on July 2, 1998, the Company has
entered into a $10.0 million revolving credit facility (the "New Credit
Facility") with BankBoston, N.A. ("BankBoston") and Summit Bank ("Summit").
The term of the New Credit Facility is six years. The lenders under the New
Credit Facility are BankBoston, Summit and any other lenders reasonably
acceptable to the Company, with BankBoston acting as administrative agent.
F-25
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Consolidated Financial
Statements of Interep are based on the historical financial statements of
Interep included elsewhere in the Offering Memorandum and give pro forma
effect to the adjustments described in the notes hereto. The Unaudited Pro
Forma Condensed Consolidated Balance Sheet gives effect to the Financing
Transactions as though these transactions had occurred on March 31, 1998. The
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1997 gives effect to the Financing Transactions as
though these transactions had occurred on January 1, 1997. The Unaudited Pro
Forma Condensed Consolidated Statement of Operations for the three months
ended March 31, 1998 gives effect to the Financing Transactions as though
these transactions had occurred on January 1, 1998. The Unaudited Pro Forma
Condensed Consolidated Statement of Operations for the twelve months ended
March 31, 1998 gives effect to the Financing Transactions as though these
transactions had occurred on April 1, 1997.
The pro forma adjustments are based upon available data and certain
assumptions that Company management believes are reasonable. The Unaudited Pro
Forma Condensed Consolidated Financial Statements are not necessarily
indicative of the Company's financial position or results of operations that
might have occurred had the aforementioned transactions been completed as of
the dates indicated above and do not purport to represent what the Company's
financial position or results of operations might be for any future period or
date. The Unaudited Pro Forma Condensed Consolidated Financial Statements
should be read in conjunction with the financial statements and the related
notes and the information contained in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
Prospectus.
P-1
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
AT MARCH 31, 1998
--------------------------------
PRO FORMA PRO
ACTUAL ADJUSTMENTS FORMA
-------- ----------- --------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.................. $ 4,441 36,801(a) $ 41,242
Receivables, net........................... 48,532 48,532
Current portion of deferred representation
contract costs............................ 38,291 38,291
Prepaid expenses and other current assets.. 932 932
-------- --------
Total current assets..................... 92,196 128,997
Fixed assets, net............................ 3,883 3,883
Deferred costs on representation contracts... 31,280 31,280
Station contract rights, net................. 2,809 2,809
Other assets................................. 14,973 3,325(b) 18,298
-------- --------
Total assets............................. $145,141 $185,267
======== ========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities and deferred income
Current portion of long-term debt.......... $ 291 $ 291
Accounts payable and accrued expenses...... 37,991 37,991
Accrued employee-related liabilities....... 2,780 2,780
Deferred income............................ 13,973 13,973
-------- --------
Total current liabilities and deferred
income.................................. 55,035 55,035
Long-term debt............................... 42,593 (42,500)(c) 93
Senior subordinated notes.................... -- 100,000(d) 100,000
Other noncurrent liabilities................. 68,700 68,700
-------- --------
Total liabilities........................ 166,328 223,828
Commitments and contingencies
Redeemable securities
Series A preferred stock................... 6,589 (6,589)(e) --
Series B preferred stock................... 800 (800)(e) --
Common stock subject to redemption......... 4,522 (4,522)(e) --
-------- --------
Total redeemable securities.............. 11,911 --
Shareholders' deficit
Common stock............................... 14 14
Additional paid-in-capital................. 228 (228)(f) --
Accumulated deficit........................ (31,142) (5,235)(g) (36,377)
Treasury stock............................. (2,198) (2,198)
-------- --------
Total shareholders' deficit.............. (33,098) (38,561)
-------- --------
Total liabilities and shareholders'
deficit............................... $145,141 $185,267
======== ========
</TABLE>
P-2
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<C> <S> <C>
(a) CASH AND CASH EQUIVALENTS
Proceeds from the issuance of Notes........................... $100,000
Cash used to pay estimated transaction fees and expenses
(including discounts and commissions)........................ (4,000)
Cash used to repay bank facility.............................. (42,500)
Cash used for redemption of Redeemable Securities............. (16,699)
--------
Net increase in cash.......................................... $ 36,801
========
(b) OTHER ASSETS
Estimated transaction fees and expenses in connection with the
Offering..................................................... $ 4,000
Write-off of deferred financing costs associated with current
bank facility................................................ (675)
--------
Net increase in other assets.................................. $ 3,325
========
(c) LONG-TERM DEBT
Repayment of bank facility.................................... $ 42,500
========
(d) SENIOR SUBORDINATED NOTES
Proceeds from the issuance of Notes........................... $100,000
========
(e) REDEEMABLE SECURITIES
Redemption of Series A preferred stock........................ $ (6,589)
Redemption of Series B preferred stock........................ (800)
Redemption of common stock subject to redemption.............. (4,522)
--------
Net decrease in redeemable securities......................... $(11,911)
========
(f) ADDITIONAL PAID-IN CAPITAL
Amount paid in excess of carrying value to acquire Redeemable
Securities attributable to Additional-paid-in-capital........ $ (228)
========
(g) ACCUMULATED DEFICIT
Write-off of deferred financing costs associated with current
bank facility................................................ $ (675)
Amount paid in excess of carrying value to acquire Redeemable
Securities................................................... (4,560)
--------
Net increase in accumulated deficit........................... $ (5,235)
========
</TABLE>
P-3
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------------------
PRO FORMA PRO
ACTUAL ADJUSTMENTS FORMA
------- ----------- --------
<S> <C> <C> <C>
Commission revenue.............................. $87,096 $ 87,096
Operating expenses:
Selling expenses.............................. 63,135 63,135
General and administrative expenses........... 12,541 12,541
Depreciation and amortization expense......... 14,983 365(a) 15,348
------- --------
Total operating expenses.................... 90,659 91,024
------- --------
Operating loss.................................. (3,563) (3,928)
Interest expense, net........................... 3,779 6,221(b) 10,000
------- --------
Loss before provision for income taxes.......... (7,342) (13,928)
Provision for income taxes...................... 412 412
------- --------
Net loss........................................ $(7,754) $(14,340)
======= ========
</TABLE>
<TABLE>
<C> <S> <C>
(a) DEPRECIATION AND AMORTIZATION
Amortization of deferred financing costs from the Offering..... $ 400
Elimination of previously recorded amortization of deferred
financing costs associated with current bank facility......... (35)
-------
$ 365
=======
(b) INTEREST EXPENSE, NET
Interest expense on the Notes at a rate of 10% per annum....... $10,000
Elimination of previously recorded interest expense............ (3,779)
-------
$ 6,221
=======
</TABLE>
P-4
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1998
----------------------------
PRO FORMA PRO
ACTUAL ADJUSTMENTS FORMA
------- ----------- -------
<S> <C> <C> <C>
Commission revenue............................... $15,898 $15,898
Operating expenses:
Selling expenses............................... 13,836 13,836
General and administrative expenses............ 2,597 2,597
Depreciation and amortization expense.......... 2,715 65(a) 2,780
------- -------
Total operating expenses..................... 19,148 19,213
------- -------
Operating loss................................... (3,250) (3,315)
Interest expense, net............................ 1,005 1,495(b) 2,500
------- -------
Loss before provision for income taxes........... (4,255) (5,815)
Provision for income taxes....................... 49 49
------- -------
Net loss......................................... $(4,304) $(5,864)
======= =======
</TABLE>
<TABLE>
<C> <S> <C>
(a) DEPRECIATION AND AMORTIZATION
Amortization of deferred financing costs from the Offering..... $ 100
Elimination of previously recorded amortization of deferred
financing costs associated with current bank facility......... (35)
-------
$ 65
=======
(b) INTEREST EXPENSE, NET
Interest expense on the Notes at a rate of 10% per annum....... $ 2,500
Elimination of previously recorded interest expense............ (1,005)
-------
$ 1,495
=======
</TABLE>
P-5
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
MARCH 31, 1998
-----------------------------
PRO FORMA PRO
ACTUAL ADJUSTMENTS FORMA
------- ----------- --------
<S> <C> <C> <C>
Commission revenue.............................. $87,965 $ 87,965
Operating expenses:
Selling expenses.............................. 62,991 62,991
General and administrative expenses........... 12,593 12,593
Depreciation and amortization expense......... 17,376 331(a) 17,707
------- --------
Total operating expenses.................... 92,960 93,291
------- --------
Operating loss.................................. (4,995) (5,326)
Interest expense, net........................... 3,953 6,047(b) 10,000
------- --------
Loss before provision for income taxes.......... (8,948) (15,326)
Provision for income taxes...................... 330 330
------- --------
Net loss........................................ $(9,278) $(15,656)
======= ========
</TABLE>
<TABLE>
<C> <S> <C>
(a) DEPRECIATION AND AMORTIZATION
Amortization of deferred financing costs from the Offering.... $ 400
Elimination of previously recorded amortization of deferred
financing costs associated with current bank facility........ (69)
--------
$ 331
========
(b) INTEREST EXPENSE, NET
Interest expense on the Notes at a rate of 10% per annum...... $ 10,000
Elimination of previously recorded interest expense........... (3,953)
--------
$ 6,047
========
</TABLE>
P-6
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALES PERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR THE
ACCOMPANYING LETTER OF TRANSMITTAL IN CONNECTION WITH THE EXCHANGE OFFER COV-
ERED BY THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
THE ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY SALE MADE HEREUNDER SHALL, UN-
DER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL DO
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECU-
RITIES, OTHER THAN THE SECURITIES TO WHICH IT RELATES, OR ANY OFFER TO BUY THE
EXCHANGE NOTES IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UN-
LAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.................................................................. 1
Risk Factors............................................................. 13
The Exchange Offer....................................................... 20
Use of Proceeds.......................................................... 28
Capitalization........................................................... 29
Selected Consolidated Financial Data..................................... 30
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 32
Business................................................................. 38
Management............................................................... 45
Principal Shareholders................................................... 52
Certain Transactions and Relationships................................... 53
Description of New Credit Facility....................................... 54
Description of Exchange Notes............................................ 55
Certain United States Federal Tax Considerations for Non-United States
Holders................................................................. 84
Plan of Distribution..................................................... 86
Legal Matters............................................................ 86
Independent Accountants..................................................
Available Information.................................................... ii
Index to Consolidated Financial Statements............................... F-1
Unaudited Pro Forma Condensed Consolidated Financial Statements.......... P-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
INTEREP NATIONAL RADIO SALES, INC.
OFFER TO EXCHANGE
10% SENIOR SUBORDINATED NOTES DUE 2008, SERIES B
FOR ALL OUTSTANDING
10% SENIOR SUBORDINATED NOTES DUE 2008, SERIES A
---------------
PROSPECTUS
---------------
, 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 727 of the Business Corporation Law of the State of New York grants
each corporation organized under such laws, such as the Company, the power to
indemnify its officers and directors. Article 12 of the Restated Certificate
of Incorporation of the Company provides that any person made a party to any
action, suit or proceeding by reason of the fact that he, his testator or
intestate, is or was an officer or director of the Company or of any company
which he served as such at the request of the Company, shall be indemnified by
the Company against the reasonable expenses, including attorneys' fees,
actually and necessarily incurred by him in connection with the defense of
such action, suit or proceeding or in connection with any appeal therein,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such officer or director is or was liable for
negligence or misconduct in the performance of his duties.
Article V of the Company's By-laws provides that, without limiting the
generality of the foregoing, the expenses referred to in the preceding
paragraph shall be deemed to include (1) if any such action, suit or
proceeding shall proceed to judgment, any and all costs and other expenses
imposed upon such person by reason of such judgment, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding
that such officer or director is liable for negligence or misconduct in the
performance of his duties; and (2) in the event of any settlement of any such
action, suit or proceeding, all reasonable costs and other expenses of such
settlement (other than any payments made to the Company itself), subject to
the condition that the costs and other expenses of such settlement shall not
substantially exceed the expenses which might reasonably be incurred in
conducting such litigation to a final conclusion. A determination that the
costs and other expenses of such settlement do not or did not substantially
exceed the expense which might reasonably be incurred in conducting such
litigation to a final conclusion made or approved (A) by a majority of the
directors of the Company then in office other than any directors who may be
involved in such litigation (whether or not such majority constitutes a
quorum, but provided that there shall be at least two such directors in
office), or (B) by the vote of the holders of at least a majority of the
outstanding stock at any annual or special meeting of the shareholders of the
Company, either before or after such settlement, shall conclusively satisfy
such condition.
If any such indemnity is paid otherwise than pursuant to a court order or
action by the shareholders, the Company shall within 18 months from the date
of such payment mail to its shareholders at the time entitled to vote for the
election of directors a statement specifying the persons paid, the amounts of
the payments and the final disposition of the litigation.
The foregoing rights of indemnification are not exclusive of any other
rights to which any director or officer may be entitled under any present or
future law, statute, by-law, agreement, vote of stockholders or otherwise.
The Company has entered into indemnity agreements with each of its directors
and certain of its executive officers which provides that the indemnitee will
be entitled to receive indemnification, which may include advancement of
expenses, to the full extent permitted by law for all expenses, judgments,
fines, penalties and settlement payments incurred by the indemnitee in actions
brought against him or her in connection with any act taken in the
indemnitee's capacity as a director or executive officer of the Company. Under
these agreements, and indemnitee's entitlement to indemnification in a
particular case will be made by a majority of the disinterested members of the
Board of Directors, if such members constitute a quorum of the full Board and,
if they do not, by independent legal counsel selected by the Board.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Purchase Agreement, dated June 29, 1998, among the Company, BancBoston
Securities Inc., Loewenbaum & Company Incorporated and SPP Hambro &
Co., LLC.
3.1 Restated Certificate of Incorporation of the Company dated April 25,
1985.
3.2 Certificate of Amendment of the Certificate of Incorporation of the
Company, dated June 24, 1993.
3.3 Certificate of Amendment of the Certificate of Incorporation of the
Company, dated November 9, 1993.
3.4 Certificate of Amendment of the Certificate of Incorporation of the
Company, dated February 14, 1994.
3.5 By-Laws (as amended) of the Company.
4.1 A/B Exchange Registration Rights Agreement, dated July 2, 1998, among
the Company, the Guarantors, BancBoston Securities Inc, Loewenbaum &
Company Incorporated and SPP Hambro & Co., LLC.
4.2 Indenture, dated July 2, 1998, between the Company, the Guarantors and
Summit Bank.
4.3 Form of Note (Included in Exhibit 4.2).
4.4 Form of Note Guarantee (Included in Exhibit 4.2).
5.1* Opinion of Christy and Viener.
10.1 Revolving Line of Credit Agreement, dated July 2, 1998, among the
Company, the Guarantors and Various Financial Institutions Now or
Hereafter Parties Hereto, BancBoston, N.A. and Summit Bank.
10.2 LLC Membership Interest Pledge Agreement, dated July 2, 1998, made by
the Company and McGavren Guild, Inc. in favor of BancBoston, N.A.
10.3 Security Agreement, dated July 2, 1998, among the Company, the
Guarantors and BankBoston, N.A.
10.4 Stock Pledge Agreement, dated July 2, 1998, by the Company in favor of
BankBoston, N.A.
10.5 Agreement of Lease, dated December 31, 1992, between the Prudential
Insurance Company of America and the Company.
10.6* Amended Lease, dated June 15, 1998, between the Tuxedo Park Executive
Conference Center Proprietorship and the Company.
10.7 Agreement, dated June 29, 1998, between the Company and Ralph C.
Guild.
10.8 Promissory Note, dated June 29, 1998 by Ralph C. Guild in favor of the
Company.
10.9 Interep National Radio Sales, Inc. Compensation Deferral Plan.
10.10 Trust Agreement under the Interep National Radio Sales, Inc.
Compensation Deferral Plan, dated August 22, 1994.
10.11 Services Agreement, dated June 1, 1997, between the Company and Media
Financial Services, Inc.
10.12 Amendment to Services Agreement, dated July 1, 1997, between the
Company and Media Financial Services, Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.13 Fourth Amended and Restated Employment Agreement, dated June 1, 1995,
between the Company and Ralph C. Guild.
10.14 Employment Agreement, dated January 1, 1991, between the Company and
Marc G. Guild.
10.15 Amendment, dated June 29, 1998, to Employment Agreement, dated January
1, 1991, between the Company and Marc G. Guild.
10.16 Non-Qualified Stock Option granted to Ralph C. Guild on December 31,
1988.
10.17 Amendment and Extension of Option, dated January 1, 1991, between the
Company and Ralph C. Guild.
10.18 Non-Qualified Stock Option granted to Ralph C. Guild on January 1,
1991.
10.19 Non-Qualified Stock Option granted to Ralph C. Guild on December 31,
1995.
10.20 Non-Qualified Stock Option granted to Marc G. Guild on January 1,
1991.
10.21 Non-Qualified Stock Option granted to Ralph C. Guild on June 29, 1997.
10.22 Non-Qualified Stock Option granted to Marc G. Guild on June 29, 1997.
10.23 Non-Qualified Stock Option granted to William J. McEntee, Jr. on June
29, 1997.
10.24 Deferred Compensation Agreement, dated September 30, 1997, between the
Company and Stewart Yaguda.
10.25 Supplemental Income Agreement, dated December 31, 1986, between the
Company and Ralph C. Guild.
10.26 Agreement, dated June 18, 1993, between the Company and Ralph C.
Guild.
12.1 Calculation of Ratio of Earnings to Fixed Charges.
21.1 Subsidiaries of Registrant.
23.1 Consent of Arthur Andersen LLP.
23.2* Consent of Christy & Viener (included in Exhibit 5.1).
24.1 Power of Attorney (included on signature pages hereto).
25.1 Form T-1 Statement of Eligibility Under the Trust Indenture Act of
1939 of Summit Bank.
27.1 Financial Data Schedule.
99.1* Form of Letter of Transmittal.
99.2* Form of Notice of Guaranteed Delivery.
</TABLE>
- --------
* To be filed by Amendment.
ITEM 22. UNDERTAKINGS.
Each undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in
II-3
<PAGE>
the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose 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) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement 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.
(c) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of 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 Act and will be governed by the final
adjudication of such issue.
(d) To respond to requests for information that is incorporated by
reference into the Prospectus pursuant to Items 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.
(e) 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.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
UNDERSIGNED REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, HEREUNTO DULY AUTHORIZED, IN THE
STATE OF NEW YORK, ON AUGUST 4, 1998.
Interep National Radio Sales, Inc.
/s/ Ralph C. Guild
By: _________________________________
Ralph C. Guild
Chief Executive Officer
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature appears
below makes, constitutes and appoints Ralph C. Guild and William J. McEntee,
Jr., and each of them acting without the other, his attorney-in-fact and
agent, in his name, place and stead, to execute on his behalf, as an officer
or director of the Company, this Registration Statement and any and all
amendments, including any post-effective amendments, to this Registration
Statement, and to file the same, with all exhibits thereto, and any other
documents in connection therewith, with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Act"), and any other
instruments which either of such attorneys-in-fact and agents deems necessary
or desirable to enable the Company to comply with the Act and the rules and
regulations promulgated thereunder and the securities or blue sky laws of any
state or other governmental subdivision, giving and granting to each of such
attorneys-in-fact and agents full power and authority to do and perform each
and every act and thing necessary or desirable to be done in and about the
premises as fully to all intents as he might or could do if personally
present, with full power of substitution and resubstitution, hereby ratifying
and confirming all that said attorneys-in-fact, or their substitutes, may
lawfully do or cause to be done by virtue thereof.
PURSUANT TO THE REQUIREMENTS OF THE ACT, THIS REGISTRATION STATEMENT HAS
BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED.
/s/ Ralph C. Guild President, Chief August 4, 1998
- ------------------------------------- Executive Officer and
RALPH C. GUILD Director (Principal
CHIEF EXECUTIVE OFFICER Executive Officer)
/s/ Marc G. Guild President, Marketing August 4, 1998
- ------------------------------------- Division; Director
MARC G. GUILD
/s/ William J. McEntee, Jr. Vice President and August 4, 1998
- ------------------------------------- Chief Financial
WILLIAM J. MCENTEE, JR. Officer (Principal
Financial and
Accounting Officer)
/s/ Leslie D. Goldberg Director August 4, 1998
- -------------------------------------
LESLIE D. GOLDBERG
/s/ Jerome S. Traum Director August 4, 1998
- -------------------------------------
JEROME S. TRAUM
II-5
<PAGE>
EXHIBIT 1.1
Execution Copy
================================================================================
INTEREP NATIONAL RADIO SALES, INC.
and
THE GUARANTORS LISTED ON SCHEDULE A HERETO
$100,000,000
10% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
June 29, 1998
BANCBOSTON SECURITIES INC.
LOEWENBAUM & COMPANY INCORPORATED
SPP HAMBRO & CO., LLC
================================================================================
<PAGE>
Interep National Radio Sales, Inc.
$100,000,000
10% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
------------------
June 29, 1998
New York, New York
BANCBOSTON SECURITIES INC.
LOEWENBAUM & COMPANY INCORPORATED
SPP HAMBRO & CO., LLC
c/o BANCBOSTON SECURITIES INC.
100 Federal Street
Boston, Massachusetts 02110
Ladies & Gentlemen:
Interep National Radio Sales, Inc., a New York corporation (the "Company"),
-------
proposes to issue and sell to BancBoston Securities Inc., Loewenbaum & Company
Incorporated and SPP Hambro & Co., LLC (each, an "Initial Purchaser" and,
-----------------
collectively, the "Initial Purchasers") $100,000,000 in aggregate principal
------------------
amount of 10% Series A Senior Subordinated Notes due 2008 (the "Series A
--------
Notes"), subject to the terms and conditions set forth herein. The Series A
Notes will be issued pursuant to an indenture (the "Indenture"), to be dated as
---------
of the Closing Date (as defined), among the Company, the Guarantors (as defined)
and Summit Bank, as trustee (the "Trustee"). The Series A Notes will be fully
-------
and unconditionally guaranteed (the "Series A Subsidiary Guarantees") as to
------------------------------
payment of principal, interest, liquidated damages and premium, if any, on an
unsecured senior subordinated basis, jointly and severally, by each entity
listed on Schedule A hereto (collectively, the "Guarantors"). Capitalized terms
---------- ----------
used herein and not otherwise defined shall have the meanings assigned to such
terms in the Indenture.
1. Issuance of Securities. The Company proposes, upon the terms and
----------------------
subject to the conditions set forth herein, to issue and sell to the Initial
Purchasers an aggregate of $100,000,000 in principal amount of Series A Notes.
The Series A Notes and the Series B Notes (as defined) issuable in exchange
therefor are collectively referred to herein as the "Notes" and the Series A
-----
Subsidiary Guarantees and the Series B Subsidiary Guarantees (as defined)
issuable in exchange therefor are collectively referred to herein as the
"Subsidiary Guarantees."
- ----------------------
Upon original issuance thereof, and until such time as the same is no
longer required
<PAGE>
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A AND REGULATION S. THE HOLDER OF THIS
SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A UNDER THE SECURITIES ACT, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S.
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a) (1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL THAT
SUCH TRANSFER IS IN COMPLIANCE WITH 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 LAW 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. Offering. The Series A Notes (including the Series A Subsidiary
--------
Guarantees) will be offered and sold to the Initial Purchasers pursuant to an
exemption from the registration requirements under the Act. The Company and the
Guarantors have prepared a preliminary offering memorandum, dated June 12, 1998
(the "Preliminary Offering Memorandum"), and a final offering memorandum, dated
-------------------------------
June 30, 1998 (the "Offering Memorandum"), relating to the Company, its
-------------------
subsidiaries, the Notes and the Subsidiary Guarantees.
The Initial Purchasers have advised the Company that the Initial Purchasers
will make offers (the "Exempt Resales") of the Series A Notes (including the
--------------
Series A Subsidiary Guarantees) on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers," as defined
in Rule 144A under the Act ("QIBs"), and (ii) non-U.S. persons outside the
----
United States in reliance upon Regulation S ("Regulation S") under the Act
------------
(each, a "Reg S Investor"). The QIBs and Reg S Investors are collectively
--------------
referred to herein as the "Eligible Purchasers." The Initial Purchasers will
-------------------
offer the Series A Notes (including the
2
<PAGE>
Series A Subsidiary Guarantees) to such Eligible Purchasers initially at a price
equal to 100.00% of the principal amount thereof. Such price may be changed at
any time without notice.
Holders (including subsequent transferees) of the Series A Notes (including
the Series A Subsidiary Guarantees) will have the registration rights set forth
in the registration rights agreement relating thereto in the form of Exhibit E
hereto (the "Registration Rights Agreement"), to be dated the Closing Date, for
-----------------------------
so long as such Series A Notes (including the Series A Subsidiary Guarantees)
constitute "Transfer Restricted Securities" (as defined in the Registration
------------------------------
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
and the Guarantors will agree to file with the Securities and Exchange
Commission (the "Commission"), under the circumstances set forth therein, (i) a
----------
registration statement under the Act (the "Exchange Offer Registration
---------------------------
Statement") relating to the 10% Series B Notes due 2008 (the "Series B Notes")
- --------- --------------
and the guarantees thereof (the "Series B Subsidiary Guarantees") to be offered
-------------------------------
in exchange for the Series A Notes and the Series A Subsidiary Guarantees,
respectively, (the "Exchange Offer") and (ii) a shelf registration statement
--------------
pursuant to Rule 415 under the Act (the "Shelf Registration Statement" and,
-------------------
together with the Exchange Offer Registration Statement, the "Registration
------------
Statements") relating to the resale by certain holders of the Series A Notes and
- ----------
the Series A Subsidiary Guarantees, and to use their best efforts to cause such
Registration Statements to be declared effective and to consummate the Exchange
Offer. This Agreement, the Notes, the Subsidiary Guarantees, the Indenture and
the Registration Rights Agreement are hereinafter referred to collectively as
the "Operative Documents."
-------------------
3. Purchase, Sale and Delivery. (a) On the basis of the representations,
---------------------------
warranties and covenants contained in this Agreement, and subject to its terms
and conditions, (i) the Company agrees to issue and sell to the Initial
Purchasers, and each of the Initial Purchasers agrees, severally and not
jointly, to purchase from the Company an aggregate principal amount of Series A
Notes (including the Series A Subsidiary Guarantees) set forth opposite its name
on Schedule D hereto and (ii) the Guarantors agree to issue the Series A
Subsidiary Guarantees. The purchase price for the Series A Notes (including the
Series A Subsidiary Guarantees) will be $970 per $1,000 principal amount of
Series A Note.
(b) Delivery of the Series A Notes (including the Series A Subsidiary
Guarantees) shall be made, against payment of the purchase price therefor, at
the offices of Christy & Viener, New York, New York or such other location as
may be mutually acceptable. Such delivery and payment shall be made at 9:00
a.m., New York City time, on July 2, 1998 or at such other time as shall be
agreed upon by the Initial Purchasers and the Company. The time and date of
such delivery and payment are herein called the "Closing Date."
------------
(c) On the Closing Date, one or more Series A Notes (including the Series A
Subsidiary Guarantees) in definitive global form, registered in the name of Cede
& Co., as nominee of The Depository Trust Company ("DTC"), having an aggregate
---
principal amount corresponding to the aggregate principal amount of the Series A
Notes (the "Global Notes") shall be delivered by the Company and the Guarantors
------------
to the Initial Purchasers (or as the Initial Purchasers direct), against payment
by the Initial Purchasers of the purchase price therefor, by wire transfer of
same day funds, to an account designated by the Company, provided that the
Company shall give at least two business days' prior written notice to the
Initial Purchasers of the information required to effect such wire transfer. The
Global Notes shall be made
3
<PAGE>
available to the Initial Purchasers for inspection not later than 9:30 a.m. on
the business day immediately preceding the Closing Date.
4. Agreements of the Company and the Guarantors. The Company and the
--------------------------------------------
Guarantors, jointly and severally, covenant and agree with the Initial
Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by the
Initial Purchasers, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Notes or Subsidiary
Guarantees for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purpose by any state securities commission or other
regulatory authority and (ii) of the happening of any event that makes any
statement of a material fact made in the Preliminary Offering Memorandum or
the Offering Memorandum untrue or that requires the making of any additions
to or changes in the Preliminary Offering Memorandum or the Offering
Memorandum in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Company and
the Guarantors shall use their reasonable best efforts to prevent the
issuance of any stop order or order suspending the qualification or
exemption of any Notes or Subsidiary Guarantees under any state securities
or Blue Sky laws and, if at any time any state securities commission or
other regulatory authority shall issue an order suspending the
qualification or exemption of any Notes or Subsidiary Guarantees under any
state securities or Blue Sky laws, the Company and the Guarantors shall use
their reasonable best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons identified by
the Initial Purchasers to the Company, without charge, as many copies of
the Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments or supplements thereto, as the Initial Purchasers may reasonably
request. The Company and the Guarantors consent to the use of the
Preliminary Offering Memorandum (until the requested number of copies of
the Offering Memorandum are furnished to the Initial Purchasers and to
those persons identified by the Initial Purchasers) and the Offering
Memorandum, and any amendments and supplements thereto required pursuant
hereto, by the Initial Purchasers in connection with Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering Memorandum or
the Offering Memorandum prior to the Closing Date unless the Initial
Purchasers shall previously have been advised thereof and shall not have
objected thereto within a reasonable time after being furnished a copy
thereof. The Company and the Guarantors shall promptly prepare, upon the
Initial Purchasers' request, any amendment or supplement to the Preliminary
Offering Memorandum or the Offering Memorandum that may be necessary or
advisable in connection with Exempt Resales.
(d) If, after the date hereof and prior to consummation of any Exempt
Resale, any event shall occur as a result of which, in the judgment of the
Company or in the reasonable opinion of counsel for the Company or counsel
for the Initial Purchasers, it becomes necessary or advisable to amend or
supplement the Preliminary Offering Memorandum or the Offering Memorandum
in
4
<PAGE>
order to make the statements therein, in the light of the circumstances
when such Preliminary Offering Memorandum or Offering Memorandum is
delivered to an Eligible Purchaser which is a prospective purchaser, not
misleading in any material respect, or if it is necessary or advisable to
amend or supplement the Preliminary Offering Memorandum or Offering
Memorandum to comply with applicable law, (i) to notify the Initial
Purchasers and (ii) forthwith to prepare an appropriate amendment or
supplement to such Preliminary Offering Memorandum or Offering Memorandum
so that the statements therein as so amended or supplemented will not, in
the light of the circumstances when it is so delivered, be misleading, or
so that such Preliminary Offering Memorandum or Offering Memorandum will
comply with applicable law.
(e) To cooperate with the Initial Purchasers and counsel for the
Initial Purchasers in connection with the qualification or registration of
the Series A Notes and Series A Subsidiary Guarantees under the securities
or Blue Sky laws of such jurisdictions as the Initial Purchasers may
reasonably request and to continue such qualification in effect so long as
required for the Exempt Resales; provided, however, that none of the
Company or the Guarantors shall be required in connection therewith 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 service of process
in suits or taxation, in each case, other than as to matters and
transactions relating to the Preliminary Offering Memorandum, the Offering
Memorandum or Exempt Resales, in any jurisdiction where it is not now so
subject.
(f) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement becomes effective or is terminated, to pay
all costs, expenses, fees and taxes incident to the performance of the
obligations of the Company and the Guarantors hereunder, including, without
limitation, in connection with: (i) the preparation, printing, filing and
distribution of the Preliminary Offering Memorandum and the Offering
Memorandum (including, without limitation, financial statements) and all
amendments and supplements thereto required pursuant hereto, (ii) the
issuance, transfer and delivery of the Series A Notes and the Series A
Subsidiary Guarantees to the Initial Purchasers, (iii) the qualification or
registration of the Series A Notes and the Series A Subsidiary Guarantees
for offer and sale under the securities or Blue Sky laws of the several
states (including, without limitation, the cost of printing and mailing a
preliminary and final Blue Sky Memorandum and the reasonable fees and
disbursements of counsel for the Initial Purchasers relating thereto), (iv)
furnishing such copies of the Preliminary Offering Memorandum and the
Offering Memorandum, and all amendments and supplements thereto, as may be
requested for use in connection with Exempt Resales, (v) the preparation of
certificates for the Series A Notes and the Series A Subsidiary Guarantees
(including, without limitation, printing and engraving thereof), (vi) the
fees, disbursements and expenses of the Company's and the Guarantors'
counsel and accountants, (vii) all fees and expenses (including fees and
expenses of counsel) of the Company and the Guarantors in connection with
the approval of the Notes (including the Subsidiary Guarantees) by DTC for
"book-entry" transfer, (viii) rating the Notes (including the Subsidiary
Guarantees) by rating agencies, (ix) the reasonable fees and expenses of
the Trustee and its counsel, (x) the performance by the Company of their
other obligations under this Agreement and the other Operative Documents
and (xi) "roadshow" travel and other expenses incurred by the
5
<PAGE>
Company in connection with the marketing and sale of the Series A Notes
(and the Series A Subsidiary Guarantees).
(g) To use the proceeds from the sale of the Series A Notes (and the
Series A Subsidiary Guarantees) in the manner described in the Offering
Memorandum under the caption "Use of Proceeds."
(h) Not to claim voluntarily, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Notes or
Subsidiary Guarantees.
(i) To do and perform all things required to be done and performed
under this Agreement by the Company and the Guarantors prior to or after
the Closing Date and to satisfy all conditions precedent on their part to
the delivery of the Series A Notes and the Series A Guarantees.
(j) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or any
Guarantor or any warrants, rights or options to purchase or otherwise
acquire debt securities of the Company or any Guarantor substantially
similar to the Notes or the Subsidiary Guarantees (other than (i) the Notes
and the Subsidiary Guarantees and (ii) commercial paper issued in the
ordinary course of business), without the prior written consent of the
Initial Purchasers.
(k) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes (and the Series A Subsidiary
Guarantees) in a manner that would require the registration under the Act
of the sale to the Initial Purchasers or the Eligible Purchasers of the
Series A Notes (and the Series A Subsidiary Guarantees) or to take any
other action that would result in the Exempt Resales not being exempt from
registration under the Act.
(l) For so long as any of the Series A Notes remain outstanding and
during any period in which the Company and the Guarantors are not subject
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to make available to any holder or beneficial owner
------------
of Notes and Subsidiary Guarantees in connection with any sale thereof and
any prospective purchaser of such Notes and Subsidiary Guarantees from such
holder or beneficial owner, the information required by Rule 144A(d)(4)
under the Act.
(m) To cause the Exchange Offer to be made in the appropriate form to
permit registered Series B Notes and Series B Subsidiary Guarantees to be
offered in exchange for the Series A Notes and Series A Subsidiary
Guarantees, respectively, and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
6
<PAGE>
(n) To comply with all of their agreements set forth in the
Registration Rights Agreement and all agreements set forth in the
representation letters of the Company and Guarantors to DTC relating to the
approval of the Notes (including the Subsidiary Guarantees) by DTC for
"book-entry" transfer.
(o) To effect the inclusion of the Notes (including the Subsidiary
Guarantees) in PORTAL and to obtain approval of the Notes (including the
Subsidiary Guarantees) by DTC for "book-entry" transfer.
(p) During a period of five years following the Closing Date, to
deliver without charge to the Initial Purchasers, as they may reasonably
request, promptly upon their becoming available, copies of (i) all reports
or other publicly available information that the Company and the Guarantors
shall mail or otherwise make available to their public securityholders and
(ii) all reports, financial statements and proxy or information statements
filed by the Company and the Guarantors with the Commission or any national
securities exchange and such other publicly available information
concerning the Company, the Guarantors, or any of their subsidiaries,
including without limitation, press releases.
(q) Prior to the Closing Date, to furnish to the Initial Purchasers,
as soon as they have been prepared in the ordinary course by the Company,
copies of any unaudited interim financial statements for any period
subsequent to the periods covered by the financial statements appearing in
the Offering Memorandum.
(r) Not to take, directly or indirectly, any action designed to, or
that might reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company or any of the
Guarantors to facilitate the sale or resale of the Notes and the
Subsidiary Guarantees. Except as permitted by the Act, the Company will
not distribute any (i) preliminary offering memorandum, including, without
limitation, the Preliminary Offering Memorandum, (ii) offering memorandum,
including, without limitation, the Offering Memorandum, or (iii) other
offering material in connection with the offering and sale of the Notes.
(s) To use their best efforts to do and perform all things required or
necessary to be done and performed under this Agreement prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Series A Notes and the Series A Subsidiary Guarantees.
5. Representations and Warranties. (a) The Company and the Guarantors,
------------------------------
jointly and severally, represent and warrant to the Initial Purchasers that:
(i) The Preliminary Offering Memorandum as of its date does not, and
the Offering Memorandum as of its date and (as amended or supplemented) as
of the Closing Date does not and will not, and any supplement or amendment
to any of them will not, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made,
7
<PAGE>
not misleading, except that the representations and warranties contained in
this paragraph shall not apply to statements in or omissions from the
Preliminary Offering Memorandum and the Offering Memorandum (or any
supplement or amendment thereto) made in reliance upon and in conformity
with information relating to the Initial Purchasers furnished to the
Company in writing by the Initial Purchasers through BancBoston Securities
Inc. expressly for use therein. No stop order preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any
amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act, has been issued.
(ii) The Company (A) is a New York corporation duly incorporated,
validly existing and in good standing under the laws of New York, (B) has
all requisite corporate power and authority to carry on its business as it
is currently being conducted and as described in the Offering Memorandum
and to own, lease and operate its properties, and (C) is duly qualified and
is in good standing as a foreign corporation, authorized to do business in
each jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification except where the failure to
be so qualified could not reasonably be expected to (x) result,
individually or in the aggregate, in a material adverse effect on the
properties, business, results of operations, condition (financial or
otherwise), affairs or prospects of the Company and its subsidiaries, taken
as a whole, (y) interfere with or adversely affect the issuance or
marketability of the Notes or the issuance of the Subsidiary Guarantees
pursuant hereto or (z) in any manner draw into question the validity of
this Agreement or any other Operative Document or the transactions
described in the Offering Memorandum under the caption "Use of Proceeds"
(any of the events set forth in clauses (x), (y) or (z), a "Material
--------
Adverse Effect").
--------------
(iii) Each of the Guarantors (A) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation or has been duly organized and is validly
existing as a limited liability company in good standing under the laws of
its jurisdiction of formation, (B) has all requisite corporate power and
authority to carry on its business as it is currently being conducted and
as described in the Offering Memorandum and to own, lease and operate its
properties, and (C) is duly qualified and in good standing as a foreign
corporation or foreign limited liability company, authorized to do business
in each jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except where the
failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect.
(iv) The entities listed on Schedule B hereto are the only
----------
subsidiaries, direct or indirect, of the Company. All of the outstanding
shares of capital stock of each of the Company's subsidiaries that are
corporations have been duly authorized and validly issued and are fully
paid and non assessable, and are owned by the Company, directly or
indirectly through one or more subsidiaries, free and clear of any security
interest, claim, lien, limitation on voting rights, encumbrance or adverse
interest of any nature (collectively, "Liens"), except for those Liens
contemplated by the Credit Agreement as described in the Offering
Memorandum. All membership interests of each of the Company's subsidiaries
that are limited liability companies are
8
<PAGE>
owned by the Company, directly or indirectly, through one or more
subsidiaries, free and clear of all Liens, except for those Liens
contemplated by the Credits Documents as described in the Offering
Memorandum.
(v) Other than as described in the Preliminary Offering Memorandum and
the Offering Memorandum, there are not currently any outstanding
subscriptions, rights, warrants, calls, commitments of sale or options to
acquire, or instruments convertible into or exchangeable for, any capital
stock or other equity interest of the Company's subsidiaries.
(vi) When the Series A Notes and the Series A Subsidiary Guarantees
are issued and delivered pursuant to this Agreement, none of the Series A
Notes or the Series A Subsidiary Guarantees will be of the same class
(within the meaning of Rule 144A under the Act) as securities of either of
the Company or of any of the Guarantors that are listed on a national
securities exchange registered under Section 6 of the Exchange Act or that
are quoted in a United States automated inter-dealer quotation system.
(vii) Each of the Company and the Guarantors has all requisite
corporate or other power and authority, to execute, deliver and perform its
obligations under this Agreement and each of the other Operative Documents
to which it is a party and to consummate the transactions contemplated
hereby and thereby, including, without limitation, the corporate power and
authority, to issue, sell and deliver the Notes and to issue and deliver
the Guarantees as provided herein and therein.
(viii) This Agreement has been duly and validly authorized, executed
and delivered by each of the Company and the Guarantors.
(ix) The Indenture has been duly and validly authorized by each of the
Company and the Guarantors and on the Closing Date, will have been duly
executed and delivered by each of the Company and the Guarantors. When the
Indenture has been duly executed and delivered by each of the Company and
the Guarantors, the Indenture will be the legal, valid and binding
obligation of each of them, enforceable against each of them in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity. On the
Closing Date, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "Trust
-----
Indenture Act"), and the rules and regulations of the Commission applicable
-------------
to an indenture which is qualified thereunder. The Offering Memorandum
contains a summary of the material terms of the Indenture, which is
accurate in all material respects.
(x) The Registration Rights Agreement has been duly and validly
authorized by each of the Company and the Guarantors and, on the Closing
Date, will have been duly executed and delivered by each of the Company and
the Guarantors. When the Registration Rights Agreement has been duly
executed and delivered by each of the Company and the Guarantors, the
Registration Rights Agreement will be the legal, valid and binding
obligation of each of the Company and the Guarantors, enforceable against
each of them in accordance with its terms, subject to applicable
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bankruptcy, insolvency, fraudulent conveyance, reorganization or similar
laws affecting the rights of creditors generally and subject to general
principles of equity. The Offering Memorandum contains a summary of the
material terms of the Registration Rights Agreement, which is accurate in
all material respects.
(xi) Each of the Company and the Guarantors has all requisite
corporate or other power and authority to execute, deliver and perform its
obligations under (i) that certain credit agreement (the "Credit
Agreement") to be executed after the date hereof but prior to the Closing
Date, by and among the Company, each of the Guarantors and BankBoston, N.A.
and Summit Bank and (ii) any and all other agreements and instruments
ancillary to or entered into in connection with the transactions
contemplated by the Credit Agreement (items (i) and (ii) are referred to
collectively as the "Credit Documents"). Each of the Credit Documents has
been duly and validly authorized by each of the Company and the Guarantors
and, on the Closing Date, will have been duly executed and delivered by
each of the Company and the Guarantors. When each of the Credit Documents
has been duly executed and delivered by each of the Company and the
Guarantors, each of the Credit Documents will be the legal, valid and
binding obligation of each of the Company and the Guarantors, enforceable
against each of them in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or other
similar laws affecting the rights of creditors generally and subject to
general principles of equity. The Company will have at least $10.0 million
of borrowings available to it under the Credit Agreement on the Closing
Date after giving effect to all transactions contemplated by the Operative
Documents, the initial borrowings under the Credit Agreement but subject to
covenant compliance in the Credit Agreement. All representations and
warranties to be made by the Company and the Guarantors under any of the
Credit Documents are true and correct in all material respects as of the
date hereof. The Offering Memorandum contains a summary of the material
terms of the Credit Documents, which is accurate in all material respects.
(xii) The Series A Notes have been duly and validly authorized by the
Company for issuance and sale to the Initial Purchasers pursuant to this
Agreement and, on the Closing Date, will have been duly executed and
delivered by the Company. When the Series A Notes have been issued and
authenticated in accordance with the terms of the Indenture and delivered
against payment therefor in accordance with the terms hereof and thereof,
the Series A Notes will be the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or similar
laws affecting the rights of creditors generally and subject to general
principles of equity. The Offering Memorandum contains a summary of the
material terms of the Notes, which is accurate in all material respects.
(xiii) The Series B Notes have been duly and validly authorized for
issuance by the Company and, when issued and authenticated in accordance
with the terms of the Registration Rights Agreement and the Indenture, will
be the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms and entitled to the
benefits of the Indenture, subject to applicable bankruptcy, insolvency,
fraudulent conveyance,
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reorganization or similar laws affecting the rights of creditors generally
and subject to general principles of equity.
(xiv) The Series A Subsidiary Guarantees have been duly and validly
authorized by each of the Guarantors and, on the Closing Date, will have
been duly executed and delivered by each of the Guarantors. When the
Series A Subsidiary Guarantees have been executed and delivered in
accordance with the terms of the Indenture and when the Series A Notes have
been issued and authenticated in accordance with the terms of the Indenture
and delivered against payment therefor in accordance with the terms hereof
and thereof, the Series A Subsidiary Guarantees will be the legal, valid
and binding obligations of each of the Guarantors, enforceable against each
of them in accordance with their terms and entitled to the benefits of the
Indenture, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity. The
Offering Memorandum contains a summary of the material terms of the
Subsidiary Guarantees, which is accurate in all material respects.
(xv) The Series B Subsidiary Guarantees have been duly and validly
authorized by each of the Guarantors and, when executed and delivered in
accordance with the terms of the Indenture and when the Series B Notes have
been issued and authenticated in accordance with the terms of the
Registration Rights Agreement and the Indenture, will be the legal, valid
and binding obligations of each of the Guarantors, enforceable against each
of them in accordance with their terms and entitled to the benefits of the
Indenture, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity.
(xvi) Each of the Company and its subsidiaries is not and, after
giving effect to the transactions contemplated hereby or by the other
Operative Documents or the Credit Documents, will not be, (A) in violation
of its charter or bylaws or other organizational documents, (B) in default
in the performance of any bond, debenture, note, indenture, mortgage, deed
of trust or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties is subject, which
singly or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, or (C) in violation of any local, state, federal or foreign
law, statute, ordinance, rule, regulation, requirement, judgment or court
decree (including, without limitation, environmental laws, statutes,
ordinances, rules, regulations, judgments or court decrees) applicable to
it or any of its subsidiaries or any of its or their assets or properties
(whether owned or leased), which singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. To the best
knowledge of the Company and the Guarantors, there exists no condition
that, with notice, the passage of time or otherwise, would constitute a
default under any such document or instrument.
(xvii) None of (A) the execution, delivery or performance by the
Company or any of the Guarantors of this Agreement or any of the other
Operative Documents or the Credit Documents, (B) the compliance by the
Company or any of the Guarantors with any of the provisions hereof or
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thereof or (C) the consummation by the Company and the Guarantors of the
transactions described in the Offering Memorandum under the caption "Use of
Proceeds," violates, conflicts with or constitutes a breach of any of the
terms or provisions of, or, after giving effect to the transactions
contemplated hereby or thereby, will violate, conflict with or constitute a
breach of any of the terms or provisions of, or a default under (or an
event that with notice or the lapse of time, or both, would constitute a
default), or require consent under, or result in the imposition of a lien
or encumbrance on any properties of the Company or any of its subsidiaries,
except as contemplated by the Credit Documents as described in the Offering
Memorandum, or an acceleration of any indebtedness of the Company or any of
its subsidiaries pursuant to, (1) the charter or bylaws of the Company or
any of its subsidiaries, (2) any bond, debenture, note, indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which any of them or
their property is or may be bound, (3) any statute, rule or regulation
applicable to the Company or any of its subsidiaries or any of their assets
or properties, (4) any judgment, order or decree of any court or
governmental agency or authority having jurisdiction over the Company or
any of its subsidiaries or any of their assets or properties or (5) any
Permits (as defined) of the Company or any of its subsidiaries. No consent,
approval, authorization or order of, or filing, registration,
qualification, license or permit of or with, (A) any court or governmental
agency, body or administrative agency or (B) any other person is required
for (1) the execution, delivery and performance by the Company or any of
the Guarantors of this Agreement or the other Operative Documents or the
Credit Documents or (2) the consummation of the transactions contemplated
hereby and thereby, except such as have been or will be obtained and made
on or prior to the Closing Date (or, in the case of the Registration Rights
Agreement, will be obtained and made under the Act, the Trust Indenture
Act, and state securities or Blue Sky laws and regulations).
(xviii) There is (A) no action, suit, investigation or proceeding
before or by any court, arbitrator or governmental agency, body or
official, domestic or foreign, now pending or, to the best knowledge of the
Company and the Guarantors, threatened or contemplated to which the Company
or any of its subsidiaries is or may be a party or to which the business or
property of the Company or any of its subsidiaries is or may be subject,
(B) no statute, rule, regulation or order that has been enacted, adopted or
issued by any governmental agency or that has been proposed by any
governmental body and (C) no injunction, restraining order or order of any
nature by a federal or state court or foreign court of competent
jurisdiction to which the Company or any of its subsidiaries is or may be
subject or to which the business, assets or property of the Company or any
of its subsidiaries is or may be subject, that, in the case of clauses (A),
(B) and (C) above, (1) is required to be disclosed in the Preliminary
Offering Memorandum and the Offering Memorandum and that is not so
disclosed, or (2) could reasonably be expected to result in a Material
Adverse Effect.
(xix) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental agency that
prevents the issuance of the Notes or the Subsidiary Guarantees or prevents
or suspends the use of the Preliminary Offering Memorandum or the Offering
Memorandum; no injunction, restraining order or order of any nature by a
federal or state court of competent jurisdiction has been issued that
prevents the issuance of the Notes or the
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Subsidiary Guarantees or prevents or suspends the sale of the Notes
(including the Subsidiary Guarantees) in any jurisdiction referred to in
Section 4(e) hereof; and every request of any securities authority or
agency of any jurisdiction for additional information has been complied
with in all material respects.
(xx) There is (A) no unfair labor practice complaint pending against
the Company or any of its subsidiaries nor threatened against any of them,
before the National Labor Relations Board, any state or local labor
relations board or any foreign labor relations board, and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the Company or any of its subsidiaries or
threatened against any of them, (B) no strike, labor dispute, slowdown or
stoppage pending against the Company or any of its subsidiaries nor
threatened against the Company or any of its subsidiaries and (C) no union
representation question existing with respect to the employees of the
Company or any of its subsidiaries. No collective bargaining organizing
activities are taking place with respect to the Company or any of its
subsidiaries, except those activities that could not reasonably be expected
to have a Material Adverse Effect. None of the Company or any of its
subsidiaries has violated (A) any federal, state or local law or foreign
law relating to discrimination in hiring, promotion or pay of employees,
(B) any applicable wage or hour laws or (C) any provision of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules
-----
and regulations thereunder, except those violations that could not
reasonably be expected to have a Material Adverse Effect.
(xxi) None of the Company or any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the Permits
or to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws") which violation could reasonably be expected to have
--------------------
a Material Adverse Effect. There is no alleged liability attributable to
the Company, nor, to the best knowledge of the Company, any reasonable
basis for liability (including, without limitation, alleged or potential
liability for investigatory costs, cleanup costs, governmental response
costs, natural resource damages, property damages, personal injuries or
penalties) of the Company or any of its subsidiaries arising out of, based
on or resulting from (A) the presence or release into the environment of
any Hazardous Material (as defined) at any location, whether or not owned
by the Company or such subsidiary, as the case may be, or (B) any violation
or alleged violation of any Environmental Law, which alleged or potential
liability is required to be disclosed in the Offering Memorandum, other
than as disclosed therein, or could reasonably be expected to have a
Material Adverse Effect. The term "Hazardous Material" means (i) any
------------------
"hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, (ii) any
"hazardous waste" as defined by the Resource Conservation and Recovery Act,
as amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl, and (v) any pollutant or contaminant or
hazardous, dangerous or toxic chemical, material, waste or substance
regulated under or within the meaning of any other law relating to
protection of human health or the environment or imposing liability or
standards of conduct concerning any such chemical material, waste or
substance.
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<PAGE>
(xxii) Each of the Company and the Guarantors has such permits,
licenses, certificates, franchises and authorizations of, and approvals
from, governmental or regulatory authorities ("Permits"), including,
-------
without limitation, any Permits required by the Federal Communications
Commission and under any applicable Environmental Laws, as are necessary to
own, lease and operate their respective properties and to conduct their
businesses except where the failure to have such Permits could not
reasonably be expected to have a Material Adverse Effect; each of the
Company and the Guarantors has fulfilled and performed all of its
obligations with respect to such Permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of the
rights of the holder of any such Permit; and such Permits contain no
restrictions that are materially burdensome to the Company or such
Guarantor, as the case may be. All such Permits are valid and in full
force and effect and each of the Company and the Guarantor is in compliance
in all material respects with the terms and conditions of all such Permits
and with the rules and regulations of the regulatory authorities having
jurisdiction with respect thereto.
(xxiii) Each of the Company and the Guarantors has (A) good and
marketable title to all of the properties and assets described in the
Offering Memorandum as owned by it, free and clear of all Liens, except for
those Liens contemplated by the Credit Documents as described in the
Offering Memorandum, (B) peaceful and undisturbed possession under all
material leases to which any of them is a party as lessee and each of which
lease is valid and binding and no default exists thereunder, except for
defaults that could not reasonably be expected to have a Material Adverse
Effect, and (C) no reason to believe that any governmental body or agency
is considering limiting, suspending or revoking any Permits material to the
business of the Company and its subsidiaries either individually or in the
aggregate. All material leases to which the Company or any of the
Guarantors is a party are valid and binding and no default by the Company
or such Guarantor, as the case may be, has occurred and is continuing
thereunder and no material defaults by the landlord are existing under any
such lease, except those defaults that could not reasonably be expected to
have a Material Adverse Effect.
(xxiv) Each of the Company and the Guarantors owns, possesses or has
the right to employ all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, software, systems or
procedures), trademarks, service marks and trade names, inventions,
computer programs, technical data and information (collectively, the
"Intellectual Property") presently employed by it in connection with the
----------------------
businesses now operated by it or that are proposed to be operated by it
free and clear of and without violating any right, claimed right, charge,
encumbrance, pledge, security interest, restriction or lien of any kind of
any other person except for those Liens contemplated by the Credit
Documents as disclosed in the Offering Memorandum, and none of the Company
or any of its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing. The use of the Intellectual Property in connection with the
business and operations of the Company or any of the Guarantors does not
infringe on the rights of any person, except as could not reasonably be
expected to have a Material Adverse Effect.
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(xxv) The market-related and customer related data and estimates
included in the Preliminary Offering Memorandum and the Offering Memorandum
are based on or derived from sources which the Company and the Guarantors
believe to be reliable and accurate.
(xxvi) All material tax returns required to be filed by the Company
or any of its subsidiaries in all jurisdictions have been so filed. All
material taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due or claimed to be due from such
entities or that are due and payable have been paid, other than those being
contested in good faith and for which adequate reserves have been provided
or those currently payable without penalty or interest. There are no
material proposed additional tax assessments against the Company or any of
its subsidiaries, or the assets or property of the Company or any of its
subsidiaries, except those tax assessments for which adequate reserves have
been established.
(xxvii) None of the Company or any of the Guarantors is and, after
giving effect to the transactions contemplated herein or in the other
Operative Documents or the Credit Documents and to the applications of the
net proceeds from the sale and issuance of the Series A Notes and the
Series A Subsidiary Guarantees to the Initial Purchasers, as described in
the Offering Memorandum under the caption "Use of Proceeds," will be an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
-----------------------
(xxviii) There are no holders of securities of the Company or any of
its subsidiaries who, by reason of the execution by the Company and the
Guarantors of this Agreement or any other Operative Document or the Credit
Documents or the consummation by the Company and the Guarantors of the
transactions contemplated hereby and thereby, have the right to request or
demand that the Company or any of its subsidiaries register under the Act
or analogous foreign laws and regulations securities held by them.
(xxix) The Company, for itself and on behalf of the Guarantors,
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that: (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (C) access to assets is permitted only in
accordance with management's general or specific authorization; and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect thereto.
(xxx) Each of the Company and its subsidiaries maintains insurance
covering its properties, operations, personnel and businesses, insuring
against such losses and risks as are consistent with reasonable and prudent
practice to protect the Company and its subsidiaries and their respective
businesses. None of the Company or any of its subsidiaries has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to
continue such insurance.
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<PAGE>
(xxxi) None of the Company or any of its subsidiaries has (A) taken,
directly or indirectly, any action designed to, or that might reasonably be
expected to, cause or result in stabilization or manipulation of the price
of any security of the Company or any of its subsidiaries to facilitate the
sale or resale of the Notes and the Subsidiary Guarantees or (B) since the
date of the Preliminary Offering Memorandum (1) sold, bid for, purchased or
paid any person any compensation for soliciting purchases of the Notes or
the Subsidiary Guarantees or (2) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the
Company or any of its subsidiaries.
(xxxii) No registration under the Act of the Series A Notes or the
Series A Subsidiary Guarantees is required for the sale of the Series A
Notes and the Series A Subsidiary Guarantees to the Initial Purchasers as
contemplated hereby or for the Exempt Resales assuming (A) that the
purchasers who buy the Series A Notes and the Series A Subsidiary
Guarantees in the Exempt Resales are Eligible Purchasers and (B) the
accuracy of the Initial Purchasers' representations regarding the absence
of general solicitation in connection with the sale of Series A Notes and
the Series A Subsidiary Guarantees to the Initial Purchasers and the Exempt
Resales contained herein. No form of general solicitation or general
advertising (as defined in Regulation D under the Act) was used by the
Company or the Guarantors or any of their representatives (other than the
Initial Purchasers, as to which the Company and the Guarantors make no
representation or warranty) in connection with the offer and sale of any of
the Series A Notes and the Series A Subsidiary Guarantees or in connection
with Exempt Resales, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Notes or the Subsidiary
Guarantees have been issued and sold by the Company or any of its
subsidiaries within the six-month period immediately prior to the date
hereof.
(xxxiii) The execution and delivery of this Agreement, the other
Operative Documents and the issuance and the sale of the Series A Notes and
the Series A Subsidiary Guarantees to be purchased by Eligible Purchasers
will not involve any prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986. The
representation made by the Company and the Guarantors in the preceding
sentence is made in reliance upon and subject to the accuracy of, and
compliance with, the representations and covenants made or deemed made by
Eligible Purchasers as set forth in the Offering Memorandum under the
caption "Notice to Investors."
(xxxiv) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as of
its date, contains the information specified in, and meets the requirements
of, Rule 144A(d)(4) under the Act.
(xxxv) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the Trust Indenture Act.
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<PAGE>
(xxxvi) None of the Company or the Guarantors or any of their
respective affiliates or any person acting on its or their behalf (other
than the Initial Purchasers, as to whom the Company and the Guarantors make
no representation) has engaged or will engage in any directed selling
efforts within the meaning of Regulation S with respect to the Series A
Notes or the Series A Subsidiary Guarantees. The Series A Notes and the
Series A Subsidiary Guarantees offered and sold in reliance on Regulation S
have been and will be offered and sold by the Company and the Guarantors
only in offshore transactions. The sale of the Series A Notes and the
Series A Subsidiary Guarantees pursuant to Regulation S is not part of a
plan or scheme by the Company or the Guarantors to evade the registration
provisions of the Act. The Company and the Guarantors and their respective
affiliates and all persons acting on their behalf (other than the Initial
Purchasers, as to whom the Company and the Guarantors make no
representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering
of the Series A Notes and the Series A Subsidiary Guarantees outside the
United States and, in connection therewith, the Preliminary Offering
Memorandum and the Offering Memorandum contains or will contain the
disclosure required by Rule 902(h).
(xxxvii) The Series A Notes and the Series A Subsidiary Guarantees
sold in reliance on Regulation S will be represented upon issuance by a
temporary global security that may not be exchanged for definitive
securities until the expiration of the 40-day restricted period referred to
in Rule 903(c)(3) of the Act and only upon certification of beneficial
ownership of such Series A Notes and the Series A Subsidiary Guarantees by
non-U.S. persons or U.S. persons who purchased such Series A Notes and
Series A Subsidiary Guarantees in transactions that were exempt from the
registration requirements of the Act.
(xxxviii) Subsequent to the respective dates as of which information
is given in the Offering Memorandum and up to the Closing Date, except as
set forth in the Offering Memorandum, (A) none of the Company or any of its
subsidiaries has incurred any liabilities or obligations, direct or
contingent, which are material, individually or in the aggregate, to the
Company and its subsidiaries, taken as a whole, (B) none of the Company or
any of its subsidiaries has entered into any transaction not in the
ordinary course of business other than, with respect to any of the
subsidiaries of the Company who is not also a Guarantor, consummation of
such subsidiary's corporate dissolution or other customary action taken
reasonably pertaining thereto, (C) there has not been any change or
development which, singly or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect and (D) there has been no dividend
or distribution of any kind declared, paid or made by the Company on any
class of their capital stock.
(xxxix) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Series A Notes, the issuance of the
Series A Subsidiary Guarantees, the application of the proceeds from the
issuance and sale of the Series A Notes and the Series A Subsidiary
Guarantees and the consummation of the transactions contemplated thereby as
set forth in the Offering Memorandum, will violate Regulations G, T, U or X
promulgated by the Board of Governors of the Federal Reserve System or
analogous foreign laws and regulations.
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(xl) Except as disclosed in the Offering Memorandum, no relationship,
direct or indirect, exists between or among the Company or any of its
subsidiaries on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of its subsidiaries on the
other hand, which would be required by the Act to be described in the
Offering Memorandum if the Offering Memorandum were a prospectus included
in a registration statement on Form S-1 filed with the Commission.
(xli) The accountants who have rendered an opinion with respect to
the financial statements included or to be included as part of the Offering
Memorandum were, as of the respective dates of their reports, independent
accountants as required by the Act. The historical financial statements of
the Company, together with related schedules and notes thereto, comply as
to form in all material respects with the requirements applicable to
registration statements on Form S-1 under the Act and present fairly in all
material respects the financial position and results of operations of the
Company and its subsidiaries at the dates and for the periods indicated.
Such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods presented. The pro forma financial statements included in the
Offering Memorandum have been prepared on a basis consistent with such
historical statements of the Company, except for the pro forma adjustments
specified therein, and give effect to assumptions made on a reasonable
basis and present fairly in all material respects the historical and
proposed transactions contemplated by this Agreement and the other
Operative Documents; and such pro forma financial statements comply as to
form in all material respects with the requirements applicable to pro forma
financial statements included in registration statements on Form S-1 under
the Act, except as expressly stated therein. The other financial and
statistical information and data included in the Offering Memorandum
derived from the historical and pro forma financial statements, are
accurately presented in all material respects and prepared on a basis
consistent with the financial statements, historical and pro forma,
included in the Offering Memorandum and the books and records of the
Company and its subsidiaries.
(xlii) All indebtedness of the Company that will be repaid with the
proceeds of the issuance and sale of the Series A Notes (including the
Series A Subsidiary Guarantees) was incurred, and the indebtedness
represented by the Series A Notes (including the Series A Subsidiary
Guarantees) is being incurred, for proper purposes and in good faith and
each of the Company and the Guarantors was, at the time of the incurrence
of such indebtedness that will be repaid with the proceeds of the issuance
and sale of the Series A Notes (including the Series A Subsidiary
Guarantees), and will be on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Series A Notes
(including the Series A Subsidiary Guarantees)) solvent, and had at the
time of the incurrence of such indebtedness that will be repaid with the
proceeds of the issuance and sale of the Series A Notes (including the
Series A Subsidiary Guarantees) and will have on the Closing Date (after
giving effect to the application of the proceeds from the issuance of the
Series A Notes (including the Series A Subsidiary Guarantees)) sufficient
capital for carrying on its business and was, at the time of the incurrence
of such indebtedness that will be repaid with the proceeds of the issuance
and sale of the Series A Notes (including the Series A Subsidiary
Guarantees), and will be on the Closing Date (after giving effect to the
application of the proceeds
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<PAGE>
from the issuance of the Series A Notes (including the Series A Subsidiary
Guarantees)) able to pay its debts as they mature.
(xliii) Except pursuant to this Agreement, there are no contracts,
agreements or understandings between the Company and its subsidiaries and
any other person that would give rise to a valid claim against the Company
or any of its subsidiaries or the Initial Purchasers for a brokerage
commission, finder's fee or like payment in connection with the issuance,
purchase and sale of the Notes or the issuance of the Subsidiary
Guarantees.
(xliv) As of the Closing date, there will be no contracts, agreements
or understandings between the Company or any Guarantor and any person
granting such person the right to require the Company or such Guarantor to
file a registration statement under the Act with respect to any securities
of the Company or such Guarantor. There are no contracts, agreements or
understandings between the Company or any Guarantor and any person granting
such person the right to require the Company or such Guarantor to include
any securities with the Notes and Guarantees registered pursuant to any
Registration Statement.
(xlv) No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company or any Guarantor that it is
considering imposing) any condition (financial or otherwise) on the
Company's or any Guarantor's retaining any rating assigned to the Company
or any Guarantor, any securities of the Company or any Guarantor or (ii)
has indicated to the Company or any Guarantor that it is considering (a)
the downgrading, suspension, or withdrawal of, or any review for a possible
change that does not indicate the direction of the possible change in, any
rating so assigned or (b) any change in the outlook for any rating of the
Company, any Guarantor or any securities of the Company or any Guarantor.
(xlvi) Each of the Company and its subsidiaries, to their knowledge,
has complied with all of the provisions of Florida H.B. 1771, codified as
Section 517.075 of the Florida statutes, and the Company and its
subsidiaries are not doing business with the Government of Cuba or with any
person or any affiliate located in Cuba.
(xlvii) No subsidiary listed on Schedule B hereto, other than those
----------
also listed on Schedule A hereto, has, individually or in the aggregate,
----------
(i) contributed in the last fiscal year ended December 31, 1997 or in the
last fiscal quarter ended March 31, 1998 greater than $10,000 of the
Company's EBITDA (as defined in the Offering Memorandum) or (ii) at the
period ended December 31, 1997 or March 31, 1998 constituted greater than
1% of the total assets or net assets of the Company.
(xlviii) Each certificate signed by any officer of the Company or any
of the Guarantors and delivered to the Initial Purchasers or counsel for
the Initial Purchasers shall be deemed to be a representation and warranty
by the Company or such Guarantor, as the case may be, to the Initial
Purchasers as to the matters covered thereby.
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<PAGE>
The Company and the Guarantors acknowledge that the Initial Purchasers and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Section 8 hereof, counsel for the Company and counsel for the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and hereby consent to such reliance.
(b) Each Initial Purchaser, severally and not jointly, represents,
warrants and covenants to the Company and agrees that:
(i) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Series A Notes
(including the Series A Subsidiary Guarantees).
(ii) Such Initial Purchaser (A) is not acquiring the Series A Notes
(including the Series A Subsidiary Guarantees) with a view to any
distribution thereof that would violate the Act or the securities laws of
any state of the United States or any other applicable jurisdiction and (B)
will be reoffering and reselling the Series A Notes only to QIBs in
reliance on the exemption from the registration requirements of the Act
provided by Rule 144A in a private placement exempt from the registration
requirements of the Act and in offshore transactions in reliance upon
Regulation S under the Act.
(iii) No form of general solicitation or general advertising (within
the meaning of Regulation D under the Act) has been or will be used by such
Initial Purchaser or any of its representatives in connection with the
offer and sale of any of the Series A Notes (including the Series A
Subsidiary Guarantees), including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising.
(iv) In connection with the Exempt Resales, it will solicit offers to
buy the Series A Notes (including the Series A Subsidiary Guarantees) only
from, and will offer to sell the Series A Notes (including the Series A
Subsidiary Guarantees) only to, Eligible Purchasers. Each Initial
Purchaser further (A) agrees that it will offer to sell the Series A Notes
(including the Series A Subsidiary Guarantees) only to, and will solicit
offers to buy the Series A Notes (including the Series A Subsidiary
Guarantees) only from (1) Eligible Purchasers that such Initial Purchaser
reasonably believes are QIBs, and (2) Reg S Investors, (B) in the case of
such QIBs and such Reg S Investors, acknowledges and agrees that such
Series A Notes (including the Series A Subsidiary Guarantees) will not have
been registered under the Act and may be resold, pledged or otherwise
transferred only (x)(I) to a person whom the seller reasonably believes is
a QIB purchasing for its own account or for the account of a QIB in a
transaction meeting the requirements of Rule 144A, (II) in an offshore
transaction (as defined in Rule 902 under the Act) meeting the requirements
of Rule 904 under the Act, (III) in a transaction meeting the requirements
of Rule 144 under the Act, (IV) to an institutional Accredited Investor
that, prior to such transfer, furnishes the Trustee a signed letter
containing certain representations and agreements relating to the
registration of
20
<PAGE>
transfer of such Series A Notes (the form of which may be obtained from the
Trustee) and, if such transfer is in respect of an aggregate principal
amount of Series A Notes less than $250,000, an opinion of counsel
acceptable to the Company that such transfer is in compliance with the Act
or (V) in accordance with another exemption from the registration
requirements of the Act (and based upon an opinion of counsel if the
Company so request), (y) to the Company, (z) pursuant to an effective
registration statement under the Act and, in each case, in accordance with
any applicable securities laws of any state of the United States or any
other applicable jurisdiction and (C) acknowledges that it will, and will
notify each subsequent holder that it is required to, notify any purchaser
of the security evidenced thereby of the resale restrictions set forth in
(B) above.
(v) Such Initial Purchaser has offered the Series A Notes (including
the Series A Subsidiary Guarantees) and will offer and sell the Series A
Notes (A) as part of its distribution at any time and (B) otherwise until
40 days after the later of the commencement of the offering of the Series A
Notes pursuant hereto and the Closing Date, only in accordance with Rule
903 of Regulation S or another exemption from the registration requirements
of the Act. Such Initial Purchaser agrees that, during such 40-day
restricted period, it will not cause any advertisement with respect to the
Series A Notes (including the Series A Subsidiary Guarantees) (including
any "tombstone advertisement") to be published in any newspaper or
periodical or posted in any public place and will not issue any circular
relating to the Series A Notes (including the Series A Subsidiary
Guarantees), except such advertisements as are permitted by and include the
statements required by Regulation S.
(vi) Such Initial Purchaser has not offered or sold and will not offer
or sell the Series A Notes (including the Series A Subsidiary Guarantees)
sold pursuant hereto in reliance on Regulation S (A) as part of its
distribution at any time and (B) otherwise until 40 days after the later of
the commencement of the offering of the Series A Notes (including the
Series A Subsidiary Guarantees) pursuant hereto and the Closing Date, to a
U.S. person (as defined in Rule 902 of the Act) or for the account or
benefit of a U.S. person (other than a distributor (as defined in Rule 902
of the Act)).
(vii) Such Initial Purchaser agrees that, at or prior to confirmation
of a sale of Series A Notes (including the Series A Subsidiary Guarantees)
by it to any distributor, dealer or person receiving a selling concession,
fee or other remuneration during the 40-day restricted period referred to
in Rule 903(c)(3) under the Act, it will send to such distributor, dealer
or person receiving a selling concession, fee or other remuneration a
confirmation or notice to substantially the following effect:
"The Series A Notes (and Series A Subsidiary Guarantees) covered
hereby have not been registered under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and may not be offered and sold within the
United States or to, or for the account or benefit of, U.S. persons (i) as
part of your distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering and the Closing Date, except
in either case in accordance with Regulation S under the Act (or Rule 144A
or to Accredited Investors in transactions that are exempt
21
<PAGE>
from the registration requirements of the Act), and in connection with any
subsequent sale by you of the Series A Notes (and Series A Subsidiary
Guarantees) covered hereby in reliance on Regulation S during the period
referred to above to any distributor, dealer or person receiving a selling
concession, fee or other remuneration, you must deliver a notice to
substantially the foregoing effect. Terms used above have the meanings
assigned to them in Regulation S."
(viii) Such Initial Purchaser agrees that the Series A Notes (and
Series A Subsidiary Guarantees) offered and sold in reliance on Regulation
S will be represented upon issuance by a global security that may not be
exchanged for definitive securities until the expiration of the 40-day
restricted period referred to in Rule 903(c)(3) of the Act and only upon
certification of beneficial ownership of such Series A Notes by non-U.S.
persons or U.S. persons who purchased such Series A Notes (and Series A
Subsidiary Guarantees) in transactions that were exempt from the
registration requirements of the Act.
Such Initial Purchaser understands that the Company and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Section 8
hereof, counsel for the Company and counsel for the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
6. Indemnification.
---------------
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) the Initial Purchasers, (ii) each person,
if any, who controls the Initial Purchasers within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and (iii) the officers,
directors, partners, employees, representatives and agents of the Initial
Purchasers or any controlling person to the fullest extent lawful, from and
against any and all losses, liabilities, claims, damages and expenses
whatsoever (including but not limited to reasonable attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing or
defending against any investigation or litigation, commenced or threatened,
or any claim whatsoever, and any and all amounts paid in settlement of any
claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as
such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that the Company and the Guarantors will not be liable in any such
case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with information relating to the
Initial Purchasers furnished to the Company in writing by or on behalf of
the Initial Purchasers expressly for use therein. This
22
<PAGE>
indemnity agreement will be in addition to any liability which the Company
and the Guarantors may otherwise have, including under this Agreement.
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless (i) the Company and the Guarantors, (ii) each
person, if any, who controls any of the Company and the Guarantors within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
and (iii) the respective officers, directors, trustees, partners,
employees, representatives and agents of the Company and the Guarantors, or
any controlling person, against any losses, liabilities, claims, damages
and expenses whatsoever (including but not limited to reasonable attorneys'
fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any investigation or litigation, commenced
or threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation) to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as
such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum, or in any amendment thereof
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to
the extent, but only to the extent, that any such loss, liability, claim,
damage or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with information relating to such Initial
Purchaser furnished to the Company in writing by or on behalf of such
Initial Purchaser expressly for use therein; provided, however, that in no
case shall such Initial Purchaser be liable or responsible for any amount
in excess of the discounts and commissions received by such Initial
Purchaser, as set forth on the cover page of the Offering Memorandum. This
indemnity will be in addition to any liability which such Initial Purchaser
may otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the commencement
thereof (but the failure so to notify an indemnifying party shall not
relieve it from any liability which it may have under this Section 6 except
to the extent that it has been prejudiced in any material respect by such
failure or from any liability which it may otherwise have). In case any
such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified
party or parties unless (i) the employment of such counsel shall have been
authorized in writing by the indemnifying parties in connection with the
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<PAGE>
defense of such action, (ii) the indemnifying parties shall not have
employed counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded, based upon
the advice of counsel, that there may be defenses available to it or them
which are different from or additional to those available to one or all of
the indemnifying parties (in which case the indemnifying party or parties
shall not have the right to direct the defense of such action on behalf of
the indemnified party or parties), in any of which events such fees and
expenses of counsel shall be borne by the indemnifying parties; provided,
however, that the indemnifying party under subsection (a) or (b) above
shall only be liable for the legal expenses of one counsel (in addition to
any local counsel) for all indemnified parties in each jurisdiction in
which any claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written
consent, provided that such consent was not unreasonably withheld.
7. Contribution. In order to provide for contribution in circumstances in
------------
which the indemnification provided for in Section 6 is for any reason held to be
unavailable from the Company and the Guarantors or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Guarantors, on the
one hand, and the Initial Purchasers, on the other hand, shall contribute to the
aggregate losses, claims, damages, liabilities and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Company and the Guarantors, any contribution received by the
Company and the Guarantors from persons, other than the Initial Purchasers, who
may also be liable for contribution, including persons who control the Company
and the Guarantors within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act) to which the Company, the Guarantors and the Initial
Purchasers may be subject, in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantors, on one hand, and
the Initial Purchasers, on the other hand, from the offering of the Series A
Notes or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 6, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Guarantors, on one hand, and the
Initial Purchasers, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Guarantors, on one hand, and the
Initial Purchasers, on the other hand, shall be deemed to be in the same
proportion as (i) the total proceeds from the offering of Series A Notes (and
Series A Subsidiary Guarantees) (net of discounts but before deducting expenses)
received by the Company and the Guarantors and (ii) the discounts and
commissions received by the Initial Purchasers, respectively, in each case as
set forth in the table on the cover page of the Offering Memorandum. The
relative fault of the Company and the Guarantors, on one hand, and of the
Initial Purchasers, 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 the Company, the Guarantors or the Initial Purchasers
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or
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<PAGE>
omission. The Company, the Guarantors and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above.
Notwithstanding the provisions of this Section 7, (i) in no case shall the
Initial Purchasers be required to contribute any amount in excess of the amount
by which the discounts and commissions applicable to the Series A Notes (and the
Series A Subsidiary Guarantees) purchased by the Initial Purchasers pursuant to
this Agreement exceeds the amount of any damages which the Initial Purchasers
have otherwise been required to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission and (ii) 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. For purposes of this Section 7, (A) each person,
if any, who controls the Initial Purchasers within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act and (B) the officers, directors,
partners, employees, representatives and agents of the Initial Purchasers or any
controlling person shall have the same rights to contribution as the Initial
Purchasers, and (A) each person, if any, who controls any of the Company and the
Guarantors within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and (B) the respective officers, directors, trustees, partners,
employees, representatives and agents of the Company and the Guarantors shall
have the same rights to contribution as the Company and the Guarantors, subject
in each case to clauses (i) and (ii) of this Section 7. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 7,
notify such party or parties from whom contribution may be sought, but the
failure to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 7 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent, provided that such written consent was not unreasonably
withheld.
8. Conditions of Initial Purchaser's Obligations. The obligations of the
---------------------------------------------
Initial Purchasers to purchase and pay for the Series A Notes (and the Series A
Subsidiary Guarantees), as provided herein, shall be subject to the satisfaction
of the following conditions:
(a) All of the representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct on the
date hereof and on the Closing Date with the same force and effect as if
made on and as of the Closing Date. The Company and the Guarantors shall
have performed or complied with all of the agreements herein contained and
required to be performed or complied with by it at or prior to the Closing
Date.
(b) The Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers not later than 10:00 a.m., New York
City time, on the second business day following the date of this Agreement
or at such later date and time as to which the Initial Purchasers may
agree, and no stop order suspending the qualification or exemption from
qualification of the Series A Notes (and the Series A Subsidiary
Guarantees) in any jurisdiction referred to in Section 4(e) shall have been
issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened.
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<PAGE>
(c) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance of the
Series A Notes or the Series A Subsidiary Guarantees; no action, suit or
proceeding shall have been commenced and be pending against or affecting or
threatened against, the Company or any of its subsidiaries before any court
or arbitrator or any governmental body, agency or official that, if
adversely determined, could reasonably be expected to prevent the issuance
of the Series A Notes or the Series A Subsidiary Guarantees; and no stop
order shall have been issued preventing the use of the Offering Memorandum,
or any amendment or supplement thereto, or which could reasonably be
expected to have a Material Adverse Effect.
(d) Since the dates as of which information is given in the Offering
Memorandum, (i) there shall not have been any material adverse change, or
any development that is reasonably likely to result in a material adverse
change, in the capital stock or the long-term debt, or material increase in
the short-term debt, of the Company or any of its subsidiaries from that
set forth in the Offering Memorandum, (ii) no dividend or distribution of
any kind shall have been declared, paid or made by the Company or any of
its subsidiaries on any class of its capital stock (other than Tax
Distributions) and (iii) none of the Company or any of its subsidiaries
shall have incurred any liabilities or obligations, direct or contingent,
that are or, after giving effect to the sale and issuance of the Series A
Notes and Series A Subsidiary Guarantees, the initial borrowings under the
Credit Agreement, and the application of the proceeds therefrom as
described in the Offering Memorandum, will be material, individually or in
the aggregate, to the Company and its subsidiaries, taken as a whole, and
that are required to be disclosed on a balance sheet or notes thereto in
accordance with generally accepted accounting principles and are not
disclosed on the latest balance sheet or notes thereto included in the
Offering Memorandum. Since the date hereof and since the dates as of which
information is given in the Offering Memorandum, there shall not have
occurred any material adverse change in the business, prospects, financial
condition or results of operation of the Company and its subsidiaries,
taken as a whole.
(e) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been
given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a
possible change that does not indicate the direction of the possible change
in, any rating of the Company or any Guarantor or any securities of the
Company or any Guarantor (including, without limitation, the placing of any
of the foregoing ratings on credit watch with negative or developing
implications or under review with an uncertain direction) by any
"nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall not
have occurred any change, nor shall any notice have been given of any
potential or intended change, in the outlook for any rating of the Company
or any Guarantor or any securities of the Company or any Guarantor by any
such rating organization and (iii) no such rating organization shall have
given notice that it has assigned (or is considering assigning) a lower
rating to the Notes than that on which the Notes were marketed.
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<PAGE>
(f) The Initial Purchasers shall have received certificates, dated the
Closing Date, signed on behalf of the Company and the Guarantors, in form
and substance satisfactory to the Initial Purchasers, confirming, as of the
Closing Date, the matters set forth in paragraphs (a), (b), (c), (d) and
(e) of this Section 8 and that, as of the Closing Date, the obligations of
the Company and the Guarantors to be performed hereunder on or prior
thereto have been duly performed.
(g) The Initial Purchasers shall have received on the Closing Date an
opinion, dated the Closing Date, in form and substance satisfactory to the
Initial Purchasers and counsel for the Initial Purchasers, of Christy &
Viener, counsel for the Company and the Guarantors, to the effect set forth
in Exhibit C-1 hereto.
-----------
(h) At the time this Agreement is executed and at the Closing Date,
the Initial Purchasers shall have received from Arthur Andersen LLP,
independent public accountants dated as of the date of this Agreement and
as of the Closing Date, customary comfort letters addressed to the Initial
Purchasers and in form and substance satisfactory to the Initial Purchasers
and counsel for the Initial Purchasers with respect to the financial
statements and certain financial information of the Company and its
subsidiaries contained in the Offering Memorandum.
(i) The Initial Purchasers shall have received an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to the Initial
Purchasers, of Latham & Watkins, counsel for the Initial Purchasers,
covering such matters as are customarily covered in such opinions.
(j) Latham & Watkins shall have been furnished with such documents, in
addition to those set forth above, as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this Section 8 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations,
warranties or conditions herein contained.
(k) Prior to the Closing Date, the Company and the Guarantors shall
have furnished to the Initial Purchasers such further information,
certificates and documents as the Initial Purchasers may reasonably
request.
(l) The Company, the Guarantors and the Trustee shall have entered
into the Indenture and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
(m) The Company and the Guarantors shall have entered into the
Registration Rights Agreement and the Initial Purchasers shall have
received counterparts, conformed as executed, thereof.
(n) The Company and the subsidiaries that are parties to the Credit
Documents shall have entered into each of the Credit Documents and the
Initial Purchasers shall have received counterparts, conformed as
executed, of each of the Credit Documents.
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<PAGE>
(o) The Company shall have applied the proceeds from the sale and
issuance of the Series A Notes and Series A Subsidiary Guarantees in
accordance with the caption "Use of Proceeds" of the Offering Memorandum.
(p) The Notes shall have been approved for trading on PORTAL.
(q) The Initial Purchasers shall have received a reliance letter,
dated the Closing Date, from Christy & Viener, counsel for the Company and
the Guarantors, authorizing each of the Initial Purchasers to rely on the
opinion provided, pursuant to the provisions of the Credit Documents, by
such counsel to BankBoston, N.A. and Summit Bank, as if such opinion were
addressed to each of the Initial Purchasers; and such opinion shall be in
form and substance satisfactory to the Initial Purchasers and shall be
substantially in the form of Exhibit C-2 hereof. .
-----------
All opinions, certificates, letters and other documents required by this
Section 8 to be delivered by the Company and the Guarantors will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Initial Purchasers and the counsel for the Initial
Purchasers. The Company and the Guarantors shall furnish the Initial Purchasers
with such conformed copies of such opinions, certificates, letters and other
documents as they shall reasonably request.
9. Initial Purchaser's Information. The Company acknowledges that the
-------------------------------
statements with respect to the offering of the Series A Notes set forth in the
third paragraph under the caption "Plan of Distribution" in the Offering
Memorandum constitute the only information relating to the Initial Purchasers
furnished to the Company in writing by or on behalf of the Initial Purchasers
expressly for use in the Offering Memorandum.
10. Survival of Representations and Agreements. All representations and
------------------------------------------
warranties, covenants and agreements of the Initial Purchasers, the Company and
the Guarantors contained in this Agreement, including the agreements contained
in Sections 4(f) and 11(d), the indemnity agreements contained in Section 6 and
the contribution agreements contained in Section 7, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf of
the Initial Purchasers, any controlling person thereof, or by or on behalf of
the Company or the Guarantors or any controlling person thereof, and shall
survive delivery of and payment for the Series A Notes to and by the Initial
Purchasers. The representations contained in Section 5 and the agreements
contained in Sections 4(f), 6, 7 and 11(d) shall survive the termination of this
Agreement, including any termination pursuant to Section 11.
11. Effective Date of Agreement; Termination.
----------------------------------------
(a) This Agreement shall become effective upon execution and delivery
of a counterpart hereof by each of the parties hereto.
(b) The Initial Purchasers shall have the right to terminate this
Agreement at any time prior to the Closing Date by notice to the Company
from the Initial Purchasers, without liability (other than with respect to
Sections 6 and 7) on the Initial Purchasers' part to the Company if, on or
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prior to such date, (i) the Company or the Guarantors shall have failed,
refused or been unable to perform in any material respect any agreement on
their part to be performed hereunder, (ii) any other condition to the
obligations of the Initial Purchasers hereunder as provided in Section 8 is
not fulfilled when and as required in any material respect, (iii) in the
reasonable judgment of the Initial Purchasers, any material adverse change
shall have occurred since the respective dates as of which information is
given in the Offering Memorandum in the condition (financial or otherwise),
business, properties, assets, liabilities, prospects, net worth, results of
operations or cash flows of the Company and its subsidiaries, taken as a
whole, other than as set forth in the Offering Memorandum, or (iv)(A) any
domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Initial Purchasers will in the
immediate future materially disrupt, the market for the Company's or the
Guarantors' securities or for securities in general; or (B) trading in
securities generally on the New York or American Stock Exchange shall have
been suspended or materially limited, or minimum or maximum prices for
trading shall have been established, or maximum ranges for prices for
securities shall have been required, on such exchange, or by such exchange
or other regulatory body or governmental authority having jurisdiction; or
(C) a banking moratorium shall have been declared by federal or state
authorities, or a moratorium in foreign exchange trading by major
international banks shall have been declared; or (D) there is an outbreak
or escalation of armed hostilities involving the United States on or after
the date hereof, or if there has been a declaration by the United States of
a national emergency or war, the effect of which shall be, in the Initial
Purchasers' judgment, to make it inadvisable or impracticable to proceed
with the offering or delivery of the Series A Notes and the Series A
Subsidiary Guarantees on the terms and in the manner contemplated in the
Offering Memorandum; or (E) there shall have been such a material adverse
change in general economic, political or financial conditions or if the
effect of international conditions on the financial markets in the United
States shall be such as, in the Initial Purchasers' judgment, makes it
inadvisable or impracticable to proceed with the delivery of the Series A
Notes and the Series A Subsidiary Guarantees as contemplated hereby.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone or telephonic facsimile and, in either case, confirmed in writing
by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to clause (iv) of Section 11(b),
in which case each party will be responsible for its own expenses), or if
the sale of the Series A Notes and the Series A Subsidiary Guarantees
provided for herein is not consummated because any condition to the
obligations of the Initial Purchasers set forth herein is not satisfied or
because of any refusal, inability or failure on the part of the Company or
the Guarantors to perform any agreement herein or comply with any provision
hereof, the Company and the Guarantors shall jointly and severally
reimburse the Initial Purchasers for all out-of-pocket expenses (including
the reasonable fees and expenses of the Initial Purchasers' counsel),
incurred by the Initial Purchasers in connection herewith.
12. Notice. All communications hereunder, except as may be otherwise
------
specifically provided herein, shall be in writing and, if sent to the Initial
Purchasers shall be mailed, delivered, telecopied and
29
<PAGE>
confirmed in writing or sent by a nationally recognized overnight courier
service guaranteeing delivery on the next business day to BancBoston Securities
Inc., 100 Federal Street, Boston, Massachusetts 02110, Attention: Corporate
Finance Department, telecopy number: (617) 434-0624, with a copy to Latham &
Watkins, 885 Third Avenue, Suite 1000, New York, New York 10022, Attention: Greg
Ezring, telecopy number: (212) 751-4864; and if sent to the Company or the
Guarantors, shall be mailed, delivered, telecopied and confirmed in writing or
sent by a nationally recognized overnight courier service guaranteeing delivery
on the next business day to Interep National Radio Sales, Inc., 100 Park Avenue,
New York, New York 10017, Attention: Chief Executive Officer, telecopy number
(212) 309-9081 and to Interep National Radio Sales, Inc., 2090 Palm Beach Lakes
Blvd., 3rd Floor, West Palm Beach, FL 33409, Attention: Chief Financial Officer,
telecopy number: (561) 616-4019, with a copy to Christy & Viener, Rockefeller
Center, 620 Fifth Avenue, New York, New York 10020, Attention: Laurence S.
Markowitz, Esq., telecopy number: (212) 307-3314.
13. Parties. This Agreement shall inure solely to the benefit of, and
-------
shall be binding upon, the Initial Purchasers, the Company and the Guarantors
and the controlling persons and agents referred to in Sections 6 and 7, and
their respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its capacity
as such, of Notes from the Initial Purchasers.
14. Construction. This Agreement shall be construed in accordance with
------------
the internal laws of the State of New York. TIME IS OF THE ESSENCE IN THIS
AGREEMENT.
15. Captions. The captions included in this Agreement are included solely
--------
for convenience of reference and are not to be considered a part of this
Agreement.
16. Counterparts. This Agreement may be executed in various counterparts
------------
which together shall constitute one and the same instrument.
[Signature page to follow]
30
<PAGE>
If the foregoing correctly sets forth the understanding among the
Initial Purchasers and the Company and the Guarantors please so indicate in the
space provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
Interep National Radio Sales, Inc.
By:/s/ William J. McEntee, Jr.
---------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
Guarantors:
McGavren Guild, Inc.
By:/s/ William J. McEntee, Jr.
---------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
D&R Radio, Inc.
By:/s/ William J. McEntee, Jr.
---------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
CBS Radio Sales, Inc.
By:/s/ William J. McEntee, Jr.
---------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
31
<PAGE>
Allied Radio Partners, Inc.
By:/s/ William J. McEntee, Jr.
---------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
32
<PAGE>
Clear Channel Radio, LLC
By:/s/ William J. McEntee, Jr.
---------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
Caballero Spanish Media LLC
By:/s/ William J. McEntee, Jr.
---------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
33
<PAGE>
Accepted and agreed to as of the date first above written:
BancBoston Securities Inc.
By: /s/ Gregory C. Foy
------------------
Name: Gregory C. Foy
Title: Managing Director
Loewenbaum & Company Incorporated
By: /s/ Calvin L. Chrisman
----------------------
Name: Calvin L. Chrisman
Title: Managing Director
SPP Hambro & Co., LLC
By: /s/ Stefan Shaffer
------------------
Name: Stefan Shaffer
Title: President
34
<PAGE>
Schedule A
THE GUARANTORS
--------------
McGavren Guild, Inc. - A New York corporation.
D&R Radio, Inc. - A New York corporation.
CBS Radio Sales, Inc. - A New York corporation.
Allied Radio Partners, Inc. - A New York corporation.
Clear Channel Radio, LLC - A New York limited liability company.
Caballero Spanish Media LLC - A New York limited liability company.
A-1
<PAGE>
Schedule B
THE SUBSIDIARIES
----------------
McGavren Guild, Inc..
D&R Radio, Inc.
CBS Radio Sales, Inc.
Allied Radio Partners, Inc.
Clear Channel Radio, LLC
Caballero Spanish Media LLC
MG Spanish Media, Inc.
McGavren Guild Radio Sales, Inc.
B-1
<PAGE>
Exhibit C-1
Form of Opinion of Christy & Viener addressed to the Initial
Purchasers
1. The Company (a) is a New York corporation duly incorporated,
validly existing and in good standing under the laws of New York, (b) has
all requisite corporate power and authority to carry on its business as it
is currently being conducted and to own, lease and operate its properties,
and (c) is duly qualified and is in good standing as a foreign corporation,
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such
qualification except where the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect.
2. Each of the Company's subsidiaries (a) is duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, (b) has all requisite corporate power and
authority to carry on its business as it is currently being conducted and
as described in the Offering Memorandum and to own, lease and operate its
properties, and (c) is duly qualified and in good standing as a foreign
corporation, authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect.
3. Each of the Company and the Guarantors has all requisite corporate
power and authority to execute, deliver and perform its obligations under
this Agreement and each of the other Operative Documents and each of the
Credit Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby, including, without limitation, the
corporate power and authority to issue, sell and deliver the Notes and to
issue and deliver the Subsidiary Guarantees as provided herein.
4. All of the outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, free and clear
of any security interest, claim, lien, limitation on voting rights,
encumbrance or adverse interest of any nature.
5. The Purchase Agreement has been duly and validly authorized,
executed and delivered by each of the Company and the Guarantors.
6. The Registration Rights Agreement has been duly and validly
authorized, executed and delivered by each of the Company and the
Guarantors, and is the valid and binding obligation of each of the Company
and the Guarantors, enforceable against each of them in accordance with its
terms, except to the extent that (a) enforcement thereof may be limited by
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law
or in equity); and
C-1-1
<PAGE>
(b) the enforceability of indemnification and contribution provisions may
be limited by Federal and state securities laws and the policies underlying
such laws.
7. The Indenture has been duly and validly authorized, executed and
delivered by each of the Company and the Guarantors, and is the valid and
binding obligation of each of the Company and the Guarantors, enforceable
against each of them in accordance with its terms (assuming the due
authorization, execution and delivery of the Indenture by the Trustee),
except to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity.
8. Each of the Credit Documents has been duly and validly authorized,
executed and delivered by each of the Company and the subsidiaries party
thereto, and is the valid and binding obligation of each of the Company and
such subsidiaries, enforceable against each of them in accordance with its
terms, except to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
9. The Series A Notes have been duly and validly authorized and
executed by each of the Company for issuance and sale to the Initial
Purchasers pursuant to the Agreement, and, when authenticated in accordance
with the terms of the Indenture and delivered against payment therefor in
accordance with the terms thereof, the Series A Notes will be the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Indenture,
except to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
10. The Series B Notes have been duly and validly authorized for
issuance by the Company, and, when issued and authenticated in accordance
with the terms of the Registration Rights Agreement and the Indenture, the
Series B Notes will be the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled
to the benefits of the Indenture, except to the extent that enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles
of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
11. The Series A Subsidiary Guarantees have been duly and validly
authorized and executed by each of the Guarantors, and when the Series A
Notes have been issued and authenticated in accordance with the terms of
the Indenture and delivered against payment
C-1-2
<PAGE>
therefor in accordance with the terms thereof, the Series A Subsidiary
Guarantees will be the valid and binding obligations of each of the
Guarantors, enforceable against each of them in accordance with their terms
and entitled to the benefits of the Indenture, except to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity.
12. The Series B Subsidiary Guarantees have been duly and validly
authorized by each of the Guarantors, and when executed and delivered in
accordance with the terms of the Registration Rights Agreement and the
Indenture, and when the Series B Notes have been issued and authenticated
in accordance with the terms of the Exchange Offer and the Indenture, the
Series B Subsidiary Guarantees will be the valid and binding obligations of
each of the Guarantors, enforceable against each of them in accordance with
their terms and entitled to the benefits of the Indenture, except to the
extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity.
13. The Offering Memorandum contains a summary of the material terms
of each of the Indenture, the Registration Rights Agreement, the Credit
Documents, the Series A Notes, the Series B Notes, the Series A Subsidiary
Guarantees and the Series B Subsidiary Guarantees, which, in each case, is
accurate in all material respects. The statements under the captions "Risk
FactorsChanges in Radio Industry Regulations and Ownership of Client
Stations," "BusinessGeneral," "BusinessIndustry OverviewRepresentation
Contracts," "Business--Litigation," "ManagementExecutive Compensation,"
"ManagementIndemnification Agreements," "Certain Transactions and
Relationships," "Description of New Credit Facility" "Description of
Notes," "Certain United States Federal Tax Considerations for Non-United
States Holders" and "Notice to Investors" in the Offering Memorandum,
insofar as such statements constitute a summary of the legal matters,
documents or proceedings referred to therein, present fairly in all
material respects, such legal matters, documents and proceedings.
14. To such counsel's knowledge, neither the Company nor any of its
subsidiaries is in violation of its charter or bylaws or other
organizational documents, as applicable.
15. No registration under the Act of the Series A Notes and the
Series A Subsidiary Guarantees is required for the sale of the Series A
Notes and the Series A Subsidiary Guarantees to the Initial Purchasers as
contemplated by the Agreement or for the Exempt Resales assuming (a) that
each of the Initial Purchasers is a QIB, (b) that the purchasers who buy
the Series A Notes and the Series A Subsidiary Guarantees in the Exempt
Resales are either QIBs or Reg S Investors and (c) the accuracy of the
Initial Purchasers' representations regarding the absence of general
solicitation in connection with the sale of Series A Notes and the Series A
Subsidiary Guarantees to the Initial Purchasers and the Exempt Resales
contained herein.
C-1-3
<PAGE>
16. Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as of
its date (except for the financial statements and related notes, the
financial statement schedules and other financial data included therein or
omitted therefrom, as to which no opinion need be expressed), contains the
information specified in, and meets the requirements of, Rule 144A(d)(4)
under the Act.
17. To such counsel's knowledge, when the Series A Notes and the
Series A Subsidiary Guarantees are issued and delivered pursuant to this
Agreement, no Series A Note or Series A Subsidiary Guarantee will be of the
same class (within the meaning of Rule 144A under the Act) as securities of
the Company or of any of the Guarantors that are listed on a national
securities exchange registered under Section 6 of the Exchange Act or that
are quoted in a United States automated inter-dealer quotation system.
18. None of (a) the execution, delivery or performance by the Company
or any of the Guarantors of this Agreement or any of the other Operative
Documents or any of the Credit Documents to which it is a party, or (b) the
consummation by the Company and its subsidiaries of the transactions
described in the Offering Memorandum under the caption "Use of Proceeds,"
violates, conflicts with or constitutes a breach of any of the terms or
provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default), or requires consent
under, or results in the imposition of a lien or encumbrance on any
properties of the Company or any of its subsidiaries, or an acceleration of
any indebtedness of the Company or any of its subsidiaries pursuant to, (i)
the charter or bylaws of the Company or any of its subsidiaries, (ii) any
bond, debenture, note, indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its subsidiaries is
a party or by which any of them or their property is or may be bound that
has been filed or incorporated by reference as an exhibit to any filing by
the Company or any of its subsidiaries with the Commission, (iii) any
statute, rule or regulation applicable to the Company or any its
subsidiaries or any of their assets or properties, (iv) to such counsel's
knowledge, any judgment, order or decree of any court or governmental
agency or authority having jurisdiction over the Company or any of its
subsidiaries or any of their assets or properties or (v) any Permits of the
Company. Assuming compliance with applicable state securities and Blue Sky
laws, as to which such counsel need express no opinion, and except for the
filing of a registration statement under the Act and qualification of the
Indenture under the Trust Indenture Act, or in connection with the
Registration Rights Agreement, no consent, approval, authorization or order
of, or filing, registration, qualification, license or permit of or with,
(a) any court or governmental agency, body or administrative agency or (b)
any other person is required for (i) the execution, delivery and
performance by the Company or any of the Guarantors of the Agreement or any
of the other Operative Documents or any of the Credit Documents to which it
is a party or (ii) the issuance and sale of the Notes and the issuance of
the Subsidiary Guarantees and the transactions contemplated thereby, except
such as have been obtained and made or have been disclosed in the Offering
Memorandum.
C-1-4
<PAGE>
14. To such counsel's knowledge, there is (a) no action, suit,
investigation or proceeding before or by any court, arbitrator or
governmental agency, body or official, domestic or foreign, now pending or
threatened to which the Company or any of its subsidiaries is or may be a
party or to which the business or property of the Company or any of its
subsidiaries, is or may be subject and (b) no injunction, restraining order
or order of any nature by a federal or state court or foreign court of
competent jurisdiction to which the Company or any of its subsidiaries is
or may be subject or to which the business, assets, or property of the
Company or any of its subsidiaries is or may be subject, that, in the case
of clauses (a) and (b) above, is required to be disclosed in the Offering
Memorandum and that is not so disclosed.
15. None of the Company or any of its subsidiaries is an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act.
16. To such counsel's knowledge, there are no holders of securities
of the Company or any of its subsidiaries who, by reason of the execution
by the Company and the Guarantors of the Agreement or any other Operative
Document or the consummation by the Company and the Guarantors of the
transactions contemplated thereby, have the right to request or demand that
the Company or any of its subsidiaries register under the Act or analogous
foreign laws and regulations securities held by them.
17. To such counsel's knowledge, no stop order preventing the use of
the Preliminary Offering Memorandum or the Offering Memorandum, or any
amendment or supplement thereto, or any order asserting that any of the
transactions contemplated by the Agreement are subject to the registration
requirements of the Act, has been issued.
18. The Indenture complies as to form in all material respects with
the requirements of the Trust Indenture Act and the rules and regulations
of the Commission applicable to an indenture which is qualified thereunder.
Prior to the Exchange Offer or the effectiveness of the Shelf Registration
Statement, the Indenture is not required to be qualified under the Trust
Indenture Act.
In addition, such counsel has participated in conferences with officers and
other representatives of the Company and the Guarantors, representatives of the
independent certified public accountants of the Company and the Guarantors and
the Initial Purchasers and its representatives at which the contents of the
Preliminary Offering Memorandum and the Offering Memorandum and related matters
were discussed and, although it has not undertaken to investigate or verify
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Preliminary Offering
Memorandum or the Offering Memorandum (except as indicated above), on the basis
of the foregoing (relying as to materiality to the extent such counsel deems
appropriate upon facts provided to such counsel by officers or other
representatives of the Company and the Guarantors and without independent
verification of such facts), no facts have come to its attention which led it to
believe that the Preliminary Offering Memorandum or the Offering Memorandum, as
of its date or the Closing Date,
C-1-5
<PAGE>
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,
in the light of the circumstances under which they were made, not misleading
(except as to financial statements and related notes, the financial statement
schedules and other financial data included therein).
C-1-6
<PAGE>
Exhibit C-2
Form of Christy & Viener Opinion addressed to BankBoston, N.A. and Summit Bank
[to be provided]
C-3-1
<PAGE>
Schedule D
PRINCIPAL AMOUNT OF NOTES
-------------------------
<TABLE>
<CAPTION>
Initial Purchasers:
- ------------------
<S> <C>
BancBoston Securities Inc.............. $ 74,800,000
Loewenbaum & Company................... 9,000,000
SPP Hambro & Co., LLC.................. 16,200,000
------------
Total............................. $100,000,000
============
</TABLE>
A-1
<PAGE>
Exhibit E
FORM OF REGISTRATION RIGHTS AGREEMENT
-------------------------------------
A-1
<PAGE>
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
of
INTEREP NATIONAL RADIO SALES, INC.
Under Section 807 of the Business Corporation Law
Haley, Bader & Potts
Suite 600
2000 M Street, N.W.
Washington, D.C. 20036
<PAGE>
RESTATED
CERTIFICATE OF INCORPORATION
of
INTEREP NATIONAL RADIO SALES, INC.
Under Section 807 of the
Business Corporation Law
Pursuant to the provisions of Section 807(a) of the Business
Corporation Law of the State of New York and pursuant to a resolution duly
adopted by the Board of Directors, the undersigned corporation hereby adopts the
following restated certificate of incorporation:
ONE. The name of the corporation is INTEREP NATIONAL RADIO SALES,
INC. The name under which the corporation was originally incorporated was
McGAVREN -QUINN CORPORATION.
TWO. The Certificate of Incorporation was filed in the office of
the Secretary of State of the State of New York on March 31, 1958.
THREE. The text of the Certificate of Incorporation as Restated, and
without further change, is as follows:
1. The name of the corporation is INTEREP NATIONAL RADIO SALES, INC.
2. The purposes for which the corporation is formed are:
To engage in all phases of the radio, television and
advertising business; including, without intending to limit the generality of
the foregoing, to act as representative of television and radio stations in the
sale of broadcast time, to act as representative of purchasers of broadcast
time, to own, operate, license, lease, or sublease television and radio
broadcasting stations and otherwise to do anything in connection therewith that
a natural person could do.
As principal, agent, or broker, and on commission or
otherwise: to buy, sell, exchange, lease, let, grant, or take licenses in
respect of, improve, develop, repair, manage, maintain and operate real property
of every kind, corporeal and incorporeal, and every kind of estate, right or
interest therein or pertaining thereto; to construct, improve, repair, raze and
wreck buildings, structures and works of all kinds for itself or for others; to
buy, sell and deal in building materials and supplies; to advance loans secured
by mortgages or other liens on real estate. To act as loan broker. Generally to
do everything suitable, proper and conducive to the
<PAGE>
successful conduct of a real estate business and real estate agency and
brokerage business in all its branches and departments.
To take, buy, purchase, exchange, hire, lease or otherwise acquire and
dispose of real property.
To purchase, sell, manufacture and deal in materials, goods, wares,
and merchandise of any and every kind and to carry on any lawful trade or
business incident to or proper or useful in connection with such purchase, sale,
manufacture and dealing; to carry on any kind of retail or wholesale mercantile
business.
To sell, manage, improve, develop, assign, transfer, convey, lease,
sublease, pledge or otherwise alienate or dispose of, and to mortgage or
otherwise encumber the lands, buildings, real property, chattels, real and other
property of the corporation real and/or personal and wheresoever situate, and
any and all legal and equitable rights therein.
To borrow money, and, from time to time, make, accept, endorse,
execute and issue bonds, debentures, promissory notes, bills of exchange and
other obligations of the corporation for moneys borrowed or in payment for
property acquired or for any of the other objects or purposes of the corporation
or its business, and to secure the payment of any such obligations by mortgage,
pledge, deed, indenture, agreement or other instrument of trust, or by other
lien upon, assignment of or agreement in regard to all or any part of the real
or personal property, interests, rights, franchises or privileges of the
corporation whenever situated, whether now owned or hereafter to be acquired.
To purchase or otherwise acquire its own shares of stock (so far as
may be permitted by law) and its bonds, debentures, notes, scrip or other
securities or evidences of indebtedness, and to cancel or to hold, transfer or
re-issue the same to such persons, firms, corporations, or associations and upon
such terms and conditions as the Board of Directors may in its discretion
determine without offering any thereof on the same terms or on any terms to the
stockholders then of record.
To do any or all things to the same extent and as fully as natural
persons might or could do, and in any part of the world, and as principal,
agent, contractor or otherwise, and either alone or in conjunction with any
other persons, firms, associations, or corporations.
To conduct its business in all its branches in the State of New York,
other states, the District of Columbia, the territories and colonies of the
United States, and in foreign countries, and to have one or more offices out of
the State of New York, and to hold, purchase, mortgage and convey real and
personal property both within and without the State of New York.
To do all and everything necessary and proper for the accomplishment
of the objects herein enumerated or necessary or incidental to the protection
and benefit of the corporation, and in general to carry on any lawful business
necessary to the attainment of the purposes of this corporation, whether such
business is similar in nature to the objects and powers hereinabove set forth,
or otherwise; but nothing hereinabove stated shall be construed to give this
corporation any rights, powers or privileges not permitted by the laws of the
State of New York to corporations organized under the Stock Corporation Law of
the State of New York.
The foregoing clauses shall be construed as objects, purposes and
powers, and it is hereby expressly provided that the foregoing enumeration of
specific powers shall not be held to limit or restrict in any manner the general
powers of this corporation.
-2-
<PAGE>
3. (a) The aggregate number of shares which the Corporation shall have
authority to issue is One Million (1,000,000) shares, all of which shares
shall be Common Stock, par value $.04 per share.
(b) No holder of shares of the Corporation shall be entitled as of
right to subscribe for, purchase or receive any new or additional shares,
whether no or hereafter authorized, or any notes, bonds, debentures, or
other securities convertible into, or carrying options or warrants to
purchase, shares; but all such new or additional shares or notes, bonds,
debentures, or other securities convertible into, or carrying options or
warrants to purchase, shares may be issued or disposed of by the Board of
Directors to such persons and on such terms as it, in its absolute
discretion, may deem advisable.
4. The office of the corporation shall be located in the Borough of Manhattan,
County of New York, City and State of New York.
5. The duration of the corporation shall be perpetual.
6. The number of directors shall be not less than three, nor more than eleven,
none of whom need to be stockholders.
7. Any director of this corporation may be removed at any annual or special
meeting of stockholders, either with or without cause, by the same vote as
that required to elect a director.
8. The Secretary of State is designated as the agent of the corporation upon
whom process in any action or proceeding against the corporation may be
served. The address to which the Secretary of State of the State of New
York shall mail a copy of process in any action or proceeding against the
corporation which may be served upon him pursuant to law is as follows:
United Corporation Services, Inc.
9 East 40th Street
New York, New York 10016
9. All corporate powers shall be exercised by the Board of Directors, except
as otherwise provided by statute or by this Certificate. By-laws may be
made by the Board of Directors, except as otherwise provided. The Board of
Directors shall have power to authorize the payment of compensation to the
directors for services to the corporation including fees for attendance at
meetings of the Board of Directors and other meetings, and to determine the
amounts of such compensation, or fees.
10. A director of the corporation shall not be disqualified by his office from
dealing or contracting with the corporation either as a vendor, purchaser
or otherwise, nor shall any transaction or contract of the corporation be
void or voidable by reason of the fact that
-3-
<PAGE>
any firm of which any director is a member or any corporation of which any
director is a shareholder or director, is in any way interested in such
transaction or contract; nor shall any director be liable to account to the
corporation for any profits realized by or from or through any such
transaction or contract of the corporation authorized, ratified or approved
as aforesaid, by reason of the fact that he or any firm of which he is a
member or any corporation of which is a shareholder or director was
interested in such transaction or contract. Nothing herein contained shall
create any liability in the events above described or prevent the
authorization, ratification or approval of such contracts in any manner
provided by law.
11. (a) The presence of 66-2/3% of the full Board of Directors as then
provided in the Certificate of Incorporation and the Bylaws shall be
necessary at any meeting of the directors in order to constitute a quorum
for the transaction of any business or of any specified item of business.
(b) The affirmative vote of 66-2/3% of the full Board of Directors as
then provided in the Certificate of Incorporation and the Bylaws shall be
necessary at any meeting of the directors for the transaction of any
business or of any specified item of business.
12. Any person made a party to any action, suit or proceeding by reason of
the fact that he, his testator or intestate, is or was an officer, director
or employee of the Corporation or of any Corporation which he served as
such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorneys' fees,
actually and necessarily incurred by him in connection with the defense of
such action, suit or proceeding or in connection with any appeal therein,
except in relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such officer, director or employee is or
was liable for negligence or misconduct in the performance of his duties.
Such right of indemnification shall not be deemed exclusive of any other
rights to which such officer, director or employee may be entitled apart
from this provision.
13. If the incorporators or the stockholders entitled to vote adopt any
provision of By-laws, or if two or more subscribers to stock or
stockholders enter into any agreement, abridging, limiting or restricting
the right of any one or more stockholders to sell, assign, transfer,
mortgage, pledge, hypothecate, or transfer on the books of the Corporation,
any or all of the stock of the Corporation held by any stockholder, or
requiring any one or more stockholders first to offer any or all of the
stock of the Corporation held by such stockholder for sale to other
stockholders or persons or to the Corporation, under rules and regulations
established in such By-laws or pursuant to such agreement, then all
certificates of stock subject to such abridgment, limitation, or
restriction shall have a reference thereto endorsed thereon by an officer
of the Corporation, and a copy of such agreement, if any, shall be filed at
the office of the Corporation, and such stock shall not thereafter be
transferred on the books of the Corporation except in accordance with the
terms and provisions of any such By-laws or agreement, as the case may be.
-4-
<PAGE>
FOUR. The foregoing restated certificate of incorporation
correctly sets forth without change, except for correction of nonsubstantive
typographical errors, the corresponding provisions of the certificate of
incorporation as heretofore amended, and supersedes the original certificate of
incorporation and all amendments thereto.
IN WITNESS WHEREOF, We hereto sign our names and affirm that the
statements contained herein are true under penalties of perjury this 25th day of
April, 1985.
By /s/ Ralph C. Guild
------------------------------------
Its President - Ralph C. Guild
and /s/ Patrick G. Healy
-----------------------------------
Its Secretary - Patrick G. Healy
STATE OF NEW YORK )
COUNTY OF NEW YORK )ss:
On this 25th day of April, 1985, before me personally came RALPH C.
GUILD and PATRICK G. HEALY to me known and known to me to be the individuals
described in and who executed the foregoing instrument and they duly severally
acknowledged to me that they executed the same.
/s/ Jane Sperrazza
----------------------------------------
Notary Public
-5-
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INTEREP NATIONAL RADIO SALES, INC.
Under Section 805 of the Business Corporation Law of the State of New York
Haley Bader & Potts
4350 N. Fairfax Dr. Suite 900
Arlington, Virginia 22203
<PAGE>
CERTIFICATE OF AMENDMENT
of the
CERTIFICATE OF INCORPORATION
of
INTEREP NATIONAL RADIO SALES, INC.
_________________________________________________
Under Section 805 of the Business Corporation Law
__________________________________________________
The undersigned President of INTEREP NATIONAL RADIO SALES, INC., for
the purpose of amending its Certificate of Incorporation, CERTIFIES that:
FIRST: The name of the corporation is INTEREP NATIONAL RADIO SALES,
INC. (the "Corporation"). The name under which the corporation was originally
incorporated was McGAVERN QUINN CORPORATION.
SECOND: The Certificate of Incorporation of the Corporation was filed
by the Department of State on March 31, 1958. A Restated Certificate of
Incorporation was filed on May 28, 1985, and since the filing of the Restated
Certificate of Incorporation a Certificate of Amendment thereof was filed on
June 13, 1991.
THIRD: The Certificate of Incorporation of the Corporation is to be
amended by the deletion in its entirety of Article THIRD, which sets forth the
total number of shares of stock which the Corporation is authorized to issue,
and by the substitution of a new Article THIRD, which will increase the
authorized shares by authorizing a class of Preferred Stock consisting of One
Million (1,000,000) shares of the par value of $0.01 per share, and which shall
read in its entirety as follows:
<PAGE>
3. The Corporation shall have authority to issue a total of Two
Million (2,000,000) shares of stock of which One Million (1,000,000) shares
shall be Common Stock of the par value of $0.04 per share and One Million
(1,000,000) shares shall be Preferred Stock of the par value of $0.01 per share.
PREFERRED STOCK
Shares of the Preferred Stock may be issued from time to time in series,
and the Board of Directors of the corporation is authorized, subject to the
limitations provided by law, to establish and designate one or more series of
the Preferred Stock, to fix the number of shares constituting each series, and
to fix the designations and rights, preferences and limitations of each series
and the variations and relative rights, preferences and limitations as between
series, and to increase and to decrease the number of shares constituting each
series. The authority of the Board of Directors of the Corporation with respect
to each series shall include, but shall not be limited to, the authority to
determine the following:
(a) the designation of such series;
(b) the number of shares initially constituting such series and any
increase or decrease (to a number not less than the number of outstanding shares
of such series) of the number of shares constituting such series theretofore
fixed;
(c) the rate or rates, and the conditions on and the times at which
dividends on the shares of such series shall be paid, the preference or relation
which such dividends shall bear to the dividends payable on any other class or
series of stock of the Corporation, and whether or not such dividends shall be
cumulative and, if so, the date or dates from and after which they shall
accumulate;
(d) whether or not the shares of such series shall be redeemable, and, if
so, the terms and conditions of such redemption, including, without limitation,
the date or dates on or after which such shares shall be redeemable and the
amount per share which shall be payable on such redemption, which amount may
vary under different conditions and at different redemption dates;
(e) the rights to which the holders of the shares of such series shall be
entitled on the voluntary or involuntary liquidation, dissolution or winding up
or on any distribution of the assets, of the Corporation, which rights may be
different in the case of a voluntary liquidation, dissolution or winding up than
in the case of such an involuntary event;
(f) whether or not the shares of such series shall have voting rights in
addition to the voting rights provided by law and, if so, the terms and
conditions thereof, including, without limitation, the right of the holders of
such shares to vote on a separate class, either alone or with the holders of
shares of one or more other series of the Preferred Stock and the right to have
more than one vote per share;
-2-
<PAGE>
(g) whether or not a sinking fund or a purchase fund shall be provided for
the redemption or purchase of the shares of such series and, if so, the terms
and conditions thereof;
(h) whether or not the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or series of the same or any other
class of stock of the Corporation and, if so, the terms and conditions of
conversion or exchange, including, without limitation, any provision for the
adjustment of the conversion or exchange rate or the conversion or exchange
price; and
(i) any other relative rights, preferences and limitation.
COMMON STOCK
(a) Subject to the preferential dividend rights of the Preferred Stock, as
determined by the Board of Directors of the Corporation pursuant to the
foregoing provisions of this Article THREE, the holders of shares of the Common
Stock shall be entitled to receive such dividends as may be declared by the
Board of Directors of the Corporation.
(b) Subject to the preferential liquidation rights of the Preferred Stock
and except as determined by the Board of Directors of the Corporation pursuant
to the foregoing provisions of this Article THREE, in the event of any voluntary
or involuntary liquidations, dissolution or winding up of, or any distribution
of the assets of, the Corporation. the holders of shares of the Common Stock
shall be entitled to receive all of the assets of the Corporation available for
distribution to its shareholders ratably in proportion to the number of shares
of the Common stock held by them.
(c) Except as otherwise required by law or by the provisions of this
Certificate of Incorporation, the holders of shares of the Common Stock shall be
entitled to vote on all matters at all meetings of the shareholders of the
Corporation, and shall be entitled to one vote for each share of the Common
Stock entitled to vote at such meeting, voting together as one class with the
holders of the Preferred Stock who are entitled to vote.
FOURTH: The foregoing amendment was duly authorized in accordance with
Section 803(a) of the Business Corporation Law by the unanimous written consent
of the Board of Directors of the Corporation on June 1, 1993, followed by the
affirmative vote of the holders of a majority of the outstanding shares of the
Corporation's Common stock entitled to vote thereon at a meeting of the
shareholders of the Corporation duly called and held on June 23, 1993.
-3-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment on June 24, 1993 and affirms its contents as true under penalties of
perjury.
/s/ Ralph C. Guild
----------------------------------
Ralph C. Guild
Chairman and Chairman of the Board
/s/ John A. Rykala
- ----------------------------
Secretary, John A. Rykala
-4-
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
INTEREP NATIONAL RADIO SALES, INC.
_________________________________________________
Under Section 805 of the Business Corporation Law
_________________________________________________
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
INTEREP NATIONAL RADIO SALES, INC.
_________________________________________________
Pursuant to Section 805 of the
Business Corporation Law of the State of New York
_________________________________________________
The undersigned President of INTEREP NATIONAL RADIO SALES, INC., for the
purpose of amending its Certificate of Incorporation, CERTIFIES that:
FIRST: The name of the corporation is INTEREP NATIONAL RADIO SALES, INC.,
(the "Corporation"). The name under which the Corporation was formed was
McGavron-Quinn Corporation.
SECOND: The Certificate of Incorporation of the Corporation was filed by
the Department of State on March 31, 1958, a Restated Certificate of
Incorporation was filed on May 28, 1985, a Certificate of Change thereof was
filed on June 13, 1991 and a Certificate of Amendment thereof was filed on June
26, 1993.
THIRD: The Certificate of Incorporation of the Corporation is to be
amended by the addition of provision stating the number, designation, relative
rights, preferences and limitations of the shares of the Series A Cumulative
Redeemable Preferred Stock of the Corporation and Series B Cumulative Redeemable
Preferred Stock of the Corporation, as fixed by the Board of Directors of the
Corporation pursuant to authority to do so set forth in ARTICLE FOURTH of the
Certificate of Incorporation of the Corporation, which provision shall read in
its entirety as follows:
-2-
<PAGE>
I. SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK
A series of Series A Cumulative Redeemable Preferred Stock, consisting of
25,000 shares of Preferred Stock which the Corporation has authority to issue,
is created, and the designated and relative rights, preferences and limitations
of the shares of such series are fixed as follows:
Series A Cumulative Redeemable Preferred Stock
----------------------------------------------
1. Designation. The designation of such series is "Series A
-----------
Cumulative Redeemable Preferred Stock" (hereinafter in this Certificate of
Amendment called the "Series A Preferred Stock") and the number of shares
constituting such series shall be 25,000, which number may be decreased (but not
increased) by the Board of Directors without a vote of stockholders; provided,
--------
however, that such number may not be decreased below the number of then
- -------
currently outstanding shares of Series A Preferred Stock, plus the number of
shares of Series A Preferred Stock, required to be issued in connection with the
payment of dividends thereon. All capitalized terms used in this part I and not
otherwise defined shall have the meaning given to such terms in Section 12
hereof.
2. Dividends. (a). The holders of shares of Series A Preferred
---------
Stock, on a parity with the holders of shares of Series B Preferred Stock (as
hereinafter defined) and otherwise in preference to the holders of the Junior
Securities, shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose, cumulative
dividends as provided in this Section 2. Dividends on each share of Series A
Preferred Stock shall accrue at the rate of 10% per annum of the sum of (i) the
Liquidation Value and (ii) all accumulated and unpaid dividends thereon. Such
dividend rate shall be increased to accrue at the rate of 15% per annum of the
sum of (i) the Liquidation Value and (ii) all accumulated and unpaid dividends
thereon from and after the occurrence of a Trigger Event; provided, however,
that the dividend rate shall be restored to 10% per annum for any period
thereafter during which no Trigger Events exist, subject to being increased
again to 15% per annum upon the occurrence of a Trigger Event. An authorized
officer of the Corporation shall deliver to the holders of Series A Preferred
Stock a certificate certifying the date as of which the Corporation believes
that any Trigger Event has been cured or has otherwise ceased to exist,
specifying in reasonable detail the basis for such belief. Such dividends shall
commence to accrue on each share of Series A Preferred Stock from the date of
issuance thereof whether or not declared by the Board of Directors and shall
continue to accrue thereon until the date the Liquidation value of such share
(plus all accrued and unpaid dividends thereon) is paid. For purposes of
determining the amount of dividends accrued on the Series A Preferred Stock
pursuant to this Section 2 in connection with the sale, redemption or repurchase
of any Series A Preferred Stock which may occur prior to December 31 of any
year, the applicable dividend rate(s) for such period shall be multiplied by a
fraction, the numerator of which is the actual number of days elapsed in the
then current year and the denominator of which is 365. Such dividends shall be
payable annually to the record holders of the Series A Preferred Stock on
December 31 of each year commencing December 31, 1993 which dividends shall be
payable in cash, by wire transfer of immediately available federal funds or, to
the extent the Board of
-3-
<PAGE>
Directors of the Corporation in its sole discretion so desires, in additional
shares of Series A Preferred Stock valued at $1,000 per share which shares shall
be deemed fully paid and non-assessable.
(b) If in any fiscal year, the Corporation assigns to the trustees of
the ESOP the Corporation's obligations to repurchase shares of the Corporation's
stock from the ESOP in connection with distributions to or stock repurchase from
plan participants, and the trustees of the ESOP assume such obligation, and the
amount of the Corporation's direct or indirect contributions to the ESOP in
connection with such assignment and assumption exceeds the Threshold Amount
(the "Excess Contributions"), each holder of Series A Preferred Stock shall be
entitled to receive, in addition to the dividends provided for in subsection (a)
above, a dividend equal to (i) the Excess Contributions divided by the number of
shares of Common Stock then held by the ESOP (before giving effect to any
repurchases effected or to be effected with such Excess Contributions),
multiplied by (ii) the number of shares of Common Stock then held by such holder
of the Series A Preferred Stock (the "Additional Dividend"). For purpose of
this subsection (b), the "Threshold Amount" shall mean for fiscal years 1993
and 1994, any contributions to the ESOP in excess of $800,000 which amount shall
be increased by Forty Thousand Dollars ($40,000) per annum effective as of
January 1, 1995 and on each January 1 thereafter. Such Additional Dividends
shall be payable no later than March 31 of each year with respect to any Excess
Contributions paid during the preceding calender year and shall be paid in cash,
by wire transfer of immediately available federal funds or, if such cash payment
is not then permitted by the Corporation's institutional lender(s), in
additional shares of Series A Preferred Stock valued at $1,000 per share which
shares shall be deemed fully paid and non-assessable. Upon payment of any
Additional Dividend, the Corporation shall provide to Providence Media a written
explanation of the calculation of such Additional Dividend.
(c) Except as otherwise provided herein, if at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Series A Preferred Stock, such payment shall be distributed
ratably among the holders thereof based upon the aggregate accrued but unpaid
dividends on the Series A Preferred Stock held by each holder.
(d) Except as otherwise provided in this Certificate of Amendment, the
Purchase Agreement or the Shareholders' Agreement, so long as any shares of
Series A Preferred Stock are outstanding, the Corporation will not declare, pay
or set apart for payment any dividends or make any other distribution on or
redeem any Junior Securities and will not permit any subsidiary or other
affiliate to redeem, purchase or otherwise acquire for value, or set apart for
any sinking or other analogous fund for the redemption or purchase of, any
Junior Securities.
3. Liquidation Preference. (a) In the event of any liquidation,
----------------------
dissolution or winding up of the affairs of the Corporation, either voluntarily
or involuntarily, each holder of Series A Preferred Stock shall be entitled,
after provision for the payment of the Corporation's debts and other
liabilities, to be paid in cash by wire transfer of immediately available
federal funds the aggregate Liquidation value of all shares of Series A
Preferred Stock held by such holder plus an amount equal to the sum of all
accrued and unpaid dividends thereon and all
-4-
<PAGE>
unpaid Additional Dividends, whether or not declared to the date of such
payment, before any distribution is made on any Junior Securities. If, upon any
such liquidation, dissolution or other winding up of the affairs of the
Corporation, the net assets of the Corporation distributable among the holders
of all outstanding shares of the Series A Preferred Stock shall be insufficient
to permit the payment in full to such holders of the preferential amounts to
which they are entitled, then the entire net assets of the Corporation remaining
after the provision for the payment of the Corporation's debts and other
liabilities shall be distributed among the holders of the Series A Preferred
Stock ratably in proportion to the full amounts to which they would otherwise be
respectively entitled.
(b) Holders of Series A Preferred Stock shall not be entitled to any
additional distribution in the event of any liquidation, dissolution or winding
up of the affairs of the Corporation in excess of the preferential amount
referred to in Section 3(a) above.
4. Voting Rights. (a) The holders of Series A Preferred Stock
-------------
shall not have or be entitled to any voting rights or powers, either general or
special, except as required by law and subparagraph (b) of this Section 4.
(b) The holders of shares of Series A Preferred Stock shall have the
following voting rights:
(i) The affirmative vote of the holders of a majority of the
outstanding shares of Series A Preferred Stock, voting separately as a
single series, in person or by proxy, at a special or annual meeting of
stockholders called for the purpose, shall be necessary to (i) authorize,
or increase the authorized number of shares of, or issue, any class or
series of the Corporation's capital stock ranking (either as to dividends
or upon liquidation, dissolution or winding up) prior to, or on a parity
with, the Series A Preferred Stock, including shares of Series A Preferred
Stock authorized pursuant to this Certificate of Amendment and issued after
the date of original issuance of the Series A Preferred Stock, provided
that no such vote shall be required to issue additional shares of Series A
Preferred Stock as a dividend to the holders of Series A Preferred Stock in
accordance with Section 2 hereof or to issue shares of Series B Preferred
Stock having a liquidation value of up to $2,000,000 in the aggregate
including dividends on such Series B Preferred Stock payable solely in
additional shares of Series B Preferred Stock in accordance with this
Certificate of Amendment, or (ii) amend, repeal or change, directly or
indirectly, any of the provisions of the Certificate of Incorporation of
the Corporation, as amended, in any manner which would alter or change the
powers, preferences or special rights of the shares of Series A Preferred
Stock so as to affect them adversely.
(ii) The rights of holders of shares of Series A Preferred Stock to
vote or take any other actions as provided in this Section 4 may be
exercised at any annual meeting of stockholders or at a special meeting of
stockholders held for such purposes. At each meeting of stockholders at
which the holders of shares of Series A Preferred Stock shall have the
right, voting separately as a single series, to take any action as provided
in this
-5-
<PAGE>
Section 4, the presence in person or by proxy of the holders of record of a
majority of the total number of shares of Series A Preferred Stock then
outstanding and entitled to vote on the matter shall be necessary and
sufficient to constitute a quorum. At any such meeting or at any
adjournment thereof, in the absence of a quorum of the holders of shares of
Series A Preferred Stock, a majority of the holders of such shares present
in person or by proxy shall have the power to adjourn the meeting as to the
actions to be taken by the holders of shares of Series A Preferred Stock
from time to time and place to place without notice other than announcement
at the meeting until a quorum shall be present.
(iii) For the taking of any action as provided in this Section 4 by
the holders of shares of Series A Preferred Stock, each such holder shall
have one vote for each share of such stock standing in his name on the
transfer books of the Corporation as of any record date fixed for such
purpose or, if no such date be fixed, at the close of business on the
business day next preceding the day on which notice is given, or if notice
is waived, at the close of business on the business day next preceding the
day on which the meeting is held. "Business Day" shall mean any date other
than a Saturday, Sunday or a day on which banking institutions in the State
of Rhode Island are authorized or obligated by law or executive order to
close.
5. Redemption. (a) The Series A Preferred Stock then outstanding
----------
shall be redeemed in whole on or after October 31, 2003 (the "Mandatory
Redemption"). The Corporation shall give each holder of Series A Preferred
Stock not less than 10 nor more than 20 days notice of such redemption (the date
set forth in such notice for the redemption of said shares of Series A Preferred
Stock shall hereinafter be referred to as the "Mandatory Redemption Date"). The
Corporation shall redeem on the Mandatory Redemption Date all shares of Series A
Preferred Stock held by the holders of Series A Preferred Stock in cash by wire
transfer of immediately available funds at the Liquidation Value plus an amount
----
equal to the sum of all accrued and unpaid dividends including unpaid Additional
Dividends (whether or not declared by the Board of Directors) on the Series A
Preferred Stock to be redeemed as of the Mandatory Redemption Date.
(b) The Series A Preferred Stock may be redeemed at the option of the
holder(s) of a majority of the then outstanding Series A Preferred Stock on the
earlier to occur of (i) the Sale of the Corporation or (ii) a Trigger Event
(each an "Optional Redemption"). In either case, the holders of a majority of
the outstanding Series A Preferred Stock shall notify the Corporation in writing
of its or their intent to exercise the rights afforded by this Section 5(b) and
specify a date not less than 10 nor more than 60 days from the date of such
notice on which the Series A Preferred Stock shall be redeemed (the "Optional
Redemption Date"). Upon receipt of such notice, the Corporation shall promptly
notify the remaining holders of the Series A Preferred Stock of the Optional
Redemption Date and offer such shareholders the opportunity to redeem their
shares of Series A Preferred Stock on such Optional Redemption Date. The
recipients of such notice may participate in the Optional Redemption by giving
prompt written notice to the Corporation to such effect. The Corporation shall
redeem on the Optional
-6-
<PAGE>
Redemption Date all shares of Series A Preferred Stock held by the holders of
the Series A Preferred Stock electing to participate in such Optional Redemption
in cash by wire transfer of immediately available funds at the Liquidation Value
plus an amount equal to the sum of all accrued and unpaid dividends including
- ----
unpaid Additional Dividends (whether or not declared by the Board of Directors)
on the Series A Preferred Stock to be redeemed on such Optional Redemption Date.
(c) On and after any Mandatory Redemption Date or any Optional
Redemption Date, dividends will cease to accumulate on shares of Series A
Preferred Stock to be redeemed and the holders of the Series A Preferred Stock
shall cease to have any rights as stockholders of the Corporation except the
right to receive, without interest, the Liquidation Value thereof and an amount
equal to the sum of all accrued and unpaid dividends, including unpaid
Additional Dividends, upon the surrender of the certificate(s) representing the
Series A Preferred Stock to the Corporation; provided, however, that in the
-------- -------
event any holder of Series A Preferred Stock tenders its shares to the
Corporation on any Mandatory Redemption Date or any Optional Redemption Date,
the Corporation shall be obligated to pay interest on the Liquidation Value at
the maximum rate allowable under applicable law in the event the Corporation
defaults in its obligation to pay the Liquidation Value on any such Mandatory
Redemption Date or Optional Redemption Date. If less than all of the
outstanding shares of Series A Preferred Stock are to be redeemed, such shares
shall be redeemed pro rata in accordance with the number of Series A Preferred
--- ----
Stock owned by each holder of Series A Preferred Stock.
(d) The redemption by the Corporation of all or any part of the Series
A Preferred Stock pursuant this Section 5 is subject to the provisions of
applicable corporate law.
6. Redemption Notice. The notice described in Section 5 hereof
-----------------
shall be sent, if by or on behalf of the Corporation to the holders of the
Series A Preferred Stock at their respective addresses as shall then appear on
the records of the Corporation, or if by any holder of Series A Preferred Stock
to the Corporation at 100 Park Avenue, New York, New York 10017, Attention:
Chief Financial Officer, by first class mail, postage prepaid, a. notifying
such recipient of the redemption, the date of such redemption, the number of
shares of Series A Preferred Stock to be redeemed, and the redemption price
therefor and b. in the case of any notice by or on behalf of the Corporation,
stating the place or places at which the shares called for redemption shall,
upon presentation and surrender of such certificates representing such shares,
by redeemed.
7. Status of Reacquired Shares. Shares of Series A Preferred Stock
---------------------------
which have been issued and reacquired in any manner shall (upon compliance with
any applicable provisions of the laws of the State of New York) have the status
of authorized and unissued shares of Series A Preferred Stock issuable in series
undesignated as to series and may be redesignated and reissued.
8. Exclusion of Other Rights. Except as may otherwise be required
-------------------------
by law, the shares of Series A Preferred Stock shall not have any preferences or
relative, participating,
-7-
<PAGE>
optional or other special rights, other than those specifically set forth in
this Certificate of Amendment. The shares of Series A Preferred Stock shall have
no preemptive or subscription rights.
9. Rank. The Series A Preferred Stock shall rank senior as to
----
dividends and upon liquidation, dissolution or winding up to all Junior
Securities, whenever issued, provided, however, that the Series B Preferred
Stock shall be on a parity with the Series A Preferred Stock as to dividends.
10. Identical Rights. Each share of the Series A Preferred Stock
----------------
shall have the same relative rights and preferences as, and shall be identical
in all respects with, all other shares of the Series A Preferred Stock.
11. Certificates. So long as any shares of the Series A Preferred
------------
Stock are outstanding, there shall be set forth on the face or back of each
stock certificate issued by the Corporation a statement that the Corporation
shall furnish without charge to each shareholder who so requests, a full
statement of the designation and relative rights, preferences and limitations of
each class of stock or series thereof that the Corporation is authorized to
issue and of the authority of the Board of Directors to designate and fix the
relative rights, preferences and limitations of each series.
12. Definitions.
-----------
"ESOP" means the Interep National Radio Sales Employee Stock
Ownership Plan and Trust.
"401(k) Plan" means The Interep National Radio Store Wealth
Attainment Plan and Trust.
"Junior Securities" means any of the Corporation's equity
securities other than the Series A Preferred Stock.
"Liquidation Value" of any share of Series A Preferred Stock or
Series B Preferred Stock shall be $1,000.
"Person" means an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization and any
government, governmental department or agency or political subdivision thereof.
"Providence Media" means Providence Media Partners L.P., a
Delaware limited partnership.
"Purchase Agreement" means that certain Securities Purchase
Agreement of even date herewith between Providence Media and the Corporation.
-8-
<PAGE>
"Sale of the Corporation" means the sale of the Corporation to a
Person or group of Persons in a single transaction or a series of transactions
pursuant to which such Person or Persons acquire (i) capital stock of the
Corporation possessing the voting power to elect a majority of the Corporation's
board of directors (whether by merger, consolidation or sale or transfer of the
Corporation's capital stock, provided, however, that an IPO that results in an
acquisition of voting power shall not be a Sale of the Corporation) or (ii) all
or substantially all of the Corporation's assets determined on a consolidation
basis.
"Shareholders' Agreement" means that certain Shareholders'
Agreement of even date herewith, among the Corporation, Providence Media and
certain other stockholders of the Corporation.
"Trigger Event" means the occurrence of any of the following:
(i) the Corporation shall fail in any material respect to perform or
observe any of the covenants set forth in the Purchase Agreement and such
failure shall continue unremedied for more than 30 days from the occurrence
thereof; or
(ii) the Corporation shall be obligated (which shall include the
obligation to provide funding for purchases by the ESOP and/or THE 401(k)
Plan to repurchase or redeem shares of its common stock constituting more
than 15% of the issued and outstanding common stock of the Corporation,
whether in a single transaction or a series of transactions occurring
during the course of any twelve month period; or
(iii) the Corporation fails to file a registration statement upon the
exercise of Providence Media's rights under the Shareholders' Agreement or
that certain Registration Rights Agreement of even date herewith between
the Corporation and Providence Media; or
(iv) the Corporation fails to purchase the PMP Securities (as
defined in the Shareholders' Agreement) by, and in accordance with Section
3 of such Shareholders' Agreement within 120 days of delivery of a Put
Notice (as defined in the Shareholders' Agreement) regardless of whether
the failure to complete such purchase results from the Corporation's lack
of sufficient capital to tender the Put Purchase Price (as defined in the
Shareholders' Agreement) for such securities; or
(v) violation of the Corporation's Articles of Incorporation or by-
laws with respect to the Series A Preferred Stock; or
(vi) the Corporation violates the terms of that certain side letter
of even date herewith between the Corporation and Providence Media and such
violation shall continue unremedied for more than 30 days after notice of
such violation is provided by Providence Media to the Corporation; or
-9-
<PAGE>
(vii) the imposition by the Federal Trade Commission of any material
fine or penalty or other form of relief or enforcement action which has a
material adverse effect on the Company.
II. SERIES B CUMULATIVE REDEEMABLE PREFERRED STOCK
A series of Series B Cumulative Redeemable Preferred Stock, consisting
of 5,000 shares of Preferred Stock which the Corporation has authority to issue,
is created, and the designation and relative rights, preferences and limitations
of the shares of such series are fixed as follows:
Series B Cumulative Redeemable Preferred Stock
----------------------------------------------
1. Designation. The designation of such series is "Series B
-----------
Cumulative Redeemable Preferred Stock" (hereinafter in this Certificate of
Amendment called the "Series B Preferred Stock") and the number of shares
constituting such series shall be 5,000, which number may be decreased (but not
increased) by the Board of Directors without a vote of stockholders; provided,
--------
however, that such number may not be decreased below the number of then
- -------
currently outstanding shares of Series B Preferred Stock, plus the number of
shares of Series B Preferred Stock required to be issued in connection with the
payment of dividends thereon. All capitalized terms used in this part II and
not otherwise defined shall have the meaning given to such terms in Section 12
of part I hereof.
2. Dividends. (a) The holders of shares of Series B Preferred
---------
Stock, on a parity with the holders of the Series A Preferred Stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, cumulative dividends as provided in
this Section 2. Dividends on each share of Series B Preferred Stock shall
accrue at the rate of 10% per annum of the sum of (i) the liquidation Value and
(ii) all accumulated and unpaid dividends thereon. Such dividends shall
commence to accrue on each share of Series B Preferred Stock from the date of
issuance thereof whether or not declared by the Board of Directors and shall
continue to accrue thereon until the date the Liquidation Value of such share
(plus all accrued and unpaid dividends thereon) is paid. For purposes of
determining the amount of dividends accrued on the Series B Preferred Stock in
connection with the sale, redemption or repurchase of any Series B Preferred
Stock which may occur prior to December 31 of any year, the applicable dividend
rate(s) for such period shall be multiplied by a fraction, the numerator of
which is the actual number of days elapsed in the then current year and the
denominator of which is 365. Such dividends shall be payable annually to the
record holders of the Series B Preferred Stock on December 31 of each year
commencing December 31, 1994 which dividends shall be payable in additional
shares of Series B Preferred Stock valued at $1,000 per share which shares shall
be deemed fully paid and non-assessable; provided, however, in the event the
dividends pursuant to Article Third, part I, Section 2(a) are paid in cash, then
the dividends payable to the holders of the Series B Preferred Stock for such
year may, at the election of the Board of Directors, be paid in cash by wire
transfer of immediately available federal funds.
-10-
<PAGE>
(b) Except as otherwise provided herein, if at any time the
Corporation pays less than the total amount of dividends then accrued with
respect to the Series B Preferred Stock, such payment shall be distributed
ratably among the holders thereof based upon the aggregate accrued by unpaid
dividends on the Series B Preferred Stock held by each holder.
(c) Except as otherwise provided in this Amendment, so long as any
shares of Series B Preferred Stock are outstanding, the Corporation will not
declare, pay or set apart for payment any dividends or make any other
distribution on or redeem any Junior Securities other than as may be required
under the Shareholders' Agreement and will not permit any subsidiary or other
affiliate to redeem, purchase or otherwise acquire for value, or set apart for
any sinking or other analogous fund for the redemption or purchase of, any
Junior Securities.
3. Liquidation Preference. (a) In the event of any liquidation,
----------------------
dissolution or winding up of the affairs of the Corporation, either voluntarily
or involuntarily, each holder of Series B Preferred Stock shall be entitled,
after provision for the payment of the Corporation's debts and other liabilities
and payment in full of the aggregate Liquidation Value of all shares of Series A
Preferred Stock plus all accrued and unpaid dividends on the Series A Preferred
Stock, including the Additional Dividends, if any, to be paid in cash by wire
transfer of immediately available federal funds the aggregate Liquidation Value
of all shares of Series B Preferred Stock held by such holder plus an amount
equal to the sum of all accrued and unpaid dividends thereon, whether or not
declared to the date of such payment, before any distribution is made on any
Junior Securities. If, upon any such liquidation, dissolution or other winding
up of the affairs of the Corporation, the net assets of the Corporation
distributable among the holders of all outstanding shares of the Series B
Preferred Stock shall be insufficient to permit the payment in full to such
holders of the preferential amounts to which they are entitled, then the entire
net assets of the Corporation remaining after the provision for the payment of
the Corporation's debts and other liabilities shall be distributed among the
holders of the Series B Preferred Stock ratably in proportion to the full
amounts to which they would otherwise be respectively entitled.
(b) Holders of Series B Preferred Stock shall not be entitled to any
additional distribution in the event of any liquidation, dissolution or winding
up the affairs of the Corporation in excess of the preferential amount referred
to in Section 3(a) above.
4. Voting Rights. (a) The holders of Series B Preferred Stock
-------------
shall not have or be entitled to any voting rights or powers, either general or
special, except as required by law and subparagraph (b) of this Section 4.
(b) The holders of shares of Series B Preferred Stock shall have the
following voting rights:
(i) The affirmative vote of the holder of a majority of the
outstanding shares of Series B Preferred Stock voting separately as a
single series, in person or by proxy, at a special or annual meeting of
stockholders called for the purpose, shall be necessary to (i) authorize or
increase the authorized number of shares of, or issue, any class or series
of
-11-
<PAGE>
the Corporation's capital stock ranking (either as to dividends or upon
liquidation, dissolution or winding up) prior to or on a parity with the
Series B Preferred Stock, including shares of Series B Preferred Stock
authorized pursuant to this Certificate of Amendment and issued after the
date of original issuance of the Series B Preferred Stock, provided that no
such vote shall be required to authorize or issue additional shares of
Series A Preferred Stock including shares of Series A Preferred Stock
issued as a dividend to the holders of Series A Preferred Stock in
accordance with Section 2 of part I hereof or in accordance with the terms
of the Shareholders' Agreement or (ii) amend, repeal or change, directly or
indirectly, any of the provisions of the Certificate of Incorporation of
the Corporation, as amended, in any manner which would alter or change the
powers, preferences or special rights of the shares of Series B Preferred
Stock so as to affect them adversely.
(ii) The rights of holders of shares of Series B Preferred Stock to
vote or take any other actions as provided in this Section 4 may be
exercised at any annual meeting of stockholders or at a special meeting of
stockholders held for such purposes. At each meeting of stockholders at
which the holders of shares of Series B Preferred Stock shall have the
right, voting separately as single series, to take any action as provided
in this Section 4, the presence in person or by proxy of the holders of
record of a majority of the total number of shares of Series B Preferred
Stock then outstanding and entitled to vote on the matter shall be
necessary and sufficient to on the matter shall be necessary and sufficient
to constitute a quorum. At any such meeting or at any adjournment thereof,
in the absence of a quorum of the holders of shares of Series B Preferred
Stock, a majority of the holders of such shares present in person or by
proxy shall have the power to adjourn the meeting as to the actions to be
taken by the holders of shares of Series B Preferred Stock from time to
time and place to place without notice other than announcement at the
meeting until a quorum shall be present.
(iii) For the taking of any action as provided in this Section 4 by
the holders of shares of Series B Preferred Stock, each such holder shall
have one vote for each share of such stock standing in his name on the
transfer books of the Corporation as of any record date fixed for such
purpose or, if no such date be fixed, at the close of business on the
business day next preceding the day on which notice is given, or if notice
is waived, at the close of business on the business day next preceding the
day on which the meeting is held. "Business Day" shall mean any date other
than a Saturday, Sunday or a day on which banking institutions in the State
of Rhode Island are authorized or obligated by law or executive order to
close.
5. Redemption. (a) The Series B Preferred Stock may be redeemed at
----------
the option of the Corporation or the holder(s) of a majority of the then
outstanding Series B Preferred Stock on the late to occur of (i) the redemption
of all outstanding Series A Preferred Stock or (ii) November 1, 2003 (the
"Series B Optional Redemption"). In either case, the Corporation shall notify
the holders of the Series B Preferred Stock or the holders of majority of the
outstanding Series B Preferred Stock shall notify the Corporation, as the case
may be, in writing of its or their
-12-
<PAGE>
intent to exercise the rights afforded by this Section 5(a) and specify a date
not less than 10 nor more than 60 days from the date of such notice on which the
Series B Preferred Stock shall be redeemed (the "Series B Optional Redemption
Date"). Upon receipt of any such notice from a majority of the holders of the
Series B Preferred Stock, the Corporation shall promptly notify the remaining
holders of the Series B Preferred Stock of the Series B Optional Redemption Date
and offer such shareholders the opportunity to redeem their shares of Series B
Preferred Stock on such Series B Optional Redemption Date. The recipients of
such notice may participate in the Series B Optional Redemption by giving prompt
written notice to the Corporation to such effect. The Corporation shall redeem
on the Series B Optional Redemption Date all shares of Series B Preferred Stock
held by the holders of the Series B Preferred Stock electing to participate in
such Series B Optional Redemption in cash by wire transfer of immediately
available funds at the Liquidation Value plus an amount equal to the sum of all
----
accrued and unpaid dividends (whether or not declared by the Board of Directors)
on the Series B Preferred Stock to be redeemed on such Series B Optional
Redemption Date.
(b) Up to 100 shares of Series B Preferred Stock may be redeemed
during any calendar year from any holder or holders of Series B Preferred Stock
who is no longer employed by the Corporation (each a "Series B mandatory
Redemption"); provided, however, that the Series B Preferred Stock has been held
by any such holder for at least two (2) years. The Corporation shall give any
such holder of Series B Preferred Stock not less than 10 nor more than 20 days
notice of such redemption (the date set forth in such notice for the redemption
of said shares of Series B Preferred Stock shall hereinafter be referred to as
the "Series B Mandatory Redemption Date"). The Corporation shall redeem on the
Series B Mandatory Redemption Date all shares of Series B Preferred Stock held
by the holders of Series B Preferred Stock entitled to participate in such
Series B Mandatory Redemption in cash by wire transfer of immediately available
funds at the Liquidation Value plus an amount equal to the sum of all accrued
----
and unpaid dividends (whether or not declared by the Board of Directors) on the
Series B Preferred Stock to be redeemed as of the Series B Mandatory Redemption
Date.
(c) On and after any Series B Optional Redemption Date or any Series B
Mandatory Redemption Date, dividends will cease to accumulate on shares of
Series B Preferred Stock to be redeemed and the holders of the Series B
Preferred Stock shall cease to have any rights as stockholders of the
Corporation except the right to receive, without interest, the Liquidation Value
thereof and an amount equal to the sum of all accrued and unpaid dividends upon
the surrender of the certificate(s) representing the Series B Preferred Stock to
the Corporation; provided, however, that in the event any holder of Series B
-------- -------
Preferred Stock tenders its shares to the Corporation on any Series B Optional
Redemption Date or any Series B Mandatory Redemption Date, the Corporation shall
be obligated to pay interest on the Liquidation Value at the maximum rate
allowable under applicable law in the event the Corporation defaults in its
obligation to pay the Liquidation Value on any such Series B Optional Redemption
Date or any Series B Mandatory Redemption Date. If less than all of the
outstanding shares of Series B Preferred Stock are to be redeemed, such shares
shall be redeemed pro rata in accordance with the number of Series B Preferred
--- ----
Stock owned by each holder of Series B Preferred Stock.
-13-
<PAGE>
(d) The redemption by the Corporation of all or any part of the Series
B Preferred stock pursuant to this Section 5 is subject to the provisions of
applicable corporate law.
6. Redemption Notice. The notice described in Section 5 hereof
-----------------
shall be sent, if by or on behalf of the Corporation to the holders of the
Series B Preferred Stock at their respective addresses as shall then appear on
the records of the Corporation, or if by any holder of Series B Preferred Stock
to the Corporation at 100 Park Avenue, New York, New York 10017, Attention:
Chief Financial Officer, by first class mail, postage prepaid, (i) notifying
such recipient of the redemption, the date of such redemption, the number of
shares of Series B Preferred Stock to be redeemed, and the redemption price
therefor and (ii) in the case of any notice by or on behalf of the Corporation,
stating the place or places at which the shares called for redemption shall,
upon presentation and surrender of such certificates representing such shares,
be redeemed.
7. Status of Reacquired Shares. Shares of Series B Preferred Stock
---------------------------
which have been issued and reacquired in any manner shall (upon compliance with
any applicable provisions of the laws of the State of New York) have the status
of authorized and unissued shares of Series B Preferred Stock issuable in series
undesignated as to series and may be redesignated and reissued.
8. Exclusion of Other Rights. Except as may otherwise be required
-------------------------
by law, the shares of Series B Preferred Stock shall not have any preferences or
relative, participating, optional or other special rights, other than those
specifically set forth in this Certificate of Amendment. The shares of Series B
Preferred Stock shall have no preemptive or subscription rights.
9. Rank. The Series B Preferred Stock shall rank junior upon
----
liquidation, dissolution or winding up to the Series A Preferred Stock, whenever
issued, provided, however, that the Series B Preferred Stock shall be on a
parity with the Series A Preferred Stock as to dividends. The Series B
Preferred Stock shall rank senior upon liquidation, dissolution or winding up to
all other classes of Junior Securities.
10. Identical Rights. Each share of the Series B Preferred Stock
----------------
shall have the same relative rights and preferences as, and shall be identical
in all respects with, all other shares of the Series B Preferred Stock.
11. Certificates. So long as any shares of the Series B Preferred
------------
Stock are outstanding, there shall be set forth on the face or back of each
stock certificate issued by the Corporation a statement that the Corporation
shall furnish without charge to each shareholder who so requests, a full
statement of the designation and relative rights, preferences and limitations of
each class of stock or series thereof that the Corporation is authorized to
issue and of the authority of the Board of Directors to designate and fix the
relative rights, preferences and limitations of each series.
-14-
<PAGE>
FOURTH: The foregoing provision and amendment was duly authorized in
accordance with Section 502 of the Business Corporation Law by the unanimous
written consent of the Board of Directors of the Corporation.
-15-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment on November 9, 1993 and affirms its contents as true under penalties
of perjury.
/s/ Leslie Goldberg
--------------------------
Leslie Goldberg
President
/s/ John Rykala
-----------------------
John Rykala
Secretary
-16-
<PAGE>
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
INTEREP NATIONAL RADIO SALES, INC.
Under Section 805 of the Business Corporation Law of the State of New York
Haley Bader & Potts
4350 N. Fairfax Dr. Suite 900
Arlington, Virginia 22203
<PAGE>
CERTIFICATE OF AMENDMENT
of the
CERTIFICATE OF INCORPORATION
of
INTEREP NATIONAL RADIO SALES, INC.
-------------------------------------------------
Under Section 805 of the Business Corporation Law
-------------------------------------------------
The undersigned Chairman of the Board and Chief Executive Officer of the
INTEREP NATIONAL RADIO SALES INC., for the purpose of amending its Certificate
of Incorporation, CERTIFIES that:
FIRST: The name of the corporation is INTEREP NATIONAL RADIO SALES, INC.
(the "Corporation"). The name under which the corporation was originally
incorporated was MCGAVERN QUINN CORPORATION.
SECOND: The Certificate of Incorporation of the Corporation was filed by
the Department of State on March 31, 1958. A Restated Certificate of
Incorporation was filed on May 28, 1985, and since the filing of the Restated
Certificate of Incorporation, Certificates of Amendment thereof were filed on
June 13, 1991, and on June 29, 1993.
THIRD: The Certificates of Incorporation is to be amended by the deletion
in its entirety of Article SIX, which sets forth the minimum and maximum number
of directors of the Corporation, and by the substitution of a new Article SIX,
which will increase the maximum number of directors to thirteen, and which shall
read in its entirety as follows:
<PAGE>
6. The number of directors shall not be less than three, nor more
than thirteen, none of whom need to be stockholders.
FOURTH: The foregoing amendment was duly authorized in accordance with
Section 803(a) of the Business Corporation Law by the unanimous written consent
of the Board of Directors on November 10, 1993, followed by the affirmative vote
of the holders of a majority of the outstanding shares of the Corporation's
Common Stock entitled to vote thereon at a meeting of the shareholders of the
Corporation duly called and held on February 14, 1994.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment on February 14, 1994, and affirms its contents as true under penalties
of perjury.
/s/ Ralph C. Guild
-------------------------------------------
Ralph C. Guild
Chairman and Chief Executive Officer
/s/ John A. Rykala
- ----------------------------------------------
John A. Rykala
Secretary
-2-
<PAGE>
Exhibit 3.5
INTEREP NATIONAL RADIO SALES, INC.
(A NEW YORK CORPORATION)
BY-LAWS
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. The annual meeting of the stockholders of
---------------
Interep National Radio Sales, Inc. (hereinafter called "the Corporation"), for
the purpose of electing directors for the ensuing year and for the transaction
of such other business as may properly come before the meeting, shall be held at
the office of the Corporation within the State of New York at ten A.M. on the
Third Tuesday in November in each year, or if such date falls on a legal
holiday, on the first business day thereafter which is not a legal holiday, or
at such other place within the State of New York and at such hour as shall be
designated by the President. If the election of directors for the ensuing year
shall not be held on the day designated herein for any annual meeting (or any
adjournment or adjournments thereof), the Board of Directors shall forthwith
call a meeting of the stockholders of the Corporation for the purpose of
electing such directors. If such meeting shall not be called within one month,
or, if held, shall result in a failure to elect such directors, any stockholder
of the Corporation entitled to vote for election of directors may call a meeting
for such purpose, as by statute in such case provided; and at such meeting the
stockholders entitled to vote may elect such directors and transact other
business with the same force and effect as at an annual meeting duly called and
held.
SECTION 2. Special Meetings. A special meeting of the stockholders,
----------------
unless otherwise prescribed by statute, may be called at any time by the
President, the Secretary, or the Board of
<PAGE>
-2-
Directors, and shall be called by the President or the Secretary on the written
request of stockholders owning of record at least twenty per cent (20%) of the
outstanding shares of stock of the Corporation entitled to vote, which written
request shall state the purpose or purposes of such meeting.
SECTION 3. Notice of Meetings. Except as hereinafter in this Section
------------------
provided, or as may be otherwise required by law, notice of each annual and
special meeting of the stockholders shall be in writing and signed by the
President, a Vice-President, the Secretary, or an Assistant Secretary. Such
notice shall state the purpose or purposes for which the meeting is called and
the time when and the place within the State of New York where it is to be held;
and a copy thereof shall be delivered personally or mailed in a postage prepaid
envelope, not less than ten (10) nor more than forty (40) days before such
meeting, to each stockholder of record entitled to vote at such meeting and to
any stockholder of record who, by reason of any action proposed at such meeting,
would be entitled to have his stock appraised if such action were taken; and, if
mailed, it shall be directed to such stockholder at his address as it appears on
such books of the Corporation, unless he shall have filed with the Secretary of
the Corporation a written request that notices intended for him be mailed to
some other address, in which case it shall be mailed to the address designated
in such request. Notice of any meeting of stockholders shall not be required to
be given to any stockholder who shall attend such meeting in person or by proxy,
or who before or after the meeting shall personally or by his attorney thereunto
authorized waive notice thereof in writing; nor shall the giving of notice to
any stockholder be required when the giving of such notice is dispensed with
pursuant to statute. Notice of any adjourned meeting need not be given.
SECTION 4. Place of Meeting. Every meeting of the stockholders of
----------------
the Corporation (other than annual meetings, which are governed by Section 1
hereof) shall be held at the office of
<PAGE>
-3-
the Corporation in the State of New York, or at such other place in the State of
New York as shall be specified or fixed in the notice or waiver of notice
thereof.
SECTION 5. Quorum. At all meetings of the stockholders of the
------
Corporation, except as otherwise provided by law or by the Certificate of
Incorporation of the Corporation, the holders of a majority of the outstanding
shares of stock of the Corporation entitled to vote thereat, present in person
or by proxy, shall constitute a quorum for the transaction of business. In the
absence of a quorum, a majority in voting power of the stockholders present in
person or by proxy and entitled to vote may adjourn the meeting from time to
time and from place to place until a quorum is obtained. At any such adjourned
meeting at which a quorum is present, any business may be transacted which might
have been transacted at the meeting as originally called.
SECTION 6. Order of Business. The order of business at all meetings of
-----------------
the stockholders shall be as determined by the Chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present may
be changed by a majority in voting power of the stockholders present in person
or by proxy and entitled to vote at the meeting.
SECTION 7. Organization. At every meeting of the stockholders, the
------------
President, or in the absence of the President, a Vice-President (and in case
more than one Vice-President shall be present, that Vice-President who shall
have served as such for the longest period of time), shall act as Chairman of
the meeting. The Secretary of the Corporation, or in his absence one of the
Assistant Secretaries of the Corporation, shall act as Secretary of the meeting.
In case none of the officers above designated to act as Chairman or Secretary of
the meeting, respectively, shall be present, a chairman or a secretary of the
meeting, as the case may be, shall be chosen by a majority in voting power of
the stockholders present in person or by proxy and entitled to vote at the
meeting.
<PAGE>
-4-
SECTION 8. Voting. At each meeting of the stockholders, every
------
stockholder of record of stock entitled to vote thereat shall be entitled to one
vote for each share of such stock outstanding in his name on the books of the
Corporation on the date determined in accordance with the provisions of Section
6 of Article VII of these By-laws. Stock belonging to the Corporation shall not
be voted upon directly or indirectly. Any stockholder entitled to vote may vote
either in person, or by proxy duly appointed by an instrument in writing
subscribed by such stockholder (or by his attorney thereunto authorized) and
delivered to the Secretary of the meeting; provided, however, that no proxy
shall be valid after the expiration of eleven months from the date of its
execution unless the stockholder executing it shall have specified therein its
duration.
At all meetings of the stockholders, a quorum being present, all matters,
except as otherwise provided by law or by the Certificate of Incorporation of
the Corporation or by these By-laws, shall be decided by a majority in voting
power of the stockholders of the Corporation present in person or by proxy and
entitled to vote.
In voting on any question on which a vote by ballot is required by law or
is demanded by any stockholder entitled to vote, the voting shall be by ballot.
Each ballot shall be signed by the stockholder voting or by his proxy, and shall
state the number of shares voted. All other questions may be passed upon by
voice vote.
SECTION 9. Inspectors of Election. At any election of directors by
----------------------
stockholders, or in any other case in which inspectors may act, inspectors of
election shall not be required unless they are requested by a stockholder
present or represented by proxy and entitled to vote, in which case not less
than two (2) inspectors shall be appointed by the Chairman of the meeting;
provided, however,
<PAGE>
-5-
that if any stockholder shall demand an election, they shall be elected by the
votes cast in person or by proxy of the holders of record of a plurality of the
shares voted, and the person presiding shall conduct such election.
The inspectors appointed or elected as aforesaid, before entering upon the
discharge of their duties, shall take and subscribe an oath faithfully to
execute the duties of inspectors with strict impartiality and according to the
best of their ability, and shall take charge of the polls and after the
balloting shall make a certificate of the result of the vote taken.
ARTICLE II
DIRECTORS
SECTION 1. General Powers. The business of the Corporation shall be
--------------
managed by the Board of Directors. The Board of Directors may adopt such rules
and regulations, not inconsistent with the Certificate of Incorporation of the
Corporation or these By-laws or the laws of the State of New York, as it may
deem proper for the conduct of its meetings and the management of the
Corporation. In addition to the powers expressly conferred by these By-laws,
the Board of Directors may exercise all powers and perform all acts which are
not required, by these By-laws, by the Certificate of Incorporation of the
Corporation or by law, to be exercised and performed by the stockholders.
SECTION 2. Number, Term of Office and Qualifications. The number of
-----------------------------------------
directors shall be not less than three (3) nor more than thirteen (13). Until
changed by an amendment to these By-laws pursuant to Article XII, the number of
directors shall be five (5). A Board of Directors shall be elected annually,
all of whom shall be of full age and at least one of whom shall be a citizen of
<PAGE>
-6-
the United States and a resident of the State of New York. Each director shall
continue in office until the annual meeting next following his election and
until his successor shall have been elected and shall qualify, or until his
death, resignation or removal. Directors need not be stockholders.
SECTION 3. Election of Directors. At each meeting of the stockholders
---------------------
for the election of directors, at which a quorum is present, the persons
receiving a plurality of the votes cast shall be directors.
SECTION 4. Organization. At each meeting of the Board of Directors,
------------
the President, or in the absence of the President a chairman chosen by the
majority of the directors present, shall preside. The Secretary of the
Corporation shall act as Secretary at each meeting of the Board of Directors.
In case the Secretary shall be absent from any meeting of the Board of
Directors, an Assistant Secretary shall perform the duties of Secretary at such
meeting; and in the absence from any such meeting of the Secretary and Assistant
Secretaries, the Chairman may appoint any person to act as Secretary of the
meeting.
SECTION 5. Place of Meeting, etc. The Board of Directors may hold its
----------------------
meetings within or without the State of New York at such places as the Board of
Directors may from time to time by resolution determine or (unless contrary to
resolution of the Board of Directors) at such place as shall be specified in the
notice of the meeting.
SECTION 6. First Meeting. After each annual election of directors, the
-------------
Board of Directors may meet, without notice of such meeting, for the purposes of
organization, the election of officers, and the transaction of other business,
on the day when and at the place where such annual election is held, and as soon
as practicable after such annual election. Such first meeting may be held at
any
<PAGE>
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other time and place specified in a notice given as hereinafter provided for
special meetings of the Board of Directors or in a consent and waiver of notice
thereof.
SECTION 7. Regular Meetings. Regular meetings of the Board of
----------------
Directors may be held at such times and places as may be fixed from time to time
by the Board of Directors; and, unless required by the Board of Directors,
notice of any such meeting need not be given. If any day fixed for a regular
meeting shall be a legal holiday at the place where the meeting is to be held,
then the meeting, which would otherwise be held on that day, shall be held at
the same hour at such place on the next succeeding business day.
SECTION 8. Special Meetings. Special meetings of the Board of
----------------
Directors shall be held whenever called by the President, the Secretary, or any
two or more directors. Notice of each such meeting shall be sent to each
director, addressed to him at his residence or usual place of business, at least
two (2) days before the date on which the meeting is to be held, by telegraph or
other means sufficient to ensure that the notice is delivered to him personally
not later than the day before the date on which the meeting is to be held.
Every such notice shall state the time and place of the meeting but need not
state the purposes of the meeting, except to the extent required by law. Notice
of any adjourned meeting of the directors need not be given.
SECTION 9. Waivers of Notice of Meetings. Anything in these By-laws or
-----------------------------
in any resolution adopted by the Board of Directors to the contrary
notwithstanding, notice of any meeting of the Board of Directors need not be
given to any director if such notice shall be waived by him in writing (before
or after the meeting). At any meeting at which every member of the Board of
Directors is present, any business may be transacted though the meeting may be
held without notice.
<PAGE>
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SECTION 10. Quorum and Manner of Acting. Notwithstanding any vacancy in
---------------------------
the Board of Directors, whether caused by death, resignation, disqualification,
increase in the number of directors, removal or otherwise, the presence of 66
2/3 of the full Board of Directors shall be present in person at the time of any
regular or special meeting of the Board of Directors in order to constitute a
quorum for the transaction of business at such meeting and, except as specified
in Section 13 of this Article II and Sections 1 and 5 of Article III of these
By-laws, the act of the majority of the full Board of Directors shall be the act
of the Board of Directors. In the absence of a quorum, any meeting may be
adjourned from time to time until a quorum be had. Any one or more members of
the Board of Directors or any committee thereof may participate in a meeting of
the Board or committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting to
hear each other at the same time; participation by such means shall constitute
presence in person at any meeting. The directors shall act only as a Board and
the individual directors shall have no power as such.
SECTION 11. Resignations. Any director of the Corporation may resign at
------------
any time orally or in writing by notifying the President or the Secretary of the
Corporation. Such resignation shall take effect at the time therein specified,
and, unless otherwise specified, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 12. Removal of Directors. Any director may be removed at any
--------------------
time, with or without cause, by the affirmative vote of a majority in voting
power of the stockholders of record of the Corporation entitled to elect a
successor, which vote shall be given, in person or by proxy, at a special
meeting of such stockholders called for that purpose.
<PAGE>
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SECTION 13. Vacancies. Any vacancy in the Board of Directors, whether
---------
caused by death, resignation, disqualification, increase in the number of
directors, removal or otherwise, may be filled for the unexpired term by
unanimous vote of the remaining directors at any regular or special meeting of
the Board of Directors, or by the stockholders entitled to vote at a special
meeting called for such purpose.
SECTION 14. Compensation. Each director, in consideration of his
------------
serving as such, shall be entitled to receive from the Corporation such amount
per annum or such fees for attendance at directors' meetings, or both, as the
Board of Directors shall from time to time determine, together with
reimbursement for the reasonable expenses incurred by him in connection with the
performance of his duties. Each director who shall serve as a member of the
Executive Committee or any other committee of the Board of Directors, in
consideration of his serving as such, shall be entitled to such additional
amount per annum or such fees for attendance at committee meetings, or both, as
the Board of Directors shall from time to time determine. Nothing in this
section contained shall preclude any director from serving the Corporation or
its subsidiaries in any other capacity and receiving proper compensation
therefor.
ARTICLE III
COMMITTEES
SECTION 1. How Constituted and Powers. The Board of Directors may, by
--------------------------
resolution passed by a majority of the full Board of Directors, designate two or
more of its number to constitute an Executive Committee, which Committee, so far
as may be permitted by law and to the extent provided in said resolution or in
these By-laws, shall have and may exercise, between meetings of
<PAGE>
-10-
the Board of Directors, the powers of the Board of Directors in the management
of the affairs and business of the Corporation and may have power to authorize
the seal of the Corporation to be affixed to all papers which may require it.
SECTION 2. Organization, etc. The Executive Committee shall choose its
-----------------
own Chairman and Secretary and shall keep and record all its acts and
proceedings and report the same from time to time to the Board of Directors.
SECTION 3. Meetings. Regular meetings of the Executive Committee, of
--------
which no notice shall be necessary, shall be held at such times and in such
places as shall be fixed by a majority of the Committee. Special meetings of
the Committee shall be called at the request of any member of the Committee.
Notice of each special meeting of the Committee shall be sent by mail,
telegraph, or telephone not later than the day before the date on which the
meeting is to be held. Notice of any such meeting need not be given to any
member of the Committee, however, if waived by him in writing before or after
the meeting; and any meeting of the Committee shall be a legal meeting without
notice thereof having been given, if all the members of the Committee shall be
present thereat.
SECTION 4. Quorum and Manner of Acting. A majority of the Executive
---------------------------
Committee shall constitute a quorum for the transaction of business, and the act
of a majority of the Executive Committee at any meeting at which a quorum is
present shall be the act of the Executive Committee. Members of the Executive
Committee shall act only as a Committee and the individual members shall have no
power as such.
<PAGE>
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SECTION 5. Other Committees. The Board of Directors may, by a
----------------
resolution passed by a majority of the full Board of Directors, designate
members of the Board to constitute such other committees, which shall in each
case consist of such number of directors and shall have and may exercise such
powers, as the Board of Directors may determine. A majority of all the members
of any such committee may determine its action, fix the time and place of its
meetings and adopt rules, unless the Board of Directors shall otherwise provide.
SECTION 6. General. The Board of Directors shall have power at any
-------
time to change the members of the Executive Committee or of any other committee
designated by it, may fill vacancies in any such committee, and may discharge
any such committee, either with or without cause.
ARTICLE IV
OFFICERS
SECTION 1. Officers. The Board of Directors shall, as soon as
--------
practicable after the annual meeting of stockholders in each year, elect a
Chairman of the Board of Directors, a President, one or more Vice-Presidents, a
Treasurer and a Secretary, each to have such functions or duties as are provided
in these By-laws or as the Board of Directors may from time to time determine
and each to hold office until his successor shall have been duly chosen and
shall qualify, or until his death, or until he shall resign or shall have been
removed in the manner hereinafter provided. The Board of Directors may, from
time to time, appoint other officers or assistant officers, each of whom shall
hold office for such period, have such authority, and perform such duties as are
provided in these By-laws or as the Board of Directors may from time to time
determine. The Board of Directors may delegate to any officer or committee the
power to appoint and to remove any such subordinate officer
<PAGE>
-12-
or assistant officer. One person may hold the office of, and perform the duties
of, any one or more of the above-mentioned positions, except those of President
and Vice-President, Treasurer and Assistant Treasurer, or Secretary and
Assistant Secretary.
SECTION 2. Removal. Any officer may be removed either with or without
-------
cause by resolution of the Board of Directors passed at any regular or special
meeting thereof, or, except in the case of any officers elected by the Board of
Directors, by any committee or superior officer upon whom the power of removal
may be conferred by the Board of Directors or by these By-laws.
SECTION 3. Resignations. Any officer may resign at any time orally or
------------
in writing by notifying the Board of Directors, the President, or the Secretary
of the Corporation. Such resignation shall take effect at the date of receipt
of such notice or at such later time as is therein specified, and, unless
otherwise specified, the acceptance of such resignation shall not be necessary
to make it effective.
SECTION 4. Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these By-laws for
the regular appointment or election to said office.
SECTION 5. Compensation. Salaries or other compensation to the
------------
officers may be fixed from time to time by the Board of Directors. No officer
shall be prevented from receiving a salary or other compensation by reason of
the fact that he is also a director of the Corporation.
SECTION 6. Chairman of the Board of Directors. The Chairman of the
----------------------------------
Board of Directors shall be a director and the chief executive officer of the
Corporation and shall have general supervision over the business of the
Corporation and its several officers, subject, however, to the
<PAGE>
-13-
control of the Board of Directors. The Chairman of the Board shall, if present,
preside at all meetings of the shareholders and the Board of Directors. In
general, the Chairman of the Board shall have such other powers and perform such
other duties as may usually pertain to the office of Chairman of the Board and
chief executive officer or as from time to time may be assigned to him by the
Board of Directors.
SECTION 7. President. The President shall be the chief operating
---------
officer of the Corporation and shall have supervision over the operations of the
Corporation, subject, however, to the control of the Board of Directors, any
duly authorized committee of directors and the Chairman of the Board. In the
absence of the Chairman of the Board, the President shall, if present, preside
at all meetings of the shareholders and the Board of Directors. He may, with
the Treasurer, the Secretary, an assistant Treasurer or an assistant Secretary,
sign certificates for stock of the Corporation. In general, the President shall
have such other powers and perform such other duties as may usually pertain to
the office of President and chief operating officer or as from time to time may
be assigned to him by the Board of Directors, any duly authorized committee of
directors, or the Chairman of the Board.
SECTION 8. Vice-Presidents. At the request of the President, or in his
---------------
absence, at the request of the Chairman of the Board or the Board of Directors,
the Vice-Presidents designated by the Board of Directors shall, in order of
seniority, perform all the duties of the President and so acting shall have all
the powers of and be subject to all the restrictions upon the President. Any
Vice-President may also, with the Treasurer, the Secretary, an Assistant
Treasurer, or an Assistant Secretary, sign certificates for stock of the
Corporation; may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts or other instruments authorized by the Board of
<PAGE>
-14-
Directors or by any duly authorized committee of directors, except in cases
where the signing and execution thereof shall be expressly delegated by the
Board of Directors or by any duly authorized committee of directors or by these
By-laws to some other officer or agent of the Corporation, or shall be required
by law otherwise to be signed or executed; and shall perform such other duties
as from time to time may be assigned to him by the Board of Directors or by any
duly authorized committee of directors or by the President or the Chairman of
the Board.
SECTION 9. The Treasurer. The Treasurer shall, if required by the
-------------
Board of Directors, give a bond for the faithful discharge of his duties, in
such sum and with such sureties as the Board of Directors shall determine. He
shall have charge and custody of, and be responsible for, all funds, securities
and notes of the Corporation; receive and give receipts for moneys due and
payable to the Corporation from any sources whatsoever; deposit all such moneys
in the name of the Corporation in such banks, trust companies or other
depositaries as shall be selected in accordance with the provisions of Section 4
of Article VI of these By-laws; against proper vouchers cause such funds to be
disbursed by checks or drafts on the authorized depositaries of the Corporation,
signed in such manner as shall be determined in accordance with the provisions
of Section 3 of Article VI of these By-laws, and be responsible for the accuracy
of the amounts of all money so disbursed; regularly enter or cause to be entered
in books to be kept by him or under his direction full and adequate account of
all moneys received or paid by him for the account of the Corporation; have the
right to require, from time to time, reports or statements giving such
information as he may desire with respect to any and all financial transactions
of the Corporation from the officers or agents transacting the same; render to
the Chairman of the Board, the President, the Board of Directors or any duly
authorized committee of directors, whenever the same shall require him so to do,
an account of the financial condition of the Corporation and of all his
transactions as Treasurer; exhibit at all
<PAGE>
-15-
reasonable times his books of account and other records to any of the directors
of the Corporation, upon application at the office of the Corporation where such
books and records are kept; and in general, perform all duties incident to the
office of Treasurer and such other duties as from time to time may be assigned
to him by the Board of Directors, any duly authorized committee of directors,
the Chairman of the Board, or the President; and he may sign with the President
or the Chairman of the Board of Directors or a Vice-President certificates for
stock of the Corporation.
SECTION 10. The Secretary. The Secretary, if present, shall act as
-------------
Secretary of all meetings of the Board of Directors and of the stockholders of
the Corporation, and shall keep the minutes thereof in the proper book or books
to be provided for that purpose; he shall see that all notices required to be
given by the Corporation are duly given and served; he may, with the President
or the Chairman of the Board of Directors or any Vice-President, sign
certificate for stock of the Corporation; he shall be custodian of the seal of
the Corporation and shall affix the seal or cause it to be affixed to all
certificates for stock of the Corporation and to all documents the execution of
which on behalf of the Corporation under its corporate seal is duly authorized
in accordance with the provisions of these By-laws; he shall have charge of the
stock records and also of the other books, records and papers of the Corporation
relating to its organization and management as a Corporation, and shall see that
the reports, statements and other documents required by law are properly kept
and filed; and shall, in general, perform all the duties incident to the office
of Secretary and such other duties as from time to time may be assigned to him
by the Board of Directors, by any duly authorized committee of directors, the
Chairman of the Board, or the President.
SECTION 11. Assistant Treasurers and Assistant Secretaries. The
----------------------------------------------
Assistant Treasurers shall, respectively, if required by the Board of Directors,
give bonds for the faithful discharge of their duties in such sums and with such
sureties as the Board of Directors shall require. Assistant
<PAGE>
-16-
Treasurers and Assistant Secretaries shall perform such duties as shall be
assigned to them by the Treasurer and by the Secretary, respectively, by the
Board of Directors, by any duly authorized committee of directors, by the
Chairman of the Board, or by the President. Assistant Treasurers and Assistant
Secretaries may, with the President or the Chairman of the Board of Directors or
a Vice-President, sign certificates for stock of the Corporation.
ARTICLE V
INDEMNIFICATION
In accordance with the provisions of the Certificate of Incorporation, any
person made a party to any action, suit or proceeding, whether civil or
criminal, by reason of the fact that he, his testator or intestate, is or was a
director, officer or employee of the Corporation or of any corporation which he
served as such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorneys' fees, actually
and necessarily incurred by him in connection with the defense of such action,
suit or proceeding, or in connection with any appeal therein, except in relation
to matters as to which it shall be adjudged in such action, suit or proceeding
that such officer, director or employee is liable for negligence or misconduct
in the performance of his duties.
Without limitation of the generality of the foregoing, the expenses
referred to in the preceding paragraph shall be deemed to include (1) if any
such action, suit or proceeding shall proceed to judgment, any and all costs and
other expenses imposed upon such person by reason of such judgment, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such officer, director or employee is liable for negligence or
misconduct in the
<PAGE>
-17-
performance of his duties; and (2) in the event of any settlement of any such
action suit or proceeding, all reasonable costs and other expenses of such
settlement (other than any payments made to the Corporation itself), subject to
the condition that the costs and other expenses of such settlement shall not
substantially exceed the expenses which might reasonably be incurred in
conducting such litigation to a final conclusion. A determination that the costs
and other expenses of such settlement do not or did not substantially exceed the
expense which might reasonably be incurred in conducting such litigation to a
final conclusion made or approved (A) by a majority of the directors of the
Corporation then in office other than any directors who may be involved in such
litigation (whether or not such majority constitutes a quorum, but provided that
there shall be at least two such directors in office), or (B) by the vote of the
holders of at least a majority of the outstanding stock at any annual or special
meeting of the stockholders of the Corporation, either before or after such
settlement, shall conclusively satisfy such condition.
If any such indemnity is paid otherwise than pursuant to a court order or
action by the stockholders, the Corporation shall within eighteen (18) months
from the date of such payment mail to its stockholders at the time entitled to
vote for the election of directors a statement specifying the persons paid, the
amounts of the payments and the final disposition of the litigation.
The foregoing rights of indemnification shall not be exclusive of any other
rights to which any such director, officer or employee may be entitled under any
present or future law, statute, by-law, agreement, vote of stockholders or
otherwise.
<PAGE>
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ARTICLE VI
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 1. Execution of Contracts. The Board of Directors or any duly
----------------------
authorized committee of directors, except as by these By-laws otherwise
required, may authorize any officer or officers, agent or agents, in the name
and on behalf of the Corporation to enter into contract or execute and satisfy
any instrument, and any such authority may be general or confined to specific
instances.
SECTION 2. Loans. The President or any other officer or agent of the
-----
Corporation thereunto authorized by these By-laws or by the Board of Directors,
any duly authorized committee of directors, or the President, may effect loans
and advances at any time for the Corporation from any bank, trust company or
other institutions or from any firm, corporation or individual and for such
loans and advances may make, execute and delivery promissory notes, bonds or
other certificates or evidence of indebtedness of the Corporation, and when
authorized so to do may pledge and hypothecate or transfer any securities or
other property of the Corporation as security for any such loans or advances.
Such authority may be general or confined to specific instances.
SECTION 3. Checks, Drafts, Etc. All checks, drafts, and other orders
--------------------
for the payment of money out of the funds of the Corporation and all notes or
other evidences of indebtedness of the Corporation shall be signed on behalf of
the Corporation in such manner as shall from time to time be determined by
resolution of the Board of Directors or of any duly authorized committee of
directors.
<PAGE>
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SECTION 4. Deposits. The funds of the Corporation not otherwise
--------
employed shall be deposited from time to time to the order of the Corporation in
such banks, trust companies or other depositaries as the Board of Directors or
any duly authorized committee of directors may select or as may be selected by
an officer or officers, agent or agents, of the Corporation to whom such power
may from time to time be delegated by the Board of Directors or any duly
authorized committee of directors.
ARTICLE VII
STOCK AND DIVIDENDS
SECTION 1. Certificates for Shares. Certificates for stock of the
-----------------------
Corporation shall be in such form as shall be approved by the Board of
Directors. The certificates for such stock shall be numbered in the order of
their issue, shall be signed by the Chairman of the Board, President or a Vice-
President, and by the Secretary, an Assistant Secretary, Treasurer, or an
Assistant Treasurer, and the seal of the Corporation shall be affixed thereto,
which seal may be facsimile, engraved or printed. Where any such certificate is
signed by a transfer agent or transfer clerk acting on behalf of the Corporation
and by a registrar, the signatures of the President, Vice-President, Secretary,
Assistant Secretary, Treasurer or Assistant Treasurer upon such certificate may
be facsimiles, engraved or printed. In case any officer or officers who shall
have signed or whose signature or facsimile signature or signatures shall be
used on any such certificate or certificates shall cease to be such officer or
officers of the Corporation, for whatever cause, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless, unless otherwise ordered by the Board of
Directors, be issued and delivered as though
<PAGE>
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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 of Stock. Transfers of stock of the Corporation
-----------------
shall be made only on the books of the Corporation by the holder thereof or by
his duly authorized attorney appointed by a power of attorney duly executed and
filed with the Secretary of the Corporation or a transfer agent of the
Corporation, and on surrender of the certificate or certificates for such stock
properly endorsed for transfer and upon payment of all necessary transfer taxes.
Every certificate exchanged, returned or surrendered to the Corporation shall be
marked "Cancelled," with the date of cancellation, by the Secretary or an
Assistant Secretary of the Corporation or the transfer agent thereof. A person
in whose name stock of the Corporation shall stand on the books of the
Corporation shall be deemed the owner thereof to receive dividends, to vote as
such owner and for all other purposes as respects the Corporation. No transfer
of stock shall be valid as against the Corporation, its stockholders and
creditors for any purpose, except to render the transferee liable for the debts
of the Corporation to the extent provided by law, until it shall have been
entered in the stock records of the Corporation by an entry showing from and to
whom transferred.
SECTION 3. Transfer and Registry Agents. The Corporation may from time
----------------------------
to time maintain one or more transfer offices or agencies and registry offices
or agencies at such place or places as may be determined from time to time by
the Board of Directors.
SECTION 4. Lost, Destroyed, Stolen and Mutilated Certificates. The
--------------------------------------------------
holder of any stock in the Corporation shall immediately notify the Corporation
of any loss, destruction, theft or mutilation of the certificate therefor, and
the Corporation may issue a new certificate in the place of
<PAGE>
-21-
any certificate theretofore issued by it alleged to have been lost, destroyed,
stolen or mutilated. The Board of Directors may, in its discretion, as a
condition to the issue of any such new certificate, require the owner of the
lost, destroyed or stolen certificate or his legal representatives to make proof
satisfactory to the Board of Directors of the loss, destruction or theft
thereof, and to advertise said fact in such manner as the Board of Directors may
require, and to give the Corporation and its transfer agents and registrars or
such of them as the Board of Directors may require a bond in such form, with
such surety or sureties as the Board of Directors (with the approval of its
transfer agents and registrars) may direct, to indemnify the Corporation and its
transfer agents and registrars against any claim that may be made against any of
them on account of the continued existence of any such certificate so alleged to
have been lost, destroyed or stolen.
SECTION 5. Regulations. The Board of Directors or any duly authorized
-----------
committee of directors may make such rules and regulations as it may deem
expedient, not inconsistent with these By-laws or with the Certificate of
Incorporation of the Corporation concerning the issue, transfer and registration
of certificates for stock of the Corporation.
SECTION 6. Closing of Transfer Books and Record Date. The Board of
-----------------------------------------
Directors may prescribe a period, not exceeding forty (40) days prior to the
date of meetings of stockholders or prior to the last day on which the consent
or dissent of stockholders may be effectively expressed for any purpose without
a meeting, during which no transfer of stock on the books of the Corporation may
be made; or, in lieu of prohibiting the transfer of stock, may fix a time not
more than forty (40) days prior to the date of any meeting of stockholders or
prior to the last day on which the consent or dissent of stockholders may be
effectively expressed for any purpose without a meeting, as the time as of which
stockholders entitled to notice of and to vote at such meeting or whose consent
or
<PAGE>
-22-
dissent is required or may be expressed for any purpose, as the case may be,
shall be determined, and all persons who were holders of record of voting stock
at such time and no others shall be entitled to notice of and to vote at such
meeting, or to express their consent or dissent, as the case may be. The Board
of Directors may fix a day and hour not exceeding forty (40) days preceding the
date fixed for the payment of any dividend or for the making of any
distribution, or for the delivery of evidences of rights or evidences of
interests arising out of any change, conversion or exchange of capital stock, as
a record time for the determination of the stockholders entitled to receive any
such dividend, distribution, rights or interests, and in such case only
stockholders of record at the time so fixed shall be entitled to receive such
dividend, distribution, rights or interests. The Board of Directors at its
option, in lieu of so fixing a record time, may prescribe a period not exceeding
forty (40) days prior to the date for such payment, distribution, or delivery
during which no transfer of stock on the books of the Corporation may be made.
SECTION 7. Dividends, Surplus, Etc. Subject to the provisions of the
------------------------
Certificate of Incorporation and of law, the Board of Directors (1) may declare
dividends on the stock of the Corporation in such amounts as, in its opinion,
the condition of the affairs of the Corporation shall render advisable, (2) may
use and apply, in its discretion, any of the surplus of the Corporation or the
net profits arising from its business in purchasing or acquiring any of the
shares of stock of the Corporation or of purchase warrants therefor in
accordance with law, or any of its bonds, debentures, notes, script or other
securities or evidences of indebtedness, and (3) may set aside from time to time
out of such surplus or net profits such sum or sums as it in its absolute
discretion may think proper, as a reserve fund to meet contingencies, or
equalizing dividends, or for the purpose of maintaining or increasing the
property or business of the Corporation, or for any other purpose it may think
conducive to the best interests of the Corporation.
<PAGE>
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ARTICLE VII
STOCK OWNERSHIP LIMITATION AND REPURCHASE OPTION
SECTION 1. No shares of stock of the Corporation (hereinafter "Shares")
may be issued to any person other than (1) an employee of the Corporation who is
such at the time of the issuance of such Shares, (2) a trust maintained by the
Corporation for the benefit of its employees and/or the employees of a
controlled group of corporations (within the meaning of Section 1563 of the
Internal Revenue Code), of which the Corporation is a member, which trust is
described in Section 401(a) of the Internal Revenue Code (hereinafter "Employee
Trust"), (3) individuals who receive Shares as a benefit pursuant to the
provisions of an Employee Trust, provided, however, that any such individual
-------- -------
must promptly resell such Shares to the Corporation or such Employee Trust and
(4) any other party to whom the Board of Directors determines an issuance of
Shares should be made in the best interests of the Corporation, provided,
--------
however, that, in any event, "substantially all" (within the meaning of Section
- -------
409(h)(2) of the Internal Revenue Code of 1986, as amended) of the Shares of the
Corporation's Common Stock shall be owned by parties described in clauses (1),
(2) or (3) of this Section 1.
SECTION 2. During his or her employment by the Corporation, no
shareholder-employee may sell or transfer any Shares of the Corporation's stock
except to another then employee of the Corporation, or to the Corporation
itself, or to an Employee Trust.
SECTION 3. By accepting ownership of Shares, each individual
shareholder shall be conclusively presumed to thereby grant to the Corporation
an irrevocable option to purchase, for the price and in the manner set forth
below, all, but not less than all, of the Shares owned by him, which
<PAGE>
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option shall be exercisable upon the termination of employment of said
shareholder with the Corporation for any reason. Each such option shall be
exercisable at any time within the period of twelve (12) months following such
termination of employment, provided however that, if such termination is caused
by death, then such option shall be exercisable at any time within the period of
twelve (12) months following the date of judicial appointment of the personal
representative of the deceased shareholder. The option shall be deemed to have
been exercised by the Corporation giving to the shareholder or, in the event of
his death, to the personal representative of the deceased shareholder, written
notice thereof. The Corporation shall have the right at any time to assign to
any Employee Trust the purchase option granted to it hereunder. The purchase
price of any Shares to be sold pursuant to this Section 3 shall be determined as
follows:
(a) If there shall then be an Employee Trust in existence, which trust
then owns Shares, the price per Share shall be the price at which such Employee
Trust would value the Shares of said employee, had he then been a participant in
said Employee Trust, and had the Shares been allocated to this account therein,
and had his employment by the Corporation terminated at the same time and in the
same manner as his employment did actually terminate.
(b) If paragraph (a) above does not apply, but an independent
valuation of the Shares has been performed within twelve months preceding the
exercise of the option, the price per Share shall be the value fixed by said
independent valuation.
(c) If neither paragraph (a) nor paragraph (b) applies, then the value
of said Shares shall be equal to the book value thereof as of the close of the
Corporation's fiscal year next preceding the exercise of the option.
<PAGE>
-25-
SECTION 4. For purposes hereof, book value shall be determined by
the independent public accountants then serving the Corporation, or if none,
then by the independent public accountants engaged by the Corporation for the
purpose of determining book value. The determination of such accountants shall
be in accordance with generally accepted accounting principles consistently
applied, but no allowance of any kind shall be made for any leaseholds, good
will, trade names, contracts or any intangible assets of the Corporation. The
determination of said accountants shall be final, conclusive and binding on all
parties hereto.
SECTION 5. The purchase price hereunder may be paid in installments and
in such event, said amount shall be paid as follows: ten percent (10%) of the
purchase price shall be paid at the closing of the sale, as provided in Section
6 below, and an additional ten percent (10%) thereof shall be paid on each of
the nine (9) succeeding anniversaries of the first payment, until the entire
purchase price is paid. Each installment payment, except the first, shall bear
interest at the minimum interest rate required in order to avoid having interest
computed at a higher rate for federal income tax purposes, imputed from the
closing date. The Corporation may, at its option, accelerate, in whole or in
part, any installment payment to be made hereunder, or all of them.
SECTION 6. The closing of the sale of any Shares pursuant to this
agreement shall be held at the office of the Corporation on a day fixed by the
Corporation, but not later than the thirtieth (30th) day following the exercise
of the option which causes the sale. At the closing, the seller shall deliver
to the Corporation the certificate representing the Shares to be sold, properly
endorsed for transfer, and with appropriate stock transfer stamps affixed.
<PAGE>
-26-
SECTION 7. Upon the failure of the Corporation to exercise the purchase
option granted to it, pursuant hereto, the shareholder may freely transfer his
Shares without restriction as to purchaser, provided however, that any and all
purchasers thereof shall be considered employees hereunder, and may not transfer
the Shares except in strict compliance with the provisions of these By-laws.
Specifically, any such purchaser desiring to sell purchased shares will be
deemed to have granted to the Corporation the option to purchase provided for
herein, and such Shares will be subject to repurchase by the Corporation for the
same amount and in the same manner as though said selling shareholder had been
in the employ of the Corporation, and had terminated his employment therewith at
the time he either attempts to sell such Shares or notifies the Corporation of
his desire to sell such Shares.
Any subsequent purchasers of Shares shall likewise be bound by all of the
provisions thereof, just as though they were employees of the Corporation at the
time they acquired Shares.
SECTION 8. Except as permitted by these By-laws, each individual
shareholder, by his acceptance of ownership of Shares, agrees that he will not
sell, transfer, assign, pledge, hypothecate or otherwise dispose of any of the
Shares or any interest therein, nor will he enter into any agreement for the
sale, transfer, assignment, pledge, hypothecation, or other disposition of any
of said Shares. Each shareholder, by his acceptance of ownership of Shares,
further agrees that all his Shares shall be held and disposed of by him solely
as provided in this Article VIII.
SECTION 9. Each certificate representing Shares issued from and after
the date of adoption of this Article VIII of these By-laws shall be stamped or
overtyped with a legend stating that the
<PAGE>
-27-
Shares represented thereby are subject to the provisions and repurchase option
contained in these By-laws.
SECTION 10. The provisions of SECTIONS 2 through 9 of this Article VIII
shall not apply to a party referred to in clause (4) of SECTION 1 of this
Article VIII.
ARTICLE IX
BOOKS
SECTION 1. Books. There shall be kept at the office of the Corporation
-----
correct books of account of all the business and transactions of the Corporation
and a copy of these By-laws. The stock records of the Corporation, which may be
kept either at the office of the Corporation or, subject to the provisions of
Section 10 of the Stock Corporation Law, at the office of a transfer agent of
the Corporation in the State of New York, if any, shall contain the names,
alphabetically arranged, of all persons who are stockholders of the Corporation,
showing their places of residence, the number of shares held by them,
respectively, the time when they respectively became owners thereof, and the
amount paid thereon.
SECTION 2. Inspection of Books. The Board of Directors shall
-------------------
determine from time to time whether, and, if allowed, when and under what
conditions and regulations, the accounts and books of the Corporation (except
such as may, by statute, be specifically open to inspection), or any of them,
shall be open to the inspection of the stockholders, and the stockholders'
rights in this respect are and all shall be restricted and limited accordingly.
<PAGE>
-28-
ARTICLE X
SEAL
The Board of Directors shall provide a corporate seal which shall be in the
form of a circle and shall bear the full name of the Corporation and the year of
its incorporation.
ARTICLE XI
FISCAL YEAR
The Fiscal Year of the Corporation shall be determined, and may be changed,
by resolution of the Board of Directors.
ARTICLE XII
VOTING OF STOCK HELD
Unless otherwise provided by resolution of the Board of Directors, the
President may, from time to time, appoint an attorney or attorneys or agent or
agents of this Corporation, in the name and on behalf of this Corporation to
cast the votes which this Corporation may be entitled to cast as a stockholder
or otherwise in any other corporation, any of whose stock or securities may be
held by this Corporation, at meetings of the holders of the stock or other
securities of such other corporation, or to consent in writing to any action by
any such other corporation, and may instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent, and may execute
or cause to be executed on behalf of this Corporation and under its corporate
seal, or otherwise, such written proxies, consents, waivers or other instruments
as he may deem necessary or proper in the
<PAGE>
-29-
premises; or the President may himself attend any meeting of the holders of
stock or other securities of any such other corporation and thereat vote or
exercise any or all other powers of this Corporation as the holder of such stock
or other securities of such other corporation.
ARTICLE XII
AMENDMENTS
These By-laws may be altered, amended, supplemented or repealed, or new By-
laws may be adopted, by the affirmative vote of the holders of a majority in
number of the shares of stock of the Corporation entitled to vote represented at
a duly constituted meeting of the stockholders or, except as may be otherwise
provided in a By-law adopted by the stockholders, by the affirmative vote of 66
2/3% of the full Board of Directors; provided, however, that any By-laws made,
altered, amended or supplemented by the Board of Directors may be altered,
amended, supplemented or repealed by the stockholders entitled to vote.
ARTICLE XIV
CERTIFICATE OF INCORPORATION
Wherever reference is made in these By-laws to the Certificate of
Incorporation of the Corporation, such reference shall be deemed to refer to the
Certificate of Incorporation as changed and amended by any other certificate
filed pursuant to law in the office of the Secretary of State of the State of
New York.
<PAGE>
-30-
The undersigned, Secretary of Interep National Radio Sales, Inc., a New
York corporation, hereby certifies that the foregoing is a true and correct copy
of the By-laws of said Corporation adopted at a meeting of the Board of
Directors of said corporation held February 14, 1994..
------------------
WITNESS the signature of the undersigned, this 2nd day of March, 1994.
--- -----
By /s/ John A. Rykala
-------------------
John A. Rykala
Secretary
<PAGE>
Exhibit 4.1
- --------------------------------------------------------------------------------
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JULY 2, 1998
BY AND AMONG
INTEREP NATIONAL RADIO SALES, INC.
AND
THE GUARANTORS NAMED ON THE SIGNATURE PAGES HERETO
AND
BANCBOSTON SECURITIES INC.
LOEWENBAUM & COMPANY INCORPORATED
SPP HAMBRO & CO., LLC
- -------------------------------------------------------------------------------
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and entered
---------
into as of July 2, 1998, by and among Interep National Radio Sales, Inc., a New
York corporation (the "COMPANY"), each of the entities named as a Guarantor on
-------
the signature pages hereto (each, a "GUARANTOR" and, collectively, the
---------
"GUARANTORS"), and BancBoston Securities Inc., Loewenbaum & Company Incorporated
- -----------
and SPP Hambro & Co., LLC (each an "INITIAL PURCHASER" and, collectively, the
-----------------
"INITIAL PURCHASERS"), each of whom has agreed to purchase the Company's 10%
- -------------------
Series A Senior Subordinated Notes due 2008 (the "SERIES A NOTES") pursuant to
--------------
the Purchase Agreement (as defined below). The Series A Notes will be fully and
unconditionally guaranteed (the "SERIES A GUARANTEES") and the Series B Notes
-------------------
(as defined) will be fully and unconditionally guaranteed (the "SERIES B
--------
GUARANTEES") as to payment of principal, interest and liquidated damages and
- ----------
premium, if any, on an unsecured senior subordinated basis, jointly and
severally, in each case, by each of the Guarantors.
This Agreement is made pursuant to the Purchase Agreement, dated June 29,
1998, (the "PURCHASE AGREEMENT"), by and among the Company, the Guarantors and
------------------
the Initial Purchasers. In order to induce the Initial Purchasers to purchase
the Series A Notes, the Company 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 3 of
the Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to them in the Indenture, dated as of the
Closing Date (as defined), between the Company and Summit Bank, as Trustee,
relating to the Series A Notes and the Series B Notes (the "INDENTURE").
---------
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 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 Series B
Notes and the Series B Guarantees 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 the Company
<PAGE>
and the Guarantors to the Registrar under the Indenture of Series B Notes
(including Series B Guarantees) in the same aggregate principal amount as the
aggregate principal amount of Series A Notes (including Series A Guarantees)
tendered by Holders thereof pursuant to the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
---------------------
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 the Company and the
--------------
Guarantors of a principal amount of Series B Notes (including the Series B
Guarantees) (which shall be registered pursuant to the Exchange Offer
Registration Statement) equal to the outstanding principal amount of Series A
Notes (including Series A Guarantees) 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.
-------
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 the Company and the
----------------------
Guarantors relating to (a) an offering of Series B Notes (including the Series B
Guarantees) 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.
RULE 144: Rule 144 promulgated under the Act.
--------
2
<PAGE>
SERIES B NOTES: The Company's 10% Series B Senior Subordinated Notes due
--------------
2008 to be issued pursuant to the Indenture: (i) in the Exchange Offer or (ii)
as contemplated by Section 4 hereof.
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 Series A Note and corresponding Series
------------------------------
A Guarantee, until the earliest to occur of (a) the date on which such Series A
Note and Series A Guarantee are exchanged in the Exchange Offer for a Series B
Note and corresponding Series B Guarantee which are entitled to be resold to the
public by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (b) the date on which such Series A Note and Series A
Guarantee have been disposed of in accordance with a Shelf Registration
Statement (and the purchasers thereof have been issued Series B Notes and
corresponding Series B Guarantee), or (c) the date on which such Series A Note
and Series A Guarantee are distributed to the public pursuant to Rule 144 under
the Act (and purchasers thereof have been issued Series B Notes and
corresponding Series B Guarantee) and each Series B Note and corresponding
Series B Guarantee until the date on which such Series B Note and Series B
Guarantee are disposed of by a Broker-Dealer pursuant to the "Plan of
Distribution" contemplated by the Exchange Offer Registration Statement
(including the delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "HOLDER" and collectively, the "HOLDERS") 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), the Company and the Guarantors shall (i) cause the Exchange Offer
Registration Statement to be filed with the Commission as soon as practicable
after the Closing Date, but in no event later than 60 days after the Closing
Date (such 60th day being the "FILING DEADLINE"), (ii) use its best efforts to
---------------
cause such Exchange Offer Registration Statement to become effective at the
earliest possible time, but in no event later than 120 days after the Closing
Date (such 120th 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
3
<PAGE>
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 Series B Notes and the Series B Guarantees 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 (i) registration of the Series
B Notes and the Series B Guarantees to be offered in exchange for the Series A
Notes and the Series A Guarantees, respectively, that are Transfer Restricted
Securities and (ii) resales of Series B Notes (including Series B Guarantees) by
Broker-Dealers that tendered into the Exchange Offer Series A Notes (including
Series A Guarantees) that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Series A Notes and the Series A Guarantees acquired directly from the Company,
the Guarantors or any of their respective Affiliates) as contemplated by Section
3(c) below.
(b) The Company and the Guarantors shall use their respective 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. The Company and the Guarantors shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities other than the Series B Notes and the Series B Guarantees
shall be included in the Exchange Offer Registration Statement. The Company and
the Guarantors shall use their respective 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) The Company and the Guarantors 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 Series A
Notes and Series A Guarantees acquired directly from the Company or any
Affiliate of the Company), may exchange such Transfer Restricted Securities
pursuant to the Exchange Offer. 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.
4
<PAGE>
Because 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 Series B
Notes (including Series B Guarantees) received by such Broker-Dealer in the
Exchange Offer, the Company and Guarantors shall permit the use of the
Prospectus contained in the Exchange Offer Registration Statement by such
Broker-Dealer to satisfy such prospectus delivery requirement. To the extent
necessary to ensure that the prospectus contained in the Exchange Offer
Registration Statement is available for sales of Series B Notes (including
Series B Guarantees) by Broker-Dealers, the Company and the Guarantors agree to
use their respective best efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented, amended and current as required
by and subject to the provisions of Section 6(a) and (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 one year 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. The Company and the Guarantors shall
provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealers, promptly upon request, and in no event later than three 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 (after the Company and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer
Restricted Securities shall notify the Company within 20 Business Days following
the Consummation Deadline that (A) such Holder was prohibited by law or
Commission policy from participating in the Exchange Offer or (B) such Holder
may not resell the Series B Notes (including Series B Guarantees) 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 Series A Notes and Series A Guarantees acquired directly
from the Company, the Guarantors or any of their respective Affiliates, then the
Company and the Guarantors shall:
(x) cause to be filed, on or prior to 60 days after the earlier of (i) the
date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company 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")), relating to
----------------------------
all Transfer Restricted Securities, and
(y) shall use their respective best efforts to cause such Shelf Registration
Statement to become effective on or prior to 120 days after the earlier of (i)
the date on which the Company determines
5
<PAGE>
that the Exchange Offer Registration Statement cannot be filed as a result of
clause (a)(i) above and (ii) the date on which the Company receives the notice
specified in clause (a)(ii) above, (such earlier date, the "EFFECTIVENESS
-------------
DEADLINE").
- ---------
If, after the Company and the Guarantors have filed an Exchange Offer
Registration Statement that satisfies the requirements of Section 3(a) above,
the Company and the Guarantors are 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, the Company and
the Guarantors shall remain obligated to meet the Effectiveness Deadline set
forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and
the Guarantors shall use their respective best efforts to keep any Shelf
Registration Statement required by this Section 4(a) continuously effective,
supplemented, amended and current as required by and subject to the provisions
of Sections 6(b) and (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 at least two years (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.
(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
the Company 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 the Company 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,
6
<PAGE>
(iii) the Exchange Offer has not been Consummated on or prior to the
Consummation Deadline or (iv) any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
immediately by a post-effective amendment to such Registration Statement that
cures such failure and that is itself declared effective immediately (each such
event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then
--------------------
the Company and the Guarantor s hereby jointly and severally agree to pay to
each Holder of Transfer Restricted Securities affected thereby liquidated
damages in an amount equal to $.05 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 $.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 $.50 per week per $1,000 in principal
amount of Transfer Restricted Securities; provided that the Company and the
Guarantors 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 (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (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 usable in the case of (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 applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated
damages are due cease to be Transfer Restricted Securities, all obligations of
the Company and the Guarantors to pay liquidated damages with respect to
securities shall survive until such time as such obligations with respect to
such securities shall have been satisfied in full.
The Company and the Guarantors shall have no liabilities for monetary
damages for any Registration Default in addition to Liquidated Damages to the
Initial Purchasers or any Holder; provided, however, that in the event of a
Registration Default, the Initial Purchasers and the Holders shall be entitled
to, and the Company and the Guarantors shall not oppose the granting of,
equitable relief, including injunction and specific performance.
SECTION 6. REGISTRATION PROCEDURES
7
<PAGE>
(a) Exchange Offer Registration Statement. In connection with the
-------------------------------------
Exchange Offer, the Company and the Guarantors shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use their respective best
efforts to effect such exchange and to permit the resale of Series B Notes
(including Series B Guarantees) by Broker-Dealers that tendered in the Exchange
Offer Series A Notes (including Series A Guarantees) that such Broker-Dealer
acquired for its own account as a result of its market making activities or
other trading activities (other than Series A Notes and Series A Guarantees
acquired directly from the Company 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 the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Guarantors hereby agree to seek
a no-action letter or other favorable decision from the Commission allowing
the Company and the Guarantors to Consummate an Exchange Offer for such
Transfer Restricted Securities. The Company and the Guarantors hereby
agree to pursue the issuance of such a decision to the Commission staff
level. In connection with the foregoing, the Company and the Guarantors
hereby agree 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 the Company 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 the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantors (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 the Company,
(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 Series B Notes or the Series B Guarantees to be issued
in the Exchange Offer and (C) it is acquiring the Series B Notes and Series
B Guarantees in its ordinary course of business. As a condition to its
participation in the Exchange Offer each Holder using the Exchange Offer to
participate in a distribution of the Series B Notes and Series B Guarantees
shall acknowledge and agree that, if the resales are of Series B Notes and
Series B Guarantees obtained by such Holder in exchange for Series A Notes
and Series A Guarantees acquired directly from the Company, the Guarantors
or an
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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, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company 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 the Company nor any
Guarantor has entered into any arrangement or understanding with any Person
to distribute the Series B Notes or the Series B Guarantees to be received
in the Exchange Offer and that, to the best of the Company's and each
Guarantor's information and belief, each Holder participating in the
Exchange Offer is acquiring the Series B Notes and the Series B Guarantees
in its ordinary course of business and has no arrangement or understanding
with any Person to participate in the distribution of the Series B Notes or
the Series B Guarantees received in the Exchange Offer and (C) 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, the Company and
the Guarantors shall (i) comply with all the provisions of Section 6(c) below
and use their respective 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 the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company and the Guarantors 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, and
(ii) issue,upon the request of any Holder or purchaser of Series A
Notes (including Series A Guarantees) covered by any Shelf Registration
Statement contemplated by this
9
<PAGE>
Agreement, Series B Notes (including Series B Guarantees) having an aggregate
principal amount equal to the aggregate principal amount of Series A Notes
(including Series A Guarantees) sold pursuant to the Shelf Registration
Statement and surrendered to the Company for cancellation; the Company shall
register Series B Notes (including Series B Guarantees) on the Shelf
Registration Statement for this purpose and issue the Series B Notes (including
Series B Guarantees) to the purchaser(s) of securities subject to the Shelf
Registration Statement in the names as such purchaser(s) shall designate;
provided, that 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 the Company in
writing, within 20 days after receipt of request therefor, the information
specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for
use in connection with such Shelf Registration Statement.
(c) General Provisions. In connection with any Registration Statement and
------------------
any related Prospectus required by this Agreement, the Company and the
Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously 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
an untrue statement of material fact or omit to state any material fact
necessary to make the statements therein not misleading or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company and the Guarantors shall
file promptly an appropriate amendment to such Registration Statement
curing such defect, and, if Commission review is required, use their
respective 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 applicable
period set forth in Section 3 or 4 hereof, as the case may be; 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 each Holder promptly and, if requested by such Holder,
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
10
<PAGE>
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, (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,
the Company and the Guarantors shall use their respective best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(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 each Holder 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 Holders in connection with such sale, if any, for a period
of at least five Business Days, and the Company 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 Holders shall reasonably object
within five Business Days after the receipt thereof. A Holder shall be
deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or
11
<PAGE>
supplement, as applicable, as proposed to be filed, contains an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading 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,
provide copies of such document to each Holder in connection with such
exchange or sale, if any, make the Company's and the Guarantors'
representatives available for discussion of such document and other
customary due diligence matters, and include such information in such
document prior to the filing thereof as such Holders may reasonably
request; provided, however, that any information that is designated in
writing by the Company, in good faith, as confidential at the time of
delivery of such information shall be kept confidential by such Holders or
any such attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by law, or such information
becomes available to the public generally or through a third party without
an accompanying obligation of confidentiality and that the foregoing
inspection and information gathering shall not be available for any such
Holder that is a competitor of the Company ;
(vii) make reasonably available for inspection by each Holder and any
attorney, accountant or other agent retained by such Holders, all financial
and other records, pertinent corporate documents and properties of the
Company and the Guarantors and cause the Company's and the Guarantors'
officers, directors, employees, accountants and auditors to supply all
information reasonably requested by any such Holder, 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, in each case, as shall be reasonably necessary to enable
such persons to conduct reasonable and customary investigation within the
meaning of Section 11 of the Securities Act; provided, however, that any
information that is designated in writing by the Company, in good faith, as
confidential at the time of delivery of such information shall be kept
confidential by such Holders or any such attorney, accountant or agent,
unless such disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the public
generally or through a third party without an accompanying obligation of
confidentiality and that the foregoing inspection and information gathering
shall not be available for any such Holder that is a competitor of the
Company;
(viii) if requested by any Holders in connection with such exchange
or sale, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holders may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" of the Transfer Restricted Securities, and make all
required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after the
12
<PAGE>
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(ix) furnish to each Holder 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 Holder without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company and
the Guarantors hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each selling Holder
in connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto;
(xi) upon the written request of any Holder, 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 any applicable Registration
Statement contemplated by this Agreement as may be reasonably requested by
any Holder in connection with any sale or resale pursuant to any applicable
Registration Statement. In such connection, the Company and the Guarantors
shall:
(A) upon request of any Holder, furnish (or in the case of paragraphs
(2) and (3), use its best efforts to cause to be furnished) to each
Holder, upon Consummation of the Exchange Offer or upon the effectiveness
of the Shelf Registration Statement, as the case may be:
(1) a certificate, dated such date, signed on behalf of the Company
and each of the Guarantors by (x) the President or any Vice President
and (y) a principal financial or accounting officer of the Company and
each of the Guarantors, confirming, as of the date thereof, the
matters set forth in Sections 5(a)(xxxviii), 8(a) and 8(e) of the
Purchase Agreement and such other similar matters as such Holders 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 the Company and the Guarantors
covering matters similar to those set forth in Exhibit C to the
Purchase Agreement and such other matters as such Holder may
reasonably request, and in any event including a statement to the
effect that such counsel has participated in
13
<PAGE>
conferences with officers and other representatives of the Company and
the Guarantors, representatives of the independent public accountants
for the Company and the Guarantors and have 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 the Company and the Guarantors
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
(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 the Company'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 8(h) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be reasonably
requested by the selling Holders to evidence compliance with the matters
covered in clause (A) above and with any customary conditions contained
in the any agreement entered into by the Company and the Guarantors
pursuant to this clause (xi);
14
<PAGE>
(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 neither the Company nor any Guarantor shall 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) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the 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;
(xiv) use their respective 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;
(xv) provide a CUSIP number for all Transfer Restricted Securities no
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;
(xvi) otherwise use their respective 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);
(xvii) 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
15
<PAGE>
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
(xviii) provide promptly to each Holder, upon written 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 agrees by acquisition of a
-----------------------
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder 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 Holder is
advised in writing by the Company 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
--------------
DATE"). Each Holder receiving a Suspension Notice hereby agrees that it will
- ----
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus 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 Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors' performance
of or compliance with this Agreement will be borne by the Company, 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
Series B 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
the Company, the Guarantors and the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing the Series B
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 the Company and
16
<PAGE>
the Guarantors (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
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 the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes (including the Series A Guarantees)
into in the Exchange Offer and/or selling or reselling Series A Notes (including
the Series A Guarantees) or Series B Notes (including the Series B guarantees)
pursuant to the "Plan of Distribution" contained in the Exchange Offer
Registration Statement or the Shelf Registration Statement, as applicable, for
the reasonable fees and disbursements of not more than one counsel, who shall be
Latham & Watkins, unless another firm shall be chosen by the Holders of a
majority in principal amount of the Transfer Restricted Securities for whose
benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder, (ii) each person, if any, who
controls such Holder within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and (iii) the officers, directors, partners,
employees, representatives and agents of such Holder or any controlling person
to the fullest extent lawful, from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to reasonable
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any investigation or litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement, preliminary
prospectus or Prospectus, or in any supplement thereto or amendment thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company and the Guarantors
will not be liable in any such case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon (i) an untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with information
17
<PAGE>
relating to any of the Holders furnished to the Company in writing by or on
behalf of any of the Holders expressly for use therein or (ii) if a court of
competent jurisdiction determines that a Holder received a Suspension Notice,
the disposition by such Holder of Transfer Restricted Securities pursuant to the
applicable Registration Statement prior to the Recommencement Date. This
indemnity agreement will be in addition to any liability which the Company and
the Guarantors may otherwise have, including under this Agreement.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless (i) the Company and the Guarantors,
(ii) each person, if any, who controls any of the Company and the Guarantors
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, and (iii) the respective officers, directors, trustees, partners,
employees, representatives and agents of the Company and the Guarantors, or any
controlling person, against any losses, liabilities, claims, damages and
expenses whatsoever (including but not limited to reasonable attorneys' fees and
any and all expenses whatsoever incurred in investigating, preparing or
defending against any investigation or litigation, commenced or threatened, or
any claim whatsoever and any and all amounts paid in settlement of any claim or
litigation) to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary prospectus or Prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with information relating to such Holder furnished to the Company in
writing by or on behalf of such Holder expressly for use therein; provided,
however, that in no case shall such Holder be liable or responsible for any
amount in excess of the amount by which the total amount received by such Holder
with respect to its sale of Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages that such
Holder, its directors, officers or any Person who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. This indemnity will be in addition
to any liability which such Holder may otherwise have, including under this
Agreement.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the
18
<PAGE>
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded, based upon
the advice of counsel, that there may be defenses available to it or them which
are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying party or parties shall not
have the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses of counsel
shall be borne by the indemnifying parties; provided, however, that the
indemnifying party under subsection (a) or (b) above shall only be liable for
the legal expenses of one counsel (in addition to any local counsel) for all
indemnified parties in each jurisdiction in which any claim or action is
brought. Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its prior written consent, provided that such consent was not
unreasonably withheld.
(d) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section 8 is for any reason held to be
unavailable from the Company and the Guarantors or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Guarantors, on the
one hand, and the Holders, on the other hand, shall contribute to the aggregate
losses, claims, damages, liabilities and expenses of the nature contemplated by
such indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, claims, damages, liabilities and expenses suffered by the
Company and the Guarantors, any contribution received by the Company and the
Guarantors from persons, other than the Holders, who may also be liable for
contribution, including persons who control the Company and the Guarantors
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act) to which the Company, the Guarantors and the Holders may be subject, in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Guarantors, on one hand, and the Initial Purchasers, on the
other hand, from the offering of the Series A Notes or, if such allocation is
not permitted by applicable law or indemnification is not
19
<PAGE>
available as a result of the indemnifying party not having received notice as
provided in Section 6, in such proportion as is appropriate to reflect not only
the relative benefits referred to above but also the relative fault of the
Company and the Guarantors, on one hand, and the Initial Purchasers, on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company and the
Guarantors, on one hand, and of the 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 the Company, the Guarantors
or the Holders 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 and judgments referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 8(a),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The Company, the
Guarantors and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 8, (i) in no case shall any Holder, its officers or any Person,
if any, who controls such Holder be required to contribute any amount in excess
of the amount by which total received by such Holder with respect to the sale of
Transfer Restricted Securities pursuant to a Registration Statement exceeds (i)
the amount paid by such Holder for such Transfer Restricted Securities and (ii)
the amount of any damages which such Holder has otherwise been required to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission and (ii) 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. For purposes of
this Section 8, (A) each person, if any, who controls any Holder within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B)
the officers, directors, partners, employees, representatives and agents of such
Holder or any controlling person shall have the same rights to contribution as
such Holder, and (A) each person, if any, who controls any of the Company and
the Guarantors within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act and (B) the respective officers, directors, trustees, partners,
employees, representatives and agents of the Company and the Guarantors shall
have the same rights to contribution as the Company and the Guarantors, subject
in each case to clauses (i) and (ii) of this Section 8. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 8,
notify such party or parties from whom contribution may be sought, but the
failure to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent, provided that such written
20
<PAGE>
consent was not unreasonably withheld. The Holders' obligations to contribute
pursuant to this Section 8(c) are several in proportion to the respective
principal amount of Transfer Restricted Securities held by each Holder hereunder
and not joint.
SECTION 9. RULE 144A AND RULE 144
The Company and each Guarantor agree with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in which
the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder, to such 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 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. The Company and the Guarantors acknowledge and agree that
--------
any failure by the Company and/or the Guarantors to comply with their respective
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 the
Company's and the Guarantor's obligations under Sections 3 and 4 hereof. The
Company and the Guarantors further agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor
--------------------------
will, 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.
Neither the Company nor any Guarantor is currently a party to 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 the Company's and
the Guarantors' 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), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in
21
<PAGE>
the case of all other provisions hereof, the Company 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 the
Company 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 Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted 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 the Company and the
Guarantors, 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 its 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:
(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 the Company or the Guarantors:
Interep National Radio Sales, Inc.
100 Park Avenue
New York, New York 10017
Telecopier No.: (212) 309-9081-0576
Attention: Chief Executive Officer
and
Interep National Radio Sales, Inc.
2090 Palm Beach Lakes Blvd., 3rd Floor
West Palm Beach, FL 33409
Telecopier No.: (561) 616-4031
Attention: Chief Financial Officer
With a copy to:
22
<PAGE>
Christy & Viener
Rockefeller Center
620 Fifth Avenue
New York, New York 10020
Telecopier No.: (212) 307-3314
Attention: Laurence S. Markowitz, 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; 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.
(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,
23
<PAGE>
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.
24
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Interep National Radio Sales, Inc.
By: /s/ Paul J. Parzuchowski
--------------------------
Name:
Title:
Guarantors:
McGavren Guild, Inc.
By: /s/ Paul J. Parzuchowski
-------------------------
Name:
Title:
D&R Radio, Inc.
/s/ Paul J. Parzuchowski
------------------------
Name:
Title:
CBS Radio Sales, Inc.
/s/ Paul J. Parzuchowski
------------------------
Name:
Title:
Allied Radio Partners, Inc.
/s/ Paul J. Parzuchowski
------------------------
Name:
Title:
25
<PAGE>
Clear Channel Radio, LLC
/s/ Paul J. Parzuchowski
------------------------
Name:
Title:
Caballero Spanish Media LLC
/s/ Paul J. Parzuchowski
------------------------
Name:
Title:
26
<PAGE>
BancBoston Securities Inc.
By: /s/Gregory C. Foy
-------------------
Name: Gregory C. Foy
Title: Managing Director
Loewenbaum & Company Incorporated
By: /s/ Mike Powell
-----------------
Name: Mike Powell
Title: Associate
SPP Hambro & Co., LLC
By: /s/ Adam C. Beshara
--------------------
Name: Adam C. Beshara
Title: Associate
27
<PAGE>
EXHIBIT 4.2
- -------------------------------------------------------------------------------
------------------------------------------
INTEREP NATIONAL RADIO SALES, INC.
SERIES A AND SERIES B
10% SENIOR SUBORDINATED NOTES DUE 2008
INDENTURE
---------------------------
Dated as of July 2, 1998
______________________
SUMMIT BANK
Trustee
______________
- -------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310 (a)(1)................................................................ 7.10
(a)(2).................................................................... 7.10
(a)(3).................................................................... N.A.
(a)(4).................................................................... N.A.
(a)(5).................................................................... 7.10
(i)(b).................................................................... 7.10
(ii)(c)................................................................... N.A.
311(a).................................................................... 7.11
(b)....................................................................... 7.11
(iii)(c).................................................................. N.A.
312 (a)................................................................... 2.05
(b).......................................................................11.03
(iv)(c)...................................................................11.03
313(a).................................................................... 7.06
(b)(1).................................................................... N.A.
(b)(2).................................................................... 7.07
(v)(c)....................................................................7.06;
11.02
(vi)(d)................................................................... 7.06
314(a)....................................................................4.03;
11.02
(A)(b)....................................................................10.02
(c)(1)....................................................................11.04
(c)(2)....................................................................11.04
(c)(3).................................................................... N.A.
(d)....................................................................... N.A.
(vii)(e)..................................................................11.05
(f)....................................................................... N.A.
315 (a)................................................................... 7.01
(b).......................................................................7.05,
11.02
(A)(c).................................................................... 7.01
(d)....................................................................... 7.01
(e)....................................................................... 6.11
316 (a)(last sentence).................................................... 2.09
(a)(1)(A)................................................................. 6.05
(a)(1)(B)................................................................. 6.04
(a)(2).................................................................... N.A.
(b)....................................................................... 6.07
(B)(c).................................................................... 2.12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
317 (a)(1)................................................................ 6.08
(a)(2).................................................................... 6.09
(b)....................................................................... 2.04
318 (a)...................................................................11.01
(b)....................................................................... N.A.
(c).......................................................................11.01
N.A. means not applicable.
</TABLE>
*This Cross-Reference Table is not part of the Indenture.
2
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................. 1
SECTION 1.01. DEFINITIONS........................................................................ 1
SECTION 1.02. OTHER DEFINITIONS.................................................................. 17
SECTION 1.03. TRUST INDENTURE ACT DEFINITIONS.................................................... 18
SECTION 1.04. RULES OF CONSTRUCTION.............................................................. 18
ARTICLE 2. THE NOTES............................................................................... 19
SECTION 2.01. FORM AND DATING.................................................................... 19
SECTION 2.02. EXECUTION AND AUTHENTICATION....................................................... 20
SECTION 2.03. REGISTRAR AND PAYING AGENT......................................................... 21
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST................................................ 21
SECTION 2.05. HOLDER LISTS....................................................................... 21
SECTION 2.06. TRANSFER AND EXCHANGE.............................................................. 21
SECTION 2.07. REPLACEMENT NOTES.................................................................. 33
SECTION 2.08. OUTSTANDING NOTES.................................................................. 34
SECTION 2.09. TREASURY NOTES..................................................................... 34
SECTION 2.10. TEMPORARY NOTES.................................................................... 34
SECTION 2.11. CANCELLATION....................................................................... 35
SECTION 2.12. DEFAULTED INTEREST................................................................. 35
ARTICLE 3. REDEMPTION AND PREPAYMENT............................................................... 35
SECTION 3.01. NOTICES TO TRUSTEE................................................................. 35
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.................................................. 35
SECTION 3.03. NOTICE OF REDEMPTION............................................................... 36
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION..................................................... 37
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE........................................................ 37
SECTION 3.06. NOTES REDEEMED IN PART............................................................. 37
SECTION 3.07. OPTIONAL REDEMPTION................................................................ 37
SECTION 3.08. MANDATORY REDEMPTION............................................................... 38
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS................................ 38
ARTICLE 4. COVENANTS............................................................................... 40
SECTION 4.01. PAYMENT OF NOTES................................................................... 40
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.................................................... 40
SECTION 4.03. REPORTS............................................................................ 41
SECTION 4.04. COMPLIANCE CERTIFICATE............................................................. 41
SECTION 4.05. TAXES.............................................................................. 42
SECTION 4.06. STAY, EXTENSION AND USURY LAWS..................................................... 42
SECTION 4.07. RESTRICTED PAYMENTS................................................................ 43
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES..................... 45
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK......................... 46
SECTION 4.10. ASSET SALES........................................................................ 48
SECTION 4.11. TRANSACTIONS WITH AFFILIATES....................................................... 49
SECTION 4.12. LIENS.............................................................................. 49
SECTION 4.13. LINE OF BUSINESS................................................................... 50
SECTION 4.14. CORPORATE EXISTENCE................................................................ 50
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL......................................... 50
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 4.16. NO SENIOR SUBORDINATED DEBT........................................................ 51
SECTION 4.17. PAYMENTS FOR CONSENT............................................................... 51
SECTION 4.18. ADDITIONAL NOTE GUARANTEES......................................................... 51
ARTICLE 5. SUCCESSORS.............................................................................. 52
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS........................................... 52
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.................................................. 53
ARTICLE 6. DEFAULTS AND REMEDIES................................................................... 53
SECTION 6.01. EVENTS OF DEFAULT.................................................................. 53
SECTION 6.02. ACCELERATION....................................................................... 54
SECTION 6.03. OTHER REMEDIES..................................................................... 55
SECTION 6.04. WAIVER OF PAST DEFAULTS............................................................ 56
SECTION 6.05. CONTROL BY MAJORITY................................................................ 56
SECTION 6.06. LIMITATION ON SUITS................................................................ 56
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT...................................... 57
SECTION 6.08. COLLECTION SUIT BY TRUSTEE......................................................... 57
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM................................................... 57
SECTION 6.10. PRIORITIES......................................................................... 57
SECTION 6.11. UNDERTAKING FOR COSTS.............................................................. 58
ARTICLE 7. TRUSTEE................................................................................. 58
SECTION 7.01. DUTIES OF TRUSTEE.................................................................. 58
SECTION 7.02. RIGHTS OF TRUSTEE.................................................................. 59
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE....................................................... 60
SECTION 7.04. TRUSTEE'S DISCLAIMER............................................................... 60
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 7.05. NOTICE OF DEFAULTS................................................................. 60
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES......................................... 60
SECTION 7.07. COMPENSATION AND INDEMNITY......................................................... 61
SECTION 7.08. REPLACEMENT OF TRUSTEE............................................................. 62
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC................................................... 63
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION...................................................... 63
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.................................. 63
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE................................................ 63
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE........................... 63
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE..................................................... 63
SECTION 8.03. COVENANT DEFEASANCE................................................................ 64
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE......................................... 64
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS....................................................................................... 65
SECTION 8.06. REPAYMENT TO COMPANY............................................................... 66
SECTION 8.07. REINSTATEMENT...................................................................... 66
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER....................................................... 67
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES................................................ 67
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES................................................... 67
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT................................................ 69
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.................................................. 69
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES................................................... 69
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.................................................... 70
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
ARTICLE 10. SUBORDINATION......................................................................... 70
SECTION 10.01. AGREEMENT TO SUBORDINATE.......................................................... 70
SECTION 10.02. CERTAIN DEFINITIONS............................................................... 70
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.............................................. 71
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT................................................. 71
SECTION 10.05. ACCELERATION OF SECURITIES........................................................ 72
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER............................................... 72
SECTION 10.07. NOTICE BY COMPANY................................................................. 73
SECTION 10.08. SUBROGATION....................................................................... 73
SECTION 10.09. RELATIVE RIGHTS................................................................... 73
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY...................................... 73
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.......................................... 74
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT................................................ 74
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION............................................. 74
SECTION 10.14. AMENDMENTS........................................................................ 74
ARTICLE 11. NOTE GUARANTEES....................................................................... 75
SECTION 11.01. GUARANTEE......................................................................... 75
SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE................................................... 76
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY................................................. 76
SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE.......................................... 76
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS................................ 77
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS................................................. 77
ARTICLE 12. MISCELLANEOUS......................................................................... 78
</TABLE>
v
<PAGE>
<TABLE>
<S> <C>
SECTION 12.01. TRUST INDENTURE ACT CONTROLS...................................................... 78
SECTION 12.02. NOTICES........................................................................... 78
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES..................... 79
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT................................ 80
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION..................................... 80
SECTION 12.06. RULES BY TRUSTEE AND AGENTS....................................................... 80
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS.......... 80
SECTION 12.08. GOVERNING LAW..................................................................... 81
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS..................................... 81
SECTION 12.10. SUCCESSORS........................................................................ 81
SECTION 12.11. SEVERABILITY...................................................................... 81
SECTION 12.12. COUNTERPART ORIGINALS............................................................. 81
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.................................................. 81
</TABLE>
EXHIBITS
Exhibit A-1 FORM OF NOTE
Exhibit A-2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E FORM OF NOTE GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
SCHEDULE
Schedule I SCHEDULE OF GUARANTORS
vi
<PAGE>
INDENTURE dated as of July 2, 1998 among Interep National Radio Sales,
Inc., a New York corporation (the "Company"), the Guarantors (as defined) and
Summit Bank, as trustee (the "Trustee").
The Company, each of the Guarantors and the Trustee agree as follows
for the benefit of each other and for the equal and ratable benefit of the
Holders (as defined) of the 10% Series A Senior Subordinated Notes due 2008 (the
"Series A Notes") and the 10% Series B Senior Subordinated Notes due 2008 (the
"Series B Notes" and, together with the Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a global note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien
encumbering any assets acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"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.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the
<PAGE>
ordinary course of business consistent with past practices and other than any
Contract Buy Out (provided that the sale, conveyance or other disposition of all
or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole shall be governed by Sections 4.15 and/or 5.01
hereof and not by Section 4.10 hereof), and (ii) the issue by any Restricted
Subsidiary of the Company of any Equity Interests of such Restricted Subsidiary
and the sale by the Company or any of its Restricted Subsidiaries of Equity
Interests of any of the Company's Subsidiaries, in the case of either clause (i)
or (ii), whether in a single transaction or a series of related transactions (a)
that have a fair market value in excess of $1.0 million or (b) for net proceeds
in excess of $1.0 million; provided that with respect to Contract Buy Outs of
Media Representation Contracts of the Company and its Restricted Subsidiaries,
if, as of any Buy Out Determination Date after the date hereof, the Buy Out
Proceeds Amount exceeds $6.0 million, the Buy Out Proceeds Amount shall be
deemed to be Net Proceeds with respect to an Asset Sale as of such date and
shall be applied in accordance with the second paragraph of Section 4.10 hereof.
Notwithstanding the foregoing, the following items shall not be deemed to be
Asset Sales: (i) a transfer of assets by the Company to a Wholly Owned
Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company
or to another Wholly Owned Restricted Subsidiary, (ii) an issuance of Equity
Interests by a Wholly Owned Restricted Subsidiary to the Company or to another
Wholly Owned Restricted Subsidiary, and (iii) a Restricted Payment that is
permitted by Section 4.07 hereof.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Buy Out Proceeds Amount" means an amount equal to (a) the aggregate
amount of cash consideration actually received by the Company and its Restricted
Subsidiaries in connection with Contract Buy Outs during a fiscal year (whether
or not a Contract Buy Out pursuant to which any such consideration was received
occurred during such fiscal year), minus (b) the aggregate amount of cash
consideration actually paid by the Company and its Restricted Subsidiaries in
connection with Contract Buy Outs during a fiscal year (whether or not a
Contract Buy Out pursuant to which any such consideration was paid occurred
during such fiscal year). Immediately following each But Out Proceeds
Determination Date, the Buy Out Proceeds Amount shall be reset at zero.
"Buy Out Proceeds Determination Date" means the last day of each
fiscal year of the Company.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents
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(however designated) of corporate stock, (iii) in the case of a partnership or
limited liability company, partnership or membership interests (whether general
or limited) and (iv) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any lender party to the New Credit Facility or with any domestic commercial
bank having capital and surplus in excess of $500 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within six months after the date of
acquisition and (vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i) - (v) of this
definition.
"Cedel" means Cedel Bank, S.A.
"Change of Control" means the occurrence of any of the following: (i)
the sale, transfer, conveyance or other disposition (other than by way of merger
or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than the Principal or a Related Party of the Principal,
(ii) the adoption of a plan relating to the liquidation or dissolution of the
Company, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person," other than the Principal and his Related Parties, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that in calculating the beneficial ownership of any
particular "person," such "person" shall be deemed to have beneficial ownership
of all securities that such person has the right to acquire, whether such right
is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition), directly or indirectly, of more than 35% of the Voting
Stock of the Company (measured by voting power rather than number of shares),
(iv) the consummation of the first transaction (including, without limitation,
any merger or consolidation) the result of which is that any "person" becomes
the "beneficial owner" (as defined above), directly or indirectly, of more of
the Voting Stock of the Company (measured by voting power rather than number of
shares) than is at the time "beneficially owned" by the Principal and his
Related Parties in the aggregate or (v) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Interep National Radio Sales, Inc., and any and all
successors thereto.
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"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income, plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was deducted in computing such Consolidated
Net Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing such
Consolidated Net Income, plus (iv) depreciation, amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of such Person and
its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (v) non-cash items increasing such
Consolidated Net Income for such period (other than items that were accrued in
the ordinary course of business), in each case, on a consolidated basis and
determined in accordance with GAAP. Notwithstanding the foregoing, the provision
for taxes on the income or profits of, and the depreciation and amortization and
other non-cash expenses of, a Subsidiary of the Company shall be added to
Consolidated Net Income to compute Consolidated Cash Flow of the Company only to
the extent that a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof that is a Guarantor, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change in
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accounting principles shall be excluded; and (v) the Net Income (but not loss)
of any Unrestricted Subsidiary shall be excluded, whether or not distributed to
the Company or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Contract Buy Out" means the involuntary disposition or termination
(including, without limitation, pursuant to a buy out) by a media client of a
Media Representation Contract.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facilities" means, with respect to the Company, one or more
debt facilities (including, without limitation, the New Credit Facility) or
commercial paper facilities, in each case with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time. Indebtedness under
Credit Facilities outstanding on the date of this Indenture shall be deemed to
have been incurred on such date in reliance on the exception provided by clause
(i) of the second paragraph of Section 4.09 hereof.
"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
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"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.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A-1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"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 Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature; provided, however, that any Capital Stock that
would constitute Disqualified Stock solely because the holders thereof have the
right to require the Company to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Section 4.07 hereof.
"Employee Stock Ownership Plan" means an employee stock ownership plan
that constitutes a qualified plan or trust, under Sections 401(a) and 501(a),
respectively of the Code and meets the requirements of Section 4975(e)(7) of the
Code.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
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"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries (other than Indebtedness under the New Credit Facility)
in existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations) and (ii)
the consolidated interest of such Person and its Restricted Subsidiaries that
was capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon) and (iv) the product of (a) all dividend payments, whether or not in cash,
on any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable solely in
Equity Interests of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiary for such period to the Fixed Charges of such Person and
its Restricted Subsidiary for such period. In the event that the referent
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues or
redeems preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, and (iii) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such
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Fixed Charges will not be obligations of the referent Person or any of its
Restricted Subsidiaries following the Calculation Date.
"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, which are in effect on the date of this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means a guarantee (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 (i) McGavren Guild, Inc., D&R Radio, Inc.,
CBS Radio Sales, Inc., Allied Radio Partners, Inc., Clear Channel Radio, LLC and
Caballero Spanish Media LLC and (ii) any other subsidiary that executes a Note
Guarantee pursuant to a supplemental indenture, in the form of Exhibit F hereto,
in accordance with the provisions of this Indenture, and, in each case, their
respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or
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<PAGE>
similar instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable or Media Representation Contract buyouts
payable incurred in the ordinary course of business and consistent with past
practices, if and to the extent any of the foregoing (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all Indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
Indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness issued with original
issue discount, and (ii) the principal amount thereof, together with any
interest thereon that is more than 30 days past due, in the case of any other
Indebtedness .
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who is not also a QIB.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Subsidiary of the Company sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the State of New Jersey 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 on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
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"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Media Representation Contract" means any contract between a media
representation firm and a media client providing for media representation
services.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), or (b)
the disposition of any securities by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries, and (ii) any extraordinary gain (but not loss), together with any
related provision for taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness (other than Indebtedness under the New Credit
Facility) secured by a Lien on the asset or assets that were the subject of such
Asset Sale and any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP.
"New Credit Facility" means that certain Credit Facility, dated as of
July 2, 1998, by and among the Company, the Guarantors and BankBoston, N.A. and
Summit Bank providing for up to $10.0 million of borrowings, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted
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Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness (other than the Notes being offered hereby) 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 (iii) 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.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Guarantee" means the Guarantee by each Guarantor of the
Company's payment obligations under this Indenture and the Notes, executed
pursuant to the provisions of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, 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, the 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 two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" means any Broker-Dealer that holds
Series B Notes that were acquired in the Registration Exchange Offer in exchange
for Series A Notes that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Series A Notes acquired directly from the Company or any of its Affiliates).
"Permitted Business" means the business of providing media
representation and media services and the sale of advertising and any other
activities that are reasonably incidental, similar or related thereto.
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"Permitted Investments" means (a) any Investment in the Company or in
a Wholly Owned Restricted Subsidiary of the Company that is a Guarantor; (b) any
Investment in Cash Equivalents; (c) any Investment by the Company or any
Subsidiary of the Company in a Person, if as a result of such Investment (i)
such Person becomes a Wholly Owned Restricted Subsidiary of the Company and a
Guarantor 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 Wholly Owned Restricted Subsidiary of the
Company that is a Guarantor; (d) any Investment made as a result of the receipt
of non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof, (e) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock) of
the Company; and (f) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (f) that are at the time
outstanding, not to exceed $5.0 million.
"Permitted Liens" means (i) Liens on the assets of the Company and its
Subsidiaries securing Indebtedness under the New Credit Facility that was
permitted by Section 4.09 hereof; (ii) Liens in favor of the Company; (iii)
Liens on property of a Person existing at the time such Person is merged with or
into or consolidated with the Company or any Subsidiary of the Company; provided
that such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company; (iv) Liens on property existing at
the time of acquisition thereof by the Company or any Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted by clause (ii) of the second
paragraph of Section 4.09 hereof covering only the assets acquired with such
Indebtedness, (vii) Liens existing on the date of this Indenture; (viii) Liens
for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (ix) Liens incurred in the ordinary course of business of
the Company or any Subsidiary of the Company with respect to obligations that do
not exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Company or
such Subsidiary and (x) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced,
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<PAGE>
renewed, replaced, defeased or refunded (plus the amount of reasonable expenses
incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the Notes on terms at least as favorable to the Holders of
Notes as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Company or by the Restricted Subsidiary
who is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Principal" means Ralph C. Guild.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of July 2, 1998, by and among the Company, the Guarantors
and the other parties named on the signature pages thereof, as such agreement
may be amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S or a Regulation S Temporary Global
Note or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
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"Regulation S Temporary Global Note" means a temporary global Note in
the form of Exhibit A-2 hereto bearing the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation S.
"Related Party" with respect to any Principal means (A) any
controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate
family member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
"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 Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
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"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Stock Growth Plan" means the Stock Growth Plan of the Company
qualified under Section 401(o) of the Code.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A-1 attached hereto that bears the Global Note Legend and that has
the "Schedule of Exchanges of Interests in the Global Note" attached thereto,
and that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that
is designated by the Board of Directors as an Unrestricted Subsidiary pursuant
to a Board Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the
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Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries; and (e) has at least one director
on its board of directors that is not a director or executive officer of the
Company or any of its Restricted Subsidiaries and has at least one executive
officer that is not a director or executive officer of the Company or any of its
Restricted Subsidiaries. Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by Section 4.07 hereof. 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 to be incurred as of such date under Section 4.09
hereof, the Company shall be in default of such covenant). 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 (i) such Indebtedness is permitted by
Section 4.09 hereof, calculated on a pro forma basis as if such designation had
occurred at the beginning of the reference period, and (ii) no Default or Event
of Default would be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"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.
"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 (x) 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 (y) 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" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
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Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction"....................................4.11
"Asset Sale Offer".........................................4.10
"Authentication Order".....................................2.02
"Bankruptcy Law"...........................................4.01
"Change of Control Offer"..................................4.15
"Change of Control Payment"................................4.15
"Change of Control Payment Date"...........................4.15
"Covenant Defeasance"......................................8.03
"Designated Senior Debt"...................................10.02
"Event of Default".........................................6.01
"Excess Proceeds"..........................................4.10
"incur"....................................................4.09
"Legal Defeasance".........................................8.02
"Offer Amount".............................................3.09
"Offer Period".............................................3.09
"Paying Agent".............................................2.03
"Payment Default"..........................................6.01
"Permitted Debt"...........................................4.09
"Permitted Junior Securities"..............................10.02
"Purchase Date"............................................3.09
"Registrar"................................................2.03
"Representative"...........................................10.02
"Restricted Payments"......................................4.07
"Senior Debt".............................................10.02
</TABLE>
Section 1.03. Trust Indenture Act Definitions
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; and
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"obligor" on the Notes and the Note Guarantees means the Company and
the Guarantors, respectively, and any successor obligor upon the Notes and the
Note Guarantees, respectively.
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 2.
THE NOTES
Section 2.01. Form and Dating.
(a) General.
The Notes, including the Trustee's certificate of authentication,
shall be substantially in the form of Exhibits A-1 or A-2 attached hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
(b) Global Notes.
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Notes issued in global form shall be substantially in the form of
Exhibits A-1 or A-2 attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A-1 attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). 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 principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee in accordance
with instructions given by the Holder thereof as required by Section 2.06
hereof.
(c) Temporary Global Notes.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at the principal Corporate Trust Office of the Trustee, as custodian
for the Depositary, and registered in the name of the Depositary or the nominee
of the Depositary for the accounts of designated agents holding on behalf of
Euroclear or Cedel, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The Restricted Period shall be terminated upon
the receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel certifying that
they have received certification of non-United States beneficial ownership of
100% of the aggregate principal amount of the Regulation S Temporary Global Note
(except to the extent of any beneficial owners thereof who acquired an interest
therein during the Restricted Period pursuant to another exemption from
registration under the Securities Act and who will take delivery of a beneficial
ownership interest in a 144A Global Note or an IAI Global Note bearing a Private
Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii)
an Officers' Certificate from the Company. Following the termination of the
Restricted Period, beneficial interests in the Regulation S Temporary Global
Note shall be exchanged for beneficial interests in Regulation S Permanent
Global Notes pursuant to the Applicable Procedures. Simultaneously with the
authentication of Regulation S Permanent Global Notes, the Trustee shall cancel
the Regulation S Temporary Global Note. The aggregate principal amount of the
Regulation S Temporary Global Note and the Regulation S Permanent 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, as the case may be, in
connection with transfers of interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel shall be applicable
to transfers of beneficial interests in the Regulation S
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Temporary Global Note and the Regulation S Permanent Global Notes that are held
by Participants through Euroclear or Cedel.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature.
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 (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. 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 Holders 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
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 The Depository Trust Company ("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 with respect to the Global Notes.
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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 or a
Subsidiary) 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 (S) 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
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 (S) 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary.
All Global Notes will be exchanged by the Company for Definitive Notes if (i)
the Company delivers to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no longer a
clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Notes (in whole but not in part) should be
exchanged for Definitive Notes and delivers a written notice to such effect to
the Trustee; provided that in no event shall the Regulation S Temporary Global
Note be exchanged by the Company for Definitive Notes prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of any
certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act
as described in Section 2.06(c)(i) hereof. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be
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authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Restricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Restricted
Global Note in accordance with the transfer restrictions set forth in the
Private Placement Legend; provided, however, that prior to the expiration of
the Restricted Period, transfers of beneficial interests in the Temporary
Regulation S Global Note may not be made to a U.S. Person or for the account
or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial
interests in any Unrestricted Global Note may be transferred to Persons who
take delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note. No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this Section
2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global
Notes. In connection with all transfers and exchanges of beneficial interests
that are not subject to Section 2.06(b)(i) above, the transferor of such
beneficial interest must deliver to the Registrar either (A) (1) a written
order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to credit
or cause to be credited a beneficial interest in another Global Note in an
amount equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such
increase or (B) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to cause to be issued a Definitive Note in
an amount equal to the beneficial interest to be transferred or exchanged and
(2) instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note shall be
registered to effect the transfer or exchange referred to in (1) above;
provided that in no event shall Definitive Notes be issued upon the transfer
or exchange of beneficial interests in the Regulation S Temporary Global Note
prior to (x) the expiration of the Restricted Period and (y) the receipt by
the Registrar of any certificates required pursuant to Rule 903 under the
Securities Act as described in Section 2.06(c)(i) hereof. Upon consummation
of an Exchange Offer by the Company in accordance with Section 2.06(f) hereof,
the requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions
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contained in the Letter of Transmittal delivered by the Holder of such
beneficial interests in the Restricted Global Notes. Upon satisfaction of all
of the requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Indenture and the Notes or otherwise applicable under
the Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global Note.
A beneficial interest in any Restricted Global Note may be transferred to a
Person who takes delivery thereof in the form of a beneficial interest in
another Restricted Global Note if the transfer complies with the requirements
of Section 2.06(b)(ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial
interest in the 144A Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications
in item (1) thereof;
(B) if the transferee will take delivery in the form of a beneficial
interest in the Regulation S Temporary Global Note or the Regulation S
Global Note, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transferee will take delivery in the form of a beneficial
interest in the IAI Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the certifications
and certificates and Opinion of Counsel required by item (3) thereof, if
applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global
Note for Beneficial Interests in the Unrestricted Global Note. A beneficial
interest in any Restricted Global Note may be exchanged by any holder thereof
for a beneficial interest in an Unrestricted Global Note or transferred to a
Person who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of the beneficial interest to be transferred, in the case of an exchange,
or the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
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(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item (1)(a)
thereof; or
(2) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who shall
take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Restricted Definitive Note, then, upon
receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted
Definitive Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (2)(a) thereof;
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(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed
in subparagraphs (B) through (D) above, a certificate to the effect set
forth in Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the Company or
any of its Subsidiaries, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications
in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial
interest in the Regulation S Temporary Global Note may not be exchanged for a
Definitive Note or transferred to a Person who takes delivery thereof in the
form of a Definitive Note prior to (x) the expiration of the Restricted
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Period and (y) the receipt by the Registrar of any certificates required
pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act as described in
Section 2.06(c)(i) hereof, except in the case of a transfer pursuant to an
exemption from the registration requirements of the Securities Act other than
Rule 903 or Rule 904.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive Note
or may transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of such beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter
of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Definitive Note
that does not bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit C hereto, including the certifications in
item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who shall
take delivery thereof in the form of a Definitive Note that does not bear
the Private Placement Legend, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such
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beneficial interest for a Definitive Note or to transfer such beneficial
interest to a Person who takes delivery thereof in the form of a Definitive
Note, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of
the applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note
issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver such Definitive
Notes to the Persons in whose names such Notes are so registered. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or to
transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note,
a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant
to an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed
in subparagraphs (B) through (D) above, a certificate to the effect set
forth in Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable;
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(F) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(b) thereof;
or
(G) if such Restricted Definitive Note is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of clause
(B) above, the 144A Global Note, in the case of clause (c) above, the
Regulation S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal that it is
not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to exchange such
Notes for a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to transfer such
Notes to a Person who shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note, a certificate from
such Holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
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and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note or
transfer such Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note at any time.
Upon receipt of a request for such an exchange or transfer, the Trustee shall
cancel the applicable Unrestricted Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the Unrestricted Global
Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name of
Persons who take delivery thereof in the form of a Restricted Definitive Note
if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
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(B) if the transfer will be made pursuant to Rule 903 or Rule 904,
then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption from
the registration requirements of the Securities Act, then the transferor
must deliver a certificate in the form of Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal that it is
not (1) a broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit C hereto, including the certifications
in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the form
of an Unrestricted Definitive Note, a certificate from such Holder in the
form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests, an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
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(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
Holder of Unrestricted Definitive Notes may transfer such Notes to a Person
who takes delivery thereof in the form of an Unrestricted Definitive Note.
Upon receipt of a request to register such a transfer, the Registrar shall
register the Unrestricted Definitive Notes pursuant to the instructions from
the Holder thereof.
(f) Exchange Offer.
Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of the beneficial interests in the
Restricted Global Notes tendered for acceptance by Persons that certify in the
applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they
are not participating in a distribution of the Exchange Notes and (z) they are
not affiliates (as defined in Rule 144) of the Company, and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes accepted for exchange in the Exchange Offer. Concurrently with the
issuance of such Notes, the Trustee shall cause the aggregate principal amount
of the applicable Restricted Global Notes to be reduced accordingly, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends.
The following legends shall appear on the face of all Global Notes and
Definitive Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note
and each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the
following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS 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
SECURITY 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 SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A AND REGULATION S. THE
HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a)
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TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT. (d) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) (1), (2), (3)
OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED
FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL
THAT SUCH TRANSFER IS IN COMPLIANCE WITH 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
LAW 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."
(B) Notwithstanding the foregoing, any Global Note or Definitive Note
issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes
issued in exchange therefor or substitution thereof) shall not bear the
Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF INTEREP NATIONAL RADIO SALES, INC."
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(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes.
At such time as all beneficial interests in a particular Global Note
have been exchanged for Definitive Notes or a particular Global Note has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Note shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be
made on such Global Note by the Trustee or by the Depositary at the direction of
the Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Global Notes and Definitive Notes
upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial interest
in a Global Note or to a Holder of a Definitive Note for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10,
4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of
transfer or exchange of Global Notes or Definitive Notes shall be the valid
obligations of the Company,
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evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any 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, (B) to register the transfer of or to exchange any Note so selected
for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part or (c) to register the transfer of or to exchange a
Note between a record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes and
for all other purposes, and none of the Trustee, any Agent or the Company
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes in
accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required
to be submitted to the Registrar pursuant to this Section 2.06 to effect a
registration of transfer or exchange may be submitted by facsimile.
Section 2.07. 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 receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements 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 for its 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 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled 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
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as not outstanding. Except as set forth in Section 2.09 hereof, 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 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide 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, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with 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, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated 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.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. 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
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
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.
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Section 2.12. 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, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall 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
and the amount of such interest to be paid.
ARTICLE 3.
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 but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased 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 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 whole 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 a 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.
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Section 3.03. Notice of Redemption
Subject to the provisions of Section 3.09 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 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,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or 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 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 the Trustee, at least 45 days 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. A notice of redemption may not be
conditional.
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Section 3.05. Deposit of Redemption Price
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. 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 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 clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to July 1, 2003. Thereafter, the Company shall have the option to redeem
the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on July 1 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003.............................. 105.000 %
2004.............................. 103.333 %
2005.............................. 101.667 %
2006 and thereafter............... 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, on
or prior to June 29, 2001, the Company may on any one or more occasions redeem
up to 30% of the aggregate principal amount of Notes originally issued hereunder
at a redemption price of 110.000% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages thereon, if any, to the redemption
date,
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with the net cash proceeds of an offering of common stock of the Company;
provided that at least 70% of the aggregate principal amount of Notes originally
issued hereunder remain outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Company and its Subsidiaries); and
provided, further, that such redemption shall occur within 45 days of the date
of the closing of such offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
Except as set forth in Sections 4.10 and 4.15 hereof, the Company
shall not be required to make mandatory redemption payments, including pursuant
to any sinking fund, with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an Asset Sale Offer, it shall follow the procedures
specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the 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 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
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(c) that any Note not tendered or accepted for payment shall continue to
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 accrue
interest after the Purchase Date;
(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 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 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 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 Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall 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 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the 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 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 Purchase
Date.
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Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4.
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.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in either the Borough of Manhattan in the
City of New York, or the City of Hackensack in the State of New Jersey, 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 either the Borough
of Manhattan in the City of New York or the City of Hackensack in the State of
New Jersey 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.
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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 the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q (commencing with the
fiscal quarter ending June 30, 1998) 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" that describes the financial condition and
results of operations of the Company and its consolidated Subsidiaries (showing
in reasonable detail, either on the face of the financial statements or in the
footnotes thereto and in Management's Discussion and Analysis of Financial
Condition and Results of Operations, the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial condition and results of operations of the Unrestricted Subsidiaries
of the Company) and, with respect to the annual information only, a report
thereon by the Company's certified independent 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 each case within the time periods
specified in the SEC's rules and regulations. In addition, following the
consummation of the Exchange Offer, whether or not required by the rules and
regulations of the SEC, the Company shall file a copy of all such information
and reports with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request.
(b) For so long as any Notes remain outstanding, the Company and the
Guarantors shall furnish to the 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.
Section 4.04. Compliance Certificate.
(a) The Company and each Guarantor (to the extent that such Guarantor is so
required under the TIA) shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its 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 covenant 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.
(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)
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<PAGE>
above 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 4 or Article 5 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 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. Taxes.
The Company shall pay, and shall cause each of its 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 and each of the Guarantors 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 and each of the Guarantors (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. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company or
any of its Restricted Subsidiaries) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including, without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company or other Affiliate of
the Company (other than any such Equity Interests owned by the Company or any
Restricted Subsidiary
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<PAGE>
of the Company); (iii) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any Indebtedness that
is subordinated to the Notes, except a payment of interest or principal at
Stated Maturity; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii) and (iv) of the next succeeding paragraph), is less than the
sum, without duplication, of (i) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from the beginning of
the first fiscal quarter commencing after the date of this Indenture to the end
of the Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
Company since the date of this Indenture as a contribution to its common equity
capital or from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale of Disqualified Stock or debt
securities of the Company that have been converted into such Equity Interests
(other than Equity Interests (or Disqualified Stock or convertible debt
securities) sold to a Subsidiary of the Company), plus (iii) to the extent that
any Restricted Investment that was made after the date of this Indenture is sold
for cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted Investment.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Restricted Subsidiary of the Company) of, other Equity
Interests of the Company (other than any Disqualified Stock); provided that the
amount of any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement, defeasance or other acquisition shall be excluded from
clause (c) (ii) of the preceding paragraph; (iii) the defeasance, redemption,
repurchase or other acquisition of subordinated Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv) the
payment of any dividend by a Restricted Subsidiary of the Company to the holders
of its Equity Interests on a pro rata basis; (v) the repurchase, redemption or
other acquisition or retirement for value of any Equity
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Interests of the Company or any Restricted Subsidiary of the Company held by (A)
any employee, director or consultant of the Company (or any of its Restricted
Subsidiaries) pursuant to any employee, director or consultant equity
subscription agreement or stock option agreement or (B) any Employee Stock
Ownership Plan (or related trust) of the Company; provided that the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests shall not exceed $750,000 in any twelve-month period and (vi) the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interest of the Company or any Restricted Subsidiary of the Company held
by any Employee Stock Ownership Plan (or related trust) of the Company necessary
in order for any such Employee Stock Ownership Plan (or related trust) of the
Company to constitute a qualified plan or trust under Sections 401(a) and
501(a), respectively of the Code; provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests (excluding any
Equity Interests repurchased, redeemed, acquired or retired pursuant to clause
(v) hereof) since the date of this Indenture shall not exceed $2.5 million.
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause of Default. In
the event of any such designation, all outstanding Investments owned by the
Company and its Restricted Subsidiaries in the Subsidiary so designated shall be
deemed to be an Investment made as of the time of such designation and shall
reduce the amount available for Restricted Payments under the first paragraph of
this Section 4.07 or Permitted Investments, as applicable. All such outstanding
Investments shall be deemed to constitute Restricted Investments in an amount
equal to the fair market value of such Investments at the time of such
designation. Such designation shall only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
covenant shall be determined by the Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee, such determination to be
based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing if such fair market value exceeds
$5.0 million. Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, together with a copy
of any fairness opinion or appraisal required by this Indenture. Contributions
by employees to the Company's Stock Growth Plan, as in effect on the date of
this Indenture, and, if such Plan is not a Restricted Subsidiary, payments by
such Plan to purchase Equity Interests of the Company, in each case, in the
ordinary course of business on a basis consistent with past practice shall not
constitute Restricted Payments for the purposes of this Section 4.07.
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Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
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
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions shall not apply to encumbrances or restrictions existing under or
by reason of (a) Existing Indebtedness as in effect on the date of this
Indenture, (b) the New Credit Facility as in effect as of the date of this
Indenture, and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided that
such amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than those
contained in the New Credit Facility as in effect on the date of this Indenture,
(c) this Indenture and the Notes, (d) applicable law, (e) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, provided that,
in the case of Indebtedness, such Indebtedness was permitted by the terms hereof
to be incurred, (f) customary non-assignment provisions in leases entered into
in the ordinary course of business and consistent with past practices, (g)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii) above
on the property so acquired, (h) any agreement for the sale or other disposition
of a Restricted Subsidiary that restricts distributions by that Restricted
Subsidiary pending its sale or other disposition, (i) Liens securing
Indebtedness otherwise permitted to be incurred pursuant to the provisions of
Section 4.12 hereof that limit the right of the Company or any of its Restricted
Subsidiaries to dispose of the assets subject to such Lien, (j) provisions with
respect to the disposition or distribution of assets or property in joint
venture agreements and other similar agreements entered into in the ordinary
course of business and (k) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of preferred stock; provided, however, that the
Company and the Guarantors may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for
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which internal financial statements are available immediately preceding the date
on which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least 2.0 to 1, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this Section 4.09 shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company of Indebtedness under the New Credit
Facility; provided that the aggregate principal amount of all Indebtedness
outstanding under the New Credit Facility after giving effect to such
incurrence does not exceed an amount equal to $10.0 million less the aggregate
amount of all Net Proceeds of Asset Sales that have been applied since the
date of this Indenture to repay Indebtedness pursuant to Section 4.10 hereof;
(ii) the incurrence by the Company of Indebtedness represented by Capital
Lease Obligations, mortgage financings or purchase money obligations, in each
case incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or equipment
used in the business of the Company, in an aggregate principal amount not to
exceed $2.5 million at any time outstanding;
(iii) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(iv) the incurrence by the Company of up to $100.0 million of Indebtedness
represented by the Notes and the Exchange Notes;
(v) The guarantee by the Company or any of the Guarantors of Indebtedness
that was permitted to be incurred by another provision of this Section 4.09;
(vi) the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Company and any of its
Wholly Owned Restricted Subsidiaries; provided, however, that (i) if the
Company is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes and (ii)(A) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person other
than the Company or a Restricted Subsidiary thereof and (B) any sale or other
transfer of any such Indebtedness to a Person that is not either the Company
or a Wholly Owned Restricted Subsidiary thereof shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that was not permitted by this
clause (vi);
(vii) the incurrence by the Company of Hedging Obligations that are
incurred for the purpose of fixing or hedging interest rate risk with respect
to any floating rate Indebtedness that is permitted
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by the terms of this Indenture to be outstanding; provided, that the agreement,
indenture or other documents governing such Indebtedness require such fixing or
hedging of interest rate risk;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace Indebtedness (other
than intercompany Indebtedness) that was permitted by this Indenture to be
incurred under the first paragraph hereof or clauses (iii), (iv), (viii) and
(x) of this paragraph;
(ix) the incurrence by the Company of Indebtedness with respect to
performance, surety and appeal bonds in the ordinary course of business;
(x) the incurrence by the Company's Unrestricted Subsidiaries of Non-
Recourse Debt, provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
Company that was not permitted by this clause (x); and
(xi) the incurrence by the Company of additional Indebtedness in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this clause
(xi), not to exceed $5.0 million.
The Company shall not incur any Indebtedness (including Permitted
Debt) that is contractually subordinated in right of payment to any other
Indebtedness of the Company unless such Indebtedness is also contractually
subordinated in right of payment to the Notes on substantially identical terms;
provided, however, that no Indebtedness of the Company shall be deemed to be
contractually subordinated in right of payment to any other Indebtedness of the
Company solely by virtue of being unsecured.
For purposes of determining compliance with this Section 4.09, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (i) through (xi) above
as of the date of incurrence thereof, or is entitled to be incurred pursuant to
the first paragraph of this Section 4.09 as of the date of incurrence thereof,
the Company shall, in its sole discretion, classify such item of Indebtedness on
the date of its incurrence in any manner that complies with this Section 4.09.
Accrual of interest, accretion or amortization of original issue discount, the
payment of interest on any Indebtedness in the form of additional Indebtedness
with the same terms and the payment of dividends on Disqualified Stock in the
form of additional shares of the same class of Disqualified Stock shall not be
deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock
for purposes of this Section 4.09; provided, in each such case, that the amount
thereof is included in Fixed Charges of the Company as accrued.
Section 4.10. Asset Sales
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be)
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receives consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee in the event of an Asset Sale
(whether pursuant to a single transaction or a series of related transactions)
that has fair market value or involves Net Proceeds in excess of $5.0 million)
of the assets or Equity Interests issued or sold or otherwise disposed of and
(ii) at least 80% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash; provided that the amount of (x)
any liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet) of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any guarantee thereof) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Company
or such Restricted Subsidiary from further liability and (y) any securities,
notes or other obligations received by the Company or any such Restricted
Subsidiary from such transferee that are contemporaneously (subject to ordinary
settlement periods) converted by the Company or such Subsidiary into cash (to
the extent of the cash received), shall be deemed to be cash for purposes of
this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset
Sale (360 days in the case of Net Proceeds that are comprised solely of Buy Out
Proceeds), the Company may apply such Net Proceeds (a) to repay Indebtedness
under the New Credit Facility, (b) to acquire all or substantially all of the
assets of, or a majority of the Voting Stock of, another Permitted Business, (c)
to make capital expenditures, (d) to acquire other long-term assets that are
used or useful in a Permitted Business, including Media Representation
Contracts, or (e) to pay Buy Out Proceeds Amounts in connection with Contract
Buy Outs. Pending the final application of any such Net Proceeds, the Company
may temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph shall be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million,
the Company shall be required to make an offer to all Holders of Notes and all
holders of other Indebtedness that is pari passu with the Notes containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets (an "Asset Sale
Offer") to purchase the maximum principal amount of Notes and such other pari
passu Indebtedness that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, in accordance with the procedures set forth in Section 3.09 hereof,
and such other pari passu Indebtedness. To the extent that any Excess Proceeds
remain after consummation of an Asset Sale Offer, the Company may use such
Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If
the aggregate principal amount of Notes and such other pari passu Indebtedness
tendered into such Asset Sale Offer surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes and such other
pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of
such offer to purchase, the amount of Excess Proceeds shall be reset at zero.
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Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement entered into by the
Company or any of its Restricted Subsidiaries in the ordinary course of business
and consistent with the past practice of the Company or such Restricted
Subsidiary, (ii) transactions between or among the Company and/or its Restricted
Subsidiaries, (iii) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of the Company, (iv) any sale or other issuance of Equity
Interests (other than Disqualified Stock) of the Company, (v) Restricted
Payments that are permitted by the provisions of Section 4.07 hereof, (vi) the
application of the proceeds from the sale of the Notes as described in the final
offering memorandum, dated June 29, 1998 pertaining thereto, (vii) the
performance of the Services Agreement between the Company and Media Financial
Services, Inc. as in effect on the date of this Indenture, (viii) the
performance of the lease of the real property located in Tuxedo Park, New York,
between the Company and The Tuxedo Park Executive Conference Center
Proprietorship as in effect on the date of this Indenture and (ix) payment in
respect of the promissory note from Mr. Ralph C. Guild payable to the Company in
the original aggregate principal amount of $389,000 as in effect on the date of
this Indenture.
Section 4.12. Liens.
The Company shall not and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind (other than Permitted Liens) upon any of
their property or assets, now owned or hereafter acquired, unless all payments
due under this Indenture and the Notes are secured on an equal and ratable basis
with the obligations so secured until such time as such obligations are no
longer secured by a Lien.
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Section 4.13. Line of Business.
The Company shall not, and shall not permit any Subsidiary to, engage
in any business other than Permitted Businesses, except to such extent as would
not be material to the Company and its Subsidiaries taken as a whole.
Section 4.14. Corporate Existence.
Subject to Article 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 Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its 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 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 Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to each Holder to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Notes at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 10 days following any
Change of Control, the Company shall mail a notice to each Holder stating: (1)
that the Change of Control Offer is being made pursuant to this Section 4.15 and
that all Notes tendered will be accepted for payment; (2) the purchase price and
the purchase date, which shall be no earlier than 30 and no later than 60 days
from the date such notice is mailed (the "Change of Control Payment Date"); (3)
that any Note not tendered will continue to accrue interest; (4) that, unless
the Company defaults in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Payment Date; (5) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (6) that Holders will
be entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the second Business Day preceding the Change of
Control Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing his election to
have the Notes purchased; and (7) that Holders whose Notes are being purchased
only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple thereof. The
Company shall comply with the requirements of Rule 14e-1
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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 Notes in connection with a Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Holder's Notes, and the Trustee
shall promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered by such Holder, if any; provided, that each such new
Note shall be in a principal amount of $1,000 or an integral multiple thereof.
The Company shall publicly announce the results of the Change of Control Offer
on or as soon as practicable after the Change of Control Payment Date.
(c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall 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
Section 4.15 and Section 3.09 hereof and purchases all Notes validly tendered
and not withdrawn under such Change of Control Offer.
Section 4.16. No Senior Subordinated Debt.
Notwithstanding the provisions of Section 4.09 hereof, (i) the Company
shall not incur, create, issue, assume, guarantee or otherwise become liable for
any Indebtedness that is subordinate or junior in right of payment to any Senior
Debt and senior in any respect in right of payment to the Notes, and (ii) no
Guarantor shall incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
any Indebtedness of such Guarantor and senior in any respect in right of payment
to the Note Guarantee of such Guarantor.
Section 4.17. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid and is
paid to all Holders of the Notes in connection with such consent, waiver or
agreement.
Section 4.18. Additional Note Guarantees
If the Company or any of its Restricted Subsidiaries shall acquire or
create another Subsidiary after the date of this Indenture, then such newly
acquired or created Subsidiary shall become
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a Guarantor by executing a Supplemental Indenture in the form attached hereto as
Exhibit F and deliver an Opinion of Counsel to the Trustee to the effect that
such Supplemental Indenture has been duly authorized, executed and delivered by
such Subsidiary and constitutes a valid and binding obligation of such
Subsidiary, enforceable against such Subsidiary in accordance with its terms
(subject to customary exceptions); provided, that all Subsidiaries that have
properly been designated as Unrestricted Subsidiaries in accordance with this
Indenture (i) shall not be subject to the requirements of this Section 4.18 and
(ii) shall be released from Obligations under any Note Guarantee, in each case
for so long as they continue to constitute Unrestricted Subsidiaries.
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
(a) The Company shall not, directly or indirectly, consolidate or merge
with or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, convey or otherwise dispose of all or substantially all of its
properties or assets, in one or more related transactions, to another Person
unless (i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, conveyance or other disposition shall
have been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia; (ii) the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or the Person to which such sale, assignment, transfer, conveyance or
other disposition shall have been made assumes all the obligations of the
Company under the Registration Rights Agreement, the Notes and this Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee; (iii) immediately after such transaction no Default or Event of Default
exists; and (iv) except in the case of a merger of the Company with or into a
Wholly Owned Restricted Subsidiary of the Company, the Company or the Person
formed by or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction and (B) will,
immediately after such transaction after giving pro forma effect thereto and any
related financing transactions as if the same had occurred at the beginning of
the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09 hereof.
(b) The Company shall not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person.
(c) Notwithstanding anything contrary to the contrary in this section 5.01,
this Section 5.01 shall not be applicable to a sale, assignment, transfer,
conveyance or other disposition of assets between or among the Company and any
of the Guarantors.
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Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, conveyance or other disposition is made shall
succeed to, and be substituted for (so that from and after the date of such
consolidation, merger, sale, conveyance or other disposition, the provisions of
this Indenture referring to the "Company" shall refer instead to the successor
corporation and not to the Company), and may exercise every right and power of
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein; provided, however, that the
predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes and such default continues for a
period of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise;
(c) the Company fails to comply with any of the provisions of Section 4.07,
4.09, 4.10 or 4.15;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture or the Notes for
60 days after notice to the Company by the Trustee or the Holders of at least
25% in aggregate principal amount of the Notes then outstanding;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries,
whether such Indebtedness or guarantee now exists, or is created after the date
of this Indenture, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more;
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(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Significant Subsidiaries or any group of Subsidiaries that, taken as
a whole, would constitute a Significant Subsidiary and such judgment or
judgments remain undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of all such
undischarged judgments exceeds $5.0 million;
(g) the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary or for all or substantially all of the
property of the Company or any of its Significant Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary; or
(iii) orders the liquidation of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days; or
(i) except as permitted by this Indenture, any Note Guarantee is held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under such
Guarantor's Note Guarantee.
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Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 hereof with respect to the Company, any
Significant Subsidiary or any group of Significant Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Upon any such declaration, the Notes shall become due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (g) or
(h) of Section 6.01 hereof occurs with respect to the Company, any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, all outstanding Notes shall be due
and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived.
If an Event of Default occurs on or after July 1, 2003 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to July 1, 2003 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding the prohibition on redemption of
the Notes prior to such date, then, upon acceleration of the Notes, an
additional premium shall also become and be immediately due and payable in an
amount, for each of the years beginning on July 1 of the years set forth below,
as set forth below (expressed as a percentage of principal amount):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1998................................... 113.333 %
1999................................... 111.667 %
2000................................... 110.000 %
2001................................... 108.333 %
2002................................... 106.667 %
</TABLE>
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 and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
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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 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 personal 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;
(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
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(e) during such 60-day period the Holders of a majority in 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(a) or (b) 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 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
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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 Article, 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 and the fees and expenses of the Trustee's agents and
legal counsel;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium 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, including reasonable
attorneys' fees, 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 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of 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 man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
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(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. However, the Trustee shall
examine the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities 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 incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(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 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 the 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
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counsel and the written advice of such counsel or any Opinion of Counsel 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
reliance thereon.
(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.
(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) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
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, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
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.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders 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 or Liquidated Damages, if any, on any Note, the Trustee may withhold
the
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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.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA (S) 313(a) (but if no
event described in TIA (S) 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA (S) 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA (S) 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 (S) 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or 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 and the Company
shall pay the reasonable fees and expenses of such counsel. 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
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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 after an Event of
Default specified in Section 6.01(g) or (h) 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 any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 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 the Company. The Holders of Notes of 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 Custodian or 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 Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may 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 of Notes of at least 10% in principal amount of the then outstanding
Notes may 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 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, 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, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof 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 $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
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ARTICLE 8.
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
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in Section 8.04 hereof, be deemed to have been discharged from its 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, 4.15, 4.16, 4.17 and 4.18 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section 8.04
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(d) through 6.01(f) 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:
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(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in U.S. dollars, non-callable Government
Securities, 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 Liquidated Damages, if any, and
interest on the outstanding Notes on the stated date for payment thereof 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 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 Default or Event of Default shall have occurred and be continuing on
the date of such deposit (other than a Default or Event of 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) or insofar as Sections 6.01(g) or 6.01(h) hereof is concerned,
at any time in the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any 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 Opinion of Counsel
(which may be subject to customary exceptions) 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;
(g) 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
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of the Company or with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; 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 or relating to the Legal Defeasance or the Covenant
Defeasance 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 non-callable
Government Securities (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 and Liquidated Damages, if any, 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 non-callable
Government Securities 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 non-callable Government Securities 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, 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), notice that such money remains unclaimed and that, after a date
specified
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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 U.S.
dollars or non-callable Government Securities 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 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the Note
Guarantees 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 or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's or a Guarantor's
obligations to the Holders of the Notes by a successor to the Company or a
Guarantor pursuant to Article 5 or Article 11 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to allow any Guarantor to execute a supplemental indenture
and/or a Note Guarantee with respect to the Notes.
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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 and
the Guarantors 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 and
the Trustee may amend or supplement this Indenture (including Section 3.09, 4.10
and 4.15 hereof), the Note Guarantees and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including, without limitation, consents
obtained in connection with a tender offer or exchange offer for, or purchase
of, 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 or Liquidated Damages,
if any, on the Notes, except a payment default resulting from an acceleration
that has been rescinded) or compliance with any provision of this Indenture, the
Note Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes). Without the consent of at least 75% in
principal amount of the Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, such
Notes), no waiver or amendment to this Indenture may make any change in the
provisions of Article 10 hereof that adversely affects the rights of any Holder
of Notes. Section 2.08 hereof shall determine which Notes are considered to be
"outstanding" for purposes of this Section 9.02.
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 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 directly
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
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
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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 under this Section 9.02 may not (with respect to any Notes held by a non-
consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of the
Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15
hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest or Liquidated Damages, if any, on the Notes
(except a rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the then outstanding Notes and a
waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) 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;
(g) waive a redemption payment with respect to any Note, except
payments required by either Section 4.10 or 4.15;
(h) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions; or
(i) release any Guarantor from any of its obligations under its Note
Guarantee or this Indenture, except in accordance with the terms of this
Indenture.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in a 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
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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, upon receipt
of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
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 9 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 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 12.04 hereof, 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 10.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees,
that the Indebtedness (including premium and Liquidated Damages, if any)
evidenced by the Notes is subordinated in right of payment, to the extent and in
the manner provided in this Article 10, to the prior payment in full of all
Senior Debt (whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed), and that the subordination is for the benefit
of the holders of Senior Debt.
SECTION 10.02. CERTAIN DEFINITIONS.
"Designated Senior Debt" means (i) any Indebtedness outstanding
under the New Credit Facility and (ii) any other Senior Debt permitted hereunder
the principal amount of which is $25.0 million or more and that has been
designated by the Company as "Designated Senior Debt."
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"Permitted Junior Securities" means Equity Interests in the
Company or any Guarantor or debt securities that are subordinated to all Senior
Debt (and any debt securities issued in exchange for Senior Debt) to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Debt pursuant to this Article 10.
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Debt.
"Senior Debt" means (i) all Indebtedness outstanding under the
New Credit Facility and all Hedging Obligations with respect thereto, (ii) any
other Indebtedness permitted to be incurred by the Company pursuant to this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes and (iii) all Obligations with respect to the foregoing.
Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not
include (w) any liability for federal, state, local or other taxes owed or owing
by the Company, (x) any Indebtedness of the Company to any of its Subsidiaries
or other Affiliates, (y) any trade payables or (z) any Indebtedness that is
incurred in violation of this Indenture.
A distribution may consist of cash, securities or other
property, by set-off or otherwise.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive payment
in full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Debt) before Holders of the Notes shall be entitled to
receive any payment with respect to the Notes (except that Holders may receive
and retain (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof); and
(2) until all Obligations with respect to Senior Debt (as
provided in subsection (1) above) are paid in full, any distribution to which
Holders would be entitled but for this Article 10 shall be made to holders of
Senior Debt (except that Holders of Notes may receive and retain (i) Permitted
Junior Securities and (ii) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof), as their interests
may appear.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution to the
Trustee or any Holder in respect of Obligations with respect to the Notes and
may not acquire from the Trustee or any Holder any Notes for cash or property
(other than (i) Permitted Junior Securities and (ii) payments and other
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distributions made from any defeasance trust created pursuant to Section 8.01
hereof) until all principal and other Obligations with respect to the Senior
Debt have been paid in full if:
(i) a default in the payment of any principal or other Obligations with
respect to Designated Senior Debt occurs and is continuing beyond any
applicable grace period in the agreement, indenture or other document
governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated Senior Debt
occurs and is continuing that then permits holders of the Designated Senior
Debt to accelerate its maturity and the Trustee receives a notice of the
default (a "Payment Blockage Notice") from a Person who may give it pursuant
to Section 10.12 hereof. If the Trustee receives any such Payment Blockage
Notice, no subsequent Payment Blockage Notice shall be effective for purposes
of this Section unless and until (i) at least 360 days shall have elapsed
since the effectiveness of the immediately prior Payment Blockage Notice and
(ii) all scheduled payments of principal, premium, if any, and interest on the
Note that have come due have been paid in full in cash. No nonpayment default
that existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a subsequent Payment
Blockage Notice unless such default shall have been waived for a period of not
less than 90 days.
The Company may and shall resume payments on and distributions
in respect of the Notes and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 10.04(ii)
hereof, 179 days after the date on which the applicable Payment Blockage Notice
is received if the maturity of such Designated Senior Debt has not been
accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.05. ACCELERATION OF SECURITIES.
If payment of the Securities is accelerated because of an Event
of Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment
of any Obligations with respect to the Notes at a time when the Trustee or such
Holder, as applicable, has actual knowledge that such payment is prohibited by
Section 10.04 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Debt as their interests may
appear or their Representative under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
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interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.07. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to violate this Article 10, but failure to
give such notice shall not affect the subordination of the Notes to the Senior
Debt as provided in this Article 10.
SECTION 10.08. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are
paid in full, Holders of Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
SECTION 10.09. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes
and holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest and Liquidated Damages, if any, on the Notes in accordance with
their terms;
(2) affect the relative rights of Holders of Notes and
creditors of the Company other than their rights in relation to holders of
Senior Debt; or
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(3) prevent the Trustee or any Holder of Notes from
exercising its available remedies upon a Default or Event of Default, subject to
the rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal
of or interest or Liquidated Damages, if any, on a Note on the due date, the
failure is still a Default or Event of Default.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Debt, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 10, the Trustee and the Holders of Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of Notes for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior Debt and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10.
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold
Senior Debt with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof,
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the
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subordination as provided in this Article 10, and appoints the Trustee to act as
such Holder's attorney-in-fact for any and all such purposes. If the Trustee
does not file a proper proof of claim or proof of debt in the form required in
any proceeding referred to in Section 6.09 hereof at least 30 days before the
expiration of the time to file such claim, the Representatives are hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes.
SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 shall not be amended or
modified without the written consent of the holders of all Senior Debt.
ARTICLE 11.
NOTE GUARANTEES
SECTION 11.01. GUARANTEE.
Subject to this Article 11, each of the Guarantors hereby,
jointly and severally, unconditionally and fully guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that: (a) the principal of and interest on the Notes will be promptly paid in
full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations,
that 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 any performance so guaranteed for whatever reason, the Guarantors shall be
fully and unconditionally obligated on a joint and several basis to pay the same
immediately. Each Guarantor agrees that this is a guarantee of payment and not a
guarantee of collection.
The Guarantors hereby agree that their 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 same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery 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 diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenant that this Note Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and this Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation
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to either the Company or the Guarantors, any amount paid by either to the
Trustee or such Holder, this Note Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall 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 further agrees that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Guarantee.
SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE.
The Obligations of each Guarantor under its Note Guarantee
pursuant to this Article 11 shall be junior and subordinated to the Senior Debt
of such Guarantor on the same basis as the Notes are junior and subordinated to
Senior Debt of the Company. For the purposes of the foregoing sentence, the
Trustee and the Holders shall have the right to receive and/or retain payments
by any of the Guarantors only at such times as they may receive and/or retain
payments in respect of the Notes pursuant to this Indenture, including Article
10 hereof.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder,
hereby confirms that it is the intention of all such parties that the Note
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Note Guarantee. To effectuate the foregoing intention,
the Trustee, the Holders and the Guarantors hereby irrevocably agree that the
obligations of such Guarantor under its Note Guarantee and this Article 11 shall
be limited to the maximum amount as will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of such Guarantor that are
relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under this
Article 11, result in the obligations of such Guarantor under its Note Guarantee
not constituting a fraudulent transfer or conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 11.01, each
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form included in Exhibit E shall be endorsed
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<PAGE>
by an Officer of such Guarantor on each Note authenticated and delivered by the
Trustee and that this Indenture shall be executed on behalf of such Guarantor by
its President or one of its Vice Presidents.
Each Guarantor hereby agrees that its Note Guarantee set forth
in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the
Note Guarantee no longer holds that office at the time the Trustee authenticates
the Note on which a Note Guarantee is endorsed, the Note Guarantee shall be
valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Note
Guarantee set forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.18 hereof, the Company shall cause such Subsidiaries to execute supplemental
indentures to this Indenture and Note Guarantees in accordance with Section 4.18
hereof and this Article 11, to the extent applicable.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into (whether
or not such Guarantor is the surviving Person) another corporation, entity or
Person whether or not affiliated with such Guarantor unless:
(a) subject to this Section 11.05, the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, this Indenture, Registration Rights Agreement and the
Note Guarantee on the terms set forth herein or therein; and
(b) immediately after giving effect to such transaction, no
Default or Event of Default exists.
In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Note 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 the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Note 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 Note Guarantees so issued shall in all
respects have the same legal rank and benefit under this Indenture as the
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<PAGE>
Note Guarantees theretofore and thereafter issued in accordance with the terms
of this Indenture as though all of such Note Guarantees had been issued at the
date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all of the capital stock of any Guarantor, then such
Guarantor (in the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the capital stock of such Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor) will be
released and relieved of any obligations under its Note Guarantee; provided that
the Net Proceeds of such sale or other disposition are applied in accordance
with the applicable provisions of this Indenture, including without limitation
Section 4.10 hereof. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the applicable provisions
of this Indenture, including without limitation Section 4.10 hereof, the Trustee
shall execute any documents reasonably required in order to evidence the release
of any Guarantor from its obligations under its Note Guarantee.
Any Guarantor not released from its obligations under its Note
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 11.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA (S) 318(c), the imposed duties shall
control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, any Guarantor 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),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
79
<PAGE>
if to the Company and/or any Guarantor:
Interep National Radio Sales, Inc.
100 Park Avenue
New York, NY 10017
Telecopier No.: (212) 309-9081
Attention: Chief Executive Officer
and
Interep National Radio Sales, Inc.
2090 Palm Beach Lakes Blvd.
3rd Floor
West Palm Beach, FL 33409
Telecopier No.: (561) 616-4019
Attention: Chief Financial Officer
With a copy to:
Christy & Viener
Rockefeller Center
620 Fifth Avenue
New York, NY 10020
Telecopier No.: (212) 307-3314
Attention: Laurence S. Markowitz, Esq.
If to the Trustee:
Summit Bank
210 Main Street
6th Floor
Hackensack, NJ 07601
Telecopier No.: (201) 646-0087
Attention: Jennifer J. Houle
The Company, any Guarantor 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; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; 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.
80
<PAGE>
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 (S) 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 or any Guarantor mails a notice or communication
to Holders, it shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA (S) 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).
SECTION 12.04. 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 12.05 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 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 12.05. 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 (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 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;
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(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 12.06. 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 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee,
incorporator or stockholder of the Company or any Guarantor, as such, shall have
any liability for any obligations of the Company or such Guarantor under the
Notes, the Note Guarantees or 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 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
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 12.10. 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.
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SECTION 12.11. 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 12.12. 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 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles 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]
83
<PAGE>
Dated as of July 2, 1998
INTEREP NATIONAL RADIO SALES, INC.
By: /s/ William J. McEntee, Jr.
-------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
GUARANTORS:
MCGAVREN GUILD, INC.
By: /s/ William J. McEntee, Jr.
-------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
D&R RADIO, INC.
By: /s/ William J. McEntee, Jr.
-------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
CBS RADIO SALES, INC.
By: /s/ William J. McEntee, Jr.
-------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
ALLIED RADIO PARTNERS, INC.
By: /s/ William J. McEntee, Jr.
-------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
84
<PAGE>
CLEAR CHANNEL RADIO SALES, LLC
By: /s/ William J. McEntee, Jr.
-------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
CABALLERO SPANISH MEDIA LLC
By: /s/ William J. McEntee, Jr.
-------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and Chief
Financial Officer
85
<PAGE>
Trustee:
SUMMIT BANK
By: /s/ Jennifer J. Houle
--------------------------------------
Name: Jennifer J. Houle
Title: Assistant Vice President
86
<PAGE>
EXHIBIT A-1
(Face of Note)
================================================================================
CUSIP
---------
10% [SERIES A] [SERIES B] SENIOR SUBORDINATED NOTES DUE 2008
No. $
--- ----------
INTEREP NATIONAL RADIO SALES, INC.
promises to pay to
--------------------------------------------------
or registered assigns,
the principal sum of
---------------------------------------
Dollars on July 1, 2008.
Interest Payment Dates: January 1, and July 1
Record Dates: December 15, and June 15
Dated: July 2, 1998
Interep National Radio Sales, Inc.
By:_______________________________
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
Summit Bank,
as Trustee
By:__________________________
================================================================================
A-1-1
<PAGE>
(Back of Note)
10% [Series A] [Series B] Senior Subordinated Notes due 2008
[INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS OF THE
INDENTURE]
[INSERT THE PRIVATE PLACEMENT LEGEND, IF APPLICABLE PURSUANT TO THE PROVISIONS
OF THE INDENTURE]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Interep National Radio Sales, Inc. a New York
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at 10% per annum from July 2, 1998 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages, if any, semi-annually on January 1 and July 1 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 January 1, 1999. 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 December 15 or
June 15 next preceding the Interest Payment Date, even if such Notes are
canceled 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 and Liquidated
Damages, if any, and interest 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, if any, 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
A-1-2
<PAGE>
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, Summit Bank, 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 July 2, 1998 ("Indenture") among the Company, 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 (S)(S) 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. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are unsecured obligations of the Company limited to
$100.0 million in aggregate principal amount.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to July 1, 2003.
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 July 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003................................................ 105.000 %
2004................................................ 103.333 %
2005................................................ 101.667 %
2006 and thereafter................................. 100.000 %
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, during the first 36 months after the date of the Indenture, the
Company may on any one or more occasions redeem up to 30% of the aggregate
principal amount of Notes originally issued under the Indenture at a redemption
price of 110.000% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the redemption date, with
the net cash proceeds of an offering of common stock of the Company; provided
that at least 70% of the aggregate principal amount of Notes originally issued
under the Indenture remain outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Company and its Subsidiaries); and
provided, further, that such redemption shall occur within 45 days of the date
of the closing of such offering.
A-1-3
<PAGE>
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at an offer
price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 10 days following any
Change of Control, the Company shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, when
the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will
be required to make an offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in the Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the
maximum principal amount of Notes and such other pari passu Indebtedness that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase, in
accordance with the procedures set forth in the Indenture, and such other pari
passu Indebtedness. To the extent that any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by the Indenture. If the aggregate
principal amount of Notes and such other pari passu Indebtedness tendered into
such Asset Sale Offer surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee will select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
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
A-1-4
<PAGE>
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, the Company
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, the Note Guarantees or the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes and any existing default or compliance with any
provision of the Indenture, the Note Guarantees or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes. Without the consent of any Holder of a Note, the Indenture,
the Note Guarantees 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 or any Guarantor's obligations to Holders of the Notes in case of
a merger or consolidation or sale of all or substantially all of the Company's
assets, to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal rights
under the Indenture of any such Holder, to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act or to allow any Guarantor to execute a
supplemental indenture to the Indenture and/or a Note Guarantee with respect to
the Notes.
12. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest or Liquidated Damages on the
Notes; (ii) default in payment when due of principal of or premium, if any, on
the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company to comply with Section 4.07, 4.09, 4.10 or 4.15 of the Indenture;
(iv) failure by the Company for 60 days after notice to the Company by the
Trustee or the Holders of at least 25% in principal amount of the Notes then
outstanding to comply with certain other agreements in the Indenture or the
Notes; (v) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any of its Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (vi) failure by the Company or
any of its Subsidiaries to pay final judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or
A-1-5
<PAGE>
stayed for a period of 60 days; (vii) certain events of bankruptcy or insolvency
with respect to the Company or any of its Subsidiaries; and (viii) except as
permitted by the Indenture, any Note Guarantee shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Guarantor or any Person acting on its behalf shall
deny or disaffirm its obligations under such Guarantor's Note Guarantee. If any
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes may declare all the
Notes to be due and payable. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Notes will become due and payable without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
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 or any of the Guarantors, as such,
shall not have any liability for any obligations of the Company or such
Guarantor under the Notes, the Note Guarantees 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).
17. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set
A-1-6
<PAGE>
forth in the A/B Exchange Registration Rights Agreement dated as of July 2,
1998, among the Company and the parties named on the signature pages thereof
(the "Registration Rights Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
A-1-7
<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:
Interep National Radio Sales, Inc.
100 Park Avenue
New York, NY 10017
Attention: Chief Executive Officer
A-1-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:____________
Your Signature:_____________________________
(Sign exactly as your name appears on the
face of this Note)
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
A-1-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $________
Date:_________
Your Signature:_____________________________
(Sign exactly as your name appears on the
face of this Note)
Tax Identification No:______________________
SIGNATURE GUARANTEE:
___________________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
A-1-10
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/1/
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<S> <C> <C> <C> <C>
Principal Amount
Amount of Amount of increase of this Global
decrease in in Principal Note following Signature of
Principal Amount Amount of such decrease authorized officer
Date of Exchange of this Global Note this Global Note (or increase) of Trustee
---------------- -------------------- ---------------- ------------- ----------
</TABLE>
- ----------------------------------
/1/ This should be included only if the Note is issued in global form.
A-1-11
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
================================================================================
CUSIP
_______
10% SERIES A SENIOR SUBORDINATED NOTES DUE 2008
No. $
--- -----------
INTEREP NATIONAL RADIO SALES, INC.
promises to pay to
--------------------------------------------
or registered assigns,
the principal sum of
-------------------------------------
Dollars on July 1, 2008.
Interest Payment Dates: January 1, and July 1
Record Dates: December 15, and June 15
Dated: July 2, 1998
Interep National Radio Sales, Inc.
By:
-------------------------------
Name:
Title:
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
Summit Bank,
as Trustee
By:
----------------------------
================================================================================
A-2-1
<PAGE>
(Back of Regulation S Temporary Global Note)
10% Series A Senior Subordinated Notes due 2008
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), 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 MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE 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.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS 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 SECURITY
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 SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A AND REGULATION S. THE HOLDER OF THIS
SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(a) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A UNDER THE SECURITIES ACT, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S.
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT. (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a) (1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
A-2-2
<PAGE>
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN
BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF
COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH 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 LAW 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.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Interep National Radio Sales, Inc., a New York
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at 10% per annum from July 2, 1998 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, if any, semi-annually on January 1 and July 1 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 January 1,
1999. 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.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
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 December 15 or
June 15 next preceding the Interest Payment Date, even if such Notes are
canceled 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
A-2-3
<PAGE>
to principal, premium, if any, and Liquidated Damages, if any, and interest 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, if any, 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, Summit Bank, 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 July 2, 1998 ("Indenture") among the Company, 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 (S)(S) 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. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are unsecured obligations of the Company limited to
$100.0 million in aggregate principal amount.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to July 1, 2003.
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 July 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003........................................................ 105.000 %
2004........................................................ 103.333 %
2005........................................................ 101.667 %
2006 and thereafter......................................... 100.000 %
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, during the first 36 months after the date of the Indenture, the
Company may on any one or more occasions
A-2-4
<PAGE>
redeem up to 30% of the aggregate principal amount of Notes originally issued
under the Indenture at a redemption price of 110.000% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the redemption date, with the net cash proceeds of an offering of common
stock of the Company; provided that at least 70% of the aggregate principal
amount of Notes originally issued under the Indenture remain outstanding
immediately after the occurrence of such redemption (excluding Notes held by the
Company and its Subsidiaries); and provided, further, that such redemption shall
occur within 45 days of the date of the closing of such offering.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at an offer
price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 10 days following any
Change of Control, the Company shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, when
the aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will
be required to make an offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in the Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the
maximum principal amount of Notes and such other pari passu Indebtedness that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase, in
accordance with the procedures set forth in the Indenture, and such other pari
passu Indebtedness. To the extent that any Excess Proceeds remain after
consummation of an Asset Sale Offer, the Company may use such Excess Proceeds
for any purpose not otherwise prohibited by the Indenture. If the aggregate
principal amount of Notes and such other pari passu Indebtedness tendered into
such Asset Sale Offer surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee will select the Notes and such other pari passu
Indebtedness to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in
A-2-5
<PAGE>
whole multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
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.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
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, the Note Guarantees or the Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Notes and any existing default or compliance with any
provision of the Indenture, the Note Guarantees or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes. Without the consent of any Holder of a Note, the Indenture,
the Note Guarantees 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 or any Guarantor's obligations to Holders of the Notes in case of
a merger or consolidation or sale of all or substantially all of the Company's
assets, to make any change that would provide any additional rights or benefits
to the Holders of the Notes or that does not adversely affect the legal rights
under the Indenture of any such Holder, to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act or to allow any Guarantor to execute a
supplemental indenture to the Indenture and/or a Note Guarantee with respect to
the Notes.
12. Defaults and Remedies. Events of Default include: (i) default
for 30 days in the payment when due of interest or Liquidated Damages on the
Notes; (ii) default in payment when due of principal of or premium, if any, on
the Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company to comply with Section 4.07, 4.09, 4.10 or 4.15 of the Indenture;
(iv) failure by the Company for 60 days after notice to the Company by the
Trustee or the Holders of at least 25% in principal amount
A-2-6
<PAGE>
of the Notes then outstanding to comply with certain other agreements in the
Indenture or the Notes; (v) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of the Indenture, which default (a) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the date of such
default (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5.0 million or more; (vi) failure
by the Company or any of its Subsidiaries to pay final judgments aggregating in
excess of $5.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days; (vii) certain events of bankruptcy or insolvency with respect
to the Company or any of its Subsidiaries; and (viii) except as permitted by the
Indenture, any Note Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor or any Person acting on its behalf shall deny or
disaffirm its obligations under such Guarantor's Note Guarantee. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
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 or any of the Guarantors, as such,
shall not have any liability for any obligations of the Company or such
Guarantor under the Notes, the Note Guarantees 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.
A-2-7
<PAGE>
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).
17. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of July 2, 1998, among the Company and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
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:
Interep National Radio Sales, Inc.
100 Park Avenue
New York, NY 10017
Attention: Chief Executive Officer
A-2-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
--------------
Your Signature:
-----------------------------
(Sign exactly as your name appears on the
face of this Note)
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
A-2-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box
below:
[ ]Section 4.10 [ ]Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $_________
Date:
------------
Your Signature:
-----------------------------
(Sign exactly as your name appears on the
face of this Note)
Tax Identification No:
----------------------
SIGNATURE GUARANTEE:
_________________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
A-2-10
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note, or of other Restricted
Global Notes for an interest in this Regulation S Temporary Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of increase of this Global
decrease in in Principal Note following Signature of
Principal Amount Amount of such decrease authorized officer
Date of Exchange of this Global Note this Global Note (or increase) of Trustee
---------------- ------------------- ------------------ ---------------- ----------
<S> <C> <C> <C> <C>
</TABLE>
A-2-11
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Interep National Radio Sales, Inc.
100 Park Avenue
New York, NY 10017
Summit Bank
210 Main Street
6th Floor
Hackensack, NJ 07601
Re: 10% Senior Subordinated Notes due 2008
------------------------------------
Reference is hereby made to the Indenture, dated as of July 2, 1998
(the "Indenture"), among Interep National Radio Sales, Inc., as issuer (the
---------
"Company"), the Guarantors and Summit Bank, as trustee. Capitalized terms used
- --------
but not defined herein shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
----------
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
--------
to __________ (the "Transferee"), as further specified in Annex A hereto. In
----------
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
- -----------------------------------------------------------
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
---------- ---
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
----------------------------------------------------------------------
REGULATION S TEMPORARY GLOBAL NOTE, THE REGULATION S PERMANENT GLOBAL NOTE OR A
- -------------------------------------------------------------------------------
DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected
- ----------------------------------------
pursuant to and in accordance with Rule 903 or Rule 904
B-1
<PAGE>
under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed transfer is being made prior to the expiration of the Restricted
Period, the transfer is not being made to a U.S. Person or for the account or
benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of
the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on Transfer enumerated in the Private Placement Legend printed on
the Regulation S Permanent Global Note, the Regulation S Temporary Global Note
and/or the Definitive Note and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
-------------------------------------------------------------------
INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION
- ------------------------------------------------------------------------------
OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is
- ----------------------------------------------------------
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904,
and the Transferor hereby further certifies that it has not engaged in any
general solicitation within the meaning of Regulation D under the Securities Act
and the Transfer complies with the transfer restrictions applicable to
beneficial interests in a Restricted Global Note or Restricted Definitive Notes
and the requirements of the exemption claimed, which certification is supported
by (1) a
B-2
<PAGE>
certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) if such Transfer is in respect of a principal amount of Notes
at the time of transfer of less than $250,000, an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the IAI Global Note and/or the Definitive Notes and
in the Indenture and the Securities Act.
4. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
-------------------------------------------------------------------
INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
- -----------------------------------------------------------------------------
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
B-3
<PAGE>
------------------------------
[Insert Name of Transferor]
By:
---------------------------
Name:
Title:
Dated: ,
----------- -------
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP _________), or
(ii) [ ] Regulation S Global Note (CUSIP _________), or
(iii) [ ] IAI Global Note (CUSIP ________); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ________), or
(ii) [ ] Regulation S Global Note (CUSIP ________), or
(iii) [ ] IAI Global Note (CUSIP ________); or
(iv) [ ] Unrestricted Global Note (CUSIP ________); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Interep National Radio Sales, Inc.
100 Park Avenue
New York, NY 10017
Summit Bank
210 Main Street
6th Floor
Hackensack, NJ 07601
Re: 10% Senior Subordinated Notes due 2008
------------------------------------
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of July 2, 1998
(the "Indenture"), among Interep National Radio Sales, Inc., as issuer (the
---------
"Company"), the Guarantors and Summit Bank, as trustee. Capitalized terms used
- --------
but not defined herein shall have the meanings given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the Note[s]
-----
or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
--------
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
- -----------------------------------------------------------------
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
--------------
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
- -------------------------------------------
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes
C-1
<PAGE>
and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
(c) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
- --------------------------------------------------
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
- ----------------------------
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [_] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
-------------------------------------------------------------
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
- -----------------------------------------
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) [_] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
-------------------------------------------------------
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
- -----------------------------------------------
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] [_] 144A Global Note, [_] Regulation S Global Note, [_] IAI Global
Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue
C-2
<PAGE>
sky securities laws of any state of the United States. Upon consummation of the
proposed Exchange in accordance with the terms of the Indenture, the beneficial
interest issued will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the relevant Restricted Global Note and
in the Indenture and the Securities Act.
C-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
___________________________________
[Insert Name of Owner]
By: _______________________________
Name:
Title:
Dated: ________________, ____
C-4
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Interep National Radio Sales, Inc.
100 Park Avenue
New York, NY 10017
Summit Bank
210 Main Street
6th Floor
Hackensack, NJ 07601
Re: 10% Senior Subordinated Notes due 2008
--------------------------------------
Reference is hereby made to the Indenture, dated as of July 2,
1998 (the "Indenture"), among Interep National Radio Sales, Inc., as issuer
---------
(the "Company"), the Guarantors and [insert Trustee], as trustee. Capitalized
-------
terms used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes
or any interest therein is subject to certain restrictions and conditions set
forth in the Indenture and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
--------------
2. We understand that the offer and sale of the Notes have
not been registered under the Securities Act, and that the Notes and any
interest therein may not be offered or sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell the Notes or any
interest therein, we will do so only (A) to the Company or any subsidiary
thereof, (B) in accordance with Rule
D-1
<PAGE>
144A under the Securities Act to a "qualified institutional buyer" (as defined
therein), (c) to an institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you and to the Company a signed letter substantially in the
form of this letter and, if such transfer is in respect of a principal amount of
Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in
form reasonably acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act, (D) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the
provisions of Rule 144(k) under the Securities Act or (F) pursuant to an
effective registration statement under the Securities Act, and we further agree
to provide to any person purchasing the Definitive Note or beneficial interest
in a Global Note from us in a transaction meeting the requirements of clauses
(A) through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes
or beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect. We further understand that any
subsequent transfer by us of the Notes or beneficial interest therein acquired
by us must be effected through one of the Placement Agents.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the Notes,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Notes or beneficial interest
therein purchased by us for our own account or for one or more accounts (each of
which is an institutional "accredited investor") as to each of which we exercise
sole investment discretion.
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.
__________________________________________
[Insert Name of Accredited Investor]
By: _______________________________
Name:
Title:
Dated: __________________, ____
D-2
<PAGE>
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has unconditionally and fully guaranteed on a joint
and several basis, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of July 2, 1998 (the "Indenture") among
Interep National Radio Sales, Inc., the Guarantors listed on Schedule I thereto
and Summit Bank, as trustee (the "Trustee"), (a) the due and punctual payment of
the principal of, premium, if any, and interest and Liquidated Damages (as
defined in the Indenture), if any, on the Notes (as defined in the Indenture),
whether at maturity, by acceleration, redemption or otherwise, the due and
punctual payment of interest on overdue principal and premium, and, to the
extent permitted by law, interest, and the due and punctual performance of all
other obligations, including Liquidated Damages, if any, of the Company to the
Holders or the Trustee all in accordance with the terms of the Indenture and (b)
in case of any extension of time of payment or renewal of any Notes or any of
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. The obligations of the
Guarantors to the Holders of Notes and to the Trustee pursuant to the Note
Guarantee and the Indenture are expressly set forth in Article 11 of the
Indenture and reference is hereby made to the Indenture for the precise terms of
the Note Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to
and shall be bound by such provisions, (b) authorizes and directs the Trustee,
on behalf of such Holder, to take such action as may be necessary or appropriate
to effectuate the subordination as provided in the Indenture and (c) appoints
the Trustee attorney-in-fact of such Holder for such purpose; provided, however,
that the Indebtedness evidenced by this Note Guarantee shall cease to be so
subordinated and subject in right of payment upon any defeasance of this Note in
accordance with the provisions of the Indenture.
[Name of Guarantor(s)]
By: ________________________________
Name:
Title:
E-1
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
Supplemental Indenture (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of Interep National Radio Sales, Inc. (or its permitted successor), a
New York corporation (the "Company"), the Company, the other Guarantors (as
defined in the Indenture referred to herein) and Summit Bank, as trustee under
the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of July 2, 1998 providing for
the issuance of an aggregate principal amount of up to $100.0 million of 10%
Senior Subordinated Notes due 2008 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
and fully guarantee all of the Company's Obligations under the Notes and the
Indenture on the terms and conditions set forth herein (the "Note Guarantee");
and
WHEREAS, pursuant to Section 9.01 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
Guaranteeing Subsidiary and the Trustee 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 Guaranteeing Subsidiary hereby
agrees as follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of
the Indenture, the Notes or the obligations of the Company
hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration,
redemption or
F-1
<PAGE>
otherwise, and interest on the overdue principal of and
interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and
thereof; and
(ii) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that 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 any
performance so guaranteed for whatever reason, the
Guarantors shall be fully and unconditionally obligated to
pay on a joint and several basis the same immediately.
(b) The obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or the
Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to
any provisions hereof or thereof, the recovery 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.
(c) The following is hereby waived: diligence presentment, demand of
payment, filing of claims with a court in the event of insolvency
or bankruptcy of the Company, any right to require a proceeding
first against the Company, protest, notice and all demands
whatsoever.
(d) This Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the
Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting
in relation to either the Company or the Guarantors, any amount
paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall 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.
F-2
<PAGE>
(g) As between the Guarantors, on the one hand, and the Holders and
the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in
Article 6 of the Indenture for the purposes of this Note
Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in
Article 6 of the Indenture, such obligations (whether or not due
and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Note Guarantee.
(h) The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Guarantee.
(i) Pursuant to Section 11.03 of the Indenture, after giving effect
to any maximum amount and any other contingent and fixed
liabilities that are relevant under any applicable Bankruptcy or
fraudulent conveyance laws, and after giving effect to any
collections from, rights to receive contribution from or payments
made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under Article 11 of the
Indenture shall result in the obligations of such Guarantor under
its Note Guarantee not constituting a fraudulent transfer or
conveyance.
3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that
the Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving
Person) another corporation, Person or entity whether or not
affiliated with such Guarantor unless:
(i) subject to Section 11.05 of the Indenture, the Person formed
by or surviving any such consolidation or merger (if other
than such Guarantor) unconditionally assumes all the
obligations of such Guarantor, pursuant to a supplemental
indenture in form and substance reasonably satisfactory to
the Trustee, under the Notes, the Indenture, Registration
Rights Agreement and the Note Guarantee on the terms set
forth herein or therein; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
F-3
<PAGE>
(b) In case of any such consolidation, merger, sale or conveyance 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 Note Guarantee endorsed upon the
Notes and the due and punctual performance of all of the
covenants and conditions of the Indenture to be performed by the
Guarantor, such successor corporation shall succeed to and be
substituted for the 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 Note
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 Note Guarantees so
issued shall in all respects have the same legal rank and benefit
under the Indenture as the Note Guarantees theretofore and
thereafter issued in accordance with the terms of the Indenture
as though all of such Note Guarantees had been issued at the date
of the execution hereof.
(c) Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in
the Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company
or another Guarantor, or shall prevent any sale or conveyance of
the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.
5. RELEASES.
(a) In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise,
or a sale or other disposition of all to the capital stock of any
Guarantor, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under
its Note Guarantee; provided that the Net Proceeds of such sale
or other disposition are applied in accordance with the
applicable provisions of the Indenture, including without
limitation Section 4.10 of the Indenture. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion
of Counsel to the effect that such sale or other disposition was
made by the Company in accordance with the provisions of the
Indenture, including without limitation Section 4.10 of the
Indenture, the Trustee shall execute any documents reasonably
required in order to evidence the release of any Guarantor from
its obligations under its Note Guarantee.
F-4
<PAGE>
(b) Any Guarantor not released from its obligations under its Note
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 the Indenture as provided in Article 11 of the
Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE NOTE
GUARANTEE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
8. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
F-5
<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.
Dated: _______________, ____
[Guaranteeing Subsidiary]
By: _________________________________
Name:
Title:
INTEREP NATIONAL RADIO SALES, INC.
By: _________________________________
Name:
Title:
[EXISTING GUARANTORS]
By: ______________________________
Name:
Title
SUMMIT BANK
as Trustee
By: ______________________________
Name:
Title:
F-6
<PAGE>
EXHIBIT 10.1
REVOLVING LINE OF CREDIT AGREEMENT
Dated as of July 2, 1998
Among
INTEREP NATIONAL RADIO SALES, INC.,
MCGAVREN GUILD, INC. ,
D&R RADIO, INC.,
CBS RADIO SALES, INC.,
ALLIED RADIO PARTNERS, INC.
CABALLERO SPANISH MEDIA L.L.C., and
CLEAR CHANNEL RADIO, LLC
as Borrowers
and
VARIOUS FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES HERETO,
as Lenders
and
BANKBOSTON, N.A.,
as Administrative Agent
and
SUMMIT BANK
as Documentation Agent
===============================================================================
<PAGE>
This REVOLVING LINE OF CREDIT AGREEMENT (this "Credit Agreement") is dated
as of July 2, 1998 among INTEREP NATIONAL RADIO SALES, INC. (the "Company"),
MCGAVREN GUILD, INC., D&R RADIO, INC., CBS RADIO SALES, INC., ALLIED RADIO
PARTNERS, INC., CABALLERO SPANISH MEDIA L.L.C., and CLEAR CHANNEL RADIO, LLC,
(collectively, the "Subsidiary Borrowers", and, together with the Company, the
"Borrowers"), BANKBOSTON, N.A., as Administrative Agent, SUMMIT BANK, as
Documentation Agent, and the undersigned Lenders and other Lenders that may from
time to time be parties hereto.
WHEREAS, the Borrowers have requested that the Lenders make available
credit facilities in the aggregate principal amount of $10,000,000 for the
purposes hereinbelow described;
WHEREAS, the Lenders have agreed, on the terms and conditions set forth in
this Credit Agreement, to provide credit facilities to the Borrowers for such
purposes.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
--------------------------------
Section 1.01 Certain Defined Terms. As used herein, the following terms
---------------------
shall have the following meanings.
"Accumulated Funding Deficiency" shall mean an accumulated funding
------------------------------
deficiency as defined in Section 302 of ERISA.
"Acquisition EBITDA" shall mean, as of any date, the EBITDA generated by a
------------------
Representative Firm acquired or to be acquired by one or more of the Borrowers
for the following number of Quarters:
(i) if measured during the Quarter such Representative Firm is
acquired or to be acquired, Acquisition EBITDA shall mean the EBITDA of
such Representative Firm for the four Quarters immediately preceding the
date of such acquisition; or
(ii) if measured during the first Quarter following the date such
Representative Firm is acquired, Acquisition EBITDA shall mean the
<PAGE>
-2-
EBITDA of such Representative Firm for the three Quarters immediately
preceding the date of such acquisition; or
(iii) if measured during the second Quarter following the date such
Representative Firm is acquired, Acquisition EBITDA shall mean the EBITDA
of such Representative Firm for the two Quarters immediately preceding the
date of such acquisition; or
(iv) if measured during the third Quarter following the date such
Representative Firm is acquired, Acquisition EBITDA shall mean the EBITDA
of such Representative Firm for the Quarter immediately preceding the date
of such acquisition; or
(v) if measured during the fourth or subsequent Quarter following the
date such Representative Firm is acquired, Acquisition EBITDA shall not
include any EBITDA of such Representative Firm for any Quarter preceding
the date of such acquisition.
Acquisition EBITDA shall be determined from the latest audited financial
statements of the Representative Firm to be acquired. The Lenders may, in their
sole discretion, permit adjustments to such Acquisition EBITDA which may
involve, among others things, an analysis of the amounts paid to former owners
or principals with respect to wages or benefits, or Pension Plan expenses.
"Additional Costs" shall have the meaning given to such term in Section
----------------
5.01 hereof.
"Affiliate" shall mean, as to any Person, any other Person which directly
---------
or indirectly controls, or is under common control with, or is controlled by,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise); provided,
--------
however, that any Person which owns directly or indirectly 10% or more of the
- -------
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 10% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.
"Agent" shall mean BankBoston, N.A., in its capacity as administrative
-----
agent for the Lenders hereunder, and its successors in such capacity.
<PAGE>
-3-
"Agents" shall mean, collectively, the Agent and the Documentation Agent.
------
"Aggregate Commitment" shall mean, as to each Lender, the aggregate amount
--------------------
set forth opposite its name on the signature pages hereto under the heading
"Revolving Credit Commitment" (as the same may be reduced or otherwise adjusted
from time to time as provided in this Credit Agreement).
"Annual Compliance Certificates" shall mean the certificates delivered to
------------------------------
the Lenders pursuant to Section 8.01(b) hereof.
"Assignment and Acceptance" shall have the meaning given to such term in
-------------------------
Section 11.06(d) hereof.
"Base Rate" shall mean, for any period, a fluctuating interest rate per
---------
annum as shall be in effect from time to time, which rate per annum shall at all
times be equal to the rate of interest announced by BankBoston, N.A., from time
to time, as its reference rate for the determination of interest rates on loans
of varying maturities in Dollars to United States residents of varying degrees
of creditworthiness and being quoted at such time by BankBoston, N.A., as its
"base rate," which rate is not necessarily the lowest rate of interest charged
by BankBoston, N.A.
"Base Rate Loans" shall mean Loans which accrue interest on the basis of
---------------
the Base Rate.
"Base Rate Loan Interest Margin" shall have the meaning given to such term
------------------------------
in Section 2.04(b) hereof.
"Borrowers" shall have the meaning given to such term in the preamble to
---------
this Credit Agreement.
"Business Day" shall mean any day other than a day on which commercial
------------
banks in Boston, Massachusetts or New York City are authorized or required to
close.
"Capital Expenditures" shall mean, for any period, amounts paid or
--------------------
Indebtedness incurred by the Borrowers in connection with the purchase or lease
of capital assets that would be required to be capitalized and shown on the
consolidated balance sheet of the Borrowers in accordance with GAAP.
"Capital Lease Obligations" shall mean, for any period, the amount of the
-------------------------
liability reflecting the aggregate discounted amount of future payments under
all leases which are or should be capitalized on the balance sheet of the lessee
<PAGE>
-4-
calculated in accordance with GAAP pursuant to Statement of Financial Accounting
Standards No. 13 of the Financial Accounting Standards Board.
"Capital Maintenance Costs" shall mean, for any period, with respect to the
-------------------------
Loans of each Lender, any costs which such Lender determines are attributable to
the maintenance by such Lender or any holding company of such Lender, pursuant
to any law or regulation or any interpretation, directive or request (whether or
not having the force of law) of any court or governmental or monetary authority,
whether in effect on the Closing Date or thereafter, of capital in respect of
its maintaining Loans hereunder or its commitment to make Loans hereunder (e.g.,
any additional capital maintenance requirements imposed by the Board of
Governors of the Federal Reserve System with respect to the Loans pursuant to
Regulation D).
"Closing Date" shall mean the date of this Credit Agreement.
------------
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Collateral" shall mean the collateral subject to the Security Documents.
----------
"Commitment. Percentage" shall mean, as to each Lender at any time, the
----------------------
percentage obtained by dividing such Lender's Revolving Credit Commitment by the
Total Revolving Credit Commitment.
"Commitment Termination Date" shall mean the Quarterly Date falling on or
---------------------------
nearest to July 1, 2004.
"Company" shall have the meaning given to such term in the preamble to this
-------
Credit Agreement.
"Contracts" shall mean all binding contracts or agreements between any of
---------
the Borrowers and any radio, television or cable systems or network utilizes of
such forms of media which grant any Borrower the right to act as agent in
securing national advertising for such entity. Each such Contract shall
conform, in form and substance, with the then prevailing industry practice.
"Contract Buyout Disbursements" shall mean, for any period, the aggregate
-----------------------------
cash payments made by any Borrower to other Persons in connection with the
termination, sale, transfer, assignment or other disposition of a Contract by
any such other Person to any Borrower, plus any cash payments made by any
Borrower in connection with any long term Investments related to the business of
the Borrowers as permitted by Section 8.15 hereof.
"Contract Buyout Expense" shall mean, for any period, the accrued amount of
-----------------------
any expenses incurred by any Borrower in connection with the
<PAGE>
-5-
termination, sale, transfer, assignment or other disposition of a Contract by
other Persons to any Borrower.
"Contract Buyout Receipts" shall mean, for any period, the aggregate cash
------------------------
payments received by any Borrower from other Persons in connection with the
termination, sale, transfer, assignment or other disposition of a Contract by
such Borrower to any such other Person.
"Contract EBITDA" shall mean, for any Contract, the product of (i) the
---------------
greater of (A) the total revenue from such Contract for the most recently
completed twelve-month period, or (B) the total revenue to be received from such
Contract for the next twelve-month period, as determined by the Borrowers on a
reasonable basis, multiplied by (ii) the EBITDA margin of the Borrowers for the
---------- --
most recently completed period of four consecutive Quarters. The Borrowers may
submit a schedule of pro forma expenses for such Contract and request
adjustments to the EBITDA margin which the Lenders, in their reasonable
discretion, may approve.
"Contract Value" shall mean, with respect to a Contract, the dollar amount
--------------
produced by multiplying (i) the Average Monthly Commissions, times (ii) the
number of months remaining under the applicable Contract plus two (2). The term
"Average Monthly Commissions" shall mean the amount produced by dividing (i) the
amount produced by multiplying (x) the commission rate stated in the applicable
Contract, times (y) the annual billings which the Borrowers estimate in good
faith (supported by such detail as the Lenders may reasonably require) will be
generated pursuant to such Contract during the next twelve month period, or, if
less than twelve months remain before the expiration of such Contract, the
estimated billings to be generated during the remaining life of the Contract, by
(ii) the lesser of (x) 12 and (y) the number of months remaining before the
expiration of the Contract.
"Contract Value Report" shall mean a report in substantially the form of
---------------------
Exhibit B hereto listing Contract Values on a station by station basis, as of
- ------- -
the close of business on the last Business Day of the immediately preceding
Quarter of the Borrowers.
"Credit Agreement" shall have the meaning given to such term in the
----------------
preamble hereof.
"Credit Documents" shall mean each of this Credit Agreement, the Notes, and
----------------
the Security Documents, and all other agreements or documents delivered by the
Borrowers to the Lenders in connection with the transactions contemplated by
this Credit Agreement.
<PAGE>
-6-
"Default" shall mean an event or condition which, with notice and/or the
-------
passage of time or both, would become an Event of Default hereunder.
"Deferred Compensation Plan" shall mean the Company's Compensation Deferral
--------------------------
Plan as in effect from time to time.
"Documentation Agent" shall mean Summit Bank, in its capacity as
-------------------
documentation agent for the Lenders, and its successors in such capacity.
"Dollars" shall mean lawful money of the United States of America.
-------
"EBITDA" shall mean, for any period, the Borrowers' operating income for
------
such period determined on a consolidated basis plus the sum of (i) all non-cash
----
charges (including, without limitation, depreciation and amortization) of the
Borrowers for such period, to the extent deducted in determining such operating
income, and (ii) Acquisition EBITDA for such period, if any, minus all non-cash
-----
revenues of the Borrowers for such period, to the extent included in determining
such operating income. For purposes of calculating EBITDA for any period, (A)
there shall be included in EBITDA the Contract EBITDA for any Material Contract
entered into by the Borrowers during such period multiplied by a fraction, the
---------- --
numerator of which shall be the number of days from the first day of such period
through the date of such Material Contract, and the denominator of which shall
be 365, and (B) there shall be excluded from EBITDA the Contract EBITDA for any
Material Contract of the Borrowers cancelled or otherwise terminated during such
period multiplied by a fraction, the numerator of which shall be the number of
---------- --
days from the first day of such period through the date of such cancellation or
termination, and the denominator of which shall be 365.
For the purposes of determining compliance with the Sections in Article
VIII D hereof for the fiscal Quarters ending on or before December 31, 1998,
certain expenses associated with the Florida Relocation and Expense Reduction
Program, identified and reasonably acceptable to the Lenders, and in amounts not
to exceed the following amounts for the following periods, will be excluded from
the definition of EBITDA by adding such amounts in the calculation of EBITDA for
the periods set forth in the table (the "Adjustment Table") as follows:
<TABLE>
<CAPTION>
Aggregate Annualized
Quarter or Fiscal Year Ending Adjustment to EBITDA
----------------------------- --------------------
<S> <C>
September 30, 1998 $825,000
December 31, 1998 $500,000
</TABLE>
"Effective Date" shall have the meaning given to such term in Section 11.10
---------------
hereof.
<PAGE>
-7-
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended.
"ESOP" shall mean the Company's Employee Stock Ownership Plan as in effect
----
from time to time.
"Eurodollar Breakage Costs" shall mean, for any Lender, an amount equal to
-------------------------
the excess, if any, of (i) the amount of interest which would have accrued on
the principal amount paid, prepaid or converted or not borrowed for the period
from the date of such payment, prepayment or conversion or failure to borrow to
the last day of the Interest Period for such Loan (or, in the case of a failure
to borrow, the Interest Period for such Loan which would have commenced on the
date of such failure to borrow) had such principal amount borne interest on the
basis of the Eurodollar Rate applicable to such Loan in accordance with Section
2.04(a)(ii) hereof over (ii) the interest component of the amount such Lender
would be required to bid in the London interbank market for Dollar deposits of
leading banks in amounts comparable to such principal amount and with maturities
comparable to such period (as reasonably determined by such Lender).
"Eurodollar Business Day" shall mean any Business Day on which dealings in
-----------------------
Dollars are carried on in the London interbank market.
"Eurodollar Loan" shall mean any Loan which accrues interest on the basis
---------------
of the Eurodollar Rate.
"Eurodollar Loan Interest Margin" shall have the meaning given to such term
-------------------------------
in Section 2.04(b) hereof.
"Eurodollar Rate" shall mean, for any Interest Period for all Eurodollar
---------------
Loans to which such Interest Period relates, the rate per annum obtained by
dividing (x) the "London Interbank Offered Rate" for Dollar deposits, as quoted
by the Agent to prime banks in the London interbank market at approximately
11:00 a.m. (London time) two Eurodollar Business Days prior to the first day of
such Interest Period, in accordance with the usual practice in such market, for
delivery on the first day of such Interest Period and for the number of days
comprised therein, in amounts comparable to the aggregate principal amount of
such Eurodollar Loans, by (y) a percentage equal to 100% minus the Eurodollar
Reserve Percentage. Such rate of interest shall be rounded, if necessary,
upwards to the next higher 1/16 of 1% (if such rate is not an integral multiple
of 1/16 of 1%). Each determination by the Agent of any Eurodollar Rate shall,
in the absence of manifest error, be conclusive.
<PAGE>
-8-
"Eurodollar Reserve Percentage" shall mean, for any Interest Period for all
-----------------------------
Eurodollar Rate Loans to which such Interest Period relates, a percentage equal
to the daily average during such Interest Period of the maximum percentages in
effect on each day of such Interest Period, as prescribed by the Board of
Governors of the Federal Reserve System, for determining the maximum reserve
requirements applicable to "Eurocurrency Liabilities" pursuant to Regulation D
or any other applicable regulation of the Board of Governors of the Federal
Reserve System that prescribes reserve requirements applicable to "Eurocurrency
Liabilities" as currently defined in Regulation D.
"Event of Default" shall mean any of the events described in Article IX
----------------
hereof
"Exchange Offer" shall mean the offer to exchange the 1998 Subordinated
--------------
Notes for a new issue of notes of the Company that are registered under the
Securities Act of 1933, as amended, as contemplated by the Offering Memorandum.
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers on such day, as published for
such day (or if such day is not a Business Day, for the immediately preceding
Business Day) by the Federal Reserve Bank of New York in the statistical release
designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities,
or any successor publication (including any such successor publication, the
"Composite 3:30 p.m. Quotations"), under the caption "Federal Funds Effective
Rate". If such rate is not published in the Composite 3:30 p.m. Quotations for
any Business Day, the rate for such Business Day will be the arithmetic mean of
the rates for the last transaction in overnight federal funds arranged prior to
9:00 a.m. (Boston, Massachusetts time) on such Business Day by each of three
leading brokers of federal funds transactions in New York City selected by the
Agent.
"Fixed Charge Coverage" shall mean, for any period (based upon the most
---------------------
recent financial statements required to be delivered pursuant to Section 8.01
hereof), the ratio of (i) EBITDA for the immediately preceding four Quarter
period for which financial statements are required to be delivered as aforesaid,
to (ii) the sum of (u) Total Debt Service for such immediately preceding four
Quarter period, (v) income taxes paid during such immediately preceding four
Quarter period, (w) Capital Expenditures made during such immediately preceding
four Quarter period, and (x) Net Contract Buyout Disbursements for the
immediately preceding twelve months.
<PAGE>
-9-
"Florida Relocation and Expense Reduction Program" shall mean the
------------------------------------------------
identified one-time expenses incurred by the Borrowers to relocate certain
personnel and assets to Florida and identified severance expenses related to
severance packages for certain employees, all as set forth on Exhibit P attached
hereto and as reflected in the Adjustment Table set forth in the definition of
EBITDA above.
"GAAP" shall mean generally accepted accounting principles as defined by
----
controlling pronouncements of the Financial Accounting Standards Board, as from
time to time supplemented and amended.
"Governmental Authority" shall mean any federal, state, local, foreign or
----------------------
other governmental or administrative (including self-regulatory) body,
instrumentality, department or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission or other similar dispute resolving
panel or body, including, without limitation, those governing the regulation and
protection of the environment.
"Guild" shall mean Ralph C. Guild.
-----
"Hedging Breakage Costs" shall mean, with respect to any prepayment made by
----------------------
the Borrowers pursuant to Section 3.01 in respect of Loans which are the subject
of an Interest Rate Hedging Agreement, any costs or expenses incurred as a
result of such prepayment by the bank or banks which are party to such Interest
Rate Hedging Agreement, including, without limitation, (i) any contractual
costs, damages or penalties required to be paid pursuant to the express terms of
such Interest Rate Hedging Agreement, (ii) any Capital Maintenance Costs, and
(z) any reduction in the income to be earned by such bank or banks pursuant to
such Interest Rate Hedging Agreement.
"Indebtedness" shall mean all obligations, contingent and otherwise, which
------------
in accordance with GAAP should be classified upon the obligor's balance sheet as
liabilities, including but not limited to, Settlement Obligations, liabilities
secured by any mortgage, pledge, security interest, lien, charge, or other
encumbrance existing on property owned or acquired subject thereto, whether or
not the liability secured thereby shall have been assumed, and all guarantees,
endorsements and other contingent obligations whether direct or indirect with
respect to Indebtedness of others and the obligations to reimburse the issuer of
any letters of credit, but excluding solely for the purpose of determining Total
Debt Service and Total Funded Debt: indebtedness representing trade payable,
liabilities which accrue but are not currently payable, indebtedness giving rise
to Contract Buyout Expense, liabilities for deferred compensation owing to
employees, obligations owing to terminated employees, and indebtedness owing to
the Company or any Subsidiary from the Company or any Subsidiary.
<PAGE>
-10-
"Interest Margin" shall have mean the Base Rate Loan Interest Margin or the
---------------
Eurodollar Loan Interest Margin, whichever shall be applicable pursuant to
Section 2.04(b) hereof.
"Interest Period" shall mean: (i) with respect to a Eurodollar Loan, the
---------------
period commencing on the date such Eurodollar Loan is made, if applicable, or on
the date such Eurodollar Loan is converted from a Base Rate Loan, or, in the
case of a continuation, on the last day of the immediately preceding Interest
Period applicable to such Eurodollar Loan, and ending on the date which is one,
two, three or six months thereafter, as the Borrowers may select as provided in
Section 2.02 or Section 2.03 hereof, or (ii) with respect to a Base Rate Loan,
the period commencing on the date such Base Rate Loan is made and ending on the
next Quarterly Date thereafter. Notwithstanding the foregoing: (i) no Interest
Period with respect to any Loan may end after the Commitment Termination Date;
(ii) each Interest Period for a Eurodollar Loan which would otherwise end on a
day which is not a Eurodollar Business Day shall end on the next succeeding
Eurodollar Business Day unless such next succeeding Eurodollar Business Day
falls in the next succeeding calendar month, in which case such Interest Period
shall end on the next preceding Eurodollar Business Day; and (iii) any Interest
Period for a Eurodollar Loan that begins on the last Eurodollar Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month in which such Interest Period ends) shall, subject to
the foregoing clauses (i) through (ii) above, end on the last Eurodollar
Business Day of the calendar month in which such Interest Period ends.
"Interest Rate Hedging Agreement" shall mean an interest rate swap, cap or
-------------------------------
collar agreement or similar arrangement among the Borrowers and one or more
banks satisfactory to the Lenders providing for protection against fluctuations
in interest rates or the exchange of nominal interest obligations among the
Borrowers and such banks, either generally or under specific contingencies, as
said agreement or arrangement shall be modified and supplemented and in effect
from time to time.
"Investments" shall have the meaning given to such term in Section 8.15
-----------
hereof.
"Lenders" shall mean BankBoston, N.A. and Summit Bank, in their capacity as
-------
Lenders hereunder, and any other person which may become a Lender pursuant to
Section 11.06 hereof
"Letter of Credit" shall mean a letter of credit issued by the Letter of
----------------
Credit Lender for the account of the Borrowers, or any of them, in accordance
with Section 2.01 hereof.
<PAGE>
-11-
"Letter of Credit Exposure" shall mean, as of any date, the aggregate
-------------------------
maximum amount available for drawing under all outstanding Letters of Credit
without regard to whether conditions to drawing can then be satisfied.
"Letter of Credit Lender" shall mean BankBoston, N.A., in its capacity as
-----------------------
the issuer of a Letter of Credit.
"Liens" shall have the meaning given to such term in Section 8.12 hereof
-----
"Loans" shall mean Revolving Credit Loans.
-----
"Majority Lenders" shall mean one or more Lenders whose Aggregate
-----------------
Commitments, when added together, total at least 51% of the amount of the Total
Revolving Credit Commitment.
"Margin Stock" shall mean "margin stock" as defined in Regulations G and U.
------------
"Material Adverse Effect" shall mean, with respect to any Person, a
-----------------------
material adverse effect upon the business, assets, financial condition or
results of operations of such Person.
"Material Contract" shall mean any Contract the Contract EBITDA for which
-----------------
would have been equal to five percent (5%) or more of the EBITDA of the
Borrowers for the period of four consecutive Quarters ended most recently prior
to the date of determination.
"Membership Interest Pledge Agreements" shall mean the Membership Interest
-------------------------------------
Pledge Agreements among the Securing Parties and the Agent substantially in the
form of Exhibit C hereto, as amended and in effect from time to time.
------- -
"1940 Act" shall mean the Investment Company Act of 1940, as amended.
--------
"1998 Subordinated Note Documents" shall mean the 1998 Subordinated Note
--------------------------------
Indenture, the 1998 Subordinated Notes and each of the documents, instruments
and other agreements evidencing, governing or guaranteeing the obligations of
the Company under the 1998 Subordinated Notes, as in effect on the Closing Date
and as the same may be amended, modified or supplemented from time to time in
accordance with the terms thereof and hereof.
"1998 Subordinated Note Indenture" shall mean the Indenture to be executed
--------------------------------
by and among the Company, the other Borrowers and Summit Bank, as trustee,
providing for the issuance of the 1998 Subordinated Notes.
<PAGE>
-12-
"1998 Subordinated Notes" shall mean the 10% Senior Subordinated Notes due
-----------------------
2008 of the Company issued in accordance with the terms contained in the
Offering Memorandum in an aggregate principal amount outstanding on the Closing
Date not to exceed $100,000,000. The 1998 Subordinated Notes shall include the
notes issued pursuant to the Exchange Offer.
"Net Contract Buyout Disbursements" shall mean, for any period, the excess,
---------------------------------
if any, of Contract Buyout Disbursements over Contract Buyout Receipts.
"Net Contract Buyout Receipts" shall mean, for any period, the excess, if
----------------------------
any, of Contract Buyout Receipts over Contract Buyout Disbursements.
"New Subsidiary" shall mean any Person which becomes a Subsidiary of the
--------------
Borrowers after the Closing Date.
"Notice of Borrowing" shall have the meaning given to such term in Section
-------------------
2.02(a) hereof.
"Notes" shall mean the Revolving Credit Notes.
-----
"Obligations" shall mean, collectively, the obligations of the Borrowers
-----------
hereunder in respect of principal of and interest on the Loans, together with
all obligations in respect of or relating to any Letter of Credit issued
hereunder, and all obligations in respect of fees and other amounts payable by
the Borrowers hereunder.
"Offering Memorandum" shall mean the offering memorandum dated as of June
-------------------
29, 1998, disclosing the terms and conditions of the 1998 Subordinated Notes.
"Participant" shall have the meaning given to such term in Section 11.06(c)
-----------
hereof.
"Participation Agreement" shall have the meaning given to such term in
-----------------------
Section 11.06(c) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Pension Plan" shall mean the Company's KPMG Peat Marwick LLP Regional
------------
Prototype Retirement Savings Plan as adopted by the Company with its Adoption
Agreement #005, dated December 22, 1994, as in effect from time to time or any
successor Plan thereto having the same basic characteristics.
<PAGE>
-13-
"Permitted Acquisition" shall have the meaning given to such term in
---------------------
Section 8.14(b) hereof.
"Permitted Investments" shall mean: (i) shares of a money market fund
---------------------
which: (a) is a registered investment company under the 1940 Act; and (b)
complies with Rule 270.2a7 of the 1940 Act (the "Rule") and either (A) is rated
in one of the two highest rating categories by Standard & Poor's Ratings Group
or Moody's Investors Service, Inc. or (B) (1) has assets of at least
$200,000,000 at all times upon and after the date of acquisition of such shares,
and (2) will limit its portfolio investments to instruments that are, at the
time of acquisition, "First Tier Securities" or "Government Securities" as such
terms are defined in the Rule; (ii) investments in certificates of deposit or
Eurodollar time deposits of the Lenders or other banks organized under the laws
of the United States or any State thereof having a combined capital and surplus
of at least $100,000,000; (iii) investments in commercial paper given a rating
of at least "A" or its equivalent by Moody's Investors Service, Inc. or Standard
and Poor's Corporation or similarly rated by any successor to either of such
rating services and which has a maturity of 180 days or less; (iv) Interest Rate
Hedging Agreements; and (v) obligations of the United States of America or any
agency thereof which are backed by the full faith and credit of the United
States of America and which mature not more than one year from the date of
acquisition thereof.
"Permitted Liens" shall mean, with respect to any Person, (i) pledges or
---------------
deposits by such Person under worker's compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits of cash or U.S. Government bonds to
secure surety or appeal bonds to which such Person is a party, or deposits as
security for contested taxes or import duties or for the payment of rent; (ii)
liens imposed by law, such as carriers', warehousemen's and mechanics' liens or
other liens arising out of judgments or awards against such Person with respect
to which such Person shall then be prosecuting in good faith an appeal or other
proceedings for review (and as to which all foreclosures and other enforcement
proceedings shall have been fully bonded or otherwise effectively stayed) or to
the extent that payment of the obligations secured thereby shall not at the time
be required to be made in accordance with the provisions of applicable law,
rule, regulation or agreement, as the case may be; (iii) liens for property
taxes not yet subject to penalties for non-payment which are being contested in
good faith and by appropriate proceedings (and as to which all foreclosures and
other enforcement proceedings shall have been fully bonded or otherwise
effectively stayed); (iv) liens in favor of issuers of performance bonds issued
pursuant to the request of and for the account of such Person in the ordinary
course of its
<PAGE>
-14-
business (but only if junior to the liens created by the Security
Documents); and (v) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or other
restrictions as to the use of real properties or liens incidental to the conduct
of the business of such Person or to the ownership of its properties (including
landlord's liens), which were not incurred in connection with Indebtedness or
other extensions of credit and which do not in the aggregate constitute a
Material Adverse Effect with respect to such Person.
"Permitted Payments" shall mean (i) contributions made to the ESOP to the
------------------
extent permitted by the terms of the ESOP, (ii) all payments required to be made
by the terms of the ESOP, the Stock Growth Plan, the Pension Plan or the
Deferred Compensation Plan on account of the repurchase of any stock of the
Borrowers from employees who have terminated or have been terminated from their
employment with the Borrowers, (iii) all payments required by the terms of any
other employment agreement or applicable law or contemplated by Article VIII of
the by-laws of the Company on account of the repurchase of any stock of the
Borrowers from employees who have terminated or have been terminated from their
employment with the Borrowers, (iv) Restricted Payments made on the Closing Date
with the proceeds of the issuance of the 1998 Subordinated Notes and described
in the Offering Memorandum, (v) payments of interest on the 1998 Subordinated
Notes, provided that such payments are not prohibited by the subordination
provisions contained in the 1998 Subordinated Note Indenture, (vi) Restricted
Payments consisting of the exchange of notes pursuant to the Exchange Offer,
(vii) the redemption by the Company of 1998 Subordinated Notes with the net cash
proceeds of an offering of common stock of the Company, provided that such
--------
redemption is made in accordance with the terms of Article 3 of the 1998
Subordinated Note Indenture, as in effect on the date of this Agreement and
(viii) the redemption by the Company of the 1998 Subordinated Notes with Excess
Proceeds (as defined in the 1998 Subordinated Note Indenture), provided that
--------
such redemption is made in accordance with, and only as required by, Section
4.10 of the 1998 Subordinated Note Indenture, as in effect on the date of this
Agreement, and provided, further that no Default or Event of Default shall have
-------- -------
occurred and shall be continuing at the time of such redemption and, after
giving pro forma effect to any such redemption, no Default or Event of Default
shall occur and be continuing, including without limitation, any such Default or
Event of Default arising as the result of a violation of the terms of Article
VIII D hereof.
"Permitted Seller Note Indebtedness" Permitted Seller Note Indebtedness
----------------------------------
shall mean unsecured Indebtedness, in an aggregate principal amount not to
exceed $5,000,000 at any one time outstanding, arising under or related to
acquisitions of Representative Firms, provided that (i) after giving effect to
such Permitted Seller Note Indebtedness, no Default or Event of Default shall
have
<PAGE>
-15-
occurred and shall be continuing (including, without limitation, any violation
of any Section in Articles 8(C) or 8(D) hereof), and (ii) any such Permitted
Seller Note Indebtedness should be expressly subordinated to the Obligations
pursuant to subordination documentation acceptable to the Majority Lenders in
their sole discretion.
"Permitted Subordinated Debt" shall mean the issuance of any subordinated
---------------------------
Indebtedness for borrowed money by any Borrower after the Closing Date,
provided, however that (i) all such Permitted Subordinated Debt shall be
- --------
unsecured, (ii) the provisions of all such Permitted Subordinated Debt shall
have been approved in writing by the Majority Lenders, (iii) the maturity date
of any such Permitted Subordinated Debt is not less than two years after the
Commitment Termination Date, and (iv) after giving effect to any such Permitted
Subordinated Debt, no Default or Event of Default shall have occurred and shall
be continuing (including, without limitation, any violation of any Section in
Articles VIII C or VIII D hereof).
"Person" shall mean an individual, a corporation, a partnership, a limited
------
liability company, a joint venture or adventure, a trust or estate or
unincorporated organization, a joint stock company or other similar
organization, a governmental or political subdivision thereof, or any other
legal entity.
"Plan" shall mean an employee pension benefit plan which is covered by
----
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code, and is either (i) maintained by any of the Borrowers or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
any of the Borrowers is then making or accruing an obligation to make
contributions or has within the preceding six Plan years made contributions.
"Post-Default Rate" shall mean a rate per annum equal to 2% above the
-----------------
highest interest rate per annum otherwise applicable to any Loan pursuant to
Section 2.04 hereof.
"Prior Loan Documents" shall mean that certain Amended and Restated
--------------------
Revolving Line of Credit Agreement, dated as of September 19, 1997, entered into
among Interep National Radio Sales, Inc., McGavren Guild, Inc., D&R Radio, Inc.,
Group W Radio Sales, Inc., Allied Radio Partners, Inc., McGavren Guild Radio
Sales, Inc., Caballero Spanish Media L.L.C., Clear Channel Radio, LLC, and
Infinity Radio Sales LLC, as borrowers, the financial institutions parties
thereto, as lenders, Fleet National Bank, as administrative agent, and Summit
Bank and BankBoston, N.A., as co-documentation agents, and all notes
instruments, documents and agreements executed in connection therewith.
<PAGE>
-16-
"Prohibited Transaction" shall mean a transaction that is prohibited under
----------------------
Section 4975 of the Code or Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA.
"Quarter" shall mean each period of three consecutive months ending on the
-------
last day of each March, June, September and December.
"Quarterly Compliance Certificates" shall mean the certificates delivered
---------------------------------
to the Lenders pursuant to Section 8.01(a) hereof.
"Quarterly Date" shall mean the last day of each March, June, September and
--------------
December, the first of which shall be on September 30, 1998, or, if any such day
is not a Business Day, the next succeeding Business Day.
"Regulation D" shall mean Regulation D of the Board of Governors of the
------------
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulation G" shall mean Regulation G of the Board of Governors of the
------------
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulation T" shall mean Regulation T of the Board of Governors of the
------------
Federal Revenue System as the same may be supplemented from time to time.
"Regulation U" shall mean Regulation U of the Board of Governors of the
------------
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulation X" shall mean Regulation X of the Board of Governors of the
------------
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" shall mean, with respect to any Lender, any change, on
-----------------
or after the Closing Date, in United States Federal, state or foreign laws or
regulations (including Regulation D), or the adoption or making on or after such
date of any interpretations, directives or requests applying to a class of banks
including such Lender, of or under any United States Federal, state or foreign
laws or regulations (whether or not having the force of law), by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Reimbursement Amount" shall have the meaning given to such term in Section
--------------------
2.01(f) hereof.
<PAGE>
-17-
"Reportable Event" shall mean (i) any of the events set forth in Sections
----------------
4043(b) (other than a Reportable Event as to which the provision of 30 days'
notice to the PBGC is waived under applicable regulations), 4068(f) or 4063(a)
of ERISA or the regulations thereunder, (ii) an event requiring the Borrowers to
provide security to a Plan under Section 401(a)(29) of the Code, and (iii) any
failure to make payments required by Section 412(m) of the Code if such failure
continues for 30 days following the due date for any required payment.
"Representative Firm" shall mean a broadcast media representation firm
-------------------
which is engaged in the business of contracting with media systems or network
utilizers of media to act as agent in securing national advertising.
"Reserve Requirement" shall mean, for any Eurodollar Loan, the rate at
-------------------
which the Lenders are required to maintain reserves under Regulation D against
"Eurocurrency Liabilities" (as such term is used in Regulation D), including any
marginal, supplemental or emergency reserves. Without limiting the effect of
the foregoing, the Reserve Requirement shall reflect any other reserves actually
required to be maintained by the Lenders by reason of any Regulatory Change
applicable to (i) any category of liabilities which includes deposits by
reference to which the Eurodollar Rate is to be determined as provided in the
definition of Eurodollar Rate in this Section 1.01, or (ii) any category of
extensions of credit or other assets which include Eurodollar Loans.
"Restricted Payments" shall mean (i) direct or indirect distributions,
-------------------
dividends or other payments by the Borrowers on account of any general or
limited partnership or joint venture interest in, or any capital stock of, any
of the Borrowers, including, without limitation, sinking fund or other payments
on account of the redemption, retirement, purchase or acquisition of any such
interests or capital stock (whether made in cash, property or other
obligations), other than payment of salaries, bonuses, expense reimbursements
paid in the ordinary course of business, advances to employees of the Borrowers
made in the ordinary course of the Borrowers' business and not exceeding
$500,000 in the aggregate, "payment in kind" distributions on preferred stock or
"payment in kind" distributions on shares which have been distributed as
"payment in kind" and (ii) direct or indirect payments or distributions on or in
respect of the 1998 Subordinated Note Documents, whether on account of
principal, interest or other sums, or in respect of the purchase, repurchase,
redemption, retirement, acquisition or defeasance of any Indebtedness under the
1998 Subordinated Note Documents.
"Revolving Credit Commitment" shall mean, as to each Lender, the amount set
---------------------------
forth opposite its name on the signature pages hereto under the heading
"Revolving Credit Commitments" (as the same may be reduced or otherwise adjusted
from time to time as provided in this Credit Agreement).
<PAGE>
-18-
"Revolving Credit Loans" shall mean the Loans made pursuant to Section 2.01
----------------------
(a) hereof.
"Revolving Credit Notes" shall mean the promissory notes evidencing the
----------------------
Revolving Credit Loans provided for by Section 2.01 (a) hereof.
"Securing Parties" shall mean the debtors, pledgors and grantors under the
----------------
Security Documents.
"Security Agreement" shall mean the Security Agreement granted by the
------------------
Securing Parties to the Agent substantially in the form of Exhibit D attached
------- -
hereto, as amended and in effect from time to time.
"Security Documents" shall mean the Security Agreement, the Stock Pledge
------------------
Agreements, the Membership Interest Pledge Agreements, the Trademark Collateral
Assignment Agreement and all documents relating thereto.
"Senior Debt" shall mean Indebtedness of the Borrowers arising under or
-----------
relating to (i) any of the Credit Documents, (ii) purchase money transactions,
(iii) financing leases and (iv) mortgages.
"Settlement. Obligations" shall mean the aggregate amount of any
-----------------------
liabilities or obligations of any of the Borrowers, whether or not contingent,
arising out of any judgment, settlement or compromise of any litigation,
arbitration, administrative or legal proceeding or investigation, whether
pending or threatened.
"Settlement Expenses" shall mean, for any period, the sum of all payments
-------------------
made with respect to Settlement Obligations.
"Shareholder Stock Appraisal Reports" shall mean stock appraisal reports in
-----------------------------------
the form customarily prepared by the Company in connection with the Stock Growth
Plan.
"Solvency Certificate" shall mean a certificate of the Chief Financial
--------------------
Officer or Treasurer of each of the Borrowers in substantially the form of
Exhibit E hereto.
- ------- -
"Stock Growth Plan" shall mean the Interep Radio Store Stock Growth Plan,
-----------------
effective as of January 1, 1995, as in effect from time to time.
"Stock Pledge Agreements" shall mean the Stock Pledge Agreements among the
-----------------------
Securing Parties and the Agent substantially in the form of Exhibit F hereto, as
------- -
amended and in effect from time to time.
<PAGE>
-19-
"Subsidiary" shall mean, with respect to any Person, any corporation,
----------
limited liability company, partnership, joint venture or adventure, trust or
estate with respect to which:
(a) in the case of a corporation, such Person owns, directly or indirectly,
a majority of the outstanding capital stock of such corporation necessary to
elect a majority of the Board of Directors (whether or not such Person's voting
power may be diluted upon the occurrence of any contingency);
(b) in the case of a limited liability company, partnership or joint
venture, such Person is a general partner, joint venture, or managing member or
such Person owns, directly or indirectly, a majority of the partnership,
membership or other ownership interests; or
(c) in the case of a trust or estate, such Person owns, directly or
indirectly, the beneficial interest of such trust or estate.
The Subsidiaries of the Company as of the date hereof are set forth on Schedule
--------
1.01(i) hereto.
- -------
"Subsidiary Borrowers" shall have the meaning given to such term in the
--------------------
preamble to this Credit Agreement.
"Termination Event" shall mean (i) a Reportable Event, (ii) the termination
-----------------
of a Plan, or the filing of a notice of intent to terminate a Plan, or the
treatment of a Plan amendment as a termination under Section 4041 (c) of ERISA,
(iii) the institution of proceedings to terminate a Plan under Section 4042 of
ERISA, or (iv) the appointment of a trustee to administer any Plan under Section
4042 of ERISA.
"Total Debt Service" shall mean, for any period, the Total Interest Expense
------------------
for such period plus the amount of any principal payments required to be made
pursuant to Section 3.02 hereof for such period, plus any other scheduled
payments of principal, interest and expenses or other charges on account of any
other Indebtedness of the Borrowers during such period (including, but not
limited to, Settlement Expenses and any principal portion paid with respect to
Capital Lease Obligations or Permitted Seller Note Indebtedness).
"Total Funded Debt" shall mean all Indebtedness of the Borrowers for
-----------------
borrowed money or extensions of credit (other than in connection with operating
leases) which bear interest, including, without limitation, the obligations of
the Borrowers hereunder in respect of the principal of and interest on the
Loans, outstanding Indebtedness pursuant to the Settlement Obligations, any
<PAGE>
-20-
Permitted Seller Note Indebtedness, and any Permitted Subordinated Debt;
provided, however, the amount of Permitted Subordinated Debt to be included the
- -------- -------
calculation of Total Funded Debt shall include the face amount of all Permitted
Subordinated Debt without any deduction for original issue discount required by
GAAP.
"Total Interest Expense" shall mean, for any period, the sum of the
----------------------
aggregate amount of interest accrued in respect of Indebtedness of the Borrowers
(including the interest component in respect of Capital Lease Obligations). For
purposes hereof, the amount of interest accrued in respect of Indebtedness for
any period shall be increased (to the extent not already treated as interest
expense) by the excess, if any, of amounts payable by the Borrowers arising
under any Interest Rate Hedging Agreements during such period over amounts
receivable by the Borrowers thereunder (or reduced by the excess, if any, of
such amounts receivable over such amounts payable). Interest on any Capital
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by the Borrowers to be the rate of interest implicit in such Capital
Lease Obligation in accordance with GAAP taking into account the provisions of
Statement of Financial Accounting Standards No. 13 of the Financial Accounting
Standards Board.
"Total Leverage" shall mean, at any time, the ratio of (i) Total Funded
--------------
Debt to (ii) EBITDA for the immediately preceding four Quarter period for which
the most recent financial statements are required to be delivered pursuant to
Section 8.01 hereof.
"Total Revolving Credit Commitment" shall mean, at any time, the aggregate
---------------------------------
amount of the Revolving Credit Commitments of all the Lenders (as the same may
be reduced or otherwise adjusted from time to time as provided in this Credit
Agreement).
"Trademark Collateral Assignment Agreement" shall mean the Trademark
-----------------------------------------
Collateral Assignment Agreement among the Securing Parties and the Agent
substantially in the form of Exhibit G hereto, as amended and in effect from
------- -
time to time.
"Type" shall mean and describe, with respect to a Revolving Credit Loan,
----
whether such Revolving Credit Loan is a Base Rate Loan or a Eurodollar Loan.
Section 1.02 Accounting Terms. Unless otherwise specified herein, all
----------------
accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be
delivered hereunder shall be prepared, in accordance with GAAP, applied on a
<PAGE>
-21-
basis consistent with the audited financial statements of the Borrowers referred
to in Section 7.04 hereof.
Section 1.03 Fiscal Year. To enable the ready determination of compliance
-----------
by the Borrowers with the various covenants set forth in Article VIII hereof,
the Borrowers agree that the fiscal year of each Borrower shall end each
December 31, and the first three Quarters in each fiscal year shall end on March
31, June 30 and September 30, respectively.
ARTICLE II
THE LOANS
---------
Section 2.01 Amounts and Types of Loans. Each Lender severally agrees to
--------------------------
make Loans to the Borrowers in accordance with the following terms and
conditions.
(a) Revolving Credit Loans. On or after the Effective Date, each Lender
----------------------
shall make one or more Revolving Credit Loans to the Borrowers from time to time
on any Business Day prior to the Commitment Termination Date, in an aggregate
principal amount not to exceed at any time outstanding such Lender's Revolving
Credit Commitment; provided, however, that the sum of (x) the aggregate
-------- -------
principal amount of all Loans plus (y) the Letter of Credit Exposure plus (z)
the aggregate principal amount of all Reimbursement Amounts shall not at any
time exceed the Total Revolving Credit Commitment. The Revolving Credit Loans
made by each Lender shall be evidenced by a Revolving Credit Note executed and
delivered by the Borrowers and substantially in the form of Exhibit A hereto,
------- -
each dated as of the Effective Date and payable to the order of such Lender in a
principal amount equal to such Lender's Revolving Credit Commitment as of the
Effective Date.
(b) Types of Loans. The Loans, at the option of the Borrowers, may be made
--------------
as, and from time to time continued as, or converted into, Base Rate Loans or
Eurodollar Loans or any combination thereof.
(c) Letters of Credit. Subject to the terms and conditions hereof, and
-----------------
provided that no Event of Default has occurred and is continuing, the Letter of
Credit Lender shall, upon the request of the Borrowers pursuant to Section
2.01(d) hereof, issue Letters of Credit for the account of the Borrowers prior
to the Commitment Termination Date, provided, however, that (i) the aggregate
-------- -------
face amount of all outstanding Letters of Credit shall not at any time exceed
$1,000,000, and (ii) each such Letter of Credit shall terminate no later than
the Commitment Termination Date. Such Letters of Credit shall only be issued in
conformity with the policies and requirements of the Letter of Credit Lender
existing at the time of such issuance relating to the issuance of letters of
credit
<PAGE>
-22-
generally for customers of the Letter of Credit Lender, including, without
limitation, the use of applications, agreements, forms and other documentation
customarily utilized by the Letter of Credit Lender when issuing letters of
credit.
(d) Procedure for Issuing Letters of Credit. The Borrowers may request
---------------------------------------
that the Letter of Credit Lender issue a Letter of Credit by written notice to
the Agent and the Letter of Credit Lender in accordance with the standard
practices for issuance of letters of credit by the Letter of Credit Lender given
to the Agent and the Letter of Credit Lender not less than five Business Days
prior to the proposed date of issuance of such Letter of Credit.
(e) Fees and Expenses. The Borrowers hereby agree to pay to the Letter of
-----------------
Credit Lender, for its own account, sums equal to any and all customary fees
charged by the Letter of Credit Lender in connection with the issuance of
letters of credit for customers of the Letter of Credit Lender, together with
any expenses which the Letter of Credit Lender may pay or incur relative to the
issuance of any Letter of Credit, any amendment, transfer, or negotiation
thereof, or any payment by the Letter of Credit Lender of a draw thereunder.
(f) Reimbursement Obligation. The Borrowers hereby agree to pay to the
------------------------
Letter of Credit Lender, on the date on which the Letter of Credit Lender shall
be required to pay any draft presented under any Letter of Credit, a sum (the
"Reimbursement Amount") equal to: (i) the amount so paid under such Letter of
Credit, plus (ii) interest on any amount remaining unpaid by the Borrowers to
the Letter of Credit Lender under clause (i) for the period from and including
the date on which such amount becomes payable pursuant to clause (i) until
payment in full, payable on demand, at the rate of interest applicable to Base
Rate Loans. If the Borrowers shall fail to pay to the Letter of Credit Lender
the Reimbursement Amount on the date on which the Letter of Credit Lender shall
be required to pay any draft presented under any Letter of Credit, the Letter of
Credit Lender may, at its election, consider such failure to be a request for
Base Rate Loans in the aggregate principal amount of the unpaid Reimbursement
Amount. The Borrowers hereby authorize the Letter of Credit Lender, without
further request from the Borrowers, to direct the Agent to cause the Borrowers'
liability to the Letter of Credit Lender for reimbursement to be repaid from the
proceeds of Base Rate Loans to be made hereunder; provided, however, that in the
-------- -------
event that the Lenders do not make such Base Rate Loans for any reason, each
Lender shall pay to the Agent, acting on behalf of the Letter of Credit Lender,
in immediately available funds, not later than 3:00 p.m. (Boston, Massachusetts
time) on the date of such payment (or if the Agent shall notify such other
Lender of such payment after 1:00 p.m. (Boston, Massachusetts time), not later
than 3:00 p.m. (Boston Massachusetts time) on the next succeeding Business Day),
an amount equal to its ratable share of such payment based on its Commitment
Percentage. Each Lender's obligation to
<PAGE>
-23-
make such payment to the Agent shall be absolute and unconditional under any and
all circumstances without regard to any termination or reduction of the total
Revolving Credit Commitment, any demand for payment of any Obligations or any
failure of any other Lender to make such payment. Promptly upon its receipt of
funds from the Lenders, the Agent shall pay such amounts, in immediately
available funds, to the Letter of Credit Lender, whereupon each such Lender
which pays the Agent as aforesaid shall have a participation in the Letter of
Credit equal to its Commitment Percentage.
Section 2.02 Procedure for Making Revolving Credit Loans.
-------------------------------------------
(a) Revolving Credit Loans shall be made pursuant to a notice (a "Notice of
Borrowing") given by the Company, on behalf of the Borrowers, to the Agent not
later than 1:00 p.m. (Boston, Massachusetts time) (y) in the case of Base Rate
Loans, on the day of the requested Base Rate Loans, or (z) in the case of
Eurodollar Loans, at least three Eurodollar Business Days prior to the date of
the requested Eurodollar Loans. Each such Notice of Borrowing shall be given to
the Agent by telephone, telecopy, telex or cable, in each case confirmed
immediately in writing by the Borrowers in substantially the form of Exhibit H
------- -
hereto, specifying therein (i) the requested date of such Loans (which date
shall be a Business Day, in the case of Base Rate Loans, and a Eurodollar
Business Day, in the case of Eurodollar Loans), (ii) the aggregate principal
amount of such Loans (which must be in integral multiples of $100,000), (iii)
whether such request is a request for Base Rate Loans or Eurodollar Loans, and
(iv) in the case of Eurodollar Loans, the duration of the requested Interest
Period. In the event the Borrowers shall fail to state the Type of Loans, or,
if the Borrowers shall select Eurodollar Loans but shall fail to select an
Interest Period with respect to such Loans, the Borrowers shall be deemed to
have chosen Base Rate Loans. The Borrowers hereby agree that each request for
Loans shall constitute a representation and warranty by the Borrowers that no
Default or Event of Default has occurred and is continuing under the Credit
Documents. The Agent shall notify each of the Lenders of any requested Loans
promptly after the Agent receives a Notice of Borrowing requesting such Loans
and of such Lender's share thereof based on its Commitment Percentage. The
Borrowers agree to indemnify and hold the Agent and the Lenders harmless for any
action, including the making of any Loans hereunder, or loss or expense
(excluding the Lenders' or the Agent's internal costs and expenses), taken or
incurred by the Agent or the Lenders in good faith reliance upon any such
request for Revolving Credit Loans.
(b) Not later than 3:00 p.m. (Boston, Massachusetts time) on the date
specified for each borrowing hereunder, each Lender shall make available to the
Agent, at its address for notices specified in Section 11.02 hereof, the amount
of the Revolving Credit Loan to be made by it on such date in immediately
available funds. The amounts so received by the Agent shall, subject to the
<PAGE>
-24-
terms and conditions of this Agreement, be made available to the Borrowers by
depositing the same, in immediately available funds, in a designated account of
the Borrowers, which account is maintained at the office of the Agent, or by
wiring the same, in immediately available funds, to any other account specified
by the Borrowers in the Notice of Borrowing.
(c) Unless the Agent shall have received a notice from a Lender prior to
the date of funding any Loan stating that such Lender will not make available to
the Agent the amount of the Loan to be made by it on such date, the Agent may
assume that such Lender has made such amount available to the Agent on the date
of such Loan in accordance with and as provided by this Section 2.02(c), and the
Agent may, in reliance upon such assumption, make available on such date a
corresponding amount to the Borrowers. If and to the extent such Lender shall
not have made available to the Agent the amount of the Loan to be made by it on
such date, and the Agent shall have made available such corresponding amount to
the Borrower, such Lender agrees to pay the Agent forthwith on demand, and the
Borrowers agree to repay to the Agent within thirty (30) days after demand (but
only after demand for payment has first been made to such Lender and such Lender
has failed to make such payment), an amount equal to such corresponding amount
together with interest thereon, for each day from the date the Agent shall have
made such amount available to the Borrowers until the date such amount is paid
or repaid to the Agent, at the then current Federal Funds Rate, in the case of
such Lender, and the higher of (i) the interest rate applicable thereto pursuant
to Section 2.04 hereof and (ii) the Federal Funds Rate, in the case of the
Borrowers. If such Lender shall pay to the Agent such corresponding amount,
such amount so paid shall constitute such Lender's Loan for the purposes of this
Credit Agreement. If the Borrowers make a repayment required by the foregoing
provisions of this Section 2.02(c) and thereafter such Lender makes the payments
to the Agent required by this Section 2.02(c), the Agent will promptly refund
the amount of the repayment made by the Borrowers.
Section 2.03 Conversion and Continuation of Loans.
------------------------------------
(a) All or any part of the principal amount of a Loan may, on any Business
Day, be converted into another Type of Loan; provided, however, that Eurodollar
-------- -------
Loans may be converted into Base Rate Loans only on the last day of the
applicable Interest Period; provided, further, that the share of each Lender in
-------- -------
the Loans being so converted shall correspond to its Commitment Percentage.
(b) Base Rate Loans shall continue as Base Rate Loans unless and until such
Loans are converted into Eurodollar Loans.
(c) Each Eurodollar Loan shall continue as a Eurodollar Loan until the end
of the then current Interest Period applicable thereto, at which time such
<PAGE>
-25-
Loans shall be automatically converted into Base Rate Loans unless the Borrowers
shall have given the Agent notice in accordance with Section 2.03(e) hereof
requesting that such Eurodollar Loans continue as Eurodollar Loans for another
Interest Period.
(d) Notwithstanding anything to the contrary contained in this Section
2.03, upon the occurrence and continuation of a Default or an Event of Default,
Loans may not be converted into or continued as Eurodollar Loans, unless the
Majority Lenders shall instruct the Agent to notify the Borrowers, and the Agent
so notifies the Borrowers in writing, that Loans may be converted into or
continued as Eurodollar Loans.
(e) The Borrowers shall give the Agent notice of each conversion or
continuation of Loans not later than 1:00 p.m. (Boston, Massachusetts time) as
follows: (y) at least three Eurodollar Business Days prior to the date of any
requested conversion of a Base Rate Loan into a Eurodollar Loan, or (z) at least
three Eurodollar Business Days prior to the date of any requested continuation
of a Eurodollar Loan. Such notice shall be substantially in the form of Exhibit
-------
I hereto, and shall be irrevocable and effective only upon receipt by the Agent.
- -
Such notice shall specify (i) the aggregate amount and the description of the
Loans to be converted or continued, (ii) the requested date of such conversion
or continuation, and (iii) the amount and Type of Loans into which such Loans,
if any, are to be converted, or the amount of the Loans, if any, which are to be
continued and, in the case of continued Eurodollar Loans, or Loans being
converted into Eurodollar Loans, the duration of the Interest Period therefor.
Section 2.04 Interest.
--------
(a) The Borrowers shall pay to each Lender interest on the unpaid principal
amount of each Loan made by such Lender, at the following rates per annum:
(i) if such Loan is a Base Rate Loan, the Base Rate plus the Base Rate
Loan Interest Margin for each day that such Loan is outstanding; or
(ii) if such Loan is a Eurodollar Loan, the Eurodollar Rate for the
applicable Interest Period plus the Eurodollar Loan Interest Margin.
Notwithstanding the foregoing, upon the occurrence of an Event of Default
hereunder, the Borrowers shall pay to each Lender interest at the Post-Default
Rate on the outstanding principal balance of any Loan made by such Lender, and
on any other amount payable by the Borrowers hereunder to or for the account of
such Lender, until the same is paid in full or, if applicable, until such Event
of Default is cured.
<PAGE>
-26-
(b) The Base Rate Loan Interest Margin and the Eurodollar Loan Interest
Margin shall be adjusted within ten (10) days of the receipt by the Agent of the
Borrowers' Quarterly Compliance Certificates delivered pursuant to Section
8.01(a) hereof, and the adjusted Base Rate Loan Interest Margin and the adjusted
Eurodollar Loan Interest Margin shall apply to all outstanding balances from the
date of such adjustment forward. The Interest Margin shall be based on the
computation of Total Leverage calculated from such Quarterly Compliance
Certificates as follows:
<TABLE>
<CAPTION>
Total Base Rate Loan Eurodollar
Leverage Interest Margin Loan
- -------- --------------- Interest Margin
---------------
<S> <C> <C>
greater than or equal to 1.875% 2.875%
4.50:1
greater than or equal to 1.625% 2.625%
4.00:1; but less than 4.50:1
greater than or equal to 1.375% 2.375%
3.50:1 but less than 4.00:1
greater than or equal to 1.125% 2.125%
3.00:1 but less than 3.50:1
greater than or equal to 0.875% 1.875%
2.00:1 but less than 3.00:1
less than 2.00:1 0.625% 1.625%
</TABLE>
(c) Accrued interest on each Loan shall be payable (i) in the case of a
Base Rate Loan, on each Quarterly Date and, in the case of a Eurodollar Loan, on
the last day of the Interest Period for such Eurodollar Loan and, if such
Interest Period is longer than three months, on the day which falls three months
after the first day thereof, (ii) when such Loan shall become due and payable
(whether at maturity, by reason of prepayment or acceleration or otherwise) and
(iii) on the date of conversion of such Loan to another Type of Loan. After the
determination of any interest rate provided for herein or any change thereto,
the Agent shall notify the Lenders and the Borrowers thereof
(d) All computations of interest and fees hereunder shall be made by the
Agent (i) in the case of fees and Eurodollar Loans, on the basis of a year of
360 days, and (ii) in the case of Base Rate Loans, on the basis of a year of 365
or 366 days, as the case may be, in each case for the actual number of days
elapsed (including the first day but excluding the last day). No interest
payment or interest rate charged hereunder shall exceed the maximum rate
authorized from time to time by applicable law.
<PAGE>
-27-
Section 2.05 Fees.
----
(a) The Borrowers shall pay to each Lender a commitment fee on the daily
average unutilized amount of such Lender's Revolving Credit Commitment for the
period from and including the Effective Date to, but not including, the earlier
of (i) the date such Lender's Revolving Credit Commitment is terminated or (ii)
the Commitment Termination Date, at a rate per annum (based on a year of 360
days) equal to .50%, if Total Leverage (calculated from the most recent
Quarterly Compliance Certificate) is greater than or equal to 3.00:1, and .375%
if such Total Leverage is less than 3.00:1, of the unused portion of such
Lender's Revolving Credit Commitment. For purposes of calculating such
commitment fee, the Revolving Credit Commitment of each Lender shall be deemed
to be utilized in an amount equal to the aggregate outstanding principal amount
of such Lender's Revolving Credit Loans. Accrued commitment fees under this
Section 2.05(a) shall be payable in arrears on each Quarterly Date.
(b) The Borrowers shall pay to the Agent, for the account of the Lenders, a
Facility Fee in accordance with the terms of the commitment letters executed and
delivered by the Lenders in respect of the transactions contemplated hereby.
(c) The Borrowers shall pay to the Agent an Agent's fee in accordance with
Section 10.09 hereof.
Section 2.06 Reductions to Commitments.
-------------------------
(a) Reduction. The Borrowers shall have the right to reduce, in whole or
---------
in part, the unutilized Total Revolving Credit Commitment at any time or from
time to time, provided that (i) the Borrowers shall give notice of each such
reduction to the Agent at least two Business Days prior thereto and (ii) each
partial reduction thereof shall be in an aggregate amount of not less than
$100,000. Any such reduction to the Total Revolving Credit Commitment shall also
reduce each Lender's Revolving Credit Commitment by an amount equal to the
product of such total reduction multiplied by such Lender's Percentage
Commitment in respect of the Total Revolving Credit Commitment (prior to
reduction).
(b) No Reinstatement. The Total Revolving Credit Commitment, and each
----------------
Lender's Revolving Credit Commitment, once terminated or reduced, may not be
reinstated.
Section 2.07 Several Obligations; Remedies of Lenders. The failure of any
----------------------------------------
Lender to make any Loan required to be made hereunder shall not relieve any
other Lender of its obligations hereunder, but neither the Agent nor any Lender
shall be responsible for the failure of any other Lender to comply with
<PAGE>
-28-
the provisions of this Credit Agreement. The amounts payable by the Borrowers
hereunder and under the Notes shall be a separate and independent debt owing to
each Lender and the Agents, and each of the Lenders and the Agents shall,
subject to the limitations contained in the Credit Documents, be entitled to
protect and enforce its rights arising out of the Credit Documents, and it shall
not be necessary for any other Lender or any Agent to be joined as an additional
party in any proceedings for such purposes.
Section 2.08 Use of Proceeds. The proceeds of the Revolving Credit Loans
---------------
shall be used by the Borrowers for capital expenditures, working capital and
other general business purposes of the Borrowers, including, without limitation,
the acquisition of Contracts. The proceeds of any extension of credit hereunder
shall not be used in violation of the provisions of Section 7.07 hereof.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
----------------------------------
Section 3.01 Prepayments.
-----------
(a) Voluntary Payments. The Borrowers may, at any time and from time to
------------------
time, prepay, in whole or in part, the principal balance of any Loans upon not
less than three Business Days' prior notice, in the case of Base Rate Loans, and
five Eurodollar Business Days prior notice, in the case of Eurodollar Loans, to
the Agent (which shall notify the Lenders thereof), which notice shall specify
the prepayment date (which shall be a Business Day), and the amount of the
prepayment (which shall be not less than $100,000) provided that interest on the
principal prepaid, accrued to the prepayment date, and, in the case of a
prepayment of Eurodollar Loans on a day other than the last day of an Interest
Period applicable thereto, any amounts payable pursuant to Section 3.01(b)
hereof shall be paid on the prepayment date. Such prepayment shall be
irrevocable and effective only upon receipt by the Agent. All payments made by
the Borrower pursuant to this Section 3.01 (a) shall be applied first, to the
amount of any interest outstanding pursuant to such Loan and any amounts payable
pursuant to Section 3.01(b) hereof, and second, to the amount of the principal
balance of such Loan.
(b) Breakage Costs. If the Borrowers make any payment of principal with
--------------
respect to any Eurodollar Loans on any day other than the last day of the
Interest Period applicable to such Eurodollar Loans, the Borrowers shall pay to
the Lenders any Eurodollar Breakage Costs incurred by the Lenders on account of
such payment. In addition, if the Borrowers make any payment of principal with
respect to Loans which are the subject of an Interest Rate Hedging Agreement,
the Borrowers shall pay all Hedging Breakage Costs incurred by the
<PAGE>
-29-
any Lender which is a party to such Interest Rate Hedging Agreement with any
such Borrower.
Section 3.02 Mandatory Prepayments. If, after giving effect to any
---------------------
termination or reduction of the Revolving Loan Commitments pursuant to Section
2.06(a), the aggregate outstanding principal balance of the Revolving Credit
Loans exceeds the Total Revolving Credit Commitment, the Borrowers shall repay
Revolving Credit Loans on the date of such termination or reduction in an
aggregate principal amount equal to such excess.
Section 3.03 Records of Loans and Payments. Each Lender is hereby
-----------------------------
authorized by the Borrowers to set forth in writing on a schedule attached to
each Note of such Lender (or on any continuation thereof) the amount and date of
each Loan made by such Lender to the Borrowers hereunder, and the amount of each
payment on account of principal or interest of such Loans received by such
Lender, provided, however, that any failure by such Lender to make any such
-------- -------
notation shall not affect the obligations of the Borrowers under such Note or
hereunder in respect of such Loans.
ARTICLE IV
PAYMENT PROCEDURES; DISTRIBUTIONS TO LENDERS
--------------------------------------------
Section 4.01 Procedure For Making Payments. Except to the extent
-----------------------------
otherwise provided herein, all payments of principal, interest and other amounts
to be made by the Borrowers hereunder and under the Notes shall be made in
Dollars, in immediately available funds, to the Agent not later than 11:00 a.m.
(Boston, Massachusetts time) on the date on which such payment shall become due
without set-off, recoupment, counterclaim or deduction of any nature whatsoever.
Any such payment made after such time on such due date shall be deemed to have
been made on the next succeeding Business Day. Any Lender may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time and date to any ordinary deposit or checking account of the Borrowers or
any of them maintained with such Lender. Except as otherwise required by the
terms of this Credit Agreement, the Borrowers may, at the time of making each
payment hereunder or under any Note, specify to the Agent the Loans or other
amounts payable by the Borrowers hereunder to which such payment is to be
applied (but in the event that the Borrowers fail to so specify, or if an Event
of Default has occurred and is continuing, the Lenders may apply such payment as
they may elect in their sole discretion). Each payment hereunder shall be paid
promptly to the Agent at its address for notices as set forth in Section 11.02.
Whenever any payment of principal of, or interest on, the Base Rate Loans or of
fees shall be due on a day which is not a Business Day, the date for payment
thereof shall be extended to the next succeeding Business Day. Whenever any
payment of principal of, or interest on, the
<PAGE>
-30-
Eurodollar Loans shall be due on a day which is not a Eurodollar Business Day,
the date for payment thereof shall be extended to the next succeeding Eurodollar
Business Day unless such Eurodollar Business Day falls in another calendar
month, in which case the date for payment thereof shall be the next preceding
Eurodollar Business Day.
Section 4.02 Pro Rata Treatment. Except to the extent otherwise provided
------------------
herein: (i) Loans should be advanced by the Lenders pro rata according to their
respective Commitment Percentages, as applicable, and each payment made by the
Borrowers on account of such Loans shall be paid to the Agent and distributed to
the Lenders pro rata according to their respective Commitment Percentages, and
shall be applied to each Loan first, to any accrued but unpaid interest, and
second, to the principal balance of each Loan. Each payment of fees due to be
paid by the Borrowers pursuant to Section 2.05(a) shall be made to the Lenders
pro rata in accordance with their respective Commitment Percentages.
Section 4.03 Sharing of Payments, Etc.
------------------------
Each of the Borrowers agrees that, in addition to (and without limitation of)
any right of set-off, banker's lien or counterclaim which a Lender may otherwise
have, each Lender shall be entitled, upon the occurrence and during the
continuance of a Default or Event of Default, to offset balances held by it for
the account of any of the Borrowers at any of its offices, in Dollars or in any
other currency, against any principal of or interest on any of such Lender's
Loans hereunder, which is not paid when due (regardless of whether such balances
are then due to the Borrowers), whereupon it shall promptly notify the Borrowers
and the Agent thereof, provided that such Lender's failure to give such notice
shall not affect the validity thereof If a Lender shall obtain payment of any
principal of, or interest on any Loan made by it to the Borrowers under this
Credit Agreement through the exercise of any right of set-off, banker's lien,
counterclaim or similar right or otherwise, and, as a result of such payment,
such Lender shall have received a greater percentage of the amounts then due
from the Borrowers to such Lender than it would otherwise be entitled to receive
pursuant to its Commitment Percentage, such Lender shall promptly purchase from
any other Lender which receives less than its Commitment Percentage a
participation in the Loans made by such other Lender in such amounts, and make
such other adjustments from time to time as shall be equitable, to the end that
all the Lenders shall share the benefit of such excess payment (net of any
expense which may be incurred by such Lender in obtaining or preserving such
excess payment) pro rata in accordance with the Commitment Percentage of each
Lender. To such end, all the Lenders shall make appropriate adjustments among
themselves (by the resale of participations sold or otherwise) if such payment
is rescinded or must otherwise be restored. The Borrowers agree that any Lender
so purchasing a participation in the Loans made by other Lenders may exercise
all rights of set-off, banker's lien, counterclaim or similar rights with
respect to such participation as fully as
<PAGE>
-31-
if such Lender were a direct holder of Loans in the amount of such
participation. Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise and retain the
benefits of exercising any such right with respect to any other indebtedness or
obligation of the Borrowers. If, under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 4.03 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 4.03 to share in the
benefits of any recovery on such secured claim.
Section 4.04. Withholding Taxes. All payments by the Borrowers of
-----------------
principal of and interest on the Notes and of all other amounts payable under
this Credit Agreement are payable without deduction for or on account of any
present or future taxes, duties or other charges levied or imposed by any
Governmental Authority or by any political subdivision or taxing authority
thereof or therein through withholding or deduction with respect to any such
payments. If any such taxes, duties or other charges are so levied or imposed,
the Lender or the Agent, as the case may be, so affected shall notify the Agent
and the Borrowers thereof as promptly as practicable after it obtains knowledge
thereof, and the Borrowers will pay additional interest or will make additional
payments in such amounts so that every net payment of principal of and interest
on the Notes and of all other amounts payable by them under this Credit
Agreement, after withholding or deduction for or on account of any such present
or future taxes, duties or other charges, will not be less than the amount
provided for herein; provided, however, that the failure of the Lender or the
-------- -------
Agent so affected to give such notice shall not affect the obligations of the
Borrowers under this Section 4.04. The Borrowers shall furnish promptly to the
Agent official receipts evidencing the payment of such taxes, duties or other
charges.
ARTICLE V
YIELD PROTECTION AND ILLEGALITY
-------------------------------
Section 5.01 Additional Costs in Respect of Loans.
------------------------------------
(a) The Borrowers shall pay to the Agent from time to time such amounts as
any Lender may determine to be necessary to compensate it for any costs incurred
by such Lender, which such Lender determines are attributable to its making or
maintaining any Loans hereunder or its commitment to make such Loans hereunder,
or any reduction in any amount receivable by such Lender hereunder in respect of
such Loans (collectively "Additional Costs"), resulting from any Regulatory
Change which:
<PAGE>
-32-
(i) changes the basis of taxation of any amounts payable to such
Lender under this Credit Agreement or the Notes in respect of such Loans;
or
(ii) imposes any reserve, special deposit or other requirement (other
than any reserve included in the Eurodollar Reserve Percentage with respect
to Eurodollar Loans) or modifies any reserve, special deposit, minimum
capital, capital ratio or similar requirements relating to any extensions
of credit or other assets of, or any deposits with or other liabilities of,
such Lender (including any deposits referred to the definition of
"Eurodollar Rate" in Section 1.01 hereof), or any commitments of such
Lender; or
(iii) imposes any other similar or like condition affecting this
Credit Agreement or the commitments of such Lender.
Each Lender shall notify the Agent and the Borrowers of any event which shall
entitle such Lender to compensation pursuant to this Section 5.01(a) as promptly
as practicable after it obtains knowledge thereof and determines to request such
compensation. Each Lender will furnish the Agent and the Borrowers with a
statement setting forth the basis and amount of each request by such Lender for
compensation under this Section 5.01(a). If any Lender requests compensation
from the Borrowers under this Section 5.01(a), the Borrowers may, by notice to
such Lender, require that any Loan for which compensation is requested be
converted into a different Type of Loan in accordance with Section 2.03 hereof.
(b) Without limiting the effect of the foregoing provisions of this Section
5.01, in the event that, by reason of any Regulatory Change, any Lender either
(i) incurs Additional Costs based on or measured by the excess above a specified
level of the amount of a category of deposits or other liabilities of such
Lender (which includes deposits by reference to which the interest rate on any
Eurodollar Loans is determined as provided in this Credit Agreement) or a
category of extensions of credit or other assets of such Lender (which includes
any Eurodollar Loans), or (ii) becomes subject to restrictions on the amount of
such category of liabilities or assets which it may hold, then, if such Lender
so elects by notice to the Borrowers (with a copy to the Agent), the obligation
of such Lender to make the Type of Loans which are subject to such Additional
Costs or such restrictions, and to convert any Loan into such Type of Loan,
shall be suspended until the date such Regulatory Change ceases to be in effect.
(c) Without limiting the effect of the foregoing provisions of this Section
5.01 (but without duplication), the Borrowers shall pay directly to each Lender
from time to time on request such amounts as such Lender may determine to be
necessary to compensate such Lender for Capital Maintenance
<PAGE>
-33-
Costs with respect to its Loans (such compensation to include, without
limitation, an amount equal to any reduction of the rate of return on assets or
equity of such Lender to a level below that which such Lender could have
achieved but for such law, regulation, interpretation, directive or request).
Each Lender will notify the Borrowers that it is entitled to compensation
pursuant to this Section 5.01(c) as promptly as practicable after it determines
to request such compensation.
(d) Determinations by any Lender for purposes of this Section 5.01 of the
effect of any Regulatory Change on its costs of making or maintaining Loans or
maintaining its commitments or on amounts receivable by it in respect of Loans
or such commitments, and of the additional amounts required to compensate such
Lender in respect of any Additional Costs, shall be conclusive absent manifest
error.
Section 5.02 Limitation on Types of Loans. Anything herein to the
----------------------------
contrary notwithstanding, if, with respect to any Eurodollar Loans:
(i) the Agent determines (which determination shall be conclusive) that
quotations of interest rates for the relevant deposits referred to in the
definition of "Eurodollar Rate" in Section 1.01 hereof are not being
provided in the relevant amounts or for the relevant maturities for
purposes of determining the rate of interest for such Loans as provided in
this Credit Agreement; or
(ii) a Lender reasonably determines and notifies the Agent, the Borrowers
and the other Lenders that the relevant rates of interest referred to in
the definition of "Eurodollar Rate" in Section 1.01 hereof do not
adequately cover the cost to such Lender of making or maintaining such
Loans;
then, and so long as such condition remains in effect, the Lenders shall be
under no obligation to make Eurodollar Loans and the Borrowers shall not be
entitled to convert Base Rate Loans into Eurodollar Loans, and upon the
expiration of any Interest Period applicable to Eurodollar Loans, such Loans
shall convert to Base Rate Loans.
Section 5.03 Illegality. Notwithstanding any other provision of this
----------
Credit Agreement to the contrary, in the event that it becomes unlawful for any
Lender to (i) honor its obligation to make a particular Type of Loan hereunder,
or (ii) maintain a particular Type of Loan hereunder, then such Lender shall
promptly notify the Agent and the Borrowers thereof (which notice shall include
a statement explaining the nature of such unlawfulness) and such Lender's
obligation to make such Type of Loan shall be suspended until such time as such
Lender may again make and maintain such Type of Loan, and such Lender's
<PAGE>
-34-
outstanding Loans constituting such Type of Loan shall be converted into another
Type of Loan in accordance with Section 2.03 hereof.
Section 5.04 Compensation.
------------
(a) The Borrowers shall pay to each Lender, upon the request of such
Lender, such amount or amounts as shall be sufficient (in the reasonable opinion
of such Lender) to compensate it for any loss, costs or expenses incurred by it
as a result of:
(i) any payment, prepayment or conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the Loans
pursuant to Article IX hereof) on a date other than the last day of an
Interest Period for such Loan; or
(ii) any failure by the Borrowers for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Article VI hereof to be satisfied) to borrow a Eurodollar Loan to be made
by such Lender on the date for such borrowing specified in the relevant
Notice of Borrowing under Section 2.02 hereof.
(b) Such compensation shall include Eurodollar Breakage Costs in the case
of any payment, prepayment or conversion of, or failure to borrow, any Loan made
or to be made as a Eurodollar Loan.
Section 5.05 Replacement of Lenders. If any Lender requests compensation
----------------------
pursuant to Section 5.01 or 4.04, or such Lender's obligation to make or
continue, or to convert Loans into any other Type of Loan shall be suspended
pursuant to Section 5.02 or Section 5.03, the Borrowers, upon three Business
Days' notice to the Agent and such Lender, may request that such Lender transfer
the administration of this Credit Agreement and such Lender's Notes to another
lending office of such Lender, or require that such Lender transfer all of its
right, title and under this Credit Agreement and such Lender's Notes to any bank
or financial institution identified by the Borrowers with the consent of the
Agent (which consent shall not be unreasonably withheld); provided, however,
-------- -------
that such proposed transferee agrees to assume all of the obligations of such
Lender for consideration equal to the outstanding principal amount of such
Lender's Loans, together with interest thereon to the date of such transfer, and
satisfactory arrangements are made for payment to such Lender of all other
amounts payable hereunder to such Lender on or prior to the date of such
transfer (as if all of such Lender's Loans were being prepaid in full on such
date). The agreements of the Borrowers contained in Sections 11.03 and 11.04
(without duplication of any payments made to such Lender by the
<PAGE>
-35-
Borrowers or the proposed transferee) shall survive for the benefit of any
Lender replaced under this Section 5.05 with respect to the time period prior to
such replacement.
ARTICLE VI
CONDITIONS PRECEDENT TO MAKING LOANS
------------------------------------
Section 6.01 Initial Loans. The obligation of each Lender to make the
-------------
initial Revolving Credit Loan is subject to the satisfaction of the following
conditions precedent on or prior to the date of such initial advance.
(a) Execution. This Credit Agreement shall have been duly authorized,
---------
executed and delivered by each of the Borrowers, the Lenders and the Agents,
each Borrower shall have executed and delivered to each Lender its respective
Revolving Credit Note evidencing the Revolving Credit Loans to be made by such
Lender hereunder.
(b) Signatures. Each of the Borrowers shall have certified to the Agent
----------
(with copies to be provided for each Lender) the name and signature of each of
the persons authorized (i) to sign on its respective behalf this Credit
Agreement, the Notes, the Security Documents and other Credit Documents to which
it is a party, and (ii) to borrow under this Credit Agreement. The Lenders may
conclusively rely on such certifications until they receive notice in writing
from any Borrower, as the case may be, to the contrary.
(c) Proof of Action. The Agent shall have received evidence satisfactory
---------------
to the Agent of all necessary action taken by each of the Borrowers to authorize
the execution, delivery and performance of such of the Credit Documents to which
it is a party.
(d) Opinions of Counsel to the Borrowers. The Agent shall have received an
------------------------------------
opinion of Christy & Viener, special New York counsel to the Borrowers,
substantially in the form of Exhibit J hereto.
------- -
(e) Security Documents. Each Borrower shall have duly authorized,
------------------
executed, delivered, filed, registered and recorded such Security Documents,
notices, financing statements and other instruments as the Agent may have
reasonably requested, at any time and from time to time, in order to perfect the
liens required pursuant to the Credit Documents.
(f) Contract Value Report. The Borrowers shall have delivered to the Agent
---------------------
an updated Contract Value Report as of March 31, 1998.
<PAGE>
-36-
(g) Solvency Certificate. The Agent shall have received a Solvency
--------------------
Certificate demonstrating that, after giving effect to the Credit Documents,
each of the Borrowers is solvent.
(h) Certain Fees. The Borrowers shall have paid to the Agents any fees due
------------
pursuant to Section 2.05 hereof.
(i) Regulations G, T, U and X. Each Lender shall be satisfied that the
-------------------------
making of any Loan shall not violate Regulations G, T, U or X (or any successor
provisions) and no order, judgment or decree of any Governmental Authority shall
enjoin or restrain, or purport to enjoin or restrain, any Lender from making any
Loan.
(j) Other Documents. The Borrower shall have delivered to the Agent such
---------------
other documents and papers relating to the Credit Documents and the transactions
contemplated hereby as any Lender or the Agent shall reasonably request.
(k) Payment of Prior Indebtedness. The Borrowers shall have paid in full
-----------------------------
all of their obligations under the Prior Loan Documents and the commitments of
the Lenders thereunder shall have terminated.
(l) No Litigation. There shall be no litigation, proceeding, inquiry or
-------------
other action seeking an injunction or other restraining order, damages or other
relief by any Governmental Authority or any Person, or investigation by any
Governmental Authority pending or existing with respect to, or known to any of
the Borrowers to be threatened with respect to, any of the Borrowers or any of
their respective assets or any of the Credit Documents or any of the
transactions contemplated thereby, as to which, in the view of the Lenders,
could reasonably be expected to have a Material Adverse Effect, and there shall
have occurred no development in any action, suit, proceeding, investigation or
arbitration previously disclosed to the Lenders pursuant to this Credit
Agreement as to which, in the view of the Lenders, there is a reasonable
possibility of such an effect.
(m) No Material Adverse Change. Except as set forth in Schedule 6.01(m)
-------------------------- -------- -------
attached hereto, since the date of the most recent financial statements
delivered to the Agent in connection with this Credit Agreement, there shall
have been no change in the business or assets or in the financial condition of
the Borrowers, singly or taken as a whole, that could reasonably be expected to
have a Material Adverse Effect on the Borrowers, and none of the Borrowers shall
have entered into any transaction outside of the ordinary course of business
which is material to such Borrower.
<PAGE>
-37-
(n) Consents and Approvals. The Lenders shall be satisfied that the
----------------------
execution, delivery and performance by the Borrowers of the Credit Documents
(including the application of the proceeds of the Loans) and the grant of the
security interests in the Collateral pursuant to the Security Documents) do not
and will not require any registration with, consent or waiver or approval of, or
notice to, or other action, with or by, any Governmental Authority or other
Person, except filings required for the perfection of security interests granted
pursuant to the Security Documents and except for consents previously obtained.
(o) No Violation. Neither the execution, delivery nor performance by any
------------
of the Borrowers of any of the Credit Documents to which such Borrower is, or is
to be, a party, nor the compliance with any of the terms and provisions of any
thereof, nor the consummation of any of the transactions contemplated therein
(i) will contravene any provision of any law, statute, rule, regulation, order,
writ, injunction or decree of any Governmental Authority, (ii) will, to the best
of Borrowers' knowledge after reasonable investigation, conflict or be
inconsistent with, or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute (with notice or lapse of time or
both) a default under, or (other than the Liens created by the Security
Documents) result in the creation, imposition of (or the obligation to create or
impose) any Lien upon any of the property or assets of any Borrower pursuant to
any contractual obligation, or (iii) will violate any provision of any of the
organizational documents of any Borrower.
(p) Organizational Documents. The Lenders shall have received copies of
------------------------
(i) the organizational documents and good standing certificates of each of the
Borrowers and any agreements entered into, or to be entered into, by any
Borrower governing the terms and relative rights of its capital stock or any
agreements entered into by stockholders relating to any Borrower, and (ii)
resolutions of the board of directors or other governing body under applicable
law of each Borrower approving and authorizing the execution, delivery and
performance of this Credit Agreement and each of the other Credit Documents to
which it is, or is to be, a party and any other documents, instruments and
certificates required to be executed by it in connection herewith or therewith
and approving and authorizing the execution, delivery and payment of the Notes
to be issued by it and the Liens to be created by it, as the case may be, and
the other transactions contemplated by this Credit Agreement, certified, in each
case, as true and complete by an appropriate corporate officer or Governmental
Authority, and the provisions of the foregoing shall be satisfactory in form and
substance to each of the Lenders.
(q) Financial Statements. The Borrowers shall have delivered to the
--------------------
Lenders (i) the Borrowers' most recent audited consolidated balance sheet and
related consolidated statements of earnings and retained earnings for the most
<PAGE>
-38-
recent audited fiscal year, together with any notes to such financial
statements, (ii) the Borrowers' unaudited consolidated balance sheets and
related consolidated statements of earnings and retained earnings for the period
ending March 31, 1998, and (iii) such other financial statements as the Lenders
may reasonably request.
(r) Investigation Satisfaction. The Agent and the Lenders shall have
--------------------------
completed their review of the assets, business operations and business plan of
the Borrowers, and shall have determined that the same (including, without
limitation, the business plan) are satisfactory to the Agent and the Lenders.
(s) Equity Purchase. All equity interests held by Providence Media
---------------
Partners L.P. in any Borrower and any such equity interests held by any
Affiliate of Providence Media Partners L.P. shall have been repurchased either
by the Company or an Affiliate of the Company for an aggregate purchase price
not to exceed $15,000,000.
(t) Subordinated Debt Issuance. The Borrowers shall have received not less
--------------------------
than $100,000,000 as proceeds of the issuance of the 1998 Subordinated Notes.
Section 6.02 All Revolving Credit Loans. The obligation of each Lender to
--------------------------
make each Revolving Credit Loan hereunder (which shall not include any
conversion or continuation of any outstanding Loan) is subject to the additional
conditions precedent that: (i) no Default or Event of Default shall have
occurred and be continuing or shall occur as a result of any such requested
Loan; (ii) the representations and warranties in Article VII hereof and in each
of the Credit Documents shall be true and correct on and as of the date of the
making of, and after giving effect to, such Loan with the same force and effect
as if made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date; and (iii)
the Borrowers shall have delivered to the Agent a Notice of Borrowing
satisfactory to the Agent.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
------------------------------
Each of the Borrowers represents and warrants as follows:
Section 7.01 Existence and Power. Each of the Borrowers is a corporation
-------------------
or a limited liability company duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and, except as set
forth on Schedule 7.01 attached hereto, is duly qualified to transact business
-------- ----
and is in good standing in all jurisdictions in which such qualification is
necessary in view of the properties and assets owned and presently intended to
<PAGE>
-39-
be owned and the business transacted and presently intended to be transacted by
it, except for qualifications the lack of which, singly or in the aggregate,
have not had and are not reasonably expected to have a Material Adverse Effect,
and each of the Borrowers has full power, authority and legal night to make and
perform each of the Credit Documents to which it is a party.
Section 7.02 Subsidiaries and Affiliates. Schedule 1.01(i) contains a
--------------------------- -------- -------
complete and correct list, as of the date hereof, of all Subsidiaries of the
Company and a description of the legal nature of such Subsidiaries, the nature
of the ownership interests (shares of stock, membership or general or limited
partnership or other interests) in such Subsidiaries and the holders of such
interests and as of the Closing Date the Company and each of its Subsidiaries
owns all of the ownership interests of its Subsidiaries indicated in such
Schedule. 1.01(i) as being owned by the Company or such Subsidiary, as the case
- -------- -------
may be, and all such ownership interests are validly issued and, in the case of
shares of stock, fully paid and non-assessable. Schedule 7.02 hereto contains a
-------- ----
complete and correct list, as of the Closing Date, of all Affiliates of the
Company or its Subsidiaries which are not Subsidiaries of the Company or its
Subsidiaries, the nature of the respective ownership interests in each such
Affiliate, and the holder of each such interest.
Section 7.03 Authority, No Conflict. The making and performance by each
----------------------
of the Borrowers of such of the Credit Documents to which it is a party, and
each extension of credit hereunder, have been duly authorized by all necessary
action and do not and will not: (i) subject to the consummation of the action
described in Section 7.12 hereof, violate any provision of any laws, orders,
rules or regulations presently in effect, or any provision of any of such
Borrower's charter, certificate, by-laws or operating agreement presently in
effect; or (ii) to the best of Borrowers' knowledge after reasonable
investigation, result in the breach of, or constitute a default or require any
consent (except for the consents described on Schedule 7.03 hereto, each of
-------- ----
which has been duly obtained) under, any existing indenture or other agreement
or instrument to which any Borrower is a party or their respective properties
may be bound or affected; or (iii) result in, or require, the creation or
imposition of any Lien (other than those contemplated by the Security Documents)
upon or with respect to any of the properties or assets now owned or hereafter
acquired by any of the Borrowers.
Section 7.04 Financial Condition. The Borrowers have furnished to each
-------------------
Lender the audited consolidated balance sheets of the Company and its
Subsidiaries as at December 31, 1997, and the related consolidated statements of
operations, stockholders' equity (deficiency) and cash flows for the fiscal year
ended on said date, said financial statements having been audited by Arthur
Andersen & Co., LLP, whose opinion shall be unqualified. All financial
statements referred to above are complete and correct in all material respects
and fairly present the financial condition of the Borrowers on said date. None
of
<PAGE>
-40-
the Borrowers had on said date any material contingent liabilities, liabilities
for taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments or operations which are substantial in
amount, except as referred to, or reflected or provided for in said financial
statements. From the date of the most recent financial statements delivered to
the Lenders, there has been no change in the financial condition or the
businesses or operations of the Borrowers, singly or taken as a whole on a
consolidated basis, which could reasonably be expected to have a Material
Adverse Effect on the Borrowers.
Section 7.05 Litigation, Etc. Except as disclosed to the Lenders on
---------------
Schedule 7.05, there are no lawsuits or other proceedings pending against any
- -------- ----
Borrower or any of their respective properties or assets before any court or
arbitrator or by or before any governmental commission, bureau or other
regulatory authority that, singly or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Borrowers. No Borrower is in
default under, or in violation of or with respect to, any laws or orders, or any
material provision of any rules or regulations, or any writ, injunction or
decree of any court, arbitrator, governmental commission, bureau or other
regulatory authority, except for minor defaults which, if continued unremedied,
are not reasonably expected to have a Material Adverse Effect on the Borrowers.
Section 7.06 Titles and Liens. Except as set forth on Schedule 8.12, each
---------------- -------- ----
of the Borrowers has good title to its properties and assets, free and clear of
all Liens except those permitted by Section 8.12 hereof.
Section 7.07 Regulations G, T, U and X. No part of the proceeds of the
-------------------------
Loans will be used to purchase or carry any Margin Stock in violation of
Regulation U or to extend credit for the purpose of purchasing or carrying any
Margin Stock. Neither the making of any Loan hereunder nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulations G, T, U or X.
Section 7.08 Taxes. Except as is otherwise set forth in Schedule 7.01
----- -------- ----
hereof, each of the Borrowers has filed all tax returns which are required to be
filed under any law applicable thereto, and has paid, or made provision for the
payment of, all taxes shown to be due pursuant to said returns or pursuant to
any assessment received by any of the Borrowers, except such taxes, if any, as
are being contested in good faith and as to which adequate reserves have been
provided.
Section 7.09 Other Credit Agreements. Schedule 8.10 (Existing
----------------------- -------- ----
Indebtedness) and Schedule 8.12 (Existing Liens) attached hereto contain
-------- ----
complete and correct lists, as at the date hereof, of all credit agreements,
indentures, purchase agreements, obligations in respect of letters of credit,
<PAGE>
-41-
guarantees and other instruments presently in effect (including Capital Lease
Obligations) providing for, evidencing, securing or otherwise relating to any
Indebtedness of the Borrowers, and such lists, as of the date hereof, correctly
set forth the names of the debtor or lessee and creditor or lessor with respect
to the Indebtedness outstanding or to be outstanding thereunder, the rate of
interest or rent, a description of any security given or to be given therefor,
and the maturity or maturities or expiration date or dates thereof
Section 7.10 Full Disclosure. As of the Closing Date, none of the
---------------
financial statements referred to in Section 7.04 hereof contains any untrue
statement of a material fact, nor do such financial statements and such written
statements, taken as a whole, omit to state a material fact necessary to make
the statements contained therein not misleading.
Section 7.11 No Default. None of the Borrowers is in default in the
----------
payment or performance or observance of any contract, agreement or other
instrument to which it is a party or by which it or its properties or assets may
be affected or bound, which default, either alone or in conjunction with all
other such defaults, has had or could reasonably be expected to have a Material
Adverse Effect on the Borrowers.
Section 7.12 Approval of Regulatory Authorities. No approval or consent
----------------------------------
of, or filing or registration with, any Federal, state or local commission or
other regulatory authority is required in connection with the execution,
delivery and performance by any of the Borrowers of any of the Credit Documents
to which it is a party. All such described action required to be taken as a
condition to the execution and delivery of such of the Credit Documents to which
any of the Borrowers is a party has been duly taken by all such commissions and
authorities or other Persons, as the case may be, and all such action required
to be taken as a condition to the initial advance hereunder has been or will be
duly taken prior to such initial advance.
Section 7.13 Binding Agreements. The Credit Documents constitute the
------------------
legal, valid and binding obligations of each of the Borrowers which is a party
thereto, enforceable in accordance with their respective terms (except for
limitations on enforceability under bankruptcy, reorganization, insolvency and
other similar laws affecting creditors' rights generally, and limitations on the
availability of the remedy of specific performance imposed by the application of
general equitable principles).
Section 7.14 Collective Bargaining Agreements. There are no collective
--------------------------------
bargaining agreements between any of the Borrowers and any trade or labor union
or other employee collective bargaining agent.
<PAGE>
-42-
Section 7.15 Investments. Schedule 7.15 attached hereto contains a
----------- -------- ----
complete and correct list, as of the Closing Date, of all Investments in amounts
in excess of $50,000 of the Borrowers (other than Investments in Subsidiaries or
overnight cash management Investments made on behalf of the Company or its
Subsidiaries) showing the respective amounts of each such Investment and the
respective entity in which each such Investment has been made.
Section 7.16 Real Property. As of the Closing Date, none of the Borrowers
-------------
owns any real property.
Section 7.17 Intellectual Property. The Borrowers own or have a valid
---------------------
right to use the patents, patent rights or licenses, trademarks, trademark
applications, trademark rights and trade names or trade name rights or
franchises now being used or necessary to conduct its business, all of which, as
of the Closing Date, are listed on the attached Schedule 7.17. The conduct of
-------- ----
the businesses of the Borrowers as now operated does not conflict with any valid
patents, patent rights or licenses, trademarks, trademark rights and trade names
and trade name rights or franchises of others in any manner that could result in
a Material Adverse Effect on the Borrowers.
Section 7.18 Principal Places of Business. The principal place of
----------------------------
business and chief executive offices of each Borrower is located at 100 Park
Avenue, New York, New York 10017. The Borrowers maintain no records relating
to Collateral at any address other than their respective Chief Executive Offices
(other than copies of materials, the originals of which are maintained at such
Chief Executive Offices), nor do the Borrowers maintain, store or keep any
material Collateral at any location other than such office.
Section 7.19 Investment Company Act; Public Utility Holding Company Act.
----------------------------------------------------------
None of the Borrowers is an "investment company" or a "company controlled by
an investment company" within the meaning of the 1940 Act, 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, as amended.
Section 7.20 1998 Subordinated Note Documents. True and complete copies
--------------------------------
of the 1998 Subordinated Note Documents have been delivered to the Lenders, and
each of the 1998 Subordinated Note Documents have been duly executed and
delivered by the parties thereto and are in full force and effect. All
Obligations constitute "Senior Indebtedness" (or the equivalent term) under and
as described in the 1998 Subordinated Note Documents and the Offering
Memorandum. No default has occurred and is continuing under the 1998
Subordinated Note Documents.
<PAGE>
-43-
ARTICLE VIII
COVENANTS
---------
From and after the Closing Date until the payment in full of all Obligations
hereunder and the performance of all other obligations of the Borrowers under
the Credit Documents, each of the Borrowers agrees that, unless the Lenders
shall otherwise consent in writing:
A. Informational Covenants:
-----------------------
Section 8.01 Financial Information. The Company, on behalf of the
---------------------
Borrowers, shall deliver to each Lender:
(a) As soon as available and in any event within 60 days of the end of each
Quarter of each fiscal year of the Borrowers: (i) consolidated statements of
income and loss for such Quarter and for the period from the beginning of such
fiscal year to the end of such Quarter and (ii) the related consolidated balance
sheets of the Borrowers as of the end of such Quarter (which financial
statements shall set forth in comparative form the corresponding figures as at
the end of and for the corresponding Quarter in the preceding fiscal year), all
in reasonable detail and, accompanied by a Quarterly Compliance Certificate in
the form of Exhibit K hereto of the Chief Financial Officer or Treasurer of the
------- -
Company certifying, on behalf of the Borrowers, such financial statements,
subject, however, to year-end audit adjustments, which certificate shall include
a statement that the Chief Financial Officer or Treasurer signing the same has
no knowledge, except as specifically stated, that any Default or Event of
Default has occurred and is continuing; provided, however, that the financial
-------- -------
statements for the last Quarter of each fiscal year shall be delivered at the
time the financial statements referred to in Section 8.01(b) hereof shall be
due.
(b) As soon as available and in any event within 120 days after the end of
each fiscal year of the Borrowers: (i) audited consolidated statements of income
and loss and sources and applications of funds of the Borrowers for such fiscal
year and (ii) the related consolidated balance sheets of the Borrowers, as of
the end of such fiscal year (which financial statements shall set forth in
comparative form the corresponding figures as at the end of and for the
preceding fiscal year), all in reasonable detail and accompanied by (x) an
opinion of independent certified public accountants of nationally recognized
standing selected by the Borrowers as to said financial statements, together
with a certificate of such accountants stating that, in making the examination
necessary for said opinion, they obtained no knowledge, except as specifically
stated, of any failure by the Borrowers to perform or observe any of its
covenants relating to financial matters contained in this Credit Agreement, and
it being understood that the examination of such accountants cannot be relied
<PAGE>
-44-
upon to give them knowledge of any such Default or Event of Default except as it
relates to accounting and auditing matters, (y) an Annual Compliance Certificate
in the form of Exhibit L hereto of the Chief Financial Officer or Treasurer of
------- -
the Company stating that, on behalf of the Borrowers, such financial statements
are correct and complete and fairly present the financial condition and results
of operations of the respective entities covered thereby as at the end of and
for such fiscal year and that the officer signing the same has no knowledge,
except as specifically stated, that any Default or Event of Default has occurred
and is continuing.
(c) Promptly after becoming available, copies of all financial statements
which any of the Borrowers shall have sent to their respective shareholders
generally (other than tax returns, unless specifically requested under clause
(h) of this Section 8.01), and copies of all documents, if any, which any of the
Borrowers shall have filed with any Governmental Authority, including, without
limitation, the Securities and Exchange Commission.
(d) At the time of delivery of the financial statements required in
subsections (a) and (b) of this Section 8.01, a Contract Value Report.
(e) Prior to the last day of each fiscal year, a revised annual budget for
the Borrowers, on a consolidated and consolidating basis, for the following
fiscal year, satisfactory in form to the Lenders.
(f) Within 30 days of receipt by the Company, Shareholder Stock Appraisal
Reports.
(g) As soon as possible, and in any event within five (5) days after any
senior executive of any of the Borrowers shall have obtained knowledge of the
occurrence of a Default or Event of Default, a statement describing such Default
or Event of Default and the action which is proposed to be taken with respect
thereto.
(h) As soon as possible, and in any event within five (5) days after any
senior executive shall have obtained knowledge of a default under any 1998
Subordinated Note Document, a statement describing the same.
(i) As soon as possible, and in any event within five (5) days, copies of
all amendments entered into and waivers granted in respect of the 1998
Subordinated Note Documents and copies of all notices and other communications
received by the Company from, or given by the Company to, the trustee under the
1998 Subordinated Note Indenture or any holder of a 1998 Subordinated Note.
<PAGE>
-45-
(j) From time to time, with reasonable promptness, such further information
or financial reports (including, without limitation, audit letters) regarding
the business, affairs and financial condition of the Borrowers or any of their
respective Affiliates, as any Lender may reasonably request.
B. Affirmative Covenants:
----------------------
Section 8.02 Taxes and Claims. Each of the Borrowers will pay and
----------------
discharge all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits, or upon any properties or assets belonging to
it, prior to the date on which penalties attach thereto, and all other lawful
claims which, if unpaid, might become a Lien (other than Permitted Liens) upon
the property of any of the Borrowers, provided, that none of the Borrowers shall
--------
be required to pay any such tax, assessment, charge, levy, fee or other claim
the payment of which is being contested in good faith and by proper proceedings
if it maintains adequate reserves with respect thereto.
Section 8.03 Insurance. Each of the Borrowers will maintain insurance
---------
issued by responsible companies in such amounts and against such risks as is
prudent in the Company's reasonable discretion. The Company, on behalf of the
Borrowers, will furnish to any Lender, upon the request of such Lender from time
to time, full information as to the insurance maintained in accordance with this
Section 8.03. Without limiting the generality of the foregoing, within 45 days
after the Closing Date, the Company shall deliver to the Agent copies of all
insurance policies, certificates and endorsements, which shall name the Agent
(for the benefit of the Lenders) as loss payee.
Section 8.04 Maintenance of Existence. Except as permitted by Section 8.14
------------------------
hereof, each of the Borrowers will preserve and maintain its existence and
corporate structure and all of its rights, privileges and franchises, except
where a failure to do so, singly or in the aggregate, is not reasonably expected
to have a Material Adverse Effect on the Borrowers taken as a whole.
Section 8.05 Maintenance of and Access to Properties. Each of the
---------------------------------------
Borrowers will keep all of its properties and assets necessary to its business
in good working order and condition, ordinary wear and tear excepted, and, upon
reasonable advance notice, will permit and assist representatives of the Lenders
to inspect such properties, to confer with its officers, employees, directors
and agents, and to examine and make extracts from its books and records, during
normal business hours.
Section 8.06 Compliance with Applicable Laws. Each of the Borrowers will
-------------------------------
comply with the requirements of all applicable laws, rules, regulations and
<PAGE>
-46-
orders of any governmental body or regulatory authority, a breach of which could
reasonably be expected, singly or in the aggregate, to have a Material Adverse
Effect on the Borrowers taken as a whole.
Section 8.07 Litigation. The Company, on behalf of each of the Borrowers,
----------
will promptly give to the Lenders notice in writing of all litigation and of all
proceedings before any courts, arbitrators or governmental or regulatory
agencies against any of the Borrowers or, to the knowledge of any of the
Borrowers, otherwise affecting any of the Borrowers or any of their respective
properties or assets, except litigation or proceedings which, if adversely
determined, could reasonably be expected, singly or in the aggregate, to have a
Material Adverse Effect on the Borrowers taken as a whole. Following the
initial notice of each such litigation or proceeding, supplementary notices of
all material developments in respect thereof shall be given to the Lenders from
time to time in like manner.
Section 8.08 New Subsidiaries. Promptly upon the acquisition or formation
----------------
of any New Subsidiary or the issuance of new stock and/or other ownership
interest in any existing Subsidiary, the Borrowers shall notify the Agent of
such acquisition, formation or issuance and cause (by documentation satisfactory
to the Lenders) (i) the capital stock of and/or other ownership interests in
such New Subsidiary or existing Subsidiary held by any Borrower to be pledged or
otherwise assigned and delivered with stock powers executed in blank to the
Agent, as additional collateral under the Security Documents, (ii) such New
Subsidiary to undertake all of the obligations of a "Borrower" as defined under
this Credit Agreement and of a "Securing Party" under the Security Documents,
and to create on its revenues and assets all of the Liens to be created by a
"Securing Party" under the Security Documents, and (iii) all such filings and
recordings in public offices as the Lenders shall determine to be desirable in
order to perfect the Liens in favor of the Agent on the properties of such New
Subsidiary created under the Security Documents as contemplated by clause (ii)
above to be effected. Each such New Subsidiary shall thereafter be a
"Borrower," a " Borrower Subsidiary" and a "Securing Party" for all purposes of
the Credit Documents.
Section 8.09 [INTENTIONALLY OMITTED]
C. Negative Covenants:
------------------
Section 8.10 Indebtedness. Except as otherwise permitted in this Credit
------------
Agreement, none of the Borrowers shall create, incur or suffer to exist any
Indebtedness except:
(i) Indebtedness created by this Credit Agreement;
<PAGE>
-47-
(ii) Indebtedness in respect of Capital Lease Obligations, and
Indebtedness incurred to finance the purchase price of property or
equipment, so long as the aggregate principal amount of all such
Indebtedness outstanding at any one time does not exceed $2,500,000.
(iii) Indebtedness under the 1998 Subordinated Note Documents in an
aggregate principal amount not to exceed $100,000,000 minus the amount of
-----
any payment, prepayment, purchase, repurchase, redemption, retirement, or
other acquisition of, or cancellation or discharge of, any 1998
Subordinated Notes (excluding, for purposes of this reduction, the exchange
of notes pursuant to the Exchange Offer);
(iv) current liabilities of the Borrowers, other than for money
borrowed, incurred in the ordinary course of business;
(v) indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment thereof shall not at the time be required to be made in
accordance with the terms of applicable law, rules, regulations or
contracts, as the case may be, and indebtedness secured by liens of
carriers, warehousemen, mechanics and material men permitted by Section
8.12 hereof,
(vi) liabilities for deferred compensation owing to employees of the
Borrowers;
(vii) obligations owing to terminated employees of the Borrowers;
(viii) Permitted Seller Note Indebtedness; and
(ix) Permitted Subordinated Debt.
As of the Closing Date, all Indebtedness of the Borrowers other than pursuant to
clause (ii) above is set forth on Schedule 8.10 attached hereto.
-------- ----
Section 8.11 Contingent Liabilities. Except as set forth on Schedule 8.11
---------------------- -------- ---
attached hereto, or as otherwise permitted in this Credit Agreement, none of the
Borrowers shall, directly or indirectly (including, without limitation, by means
of causing a bank to open a letter of credit), guarantee, endorse, contingently
agree to purchase or to furnish funds for the payment or maintenance of, or
otherwise be or become contingently liable upon or with respect to, the
Indebtedness of any other Person, or guarantee the payment of dividends or other
distributions upon the stock or other ownership interests of any other Person,
or agree to purchase, sell or lease (as lessee or lessor) property, products,
materials, supplies or services primarily for the purpose of enabling a
<PAGE>
-48-
debtor to make payment of its obligations or to assure a creditor against loss,
except endorsements of negotiable instruments for deposit or collection in the
ordinary course of business.
Section 8.12 Liens. None of the Borrowers shall create or suffer to exist
-----
any mortgage, pledge, security interest, conditional sale or other title
retention agreement, lien, charge or encumbrance upon any of its assets, now
owned or hereafter acquired, securing any Indebtedness (all such security being
herein called "Liens"), except:
(i) Liens securing Indebtedness permitted by Section 8.10 hereof;
(ii) Liens provided for by the Security Documents;
(iii) Permitted Liens;
(iv) Liens existing on the Closing Date and listed in Schedule 8.12
-------- ----
hereof, and
(v) the renewal, extension or refunding of any of the foregoing liens
securing an amount not exceeding the amount thereof remaining unpaid
immediately prior to such renewal, extension or refunding.
In addition, none of the Borrowers shall enter into or permit to exist any
undertaking by it or affecting any of its properties whereby any of the
Borrowers shall agree with any Person (other than the Lenders or the Agent) not
to create or suffer to exist any Liens in favor of any other Person.
As of the Closing Date, all Liens of any of the Borrowers, except for
Permitted Liens and Liens permitted pursuant to clause (ii) above, are set forth
on Schedule 8.12 attached hereto.
-------- ----
Section 8.13 Leases. None of the Borrowers shall incur, assume or have
------
outstanding any obligation to pay rent under leases (as lessee, guarantor or
otherwise) except:
(i) obligations under leases by one Subsidiary to another Subsidiary
or the Company;
(ii) obligations under leases of equipment and other real or personal
property for use in the ordinary course of business; and
(iii) Capital Lease Obligations to the extent permitted by Section
8.10 hereof.
<PAGE>
-49-
All leases in respect of real estate to which any of the Borrowers are a
party as of the Closing Date are set forth on Schedule 8.13 attached hereto.
-------- ----
The Company shall give prompt notice to the Agent of any leases entered into
after the Closing Date.
Section 8.14 Mergers, Acquisitions and Dispositions.
--------------------------------------
(a) Except as set forth in Section 8.14(b), none of the Borrowers shall
consolidate or merge with any Person, or sell, lease, license, assign, transfer
or otherwise dispose of any part of its business, assets or rights; provided,
--------
however, that, unless a Default or Event of Default has occurred and is
- -------
continuing: (i) the Borrowers may make dispositions in the ordinary course of
business (including dispositions of obsolete or worn-out property and other
property reasonably determined by the management of the disposing entity to be
not used or useful in its business); and (ii) the Company or a Subsidiary may
merge with another wholly-owned Subsidiary Borrower or the Company provided that
such wholly-owned Subsidiary Borrower or the Company shall be the surviving
entity.
(b) None of the Borrowers shall purchase or acquire assets from, or the
business or assets of, any other Person, except: (i) the purchase of assets in
the ordinary course of business as conducted on the Closing Date by the
Borrowers; or (ii) the acquisition of all or any part of the business or assets
of, or merger with any Representative Firm (a "Permitted Acquisition"),
provided, however, that: (w) after giving pro forma effect to any such merger or
- -------- -------
acquisition, (including the incurrence by any Borrower of any Indebtedness in
connection therewith) (A) no Default or Event of Default shall have occurred and
shall be continuing and (B) no Default shall occur under Article VIII D hereof
as of the last day of the most recent Quarter (assuming for this purpose that
the merger or acquisition was completed on the first day of the four Quarter
period ending on such day); (x) prior to such merger or acquisition, the
Borrowers shall have furnished to the Lenders the terms of such merger or
acquisition, including a reasonably detailed description of such business or
assets; (y) if the assets so acquired consist of stock of any Person, such
Person acquired shall immediately agree to become a "Borrower" and "Subsidiary
Borrower" in accordance with Section 8.08 hereof; and (z) after giving effect to
such merger or acquisition, Guild will hold at least the same percentage of
common or voting stock of the Company as he held prior to such merger or
acquisition.
Section 8.15 Investments. Except as otherwise permitted in this Credit
-----------
Agreement, and except for Permitted Investments, investments by the Company in
any Subsidiary Borrower, and long-term investments related to the business of
the Borrowers in the aggregate amount outstanding at any time not to exceed
$250,000, none of the Borrowers shall, directly or indirectly, make or permit to
<PAGE>
-50-
remain outstanding any advances, loans (other than advances to employees of the
Borrowers made in the ordinary course of the Borrowers' business and not
exceeding $200,000 in the aggregate), accounts receivable (other than accounts
receivable arising in the ordinary course of business of the Borrowers,
including, without limitation, any accounts receivable arising from the purchase
of Contracts), or purchase or own any stocks, bonds, notes, debentures,
interests or securities (including, without limitation, any interests in any
partnership, joint venture or joint adventure), or guarantee any Indebtedness or
other obligations of any Person except as expressly permitted by Section 8.11 of
this Credit Agreement (all such transactions being herein called "Investments").
Section 8.16 Restricted Payments. None of the Borrowers shall, directly or
-------------------
indirectly, make any Restricted Payment, except that the Company may make
Permitted Payments, and a Subsidiary may make dividend payments to the Company.
Section 8.17 Business.
--------
(a) None of the Borrowers shall engage in any business other than that of a
Representative Firm.
(b) The Company will not (i) permit any Subsidiary identified as "inactive"
in Schedule 8.17(b) attached hereto or identified by the Company "inactive" in
-------- -------
any written notice furnished to the Agent at any time after the date hereof to
conduct or engage in any business or operations of any kind, to own any property
other than its nominal capitalization and rights under immaterial agreements or
contracts that do not require any payments by such Subsidiary, to incur or
assume or permit to exist any Indebtedness or to make or permit to exist any
Investment (other than Investments in nominal aggregate amounts), or (ii) create
or acquire at any time after the date hereof any direct or indirect Subsidiaries
other than Subsidiaries that are created or acquired (A) pursuant to or in
connection with any Permitted Acquisitions, and (B) in compliance with Section
8.08 hereof.
Section 8.18 Transactions with Affiliates. None of the Borrowers shall
----------------------------
effect any transaction with any of its Affiliates that is not a Borrower
hereunder unless (i) the Lenders shall have received notice of any such
transaction which exceeds $100,000 and (ii) any such transaction is entered into
on a basis which is no less favorable to such Borrower than would be obtainable
in connection with a comparable transaction at arms' length dealing with an
unrelated third party.
<PAGE>
-51-
Section 8.19 Material Change to Corporate Structure. None of the Borrowers
--------------------------------------
shall amend, modify or supplement any of the provisions of its charter or by-
laws as presently in effect.
Section 8.20 Issuance of Stock.
-----------------
(a) The Borrowers shall not permit any Subsidiary to issue any shares of
stock or other ownership interests in such Subsidiary if, after giving effect
thereto, the percentage of ownership interests in such Subsidiary held by one or
more of the Borrowers immediately prior to such issuance would be decreased.
(b) In the event that an Event of Default has occurred and is continuing,
the Company may not issue any shares of capital stock or other equity interest
unless the net cash proceeds thereof are paid to the Lenders for application
against the Obligations hereunder
Section 8.21 Amendments or Termination of 1998 Subordinated Note Documents.
-------------------------------------------------------------
None of the Borrowers shall enter into, agree to or otherwise permit any
amendment, supplement or other modification to any 1998 Subordinated Note
Document.
D. Financial Covenants:
-------------------
Section 8.22 Total Leverage. At all times during each of the periods
--------------
listed below, the Borrowers shall, on a consolidated basis, maintain a ratio of
(i) (a) Total Funded Debt, less (b) the aggregate amount of cash and Permitted
----
Investments of the Borrowers in excess of $5,000,000 to (ii) EBITDA (measured
for the immediately preceding four Quarters for which the most recent financial
statements are required to be delivered pursuant to Section 8.01 hereof) of not
more than the amount listed below opposite each such period:
<TABLE>
<CAPTION>
PERIOD MAXIMUM
------ -------
<S> <C>
Closing Date - December 31, 1999 4.75:1
January 1, 2000 - December 31, 2000 4.50:1
January 1, 2001 - December 31, 2001 4.25:1
January 1, 2002 and thereafter 4.00:1
</TABLE>
Section 8.23 Interest Coverage. At all times during each of the periods
-----------------
listed below, the Borrowers shall, on a consolidated basis, maintain a ratio of
(i) EBITDA (measured for the immediately preceding four Quarters for which the
most recent financial statements are required to be delivered pursuant to
Section 8.01 hereof) to (ii) Total Interest Expense of not less than the amount
listed below opposite each such period:
<TABLE>
<CAPTION>
PERIOD LIMIT
------ -----
<S> <C>
Closing Date - December 31, 1999 1.60:1
</TABLE>
<PAGE>
-52-
<TABLE>
<S> <C>
January 1, 2000 - December 31, 2000 1.75:1
January 1, 2001 and thereafter 2.00:1
</TABLE>
Section 8.24. Senior Leverage. At all times during the periods listed
---------------
below, the Borrowers shall, on a consolidated basis, maintain a ratio of (i)
Senior Debt to (ii) EBITDA (measured for the immediately preceding four Quarters
for which the most recent financial statements are required to be delivered
pursuant to Section 8.01 hereof) of not more than the amount listed below
opposite such period:
<TABLE>
<CAPTION>
PERIOD LIMIT
------ -----
<S> <C>
Closing Date - December 31, 1999 2.00:1
January 1, 2000 - December 31, 2000 1.85:1
January 1, 2001 and thereafter 1.75:1
</TABLE>
Section 8.25 Fixed Charge Coverage. At all times, the Borrowers shall, on
---------------------
a consolidated basis, maintain a Fixed Charge Coverage of not less than 1.05 to
1.
Section 8.26 Aggregate Contract Value. At all times, the Borrowers shall,
------------------------
on a consolidated basis, maintain an aggregate Contract Value for all of the
Borrowers' Contracts of not less than $150,000,000.
Section 8.27 Capital Expenditures. The Borrowers shall not, on a
--------------------
consolidated basis, make Capital Expenditures for any fiscal year (commencing
with the fiscal year ending December 31, 1998) in excess of the sum of (i)
$1,750,000 and (ii) the difference, if any, between $1,750,000 and the aggregate
amount of Capital Expenditures for the immediately preceding fiscal year.
ARTICLE IX
DEFAULTS
--------
Section 9.01 Events of Default. If any one of the following events shall
-----------------
occur and be continuing (each, an "Event of Default"):
(a) Failure of the Borrowers to pay when due any amount payable pursuant to
the Credit Documents; or
(b) Failure by any of the Borrowers to perform or observe any of the terms
or provisions of this Credit Agreement (other than Sections 8.01, 8.02, 8.03,
8.05, 8.06, 8.07, and 8.08, but including Section 8.01(g) hereof);or
(c) Failure by any Borrower to perform or observe any of the terms or
provisions of Sections 8.01 (excluding Section 8.01(g)), 8.02, 8.03, 8.05, 8.06,
8.07 or 8.08 hereof or failure by any of the Borrowers to perform or observe
any of the
<PAGE>
-53-
terms or provisions contained in the other Credit Documents to which it is a
party (and not referred to in paragraph (b) above), and such failure continues
unremedied for 30 days; or
(d) Any representation or warranty contained in any of the Credit Documents,
or in any certificate, statement or other document furnished to the Lenders or
the Agent pursuant thereto (including, without limitation, any amendment to any
of the foregoing), or any certification made or deemed to have been made by any
Borrower to the Agent or any Lender hereunder, shall prove to have been
incorrect in any material respect, when made or deemed made, or
(e) A default shall have occurred and be continuing beyond any applicable
grace period under any Indebtedness of any Borrower which Indebtedness has an
outstanding balance exceeding $200,000, and such default shall be sufficient to
permit the holder or holders of such Indebtedness (or a trustee or agent on its
or their behalf) to accelerate the maturity thereof or to enforce any Lien
provided for by such Indebtedness, or such Indebtedness shall become due by its
terms and shall not be promptly paid or extended; or
(f) (i) any default or event of default shall occur under any 1998
Subordinated Note Document, (ii) any holder or holders of any 1998 Subordinated
Note (or any representatives of any such holders) shall exercise, purport to
exercise, give any notice of its intention to exercise, or become entitled by
the terms of any 1998 Subordinated Note Document to exercise (A) any right to
accelerate any 1998 Subordinated Note or (B) any right to require any payment,
prepayment, purchase, repurchase, redemption, retirement, acquisition or
defeasance of any 1998 Subordinated Note not permitted by this Credit Agreement,
or (iii) any Borrower shall make, offer to make or become obligated to make or
offer to make any payment, prepayment, purchase, repurchase, redemption,
retirement, acquisition or defeasance of any 1998 Subordinated Note not
permitted by this Credit Agreement, including any optional prepayment or
repurchase thereof, or any prepayment or repurchase thereof upon a change in
control or upon a sale of assets;
(g) Any Borrower shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (ii) admit in writing
its inability, or be generally unable, to pay its debts as they become due,
(iii) make a general assignment for the benefit of creditors, (iv) be
adjudicated a bankrupt or insolvent, (v) commence a voluntary case under the
Federal bankruptcy laws (as now or hereafter in effect), (vi) file a petition
seeking to take advantage of any law relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, (vii)
acquiesce in writing to, or fail to controvert in a timely and appropriate
manner, any petition filed against any
<PAGE>
-54-
Borrower in any involuntary case under such bankruptcy laws, or (viii) take any
action for the purpose of effecting any of the foregoing; or
(h) A case or other proceeding shall be commenced, without the application,
approval or consent of any Borrower, in any court of competent jurisdiction,
seeking the liquidation, reorganization, dissolution, winding up, or composition
or readjustment of debts of any Borrower, the appointment of a trustee,
receiver, custodian, liquidator or the like of such Borrower or of all or any
substantial part of its assets, or any other similar action with respect to such
Borrower under the laws of bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, and such case or proceeding shall continue
undismissed, or unstayed and in effect, for a period of 45 consecutive days, or
an order for relief against any Borrower shall be entered in an involuntary case
under the Federal bankruptcy laws (as now or hereafter in effect); or
(i) A judgment for the payment of money in excess of $200,000 shall be
rendered against any Borrower and such judgment shall remain unsatisfied and in
effect for any period of 30 consecutive days without a stay of execution or (if
a stay is not provided for by applicable law) without having been fully bonded,
or
(j) (i) Any Termination Event shall occur; (ii) any Accumulated Funding
Deficiency, whether or not waived, shall exist with respect to any Plan; (iii)
any Person shall engage in any Prohibited Transaction involving any Plan; (iv)
one or more of the Borrowers in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a multiemployer Plan resulting from such
Borrower's complete or partial withdrawal (as described in Section 4203 or 4205
of ERISA) from such Plan; (v) any of the Borrowers shall fail to pay when due an
amount which is payable by it to the PBGC or to a Plan under Title IV of ERISA;
(vi) a proceeding shall be instituted by a fiduciary of any Plan against any of
the Borrowers to enforce Section 515 of ERISA and such proceeding shall not have
been dismissed within 30 days thereafter, or
(k) Guild shall cease to own (beneficially or directly) stock of the Company
having at least 10.75% of the votes that may be cast by the holders of all
classes of stock of the Company; or
(l) Guild shall cease to be a trustee of the ESOP or the Stock Growth Plan,
unless a determination is made by the Board of Directors of the Company that the
removal of Guild is prudent, in which case the Board of Directors shall
immediately notify the Lenders in writing describing the nature and
circumstances giving rise to such determination; or
(m) Guild shall cease to perform services in his current capacities with
the
<PAGE>
-55-
Company and a replacement employee satisfactory to the Majority Lenders is
not hired by the Company within 180 days.
THEREUPON, the Majority Lenders may direct the Agent to do any one or more
of the following: (i) by notice to the Borrowers, terminate the Revolving Credit
Commitments of the Lenders hereunder (if then outstanding), (ii) declare the
unpaid principal of and accrued interest on the Notes, and all other amounts
payable hereunder, to be forthwith due and payable, whereupon the same shall be
and become forthwith due and payable, without presentment or demand for payment,
notice of nonpayment, protest or further notice or demand of any kind, all of
which are hereby expressly waived by the Borrowers, provided, however, that the
-------- -------
Revolving Credit Commitments hereunder shall forthwith terminate and the unpaid
principal of and accrued interest on the Notes, and all other amounts payable
hereunder, shall automatically become due and payable upon the occurrence of any
event specified in clauses (g) or (h) above without any such notice or other
action, all of which are hereby expressly waived by the Borrowers, and (iii)
exercise any or all of the rights of the Agent or the Lenders under the Credit
Documents or under applicable law (including all rights as a secured party, for
the benefit of the Lenders, under the Security Documents).
ARTICLE X
THE AGENT
---------
Section 10.01 Appointment, Powers and Immunities.
----------------------------------
(a) Each Lender hereby appoints and authorizes the Agent to act as its agent
hereunder with such powers as are specifically delegated to the Agent by the
terms of the Credit Documents, together with such other powers as are reasonably
incidental thereto. The Agent shall not have any duties or responsibilities
except those expressly set forth in the Credit Documents and shall not be a
trustee for any Lender. The Agent shall not be responsible to any of the
Lenders for any recitals, statements, representations or warranties contained in
any of the Credit Documents, or in any certificate or other document referred to
or provided for in, or received by, any of the Lenders under the Credit
Documents, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of the Credit Documents (including, without
limitation, for the creation or perfection of any security interests granted by
the Security Documents) or any other document referred to or provided for
therein or for any failure by the Borrowers to perform any of their obligations
thereunder. The Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or attorneys-in-
fact selected by it with reasonable care. Neither the Agent nor any of its
directors, officers, employees or agents shall be liable or responsible for any
action taken or omitted to be taken by it or them hereunder or under the
<PAGE>
-56-
Security Documents or in connection herewith or therewith, except for its or
their own gross negligence or willful misconduct.
(b) Maintenance of Books and Records. The Agent shall maintain books and
--------------------------------
records in which shall be recorded: (i) the names and addresses of the Lenders
and the Revolving Credit Commitments of, and the principal amount of Obligations
owing to, each Lender from time to time; (ii) all other appropriate debits and
credits as provided in this Credit Agreement, including, without limitation, all
interest, fees (including attorneys' fees and disbursements to the extent
reimbursable hereunder), expenses, charges and other Obligations; and (iii) all
payments of Obligations made by the Borrowers or for the Borrowers' account.
All entries in such books and records shall be made in accordance with the
Agent's customary accounting practices as in effect from time to time. The Agent
will render periodic statements to the Borrowers detailing all relevant
transactions for billing purposes. Each and every such statement shall be
deemed final, binding and conclusive upon the Borrowers in all respects as to
all matters reflected therein, unless the Borrowers, within 15 days after the
date such statement is rendered, delivers to the Agent written notice of any
objections which the Borrowers may have to any such statement. In that event,
only those items expressly objected to in such notice shall be deemed to be
disputed by the Borrowers. Notwithstanding the foregoing, the Agent's entries
in the books and records evidencing Loans and other financial accommodations
made from time to time shall be final, binding and conclusive upon the Borrowers
as to the existence and amount of the Obligations recorded in such books and
records.
Section 10.02 Reliance by Agent By Lenders. The Agent shall be entitled to
----------------------------
rely upon any certification, notice or other communication (including any
received by telephone, telex, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper
Person, and upon advice and statements of legal counsel, independent accountants
and other experts selected by the Agent. As to any matters not expressly
provided for by this Credit Agreement, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or thereunder in
accordance with instructions given by the Majority Lenders. Any instructions
given by the Majority Lenders to the Agent and any action taken or not taken
pursuant thereto shall be binding on all of the Lenders, and no Lender shall
take any action or exercise any rights under any of the Credit Documents which
is inconsistent with any instructions given to the Agent by the Majority
Lenders.
Section 10.03 No Knowledge of Defaults. The Agent shall not be deemed to
------------------------
have knowledge of the occurrence of a Default or Event of Default unless the
Agent has received notice from a Lender or the Borrowers specifying such Default
or Event of Default and stating that such notice is a "Notice of Default". In
the event that the Agent receives such a notice of the occurrence of a Default
<PAGE>
-57-
or Event of Default, the Agent shall give prompt notice thereof to the Lenders.
The Agent shall (subject to Section 10.07 hereof) take such action with respect
to such Default or Event of Default as shall be reasonably directed by the
Majority Lenders, provided that, unless and until the Agent shall have received
such directions, the Agent may take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
Section 10.04 Rights as a Lender. With respect to its Revolving Credit
------------------
Commitment and the Loans made by it, BankBoston, N.A., in its capacity as a
Lender hereunder, shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include BankBoston, N.A. in its individual capacity. BankBoston, N.A. and its
Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to and generally engage in any kind of banking, trust
or other business with the Borrowers and any of their Affiliates as if it were
not acting as Agent, and BankBoston, N.A. and its Affiliates may accept fees and
other consideration from the Borrowers for services in connection with this
Agreement or otherwise without having to account for the same to the Lenders.
Section 10.05 Indemnification. The Lenders agree to indemnify the Agent,
---------------
ratably in accordance with the aggregate principal amount of the Obligations
held by the Lenders (or, if no Loans are at the time outstanding, ratably in
accordance with their respective Commitment Percentages), for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent, in any way relating to or
arising out of the Credit Documents or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses which the Borrowers are
obligated to pay under Sections 11.03 and 11.04 hereof) or the enforcement of
any of the terms hereof or of any such other documents, provided, however, that
-------- -------
no Lender shall be liable for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of the Agent.
Section 10.06 Non-Reliance on Agent and Other Lenders. Each Lender agrees
---------------------------------------
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrowers and the decision to
enter into this Credit Agreement, and that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
<PAGE>
-58-
analysis and decisions in taking or not taking action under the Credit Documents
or any other document contemplated by or referred to herein. The Agent shall
not be required to keep itself informed as to the performance or observance by
the Borrowers of the provisions of this Credit Agreement or to inspect the
properties or books of the Borrowers. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrowers (or any of their Affiliates)
which may come into the possession of the Agent or any of its Affiliates;
provided, however, that the Agent shall deliver to the Lenders copies of any
- -------- -------
documents or writings received by the Agent pursuant to Section 6.01 hereof.
Section 10.07 Failure to Act. Except for action expressly required of the
--------------
Agent hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
Section 10.08 Resignation or Removal of Agent. Subject to the appointment
-------------------------------
and acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving notice thereof to the Lenders and the Borrowers, and the
Agent may be removed at any time with or without cause by the Majority Lenders.
Upon any such resignation or removal, the Majority Lenders shall have the night
to appoint a successor Agent. If no successor Agent she have been so appointed
by the Majority Lenders and shall have accepted such appointment within 30 days
after the retiring Agent has given notice of resignation or the removal of the
retiring Agent by the Majority Lenders, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a bank organized under
the laws of the United States of America or any State having a combined capital
and surplus of at least $100,000,000. Upon the acceptance of an appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder. After the retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article X shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent.
Section 10.09 Agency Fee. So long as the Commitments are outstanding and
----------
until payment in full of all Obligations hereunder, the Borrowers shall pay to
the Agent an annual Agent's fee payable on the first Business Day of each
calendar year in accordance with the terms of that certain letter dated of even
date herewith. Such fees, once paid, shall be non-refundable.
<PAGE>
-59-
ARTICLE XI
MISCELLANEOUS
-------------
Section 11.01 No Waiver, Confidentiality.
--------------------------
(a) No failure on the part of the Agent or any Lender to exercise, and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under this Credit Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under this
Credit Agreement preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The remedies provided herein are
cumulative and not exclusive of any other remedies provided by law.
(b) The Agent and each of the Lenders hereby acknowledge that the written
information to be furnished to them by the Borrowers pursuant to this Credit
Agreement and the documents related hereto may be non-public information. In
addition to any duty of confidentiality imposed on the Agent or any Lender by
applicable law, each of the Agent and each Lender hereby agrees that it will
keep all such information expressly marked "Confidential" and furnished to it
confidential in accordance with reasonable, customary, safe and sound banking
practices, and will not knowingly make any disclosure to any other person of
such information until the same she have become public, except (i) in connection
with disputes arising out of this Credit Agreement or the Security Documents
(including, without limitation, litigation involving the Borrowers, the Agent or
the Lenders) and with the obligations of any of the Agent or such Lender under
law or regulation, (ii) pursuant to subpoenas or similar process, (iii) to
governmental authorities or examiners, (iv) to independent auditors or counsel,
(v) to any corporate Affiliate of any of the Agent or such Lender, or (vi) to
any participant or proposed participant or assignee or proposed assignee
hereunder so long as such participant or proposed participant or assignee or
proposed assignee (a) is not in the same general type of business as the
Borrowers on the date of such disclosure and (b) agrees in writing to accept
such information subject to the restrictions provided in this Section 11.01(b).
The Agent and the Lenders further agree to use such information solely for the
purpose of their respective evaluations of the transactions contemplated hereby
and their respective ongoing relationships with the Borrowers. Neither the
Agent nor any Lender shall be liable or responsible for the breach or violation
of this Section 11.01(b) which breach or violation is caused by any other Person
(including any other Lender).
Section 11.02 Notices. All notices and other communications provided for
-------
herein shall be by telegraph, cable or in writing and telecopied, telegraphed,
cabled, mailed or delivered to the intended recipient at the "Address for
Notices"
<PAGE>
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specified in Schedule 11.02 attached hereto or at such other address as shall be
-------- -----
designated by such party in a notice to each other party. Except as otherwise
provided in Section 2.02 hereof, all notices and other communications hereunder
shall be deemed to have been duly given when transmitted by telecopier,
delivered to the telegraph or cable office, or personally delivered or, in the
case of a mailed notice, four Business Days after the date deposited in the
mails, postage prepaid, in each case given or addressed as aforesaid.
Section 11.03 Expenses, Etc. The Borrowers shall pay or reimburse each of
-------------
the Lenders and the Agent for: (i) the reasonable fees and expenses of Bingham
Dana LLP incurred in connection with any amendment, modification or waiver of
any of the terms of the Credit Documents or any other documents contemplated
thereby or referred to therein; (ii) all reasonable costs and expenses of the
Lenders and the Agent (including reasonable attorneys' fees) incurred in
connection with the enforcement of any of the Credit Documents or the other
documents contemplated by or referred to herein; and (iii) all transfer, stamp,
documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of the Credit Document or any other
document referred to herein.
Section 11.04 Indemnification. The Borrowers shall (to the fullest extent
---------------
permitted by applicable law) indemnify the Agent, the Lenders and each Affiliate
thereof and their respective directors, officers, employees, attorneys and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims or damages to which any of them may become subject, insofar
as such losses, liabilities, claims or damages arise out of, or in any way
relate to, or result from any actual or proposed use by the Borrowers of the
proceeds of any of the Loans and/or the negotiation, execution, delivery or
performance of the Credit Documents, or from any investigation, litigation or
other proceeding (including any threatened investigation or proceeding) relating
to the foregoing, and the Borrowers shall reimburse the Agent and each Lender,
and each Affiliate thereof and their respective directors, officers, employees,
attorneys and agents, upon demand, for any expenses (including legal fees)
incurred in connection with any such investigation or proceeding (but excluding
any such losses, liabilities, claims, damages, or expenses to the extent caused
by action taken which constitutes the gross negligence or willful misconduct of
the Person to be indemnified). If and to the extent that the obligations of the
Borrowers under the preceding sentence may be unenforceable for any reason, the
Borrowers shall make the maximum contribution to the payment and satisfaction of
each of the losses, liabilities, claims, damages and expenses referred to above
as may be permitted by applicable law.
Section 11.05 Amendments, Etc. No amendment or waiver of any provision of
---------------
the Credit Documents, nor any consent to waive strict compliance with such
provisions, shall in any event be effective unless the same shall be
<PAGE>
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agreed or consented to in writing by the Majority Lenders, and each such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
-------- -------
shall, unless the same shall be in writing and signed by all the Lenders: (a)
increase the Revolving Credit Commitment of any of the Lenders, extend the
Commitment Termination Date, or subject the Lenders to any additional
obligations; (b) reduce the principal of, or interest on, or fees with respect
to, the Obligations; (c) postpone any date fixed for payment of principal of, or
interest on, the Obligations or the Notes; (d) change the Commitment Percentages
of any of the Lenders or the aggregate unpaid principal amount of the
Obligations, or the number of Lenders which shall be required for the Lenders or
any of them to take any action under this Credit Agreement; (e) release all or a
significant portion of the Collateral; (f) modify the definition of Majority
Lenders; or (g) change any provision contained in Section 4.03, Articles V or
VI, Section 11.03 or this Section 11.05.
Section 11.06 Successors and Assigns.
----------------------
(a) This Credit Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
(b) The Borrowers may not sell or assign their rights or obligations
hereunder or under the Notes without the prior consent of all of the Lenders and
the Agent.
(c) At any time after the Effective Date, any Lender or Lenders may, with
the consent of the Agent and the Borrowers (not to be unreasonably withheld),
sell a participation interest in a portion of its rights and obligations under
such Lenders' Revolving Credit Commitment and Notes to one or more commercial
banks or investment companies that enter into participations of the type
contemplated by this Section 11.06 in the ordinary course of their business and
that qualify as "accredited investors," as such term is defined under Regulation
D under the Securities Act of 1933, as amended (each, a "Participant"), such
Participant's rights against such Lender to be set forth in a participation
agreement (a "Participation Agreement"); provided, however, that the aggregate
-------- -------
amount of such participation must be in an amount not less than $5,000,000. All
amounts payable by the Borrowers to any Lender under Article V hereof shall be
determined as if such Lender had not sold any such participation and as if such
Lender were funding all of its Revolving Credit Commitments and Loans in the
same way that it is funding the Revolving Credit Commitments and Loans in which
no participation have been sold. In no event shall a Lender that sells a
participation agree to be obligated to the Participant under its Participation
Agreement to refrain from taking any action hereunder or under any of such
Lender's Notes, except that such Lender may
<PAGE>
-62-
agree in such Participation Agreement that it will not, without the consent of
such Participant, agree to (i) extend the Commitment Termination Date, (ii)
reduce the principal of, or interest on, the Obligations or under the Notes or
any fees hereunder, (iii) postpone any date fixed for payment of the principal
of, or interest on, the Obligations or under the Notes, or (iv) consent to any
release of all or a significant portion of the Collateral. Any Lender selling a
participation hereunder shall promptly notify the Borrowers, the other Lenders,
and the Agent of the effectiveness thereof.
(d) At any time after the Effective Date, a Lender or Lenders may assign a
portion of their rights and obligations under such Lenders' Revolving Credit
Commitments and Notes to one or more commercial banks (each, an "assignee")
pursuant to an Assignment and Acceptance Agreement substantially in the form of
Exhibit M hereto (an "Assignment and Acceptance"); provided, however, that (i)
- ------- - -------- -------
such Lenders shall have submitted in writing to the Borrowers and the Agent a
request that each of the Borrowers and the Agent consent to the choice of the
assignee, (ii) the Borrowers and the Agent shall have consented in writing to
the choice of the assignee prior to the time of effectiveness of such
assignment, such consent not to be unreasonably withheld, (iii) such assignment
must be in an aggregate amount of not less than $5,000,000, and (iv) the parties
to each assignment shall execute and deliver to the Agent, for its approval,
acceptance and recording in the books and records maintained pursuant to Section
10.01(b) hereof, an Assignment and Acceptance, together with a processing and
recordation fee of $2,500. Upon such execution, delivery, approval, acceptance
and recording, from and after the effective date specified in each Assignment
and Acceptance, (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, have the rights and obligations of a Lender
hereunder and under the Notes and (ii) the Lender assignors thereunder shall, to
the extent that rights and obligations hereunder have been assigned by them
pursuant to such Assignment and Acceptance, relinquish their rights and be
released from their obligations hereunder and under the Notes. Any Lender
making an assignment hereunder shall promptly notify the Borrowers of the
effectiveness thereof In the event of any such assignment, the Borrowers shall,
against receipt of the existing Notes of the assigning Lenders, issue new Notes
to the assignee and, in the case of a partial assignment, to such assignors, in
either case appropriately reflecting such assignment.
(e) By executing and delivering an Assignment and Acceptance, the assignor
thereunder and the assignee thereunder shall confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in, or in connection with, this
<PAGE>
-63-
Credit Agreement or the Security Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement or
the Security Documents or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrowers or the performance or observance by the Borrowers of any of their
obligations under this Credit Agreement, the Security Documents or any other
instrument or document furnished pursuant hereto; (iii) such assignee confirms
that it has received a copy of this Credit Agreement, together with copies of
the financial statements referred to in Sections 7.04 and 8.01 hereof and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee will, independently and without reliance upon the Agent, the
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Credit Agreement; (v)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Credit Agreement and the
Security Documents as are delegated to the Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto; and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Credit Agreement and the
Security Documents are required to be performed by it as a Lender.
(f) The Agent shall retain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall record in its books and records the
names and addresses of each Lender and the Revolving Credit Commitments of, and
the principal amount of the Loans owing to, such Lender from time to time. The
Borrowers, the Agent and the Lenders may treat each Person whose name is so
recorded as a Lender hereunder for ail purposes of this Credit Agreement.
(g) A Lender may furnish any information concerning any of the Borrowers in
the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants).
(h) Notwithstanding anything in the foregoing to the contrary, each Lender
may, without complying with any restrictions set forth in this Section 11.06,
sell participations in or assign all or any part of its rights and obligations
under such Lender's Revolving Credit Commitment under this Credit Agreement and
the Notes to any Affiliate of such Lender or to any Federal Reserve Bank.
Section 11.07 Survival. The obligations of the Borrowers under Sections
--------
11.03 and 11.04, and the obligations of the Lenders under Section 10.05 hereof,
shall survive the repayment of the Loans.
<PAGE>
-64-
Section 11.08 Joint and Several. The Obligations of the Borrowers
-----------------
hereunder, including, without limitation, the liability of the Borrowers for the
payment of all fees, costs, expenses, Additional Costs, and any compensation
required to be paid pursuant to Section 5.04, constitute the joint and several
obligation and liability of each of the Borrowers.
Section 11.09 Senior Indebtedness. The Obligations, including, without
-------------------
limitation, the obligations of the Borrowers to pay when due (whether at stated
maturity, by acceleration or otherwise) the principal of and interest on the
Loans to be made by the Lenders to the Borrowers pursuant to Section 2.01
hereof, and the obligations of the Borrowers with respect to Interest Rate
Hedging Agreements, shall constitute "Senior Indebtedness" as such term is
defined in all documents to which any Borrower shall be a party.
Section 11.10 Conditions to Effectiveness. This Credit Agreement shall
---------------------------
become effective on the first day (the "Effective Date") on which (i) this
Credit Agreement shall have been duly executed by the parties hereto and (ii)
the conditions precedent to the initial extension of credit under Article VI
hereof shall have been satisfied.
Section 11.11 Counterparts. This Credit Agreement may be executed in any
------------
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Credit Agreement
by signing any such counterpart.
SECTION 11.12 WAIVER OF JURY TRIAL. THE BORROWERS HEREBY WAIVE TRIAL BY
--------------------
JURY IN ANY JUDICIAL PROCEEDING TO WHICH ANY OF THEM IS A PARTY INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THE CREDIT
DOCUMENTS OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
Section 11.13 Entire Agreement. The Credit Documents embody the entire
----------------
agreement among the Borrowers and the Lenders and supersede all prior
agreements, representations, understandings and courses of dealing, if any,
relating to the subject matter hereof.
Section 11.14 Governing, Law. The Credit Documents shall be governed by,
--------------
and construed in accordance with, the law of The Commonwealth of Massachusetts.
Section 11.15 Captions, Etc. Captions, section headings and the table of
-------------
contents appearing herein are included solely for convenience of reference and
<PAGE>
-65-
are not intended to affect the interpretation of any provision of this Credit
Agreement.
[remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be duly executed as of the day and year first above written.
THE COMPANY:
INTEREP NATIONAL RADIO SALES, INC.
By: /s/ Marc G. Guild
---------------------------------------
Name: Marc G. Guild
Title: President, Marketing Division
THE SUBSIDIARIES:
McGAVREN GUILD, INC.
By: /s/ William J. McEntee, Jr.
----------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
D&R RADIO, INC.
By: /s/ William J. McEntee, Jr.
----------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
CBS RADIO SALES, INC.
By: /s/ William J. McEntee, Jr.
----------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
<PAGE>
ALLIED RADIO PARTNERS, INC.
By: /s/ William J. McEntee, Jr.
----------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
CABALLERO SPANISH MEDIA L.L.C.
By: /s/ William J. McEntee, Jr.
----------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
CLEAR CHANNEL RADIO, LLC
By: /s/ William J. McEntee, Jr.
----------------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
THE ADMINISTRATIVE AGENT:
BANKBOSTON, N.A., as
Administrative Agent
By: /s/ Jay Michael MacKeen
---------------------------------------
Name: Jay Michael MacKeen
Title: Vice President
<PAGE>
THE LENDERS:
REVOLVING
CREDIT
COMMITMENT
- ----------
$5,000,000 BANKBOSTON, N.A., as Lender
By: /s/ Jay Michael MacKeen
---------------------------------------
Name: Jay Michael MacKeen
Title: Vice President
$5,000,000 SUMMIT BANK, as Lender
By: /s/ Kenneth Stoddard
---------------------------------------
Name: Kenneth Stoddard
Title: Vice President
THE DOCUMENTATION AGENT
SUMMIT BANK, as Documentation Agent
By: /s/ Kenneth Stoddard
---------------------------------------
Name: Kenneth Stoddard
Title: Vice President
<PAGE>
EXHIBIT 10.2
LLC MEMBERSHIP INTEREST PLEDGE AGREEMENT
This LLC MEMBERSHIP INTEREST PLEDGE AGREEMENT (as amended, restated,
supplemented or otherwise modified from time to time, this "Agreement"), dated
as of July 2, 1998, is made by INTEREP NATIONAL RADIO SALES, INC. ("Interep")
and MCGAVREN GUILD, INC. ("MG" and, together with Interep, the "Pledgors"), in
favor of BANKBOSTON, N.A., as administrative agent (the "Secured Party") for the
Lenders that may, from time to time, be parties to that certain Credit Agreement
(as defined below).
WHEREAS, the Pledgors, CLEAR CHANNEL RADIO, LLC and CABALLERO SPANISH MEDIA
L.L.C (each, an "LLC" and collectively, the "LLCs"), among others, are the
Borrowers pursuant to that certain Revolving Line of Credit Agreement, dated of
even date herewith (the "Credit Agreement"; capitalized terms not otherwise
defined herein shall have the meanings given such term in the Credit Agreement)
with the Agent, SUMMIT BANK, as documentation agent, and the Lenders.
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement that the Pledgors shall pledge their membership interests in the LLCs
to secure the payment and performance of all of the Secured Obligations (as
hereinafter defined).
WHEREAS, the Pledgors are the legal and beneficial owner of the membership
interests of the LLCs (collectively, the "Pledged Interests"), which interests
constitute the percentage of all of the membership interests of the LLCs
identified in Schedule A.
-------- -
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Pledge. The Pledgors hereby pledge and grant to the Secured
------
Party, for the ratable benefit of the Lenders, a continuing first priority
security interest in all of the Pledgors' now existing or hereafter
arising right, title and interest in and to the following property
<PAGE>
2
(collectively, the "Pledged Collateral") to secure all of the Secured
Obligations:
(i) the Pledged Interests;
(ii) all distributions, refunds or returns of capital, repayments of
loans or advances, fees, income, profits and other property, interests or
proceeds from time to time received, receivable or otherwise distributed or
owing to the Pledgors in respect of, or in exchange for, any or all of the
Pledged Interests (collectively, "Distributions"); and
(iii) all Proceeds (as defined under the Uniform Commercial Code (the
"UCC") as in effect in any relevant jurisdiction or under other relevant
law) of any of the foregoing (i)-(ii), including, without limitation,
obligations to pay amounts in respect of any Pledged Shares and any other
amounts at any time paid or payable under or in connection with any of the
Pledged Collateral.
Section 2. Secured Obligations. This Agreement secures, and the Pledged
-------------------
Collateral is collateral security for, the prompt payment and performance in
full when due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the filing of a petition in bankruptcy or
the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code), of (i) all obligations of the Borrowers now or hereafter existing under
or in respect of the Credit Documents (as defined in the Credit Agreement) and
(ii) all obligations of the Pledgors now or hereafter existing under or in
respect of this Agreement (the obligations described in clauses (i) and (ii) are
collectively referred to as the "Secured Obligations").
Section 3. No Release. Nothing set forth in this Agreement shall (i)
----------
relieve the Pledgors from the performance of any term, covenant, condition or
agreement on the Pledgors' part to be performed or observed under or in respect
of any of the Pledged Collateral or from any liability to any person or entity
under or in respect of any of the Pledged Collateral, or (ii) impose any
obligation on the Secured Party to perform or observe any such term, covenant,
condition or agreement on the Pledgor's part to be so performed or observed, or
(iii) impose any liability on the Secured Party for any act or omission on the
part of the Pledgors relating thereto
<PAGE>
3
or for any breach of any representation or warranty on the part of the Pledgors
contained in this Agreement or any other Credit Document. The obligations of the
Pledgors contained in this Section 3 shall survive the termination of this
Agreement and the discharge of the Pledgors' other obligations hereunder.
Section 4. Supplements; Further Assurances. At any time and from time to
-------------------------------
time, at the expense of the Pledgors, the Pledgors shall promptly execute and
deliver all further instruments and documents, including supplemental or
additional UCC-1 financing statements, and take all further action that may be
necessary or that the Secured Party may request, in order to perfect and protect
any pledge or security interest granted or purported to be granted hereby or to
enable the Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral.
Section 5. Representations and Warranties. The Pledgors represent and
------------------------------
warrant as follows:
(i) The Pledgors are, and at the time of any delivery of any Pledged
Collateral to the Secured Party will be, the legal and beneficial owner of
the Pledged Collateral. All Pledged Collateral is and will be owned by the
Pledgors free and clear of any lien or other encumbrance except for the
lien created by this Agreement.
(ii) The Pledgors have full power, authority and legal right to pledge
all the Pledged Collateral pursuant to this Agreement.
(iii) No consent of any party, and no consent, authorization, approval,
or other action by, and no notice to or filing with, any governmental
authority or other person or entity is required either (a) for the pledge
by the Pledgors of the Pledged Collateral pursuant to this Agreement or for
the execution, delivery or performance of this Agreement by the Pledgors,
(b) for the exercise by the Secured Party of the voting or other rights
provided for in this Agreement, or (c) for the exercise by the Secured
Party of the remedies in respect of the Pledged Collateral pursuant to this
Agreement.
<PAGE>
4
(iv) Each of the Pledgors' chief executive office and principal place
of business is 100 Park Avenue, New York, New York.
(v) As of the date hereof, (a) the Pledged Interests of the LLCs
identified in Schedule A constitute the percentage of membership interests
of the LLC s as identified in Schedule A, and (b) Schedule A constitutes a
---------- ----------
true and complete description of the Pledged Interests.
(vi) The membership interests in the LLCs are not evidenced by any
written certificate. The Pledgors have caused to be filed with the
Secretary of State of the State of New York, and with the county clerk of
the county in which the chief executive office and principal place of
business of each Pledgor, UCC-1 financing statements evidencing the lien
and pledge created by this Agreement, have amended each LLC's operating
agreement to allow for the pledge of the Pledged Interests and have caused
each LLC to record the Secured Party's security interest on the books and
records of such LLC and such actions create a valid and perfected first
priority security interest in the Pledged Collateral securing the payment
of the Secured Obligations.
(vii) There are no other members to any LLC. The Pledgors have
consented to the Secured Party, upon the occurrence of an Event of Default,
exercising any rights of membership in each LLC and consented to Secured
Party electing to become a successor member in each LLC. This Agreement
constitutes the legal, valid and binding obligation of the Pledgors,
enforceable against the Pledgors in accordance with its terms.
(viii) All information set forth herein relating to the Pledged
Collateral is accurate and complete in all respects.
(ix) The Pledgors at all times will be the sole beneficial owner of the
Pledged Collateral.
Section 6. Voting Rights: Distributions: Etc.
---------------------------------
(a) So long as no Event of Default shall have occurred and be continuing:
<PAGE>
5
(i) The Pledgors shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Interests or any part
thereof for any purpose not inconsistent with the terms or purpose of this
Agreement or any of the other Credit Documents; provided, however, that the
-------- -------
Pledgors shall not in any event exercise such rights in any manner which
may have an adverse effect on the value of the Pledged Collateral or the
security intended to be provided by this Agreement.
(ii) Except as otherwise provided in this Agreement, the Pledgors shall
be entitled to receive and retain, and to utilize free and clear of the
lien of this Agreement, any and all Distributions.
(b) Upon the occurrence and during the continuance of an Event of Default:
(i) All rights of the Pledgors to exercise the voting and other
consensual rights it would otherwise be entitled to exercise pursuant to
Section 6(a)(i) hereof shall immediately cease, and all such rights shall
thereupon become vested in the Secured Party, which shall thereupon have
the sole right to exercise such voting and other consensual rights.
(ii) All rights of the Pledgors to receive Distributions which it would
otherwise be authorized to receive and retain pursuant to Section 6(a)(ii)
hereof shall cease, and all such rights shall thereupon become vested in
the Secured Party, which shall thereupon have the sole right to receive
and hold as Pledged Collateral such Distributions.
(c) The Pledgors shall, at the Pledgors' expense, from time to time,
execute and deliver to the Secured Party appropriate instruments as the Secured
Party may request in order to permit the Secured Party to exercise the voting
and other rights which it may be entitled to exercise pursuant to Section
6(b)(i) hereof and to receive all Distributions which it may be entitled to.
receive under Section 6(b)(ii) hereof.
(d) All Distributions which are received by the Pledgors contrary to the
provisions of Section 6(b)(ii) hereof shall be received in trust for the benefit
of the Secured Party, shall be segregated from other funds of the
<PAGE>
6
Pledgors and shall immediately be paid over to the Secured Party as Pledged
Collateral in the same form as so received (with any necessary endorsement).
Section 7. Additional Covenants of Pledgors.
--------------------------------
(a) The Pledgors shall not (i) sell, convey, assign or otherwise dispose
of, or grant any option, right or warrant with respect to, any of the Pledged
Collateral, (ii) create or a permit to exist any lien or other encumbrance upon
or with respect to any Pledged Collateral other than the lien and security
interest granted to the Secured Party under this Agreement, (iii) amend, modify
or terminate the Operating Agreement of any LLC, or (iv) permit any LLC to
merge, dissociate, liquidate, consolidate or change its legal form, except as
expressly permitted by the Credit Agreement.
(b) The Pledgors shall (i) cause the LLCs not to issue any membership
interests in addition to or in substitution for the Pledged Interests, except to
the Pledgors, and (ii) pledge hereunder, immediately upon its acquisition
(directly or indirectly) thereof, any and all additional membership interests
which are required to be pledged hereunder.
(c) The Pledgors shall deliver to the Secured Party, immediately upon
receipt thereof, copies of all notices, certificates, documents, and instruments
received with respect to the Pledged Collateral.
(d) The Pledgors shall use any distributions from the LLCs for the purposes
of payment of estimated or actual federal or state income taxes with respect to
the Pledged Interests solely to pay such taxes and shall hold any such
distributions not used for the payment of such taxes in trust for the Secured
Party.
(e) The Pledgors hereby waive any restriction on the transfer of the
Pledgors' interests as members in each LLC.
(f) Neither Pledgor will, without giving the Secured Party at least forty-
five (45) days prior written notice, change its corporate name or the name under
which it conducts its business, change the address of its chief executive office
and principal place of business or change the location of its records and books
of account.
<PAGE>
7
Section 8. Remedies upon Default: Decisions Relating to Exercise
------------------------------------------------------
of Remedies.
- -----------
(a) If any Event of Default shall have occurred and be continuing, the
Secured Party shall have the right. in addition to other rights and remedies
provided for herein or otherwise available to it to be exercised from time to
time, (i) to retain and apply the Distributions to the Secured Obligations, (ii)
to exercise all the rights and remedies of a secured party on default under the
UCC in effect in any applicable jurisdiction at that time, (iii) to exercise
all, rights of the Pledgors as a member of any LLC and/or become a successor
member to such LLC, and (iv) to exercise any other rights or remedies pursuant
to the Credit Documents, and the Secured Party may also in its sole discretion,
without notice except as specified below, sell the Pledged Collateral or any
part thereof (including, without limitation, any partial interest in the Pledged
Interests) in one or more parcels at public or private sale, at any exchange,
broker's board or at any of the Secured Party's offices or elsewhere, for cash,
on credit or for future delivery, and at such price or prices and upon such
other terms as the Secured Party may deem commercially reasonable, irrespective
of the impact of any such sales on the market price of the Pledged Collateral.
The Secured Party or any of its affiliates may be the purchaser of any or all of
the Pledged Collateral at any such sale and shall be entitled, for the purpose
of bidding and making settlement or payment of the purchase price for all or any
portion of the Pledged Collateral sold at such sale, to use and apply any of the
Secured Obligations as a credit on account of the purchase price of any Pledged
Collateral. Each purchaser at any such sale shall acquire the property sold
absolutely free from any claim or right on the part of the Pledgors, and the
Pledgors hereby waive (to the full extent permitted by law) all rights of
redemption, stay and/or appraisal which they now have or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
The Pledgors acknowledge and agree that, to the extent notice of sale shall be
required by law, 5 days' notice to the Pledgors of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Secured Party shall not be obligated to
make any sale of Pledged Collateral regardless of notice of sale having been
given. The Secured Party may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The Pledgors hereby waive any claims against the Secured
<PAGE>
8
Party arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if the Secured Party
accepts the first offer received and does not offer such Pledged Collateral to
more than one offeree.
(b) In addition to any of the other rights and remedies hereunder, the
Secured Party shall have the right to institute a proceeding seeking specific
performance in connection with any of the agreements or obligations hereunder.
Section 9. Application of Proceeds. All Distributions held from time to
-----------------------
time by the Secured Party and all cash proceeds received by the Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Pledged Collateral pursuant to the exercise by the Secured Party of
its remedies as a secured creditor as provided herein shall be applied from time
to time by the Secured Party as follows:
First, to the payment of all costs and expenses, fees, commissions and
-----
taxes of such sale, collection or other realization, including, without
limitation, reasonable compensation to the Secured Party's agents and counsel;
Second, to the indefeasible payment in full in cash of the Secured
------
Obligations; and
Third, to the Pledgors, or its successors or assigns or to whomsoever may
-----
be lawfully entitled to receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such proceeds.
Section 10. Obligations Absolute. All obligations of the Pledgors
--------------------
hereunder shall be absolute and unconditional irrespective of (i) any
bankruptcy, reorganization or the like of any Borrower, (ii) any lack of
validity or enforceability of the Credit Documents, (iii) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of, or any consent to any
departure from, the Credit Documents, (iv) any exchange, release or non-
perfection of any other collateral, or any release or amendment or waiver of or
consent to any departure from any guaranty, for all or any of the Secured
Obligations; or (v) any other circumstances
<PAGE>
9
which might otherwise constitute a defense available to, or a discharge of, the
Borrowers. The Pledgors hereby waive any and all suretyship defenses.
Section 11. Expenses. Upon demand, the Pledgors will pay to the Secured
--------
Party the amount of any and all reasonable out of pocket expenses, including the
reasonable fees and expenses of its counsel and the reasonable fees and expenses
of any experts and agents, which the Secured Party may incur in connection with
(i) the collection of the Secured Obligations, (ii) the custody or preservation
of, or the sale of, collection from, or other realization upon, any of the
Pledged Collateral, (iii) the exercise or enforcement of any of the rights of
the Secured Party hereunder, or (iv) the failure by the Pledgors to perform or
observe any of the provisions hereof. All amounts payable by the Pledgors under
this Section shall be due upon demand and shall be part of the Secured
Obligations. The Pledgors' obligations under this Section shall survive the
termination of this Agreement and the discharge of the Pledgors' other
obligations hereunder.
Section 12. No Waiver; Cumulative Remedies.
------------------------------
(a) No failure on the part of the Secured Party to exercise, no course of
dealing with respect to, and no delay on the part of the Secured Party in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies herein provided are cumulative
and are not exclusive of any remedies provided by law.
(b) In the event the Secured Party shall have instituted any proceeding to
enforce any right, power or remedy under this instrument by foreclosure, sale,
entry or otherwise. and such proceeding shall have been discontinued or
abandoned for any reason, then and in every such case, the Pledgors and the
Secured Party shall be restored to their respective former positions and rights
hereunder with respect to the Pledged Collateral, and all rights, remedies and
powers of the Secured Party shall continue as if no such proceeding had been
instituted.
Section 13. The Secured Party May Perform: The Secured Party Appointed
----------------------------------------------------------
Attorney-in-Fact. If either Pledgor shall fail to do any act or
- ----------------
<PAGE>
10
thing that it has covenanted to do hereunder or any warranty on the part of the
Pledgors contained herein shall be breached, the Secured Party may (but shall
not be obligated to) do the same or cause it to be done or remedy any such
breach, and may expend funds for such purpose. Any and all amounts so expended
by the Secured Party shall be paid by the Pledgor promptly upon demand therefor,
with interest at the Post-Default Rate during the period from and including the
date so expended to the date of repayment. Each Pledgor's obligations under
this Section shall survive the termination of this Agreement and the discharge
of the Secured Obligations. Upon the occurrence and continuation of an Event of
Default, each Pledgor appoints the Secured Party its attorney-in-fact with an
interest, with full authority in the place and stead of such Pledgor and in the
name of such Pledgor, or otherwise, from time to time in the Secured Party's
discretion, to take any action and to execute any instrument consistent with the
terms of this Agreement and the other Credit Documents which the Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement.
The foregoing grant of authority is a power of attorney coupled with an interest
and such appointment shall be irrevocable for the term of this Agreement. Each
Pledgor hereby ratifies all that such attorney shall lawfully do or cause to be
done by virtue hereof.
Section 14. Indemnity.
---------
(a) Indemnity. The Pledgors agree to indemnify, reimburse and hold the
---------
Secured Party and its respective successors, assigns, employees, agents and
servants (collectively, "Indemnitees") harmless from and against any and all
liabilities, obligations, damages. injuries, penalties, claims, demands,
actions, suits, judgments and any and all reasonable out of pocket costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) of whatsoever kind and nature imposed on, asserted against, or
incurred by any of the Indemnitees in any way relating to or arising out of this
Agreement or in any way connected with the administration of the transactions
contemplated hereby or the enforcement of any of the terms hereof, or the
preservation of any rights hereunder; provided that the Pledgors shall have no
--------
obligation to an Indemnitee hereunder to the extent it is finally judicially
determined that such indemnified liabilities arise solely from the gross
negligence or willful misconduct of such Indemnitee. Upon written notice by any
Indemnitee of the assertion of an indemnified claim hereunder, the Pledgors
shall assume full responsibility for the defense thereof. If any
<PAGE>
11
action, suit or proceeding arising from any of the foregoing is brought against
any Indemnitee, the Pledgors shall, if requested by such Indemnitee, resist and
defend such action, suit or proceeding or cause the same to be resisted and
defended by counsel reasonably satisfactory to such Indemnitee. Each Indemnitee
shall, unless any other Indemnitee has made the request described in the
preceding sentence and such request has been complied with, have the right to
employ its own counsel (or internal counsel) to investigate and control the
defense of any matter covered by the indemnity set forth in this Section, and
the fees and expenses of such counsel shall be paid by the Pledgors; provided
--------
that, only to the extent no conflict exists between or among the Indemnitees, as
reasonably determined by the Indernnitees, the Pledgors shall not be obligated
to pay the fees and expenses of more than one counsel for all Indemnitees as a
group with respect to any indemnified claim.
(b) Contribution. If and to the extent that the obligations of the
------------
Pledgors under this Section are unenforceable for any reason, the Pledgors
hereby agree to make the maximum contribution to the payment and satisfaction of
such obligations that is permissible under applicable law.
(c) Survival. The obligations of the Pledgors contained in this Section
--------
shall survive the termination of this Agreement and the discharge of the Secured
Obligations.
(d) Reimbursement. Any amounts paid by any Indemnitee as to which such
-------------
Indemnitee has the right to reimbursement shall constitute Secured Obligations
secured by the Pledged Collateral.
Section 15. Modification in Writing. No amendment, modification.
-----------------------
supplement, termination or waiver of or to any provision of this Agreement, nor
consent to any departure by the Pledgors therefrom, shall be effective unless
the same shall be in writing and signed by the Secured Party. Any such
amendment, modification, supplement, termination, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
made or given. Except where notice is specifically required by this Agreement,
no notice to or demand on the Pledgors in any case shall entitle the Pledgors to
any other or further notice or demand in similar or other circumstances.
Section 16. Termination. When all the Secured Obligations (other than
-----------
Secured Obligations in the nature of continuing indemnities and
<PAGE>
12
expense reimbursement obligations not yet due and payable) have been
indefeasibly paid in full in cash and have been terminated, this Agreement shall
terminate. Upon termination of this Agreement, the Secured Party shall, upon
the written request and at the expense of the Pledgors, forthwith assign,
transfer and deliver to the Pledgors, against receipt and without recourse to or
warranty by the Secured Party, such of the Pledged Collateral as may be in the
possession of the Secured Party and as shall not have been sold or otherwise
applied pursuant to the terms hereof, and shall execute UCC termination
statements on Form UCC-3. The Secured Party shall have no responsibility to
undertake any other actions upon termination of this Agreement except as
provided in this Section.
Section 17. Notices. Except as otherwise provided herein, any notice or
-------
other communication required or permitted to be given under this Agreement shall
be in writing and may be personally delivered, telecopied, or sent by overnight
courier service or United States mail to the respective party, addressed to it
at the address for notices specified in accordance with Section 11.02 of the
Credit Agreement or to such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section. All such notices and other communications shall be deemed to
have been given when delivered in person, or received by telecopy or overnight
mail; or three Business Days after deposit in the United States mail; provided
--------
that notices to the Secured Party shall not be effective until received by the
Secured Party.
Section 18. Assignment. This Agreement shall be binding upon the
----------
Pledgors, their successors, and assigns, and shall inure, together with the
rights and remedies of the Secured Party hereunder, to the benefit of the
Secured Party and each of its successors, transferees and assigns. No other
Persons (including, without limitation, any other creditor of the Pledgors)
shall have any interest herein or any right or benefit with respect hereto. The
Pledgors may not assign their rights or obligations under this Agreement to any
other Person. The Secured Party may assign or otherwise transfer its rights
under this Agreement or any indebtedness held by it secured by this Agreement to
any other Person, and such other Person shall thereupon become vested with all
the benefits in respect thereof granted to the Secured Party, subject however,
to the provisions of the Credit Documents.
<PAGE>
13
Section 19. Governing Law. This Agreement shall be governed by, and shall
-------------
be construed and enforced in accordance with, the laws of the Commonwealth of
Massachusetts, without regard to principles of conflicts of laws.
Section 20. Consent to Jurisdiction. All judicial proceedings brought
-----------------------
against the Pledgors with respect to this Agreement may be brought in any state
or federal court of competent jurisdiction in the Commonwealth of Massachusetts
and, by execution and delivery of this Agreement, the Pledgors accept for
themselves and in connection with their respective properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts.
SECTION 21. WAIVER OF TRIAL BY JURY. THE PARTIES HERETO IRREVOCABLY WAIVE
-----------------------
TRIAL BY JURY IN CONNECTION WITH ANY MATTER ARISING OUT OF THIS AGREEMENT.
Section 22. Severabilitv of Provisions. Any provision of this Agreement
--------------------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 23. Execution in Counterparts. This Agreement and any amendments,
-------------------------
waivers, consents or supplements hereto may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original, but all
such counterparts together shall constitute one and the same agreement.
Section 24. Headings. The Section headings used in this Agreement are for
--------
convenience of reference only and shall not affect the construction of this
Agreement.
<PAGE>
14
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be duly
executed and delivered as of the date first above written.
INTEREP NATIONAL RADIO
SALES, INC.
By: /s/ Marc G. Guild
-----------------------------------
Name: Mark G. Guild
Title: President, Marketing Division
MCGAVREN GUILD, INC.
By: /s/ William J. McEntee, Jr.
-----------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
ACCEPTED:
BANKBOSTON, N.A., as Administrative Agent
By: /s/ Jay Michael MacKeen
---------------------------
Name: Jay Michael MacKeen
Title: Vice President
<PAGE>
15
SCHEDULE A
----------
Interep
- -------
<TABLE>
<CAPTION>
LLC Percentage of all such
---- Interests in LLC
----------------
<S> <C>
Caballero Spanish Media L.L.C. 95%
Clear Channel Radio, LLC 95%
</TABLE>
MG
- --
<TABLE>
<CAPTION>
LLC
---
<S> <C>
Caballero Spanish Media L.L.C. 5%
Clear Channel Radio, LLC 5%
</TABLE>
<PAGE>
EXHIBIT 10.3
SECURITY AGREEMENT
This SECURITY AGREEMENT (the "Security Agreement"), dated as of July 2,
1998, among INTEREP NATIONAL RADIO SALES, INC., (the "Company"), MCGAVREN GUILD,
INC., D&R RADIO, INC., CBS RADIO SALES, INC., ALLIED RADIO PARTNERS, INC.,
CABALLERO SPANISH MEDIA L.L.C. AND CLEAR CHANNEL RADIO, LLC (collectively, and
together with the Company, the "Securing Parties"), and BANKBOSTON, N.A., as
administrative agent (the "Agent") for the Lenders from time to time parties to
the Credit Agreement (as defined below).
WHEREAS, pursuant to a certain Revolving Line of Credit Agreement, dated as
of the date hereof (as amended, restated, modified and supplemented and in
effect from time to time, the "Credit Agreement"), among the Securing Parties,
the Lenders, the Agent, and SUMMIT BANK, as documentation agent, the Lenders
have agreed to make certain loans to the Securing Parties, each of which will
derive benefit, directly and indirectly, from such loans;
WHEREAS, it is a condition precedent to the agreement of the Lenders to
make loans under the Credit Agreement that each of the Securing Parties shall
have executed and delivered to the Agent certain Security Documents, including,
without limitation, this Security Agreement; and
WHEREAS, this Security Agreement is given by the Securing Parties in favor
of the Agent and the Lenders to secure the payment and performance of all of the
Secured Obligations (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows.
Section 1. Certain Definitions. As used herein, the following terms shall
--------- -------------------
have the following meanings:
"Collateral" shall mean:
----------
<PAGE>
2
(i) all personal property and fixtures of each of the Securing Parties,
whether now or hereafter existing or now owned or hereafter acquired by any
Securing Party and whether the same is now contemplated, anticipated or
foreseeable, and wherever located, of every kind and description, tangible or
intangible, including without limitation, the following, to the extent now owned
or hereafter acquired by such Securing Party:
(a) all goods (which shall mean and include all inventory, merchandise,
raw materials, supplies, work in process, finished goods, and other
tangible personal property held for processing, sale or lease or
furnished or to be furnished under contracts of service or used or
consumed in any Securing Parties' business) as well as all goods in
transit, all returned or rejected goods, and all documents which
represent any of the foregoing;
(b) all accounts (which shall mean and include all accounts receivable,
notes, drafts, acceptances and other instruments representing or
evidencing a right to payment for goods sold or leased or for services
rendered whether or not earned by performance) and all books, records,
ledgers, print-outs, file materials and other papers relating thereto;
(c) all equipment, machinery, tools, dies, molds, furniture, furnishings,
fixtures and all tangible personal property similar to any of the
foregoing;
(d) all general intangibles, including, without limitation, tradenames,
customer lists, goodwill, computer programs, computer records,
computer software, computer data, trade secrets, intellectual
property, trademarks (and all goodwill connected with and symbolized
by such trademarks), patents, licenses, ledger sheets, files, records,
and data processing records relating to any accounts;
(e) all chattel paper of every kind and description, including additions
thereto and substitutions therefor;
<PAGE>
3
(f) all rights to payment of money arising under contracts (whether
written or oral or otherwise), including, without limitation, amounts
due from affiliates, all tax refunds of every kind and nature
including loss carryback refunds, insurance policies and proceeds,
factoring agreements, all rights to deposits or advance payments and
all rights to receive surplus funds, if any, which are payable to any
Securing Party following the termination of any employee pension plan;
(g) all documents, documents of title, and instruments (whether negotiable
or non-negotiable);
(h) all Investment Property (as such term is defined in the Uniform
Commercial Code as enacted in the Commonwealth of Massachusetts);
(i) all liens, guaranties and securities for any of the foregoing; and
(j) all products of, accessions to, and proceeds of any of the foregoing.
provided, however, the Collateral shall not include the Borrowers' rights, title
- -------- -------
or interest in or to the Contracts (as that term is defined in the Credit
Agreement); provided, further, however, that the Collateral shall include all of
-------- ------- -------
the Borrowers' rights, title or interest in or to any or all proceeds or rights
to payment arising under or relating to such Contracts.
All of such property in (a) through (j) above is collectively referred to
as the "Collateral".
"Secured Obligations" shall mean (i) the obligations of the Securing
---------------------
Parties under this Agreement (including, without limitation, the obligation of
the Securing Parties to repay any and all sums advanced by the Agent or any
Lender, at its or their option, in payment of taxes, assessments or other
charges and expenses, or to satisfy Liens, other than those created hereby, on
or in the Collateral or any part thereof) and (ii) the obligations of the
Securing Parties to pay, when due (whether at stated maturity, by acceleration
or otherwise), the principal of and interest on the Loans made and to be made to
the Securing Parties under
<PAGE>
4
the Credit Agreement and the Notes evidencing the same, and the commitment fees
and Agent's fees and all other amounts payable by any Securing Party to the
Agent and/or the Lenders thereunder.
Except as otherwise defined herein, all capitalized terms which are used in
this Agreement which are defined in the Credit Agreement shall have the
respective meanings assigned to such terms in the Credit Agreement.
Section 2. Grant of Security Interest. As security for the prompt
--------- --------------------------
payment, observance and performance when due (by acceleration or otherwise) of
the Secured Obligations, each of the Securing Parties hereby grants to the
Agent, for the ratable benefit of the Lenders, a continuing first priority
security interest in, a continuing lien upon and/or a right of set-off against
all of the Collateral.
Section 3. Representations, Warranties and Covenants of the Securing
---------- ---------------------------------------------------------
Parties.
- -------
A. Perfection. At any time and from time to time, upon demand of the
Agent, each Securing Party will:
(1) Deliver and pledge (or cause to be delivered and pledged) to the
Agent, endorsed and/or accompanied by such further instruments of
assignment and transfer in such form and substance as the Agent may
reasonably request, any and all cash equivalents (other than balances in
bank accounts), instruments, securities, investments, documents and/or
chattel paper included in or evidencing or otherwise relating to the
Collateral owned or held by such Securing Party as the Agent may specify;
(2) Execute and deliver to the Agent a mortgage or mortgages
(satisfactory in form and substance to the Agent) creating Liens in favor
of the Agent securing the Secured Obligations on any real property
(including, without limitation, leasehold interests) of the Securing
Parties, or such portion thereof as may be specified by the Agent, and take
such action as may be necessary to duly file and/or record such Liens in
such public office or offices, and take such other actions (including using
reasonable efforts for a reasonable period of time to obtain consents and
acknowledgments of landlords and other third parties) as may be
<PAGE>
5
necessary or desirable (in the opinion of the Agent), in order for such
Liens to constitute valid and effective Liens on such real property as
security for the Secured Obligations, subject to no equal or prior Liens
(other than Permitted Liens and the other Liens permitted by, and subject
to, Section 8.12 of the Credit Agreement);
(3) To the extent any of the Collateral owned or held by such Securing
Party consists of property which constitutes fixtures under the laws of the
jurisdiction in which such property is located, use reasonable efforts for
a reasonable period of time to furnish or cause to be furnished to the
Agent valid and effective waivers of interest in such Collateral by all
landlords, lessors, mortgagees, co-owners, encumbrances or other parties in
interest with respect to the real property upon which such Collateral is
located;
(4) If and to the extent determined by the Agent, at the direction of
the Majority Lenders, to be desirable to protect the interests of the Agent
and the Lenders (and in any event with respect to Contracts only after a
Default or Event of Default and an acceleration by the Agent pursuant to
Article IX of the Credit Agreement), notify each obligor upon any credit or
other obligation included in the Collateral at any time owing to such
Securing Party, in such manner as the Agent may specify; and
(5) Permit representatives of the Agent or any Lender, during business
hours, to inspect the inventory and other properties constituting
Collateral of such Securing Party and to inspect and make abstracts from
its books and records pertaining to the Collateral, allow the Agent or any
Lender to speak with representatives or employees of such Securing Party,
and assist the Agent or such Lender's representative obtaining any
information requested by the Agent or such Lender.
B. Necessary Filings. With the exception of landlord consents and waivers
-----------------
and fixture filings. all filings, registrations and recordings necessary,
appropriate or reasonably requested by the Agent to create, preserve, protect
and perfect the security interest granted by the Securing Parties to the Agent
hereby in respect of the Collateral and required to be made on or before the
date hereof have been accomplished. The security interest granted to the Agent
for the benefit of the Lenders pursuant to this Security Agreement in and to the
Collateral constitutes and hereafter
<PAGE>
6
will constitute a perfected security interest therein, superior and prior to the
rights of all persons therein and subject to no other Liens except Liens which
are permitted by, and subject to, Section 8.12 of the Credit Agreement.
C. Insurance. Each of the Securing Parties will maintain insurance issued
---------
by responsible companies, satisfactory to the Agent, in such amounts and against
such risks as is response usually carried by owners of similar businesses and
properties in the same general areas in which such Securing Party operates;
provided, however, that, if any Event of Default or Default shall be continuing,
- -------- -------
the Securing Parties will insure the Collateral or will cause the Collateral
which is tangible property to be insured against such risks as the Agent, at the
direction of the Majority Lenders, may from time to time reasonably require,
such insurance to be in such forms and amounts and with such companies as may be
satisfactory to the Agent and the Majority Lenders. To the extent available from
applicable insurers, all policies of such insurance shall, unless otherwise
specified by the Agent, be written for the benefit of the Securing Parties and
the Agent (for its own benefit and that of the Lenders) as their interests may
appear and shall provide that such insurance may not be canceled by reason of
the act or neglect of any Securing Party and shall provide that the rights of
the Agent and Lenders are independent of any breach of condition by the named
insured, and all such policies or certificates evidencing the same, shall be
furnished to the Agent. Each Securing Party hereby assigns to the Agent as part
of the Collateral all returned or unearned premiums which may be due upon the
cancellation of any of such policies for any reason whatsoever and hereby
directs the insurer thereunder to pay to the Agent any amounts so due. Each
Securing Party will cause the carriers of its insurance to issue loss payee and
additional insured or mortgagee clauses in favor of the Agent with respect to
such insurance and to cause such carriers to give not less than ten days' prior
notice to the Agent of the cancellation or non-renewal of any of such policies.
D. Liens. The Securing Parties will not, without the prior written
consent of the Majority Lenders:
(1) Permit any of the Collateral to be levied upon under legal process
or be subject to any Lien of whatsoever nature (except for those created
hereby, Permitted Liens and other Liens to the
<PAGE>
7
extent permitted by, and subject to, Section 8.12 of the Credit Agreement)
unless promptly discharged; or
(2) Cause or permit anything to be done which may materially impair
the value of the Collateral (other than normal wear and tear with respect
to property and fixtures included in the Collateral and dispositions
permitted by Section 8.14 of the Credit Agreement) or the Liens granted
and/or intended to be granted hereby.
E. Notations. Each of the Securing Parties will keep and stamp or
---------
otherwise mark any and all documents and chattel paper and its individual books
and records relating to the Collateral in such manner as the Agent may
reasonably require.
F. Place of Business/Location of Collateral. Each of the Securing Parties
----------------------------------------
represents and warrants to the Lenders that the chief executive office and
principal place of business of such Securing Party, and the place where such
Securing Party keeps all of its books and records, is specified in Schedule I
hereof. All tangible evidence and all receivables, contracts and general
intangibles of each Securing Party and the only original books of account and
records of such Securing Party relating thereto are, and will continue to be,
kept at such chief executive office and principal place of business, or at such
new location for such chief executive office and principal place of business as
such Securing Party may establish in accordance with the last sentence of this
Section F. All Collateral of each Securing Party is located at one of the
locations for such Securing Party listed on Schedule I hereof, and will remain
located at any one of such locations unless the Securing Party shall have given
the Agent at least 45 days prior written notice of its intention to remove
Collateral from such location clearly describing the proposed new location which
shall be in the United States of America. No Securing Party shall establish a
new location for its chief executive office and principal place of business nor
shall it change its corporate name or the name under which it is conducting
business, until (i) it shall have given to the Agent not less than 45 days prior
written notice of its intention to do so, clearly describing such new location
(which shall be in the United States of America) or name, and providing such
other information in connection therewith as the Agent may reasonably request,
and (ii) with respect to such new location or name, the Securing Parties shall
have taken all actions satisfactory to the Agent to maintain the perfection and
proof of the
<PAGE>
8
security interest of the Agent for the benefit of the Lenders in the Collateral
intended to be granted hereby, including, without limitation, obtaining waivers
of landlord's or warehouseman's liens with respect to such new location.
Section 4. Further Assurances, Etc. Each of the Securing Parties will,
--------- ------------------------
from time to time and at their own expense, promptly execute, acknowledge,
witness and deliver and file and/or record, or cause the execution,
acknowledgment, witnessing, and delivery and the filing and/or recordation of,
such specific and further assignments of Collateral and such other documents or
instruments, and shall take or cause to be taken such other action as the Agent
may reasonably request for the perfection against such Securing Party and all
third parties whomsoever of the Liens created hereby, or for the continuation
and protection thereof, and promptly furnish to the Agent evidence satisfactory
to the Agent of such action. Without limiting the generality of the foregoing,
each of the Securing Parties promptly upon the execution and delivery of this
Agreement, and at any time and from time to time thereafter upon the request of
the Agent, will execute, acknowledge, witness and deliver such financing and
continuation statements, notices, and additional security agreements, make such
notations on its records, and take such other action as the Agent may reasonably
request for the purpose of so perfecting, maintaining and protecting such Liens
and shall cause this Agreement, any amendment or supplement hereto or thereto
and each such financing and continuation statement, notice and additional
security agreements to be filed and/or recorded in such manner and in such
places as may be required by applicable law or as the Agent may reasonably
request for such purpose. After written notice to the Securing Parties, each of
the Securing Parties hereby authorizes the Agent to effect any filing and/or
recording which the Agent or the Majority Lenders has requested pursuant to this
Section 4 without the signature of such Securing Party, to the extent permitted
by applicable law. The Agent shall give the Securing Parties written notice
subsequent to any such filing and/or recording.
Section 5. Actions by Agent. The Agent may, at any time and from time to
--------- ----------------
time, at its option, after having given notice of its intention to do so to the
Securing Parties, perform any act which is undertaken by any of the Securing
Parties to be performed by such Securing Party hereunder but which such Securing
Party shall have failed to perform, and the Agent may take any other action
which the Agent may deem necessary for the
<PAGE>
9
maintenance, preservation or protection of any of the Collateral or the security
interests therein, and the Agent is hereby irrevocably appointed attorney-in-
fact of each of the Securing Parties for this purpose. All moneys advanced by
the Agent in connection with any of the foregoing, together with interest
thereon at the highest rate then in effect pursuant to the Credit Agreement from
the date of such advance to the date of the repayment thereof, shall be repaid
by the Securing Parties to the Agent upon demand, and shall constitute
additional Secured Obligations secured hereby. The making of any such advance
by the Agent shall not, however, relieve any of the Securing Parties of
liability for any default hereunder until the full amount of all such moneys so
advanced and such interest thereon shall have been repaid by the Securing
Parties to the Agent and such default shall have otherwise been cured.
Section 6. Rights and Remedies Upon Default.
--------- --------------------------------
A. Rights and Remedies Generally. Upon the occurrence and during the
-----------------------------
continuance of any Event of Default, the Agent shall have all the rights and
remedies of a secured party under the Massachusetts Uniform Commercial Code, or
other applicable law, including the power of sale upon notice, and all rights
provided herein, all of which rights and remedies shall, to the fullest extent
permitted by law, be cumulative, provided that the Agent shall not notify
--------
obligors on Contracts of the exercise of any right unless the Agent shall have
accelerated the Obligations pursuant to Article IX of the Credit Agreement.
B. Specific Rights and Remedies. Without limiting the generality of the
----------------------------
foregoing:
(1) After an Event of Default shall have occurred and while it shall be
continuing, each of the Securing Parties will at the request of the Agent cause
all payments made under or in respect of accounts or other obligations owed to
such Securing Party to be paid directly to the Agent. The Agent shall hold all
such payments as additional Collateral hereunder. Neither the Agent nor any
Lender shall be liable to any Person for any incorrect or improper payment made
pursuant to this Section 6.B(1) in the absence of gross negligence or willful
misconduct.
(2) Each of the Securing Parties hereby constitutes the Agent its true and
lawful attorney, irrevocably and with full power of substitution, in the name of
such Securing Party or otherwise, upon the occurrence and
<PAGE>
10
during the continuance of any Event of Default, (i) to give notice at any time
to each account debtor or other obligor of the fact of assignment of the
respective account or other obligation under this Agreement, (ii) to demand,
receive, compromise, sue for, and give acquaintance for, any and all moneys and
claims for money due and to become due under or arising out of such accounts and
other obligations, (iii) to endorse any checks or other instruments or orders in
connection therewith, (iv) to file any claims or take any actions or institute
any proceedings which the Agent may deem to be necessary or advisable in its
sole and complete discretion and to compromise, litigate or settle the same and
(v) to take any other action which by the terms of this Agreement is to be taken
by such Securing Party.
(3) (a) Upon the occurrence and during the continuance of any Event of
Default, the Agent may do any one or more of the following acts:
(i) exercise all of the rights and remedies of a mortgagee and secured
party under the provisions of applicable law;
(ii) institute legal proceedings for the specific performance of any
covenant or agreement herein undertaken by each of the Securing Parties, or
for aid in the execution of any power or remedy herein granted;
(iii) institute legal proceedings to foreclose upon and against any of
the Liens created hereby;
(iv) institute legal proceedings for the sale, under a judgment or
decree of any court of competent jurisdiction, of any of the Collateral;
(v) institute legal proceedings for the appointment of a receiver or
receivers pending foreclosure hereunder or the sale of any of the
Collateral under the order of a court of competent jurisdiction or under
other legal process;
(vi) personally, or by agents or attorneys, enter into and upon any
premises wherein the Collateral or any part thereof may then be situated
and take possession of all or any part thereof or render it unusable; and,
without being responsible (except for gross negligence or willful
misconduct) for loss or damage, hold, store,
<PAGE>
11
and keep idle, or operate, lease, or otherwise use or permit the use of the
same or any part thereof, for such time and upon such terms as the Agent
may deem to be in the best interests of the Lenders, and demand, collect,
and retain all hire, earnings and all other sums due and to become due in
respect of the same from any party whomsoever, accounting only for net
earnings, if any, arising from such use, after charging against all
receipts from the use of the same and from any subsequent sale thereof, by
court proceedings or pursuant to clause (vii) of this Section 6.B(3)(a),
all reasonable costs and expenses of, and damages or losses by reason of,
such use and/or sale; and/or
(vii) personally, or by agents or attorneys, enter upon and into any
place wherein the same may then be located and take possession of any part
or all of the Collateral, with or without process of law and without being
responsible for loss or damage (except such as results from the Agent's
gross negligence or willful misconduct), and sell, lease or otherwise
dispose of all or any part of the same, free from any and all claims of any
of the Securing Parties at law, in equity, or otherwise, at one or more
public or private sales, in such place or places, at such time or times,
for cash or credit and upon such terms as the Agent or the Majority Lenders
may determine, with or without any previous demand or notice to any of the
Securing Parties or advertisement and demand, and any right or equity of
redemption otherwise required by law is hereby waived by each of the
Securing Parties to the fullest extent permitted by applicable law. The
power of sale hereunder shall not be exhausted by one or more sales, and
the Agent may from time to time adjourn any sale to be made pursuant to
this Section 6.
(b) If the Agent shall demand possession of the Collateral or any part
thereof pursuant hereto, each of the Securing Parties will, at its own expense,
forthwith cause the Collateral or any part thereof designated by the Agent to be
assembled and made available and/or delivered to the Agent at any place
designated by the Agent.
(c) In the event that any mandatory requirement of applicable law shall
obligate the Agent to give prior notice to any of the Securing Parties of any of
the foregoing acts, each of the Securing Parties agrees that a notice sent to
the Company in writing by certified U.S. mail, return receipt requested, at
least five days before the date of any such act, at the
<PAGE>
12
Company's address specified in Schedule 11.02 of the Credit Agreement (or such
other address as shall have been notified to the Agent in writing), shall be
deemed to be reasonable notice of such act and, specifically, reasonable
notification of the time and place of any public sale hereunder and reasonable
notification of the time after which any private sale or other intended
disposition to be made hereunder is to be made.
(d) The Agent shall apply the proceeds from the sale or other disposition
of the Collateral in accordance with the terms and provisions of the Credit
Agreement.
(e) No sale or other disposition of all or any part of the Collateral by
the Agent pursuant to this Section 6.B(3) shall be deemed to relieve any of the
Securing Parties of its obligations in respect of any Secured Obligations except
to the extent the proceeds thereof are finally and irrevocably applied by the
Agent to the payment of such Secured Obligations.
Section 7. Possession Until Default. Until an Event of Default shall
--------- ------------------------
occur, except as otherwise provided in this Agreement or in the other Security
Documents and other documents referred to herein, the Securing Parties will have
the right to the possession and enjoyment of the Collateral subject to and upon
the terms of this Agreement.
Section 8. Waiver bv Securing Parties. To the fullest extent it may
--------- --------------------------
lawfully so agree, each of the Securing Parties agrees that it will not at any
time insist upon, claim, plead, or take any benefit or advantage of any
appraisement, valuation. stay, extension, moratorium, redemption or similar law
now or hereafter in force in order to prevent, delay, or hinder the enforcement
hereof or the absolute sale of any part of the Collateral or the possession
thereof by any purchaser at any sale pursuant to Section 6.B(3) above; and each
of the Securing Parties, for itself and all who claim through it, as far as it
or they now or hereafter lawfully may do so, hereby waives the benefit of all
such laws, and all right to have the Collateral marshaled upon any foreclosure
hereof, and agrees that any court having jurisdiction to foreclose this
Agreement may order the sale of the Collateral as an entirety. Without limiting
the generality of the foregoing, upon the occurrence and during the continuance
of an Event of Default, each of the Securing Parties hereby: (i) authorizes the
Agent, in its sole discretion and without notice to or demand upon any of the
Securing Parties and without otherwise affecting the obligations of any of the
<PAGE>
13
Securing Parties hereunder or in respect of the Secured Obligations, from time
to time to take and hold other collateral (in addition to the Collateral) for
payment of the Secured Obligations, or any part thereof, and to exchange,
enforce or release such other collateral or any part thereof and to accept and
hold any endorsement or guarantee of payment of the Secured Obligations or any
part thereof and to release or substitute any endorser or guarantor or any other
Person granting security for or in any other way obligated upon any Secured
Obligations or any part thereof and/or to modify or terminate the terms of
subordination of any Indebtedness subordinated to any of the Secured
Obligations; and (ii) waives and releases any and all right to require the Agent
to collect any of the Secured Obligations from any specific item or items of the
Collateral, from any other Person liable as guarantor or in any other manner in
respect of any of the Secured Obligations or from any other collateral.
Section 9. Purchase By Agent or Lenders. At any public or private sale
--------- ----------------------------
pursuant to Section 6.B(3) hereof, the Agent or any Lender or their respective
agents may to the extent permitted by applicable law bid for and purchase the
Collateral offered for sale, may make payment on account thereof as hereinafter
provided in this Section 9, and, upon compliance in full with the terms of such
sale, may hold, retain, and dispose of such property without further
accountability therefor to any of the Securing Parties or any other party. In
any such sale to the Agent or any Lender, the Agent or such Lender may, for the
purposes of making payment for the Collateral or any part thereof so purchased,
use any claim for the Secured Obligations then due and payable to it as a credit
against the purchase price.
Section 10. No Representation, Etc. Anything herein contained to the
---------- ----------------------
contrary notwithstanding, neither the Agent, nor any of the Lenders nor any of
their respective nominees or assignees shall have any obligation or liability by
reason of or arising out of this Agreement to make any inquiry as to the nature
or sufficiency of, to present or file any claim with respect to, or to take any
action to collect or enforce the payment of, any amounts to which it may be
entitled at any time or times by virtue of this Agreement. The Agent and the
Lenders make no representations or warranties with respect to the Collateral or
any part thereof, and the Agent and the Lenders shall not be chargeable with any
obligations or liabilities of any of the Securing Parties or any other Person
with respect thereto.
<PAGE>
14
Section 11. Remedies. Each right, power, and remedy herein specifically
---------- --------
granted to the Agent or otherwise available to it shall be cumulative, and shall
be in addition to every other right, power and remedy herein specifically given
or now or hereafter existing at law, in equity or otherwise; and each right,
power and remedy, whether specifically granted herein or otherwise existing, may
be exercised at any time and from time to time as often and in such order as may
be deemed expedient by the Agent in its sole and complete discretion; and the
exercise or commencement of exercise of any right, power, or remedy shall not be
construed as a waiver of the right to exercise, at the same time or thereafter,
the same or any other right, power or remedy. No delay or omission by the Agent
in exercising any such right or power, or in pursuing any such remedy, shall
impair any such right, power or remedy or be construed to be a waiver of any
default on the part of any of the Securing Parties or an acquiescence therein.
No waiver by the Agent of any breach or default of or by any of the Securing
Parties hereunder shall be deemed to be a waiver of any other or similar,
previous or subsequent breach or default.
Section 12. Notices. All notices, requests and demands will be given to
---------- -------
or made upon the respective parties hereto in writing (the term "in writing"
------------
shall include reference to communications by telex, telegram, cable or
telecopier provided the same are promptly confirmed by letter) in accordance
with Section 11.02 of the Credit Agreement or as to any party at such other
address as may be designated by it in a written notice to all other parties. All
notices, requests, consents and demands hereunder will be effective when
personally delivered or when duly deposited in the mails, delivered to the
telegraph office or telexed or telecopied, addressed as aforesaid.
Section 13. Amendments, Etc. This Agreement may not be amended or
---------- ---------------
modified except by written agreement of the Securing Parties (or the Company on
their behalf pursuant to Section 16 hereof) and the Agent (at the direction of
the Majority Lenders), and no consent or waiver hereunder shall be valid unless
in writing and signed by the Person or Persons giving such consent or waiver;
provided, however, that any amendment or modification that releases all or a
- --------- -------
significant portion of the Collateral hereunder shall require the consent of
each of the Lenders.
Section 14. Indemnity. Each of the Securing Parties hereby agrees to
---------- ---------
assume liability for, and does hereby agree to indemnify, protect, save
<PAGE>
15
and keep harmless the Agent and the Lenders and each of their respective agents
and servants, from and against, any and all liabilities, obligations. losses.
damages, penalties, claims, actions, suits and reasonable costs and expenses
(including, without limitation, those referred to in clause (i) of Section
6.B(3) hereof), of whatsoever kind or nature, imposed on, incurred by or
asserted against the Agent, the Lenders, or their respective agents and
servants, in any way relating to or arising out of this Agreement, or the
manufacture, purchase, acceptance, rejection, ownership, delivery, lease,
possession, use, operation, condition. merchantability, fitness, sale, return or
other disposition of any Collateral (other than by reason of the respective
indemnitees' own gross negligence or willful misconduct). Without limiting the
generality of the foregoing, each of the Securing Parties hereby jointly and
severally agrees to reimburse the Agent and the Lenders for all costs,
liabilities or expenses reasonably incurred by them pursuant to any of the
duties hereby or thereby created or in the exercise of any duty, right, remedy
or power herein or therein imposed or conferred upon any of them (other than any
such costs, liabilities and expenses resulting from the Agent's or such Lender's
gross negligence or willful misconduct). The obligations of the Securing
Parties contained in this Section 14 shall survive the termination of this
Agreement and the discharge of the Securing Parties' other obligations under the
other Credit Documents.
Section 15. Miscellaneous.
---------- -------------
A. Successors. This Agreement shall be binding upon and shall inure to
----------
the benefit of each of the Securing Parties, the Agent and the Lenders and their
respective successors and assigns; provided, however, that none of the Securing
-------- -------
Parties may assign its rights or obligations hereunder without the prior written
consent of all of the Lenders.
B. Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
C. Governing Law. This Agreement shall be construed in accordance with
-------------
and governed by the law of The Commonwealth of Massachusetts.
<PAGE>
16
D. Headings. The section headings used herein have been inserted for
--------
convenience of reference only and do not constitute matters to be considered in
interpreting this Agreement.
E. Assignments. Subject to the provisions of Section 11.06 of the Credit
-----------
Agreement, it is understood that the Lenders may from time to time assign their
rights in respect of the Secured Obligations. and the word "Lenders" when used
herein shall be deemed to mean the Lenders and their respective successors and
assignees.
F. Severability. Any provision of this Agreement which is prohibited or
------------
unenforceable in any in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or effecting the validity or
enforceability of such provision in any other jurisdiction.
G. Senior Indebtedness. The obligations of the Securing Parties hereunder
-------------------
shall constitute "Senior Indebtedness" and "Senior Debt" as such terms are
defined in all documents to which any Securing Party is a party.
Section 16. Securing Parties Other Than The Company. Each of the Securing
---------- ---------------------------------------
Parties (other than the Company, except for purposes of clause (iv) below)
hereby irrevocably; (i) appoints the Company its attorney-in-fact, with full
power and authority in the name and on behalf of such Securing Party or
otherwise, to amend, modify or waive any and all provisions of this Agreement
and to grant consents and give instructions hereunder; (ii) expressly ratifies,
consents to and adopts any and all agreements which the Company may hereafter
make with the Agent and/or any of the Lenders with respect to the Collateral
owned or held by such Securing Party: (iii) authorizes the Agent to deliver all
such Collateral to the Company or to make such other dispositions thereof as the
Company has instructed or may instruct and agrees that any and all such
agreements and instructions of the Company shall be applicable to such
Collateral exactly as if such Collateral were owned or held by the Company; and
(iv) to the fullest extent permitted by applicable law, waives any and all
notices of every kind to which such Securing Party might otherwise be entitled,
or of demand for payment or the payment of any Secured Obligations, or of the
presentment or dishonor of any instrument for the payment of money at any time
in connection with any
<PAGE>
17
Secured Obligations, or of protest and/or non-payment thereof, or of any
exchange, sale, release or other handling or disposition of all or any such
Collateral, or otherwise. Without limiting the generality of the foregoing: (a)
none of the Securing Parties other than the Company shall have the right to
receive from the Agent any statement, report or other notice, to object to any
disposition or application of its Collateral, to obtain injunctive or other
relief by reason of the Agent's handling or disposition of such Collateral, or
to recover losses caused to such Securing Party by reason of the Agent's failure
to furnish to such Securing Party other than the Company any statement or other
information with respect to such Collateral or any other Collateral; and (b) no
agreement or consent of any Securing Party other than the Company shall be
required for any amendment or modification of this Agreement.
Section 17. Termination: Release. When all the Secured Obligations (other
---------- --------------------
than Secured Obligations in the nature of continuing indemnitees or expense
reimbursement obligations not yet due and payable) have been paid in full and
have been terminated and the Revolving Credit Commitments of each of the Lenders
to make any Loan under the Credit Agreement have expired, this Agreement shall
terminate. Upon termination of this Agreement or any release of Collateral in
accordance with the provisions of the Credit Agreement, the Agent shall, upon
the request and at the expense of the Company, forthwith assign, transfer and
deliver to the Company, against receipt and without recourse to or warranty by
the Agent or the Lenders, such of the Collateral to be released (in the case of
a release) as may be in possession of the Agent and which shall not have been
sold or otherwise applied pursuant to the terms hereof, in the order of and at
the expense of the Securing Parties, and proper instruments (including UCC
termination statements on Form UCC-3) acknowledging the termination of this
Agreement or the release of such Collateral, as the case may be.
Section 18. Credit Agreement Provisions. For purposes hereof, the
---------- ---------------------------
provisions of Sections 10.09, 11.03 and 11.04 of the Credit Agreement are hereby
incorporated, mutatis mutandis, as if set forth herein in fall. So long as any
------- ---------
Secured Obligations shall remain outstanding hereunder, such provisions. as so
incorporated, shall survive the payment in full of the Loans, and the
termination of the Credit Agreement.
<PAGE>
18
Section 19. Future Advances. This Security Agreement shall secure payment
---------- ---------------
of any amounts advanced from time to time pursuant to the Credit Agreement.
The parties hereto have caused this Agreement to be duly executed as of the
day and year first above written.
INTEREP NATIONAL RADIO
SALES, INC.
By: /s/ Marc G. Guild
----------------------------------
Name: Mark G. Guild
Title: President, Marketing Division
MCGAVREN GUILD, INC.
By: /s/ William J. McEntee, Jr.
----------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
D&R RADIO, INC.
By: /s/ William J. McEntee, Jr.
----------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
CBS RADIO SALES, INC.
By: /s/ William J. McEntee, Jr.
----------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
<PAGE>
19
ALLIED RADIO PARTNERS, INC.
By: /s/ William J. McEntee, Jr.
----------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
CABALLERO SPANISH MEDIA
L.L.C.
By: /s/ William J. McEntee, Jr.
----------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
CLEAR CHANNEL RADIO, LLC
By: /s/ William J. McEntee, Jr.
----------------------------------
Name: William J. McEntee, Jr.
Title: Vice President and
Chief Financial Officer
<PAGE>
20
SCHEDULE 1
----------
PLACE OF BUSINESS LOCATION OF COLLATERAL
Securing Parties
- ----------------
Interep National Radio Sales, Inc.
McGavren Guild, Inc.
D & R Radio, Inc.
CBS Radio Sales, Inc.
Allied Radio Partners, Inc.
Caballero Spanish Media L.L.C.
Clear Channel Radio, LLC
Chief Executive Office and Principal Place of Business for All Securing Parties
- -------------------------------------------------------------------------------
100 Park Avenue, New York, NY 10017
Locations of Collateral
-----------------------
100 Park Avenue
New York, NY 10017
31 St. James Ave., Suite 809
Boston, MA 02116
10880 Wilshire Blvd, Suite 1215
Los Angeles, CA 90024
The Bellevue
200 Broad Street
Broad & Walnut Streets, 9th Fl.
Philadelphia, PA 19102
4800 S.W. Macadam Avenue, Suite 200
Portland. OR 97201
<PAGE>
21
2505 Second Avenue, Suite 602
Seattle, WA 98121
Platinum Tower
400 Interstate North Parkway
Suite 400
Atlanta, GA 30339
205 North Michican Avenue, Suite 2015
Chicago, IL 60601
Travelers Tower 1
26555 Evergreen Road
Southfield, MI 48076
2090 Palm Beach Lakes Blvd.
West Palm Beach, FL 33409
60 South Sixth Street
Suite 3110
Minneapolis, MN 55402
1300 Coral Way, Suite 204
Miami, FL 33145
118 Broadway, Suite 617
San Antonio, TX 78205
505 Sansome Street, 2nd Floor
San Francisco, CA 94111
515 Olive Street, Suite 1507
St. Louis, MO 63101
5000 Quorum, Suite 700
Dallas, TX 75240-7509
3500 Maple Avenue, Suite 1320
Dallas, TX 75219
<PAGE>
EXHIBIT 10.4
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT (the "Agreement"), dated as of July 2, 1998, by
INTEREP NATIONAL RADIO SALES, INC. (the "Company") in favor of BANKBOSTON, N.A.,
(the "Agent"), as administrative agent for the Lenders from time to time parties
to the Credit Agreement (as defined below).
WHEREAS, pursuant to a certain Revolving Line of Credit Agreement, dated as
of the date hereof, among the Company, MCGAVREN GUILD, INC., D&R RADIO, INC.,
CBS RADIO SALES, INC., ALLIED RADIO PARTNERS, INC., CABALLERO SPANISH MEDIA
L.L.C. and CLEAR CHANNEL RADIO, LLC, the Agent, SUMMIT BANK, as documentation
agent, and the Lenders (as amended, restated, modified and supplemented and in
effect, from time to time, the "Credit Agreement"; capitalized terms not
otherwise defined herein shall have the meanings given to such terms in the
Credit Agreement), the Lenders have agreed to make certain Loans to the
Borrowers, each of which will derive benefit, directly and indirectly, from such
Loans; and
WHEREAS, it is a condition precedent to the agreement of the Lenders to
make Loans under the Credit Agreement that, among other things, the Company
shall have executed and delivered to the Agent certain Security Documents,
including, without limitation, this Stock Pledge Agreement; and
WHEREAS, this Stock Pledge Agreement is given by the Company in favor of
the Agent and the Lenders to secure the payment and performance of all of the
Secured Obligations (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Pledge. As security for the prompt payment, observance and
------
performance when due (by acceleration or otherwise) of the Secured Obligations,
the Company hereby pledges and grants to the Agent, for the
<PAGE>
2
equal and ratable benefit of the Lenders, a continuing first priority security
interest in all of the Company's right, title and interest in and to, whether
now existing or hereafter acquired, the following property (collectively, the
"Pledged Collateral"):
(i) the shares of capital stock of any Subsidiary held by the Company
and listed on Schedule I hereto (the "Pledged Shares") (which to the extent
permitted by law are, and shall remain at all times until this Agreement
terminates, certificated securities) and, if incorporated in a jurisdiction
which permits certificates, the certificates representing the Pledged
Shares and in all cases any interest of the Company in the entries on the
books of any financial intermediary pertaining to the Pledged Shares;
(ii) all additional shares of stock of such Subsidiaries from time to
time acquired by the Company in any manner (which to the extent permitted
by law are, and shall remain at all times until this Agreement terminates,
certificated securities) (which shares shall be deemed to be part of the
Pledged Shares) and, if incorporated in a jurisdiction which permits
certificates, the certificates representing such additional shares and in
all cases any interest of the Company in the entries on the books of any
financial intermediary pertaining to such additional shares;
(iii) all dividends, cash, options, warrants, rights, instruments,
distributions, returns of capital, income, profits and other property,
interests or proceeds from time to time received, receivable or otherwise
distributed to the Company in respect of or in exchange for any or all of
the Pledged Shares (collectively, "Distributions"); and
(iv) all Proceeds (as defined under the Uniform Commercial Code as in
effect in any relevant jurisdiction or under other relevant law) of any of
the foregoing, and in any event including, without limitation, any and all
(i) proceeds of any insurance, indemnity, warranty or guarantee payable to
the Agent or to the Company from time to time with respect to any of the
Pledged Collateral, (ii) payments (in any form whatsoever) made or due and
payable to the Company from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or
any part of the Pledged Collateral by any Governmental Authority (or any
<PAGE>
3
person acting on behalf of a Governmental Authority), (iii) instruments
representing obligations to pay amounts in respect of Pledged Shares (iv)
products of the Pledged Collateral, and (v) other amounts from time to time
paid or payable under or in connection with any of the Pledged Collateral.
Section 2. Secured Obligations. This Agreement secures, and the Pledged
-------------------
Collateral is collateral security for, the prompt payment and performance in
full when due, whether at stated maturity, by acceleration or otherwise, of (i)
the obligations of the Company under this Agreement (including, without
limitation, the obligation of the Company to repay any and all sums advanced by
the Agent or any Lender, at its or their option, in payment of taxes,
assessments or other public charges and expenses, or to satisfy Liens, other
than those created hereby, on or in the Pledged Collateral or any part thereof
which, if not paid, might encumber the Pledged Collateral or any part thereof)
and (ii) the obligations of the Borrowers to pay, when due (whether at stated
maturity, by acceleration or otherwise), the principal of and interest on the
Loans made and to be made to the Borrowers under the Credit Agreement and the
Notes evidencing the same, and the commitment fees and Agents' fees and all
other amounts payable by any Borrower to the Agents and/or the Lenders
thereunder ((i) and (ii) being collectively referred to as the "Secured
Obligations").
Section 3. No Release. Nothing set forth in this Agreement shall relieve
----------
the Company from the performance of any term, covenant, condition or agreement
on the Company's part to be performed or observed under or in respect of any of
the Pledged Collateral or from any liability to any person or entity under or in
respect of any of the Pledged Collateral or impose any obligation on the Agent
or any Lender to perform or observe any such term, covenant, condition or
agreement on the Company's part to be so performed or observed or impose any
liability on the Agent or any Lender for any act or omission on the part of the
Company relating thereto or for any breach of any representation or warranty on
the part of the Company contained in this Agreement or any other Credit Document
or in respect of the Pledged Collateral or made in connection herewith or
therewith. The obligations of the Company contained in this Section 3 shall
survive the termination of this Agreement and the discharge of the Company's
other obligations hereunder and under the other Credit Documents.
<PAGE>
4
Section 4. Delivery of Pledged Collateral.
------------------------------
(a) All certificates, agreements or instruments representing or evidencing
the Pledged Collateral, to the extent not previously delivered to the Agent,
shall immediately upon receipt thereof by the Company be delivered to and held
by the Agent on behalf of the Lenders pursuant hereto. All Pledged Collateral
shall be in suitable form for transfer by delivery and shall be accompanied by
duly executed instruments of transfer or assignment in blank (with signatures
appropriately guaranteed), all in form and substance satisfactory to the Agent.
The Agent shall have the right, at any time after the occurrence and during the
continuance of an Event of Default and without notice to the Company, to
endorse, assign or otherwise transfer to or to register in the name of the Agent
or any of its nominees any or all of the Pledged Collateral. In addition, the
Agent shall have the right at any time to exchange certificates representing or
evidencing Pledged Collateral for certificates of smaller or larger
denominations.
(b) If any Subsidiary is incorporated in a jurisdiction which does not
permit the use of certificates to evidence equity ownership, then the Company
shall cause such Subsidiary, to the extent permitted by applicable law, to
record such pledge on the stock register of the issuer, execute any customary
stock pledge forms or other documents necessary or appropriate to complete the
pledge and give the Agent the right to transfer such Pledged Shares under the
terms hereof and provide to the Agent an opinion of counsel, in form and
substance satisfactory to it, confirming such pledge.
(c) Notwithstanding anything to the contrary in this Agreement, if any
Pledged Shares (whether now owned or hereafter acquired) are uncertificated
securities, the Company shall promptly notify any Agent thereof, and shall
promptly take all actions required to perfect the security interests of the
Agent under applicable law (including, in any event, under Sections 8-106 and 9-
115 of the Massachusetts Uniform Commercial Code, if applicable). The Company
further agrees to take such actions as the Agent deems reasonably necessary or
desirable to effect the foregoing and to permit the Agent to exercise any of its
rights and remedies hereunder, and agrees to provide an opinion of counsel
reasonably satisfactory to the Agent with respect to any such pledge of
uncertificated securities promptly upon request of the Agent.
<PAGE>
5
Section 5. Supplements; Further Assurances.
-------------------------------
(a) At any time and from time to time, at the expense of the Company, the
Company shall promptly execute and deliver all further instruments and
documents, including supplemental or additional UCC-1 financing statements, and
take all further action that may be necessary or that the Agent or any Lender
may request, in order to perfect and protect any pledge or security interest
granted or purported to be granted hereby or to enable the Agent to exercise and
enforce its rights and remedies hereunder with respect to any Pledged
Collateral.
(b) The Company shall, upon obtaining any Pledged Shares, promptly (and in
any event within 5 Business Days) deliver to the Agent a pledge amendment in
substantially the form of Schedule II hereto (each, a "Pledge Amendment"), in
-----------
respect of the additional Pledged Shares which are to be pledged pursuant to
this Agreement, and confirming the attachment of the Lien hereby created on and
in respect of such Pledged Collateral, and shall deliver to the Agent duly
executed instruments of transfer or assignments in blank (with signatures
appropriately guaranteed), all in form and substance satisfactory to the Agent.
The Company hereby authorizes the Agent to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Shares listed on any Pledge Amendment
delivered to the Agent shall for all purposes hereunder be considered Pledged
Collateral.
Section 6. Representations and Warranties. The Company represents and
------------------------------
warrants as follows:
(i) The Company is, and at the time of any delivery of any Pledged
Collateral to the Agent pursuant to Section 4 of this Agreement will be,
the legal and beneficial owner of the Pledged Collateral. All Pledged
Collateral is on the date hereof and will be, subject to Section 8 hereof,
so owned by the Company free and clear of any Lien or other encumbrance
except for the Lien created by this Agreement or Liens permitted pursuant
to the Credit Agreement.
(ii) The Company has full power, authority and legal right to pledge
all the Pledged Collateral pursuant to this Agreement.
(iii) To our knowledge, no consent of any party (including, without
limitation, any stockholders or creditors of the Company)
<PAGE>
6
and no consent, authorization, approval, or other action by, and no notice
to or filing with, any Governmental Authority or other person or entity is
required either (x) for the pledge by the Company of the Pledged Collateral
pursuant to this Agreement or for the execution, delivery or performance of
this Agreement by the Company, (y) for the exercise by the Agent of the
voting or other nights provided for in this Agreement, or (z) for the
exercise by the Agent of the remedies in respect of the Pledged Collateral
pursuant to this Agreement.
(iv) To our knowledge, all of the Pledged Shares have been, and to the
extent hereafter issued will be upon such issuance, duly authorized and
validly issued and fully paid and nonassessable.
(v) The Company's chief executive office and principal place of
business is at the address set forth in Schedule 11.02 to the Credit
Agreement.
(vi) To our knowledge, as of the date hereof, (x) the Pledged Shares
identified in Schedule I constitute the percentage of the issued and
----------
outstanding shares of capital stock of the Subsidiaries as identified in
Schedule I, and (y) Schedule I constitutes a true and complete description
---------- ----------
of the Pledged Shares.
(vii) The Company has delivered to the Agent all certificates
representing the Pledged Shares and such delivery and pledge of the Pledged
Collateral pursuant to this Agreement creates a valid and perfected first
priority security interest or the comparable interest under foreign law in
the Pledged Collateral securing the payment of the Secured Obligations
pursuant to the Uniform Commercial Code in effect in each applicable
jurisdiction. This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, subject to general principles of equity and bankruptcy,
insolvency, fraudulent conveyance, moratorium or similar laws of general
application affecting the rights and remedies of creditors.
(viii) All information set forth herein relating to the Pledged
Collateral is accurate and complete in all respects.
<PAGE>
7
(ix) The pledge of the Pledged Collateral pursuant to this Agreement
does not violate Regulation G, T, U or X or any other provision of any
applicable law or regulation or any order, judgment, writ, award or decree
of any court, arbitrator or Governmental Authority, or the certificate of
incorporation or bylaws of the Company.
(x) The Company at all times will be the beneficial owner of the
Pledged Collateral.
Section 7. Voting Rights, Distributions: Etc.
---------------------------------
(a) So long as no Event of Default shall have occurred and be continuing:
(i) The Company shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Shares or any part
thereof for any purpose not inconsistent with the terms or purpose of this
Agreement or any of the other Credit Documents; provided, however, that the
-------- -------
Company shall not in any event exercise such rights in any manner which may
have a material adverse effect on the value of the Pledged Collateral or
the security intended to be provided by this Agreement.
(ii) Subject to the provisions of Section 1 hereof and the terms of
the Agreement, the Company shall be entitled to receive and retain, and to
utilize free and clear of the Lien of this Agreement, any and all
Distributions; provided, however, that any and all such Distribution
-------- -------
consisting of rights or interests in the form of shares of stock shall be,
and shall be forthwith delivered to the Agent to hold as, Pledged
Collateral and shall, if received by the Company, be received in trust for
the benefit of the Lenders, be segregated from the other property or funds
of the Company, and be forthwith delivered to the Agent as Pledged
Collateral in the same form as so received (with any necessary endorsement
and stock powers executed in blank).
(iii) The Agent shall be deemed without further action or formality to
have granted to the Company all necessary consents relating to voting
rights and shall, if necessary, upon written request of the Company and at
the Company's sole expense, from
<PAGE>
8
time to time execute and deliver (or cause to be executed and delivered) to
the Company all such instruments as the Company may reasonably request in
order to permit the Company to exercise the voting and other rights which
it is entitled to exercise pursuant to Section 7(a)(i) hereof and to
receive the Distributions which it is authorized to receive and retain
pursuant to Section 7(a)(ii) hereof.
(b) Upon the occurrence and during the continuance of an Event of Default:
(i) All rights of the Company to exercise the voting and other
consensual rights it would otherwise be entitled to exercise pursuant to
Section 7(a)(i) hereof without any action or the giving of any notice shall
cease, and all such rights shall thereupon become vested in the Agent,
which shall thereupon have the sole right to exercise such voting and other
consensual rights.
(ii) All rights of the Company to receive Distributions which it would
otherwise be authorized to receive and retain pursuant to Section 7(a)(ii)
hereof shall cease and all such rights shall thereupon become vested in the
Agent, which shall thereupon have the sole right to receive and hold as
Pledged Collateral such Distributions.
(c) The Company shall, at its own expense, from time to time execute and
deliver to the Agent appropriate instruments as the Agent or any Lender may
request in order to permit the Agent to exercise the voting and other rights
which it may be entitled to exercise pursuant to Section 7(b)(i) hereof and to
receive all Distributions which it may be entitled to receive under Section
7(b)(ii) hereof.
(d) All Distributions which are received by the Company contrary to the
provisions of Section 7(b)(ii) hereof shall be received in trust for the benefit
of the Lenders, shall be segregated from other funds of the Company and shall
immediately be paid over to the Agent as Pledged Collateral in the same form as
so received (with any necessary endorsement).
Section 8. Transfers and Other Liens;, Additional Equity Interests;
--------------------------------------------------------
Principal Office.
- ----------------
<PAGE>
9
(a) The Company shall not (i) sell, convey, assign or otherwise dispose of,
or grant any option, right or warrant with respect to, any of the Pledged
Collateral, (ii) create or a permit to exist any Lien or other encumbrance upon
or with respect to any Pledged Collateral other than the Lien and security
interest granted to the Agent for the benefit of the Lenders under this
Agreement, or (iii) permit any Subsidiary to merge, consolidate or change its
legal form, except as expressly permitted by the Credit Agreement and, in the
case of any Subsidiary the shares in which have been pledged hereunder, unless
(i) all of the outstanding capital stock of the surviving or resulting
corporation is, upon such merger or consolidation, pledged hereunder and no
cash, securities or other property is distributed in respect of the outstanding
shares of any other constituent corporation, or (ii) the surviving or resulting
corporation is the Company and any cash, securities or other property
distributed in connection therewith is distributed to the Company.
(b) The Company shall (i) cause each Subsidiary not to issue any shares of
stock in addition to or in substitution for the Pledged Shares issued by such
Subsidiaries, except to the Company, and (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional shares
of stock which are required to be pledged hereunder.
(c) The Company shall not change its chief executive office and principal
place of business, and shall not change its corporate name or the name under
which it is conducting business, without giving the Agent not less than 45 days
prior written notice of such change.
Section 9. Reasonable Care. The Agent shall be deemed to have exercised
---------------
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially
equivalent to that which the Agent, in its individual capacity, accords its own
property consisting of similar instruments or interests, it being understood
that the Agent shall not have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Pledged Collateral, whether or not the Agent has
or is deemed to have knowledge of such matters, or (ii) taking any necessary
steps to preserve rights against any person or entity with respect to any
Pledged Collateral.
Section 10. Remedies upon Default; Decisions Relating to Exercise
-----------------------------------------------------
<PAGE>
10
of Remedies.
- -----------
(a) If any Event of Default shall have occurred and be continuing, the
Agent shall be entitled to exercise any of the rights, powers and remedies
(whether vested in it by this Agreement or by any other Credit Document or by
law) for the protection and enforcement of the rights of the Lenders in respect
of the Pledged Collateral, and the Agent may, at the instruction of the Majority
Lenders, in addition to other rights and remedies provided for herein or
otherwise available to it to be exercised from time to time, do any one or more
of the following acts, which the Company hereby agrees to be commercially
reasonable: (i) retain and apply the Distributions to the Secured Obligations as
provided for in Section 11 hereof, (ii) transfer all or any part of the Pledged
Collateral into the Agent's name or the name of its nominee or nominees, and
(ii) exercise all the rights and remedies of a secured party on default under
the Uniform Commercial Code in effect in any applicable jurisdiction at that
time, and the Agent may also in its sole discretion, without notice except as
specified below, sell the Pledged Collateral or any part thereof (including,
without limitation, any partial interest in the Pledged Shares) in one or more
parcels at public or private sale, at any exchange, broker's board or at any of
the Agent's offices or elsewhere, for cash, on credit or for future delivery,
and at such price or prices and upon such other terms as the Agent may deem
commercially reasonable, irrespective of the impact of any such sales on the
market price of the Pledged Collateral. The Agent, any Lender or any of their
respective affiliates may be the purchaser of any or all of the Pledged
Collateral at any such sale and shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
the Pledged Collateral sold at such sale, to use and apply any of the Secured
Obligations owed to such person or entity as a credit on account of the purchase
price of any Pledged Collateral payable by such Person at such sale. Each
purchaser at any such sale shall acquire the property sold absolutely free from
any claim or right on the part of the Company, and the Company hereby waives (to
the full extent permitted by law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. The Company acknowledges
and agrees that, to the extent notice of sale shall be required by law, 5 days'
notice to the Company of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification to
the Company. The Agent shall not be obligated to make any sale of
<PAGE>
11
Pledged Collateral regardless of notice of sale having been given. The Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. The Company hereby waives any
claims against the Agent or any Lender arising by reason of the fact that the
price at which any Pledged Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale, even if
the Agent accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree.
(b) The Company recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws, the Agent may be compelled, with respect to
any sale of all or any part of the Pledged Collateral, to limit purchasers to
Persons who will agree, among other things, to acquire the Pledged Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. The Company acknowledges that any such private sales may be at
prices and on terms less favorable to the Agent than those obtainable through a
public sale without such restrictions (including, without limitation, a public
offering made pursuant to a registration statement under the Securities Act),
and, notwithstanding such circumstances, agrees that any such private sale shall
be deemed to have been made in a commercially reasonable manner and that the
Agent shall have no obligation to engage in public sales and no obligation to
delay the sale of any Pledged Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities laws,
even if such issuer would agree to do so.
(c) If the Agent determines to exercise its right to sell any or all of the
Pledged Collateral, upon written request, the Company shall from time to time
furnish to the Agent all such information as the Agent may request in order to
determine the number of Pledged Shares included in the Pledged Collateral which
may be sold by the Agent as exempt transactions under the Securities Act and the
rules of the Securities and Exchange Commission thereunder, as the same are from
time to time in effect.
<PAGE>
12
(d) The Company recognizes that, by reason of certain prohibitions
contained in laws, rules, regulations or orders of any foreign governmental
authority, the Agent may be compelled, with respect to any sale of all or any
part of the Pledged Collateral, to limit purchasers to those who meet the
requirements of such foreign governmental authority. The Company acknowledges
that any such sales may be at prices and on terms less favorable to the Agent
than those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agree that any such restricted sale shall be
deemed to have been made in a commercially reasonable manner and that the Agent
shall have no obligation to engage in public sales.
(e) In addition to any of the other rights and remedies hereunder, the
Agent shall have the right to institute a proceeding seeking specific
performance in connection with any of the agreements or obligations hereunder.
Section 11. Application of Proceeds. All Distributions held from time to
-----------------------
time by the Agent for the benefit of the Lenders and all cash proceeds received
by the Agent in respect of any sale of, collection from, or other realization
upon all or any part of the Pledged Collateral pursuant to the exercise by the
Agent of its remedies as a secured creditor as provided in Section 10 hereof
shall be applied from time to time by the Agent in accordance with the terms and
provisions of the Credit Agreement.
Section 12. Expenses. The Company shall upon demand pay to the Agent and
--------
any Lender the amount of any and all reasonable out of pocket expenses,
including the reasonable fees and expenses of its counsel and the reasonable
fees and expenses of any experts and agents, which the Agent or such Lender may
incur in connection with (i) the collection of the Secured Obligations, (ii) the
administration of this Agreement, (iii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral, (iv) the exercise or enforcement of any of the rights of the Agent
or such Lender hereunder or (v) the failure by the Company to perform or observe
any of the provisions hereof. All amounts payable by the Company under this
Section 12 shall be due upon demand and shall be part of the Secured
Obligations. The Company's obligations under this Section shall survive the
termination of this Agreement and the discharge of the Company's other
obligations hereunder.
<PAGE>
13
Section 13. No Waiver; Cumulative Remedies.
------------------------------
(a) No failure on the part of the Agent or any Lender to exercise, no
course of dealing with respect to, and no delay on the part of the Agent or any
Lender in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law.
(b) In the event the Agent shall have instituted any proceeding to enforce
any right, power or remedy under this instrument by foreclosure, sale, entry or
otherwise, and such proceeding shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Agent, then and in every
such case, the Company and the Agent shall be restored to their respective
former positions and rights hereunder with respect to the Pledged Collateral,
and all rights, remedies and powers of the Agent shall continue as if no such
proceeding had been instituted.
Section 14. The Agent May Perform; The Agent Appointed Attorney-in-Fact.
-----------------------------------------------------------
If the Company shall fail to do any act or thing that it has covenanted to do
hereunder or any warranty on the part of the Company contained herein shall be
breached, the Agent may (but shall not be obligated to) do the same or cause it
to be done or remedy any such breach, and may expend funds for such purpose.
Any and all amounts so expended by the Agent shall be paid by the Company
promptly upon demand therefor, with interest at the highest rate then in effect
under the Credit Agreement during the period from and including the date so
expended to the date of repayment. The Company's obligations under this Section
14 shall survive the termination of this Agreement and the discharge of the
Company's other obligations hereunder and under the Credit Documents. The
Company hereby appoints the Agent its attorney-in-fact with an interest, with
full authority in the place and stead of the Company and in the name of the
Company, or otherwise, from time to time in the Agent's discretion to take any
action and to execute any instrument consistent with the terms of this Agreement
and the other Credit Documents which the Agent may deem necessary or advisable
to accomplish the purposes of this Agreement. The foregoing grant of authority
is a power of attorney coupled with an interest and such
<PAGE>
14
appointment shall be irrevocable for the term of this Agreement. The Company
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof other than anything that constitutes gross negligence or willful
misconduct by such attorney.
Section 15. Indemnity.
---------
(a) Indemnity. The Company hereby agrees to assume liability for, and does
---------
hereby agree to indemnify, protect, save and keep harmless the Agent, the
Lenders and their respective agents and servants, from and against, any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits and
reasonable costs and expenses of whatsoever kind or nature, imposed on, incurred
by or asserted against the Agent, the Lenders or their respective agents and
servants, in any way relating to or arising out of this Agreement, or the
manufacture, purchase, acceptance, rejection, ownership, delivery, lease,
possession, use, operation, condition, merchantability, fitness, sale, return or
other disposition of any Pledged Collateral (other than by reason of the
respective indemnitees' own gross negligence or willful misconduct). Without
limiting the generality of the foregoing, the Company hereby agrees to reimburse
the Agent and the Lenders for all costs, liabilities or expenses reasonably
incurred by them pursuant to any of the duties hereby or thereby created or in
the exercise of any duty, right, remedy or power herein or therein imposed or
conferred upon them (other than any such costs, liabilities and expenses
resulting from the Agent's gross negligence or willful misconduct).
(b) Survival. The obligations of the Company contained in this Section 15
--------
shall survive the termination of this Agreement and the discharge of the
Company's other obligations hereunder and under the other Credit Documents.
Section 16. Amendments; Etc. This Agreement may not be amended or
---------------
modified except by written agreement of the Company and the Agent (with the
consent of the Majority Lenders), and no consent or waiver hereunder shall be
valid unless in writing and signed by the Person or Persons giving such consent
or waiver, provided that any amendment or modification that releases all or a
significant portion of the Pledged Collateral hereunder shall require the
consent of each of the Lenders.
<PAGE>
15
Section 17. Termination. When all the Secured Obligations (other than
-----------
Secured Obligations in the nature of continuing indemnities and expense
reimbursement obligations not yet due and payable) have been indefeasibly paid
in full in cash and have been terminated this Agreement shall terminate. Upon
termination of this Agreement, the Agent shall, upon the request and at the
expense of the Company, forthwith assign, transfer and deliver to the company,
against receipt and without recourse to or warranty by the Agent or the Lenders,
such of the Pledged Collateral as may be in the possession of the Agent and as
shall not have been sold or otherwise applied pursuant to the terms hereof, on
the order of and at the expense of the Company, and proper instruments
(including UCC termination statements on Form UCC-3) acknowledging the
termination of this Agreement.
Section 18. Notices. All notices, requests and demands will be given to
-------
or made upon the respective parties hereto in writing (the term "in writing" to
----------
include reference to communications by telex, telegram, cable or telecopier
provided the same are promptly confirmed by letter) at their respective
addresses specified in Schedule 11.02 of the Credit Agreement or as to any party
at such other address as may be designated by it in a written notice to all
other parties. All notices, requests, consents and demands hereunder will be
effective when personally delivered or when duly deposited in the mails,
delivered to the telegraph office or telexed or telecopied, addressed as
aforesaid.
Section 19. Assignment. Subject to the provisions of Section 11.06 of the
----------
Credit Agreement, it is understood that the Lenders may from time to time assign
their rights in respect of the Secured Obligations, and the word "Lenders" when
used herein shall be deemed to mean the Lenders and their respective successors
and assignees.
Section 20. Governing Law. This agreement shall be governed by, and shall
-------------
be construed and enforced in accordance with, the laws of The Commonwealth of
Massachusetts.
Section 21. Severability of Provisions. Any provision of this Agreement
--------------------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
<PAGE>
16
Section 22. Execution in Counterparts. This Agreement and any amendments,
-------------------------
waivers, consents or supplements hereto may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original, but all
such counterparts together shall constitute one and the same agreement.
Section 23. Headings. The Section headings used in this Agreement are for
--------
convenience of reference only and shall not affect the construction of this
Agreement.
Section 24. Credit Agreement Provisions. For purposes hereof, the
---------------------------
provisions of Sections 10.09, 11.03 and 11.04 of the Credit Agreement are hereby
incorporated, mutatis mutandis, as if set forth herein in full. So long as any
------- --------
Secured Obligations shall remain outstanding hereunder, such provisions, as so
incorporated, shall survive the payment in full of the Loans, and the
termination of the Credit Agreement.
Section 25. Future Advances. This Agreement shall secure payment of any
---------------
amounts advanced from time to time pursuant to the Credit Agreement.
IN WITNESS WHEREOF, the Company has caused this Stock Pledge Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
INTEREP NATIONAL RADIO
SALES, INC.
By: /s/ Marc G. Guild
----------------------------------
Name: Mark G. Guild
Title: President, Marketing Division
<PAGE>
SCHEDULE I
----------
<TABLE>
<CAPTION>
CERT- NUMBER NUMBER OF
CLASS OF PAR IFICATE OF OUTSTANDING
ISSUER STOCK VALUE NO(S) SHARES PLEDGED SHARES
- ---------------- ----------------- ------------------ ------------------ ------------------ ----------------------
<S> <C> <C> <C> <C> <C>
McGavren Common No par 3 200 200
Guild, Inc. Common No par 4 43.25 43.25
Common No par 166 6.75 6.75
D&R Radio, Common No par 10 196 196
Inc.
CBS Radio Common No par 1 10 10
Sales, Inc.
Allied Radio Common $1.00 par 7 1790 1790
Partners, Inc.
</TABLE>
<PAGE>
2
SCHEDULE II
-----------
PLEDGE AMENDMENT
----------------
This Pledge Amendment, dated , , is delivered pursuant to
---------- ---
Section 5(b) of the Agreement referred to below. The undersigned hereby agrees
that this Pledge Amendment may be attached to the Stock Pledge Agreement, dated
as of September 19, 1997, between, among others, the undersigned and BankBoston,
N.A., as agent (the "Agreement"; capitalized terms defined therein being used
herein as therein defined). and that the Pledged Shares listed on this Pledge
Amendment shall be deemed to be and shall become part of the Pledged Collateral
and shall secure all Secured Obligations.
INTEREP NATIONAL RADIO SALES, INC.
By:
--------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.5
AGREEMENT OF LEASE
between
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
Landlord,
and
INTEREP NATIONAL RADIO SALES, INC.,
Tenant,
Dated: As of December 31, 1992
PREMISES:
--------
Entire Fifth (5th) Floor
Portion of Sixth (6th) Floor
100 Park Avenue
New York, New York
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE 1 RENT............................................. 1
ARTICLE 2 PREPARATION OF THE DEMISED PREMISES.............. 3
ARTICLE 3 ADJUSTMENTS OF RENT.............................. 4
ARTICLE 4 ELECTRICITY...................................... 13
ARTICLE 5 USE.............................................. 15
ARTICLE 6 ALTERATIONS AND INSTALLATIONS.................... 15
ARTICLE 7 REPAIRS.......................................... 19
ARTICLE 8 REQUIREMENTS OF LAW.............................. 21
ARTICLE 9 INSURANCE, LOSS, REIMBURSEMENT, LIABILITY........ 22
ARTICLE 10 DAMAGE BY FIRE OR OTHER CAUSE.................... 25
ARTICLE 11 ASSIGNMENT, MORTGAGING, SUBLETTING, ETC.......... 27
ARTICLE 12 CERTIFICATE OF OCCUPANCY......................... 36
ARTICLE 13 ADJACENT EXCAVATION; SHORING..................... 36
ARTICLE 14 CONDEMNATION..................................... 36
ARTICLE 15 ACCESS TO DEMISED PREMISES; CHANGES.............. 38
ARTICLE 16 CONDITIONS OF LIMITATION......................... 39
ARTICLE 17 RE-ENTRY BY LANDLORD; INJUNCTION................. 41
ARTICLE 18 DAMAGES.......................................... 42
ARTICLE 19 LANDLORDS RIGHT TO PERFORM TENANT'S OBLIGATIONS.. 44
</TABLE>
i
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<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE 20 QUIET ENJOYMENT.................................. 44
ARTICLE 21 SERVICES AND EQUIPMENT........................... 44
ARTICLE 22 DEFINITIONS...................................... 47
ARTICLE 23 INVALIDITY OF ANY PROVISION...................... 48
ARTICLE 24 BROKERAGE........................................ 49
ARTICLE 25 SUBORDINATION.................................... 49
ARTICLE 26 CERTIFICATE OF TENANT............................ 52
ARTICLE 27 LEGAL PROCEEDINGS; WAIVER OF JURY TRIAL.......... 52
ARTICLE 28 SURRENDER OF PREMISES............................ 53
ARTICLE 29 RULES AND REGULATIONS............................ 53
ARTICLE 30 CONSENTS AND APPROVALS........................... 53
ARTICLE 31 NOTICES.......................................... 54
ARTICLE 32 NO WAIVER........................................ 54
ARTICLE 33 CAPTIONS......................................... 55
ARTICLE 34 INABILITY TO PERFORM............................. 55
ARTICLE 35 NO REPRESENTATIONS BY LANDLORD................... 56
ARTICLE 36 NAME OF BUILDING................................. 56
ARTICLE 37 RESTRICTIONS UPON USE............................ 56
ARTICLE 38 ARBITRATION...................................... 56
ARTICLE 39 INDEMNITY........................................ 57
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
ARTICLE 40 MEMORANDUM OF LEASE.............................. 57
ARTICLE 41 SECURITY......................................... 57
ARTICLE 42 MISCELLANEOUS.................................... 60
ARTICLE 43 EXTENSION OF TERM................................ 62
ARTICLE 44 RIGHT OF FIRST OFFERING.......................... 65
ARTICLE 45 LAYOUT AND FINISH................................ 67
ARTICLE 46 TENANT'S WORK CREDIT............................. 70
ARTICLE 47 EXISTING LEASE................................... 71
</TABLE>
SCHEDULES
A - Floor Plan
B - Rules and Regulations
C - Cleaning Specifications
D - Approved Contractors
E - Freight Elevator Rules and Regulations
F - Air Conditioning Specifications
iii
<PAGE>
AGREEMENT OF LEASE, made as of the 31st day of December, 1992, between
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, having an
office at 10 Rockefeller Plaza, 15th Floor, New York, New York 10020
(hereinafter referred to as "Landlord") and INTEREP NATIONAL RADIO SALES, INC.,
a New York corporation, having an office at 100 Park Avenue, New York, New York,
Attention: Chief Financial Officer (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 100 Park Avenue,
New York, New York, the following space: the entire rentable space on the fifth
(5th) floor and a portion of the rentable space on the sixth (6th) floor as
shown hatched on the plans annexed hereto as Schedule A (which space is
hereinafter referred to as "the demised premises"); for a term commencing April
1, 1993 (such date on which the term of the Lease commences is hereinafter
referred to as the "Commencement Date"), and which shall end on March 31, 2005
(such date on which the term of the Lease expires is hereinafter referred to as
the "Expiration Date") or until such term shall sooner cease and terminate as
hereinafter provided.
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. Tenant shall pay to Landlord a fixed annual rent (hereinafter
referred to as "fixed annual rent") at the rate of:
(i) ONE MILLION EIGHT HUNDRED SIXTEEN THOUSAND TWO HUNDRED
SIXTY-FOUR and 40/100 ($1,816,264.40) DOLLARS per annum for the period
commencing on the Commencement Date and ending on the last day of the month
immediately preceding the month in which occurs the third (3rd) anniversary
of the Commencement Date;
(ii) ONE MILLION NINE HUNDRED FORTY-NINE THOUSAND FIVE
HUNDRED NINETY-TWO and 40/100 ($1,949,592.40) DOLLARS per annum for the
period commencing on the first day of the month in which occurs the third
(3rd) anniversary of the Commencement Date and ending on the last day of the
month immediately preceding tho month in which occurs the sixth (6th)
anniversary of the Commencement Date;
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<PAGE>
(iii) TWO MILLION EIGHTY-TWO THOUSAND NINE HUNDRED TWENTY and
40/100 ($2,082,920.40) DOLLARS per annum for the period commencing on the
first day of the month in which occurs the sixth (6th) anniversary of the
Commencement Date and ending on the last day of the month immediately
preceding the month in which occurs the ninth (9th) anniversary of the
Commencement Date; and
(iv) TWO MILLION TWO HUNDRED SIXTEEN THOUSAND TWO HUNDRED
FORTY-EIGHT and 40/100 ($2,216,248.40) DOLLARS per annum for the period
commencing on the first day of the month in which occurs the ninth (9th)
anniversary of the Commencement Date and ending on the Expiration Date.
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 such other place
in the United States of America 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 specifically set forth in Articles 10 and 14 hereof. Should the
obligation to pay fixed annual rent commence on any day other than on the first
day of a mouth, then the fixed annual rent for such month shall be prorated on a
per diem basis.
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 New York City bank which is a member of the New York
Clearing House 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 on demand,
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 10 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.
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 Requirement (as such
term is defined in Article 22 hereof), Tenant shall enter into such reasonable
agreement(s) and take such other reasonable steps (without additional expense to
Tenant), as Landlord may request and as may be, legally permissible to permit
Landlord to collect the maximum rents which from time to time during the this
Lease (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 (the "Uncollected Rent") equal to (i) the rents which would
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<PAGE>
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; provided that (a) if Tenant is not in default under any of the terms
and conditions of this Lease and (b) if the amount of Uncollected Rent exceeds
six (6) times the monthly installments of fixed annual rent payable thereafter,
then Tenant shall pay to Landlord the Uncollected Rent in twelve (12) equal
monthly installments, commencing on the first (1st) day of the month after the
termination of such legal rent restriction and continuing thereafter on the
first (1st) day of each month during such twelve, (12) month period until Tenant
shall have paid to Landlord the entire amount of Uncollected Rent, provided that
in the event that the Lease shall expire or be, terminated after the termination
of such legal rent restriction and prior to the full payment of the Uncollected
Rent, the entire unpaid amount thereof shall immediately be due and payable by
Tenant to Landlord.
1.05. Notwithstanding anything to the contrary in Section 1.01
hereof, the fixed annual rent payable hereunder (but expressly excluding any
additional rent payable hereunder) shall be abated for the period (the
"abatement period") commencing on the Commencement Date and ending April 30,
1994.
ARTICLE 2
PREPARATION OF THE DEMISED PREMISES
2.01. Tenant acknowledges that Tenant has inspected the demised
premises and is fully acquainted with the, demised premises and the condition
thereof and agrees to accept the demised premises absolutely "as is" in their
condition and state of repair existing as of the date hereof and further 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 (i) has performed the work detailed A(1) through A(4) hereafter
all of which Tenant acknowledges has been satisfactorily completed as of the
date of execution hereof, and (ii) shall perform, promptly following the date,
of execution hereof, at Landlord's sole, cost and expense, the work and
installations detailed B(l) hereafter (hereinafter referred to as "Landlord's
Work"), all of which work is being or has been (as the case may be) performed in
the sixth (6th) floor portion (hereinafter called the "6th Floor Space,") of the
demised promises using materials of a manufacture, material, design, capacity
and finish and otherwise in a manner, selected by Landlord as the standard of
the Building (hereinafter called "Building Standard"):
A(1). Demolish the 6th Floor Space except for core
areas;
A(2). Remove asbestos from the 6th Floor Space as
required by law and as required by the performance of Landlord's Work;
A(3). Provide and install three new Building Standard
bathrooms in the 6th Floor Space which shall comply with both Local Law
58 and the Americans with
3
<PAGE>
Disabilities Act of 1990, Public Law 101-336, 42 U.S.A. Secs. 12110 et
seq. ("Disabilities Act"); and
A(4). Replace existing lotline windows in the 6th Floor
Space with now Building Standard clear glass windows, compatible with
the clear glass windows in the balance of the 6th floor.
B(1). Demise the 6th Floor Space as per plan annexed
hereto as Schedule A.
2.02. Tenant acknowledges that Tenant agrees to accept the fifth
(5th) floor portion of the demised promises absolutely "as is" in the condition
and state of repair existing as of the date hereof and further agrees that
Landlord shall not be required to perform any work, supply any materials or
incur any expense to prepare the fifth (5th) floor portion of the demised
promises for Tenant's occupancy.
2.03. In addition to Landlord's Work to the 6th Floor Space,
Landlord shall within a reasonable time after the completion of Tenant's Work
decorate the common areas on the sixth (6th) floor of the Building to the extent
customary and standard for the decorating of such common areas in first-class
office buildings comparable to the Building.
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 be deemed to mean fifty (50%) Percent of
the aggregate of (i) the Taxes (as hereinafter defined) for the New York City
real estate tax fiscal year commencing on July 1, 1992 and ending June 30, 1993
and (b) the Taxes for the New York City real estate tax fiscal year commencing
on July 1, 1993 and ending June 30, 1994.
(b) The term "Tenant's Tax Proportionate Share" shall be deemed to
mean 8.07 (8.07%) percent. For the purpose of this calculation, the parties
hereto have agreed that the demised premises shall be deemed to have a rentable
area of 66,664 rentable square foot.
(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, including any tax, excise or
fee measured by or payable with respect to any rent, 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
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<PAGE>
political subdivision thereof. If, due to a future change in the method of
taxation 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 (in its capacity as the
owner or lessee of the Land and/or Building), and/or the Land and/or Building,
in addition to, or 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". The
term "Taxes" shall in no event include (i) any taxes included as Operating
Expenses (as hereinafter defined), (ii) any estate or inheritance taxes, (iii)
except as set forth in the preceding sentence, any taxes based on Landlord's
income, or (iv) except as set forth in the preceding sentence, any franchise
taxes relating to or arising out of the corporate status of Landlord. To the
extent that Taxes hereunder may include income or franchise taxes, the same
shall be determined as though the Land and Building (or Landlord's leasehold
interest therein) were Landlord's only asset and the revenues derived therefrom
were Landlord's only income.
(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 full calendar year in
which the term of this Lease commences and each succeeding calendar year
thereafter.
(f) The term "Base Year" shall mean the calendar year 1993.
(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. Operating expenses shall include, without being
limited thereto, the following (i) salaries, wages, medical, surgical and
general welfare benefits (including group life insurance) and pension payments
of employees of the managing agent for the Building (or, in the event of a
successor Landlord or a change, in the agreement practices of Landlord, the
employees of such managing agent or Landlord) engaged in the operation and
maintenance of the Building; (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 water and sewer rentals) 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 obtainable, from the United
States government), liability and other types of insurances (v) the cost of all
building and cleaning supplies and charges for telephone for the Building and
cleaning of the Building, including common areas; (vi) the cost of all charges
for management, cleaning and service contracts for any areas of the Building;
(vii) the cost of Building electric current (for the purposes of this clause
(vii), the cost of Building electric current shall be deemed to mean the Cost of
all
5
<PAGE>
e1ectricity 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 tenants in the Building; the parties agree
that forty (40%) 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); (viii) the cost relating to the elevators and escalators; (ix) the
cost relating to protection and security; (x) the cost relating to lobby
decorations and interior and exterior landscape maintenance; (xi) repairs,
replacements and improvements performed after the Base Year which are
appropriate for the continued operation of the Building as a first class office
building (no such capital expenditures incurred during the Base Year shall be
included in Operating Expenses for the Base Year nor shall any unamortized
portion of such expenditure incurred during the Base Year be included in
Operating Expenses of any subsequent Operating Year); (xii) painting of non-
tenanted areas; (xiii) professional and consulting fees; (xiv) association fees
or dues; (xv) the cost of capital expenditures made to the Building by reason of
the laws and requirements of any public authorities or the requirements of
insurance bodies incurred after the Base Year (no such capital expenditures
incurred during the Base Year shall be included in Operating Expenses for the
Base Year nor shall any unamortized portion of such expenditure incurred during
the Base Year be included in Operating Expenses of any subsequent Operating
Year), provided, however, that if under generally accepted accounting principles
consistently applied, any of the costs referred to in clause (xi) or this clause
(xv) are required to be, capitalized, then such capitalized costs, together with
interest on the, Amortized portion thereof at the Interest Rate (as defined in
Section 22.03 hereof) at the time of Landlord having incurred said costs, shall
be amortized or depreciated, as the case may be, over a period of time which
shall be the shorter of (A) the useful life of the item in question, as
reasonably determined by Landlord; or (B) ten (10) years; and (xvi) the rental
value of Landlord's Building office and any other promises in the Building
utilized by the personnel of either Landlord or Landlord's affiliates or
contractors (to the extent that the amount of such rental value is customary and
standard for owners of first-class office buildings in midtown Manhattan
comparable to the Building), in connection with the repair, replacement,
maintenance, operation and/or security thereof, and all Building office
expenses, such as telephone, utility, stationery and similar expenses incurred
in connection therewith. The term "Operating Expenses", as used and defined
under, this Subsection (g), shall not, however, include the following item:
(1) depreciation and amortization (except as provided above in this
Section 3.01(g);
(2) Interest on and amortization of debts;
(3) the cost of tenant improvements made for new or existing tenants
of the Building and all other costs incurred in preparing space for now or
existing tenants;
(4) leasing or brokerage commissions in connection with the
procurement of tenants or other occupants of the Building;
6
<PAGE>
(5) financing or refinancing costs;
(6) the cost of any work or services performed for any tenants of
the Building, to the extent that such work or services are in excess of the
work or services which Landlord is required to furnish or actually furnishes
to Tenant under this Lease;
(7) Taxes;
(8) franchise, gains, inheritance, or income taxes imposed upon
Landlord;
(9) any rent, additional rent or other charges under any ground
leases or superior leases;
(10) salaries and fringe and other benefits of personnel above the
grade of building manager and all other expenses and taxes relating thereto;
(11) expenses in an amount equal to proceeds of insurance,
condemnation, refund, credit, warranty or indemnity received by Landlord, to
the extent such proceeds are compensation for expenses which would otherwise
be included in Operating Expenses; provided, however, in the event that any
reimbursement refund or credit in received or receivable by Landlord in a
later Operating Year, Tenant's Proportionate Share of such reimbursement (less
the cost incurred by Landlord in obtaining the same) shall be applied against
the Operating Expenses for such later Operating Year as and when received, or
if such later Operating Year is not one for which Tenant shall be obligated to
make a payment towards Operating Expenses, Landlord shall refund such amount
to Tenant within thirty (30) days after Landlord's receipt of such
reimbursement;
(12) any other expenditure which would otherwise be an Operating
Expense, to the extent Landlord in reimbursed directly therefor by a tenant,
including Tenant (excluding, however, any reimbursement from any tenant
pursuant to rent provisions in the nature of an operating expense escalation);
(13) any costs representing an amount paid to an affiliate of
Landlord to the extent that same is in excess of the amount which would have
been paid in the absence of such relationship;
(14) advertising and promotional expenditures;
(15) the costs and expenses of any judgment, settlement or
arbitration award resulting from any tort liability of Landlord and any
attorneys' fees or other expenses incurred in connection therewith, except
that the cost of performing any repair,
7
<PAGE>
alteration or other work which would otherwise be includable in Operating
Expenses to the extent included in any such Judgment, settlement or
arbitration award shall not be excluded hereby;
(16) the cost of installing, maintaining and operating any
observatory, broadcasting facility, newsstand, athletic or recreational club
or other similar specialty service, provided, however, this exclusion shall
not apply to the cost of any building services furnished to an area of space
leased to another tenant and used by such tenant for such purposes, except as
otherwise provided in clause (6) of this Section 3.01(g);
(17) cost of alterations and improvements made to cure conditions
existing as of the Commencement Date, which conditions, as of the Commencement
Date, constitute a violation of Legal Requirements (as defined in Article 22
hereof) in effect as of the Commencement Dates provided, however, that costs
to comply with any re-interpretation, amendment or modification of such Legal
Requirements which are enacted, adopted or enforced after the Commencement
Date shall be includable in Operating Expenses);
(18) costs and expenses otherwise included in Operating Expenses to
the extent incurred due to any misrepresentations expressly made herein by
Landlord;
(19) salaries paid to personnel in commercial concessions operated in
the Building by Landlord or any affiliate of Landlord;
(20) the cost of any reconstruction made in accordance with Articles
10 and 14 of this Lease, except that in connection therewith, any amount equal
to the deductibles under Landlord's insurance policies, provided such
deductibles are not substantially higher than the deductibles customarily
carried by landlords of first-class office buildings in midtown Manhattan
comparable to the Building, may be included in Operating Expenses; and
(21) capital expenditures (which for the purposes hereof, shall mean
expenditures which, in accordance with generally accepted accounting
principles consistently applied, are or should be capitalized on the books of
Landlord) other than those expressly set forth in Sections 3.01(g)(xi) and
(xv) hereof.
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 included in Operating Expenses. The
costs of capital equipment or capital expenditures are so to be included in
Operating Expenses for the Operating Year in which the costs are incurred and
subsequent Operating Years, on a straight line basis, to the extent that such
items are amortized over such period of time as reasonably can be estimated as
the time in which such savings or reductions in Operating Expenses are expected
to equal Landlord's costs for such
8
<PAGE>
capital equipment or capital expenditure, with an interest factor equal to the
Interest Rate at the time of Landlord's having incurred said costs. If Landlord
shall lease any such item of capital equipment designed to result in savings or
reductions in Operating Expenses, then the rentals and other costs paid or
incurred in connection with such leasing shall be included in Operating Expenses
for the Operating Year in which they were incurred.
If during all or part of the Base Year or any Operating Year, Landlord
shall not furnish any particular item(s) of work or service (which would
constitute an Operating Expense 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) or
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 paragraphs A and 3 of 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 item(s) of work
or services to such portion of the Building.
(h) The term "Tenant's Proportionate Share" shall be deemed to mean
8.72 (8.72%) percent. For the purpose of this calculation, the parties hereto
have agreed that the demised premises shall be deemed to have a rentable area of
66,664 rentable square feet.
(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 Operating Expenses in the Base Year.
(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, however,
Landlord shall furnish any such estimate for an Operating Year subsequent to the
commencement thereof (provided that Landlord will furnish no more than three (3)
such estimates during any Operating Year), then (a) until the first day of the
month following the month in which such estimate is furnished to Tenant, Tenant
shall pay to Landlord on the first day of each month an amount equal to the
monthly sum payable by Tenant to Landlord under this Section in respect of the
last month of the preceding Operating Year; (b) promptly after such estimate is
furnished to Tenant, Landlord shall give notice to Tenant stating whether the
installments of Tenant's Projected Share of Increase previously made for such
Operating Year were greater or less than the installments of Tenant's Projected
Share of Increase to be made for such Operating Year in accordance with such
estimate, and (i) if there shall be a deficiency, Tenant shall pay the amount
thereof within 10 days after demand therefor, or (ii) if there shall have been
an overpayment, Landlord shall promptly either refund to Tenant the amount
thereof or permit Tenant to credit the amount thereof against subsequent
payments under
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this Article 3; and (c) on the first day of the month following the month in
which such estimate is furnished to Tenant, and monthly thereafter throughout
the remainder of such Operating Year, Tenant shall pay to Landlord an amount
equal to Tenant's Projected Share of Increase as shown on such estimate. If the
aggregate installments of Tenant's Projected Share of increase for any Operating
year shall exceed Tenant's Proportionate Share of increase for such Operating
Year by an amount in excess of ten (10%) percent, such excess shall bear
interest at the Interest Rate from the date the aggregate excess exceeded such
ten (10%) percent to the date the excess is refunded or credited by Landlord to
Tenant.
(k) The term "Escalation Statement" shall mean a statement setting
forth in reasonable detail 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 the Base Year, Landlord shall
furnish Tenant a statement setting forth the Operating Expenses incurred for
such Base Year. After the expiration of any Operating Year, 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 Operating Year, Tenant shall pay Tenant's Proportionate Share
of Increase to Landlord as additional rent to the extent set forth in Section
3.02B hereof.
B. Commencing with the first Operating Year for which
Landlord shall be entitled to receive Tenant's Proportionate Share of Increase,
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 Section 3.02A above at the end of the then
Operating Year shall indicate that Tenant's Projected Share of Increase exceeded
Tenant's Proportionate Share of Increase, Landlord shall forthwith either (i)
pay the amount of excess directly to Tenant concurrently with the notice or (ii)
permit Tenant to credit the amount of such excess against the subsequent
payments of rent due hereunder; 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 ten (10) Business Days pay the amount of such excess to
Landlord.
3.03. A. Tenant shall pay as additional rent for each Tax Year a
sum (hereinafter referred to as "Tenant's Tax Payment") equal to Tenant's Tax
Proportionate Share of the amount 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
two (2) equal installments, in advance, on the first day, of each June and
December during each 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. If an Escalation
Statement is furnished to Tenant after the commencement of a Tax Year in respect
of which such Escalation Statement is rendered, Tenant shall, within 15 days
thereafter, pay to Landlord an amount equal to the amount of any underpayment of
Tenant's Tax Payment with respect to such Tax Year and,
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in the event of an overpayment, Landlord shall permit Tenant to credit against
subsequent payments under this Section 3.03 the amount of Tenant's overpayment.
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 substantially 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 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 at Landlord's option, Tenant's
Tax Payments shall be correspondingly accelerated or revised so that said
Tenant's Tax Payments are due at least 30 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.
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 particularTax Year for the purpose of making the
computations under this Section 3.03.
C. If Landlord shall receive a refund of Taxes for any Tax
Year, Landlord shall permit Tenant to credit against subsequent payments under
this Section 3.03, Tenant's Tax Proportionate Share of the refund (after
deducting all reasonable or customary costs incurred by Landlord to obtain such
refund which have not been previously recovered); but not to exceed Tenant's Tax
Payment paid for such Tax Year.
D. If the Base Tax is reduced as a result of a certiorari
proceeding or otherwise Landlord shall adjust the amounts previously paid by
Tenant pursuant to the provisions of Section 3.03 hereof, and Tenant shall pay
the amount of said adjustment within thirty (30) days after demand setting forth
the amount of said adjustment.
3.04. Tenant shall pay to Landlord upon demand, as additional
rent, any occupancy tax or rent tax now in effect or hereafter enacted, if
payable by Landlord in the first instance or hereafter required to be paid by
Landlord.
3.05. In the event that the Commencement Date shall be other than
the first day of a Tax Year or an Operating Year or the date of the expiration
or other termination of this Lease shall be a day other than the last day of a
Tax Year or an Operating Year, then in such event in applying the provisions of
this Article 3 with respect to any Tax Year or Operating Year in which such
event shall have occurred, appropriate adjustments shall be made to reflect the
occurrence of such event on a basis consistent with the principles underlying
the provisions of this Article 3 taking into consideration the portion of such
Tax Year or Operating Year which shall have elapsed after the term hereof
commences in the case of the Commencement Date, and
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prior to the date of such expiration or termination in the case of the
Expiration Date or other termination.
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, except as otherwise set forth in
Section 3.08 hereof.
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 shall survive the termination of this Lease.
3.08. Landlord's failure to render an Escalation Statement with
respect to any Tax Year or Operating Year 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; provided, however, that in
the event that Landlord shall have failed to render any Escalation Statement
prior to the expiration of the two (2) year period following the Expiration
Date, then Landlord shall be deemed to have waived its right to any unpaid
additional rent in connection with such Escalation Statement.
3.09. Each Escalation Statement shall be conclusive and binding
upon Tenant unless within 30 days after receipt of such Escalation Statement
Tenant shall notify Landlord that it disputes the correctness of such Escalation
Statement ("Tenant's Dispute Notice"). After Tenant delivers Tenant's Dispute
Notice, Tenant shall have the right during normal business hours and upon not
less than five (5) Business Days' (as defined in Article 22 hereof) prior
written notice to Landlord, to examine (or cause its accountants to examine)
such of Landlord's books and records as are relevant to the Escalation Statement
in question, provided such examination is commenced within fifteen (15) days
after Tenant's Dispute Notice is given and is concluded within twenty (20) days
after said books and records are made available to Tenant. In making such
examination, Tenant agrees, and shall cause its accountant (and such other
agents of Tenant who may be accompanying the accountant) to agree to keep
confidential any and all information contained in such books and records. Any
dispute relating to any Escalation Statement, not resolved within ninety (90)
days after the giving of such Escalation Statement, may be submitted to
arbitration by either party pursuant to Article 38 hereof. 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.
3.10. If Landlord shall pay or incur any costs or expenses in
contesting any Taxes for any Tax Year (other than any such year for which such
Taxes comprise all or part of the Base Tax) or in connection with any challenge
to the assessed valuation of all or part of the Building or the parcel of land
on which the Building is constructed (the "Land") or otherwise in connection
with any endeavor to lower the Taxes for any Tax Year (other than any such year
for which such Taxes comprise all or part of the Base Tax), and such contest,
challenge or endeavor has the effect of reducing the Taxes for any Tax Year,
then, within twenty (20) days after request
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by Landlord, Tenant shall pay to Landlord Tenant's Tax Proportionate Share of
the aggregate amounts of such costs and expenses so paid or incurred by
Landlord.
ARTICLE 4
ELECTRICITY
4.01. Subject to the provisions of this Article 4, Tenant and
Landlord agree that Landlord shall make available for Tenant's use within the
demised premises up to six (6) watts connected load per rentable square foot of
electric energy (the "Electric Capacity") and Tenant will pay Landlord or
Landlord's designated agent, as additional rent for the supplying of such
electric energy, the sum of (i) an amount computed by applying Tenant's
consumption and demand for the billing period in question (as measured by the
meter installed in the demised promises) to Landlord's Rate, as such term is
hereinafter defined, plus, (iii) ten (10%) percent of such amount. As used
herein, the term "Landlord's Rate" shall mean the rate classification of the
public utility serving the Building pursuant to which Landlord purchases
electricity for the Building. Where more than one (1) meter measures the service
of Tenant in the Building of which the demised premises forms a part, the
service rendered through each meter may be computed and billed separately in
accordance with the rates herein. Bills therefor shall be rendered at such times
as Landlord may elect and the amount, as computed from a meter, shall be deemed
to be, and be paid as, additional rent within twenty (20) days of rendition
thereof. Each electric bill shall be conclusive and binding upon Tenant unless,
within thirty (30) days after receipt of such electric bill, Tenant shall notify
Landlord that it disputes the correctness of such electric bill (hereinafter
called "Tenant's Electric Dispute Notice"). After Tenant delivers Tenant's
Electric Dispute Notice, Tenant shall have the right during normal business
hours and upon not less than five (5) Business Days ' (as defined in Article 22
hereof) prior written notice to Landlord, to examine (or cause its accountants
to examine) such of Landlord's books and records as are relevant to the
calculation of the electric bill in question, provided such examination is
commenced within fifteen (15) days after Tenant's Electric Dispute Notice is
given and is concluded within twenty (20) days after said books and records are
made available to Tenant. In making such examination, Tenant agrees; and shall
cause its accountant (and such other agents of Tenant who may be accompanying
the accountant) to agree to keep confidential any and all information contained
in such books and records. If any tax is imposed or Landlord's receipt from the
sale or resale of electric energy or gas or telephone service to Tenant by any
federal, state or municipal authority, Tenant covenants and agrees that where
permitted by law, Tenant's pro rate share of such taxes shall be passed on to,
and included in the bill of, and paid by, Tenant to Landlord. In no event shall
the cost to Tenant for the supply of electric energy be less than 110% of the
aggregate cost to Landlord for the supply of electric energy to Tenant at the
demised premises (including any meter company charges, taxes, fuel adjustment
charges and other charges and expenses to which Landlord is subject). If any
meters or other equipment must be installed to furnish electric service to the
demised premises on a submetered basis, as herein provided, the same shall be
installed by Landlord at Landlord's expense.
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4.02. Landlord shall not be liable in any way to Tenant for any
failure or defect in the supply or character of electric energy, steam or other
utilities furnished to the demised premises by reason of any requirement, act or
omission of the public utility serving the. Building with electricity or steam
or other utilities or for any other reason. Tenant's use of electric energy in
the demised premises shall not at any time exceed the capacity of any of the
electrical conductors, machinery and equipment in or otherwise serving the
demised premises. In order to ensure that such capacity is not exceeded and to
avert possible adverse effect upon the electric service in the Building, Tenant
agrees not to connect any additional electrical equipment, fixtures, machinery
or appliances of any type to the Building electric distribution system, other
than lamps, typewriters and other small office machines which consume comparable
amounts of electricity, without Landlord's prior written consent, which consent
shall not be unreasonably withhold. Any additional risers, feeders, or other
equipment proper or necessary to supply Tenant's electrical requirements, upon
written request of Tenant, will be installed by Landlord, at the sole cost and
expense of Tenant, if, in Landlord's sole judgment, the same are necessary and
will not cause permanent damage or injury to the Building or the demised
premises, or cause or create a dangerous or hazardous condition or entail
excessive or unreasonable alterations, repair or expense or interfere, with or
disturb other tenants or occupants. Landlord agrees that Tenant's use of
electric energy which does not exceed in the aggregate the Electric Capacity
shall not exceed the electric capacity of the lines, feeders, cables and other
equipment furnishing electric power to (as opposed to within) the demised
premises.
4.03. Landlord reserves the right to discontinue furnishing
electric energy to Tenant at any time upon sixty (60) days' written notice to
Tenant, and from and after the effective date of such termination, Landlord
shall no longer be obligated to furnish Tenant with electric energy, provided,
however, that such termination date shall be extended for a time reasonably
necessary for Tenant to make arrangements to obtain electric service directly
from the public utility company servicing the Building. If Landlord exercises
such right of termination, this Lease shall remain unaffected thereby and shall
continue in full force and effect, and thereafter Tenant shall diligently
arrange to obtain electric service directly from the public utility company
servicing the Building, and may utilize the then existing electric feeders,
risers and wiring serving the demised premises to the extent available and
safely capable of being used for such purpose and only to the extent of Tenant's
then authorized connected load. Landlord shall be obligated to pay no part of
any cost required for Tenant's direct electric service including without
limitation the cost of obtaining the same.
4.04. To the extent that Landlord shall receive any rebates or
refunds of payments to the public utility furnishing electric service to the
Building on account of energy saving light fixtures installed on the portion of
the demised premises located on the 5th floor, Tenant shall be entitled thereto,
and Landlord shall promptly remit the same to Tenant or at Landlord's option, if
the same is possible, advise the public utility to pay the same directly to
Tenant.
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ARTICLE 5
USE
5.01. The demised premises shall be used solely as and for
executive, sales and general offices, and for no other purpose.
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 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 in any way impair
or tend to impair the character, reputation or appearance of the Building as a
high quality office building, impair or interfere with or tend to 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 or tend to impair or interfere with the
use, of any of the other areas of the Building by, or occasion discomfort,
inconvenience or annoyance to, any of the other tenants or occupants of the
Building. Tenant shall not install any electrical or other equipment of any kind
which causes any such impairment, interference, discomfort, inconvenience or
annoyance.
ARTICLE 6
ALTERATIONS AND INSTALLATIONS
6.01. Tenant shall make no alterations, installations, additions
or improvements in or to the demised premises without Landlord's prior written
consent. Nothing contained herein shall be construed to require Tenant to
obtain Landlord's consent for painting, wall and floor coverings and other
purely cosmetic or decorative changes to be performed in the demised premises;
provided, however, that Tenant shall (i) give Landlord reasonable prior notice
of the performance of any such activities (for informational purposes only) and
(ii) perform (or cause its contractor to perform) the same in compliance with
all Legal Requirements and (iii) maintain (or cause its contractor to maintain)
adequate insurance in connection with such performance. Tenant agrees that
Tenant will not at any time during the term, of this Lease, either directly or
indirectly, use any contractors and/or labor and/or materials if the use of such
contractors and/or labor and/or materials would or will create any difficulty
with other contractors and/or labor engaged by Tenant or Landlord or others in
the maintenance and/or operation of the Building or any part thereof. Landlord
shall provide upon request a list of contractors approved for work in the
Building (hereinafter called the "Approved List"). There shall be at least three
(3) contractors for each trade on the Approved List at all times. Landlord
hereby agrees, except as provided in the next sentence, not to unreasonably
withhold or delay its consent to Tenant's. request for approval of any
contractor or tradesman not on the Approved List, provided Tenant supplies
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Landlord with reasonable information about such tradesman or contractor.
Notwithstanding the foregoing, with respect to the mechanical,' electrical,
sanitary, heating, ventilating, air-conditioning, plumbing, lift-safety or other
systems of the Building, Tenant agrees to use only contractors on the Approved
List. All such work, alterations, installations, additions and improvements
shall be done at Tenant's sole expense and at such times and in such manner as
Landlord may from time to time designate. Prior to commencement of any
alterations as to which Landlord's consent is required, Landlord may request and
Tenant shall upon such request provide to Landlord proof reasonably satisfactory
to Landlord of Tenant's financial capacity to complete the performance of such
alterations and pay the entire cost thereof including without limitation all
contractors and suppliers utilized in connection therewith. Landlord agrees that
with respect to non-structural alterations which do not affect the exterior of
the Building or any portions of the Building outside the demised premises or
adversely affect any Building systems, Landlord shall not unreasonably withhold
or delay its approval.
Any Tenant's work 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 (including, without limitation,
the commercially reasonable fees of any architect or engineer or any independent
third party employed by Landlord, but excluding attorneys' fees if any) in
connection with Landlord's review of such Tenant's plans and specifications.
Provided that Tenant makes reference to the following time limitation in its
submission of plans and specifications and the consequences of Landlord's
failure to abide thereby, Landlord's failure to respond to Tenant' s submission
within two (2) weeks thereof (or to specify' the reasons for any disapproval)
shall be ftemod approval. The date of submission shall be the date of Landlord's
receipt thereof.
Any such approved alterations and improvements 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 workmanlike 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 ten (10) days prior to the beginning of work by such
contractor or subcontractor.
3. All such alterations shall be effected in compliance with all
applicable laws, ordinances, rules and regulations of governmental bodies having
or asserting jurisdiction in the demised premises and in accordance with
Landlord's Rules and Regulations with respect to alterations.
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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 which shall be
permitted access and the opportunity to inspect, at reasonable times, but this
provision shall not in any way whatsoever create any obligation on Landlord to
conduct such an inspection.
6. Tenant agrees to pay to Landlord or its managing agent, as
additional rent, promptly upon being billed therefor, Landlord's reasonable out-
of-pocket costs and expenses (including, without limitation, the fees of any
architect or engineer employed by Landlord, but excluding attorneys' fees if
any) for Landlord's field supervision and coordination in connection with such
work.
7. Prior to commencement of any work, Tenant shall furnish to
Landlord certificates evidencing the existence of:
(i) workmen's compensation insurance covering all persons
employed for such work; and
(ii) reasonable comprehensive general liability and property
damage insurance naming Landlord, its designees and Tenant as insureds, with
coverage of at least $3,000,000 single limit.
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 such filing, by payment, filing of the bond required by
law or otherwise.
6.03. All alterations, installations, additions and improvements
made and installed by Landlord, if any, shall 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.
6.04. All alterations, installations, additions and improvements
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
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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. Notwithstanding the foregoing, Landlord may require Tenant
to remove any "non-standard Building alteration" (as hereinafter defined) and to
restore the affected portions of the demised premises to their condition
immediately prior to the making of an such non-standard Building alteration. If
Landlord requires removal of any non-standard Building alteration, the same
shall be removed from the demised premises by Tenant prior to the expiration of
the Lease at Tenant's sole cost and expense. For the purposes hereof, a "non-
standard Building alteration" shall include: auditoriums or similar type special
use areas, vaults, atriums, kitchen equipment or cafeterias, internal stairways,
slab reinforcements which reduce the height of the finished coiling within the
demised premises or impede the installation of duct work and other normal
installations above the finished ceiling, and any installations which are
unusually difficult or costly to remove.
6.05. Where furnished by or at the expense of Tenant all
furniture, furnishings and trade fixtures, including without limitation, murals,
business machines and equipment, counters, screens, grille work, special paneled
doors, cages, partitions, metal railings, closets, paneling lighting fixtures
and equipment, drinking fountains, refrigeration and air-handling equipment, 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 in accordance with
such request. 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, installations, additions, improvements
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
(provided that Landlord acts reasonably under the circumstances) 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, which damage is not caused
by or due to the gross negligence or willful misconduct of Landlord, its agents,
servants or employees, 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.
6.07. Tenant shall keep records of Tenant's alterations,
installations, additions and improvements costing in excess of $5,000 and of the
cost thereof. Tenant shall, within forty-five (45) days after demand by
Landlord, furnish to Landlord copies of such records and
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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 14 hereof or for any other reason or purpose
contemplated by this Lease.
ARTICLE 7
REPAIRS
7.01. A. Tenant shall take good care of the demised premises and
the fixtures and appurtenances therein and at its sole cost and expense make all
repairs thereto as and when needed to preserve the same in good working order
and condition. With respect to the Building systems serving the demised
premises, Tenant shall be responsible for (i) repair and maintenance of Tenant's
internal air-distribution system to the point at which the same connects to the
main distribution duct for the demised premises, (ii) repair and maintenance of
the internal electrical system to the panel box serving the demised premises,
and (iii) repair and maintenance of all plumbing fixtures and lines in and
serving the demised premises to the point at which the same join the main
vertical risers of the Building. All such repairs and maintenance with respect
to such Building systems shall be performed by contractors or tradesmen set
forth on the Approved List. As to work which does not involve Building systems,
Landlord hereby agrees not to unreasonably withhold or delay its consent to
Tenant's request for approval of any contractor or tradesman not on the Approved
List, provided Tenant supplies Landlord with reasonable information with respect
to such contractor or tradesman. 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 in 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 equal to the original work or installations. If Tenant fails to make such
repairs, restoration or replacements, 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.
B. The exterior walls of the Building, the portions of any
window sills outside the windows, and the 'windows are not part of the premises
demised by this Lease and Landlord reserves all rights to such parts of the
Building.
C. Except as provided for in this Lease, Landlord shall
maintain the Building to the extent customary and standard within the real
estate industry for first-class office buildings in midtown Manhattan comparable
to the Building and in connection therewith (but without being limited thereby),
shall keep and maintain in good order and repair the following items, but only
to the extent that such items affect Tenant in the conduct of Tenant's business
and its use and enjoyment of, and access to and from the demised premises: (a)
the lobbies and common corridors of the Building; (b) the roof, exterior, load-
bearing columns, the structural
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integrity of the slab floors and foundation of the Building; (c) the HVAC,
electric, elevator, plumbing, fire protection and other common Building systems
servicing the demised premises to the point of connection where the same enter
(or connect with the riser, conduit, direct line, or shaft, as the case may be,
that enters) the demised premises; (d) the exterior windows; and (e) the
exterior walls; provided, however, that with respect to all of the foregoing
Landlord shall not be responsible for repair of (and Tenant shall be solely
responsible and liable therefor) any damage, defects or deficiencies thereof
which shall be caused by Tenant's equipment, alterations or installations, or
which shall result from acts or omissions of Tenant, its contractors, employees,
agents, representatives, licensees, subtenants or invitees.
7.02. Tenant shall not place a load upon any floor of the demised
premises exceeding the floor load per square foot area which such floor was
designed to carry and which is allowed by law. If Tenant shall desire a floor
load in excess of that which the affected floors are designed to carry Landlord
agrees (provided Landlord's architects, in their sole discretion, find that the
work necessary to increase such floor load does not adversely affect the
structure of the Building, and further provided that such work will not
interfere with the amount or availability of any space adjoining alongside,
above or below the demised promises, or interfere with the occupancy of other
tenants in the Building), to strengthen and reinforce the same so as to give the
live load desired, provided Tenant shall submit to Landlord the plans showing
the locations of and the desired floor live load for the areas in question, and
provided further, that Tenant shall agree to pay for or reimburse Landlord on
demand for the cost of such strengthening and reinforcement as well as any other
costs to and expenses of Landlord occasioned by or resulting from such
strengthening or reinforcement.
7.03. Business machines and mechanical equipment used by Tenant
which cause vibration, noise, cold or heat that may be 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 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 produce such vibration, noise, heat or
cold, unless (i) such vibration, noise, heat or cold is greater than the
vibration, noise, heat or cold affecting the fifth (5th) floor portion of the
demised premises as of the date hereof and (ii) the same unreasonably interferes
with Tenant's use and occupancy of the demised premises.
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. In making any
repairs, alterations, additions or improvements in or to the demised premises
pursuant to this Section
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7.04, Landlord shall use reasonable efforts, to the extent reasonably
practicable, to minimize interference with Tenants use and occupancy of the
demised premises; provided, however, that Landlord shall have no obligation to
employ contractors or labor at overtime or other premium-pay rates or to incur
any other overtime, costs or expenses whatsoever in the making of such repairs,
alterations, additions or improvements.
ARTICLE 8
REQUIREMENTS OF LAW
8.01. Tenant at Tenant's 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 hereby be under any obligation to comply with any law, order, regulation or
direction of any public authority requiring any structural alteration within the
demised premises, unless such structural alteration is required by reason of (i)
any cause or condition which has been created by or at the insistence of Tenant,
its agents, servants or employers; (ii) Tenant's particular use of the demised
premises; or (iii) the manner of conduct of Tenant's business or operation of
its installations, equipment or other property therein; or (iv) the breach of
any of Tenant's obligations hereunder. With respect to structural alterations
required to comply with laws, orders, regulations or directions of any public
authority for which Tenant is not responsible pursuant to the preceding
sentence, Landlord shall (to the extent that the performance, the roof is
required for Tenant' s use, of the demised premises or access thereto as
contemplated hereby) be, responsible for the performance thereof at Landlord's
cost and expense (subject to recoupment thereof in accordance with Article 3
hereof).
8.02. Notwithstanding the provisions of Section 8.01 hereof,
Tenant, at its own cost and expense, may contest, in any manner permitted by law
(including appeals to a court, or governmental department or authority having
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 noncompliance shall not subject Landlord to
criminal prosecution or subject the Land and/or Building to lien or sale;
(b) such noncompliance shall not be in violation of any
fee mortgage, or of any ground or underlying lease or any mortgage thereon;
(c) Tenant shall first furnish to Landlord proof reasonably
satisfactory to Landlord of Tenant's financial capacity to complete and pay
for the required work and to indemnify and protect Landlord against any loss
or injury by reason of such noncompliance; and
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(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 do or permit to be done any act or thing
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 or might 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; but nothing in this
Section 9.01 shall prevent Tenant's use of the demised premises for the purposes
stated in Article 5 hereof, and Landlord represents that Tenant's use of the
demised premises for the purposes stated in Section 5.01 hereof will not
invalidate or be in conflict with or increase the rate of such New York standard
fire insurance policies.
9.02. If, as a result of any act or omission by Tenant or
violation of this Lease, the rate of fire insurance applicable to the Building
shall be increased to an amount higher that it otherwise would be, then in
addition to any other remedies which Landlord has hereunder for any such
violations of the terms of this Lease, Tenant shall reimburse Landlord for all
increases of Landlord's fire insurance premiums so caused; such reimbursement to
be additional rate 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 "makeup" 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. Except for any obligation that Landlord may have for repairs
in accordance with the provisions of Section 7.01C hereof, 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.
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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 or permanently (restricted to windows on a lot line, if
permanently) closed, darkened or bricked up for any reason whatsoever, except
only Landlord's arbitrary acts if the result is permanent, 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 shall exercise reasonable efforts, to the extent
reasonably practicable, to minimize the time during which such temporary
closing, darkening or bricking up of such windows shall affect the conduct of
Tenant's business in the demised premises but shall not be obligated in
connection therewith to do any work on an overtime or premium pay basis. Tenant
agrees that Landlord shall be permitted at any time to install film on the
inside of the windows of the Building to reduce the usage of energy in the
Building, provided that such film shall not unreasonably darken such windows or
unreasonably detract from the appearance of the demised premises. Tenant
consents to such installation and agrees that Landlord shall have no liability
with respect to any closing or darkening of the windows of the demised premises
in connection therewith.
9.05. Tenant shall reimburse Landlord for all expenses, damages or
fines incurred or suffered by Landlord, (i) by reason of any breach, violation
or nonperformance by Tenant, or its agents, servants or employees, of -any
covenant or provision of this Lease, or (ii) 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 unless caused by Landlord's negligence or the negligence of Landlord's
agents, employees or contractors, or (iii) by reason of or arising out of the
carelessness, negligence or improper conduct of 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 (and the proceeds resulting from the sale
thereof, provided Tenant has commenced a legal action or proceeding against
Landlord with respect to such proceeds on or before the date Tenant shall have
been given notice of such sale or such earlier date as Tenant has actual
knowledge thereof), or the lease of the Building, or of the Land and Building,
and the demised premises, 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 and no property of any partner, shareholder
or principal of Landlord shall be subject to levy, execution, attachment, or
other enforcement procedure for the satisfaction of Tenant's remedies under or
with respect to this
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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.
9.08. (a) Landlord agrees that, if obtainable, it will include in
its fire insurance policies appropriate clauses pursuant to which the insurance
companies (i) waive all right of subrogation against Tenant with respect to
losses payable under such policies and (ii) agree that such policies shall not
be invalidated should the insured waive in writing prior to a loss any or all
right of recovery against any party for losses covered by such policies. But
should any additional premiums be exacted for any such clause or clauses,
Landlord shall be released from the obligation hereby imposed unless Tenant
shall agree to pay such additional premium.
(b) Tenant agrees to include, if obtainable, in its fire
insurance policy or policies on its furniture, furnishings, fixtures and other
property removable by Tenant under the provisions of this Lease appropriate
clauses pursuant to which the insurance company or companies (i) waive the right
of subrogation against Landlord and any tenant of space in the Building with
respect to losses payable under such policy or policies and/or (ii) agree that
such policy or policies shall not be invalidated should the insured waive in
writing prior to a loss any or all right of recovery against any party for
losses covered by such policy or policies. But should any additional premium be
exacted for any such clause or clauses, Tenant shall be released from the
obligation hereby imposed unless Landlord or the other tenants shall agree to
pay such additional premium.
(c) Provided that Landlords' right of full recovery under
its policy or policies aforesaid is not adversely affected or prejudiced
thereby, Landlord hereby waives any and all right of recovery which it might
otherwise have against Tenant, its servants, agents and employees, for loss or
damage occurring to the Building and the fixtures, appurtenances and equipment
therein, to the, extent the same is covered by Landlord's insurance,
notwithstanding that such loss or damage may result from, the negligence or
fault of Tenant, its servants, agents or employees. Provided that Tenant's right
of full recovery under its aforesaid policy or policies is not adversely
affected or prejudiced thereby, Tenant hereby waives any and all right of full
recovery which it might otherwise have against Landlord, its servants, agents
and employees, and against every other tenant in the Building who shall have
executed a similar waiver as set forth in this Section 9.08(c) for loss or
damage to, Tenant's furniture, furnishings, fixtures and other property
removable by Tenant under the provisions hereof to the extent that the same is
covered by Tenant's insurance, notwithstanding that such loss or damage may
result from the negligence or fault of Landlord, its servants, agents or
employees, or such other tenant and the servants, agents or employees thereof.
(d) Landlord and Tenant hereby agree to advise the other
promptly if the clauses to be included in their respective insurance policies
pursuant to subdivisions 9.08(a) and (b) hereof cannot be obtained. Landlord and
Tenant hereby also agree to notify the other promptly of any cancellation or
change of the terms of any such policy which would affect such clauses.
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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 comprehensive general liability insurance policy
protecting Landlord and Tenant against any liability whatsoever, occasioned by
any occurrence on or about the 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, and as of the date of this Lease Landlord reasonably requires limits of
liability thereunder of not loss than the amount of Three Million ($3,000,000)
Dollars single limit for bodily or personal injury (including death) and in the
amount of Three Hundred Thousand (S300,000) 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 policy or certificate, as the case
may be, shall contain an endorsement that such insurance may not be cancelled
except upon ten (10) days' notice to Landlord 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 maintain at all times during the term of this
Lease (i) a comprehensive general liability insurance policy and (ii) a fire and
property insurance policy in each case with limits customary and standard within
the real estate industry for owners of first-class office buildings in midtown
Manhattan comparable to the Building.
ARTICLE 10
DAMAGE BY FIRE OR OTHER CAUSE
10.01. If the Building or the demised premises shall be partially
or totally damaged or destroyed by fire or other cause, then whether 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/or 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 of Tenant's property.
10.02. If the Building or the demised premises shall be, partially
damaged or partially destroyed by fire or other cause, then the rents payable
hereunder shall be abated to the extent that the demised premises shall have
been rendered untenantable for the period from the date of such damage or
destruction to the date the damage shall be repaired or restored.
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If the demised premises or a major part thereof shall be totally
(which shall be deemed to include substantially totally) damaged or destroyed or
rendered completely (which shall be deemed to include substantially completely)
untenantable on account of fire or other cause, the rents shall abate as of the
date of the damage or destruction and until Landlord shall repair, restore and
rebuild the Building and the demised promises, provided, however, that should
Tenant reoccupy a portion of the demised promises 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.
10.03. If the Building or the demised premises 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 fifty (50%) percent of the full insurable 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
eighty (180) days after the date of the casualty. In case of any damage or
destruction mentioned in this Article 10, Tenant may terminate this Lease by
notice to Landlord, if 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) month ) as shall equal the
aggregate period Landlord may have been delayed in doing so by adjustment of
insurance, labor trouble, governmental controls, act of God, or any other cause
beyond Landlord's reasonable control.
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. Tenant, at no expense to Tenant, shall fully cooperate with
Landlord and its insurance companies in connection with the collection by
Landlord of any insurance proceeds (including, without limitation, rent
insurance proceeds) payable in respect of any damage or destruction to the
Building or the demised premises by fire or other casualty and -shall comply
with all reasonable requests of Landlord and its insurance companies in
connection therewith, including, without limitation, the execution of any
affidavits or proofs of loss required by any insurance companies.
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,
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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.
ARTICLE 11
ASSIGNMENT, MORTGAGING, SUBLETTING, ETC.
11.01. 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, or (c) mortgage, pledge or encumber this Lease or the demised
premises or any part thereof in any manner by reason of any act or omission on
the part of Tenant without, in each instance, obtaining the prior consent of
Landlord, except as otherwise expressly provided in this Article 11. Tenant
shall not advertise, or authorize a broker to advertise, for a subtenant or an
assigns, without obtaining the prior consent of Landlord, which consent shall
not be unreasonably withhold or delayed. For purposes of this Article 11, (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 related or unrelated
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 of
such stock by persons or parties, through the "over-the-counter market" or
through any recognized stock exchange, other than those deemed, "insiders"
within the meaning of the Securities Exchange Act of 1934 as amended, (ii) a
takeover agreement shall be deemed a transfer of this Lease, (iii) 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 (iv) a material modification or amendment affecting the
basic terms of a sublease or an extension thereof shall be deemed a sublease.
11.02. Notwithstanding anything to the contrary contained herein,
Landlord's consent shall not be required and the terms and provisions of Section
11.01 hereof shall not be applicable with respect to an assignment of this Lease
or the subletting of all or a portion of the demised premises to any corporation
or other entity which shall be an "affiliate", "subsidiary", or "successor" of
Tenant (as such terms are hereinafter defined), provided and on condition that
(x) (i) in the event of an assignment, the affiliate or subsidiary to Tenant or
transferee has a net worth immediately following such transfer at least equal to
or in excess of the lesser of (A) the net worth of Tenant immediately prior to
such transfer, or (B) the net worth of Tenant as of the date hereof, and (ii) in
the event of a sublease, the affiliate, subsidiary or successor to Tenant or
transferee has reasonably sufficient financial worth considering the financial
obligations under the sublease and, in case of either (A) or (B), proof thereof,
reasonably satisfactory to Landlord, shall be delivered to Landlord at least
(10) days prior to the effective date of such transfer, and (y) such transaction
is for a bona fide business purpose and not, either directly or indirectly,
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principally for the purpose, of transferring the leasehold created hereby to a
corporation or entity other than an affiliate, subsidiary or successor.
For the purpose of this Section 11.02, an "affiliate" or "subsidiary"
or "successor" of Tenant shall mean the following:
(i) An "affiliate" shall mean any corporation or other
entity which, directly or indirectly, controls or is controlled by or is under
common control with Tenant. For this purpose, "control" shall mean ownership
of a 50% or greater equity interest in and the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such corporation or other entity;
(ii) "subsidiary" shall mean any corporation not less the
50% of whose outstanding voting stock shall, at the time, be owned directly or
indirectly by Tenant. Any cessation of the affiliate or subsidiary
relationship between Tenant and the entity in question 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; and
(iii) A "successor" of Tenant shall mean (x) a corporation in
which or with which Tenant is merged or consolidated, in accordance with
applicable statutory provisions for merger or consolidation of corporations,
provided that by operation of law or by effective provisions contained in the
instruments of merger or consolidation, the liabilities of the corporations
participating in such merger or consolidation are assumed by the corporation
surviving such merger or created by such consolidation or (y) a corporation or
other entity to which this Lease is assigned together and in connection with a
transfer of all or substantially all of Tenant's assets.
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 form and substance reasonably satisfactory to Landlord, 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 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 assign or transferee or any other party, Tenant shall remain jointly and
severally liable for the payment of the fixed annual 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.
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11.04. The joint and several liability of Tenant and any successor
in interest to Tenant for the due performance of the obligations 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 under this Lease, and Tenant and any
successor in interest to Tenant shall continue to be 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. In the event of an assignment, 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 waives
any such demand or notice.
11.05. Notwithstanding anything to the contrary contained in this
Article 11, if Tenant desires to assign this Lease or sublet all or part of the
demised premises, 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 term of the
proposed subletting and the date the area to be sublet is intended to be vacated
by Tenant, and (c) the rents (hereafter 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 proposed date upon which the demised premises are intended to be vacated
by Tenant, and (z) all financial and other material terms of the proposed
assignment (herein called the "Proposed Assignment Components"). Tenant's
Article 11 Offer Notice shall be, deemed an offer from Tenant to Landlord
whereby Landlord may, at its option, (i)(A) terminate this Lease if the proposed
transaction is an assignment of the Lease or a sublease of all or substantially
all of the demised premises, or (B) accept an assignment of this Lease from
Tenant, and Tenant shall then promptly execute and deliver to Landlord, or
Landlord's designee if so elected by Landlord, an assignment in form reasonably
satisfactory to Landlord's counsel, and the terms of such assignment may, at
Landlord's election, be either (z) the Proposed Assignment Components set forth
in the proposed assignment, or (y) the terms contained in this Lease, or (ii)(A)
terminate this Lease with respect to the space covered by the proposed sublease
if the, proposed transaction is a sublease of part of the demised premises, or
accept a sublease from Tenant with respect to the space covered by the proposed
sublease, and Tenant shall then promptly execute and deliver to Landlord, or
Landlord's designee if so elected by Landlord, a sublease in form reasonably
satisfactory to Landlord's counsel and in compliance with the provisions of
Section 11.11 hereof. Said options may be exercised by Landlord by notice to
Tenant at any time, within thirty (30) days after such Tenant's Article 11
Notice has been received by Landlord, and during such thirty (30) day period
Tenant shall not assign this Lease or sublet such space to any person except
Landlord. In the event that this Lease shall be assigned to Landlord or
Landlord's designee or if the demised
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premises shall be sublet to Landlord or Landlord's designee pursuant to this
Section 11.05 the provisions of any such sublease or assignment and the
obligations of Landlord and the rights of Tenant with respect thereto shall not
be binding upon or otherwise affect the rights of any holder of a superior
mortgage or of a superior lease unless such holder shall elect by written notice
to Tenant to succeed to the position of Landlord or its design, as the case may
be, thereunder.
11.06. If Landlord exercises its option to terminate this Lease in
the case where Tenant desires either to assign this Lease or sublet all or
substantially all of the demised premises, then, this Lease shall end and expire
on the date that such assignment or sublet was to be effective or commence, as
the case may be, and the fixed annual rent and additional rent shall be paid and
apportioned to such date.
11.07. If Landlord exercises its option to terminate this Lease
with respect to the space covered by Tenant's proposed sublease in any case
where Tenant desires to sublet part of the demised premises, then (a) this Lease
shall end and expire with respect to such part of the demised premises on the
date that the proposed sublease was to commence; and (b) from and after such
date the fixed annual rent and additional rent shall be adjusted, based upon the
proportion that the rentable area of the demised premises remaining bears to the
total rentable area of the demised premises.
11.08. In the event Landlord does not exercise any of its options
pursuant to Section 11.05 hereof and provided that Tenant is not in default of
any of Tenant's obligations under this Lease beyond any applicable grace period,
Landlord's consent to the proposed assignment or sublease shall not be
unreasonably withhold, provided and upon condition that:
(a) Tenant shall request, in writing Landlord's consent to
each subletting or assignment, which request shall be accompanied by (i) a
statement from Tenant listing the items set forth in clauses (a), (b) and (c)
of Section 11.05 hereof with respect to a proposed subletting, or clauses (z),
(y) and (z) of Section 11.05 hereof with respect to a proposed assignment,
which shall demonstrate that the aggregate financial value of the components
of such proposed assignment or such proposed sublease comparable to the
Proposed Rent Rate or the Proposed Assignment Components, as the case may be,
shall be equal to at least ninety (90%) percent of the aggregate financial
value of the Proposed Rent Rate or the Proposed Assignment Components, as the
case may be, set forth in Tenant's Article 11 Offer Notice, and the area
proposed to be sublet and the term of the proposed subletting or the proposed
assignment shall be substantially the same as the Area and term set forth in
Tenant's Article 11 Offer Notice; and that the effective or commencement date
of such transaction shall be at least thirty (30) days after the giving of
such notice; (ii) a statement setting forth in reasonable detail the identity
of the proposed assignee, or subtenant, and the nature of its business and
that its proposed use of the demised premises shall be for general and/or
executive offices; and (iii) a current financial report or annual report with
respect to the proposed assignee or subtenant, including, without limitation,
its most recent financial report. If Landlord shall
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approve such proposed subtenant or assignee, Tenant shall submit to Landlord
the proposed assignment or sublease prior to the execution thereof. In the
event that Landlord shall request reasonable additional information with
respect to the proposed assignee or subtenant, then Tenant shall promptly
provide such information to Landlord;
(b) the proposed subtenant or assignee is a reputable party whose
financial net worth, credit and financial responsibility is, considering the
responsibilities involved, reasonably satisfactory to Landlord;
(c) the intended use of the demised premises is, in Landlord's
reasonable judgment, in keeping with the standards of the Building;
(d) 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 6 months immediately preceding Tenant's request for Landlord's consent,
and if Tenant supplies Landlord with a list of proposed assignees or
subtenants, Landlord shall notify Tenant if such proposed assignees or
subtenants would violate the provisions of this clause (d);
(e) all costs incurred with respect to providing reasonably
appropriate means of ingress and egress from the sublet space or to separate
the sublet space from the remainder of the demised premises shall, subject to
the provisions of Article 6 with respect to alterations, installations,
additions or improvements, be borne by Tenant;
(f) each sublease shall specifically state that (i) it is subject to
all the terms, covenants, agreements, provisions, and conditions of this
Lease, (ii) the subtenant or assignee, as the case may be, shall not have the
right to a further assignment thereof or sublease or assignment thereunder, or
to allow the demised premises to be used by others, without the consent of
Landlord in each instance, which consent, Landlord agrees, shall not be
unreasonably withheld or delayed, provided that such subtenant or assignee
shall satisfy the conditions applicable to Tenant in this Article 11 with
respect to subleases and assignments, including affording Landlord rights and
benefits with respect to the proposed assignment or subletting by such
subtenant at least equal to those set forth in Section 11-05 hereof in the
event of a proposed subletting or assignment by Tenant, and that the proposed
assignment or sublease complies with the provisions of this Article 11;
(g) Tenant shall, together with requesting Landlord's consent
hereunder, have paid Landlord any reasonable out-of-pocket costs incurred by
Landlord to review the proposed assignment or subletting including reasonable
attorneys fees incurred by Landlord;
(h) Tenant shall have complied with the provisions in Section 11.05
and Landlord shall not have made any of the elections provided for therein;
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(i) the proposed subtenant or assignee is not (i) a retail,
off-the-street office or branch of a bank, trust company, safe deposit
business, savings and loan association or loan company; (ii) an employment or
recruitment agency; (iii) a school, college, university or educational
institution whether or not for profit; or (iv) a government or any subdivision
or agency thereof;
(j) in the case of a subletting of a portion of the demised
premises, the portion so sublet shall be regular in shape and suitable in
location and configuration for normal renting purposes;
(k) the proposed assignment shall be for a consideration which
shall reflect the fair market value of the leasehold interest being assigned
(in the case of an assignment) or the proposed subletting shall be at a rental
rate which shall reflect the fair market rental value of the space being
sublet (in case of a subletting) and in no event shall Tenant publicly
advertise or list with brokers at a lower rental rate than Landlord is
charging for comparable, space (however, the foregoing shall not be deemed to
prohibit Tenant from advising a broker of the price for subrental for which
Tenant is prepared to consummate an assignment or sublease);
(l) the form of proposed sublease shall comply with the
applicable provisions of this Article 11; and
(m) the space in question, the term, the rental and other terms
and conditions of the sublease are substantially the same as those contained
in Tenant's Article 11 Offer Notice.
In the event that Tenant's Article 11 Offer Notice sets forth the
information required pursuant to Section 11.08(a) above, Landlord shall approve
or disapprove Tenant's request for Landlord's consent to the proposed assignment
or subletting as soon as practicable and in any event within thirty (30) days
after Landlord's receipt of the request therefor.
11.09.(a) In the event that in connection with Tenant's request
for Landlord's consent pursuant to Section 11.08 hereof, Tenant submits to
Landlord a statement (hereinafter called "Tenant's Statement") pursuant to
Section 11.08(a) with respect to the proposed subletting or assignment set forth
in Tenant's Article 11 Offer Notice and the aggregate, financial value of the
components of such proposed assignment or sublease comparable to the Proposed
Rent Rate, or the Proposed Assignment Components, as the, case may be, is equal
to less than ninety (90%) percent of the aggregate financial value to Tenant of
the Proposed Rent Rate or the Proposed Assignment Components, as the case may
be, set forth in the Tenant's Article 11 Offer Notice, or the area proposed to
be, sublet or the term of the proposed subletting or the proposed assignment are
not substantially the same as the area or term set forth in Tenant's Article 11
Offer Notice, then, in such. event, Tenant's request for consent pursuant to
Section
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11.08 hereof shall be, deemed an offer from Tenant to Landlord as to which
Landlord shall have the options set forth in 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 one hundred eighty (180) days from the date of
Landlord's response to Tenant's Article 11 Offer Notice, or if Landlord fails to
exercise any of its options under Section 11.05 hereof, and consents to a
proposed assignment or sublease, and Tenant fails to execute and deliver the
assignment or sublease to which Landlord consented within one hundred eighty
(180) days after the giving of such consent, then, in any event, Tenant shall
again comply with all of the provisions and conditions of Article 11 hereof
before assigning this Lease or subletting all or part of the demised premises.
11.10. With respect to each and every sublease, or subletting
authorized by Landlord under the provisions of this Lease, it is further agreed:
(a) No subletting shall be for a term (including any
renewal or extension options contained in the sublease) ending later than one
day prior to the Expiration Date of this Lease;
(b) No sublease shall be valid, and no subtenant shall take
possession of the demised premises or any part thereof, until an executed
counterpart of such sublease (and all ancillary documents executed in connection
with, with respect to or modifying such sublease) has been delivered to
Landlord;
(c) Each sublease shall provide that it is subject and
subordinate to this Lease and to any matters to which this Lease is or shall be
subordinate, and that in the event of termination, reentry or dispossess by
Landlord under this Lease, Landlord may, at its option, take over all of the
right, title and interest of Tenant, as sublessor, under such sublease, and such
subtenant shall, at Landlord's option, attorn to Landlord, except that Landlord
shall not be (I) liable for any previous act or omission of Tenant under such
sublease, (ii) subject to any credit, offset, claim, counterclaim, demand or
defense which such subtenant may have against Tenant, (iii) bound by any
previous modification of such sublease or by any previous prepayment of more
than one, (1) month's rent, (iv) bound by any covenant of Tenant to undertake or
complete any construction of the demised premises or any portion thereof, (v)
required to account for any security deposit of the subtenant other than any
security deposit actually delivered to Landlord by Tenant, (vi) bound by any
obligation to make any payment to such subtenant or grant any credits, except
for services, repairs, maintenance and restoration provided for under the
sublease to be performed after the date of such attornment, (vii) responsible
for any monies owing by Landlord to the credit of Tenant or (viii) required to
remove any person occupying the demised premises or any part thereof.
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11.11. If Landlord should elect to have Tenant execute and deliver
a sublease to Landlord pursuant to Section 11.05 of this Lease, said sublease to
Landlord shall be in a form reasonably satisfactory to Landlord's and Tenant's
counsel and on all the terms contained in this Lease, except that:
(i) The rental terms, if elected by Landlord, may
be either at (x) the Proposed Rent Rate set forth in the proposed sublease, or
(y) the rental terms contained in this Lease on a per rentable square foot
basis, as elected by Landlord in such notice;
(ii) The sublease shall not provide for any work to
be done for the subtenant or for any Initial rent concessions or contain
provisions inapplicable to a sublease, except that in the case of a subletting
of a portion of the demised premises Tenant shall reimburse subtenant for the
cost of erecting such demising walls as are necessary to separate the
subleased premises from the remainder of the demised premises and to provide
access thereto,
(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 subtenant may desire or authorize,
(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) There shall be no limitation as to the use of
the sublet premises by the subtenant thereunder,
(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 noncompliance, and
(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.
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11.12. If Landlord shall give its consent to any assignment of this
Lease or to any sublease, Tenant shall in consideration therefor, pay to
Landlord, as additional rent:
(i) in the case of an assignment, an amount equal to fifty
(50%) percent of all sums and other considerations 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 of any of the foregoing other than leasehold improvements, the
then not unamortized or undepreciated cost thereof determined on the basis of
Tenant's federal income tax returns), less the reasonable brokerage fees and
commissions, advertising fees and attorneys' fees paid by Tenant to
independent third parties in connection with such assignment; and
(ii) in the case of a sublease, fifty (50%) percent of any
rents, additional charge or other consideration payable under the sublease to
Tenant by the subtenant which is in excess of the fixed annual rent and
additional rent 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 too 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 of any of
foregoing other than leasehold improvements, the then net unamortized or
undepreciated cost thereof determined on the basis of Tenant, federal income
tax returns), less (x) the reasonable brokerage fees and commissions,
advertising fees and attorneys' fees paid by Tenant to independent third
parties in connection with such sublease, and (y) the reasonable costs
incurred by Tenant to segregate the subleased space from the remainder of the-
demised premises and to provide access thereto.
The sums payable under this Section 11.12 shall be paid to Landlord as and when
paid by the subtenant or assignee to Tenant.
11.13. Landlord's consent to any sublease or assignment 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 occupants thereof, as if the sublease or assignment had not been made.
Notwithstanding any assignment or sublease, Tenant shall remain fully liable for
the payment of fixed annual rent and additional rents and for the other
obligations of this Lease on the part of Tenant to be performed or observed. In
the event that Tenant defaults in the payment of any rent, Landlord is
authorized to collect any rents due or accruing from any 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, and the receipt of any
such amounts by Landlord from an assignee or subtenant, or other occupant of any
part of the demised promises, shall not be deemed or construed as releasing
Tenant from Tenant's obligations hereunder or the acceptance of that party as a
direct tenant.
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ARTICLE 12
CERTIFICATE Of OCCUPANCY
12.01. Tenant will not at any time use or occupy the demised
premises in violation of the Certificate of Occupancy issued for the Building.
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 purposes 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 diminution or abatement of rent.
ARTICLE 14
CONDEMNATION
14.01. 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.
In the event that only a part of the Building shall be so condemned or taken,
then (a) 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 60 days following the date on which Landlord shall have
received notice of vesting of title, or (b) if such condemnation or taking shall
be of a substantial part of the demised premises or of a substantial part of the
means of access thereto and the remaining portion of the demised premises shall
not be reasonably sufficient for Tenant to continue the operation of its
business, 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
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provided in this Article 14. In the event that only a part 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 as nearly as practicable to the same condition as it was in prior to
such condemnation or taking.
14.02. 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.
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.
14.04. It is expressly understood and agreed that the provisions of
this Article 14 shall not be applicable to any condemnation or taking for
governmental occupancy for a limited period.
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.
14.06. In the event of a taking or condemnation for a temporary use
or occupancy of all or any part of the demised premises during the term of this
Lease, Tenant shall be entitled, except as hereinafter set forth, to receive,
that portion of the award or payment for such taking or condemnation which
represents compensation for the use and occupancy of the demised premises, for
the taking of Tenant's property and for moving expenses, and Landlord shall be
entitled to receive that portion of such award or payment which represents
reimbursement for the cost of restoration of the demised premises. This Lease
shall be and remain unaffected by such taking or condemnation and Tenant shall
continue to be responsible for all of its obligations hereunder insofar as such
obligations are not affected by such taking or condemnation and shall continue
to pay in full the fixed annual rent and additional rent when due undo this
Lease. If the period of temporary use or occupancy shall extend beyond the
Expiration Date of this Lease, that
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part of the award which represents compensation for the use and occupancy of the
demised premises (or a part thereof) shall be divided between Landlord and
Tenant so that Tenant shall receive so much thereof as represents the period up
to and including such Expiration Date and Landlord shall receive so much thereof
as represents the period after such Expiration Date.
14.07. In the event any part of the demised premises be taken to
effect compliance with any law or requirement of public authority other than in
the manner hereinabove provided in this Article 14, then (i) if such compliance
is the obligation of Tenant under this Lease, Tenant shall not be entitled to
any diminution or abatement of rent or other compensation from Landlord
therefor, but (ii) if such compliance is the obligation of Landlord under this
Lease, the fixed annual rent hereunder shall be reduced and additional rents
under Article 3 shall be adjusted in the same manner as is provided in Section
14.01 according to the reduction in rentable area of the demised premises
resulting from such taking.
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 installed adjacent to and are placed in box enclosures or concealed behind
walls and ceilings of the demised premises and do not adversely affect (except
to a de minimus extent) the Building systems affecting the demised premises.
Landlord shall to the extent reasonably practicable install such pipes, ducts
and conduits by such methods and at such locations as will not materially
interfere with or impair Tenant's layout or use of the demised premises.
Landlord or its agents or designees shall have the right, upon reasonable prior
notice (except in the case of emergency) to Tenant or any authorized employee of
Tenant at the demised premises, 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 any other
lease in the Building or in connection with the removal of asbestos from the
demised premises and, subject to the foregoing, shall also have the right to
enter the demised premises 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 the 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. Landlord shall be allowed to take all material into and
upon the demised premises 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. Landlord shall exercise reasonable diligence so as
to minimize the disturbance but nothing contained herein shall be deemed to
require Landlord to perform the same on an overtime or premium pay basis. In
connection with the removal of asbestos from the
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demised premises, Landlord agrees to repair and restore the demised premises to
their condition and state of repair existing as of the commencement of such
asbestos removal. Tenant agrees that, subject to the provisions of Section 9.04
hereof, Landlord shall have the right at any time to install in the Building on
the insides of the windows thereof, a film to reduce the usage of energy in the
Building. Tenant agrees that the foregoing provisions of this Section shall
apply to the installation, maintenance of replacement of such film.
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, stairway, toilets or other public parts of the Building;
provided, however, that access to the Building shall not be cut off and that
- -------- -------
there shall be no unreasonable obstruction of access to the demised premises or
unreasonable interference with the use or enjoyment thereof or applicable Legal
Requirements.
15.03. Landlord reserves the right to light from time to time all
or any portion of the demised premises at night for display purposes at
Landlord's sole cost and expense.
15.04. Landlord may, during the (12) months prior to expiration of
the term of this Lease, exhibit the demised premises to prospective tenants at
any reasonable time or times upon reasonable prior notice (except in the case of
an emergency), which notice may be oral, and Landlord shall exercise reasonable
efforts, so as to minimize any interference with the. conduct of Tenant's
business in the demised premises.
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, if necessary, 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.
ARTICLE 16
CONDITIONS Of LIMITATION
16.01. This Lease and the term and estate hereby granted are
subject to the limitation that whenever Tenant 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 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 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 of or for the property of Tenant
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shall be appointed, then, Landlord may, (a) at any time after receipt of such
notice of the occurrence of any such event, or (b) if such event occurs without
the acquiescence of Tenant, at any time after the event continues for thirty
(30) 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 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, contrary to 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, if Tenant shall not
(i) within said thirty (30) day period advise Landlord of Tenant's intention
to duly institute all steps necessary to remedy such situation, and (ii) duly
institute within said thirty (30) day period, and thereafter diligently and
continuously prosecute to completion all steps necessary to remedy the same,
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 five (5)
days after Landlord shall have given to Tenant a notice specifying the same,
or
(e) whenever a default of the kind set forth in Subsection 16(a), (b),
(c) or (d) hereof shall occur and if either (i) Tenant shall cure, after
notice, such default within any applicable grace period or (ii) Landlord
shall, in its sole discretion, permit Tenant to cure, such default after the
applicable grace period has expired, and if a similar
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default shall occur more than three (3) times within the next three hundred
sixty-five (365) days, whether or not such similar default or defaults is or
are cured within the applicable grace period,
then in any of said cases set forth in the foregoing Subsections (a), (b), (c),
(d), and Landlord may give to Tenant a notice of intention to end the term of
this Lease at the expiration of three (3) days from the date of the service of
such notice of intention and upon the expiration of said three (3) 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 beyond the expiration of
any applicable grace period 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,
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, Tenant shall thereupon pay to Landlord the
fixed annual rent and additional rent payable by 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 of Tenant of
any of its obligations under this Lease, Landlord shall also have the right of
injunction. 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 entry, by or under any summary dispossess or other
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proceeding or action or any provision of law by reason of default hereunder on
the part of Tenant, Landlord shall be entitled to retain all moneys, if any,
paid by Tenant to Landlord, whether as advancement, security or otherwise,but
such moneys shall be credited 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, 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 present value of the excess, if any, of
(1) the aggregate of the fixed annual rent and the additional
rent payable hereunder which would have been payable by Tenant
(conclusively presuming that additional rent on account of increases in
Taxes and Operating Expenses shall increase, at the average of the rates of
increase thereof previously experienced by Landlord during the period (not
to exceed three (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 rental value of the demised premises for the
same period, or
(b) sums equal to the fixed annual rent and the additional rent
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
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Expiration Date; provided, however, that if Landlord shall re-let the
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demised premises during said period, Landlord shall credit Tenant with the
net rents received by Landlord from such re-letting, such not rents to be
determined by first deducting from the gross rents as and when received by
Landlord expenses incurred 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 now tenants, brokers' commissions, and all other reasonable
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, or 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-lot 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 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 both fair and
----- -----
reasonable rental value for the demised premises, or part thereof, so re-let
during the term of the re-letting.
18.02. 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 provision 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 preclude recovery by Landlord
against Tenant of any sums or damages to which, in addition to the damages
particularly provided above, Landlord may lawfully be entitled by reason of any
default hereunder on the part of Tenant. 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.
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ARTICLE 19
LANDLORDS 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, (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 the
applicable grace period for curing such default shall have expired; and (b) if
Landlord makes any expenditures or incurs any 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 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 upon rendition of a bill to Tenant therefor.
ARTICLE 20
QUIET ENJOYMENT
20.01. Landlord covenants and agrees that subject to the terms and
provisions of this Lease, if, and so long as, Tenant keeps and performs each and
every covenant, agreement, term, provision and condition herein contained on the
part or on behalf of Tenant to be kept or performed, then Tenant's right 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) as
provided in Article 25 hereof with respect to ground and underlying leases and
mortgages which affect this Lease.
ARTICLE 21
SERVICES AND EQUIPMENT
21.01. Landlord shall, at its cost and expense:
(a) Provide necessary elevator facilities on Business Days (as
hereinafter defined in Article 22) during "regular hours" (that is between the
hours of 8:00 A.M. and 6:00 P.M.) and shall have at least one elevator in
Tenant's elevator bank subject to call at all other times. At Landlord's option,
the elevator shall be operated by automatic control or manual control, or by a
combination of both of such methods. Landlord shall provide freight elevator
service to the demised premises at no charge for casual deliveries on a first
come first served basis (i.e., no advance scheduling) during those hours of
Business Days during which freight elevator service is regularly provided.
Freight elevator service shall also be provided to the
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demised premises on a reserved basis at all other times, upon the payment of
Landlord's then established charges therefor which shall be additional rent
hereunder. The use of all elevators shall be on a non-exclusive basis and shall
be subject to Landlord's Freight Elevator Rules and Regulations which in their
current form are annexed hereto as Schedule E.
(b) Maintain and operate the heating system and shall, subject to the
design specifications of the heating system and to energy conservation
requirements of, and voluntary energy conservation programs sponsored by,
governmental authorities, furnish heat (hereinafter called "Heat service") to
the demised premises. Heat service shall be provided, as may be required for
comfortable occupancy of the demised premises during regular hours on Business
Days during the heating season. If Tenant shall require Heat service during
hours other than regular hours or on days other than Business Days (hereinafter
called "After Hours"), Landlord shall furnish such After Hours Heat service upon
reasonable advance notice from Tenant, and Tenant shall pay, on demand,
Landlord's established charges therefor. Landlord's current charge for such
After Hours Heat service is $275.00 per hour per floor, which charge shall be
subject to increases from time to time in the same percentage as increases in
Landlord's costs.
(c) Supply air conditioning (hereinafter referred to as "A/C service")
to the demised premises, subject to the design specifications of the systems
annexed hereto as Schedule F and to energy conservation requirements of, and
voluntary energy conservation programs sponsored by, governmental authorities,
during regular hours of Business Days from May 15 to October 15. If Tenant shall
require A/C service during After Hours, Landlord shall furnish such After Hours
A/C service upon reasonable advance notice from Tenant, and Tenant shall pay, on
demand, Landlord's established charge therefor. Landlord's current charge for
such After Hours A/C service is $325.00 per hour per floor, which charge shall
be subject to increases from time to time in the same percentage as increases in
Landlord's costs. If Tenant's manner of us and occupancy are consistent with the
design specifications of the air-conditioning system (i.e., electrical usage not
----
exceeding 5 watts per square foot of ceiling area, etc.) and, notwithstanding
that the same are not exceeded, the A/C service provided to those portions of
the demised premises located proximately to core facilities is inadequate in
accordance with usual Building Standards, Landlord shall at Landlord's expense
provide such supplemental air-conditioning to the 6th floor Space as may be
required to provide design conditions.
(d) Provide cleaning and janitorial services on Business Days in
accordance with the cleaning specifications annexed hereto as Exhibit C. Tenant
shall pay to Landlord on demand the costs incurred by Landlord for (a) extra
cleaning work in the demised premises required because of (i) misuse or neglect
on the part of Tenant or its employees or visitors, (ii) use of portions of the
demised premises for preparation, serving or consumption of food or beverages,
data processing, or reproducing operations, private lavatories or toilets or
other special purposes requiring greater or more difficult cleaning work than
office areas, (iii) unusual quantity of interior glass surfaces, (iv) non-
Building Standard materials or finishes installed by Tenant or at its request
and (b) removal from the demised premises and the Building of so much of any
refuse and rubbish of Tenant as shall exceed that ordinarily accumulated daily
in the
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routine of business/sales office occupancy. Landlord, its cleaning contractor
and their employees shall have After Hours access to the demised premises and
the free use of light, power and water in the demised premises as reasonably
required for the purpose of cleaning the demised premises in accordance with
Landlord's obligations hereunder.
(e) Furnish water for lavatory and drinking and office cleaning
purposes ("Customary Water Uses"). If Tenant requires, uses or consumes water
for any other purposes, Tenant agrees to Landlord installing a meter or meters
or other means to measure Tenant's water consumption, and Tenant further agrees
to reimburse Landlord for the cost of the meter or meters and the installation
thereof, and to pay for the maintenance of said meter equipment and/or to pay
Landlord's cost of other means of measuring such water consumption by Tenant.
Tenant shall reimburse Landlord for the cost of all water consumed (for other
than Customary Water Uses), as measured by said meter or meters or as otherwise
measured, including sewer rents.
21.02. Any use of the demised premises, or any part thereof, or
rearrangement of partitioning in a manner that interferes with normal operation
of the heat and air-conditioning systems (hereinafter called the systems)
servicing the same, may require changes in such systems. Such changes, when so
occasioned, shall be made by Tenant, at its expense, subject to Landlord's prior
written approval of such changes, which approval shall not be unreasonably
withhold or delayed. Tenant shall not make any change, alteration, addition or
substitution to the air-conditioning system without Landlord's prior written
approval, which may be withhold for any reason.
21.03. If any permit or license shall be required for the operation
of any air-conditioning unit in or serving the demised premises, Landlord shall
have the option of obtaining the same on Tenant's behalf and at Tenant's
expense, or by written notice to Tenant requiring Tenant, at Tenant's expense,
to obtain and maintain any such permit or license.
21.04. Landlord reserves the right without any liability whatsoever
or except as hereinafter in this Section 21.04 provided, abatement of fixed
annual rent, or additional rent, to stop the heating, air-conditioning,
elevator, plumbing, electric and other systems when necessary by reason of
accident or emergency or for repairs, alterations, replacements or improvements.
Landlord shall use reasonable efforts, to the extent reasonably practicable, to
perform such repairs, alterations, replacements or improvements in a manner
which shall minimize interference with the conduct of Tenant's business and
Tenant's use, occupancy and enjoyment of the demised premises, provided,
however, that Landlord shall have no obligation to employ contractors or labor
at overtime or other premium-pay rates or to incur any other overtime costs or
expenses whatsoever. No such stoppage or interruption shall result in any
liability from Landlord to Tenant or entitle Tenant to any diminution or
abatement of rent or other compensation nor shall this Lease or any of the
obligations of Tenant be affected or reduced by reason of any such stoppage or
interruption; provided, however, that if such stoppage or interruption is not
the result of any act or omission of Tenant or its agents, contractors or
employees and if such interruption renders the demised premises untenantable for
more than seven (7) consecutive Business Days
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("Untenantability Period"), and during such Untenantability Period, Tenant shall
not have been using or occupying the demised premises for the conduct of its
business, and Tenant shall have given Landlord notice thereof, then as Tenant's
sole remedy, fixed rent and additional rent shall abate hereunder from and after
the day following the expiration of such Untenantability Period until the
earlier of such time as the demised premises is rendered tenantable or Tenant
uses or occupies any portion of the demised premises for the conduct of its
business. Neither this Lease nor any of the obligations of Tenant shall
otherwise be affected or reduced by reason of such interruption, curtailment or
suspension.
21.05. Landlord may fix, in its own reasonable discretion taking
into account the security of the Building, at any time and from time to time,
the hours during which and the regulations under which laundry, linen towels,
drinking water, ice or other similar supplies and services to tenants in the
Building are to be furnished or other deliveries (including food and beverages)
are made and Landlord furthermore expressly reserves the right to exclude from
the Building, in its own reasonable discretion taking into account the security
of the Building, any person, firm or corporation attempting to furnish any of
such supplies or services. Nothing contained herein shall be deemed to limit
Tenant's rights utilizing its own employees to obtain or furnish the foregoing.
It is also understood that Tenant or regular office employees of Tenant who are
not employed by any supplier of such food or beverages or by any person, firm or
corporation engaged in the business of purveying such food or beverages, may
personally bring food or beverages into the Building for consumption within the
demised premises by employees of Tenant, but not for resale to or for
consumption by any other tenant. Landlord may fix in its absolute discretion, at
any time and from time to time, the hours during which, and the regulations
under which, foods and beverages may be brought into the Building by persons
other than the regular employees of Tenant.
21.06. Tenant agrees to employ such office maintenance contractors
as Landlord may from time to time designate, for all waxing, polishing, lamp
replacement, cleaning and maintenance work in the demised premises, provided
that the quality thereof and the charges therefor are reasonably comparable to
that of other contractors. Tenant shall not employ any other contractor without
Landlord's prior written consent.
21.07. Landlord will not be required to furnish any other services,
except as otherwise provided in this Lease.
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,
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upon notification to Tenant of such transfer or lease the said transferor
Landlord shall be and hereby is entirely freed and relieved of all future
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 observed by the Federal, State or local
government as legal holidays as well as all other days recognized as holidays
under applicable union contracts.
22.03. "Interest Rate" shall mean a rate per annum equal to the
lesser of (a) 2% above the commercial lending rate announced from time to time
by Chemical Bank (New York, New York), as its prime rate for ninety (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, and 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, 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 and all requirements, obligations and conditions of all instruments of
record on the date of this Lease.
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 terms, 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.
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ARTICLE 24
BROKERAGE
24.01. Tenant covenants, represents and warrants that Tenant hat
had no dealings or communications with any broker, or agent other than Cushman &
Wakefield, Inc. (which is representing Landlord) and Julien J. Studley, Inc.
(which is acting as broker only with respect to the 6th Floor Space) in
connection with the consummation of this Lease, and Tenant covenants and agrees
to pay, hold harmless and indemnify Landlord from and against any and all cost,
expense (including reasonable attorneys' fees) or liability for any
compensation, commissions or charges claimed by any broker or agent, other than
the brokers set forth in this Section 24.01, with respect to this Lease or the
negotiation thereof. Landlord covenants, represents and warrants that Landlord
has had no dealings or communications with any broker or agent purporting to
represent either Tenant or Landlord in connection with this Lease except the
brokers named in this Section 24.01 and Landlord covenants and agrees to pay,
hold harmless and indemnify Tenant from and against any and all cost, expense
(including reasonable attorneys' fees) or liability for any compensation,
commissions or charges resulting from a breach of the foregoing representation.
Landlord agrees to pay the brokers named in this Section 24.01 any commissions
which may be due to such brokers in connection with this Lease pursuant to
separate agreements.
ARTICLE 25
SUBORDINATION
25.01. Subject to the provisions of Section 25.05 hereof, this
Lease is and shall be subject and subordinate to all ground or underlying leases
which may now or hereafter affect the real property of which the demised
premises forms 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
at its own cost and expense any instrument, in recordable form if required, that
Landlord, the lessor of any such ground or underlying lease or the holder of any
such mortgage or any of their respective successors in interest may request to
evidence such subordination. Any lease to which this Lease is, at the time
referred to, subject and subordinate, is sometimes herein called "Superior
Lease" and the lessor of a Superior Lease or its successor in interest, at the
time referred to, is sometimes herein called "Superior Lessor"; and any mortgage
to which this Lease is, at the time referred to, subject and subordinate, is
sometimes herein called "Superior Mortgage" and the holder of a Superior
Mortgage or its successor in interest, at the time referred to, is sometimes
herein called "Superior Mortgagee". As of the date hereof there are no Superior
Leases and the only Superior Mortgage to which this Lease is subject and
subordinate is that certain Mortgage and Security Agreement dated March 30, 1990
between Asahi International, Ltd., as mortgagee, and Landlord, as mortgagor.
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25.02. In the event of a termination of any ground or underlying
lease, 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, or if the holder of any mortgage acquires a lease
in substitution therefor, 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 and will perform for its benefit all the terms, covenants and
conditions of this Lease on Tenant's part 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 shall 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,
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
(however the foregoing shall not be deemed to exculpate such successor from
its own defaults to the extent that a preexisting default shall continue after
the succession contemplated hereby and after such additional period as might
reasonably be required for the cure thereof assuming reasonable diligence); or
(b) subject to any offsets, claims or defenses which Tenant might have
against any prior landlord; or
(c) bound by any 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.
25.04. If, in connection with the financing of the Building, a
Superior Mortgagee shall request reasonable modifications in this Lease as a
condition of approval thereof, Tenant
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shall not unreasonably withhold, delay or defer making such modifications,
provided that same does not (i) conflict with Tenant's use of the demised
premises as permitted hereunder; (ii) increase Tenant's obligations (including
financial obligations) hereunder (except to a de minimis extent), or (iii)
decrease Tenant's rights hereunder (except to a de minimis extent).
25.05. (a) Landlord shall make a reasonable effort to obtain for
Tenant from the holder of the existing Superior Mortgage affecting the Building,
an agreement (hereinafter called a "Non-Disturbance Agreement") on the usual
form of such holder providing in substance that so long as Tenant is not in
default of any of its obligations under this Lease beyond applicable grace
periods, Tenant's occupancy of the demised premises shall not be disturbed
notwithstanding foreclosure of such existing Superior Mortgage. If Landlord
fails to obtain a Non-Disturbance Agreement signed by such existing Superior
Mortgagee within forty-five (45) days after the date hereof, then Tenant may
(during the five (5) day period occurring after such forty-five (45) day
period), upon ten (10) days' written notice, terminate this Lease, and if
Landlord fails to furnish such Non-Disturbance Agreement during such ten (10)
day notice period, this Lease shall terminate upon expiration of such ten (10)
day notice period. Landlord shall be deemed to have fulfilled its obligations
hereunder by submitting to Tenant a Non-Disturbance Agreement on the foregoing
form, signed by such existing Superior Mortgagee. If Tenant fails within twenty
(20) days after submission of the Non-Disturbance Agreement to countersign and
return the same, Landlord or such existing Superior Mortgages, as the case may
be, may, without liability hereunder or further obligation under this Section
25.05, declare such Non-Disturbance Agreement null and void. If Tenant exercises
its option to terminate this Lease as provided in this Section 25.05(a), then,
notwithstanding the provisions of Article 47 hereof, the Existing Lease shall
once again be deemed in full force and effect as between the parties hereto.
(b) With respect to future Superior Mortgages and future Superior
Leases which may be executed on or after the date of this Lease, the
subordination of this Lease thereto pursuant to, the provisions of Section 25.01
hereof shall be conditioned upon the execution and delivery by and between
Tenant and any such Superior Mortgagee or Superior Lessor of a Non-Disturbance
Agreement on the customary form of such Superior Mortgagee or Superior Lessor
which shall provide in substance that so long as no default exists hereunder
beyond any applicable grace period, Tenant shall not be disturbed in its
possession of the demised premises pursuant to the provisions of this Lease.
Tenant agrees to execute such Non-Disturbance Agreements and return same to
Landlord within ten (10) days after Landlord's written request therefor. If
Tenant shall fail to execute, acknowledge and return any such Non-Disturbance
Agreements within such ten (10) day period, then (x) the provisions of Section
25.01 shall apply, and (y) this Lease shall be subordinate to such future
Superior Mortgages or future Superior Leases, as the case may be, pursuant to
the terms and conditions of the Lease and such Non-Disturbance Agreement shall
at Landlord's option and upon notice to Tenant be deemed void.
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ARTICLE 26
CERTIFICATE OF TENANT
26.01. Tenant agrees, at any time and from time to time, as
requested by Landlord, upon not less than ten (10) Business Days' prior notice,
to execute and deliver to Landlord 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 and effect as modified and stating the
modifications), certifying the dates to which the fixed annual rent and
additional rent have been paid; and stating whether or not, to the best
knowledge of Tenant, Landlord is in default in performance of any of its
obligations under this Lease, and, if so, specifying each such default of which
Tenant may have knowledge, it being intended that any such statement delivered
pursuant hereto may be relied upon by others with whom Landlord may be dealing.
26.02. 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, if so restricted by any existing or future ground lease
or mortgage to which this Lease is subordinated or by an assignment of this
Lease to the ground lessor or the holder of such mortgage, 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, and following the time when such
lessor or holder shall have the right pursuant to such superior instrument to
cure the same, during which time such lessor or holder shall have the right, but
shall not be obligated, to remedy or cause to be remedied 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.
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
bodily injury or damage to physical property), 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
not interpose and does hereby waive the right to interpose any counterclaim of
whatever nature or description in
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any such proceeding, unless Tenant's failure to interpose such a counterclaim
would otherwise bar Tenant from asserting such counterclaim in a separate action
or proceeding.
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 and damage by fire,
the elements or other casualty excepted, and Tenant shall remove all of its
property as herein provided. Tenant's obligation to observe, or perform this
covenant shall survive the expiration or other termination of the term of this
Lease but if Landlord shall fail to assert a claim under this Section 28.01
within one (1) year after the Expiration Date the same shall be deemed to have
been waived.
ARTICLE 29
RULES AND REGULATIONS
29.01. Tenant and Tenant's servants, employees and agents shall
observe faithfully and comply strictly with the Rules and Regulations set forth
in Schedule 8 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; provided, however,
-----------------
that in case of any conflict or inconsistency between the provisions of this
Lease and of any of the Rules and Regulations as originally or as hereafter
adopted, the provisions of this Lease shall control. Reasonable written notice
of any additional Rules and Regulations shall be given to Tenant.
Nothing in this Lease 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 of the Rules and Regulations against
Tenant in an unfairly discriminatory manner.
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 setoff, counterclaim or defense)
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based upon any claim or assertion by Tenant that Landlord unreasonably withhold
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. In no event shall the foregoing be deemed to
exculpate Landlord from liability for claims for damages if the Landlord shall
be found by final Judgment from which all further appeal has been exhausted, in
withholding or delaying a consent or approval, despite its agreement not to do
so unreasonably, to have acted maliciously or in bad faith.
ARTICLE 31
NOTICES
31.01. Any notice or demand, consent, approval or disapproval, or
statement 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, such notice or demand shall be given, and shall be deemed to have
been served and given when such notice or demand is mailed by registered or
certified mail deposited enclosed in a securely closed postpaid wrapper, in a
United States Government general or branch post office, or official depository
within the exclusive care and custody thereof, addressed to either party, at its
address set forth on page 1 of this Lease. After Tenant shall occupy the demised
premises, the address of Tenant for notices, demands, consents, approvals or
disapprovals shall be the Building. Either party may, by notice as aforesaid,
designate a different address or addresses for notices, demands, consents,
approvals or disapprovals. Copies of any notices to Tenant shall be sent to
Christy & Viener, 620 Fifth Avenue, New York, New York 10020-2402, Attention:
Richard B. Salomon, Esq.
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 or demand, consent approval or disapproval, or statement, on one other
person or entity designated in such request, such service to be effected as
provided in Section 31.01 hereof.
ARTICLE 32
NO WAIVER
32.01. No agreement to accept a surrender of this 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 demised 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
Landlord to seek redress for violation of, or to insist
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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
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, provided that Landlord does not
enforce any such Rules and Regulations against Tenant in an unfairly
discriminatory manner. No provision of this Lease shall be deemed to have been
waived by Landlord, unless such waiver be in writing signed by Landlord. 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 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.
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 preemption 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, or any other cause constituting force majeure or (6) any cause beyond
Landlord's reasonable control (excluding lack of funds), 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, Landlord shall have no
liability in connection therewith and this Lease and Tenant's obligation to pay
rent hereunder shall in no wise be affected, impaired or excused except as
otherwise set forth in Section 21.04 hereof.
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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.
ARTICLE 36
NAME OF BUILDING
36.01. 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. 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.
ARTICLE 37
RESTRICTIONS UPON USE
37.01. It is expressly understood that no portion of the demised
premises shall be used as, or for (i) the retail, off-the-street operation of a
bank, trust company, savings bank, industrial bank, savings and loan association
or personal loan bank (or any branch office or public accommodation 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, travel or tourist agency, employment
agency, public restaurant or bar, commercial document reproduction or offset
printing service, public vending machines, retail, wholesale or discount shop
for sale of merchandise, retail service shop, labor union, school or classroom,
governmental or quasi-governmental bureau, department or agency, including an
autonomous governmental corporation, a firm whose principal business is real
estate brokerage, or a company engaged in the business of renting office or desk
space.
ARTICLE 38
ARBITRATION
38.01 In each case specified in this Lease in which resort to
arbitration shall be required, 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 American Arbitration
Association and the provisions of this Lease. The decision and award of the
arbitrators shall be in writing, shall be final and conclusive on the parties,
and counterpart copies thereof shall be delivered to each of the parties. In
rendering such decision and awards, the arbitrators. shall not add to, subtract
from or otherwise modify the provisions of this Lease.
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Judgment may be had or the decision and award of the arbitrators so rendered in
any court of competent jurisdiction.
ARTICLE 39
INDEMNITY
39.01. Tenant shall indemnify, defend and save Landlord, its
agents, and employees and any mortgages of Landlord's interest in the Land
and/or the Building and any lessor under any superior lease harmless from and
against any liability or expense arising from the use or occupation of the
demised promises by Tenant or anyone in the demised promises with Tenant's
permission, or from any breach of this Lease by Tenant. Landlord shall
indemnify, defend and save Tenant, its agents and employees harmless from and
against any liability or expense arising from (x) the negligent use of the
public areas of the Building located outside of the demised premises by Landlord
or its employees or agents or (y) the negligent performance of any repair,
operation or maintenance in the demised premises by Landlord or its employees or
agents.
ARTICLE 40
MEMORANDUM OF LEASE
40.01. Tenant shall, at the request of Landlord execute and deliver
a statutory form of memorandum of this Lease 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. In no event shall Tenant
record this Lease.
ARTICLE 41
SECURITY
41.01. Tenant has deposited with Landlord upon execution hereof the
sum of $175,000.00 as security for the faithful performance and observance by
Tenant of the terms, provisions, covenants and conditions of this Lease; it is
agreed that in the 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, Landlord may 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
expend or may be required to 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. In the event that Tenant shall fully
and faithfully comply with all of the terms, provisions, covenants and
conditions of this Lease, the security shall be returned to Tenant
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after the date fixed as the end of the Lease and after delivery of entire
possession of the demised premises to Landlord. In the event of a sale of the
Land and Building or leasing of the Building, of which the demised premises form
a part, Landlord shall have the right to transfer the security to the vendee or
lessee and Landlord shall thereupon be released by Tenant from all liability for
the return of such security and 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 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 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 except as provided in the following sentence the amount deposited shall be
$175,000.00. On the date occurring thirty (30) days prior to the expiration of
the abatement period (as defined in Section 1.5 hereof) the, security to be
retained by Landlord hereunder shall be increased to $350,000.00 and Tenant
shall on or before such date provide Landlord with such additional funds as may
be necessary to maintain the security deposit at such amount. The cash security
required to be maintained under this Lease shall be hold in an interest-bearing
account, the interest on which, less an administration fee in the amount of one
(1%) percent per annum of the principal amount thereof, shall be paid to Tenant
annually.
41.02. In lieu of the cash security deposit provided for in Section
41.01 hereof Tenant may deliver to Landlord and, shall, except as otherwise
provided herein, maintain in effect at all times during the term hereof, an
irrevocable letter of credit, in form and substance reasonably satisfactory to
Landlord in the amount of the security deposit required hereunder issued by a
banking corporation satisfactory to Landlord and having its principal place of
business or its duly licensed branch or agency in the State of Now York. 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 45 days prior to the expiration thereof. Except as
otherwise provided herein, Tenant shall, throughout the term of this Lease
deliver to Landlord, in the event of the termination of any such letter of
credit, replacement letters 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 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 year and shall be automatically
renewable from year to year as aforesaid. If Tenant shall fail to obtain any
replacement of a Security Letter within the time limits set forth in this
Section 41.2, Landlord may draw down the full amount of the existing Security
Letter and retain the same as security hereunder.
41.03. In the event Tenant defaults in respect to 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, Landlord may 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
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any other sum as to which Tenant is in default or for any sum which Landlord may
expend or may be required to 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 Landlord may utilize
the security represented by the Security Letter in the manner, for the purpose,
and to the extent provided in this Article 41, 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.
41.04. In the event that Tenant defaults 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 may, in.
addition to exercising its rights as provided in Section 41.3 hereof, 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
fixed annual rent, additional rent, or any other sums 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 this Article 41.
41.05. If Tenant shall fully and faithfully comply with all of the
terms, provisions, covenants and conditions of this Lease, the security or any
balance thereof to which Tenant is entitled shall be returned or paid over to
Tenant after the date fixed as the end of the Lease and after delivery of entire
possession of the demised premises to Landlord. In the event of a sale,
transfer or leasing of Landlord's interest in the Building whether or not in
connection with a sale, transfer or leasing of the Land, Landlord shall have the
right to transfer any interest it may have in the Security Letter to the vendee
or lessee and Landlord shall thereupon be released by Tenant from all liability
for the return of such Security Letter, and 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 now 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 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.
41.06. Provided that Tenant is not then in default of its
obligations under this Lease on the sixth (6th) anniversary of the Commencement
Date, the security which Tenant is
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obligated to maintain hereunder shall be reduced to $175,000.00 for the
remainder of the term of this Lease. If Tenant is at such time in default and
thereafter cures such default within the grace period, after notice, provided
herein, then promptly after Tenant effects such cure the reduction provided
herein shall take effect.
ARTICLE 42
MISCELLANEOUS
42.01. Irrespective of the place of execution or performance, this
Lease shall be governed by and construed in accordance with the laws of the
State of Now York.
42.02. This Lease shall be construed without regard to any
presumption or other rule requiring construction against the party causing this
Lease to be drafted.
42.03. Except as otherwise expressly provided in this Lease, each
covenant apartment, 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.
42.04. 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.
42.05. Time shall be of the essence with respect to the exercise of
any option granted under this Lease.
42.06. Except as otherwise provided herein, whenever payment of
interest is required by the terms hereof it shall be at the Interest Rate.
42.07. If the demised premises or any additional space to be
included within the demised premises shall not be available for occupancy by
Tenant on the specific date hereinbefore designated for the commencement of the
term of this Lease or for the inclusion of such space for any reason whatsoever,
then this Lease shall not be affected thereby but, in such case, said specific
date shall be deemed to be postponed until the date when the demised premises or
such additional space shall be available for occupancy by Tenant, and Tenant
shall not be entitled to possession of the demised premises or such additional
space until the same are available for occupancy by Tenant; provided, however,
-------- -------
that Tenant shall have no claim against Landlord, and Landlord shall have no
liability to Tenant by reason of any such postponement of said specific date,
and the parties hereto further agree that any failure to have the demised
promises or such additional space available for occupancy by Tenant on said
specific date or on the Commencement Date shall in no wise affect the
obligations of Tenant hereunder nor shall the same be construed in any wise to
extend the term of this Lease and furthermore, this Section 42.7
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shall be deemed to be an express provision to the contrary of Section 223a of
the Real Property Law of the State of New York and any other law of like import
now or hereafter in force.
42.08. In the event that Tenant is in arrears in payment of fixed
annual rent or additional rent hereunder, 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 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.
42.09. This Lease shall not be, binding upon Landlord or Tenant
unless and until it is signed by both Landlord and Tenant and a signed copy
thereof is delivered to both parties.
42.10. Tenant shall not occupy any space in the Building (by
assignment, sublease or otherwise) other than the demised promises, except with
the prior written consent of Landlord in each instance.
42.11. Intentionally omitted.
42.12 (a) 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 promises) 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 and one-half times one-twelfth of the sum
of: (a) 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 as shall be established by Landlord giving notice to Tenant of
Landlord's good faith estimate of such market rental value. Tenant may dispute
such market rental value for the demised promises as estimated by Landlord by
giving notice to Landlord within but in no event after ten days after the giving
of Landlord's notice to Tenant (as to the giving of which notice to Landlord,
time shall be deemed of the essence). Enclosed with such notice, Tenant shall be
required to furnish to Landlord a certified opinion of a reputable New York
licensed real estate broker having leasing experience in the Borough of
Manhattan, for a period of not less than ten (10) years setting forth said
broker's good faith opinion of the market rental value of the demised premises.
If Tenant and Landlord are unable to resolve any such dispute as to the market
rental value, for the demised premises then an independent arbitrator who shall
be a real estate broker of similar qualification's and shall be selected from a
listing of
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not loss than three (3) brokers furnished by the Real Estate Board of New York,
Inc. to Tenant and Landlord (at the request of either Landlord or Tenant). If
Landlord and Tenant are unable to agree upon the se1ection of the individual
arbitrator from such listing, then the first arbitrator so listed by the Real
Estate Board of New York, Inc. shall be conclusively presumed to have been
selected by both Landlord and Tenant and the decision of such arbitrator shall
be conclusive and binding upon the parties as to the market rental value for the
demised premises. Pending the determination of the market rental value of the
demised premises upon the expiration of the term of this lease, Tenant shall pay
to Landlord as fixed annual rent an amount computed in accordance with clauses
(1) or (ii) of this subsection 42.12(a) (as Landlord shall then elect), and upon
determination of the market rental value of the demised promises in accordance
with the preceding provisions hereof appropriate adjustments and payments. shall
be effected. Further, Landlord shall not be required to perform any work,
furnish any materials or make any repairs within the demised promises during the
holdover period. 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 promises
as a holdover, the fixed annual rent for the use and occupancy of the demised
promises during any holdover period shall be calculated in the same manner as
set forth above in this Section 42.12. In addition to the foregoing, Landlord
shall be entitled to recover from Tenant any losses or damages arising from such
holdover, excluding consequential damages, except to the extent of consequential
damages arising out of any new leases executed by Landlord with respect to the
demised premises or any portion thereof.
(b) Notwithstanding anything to the contrary contained in this lease,
the acceptance of any rent paid by Tenant pursuant to subsection 42.12(a) 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.
(c) If Tenant shall hold-over or remain in possession of any portion
of the demised premises beyond the Expiration Date, Tenant shall be subject not
only to summary proceeding and all damages related thereto, but also to any
damages arising out of any lost opportunities (and/or new leases) by Landlord to
re-let the demised premises (or any part thereof). All damages to Landlord by
reason of such holding over by Tenant may be the subject of a separate action
and need not be assorted by Landlord in any summary proceedings against Tenant.
ARTICLE 43
EXTENSION OF TERM
43.01. Tenant, at Tenant's solo option, shall have the right to
extend the term of this Lease for an additional term (hereinafter called the
"Extension Term") commencing on the
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day following the expiration of the initial term of this Lease (hereinafter
referred to as the "Commencement Date of the Extension Term"); and expiring on
the last day of the month preceding the month in which shall occur the fifth
(5th) anniversary of the Commencement Date of the Extension Term, upon Tenant's
written notice to Landlord (hereinafter referred to as the "Extension Notice"),
given no later than the day occurring twelve (12) months prior to the expiration
of the initial term of this Lease, time being of the essence with respect to the
giving of the Extension Notice, provided that:
(a) Tenant shall not be in default after the expiration of any
applicable grace period under this Lease either as of the time of the giving of
the Extension Notice or the Commencement Date of the Extension Term, and
(b) Tenant or Tenant's affiliates shall, as of the giving of the
Extension Notice and as of the Commencement Date of the Extension Term, be in
actual occupancy of not less than sixty-seven (67%) percent of the rentable
square foot area of the demised premises (including any additional space in the
Building hereinafter leased by Tenant).
43.02. The fixed annual rent payable by Tenant to Landlord during
the Extension Term shall be ninety-five percent (95%) of the fair market rent
for the demised promises as determined by Landlord and set forth in a written
notice to Tenant, which determination shall be as of the date occurring six (6)
months prior to the expiration of the initial term (such date is hereinafter
sometimes called the "Determination Date") and which determination shall be made
within a reasonable period of time after the occurrence of the Determination
Date. For the purposes of determining the fair market rent for the Extension
Term pursuant to this Article 43, the base periods for escalation purposes shall
be the same as those set forth in Article 3 hereof.
43.03. (a) (i) In the event that Tenant gives the Extension
Notice in accordance with the provisions of Section 43.1 hereof and Tenant
disputes the amount of the fair market rent, then Tenant may initiate the
arbitration process provided for herein by giving notice to that effect to the
Landlord, and Tenant shall specify in such notice the name and address of the
person designated to act as an arbitrator on its behalf. Within twenty (20) days
after the designation of such 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 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 if, within thirty (30) days after the second
arbitrator is appointed, the two arbitrators shall not agree, they shall
together app9int a third arbitrator. In the event of their being unable to agree
upon such appointment within sixty (60) days after the appointment of the second
arbitrator, the third arbitrator shall be selected. by the parties themselves if
they can agree thereon within a further period of ten (10) days. If, the
parties do not so agree, then either party, on behalf of both and on notice to
the other may request
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such appointment by the American Arbitration Association (or organization
successor thereto) in accordance with its rules then prevailing or if the
American Arbitration Association (or such successor organization) shall fail to
appoint said third arbitrator within ten (10) days after such request is made,
then either party may apply on notice to the other, to the Supreme Court, Now
York County, New York (or any other court having jurisdiction and exercising
functions similar to those now exercised by said Court) for the appointment of
such third arbitrator.
(ii) In determining the fair market rent under this Section 43.3,
the arbitrators shall take into account all relevant factors based on the
following assumptions, (A) that the standard work letter or work credit, if
any, then being offered to office tenants of the Building is being offered to
Tenant even though it is not actually offered, (B) that other concessions and
allowances then being given by landlords of comparable office buildings to
tenants entering into now office leases in New York City are being given to
tenant even though same is not actually given, and (C) that brokerage
commissions payable in connection with such new leases are being incurred by
Landlord even though same are not actually incurred.
(b) 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.
(c) The majority of the arbitrators shall determine the fair market
rent of the demised premises and render a written certified report of their
determination to both Landlord and Tenant within sixty (60) days of the
appointment of the first two arbitrators or sixty (60) days from the appointment
of the third arbitrator if such third arbitrator is appointed pursuant to this
Article 43.
(d) Each of the arbitrators selected as herein provided shall have at
least ten (10) years' experience in the leasing and renting (as broker, agent or
owner) of office space in first-class office buildings in New York County.
(e) Prior to such determination by the arbitrators of the amount of
the fair market rent to be paid during the Extension Term, Tenant shall pay the
amount determined by Landlord to be ninety-five percent (95%) of the fair market
rent for the Extension Term and when the determination has actually been made,
an appropriate retroactive adjustment shall be made as of the Commencement Date
of the Extension Term.
43.04. Except as provided in Section 43.2 hereof, Tenant's
occupancy of the demised premises during the Extension Term shall be on the same
terms and conditions as are in effect immediately prior to the expiration of the
initial term of this Lease, provided, however, Tenant shall have no further
right to extend the term of this Lease pursuant to this Article 43 and
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Tenant shall not be entitled to any rental abatement provided in Article 1
hereof or any Work Credit provided in Article 46 hereof.
43.05. If Tenant does not timely send the Extension Notice pursuant
to provisions of Section 43.1 hereof, this Article 43 shall have no force or
effect and shall be deemed deleted from this Lease. Time shall be of the
essence with respect to the giving of the Extension Notice. The termination of
this Lease during the initial term hereof shall also terminate and render void
any option or right on Tenant's part to extend the term of this Lease pursuant
to this Article 43 whether or not such option or right shall have theretofore
been exercised.
43.06. If this Lease is renewed for the Extension Term, then
Landlord or Tenant can request the other party hereto to execute an instrument
in form for recording setting forth the exercise of Tenant's right to extend the
term of this Lease and the last day of the Extension Term.
43.07. If Tenant exercises its right to extend the term of this
Lease for the Extension Term pursuant to this Article, the phrases "the term of
this Lease" or "the term hereof" as used in this Lease, shall be construed to
include, when practicable, the Extension Term and "Expiration Date" shall mean
the last day of the Extension Term and "Expiration Date" shall mean the last day
of the Extension Term.
ARTICLE 44
RIGHT OF FIRST OFFERING
44.01. For purposes of this Lease, the term "First Offering Space"
shall mean a portion of rentable space in the Building consisting of the balance
of the sixth (6th) floor not included in the demised premises and the entire
fourth (4th) floor.
44.02. Provided Tenant is not in default under the terms and
conditions of this Lease after the expiration of any applicable grace period
either as of the date of the giving of "Tenant's First Notice"' or the "First
Offering Space Inclusion Date" (as such terms are hereinafter defined), if at
any time during the term of this Lease the First Offering Space shall become
available for leasing to anyone other than the existing tenant thereof or any
subsidiary or affiliate thereof (hereinafter called the "Current Tenant") then
Landlord, before offering such First Offering Space to anyone other than the
Current Tenant, shall offer to Tenant, subject to the provisions of this Article
44, the right to include the entire First Offering Space then offered to Tenant
within the demised promises upon all the terms and conditions of this Lease
(including the provisions of Articles 3 and 4 hereof with the base year periods
specified in Article 3, but excluding Articles 2 and 46 hereof), except that:
(i) the fixed annual rent with respect to the First Offering Space
shall be at. the rate of ninety-five (95%) percent of the fair market rent
(based upon all relevant factors, including without limitation, the fact that
the base year periods specified in
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Article 3 shall not change) for the First Offering Space, which shall be
determined by Landlord as of the date (hereinafter called the "First Offering
Space Determination Date") occurring 30 days prior to the First 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 First Offering Space be less than the product obtained by
multiplying (A) the monthly amount of fixed annual rent (determined on a
rentable square foot basis) for the last full calendar month prior to the
First Offering Space Inclusion Date (as hereinafter defined) computed on an
annualized basis without giving effect to, any abatement, credit or offset in
effect, by (B) 12, and by (C) the amount of rentable square feet included
within the First Offering Space (hereinafter called the "First Offering Space
Escalated Rent"); and
(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, (y) Tenant's Proportionate 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 764,800, and W Tenant's Tax Proportionate 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 825,815.
44.03. Such offer shall be made by Landlord to Tenant in a written
notice (hereinafter called the "First Offer Notice"') which offer shall specify
the fixed annual rent payable with respect to the First offering Space,
determined in accordance with the provisions of Section 44.02 hereof.
44.04. Tenant may accept the offer set forth in the First Offer
Notice by delivering to Landlord an unconditional acceptance (hereinafter called
"'Tenant's First Notice") of such offer within fifteen (15 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 First Notice.
44.05. If Tenant does not accept (or fails to timely accept) an
offer made by Landlord pursuant to the provisions of this Article 44 with
respect to the First Offering Space, Landlord shall be under no further
obligation to Tenant with respect to the first Offering Space or this Article
44.
44.06. In the event that Tenant disputes the amount of the fair
market rent specified in the First Offer Notice, then at any time on or before
the date occurring thirty (30)
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days after Tenant has received the First Offer Notice, and provided that Tenant
shall have given Tenant's First Notice, Tenant may initiate the arbitration
process set forth in Sections 43-03(a), (b), (c) and (d) hereof.
44.07. If Tenant fails to initiate the arbitration process within
the aforesaid thirty (30) day period, time being of the essence, then Landlord's
determination of the fixed annual rent set forth in the First Offer Notice shall
be conclusive. In the event Landlord notifies Tenant that the fixed annual rent
for the First Offering Space shall be the first Offering Space Escalated Rent,
then the provisions of Section 44.05 hereof shall be inapplicable.
44.08. In the event the Tenant initiates the aforesaid arbitration
process and, is of the first 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 ninety-five (95%) percent of the fair market rent for the
First Offering Space, which determination of fair market rent shall be made
considering the relevant factors and discount set forth in Section 43.03(a)(ii),
and when the determination has actually been made, an appropriate retroactive
adjustment shall be made as of the First Offering Space Inclusion Date.
44.09. The provisions of this Article 44 shall be effective only
if, on the date on which Tenant accepts possession of the First Offering Space,
the Tenant named herein and only such Tenant is in actual occupancy of sixty-
seven (67%) percent of the demised premises (including any additional space in
the Building hereafter leased by Tenant).
44.10. Tenant agrees to accept the 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.
44.11. The fixed annual rent for the First Offering Space as
determined pursuant to this Article 44 shall be subject to periodic increases
for any period during the term of this Lease for which such fixed annual rent
would otherwise be less (on a per rentable square foot basis) than the fixed
annual rent payable pursuant to Section 1.01 hereof (on a per rentable square
foot basis) for such period, so that the fixed annual rent payable during such
periods with respect to the First Offering Space shall be equal (on a per
rentable square foot basis) to the fixed annual rent payable pursuant to Section
1.01 hereof during such periods.
ARTICLE 45
LAYOUT AND FINISH.
45.01. Tenant hereby covenants and agrees that Tenant will, at
Tenant's own cost and expense, make and complete the work and installations in
and to the demised promises set
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forth below in a good and workerlike manner to the extent customary and standard
with the real estate industry for first class office buildings in midtown
Manhattan comparable to the Building.
Tenant, at Tenant's expense, shall prepare a final plan or final set of plans
and specifications (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 on or before
Juno 30, 1993 for Landlord's written approval which written approval shall not
be unreasonably withhold or delayed. Tenant shall promptly reimburse Landlord
upon demand for any reasonable out-of-pocket costs And expenses incurred by
Landlord or independent third parties in connection with Landlord's review of
Tenant's final plan. Landlord shall incur no liability, obligations or
responsibility to Tenant or any third party by reason of such review. 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 doomed 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 promises of
materials or equipment which do not equal or exceed Building Standard quality.
If Tenant in its submission to Landlord of its final plans make specific
reference to the following time limitation and the consequences of Landlord's
failure to respond, then, Landlord's failure to respond to Tenant's submission
within two, (2) weeks after the later of (i) its receipt thereof or (ii) the
date that Landlord executes this Lease and delivers copies thereof to Tenant,
shall be deemed approval.
In accordance with the final plan, Tenant, at Tenant's expense, will
make and complete in and to the demised premises (hereinafter Sometimes called
the "'Work Area") the work and installations (hereinafter called "Tenant's
Work") specified in the final plan. Tenant shall perform Tenant's Work in
accordance with such rules and regulations as Landlord may from time to time
designed governing the performance. of tenant improvement work in the Building.
Tenant agrees that Tenant's Work will be, performed with the, least possible
disturbance to other occupants of the, Building and 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 good and workmanlike operating condition. Tenant,
in performing Tenant's Work will, at its own cost and expense, promptly comply
with all laws, rules and regulations of all public authorities having
jurisdiction in the Building with reference, to Tenant's Work. Tenant shall not
do or fail to do- any act which shall or may render the Building of which the
demised premises are a part, liable to any mechanic's lien or other lien and if
any such lien or liens be filed against the Building of which the demised
premises are a part, or against Tenant's Work, or any part thereof, Tenant will,
at Tenant's own cost and expense, promptly remove, the same of record within
thirty (30) days after the filing of such lion or lions; or in -default thereof,
Landlord may cause any such lien or liens to be removed of record by payment of
bond or otherwise, an Landlord may elect, and Tenant will reimburse Landlord for
all costs and expenses incidental to the removal of any such lien or
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liens incurred by Landlord. Tenant shall indemnify and save harmless Landlord of
and from all claims, counsel fees, loss, damage and expenses whatsoever by
reason of any lions, charges or payments of any kind whatsoever that may be
incurred or become chargeable against Landlord or the Building of which the
demised promises are a part, or Tenant's Work or any part thereof, by reason of
any work done or to be, done or materials furnished or to bo furnished to or
upon the demised premises in connection with Tenant's Work. Tenant hereby
covenants and agrees to indemnify and save harmless Landlord of and from all
claims, counsel fees, lose, damage and expenses whatsoever by reason of any
injury or damage, howsoever caused, to any person or property occurring prior to
the completion of Tenant's Work or occurring after such completion, as a result
of anything done, or omitted in connection therewith or arising out of any fine,
penalty or imposition or out of any other matter or thing connected with any
work done or to be done or materials furnished or to be furnished in connection
with Tenant's Work. At any and all times during the progress of Tenant's Work,
Landlord, at Landlord's sole cost and expense, shall be entitled to have a
representative or representatives on the site to inspect Tenant's Work and such
representative or representatives shall have free and unrestricted access to any
and every part of the demised premises; provided, however, that any such
representative shall use reasonable efforts, to the extent reasonably
practicable, to minimize any interference with the performance of Tenant's Work.
Tenant shall advise Landlord in. writing of Tenant's general contractor and
subcontractors who are to do Tenant's Work, and such general contractor and
subcontractors shall be subject to Landlord's prior written approval in advance;
such contractors shall, to the extent permitted by law, use employees for
Tenant's Work who will work harmoniously with other employees on the job.
Annexed hereto as Schedule D is a list of general contractors and subcontractors
which have been approved by Landlord for the performance of 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 45.
45.02. The following conditions shall also apply to Tenant's Work:
(a) all Tenant's Work shall be of material, manufacture, design,
capacity and light colors at least equal to Building Standard;
(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;
(c) Tenant shall use, in connection with the preparation of Tenant's
plans and specifications, an architect who shall be licensed in the City and
State of New York, and such plans and specifications shall be approved by (and
all engineering required to be performed in connection therewith shall be
performed by) an engineering
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firm approved by Landlord, which engineering firm shall likewise be licensed
in the City and State of New York;
(d) Prior to the commencement of Tenant's Work Tenant shall furnish to
Landlord certificates evidencing the existence of (i) workmen's compensation
insurance, covering all persons employed for such work, and (ii) reasonable
comprehensive general liability and property damage insurance naming Landlord,
its designees, and Tenant as insureds with coverage of at least $3,000,000
single limit;
(e) Tenant shall complete Tenant's Work on or before December 31,
1993; and
(f) Notwithstanding anything to the contrary contained herein,
Landlord shall have no liability to Tenant and this Lease shall not be
affected if Tenant is unable to obtain a building permit or other necessary
approval for the performance of Tenant's Work.
45.03. 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. .
45.04. 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
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 expense in so cooperating or in
rendering such assistance, Tenant shall reimburse Landlord for such expense as
additional rent hereunder.
45.05. Intentionally omitted.
45.06. Tenant acknowledges and agrees. that, notwithstanding
anything in the Lease to the contrary, Landlord have, no responsibility
whatsoever for the installation or proper functioning of, or cost of correcting,
any portion of Tenant's Work and Tenant shall boar the entire responsibility and
liability therefor.
ARTICLE 46
TENANT'S WORK CREDIT
46.01. (a) Landlord shall allow Tenant a credit not to exceed the
amount of ONE MILLION NINE HUNDRED EIGHTY-SEVEN THOUSAND SIX RUN RED EIGHTY and
00/100 ($1,987,680.00) DOLLARS (hereinafter called the, "'Work Credit"), which
credit shall be applied solely against the cost and expense incurred in
connection with the performance
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of Tenant's Work set forth in Article 45 hereof, including so called "soft
costs" such as the architectural and engineering fees incurred by Tenant for the
preparation of the final plan and decorating and consulting fees provided such
soft costs do not exceed in the aggregate fifteen (15%) percent of the Work
Credit disbursed hereunder. In the event that the cost and expense, of Tenant's
Work shall exceed the amount of the Work Credit, Tenant shall be, entirely
responsible for such excess. In the event that the cost and expense, of Tenant's
Work shall be less than the mount of the Work Credit, then the amount of the
Work Credit shall- be reduced accordingly. The Work Credit shall be payable to
Tenant upon written requisition in installments as Tenant's Work progresses, but
in no event more frequently than monthly. Prior to the payment -of any such
installment, (except in the, case of clause (1) the first such installment)
Tenant shall deliver to Landlord a written requisition for disbursement which
shall be accompanied by (1) proof of payment of the invoices for the Tenant's
Work as, to which Landlord made the previous disbursement, (2) invoices for the
Tenant's Work performed since the last disbursement and a certificate signed by
Tenant's architect certifying that the Tenant's Work represented by the
aforesaid invoices has been satisfactorily completed in accordance with the
final plan, (3) partial lien waivers by contractors, subcontractors and all
materialmen for all such work if then available and for work covered by the
prior disbursement, and (4) with respect to the final disbursement of the Work
Credit, all Building Department sign-offs, inspection certificates and any
permits required to be issued by any governmental entities having jurisdiction
thereover with respect to all of Tenant's Work. Within fifteen (15) business
days after final completion of Tenant's work, Tenant shall submit to Landlord
(i) a general release or final lion waivers from all contractors and
subcontractors performing Tenant's Work acknowledging payment for Tenant's Work
and releasing Tenant from all liability or payment for any Tenant's Work, or a
payment bond of a surety company licensed to do business in the State of Now
York for one and one-half times the full contract price of such Tenant's Work
not covered by such general releases or final lien waivers, and (ii) a
certificate signed by Tenant's architect certifying that Tenant's Work has been
completed in accordance with-tho final plan.
(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 and shall have the right to withhold all or any
portion of the Work Credit as shall equal the cost of correcting any portions of
Tenant's Work which shall not have been performed in a good and workmanlike
manner; provided, however, that Landlord shall incur no liability, 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 willful misconduct.
ARTICLE 47
EXISTING LEASE
47.01. Tenant and Landlord are currently parties to a lease dated
September 20, 1985 (hereinafter the "Existing Lease") with respect to the
portion of the demised premises located on the fifth (5th) floor which shall
terminate on the Commencement Date of this Lease;
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provided, however, that any obligation of Tenant for the payment of rent or
additional rent or the performance, of any obligation under such Existing Lease
which accrues prior to the Commencement Date of this Lease shall constitute an
obligation under this Lease the non-payment or non-performance, for which
Landlord shall have all of the remedies provided herein.
IN WITNESS WHEREOF, Landlord and Tenant have respectively executed
this Lease as of the day and year first above written.
ATTEST: THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, Landlord
/s/ By: /s/
- ----------------------- ----------------------------
ATTEST: INTEREP NATIONAL RADIO SALES,
INC., Tenant
/s/ By: /s/
- ------------------------ ----------------------------
Tenant's Federal Tax Identification Number is 13-Z885151.
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 20th of May, 1993, before me personally came Terry McHugh, to
me known who, being by me duly sworn, did depose and say that he resides at 25
Battery Place, Backing Ridge, NJ, that he is the Vice President of THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation, the
corporation described 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.
/s/ Florence A. Ires
-----------------------------
Notary Public
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 10th day of May, 1993, before me personally came Patrick M.
Healy, to me known, being duly sworn by me, did depose and say that he resides
at 17 Albert Road, Allendale, NJ 07101, that he is the EVP and CEO of INTEREP
NATIONAL RADIO SALES, INC., a New York corporation, the corporation mentioned
in, and which executed the foregoing instrument and that he signed his name
thereto by order of the Board of Directors of said corporation.
/s/ Carrolyn Sarr
--------------------------------
Notary Public
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EXHIBIT 10.7
AGREEMENT
AGREEMENT, dated as of June 29, 1998, between INTEREP NATIONAL RADIO
SALES, INC., a New York corporation ("Interep"), and RALPH C. GUILD ("Guild").
W I T N E S S E T H:
-------------------
WHEREAS, Interep owns 100 shares (the "Shares") of the Common Stock of
Corporate Family Network, Inc. ("CFN"), which is all of the outstanding captial
stock of CFN, and Interep wishes to dispose of the Shares and Guild is willing
to purchase the Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the parties agree as follows:
1. PURCHASE AND SALE. On the date hereof, Guild shall purchase all
of the Shares from Interep for a purchase price of $200,000. Payment is being
made by Guild's delivery to Interep on the date hereof of (a) a check in the
amount of $50,000 and (b) a promissory note in the principal amount of $150,000,
payable in three annual installments of $50,000 each, and bearing interest at a
fluctuating rate equal to the prime rate of BancBoston, N.A. as in effect from
time to time, plus 1%. Concurrently, Interep is delivering to Guild of a stock
certificate for the Shares, accompanied by a duly executed stock power in blank.
2. REPRESENTATIONS AND WARRANTIES. Interep represents and warrants
to Guild that (i) it is the sole owner of all of the Shares and has the
unrestricted right to transfer them to Guild and (ii) it shall transfer all of
the Shares to Guild free and clear of all claims, liens, security interests,
charges, encumbrances and restrictions of any kind, except any imposed under any
applicable securities laws.
3. MISCELLANEOUS. This Agreement sets forth the entire
understanding of the parties with respect to its subject matter, merges and
supersedes all prior understandings, and may not be waived or modified, in whole
or in part, except by a writing signed by each of the parties. This Agreement
shall be binding on, enforceable against and inure to the benefit of the parties
and their respective successors and assigns, and nothing herein is intended to
confer any right, remedy or benefit upon any other person. This Agreement shall
in all respects be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and fully to be performed in
such state, without giving effect to conflicts of law principles. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
INTEREP NATIONAL RADIO SALES, INC. /s/ Ralph C. Guild
-------------------------------------
RALPH C. GUILD
By /s/ William J. McEntee, Jr.
------------------------------------------------------
William J. McEntee, Jr., Vice President
<PAGE>
EXHIBIT 10.8
PROMISSORY NOTE
$150,000.00 June 29, 1998
FOR VALUE RECEIVED, RALPH C. GUILD ("Maker") unconditionally promises
to pay to the order of INTEREP NATIONAL RADIO SALES, INC. ("Payee") the
principal amount of ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000), in three
equal annual installments of FIFTY THOUSAND DOLLARS ($50,000) each, payable on
the anniversary date of this Note in 1999, 2000 and 2001.
Maker also promises to pay to Payee interest on the outstanding
principal of this Note at a fluctuating rate per annum equal to the prime
commercial lending rate announced by BancBoston, N.A., from time to time, plus
1%, computed on the basis of a 360-day year for the actual number of days
elapsed. All accrued and unpaid interest on this Note shall be payable in
arrears with each payment of principal hereunder. Interest on this Note shall
be charged from the date hereof until the date on which this Note is paid in
full.
If Maker fails to pay in full any installment of principal of, or
interest on, this Note or any other amount payable hereunder when due (whether
at stated maturity, by acceleration or otherwise), Maker shall thereafter pay
interest on the principal amount of this Note at a rate equal to the lower of
12% per annum or the highest rate then permissible under applicable law, unless
and until such default is fully cured.
Maker shall make all payments of the principal of, and interest on,
this Note in immediately available funds and in lawful currency of the United
States of America.
All payments under this Note shall be made to Payee or any holder
without set-off, counterclaim or deduction of any kind, at Payee's address at
100 Park Avenue, New York, New York 10022, Attention: William J. McEntee, Jr.,
or any other address as Payee may designate in writing to Maker.
This Note may be prepaid, in whole or in part, without penalty or
premium, at any time at the election of Maker; provided, however, that accrued
-------- -------
interest on the amount prepaid is paid to the date of prepayment. Partial
principal prepayments shall be applied to the then last maturing installments of
the principal of this Note.
If an Event of Default (as defined below) occurs and is continuing,
Payee may, at its option, by notice in writing to Maker, declare this Note to
be, and the principal of this Note shall thereupon be, forthwith due and
payable, together with all interest then accrued thereon; provided, however,
-------- -------
that if the Event of Default described in clauses (b) or (c) below occurs, this
Note shall automatically, without notice, declaration or other further action by
Payee, become forthwith due and payable in full as of the date of such Event of
Default.
<PAGE>
An Event of Default shall exist on the occurrence of any of the
following:
(a) Maker defaults in the payment of any portion of the principal or
interest of this Note when due and such default is not cured within 15 days
after such date;
(b) if there is an entry of a decree or order for relief by a court
having jurisdiction in the premises (i) in respect of Maker in any involuntary
case under the federal bankruptcy laws or any other applicable federal or state
bankruptcy, insolvency or other similar law, as now or hereafter in effect, or
(ii) appointing a receiver, liquidator, assignee, trustee, sequestrator (or
similar official) of or of any substantial part of the property of Maker, and
the continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or
(c) if there is (i) the commencement by Maker of a voluntary case
under the federal bankruptcy laws or any other applicable federal or state
bankruptcy, insolvency or other similar law, as now or hereafter in effect, (ii)
the consent of Maker to the entry of any order for relief in an involuntary case
under any such law, (iii) the consent of Maker to the appointment of, or taking
possession by, a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of Maker or of any substantial part of the property of Maker,
(iv) the making by Maker of a general assignment for the benefit of creditors or
(v) the admission by Maker in writing of its inability generally to pay its
debts as they become due.
This Note is being executed in connection with the purchase on the
date hereof by Maker from Payee of 100 shares of the Common Stock of Corporate
Family Network, Inc. (the "Shares") and is being made by Maker as payment of the
exercise price of such options. In order to secure the full and timely payment
of this Note, Maker pledges, assigns, hypothecates and trans fers the Shares to
Payee, and grants to Payee a first lien on, and security interest in, the Shares
and in all dividends, distributions and other proceeds thereof, solely as
collateral security for the full and timely payment by Maker of the principal
of, interest on, and any other obligations for payment under, this Note.
Maker agrees to pay, and hold Payee harmless against, any liability
for the payment of any costs and expenses, including, without limitation,
reasonable attorneys' fees and dis bursements, arising in connection with the
enforcement or collection of this Note by Payee or any holder.
No provision of this Note shall be construed or shall operate so as to
require Maker to pay interest in an amount or at a rate greater than the maximum
allowed from time to time under applicable law. Should any payment of interest
or other charges by Maker hereunder exceed the maximum rate of interest then
permitted under applicable law, the amount of the excess interest shall be
waived by Payee and shall be automatically credited against and in reduction of
the principal balance of this Note.
Maker waives diligence, demand, presentment, protest and all other
demands and notices of any kind, consents to any renewals, extensions, and
partial payments of this Note or the
2
<PAGE>
indebtedness for which it is given without notice to it and agrees that no such
renewal, extension or partial payment shall discharge Maker from liability
hereon in whole or in part (except to the extent of such partial payments).
This Note may not be amended or modified except in a writing signed by
Payee and Maker. If any provision of this Note is held to be invalid or
unenforceable in any respect, the valid ity, legality and enforceability of the
remaining provisions of this Note shall be unaffected thereby.
No failure or delay on the part of Payee or any other holder of this
Note to exercise any right under this Note shall operate as a waiver thereof,
nor shall any single or partial exercise of any right preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in this Note are cumulative and not exclusive of any remedies provided
by law.
On receipt of evidence reasonably satisfactory to Maker of the loss,
theft, destruction or mutilation of this Note and, in the case of loss, theft or
destruction, on receipt of indemnity or security reasonably satisfactory to
Maker from Payee or, in the case of mutilation, on surrender of the mutilated
Note, Maker shall execute and deliver to Payee a new Note of like tenor in lieu
of this Note.
This Note shall be governed by and construed in accordance with the
laws of the State of New York. Maker irrevocably submits to the personal
jurisdiction and venue of any State or Federal court within New York County,
State of New York, in connection with any action or pro ceeding instituted to
enforce this Note.
IN WITNESS WHEREOF, Maker has caused this instrument to be duly
executed on its behalf on the date first set forth above.
/s/ Ralph C. Guild
-------------------------------------------
RALPH C. GUILD
3
<PAGE>
EXHIBIT 10.9
INTEREP NATIONAL RADIO SALES, INC.
COMPENSATION DEFERRAL PLAN
<PAGE>
Exhibit 10.9
INTEREP NATIONAL RADIO SALES, INC.
COMPENSATION DEFERRAL PLAN
1. Introduction. Interep hereby establishes the Plan, effective January
------------
1, 1994, for the purpose of providing deferred compensation to a select group of
executive employees in recognition of their contributions to Interep. This
document constitutes the written instrument under which the Plan is maintained.
2. Definitions.
-----------
2.1 "Account" means the separate account established and maintained by
-------
Interep to reflect the interest of each Participant in the Plan.
2.2 "Committee" means the committee appointed by Interep's board of
---------
directors.
2.3 "Common Stock" means common stock issued by Interep.
------------
2.4 "Compensation" means a Participant's salary and/or incentive
------------
compensation from Interep.
2.5 "ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
2.6 "Interep" means Interep National Radio Sales, Inc., a New York
-------
corporation.
2.7 "Participant" means each employee of Interep who is designated as such
-----------
by the Committee.
2.8 "Plan" means the Interep National Radio Sales, Inc. Compensation
----
Deferral Plan, as set forth in this instrument and as hereafter amended.
2.9 "Plan Year" means the calendar year.
---------
2.10 "Preferred Stock" means shares of Series B Cumulative Convertible
---------------
Preferred Stock issued by Interep.
3. Eligibility To Participate.
--------------------------
(a) Determination of Eligibility. The Committee will, from time to
----------------------------
time, designate Interep employees to be Participants. Each such employee must
be one of a select group of management and highly compensated employees of
Interep.
<PAGE>
(b) Termination Of Participation. A Participant's participation in
----------------------------
the Plan will terminate upon the Participant's payment to the Participant or his
or her beneficiary of all amounts credited to the Participant's Account. A
Participant's active Plan participation will cease and no allocations will be
made to his or her Account under Section 5 for any period that he or she is a
Interep employee but does not satisfy the criteria set forth in Section 3 (a).
4. Vesting. Each Participant will always be 100% vested in his or her
-------
Account.
5. Compensation Deferrals.
----------------------
(a) Participant Compensation Deferrals. With respect to the 1994 and
----------------------------------
1995 Plan Years, each Participant may elect to defer the receipt of Compensation
under the terms of deferral election forms prepared by Interep.
(b) Deferral Elections. Each Participant must complete a deferral
------------------
election form for each Plan Year for which he or she wishes to defer the receipt
of Compensation. To be effective, each such deferral form must satisfy the
following rules:
. The deferral form must be signed and dated by the Participant.
. The deferral form must be received by the Committee before the
beginning of the Plan Year for which the Compensation is payable.
However, in the case of an employee who becomes a Participant
after the beginning of a Plan Year, the deferral form must be
received by the Committee both (i) within 30 days of the
----
date on which the employee is notified of his or her eligibility
to participate, and (ii) before the date on which the
---
Compensation subject to the deferral election would otherwise be
paid.
. A Participant's election to defer Compensation is irrevocable and
cannot be modified or amended by the Participant.
6. Account Values. Each Participant's Account will be credited with an
--------------
initial balance of Preferred Stock (valued at $1,000 per share) equal in value
to the amount deferred by the Participant, plus 11.2875 shares of Common Stock
for each share of Preferred Stock initially credited to the Participant's
Account. Upon distribution of an Account, the value of the Account will equal
the value of the shares of Common Stock and Preferred Stock credited to the
Account as of the distribution date. The value of the shares of Common Stock
credited to a Participant's Account will be determined using its fair market
value under the terms of The Interep Radio Store Employee Stock Ownership Plan.
-2-
<PAGE>
7. Distribution of Accounts.
------------------------
(a) Timing And Form Of Distributions. Subject to Section 10, each
--------------------------------
Participant will receive distribution(s) of his or her Account an follows:
. To the extent that a Participant's Account holds shares of Common
Stock, the value of that portion of the Account will be
distributed in cash to the Participant upon his or her
termination of Interep employment, as set forth in the following
schedule:
Amount of Timing/Form of
Distribution Distribution
------------ -----------
Less than $10,000 Lump sum
$10,000 to $24,999 Quarterly payments
over one year
$25, 000 to $99, 999 Quarterly payments
over two years
$100,000 to $199,999 Quarterly payments
over three years
$200,000 to $299,999 Quarterly payments
over four years
$300,000 or more Quarterly payments
over five years
. To the extent that a Participant's Account holds shares of
Preferred Stock, the value of that portion of the Participant's
Account will be distributed in cash to the Participant at the
later of (i) his or her termination of Interep employment, or
--
(ii) when Interep redeems such Preferred Stock. The Preferred
Stock may be redeemed at the option of Interep or the trustee of
the trust described in Section 13 on the later to occur of (i)
-----
the redemption of all outstanding shares of Series A Preferred
Stock issued by Interep, or (ii) November 1, 2003.
(b) Beneficiary Designation. Each Participant must designate a
-----------------------
beneficiary to receive a distribution of his or her Account if the Participant
dies before it is distributed to him or her. A beneficiary designation must be
signed, dated and delivered to the Committee to become effective. Each new,
valid beneficiary designation will cancel and supercede all prior beneficiary
designations. In the absence of a valid or effective beneficiary designation,
the Participant's surviving spouse will be his or her beneficiary or, if there
is no surviving spouse, the Participant's estate will be his or her beneficiary.
If a married Participant designates anyone other than his or
-3-
<PAGE>
her spouse as his or her beneficiary, such designation will be void unless it is
signed and dated by the Participant's spouse.
8. Withholding. Interep will withhold from any Plan distribution all
-----------
required federal, state, local and other taxes and any other payroll deductions
required. Each Participant will agree as a condition of participation in the
Plan to pay such amounts, or to have withheld annually from his or her
Compensation such amounts, as are necessary to satisfy his or her tax and
payroll withholding obligations.
9. Administration. The Plan is administered and interpreted by Interep.
--------------
Interep has delegated to the Committee its delegable responsibilities under the
Plan. The Committee will maintain, or cause to be maintained, records that show
the balance of each Participant's Account, and will provide each Participant
with an annual statement that reflects his or her Account balance. The
Committee has the full and exclusive discretion to interpret and administer the
Plan. All actions, interpretations and decisions of the Committee are
conclusive and binding on all persons, and will be given the maximum possible
deference allowed by law.
10. Amendment Or Termination. Interep reserves the right, in its sole and
------------------------
unlimited discretion, to amend or terminate the Plan at any time, without prior
notice to any Participant. Interep may amend the Plan by action of any of its
officers authorized to do so by its board of directors. However, no such
amendment or termination will reduce the amounts credited to a Participant's
Account prior to such amendment or termination.
11. Claims Procedure. Any person who believes that he or she is entitled
----------------
to any payment under the Plan may submit a claim in writing to the Committee.
If the claim is denied (either in full or in part), the claimant will be
provided a written notice that explains the specific reasons for the denial and
refers to the provisions of the Plan on which the denial is based. The notice
will describe any additional information needed to support the claim. The
denial notice will be provided to the claimant within 90 days after the claim is
received. If special circumstances require an extension of time (up to 90
days), written notice of the extension will be given within the initial 90-day
period.
12. Appeal Procedure. If a claim is denied, the claimant (or his or her
----------------
authorized representative) may apply in writing to the Committee for a review of
the decision denying the claim. The claimant (or representative) then has the
right to review pertinent documents and to submit issues and comments in
writing. The Committee will provide written notice of its decision on review
within 60 days after it receives a review request. If additional time (up to 60
days) is needed to review the request, the claimant will be given written notice
of the reason for the delay.
13. Source Of Payments. Interep intends to establish a trust and to
------------------
contribute shares of Common Stock and Preferred Stock to this trust for the
benefit of Participants. Under the terms of the trust instrument, the trust's
assets will be available to pay the claims of Interep's creditors in the event
of Interep's insolvency. All payments under the Plan will be paid in cash
-4-
<PAGE>
from either the general funds of Interep or from the trust. To the extent that
Interep or the trust makes payments under the Plan, the other entity will be
absolved of its responsibility for such payments. Any right of any person to
receive any payment under the Plan is no greater than the right of any other
unsecured creditor of Interep.
14. Inalienability. A Participant's rights to benefits under the Plan are
--------------
not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or the Participant's beneficiary.
15. Applicable Law. The provisions of the Plan will be construed,
--------------
administered and enforced in accordance with ERISA and, to the extent
applicable, the laws of the State of New York.
16. Severability. If any provision of the Plan is held invalid or
------------
unenforceable, its invalidity or unenforceability will not affect any other
provision of the Plan, and the Plan will be construed and enforced an if such
provision had not been included.
17. No Employment Contract. No Interep employee has any right to be
----------------------
retained in the employ of Interep by virtue of his or her status as a
Participant.
18. Status Of Plan As ERISA "Top Hat" Plan. The Plan is intended to be an
--------------------------------------
unfunded plan maintained primarily for the purpose of providing deferred
compensation for a select group of management and highly compensated employees
and will be administered and construed to effectuate this intent. Accordingly,
the Plan is subject to Title I of ERISA, but is exempt from Parts 2, 3 and 4 of
Title I (B) of ERISA.
Execution
- ---------
IN WITNESS WHEREOF, Interep National Radio Sales, Inc., by its duly
authorized officer, has executed the Plan on the date indicated below.
INTEREP NATIONAL RADIO SALES, INC.
By/s/ Debra Schwartz
------------------
Dated August 22, 1994
--------------------
-5-
<PAGE>
EXHIBIT 10.10
TRUST AGREEMENT
UNDER THE
INTEREP NATIONAL RADIO SALES, INC.
COMPENSATION DEFERRAL PLAN
<PAGE>
TRUST AGREEMENT
UNDER THE
INTEREP NATIONAL RADIO SALES, INC.
COMPENSATION DEFERRAL PLAN
THIS AGREEMENT is entered into as of the date or dates set forth below, by
and between INTEREP NATIONAL RADIO SALES, INC. ("Interep") and RALPH C. GUILD
and HENRY LAWSON (the "Trustees");
WHEREAS, Interep has adopted the Interep National Radio Sales, Inc.
Compensation Deferral Plan (the "Plan");
WHEREAS, Interep has incurred or expects to incur liability under the terms
of the Plan with respect to the individuals participating in the Plan;
WHEREAS, Interep wishes to establish a trust (the "Trust") and to
contribute to the Trust assets that shall be held therein, subject to the claims
of Interep's creditors in the event of Interep's Insolvency, as herein defined,
until paid to Plan participants and their beneficiaries in such manner and at
such times as specified in the Plan;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded Plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
WHEREAS, it is the intention of Interep to make contributions to the Trust
to provide itself with a source of funds to assist it in the meeting of its
liabilities under the Plan;
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:
Section 1. ESTABLISHMENT OF TRUST
(a) Interep hereby deposits with the Trustees in trust $100.00, which
shall become the principal of the Trust to be held, administered and disposed of
by the Trustees as provided in this Trust Agreement.
(b) The Trust shall be irrevocable.
<PAGE>
(c) The Trust is intended to be a grantor trust, of which Interep is the
grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Interep, and shall be used exclusively
for the uses and purposes of Plan participants and general creditors as herein
set forth. Plan participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of the Trust. Any
rights created under the Plan and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against Interep.
Any assets held by the Trust will be subject to the claims of Interep's general
creditors under federal and state law in the event of insolvency, as defined in
Section 3(a) herein.
(e) Interep, in its sole discretion, may at any time, or from time to
time, make additional deposits of cash or other property in Trust with the
Trustees to augment the principal to be held, administered and disposed of by
the Trustees as provided in this Trust Agreement. Neither the Trustees nor any
Plan participant or beneficiary shall have any right to compel such additional
deposits.
Section 2. PAYMENTS TO PLAN PARTICIPANTS AND THE BENEFICIARIES
(a) Interep shall deliver to the Trustees a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to the Trustees for determining the amounts so payable,
the form in which such amount is to be paid (as provided for or available under
the Plan), and the time of commencement for payment of such amounts. Except as
otherwise provided herein, the Trustees shall make payments to the Plan
participants and their beneficiaries in accordance with such Payment Schedule.
The Trustees shall not be liable for payment of any tax assessed under any
existing or future law against the assets of the Trust fund. With respect to any
benefit payment which is subject to federal, state or local income tax
withholding, as directed in writing by Interep, the Trustees shall distribute
assets of the Trust fund to Interep for its submission to the applicable taxing
authority. With respect to any federal, state or local income tax on the
earnings on the assets of the Trust fund, such tax shall be paid by Interep.
(b) The entitlement of a Plan participant or his or her beneficiaries to
benefits under the Plan shall he determined by Interep or such party as it shall
designate under the Plan, and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plan.
(c) Interep may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the terms of the
Plan. Interep shall notify the Trustees of its decision to make payment of
benefits directly prior to the time amounts are payable to participants or their
beneficiaries. In addition, if the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with the
terms of the Plan,
2
<PAGE>
Interep shall make the balance of each such payment as it falls due. The
Trustees shall notify Interep where principal and earnings are not sufficient.
The Trustees shall have no obligation to determine the identity of persons
entitled to benefits or their mailing addresses.
Section 3. TRUST RESPONSIBILITY REGARD PAYMENTS TO TRUST BENEFICIARY
WHEN INTEREP IS INSOLVENT
(a) The Trustees shall cease payment of benefits to Plan participants
and their beneficiaries if Interep is Insolvent. Interep shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Interep is unable to pay
its debts as they become due, or (ii) Interep is subject to a pending proceeding
as a debtor under the United States Bankruptcy Code. For purposes of this
Section 3 (other than Section 3(b)(1)), the term "Interep" shall include Interep
and its affiliates.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Interep under federal and state law as set forth
below.
(1) The Board of Directors and the President of Interep shall have
the duty to inform the Trustees in writing of Interep's Insolvency. If a
person claiming to be a creditor of Interep alleges in writing to the
Trustees that Interep has become Insolvent, the Trustees shall determine
whether Interep is Insolvent and, pending such determination, the Trustees
shall discontinue payment of benefits to Plan participants or their
beneficiaries.
(2) Unless the Trustees have actual knowledge of Interep's
Insolvency, or have received notice from Interep or a person claiming to be
a creditor alleging that Interep is Insolvent, the Trustees shall have no
duty to inquire whether Interep is Insolvent. The Trustees may in all
events rely on such evidence concerning Interep's solvency as may be
furnished to the Trustees and that provides the Trustees with a reasonable
basis for making a determination concerning Interep's solvency.
(3) If at any time the Trustees have determined that Interep is
Insolvent, the Trustees shall discontinue payments to Plan participants or
their beneficiaries and shall hold the assets of the Trust for the benefit
of Interep's general creditors. Nothing in this Trust Agreement shall in
any way diminish any rights of Plan participants or their beneficiaries to
pursue their rights as general creditors of Interep with respect to
benefits due under the Plan or otherwise.
(4) The Trustees shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of this
Trust Agreement only after the Trustees have determined that Interep is not
insolvent (or is no longer Insolvent).
3
<PAGE>
(c) Provided that there are sufficient assets, if the Trustees
discontinue the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan for the period
of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by Interep in lieu of the payments provided
for hereunder during any such period of discontinuance.
Section 4. PAYMENTS TO INTEREP
Except as provided in Sections 1(b) and 3 hereof, after the Trust has
become irrevocable, Interep shall have no right or power to direct the Trustees
to return to Interep or to divert to others any of the Trust assets before all
payment of benefits have been made to Plan participants and their beneficiaries
pursuant to the terms of the Plan.
Section 5. INVESTMENT AUTHORITY
(a) The Trustees may invest in securities (including stock or rights
to acquire stock) or obligations issued by Interep. The Trustees shall invest
Trust assets as directed by Interep. All other rights associated with assets of
the Trust shall be exercised by the Trustees or the person designated by the
Trustees, and shall in no event be exercisable by or rest with Plan
participants.
(b) Interep shall have the right at any time, and from time to time
in its sole discretion, to substitute assets of equal fair market value for any
asset held by the Trust. This right is exercisable by Interep, in a nonfiduciary
capacity without the approval or consent of any person in a fiduciary capacity.
(c) Notwithstanding any provision herein to the contrary, the
Trustees are hereby expressly authorized to invest in any common, collective or
pooled fund maintained by any bank or trust company exclusively for the
commingling and collective investment of assets of grantor trusts, and the
documents establishing or amending these trust funds are hereby incorporated by
reference into this Trust Agreement. The Trustees may deposit or invest all or
any part of the assets of the Trust fund in savings accounts or certificates of
deposit or other deposits which bear a reasonable interest rate in a bank. The
Trustees may cause title to property of the Trust to be issued, held or
registered in the individual names of the Trustees, or in the name of their
nominee(s) or agents, or in such form that title will pass by delivery and may
employ such agents, including custodians and counsel, as may be reasonably
necessary and to pay them reasonable compensation.
4
<PAGE>
Section 6. DISPOSITION OF INCOME
During the term of this Trust, all income received by the Trust, net of
certain expenses and taxes as designated by Interep, shall be accumulated and
reinvested.
Section 7. ACCOUNTING BY TRUSTEES
The Trustees shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
Interep and the Trustees. Within 60 days following the close of each calendar
year and within 60 days after the removal or resignation of one or more of the
Trustees, the Trustees shall deliver to Interep a written account of his
administration of the Trust during such year or during the period from the close
of the last preceding year to the date of such removal or resignation, setting
forth all investments, receipts, disbursements and other transactions effected
by it, including a description of all securities and investments purchased and
sold with the cost or net proceeds of such purchases or sales (accrued interest
paid or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be.
Section 8. RESPONSIBILITY OF TRUSTEES
(a) The Trustees shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; provided, however, that the
Trustees shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Interep which is contemplated by, and
in conformity with, the terms of the Plan or this Trust and is given in writing
by Interep. In the event of a dispute between Interep and a party with respect
co the Plan or this Trust, the Trustees may apply to a court of competent
jurisdiction to resolve the dispute.
(b) If the Trustees undertake or defend any litigation arising in
connection with this Trust, Interep agrees to indemnify the Trustees against the
Trustees' costs, expenses and liabil ities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments. If Interep does not pay such costs, expenses and liabilities in
a reasonably timely manner, the Trustees may obtain payment from the Trust.
(c) The Trustees may consult with legal counsel (who may also be
counsel for Interep) with respect to any of their duties or obligations
hereunder.
(d) With the prior consent of Interep, the Trustees may hire agents,
accountants, actuaries, investment advisors, financial consultants or other
professionals to assist them in per forming any of their duties or obligations
hereunder. Any expenses incurred therewith shall be considered an expense of the
administration of the Trust.
5
<PAGE>
(e) The Trustees shall have, without exclusion, all powers conferred
on trustees by applicable law, unless expressly provided otherwise herein.
(f) Notwithstanding any powers granted to the Trustees pursuant to
this Trust Agreement or to applicable law, the Trustees shall not have any power
that could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the Procedure
and Administrative Regulations promulgated pursuant to the Internal Revenue
Code.
Section 9. COMPENSATION AND EXPENSES OF THE TRUSTEES
Interep shall pay all administrative and Trustees' fees and expenses. If
not so paid, the fees and expenses shall be paid from the Trust.
Section 10. RESIGNATION AND REMOVAL OF THE TRUSTEES
(a) A Trustee may resign at any time by written notice to Interep,
which shall be effective 60 days after receipt of such notice unless Interep and
the Trustee agree otherwise.
(b) A Trustee may be removed by Interep on 60 days notice or upon
shorter notice accepted by the Trustee.
(c) Upon resignation or removal of a Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee(s). The transfer shall be completed within 60 days after receipt of
notice of resignation, removal or transfer, unless Interep extends the time
limit.
(d) If a Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraph (a) or (b) of this Section. If both
Trustees resign and no such appointment has been made, a Trustee may apply to a
court of competent jurisdiction for appointment of a successor or for
instructions. All expenses of a Trustee in connection with the proceeding shall
be allowed as administrative expenses of the Trust.
Section 11. APPOINTMENT OF A SUCCESSOR TRUSTEE
If either or both of the Trustees resigns or is removed in accordance with
Section 10(a) or (b) hereof, Interep may appoint any third party, such as an
individual, a bank trust department or other party that may be granted corporate
trustee powers under state law, as a successor to replace either or both
Trustees upon resignation or removal. The appointment shall be effective when
accepted in writing by the new Trustee or Trustees, who shall have all of the
rights and powers of the former Trustee(s) including ownership rights in the
Trust assets. The former Trustee(s) shall execute any instrument necessary or
reasonably requested by Interep or the successor Trustee(s) to evidence the
transfer.
6
<PAGE>
Section 12. AMENDMENT OR TERMINATION
(a) This Trust Agreement may be amended by a written instrument
executed by the Trustees and Interep. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan or shall make the Trust
revocable after it has become irrevocable in accordance with Section 1(b)
hereof.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan unless sooner revoked in accordance with Section 1(b)
hereof. Upon termination of the Trust any assets remaining in the Trust shall be
returned to Interep.
(c) Upon written approval of participants or beneficiaries entitled
to payment of benefits pursuant to the terms of the Plan, Interep may terminate
this Trust prior to the time all benefit payments under the Plan have been made.
All assets in the Trust at termination shall be returned to Interep.
Section 13. MISCELLANEOUS
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries
under this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the state of New York.
(d) This Trust Agreement and the Plan are part of and constitute a
single, integrated employee benefit plan and trust and shall be construed
together. If there is a conflict between the provisions of the Plan and this
Trust Agreement, the provisions of this Trust Agreement shall control with
respect to all rights, duties, responsibilities, obligations, power and
authorities to the Trustees, and the Trustees shall have no duty to inquire
into, nor shall they have any obligation or liability with respect to, the
provisions of the Plan.
(e) All releases and indemnities provided herein shall survive
termination of this agreement. Interep shall indemnify and hold the Trustees and
Trust fund harmless from and against any loss or liability, including reasonable
attorneys' fees, that arises in connection with (i) any acts taken in accordance
with written direction (or failure to act, in the absence of such direction)
from Interep or any person designated to act on Interep's behalf, or (ii) the
Trustees' good faith execution of their duties under this Trust Agreement,
except in the event of the Trustees' own gross negligence or willful misconduct.
7
<PAGE>
Section 14. EFFECTIVE DATE AND EXECUTION
The effective date of this Trust Agreement shall be August 22, 1994.
<TABLE>
<CAPTION>
<S> <C>
INTEREP NATIONAL RADIO SALES, RALPH C. GUILD
INC.
By:/s/ Debra Schwartz /s/ Ralph C. Guild
---------------------------- ---------------------------------
Its Vice President
Date August 22, 1994 Date August 22, 1994
---------------------------- -----------------------------
HENRY LAWSON
/s/ Henry Lawson
---------------------------------
Date August 22, 1994
-----------------------------
</TABLE>
8
<PAGE>
EXHIBIT 10.11
SERVICES AGREEMENT
AGREEMENT, dated as of June 1, 1997, between INTEREP NATIONAL RADIO
SALES, INC., a New York corporation ("Interep"), and MEDIA FINANCIAL SERVICES,
INC., a Florida corporation ("Media").
W I T N E S S E T H :
--------------------
WHEREAS, Interep wishes to retain Media to provide certain financial
and accounting services for Interep and its subsidiaries, and Media is willing
to provide such services;
NOW, THEREFORE, the parties agree as follows:
1. TERM. The term of this Agreement (the "Term") shall commence on
the date hereof and, unless earlier terminated by either party pursuant to the
provisions of Section 8, shall continue for a period of five years. The parties
may renew this Agreement for successive additional five-year periods by, in each
case, entering into a written extension of this Agreement prior to the end of
the then current period.
2. SERVICES. During the Term of this Agreement, Media shall perform
all corporate, accounting and financial functions for Interep, each of its
subsidiaries and, as requested by Interep, departments or business segments of
Interep, as were formerly provided by Interep's internal finance department,
including without limitation, the following:
(a) the preparation of monthly, quarterly and annual financial
statements and projections and operating reports as required by management;
(b) the preparation of annual budgets;
(c) the preparation and maintenance of all accounts payable, accounts
receivable and fixed asset ledgers and all other customary books and records of
account;
(d) the preparation and filing of all required federal, state and
local tax returns for Interep, each of its subsidiaries and Interep's Employee
Stock Ownership Plan (the "ESOP"), although Media may utilize the services of
Interep's independent accounting firm or other experts for such purpose;
(e) the preparation and filing of any other reports, applications and
other documents required by the federal and any applicable state and local
governments with respect to Interep, each of its subsidiaries and the ESOP;
(f) the maintenance of appropriate internal accounting controls;
<PAGE>
(g) all accounts payable functions;
(h) all billing, accounts receivable and collections functions;
(i) all dealings with independent accountants and auditors, including
the coordination of all audits;
(j) the maintenance of all banking accounts and all relationships
between Interep and commercial lenders, investment bankers and other financial
institutions in the ordinary course and in connection with any financings;
(k) the investment of cash balances;
(l) all unwired network accounting and dealings with radio stations
and agency clients;
(m) such similar, additional services as the parties may agree from
time to time.
Media shall have no responsibility for any payroll, personnel or benefits
functions, all of which shall be performed by Interep.
3. SERVICES OF MCENTEE. During the Term, William J. McEntee, Jr.,
President of Media, shall be in charge of all services rendered by Media to
Interep. Further, as requested by Interep, Media shall cause Mr. McEntee to
serve as Vice President and Chief Financial Officer of Interep and in such other
offices as Interep and Media shall agree. In such capacity, Mr. McEntee shall
participate on behalf of Interep with respect to such corporate mergers,
acquisitions, dispositions, mergers and similar transactions as are requested by
Interep.
4. FEES. In consideration of the above services to be provided by
Media to Interep pursuant to Sections 2 and 3, Interep shall pay annual fees to
Media as follows:
<TABLE>
<CAPTION>
Contract Year Annual Fee
- ------------- ----------
<S> <C>
1 $2,580,000
2 $2,580,000
3 $2,709,000
4 $2,844,450
5 $2,986,675
</TABLE>
Schedule A illustrates how the initial annual fee was calculated. If the Term is
extended beyond five years, Media's fees shall be in such amounts as the parties
shall agree. All annual fees shall be payable, in advance, in 24 equal semi-
monthly installments (initially $107,500 per installment) on the first and 16th
days of each month. Media shall render invoices for such monthly fees to Interep
at least five days prior to the scheduled payment dates. Media shall be
responsible for the payment
2
<PAGE>
of any sales, use or similar taxes, if any, that may be payable with respect to
the services it provides pursuant to this Agreement.
Further, if pursuant to clause (m) of Section 2, Media provides
additional services to Interep, or Interep forms or acquires an additional
subsidiary, business segment or business, with the result that Media must expand
its personnel, office space or facilities, the parties shall in good faith
negotiate and agree on an appropriate increase in Media's fee to take the
reasonable, additional costs of such expansion into account.
If Media finds, initiates or otherwise arranges for financing for
Interep, or is able to reduce the charges of any firm which provides or arranges
for such financing, Interep shall pay Media a fee for its financing activities,
or an incentive for its cost savings, as the case may be, and as the parties
shall agree.
5. EXPENSES. The fees contemplated under Section 4 are intended to
compensate Media for all expenses that it may incur in the performance of its
services under this Agreement. A non-exclusive summary of such expenses,
including all auditing and tax preparation fees payable in connection with the
annual audit and tax returns of Interep and its subsidiaries (but not the ESOP),
is set forth in Schedule A. Accordingly, Media shall not be entitled to seek
any further amounts from Interep on account of expenses or otherwise, except as
provided in the next sentence. If Media anticipates that it shall be necessary
to incur any extraordinary expenses not listed in Schedule A in connection with
the performance of its services, it shall obtain Interep's prior written consent
therefor, in which case such expenses shall be paid by Interep. Media shall not
incur any such expenses without Interep's written consent.
It is contemplated that Mr. McEntee shall be required to be in New
York, New York, from time to time in order to carry out his duties. Media shall
be responsible for all travel and lodging costs incurred for up to 24 trips to
New York each year by Mr. McEntee in connection with Interep business. Interep
shall pay the cost of any additional such trips. If Mr. McEntee is required to
travel to visit Interep client stations or agencies, Interep shall reimburse
Media for all related travel and lodging costs.
6. CONFIDENTIALITY. During and after the Term, Media shall, and
shall cause its employees and agents to, keep secret and not divulge to any
party not employed or retained by Interep any information or documents regarding
Interep's business and affairs, whether or not marked as confidential. This
obligation shall not apply to any information or document if it is or becomes
public knowledge as a result of causes other than the acts or omissions of Media
or its employees.
7. NON-COMPETITION. During the Term and for one year following the
end of the Term, Media shall not provide any financial, accounting or other
services to Katz Media Corporation or any of its subsidiaries, affiliates,
successors or assigns.
3
<PAGE>
8. TERMINATION. Either party may terminate this Agreement if the
other party breaches any provision of this Agreement and such breach is not
cured within 30 days after the first party notifies the breaching party of such
breach. Further, Interep shall have the right to terminate this Agreement in
the event of Mr. McEntee's death, permanent disability or incompetence on not
less than 90 days' prior written notice.
9. INDEMNIFICATION. Mr. McEntee and Interep are parties to an
Indemnification Agreement, dated as of March 3, 1997. Interep agrees to provide
the same indemnification rights to Media as it provides to Mr. McEntee under
such Agreement, on and subject to the terms and conditions set forth in such
agreement.
10. INDEPENDENT CONTRACTOR. For all purposes, Media shall be an
independent contractor, and not an employee, partner or joint venturer, of
Interep. Media may employ or retain any person it believes appropriate to
assist it in carrying out its obligations under this Agreement, and no such
person shall be deemed to be an employee of Interep. Media shall be solely
responsible for (i) the compensation and benefits of all of its employees,
including workers' compensation benefits, and (ii) withholding and payment of
all taxes and contributions which an employer is required to withhold or pay in
respect of its employees.
11. ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties with respect to its subject matter, merges and
supersedes any prior or contemporaneous understandings with respect to its
subject matter, and shall not be modified or terminated except by a written
instrument executed by both of the parties. Failure of a party to enforce one
or more of the provisions of this Agreement or to require at any time
performance of any of the obligations hereunder shall not be construed to be a
waiver of such provisions by such party nor to in any way affect the validity of
this Agreement or such party's right thereafter to enforce any provision of this
Agreement, nor to preclude such party from taking any other action at any time
which it would legally be entitled to take.
12. COMMUNICATIONS. All notices, consents and other communications
given under this Agreement shall be in writing and shall be deemed to have been
duly given (a) when delivered by hand or by Federal Express or a similar
overnight courier to, (b) seven days after being deposited in any United States
post office enclosed in an airmail postage prepaid registered or cer tified
envelope addressed to, or (c) when successfully transmitted by facsimile (with a
confirming copy of such communication to be sent as provided in (a) or (b)
above) to, the party for whom intended, at the address or facsimile number for
such party set forth below, or to such other address or facsimile number as may
be furnished by such party by notice in the manner provided herein; provided,
--------
however, that any notice of change of address or facsimile number shall be
- -------
effective only on receipt.
<TABLE>
<CAPTION>
If to Interep: If to Media:
<S> <C>
Interep National Radio Sales, Inc. Media Financial Services, Inc.
100 Park Avenue, 5th Floor 2090 Palm Beach Lakes Boulevard, Suite 300
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
New York, New York 10017 West Palm Beach, Florida 33409
Attention: Mr. Ralph C. Guild Attention: Mr. William J. McEntee, Jr.
Fax No.: (212) 309-9081 Fax No.: (561) 616-4019
</TABLE>
13. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of, be binding on and be enforceable by, the parties and their
respective permissible successors and assigns. Neither party shall have the
right to assign this Agreement, or any rights or obligations hereunder, without
the consent of the other, which consent may be withheld for any reason.
14. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York applicable to agreements made and fully to be performed in
such state, without giving effect to conflicts of law principles.
15. ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement shall be finally resolved by arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration Association. Any such
arbitration shall take place in New York, New York, before three arbitrators,
one of which shall be appointed by Interep, one by Media and the third by the
arbitrators so appointed; provided, however, that the parties may by mutual
-------- -------
agreement designate a single arbitrator. The parties further agree that (i) the
arbitrators shall be empowered to include arbitration costs and attorney fees in
the award to the prevailing party in such proceedings and (ii) the award in such
proceedings shall be final and binding on the parties. Judgment on the
arbitrators' award may be entered in any court having the requisite
jurisdiction. Each party irrevocably submits to the jurisdiction and venue of
the arbitration described above and to the jurisdiction and venue of the federal
and state courts sitting in New York County, New York, for the enforcement of
any judgment on the arbitrators' award, and waives any objection it may have
with respect to the jurisdiction of such arbitrations or courts or the
inconvenience of such forums or venues.
16. CONSTRUCTION; COUNTERPARTS. The headings contained in this
Agreement are for convenience only and shall in no way restrict or otherwise
affect the construction of the provisions hereof. References in this Agreement
to Sections and Schedules are to the sections and schedules of this Agreement.
This Agreement may be executed in multiple counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
INTEREP NATIONAL RADIO SALES, INC.
By /s/ Ralph C. Guild
-----------------------------------------------
Ralph C. Guild
Chairman of the Board
5
<PAGE>
MEDIA FINANCIAL SERVICES, INC.
By /s/ William J. McEntee, Jr.
-----------------------------------------------
William J. McEntee, Jr.
President
6
<PAGE>
EXHIBIT 10.12
AMENDMENT TO SERVICES AGREEMENT
AMENDMENT, dated as of July 1, 1997, to the Agreement, dated as of
June 1, 1997 (the "Agreement'"), between INTEREP NATIONAL RADIO SALES, INC., a
New York corporation ("Interep"), and MEDIA FINANCIAL SERVICES, INC., a Florida
corporation ("Media").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Interep and Media wish to amend the Agreement as set forth
below;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties agree as follows:
1. Inasmuch as Interep has determined to employ William J. McEntee,
Jr. directly as its Vice President and Chief Financial Officer at an annual
salary of $120,000, the table set forth in Section 4 of the Agreement is amended
to deduct such amount from the fees payable to Media and to read as follows:
<TABLE>
<CAPTION>
Contract Year Annual Fee
- ------------- ----------
<S> <C>
1 $2,460,000
2 $2,460,000
3 $2,589,000
4 $2,724,450
5 $2,866,675
</TABLE>
2. Except as provided above, the Agreement shall continue unchanged
and in full force and effect. This Amendment shall be given effect as of June
1, 1997.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
INTEREP NATIONAL RADIO SALES, INC. MEDIA FINANCIAL SERVICES, INC.
By /s/ Ralph C. Guild By /s/ William J. McEntee, Jr.
-------------------------------------- ------------------------------
Ralph C. Guild William J. McEntee, Jr.
Chairman of the Board President
<PAGE>
EXHIBIT 10.13
FOURTH AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
Fourth Amended and Restated Employment Agreement, dated as of June 1,
1995, between INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the
"Company"), and RALPH C. GUILD ("Guild").
W I T N E S S E T H:
-------------------
WHEREAS, the Company and Guild are parties to an Employment Agreement,
dated as of August 1, 1986, as amended and restated as of August 1, 1987,
January 1, 1989 and January 1, 1991 (as so amended and restated, the "Original
Agreement"); and
WHEREAS, the Company and Guild wish to amend and restate the Original
Agreement in order to extend the term of the Original Agreement and to make
certain other changes;
NOW, THEREFORE, in consideration of the mutual agreements set forth
below, the parties agree that the Original Agreement is amended and restated as
follows:
1. EMPLOYMENT.
(a) TERM. Subject to the terms and conditions of this Agreement, the
Company employs Guild, and Guild agrees to serve, as Chairman of the Board and
Chief Executive Officer of the Company for a term commencing on the date hereof
and ending May 31, 2000, unless extended as provided in the following sentence
(the "Term"). On June 1, 1998 and each following June 1 during the Term, the
Term shall automatically be extended for one additional year, unless the Company
or Guild notified the other on or before the immediately preceding May 1 that
the Term is not to be so extended. For example, (i) if no such notice is given
on May 1, 1998, the Term would automatically be extended by one year and would
end on May 31, 2001 or (ii) if such notice is given by the Company on May 1,
1998, the Term would end on May 31, 2000 and the Consulting Period (as defined
in Section 1(c)) would begin on the following day.
(b) DUTIES. Guild shall report directly to the Board of Directors of
the Company. The Company shall use its best efforts to cause Guild to be elected
a director of the Company at all times during the Term. Guild shall perform his
duties to the best of his ability and shall devote a reasonable portion of his
time, energies and skills to such duties, subject to the understanding that he
has various investments and participates in other business ventures and
activities which may, from time to time, require his attention, but which shall
not interfere with the performance of his duties to the Company. It is further
understood that such other investments, ventures and activities may include
radio stations that may compete in the same markets as radio stations which are
clients of the Company. Guild may perform his duties at the offices of the
Company or at such other locations as he reasonably deems appropriate.
<PAGE>
(c) CONSULTING. If the Company gives Guild notice pursuant to Section
1(a) that the Term of this Agreement is not to be extended, the Company shall
retain Guild as a consultant for a period of two years beginning on the day
after the last day of the Term (the "Consulting Period"). During the Consulting
Period, Guild shall provide the Company with such advice, assistance and
services regarding any aspect of the Company's business and affairs as the
Company and Guild shall from time to time agree. During the Consulting Period,
the Company shall pay Guild annual consulting fees in an amount equal to Guild's
base salary under Section 2(a) in effect at the end of the Term, the Company
shall provide him with the health, hospitalization and welfare benefits referred
to in Section 3 and the provisions of Section 4 (other than those respecting
vacations) shall apply. The Company shall pay such consulting fees to Guild in
equal semi-monthly installments or, if Guild requests the Company in writing at
any time, the Company shall pay to Guild an amount equal to the total consulting
fees payable during the Consulting Period (or then remaining balance thereof)
discounted at the discount rate (as defined in Section 7(b)) to present value as
of the date of such request. Any such accelerated payment shall not relieve
Guild of his obligation to perform the consulting services contemplated by this
Section 1(c).
2. COMPENSATION.
(a) BASE SALARY. During the Term, the Company shall pay Guild a
base salary of not less than $925,000 per year ("base salary"), payable in
equal semi-monthly installments; provided, however, that the Company and Guild
-------- -------
may from time to time agree on different payment schedules, which may involve
the payment of portions of such annual salary (not to exceed $175,000 at any one
time) in advance to assist Guild, for example, in making life insurance premium
payments. The foregoing shall not preclude Guild from receiving salary
increases or awards of bonuses, incentive or other types of additional
compensation (in addition to the bonus compensation described in Section 2(b))
which the Company in its sole discretion may wish to pay.
(b) INCENTIVE BONUS. In addition to his base salary, Guild shall be
entitled to receive a minimum incentive bonus ("incentive bonus") in respect of
each year during the Term, based on the Company's performance and calculated as
follows. If the Company achieves 1995 EBITDA in excess of its 1994 EBITDA,
Guild shall be entitled to a bonus in respect of fiscal 1995 equal to a
percentage of his 1995 base salary, which percentage shall be equal to two times
the percentage increase of 1995 EBITDA over 1994 EBITDA. Thereafter, for each
fiscal year of the Company for which EBITDA exceeds EBITDA for the prior year,
Guild shall similarly be entitled to an incentive bonus equal to a percentage of
his base salary for such year, which percentage shall be equal to two times the
percentage increase of EBITDA for such year over the higher of (i) EBITDA for
the prior year and (ii) the highest EBITDA for any prior year back to 1994. All
incentive bonus amounts payable hereunder shall be paid within 30 days following
the Company's determination thereof, which shall be not later than 30 days
following the delivery to the Company of audited financials for the year in
respect of which the determination is made. "EBITDA" means the Company's
operating income, plus depreciation, amortization and other non-cash items,
including non-cash rent and compensation expense, plus payments made pursuant to
this Section
-2-
<PAGE>
2(b), as derived based on the Company's audited financials for the fiscal year
in respect of which it is determined.
3. BENEFIT PLANS. Guild shall be entitled to participate in all
employee fringe benefit plans and policies that the Company may make available
to, or have in effect for, its senior executives from time to time, including,
without limitation, health, hospitalization and welfare benefits, pension,
profit-sharing and similar plans, stock option, incentive compensation, savings,
investment, retirement and supplemental benefit plans, in each case subject to
the eligibility and other provisions of any such plan or policy. Nothing in this
Section 3 shall require the Company to institute or make available to Guild any
particular benefit plan or policy.
4. EXPENSES; VACATIONS; FACILITIES. Guild shall be entitled to
incur on behalf of the Company reasonable and necessary expenses in connection
with the performance of his duties and in accordance with the customary practice
of the Company. The Company shall reimburse Guild for any such expenses paid by
him. Whenever Guild is required to travel in connection with his duties, he may
arrange for his wife to accompany him and for the Company to reimburse him for
the related cost. During each 12-month period during the Term, Guild shall be
entitled to paid vacation in accordance with his status and the policies of the
Company regarding paid vacation time for its senior executives. The Company
shall provide Guild with all reasonable facilities necessary for the performance
of his duties hereunder and suitable to his position.
5. TEMPORARY DISABILITY. If, during the Term, Guild becomes
disabled, through illness or otherwise, from performing his duties hereunder, he
shall be entitled to a leave of absence for up to six consecutive months. The
Company shall continue to pay Guild's compensation during any such leave of
absence. If such disability continues beyond such period, it shall be deemed to
be a permanent disability subject to the provisions of Sections 6(b) and 7(a).
6. RIGHTS OF TERMINATION.
(a) TERMINATION FOR CAUSE BY THE COMPANY. The Company shall have the
right to terminate Guild's employment forthwith for cause, limited to (i) an
action by Guild involving willful malfeasance or gross negligence or (ii)
Guild's incapacity to perform the duties called for under this Agreement by
reason of the abuse of alcohol or drugs.
(b) PERMANENT DISABILITY; DEATH. If Guild is disabled through illness
or other wise from performing his duties hereunder for a period in excess of six
consecutive months, so that such disability is deemed to be a permanent
disability under Section 5, the Company shall have the option, exercisable on
written notice to Guild and only so long as such disability continues, to
terminate his employment under this Agreement. Any such termination shall be
effective as of the end of the month in which such written notice is given to
Guild. If Guild dies, the Term shall end on the date of his death.
-3-
<PAGE>
(c) TERMINATION FOR CAUSE BY GUILD. Guild shall have the right,
exercisable within six months after the occurrence of any of the following
events, to terminate his employment under this Agreement on delivery of 30 days'
written notice thereof to the Company:
(i) if the Company violates this Agreement in any material
respect, and such violation is not cured within 15 days of Guild's written
notice thereof to the Company;
(ii) if Guild is not re-elected or re-appointed to the offices of
Chairman of the Board and Chief Executive Officer, other than by his own
choice, by reason of his permanent disability, or is removed from such
offices, other than for reasons justifying termination by the Company under
Section 6(a);
(iii) if Guild ceases to be a member of the Board of Directors of
the Company, other than by his own choice, by reason of his permanent
disability or for reasons justifying termination under Section 6(a); or
(iv) in the event of a change of control of the Board of
Directors of the Company as a result of (A) a contest for the control of
the Company, (B) the consolidation of the Company with, or merger of the
Company into, any other corporation, (C) the acquisition of the Company, of
a controlling interest in the Company or of all or substantially all of the
assets of the Company by another person, or (D) the cessation of the
corporate existence of the Company or failure to continue such existence in
full force and effect as a result of any circumstances.
7. EFFECTS OF TERMINATION.
(a) TERMINATION FOR PERMANENT DISABILITY. If Guild's employment
terminates under Section 6(b) on account of Guild's permanent disability, the
Company shall continue to pay (or cause to be paid) to Guild, for the remainder
of the Term (the "Remainder Term"), in equal semi-monthly installments, 75% of
his then current salary, less the aggregate amount of all income disability
benefits which he may receive or to which he may be entitled for such period by
reason of (i) any group health insurance plan which is intended to function as a
salary replacement plan, (ii) any applicable compulsory state disability law,
(iii) the Federal Social Security Act, (iv) any applicable workmen's
compensation law or similar law and (v) any disability plan to which the Company
or any of its affiliates has contributed or for which it has made payroll
deductions, other than those which reimburse for actual medical expenses.
(b) PAYMENT ON TERMINATION BY REASON OF DEATH OR BY GUILD FOR CAUSE.
If Guild dies during the Term or the Remainder Term, or if Guild elects to
terminate his employment hereunder pursuant to Section 6(c), (i) the Company
shall continue to pay (or cause to be paid) to Guild or his designated
beneficiary (or, if no beneficiary has been designated, his estate), for the
Remainder Term, in equal semi-monthly installments, the base salary that would
have been payable to Guild during the Remainder Term pursuant to Section 2(a)
had Guild's employment not been
-4-
<PAGE>
terminated, and (ii) after the Remainder Term, if Guild elected to terminate his
employment hereunder pursuant to Section 6(c), the Company shall also pay during
the Consulting Period the consulting fees that would have been payable during
the Consulting Period as if the Company had elected not to extend the Term
pursuant to Section 1(a). If, however, Guild or his designated beneficiary or
estate so requests the Company in writing at any time after Guild's election to
terminate his employment pursuant to Section 6(c) or Guild's death, the Company
shall pay to him or his designated beneficiary (or, if no beneficiary has been
designated, his estate), an amount equal to the total base salary and, if
applicable, consulting fees, otherwise owing pursuant to the preceding sentence,
discounted at the Discount Rate (as defined below) to its present value as of
the date of such request (the "Notice Date"). The Company shall pay such amount
in a lump sum not later than 30 days after the Notice Date. "Discount Rate"
means the yield to maturity, as determined on the Notice Date, on U.S. Treasury
obligations having an original maturity comparable to the Remainder Term plus,
if applicable, the Consulting Period. Guild may waive his right to receive all
or part of any payment otherwise owing pursuant to this Section 7(b) by written
notice to the Company and may also elect to receive a portion of any payments
owing to him pursuant to this Section 7(b) on the installment basis referred to
in the first sentence of this Section 7(b) and a portion on the lump sum basis
referred to in the second sentence hereof.
(c) GENERAL. Except as otherwise set forth herein, Guild's right to
receive the base salary provided for in Section 2(a) shall cease on the
effective date of any termination of his employment under Section 6, nor shall
he have any right to any incentive bonus in respect of the year in which
termination occurs, unless it occurs as of December 31 of such year.
Termination of Guild's employment under any provision of this Agreement shall
not affect the right of Guild or his designated beneficiary or estate to receive
benefits accrued to him through the date of such termination under this
Agreement or any employee benefit plan of the Company in which he is then
participating; provided, however, that the rights of Guild or his designated
-------- -------
beneficiary or estate under any such plan and any termination of his
participation thereunder shall be governed by the terms of such plans as then in
effect. All payments and rights under Sections 7 (a) and 7(b) shall be in lieu
of any other amounts Guild (or his estate) might be entitled to receive under
this Agreement for any breach hereof by the Company. Payments under Sections
7(a) or 7(b) shall not affect Guild's right to receive any severance payments or
other benefits to which he is entitled in accordance with the Company's policy.
At Guild's request at any time prior to the termination of his employment
hereunder, the Company shall provide him with such reasonable security as Guild
shall reasonably request to secure payment of all amounts payable to him after
such termination, such as a bank letter of credit, bond or security interest in
a portion of the Company's assets.
8. CONFIDENTIALITY. All information possessed by Guild relative to
the activities of the Company which is of a secret or confidential nature,
including business plans, sales or marketing data, financial data, developments
and administrative procedures, is the property of the Company. Guild shall not,
during the Term and any Remainder Term, disclose any such information to others
not in the employ of the Company or its subsidiaries or use it for his benefit
or that of any third party. Nothing herein shall prevent Guild, subsequent to
the termination of his employment
-5-
<PAGE>
hereunder, from using and availing himself of his general skill, knowledge and
experience, including that pertaining to or derived from the non-confidential
aspects of the business of the Company.
9. NON-COMPETITION. During the Term, any Remainder Term with
respect to which he is receiving payment hereunder and any Consulting Period,
Guild shall not, anywhere in the United States of America, without the consent
of the Board of Directors of the Company:
(a) engage in any national radio sales representation business on
behalf of any party other than the Company and its subsidiaries;
(b) solicit business from or represent any client of the Company or
any of its subsidiaries in connection with national radio sales representation;
or
(c) offer employment to or hire any employee of the Company or any of
its subsidiaries.
10. NOTICES. Any notice given by either party to the other shall be
in writing and delivered by personal delivery or registered or certified mail,
return receipt requested, addressed to Guild at his address of record with the
Company, or to the Company at is principal office, as the case may be, or, in
either case, at such other place as Guild or the Company may from time to time
designate in writing. The date of personal delivery or the date of mailing any
such notice shall be deemed to be the date of delivery thereof.
11. PRIOR AGREEMENTS; AMENDMENTS. This Agreement constitutes the
entire agreement between the Company and Guild with regard to its subject matter
and merges and supersedes any employment understandings or agreements which may
have been previously made between the Company and Guild (other than the
Supplemental Income Agreement, dated as of December 31, 1986 and amended as of
June 18, 1993, and the Amendment and Extension of Option, dated January 1, 1991
and amended as of June 18, 1993), including, without limitation, the Original
Agreement. This Agreement may not be changed, waived, discharged or terminated
orally, but only by an instrument in writing, signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
12. PARTIES IN INTEREST. Neither this Agreement nor any rights or
obligations hereunder may be assigned by one party without the consent of the
other, except that this Agreement (a) shall be binding on and inure to the
benefit of any successor of the Company whether by merger, consolidation, sale
of assets or otherwise, and references to the Company shall be deemed to include
any such successor, and (b) to the extent provided herein, shall be binding on
and inure to the benefit of the estate, heirs, designated beneficiaries or
personal representatives, if any, of Guild, and references to Guild shall be
deemed to include such estate, heirs, designated beneficiaries or personal
representatives. Any designation by Guild of a beneficiary to receive payments
hereunder in the event of Guild's death or permanent disability, and any change
in such designation, shall be made by written notice from Guild to the Company.
-6-
<PAGE>
13. SEVERABILITY. If any provision of this Agreement is held
invalid, illegal or unenforceable by a court or tribunal of competent
jurisdiction, the remainder of this Agreement shall not be affected thereby, and
such provision shall be carried out as nearly as possible according to its
original terms and intent to eliminate such invalidity or unenforceability. In
this regard, the parties agree that the provisions of Section 9, including,
without limitation, the scope of the territorial and time restrictions, are
reasonable and necessary to protect and preserve the Company's legitimate
interests. If the provisions of Section 9 are held by a court of competent
jurisdiction to be in any respect unreasonable, then such court may reduce the
territory or time to which it pertains or otherwise modify such provisions to
the extent necessary to render such provisions reasonable and enforceable.
14. MISCELLANEOUS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Headings used in this
Agreement are for convenience only and shall not be used in the interpretation
of this Agreement. References to Sections are to the sections of this
Agreement.
15. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Florida applicable to
agreements made and fully to be performed therein by residents thereof.
16. ARBITRATION. Any dispute arising out of or relating to any
provision of this Agreement or to the parties' performance of any of their
respective obligations hereunder shall be resolved before a single arbitrator
chosen in accordance with the Rules of the American Arbitration Association as
at the time in effect Florida. The arbitration shall take place in a major city
in Florida designated by Guild and otherwise in accordance with such Rules.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
INTEREP NATIONAL RADIO SALES, INC.
By /s/ Leslie D. Goldberg
----------------------------------
Leslie D. Goldberg, President
/s/ Ralph C. Guild
----------------------------------
RALPH C. GUILD
-7-
<PAGE>
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement, dated as of January 1, 1991, between
INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"), and
MARC G. GUILD ("Guild"),
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Guild has been employed by the Company in various executive
capacities for a number of years;
WHEREAS, the Company desires to secure Guild's services and Guild
desires to perform such services for the Company, on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
interests, agree as follows:
1. Employment. The Company will employ Guild as President -
----------
Marketing Division of the Company for a term commencing on the date hereof and
ending on January 1, 1997. On each anniversary of the date hereof commencing on
January 1, 1995, the term of this Agreement shall be automatically extended for
successive one-year periods, unless the Company notifies Guild by December 1 in
the calendar year preceding such anniversary that the term shall not be so
extended. Guild shall report directly to Leslie Goldberg, President of the
Company, and shall have the right to be consulted by Goldberg concerning major
decisions affecting the Company, including, without limitation, decisions to
acquire or dispose of significant assets, merge with any other corporation or
change the nature of the business of the Company, it being understood that any
such decision is subject to approval by the Board of Directors of the Company.
For the duration of his employment under this Agreement, the Company will use
its
<PAGE>
best efforts to cause Guild to be elected a Director of the Company. Guild
agrees to perform the duties called for hereunder to the best of his ability and
to devote substantially all his time, energies and skills to such duties during
the term of his employment.
2. Base Salary. In consideration of the services and duties to be
-----------
rendered and performed by Guild hereunder, the Company shall pay to Guild a base
salary consisting of the sum of the Base Amount and the Incentive Amount, as
hereinafter defined. The "Base Amount" shall be the amount of $225,000 per
annum and shall be payable in equal semi-monthly installments for the duration
of his employment under this Agreement and for such additional periods as are
hereinafter provided for. The "Incentive Amount" shall be the amount of $75,000
per annum and shall be payable by the Company only if the Company and/or Guild
achieve certain financial and/or other goals in each such year, which goals
shall be agreed upon by the Company and Guild for each year prior to the
beginning of such year. The Incentive Amount of such base salary shall be
payable in quarterly installments in accordance with the Company's then-existing
incentive plan. In establishing such salary, it is not intended to preclude
Guild from salary increases or awards of bonuses, incentive or other types of
additional compensation which the Company in its sole discretion shall agree to
pay. Moreover, it is contemplated that in addition to such salary and other
possible compensation, Guild shall be eligible for and shall (except as
otherwise agreed) participate in all employment benefit programs now or
hereafter provided for by the Company for its senior executives in accordance
with the provisions thereof, including any stock option, incentive compensation,
savings and investment, retirement, supplemental benefit plans and programs.
-2-
<PAGE>
3. Expenses; Vacations; etc. During the term of employment of Guild
------------------------
hereunder, Guild shall be entitled to incur on behalf of the Company reasonable
and necessary expenses in connection with his duties in accordance with
customary practice and shall be entitled to reimbursement of any such expenses
incurred and paid by him directly. Whenever Guild is required to travel in
connection with his duties, he shall be entitled to arrange for his wife to
accompany him and for the Company to reimburse him for the cost of such
arrangements. During each 12-month period of the term of employment of Guild
hereunder, Guild shall be entitled to a vacation with pay in accordance with his
status and the general policy of the Company with respect to vacations for its
executive personnel. During the term of employment of Guild hereunder, the
Company shall provide Guild with all reasonable facilities necessary for the
performance of his duties hereunder and suitable to his position, including an
appropriate office and staff.
4. Temporary Disability. If, during the term of employment of Guild
--------------------
hereunder, Guild should become disabled, through illness or otherwise, from
performing his duties hereunder, he shall be entitled to a leave of absence
from his employment for up to but not exceeding six consecutive months. His
compensation shall continue during any such leave of absence. If such
disability continues beyond the foregoing specified period, it shall be deemed a
permanent disability and subject to the provisions of Sections 5(b) and 6(a).
5. Rights of Termination.
---------------------
(a) Termination for Cause by the Company. The Company shall have the
------------------------------------
right to terminate this Agreement and Guild's employment hereunder forthwith for
cause limited
-3-
<PAGE>
to (i) action by Guild involving willful malfeasance or gross negligence or (ii)
Guild's incapacity to perform the duties called for under this Agreement by
reason of the abuse of alcohol or drugs.
(b) Permanent Disability; Death. In the event that Guild shall be
---------------------------
disabled through illness or otherwise from performing his duties hereunder for a
period in excess of the period provided for in Section 4 so that such
disability is deemed a permanent disability thereunder, the Company shall have
the option, upon giving to Guild written notice thereof and exercisable only so
long as such disability shall continue, to terminate his employment under this
Agreement at the end of the month after the date when such written notice is
given to Guild. If Guild shall die during the term his employment under this
Agreement, his term of employment hereunder shall be deemed terminated on the
date of his death.
(c) Termination for Cause by Guild. Guild shall have the further
------------------------------
right to terminate his employment with the Company under this Agreement as
follows:
(i) if the Company violates this Agreement in any material
respect,
(ii) if Guild shall fail to be re-elected or reappointed to
(other than by his own choice) or shall be removed from (other than by
reasons justifying termination by the Company under Section 5(a) above) the
office of President-Marketing Division,
(iii) if Guild shall cease to be a Director of the Company (other
than by his own choice or by reason of removal or reasons justifying
termination under Section 5(a) above),
(iv) in the event of a change of control of the Board of
Directors of the Company as a result of (w) a contest for the control of
the Company, (x) the consolidation of the Company with, or merger of the
Company into, any other corporation, (y) the acquisition of the Company, of
a controlling interest in the Company or all or substantially all of the
assets of the Company by another corporation, or (z) the cessation of the
corporate existence of the Company or failure to continue such existence in
full force and effect as a result of any circumstances, or
-4-
<PAGE>
(v) in the event that the Company notifies Guild in accordance
with the provisions of Section 1 that the term of this Agreement will not
be extended, then Guild shall have the right, exercisable within six months
of such event or default, to terminate his employment under this Agreement
upon delivery of 30 days' written notice thereof to the Company.
6. Effects of Termination.
----------------------
(a) Payments Upon Termination Upon Permanent Disability. In the event
---------------------------------------------------
Guild's employment hereunder is terminated by the Company under Section 5(b)
upon Guild's permanent disability, Guild shall be entitled to receive, and the
Company shall continue to pay (or cause to be paid) to Guild, 75% of his then-
current salary (less the aggregate amount of all income disability benefits
which for such period he may receive or to which he may be entitled by reason of
(i) any group health insurance plan which is intended to function as a salary
replacement plan, (ii) any applicable compulsory state disability law, (iii) the
Federal Social Security Act, (iv) any applicable workmen's compensation law or
similar law and (v) any plan towards which the Company or any parent, subsidiary
or affiliate of the Company has contributed or for which it has made payroll
deductions, such as group accident or health policies, other than those which
reimburse for actual medical expenses) for the duration of the original term of
his employment under this Agreement (as the same may have been extended prior to
such termination) (the "Remainder Term"); provided, however that (i) the
-----------------
Incentive Amount shall be calculated for the year in which such employment
terminates based on whether the Company and/or Guild have met the agreed-upon
goals as of the last day of the calendar month ending closest to such
termination, (ii) the Incentive Amount shall be prorated for the
-5-
<PAGE>
portion of the year ending on the date of such termination, (iii) the prorated
portion of such Incentive Amount shall be paid in a lump sum within thirty days
of such termination, and (iv) the Incentive Amount shall be paid with respect to
the Remainder Term notwithstanding whether the agreed-upon goals were met.
(b) Payment Upon Termination By Reason of Death. In the event that
-------------------------------------------
Guild's employment hereunder is terminated pursuant to Section 5(b) upon his
death, or that Guild dies during the Remainder Term, Guild or his designated
beneficiary (or, in the event of his death if no beneficiary shall have been
designated hereunder, his estate) shall be entitled to receive as a death
benefit, and the Company shall pay, an amount equal to the present value at the
time of his death, discounted at the Discount Rate, of the entire amount of the
salary which would have been payable to Guild during the Remainder Term. Such
death benefit shall be payable on the earlier of the first anniversary of
Guild's death or the last day of the Remainder Term (which period may not be
terminated or shortened by waiver of the Company executed after such death), as
the case may be; provided, however that if such beneficiary (or estate, if
-------- -------
applicable), gives written notice to the Company within one month after the date
of death, such death benefit shall not be paid in a lump sum but shall instead
be payable in the amounts and at the times set forth in Section 2 hereof for the
duration of the Remainder Term; and provided, further that the Incentive Amount
-------- -------
shall be calculated and paid as set forth in Section 6(a). As used herein, the
"Discount Rate" shall mean the yield to maturity, as determined on the date of
termination on U.S. Treasury obligations having an original maturity comparable
to the Remainder Term. All amounts payable in a lump sum hereunder shall be
paid within one month after the date of termination or of death during the
Remainder Term, as the case may be. Amounts payable under any
-6-
<PAGE>
applicable plans or arrangements of the Company shall be payable in accordance
therewith and amounts which may not be calculated as of such date shall be paid
as soon as practicable thereafter.
(c) Payment Upon Termination for Cause. In the event Guild terminates
----------------------------------
his employment hereunder for cause under Section 5(c), Guild shall be entitled
to receive, and the Company shall continue pay (or cause to be paid) to Guild,
his then-current salary for the Remainder Term; provided, that the Incentive
--------
Amount shall be calculated and paid as set forth in Section 6(a).
(d) In General. Guild's right to receive the base salary provided for
----------
in Section 2 shall cease upon the effective date of any termination of his
employment under Section 5(a) of this Agreement. Termination of Guild's
employment under any provision of this Agreement shall not in any event affect
the right of Guild or his designated beneficiary hereunder (or, if no
beneficiary shall be designated hereunder, his estate) to receive benefits
accrued to him through the date of such termination under this Agreement or any
employee benefit plans of the Company in which he is then participating as
contemplated under Section 2, provided, that the rights of Guild or his
--------
designated beneficiary or estate under any such plans and any termination of his
participation thereunder shall be governed by the terms of such plans as then in
effect. All payments and rights under Section 6 (a) and (c) shall be in lieu of
any other amounts Guild might be entitled to receive under this Agreement for
any breach hereof. Payments under Section 6(a) or (c) shall not affect Guild's
right to receive any severance payments or other benefits to which he is
entitled in accordance with the Company's policy.
-7-
<PAGE>
7. Secrecy Agreement. All information obtain or possessed by Guild
-----------------
relative to the activities of the Company and its subsidiaries and affiliates
which secret or confidential nature, including business plans, financial data,
trademarks, developments or administrative procedures, is the property of the
Company and its subsidiaries or affiliates, as the case may be, and Guild shall
not, during the term of his employment under this Agreement or during any
Remainder Term as to which he is receiving payment hereunder, use any such
information for the benefit of others than the Company and its subsidiaries and
affiliates, or disclose it to others. Nothing herein shall prevent Guild,
subsequent to the termination of his employment hereunder, from using and
availing himself of his general skill, knowledge and experience, including that
pertaining to or derived from the nonsecret and nonconfidential aspects of the
business of the Company and its subsidiaries and affiliates.
8. Non-Competition. During the period of Guild's employment
---------------
hereunder and during any Remainder Term as to which he is receiving payment
hereunder, Guild will not, without the consent of the Board of Directors of the
Company, engage in the national radio sales representation business, offer
employment to or hire any employee of the Company or any of its subsidiaries or
solicit business from or represent any client of the Company or any of its
subsidiaries in connection with national radio sales representation.
9. Notices. Any notices which the Company is required or may desire
-------
to give to Guild shall be given by personal delivery or registered or certified
mail, return receipt requested, addressed to Guild at his address of record with
the Company, or at such other place as Guild may from time to time designate in
writing. Any notice which Guild is required or may desire to give to the
Company hereunder shall be given by personal delivery or by registered or
-8-
<PAGE>
certified mail, return receipt requested, addressed to the Company at its
principal office, or at such other office as the Company may from time to time
designate in writing. The date of personal delivery or the date of mailing any
such notice shall be deemed to be the date of delivery thereof.
10. Prior Agreements; Amendments. This Agreement supersedes any
----------------------------
employment understandings or agreements which may have been previously made
between the Company and Guild and this Agreement represents all the terms and
conditions and the entire agreement between the Company and Guild with respect
to such employment. This Agreement may not be changed, waived, discharged or
terminated orally, but only by an instrument in writing, signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
11. Parties in Interest. Neither this Agreement nor any rights or
-------------------
obligations hereunder may be assigned by one party without the consent of the
other, except that this Agreement shall be binding upon and inure to the benefit
of any successor or successors of the Company whether by merger, consolidation,
sale of assets or otherwise and reference herein to the Company shall be deemed
to include any such successor or successors, and except that this Agreement
shall, to the extent provided herein, be binding upon and inure to the benefit
of the estate, heirs, designated beneficiaries or personal representatives, if
any, of Guild and references herein to Guild shall be deemed to include such
estate, heirs, designated beneficiaries or personal representatives. Any
designation by Guild of a beneficiary to receive payments hereunder in the event
of Guild's death or permanent disability, and any change in such designation,
shall be made by written notice from Guild to the Company.
-9-
<PAGE>
12. Severability. If any provision of this Agreement is, for any
------------
reason, held invalid, illegal or unenforceable in any respect, its invalidity,
illegality or unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall thereafter be construed and enforced as if
such invalid, illegal or unenforceable provision had not been included herein.
13. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
INTEREP NATIONAL RADIO
SALES, INC.
By: /s/ Ralph C. Guild
-------------------
Chairman of the Board
/s/ Marc G. Guild
------------------
Marc G. Guild
-10-
<PAGE>
EXHIBIT 10.15
AMENDMENT TO EMPLOYMENT AGREEMENT
AMENDMENT, dated as of June 29, 1998, to Employment Agreement, dated
as of January 1, 1991 (the "Agreement"), between INTEREP NATIONAL RADIO SALES,
INC., a New York corporation (the "Company"), and MARC G. GUILD ("Guild").
W I T N E S S E T H:
-------------------
WHEREAS, the Company and Guild are parties to the Agreement and wish
to document an amendment of the Agreement which was effective as of January 1,
1997, as set forth below;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties agree as follows:
1. SECTION 2 (BASE SALARY). Section 2 of the Agreement is amended
by (i) deleting "$225,000" on line 6 and inserting in lieu thereof "$320,000"
and (ii) deleting "$75,000" on line 10 and inserting in lieu thereof "$80,000".
2. FULL FORCE AND EFFECT. Except as amended by this Amendment, the
Agreement shall continue unchanged and in full force and effect. The amendment
set forth in Section 1 above shall be deemed to have been effective as of
January 1, 1997.
3. COUNTERPARTS. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Amendment as of the date first set forth above.
INTEREP NATIONAL RADIO
SALES, INC.
By /s/ Ralph C. Guild /s/ Marc G. Guild
--------------------------------- ------------------------
Ralph C. Guild MARC G. GUILD
Chairman of the Board
<PAGE>
EXHIBIT 10.16
INTEREP NATIONAL RADIO SALES, INC.
----------------------------------
NON-QUALIFIED STOCK OPTION
--------------------------
For valuable consideration, receipt of which is hereby acknowledged,
INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"),
hereby grants to Ralph C. Guild, who resides at 142 South County Road, Palm
Beach, Florida 33480 (the "Optionee"), a non-qualified stock option ("Option"),
subject to the terms and conditions hereof, to purchase from the Company an
aggregate of 10,000 shares of the Common Stock of the Company, par value $.04
per share (the "Common Stock"), at the price of $32.62 per share (the "Option
Price"), such option to be exercisable as set forth below on or before the date
(the "Termination Date") which is the later of (i) August 1, 1991 or (ii) the
date which is 210 days after the day the notice referred to in the next sentence
is delivered to Optionee or his Beneficiary (as defined below). The Company
shall give Optionee written notice of his rights under this Option on or about
February 1, 1991.
Subject to the provisions of this Option, this Option may be exercised
by written notice (the "Notice") to the Company stating the number of shares of
Common Stock with respect to which it is being exercised. The Notice shall be
accompanied by the Optionee's payment in full of the Option Price for each of
the shares to be purchased by the Optionee, such payment to be made by (a)
certified or bank cashier's check payable to the order of the Company or (b) any
other means acceptable to the Company.
This Option is issued pursuant to the Amendment and Termination
Agreement, dated as of December 31, 1988 (the "Agreement") between the Company
and the Optionee, and upon execution hereof supersedes in all respects the
rights granted to Optionee, and the obligations of the Company, under the
Agreement with respect to the shares of Common Stock subject hereto.
As soon as practicable after receipt of the Notice and payment, and
subject to the next paragraph, the Company shall, without transfer or issue tax
or other incidental expense to the Optionee, deliver to the Optionee a
certificate or certificates for the shares of Common Stock so purchased. Such
delivery shall be made (a) at the offices of the Company at 100 Park Avenue, New
York, New York 10017, (b) at such other place as may be mutually acceptable to
the Company and the Optionee, or (c) at the election of the Company, by
certified mail addressed to the Optionee at (i) the Optionee's address shown in
the records of the Company or (ii) the address specified for the Optionee in the
first paragraph above.
The Company shall have the right to withhold an appropriate number of
shares of Common Stock (based on the fair market value thereof on the date of
exercise) for payment of taxes required by law or to take such other action as
may be necessary in the opinion of the Company to satisfy all withholding tax
obligations.
<PAGE>
The Company may postpone the time of delivery of certificate(s) for
shares of Common Stock for such additional time as the Company shall deem
necessary or desirable to enable it to comply with the requirements of any
applicable laws or regulations relating to the authorization, issuance or sale
of securities.
The issuance of the shares of Common Stock subject hereto and issuable
upon the exercise of this Option and the transfer or resale of such shares shall
be subject to such restrictions as are, in the opinion of the Company's counsel,
required to comply with the Securities Act of 1933, as amended, and the rules
and regulations thereunder, and the certificate(s) representing such shares
shall, if it is deemed advisable by the Company's counsel, bear a legend to such
effect.
If, upon tender of delivery thereof, the Optionee fails to accept
delivery of and pay or have paid for all or any part of the number of shares of
Common Stock specified in the Notice, the Optionee's right to exercise this
Option with respect to such undelivered or unpaid shares will be terminated by
the Company.
During the Optionee's lifetime, this Option shall be exercisable only
by the Optionee (except as otherwise provided below), and neither this Option
nor any right hereunder shall be assignable or transferable otherwise than by
will or the laws of descent and distribution (as provided below), or be subject
to attachment, execution or other similar process. In the event of any attempt
by the Optionee to alienate, assign, pledge, hypothecate or otherwise dispose of
this Option or of any right hereunder, except as provided for herein, or in the
event of any levy or any attachment, execution or similar process upon the
rights or interest hereby conferred, this Option shall terminate and become null
and void.
In the event of the Optionee's death prior to the Termination Date,
this Option may be exercised after the date of the Optionee's death by the
Optionee's estate or beneficiaries, but in no event may this Option be exercised
later than the Termination Date. All rights with respect to this Option,
including the right to exercise it, shall pass in the following order: (a) to
such person(s) as the Optionee may designate in a writing duly delivered to the
Company (in the form available from the Company for such purpose), or in the
absence of such a designation, then (b) to the Optionee's estate (the Option to
be exercised by the legal representative).
If any of the events set forth below shall occur between the date
hereof and the date of any issuance of Common Stock pursuant to this Option (the
"Issue Date"), the number of shares issuable pursuant to this Option (the "Issue
Number") shall be adjusted in respect of each such event as set forth in this
paragraph:
(i) In the event that the Company, at any time or from time to time
prior to the Issue Date, issues any shares of Common Stock in subdivision
of outstanding shares of Common Stock, by recapitalization,
reclassification, stock split or stock dividend, or in case of any
combination of outstanding shares of Common Stock by reverse stock split,
recapitalization, reclassification or otherwise, the Issue Number shall be
adjusted to equal
-2-
<PAGE>
that number of shares of Common Stock (including fractional shares, if any)
that Optionee would have owned immediately after such event had he,
immediately prior to such event, owned that number of shares of Common
Stock that he otherwise would have been entitled to receive pursuant to
this Option. The provisions of this paragraph shall not be construed to
effect any adjustment in the event of the issuance of any shares of Common
Stock or other securities of the Company in return for consideration
acceptable to the Board of Directors, except as provided in subparagraph
(ii), below.
(ii) In case of any capital reorganization of the Company, sale of
substantially all of the assets of the Company or any reclassification of
the shares of Common Stock of the Company other than into shares of Common
Stock of the Company, or in case of any consolidation or merger of the
Company into or with another corporation, provision shall be made so that
Optionee shall have the right thereafter to receive his proportionate share
of the securities or property (including any contingent or deferred
payments) issued or issuable with respect to the number of shares of Common
Stock which Optionee has the right to receive under this Option, to the end
that the provisions of this Option shall thereafter be applicable, as
nearly as reasonably may be, in relation to securities or other property
distributed in respect of the Common Stock.
Neither the Optionee nor any person or persons entitled to exercise
the Optionee's rights under this Option in accordance herewith shall have any
rights to dividends or any other rights of a stockholder with respect to any
shares of Common Stock subject to this Option, except to the extent that a
certificate for such shares shall have been issued upon the exercise of this
Option as provided herein.
Any notices which the Company is required or may desire to give to
Optionee or his Beneficiary shall be given by personal delivery or by registered
or certified mail, return receipt requested, addressed to Optionee at his
address of record with the Company, or at such other place as Optionee or his
Beneficiary may from time to time designate in writing. Any notice which
Optionee or his Beneficiary is required or may desire to give to the Company
hereunder shall be given by personal delivery or by registered or certified
mail, return receipt requested, addressed to the Company at its principal
office, or at such other office as the Company may from time to time designate
in writing. The date of personal delivery or five days after the date of
mailing of any such notice shall be deemed to be the date of delivery thereof.
For purposes of this Option, Optionee's "Beneficiary" shall be any
person designated by Optionee in accordance with this paragraph who will succeed
to the benefits of Optionee under this Option upon Optionee's death or other
events specified by Optionee, or, in the event of Optionee's death or incapacity
without such a beneficiary having been designated, Optionee's executor,
guardian, other personal or legal representative, heirs or estate. No
Beneficiary shall have any rights under this Option unless and until Optionee
shall have died or there shall have occurred some other event giving rise to the
rights of such Beneficiary under the preceding sentence or, if applicable, the
terms of the instrument executed by Optionee designating such Beneficiary, and
all
-3-
<PAGE>
references in this Option to such Beneficiary and his or its rights hereunder
shall be deemed qualified by this sentence. Neither this Option nor any rights
or obligations hereunder may be assigned by one party without the consent of the
other, except that this Option shall be binding upon and inure to the benefit of
any successor or successors of the Company whether by merger, consolidation,
sale of assets or otherwise and reference herein to the Company shall be deemed
to include any such successor or successors, and this Option shall be binding
upon and inure to the benefit of Optionee and, subject to the happening of the
events giving rise to its rights hereunder, Optionee's Beneficiary, if any. Any
designation by Optionee of a Beneficiary, and any change in such designation,
shall be made by written notice from Optionee to the Company. Except as here
under provided, no rights under this Option shall be subject in any manner to
participation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt to do any of the foregoing shall be void and no such
benefit shall be in any manner liable for or subject to debts, contracts,
liabilities, or engagements or torts of Optionee or his Beneficiary.
This Option and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the Internal Revenue Code of
1986, as amended from time to time, or the securities laws of the United States
of America, shall be governed by and construed in accordance with the laws of
the State of New York.
-4-
<PAGE>
This Option shall be wholly void and of no effect after the
Termination Date.
IN WITNESS WHEREOF, INTEREP NATIONAL RADIO SALES, INC. has caused this
Option to be executed by its officers, thereunto duly authorized, as of the 31st
day of December, 1988.
INTEREP NATIONAL RADIO SALES, INC.
By:/s/ Les Goldberg
------------------------------------
Name: Les Goldberg
Title: President / COO
ATTEST:
/s/ John Rykala
- ---------------------------------
John Rykala
Assistant Secretary
AGREED TO AND ACKNOWLEDGED as of
the 31st day of December,
1988, by:
/s/ Ralph C. Guild
- ---------------------------------
Optionee
-5-
<PAGE>
EXHIBIT 10.17
AMENDMENT AND EXTENSION OF OPTION
This Amendment, dated as of January 1, 1991, between INTEREP NATIONAL
RADIO SALES, INC., a New York corporation (the "Company"), and RALPH C. GUILD
(the "Optionee"),
W I T N E S S E T H:
-------------------
WHEREAS, the Company granted the Optionee a nonqualified stock option
on December 31, 1988 to purchase 10,000 shares of the Common Stock of the
Company, par value $.04 per share, for a price of $32.62 per share, expiring on
August 31, 1991 (the "Original Option"); and
WHEREAS, the Company and the Optionee are entering an Amended and
Restated Employment Agreement (the "Agreement"), dated as of January 1, 1991
pursuant to which the Company will secure the services of Optionee for the term
stated therein;
WHEREAS, in order to induce the Optionee to enter into the Agreement,
the Company has agreed with Optionee to extend the term of the Original Option
to December 31;
NOW THEREFORE, in consideration of the premises, and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
The Original Option is hereby amended as follows:
(i) In the first sentence of the first paragraph of the Original
Option, all of the words after "as set forth below on or before" are hereby
deleted and replaced with "December 31, 1993 (the "Termination Date")."
(ii) In the second sentence of the first paragraph of the Original
Option, the words "on or about February 1, 1991" are hereby deleted and
replaced with the words "on a date which is not earlier than twelve months
prior to, and not later than 6 months prior to, the Termination Date."
Except as expressly amended hereby, the Original Option continues and
remains in full force and effect as originally executed.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
INTEREP NATIONAL RADIO SALES, INC.
By: /s/ Les Goldberg
--------------------------------
ATTEST:
By: /s/ John Rykala
-----------------------------
John Rykala
Assistant Secretary OPTIONEE:
/s/ Ralph C. Guild
------------------------------------
Ralph C. Guild
-2-
<PAGE>
EXHIBIT 10.18
INTEREP NATIONAL RADIO SALES, INC.
----------------------------------
NON-QUALIFIED STOCK OPTION
--------------------------
For valuable consideration, receipt of which is hereby acknowledged,
INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"),
hereby grants to Ralph C. Guild, who resides at 142 South County Road, Palm
Beach, Florida 33480 (the "Optionee"), a non-qualified stock option ("Option"),
subject to the terms and conditions hereof, to purchase from the Company an
aggregate of 10,000 shares of the Common Stock of the Company, par value $.04
per share (the "Common Stock"), at the price of $57.9082 per share (the "Option
Price"), such option to be exercisable as set forth below on or before the day
(the "Termination Date") preceding the tenth anniversary of the date hereof.
The Company shall give Optionee written notice of his rights under this Option
on a date no earlier than twelve months prior to, and no later than 6 months
prior to, the Termination Date.
Subject to the provisions of this Option, this Option may be exercised
by written notice (the "Notice") to the Company stating the number of shares
of Common Stock with respect to which it is being exercised. The Notice shall
be accompanied by the Optionee's payment in full of the Option Price for each of
the shares to be purchased by the Optionee, such payment to be made by (a)
certified or bank cashier's check payable to the order of the Company or (b) any
other means acceptable to the Company.
As soon as practicable after receipt of the Notice and payment, and
subject to the next paragraph, the Company shall, without transfer or issue tax
or other incidental expense to the Optionee, deliver to the Optionee a
certificate or certificates for the shares of Common Stock so purchased. Such
delivery shall be made (a) at the offices of the Company at 100 Park Avenue, New
York, New York 10017, (b) at such other place as may be mutually acceptable to
the Company and the Optionee, or (c) at the election of the Company, by
certified mail addressed to the Optionee at (i) the Optionee's address shown in
the records of the Company or (ii) the address specified for the Optionee in the
first paragraph above.
The Company shall have the right to withhold an appropriate number of
shares of Common Stock (based on the fair market value thereof on the date of
exercise) for payment of taxes required by law or to take such other action as
may be necessary in the opinion of the Company to satisfy all withholding tax
obligations.
<PAGE>
The Company may postpone the time of delivery of certificate(s) for
shares of Common Stock for such additional time as the Company shall deem
necessary or desirable to enable it to comply with the requirements of any
applicable laws or regulations relating to the authorization, issuance or sale
of securities.
The issuance of the shares of Common Stock subject hereto and issuable
upon the exercise of this Option and the transfer or resale of such shares shall
be subject to such restrictions as are, in the opinion of the Company's counsel,
required to comply with the Securities Act of 1933, as amended, and the rules
and regulations thereunder, and the certificate(s) representing such shares
shall, if it is deemed advisable by the Company's counsel, bear a legend to such
effect.
If, upon tender of delivery thereof, the Optionee fails to accept
delivery of and pay or have paid for all or any part of the number of shares of
Common Stock specified in the Notice, the Optionee's right to exercise this
Option with respect to such undelivered or unpaid shares will be terminated by
the Company.
During the Optionee's lifetime, this Option shall be exercisable only
by the Optionee (except as otherwise provided below), and neither this Option
nor any right hereunder shall be assignable or transferable otherwise than by
will or the laws of descent and distribution (as provided below), or be subject
to attachment, execution or other similar process. In the event of any attempt
by the Optionee to alienate, assign, pledge, hypothecate or otherwise dispose
of this Option or of any right hereunder, except as provided for herein, or in
the event of any levy or any attachment, execution or similar process upon the
rights or interest hereby conferred, this Option shall terminate and become null
and void.
In the event of the Optionee's death prior to the Termination Date,
this Option may be exercised after the date of the Optionee's death by the
Optionee's estate or beneficiaries, but in no event may this Option be exercised
later than the Termination Date. All rights with respect to this Option,
including the right to exercise it, shall pass in the following order: (a) to
such person(s) as the Optionee may designate in a writing duly delivered to the
Company (in the form available from the Company for such purpose), or in the
absence of such a designation, then (b) to the Optionee's estate (the Option to
be exercised by the legal representative).
In the event of any change in the number of shares of outstanding
Common Stock by reason of a stock split, stock dividend, combination or
reclassification of shares, recapi-
-2-
<PAGE>
talization, merger or consolidation, or any other event changing the number of
shares of Common Stock outstanding without receipt of consideration by the
Company, the number of shares of Common Stock covered by this Option and the
Option Price thereof shall automatically be adjusted proportionately. In the
event of any other change affecting the Common Stock or any distribution (other
than normal cash dividends) to holders of Common Stock, such adjustments as may
be deemed equitable by the Board of Directors, including adjustments to avoid
fractional shares, shall be made to give proper effect to such event. In the
event of a corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Board of Directors may authorize
the assumption of this Option or the substitution of a new stock option for this
Option, whether or not in a transaction to which Section 424(a) of the Internal
Rvenue Code applies. The judgment of the Board of Directors with respect to any
matter refereed to in this paragraph shall be conclusive and binding upon the
Optionee and any parties validly claiming through the Optionee.
Neither the Optionee nor any person or persons entitled to exercise
the Optionee's rights under this Option in accordance herewith shall have any
rights to dividends or any other rights of a stockholder with respect to any
shares of Common Stock subject to this Option, except to the extent that a
certificate for such shares shall have been issued upon the exercise of this
Option as provided herein.
Each notice relating to this Option shall be in writing and delivered
in person or by certified mail to the proper address. All notices to the Company
shall be addressed to it at its offices at 100 Park Avenue, New York, New York
10017, c/o the Company's Secretary, and shall become effective when received by
the Secretary. All notices to the Optionee or other person or persons then
entitled to exercise any rights with respect to this Option shall be addressed
to the Optionee or such other person or persons at the Optionee's address
specified in the first paragraph above. Anyone to whom a notice may be given
under this Option may designate a new address by notice to that effect.
This Option and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the Internal Revenue Code of
1986, as amended from time to time, or the securities laws of the United States
of America, shall be governed by and construed in accordance with the laws of
the State of New York.
-3-
<PAGE>
This Option shall be wholly void and of no effect after the
Termination Date.
IN WITNESS WHEREOF, INTEREP NATIONAL RADIO SALES, INC. has caused this
Option to be executed by its officers, thereunto duly authorized, as of the 1st
day of January, 1991.
INTEREP NATIONAL RADIO SALES, INC.
By: /s/ Les Goldberg
---------------------------------
Name:
Title:
ATTEST:
/s/ John Rykala
-----------------------------
John Rykala
Assistant Secretary
AGREED TO AND ACKNOWLEDGED as of
this 1st day of January,
1991, by:
/s/ Ralph C. Guild
-----------------------------
Optionee
-4-
<PAGE>
EXHIBIT 10.19
INTEREP NATIONAL RADIO SALES, INC.
NON-QUALIFIED STOCK OPTION
For valuable consideration, the receipt and sufficiency of which is
acknowledged, INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the
"Company"), grants to Ralph C. Guild, residing at 10 South Lake Trail, Palm
Beach, Florida 33480 ("Optionee"), a non-qualified stock option (the "Option")
to purchase from the Company an aggregate of 10,000 shares of the Company's
Common Stock, par value $.04 per share (the "Common Stock"), at an exercise
price equal to the fair market value per share of the Common Stock on the date
hereof, which shall be determined based on the independent appraisal thereof to
be conducted for the Company's Employee Stock Ownership Plan as of December 31,
1995 (the "Option Price"). This Option shall be exercisable at any time on and
after the six-month anniversary of the date hereof until the close of business
on the tenth anniversary of the date hereof (the "Termination Date"), and may
be exercised in whole or in part from time to time. The Company shall give
Optionee written notice of the pending expiration of this Option on a date no
earlier than twelve months prior to, and no later than 6 months prior to, the
Termination Date.
Subject to the provisions of this Option, this Option may be exercised
by written notice to the Company stating the number of shares of Common Stock
with respect to which it is being exercised. Such notice shall be accompanied
by Optionee's full payment of the Option Price for the shares to be purchased by
certified or bank cashier's check payable to the order of the Company or by any
other means acceptable to the Company.
As soon as practicable after receipt of such notice and payment, and
subject to the next paragraph, the Company shall, without transfer or issue tax
or other expense to Optionee, deliver to Optionee a certificate for the shares
purchased. Such delivery shall be made at the offices of the Company, at such
other place as may be mutually acceptable to the Company and Optionee or, at the
election of the Company, by certified mail addressed to Optionee at Optionee's
address set forth above or, if different, Optionee's address shown in the
records of the Company.
The Company shall have the right to withhold an appropriate number of
shares of Common Stock (based on the fair market value thereof on the date of
exercise) for payment of taxes required by law or to take such other action as
may be necessary in the opinion of the Company to satisfy all withholding tax
obligations. The Company may postpone the time of delivery of certificates for
shares of Common Stock for such additional time as the Company shall deem
necessary or desirable to enable it to comply with the requirements of any
applicable laws or regulations relating to the authorization, issuance or sale
of securities.
The issuance of the shares of Common Stock subject hereto and issuable
on the exercise of this Option and the transfer or resale of such shares shall
be subject to such restrictions as are, in the opinion of the Company's counsel,
required to comply with the Securities Act of 1933 and the rules and regulations
thereunder, and the certificates representing such shares shall, if it is deemed
advisable by counsel, bear a legend to such effect. On exercise of this Option,
Optionee
<PAGE>
shall, if so requested by the Company, deliver to the Company a
written representation that he is acquiring the shares of Common Stock to be
purchased solely for his own account for investment and not with a view to, or
for resale in connection with, any distribution thereof.
During Optionee's lifetime, this Option shall be exercisable only by
Optionee (except as otherwise provided below), and neither this Option nor any
right hereunder shall be assignable or transferable otherwise than by will or
the laws of descent and distribution (as provided below), or be subject to
attachment, execution or other similar process. If Optionee attempts to
alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of
any right hereunder, except as provided for herein, or in the event of any levy
or any attachment, execution or similar process upon the rights or interest
hereby conferred, this Option shall terminate and become null and void.
Notwithstanding the foregoing, Optionee shall have the right to transfer this
Option during his lifetime to a trust for the benefit of his spouse and/or his
descendants.
In the event of Optionee's death prior to the Termination Date, this
Option may be exercised after the date of Optionee's death by Optionee's estate
or beneficiaries, or by the trustee or trustees of a trust for the benefit of
his spouse and/or his descendants, but in no event may this Option be exercised
later than the Termination Date. All rights with respect to this Option (to the
extent held by Optionee at death and not by such a trust), including the right
to exercise it, shall pass in the following order: (a) to such persons as
Optionee may designate in a writing duly delivered to the Company (in the form
available from the Company for such purpose), or in the absence of such a
designation, (b) to Optionee's estate (this Option to be exercised by the legal
representative). References to "Optionee" shall be deemed to include Optionee's
estate, executor, beneficiaries or the trustee or trustees of any trust for the
benefit of his spouse and/or his descendants, as appropriate.
The right of the Company to terminate (whether by dismissal,
discharge, retirement or otherwise) Optionee's employment with it at any time at
will, or as otherwise provided by an agreement between the Company and Optionee,
is specifically reserved. The termination of Optionee's employment with the
Company, for any reason, shall, however, have no effect on this Option, which
shall continue in full force and effect in accordance with its terms.
In the event of any change in the number of shares of outstanding
Common Stock by reason of a stock split, reverse stock split, stock dividend,
combination or reclassification of shares, recapitalization or any other event
changing the number of shares of Common Stock outstanding without receipt of
consideration by the Company, the number of shares of Common Stock covered by
this Option and the Option Price thereof shall automatically be adjusted to
equal that number of shares of Common Stock (including fractional shares, if
any) that Optionee would have owned immediately after such event had he,
immediately prior to such event, owned that number of shares of Common Stock
that he otherwise would have been entitled to receive pursuant to this Option.
In the event of any capital reorganization of the Company, sale of
substantially all of the assets of the Company or any reclassification of the
shares of Common Stock of the Company other than into shares of Common Stock of
the Company, or in case of any consolidation or merger
-2-
<PAGE>
of the Company into or with another corporation, provision shall be made so that
Optionee shall have the right thereafter to receive his proportionate share of
the securities or property (including any contingent or deferred payments)
issued or issuable with respect to the number of shares of Common Stock which
Optionee has the right to receive under this Option, to the end that the
provisions of this Option shall thereafter be applicable, as nearly as
reasonably may be, in relation to securities or other property distributed in
respect of the Common Stock. This Option shall be binding on and inure to the
benefit of any successor of the Company, whether by merger, consoli dation, sale
of assets or otherwise, and reference herein to the Company shall be deemed to
include any such successor.
If there is any other change affecting the Common Stock or any
distribution (other than normal cash dividends) to holders of Common Stock, such
adjustments as may be deemed equitable by the Board of Directors, including
adjustments to avoid fractional shares, shall be made to give proper effect to
such event.
Neither Optionee nor any person entitled to exercise Optionee's rights
under this Option shall have any right to receive dividends or any other rights
of a stockholder with respect to any shares of Common Stock subject to this
Option, unless and until a certificate for such shares shall have been issued
on the exercise of this Option.
Each notice relating to this Option shall be in writing and delivered
in person or by certified mail to the proper address. All notices to the
Company shall be addressed to it at its offices at 100 Park Avenue, New York,
New York 10017, c/o the Company's Secretary, and shall become effective when
received by the Secretary. All notices to Optionee or other persons then
entitled to exercise any rights with respect to this Option shall be addressed
to Optionee or such other persons at Optionee's address specified above. Anyone
to whom a notice may be given under this Option may designate a new address by
written notice to that effect.
This Option and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the Internal Revenue Code of
1986, as amended from time to time, or the securities laws of the United States
of America, shall be governed by and construed in accordance with the laws of
the Sate of New York. This Option shall be void and of no effect after the
Termination Date.
IN WITNESS WHEREOF, the Company has caused this Option to be executed
by its officers, thereunto duly authorized, as of December 31, 1995.
INTEREP NATIONAL RADIO SALES, INC.
By /s/ Debra Schwartz
--------------------------------
Name:_______________________
Title:_____________________
ATTEST:
/s/ John Rykala
--------------------------
John Rykala, Secretary
-3-
<PAGE>
EXHIBIT 10.20
INTEREP NATIONAL RADIO SALES, INC.
----------------------------------
NON-QUALIFIED STOCK OPTION
--------------------------
For valuable consideration, receipt of which is hereby acknowledged,
INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the "Company"),
hereby grants to Marc G. Guild, who resides at 45 Ellison Avenue, Bronxville,
New York 10708 (the "Optionee"), a non-qualified stock option ("Option"),
subject to the terms and conditions hereof, to purchase from the Company an
aggregate of 5,000 shares of the Common Stock of the Company, par value $.04
per share (the "Common Stock"), at the price of $57.9082 per share (the "Option
Price"), such option to be exercisable as set forth below on or before the day
(the "Termination Date") preceding the tenth anniversary of the date hereof.
The Company shall give the Optionee written notice of his rights under this
Option on a date no earlier than twelve months prior to, and no later than 6
months prior to, the Termination Date.
Subject to the provisions of this Option, this Option may be exercised
by written notice (the "Notice") to the Company stating the number of shares of
Common Stock with respect to which it is being exercised. The Notice shall be
accompanied by the Optionee's payment in full of the Option Price for each of
the shares to be purchased by the Optionee, such payment to be made by (a)
certified or bank cashier's check payable to the order of the Company or (b) any
other means acceptable to the Company.
As soon as practicable after receipt of the Notice and payment, and
subject to the next paragraph, the Company shall, without transfer or issue tax
or other incidental expense to the Optionee, deliver to the Optionee a
certificate or certificates for the shares of Common Stock so purchased. Such
delivery shall be made (a) at the offices of the Company at 100 Park Avenue, New
York, New York 10017, (b) at such other place as may be mutually acceptable to
the Company and the Optionee, or (c) at the election of the Company, by
certified mail addressed to the Optionee at (i) the Optionee's address shown in
the records of the Company or (ii) the address specified for the Optionee in the
first paragraph above.
The Company shall have the right to withhold an appropriate number of
shares of Common Stock (based on the fair market value thereof on the date of
exercise) for payment of taxes required by law or to take such other action as
may be necessary in the opinion of the Company to satisfy all withholding tax
obligations.
The Company may postpone the time of delivery of certificate(s) for
shares of Common Stock for such additional time as the Company shall deem
necessary or desirable to enable it to comply with the requirements of any
applicable laws or regulations relating to the authorization, issuance or sale
of securities.
The issuance of the shares of Common Stock subject hereto and issuable
upon the exercise of this Option and the transfer or resale of such shares shall
be subject to such
1
<PAGE>
restrictions as are, in the opinion of the Company's counsel, required to comply
with the Securities Act of 1933, as amended, and the rules and regulations
thereunder, and the certificate(s) representing such shares shall, if it is
deemed advisable by the Company's counsel, bear a legend to such effect.
If, upon tender of delivery thereof, the Optionee fails to accept
delivery of and pay or have paid for all or any part of the number of shares of
Common Stock specified in the Notice, the Optionee's right to exercise this
Option with respect to such undelivered or unpaid shares will be terminated by
the Company.
During the Optionee's lifetime, this Option shall be exercisable only
by the Optionee (except as otherwise provided below), and neither this Option
nor any right hereunder shall be assignable or transferable otherwise than by
will or the laws of descent and distribution (as provided below), or be subject
to attachment, execution or other similar process. In the event of any attempt
by the Optionee to alienate, assign, pledge, hypothecate or otherwise dispose of
this Option or of any right hereunder, except as provided for herein, or in the
event of any levy or any attachment, execution or similar process upon the
rights or interest hereby conferred, this Option shall terminate and become null
and void.
In the event of the Optionee's death prior to the Termination Date,
this Option may be exercised after the date of the Optionee's death by the
Optionee's estate or beneficiaries, but in no event may this Option be exercised
later than the Termination Date. All rights with respect to this Option,
including the right to exercise it, shall pass in the following order: (a) to
such person(s) as the Optionee may designate in a writing duly delivered to the
Company (in the form available from the Company for such purpose), or in the
absence of such a designation, then (b) to the Optionee's estate (the Option to
be exercised by the legal representative).
In the event of any change in the number of shares of outstanding
Common Stock by reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, merger or consolidation, or any
other event changing the number of shares of Common Stock outstanding without
receipt of consideration by the Company, the number of shares of Common Stock
covered by this Option and the Option Price thereof shall automatically be
adjusted proportionately. In the event of any other change affecting the Common
Stock or any distribution (other than normal cash dividends) to holders of
Common Stock, such adjustments as may be deemed equitable by the Board of
Directors, including adjustments to avoid fractional shares, shall be made to
give proper effect to such event. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board of Directors may authorize the assumption of this Option
or the substitution of a new stock option for this Option, whether or not in a
transaction to which Section 424(a) of the Internal Rvenue Code applies. The
judgment of the Board of Directors with respect to any matter refereed to in
this paragraph shall be conclusive and binding upon the Optionee and any parties
validly claiming through the Optionee.
-2-
<PAGE>
Neither the Optionee nor any person or persons entitled to exercise
the Optionee's rights under this Option in accordance herewith shall have any
rights to dividends or any other rights of a stockholder with respect to any
shares of Common Stock subject to this Option, except to the extent that a
certificate for such shares shall have been issued upon the exercise of this
Option as provided herein.
Each notice relating to this Option shall be in writing and delivered
in person or by certified mail to the proper address. All notices to the
Company shall be addressed to it at its offices at 100 Park Avenue, New York,
New York 10017, c/o the Company's Secretary, and shall become effective when
received by the Secretary. All notices to the Optionee or other person or
persons then entitled to exercise any rights with respect to this Option shall
be addressed to the Optionee or such other person or persons at the Optionee's
address specified in the first paragraph above. Anyone to whom a notice may be
given under this Option may designate a new address by notice to that effect.
This Option and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the Internal Revenue Code of
1986, as amended from time to time, or the securities laws of the United States
of America, shall be governed by and construed in accordance with the laws of
the State of New York.
-3-
<PAGE>
This Option shall be wholly void and of no effect after the
Termination Date.
IN WITNESS WHEREOF, INTEREP NATIONAL RADIO SALES, INC. has caused this
Option to be executed by its officers, thereunto duly authorized, as of the 1st
day of January, 1991.
INTEREP NATIONAL RADIO SALES, INC.
By: /s/ Les Goldberg
-------------------------------
Name:
Title:
ATTEST:
/s/ John Rykala
- -------------------------
John Rykala
Assistant Secretary
AGREED TO AND ACKNOWLEDGED as of
this 1st day of January,
1991, by:
/s/ Marc Guild
- -------------------------
Optionee
-4-
<PAGE>
EXHIBIT 10.21
INTEREP NATIONAL RADIO SALES, INC.
NON-QUALIFIED STOCK OPTION
For valuable consideration, the receipt and sufficiency of which is
acknowledged, INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the
"Company"), grants to RALPH C. GUILD, with a residence address of 10 South Lake
Trail, Palm Beach, Florida 33480 ("Optionee"), a non-qualified stock option (the
"Option") to purchase from the Company an aggregate of 30,000 shares of the
Company's Common Stock, par value $.04 per share (the "Common Stock"), at an
exercise price equal to the fair market value per share of the Common Stock on
the date hereof, which shall be determined based on the independent appraisal
thereof to be conducted for the Company's Employee Stock Ownership Plan as of
December 31, 1997 (the "Option Price"). This Option shall be exercisable at any
time on and after the six-month anniversary of the date hereof until the close
of business on the tenth anniversary of the date hereof (the "Termination
Date"), and may be exercised in whole or in part from time to time. The Company
shall give Optionee written notice of the pending expiration of this Option on a
date no earlier than twelve months prior to, and no later than 6 months prior
to, the Termination Date.
Subject to the provisions of this Option, this Option may be exercised
by written notice to the Company stating the number of shares of Common Stock
with respect to which it is being exercised. Such notice shall be accompanied
by Optionee's full payment of the Option Price for the shares to be purchased by
certified or bank cashier's check payable to the order of the Company or by any
other means acceptable to the Company.
As soon as practicable after receipt of such notice and payment, and
subject to the next paragraph, the Company shall, without transfer or issue tax
or other expense to Optionee, deliver to Optionee a certificate for the shares
purchased. Such delivery shall be made at the offices of the Company, at such
other place as may be mutually acceptable to the Company and Optionee or, at the
election of the Company, by certified mail addressed to Optionee at Optionee's
address set forth above or, if different, Optionee's address shown in the
records of the Company.
The Company shall have the right to withhold an appropriate number of
shares of Common Stock (based on the fair market value thereof on the date of
exercise) for payment of taxes required by law or to take such other action as
may be necessary in the opinion of the Company to satisfy all withholding tax
obligations. The Company may postpone the time of delivery of certificates for
shares of Common Stock for such additional time as the Company shall deem
necessary or desirable to enable it to comply with the requirements of any
applicable laws or regulations relating to the authorization, issuance or sale
of securities.
The issuance of the shares of Common Stock subject hereto and issuable
on the exercise of this Option and the transfer or resale of such shares shall
be subject to such restrictions as are, in the opinion of the Company's counsel,
required to comply with the Securities Act of 1933 and the rules and regulations
thereunder, and the certificates representing such shares shall, if it is deemed
advisable by counsel, bear a legend to such effect. On exercise of this Option,
Optionee
<PAGE>
shall, if so requested by the Company, deliver to the Company a written
representation that he is acquiring the shares of Common Stock to be purchased
solely for his own account for investment and not with a view to, or for resale
in connection with, any distribution thereof.
During Optionee's lifetime, this Option shall be exercisable only by
Optionee (except as otherwise provided below), and neither this Option nor any
right hereunder shall be assignable or transferable otherwise than by will or
the laws of descent and distribution (as provided below), or be subject to
attachment, execution or other similar process. If Optionee attempts to
alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of
any right hereunder, except as provided for herein, or in the event of any levy
or any attachment, execution or similar process upon the rights or interest
hereby conferred, this Option shall terminate and become null and void.
Notwithstanding the foregoing, Optionee shall have the right to transfer this
Option during his lifetime to a trust for the benefit of his spouse and/or his
descendants.
In the event of Optionee's death prior to the Termination Date, this
Option may be exercised after the date of Optionee's death by Optionee's estate
or beneficiaries, or by the trustee or trustees of a trust for the benefit of
his spouse and/or his descendants, but in no event may this Option be exercised
later than the Termination Date. All rights with respect to this Option (to the
extent held by Optionee at death and not by such a trust), including the right
to exercise it, shall pass in the following order: (a) to such persons as
Optionee may designate in a writing duly delivered to the Company (in the form
available from the Company for such purpose), or in the absence of such a
designation, (b) to Optionee's estate (this Option to be exercised by the legal
representative). References to "Optionee" shall be deemed to include Optionee's
estate, executor, beneficiaries or the trustee or trustees of any trust for the
benefit of his spouse and/or his descendants, as appropriate.
The right of the Company to terminate (whether by dismissal,
discharge, retirement or otherwise) Optionee's employment with it at any time at
will, or as otherwise provided by an agreement between the Company and Optionee,
is specifically reserved. The termination of Optionee's employment with the
Company, for any reason, shall, however, have no effect on this Option, which
shall continue in full force and effect in accordance with its terms.
In the event of any change in the number of shares of outstanding
Common Stock by reason of a stock split, reverse stock split, stock dividend,
combination or reclassification of shares, recapitalization or any other event
changing the number of shares of Common Stock outstanding without receipt of
consideration by the Company, the number of shares of Common Stock covered by
this Option and the Option Price thereof shall automatically be adjusted to
equal that number of shares of Common Stock (including fractional shares, if
any) that Optionee would have owned immediately after such event had he,
immediately prior to such event, owned that number of shares of Common Stock
that he otherwise would have been entitled to receive pursuant to this Option.
In the event of any capital reorganization of the Company, sale of
substantially all of the assets of the Company or any reclassification of the
shares of Common Stock of the Company other than into shares of Common Stock of
the Company, or in case of any consolidation or merger of the Company into or
with another corporation, provision shall be made so that Optionee shall
2
<PAGE>
have the right thereafter to receive his proportionate share of the securities
or property (including any contingent or deferred payments) issued or issuable
with respect to the number of shares of Common Stock which Optionee has the
right to receive under this Option, to the end that the provisions of this
Option shall thereafter be applicable, as nearly as reasonably may be, in
relation to securities or other property distributed in respect of the Common
Stock. This Option shall be binding on and inure to the benefit of any successor
of the Company, whether by merger, consoli dation, sale of assets or otherwise,
and reference herein to the Company shall be deemed to include any such
successor.
If there is any other change affecting the Common Stock or any
distribution (other than normal cash dividends) to holders of Common Stock, such
adjustments as may be deemed equitable by the Board of Directors, including
adjustments to avoid fractional shares, shall be made to give proper effect to
such event.
Neither Optionee nor any person entitled to exercise Optionee's rights
under this Option shall have any right to receive dividends or any other rights
of a stockholder with respect to any shares of Common Stock subject to this
Option, unless and until a certificate for such shares shall have been issued
on the exercise of this Option.
Each notice relating to this Option shall be in writing and delivered
in person or by certified mail to the proper address. All notices to the
Company shall be addressed to it at its offices at 100 Park Avenue, New York,
New York 10017, c/o the Company's Secretary, and shall become effective when
received by the Secretary. All notices to Optionee or other persons then
entitled to exercise any rights with respect to this Option shall be addressed
to Optionee or such other persons at Optionee's address specified above. Anyone
to whom a notice may be given under this Option may designate a new address by
written notice to that effect.
This Option and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the Internal Revenue Code of
1986, as amended from time to time, or the securities laws of the United States
of America, shall be governed by and construed in accordance with the laws of
the Sate of New York. This Option shall be void and of no effect after the
Termination Date.
IN WITNESS WHEREOF, the Company has caused this Option to be executed
by its officers, thereunto duly authorized, as of June 29, 1997.
INTEREP NATIONAL RADIO SALES, INC.
By /s/ Marc G. Guild
--------------------------------
Marc G. Guild
President, Marketing Division
ATTEST:
/s/ Paul Parzuchowski
- --------------------------------
Paul Parzuchowski, Secretary
3
<PAGE>
EXHIBIT 10.22
INTEREP NATIONAL RADIO SALES, INC.
NON-QUALIFIED STOCK OPTION
For valuable consideration, the receipt and sufficiency of which is
acknowledged, INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the
"Company"), grants to MARC G. GUILD, with a business address of 100 Park Avenue,
New York, New York 10017 ("Optionee"), a non-qualified stock option (the
"Option") to purchase from the Company an aggregate of 5,000 shares of the
Company's Common Stock, par value $.04 per share (the "Common Stock"), at an
exercise price equal to the fair market value per share of the Common Stock on
the date hereof, which shall be determined based on the independent appraisal
thereof to be conducted for the Company's Employee Stock Ownership Plan as of
December 31, 1997 (the "Option Price"). This Option shall be exercisable at any
time on and after the six-month anniversary of the date hereof until the close
of business on the tenth anniversary of the date hereof (the "Termination
Date"), and may be exercised in whole or in part from time to time. The Company
shall give Optionee written notice of the pending expiration of this Option on a
date no earlier than twelve months prior to, and no later than 6 months prior
to, the Termination Date.
Subject to the provisions of this Option, this Option may be exercised
by written notice to the Company stating the number of shares of Common Stock
with respect to which it is being exercised. Such notice shall be accompanied
by Optionee's full payment of the Option Price for the shares to be purchased by
certified or bank cashier's check payable to the order of the Company or by any
other means acceptable to the Company.
As soon as practicable after receipt of such notice and payment, and
subject to the next paragraph, the Company shall, without transfer or issue tax
or other expense to Optionee, deliver to Optionee a certificate for the shares
purchased. Such delivery shall be made at the offices of the Company, at such
other place as may be mutually acceptable to the Company and Optionee or, at the
election of the Company, by certified mail addressed to Optionee at Optionee's
address set forth above or, if different, Optionee's address shown in the
records of the Company.
The Company shall have the right to withhold an appropriate number of
shares of Common Stock (based on the fair market value thereof on the date of
exercise) for payment of taxes required by law or to take such other action as
may be necessary in the opinion of the Company to satisfy all withholding tax
obligations. The Company may postpone the time of delivery of certificates for
shares of Common Stock for such additional time as the Company shall deem
necessary or desirable to enable it to comply with the requirements of any
applicable laws or regulations relating to the authorization, issuance or sale
of securities.
The issuance of the shares of Common Stock subject hereto and issuable
on the exercise of this Option and the transfer or resale of such shares shall
be subject to such restrictions as are, in the opinion of the Company's counsel,
required to comply with the Securities Act of 1933 and the rules and regulations
thereunder, and the certificates representing such shares shall, if it is deemed
advisable by counsel, bear a legend to such effect. On exercise of this
Option, Optionee
<PAGE>
shall, if so requested by the Company, deliver to the Company a written
representation that he is acquiring the shares of Common Stock to be purchased
solely for his own account for investment and not with a view to, or for resale
in connection with, any distribution thereof.
During Optionee's lifetime, this Option shall be exercisable only by
Optionee (except as otherwise provided below), and neither this Option nor any
right hereunder shall be assignable or transferable otherwise than by will or
the laws of descent and distribution (as provided below), or be subject to
attachment, execution or other similar process. If Optionee attempts to
alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of
any right hereunder, except as provided for herein, or in the event of any levy
or any attachment, execution or similar process upon the rights or interest
hereby conferred, this Option shall terminate and become null and void.
Notwithstanding the foregoing, Optionee shall have the right to transfer this
Option during his lifetime to a trust for the benefit of his spouse and/or his
descendants.
In the event of Optionee's death prior to the Termination Date, this
Option may be exercised after the date of Optionee's death by Optionee's estate
or beneficiaries, or by the trustee or trustees of a trust for the benefit of
his spouse and/or his descendants, but in no event may this Option be exercised
later than the Termination Date. All rights with respect to this Option (to the
extent held by Optionee at death and not by such a trust), including the right
to exercise it, shall pass in the following order: (a) to such persons as
Optionee may designate in a writing duly delivered to the Company (in the form
available from the Company for such purpose), or in the absence of such a
designation, (b) to Optionee's estate (this Option to be exercised by the legal
representative). References to "Optionee" shall be deemed to include Optionee's
estate, executor, beneficiaries or the trustee or trustees of any trust for the
benefit of his spouse and/or his descendants, as appropriate.
The right of the Company to terminate (whether by dismissal,
discharge, retirement or otherwise) Optionee's employment with it at any time at
will, or as otherwise provided by an agreement between the Company and Optionee,
is specifically reserved. The termination of Optionee's employment with the
Company, for any reason, shall, however, have no effect on this Option, which
shall continue in full force and effect in accordance with its terms.
In the event of any change in the number of shares of outstanding
Common Stock by reason of a stock split, reverse stock split, stock dividend,
combination or reclassification of shares, recapitalization or any other event
changing the number of shares of Common Stock outstanding without receipt of
consideration by the Company, the number of shares of Common Stock covered by
this Option and the Option Price thereof shall automatically be adjusted to
equal that number of shares of Common Stock (including fractional shares, if
any) that Optionee would have owned immediately after such event had he,
immediately prior to such event, owned that number of shares of Common Stock
that he otherwise would have been entitled to receive pursuant to this Option.
In the event of any capital reorganization of the Company, sale of
substantially all of the assets of the Company or any reclassification of the
shares of Common Stock of the Company other than into shares of Common Stock of
the Company, or in case of any consolidation or merger of the Company into or
with another corporation, provision shall be made so that Optionee shall
2
<PAGE>
have the right thereafter to receive his proportionate share of the securities
or property (including any contingent or deferred payments) issued or issuable
with respect to the number of shares of Common Stock which Optionee has the
right to receive under this Option, to the end that the provisions of this
Option shall thereafter be applicable, as nearly as reasonably may be, in
relation to securities or other property distributed in respect of the Common
Stock. This Option shall be binding on and inure to the benefit of any successor
of the Company, whether by merger, consoli dation, sale of assets or otherwise,
and reference herein to the Company shall be deemed to include any such
successor.
If there is any other change affecting the Common Stock or any
distribution (other than normal cash dividends) to holders of Common Stock, such
adjustments as may be deemed equitable by the Board of Directors, including
adjustments to avoid fractional shares, shall be made to give proper effect to
such event.
Neither Optionee nor any person entitled to exercise Optionee's rights
under this Option shall have any right to receive dividends or any other rights
of a stockholder with respect to any shares of Common Stock subject to this
Option, unless and until a certificate for such shares shall have been issued
on the exercise of this Option.
Each notice relating to this Option shall be in writing and delivered
in person or by certified mail to the proper address. All notices to the
Company shall be addressed to it at its offices at 100 Park Avenue, New York,
New York 10017, c/o the Company's Secretary, and shall become effective when
received by the Secretary. All notices to Optionee or other persons then
entitled to exercise any rights with respect to this Option shall be addressed
to Optionee or such other persons at Optionee's address specified above. Anyone
to whom a notice may be given under this Option may designate a new address by
written notice to that effect.
This Option and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the Internal Revenue Code of
1986, as amended from time to time, or the securities laws of the United States
of America, shall be governed by and construed in accordance with the laws of
the Sate of New York. This Option shall be void and of no effect after the
Termination Date.
IN WITNESS WHEREOF, the Company has caused this Option to be executed
by its officers, thereunto duly authorized, as of June 29, 1997.
INTEREP NATIONAL RADIO SALES, INC.
By /s/ Ralph C. Guild
--------------------------------------
Ralph C. Guild
Chairman of the Board
ATTEST:
/s/ Paul Parzuchowski
- ---------------------------------
Paul Parzuchowski, Secretary
3
<PAGE>
EXHIBIT 10.23
INTEREP NATIONAL RADIO SALES, INC.
NON-QUALIFIED STOCK OPTION
For valuable consideration, the receipt and sufficiency of which is
acknowledged, INTEREP NATIONAL RADIO SALES, INC., a New York corporation (the
"Company"), grants to WILLIAM J. MCENTEE, JR., with a business address of 2090
Palm Beach Lakes Boulevard, Suite 300, West Palm Beach, Florida 33409
("Optionee"), a non-qualified stock option (the "Option") to purchase from the
Company an aggregate of 5,000 shares of the Company's Common Stock, par value
$.04 per share (the "Common Stock"), at an exercise price equal to the fair
market value per share of the Common Stock on the date hereof, which shall be
determined based on the independent appraisal thereof to be conducted for the
Company's Employee Stock Ownership Plan as of December 31, 1997 (the "Option
Price"). This Option shall be exercisable at any time on and after the six-
month anniversary of the date hereof until the close of business on the tenth
anniversary of the date hereof (the "Termination Date"), and may be exercised
in whole or in part from time to time. The Company shall give Optionee written
notice of the pending expiration of this Option on a date no earlier than twelve
months prior to, and no later than 6 months prior to, the Termination Date.
Subject to the provisions of this Option, this Option may be exercised
by written notice to the Company stating the number of shares of Common Stock
with respect to which it is being exercised. Such notice shall be accompanied
by Optionee's full payment of the Option Price for the shares to be purchased by
certified or bank cashier's check payable to the order of the Company or by any
other means acceptable to the Company.
As soon as practicable after receipt of such notice and payment, and
subject to the next paragraph, the Company shall, without transfer or issue tax
or other expense to Optionee, deliver to Optionee a certificate for the shares
purchased. Such delivery shall be made at the offices of the Company, at such
other place as may be mutually acceptable to the Company and Optionee or, at the
election of the Company, by certified mail addressed to Optionee at Optionee's
address set forth above or, if different, Optionee's address shown in the
records of the Company.
The Company shall have the right to withhold an appropriate number of
shares of Common Stock (based on the fair market value thereof on the date of
exercise) for payment of taxes required by law or to take such other action as
may be necessary in the opinion of the Company to satisfy all withholding tax
obligations. The Company may postpone the time of delivery of certificates for
shares of Common Stock for such additional time as the Company shall deem
necessary or desirable to enable it to comply with the requirements of any
applicable laws or regulations relating to the authorization, issuance or sale
of securities.
The issuance of the shares of Common Stock subject hereto and issuable
on the exercise of this Option and the transfer or resale of such shares shall
be subject to such restrictions as are, in the opinion of the Company's counsel,
required to comply with the Securities Act of 1933 and the rules and regulations
thereunder, and the certificates representing such shares shall, if it is
<PAGE>
deemed advisable by counsel, bear a legend to such effect. On exercise of this
Option, Optionee shall, if so requested by the Company, deliver to the Company a
written representation that he is acquiring the shares of Common Stock to be
purchased solely for his own account for investment and not with a view to, or
for resale in connection with, any distribution thereof.
During Optionee's lifetime, this Option shall be exercisable only by
Optionee (except as otherwise provided below), and neither this Option nor any
right hereunder shall be assignable or transferable otherwise than by will or
the laws of descent and distribution (as provided below), or be subject to
attachment, execution or other similar process. If Optionee attempts to
alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of
any right hereunder, except as provided for herein, or in the event of any levy
or any attachment, execution or similar process upon the rights or interest
hereby conferred, this Option shall terminate and become null and void.
Notwithstanding the foregoing, Optionee shall have the right to transfer this
Option during his lifetime to a trust for the benefit of his spouse and/or his
descendants.
In the event of Optionee's death prior to the Termination Date, this
Option may be exercised after the date of Optionee's death by Optionee's estate
or beneficiaries, or by the trustee or trustees of a trust for the benefit of
his spouse and/or his descendants, but in no event may this Option be exercised
later than the Termination Date. All rights with respect to this Option (to the
extent held by Optionee at death and not by such a trust), including the right
to exercise it, shall pass in the following order: (a) to such persons as
Optionee may designate in a writing duly delivered to the Company (in the form
available from the Company for such purpose), or in the absence of such a
designation, (b) to Optionee's estate (this Option to be exercised by the legal
representative). References to "Optionee" shall be deemed to include Optionee's
estate, executor, beneficiaries or the trustee or trustees of any trust for the
benefit of his spouse and/or his descendants, as appropriate.
The right of the Company to terminate (whether by dismissal,
discharge, retirement or otherwise) Optionee's employment with it at any time at
will, or as otherwise provided by an agreement between the Company and Optionee,
is specifically reserved. The termination of Optionee's employment with the
Company, for any reason, shall, however, have no effect on this Option, which
shall continue in full force and effect in accordance with its terms.
In the event of any change in the number of shares of outstanding
Common Stock by reason of a stock split, reverse stock split, stock dividend,
combination or reclassification of shares, recapitalization or any other event
changing the number of shares of Common Stock outstanding without receipt of
consideration by the Company, the number of shares of Common Stock covered by
this Option and the Option Price thereof shall automatically be adjusted to
equal that number of shares of Common Stock (including fractional shares, if
any) that Optionee would have owned immediately after such event had he,
immediately prior to such event, owned that number of shares of Common Stock
that he otherwise would have been entitled to receive pursuant to this Option.
In the event of any capital reorganization of the Company, sale of
substantially all of the assets of the Company or any reclassification of the
shares of Common Stock of the Company other than into shares of Common Stock of
the Company, or in case of any consolidation or merger
2
<PAGE>
of the Company into or with another corporation, provision shall be made so that
Optionee shall have the right thereafter to receive his proportionate share of
the securities or property (including any contingent or deferred payments)
issued or issuable with respect to the number of shares of Common Stock which
Optionee has the right to receive under this Option, to the end that the
provisions of this Option shall thereafter be applicable, as nearly as
reasonably may be, in relation to securities or other property distributed in
respect of the Common Stock. This Option shall be binding on and inure to the
benefit of any successor of the Company, whether by merger, consoli dation, sale
of assets or otherwise, and reference herein to the Company shall be deemed to
include any such successor.
If there is any other change affecting the Common Stock or any
distribution (other than normal cash dividends) to holders of Common Stock, such
adjustments as may be deemed equitable by the Board of Directors, including
adjustments to avoid fractional shares, shall be made to give proper effect to
such event.
Neither Optionee nor any person entitled to exercise Optionee's rights
under this Option shall have any right to receive dividends or any other rights
of a stockholder with respect to any shares of Common Stock subject to this
Option, unless and until a certificate for such shares shall have been issued
on the exercise of this Option.
Each notice relating to this Option shall be in writing and delivered
in person or by certified mail to the proper address. All notices to the
Company shall be addressed to it at its offices at 100 Park Avenue, New York,
New York 10017, c/o the Company's Secretary, and shall become effective when
received by the Secretary. All notices to Optionee or other persons then
entitled to exercise any rights with respect to this Option shall be addressed
to Optionee or such other persons at Optionee's address specified above. Anyone
to whom a notice may be given under this Option may designate a new address by
written notice to that effect.
This Option and all determinations made and actions taken pursuant
hereto, to the extent not otherwise governed by the Internal Revenue Code of
1986, as amended from time to time, or the securities laws of the United States
of America, shall be governed by and construed in accordance with the laws of
the Sate of New York. This Option shall be void and of no effect after the
Termination Date.
IN WITNESS WHEREOF, the Company has caused this Option to be executed
by its officers, thereunto duly authorized, as of June 29, 1997.
INTEREP NATIONAL RADIO SALES, INC.
By /s/ Ralph C. Guild
----------------------------------------------
Ralph C. Guild
Chairman of the Board
ATTEST:
/s/ Paul Parzuchowski
-------------------------------------------------------
Paul Parzuchowski, Secretary
3
<PAGE>
EXHIBIT 10.24
DEFERRED COMPENSATION AGREEMENT
AGREEMENT, dated as of September 30, 1997, between INTEREP NATIONAL
RADIO SALES, INC., a corporation with offices at 100 Park Avenue, New York, New
York 10017 (the "Company") and STEWART YAGUDA, residing at 208 Midland Avenue,
Montclair, New Jersey 07042 ("Executive").
W I T N E S S E T H:
-------------------
WHEREAS, Executive has rendered many years of valuable service to the
Company, and the Company wishes to have the benefit of his continued service,
loyalty and counsel; and
WHEREAS, Executive is willing to continue in the employ of the Company
if the Company agrees to pay certain benefits to him or his beneficiaries in
accordance with the provisions of this Agreement;
NOW, THEREFORE, in consideration of Executive's services performed in
the past and to be performed in the future for the Company, and of the mutual
agreements set forth below, the parties agree as follows:
1. RETIREMENT BENEFIT.
(a) The Company will establish a bookkeeping account (the "Account")
in the name of Executive and will credit $27,750.00 to the Account (the
"Allocation") on or before September 24, 1997 and on April 1 in 1998 and each
succeeding year (the "Allocation Dates") until the earlier of (i) the date of
termination of Executive's employment with the Company and (ii) April 1, 2010.
The Company will maintain the Account until it is paid out in full pursuant to
Paragraphs 2(b) or (c) or terminated pursuant to Paragraph 2(a). During this
time period, the Executive will not be taxed on the deferred compensation or on
the growth.
(b) Earnings and losses will be credited to the Account quarterly on
the last day of September, December, March and June of each year during which
the Account is maintained (each such date is referred to as a "Valuation Date"),
determined as though the Account were invested in such mutual funds as Executive
and the Company agree in writing (the "Reference Funds") and in such percentages
among such funds as is specified in writing by Executive from time to time.
(i) On the first Valuation Date (September 30, 1997), earnings
and losses will be calculated on the initial Allocation. On subsequent Valuation
Dates, earnings and losses will be calculated on the Account balance determined
as of the preceding Valuation Date, together, in the case of each June 30
Valuation Date, with the amount of any annual Allocation credited during the
preceding quarter.
(ii) Any change in percentage allocations among the Reference
Funds may
<PAGE>
be made by Executive, to be effective as of the next following Valuation
Date, so long as a change in election form is received by the Company's Chief
Financial Officer at least five days prior to such Valuation Date. Any such
change will apply to the total balance of the Account determined at such
Valuation Date and to all subsequent Allocations and valuations of the Account
until a further change in election is made in such manner. No more than one
change may be made during each calendar year.
2. PAYMENT ON TERMINATION OF EMPLOYMENT.
(a) No benefits will be payable under this Agreement if Executive's
employment with the Company is terminated for "cause", that is, Executive's
gross neglect of his duties, willful failure to perform his duties, dishonesty,
fraud or other gross misconduct, or conviction of a felony. If Executive's
employment with the Company is terminated for cause, the Company will terminate
the Account and Executive will have no further right, claim or interest in the
Account.
(b) For purposes of this Agreement, the term "Allocation Period" means
the period beginning on the date of this Agreement and ending on the 30th day
following the earlier of the dates referred to in clauses (i) and (ii) of
Section 1(a). If Executive's employment with the Company terminates before the
end of the Allocation Period for any reason other than cause, the Company will
pay Executive or his beneficiary, in the event of his death, an amount equal to
the value of the Account determined as of the Valuation Date next following the
date of termination of Executive's employment. Such payment will be made within
30 days after such date of termination, in a single, lump sum cash payment.
(c) If the termination of Executive's employment occurs on or after
April 1, 2010, the Company will pay Executive the value of the Account in ten
annual installments. For this purpose, the Account will be valued as of the
Valuation Date next following the date of termination of Executive's employment
and on the anniversary date of such Valuation Date in each of the following nine
years. The first installment will be in an amount equal to 1/10th of the value
of the Account as of such first Valuation Date, the second installment will be
in an amount equal to 1/9th of the value of the Account as of the second such
Valuation Date, the third installment will be in an amount equal to 1/8th of the
value of the Account as of the third such Valuation Date and so on until the
remaining balance of the Account is paid in the 10th installment. All payments
will be made within 30 days after the Valuation Date in question. The Company
will continue to credit earnings quarterly on the declining balance of the
Account in the manner set forth in Paragraph 1.
3. BENEFICIARY DESIGNATION. The amount payable on the death of
Executive pursuant to Paragraph 2(b) will be paid to the parties designated in
writing by Executive as his beneficiaries in a form acceptable to the Company
and furnished to its Chief Financial Officer. Executive will have the right to
change such designation from time to time in the same manner. If Executive
fails to make such a designation prior to his death, the payment will be made to
his wife, or if he leaves no wife surviving him, to the duly appointed,
executor, administrator or other personal representative of his estate.
-2-
<PAGE>
4. NON-COMPETITION. In consideration of the Company's obligations
under this Agreement, Executive agrees that he will not participate, directly or
indirectly, in the ownership, management, operation or control of, or be a
director or employee of, or a consultant to, any person or entity that is in
competition with the Company in the New York City metropolitan area in the
business of repping stations and networks or developing radio business that
would be in direct competition with the Company, for a period of two years after
the date of the termination of Executive's employment with the Company. At the
time of such termination, Executive will, on the Company's request, execute a
supplementary agreement to the same effect. If Executive breaches any of his
obligations under this Paragraph 4, he will be deemed to have forfeited all of
his rights under this Agreement and the Company will no longer be obligated to
make any payments to Executive hereunder.
5. ASSIGNABILITY. No transfer, assignment, pledge,
collateralization, attach ment, execution or levy of any kind, voluntary or
involuntary, of any of the benefits under this Agreement by Executive will be
valid or recognized by the Company.
6. CONSTRUCTION. All questions of interpretation, construction or
application arising under this Agreement will be decided by the Board of
Directors of the Company, whose decision will be final and conclusive on all
parties.
7. NO SECURITY. The Company's obligations under this Agreement
constitute merely the unsecured promise of the Company to make the payments
provided for herein. No property of the Company will, by reason of this
Agreement, be held in trust for Executive, any designated beneficiary or any
other party, and neither Executive nor any designated beneficiary or other party
will have, by reason of this Agreement, any rights, title or interest of any
kind in or to any property of the Company.
8. NO EMPLOYMENT RIGHTS. This Agreement creates no right in
Executive to continue in the Company's employ for any specific length of time,
nor does it create any rights in favor of Executive or obligations on the part
of the Company not set forth in this Agreement.
9. MISCELLANEOUS. This Agreement may not be modified or amended
except by a writing signed by the Company and Executive. This Agreement will be
binding on Executive and his heirs, personal representatives and assigns and on
the Company and its successors and assigns. This Agreement will be governed by
and construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first set forth above.
INTEREP NATIONAL RADIO SALES, INC.
By /s/ William J. McEntee, Jr. /s/ Stewart Yaguda
--------------------------- ------------------
WILLIAM J. McENTEE, JR. STEWART YAGUDA
CHIEF FINANCIAL OFFICER
-3-
<PAGE>
EXHIBIT 10.25
11/24/86
Exhibit A
---------
SUPPLEMENTAL INCOME AGREEMENT
-----------------------------
THIS AGREEMENT is entered into this 31st day of December, 1986, between
----- --------
INTEREP NATIONAL RADIO SALES, INC., a corporation having its principal place of
business at 100 Park Avenue, New York, New York 10017 (herein called "Company")
and RALPH GUILD (herein called "Employee").
WITNESSETH:
WHEREAS, Employee has been employed by the Company since April 1, 1957 and
by reason thereof has acquired experience and knowledge of considerable value to
the Company; and
WHEREAS, in order to induce the Employee to remain employed by the company,
the Company and the Employee desire to enter into an Agreement whereby the
Company will make certain payments to the Employee after his retirement or to
the Employee's designated beneficiary upon the Employee's death prior to
retirement.
NOW THEREFORE, it is mutually agreed as follows:
<PAGE>
SECTION 1. Retirement Payments Commencement Date. If the Employee remains
-------------------------------------
in the continuous employ of the Company until attainment of age 62, the Company
will pay the Employee a Monthly Benefit commencing on the 1st of any month
coinciding with or next following attainment of his sixty-second birthday but no
later than his sixty-fifth birthday as set forth in Section 2 below.
SECTION 2. Computation of the Monthly Benefit. The total benefit payable
----------------------------------
shall be equivalent to the present value of an annual benefit of $104,583
--------
commencing on the first of the month coinciding with or next following the
Employee's sixty-fifth birthday and payable for 15 years certain. The
computation of the present value shall be made using the Pension Benefit
Guarantee Corporation Prospective Actuarial and Mortality Tables (Publication
509) in effect as of the first of the month three months prior to the effective
date benefit payments are to begin. The resulting present value will be paid out
in monthly installments over a period of 180 months.
SECTION 3. Pre-Retirement Survivor Benefit. In the event the Employee
-------------------------------
should die prior to commencement of benefit payments the Company shall pay the
Monthly Benefit that would have been paid at 65 had he lived, as set forth in
Section 2, to whomever the Employee has designated in writing or, if no such
designation has been made, the Employee's spouse, if living, otherwise to the
Employee's estate. Said payments shall commence on the first day of the month
following Employee' s death. Said beneficiary may appoint by notice in writing
to the Company any remaining payments to any person or to said beneficiary's
estate; failing such appointment, the remaining payments shall be made to the
beneficiary's estate.
-2-
<PAGE>
SECTION 4. Post-Retirement Benefit. In the event the Employee dies after
-----------------------
Monthly Benefit payments commence but before receiving the total number of
Monthly payments, the Company shall continue the payments until the balance of
the Monthly Benefit set forth in Section 2 had been paid to whomever the
Employee has designated in writing or, if no such designation has been made, to
the Employee' s spouse, if 1iving, otherwise to the Employee's estate.
SECTION 5. Disability Benefit. If Employee ceases employment by reason of
------------------
Total and Permanent Disability prior to age 62 then, for the purposes of this
Agreement, Employee shall be deemed continuously employed until the earliest of
the attainment of age 62, death or the date on which such Disability ceases.
Total and Permanent Disability shall mean the incapacity of the Employee, either
mental or physical, to perform the usual duties of his employment with the
Company, such incapacity to be deemed to exist when so declared by the Company
in its judgment and discretion, supported by the written opinion of at least one
physician approved by the Company.
SECTION 6. Agreement Unfunded. It is the intention of the parties hereto
------------------
the Company's obligations to pay retirement or survivor benefits hereunder shall
be an unsecured promise, and that any right to enforce such obligation shall be
solely as a general creditor of the Company. If the Company shall acquire an
insurance policy or any other asset in connection with the liabilities assumed
by it hereunder, it is expressly agreed that neither Employee nor any
beneficiary of Employee shall have any right with respect to or claim against
such policy except
-3-
<PAGE>
as expressly provided by the terms of such policy. Such policy shall not be
deemed to be held under any trust for the benefit of Employee or his
beneficiaries or to be held in any way collateral security for the fulfilling of
the obligations of the Company under this Agreement, except as may be expressly
provided by the terms of such policy and shall be, and remain, a general,
unpledged, un-restricted asset of the company. Notwithstanding the foregoing,
the Company may contribute assets, including but not limited to insurance
policies, to a trust designed to provide the Employee with psychological comfort
and reassurance (but not providing the Employee with any interest in said trust
other than as a general unsecured creditor of the Company) that the benefits
provided in this Agreement will be paid to the Employee.
SECTION 7. Merger or Consolidation. In the event the Company merges or
-----------------------
consolidates with any other company, or agrees that substantially all its
business activities be taken over by any other company, the succeeding or
continuing company shall be required to assume all obligations and liabilities
herein set forth.
SECTION 8. Suicide. No benefits will be paid if the Employee's death is
-------
from suicide within two years of the date of this contract.
SECTION 9. Employment Contract to Govern. This Agreement is subject to
-----------------------------
the terms of any employment contract heretofore or hereafter entered into
between the Company and the Employee. If the terms of such other employment
contract conflict with the provisions of this Agreement, the terms of such other
employment contract shall govern. Nothing in this
-4-
<PAGE>
Agreement shall confer upon the Employee the right to continue in the employ of
the Company or affect any right the Company may have to terminate the Employee's
employment. It is the express intent of the parties hereto that this Agreement
not be deemed an employment contract between the Employee and the Company.
SECTION 10. Late Retirement. If, with the consent of the Board of
---------------
Directors, the Employee remains in the employ of the Company beyond age 65, he
may, at his option, receive benefits beginning at age 65 or delay receipt until
actual retirement and receive an increase in benefit as mutually agreed upon by
the Employee and the Company.
SECTION 1. Termination for Cause. The Company retains the right at all
---------------------
times to dismiss the Employee for cause such as dishonesty. In the event of
termination for cause by the Company of the Employee, the Employee's vested
interest in the plan will be forfeited and he will have no rights whatsoever
under the contract. If, following termination for any reason, it is discovered
that the Employee has committed any act of dishonesty while employed by the
Company, then all rights which the Employee or his spouse or beneficiaries may
have had under this Agreement shall be forfeited and any liability of the
Company to make payments hereunder shall be terminated.
SECTION 12. Employee Information Required. Payment of benefits is
-----------------------------
conditioned upon the Employee furnishing to the Company all information which
the Company may deem necessary or desirable to assist in the administration of
this Agreement and upon the employee
-5-
<PAGE>
submitting to medical examinations and/or questionnaires and to supply all such
information referred to above accurately and truthfully and to execute such
documents as may be required by the Company or their designated agents.
SECTION 13. Whole Agreement; Amendment. This Agreement constitutes the
--------------------------
whole Supplemental Income Agreement between the Company and the Employee and may
not be modified, amended or terminated except by a written instrument signed by
the Company and the Employee. The Employee and the Company may amend this
Agreement by a document in writing, without the consent of the Employee's spouse
or Beneficiary, notwithstanding that any such amendment may have the effect of
diminishing or eliminating benefits payable to such spouse or Beneficiary under
the several provisions of this Agreement.
A. No waiver of any breach or default hereunder shall be considered
valid unless in writing, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or similar nature.
B. If any provision of this Agreement is held invalid or
unenforceable, its invalidity or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed and enforced
as if such provision had not been included herein.
C. The captions contained herein are inserted only as a matter of
convenience and for reference and in no way define, limit, enlarge or describe
the scope or intent of this
-6-
<PAGE>
Agreement nor in any way shall affect the Agreement or the construction of any
provision thereof.
SECTION 14. Governing Law. This Agreement shall be governed by, construed
-------------
and enforced in accordance with the laws of the State of New York (without
regard to principles of conflict of laws).
IN WITNESS WHEREOF, Company and Employee have hereunto executed this
Agreement the day and year above written.
INTEREP NATIONAL RADIO SALES, INC.
Attest: /s/ Patricia H. Baker By: /s/ Les Goldberg
------------------------- ------------------------------------
(Seal)
Witness: /s/ Patricia H. Baker /s/ Ralph Guild
---------------------- ------------------------
RALPH GUILD
-7-
<PAGE>
EXHIBIT 10.26
June 18, 1993
AGREEMENT
BETWEEN INTEREP NATIONAL RADIO SALES, INC.
AND RALPH GUILD
WHEREAS, Interep National Radio Sales, Inc. ("The Company") and Ralph Guild
("Guild") are parties to the following agreements:
1) The Supplemental Income Agreement dated as of December 31, 1986
2) The Third Amended and Restated Employment Agreement dated as of January
1, 1991 ("The Employment Agreement")
3) The Amendment and Extension of Option dated as of January 1, 1991 ("The
Extended Option")
WHEREAS, the Employment Agreement calls for the continued employment of Guild
through January 1, 1997; and,
WHEREAS, the Company and Guild both desire that Guild remain active in his
position as Chairman of the Company.
Now, therefore, the Company and Guild in consideration of their mutual interests
agree as follows:
1) The total benefit payable under the Supplemental Income Agreement is
hereby reduced from a 15 year benefit beginning at age 65 to a 12 year
benefit beginning January 1, 1997.
2) The Extended Option is hereby further extended to January 1, 1997.
Accepted and Agreed To:
INTEREP NATIONAL RADIO SALES, INC. Ralph C. Guild
/s/ Les Goldberg /s/ Ralph C. Guild
- ---------------------------- --------------------------
By: Les Goldberg, Director
/s/ Marc Guild
- ----------------------------
By: Marc Guild, Director
<PAGE>
EXHIBIT 12.1
Interep National Radio Sales, Inc.
Calculation of Earnings to Fixed Charges
(Thousands of dollars)
<TABLE>
<CAPTION>
Years Ended December 31,
1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C>
Earnings:
Operating income (loss) $ 1,760 $ 3,213 $ 3,777 $ 1,794 $(3,563)
Fixed charges 1,456 1,359 1,401 1,455 1,511
---------------------------------------------------------------
Earnings as adjusted $ 3,216 $ 4,572 $ 5,178 $ 3,249 $(2,052)
Fixed Charges:
Interest on debt $ 3,191 $ 3,379 $ 3,494 $ 4,049 $ 3,888
Amortization of debt issuance costs 94 94 55 73 89
Imputed interest portion of rent 1,362 1,265 1,346 1,382 1,422
----------------------------------------------------------------
Total fixed charges $ 4,647 $ 4,738 $ 4,895 $ 5,504 $ 5,399
Deficiency of earnings to fixed charges $ 1,431 $ 166 $ - $ 2,255 $ 7,451
================================================================
Ratio of earnings to fixed charges 1.06
=======
</TABLE>
<TABLE>
<CAPTION>
Proforma (1)
Three Months Ended Year Ended Three Months
March 31, December 31, Ended March 31,
1997 1998 1997 1998
<S> <C> <C> <C> <C>
Earnings:
Operating income (loss) $(1,818) $(3,250) $(3,563) $(3,250)
Fixed charges 386 404 1,822 469
------------------------------------------------------------
Earnings as adjusted $(1,432) $(2,846) $(1,741) $(2,781)
Fixed Charges:
Interest on debt $ 842 $ 1,017 $10,000 $ 2,500
Amortization of debt issuance costs 34 35 400 100
Imputed interest portion of rent 352 369 1,422 369
-------------------------------------------------------------
Total fixed charges $ 1,228 $ 1,421 $11,822 $ 2,969
Deficiency of earnings to fixed charges $ 2,660 $ 4,267 $13,563 $ 5,750
==============================================================
</TABLE>
(1) Refer to the unaudited pro forma consolidated financial data for further
detail.
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF INTEREP NATIONAL RADIO SALES, INC.
Corporations
- ------------
McGavren Guild, Inc. ("MG")
D&R Radio, Inc.
CBS Radio Sales, Inc.
ABC Radio Sales (a division of Interep National Radio Sales, Inc.)
Allied Radio Partners, Inc.
MG Spanish Media, Inc.
McGavren Guild Radio Sales, Inc.
LLC's - 95% Interep, 5% MG
- --------------------------
Caballero Spanish Media L.L.C.
Clear Channel Radio LLC
All of the subsidiaries were organized in the State of New York.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
New York, New York
August 3, 1998
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
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) X
-
(Name of Trustee)
SUMMIT BANK
(I.R.S. Employer Identification No.)
22-0834947
(Address of Principal Executive Offices)
210 Main Street
Hackensack, NJ
07601
(Name of Obligor)
Interep National Radio Sales, Inc.
(State of Incorporation)
New York
(I.R.S. Employer Identification No.)
13-1865151
(Address of Principal Executive Offices)
100 Park Avenue
New York, NY 10017
(Title of Indenture Securities)
10 % Subordinated Debt Securities due 2008
<PAGE>
1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to which it
is subject:
Name Address
- ---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New Jersey Department of Banking Trenton, NJ
(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 (See Note on page 6)
3. VOTING SECURITIES OF THE TRUSTEE
Furnish the following information as to each class of voting securities of
the trustee: As of _____________________
Col. A Col. B
------ ------
Summit Bank Common Stock 34,021,623 shares
Summit Bank, Preferred Stock 120,000 shares
4. TRUSTEESHIPS UNDER OTHER INDENTURES
If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following
information:
Not applicable - see answer to item 13
<PAGE>
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR
UNDERWRITERS
If the trustee or any of the directors or executive officers of the trustee
is a director, officer, partner, employee, appointee, or representative of
the obligor or of any underwriter for the obligor, identify each such
person having any such connection and state the nature of each such
connection.
Not applicable - see answer to item 13
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner, and
executive officer of the obligor:
Not applicable - see answer to item 13
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such underwriter:
8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE
Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by
the Trustee:
Not applicable - see answer to item 13
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE
If the trustee owned beneficially or holding as collateral security for
obligations in default any securities or an underwriter for the obligor,
furnish the following information as to each class of securities of such
underwriter any of which are owned or held by the trustee:
Not applicable - see answer to item 13
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR
If the trustee owns beneficially or holds as collateral security for
oblications in default voting securities of a person who, to the knowledge
of the trustee (1) owns 10 percent or
-2-
<PAGE>
more of the voting stock of the obligor or (2) is an affiliate, other than
a subsidiary, of the obligor, furnish the following information as to the
voting securities of such person:
Not applicable - see answer to item 13
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING
50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of
the trustee, owns 50 percent or more of the voting securities of the
obligor, furnish the following information as to each class of securities
of such person any of which are owned or held by the trustee:
Not applicable - see answer to item 13
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such
default.
None
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, or is trustee for
more than one outstanding series of securities under the indenture,
state whether there has been a default under any such indenture or
series, identify the indenture or series affected, and explain the
nature of any such default.
13. DEFAULTS BY THE OBLIGOR
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such
default.
None
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, or is trustee for
more than one outstanding series of securities under the indenture,
state whether there has been a default under any such indenture or
series, identify the indenture or series affected, and explain the
nature of any such default.
-3-
<PAGE>
NOTE
The Trustee disclaims responsibility for the accuracy or completeness
of information contained in this Statement of Eligibility and Qualification not
known to the trustee and not obtained by it through reasonable investigation and
as to which information it has obtained from the obligor and has had to rely or
will obtain from the principal underwriters and will have to rely.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, Summit Bank, a corporation organized and existing under the laws of the
State of New Jersey, has duly caused this Statement of Eligibility and
Qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Hackensack and State of New Jersey on the 29th
day of June, 1998.
SUMMIT BANK
By:/s/ Jennifer J. Houle
------------------------
Jennifer J. Houle
Assistant Vice President
-4-
<PAGE>
CONSENT OF TRUSTEE
Summit Bank, as trustee (the "Trustee") under an indenture to be
entered into between itself and Interep National Radio Sales, Inc. hereby
consents to Section 321(b) of the Trust Indenture Act of 1939, as amended, to
the furnishing by Federal, State, Territorial or District Authorities to the
Securities and Exchange Commission of all reports, records or other information
relating thereto.
SUMMIT BANK
By: /s/ Jennifer J. Houle
---------------------
Jennifer J. Houle
Assistant Vice President
Dated: June 29, 1998
-5-
<PAGE>
Board of Governors of the Federal
Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 2000
Federal Financial Institutions Examination Council
- --------------------------------------------------------------------------------
Please refer to page 1,
Table of Contents, for
the required disclosure
of estimated burden
- --------------------------------------------------------------------------------
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices -- FFIEC 031
Report at the close of business December 31, 1997 (971231)
---------
(RCRI 9999)
<TABLE>
<S> <C>
This report is required by law: 12 U.S.C. (S)324 (State This report form is to be filed by banks with branches and
member banks); 12 U.S.C. (S)1817 (State nonmember banks); consolidated subsidiaries in U.S. territories and possessions,
and 12 U.S.C. (S)161 (National banks). Edge or Agreement subsidiaries, foreign branches, consolidated
foreign subsidiaries, or International Banking Facilities.
- ------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by The Reports of Condition and Income are to be prepared in
an authorized officer and the Report of Condition must be accordance with Federal regulatory authority instructions.
attested to by not less than two directors (trustees) for
State nonmember banks and three directors for State member We, the undersigned directors (trustees), attest to the
and National banks. correctness of the Report of Condition (including the supporting
schedules) for this report date and declare that it has been
I, William J. Healy, Assistant Treasurer examined by us and to the best of our knowledge and belief has
------------------------------------------------------- been prepared in conformance with the instructions issued by the
Name and Title of Officer Authorized to Sign Report appropriate Federal regulatory authority and is true and correct.
of the named bank do hereby declare that the Reports of
condition and income (including the supporting schedules) on
this report date have been prepared in conformance with the
instructions issued by the appropriate Federal regulatory
authority and are true to the best of my knowledge and /s/
belief. ------------------------------------------------------------------
Director (Trustee)
/s/ William J. Healy /s/
- ------------------------------------------------------------ ------------------------------------------------------------------
Signature of Officer Authorized to Sign Report Director (Trustee)
/s/
- ------------------------------------------------------------ ------------------------------------------------------------------
Date of Signature Director (Trustee)
- ------------------------------------------------------------------------------------------------------------------------------
(b) in hard-copy (paper) form and arrange for another party to
Submission of Reports convert the paper report to automated form. That party (if other
than EDS) must transmit the bank's computer data file to EDS.
Each bank must prepare its Reports of Condition and Income
either: To fulfill the signature and attestation requirement for the
Reports of Condition and Income for this report date, attach this
(a) in automated form and then file the computer data file signature page to the hard-copy record of the completed report
directly with the banking agencies' collection agent, that the bank places in its files
Electronic Data Systems Corporation (EDS), by modern or on
computer diskette; or
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FDIC Certificate Number 00550
---------
(RCRI 9050) SUMMIT BANK
301 CARNEGIE CENTER
4TH FLOOR
PRINCETON NJ 8543 2066
B341220000 023412200000 00550
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
Affix the address label in this space
Summit Bank NJ
- --------------------------------------------------------------------------------
Legal Title of Bank
FDIC Certificate Number 550
-----
Consolidated Report of Income
for the period January 1, 1997 - December 31, 1997
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
Schedule RI - Income Statement
<TABLE>
<CAPTION>
480
--------------------------------
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income:
a. Interest and fee income on loans:
(1) In domestic offices:
--------------------
(a) Loans secured by real estate......................................... RIAD 653,773 1.a.(1)(a)
4011
--------------------
(b) Loans to depository institutions..................................... RIAD 4,276 1.a.(1)(b)
4019
--------------------
(c) Loans to finance agricultural production and other loans to farmers.. RIAD 22 1.a.(1)(c)
4024
--------------------
(d) Commercial and industrial loans...................................... RIAD 340,201 1.a.(1)(d)
4012
--------------------
(e) Acceptances of other banks........................................... RIAD 0 1.a.(1)(e)
4026
--------------------
(f) Loans to individuals for household, family, and other personal
expenditures:
--------------------
(1) Credit cards and related plans.................................. RIAD 13,621 1.a.(1)(f)(1)
4054
--------------------
(2) Other........................................................... RIAD 60,083 1.a.(1)(f)(2)
4055
--------------------
(g) Loans to foreign governments and official institutions............... RIAD 0 1.a.(1)(g)
4056
--------------------
(h) Obligations (other than securities and leases) of states and
political subdivisions in the U.S.:
--------------------
(1) Taxable obligations............................................ RIAD 99 1.a.(1)(h)(1)
4503
--------------------
(2) Tax-exempt obligations......................................... RIAD 7,599 1.a.(1)(h)(2)
4504
--------------------
(i) All other loans in domestic offices.................................. RIAD 12,012 1.a.(1)(i)
4058
--------------------
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs............ RIAD 0 1.a.(2)
4059
--------------------
b. Income from lease financing receivables:
--------------------
(1) Taxable leases............................................................ RIAD 36,976 1.b.(1)
4505
--------------------
(2) Tax-exempt leases......................................................... RIAD 0 1.b.(2)
4307
--------------------
c. Interest income on balances due from depository institutions/1/:
--------------------
(1) In domestic offices...................................................... RIAD 557 1.c.(1)
4105
--------------------
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs............ RIAD 0 1.c.(2)
4106
d. Interest and dividend income on securities:
--------------------
(1) U.S. Treasury securities and U.S. Government agency obligations.......... RIAD 287,674 1.d.(1)
4027
--------------------
(2) Securities issued by states and political subdivisions in the U.S.:
--------------------
(a) Taxable securities.................................................. RIAD 0 1.d.(2)(a)
4506
--------------------
(b) Tax-exempt securities............................................... RIAD 11,434 1.d.(2)(b)
4507
--------------------
(3) Other domestic debt securities.......................................... RIAD 72,826 1.d.(3)
3657
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ Includes interest income on time certificates of deposit not held for
trading.
<PAGE>
<TABLE>
<CAPTION>
480
-----------------------
Dollar Amounts in Thousands Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(4) Foreign debt securities................................................. RIAD 1,390 1.d.(4)
3658
--------------------
(5) Equity securities (including investments in mutual funds)............... RIAD 6,986 1.d.(5)
3659
--------------------
e. Interest income from trading assets........................................... RIAD 745 1.e.
4069
--------------------
f. Interest income on federal funds sold and securities purchased under RIAD 7,892 1.f.
agreements to resell.......................................................... 4020
--------------------
g. Total interest income (sum of items 1.a through 1.f).......................... RIAD 1,518,166 1.g.
4107
--------------------
2. Interest expense:
a. Interest on deposits:
(1) Interest on deposits in domestic offices:
--------------------
(a) Transaction accounts (NOW accounts, ATS accounts, and RIAD 34,791 2.a.(1)(a)
telephone and preauthorized transfer accounts)..................... 4508
--------------------
(b) Nontransaction accounts:
--------------------
(1) Money market deposit accounts (MMDAs).......................... RIAD 114,440 2.a.(1)(b)(1)
4509
--------------------
(2) Other savings deposits......................................... RIAD 43,429 2.a.(1)(b)(2)
4511
--------------------
(3) Time deposits of $100,000 or more.............................. RIAD 61,242 2.a.(1)(b)(3)
A517
--------------------
(4) Time deposits of less than $100,000............................ RIAD 212,039 2.a.(1)(b)(4)
A518
--------------------
(2) Interest on deposits in foreign offices, Edge and Agreement RIAD 0 2.a.(2)
subsidiaries, and IBFs.................................................. 4172
--------------------
b. Expense of federal funds purchased and securities sold under RIAD 107,871 2.b.
agreements to repurchase..................................................... 4180
--------------------
c. Interest on demand notes issued to the U.S. Treasury, trading RIAD 39,158 2.c.
liabilities, and other borrowed money........................................ 4185
--------------------
d. Not applicable
--------------------
e. Interest on subordinated notes and debentures................................. RIAD 11,303 2.e.
4200
--------------------
f. Total interest expense (sum of items 2.a through 2.e)......................... RIAD 624,273 2.f.
4073
---------------------------------------
3. Net interest income (item 1.g minus 2.f).......................................... RIAD 893,893 3.
4074
---------------------------------------
4. Provisions:
---------------------------------------
a. Provision for loan and lease losses........................................... RIAD 49,904 4.a.
4230
---------------------------------------
b. Provision for allocated transfer risk......................................... RIAD 0 4.b.
4243
---------------------------------------
5. Noninterest income:
--------------------
a. Income from fiduciary activities.............................................. RIAD 43,689 5.a.
4070
--------------------
b. Service charges on deposit accounts in domestic offices....................... RIAD 97,340 5.b.
4080
--------------------
c. Trading revenue (must equal Schedule RI, sum of Memorandum items RIAD 405 5.c.
8.a through 8.d)............................................................. A220
--------------------
d.-e. Not applicable
--------------------
f. Other noninterest income:
--------------------
(1) Other fee income......................................................... RIAD 47,072 5.f.(1)
5407
--------------------
(2) All other noninterest income/*/.......................................... RIAD 42,089 5.f.(2)
5408
---------------------------------------
g. Total noninterest income (sum of items 5.a through 5.f)....................... RIAD 230,595 5.g.
4079
---------------------------------------
6. a. Realized gains (losses) on held-to-maturity securities........................ RIAD 5 6.a.
3529
---------------------------------------
b. Realized gains (losses) on available-for-sale securities...................... RIAD 526 6.b.
3196
---------------------------------------
7. Noninterest expense:
--------------------
a. Salaries and employee benefits................................................ RIAD 245,988 7.a.
4135
--------------------
b. Expenses of premises and fixed assets (net of rental income) RIAD 83,724 7.b.
(excluding salaries and employee benefits and mortgage interest).............. 4217
--------------------
c. Other noninterest expense/*/.................................................. RIAD 320,550 7.c.
4092
--------------------
d. Total noninterest expense (sum of items 7.a. through 7.c.).................... RIAD 650,262 7.d.
4093
---------------------
</TABLE>
- --------------------
/*/ Describe on Schedule RI-E - Explanations
<PAGE>
<TABLE>
<CAPTION>
480
-----------------------
Dollar Amounts in Thousands Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
-----------------------------------------
8. Income (loss) before income taxes and extraordinary items and other RIAD 424,853 8.
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b and 7.d).... 4301
-----------------------------------------
9. Applicable income taxes (on item 8)......................................... RIAD 149,030 9.
4302
-----------------------------------------
10. Income (loss) before extraordinary items and other adjustments RIAD 275,823 10.
(item 8 minus 9)........................................................... 4300
-----------------------------------------
11. Extraordinary items and other adjustments, net of income taxes/*/.......... RIAD 0 11.
4320
-----------------------------------------
12. Net income (loss) (sum of items 10 and 11)................................. RIAD 275,823 12.
4340
-----------------------------------------
</TABLE>
- --------------------
/*/ Describe on Schedule RI-E - Explanations
<PAGE>
Summit Bank NJ
- ----------------------------------------------------------------------
Legal Title of Bank
FDIC Certificate Number 550
---
Schedule RI - Continued
<TABLE>
<CAPTION>
--------------------------------------
481
--------------------------------------
Memoranda Year-to-date
- ---------------------------------------------------------------------------------------------------------------------------
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and RIAD 0 M.1.
leases acquired after August 7, 1986, that is not deductible 4513
for federal income tax purposes................................................
-----------------------------------
2. Income from the sale and servicing of mutual funds and annuities in RIAD 28,911 M.2.
domestic offices (included in Schedule RI, item 8)............................. 8431
-----------------------------------
3.-4. Not applicable............................................................... Number
-----------------------------------
5. Number of full-time equivalent employees at end of current period (round RIAD 5238 M.4.
to nearest whole number)....................................................... 4150
-----------------------------------
6. Not applicable
-----------------------------------
7. If the reporting bank has restated its balance sheet as a result of RIAD CC YY MM DD M.7.
applying push down accounting this calendar year, report the date of 9106
the bank's acquisition/1/...................................................... 00000000
-----------------------------------
8. Trading revenue (from cash instruments and off-balance sheet derivative
instruments) (sum of Memorandum items 8.a through 8.d must equal
Schedule RI, item 5.c):
-----------------------------------
a. Interest rate exposures.................................................... RIAD (2,017) M.8.a.
8757
-----------------------------------
b. Foreign exchange exposures.................................................. RIAD 2,422 M.8.b.
8758
-----------------------------------
c. Equity security and index exposures......................................... RIAD 0 M.8.c.
8759
-----------------------------------
d. Commodity and other exposures............................................... RIAD 0 M.8.d.
8760
-----------------------------------
9. Impact on income of off-balance sheet derivatives held for purposes
other than trading:
-----------------------------------
a. Net increase (decrease) to interest income.................................. RIAD (815) M.9.a.
8761
-----------------------------------
b. Net (increase) decrease to interest expense................................. RIAD (947) M.9.b.
8762
-----------------------------------
c. Other (noninterest) allocations............................................. RIAD 0 M.9.c.
8763
-----------------------------------
10. Credit losses on off-balance sheet derivatives (see instructions)............. RIAD 0 M.10.
A251
-----------------------------------
11. Does the reporting bank have a Subchapter Selection in effect for RIAD YES NO M.11.
federal income tax purposes for the current tax year?......................... A530 [ ] [ ]
-----------------------------------
<CAPTION>
-----------------------------------
Bil Mil Thou
-----------------------------------
<S> <C> <C> <C> <C> <C>
12. Deferred portion of total applicable income taxes included in Schedule RIAD 0 M.12.
RI, items 9 and 11 (to be reported with the December Report of Income)........ 4772
-----------------------------------
</TABLE>
- -----------------------
/1/ For example, a bank acquired on June 1, 1997, would not report 19970601.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF OPERATIONS AND CONSOLIDATED BALANCE SHEETS OF INTEREP
NATIONAL RADIO SALES, INC. AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996 DEC-31-1998
<PERIOD-START> JAN-01-1997 JAN-01-1996 JAN-01-1998
<PERIOD-END> DEC-31-1997 DEC-31-1996 MAR-31-1998
<CASH> 1,419 2,653 4,441
<SECURITIES> 0 0 0
<RECEIVABLES> 43,544 39,114 49,752
<ALLOWANCES> 1,220 982 1,220
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 83,119 64,597 92,196
<PP&E> 19,384 17,678 19,275
<DEPRECIATION> 15,049 13,462 15,392
<TOTAL-ASSETS> 141,212 94,185 145,141
<CURRENT-LIABILITIES> 49,921 44,378 41,062
<BONDS> 44,425 34,235 42,884
6,924 5,334 7,389
0 0 0
<COMMON> 4,536 4,675 4,536
<OTHER-SE> (28,087) (18,420) (33,112)
<TOTAL-LIABILITY-AND-EQUITY> 141,212 94,185 145,141
<SALES> 87,096 72,858 15,898
<TOTAL-REVENUES> 87,096 72,858 15,898
<CGS> 0 0 0
<TOTAL-COSTS> 90,659 71,064 19,148
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 3,779 3,911 1,005
<INCOME-PRETAX> (7,342) (2,117) (4,255)
<INCOME-TAX> 412 400 49
<INCOME-CONTINUING> (7,754) (2,517) (4,304)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (7,754) (2,517) (4,304)
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
